COURT OF APPEAL FOR ONTARIO

CITATION: Scala v. Toronto (Police Services Board), 2021 ONCA
    297

DATE: 20210505

DOCKET: C66893

Feldman, Harvison Young and Thorburn JJ.A.

BETWEEN

Felice Scala
and Catarina Scala

Appellant

and

Toronto Police Services
    Board, Detective Todd Hall, Police Officer(s) John Doe and Police Officer(s) Jane
    Doe

Respondents

Jonathan Shulman, for the
    appellant

Douglas O. Smith and Sarah
    Sweet, for the respondents

Heard and released: April 16, 2021 by videoconference

On appeal
    from the judgment of Justice Andrew A. Sanfilippo of the Superior Court of
    Justice, dated July 18, 2019, with reasons reported at 2019 ONSC 2239 and 2019
    ONSC 4359.

REASONS
    FOR DECISION

Basis for the Appeal

[1]

The appellant, Felice Scala, appeals the judgment in which the trial
    judge denied his claim for damages resulting from the alleged excessive use of force
    by police and the award of costs.

[2]

The key issue was whether the respondents, Toronto Police Services
    Board, Detective Todd Hall, and other unidentified police officers (together the
    Police Respondents) acted on reasonable grounds, [and were therefore]
    justified in doing what [they are] required or authorized to do and in using as
    much force as is necessary for that purpose within the meaning of s. 25(1) of
    the
Criminal Code

and, if so, they are protected from
    liability.

[3]

The appellant claims the trial judge made numerous errors of fact in
    dismissing his claim for damages resulting from alleged excessive police force.
    He claims the police respondents ought to have known of his health conditions, were
    not justified in using force, and should reasonably have known the grounding
    manoeuvre would cause him harm. They further claim that the trial judge erred
    in determining that Mr. Scala did not comply with a demand to surrender, and
    that police therefore used proper procedures and were justified in using force
    to overcome resistance, and that Mr. Scala did not report injuries to police.

The Law of Excessive Use of Force and the Standard of Review

[4]

There is no dispute over the applicable law. In brief, in order to
    obtain protection from civil liability, police must establish that the level of
    force used to arrest was necessary, meaning that it was objectively reasonable
    in the circumstances presented to the police at the time of the arrest:
Wilsdon
    v. Durham Regional Police
, 2011
    ONSC 3419,
at para 85;
R. v. Nasogaluak
,

[2010] 1 S.C.R. 206
,
at paras. 34-35.
    Objectively reasonable has been defined as reasonable given the nature and
    quality of the threat, the force used in response to it, and the
    characteristics of the parties:
R. v. Power
,
2016 SKCA 29, 335
    C.C.C. (3d) 317, at para 35.

[5]

The contested findings that form the basis of the judges conclusion are
    all issues of fact for which the standard of review is palpable and overriding
    error. In addition, a trial judges credibility assessments are entitled to a
    high degree of deference.

The Positions of the Parties

Uncontested Facts

[6]

On July 10, 2008, the appellant Felice Scala and his son, Ralph, were
    arrested while walking their pit-bull terrier. At the time, the appellant was
    sixty-two years old.

[7]

As noted by the trial judge in his reasons, Mr. Scala was arrested on
    charges of breach of recognizance and criminal harassment. He conceded at trial
    that the police had probable cause for his arrest, were required or authorized
    by law to perform the arrest and acted on reasonable grounds in doing so.

The Appellants Position

[8]

Mr. Scala and his wife, Catarina, commenced an action in 2010 alleging
    that police used excessive force during Mr. Scalas arrest, were negligent and
    breached their fiduciary duty to him, and that he suffered damages as a result.
[1]

[9]

Mr. Scala claims the police did not tell him he was being arrested;
    threw him to the ground; and punched, kicked, and beat him while he was facedown
    on the ground for 2-3 minutes. He said he asked the officers to stop and denied
    that he resisted arrest or assaulted officers.

[10]

A
    witness, who was also a friend of Mr. Scala, testified that he saw police kick
    and punch the two men for 2-3 minutes and that Mr. Scala asked the officers to
    stop but they did not.

