COURT OF APPEAL FOR ONTARIO

CITATION: Bruell Contracting Limited v. J. & P. Leveque
    Bros. Haulage Limited, 2015 ONCA 273

DATE: 20150421

DOCKET: C57554

Feldman, Watt, and van Rensburg JJ.A.

BETWEEN

Bruell Contracting Limited

Respondent (Plaintiff)

and

J. & P. Leveque Bros. Haulage Limited and
Her Majesty the Queen in Right of Ontario, as represented by
    the Ministry of Transportation Ontario

Appellants (Defendants)

AND BETWEEN

J. & P. Leveque Bros. Haulage Limited

Respondent (Plaintiff)

and

Her Majesty the Queen in
    Right of Ontario
, Earth Tech Canada Inc. now doing business under the
    name of AECOM Canada Ltd., Bruell Contracting Limited and McAsphalt Industries
    Limited

Appellant (Defendants)

Ronald Carr and Fatema Dada, for the appellant

Jeffrey S. Percival, for AECOM Canada Ltd.

Charles Loopstra and Daron L. Earthy, for Bruell
    Contracting Limited

Tom Corbett and Marcia Oliver, for J. & P. Leveque
    Bros. Haulage Limited

Heard: June 17, 2014

On appeal from the judgment of Justice David J. Nadeau of
    the Superior Court of Justice, dated July 25, 2013, with reasons reported at
    2013 ONSC 1985 and additional reasons reported at 2013 ONSC 6676.

Feldman J.A.:

Overview

[1]

This action arose out of a road surfacing contract between the Ontario Ministry
    of Transportation (MTO) and the contractor, J. & P. Leveque Bros. Haulage
    Limited (Leveque). The contract was administered by the MTO and by Earth Tech
    Canada Inc., now AECOM Canada Ltd. (AECOM). AECOM was also the Highway
    Designer.

[2]

Between September 24, 2007 and October 1, 2007, Leveque and a
    sub-contractor, Bruell Contracting Limited (Bruell), constructed a double
    lift surface treatment on Hwy. 575 near Verner, Ontario. Shortly after
    completion, the surface treatment began to show signs of failure. The MTO
    required Leveque to remove the initial surface and reapply it, then refused to
    pay for that work.

[3]

The two liability issues at trial were (i) who bore responsibility under
    the terms of the contract in the event of a performance failure, and (ii) what
    caused the surface treatment to fail. The MTO alleged that Leveque was
    responsible because, although Leveque used materials specified in the contract,
    it did not test the compatibility of the specific products it sourced. The
    MTOs position was that the resulting incompatibility of the materials caused
    the failure.

[4]

The trial judge found that the contract was a method specification
    contract, under which the contractor was not responsible for performance
    failure provided it followed the contract specifications, which in this case Leveque
    did. He also found that the primary causes of the failure were high binder
    application rates prescribed by the MTO, weather, and the heavy truck traffic that
    MTO allowed on the road before the surface had fully cured. The incompatibility
    of the resurfacing materials used was at most a contributing factor. The trial
    judge rejected the opinion evidence of the MTOs expert witness, in part
    because he found improper conduct by counsel who instructed the expert and
    obtained his report. The trial judge also found that MTO personnel had acted
    improperly in a number of ways in their dealings with Leveque in regards to the
    remediation of the problem. The trial judge awarded full indemnity costs to
    Leveque because of his findings of misconduct by MTO personnel, including MTO counsel.
    He awarded mixed partial and substantial indemnity costs to Bruell. He also
    made the MTO responsible for AECOMs costs on a partial indemnity basis through
    a
Sanderson
order.

[5]

The MTO appeals the trial judges interpretation of the contract, his
    findings regarding the cause of the failure of the surface treatment, his
    findings of misconduct by the expert witness and counsel, and the costs awards.

Facts

[6]

Under Contract 2007-5182, awarded by the MTO to Leveque on June 19, 2007,
    Leveque and its subcontractor Bruell constructed a double lift surface
    treatment on 17.9 kilometres of highway in northern Ontario. The surface treatment
    was applied from September 24, 2007 to October 1, 2007. By October 10, 2007,
    there were visible signs of deterioration. When Bruell observed these problems,
    it ordered sanding of the highway surface in order to minimize damage, but the
    MTO directed that the sanding be discontinued.

[7]

Through a work directive, the MTO required Leveque to remove the surface
    treatment, which it did on November 18, 2007. Leveque completed the
    reapplication of the surface treatment in June 2008 under protest. The MTO
    refused to pay for the costs of the removal of the initial installation and for
    the second surface treatment, resulting in the action under appeal.

[8]

The contract documents are extensive. The parties called expert evidence
    on the issue of the characterization of the contract to assist the trial judge
    in interpreting the contractual terms with which the experts had familiarity.
    Leveques position was that the contract is a method specification contract,
    where the owner specifies every aspect of the project and the contractor
    performs exactly as specified. The MTO position was that the contract is a
    mixed specification contract with many performance elements, which
    allocated responsibility for the means and methods of the project and for quality
    control to the contractor.

[9]

The MTO relied on the General Warranty provision GC 7.17, which provides:

GC 7.17           General Warranty

.01   Unless
    otherwise specified in the Contract for certain materials or components of the Work,
    the contractor shall be responsible for the proper performance of the work only
    to the extent that the design and specifications permit such performance.

.02   Subject to
    the previous paragraph, the Contractor shall correct promptly at no cost to the
    Owner defects or deficiencies in the Work which appear prior to and during the
    period of (12) twelve months after the date of completion of the Work set out
    in the Completion Certificate or such longer periods as may be specified for
    certain materials or components of the Work.

[10]

The
    MTO also referred to GC 7.01.03, Control and Responsibility, which stipulates:

GC 7.01.03      Control and
    Responsibility

.01   The
    Contractor shall have complete control of the Work and shall effectively direct
    and supervise the work so as to ensure conformity with the Contract Documents.
    The Contractor shall be responsible for construction means, methods,
    techniques, sequences and procedures and for coordinating the various parts of
    the Work.

.02   The
    Contractor shall have the sole responsibility for the design, erection,
    operation, maintenance and removal of temporary structures and other temporary
    facilities and the design and execution of construction methods required and
    their use.

.03   Notwithstanding
    paragraph 02) of clause GC 7.01.03, Control and Responsibility, where the
    Contract Documents include designs for temporary structures and other temporary
    facilities or specify a method of construction in whole or part, such
    facilities and methods shall be considered to be part of the design of the
    Work, and the Contractor shall not be held responsible for that part of the
    design or the specified method of construction. The Contractor shall, however,
    be responsible for the execution of such design or specified method of
    construction in the same manner that the Contractor is responsible for the
    execution of the Work.

[11]

As
    explained at trial, surface treatments are applied in layers of binder and
    aggregate, which are then rolled in order to bond the emulsion and the
    aggregate together. The contract provided that the surface treatment would
    consist of spraying the highway surface with a binder or liquid asphaltic
    emulsion, specified as HF-150S, which was suited for late-season application,
    in combination with Class II aggregate.

[12]

The
    MTOs position was that the failure of the highway surface was caused by the
    incompatibility of the specific Class II aggregate that was chosen by Leveque
    and the specified binder. There was no compatibility test required under the
    contract. However, the MTO submitted that there was an implied term in the
    contract that the aggregate selected would be compatible with the binder.
    Therefore, Leveque was obliged to conduct testing on the products to ensure
    their compatibility, and their suitability for the purpose of the project, before
    using them. Because Leveque did not undertake any compatibility testing, the MTOs
    position was that Leveque was responsible for the failure under the General Warranty
    provision.

[13]

Subsequent
    testing showed that the binder and the chosen aggregate required the addition
    of an anti-stripping additive in order to be compatible. Leveque pointed to
    evidence that such additives were not approved by the MTO. In any event, the
    chosen aggregate and the binder were tested by the MTO and passed all the tests
    required by the contract specifications.

[14]

Leveques
    position was that the early deterioration of the surface was caused by
    excessive application of the binder, as directed by the MTO; by wet and cool
    weather conditions, which extended the curing period of the surface; and by
    heavy truck traffic that the MTO allowed on the highway before the surface was
    cured, which led to the creation of potholes and deterioration.  Leveque
    submitted that the damage was exacerbated by the MTOs cancellation of the
    sanding ordered by Bruell and its refusal to impose a load restriction
    following the initial signs of deterioration.

The Trial Judges Reasons

(1)

Interpretation of the contract

[15]

The
    trial judge first addressed the issue of the proper interpretation of the
    contract. The MTO called expert evidence from Dr. Maher of Golder Associates Ltd.
    (Golder), whose expertise included all aspects of surface treatment projects
    including contract preparation. His evidence was that, although the MTO
    conducted quality assurance on the aggregate and the binder, it was the
    contractors responsibility to deliver a surface that met the performance
    requirements under the 12-month warranty provision. He also testified that
    there had been increased downloading of such responsibility on contractors in
    circumstances where they choose the aggregate themselves.

[16]

The
    respondent Leveque called evidence from David Peshkin, who was qualified as an
    expert in all aspects of road surfacing and on surface treatment contract
    document preparation. Mr. Peshkins opinion was that the contract was a method
    specification contract. His analysis was summarized in Leveques written
    closing argument, at para. 26, which the trial judge explicitly endorsed. That
    summary is not included in the trial judges reasons, but portions of it were
    provided to this court as part of the record.

