COURT OF APPEAL FOR ONTARIO

CITATION: Tran v. Bloorston Farms Ltd., 2020
    ONCA 440

DATE: 20200706

DOCKET: C67545

Benotto, Zarnett and Thorburn
    JJ.A.

BETWEEN

Sang Thi Tran and 1835068
    Ontario Ltd.

Plaintiffs
(Respondents)

and

Bloorston Farms Ltd.

Defendant
(Appellant)

Mark A.
    Ross and Eric Brousseau, for the appellant

Evan L.
    Tingley, for the respondents

Heard: in writing

On appeal
    from the judgment of Justice William S. Chalmers of the Superior Court of
    Justice, dated September 10, 2019, with reasons reported at 2019 ONSC 4639.

Zarnett J.A.:

INTRODUCTION

[1]

The rule in
Foss v. Harbottle
(1843), 67 E.R. 189 (U.K.H.L.)
prevents
    shareholders from suing for a loss in the value of their shares brought about
    by a wrong done to the corporation. The rule, which is well-entrenched in
    Canadian law, is a consequence of the separate legal personality of the
    corporation. Just as shareholders (subject to limited exceptions) cannot be
    sued for acts, debts, defaults or obligations of the corporation, only the
    corporation has a cause of action for wrongs done to it.
[1]

[2]

The primary issue in this appeal is whether the
    rule should have been applied to deny the claim of the respondent, Sang Thi
    Tran (Sang), for the diminution in the value of her shares in 1835068 Ontario
    Ltd. (183), a corporation she solely owned. The shares lost value because 183
    was unable to carry on its restaurant business. It could not carry on that
    business because Sangs lease for the restaurants premises was terminated by
    the appellant, Bloorston Farms Ltd. (Bloorston).

[3]

As I explain below, the wrong in this case was
    not done to the corporation, but to the shareholder personally. Only Sang was a
    tenant under the lease and only she had a cause of action for its wrongful
    termination. In these circumstances, neither the rule in
Foss v. Harbottle
nor its rationale applied. The motion judge did not err, as Bloorston contends,
    in allowing Sangs claim for diminution in share value. Nor did the motion
    judge err, as Bloorston also contends, in the quantification of that diminution
    or in finding that Bloorston had breached the lease.

[4]

I would therefore dismiss the appeal.

BACKGROUND

[5]

In 2006, Sangs sister entered into a lease with
    the then-owner of the building at 252 Carlton Street, Toronto. The lease was
    for premises on the ground floor of the building and contemplated that the premises
    would be used as a restaurant. It required payment of Minimum Rent and Additional
    Rent for the tenants share of taxes, utilities and services to the building. The
    lease was to expire on October 31, 2016, subject to a five-year renewal option.

[6]

In 2010, Sangs sister assigned the lease to Sang.
    In an agreement with the then-landlord dated December 1, 2010 (the 2010
    Agreement), Sang was recognized as the new tenant. The 2010 Agreement made amendments
    to the amount of Minimum Rent and also specified the square footage of the
    leased premises (1,120 square feet). The other terms and conditions of the
    lease remained unchanged.

[7]

From December 1, 2010 to April 1, 2014, Sangs
    corporation, 183, of which Sang was the sole shareholder, operated a restaurant
    called Gingers on the leased premises. The motion judge found that Sang never
    assigned the lease to 183. In other words, Sang always remained the tenant
    under the lease.

[8]

Bloorston became Sangs landlord when, on March
    6, 2014, it purchased the building in which the leased premises were located.
    The next day, Bloorston emailed an architects certificate to Sang, showing that
    the leased premises were larger than what the 2010 Agreement specified.

[9]

On April 1, 2014, Bloorston demanded the payment
    of increased amounts of Minimum Rent and Additional Rent. The demand for
    increased Minimum Rent was based on the larger area in the architects certificate.
    The demand for increased Additional Rent was based on Bloorston having increased
    the allocation of the buildings property taxes to the leased premises (from 26.77
    percent to 43.59 percent).

[10]

On April 3, 2014, Bloorstons lawyer wrote to Sang
    advising that payment of the additional amounts was due by April 15, 2014,
    failing which Bloorston would take the position that Sang was in default of the
    lease.

[11]

The same day, Sang wrote to Bloorston through
    her lawyer to dispute the changes to the Minimum Rent and Additional Rent. She
    relied on the amount of Minimum Rent specified in the 2010 Agreement and took
    the position that the increased allocation of property taxes was unreasonable
    given the relationship of the area of the leased premises to that of the
    building. The letter stated that Sang would continue to pay the Minimum Rent
    and Additional Rent she had been paying.

[12]

Although Bloorston received and cashed a cheque
    representing payment of Aprils Minimum Rent and Additional Rent calculated in
    accordance with past practice, Bloorston terminated Sangs tenancy on April 25,
    2014 for her failure to pay the increased amounts it had demanded. The locks on
    the premises were changed, and other than being allowed a brief period to
    retrieve property from the premises, Sang was denied the benefit of the
    premises for the balance of the term of the lease.

[13]

As a result, 183s restaurant business ceased to
    operate.

THE ACTION

[14]

Claiming that the termination of her lease was
    wrongful, Sang sued Bloorston for the return of her deposit and for damages
    arising from Bloorstons breach of the lease. 183 was later added as a
    plaintiff. Bloorston counterclaimed against Sang for lost rent and other losses
    related to Sangs failure to pay the increased rental amounts.

[15]

In December 2016, Bloorston brought a motion for
    summary judgment to dismiss the action, which came before Lederer J. Although
    no specific disposition of the claim by 183 appears to have been made at that
    time, the reasons of Lederer J. proceed on the basis that 183 had no cause
    of action against Bloorston because it was not the tenant under the lease. Lederer
    J. refused to dismiss Sangs claim, giving her the opportunity to move to amend
    her claim to seek damages for the diminution in the value of her shares in 183:
Tran v. Bloorston
, 2017 ONSC 864.

[16]

On May 12, 2017, Lederer J. granted Sang leave to
    amend the statement of claim and dismissed the action against 183. After an
    exchange of expert reports about the amount of the damages sought by Sang, Bloorston
    again moved for summary judgment.

THE MOTION JUDGES DECISION

[17]

The motion judge granted summary judgment in
    favour of Sang and dismissed Bloorstons counterclaim.
[2]

[18]

The motion judge rejected Bloorstons argument
    that it was entitled to the additional amounts it had demanded. He concluded
    that nothing in the 2010 Agreement permitted Bloorston to adjust the Minimum
    Rent based on a recalculation of the square footage of the leased premises. Accordingly,
    the motion judge found that the Minimum Rent was set in the 2010 Agreement and
    that the demand for increased amounts was improper. He noted that prior to
    April 2014, the parties had operated on the shared assumption, giving rise to
    an estoppel by convention, that the size of the leased premises was the square
    footage specified in the 2010 Agreement.

[19]

With respect to Additional Rent, the motion
    judge noted that the lease gave the landlord the right, acting reasonably, to
    re-estimate the tenants share of relevant expenses. He found that Bloorston
    had not acted reasonably, and in any event, it was not entitled to change the
    method of allocation of property taxes that its predecessor had used. The
    motion judge therefore concluded that Bloorstons demand for increased
    Additional Rent was also unjustified.

[20]

The motion judge also rejected the argument that
    Sang had breached the lease by assigning it to 183 or by allowing 183 to use
    the leased premises. He found that there had been no assignment, and that the
    prior landlord and Bloorston were aware of 183s involvement and had made no
    objection.

[21]

Accordingly, the motion judge found that
    Bloorston had wrongfully terminated the lease when it locked Sang out of the
    premises.

[22]

The next issue was whether Sang could claim for
    the loss of value of her shares. The motion judge found that the termination of
    the lease caused the restaurant to close, as a result of which Sangs shares in
    183 became worthless. He rejected Bloorstons argument that Sang was not
    entitled to damages for that loss based on the rule in
Foss v. Harbottle
.
    He held that there was an exception to that rule when the company suffers a
    loss but has no cause of action to recover the loss; in such circumstances the
    shareholder may sue for the loss of the value of the shares. The motion judge referred
    to
Meditrust Healthcare Inc. v. Shoppers Drug Mart

(2002), 220
    D.L.R. (4th) 611 (Ont. C.A.), which quoted a passage from the House of Lords
    decision in
Johnson v. Gore Wood & Co.

(No. 1)

(2000),
    [2001] B.C.C. 820 (U.K.H.L), discussed in greater detail below. He also noted that
    the exception was relied on by Newbould J. in refusing to strike a shareholder claim
    for diminution in share value as disclosing no reasonable cause of action:

Quadrangle
    Group LLC et al. v. Attorney General of Canada
, 2015 ONSC 1521, 39
    B.L.R. (5th) 321, leave to appeal to Div. Ct. refused, 2015 ONSC 7346.

[23]

The motion judge then turned to the
    quantification of damages. The point of contention was the treatment of a $137,227
    sum which represented funds advanced to 183 by Sangs sister. Bloorstons
    expert took the position that this sum had to be deducted from the share value,
    reducing the share value to $3,387 at the time of the termination of the lease.
    The motion judge rejected that position, finding on the evidence of both Sang
    and Sangs sister that the advance was not a loanit bore no interest and was
    not repayable. The sum therefore formed part of the capital of 183 and was to
    be included when determining the value of 183s shares at the time of the
    termination of the lease.

[24]

The motion judge awarded Sang damages of $145,702,
    made up of the lost share value ($140,614) and a deposit that Bloorston was
    holding ($5,088). He dismissed Bloorstons counterclaim.

ISSUES ON APPEAL

[25]

Bloorston raises three grounds of appeal.

[26]

First, it submits that the rule in
Foss v.
    Harbottle
is part of Ontario law and bars Sangs claim for diminution in
    share value. Bloorston further submits that the exception relied on by the
    motion judge has not been accepted as part of Ontario law, and, in any event, is
    not available to Sang on the facts because her claim for diminution of share
    value was not reasonably foreseeable.

[27]

Second, Bloorston argues that the motion judge
    erred in failing to deduct the amount of Sangs sisters advance from the sum
    of damages, and in failing to reconcile conflicting evidence about whether the
    advance was a loan.

[28]

Third, Bloorston submits that the motion judge
    erred in his determination that Bloorston was not entitled to claim the
    additional amounts it did, and that his reasons were inadequate to justify his
    conclusion that Bloorston breached the lease.

ANALYSIS

(1)

The Claim for Diminution in Share Value

(a)

The Rule in
Foss v. Harbottle
and its Rationale

[29]

The rule in
Foss v. Harbottle
is part
    of Ontario law. It has been firmly established by jurisprudence of the Supreme
    Court of Canada and of this court:
Hercules Management Ltd. v. Ernst &
    Young
, [1997] 2 S.C.R. 165 at para. 59;
Meditrust
, at para. 14. The
    point of central importance in this case is the extent or reach of the rule.

[30]

The rule stipulates the following: a shareholder
    of a corporationeven a controlling or sole shareholderdoes not have a
    personal cause of action for a wrong done to the corporation:
Hercules
    Management
, at para. 59;
Meditrust
, at paras. 1,12, and 15.

[31]

There are two reasons for the rule. First, the
    corporation is a separate legal entity. The corporation, and not its
    shareholders, is liable for the corporations acts and defaults, and the
    corporation, not its shareholders, acquires causes of action when wrongs are
    committed against it. Second, the rule avoids a multiplicity of actions; without
    the rule, a shareholder would always be able to sue on the basis that a wrong
    done to the corporation, which caused harm to the corporation, indirectly harmed
    the shareholder:
Hercules Management
, at para. 59;
Meditrust
,

at paras. 12-13.

[32]

While the rule in
Foss v. Harbottle
prevents
    a shareholder from suing for any type of damage resulting from a wrong done to
    the corporation, it is frequently invoked when a shareholder attempts to recover
    for the diminution in value of his or her shares. Such claims offend the rule because
    a wrong done to the corporation that results in diminished share value does not
    ground a personal cause of action for the shareholder. The party with the cause
    of action for the wrong is the corporation. The loss in share value is simply
    reflective of the loss incurred by the corporation
as a result of the wrong
    done to it
, and would be remedied if the corporation took action to recover
    its loss from the wrongdoer. Both the wording of the rule, and its rationale,
    apply to bar such claims:
Meditrust
, at para. 42.

(b)

The Limit of the Rule

[33]

But the rule has a limit. It only provides that
    shareholders cannot raise individual claims in respect of a wrong done
to
    the corporation
 (emphasis in original):
Hercules
, at para. 62.
    See also
Robak Industries Ltd. v. Gardner
, 2007 BCCA 61, 28 B.L.R.
    (4th) 1, at para. 35: There are good reasons for not allowing a shareholder to
    claim the loss in value of its shares
where a wrong has been done to the
    company
 (emphasis added). The rule in
Foss v. Harbottle
does not preclude
    an individual shareholder from pursuing a claim for harm done directly to her,
    assuming the shareholder can make out all the elements of her own cause of
    action:
Meditrust
, at paras. 16-17.

[34]

The limited reach of the rule in
Foss v.
    Harbottle
is important in two different circumstances.

(i)

When Both the Corporation and Shareholder Have
    Causes of Action

[35]

The first circumstance is when the same or
    overlapping facts constitute actionable wrongs against both the corporation and
    shareholder. When that occurs, the limit on the rule operates to ensure that
    the shareholder is not deprived of his or her cause of action, even though the
    corporation also has a cause of action. As La Forest J. explained in
Hercules
    Management
, the shareholder may have a personal cause of action even
    though the corporation may also have a separate and distinct cause of action:
    at para. 62. See also
SFC Litigation Trust v. Chan
, 2019 ONCA 525, 147
    O.R. (3d) 145, leave to appeal refd, [2019] S.C.C.A. No. 314, at para. 86.

[36]

Of course, when wrongs have been committed so
    that both the corporation and shareholder have causes of action, care must be
    taken to ensure that the shareholders personal action is not really an action
    for a wrong done to the corporation (for which the corporation, and only the
    corporation, can sue). In other words, even when the shareholder has a personal
    claim, the rule in
Foss v. Harbottle
may apply to prevent the
    shareholder from going beyond that personal claim to recover for a wrong done
    to the company.

[37]

When the same or overlapping facts constitute
    actionable wrongs against both the corporation and shareholder, a shareholders
    claim for diminution in share value may or may not be permissible. Whether it
    is permissible in a particular case will depend on the nature of the wrong done
    to the shareholder, the nature of the wrong done to the corporation, and their
    respective causes of action. It is unnecessary in this case to opine on the
    precise contours of how the distinction is made other than to note that cases
    may fall on either side of the line.

[38]

For example, when a corporate director is
    responsible for misrepresentations that induce the acquisition of shares, the
    shareholders may have a statutory and common law cause of action to sue the
    director for loss of share value due to the misrepresentations, even though the
    director making such misrepresentations may also have breached his duty to the
    corporation and thereby given the corporation its own cause of action against
    the director: see
Borrelli v. Chan
, 2018 ONSC 1429, 58 C.B.R. (6th) 1,
    at paras. 130-134;
SFC Litigation Trust
,
at paras. 85-86, 131-132.

[39]

In other cases, the mere fact that the
    shareholder has a personal claim has been held not to justify a claim for
    diminution in share value because the shareholders loss has not flowed from her
    cause of action but from a wrong done to the corporation. In order to
    distinguish what a shareholder may claim from claims that are properly made
    only by the corporation, some courts have required that the shareholders claim
    result from an independent relationship with the wrongdoer and be for an
    independent loss from that of the corporation to whom the wrong has been
    done:

Robak Industries
, at para. 38 (discussed in more detail
    below);
Walsh v. T.R.A. Company Limited
, 2015 NLTD(G) 27, 38 B.L.R.
    (5th) 256, at para. 32.

(ii)

When Only the Shareholder Has a Cause of Action

[40]

The second circumstance where the limit on the
    rule is germane is the one applicable here. Unlike the situation envisaged by
    the rule, this case does not involve a shareholder suing for a wrong done to
    the corporation for which the corporation can sue. Similarly, this case is unlike
    the circumstances discussed in paras. 35 to 39 above (when the same or
    overlapping facts constitute actionable wrongs against both the corporation and
    shareholder and give rise to separate and distinct causes of action in each).

[41]

Here the corporation has no cause of action
    whatsoever. Only the shareholder, Sang, has a cause of action. Since the rule
    in
Foss v. Harbottle
applies only to prevent a shareholder from suing
    for a wrong done to the corporation, the question is whether the rule has any
    application when the corporation has no cause of action and the shareholder,
    who does have a cause of action, makes a claim for diminution in share value.

[42]

Bloorstons argument is essentially that the
    rule applies because the claim is for diminution in share value, even though the
    predicate to the rule, a shareholder claim for a wrong done to the corporation,
    is absent. As I explain in the next sections, I do not accept that argument,
    which, if accepted, would expand the rule rather than respect its limits and its
    rationale.

(c)

Claims for Diminution in Share Value Under the Second
    Proposition in
Johnson

(i)

The Second Proposition in
Johnson

[43]

The main source for the motion judges holding that
    a claim for diminution in share value is permissible in this case is a
    statement of Lord Bingham in the House of Lords decision in
Johnson
. As
    mentioned, the motion judge referred to a passage from
Meditrust
that quoted
    this statement (which was also quoted in
Quadrangle
). The statement, which
    has come to be known as the second proposition in
Johnson
, provides that
    a shareholder may claim for diminution in share value resulting from a
    corporations loss when the wrong done is to the shareholder, who thus has a cause
    of action, and the corporation has no cause of action: at p. 838.

[44]

It is this proposition that Bloorston argues is
    not part of Ontario law.

[45]

To appreciate the second proposition in
Johnson
,
    it is important to consider it in the context of the three propositions set out
    in that case by Lord Bingham about the ability of a shareholder to sue for
    diminution in share value:

1. Where a company suffers loss caused by a
    breach of duty owed to it, only the company may sue in respect of that loss. No
    action lies at the suit of a shareholder suing in that capacity and no other to
    make good a diminution in the value of the shareholder's shareholding where
    that merely reflects the loss suffered by the company. A claim will not lie by
    a shareholder to make good a loss which would be made good if the company's
    assets were replenished through action against the party responsible for the
    loss, even if the company, acting through its constitutional organs, has
    declined or failed to make good that loss [citations omitted].

2. Where a company suffers loss but has no
    cause of action to sue to recover that loss, the shareholder in the company may
    sue in respect of it (if the shareholder has a cause of action to do so), even
    though the loss is a diminution in the value of the shareholding [citations
    omitted].

3. Where a company suffers loss caused by a
    breach of duty to it, and a shareholder suffers a loss separate and distinct
    from that suffered by the company caused by breach of a duty independently owed
    to the shareholder, each may sue to recover the loss caused to it by breach of
    the duty owed to it but neither may recover loss caused to the other by breach
    of the duty owed to that other [citations omitted].

[46]

While it is the second proposition in
Johnson

that supports Sangs claim, it is pertinent to observe that the first and
    third propositions in
Johnson
are consistent with Ontario law. The first
    proposition, dealing with the situation where only the corporation has a cause
    of action, restates the rule in
Foss v. Harbottle
. The third
    proposition deals with the situation where both the shareholder and corporation
    have causes of action. It allows both to sue for their respective claims, but neither
    to sue for the others claim. One can draw from this

that, at least as
    far as the House of Lords was concerned, the second proposition fits
    consistently into a legal framework that is otherwise consistent with Ontario law.

[47]

The second proposition in

Johnson
was partly derived from an earlier case,

George Fischer (Great Britain)
    Ltd v. Multi Construction Ltd.
(1994), [1995] B.C.C. 310 (C.A.), in
    which the facts bore a relevant similarity to those present here. In

George

Fischer
, a holding company of several subsidiary companies entered
    into a contract for the defendant to build a warehouse for one of the subsidiary
    companies. The warehouse would also be used by the other subsidiaries for
    business operations. The defendants negligence in constructing the warehouse
    caused the subsidiaries, which were not parties to the contract, loss in
    revenue. The holding company succeeded in its personal claim for the diminution
    in value of its shares in the subsidiaries because the contract was between the
    holding company and the defendant and not between the subsidiaries and the
    defendant: see also Joyce Lee Suet Lin,
Barring Recovery for Diminution in
    Value of Shares on the Reflective Loss Principle
 (2007) 66:3 Cambridge
    L.J. 537 at p. 545.