[17]

Essentially,
    Mr. Peshkin explained that the difference between the two types of contracts is
    that the risk under a method specification contract is with the owner, whereas the
    risk is transferred to the contractor under a performance specification
    contract. The price of the latter contract will therefore be higher. Under the
    Leveque contract, the working variables, including the specified tools,
    emulsion, aggregate, equipment and instructions for surface preparation, were
    controlled by the MTO and AECOM. As Mr. Peshkin explained, this degree of
    control by the owner was inconsistent with a performance specification contract:
    an owner cannot retain control and at the same time hold the contractor
    responsible for performance  the two are mutually exclusive.

[18]

Mr.
    Peshkin compared this contract to other MTO road contracts. He concluded that,
    unlike other contracts, this one had no explicit surface treatment design
    requirement nor did it have a specific warranty or a requirement for
    compatibility testing, all of which would indicate that the contractor was responsible
    for performance. Similarly, the inspection tasks AECOM followed were consistent
    with a method specification contract rather than a performance contract.

[19]

Mr.
    Peshkin observed that the contract contained no explicit performance criteria
    to evaluate post-placement performance, unlike other performance contracts. Further,
    payment was based on the quantity of materials used, indicating that payment
    would be made upon compliance with the specifications. Finally, Mr. Peshkin highlighted
    other MTO contracts entered into in the same time period that incorporated
    performance specifications that were absent from the Leveque contract.

[20]

On
    the issue of the interpretation of the contract, the trial judge accepted what
    he characterized as the thoughtful, detailed and compelling analysis of Mr.
    Peshkin. The trial judge concluded that the warranty made the contractor
    responsible for proper performance only to the extent permitted by the design
    and the specifications.

(2)

Cause of the surface treatment failure

[21]

Having
    found that the contract allocated the risk of performance failure to the MTO,
    the trial judge went on to decide the issue of causation. Evidence adduced on
    this issue consumed much of the trial.

[22]

The
    trial judge began by discounting the expert opinion of Dr. Maher. Dr. Maher
    testified that the primary cause of the deterioration of the highway surface
    was the poor compatibility of the binder and the Class II aggregate that Leveque
    had sourced from the Beauparlant Quarry. The trial judge found that Dr. Mahers
    expert opinion was not very helpful for three reasons. First, counsel for the
    MTO was extremely influential in instructing Golder Associates pursuant to their
    retainer agreement and had tainted the fairness and independence of Golders
    opinion. Second, from his observation of Dr. Maher during his
    cross-examination, and perhaps due to such MTO manipulation, the trial judge
    was concerned that Dr. Maher was committed to advancing the MTOs theory of the
    case and had assumed the role of advocate. Third, the factual underpinnings of
    Dr. Mahers opinion were inconsistent with some of the facts that were proven
    at trial.

[23]

The
    trial judge concluded that he was attaching very little weight to most of Dr.
    Mahers opinions as a result of his instructing and manipulating client,
    preferring the thoughtful, independent, fair, objective and non-partisan
    expert opinion evidence presented by David Peshkin.

[24]

The
    trial judge then made the following findings on the issue of causation: 1) the
    incompatibility of the binder and the aggregate may have been a contributing cause
    of the deterioration, but was not a primary factor; 2) the MTOs decision to opt
    for surface treatment rather than the previously approved hot mix design, and
    its redesign of the project to a double surface treatment without external design
    or engineering input, demonstrated intentional risk-taking, unwise decisions,
    and a refusal to implement self-help options; 3) after the award to Leveque, the
    MTO created delay and was uncooperative despite the fact that the late-season
    application of surface treatment was known not to be optimal; 4) the specified binder
    application rates were too high given the cool late season temperatures and the
    heavy traffic allowed by the MTO on the highway, resulting in slow curing and bleeding/flushing;
    5) heavy truck traffic on or around October 10, 2007 caused or accelerated the
    deterioration of the treatment; 6) rain was another accelerating factor; 7) all
    of this led to the picking of the roadway; 8) because of the failure to sand
    and stop the traffic, the picking led to potholing and further deterioration.

(3)

Compliance with the contract

[25]

The
    trial judge also addressed the opinion expressed in the Golder report that
    there was an industry practice for contractors to conduct compatibility testing
    on prescribed materials before using them. Although that was the case in 2012, Dr.
    Maher acknowledged in cross-examination that he did not know whether it was standard
    practice in 2007. The trial judge found that [t]here was certainly no proven
    industry practice in September 2007 requiring contractors to conduct
    aggregate-binder compatibility testing. He concluded that in fact, Leveque
    would not have been permitted under the contract to carry out such testing and
    unilaterally add an anti-stripping agent. He also commented that the MTOs
    demonstrated attitude would likely have resulted in it denying any request by
    Leveque to add such an additive.

[26]

The
    trial judge concluded that throughout the project, the MTO had acted as if
    Leveque carried all of the risk, and therefore the MTO would bear no
    responsibility for the directions and decisions it took, when in fact, the
    opposite was true. The trial judge found that Leveque and Bruell met all
    specifications under the contract, and that any warranty by Leveque did not
    apply due to the contributory fault of the MTO  particularly in causing delay,
    specifying excessive binder application rates, failing to manage heavy truck
    traffic and refusing to permit sanding when the bleeding and flushing occurred.
    Finally, the trial judge found that Leveque and Bruell performed their work in
    a good and workmanlike manner and supplied materials that were fit for the
    purpose in accordance with the contractually prescribed requirements.

(4)

Misconduct by the MTO

[27]

The
    trial judge considered awarding punitive damages against the MTO because of its
    conduct, but ultimately declined, finding no separate actionable wrong  though
    he made reference to various misconduct by the MTO including patently
    inaccurate and false meeting minutes and material non-disclosure.

[28]

However,
    he did order full indemnity costs to Leveque. In separate reasons, the trial
    judge again impugned the conduct of both trial counsel in the litigation, and
    the MTO in its dealings with Leveque in remedying the problem. He found that
    the latter type of misconduct had been proven at trial, although he had not
    referred to it in the reasons for judgment. In his costs decision, he mentioned
     but did not explain  a cancelled Change Order, an improper press release and
    various threats of infractions, among others. Ultimately, the trial judge found
    the overall conduct of the MTO to be in bad faith, describing it as
    unconscionable, egregious and reprehensible. In those circumstances, he
    imposed what he acknowledged was a rare order of full indemnity costs in favour
    of Leveque.

[29]

He
    also made a
Sanderson
order that the MTO, rather than Leveque, pay the
    costs of AECOM. He ordered the MTO to pay Bruells costs on a mixed partial and
    substantial indemnity scale, with the substantial indemnity scale commencing on
    the date of Bruells offer to settle that was rejected by the MTO.

Issues

[30]

This
    appeal raises the following issues:

1)

Did the trial judge make a reversible error in the interpretation of the
    contract between MTO and Leveque?

2)

Did the trial judge err in his finding that Dr. Mahers evidence was
    tainted by undue influence, and in his findings regarding the cause of the surface
    treatment failure?

3)

In the alternative, should Leveque have been required to contribute to
    the cost of the remediation?

4)

Did the trial judge err in his findings of litigation misconduct?

5)

If so, does the error affect the costs award? And were the costs awards excessive
    and unreasonable?

Analysis

(1)

Issue 1: Did the trial judge err in his interpretation of the contract
    and in finding that the warranty given by Leveque did not apply?

[31]

The
    appellant submits that the trial judge erred in finding that the contract is a
    method specification contract and that the warranty for performance of the work
    therefore did not apply. In particular, the appellant argues that the trial
    judge erred in his interpretation of the words or specify a method of
    construction in whole or in part in GC 7.01.03.03 and of the contractors
    responsibility for construction, means, methods, techniques, sequences and
    procedures in GC 7.01.03.01.

[32]

In
    its recent decision in
Sattva Capital Corp. v. Creston Moly Corp.
,
    2014 SCC 53, [2014] 2 S.C.R. 633,

the Supreme Court reconsidered the
    historical approach of treating contractual interpretation as a pure question
    of law. Rothstein J., speaking for the court, articulated the new governing
    approach as follows, at para. 50:

Contractual interpretation involves issues of mixed fact and
    law as it is an exercise in which the principles of contractual interpretation
    are applied to the words of the written contract, considered in light of the
    factual matrix.

[33]

As
    such, deference is owed to the trial judge on questions of contractual
    interpretation, subject to extricable legal errors including the application
    of an incorrect principle, the failure to consider a required element of a
    legal test, or the failure to consider a relevant factor:
Sattva
, at para.
    53, citing
King v. Operating Engineers Training Institute of Manitoba Inc.
,
    2011 MBCA 80, 341 D.L.R. (4th) 520, at para. 21.

[34]

In
    this case, expert evidence was called to assist the court in interpreting the
    contract. The expert evidence effectively formed part of the factual matrix, as
    it was proffered to educate the court about the types of contracts that exist
    in the road construction industry. Of course, the trial judge was not bound to
    accept the expert evidence. It was his task to interpret the contract  in
    particular, the obligations of the contractor and the scope of the warranty.

[35]

The
    trial judge reviewed the contractual language and considered the explanations
    of the expert witnesses regarding the operation of a method specification contract
    as compared to a performance contract in the context of highway construction
    and resurfacing. He concluded that the contract between the MTO and Leveque was
    a method specification contract.