(ii)

Has the Second Proposition been Rejected in
    Ontario?

[48]

Bloorston submits that the second proposition in
Johnson
is not part of Ontario law because (i) it was rejected by
    this court in
Meditrust
; (ii) that rejection was not questioned in the
    decisions of this court that have followed
Meditrust
;
[3]
and (iii) it was also rejected
    by the British Columbia Court of Appeal in
Robak

Industries
.

[49]

Bloorston therefore argues that the motion judge
    was wrong to give effect to this rejected proposition (which the motion judge
    treated as an exception to the rule in
Foss v. Harbottle
).

[50]

I disagree with Bloorstons submission.

[51]

Bloorston relies on para. 43 of
Meditrust
(the very passage cited by the motion judge and the court in
Quadrangle
),
    where Laskin J.A., writing for the court, stated:

Meditrust, nonetheless, submits that [the rule
    in
Foss v. Harbottle
]should be reconsidered in the light of recent
    English case law. I think that submission is untenable for two reasons. First,
    Canadian appellate jurisprudence has consistently invoked
Foss v. Harbottle
to reject this kind of claim. Second, the most recent English authority, the
    House of Lords decision in
Johnson v. Gore Wood & Co.
, [2001] 1
    All E.R. 481, does not support Meditrusts position. In
Johnson
, Lord
    Bingham admittedly put a gloss on the rule in
Foss v. Harbottle
when
    he [provided the second proposition above]. But, to rely on this proposition to
    claim the loss in the value of its shares, Meditrust must at least show that it
    has a cause of action and the subsidiaries do not. This, Meditrust has failed
    to do. Therefore, in my view, Meditrust cannot maintain its claim for damages
    resulting from the loss in the value of its shares in its subsidiaries.

[52]

I do not read this passage as a rejection of the
    second proposition in
Johnson
for three reasons.

[53]

First,
Meditrust
involved a shareholder
    (Meditrust) seeking to sue for the diminution in value of its shares in
    subsidiary companies due to losses suffered by the subsidiaries
because of
    wrongs done to them
. Accordingly, when Laskin J.A. stated that the rule in
Foss
    v. Harbottle
has been applied by Canadian appellate jurisprudence to reject
    this kind of claim, he was referring to the kind of claim made in
Meditrust
where
    the alleged wrong was to the corporation (Meditrusts subsidiaries), and not to
    the shareholder (Meditrust itself). He was not referring to the kind of claim contemplated
    by the second proposition in
Johnson

(and present in this case)where
    the alleged wrong was to the shareholder, and not to the corporation.

[54]

Second, if the second proposition from
Johnson
was being rejected in
Meditrust
, it would have been unnecessary for Laskin
    J.A. to explain, as he did, why on the facts of
Meditrust
the
    proposition did not apply, namely that
Meditrust
was not a case where
    the shareholder had a cause of action and the corporation did not. As noted by
    Laskin J.A, Meditrust must at least show that it has a cause of action and
    the subsidiaries do not. This, Meditrust has failed to do:
Meditrust
,
    at para. 43.

[55]

Third, the passage quoted followed statements by
    Laskin J.A. earlier in the decision about the limit of the rule in
Foss v.
    Harbottle
. Following
Hercules Management
, Laskin J.A. explicitly
    noted that the rule does not preclude a shareholder who has her own cause of
    action from suing for harm suffered by her:
Meditrust
, at paras. 16-17.
    These statements are more consistent with the second proposition in
Johnson
than with its rejection.

[56]

None of the decisions of this court since
Meditrust

(referred to in footnote 3 of these reasons) suggest that
Meditrust

rejected the second proposition in
Johnson
. Indeed, only one of
    the decisions (
Midland Resources
) involved a shareholder suing for a
    wrong done to the shareholder in circumstances where the corporation had no
    cause of action for that wrong. In
Midland

Resources
,
    this court held that the rule in
Foss v. Harbottle

did not
    apply in that circumstance:
Midland

Resources
, at
    para. 120.

(iii)

The Decision in
Robak Industries

[57]

The appellants reliance on
Robak Industries
is also misplaced.
Robak

Industries
involved
    shareholders suing for wrongs done to the corporation as well as for personal
    wrongs: see paras. 7-9. It did not involve the circumstance contemplated by the
    second proposition in
Johnson
and present in this case. In upholding
    the striking of certain portions of the claim on the basis of the rule in
Foss
    v. Harbottle
, including the claim for diminution in the value of shares,
    it was pivotal to the courts reasoning that the allegations included alleged
    wrongs done to the corporation for which the corporation could sue.

[58]

For example, Levine J.A. described the rule in
Foss
    v. Harbottle
as providing that only the company, not individual shareholders,
    may
sue for wrongs done to the company
 (emphasis added):
Robak
    Industries
, at para. 4. She concluded that the chambers judge did not err in
    striking the appellants claims as there was no basis in the law to conclude that
    the alleged wrongs to Getty [the corporation]

give rise to a cause of
    action on the part of either Mr. Lepinski or Robak [the shareholders], or
    permit Robak to claim as damages the loss of value in its shares of Getty:
Robak
    Industries
, at para. 5. In paraphrasing the chamber judges analysis, Levine
    J.A. noted that the diminution in the value of their shares of Getty was not
    an independent loss
in respect of the allegations of wrongdoing to Getty. Any
    loss suffered from wrongs to Getty was for Getty to claim
,
and any
    loss in the value of Gettys shares was not an independent loss but a loss
    suffered in common with all Getty shareholders (emphasis supplied):
Robak
    Industries
, at para. 15.

[59]

This reasoning was again underscored when Levine
    J.A. summarized her conclusions at para. 38:

The appellants arguments, based on the
    consideration of the rule in
Foss v. Harbottle
in other jurisdictions,
    does not reveal that the chambers judge made any error in striking out the
    portions of the Further Amended Statement of ClaimShe applied binding Canadian
    law, which has been considered and affirmed in a persuasive judgment of the
    Ontario Court of Appeal in
Meditrust
. In both [
Rogers v. Bank of
    Montreal
, [1985] 5 W.W.R. 193

(B.C.S.C.), affirmed [1987] 2 W.W.R.
    364

(B.C.C.A.)] and
Meditrust
, shareholders claimed losses in
    the value of their shares as the result of an alleged conspiracy against them
involving
    wrongs done to the company
,
and in both cases the claims were
    dismissed. The chambers judge did not decide, contrary to the appellants
    arguments, that a shareholder may
never
[emphasis in original] bring a
    claim for the diminution in the value of the shareholders shares, but confirmed,
    by reference to [
Hercules Management
] and

[
Haig v. Bamford

(1976), [1977] 1 S.C.R. 466], that a shareholder may have a cause of action
    for loss in the value of shares where the shareholder has both an independent
    relationship with the wrongdoer and an independent loss
from that of the
    company to whom the wrong has been done
.
She decided that in this
    case, the appellants had not shown that they have a cause of action for an
    "independent loss"
in respect of wrongs done to Getty
. I agree
    with her conclusion [emphasis added].

[60]

The shareholders claims in
Robak Industries
for diminution in share value flowed from wrongs allegedly done to the
    corporation and were therefore for the corporation to claim. The shareholders
    had not alleged any proper basis to claim that lossasserted as a claim for
    diminution in share valuepersonally. On those facts, the shareholders were
    wrong to assert that the second proposition in
Johnson
allowed them to
    claim diminution in share value. Any hesitation to accept
Johnson
as a
    statement of Canadian law in
Robak Industries

must be read in
    light of the facts there and the way it was sought to be used: see paras.
    27-28. The second proposition had no application; the facts fell within the
    third proposition, requiring the court to carefully separate claims that
    belonged to the corporation from claims that could be asserted by the
    shareholders personally.

[61]

The rationale expressed in
Robak Industries
as to why the shareholders  could not claim diminution in share value (lack of
    both an independent relationship with the wrongdoer and a loss independent of
    the loss caused by the wrong to the company) does not foreclose a shareholders
    claim in circumstances where the wrong done is only to the shareholder and the
    corporation has no cause of action. In those circumstances, there is both an
    independent relationship with the wrongdoer (hence the wrong done to the
    shareholder) and a loss that is independent of the loss to the corporation to
    whom the wrong was done (as there is no legal wrong done by the wrongdoer to
    the corporation).

(iv)

Conclusion on the Second Proposition

[62]

I therefore conclude that nothing in
Meditrust
nor this courts subsequent jurisprudence constitutes a rejection of the second
    proposition in
Johnson
or forecloses the claim that was advanced here.
    Nor do I view the decision in
Robak Industries
as warranting the
    rejection of the proposition in a case such as this one.

(d)

A Shareholder With a Proper Cause of Action May
    Sue a Wrongdoer for Diminution in Share Value When the Corporation Has No Cause
    of Action

[63]

It is a matter of semantics whether the second proposition
    in
Johnson
is a gloss on the rule in
Foss v. Harbottle
, an
    exception to the rule, or simply a statement of a circumstance beyond the
    rules application. The second proposition in
Johnson
should be treated
    as good law in Ontario. Where the wrong was not committed against the
    corporation and the corporation therefore has no cause of action, the rule in
Foss
    v. Harbottle
does not prevent a shareholder who has her own cause of
    action from suing for any damages properly recoverable under that cause of
    action, including, in appropriate cases, loss or diminution of share value.

[64]

This conclusion is entailed by the wording of
    the rule which, to repeat, is premised on precluding a personal action by a shareholder
    for a wrong done to the corporation.

[65]

It is also consistent with the rationale for the
    rule. When a shareholder sues because of a wrong done to her, and in the
    absence of a wrong to the corporation that gives the corporation a cause of
    action, allowing the shareholders action for any properly recoverable damages
    respects the separate legal identity of the corporation. The shareholder is
    pursuing her
own
cause of action, not a cause of action that belongs to a
    separate legal person (the corporation). Moreover, a claim for loss of share value
    is a claim for damage to the shareholders property (the shares), not a claim
    for anything that belongs to the corporation. Shares in a corporation are property
    of the shareholder, not of the corporation. As a general matter, the
    corporation is prohibited from owning its own shares:
BCE Inc. v. 1976 Debentureholders
,
    2008 SCC 69, [2008] 3 SCR 560, at paras. 34-35;
OBCA
, ss. 28(1)
    and 41;
Chevron Corp. v. Yaiguaje
, 2015 SCC 42; 3 S.C.R. 69, at para. 95.