[36]

The
    trial judge clearly preferred the evidence of the respondents expert, Mr.
    Peshkin, over the evidence of the appellants expert, Dr. Maher, and gave
    several reasons for this preference. He believed that Dr. Maher was influenced
    by counsel for the MTO. I will say more about whether counsel acted improperly
    later in these reasons. However, it was also the trial judges impression from
    the way Dr. Maher gave his evidence that he treated his role as an expert as
    that of an advocate for the MTO.

[37]

Further,
    the trial judge rejected Dr. Mahers evidence because certain facts proven at
    trial did not support the conclusions in his expert report, for example,  the
    condition of a parking lot surfaced by Leveque at the same time as the highway.
    In addition, the trial judge rejected Dr. Mahers description of the damage as
    a catastrophic failure over the full length and width of the placement, as
    the photographic evidence did not support such an expressive opinion.

[38]

The
    trial judge also focused on the reports conclusion that there was an industry
    practice for contractors to test materials for compatibility. As discussed
    above, when confronted in cross-examination, Dr. Maher acknowledged that although
    that practice existed in 2012 when he wrote the report, he did not know whether
    it existed in 2007, the relevant time when this contract was being performed.

[39]

The
    trial judge was entitled to accept the expert evidence that he did on the
    characterization of the contract. I see no extricable error in his approach to
    the interpretation of the contract, or in his conclusion that the contract
    specified everything the contractor was to do. There was no basis to imply a
    term other than those explicitly provided. In fact, to imply a requirement for
    compatibility testing, or a requirement that the contractor ensure
    suitability, could have contradicted what was specified in the contract.

[40]

I
    therefore see no basis to interfere with the conclusion of the trial judge that
    the warranty provided by the contractor did not oblige it to conduct
    compatibility testing on the specified aggregate and the specified binder or to
    assume responsibility for any failure that was caused or contributed to by any
    incompatibility between those two materials, provided the specified materials
    and specified procedures for their application were used. As the respondents
    did use the specified materials and applied them in accordance with the
    contract specifications, the responsibility for any failure rested with the
    owner.

(2)

Issue 2: Did the trial judge err in his conclusion regarding the cause
    of the failure of the surface and in rejecting the evidence of Dr. Maher?

[41]

It
    was conceded that if the trial judge made no error in his interpretation of the
    contract or in his finding that the respondent Leveque was not liable under the
    warranty, it becomes unnecessary to decide the cause of the failure.

(3)

Issue 3: Is Leveque required to contribute to the cost of the
    remediation?

[42]

Similarly,
    the argument that Leveque should be held partially responsible for the failure
    of the surface treatment was premised on reversing the finding that the
    contract is a method specification contract. Again, in light of my conclusion
    on the first issue, it is not necessary to address this question.

(4)

Issue 4: Did the trial judge err in his findings of litigation
    misconduct?

[43]

The
    trial judge was highly critical of two aspects of the conduct of the MTO. One
    criticism involved the conduct of MTO personnel who dealt with Leveque in the
    supervision of the remedying of the surface treatment failure. The other was
    the trial judges disparaging view of the conduct of trial counsel, Mr.
    Weilenmann, in his dealings with the expert witness, Dr. Maher, and in relation
    to disclosure.

[44]

The
    trial judge did not have the benefit of this courts recent decision in
Moore
    v. Getahun
,
2015 ONCA 55, where
    the court discussed counsels proper role in instructing and preparing expert
    witnesses, as well as the question of whether draft expert reports and
    correspondence between counsel and expert witnesses must be disclosed. Counsel
    for the appellant sought, and all counsel were granted the opportunity to provide
    further written submissions to this court following the release of that
    decision while this appeal was under reserve.

[45]

The
    trial judges findings on improper influence in his reasons for judgment were
    repeated at paras. 17 and 18 of his reasons for costs:

In my Reasons for Judgment, I specifically addressed my finding
    from
the
trial that there is convincing evidence that
    Mr. Weilenmann was pivotal in
the
development of MTO
    defence strategies including being extremely influential in instructing Golder
    Associates pursuant to their Retainer Agreement.  Exhibit 37 is but one
    striking example. Exhibits 30, 34, 35, 36, 38, 40, 41 and 42 display much of
the
same. For all of
the
reasons
    submitted in paragraph 92(c) (i) to (vi) of
the

Leveque
Closing Argument, such MTO influence and suppression
    has definitely tainted any fair, objective and non-partisan opinion
    ultimately presented by Golder Associates.

I have determined, as a result of what I had witnessed during
    this trial, that MTO was quite improperly instructing and manipulating their
    supposedly fair, objective and non-partisan expert opinion as presented to
    this Court.

[46]

The
    exhibits referred to came from Golders litigation file, which was produced on request
    during the trial. The appellant now submits, based on
Moore
, that this
    file was privileged and need not have been produced. The respondents argue that
    the file was produced voluntarily without a court order and that any privilege
    was thereby waived. They submit that there is therefore no decision for this
    court to review.

[47]

In
    my view, the pertinent issue before this court is not whether the appellant can
    now claim privilege over the file, but whether the trial judge unfairly
    impugned the conduct of trial counsel.

[48]

In
Moore
, this court made clear that it is not only appropriate but
essential
for counsel to consult and
    collaborate with expert witnesses in the preparation of expert reports. Counsel
    must explain to experts their duties to the court, clarify the relevant legal
    issues, and assist experts in framing their reports in a way that is
    comprehensible and responsive to the pertinent legal issues in a case:
Moore
at para. 62. Normally, communications between counsel and the expert, as well
    as draft reports, will be subject to litigation privilege. Only if there is
    reasonable suspicion that counsel has improperly influenced the expert may
    production of notes and drafts be ordered.

[49]

In
    this case, the file was produced on request during trial. Though there may have
    been some uncertainty in the law regarding the scope of litigation privilege,
    this does not in itself call for appellate intervention to address what was
    essentially a voluntary disclosure. As I stated, at this point the issue is
    whether the impugned communications from counsel warrant the severe criticism
    levelled by the trial judge.

[50]

The
    trial judge referred to a number of exhibits that he viewed as examples of Mr.
    Weilenmann being extremely influential in instructing Golder. Exhibit 37 was described
    as a striking example. That exhibit is an email from Mr. Weilenmann to Dr.
    Uzarowski, another expert at Golder, dated August 12, 2010. It includes other
    emails from the MTO that deal with traffic volumes regarding the hauling of
    sand over the project. Mr. Weilenmann tells Dr. Uzarowski that he thought Golders
    experts should be aware of that information, that they may already have it,
    that they may or may not include it in their report, and that regardless they
    may be asked about it at trial.

[51]

This
    is clearly the type of input from counsel to an expert preparing a report that
    is contemplated in
Moore
as being appropriate. Counsel does not
    instruct the experts as to what conclusions they should draw from the
    information. Counsel leaves it to them to decide whether to include it in the
    report, but notes that it could be an issue at trial.

[52]

Exhibit
    41 is another impugned email from Mr. Weilenmann to Dr. Uzarowski. It refers to
    the fact that Mr. Weilenmann had circulated the draft report to MTO staff for
    comments. He notes that the comments, which he attached to the email, mainly
    involved typos. However, one suggestion, which he repeated, was to delete a
    quote from Irys Steblynsky, an MTO employee, who did not consider herself an
    expert on the subject matter of the quote. This email chain also included
    diaries of weather conditions for relevant times, which Mr. Weilenmann wrote
    will not change your opinion about the weather, only improve the data.

[53]

The
    trial judge appears to have been persuaded by, and to have accepted, the
    cogency of certain paragraphs of Leveques written closing argument that
    suggested that Mr. Weilenmanns conduct was improper. The portion of the Leveque
    closing argument that the trial judge referred to was provided on appeal,
    although it is not quoted by the trial judge. In relation to the weather
    diaries in Exhibit 41, Leveque argued in its closing submissions that MTOs
    influence on Golder was demonstrated by the suggestion that further
    information provided about weather will not change your opinion about the
    weather. Leveque seems to be suggesting that Mr. Weilenmann was effectively
    telling Golder not to change its opinion. However, in my view, a fair reading
    is that Mr. Weilenmann, having read the data, believed it would not change the
    experts opinion, but rather would provide further support for it. Similarly, counsels
    instruction to remove the quote by Irys Steblynsky from the report on the
    grounds that she was not an expert, which Leveque characterized in its closing argument
    as the deletion of quotes of Irys, appears to have been an exercise of
    judgment by counsel regarding the reliability of the report, not a deliberate
    suppression of information. I see no attempt by counsel to influence the
    experts.

[54]

The
    other email exhibits that the trial judge refers to are equally innocuous. In Exhibit
    34, another impugned email, Golder is told by Mr. Weilenmann: You are not
    permitted to contact Miller [Paving] directly to find out more information, as
    this is inappropriate in the circumstances of this litigation. Miller Paving was
    a subsidiary of another company that had been a party to the litigation at one
    stage, which the appellant argues is why it was considered inappropriate to
    contact them directly. In its written argument, Leveque cites this instruction as
    an example of Mr. Weilenmann trying to exert improper influence over Golder,
    describing it as the Weilenmann directive that Golder is not to speak to their
    client Miller Paving during their investigations. This submission suggests
    something nefarious which is not borne out by the email. In fact, the expressed
    concern regarding propriety demonstrates that Mr. Weilenmann was aware of his
    ethical obligations and was attempting to abide by them.