[66]

Nor in permitting such a claim is there a risk
    of a multiplicity of proceedings as a result of the corporation and shareholder
    making the same claims. Where there has been a wrong to the shareholder, but
    not to the corporation such that the corporation has no cause of action, there can
    be no multiplicity of proceedings; the corporation cannot bring an action.

[67]

Finally, in these circumstances, a claim for
    diminution in share value is not simply a claim for loss that is reflective of
    the loss suffered by the corporation (for which the corporation, and only the
    corporation, can sue):
Meditrust
, at para. 42. When the corporation
    has no cause of action, the shareholder cannot be seen as pursuing a loss
    which would be made good if the companys assets were replenished through
    action [by the company] against the party responsible for the loss:
Johnson
,
    at p. 838. The claim for diminution in share value results from a relationship
    with the wrongdoer that is independent of any relationship the corporation had
    with the wrongdoer. For example, in this case, only Sang, and not 183, was in a
    contractual relationship with Bloorston. The loss is independent of any
    suffered by the corporation
as a result of a legal wrong done to the
    corporation
.

[68]

Accordingly, the rule in
Foss v. Harbottle
does not preclude a claim for diminution of share value when the shareholder
    has her own cause of action because of a wrong done to her, and the corporation,
    which suffered a loss but not because of a legal wrong done to it, has no cause
    of action.

[69]

This does not, of course, mean that in every
    such case damages for diminution in share value should be allowed. A claim for
    this head of damages is subject to all the same requirements of proof, causation,
    foreseeability, and quantification as a claim for any head of damages flowing
    from the wrong that grounds the shareholders cause of action. In the section
    below, I address Bloorstons argument that this head of damages was not
    reasonably foreseeable. I then address its argument about quantification.

(2)

Were Damages for Diminution in Share Value
    Reasonably Foreseeable?

[70]

Bloorston submits that the motion judge should have
    rejected the claim for diminution in share value in this case because it was
    not a reasonably foreseeable consequence of the termination of Sangs lease.
    Bloorston also submits that the motion judge failed to make a finding on the
    reasonable foreseeability of Sangs damages.

[71]

Damages for breach of a lease are reasonably
    foreseeable if (i) in the usual course of things, they arise fairly,
    reasonably, and naturally as a result of the breach of contract; or (ii) they
    were within the reasonable contemplation of the parties at the time of contract:
Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited
,
    2018 ONCA 519, at para. 36.

[72]

The lease in this case specified that the
    premises were for use as a restaurant. The original tenant under the lease was Sangs
    sister, who, like Sang, also operated a restaurant on the premises through a
    corporation. Additionally, the motion judge found that Bloorston and its
    predecessor were aware of and did not object to 183s occupation of the
    premises. Bloorstons demands for additional payments show that it was aware of
    the operation of a restaurant on the premises; indeed, the demands were
    addressed to Gingers, the name of the restaurant.

[73]

The test under the first branch of remoteness is
    objective:
Saramia
, at para. 38. That a restaurant operating on
    leased premises would cease to operate if the lease were wrongly terminated was
    reasonably foreseeable. If the tenant benefitted from the continuation of the
    lease and the operation of the restaurant, loss from the inability to continue
    in operation would arise in the usual course of things from a breach of the
    lease.

[74]

Bloorston does not argue that if Sangs property
    had been the restaurant business itself, that is, if she operated the
    restaurant directly as a sole proprietorship, the loss in value of that
    property would not have been a reasonably foreseeable consequence of the
    wrongful termination of the lease. Instead, Bloorston argues that the loss of
    share value was not reasonably foreseeable because it did not know that Sang
    owned the shares of the corporation that operated the restaurant.

[75]

I do not accept that distinction in the
    circumstances here. The requirement of reasonable foreseeability refers to the
    type of loss suffered:
Saramia
, at para. 36. As explained in
Saramia
,
    at para. 39:

The inquiry is whether, as a general matter
    and objectively viewed, [the type of loss suffered] is a type of loss that
    foreseeably and naturally arises according to the usual course of things from
    the breach of a commercial lease. One of the factors that could be used to
    define the foreseeable and natural types of losses recoverable upon breach of
    contract is the objective bargain inherent in the contract. In a commercial
    lease, the tenant's bargain is the use of the premises for trade or commerce

[76]

The fact that it was Sangs shares in the
    restaurant business that lost value due to the premature unavailability of the
    premises is not a different type of loss for the purposes of the reasonable
    foreseeability analysis. The type of loss suffered was damage to Sangs property
    caused by the premature non-availability of the restaurant premises that she
    leased. The fact that the diminished property was Sangs stake in the
    corporation operating the restaurant does not take the loss outside of the type
    that would naturally and ordinarily be expected to occur from the breach of
    this commercial lease.

[77]

Moreover, in this case, from the time of the
    lease, and from the time of the 2010 Agreement, a corporation operated the
    restaurant. As the motion judge found, 183s occupation and use of the premises
    was known, and was not objected to. Bloorston would not be able to complain if
    Sang claimed losses for the discontinuance of the restaurant business she
    operated herself; that her interest was as a shareholder does not take the loss
    out of the type that would have been in the reasonable contemplation of the parties
    at the time of contracting.

[78]

Although the motion judge did not use the words reasonably
    foreseeable, he did not award damages for a type of loss that was beyond those
    that were reasonably foreseeable. This is not a case where any alleged
    insufficiency of reasons in the court below prevents meaningful appellate
    review. I would not give effect to this ground of appeal.

(3)

Quantification of Damages

[79]

Bloorston argues that the motion judge should
    have deducted the sum of $137,227 from the value of Sangs shares. It points to
    183s financial statements and tax returns, which record this amount as a
    shareholder loan. It also points to a passage from Sangs sisters examination,
    which it says contains equivocal evidence about the terms on which the funds
    were advanced. It submits that the motion judge failed to deal with or
    reconcile this evidence with his finding that the amount was not a loan, or
    explain why, in light of the evidence, he nonetheless found Sang and her
    sisters evidence that the advance was not a loan to be credible. Finally, Bloorston
    submits that the motion judges findings that the advance did not bear interest
    and was not repayable did not mean that it was not a loan.

[80]

I would not give effect to these arguments. A
    motion judges findings of fact and mixed fact and law on a motion for summary
    judgment are entitled to deference:
Hryniak v. Mauldin
, 2014 SCC 7,
    [2014] 1 S.C.R. 87, at paras. 81-82. The motion judge clearly considered the
    issue of whether the advance was a loan owing to Sangs sister, and found that
    it was not based on evidence he considered credible from both Sang and her
    sister. He was not required to refer to all of the evidence in expressing his conclusion:
Hersey v. Hersey
, 2016 ONCA 494, at para. 13. There can be no
    suggestion that the motion judge overlooked or misapprehended the evidence. I also
    see no basis for the suggestion that even if the advance was not repayable as
    the motion judge found, it should still have been deducted in calculating
    shareholder value.

(4)

The Findings of Breach of Lease

[81]

Bloorston makes a number of arguments about the
    motion judges findings that its demands for increased Minimum Rent and
    Additional Rent were unjustified. It submits that the motion judge erred: in interpreting
    the lease and the 2010 Agreement as providing for fixed amounts of Minimum Rent
    rather than amounts based on square footage; in finding that the parties were
    bound to the amount of square footage specified in the 2010 Agreement or had
    operated on a shared assumption, giving rise to an estoppel by convention, that
    the square footage was 1,120 square feet as specified in the 2010 Agreement; and
    in finding that Bloorston was not entitled to change the method of allocation
    of property taxes as it did. Bloorston adds that the motion judges reasons
    were inadequate on each matter.

[82]

These arguments attack the motion judges interpretation
    of commercial agreements, which is subject to a deferential standard of review
    absent extricable legal error:
Sattva
Capital v. Creston Moly
,
    2014 SCC 53, [2014] 2 S.C.R. 633, at para. 55. No extricable legal error has
    been shown. They also attack the motion judges findings of fact and mixed fact
    and law, which are also entitled to deference. I am not satisfied that any
    palpable and overriding error has been shown. The motion judges reasons
    explain why he reached the conclusions that he did. I am not persuaded that any
    basis has been shown to justify appellate interference.

CONCLUSION

[83]

For these reasons, I would dismiss the appeal. If
    the parties are unable to agree on costs of the appeal, they may make written
    submissions, not exceeding three pages each, within ten days of the date of
    these reasons.

Released: M.L.B. July 6, 2020

B.
    Zarnett J.A.

I
    agree. M.L. Benotto J.A.

I
    agree. Thorburn J.A.

[1]
See
Business Corporations Act
, R.S.O. 1990,
    c. B.16, s. 92 (
OBCA
). Section 246 of the
OBCA
permits a shareholder, in some
    circumstances, to pursue a derivative action in the name of and on behalf of
    the corporation when the directors of the corporation are unwilling to bring
    the action. When a derivative action is authorized, it is still the
    corporations cause of action that is pursued for the benefit of the
    corporation. The issue in this appeal is whether the respondent had a
personal
cause of action for diminution in share value.

[2]
The motion judge noted that Sang did not bring a cross-motion for
    summary judgment. He proceeded on the basis that he was permitted to grant
    judgment in favour of Sang because of this courts decision in
Hunter-Rutland Inc. v. Huntsville (Town of),
2015 ONCA 353, at para. 5.

[3]
Bloorston points to
Malata
    Group (HK) Ltd. v. Jung
, 2008 ONCA 111, 89 O.R. (3d) 36;
Harris v. Leikin Group Inc.
, 2014 ONCA
    479, 120 O.R. (3d) 508;
Rea v. Wildeboer
,
    2015 ONCA 373, 126 O.R. (3d) 178;
Midland
    Resources Holding Limited v. Shtaif
, 2017 ONCA 320, 135 O.R. (3d) 481,
    leave to appeal refd, [2017] S.C.C.A. No. 246;
Yaiguaje v. Chevron Corporation
,
    2018 ONCA 472, 141 O.R. (3d) 1, leave to appeal refd, [2018] S.C.C.A. No. 255;
    and
SFC Litigation Trust
.