[55]

In
    my view, there was no factual basis for the allegations by Leveque of
    impropriety by Mr. Weilenmann in his instructions and dealings with Golder in
    the preparation of the expert report. The trial judge was unimpressed with Dr.
    Maher for other reasons, having heard his testimony and observed him under
    cross-examination. The trial judge was also concerned about the attitude
    displayed by MTO staff in their dealings with Leveque throughout. However, the
    extension of his criticisms of Dr. Maher and other MTO staff to the conduct of
    trial counsel in his dealings with the experts does not withstand scrutiny.
    Counsels reputation for integrity is a precious commodity, not to be impugned
    without a clear, substantiated basis. In my view, the evidence in the record
    that the trial judge relied on is benign and is no basis to impugn trial
    counsel.

[56]

I
    note that the trial judge was also critical of the MTO for non-disclosure and
    suppression of evidence, as well as the patently inaccurate and false
    meeting minutes. He did not specify the non-disclosure that he was referring
    to or who was responsible for it. On appeal, the respondent advised that the
    trial judge was referring to non-disclosure of information regarding heavy traffic
    loads carried over the surface treatment on October 10 and 11, 2007, although
    Leveque became aware of this information before trial. Although the trial judge
    impugns the conduct of the MTO in respect of non-disclosure, without clear
    findings, the trial judges reasons are not sufficient to permit this court to
    address any issue pertaining to non-disclosure. With regard to the false
    meeting minutes, this misconduct was not attributed to trial counsel and this
    court has not been asked to revisit the trial judges findings on this issue.

(5)

Issue 5: Costs

[57]

The
    awarding of costs is a discretionary matter that attracts considerable
    deference on appeal, unless the trial judge makes an error in principle or the
    costs award is plainly wrong:
Hamilton v. Open Window Bakery Ltd.
,
    2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[58]

MTO
    objects to the quantum of costs awarded to Leveque and Bruell as being
    unreasonable, submits that a number of offers to settle made by the MTO were
    not considered, and argues that the trial judge erred in awarding the
Sanderson
order which rendered the MTO responsible for AECOMs costs, the quantum of
    which is not disputed.

[59]

The
    trial judge was clearly very concerned about the conduct of the MTO throughout,
    and was satisfied that the award of costs should adequately reflect his
    concerns and disapproval. Although the amounts awarded are very high, I see no
    basis in law or principle to interfere with the orders made on these grounds.

[60]

However,
    one ground of appeal merits intervention. The trial judge ordered full
    indemnity costs against the MTO in favour of Leveque on the basis that MTOs
    misconduct was unconscionable, egregious and reprehensible and constituted
    bad faith. Because part of the misconduct that influenced the trial judges
    full indemnity costs award was the alleged misconduct attributed to trial
    counsel, a finding which has been set aside on appeal, the award of costs at
    the full indemnity level no longer rests fully on findings supported by the
    record. Based on that error, I would grant leave to appeal costs and reduce the
    quantum of costs payable to Leveque by 20% to reflect an award of substantial
    indemnity costs, rather than full indemnity.

Conclusion

[61]

I
    would dismiss the appeal, grant leave to appeal costs, allow the appeal against
    costs by reducing the amount of costs payable to Leveque by 20%, and otherwise
    dismiss the appeal against costs. I would order the costs of the appeal to the
    respondents fixed at $20,000 for Leveque and $15,000 for Bruell inclusive of
    disbursements and HST.

Released: KF APR 21, 2015

K.
    Feldman J.A.

I
    agree. David Watt J.A.

I
    agree. K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Bunan v. Toronto-Dominion Bank, 2015 ONCA 226

DATE: 20150407

DOCKET: C58212

Sharpe, Pepall and van Rensburg JJ.A.

BETWEEN

Moshe Bunan

Plaintiff (Appellant)

and

The Toronto-Dominion Bank

Defendant (Respondent)

Jonathan L. Rosenstein, for the appellant

Duncan C. Boswell, for the respondent

Heard: March 26, 2015

On appeal from the judgment of Justice Kevin W. Whitaker of
    the Superior Court of Justice, dated December 23, 2013, with reasons reported
    at 2013 ONSC 7928 and from the costs endorsement dated January 27, 2014, with reasons
    reported at 2014 ONSC 599.

By the Court:

Background

[1]

The appellant was defrauded by his cousins. He agreed to lend over $1
    million to a partnership owned and controlled by them.  They were able to
    perpetrate their fraud by making withdrawals from a bank account the appellant
    had established with the respondent.

[2]

The appellant sued his cousins on personal guarantees and promissory
    notes they signed guaranteeing the debts of their partnership. He sued the
    respondent for, among other things, breach of contract and negligence arising
    from the withdrawals from his account.

[3]

The respondent defended the action on the basis that, when opening the
    account in issue, the appellant had signed a Financial Services Agreement
    (FSA), and its provisions barred the appellants claim.

[4]

Specifically, the FSA contained an account-verification provision which,
    in the absence of 30 days written notice of errors, released the respondent
    from liability. The respondent could not locate the FSA but asserted that such
    an agreement had been signed by the appellant in 2003 and that he had failed to
    provide timely notice. Written notice of the 2004 to 2008 impugned transactions
    was provided to the respondent on May 31, 2011. The appellant neither admitted
    nor denied the execution of such an FSA.

[5]

The relevant provisions of the FSA are:

5.
Responsibility for use of your cheques
 You are in the best position to discover a forged or unauthorized cheque or
    other Instrument or a material alteration to a cheque or other Instrument drawn
    by you. All transactions with your cheques will be reflected in your account,
    even if you did not perform or authorize the transaction.
You are
    responsible for all use, including any forgery, of your cheques or other
    Instruments, and we will have no responsibility for such use, including any
    forgery, unless you prove that you took reasonable precautions to protect them
    and that you exercised reasonable care in examining your statement, passbook
    update or transaction information. You must promptly notify us of any forged or
    unauthorized Instrument or material alteration as soon as you discover it
.

11.
Recordkeeping
 We may send you
    statements by ordinary mail  or other means at your direction and risk  to
    the most recent address you have given to us You may also choose to view your
    transaction information exclusively through any electronic method that we
    permit and if so, you will review it on a monthly basis.

12.
Examining your transaction information
 You will promptly and carefully examine your account transaction information
    in your statement or passbook or through any electronic method that we permit.
You
    will notify us in writing of any errors in the account, transaction,
    information or the Instruments
. If we dont receive notice from you
    within 30 days of the statement date, passbook update date or, for electronic
    method, the transaction date, you accept the statement, update, transaction
    information and Instruments as valid and correct, and we will be released from:

Any claim with respect to any and every item or Instrument

on

or

in

the

statement

for

statement

customers or on or in the update for
    passbook customers; or

From any claim with respect to any and every transaction for
    customers who choose an electronic recordkeeping option;

And from any other claim for negligence, conversion, breach of
    trust, breach of fiduciary duty or otherwise.

[Emphasis in original]

[6]

The respondent claimed contribution and indemnity in third party
    proceedings against the appellants cousins.

Trial Judges Decision

[7]

The trial judge found in favour of the appellant in his action against
    his cousins and awarded him approximately $1 million.

[8]

The trial judge dismissed the appellants action against the respondent.
    He found that the appellant had signed the FSA. He wrote:

[T]he appellant] has not suggested that he recalls signing [the
    FSA]. The then Manager of Customer Service actually recalls [the appellant]
    signing the Agreement. There is a second bank employee who did vouch for the
    execution of the document as is standard procedure. A third check would have
    occurred before the account could be opened (again according to standard
    practice.)

[9]

The trial judge noted that it was not seriously disputed that the
    verification provisions applied if the FSA was signed, and further, that it was
    not contested that the appellant did not comply with those provisions. He
    therefore concluded that the respondent was relieved of liability. He also
    dismissed the third party claim.

[10]

The
    trial judge ordered that costs submissions be made in writing within three
    weeks of his December 23, 2013, reasons for decision. On January 27, 2014,
    (i.e. five weeks later) he ordered that the respondents costs be paid by the
    cousins fixed in the amount of $22,000. The next day, counsel for the appellant
    provided his clients costs submissions stating that the respondent was
    presumptively entitled to its costs on a partial indemnity basis and that there
    was no particular reason to depart from that rule in this case. He invited the
    trial judge to fix the respondents costs of the action at $39,000, inclusive
    of disbursements and HST.

[11]

Pursuant
    to an April 18, 2013 order, the appellant had paid $33,900 into court to the
    credit of the respondent as security for costs.

Grounds of Appeal

[12]

The
    appellant appeals from the dismissal of his action against the respondent.  He
    advances two grounds of appeal.

[13]

First,
    he submits that the judgment should be set aside on the basis of insufficiency
    of reasons. Secondly, he argues that the FSA did not provide the respondent
    with a defence in the circumstances of this case.

[14]

The
    appellant argues that judgment should be granted in his favour and that a new
    trial is not required.

[15]

The
    respondent cross-appeals, arguing that the costs award should be varied to
    reflect the position advanced in the appellants costs submissions.

Analysis

(a)

Insufficiency of Reasons

[16]

The
    trial judge made an express finding of fact that the respondents Customer
    Services Manager actually recalled the appellant signing the FSA. The appellant
    submits that the trial judge erred when he failed to explain why he found as a
    fact that the FSA had been signed.  He argues that the Manager gave conflicting
    evidence about the FSA at trial and on her examination for discovery and that her
    memory about the FSA at trial was inconsistent with her inability to recall
    that the appellant spoke no English. The appellant states that it was incumbent
    on the trial judge to address these internal inconsistencies in the Managers
    evidence.