COURT OF APPEAL FOR ONTARIO

CITATION: Woods v. Jackiewicz, 2020 ONCA 458

DATE: 20200713

DOCKET: C66929

Juriansz, Pardu and Huscroft
    JJ.A.

BETWEEN

Kelsey
    Woods, a person under disability by her litigation guardian, Michael Woods,
    Karli Woods, Bernice Booth,
and Michael Woods, personally

Plaintiffs (Respondents)

and

Dr. Allan Jackiewicz
and Dr. Ronit Mesterman

Defendants (
Appellant
)

Thomas J. Curry,
Mitchell
C. Brown, Mark Veneziano, Dena
    Varah and Robert Trenker, for the
appellant

Christopher Morrison
and
Paul Cahill, for the respondents

Heard: June 19, 2020 by video conference

On appeal from the judgment of Justice Clayton Conlan of the Superior
    Court of Justice, sitting with a jury, on April 12, 2019.

Pardu
    J.A.:

I.

Overview

[1]

The appellant physician appeals from an award of
    damages against him for negligent management of a twin pregnancy following a
    jury trial. He does not challenge the jury finding that he did not meet the
    standard of care, but he submits that the jury verdict on causation was
    unreasonable. He says there was a critical gap in the evidence on causation. He
    says further, that the trial judge ought to have instructed the jury that it
    could draw an adverse inference against the respondents because they did not
    call a witness to deal with the gap the appellant identifies in the evidence.
    He submits that the charge to the jury was inadequate, unbalanced and contained
    errors. He submits that, although the trial judges instruction on causation
    was legally correct, the trial judge erred in failing to further explain that a
    mere loss of chance to avoid an injury that does not satisfy the but for test
    does not establish causation.

[2]

I do not accept these arguments and would
    dismiss the appeal.

II.

Factual background

[3]

Ms. Booth was pregnant with twins. She saw the
    appellant for an unscheduled appointment on July 5, 1991, as she was
    experiencing severe abdominal pain and excessive weight gain. The appellant
    sent her home to rest. When the symptoms became worse, she went to Niagara
    Hospital on July 7 which arranged for her immediate transfer by ambulance to
    McMaster Hospital. By then, her cervix was two or three centimetres dilated.
    Doctors there delivered the babies by emergency C-section at 27 weeks into the
    pregnancy. As a result of the premature birth, one of the twins, Kelsey Woods,
    sustained brain damage.

[4]

The jury found that the appellant was negligent
    for, among other things, failing to arrange for her to be seen immediately by a
    perinatologist  a fetal medicine specialist  on July 5. The theory of the respondents
    case was that if she had been seen on July 5, 1991 by specialists at a tertiary
    center with expertise in high-risk pregnancies, like McMaster Hospital, then the
    Twin-to-Twin Transfusion Syndrome (TTTS) imperilling the babies would have
    been detected and treated, and the premature delivery and the brain damage to
    Ms. Woods would have been avoided.

[5]

TTTS is a rare complication of twin pregnancies.
    One twin gets too much fluid, while the other gets too little. The twin getting
    excess fluid continues to urinate, creating a large volume of amniotic fluid
    around it. This large volume of fluid compresses the other twin who gets less and
    less fluid. Untreated, this condition is usually fatal for both. The respondents
    experts testified that there was effectively only one treatment in 1991:
    amnioreduction, a procedure where a needle is inserted into the amniotic cavity
    to remove some of the excess fluid. If this was not possible, the only other
    option was an emergency C-section, which at this gestational age could have
    catastrophic consequences.

[6]

The matter went to trial in 2019. It was a
    two-issue case:

1.

Did the appellant breach the standard of care?

2.

If yes, did his breach of the standard of care cause the brain
    damage that Ms. Woods sustained because of her premature birth?

[7]

The jury answered, yes, to both questions. As
    indicated above, the appellant does not challenge the jurys conclusion that he
    breached the standard of care and limits his appeal to issues related to
    causation.

Evidence and arguments relating to the respondents
    theory of causation

[8]

Ms. Booth would have gone to McMaster Hospital,
    at least initially, had she been referred to specialists on July 5. The
    causation issues related to the availability of effective treatment for TTTS at
    McMaster Hospital at that time.

[9]

Dr. Barrett, an expert in management of twin
    pregnancies called by the respondents, testified that removal of excess fluid
    from the amniotic cavity was not a complicated procedure and that
[a]ny
    maternal-fetal medicine should do it.
He said it was first
    developed in the 1940s and became widespread in the 1980s and 1990s. If for some
    reason McMaster Hospital could not do it in order to treat TTTS, the patient
    could have been sent to Toronto for the procedure.

[10]

Dr. Barrett testified that in 40% of cases, this
    procedure would resolve the TTTS entirely, and allow the pregnancy to continue
    normally to term. In other cases, it would prolong the pregnancy, allow the
    twins more time to develop, and allow effective use of steroids. The use of the
    procedure would have immediate beneficial effect. Dr. Barrett testified that
    amnioreduction was a standard treatment of TTTS in 1991, noting, We were
    doing it all the time and I think the evidence is pretty clear that we knew it
    got better results than doing nothing. Dr. Barrett disagreed when it was
    suggested to him that the appellants expert Dr. Mundle would say that there
    was limited availability of amnioreduction, and that Ms. Booth would not have had
    the treatment if she had been referred to McMaster Hospital on July 5.

[11]

Dr. Barrett testified that TTTS develops rapidly
    and that the mothers presentation on July 5 would have been materially
    different from her condition on July 7.

[12]

Dr. Barrett testified that had amnioreduction
    been performed on July 5, the pregnancy would have been prolonged by about 5
    weeks, and in addition there was a further 40% likelihood that the TTTS would
    have resolved completely. According to other expert evidence, a five-week
    extension of the pregnancy would have avoided the brain damage.

[13]

Dr. Farine, another expert for the respondents, testified
    that in Hamilton they did amnios all the time, though he did not have direct
    knowledge of whether McMaster Hospital did amnioreduction to treat TTTS at the
    time. He testified that amnioreduction was generally used to treat pregnancies
    where the baby had too much fluid on board. When counsel put to him that Dr.
    Mundle would say that Ms. Booth would not have received amnioreduction if
    referred on July 5 or earlier because there was limited availability of
    amnioreduction in 1991, Dr. Farine disagreed. Dr. Farine responded,

[I]f youre
    perinatologist and you have two hands, you can do an amniocentesis. So each one
    of the perinatologists and probably some of the generalist[s] in Mac could have
    done it So in the 1991 there was no reason not to embark on it and its easy
    to do

[14]

The appellants expert, Dr. Mundle, ultimately
    said that his feeling was that McMaster Hospital did not offer amnioreduction
    for TTTS at that time. He explained that when he arrived in Ontario in 1997,
    McMaster Hospital was not doing it. However, by 1997 laser treatment for this
    condition had become available and was a more effective treatment.

[15]

The appellant distinguishes withdrawal of
    amniotic fluid for diagnostic purposes, amniocentesis, and withdrawal of
    amniotic fluid in single-baby pregnancies where there is too much fluid, from
    amnioreduction to treat TTTS. He submits that neither Dr. Farine nor Dr.
    Barrett were able to opine as to whether this treatment for TTTS was available
    at McMaster Hospital on July 5, 1991. Dr. Farine was familiar only with the
    practices at his own hospital. Dr. Barrett came to Canada after 1991, and when
    asked if he knew whether McMaster Hospital was offering the treatment for TTTS,
    he responded, I dont know exactly. I wasnt working there.  I would assume
    it couldve - it wouldve been. Its not a complicated procedure. Any
    maternal-fetal medicine should do it.

[16]

The appellant argues that without evidence from
    someone at McMaster Hospital that amnioreduction was available there for
    treatment of TTTS, the respondents case on causation had to fail. He says this
    absence of evidence amounted to a fatal gap in the respondents case and made
    the jury verdict on causation unreasonable.

[17]

The appellant introduced expert evidence
    supporting his position, but the jury did not accept that evidence. Since the
    appellant challenges the jury verdict on the ground that it was unreasonable,
    the focus on appeal is on whether there was evidence which could support the
    jurys decision.

The jury answers on causation

[18]

The jury answered yes to the question, If
    your answer to question 1 (a) [was there a breach of the standard of care?] is
    YES, have the plaintiffs satisfied you on the balance of probabilities that,
    but for the breach of the standard of care, [Ms. Woods] would not have
    sustained brain damage?

[19]

In response to the further question, how did [the
    appellants] breach of the standard of care cause [Ms. Woodss] brain damage?,
    the jury responded as follows:

We recognize that the breach of the standard
    of care may not be the sole, exclusive, or entire cause of the brain damage.
    However, we do believe there is a causal link between the breach in standard of
    care and the brain damage. The breach is Dr. Jackowitz [sic] failure to refer
    Ms. Booth to a perinatalogist [sic] or consult a perinatalogist [sic] on July
    5th.

In consequence,

- she did not receive specialist perinatal
    care in a timely fashion.

- this would have included an earlier
    diagnosis of TTTS.

- amnioreduction as a treatment for TTTS.

- timely
    administration of a full course of steroids to improve lung development.

III.

Issues

[20]

The appellant raises the following issues:

1.

Was the jurys verdict unreasonable because
    there was no evidentiary basis to support the jurys verdict on causation?

2.

Did the trial judges charge to the jury contain
    legal errors on the issue of causation that resulted in a substantial
    miscarriage of justice?

a.

Did the trial judge err by refusing to instruct
    the jury that they were permitted to draw an adverse inference from the
    respondents failure to call any witness from McMaster Hospital to give
    evidence on the availability of amnioreduction in 1991?

b.

Did the charge give disproportionate weight to
    the respondents experts or mischaracterize the expert evidence?

c.

Did the trial judge err by refusing to instruct
    the jury that a mere loss of chance is not compensable at law?

IV.

Analysis

(1)

Was the jurys verdict unreasonable because
    there was no evidentiary basis to support the jurys verdict on causation?

[21]

The appellant contends that there was an insufficient
    basis to conclude that his failure to refer Ms. Booth to a perinatologist on
    July 5 caused the premature birth and the brain damage. He argues that even if
    he had referred her, there was inadequate evidence that amnioreduction would
    have been performed at McMaster Hospital in a manner that would have avoided
    the injury.