[17]

The
    Managers trial and discovery testimony was not actually in conflict. At trial,
    the Manager testified that she was present when the documents were executed;
    she had a distinct memory of the appellant signing the FSA; and it was the
    normal thing that the respondent would have done. She also testified that she
    had a memory of taking the documents and having them vouched for by another
    bank representative.

[18]

At
    discovery, the Manager was asked why she thought a copy of the executed FSA
    existed. She indicated that an account opening number would only be generated
    if an FSA had been completed. She did not say that a signed FSA existed because
    she had seen it executed. She was not asked whether she was present when the
    documents were executed or whether she had witnessed or had any recollection of
    the appellant having signed the FSA. Furthermore, the Managers discovery
    evidence on this issue was never put to her at trial.

[19]

As
    for the secondary vouch, the appellant argues that at trial the Manager
    testified that the additional signature by the respondents administrator
    reflected verification of identity, the signatures authenticity, and the
    existence of a signed FSA whereas on discovery, she had not mentioned the FSA.
    The Manager acknowledged this at trial, but no further explanation was offered
    by or requested of her.

[20]

Undoubtedly,
    it would have been preferable had the trial judge elaborated on his reasoning.
    However, the test on appeal is whether any deficiency in the reasons has
    occasioned prejudice to the exercise of [the appellants] legal right to an
    appeal:
R. v. Sheppard
, 2002 SCC 26 at para. 33.

[21]

There
    was ample evidence in the record to support the trial judges conclusion that
    the appellant executed the FSA. The evidence included the following:

-      the
    practices and standard procedure of the respondent suggested that a FSA had
    been signed. A second employee of the respondent vouched for the execution of
    the FSA consistent with the respondents standard procedures and, based on
    standard procedures, a third check would have occurred before the account could
    be opened. Additionally, based on standard procedures, an account number would
    be unavailable in the absence of an executed FSA.

-      the
    signature card for the account stated: You have received a copy of the
    information detailing our account and related service charges and
your
    completed copy of the Financial Services Agreement
(Emphasis added). The
    appellant placed his signature immediately below this acknowledgement. While
    the appellant did not speak English, one of his cousins translated for him. No
    defence of
non es factum
was advanced.

-      one of
    the cousins testified that he had seen the appellant sign the agreements. His
    evidence on this issue did not appear to be challenged.

-      the
    appellant did not deny signing the FSA; he simply could not remember.

-      the
    appellant had opened bank accounts in Switzerland, Spain and Israel and knew
    there were terms associated with bank accounts. He opened another account at
    the respondent bank on the same day as the account in issue and signed a FSA
    for it.

[22]

In
    the context of the other available evidence, the absence of an actual conflict
    in the Managers evidence, the failure to put what the appellant now claims to
    be an inconsistency in the discovery evidence to the Manager at trial, and the
    appellants admission that he could neither confirm nor deny that he signed the
    FSA, the appeal should not be allowed on the basis of insufficiency of reasons.
    It is clear from the reasons, when read in the context of this record, what the
    trial judge decided and why he decided as he did.

[23]

We
    would not give effect to this ground of appeal.

(b)

Interpretation of the FSA

[24]

The
    appellant submits that a properly drafted verification agreement may provide the
    respondent with a complete defence, but in this case, the trial judge misconstrued
    the FSA and erred in finding that the FSA protected the respondent from
    liability regardless of whether the appellant had acted reasonably.

[25]

While
    there is no reference to reasonable care in clause 12, the appellant argues
    that clause 5 of the FSA restricts the scope of clause 12 by adding a reasonableness
    requirement. According to the appellant, the 30 day verification obligation created
    by clause 12 (and the consequent release from liability) is only available to
    the bank if the customer has failed to take reasonable care with respect to his
    account.

[26]

On
    the issue of reasonable care, the appellant maintains that he was not permitted
    any means to review his account, as the respondent did not send him account
    statements and he did not have online access to his account.  Furthermore, it
    must be recognized that this was a savings account, not an account from which
    withdrawals were expected.  He submits that he satisfied the reasonable care
    requirement and the 30-day written verification provision did not apply.

[27]

The
    trial judge did not provide much detail on his interpretation of the FSA. He
    clearly was of the view that if he found that the appellant had signed the FSA,
    the appellant did not seriously dispute that the verification provision applied
    and that the appellant had not been in compliance. Assuming without deciding
    that that concession was not made by the appellant, we nonetheless agree with
    the trial judges conclusion.

[28]

Courts
    have repeatedly held that verification agreements may constitute a complete
    defence to a claim of unauthorized transactions:
Arrow Transfer Co. v.
    Royal Bank of Canada
, [1972] S.C.R. 845; and
Don Bodkin Leasing Ltd.
    v. Toronto-Dominion Bank
, 40 O.R. (3d) 262 (C.A.).

[29]

Clause
    11 of the FSA imposed a contractual obligation on the appellant to review his
    transaction information monthly. Clause 12 required the appellant to examine
    his account transactions and to notify the respondent in writing of any errors.
    In the absence of written notification within 30 days, the appellant accepted
    the transaction information as valid and correct and provided a release to the
    respondent with regard to those transactions.

[30]

Construing
    the FSA as a whole, there is no suggestion that clause 5 adds to or varies the
    provisions of clause 12. Clause 12 contains no reference to clause 5. Nor are
    the two clauses directed to the same activity. Clause 5 recognizes the
    responsibility of the appellant and imposes a requirement that the appellant
    take reasonable care with his cheques or other instruments. This is an entirely
    separate requirement from the 30 day written notice provision contained in
    clause 12.

[31]

However,
    even if the appellant were correct and reasonableness was a factor to consider,
    we would not accede to the appellants submissions.

[32]

The
    trial judge made no express finding as to the reasonableness of the appellants
    conduct. This was unnecessary given his treatment of the FSA.

[33]

The
    appellant argued that based on the record before us, this court could determine
    the reasonableness of his conduct.  We agree.

[34]

While
    the account was a savings account in nature, the appellant opened the account
    to facilitate the loan to his cousins and to periodically receive loan payments
    from them.  The respondent offered three account review options: a passbook,
    statements by mail or electronic access. When he opened his account with the
    respondent, the appellant wished to access his account electronically. This
    required him to review his account monthly as described in clause 11 of the FSA
    and to exercise reasonable care in examining his transaction information under
    clause 5 of the FSA.  The characterization of an account as a savings account
    does not permit an account holder to abdicate his responsibility to examine.

[35]

Initially,
    the appellant accessed his account using his password. He subsequently forgot
    his password. He understood from his sister-in-law (who was not called as a
    witness) that he had to attend at the respondent. However, even though he was
    in Canada in 2004 and in the summer of 2005, he did not do so.

[36]

His
    brother e-mailed the respondent about the password in 2010 and received an
    immediate response that included explicit instructions together with an
    international toll-free number. Only on June 3, 2010 did the appellant attend
    at the respondent and obtain a print out of his account statement. In spite of
    this, the appellant did not provide written notification to the respondent
    until one year later when, on May 31, 2011, he challenged five transactions in
    his account that had occurred between 2004 and 2008.  One of the transactions
    arose from a blank cheque the appellant had provided to his cousins.

[37]

By
    any measure, the appellants conduct did not reflect reasonable care.  We would
    not give effect to this ground of appeal.

[38]

In
    our view, the trial judge was correct in dismissing the appellants claim
    against the respondent. There is therefore no need to address the respondents
    additional defence based on the
Limitations Act, 2002
, S.O. 2002, c. 24, Sch. B
.

Respondents Cross-Appeal

[39]

The
    respondent seeks leave to cross-appeal the trial judges costs order. Even
    though the respondent had been successful against the appellant and security
    for costs had been paid to its credit, the trial judge proceeded to award the
    respondent costs fixed in the amount of $22,000 as against the third party
    cousins.

[40]

In
    our view, the trial judge erred in the exercise of his discretion. In his costs
    award, the trial judge wrote that he had considered the parties submissions on
    costs. However, this was not the case, since the appellants submissions had
    not been provided at that time. The trial judge might have indicated that the
    parties had failed to meet the time limits established in his reasons for submissions
    on costs and that therefore he was fixing costs in the absence of all
    submissions. However, he did not do that. Rather, he stated that he had
    considered them when, in fact, the appellants submissions had not yet been
    filed. As a result, he did not consider a concession contained in the
    appellants submissions.

[41]

In
    these circumstances, the award of costs should be set aside. The award will be
    replaced with that proposed by the appellant in his costs submissions, which in
    our view is the only reasonable result.  Accordingly, the appellant is to pay
    the respondents costs fixed in the amount of $39,000 inclusive of
    disbursements and HST.

Disposition

[42]

The
    appeal is therefore dismissed. Leave to appeal the costs award is granted and
    the cross-appeal is allowed. The appellant is to pay the costs of the trial
    fixed in favour of the respondent in the amount of $39,000 inclusive of
    disbursements. Costs of the appeal and the cross-appeal are fixed in favour of
    the respondent in the amounts of $12,500 and $2,000 respectively, both amounts
    being inclusive of disbursements and HST.

Released:

RJS                                       Robert J.
    Sharpe J.A.

APR -7 2015                           S.E. Pepall J.A.

R. van
    Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Caffé Demetre Franchising Corp. v. 2249027 Ontario
    Inc., 2015 ONCA 258

DATE: 20150415

DOCKET: C58737

Doherty, Epstein and Tulloch JJ.A.

BETWEEN

Caffé Demetre Franchising Corp.