[22]

The test for appellate interference with a jury
    verdict is high. As noted in
Parent v. Janandee Management Inc.
, 2017
    ONCA 922, at para. 26:

A high degree of
    deference is given by courts to jury verdicts. A civil jury's verdict should be
    set aside only where it is so plainly unreasonable and unjust that no jury
    reviewing the evidence as a whole and acting judicially could have arrived at
    the verdict.

[23]

Hourigan J.A. described the high degree of
    deference owed to jury verdicts in
Stilwell v. World Kitchen Inc.
,
    2014 ONCA 770, 327 O.A.C. 146, at para. 36:

The appropriate degree of judicial deference
    to be applied in the consideration of jury answers and verdicts was described
    by Laskin C.J.C. in his dissent in
Wade v. C.N.R.
, 1977 CanLII 194
    (SCC)
,
[1978] 1 S.C.R.
    1064
, at pp. 1069-1070
:

Appeal Courts
    do not fine-comb jury answers but accord them the respect of a common sense
    interpretation even where there may be some ambiguity in the answers. It is
    always timely to be reminded that juries do not write reasons for judgment, and
    their answers must be taken against the background of the evidence from which
    they are entitled to select, without manifesting their selection, what is
    credible, what is significant, what is persuasive to them. It is very often
    easy for an appellate Court, in the leisurely scrutiny of the transcript, to
    find significance in pieces of evidence to contradict jury findings, and in so
    doing to usurp the jurys function. What an appellate Court may believe from a
    reading of the transcript may be the very things which a jury disbelieved or believed
    in part only. It is one thing to interfere with a jurys verdict where there is
    simply no evidence to support its findings or to support a critical one; it is
    a different thing, and not to be encouraged, to interfere with its findings
    where there is evidence, however slight, on which they may be based, but where
    because of offsetting evidence a question of credit and weight arises. These
    are matters for the jury alone.

[24]

Here it was open to the jury to infer that had Ms.
    Booth been referred to McMaster Hospital on July 5, 1991, amnioreduction would
    have been performed to effectively treat the TTTS. McMaster Hospital was a
    tertiary centre specializing in high-risk or problem pregnancies. The jury
    could infer that the easy-to-perform treatment would have been administered,
    given that there was no other treatment available other than a potentially
    catastrophic early C-section. The respondents experts provided a basis from
    which the jury could infer that the TTTS would have been successfully treated at
    McMaster Hospital in 1991. The jury rejected the appellants experts feeling
    that amnioreduction was not offered at that time at McMaster Hospital. There
    may have been any number of reasons why the jury preferred the evidence of the respondents
    experts. It was open to them to do so and conclude that the treatment would have
    been administered and would have avoided the brain damage on the balance of
    probabilities.

[25]

Trial counsel for the appellant acknowledged
    this in his submissions to the jury when discussing Dr. Barretts evidence with
    them:

He maintained the
    position that amnioreduction would have been done and would have extended the
    pregnancy on five - for five weeks. And thats what you must accept if you, if
    you are going to accept that causation has been proven, but Im going to urge
    you not to accept that. Im going to urge you not to accept the opinion of Dr.
    Barrett for six reasons.

(2)

Did the trial judges charge to the jury contain
    legal errors on the issue of causation that resulted in a substantial
    miscarriage of justice?

[26]

The appellant argues that the jury charge
    contained multiple significant misdirections and non-directions that together
    amounted to a substantial miscarriage of justice.

(a)

Did the trial judge err by refusing to instruct the
    jury that they were permitted to draw an adverse inference from the
    respondents failure to call any witness from McMaster Hospital to give
    evidence on the availability of amnioreduction in 1991?

[27]

The trial judge did not err in deciding not to
    instruct the jury that they could draw an adverse inference from the failure of
    the respondents to call a witness from McMaster Hospital to testify about whether
    amnioreduction was used to treat TTTS at the time. Either party could have
    called that evidence if they thought it was important: see
Lambert v. Quinn
,
1994 CanLii 978 (ONCA), 110 D.L.R.
    (4th) 284, at pp. 287-88.

(b)

Did the charge give disproportionate weight to the
    respondents experts or mischaracterize the expert evidence?

[28]

The appellant submits that significantly more
    space in the jury charge was devoted to the respondents evidence, even though
    the cases at trial for the appellant and the respondents were nearly equal in
    length. In particular, the summary did not include the cross-examination of Dr.
    Barrett.

[29]

The appellant further submits that the jury
    charge misrepresented the evidence by describing Dr. Farine as testifying that [a]mnioreduction
    was available in Hamilton in 1991, when Dr. Farine only testified that McMaster
    Hospital would have been technically capable of performing amnioreduction, not
    that it was actually being performed there at that time to treat TTTS. Similarly,
    the appellant submits that the trial judge misdescribed Dr. Barretts evidence
    as being that [a]mnioreduction was available at the time, when his actual
    opinion was that McMaster Hospital could have and should have performed
    amnioreduction in 1991, not that it would do so. The appellant asserts these
    statements were misleading and do not reflect the fact that neither expert was
    present at McMaster Hospital and they could not directly attest to whether
    amnioreduction was being performed at McMaster Hospital in 1991 to effectively
    treat TTTS.

[30]

I do not accept these submissions. In my view, the
    jury charge was fair and balanced. There is no sense that the trial judge put
    his thumb on one side or another of the scale. He did not unfairly
    mischaracterize the evidence.

[31]

The trial judge did not review the evidence in
    great detail and he told the jury that his references to the evidence would be
    brief. There were seven days of evidence. Counsel for the appellants closing
    submissions lasted about 3.5 hours. The respondents addressed the jury for
    about 1.5 hours. The jury charge was given the day after submissions. The trial
    judge told the jury, we have heard two very thorough, well-prepared, very
    well-presented addresses on both sides, and he thanked all counsel who had
    provided closing addresses. He told the jury This case has been presented to
    you in a fair and thorough manner.

[32]

While some judges might have reviewed the
    evidence in more detail, I cannot conclude that the trial judge erred in his
    approach to the review of the evidence. He had to decide what was required to
    enable the jury to assess the evidence in light of the course the trial had
    taken. I am not persuaded that the jury was not equipped to make a decision
    about the conflicting evidence on causation.

[33]

As noted in
Surujdeo v. Melady
, 2017
    ONCA 41, 410 D.L.R. (4th) 538, at para. 82:

The adequacy of a
    jury charge on a particular issue is not assessed by comparing the number of
    words the trial judge devoted to the issue as compared to others.
Indeed,
    brevity in a jury charge is desired
:
R. v. Daley
,
2007 SCC
    53
,
[2007]
    3 S.C.R. 523
, at para.
56. Rather, the
    extent to which a judge must review the evidence depends upon the particular
    case. The test is one of fairness. The charge will be adequate when the judge
    puts the evidence to the jury in a manner that will allow it to fully
    appreciate the issues and the defence presented:
R. v. Rodgerson
,
2015 SCC
    38
,
[2015]
    2 S.C.R. 760
, at para. 30
. [Emphasis
    added.]

[34]

Accordingly, an appeal court must assess the
    adequacy of a charge in the context of the entire trial and ask if the jury
    would have understood the issues of fact, the relevant legal principles, how
    the facts related to the law, and the positions of the parties: see
Caza v.
    Kirkland and District Hospital
,
2003
CanLII
    39169 (ON CA)
,
172 O.A.C. 388
, at para. 34
.

[35]

Following delivery of the jury charge, counsel
    for the appellant asked that excerpts of the cross-examination of Dr. Barrett
    be given to the jury so that they could look at them while deliberating,
    together with copies of documents the appellant had used as demonstrative aids
    during the closing address to lend force and clarity to his arguments. The trial
    judge acceded to this request, over the objections of the respondents, even
    though it gave relative added weight and prominence to the appellants
    arguments with the jury. There is no reason to believe that the jury did not
    have all the information the appellant thought important. The jury deliberated
    for just over one day. They had the written charge with them in the jury room.

[36]

As for mischaracterization of the expert
    evidence, I am satisfied that the statements challenged by the appellant, when
    read in their full context, would not have misled the jury. It would have been
    clear to the jury that Dr. Barrett and Dr. Farine were not at McMaster Hospital
    in 1991, and that their views were not based on direct knowledge. It would have
    been clear that their views arose from the opinion that, in 1991, use of a
    needle to remove amniotic fluid was a relatively simple and well-known
    procedure, and it was the only option for TTTS.

[37]

The trial judges description of Dr. Barretts
    and Dr. Farines evidence was comparable to his summary of Dr. Mundles
    evidence:

Dr. William Mundle, an expert
    witness, testified that amnioreduction was experimental in the early 1990s. His
    feeling is that it was not available at McMaster in 1991.
His opinion
    is that even if [Ms. Booth] had been transferred to McMaster before July 7,
    1991, even as early as June 27th, or on July 5th, the result would likely have
    been the same. No amnioreduction would have been offered. No full dose (48
    hours) of steroids would have been administered.
An emergency c-section
    would have been performed.

[38]

The trial judge did not qualify this summary of
    Dr. Mundles views with a warning that Dr. Mundle lacked direct experience of
    McMaster Hospital in 1991. Dr. Barretts and Dr. Farines views were no more
    overstated than Dr. Mundles. Dr. Barrett and Dr. Farine, like Dr. Mundle, provided
    opinions on the availability of amnioreduction at McMaster Hospital in 1991
    based on their medical knowledge, experience, and training, not direct
    knowledge of the Hospital at the time. This was abundantly clear to the jury,
    who had recently heard during the trial that none of these experts were at
    McMaster Hospital in 1991.

(c)

Did the trial judge err by refusing to instruct the
    jury that a mere loss of chance is not compensable at law?

[39]

The trial judges instruction on causation was
    legally correct:

Causation is
    established where the Plaintiffs prove on a balance of probabilities that the
    Defendant doctor caused the injury. The test you must apply is the but for
    test, which requires the Plaintiffs to show on a balance of probabilities that
    the injury, the brain damage (cerebral palsy), would not have occurred but for
    the breach of the standard of care by [the appellant].

He told the jury what proof on the
    balance of probabilities meant:

When I say that a
    party has the burden of proof of satisfying you of something, this means that
    you must be persuaded of that proposition on a balance of probabilities. That
    means more likely or more probable than not.

[40]

No one had suggested that a mere loss of a
    chance to avoid injury was sufficient to establish causation. The appellant
    does not claim that a lost chance standard was put to the jury, or that the
    correct standard was not conveyed. He points only to the complexity of the case
    and the centrality of causation as reasons why this further direction was
    necessary.

[41]

I see no error in the trial judges decision to
    refrain from embarking on a discussion of loss of chance, which would have
    risked adding unnecessary complexity and confusing the jury.

[42]

Overall, I am not persuaded that there was any
    material misdirection or non-direction by the trial judge that warrants
    appellate intervention.

V.

Disposition

[43]

Accordingly, I would dismiss the appeal.

[44]

Counsel may make brief written submissions as to
    the costs of the appeal, due from the respondents within 15 days following the
    release of these reasons, and from the appellant within 10 days thereafter.

Released: July 13, 2020

RGJ

G.
    Pardu J.A

I
    agree R.G. Juriansz J.A.

I
    agree Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 7550111 Canada Inc. v. Charles,
    2020 ONCA 505

DATE: 20200807

DOCKET: C67479

Rouleau, van Rensburg and Roberts
    JJ.A.

BETWEEN

7550111 Canada Inc.

Plaintiff (Respondent)

and

Natalie Charles

Defendant (Appellant)

Kevin Sherkin, for the appellant

Doug Bourassa, for the respondent

Heard: in writing

On appeal from the judgment of Justice Dale F.
    Fitzpatrick of the Superior Court of Justice dated August 29, 2019.

COSTS ENDORSEMENT

[1]

In our reasons for judgment, we invited the parties
    to make written submissions concerning the quantum of the judgment and the
    scale and quantum of the appeal costs, if the parties could not agree on these
    issues.

[2]

The parties have agreed that the correct amount
    of the judgment as at August 29, 2019 is $164,363.76. However, the parties have
    not achieved consensus concerning the disposition of the appeal costs. The
    respondent, as the successful party on the appeal, claims its costs on a full
    indemnity basis in the amount of $20,866.02. The appellant has not filed costs
    submissions although granted an extension until July 31, 2020 to do so.

[3]

According to s. 8 of the standard charge terms
    that formed part of the subject mortgage, the respondent is entitled to its
    full indemnity costs that it has incurred to recover the amounts owing under the
    mortgage in issue. These include appeal costs. We see no basis to depart from
    the parties contractual arrangement.

[4]

Notwithstanding the contractually agreed upon
    scale of costs, the quantum of the respondents costs must be fair, reasonable
    and proportionate having regard to the circumstances of the case:
Boucher
    v. Public Accountants Council for the Province of Ontario
(2004), 71 O.R.
    (3d) 391, [2004] O.J. No. 2634 (C.A.), at paras. 24 to 26.

[5]

In our view, the circumstances of the case
    justify the amount of costs requested by the respondent. While there has never
    been a serious issue that the claimed advances were made to the appellant, the respondent
    was obliged to respond to the other myriad factual and legal issues put forward
    by the appellant, including the repeated and unfounded allegations of fraud and
    the new issue of criminal interest rate that was raised for the first time on
    appeal.

[6]

As a result, the fair, reasonable and
    proportionate amount of appeal costs that the appellant must pay to the respondent
    is $20,866.02, inclusive of disbursements and applicable interest.

Paul Rouleau
    J.A.

K.
    van Rensburg J.A.

L.B. Roberts
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:

Aurora (Town) v. Lepp, 2020
    ONCA 528

DATE: 20200825

DOCKET: C67682

Huscroft, Zarnett and Coroza
    JJ.A.

BETWEEN

The Corporation of the Town of Aurora

Applicant
    (Appellant)

and

Robert
    Lepp

Respondent (Respondent)

Charles A.
    Painter, for the appellant

Robert
    Lepp, acting in person

Heard: July 22,
    2020 by video conference

On appeal from the judgment of Justice Mark L. Edwards of the Superior
    Court of Justice, dated October 17, 2019, with reasons reported at 2019 ONSC
    6041, and from the costs order, dated December 11, 2019.

REASONS FOR DECISION

A.

OVERVIEW

[1]

In December of 2018, Robert Lepp, the
    respondent, issued a 27-page Statement of Claim in the Superior Court of
    Justice against several parties including the appellant, the Corporation of the
    Town of Aurora (Aurora). In that claim, Mr. Lepp asserted (among other
    things) that numerous parties, including Aurora, had committed the torts of
    false arrest, false imprisonment, misfeasance in public office, and malicious
    prosecution. In addition to the Superior Court claim, Mr. Lepp had also
    initiated several other claims in the Small Claims Court.

[2]

Aurora brought an application before the Superior
    Court of Justice seeking that Mr. Lepp be declared a vexatious litigant
    pursuant to s. 140(1) of the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43 (the
CJA
). Aurora also brought a motion to have Mr. Lepps claim
    dismissed under r. 2.1.01 of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194 (the
Rules
), as being a proceeding that appears on
    its face to be frivolous or vexatious or otherwise an abuse of the process of
    the court."

B.

THE APPLICATION JUDGES DECISION

[3]

The application judge heard the matters together.
    On October 17, 2019, he provided written reasons dismissing Auroras
request
to declare Mr. Lepp a vexatious litigant and
    refusing to dismiss the entire action under r. 2.1.01. The application judge
    permitted Mr. Lepps action to continue, but he streamlined the claim by
    striking out many paragraphs without leave to amend. In the end, the
    application judge concluded that the claim contained the necessary components of
    false arrest, false imprisonment, and misfeasance in public office, such that,
    it could proceed.

[4]

The application judge seized himself of the
    matter in order to case manage the action. He imposed several conditions on Mr.
    Lepp. Of significance, he prohibited Mr. Lepp from initiating any further
    motion, action or proceeding against Aurora, its elected officials, employees,
    former employees or legal counsel, without first obtaining leave of the court.

[5]

Both parties sought their costs on the
    application and the motion. The application judge encouraged the parties to
    come to an agreement as to costs. The parties could not reach an agreement.
    After reviewing their submissions, the application judge viewed success as
    divided and held that neither party was entitled to costs.

C.

ISSUES ON APPEAL

(1)

Auroras Submissions

[6]

On appeal, Aurora argues that the application
    judge erred by:

(1)

failing to declare Mr. Lepp a vexatious litigant pursuant s. 140(1)
    of the
CJA
;

(2)

failing to dismiss Mr. Lepps claim under r. 2.1.01 of the
Rules
;

(3)

displaying a reasonable apprehension of bias during the hearing; and

(4)

failing to order that Aurora should receive full indemnity costs in
    the amount of $30,668.07.

[7]

Aurora also brings a motion to adduce fresh
    evidence. The fresh evidence consists of an affidavit that summarizes several
    events that occurred after the application was heard. These events include
    negative findings against Mr. Lepp made by several judges in unrelated
    proceedings and a finding of contempt made by the application judge.

(2)

Mr. Lepps Submissions

[8]

In response, Mr. Lepp contends that the
    application judge did not make any of the alleged errors. He denies that he is
    a vexatious litigant and he takes a very different view of the events that are
    summarized in Auroras fresh evidence affidavit. He asserts that many of the
    claims made against him in the affidavit are false.

[9]

Mr. Lepp has also brought his own fresh evidence
    application. In his application, he seeks to adduce evidence that one of the
    parties he has sued (an employee of Aurora) was previously married to the
    Deputy Chief of the York Regional Police and that this relationship influenced
    the police to arrest him.

[10]

For the following reasons, we dismiss Auroras
    appeal with respect to the application judges refusal to declare Mr. Lepp a
    vexatious litigant and his refusal to dismiss the entire action under r. 2.1.01.
    We also dismiss both motions to adduce fresh evidence. However, we grant leave
    to appeal costs. We agree with Auroras submission that the application judge
    erred in depriving Aurora of costs on the basis that success was divided.
    Aurora achieved overall success in the court below and should have received its
    costs.

D.

ANALYSIS

(1)

Vexatious Litigant Designation  s. 140(1) of
    the
CJA

[11]

Courts have a broad discretion to control their processes
    and to make appropriate orders where vexatious proceedings have been instituted
    or proceedings have been conducted in a vexatious manner:
Peoples Trust Co.
    v. Atas
, 2019 ONCA 359, at para. 5. Section 140(1) provides a process that
    can bar a party from commencing or continuing litigation except upon obtaining
    leave of the court. Section 140(1) reads as follows:

140(1) Where a judge of the Superior
    Court of Justice is satisfied, on application, that a person has persistently
    and without reasonable grounds,

(a) instituted vexatious
    proceedings in any court; or

(b) conducted a proceeding in any
    court in a vexatious manner,

the judge may order that,

(c) no further proceeding be
    instituted by the person in any court; or

(d) a proceeding previously
    instituted by the person in any court not be continued,

except
    by leave of a judge of the Superior Court of Justice.

[12]

Auroras primary submission on this appeal is
    that the trial judge erred in refusing to make the s.140(1) designation by focusing
    exclusively on whether there was a tenable cause of action in Mr. Lepps
    statement of claim. That focus, Aurora argues, led the application judge to
    ignore the troubling and vexatious conduct of Mr. Lepp in other proceedings and
    to erroneously characterize the other Small Claims Court proceedings as duplicative
    of the statement of claim, when, in fact, they were different claims, unrelated
    to the claim before the application judge.

[13]

We do not accept Auroras argument for several
    reasons.

[14]

First, the application judge properly focused on
    the Statement of Claim in his written reasons because one of the essential
    aspects of Auroras argument was that Mr. Lepps action was vexatious and
    abusive. Therefore, in assessing whether Mr. Lepp had instituted a vexatious
    proceeding against Aurora under s. 140(1)(a) of the
CJA
, the
    application judge was required to examine the claim and determine whether the
    pleadings were vexatious.