Plaintiff (Defendant by Counterclaim)

and

2249027 Ontario Inc. and Waqar Khan

Defendants (Plaintiffs by Counterclaim)

AND BETWEEN

2249027 Ontario Inc. and Waqar Khan

Plaintiffs by Counterclaim

(Appellants)

and

Caffé Demetre Franchising Corp. and Gary Steven
    Theodore

Defendants to the Counterclaim

(Respondents)

David S. Altshuller, for the appellants

John H. McNair, for the respondents

Heard: October 31, 2014

On appeal from the order of Justice T. A. Heeney of the Superior
    Court of Justice, dated April 3, 2014.

Epstein J.A.:

OVERVIEW

[1]

The respondent, Caffé Demetre Franchising Corp., is the franchisor of a
    franchise system with a number of outlets in the Toronto area. The franchise
    specializes in freshly made desserts and ice cream. In 2011, the appellant,
    Waqar Khan, through his company, the appellant, 2249027 Ontario Inc., (collectively,
    the franchisees), purchased a Caffé Demetre franchise at 3280 Dufferin Street.

[2]

This is another case from the franchise world involving whether the
    franchisor met its disclosure obligations under the
Arthur Wishart Act
    (Franchise Disclosure)
,
2000
, S.O. 2000, c. 3. The issue in this
    appeal is narrow  whether the failure to disclose ongoing litigation commenced
    by the franchisor against a competing business constituted a material
    deficiency such that the franchisees were entitled to rescind the franchise
    agreement pursuant to s. 6(2) of the Act.

[3]

Approximately a year after the franchise was purchased in 2011, difficulties
    arose between the parties that led the franchisor to sue the franchisees
    claiming, among other things, a declaration that the franchise agreement was at
    an end and damages for breach of contract. The franchisees counterclaimed,
    adding the principal of the franchisor to the action, the respondent, Gary
    Theodore, and claiming rescission of the franchise agreement and repayment of
    amounts they had invested in the business.

[4]

The franchisees claim for rescission was based on alleged deficiencies
    in the disclosure document the franchisor had provided at the time of purchase.
    The franchisor moved for partial summary judgment seeking dismissal of the
    rescission claim.

[5]

The motion judge granted partial summary judgment and dismissed the
    claim for rescission. He held that it was in the interests of justice to deal
    with the issue of rescission summarily. He found that three of the four alleged
    disclosure omissions relied upon by the franchisees were not disclosure deficiencies
    at all. With respect to the fourth alleged omission, the motion judge concluded
    that while the franchisor should have disclosed the ongoing litigation in which
    it was involved, this omission failed to come anywhere close to the type of deficiency
    that entitled the franchisees to rescind the franchise agreement under s. 6(2)
    of the Act.

[6]

On appeal, the franchisees challenge the motion judges decision that the
    summary judgment procedure was appropriate in the circumstances as well as his
    conclusion that the undisclosed litigation did not entitle them to rescission
    under s. 6(2) of the Act.

[7]

I would dismiss the appeal. I see no reason to interfere with the motion
    judges exercise of discretion in dealing with the discrete issue of the
    franchisees rescission right by way of summary judgment. And I agree that there
    was nothing about the franchisors disclosure that afforded the franchisees the
    right to rescind the franchise agreement.

FACTUAL BACKGROUND

[8]

On May 16, 2011, the franchisees acquired from the previous franchisee a
    Caffé Demetre franchise that had been operating on Dufferin Street. On June 24,
    2011, the franchisees received a disclosure document from the franchisor.

[9]

On July 22, 2011, the franchisees executed the franchise agreement and
    started operating their new business.

[10]

Also
    on July 22, 2011, at the urging of other Caffé Demetre franchisees, the
    franchisor commenced an action against a former Caffé Demetre franchisee who
    was operating a competing business called Spin Dessert. The Spin Dessert operation
    was 7.5 km from the Dufferin Street Caffé Demetre location. While this lawsuit was
    started the same day as the franchisees entered into the franchise agreement, the
    litigation had been contemplated for some time, certainly prior to June 24,
    2011, when the franchisor provided the disclosure document to the franchisees.

[11]

By
    September 2011, the franchisees were aware of the Spin Dessert litigation. They
    did not express any concerns about it.  Spin Dessert went out of business in
    December 2012 and the action was settled.

[12]

In
    or around 2012, the franchisor decided to introduce a new up-scale menu. In the
    summer of 2012, in furtherance of this anticipated change the franchisor
    inspected various franchise outlets, including the franchisees Dufferin Street
    location. As a result of this inspection, the franchisor informed the
    franchisees that they were required to perform repairs that would cost between
    $40,000 and $50,000. The franchisor was entitled to make this request pursuant
    to a provision in the franchise agreement under which the franchisees agreed to
    refurbish and renovate the premises as required by the franchisor from time to
    time. The franchisees did not perform any of the work the franchisor requested.

[13]

In
    November 2012, the franchisor discovered that customer orders at the franchisees
    Dufferin Street location were cancelled at point of sale roughly three times
    more often than at other outlets. The franchisor asked the franchisees for
    information to help it understand this anomaly. The franchisees did not provide
    it. As a result, the franchisor inferred that the franchisees were concealing
    cash sales to reduce their franchise fees.

[14]

On
    December 12, 2012, the franchisor issued a notice of default to the franchisees
    for failure to improve the appearance of the location, and to provide financial
    statements and tax returns, both as required under the franchise agreement, and
    understating gross sales through excessive error/correct key entries. The
    franchisees did not respond. The franchisor therefore issued further default
    notices on March 8, 2013, and July 5, 2013.

[15]

Still
    the franchisees did nothing. The franchisor conducted another inspection of the
    Dufferin Street operation. This inspection disclosed further problems related
    to the franchisees procedures and the physical condition of the premises.

[16]

On
    July 19, 2013, the franchisees served a notice of rescission of the franchise
    agreement.

[17]

On
    August 2, 2013, the franchisor served notice of termination of the franchise
    agreement and directed the franchisees to vacate the premises in accordance
    with the post-termination obligations contained in the franchise agreement.

[18]

The
    franchisees claimed that the franchisors actions were illegal. The franchisees
    changed the locks of the Dufferin Street location, rebranded their operation,
    and continued under the trade name Sugarn Spice Café as a business in
    competition with the Caffé Demetre franchise system.

[19]

In
    August 2013, the franchisor commenced proceedings against the franchisees
    claiming termination of the franchise agreement and damages. In their statement
    of defence and counterclaim, the franchisees claimed that the franchise
    agreement was validly rescinded under s. 6(2) of the Act because the franchisor
    did not provide the disclosure mandated by the legislation.

[20]

In
    their pleadings the franchisees identified the following information that they
    say the franchisor was aware of at the time it signed the disclosure document and
    that it was obliged to but did not disclose:

1. The
    franchisor was involved in the Spin Dessert litigation.

2. The
    franchisor was contemplating implementing a policy prohibiting franchisees from
    taking a share of their employees tips (the Tip Out Policy).

3. The
    franchisor was contemplating altering the ice cream policy to make franchisee owner
    principals directly responsible for preparing the ice cream (the Ice Cream
    Manufacturing Policy).

4. The
    Dufferin Street location would require extensive remodelling and renovations
    that would cost in excess of $50,000 (the Remodeling and Renovations).

[21]

The
    franchisor brought a motion for partial summary judgment seeking a declaration
    that the franchisees were not entitled to rescission.

THE STATUTORY FRAMEWORK

[22]

Section
    5 of the Act sets out a franchisors disclosure obligations. It requires that a
    franchisor provide a franchise disclosure document to a prospective franchisee
    no fewer than 14 days before the earlier of the signing by the prospective
    franchisee of the franchise agreement and the payment of any consideration by
    the franchisee relating to the franchise. Section 5 also governs, among other
    things, the means for delivery of the disclosure document, the requirements for
    disclosure of material changes, and the contents of the disclosure document.

[23]

Subsection
    5(4)(a) requires the franchisor to include in the disclosure document all material
    facts. The Act defines material fact broadly in s. 1(1) to include any
    information about the business, operations, capital or control of the
    franchisor or the franchise system that would reasonably be expected to have a
    significant effect on the value or price of the franchise to be granted or the
    decision to acquire the franchise.

[24]

Regulations
    under the Act provide further details of the disclosure the Act mandates. Relevant
    to the issues here, s. 2 of O. Reg. 581/00 provides that every disclosure
    document shall contain:

5. A statement, including a description of details, indicating
    whether the franchisor, the franchisors associate or a director, general
    partner or officer of the franchisor has been found liable in a civil action of
    misrepresentation, unfair or deceptive business practices or violating a law
    that regulates franchises or businesses, including a failure to provide proper
    disclosure to a franchisee,
or if a civil action
    involving such allegations is pending against the person
. [Emphasis
    added.]

[25]

Section
    6 of the Act provides the consequences for failing to strictly comply with the
    requirements set out in s. 5 and the regulations. These consequences include
    rights of rescission and compensation. Section 6 provides two separate time
    periods within which the franchisee can rescind:

6. (1) A franchisee may rescind the franchise agreement,
    without penalty or obligation, no later than 60 days after receiving the
    disclosure document, if the franchisor failed to provide the disclosure
    document or a statement of material change within the time required by section
    5 or if the contents of the disclosure document did not meet the requirements
    of section 5.

(2) A franchisee may rescind the franchise agreement, without
    penalty or obligation, no later than two years after entering into the
    franchise agreement if the franchisor never provided the disclosure document.