[15]

Second, although the judge may have mistakenly
    referred to the Small Claims Court proceedings as duplicative of the claim
    before the court, this error is of no moment. The application judge turned his
    mind to these proceedings, at para. 44 of the reasons, and noted that Mr.
    Lepp agreed that they should be dismissed. Whether the claims related to
    different matters or the same matter is irrelevant. After securing an
    undertaking that Mr. Lepp would abandon those proceedings, the application
    judge noted that Mr. Lepp would only have one claim left against Aurora in the
    Superior Court. Indeed, the application judge imposed a condition on Mr. Lepp
    that his proceeding could not continue in the Superior Court until he fulfilled
    his undertaking that the actions in the Small Claims Court would be disposed of
    by way of a dismissal order and that any costs awarded in that court against
    him shall be paid prior to his continuing with the action.

[16]

Finally, contrary to Auroras submission, the
    application judge did not ignore Mr. Lepps conduct in the proceeding. The
    application judge noted that Mr. Lepp had conducted himself in a troubling
    matter and indicated that this type of conduct would not be tolerated by the
    court.

[17]

Rather than designating Mr. Lepp a vexatious
    litigant under s. 140(1) of the
CJA
, the application judge concluded
    that aggressive case management of the proceeding would achieve the most
    expeditious, just, and least expensive determination of the merits of the
    litigation. He explicitly stated his intention to ensure that Mr. Lepp
    conducted himself throughout the ongoing litigation in a manner that is
    consistent with how civil litigation should be conducted. We see no basis to
    interfere with his decision.

(2)

Rule 2.1.01 Motion

[18]

Having dismissed Auroras application under s. 140(1)
    to designate Mr. Lepp as a vexatious litigant, we also see no basis to
    interfere with the decision to permit Mr. Lepps action to proceed, albeit in a
    streamlined form. Aurora sought to terminate the entire action by resorting to
    r. 2.1.01, on the basis that the entire claim was frivolous, vexatious, or an
    abuse of process.

[19]

This court has held that the use of r. 2.1 is
    not for close calls and should be limited to the clearest of cases where the
    abusive nature of the proceeding is apparent on the face of the pleading and
    there is a basis in the pleadings to support the resort to the attenuated
    process:
Scaduto v. The Law Society of Upper Canada
, 2015 ONCA 733,
    343 O.A.C. 87, at paras. 7-9, leave to appeal refused, [2015] S.C.C.A. No. 488.
    This court has also stressed that judges should be cautious about allowing
    parties to have recourse to r. 2.1, except where it is plain and obvious on
    the face of the pleading that the action is frivolous, vexatious or an abuse
    of process:
Khan v. Law Society of Ontario
, 2020 ONCA 320, at para. 15.

[20]

The application judge carefully examined Mr.
    Lepps claim. He recognized that although some of the allegations and pleadings
    were outrageous and should be struck, there were pleadings with respect to the
    torts of false arrest, false imprisonment, and misfeasance in public office
    that a court could recognize as legitimate, even if Mr. Lepps conduct was
    troubling. In our view, the application judge properly took a cautious approach
    and we see no error in his decision to permit Mr. Lepps action to proceed to
    the extent he did.

(3)

Reasonable Apprehension of Bias

[21]

Aurora claims that the application judge
    displayed a reasonable apprehension of bias by refusing to designate Mr. Lepp as
    a vexatious litigant and not awarding Aurora costs. We reject this submission
    as devoid of merit. Allegations of judicial bias should not be made lightly.
    The application judge, like all judges, benefits from a strong presumption of
    judicial fairness, impartiality, and integrity that is not easily displaced:
Neufeld
    v. Neufeld
, 2020 ONCA 395, citing
R. v. S.(R.D.)
, [1997] 3
    S.C.R. 484, at paras. 31-32. There is nothing in the record that can be seen as
    evidence of prejudgment or bias on his part.

(4)

Costs

[22]

In his written reasons, the application judge
    encouraged the parties to resolve the issues of costs given what some might
    perceive as a measure of divided success. The parties could not agree, and they
    filed submissions.

[23]

After reviewing the costs submissions, the
    application judge subsequently released a very brief endorsement. In that
    endorsement, the application judge reiterated that success was divided, and he
    awarded no costs to either party.

[24]

With respect, the application judge erred in denying
    Aurora costs on the basis that success was divided. Although Mr. Lepps action
    was permitted to proceed and he was not declared a vexatious litigant, the
    application judge disregarded Auroras overall success: see
Wesbell Networks
    Inc. v. Bell Canada,
2015 ONCA 33, at para. 21. The practical effect of
    the application judges decision is that Mr. Lepps claim has been trimmed down
    considerably and there is a condition that restricts him from initiating any
    further motion, action, or proceeding against Aurora, its elected officials,
    employees, former employees, or legal counsel, without first obtaining leave of
    this court. Although it did not obtain the designation it sought under s. 140(1),
    Aurora was, nevertheless, the more successful party because it obtained
    aggressive case management of a pared-down claim as well as an order restricting
    further litigation. Therefore, Aurora was entitled to its costs of the application.

[25]

We will now consider the appropriate scale of
    costs. In its costs submissions, Aurora had requested full indemnity costs in
    the amount of $30,668.07. Aurora argued that Mr. Lepps conduct was so
    reprehensible and outrageous that it justified a departure from the general rule
    that partial indemnity costs are awarded to the successful party. We disagree. We
    see no basis to depart from the general rule. Although Aurora had greater
    success given the orders obtained, we note that the application judge did not
    ultimately grant the s. 140(1) designation or the r. 2.1.01 motion in its
    entirety.

[26]

Having reviewed the costs outlines and the
    factors set out in r. 57 of the
Rules
, we fix the costs below at
    $15,000, inclusive of fees, disbursements, and applicable taxes.

(5)

Fresh Evidence

[27]

During the hearing of this appeal, the parties
    advised the court that they had agreed not to object to the respective motions
    to adduce fresh evidence. However, the admissibility of fresh evidence is a
    matter for the panel hearing the appeal.

[28]

Under s. 134(4)(b) of the
CJA
, this
    court may, in a proper case  receive further evidence. In
Ojeikere v.
    Ojeikere
, 2018 ONCA 372, 140 O.R. (3d) 561, at para. 46, Laskin J.A. noted
    that, in civil cases, this court has used two separate tests to determine the
    admissibility of fresh evidence, although they are not materially different: (1)
    the test in
Palmer v. The Queen
, [1980] 1 S.C.R. 759 (typically used
    in criminal appeals); and (2) the test established in
Sengmueller v.
Sengmueller
(1994), 17 O.R. (3d) 208 (C.A.).

[29]

The evidence proposed by both parties does not
    meet either test and we are not persuaded that the proposed evidence from
    either party should be received. Therefore, both motions to introduce fresh
    evidence are dismissed.

[30]

Auroras motion to adduce fresh evidence relates
    to events that occurred after the hearing of the application and motion below.
    The fresh evidence consists of an affidavit that summarizes court proceedings
    and events that portray Mr. Lepp in a negative light. For example, it appears
    that Mr. Lepp filed a motion against Aurora, contrary to the order of the
    application judge, because legal counsel for Aurora did not pass along his messages
    to employees. The fresh evidence also reveals that the application judge has
    subsequently found Mr. Lepp in contempt for violating a condition prohibiting
    him from contacting the Superior Court until the resolution of this appeal.

[31]

Given the nature of the fresh evidence, we are
    not persuaded that this proposed evidence would have affected the result (
Palmer
,
    at p. 775) or would likely be conclusive of an issue in the appeal (
Sengmueller
,

at
    pp. 210-11
). As we have noted above, the application judge was
    clearly alive to Mr. Lepps troubling conduct and his tendency to abuse the
    court process. The application judge attempted to achieve an appropriate
    balance at controlling Mr. Lepps conduct and permitting him access to justice
    by allowing a streamlined version of his claim to proceed.

[32]

The fresh evidence would not have changed his
    approach.

[33]

We also dismiss Mr. Lepps motion to have the
    panel consider fresh evidence that he has discovered. Specifically, that one of
    Auroras employees may have been married to the Deputy Chief of the York
    Regional Police and that this relationship influenced the police to arrest him.
    The evidence is not relevant or germane to the issues that the application judge
    had to consider.

E.

DISPOSITION

[34]

Claims relating to vexatious litigants are not
    easy to resolve. In our view, the application judge struck the appropriate
    balance. Auroras appeal in relation to the s. 140(1) application and r. 2.1.01
    motion is dismissed. We grant Aurora leave to appeal the decision on costs, and
    Aurora is entitled to its costs below on a partial indemnity basis. We fix
    those costs at $15,000, inclusive of fees, disbursements, and applicable taxes.

[35]

The parties also made submissions as to costs of
    this appeal. Aurora claims $5,000 for costs on the appeal and Mr. Lepp claims
    $10,000. In our view, success is divided. Mr. Lepp is successful on the
    substantive appeal. However, Aurora has succeeded on its costs appeal.
    Therefore, we award no costs for the appeal.

[36]

Before leaving this matter, we encourage Mr.
    Lepp to focus his attention on the claim that is before the court in Newmarket.
    As we have noted, the application judge imposed a number of conditions on Mr.
    Lepp to ensure that the action moves forward in an orderly fashion. Mr. Lepp
    would be well advised to take advantage of the application judges decision to
    case manage this proceeding and to ensure that the matter proceeds to finality.

Grant
    Huscroft J.A.

B.
    Zarnett J.A.

S. Coroza
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Becker v. Walgate, 2020 ONCA 526

DATE: 20200821

DOCKET: C66924

Rouleau, Hoy and Hourigan JJ.A.

BETWEEN

Martha Leeanne Becker and Jason
    John Becker

Applicants/Plaintiffs (Respondents)

and

Walter Eddy Walgate

Respondent/Defendant (Appellant)

Izaak de Rijcke and Robert J. Fenn, for
    the appellant

Jeffrey D. Ayotte and Michael W.
    Gunsolus, for the respondents

Heard: In writing, with questions by video
    conference on July 2, 2020

On appeal from the order of Justice J.
    Christopher Corkery of the Superior Court of Justice, dated April 11, 2019,
    with reasons reported at 2020 ONSC 2342, 6 R.P.R. (6th) 100, and the costs
    order dated August 30, 2019

COSTS ENDORSEMENT

[1]

The appellants are entitled to their costs of the
    appeal in the agreed upon, all-inclusive amount of $15,000.

Paul
    Rouleau J.A.

Alexandra
    Hoy J.A.

C.W.
    Hourigan J.A.