[26]

As
    mentioned above, the franchisees seek to rescind the franchise agreement by
    relying on s. 6(2) of the Act.

REASONS OF THE SUMMARY JUDGMENT MOTION JUDGE

The Test for Summary Judgment

[27]

The
    motion judge applied the test from
Hryniak v. Mauldin
, 2014 SCC 7, [2014]
    1 S.C.R. 87, and held that he had the evidence required to fairly and justly
    adjudicate on the rescission issue in a timely, affordable, and proportionate manner.
    He found that the material relied on by the franchisor on the summary judgment
    motion consisted of documents, the franchisees pleadings, uncontested facts,
    and admissions made by the franchisee Khan on cross-examination. The motion
    judge determined that his only task was to apply those facts to the applicable
    law to determine whether the franchisees had a right to rescission. In these
    circumstances he did not have to make use of any of the new fact-finding powers
    under ss. 20.04(2.1) or (2.2) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194.

[28]

The
    motion judge acknowledged that in
Hryniak
the Supreme Court cautioned
    against deciding an issue on summary judgment when a trial will be required in
    any event. However, at para. 49 of his reasons, he found that if the
    rescission claim is dismissed, the landscape for resolution will be
    fundamentally altered and the prospects for avoiding a lengthy trial greatly
    enhanced. Finally, the motion judge observed that because the facts were essentially
    undisputed, there was no risk of inconsistent findings.

Standard
    for Rescission for Non-disclosure Under s. 6(2) of the Act

[29]

Relying
    on
4287975 Canada Inc. v. Imvescor Restaurants Inc.
, 2009 ONCA 308, 98
    O.R. (3d) 187, the motion judge observed that the test for rescission under s.
    6(2) of the Act for failure to provide a disclosure document must be
    distinguished from the test under s. 6(1) of the Act for rescission where the
    contents of the disclosure document did not meet the requirements of section
    5.  The motion judge then cited this courts decision in
6792341 Canada
    Inc. v. Dollar It Ltd.
, 2009 ONCA 385, 95 O.R. (3d) 291, for the proposition
    that where there are stark and material deficiencies in the disclosure
    document, the document cannot be considered a disclosure document at all and a
    franchisee may have a right of rescission under s. 6(2).

The Spin Dessert Litigation

[30]

In
    dealing with the franchisors failure to disclose the Spin Dessert litigation,
    the motion judge expressed his view, at para. 26, that because the litigation
    was not a potential liability but rather a proactive measure for the benefit of
    the franchisees, it is difficult to see how the existence of this litigation
    could have a significant effect on the price to be paid by the franchisor, as
    required by the definition of material fact.

[31]

Nevertheless,
    the motion judge held that the litigation did meet the definition of material
    fact and should have been disclosed. But the motion judge reasoned that while the
    failure to disclose the litigation was a content deficiency that would give
    rise to rescission rights under s. 6(1) if identified within 60 days of signing
    the franchise agreement, it was not a stark and material deficiency.

[32]

The
    motion judge concluded that the lack of disclosure of the Spin Dessert
    litigation failed to come close to the type of deficiency that amounts, in law,
    to no disclosure at all and the franchisees were not, therefore, entitled to
    rescission under s. 6(2) of the Act.

The Tip Out Policy

[33]

In
    August of 2012, the franchisor announced a new policy that prohibited franchisees
    from keeping a portion of their employees gratuities. This policy was in
    response to proposed legislation that would prohibit employers from taking a
    share of tips.

[34]

The
    motion judge held that the franchisors policy of prohibiting franchisees from
    collecting a portion of their employees tips did not constitute a material
    fact. He found that the policy was not contemplated by the franchisor until
    June of 2012 and was not implemented until 14 months after the disclosure
    document was delivered. Its omission could not, therefore, constitute a material
    fact that should have been disclosed. The motion judge also noted that, [a]s a
    practical matter, the change in policy had no impact on the profitability of
    the Dufferin Street location, as the franchisees refused to enforce the policy.

The Ice Cream Manufacturing Policy

[35]

The
    franchisor, as a result of a concern about the consistency of the ice cream
    made at the various franchise locations, announced a policy change on February
    1, 2013, requiring that franchisee owner principals assume sole responsibility
    for ice cream production at their own restaurants.

[36]

The
    franchisees considered the policy to be unreasonable and refused to implement
    it.

[37]

Similar
    to his reaction to the Tip Out Policy, the motion judge held that the Ice Cream
    Manufacturing Policy could not be a deficiency in disclosure in the light of the
    20-month period between the delivery of the disclosure document and the implementation
    of the policy. He again noted that the policy had no financial impact on the
    franchisees because they refused to implement it.

The Remodelling and Renovations

[38]

The
    motion judge noted that the Remodelling and Renovations sought by the
    franchisor did not arise until 14 months after delivery of the disclosure
    document. Again, this issue, as with the Tip Out Policy and the Ice Cream
    Manufacturing Policy, could not be said to be a material fact that should have
    been in the disclosure document. Further, the fact that repairs or renovations
    may have been needed in June 2011 did not constitute a material fact because
    it could not have had a significant effect on the price to be paid for the
    franchise. The motion judge reasoned that because the vendor of the premises
    had an obligation under the agreement of purchase and sale to do renovations as
    required by the franchisor, any required repairs or renovations were
    cost-neutral to the franchisees.

Motion
    Judges Conclusion

[39]

Based
    on his analysis of the franchisees four complaints about disclosure, the
    motion judge concluded that the franchisees had no right to rescind the
    franchise agreement under s. 6(2) of the Act and dismissed the claim for
    rescission.

ISSUES

[40]

On
    appeal, the franchisees submit that:

(1)

the motion judge erred in
    concluding that the claim for rescission advanced in the counterclaim could be
    determined by way of summary judgment; and

(2)

the motion judge misapprehended
    the evidence and otherwise erred in finding that the failure to disclose the
    existence of the Spin Dessert litigation did not give rise to rescission rights
    under s. 6(2) of the Act.

ANALYSIS

1.

Did
    the motion judge err in concluding that the claim for rescission advanced in
    the counterclaim could be determined by way of summary judgment?

[41]

The
    franchisees submit that it was not in the interests of justice to determine the
    rescission claim on summary judgment as other matters between the parties
    arising out of the franchise investment, including a claim for damages for
    misrepresentation under s. 7 of the Act, are proceeding to trial in any event.
    While the motion judge determined that the s. 6 rescission issue turned on
    undisputed facts, his findings that three of the four alleged disclosure
    deficiencies are not material facts essentially forecloses the s. 7 claim
    with respect to those deficiencies or creates a risk of inconsistent findings.

[42]

I
    do not agree.

[43]

I
    start with the franchisees argument that their s. 7 claim will be affected by
    the results of the partial summary judgment.

[44]

Section
    7 of the Act gives a franchisee a statutory claim for damages where a
    franchisee suffers a loss because of a misrepresentation contained in a
    disclosure document. The franchisees counterclaim does not appear to advance
    such a claim. The pleadings make no reference to s. 7 of the Act. And the
    pleadings contains but one reference to damages for misrepresentation  a bald
    reference in the prayer for relief.

[45]

This
    pleadings deficiency notwithstanding, I agree with the motion judges conclusion,
    at para. 48, that there is no risk of inconsistent findings of fact as the
    facts are essentially undisputed. Further, on appeal, the franchisees do not
    challenge the motion judges findings with respect to the three alleged deficiencies.
    And the motion judge found the Spin Dessert litigation to be a material fact,
    leaving the franchisees free to pursue a claim for misrepresentation on the
    basis of this omission.

[46]

I
    also agree with the motion judge that using the summary judgment mechanism to
    deal with the discrete matter of the franchisees right to rescission was an
    expeditious and effective approach to resolving an important issue. The motion
    judge was mindful of the shift in culture (see para. 43 of his reasons)
    mandated by the Supreme Courts decision in
Hryniak
and was motivated
    to benefit the parties by narrowing their dispute and increasing the odds of
    settlement. As the Supreme Court noted in
Hryniak
, at para. 60, the
    resolution of an important claim against a key party could significantly
    advance access to justice, and be the most proportionate, timely and cost
    effective approach.

[47]

I
    see no reason to interfere with the motion judges discretionary decision to
    determine the discrete issue of rescission by way of summary judgment. I would
    therefore not give effect to this ground of appeal. See
2240802 Ontario
    Inc. v. Springdale Pizza Depot Ltd.
, 2015 ONCA 236, at para. 35.

2.

Did
    the motion judge misapprehend the evidence and otherwise err in finding that
    the failure to disclose the existence of the Spin Dessert litigation did not
    give rise to rescission rights under s. 6(2) of the Act?

[48]

The
    focus of this appeal is on the motion judges view that while the franchisors
    failure to identify the Spin Dessert litigation in the disclosure document was a
    deficiency, it was not an egregious one, leading him to conclude that the
    franchisees were not entitled to rescission under s. 6(2) of the Act.

[49]

The
    franchisees submit that it was unreasonable for the motion judge to infer that
    the Spin Dessert litigation had no impact on their decision to purchase the
    franchise or on the price they agreed to pay for the Dufferin Street franchise
    outlet. They argue that it was clear that Spin Dessert was a significant
    potential threat to the Caffé Demetre franchise system.

[50]

The
    franchisees also submit that the motion judge further erred by finding that the
    franchisees failure to complain about the litigation is relevant to whether
    the existence of the litigation could reasonably be expected to have affected
    their purchase decision.

[51]

Again,
    I do not agree.

[52]

The
    battle lines over the failure to disclose the Spin Dessert litigation were
    drawn around two questions. First, is the Spin Dessert litigation a material
    fact that had to be disclosed? Second, if the Spin Dessert litigation is a
    material fact, was the failure to disclose it a disclosure defect so egregious
    as to amount to no disclosure at all under s. 6(2) of the Act?

[53]

I
    start with whether the franchisors were required to disclose the Spin Dessert
    litigation. Since there is nothing in the Act or in the regulations that
    expressly specify that this type of information must be contained in the
    disclosure document, the question is whether the Spin Dessert litigation falls
    within the definition of a material fact in the sense of being information
    about the business, operations, capital or control of the franchisor or franchisors
    associate, or about the franchise system, that would reasonably be expected to
    have a significant effect on the value or price of the franchise to be granted
    or the decision to acquire the franchise, as contemplated by s. 1(1) of the
    Act.

[54]

While
    I say that neither the Act nor the regulations require reference to this type
    of litigation to be included in the disclosure document, I do note that s. 2(5)
    of O. Reg. 581/00 identifies a category of litigation that must be disclosed.
    Understandably, what must be disclosed is litigation
against
the
    franchisor or those associated with the franchisor based on claims of unfair or
    deceptive business practices, or violating a law that regulates franchises or
    businesses. I am not suggesting that s. 2 of the regulations should be
    interpreted as indicating that only the type of legal proceeding that falls
    within this description qualifies as a material fact that must be disclosed
    pursuant to s. 5 of the Act.  However, in my view, the type of litigation that
    must be disclosed pursuant to s. 2(5) does inform the fact-specific analysis of
    whether the litigation in issue is material.

[55]

The
    motion judges reasoning and ultimate conclusion that, while the Spin Dessert
    litigation was a material fact, the failure to disclose it did not grant the
    franchisees a right to rescission under s. 6(2) of the Act, appear in paras. 41
    and 42 of his decision, where he wrote:

[41] To recap the above analysis, I conclude that of the four
    material facts that the defendants allege should have been disclosed, three
    of them can be dismissed for the reasons given. The only one that meets the
    definition of a material fact is the existence of the Spin Desserts litigation.
    I accept that if a franchisor is involved in ongoing litigation, this should be
    disclosed to prospective franchisees: see
2240802 Ontario Inc. v.
    Springdale Pizza
, 2013 ONSC 7288 (S.C.J.) at para. 48. To that extent, the
    disclosure document was deficient. However, as was made clear in
Imvescor
,
    above, a content deficiency only gives rise to rescission under s. 6(1). It is
    only where there are stark and material deficiencies in the disclosure document
    that a court may conclude that it amounts to no disclosure at all. The sweeping
    remedy of rescission is restricted to instances of a complete failure to
    provide a disclosure document.

[42] As already noted, the Spin Desserts lawsuit was a
protective measure taken by the franchisor, at the
request of and for the benefit of the franchisees. It did not constitute a
    potential liability that might attach to the franchise system as a whole. Given
    the distance between the competing outlet and the subject premises, there is no
    basis for inferring that it could have had any economic impact on the [franchisees]
    operation, nor is there any evidence that it did so. The [franchisees] were
    aware of this litigation by September of 2011, but did not raise it as a
    concern until their Statement of Defence and Counterclaim was filed on
    September 24, 2013. If it had been a material fact that could reasonably be
    expected to have a significant impact on the price the defendants paid for the
    franchise, one would have expected them to have complained when, or shortly
    after, they found out about it.

[56]

As
    the above passages demonstrate, notwithstanding his observations about the
    nature of the litigation at para. 42, the motion judge relied on the Superior
    Courts decision in
2240802 Ontario Inc. v. Springdale Pizza,
2013
    ONSC 7288 (CanLII), for the proposition that if a franchisor is involved in
    ongoing litigation, this should be disclosed to prospective franchisees. In
    other words, the motion judge held that any litigation involving a franchisor
    amounts to a material fact  no matter what the nature and circumstances of the
    litigation might be. Since the Spin Desserts litigation was not disclosed, the
    disclosure document was deficient.

[57]

With
    respect, in my view the Superior Courts
Springdale
decision does not
    stand for the proposition identified by the motion judge. The litigation at
    issue in
Springdale
fell precisely within the type of litigation
    described in s. 2(5) of O. Reg. 581/00.

[58]

The
    Spin Dessert litigation does not come within this category.

[59]

Ongoing
    or prospective litigation involving the franchisor is not, by definition, a
    material fact. Of course, the litigation must be disclosed if it falls within
    the description contained in s. 2(5) of the regulations. But if the litigation
    in issue does not fall within that description, then whether it is a material
    fact, as contemplated by the Act, will be a question of fact determined on a
    case-by-case basis. Because the analysis is highly fact-specific, no
    bright-line rule can be articulated.

[60]

In
    the light of the motion judges unassailable observations about the Spin Dessert
    litigation, excerpted above  that it was a protective measure taken by the
    franchisor at the request of and for the benefit of the franchisees, did not
    constitute a potential liability that might attach to the franchise system and would
    not financially impact the Dufferin Street Caffé Demetre outlet - I am of the
    view that the lawsuit was not a material fact.

[61]

It
    follows that the disclosure document was not deficient by reason of the
    franchisors failure to reference the litigation.

[62]

It
    goes without saying that even if the failure to mention the Spin Dessert
    litigation amounted to a disclosure deficiency, I am also of the view that it
    was not sufficiently significant that the franchisees were entitled to
    rescission beyond the 60-day period provided for in s. 6(1).

[63]

On
    this record, I do not see how failing to mention the Spin Dessert litigation
    litigation commenced against a competing business for the purpose of protecting
    the interests of the franchisees  effectively deprived the franchisees of the
    opportunity to make a properly informed decision to invest in the Caffé Demetre
    franchise: see
Dollar It
, at para. 35. I agree with the motion judge
    that the omission of the Spin Dessert litigation from the franchisors
    disclosure document falls well short of putting the document into the category
    of no disclosure at all as contemplated by s. 6(2) of the Act.

DISPOSITION

[64]

For
    these reasons, I would dismiss the appeal. In accordance with the parties
    agreement, I would award the respondents their costs fixed in the amount of $8,500,
    including disbursements and applicable taxes.

Released: April 15, 2015 (DD)

Gloria
    Epstein J.A.

I
    agree David Doherty J.A.

I
    agree M. Tulloch J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Chand v.
    Chand, 2015 ONCA 228

DATE: 20150407

DOCKET: C57334

Feldman, Benotto and Brown JJ.A.

BETWEEN

Apollonia Chand

Respondent

and

Rabindar Chand

Appellant

Rabindar Chand, in person

Ken Nathens and Glen Schwartz, for the respondent

Heard: April 1, 2015

On appeal from the judgment of Justice Thea P. Herman of
    the Superior Court of Justice, dated June 28, 2013.

ENDORSEMENT

[1]

The appellant appeals the amount of the equalization payment owing to
    the respondent. He submits that the trial judge erred in calculating the
    equalization payment in the following ways:

·

1. By including in his net family property (NFP)  money in his
    bank account that he said belonged to his sister;

·

2. By including in his NFP proceeds from his share of the sale of
    a Florida property where the proceeds of the sale  had already been divided
    with the respondent;

·

3. By not including in the respondents NFP approximately $60,000
    which he said was in her ING bank account as well as income he said she earned from
    her rental property in Holland; and

·

4. In the valuation of the home contents and artwork.

[2]

The trial judge found that the money in the appellants bank account did
    not belong to the appellants sister.  She heard extensive evidence on this
    issue and made findings of credibility. The trial judge considered certain
    emails between the appellant and his sister. The appellant submits that the
    trial judge should not have admitted these emails into evidence because the
    respondent  had taken them without his authorization. Given the appellants
    testimony on his pre-trial questioning that there were no such emails, the
    trial judge correctly admitted them into evidence and considered them as one of
    the factors in her credibility assessment.  The trial judge concluded that the
    money belonged to the appellant, not his sister.  On the evidence, it was open
    to her to do so.

[3]

The Florida property sold in 2003.  Each party deposited half of the
    proceeds to his or her own bank account.  The valuation date was May 1, 2012.
    The funds were not excluded property and therefore the funds from the sale of
    the property remaining in the appellants bank account on valuation day were properly
    included in his NFP.

[4]

The appellant submits that approximately $60,000 representing funds
    shown on an ING bank statement from 2009 should have been included in the
    respondents NFP.  He argued that, because the bank statement was disclosed to
    him by the respondents counsel, the amount shown must be included in her NFP.
    Counsel for the respondent indicated that the statement was sent to the
    appellant as part of the usual disclosure obligation.  The relevant date for
    valuation for the purposes of equalization is May 1, 2012.  The trial judge
    found that, as of that date, the balance in the account was $4,190.  This
    latter amount was correctly included in the respondents NFP as it was
    supported by the evidence.  The respondents NFP statement was attached as an
    appendix to the trial judges reasons.

[5]

The trial judge determined that there was no undisclosed income from the
    wifes excluded property in Holland.  On the evidence, it was open to her to
    make this finding.

[6]

Lastly, the trial judge made findings with respect to the value of the artwork
    and contents which were based on the evidence. We see no error or
    misapprehension of the evidence.

[7]

The appeal is dismissed with costs payable to the respondent fixed at
    $15,000, inclusive of disbursements and HST.

K. Feldman J.A.

M.L. Benotto J.A.

David Brown J.A.