[11]

Mr.
    Scala claims that after he was taken to the police station, he asked to be
    taken to the hospital, asked repeatedly to use the washroom but was ignored,
    had to urinate on the floor of the detention room, was ordered to wipe it clean
    with his sweater, and was deprived of his medication. Mr. Scala also alleged
    that the police failed to complete required forms and reports.

The Respondents Position

[12]

The
    Police Respondents deny that any officers kicked, punched, or kneed Mr. Scala.
    The officers testified that they told Mr. Scala he was being arrested and he
    was non-compliant. He was therefore taken to the ground in a controlled manner
    by taking hold of one arm, thrusting Mr. Scala forward suddenly so he would
    lose his balance, and then guiding him to the ground in a controlled fall. His
    hands were taken from under his chest so that he could be handcuffed.

[13]

The
    Police Respondents said Mr. Scala did not complain of any injuries and was not
    refused permission to use the washroom. One officer testified he accompanied
    Mr. Scala to the washroom. Another testified that he attended Mr. Scalas
    house and obtained his medication from Ms. Scala.

The Trial Judges Decision

[14]

The
    trial took place some ten-and-a-half years after Mr. Scalas arrest. In
    addition to the testimony of witnesses, the trial judge considered and reviewed
    the booking video and the medical records from the days following the arrest.
    He found many inconsistencies and inaccuracies in Mr. Scalas evidence and
    concluded that Mr. Scalas account of the arrest and detention was neither
    credible nor reliable. He found the evidence of the police officers, on the
    other hand, to be credible and reliable, and he therefore accepted their
    evidence.

[15]

The
    trial judge offered reasons for his rejection of Mr. Scalas evidence, which
    included the following internal inconsistencies:

(i)

In
    examination for discovery, Mr. Scala testified that he was kneed and punched in
    the head, whereas at trial he denied that any of the blows were administered to
    his head. He testified earlier that he had sustained a head injury, but admitted
    at trial that he had not;

(ii)

In discovery,
    he stated that he was beaten by two police officers, whereas at trial he
    testified that the beating was administered by three police officers. In the
    video of his booking, taken within a half-hour of the arrest, Mr. Scala stated:
    They six guys and me; and,

(iii)

Mr. Scala
    testified at discovery that the police officers kneed him on the top of his
    upper body and head and punched him in his shoulders and head. At trial he
    stated that he was struck only on his back and legs.

[16]

The
    trial judge found that [t]hese inconsistencies are incapable of being
    explained as the by-product of the passage of time, or Mr. Scalas qualities as
    an historian. They are fundamental and foundational to the veracity of his
    explanation of what happened on July 10, 2008, so much so that I had to
    question which version of the Plaintiffs account of events I was being asked
    to accept.

[17]

The
    trial judge further held that there were aspects of Mr. Scalas account of
    events that were inherently not plausible, including the following:

(i)

When
    the police officers approached him, they did not utter a single word;

(ii)

He
    was not told that he was being arrested at any time from his apprehension to
    his transportation to the police station;

(iii)

He was not
    handcuffed after being apprehended, and when transported to the police station;
    and,

(iv)

After being
    placed in the police cruiser, he was driven up and down the street, with the
    police stating loudly that Scala is in the car.

[18]

The
    trial judge found these statements were inconsistent with an operation
    conducted in daylight in public view on a residential street.

[19]

The
    trial judge also held that there were elements of Mr. Scalas testimony that
    were simply shown to be inaccurate, including the following:

(i)

His
    testimony that he was bleeding when he was taken to the police station. There was
    no evidence of this on the booking video, or in the examination by the medical
    caregivers;

(ii)

He
    testified that when he was taken to the police station, his pants were torn.
    This was not borne out by the booking video;

(iii)

His
    evidence that he asked the booking officer to be taken to the hospital to
    obtain care for his injuries. The booking video shows that Mr. Scala did not
    make any such request to the booking officer. Indeed, when asked directly by that
    officer whether he had any injuries, he did not mention any;

(iv)

His statement
    that he was forced to clean up a soiled floor in the detention area with his
    sweater, when the booking video shows that he did not have a sweater;

(v)

At
    trial, Mr. Scala stated that he did not drink any alcoholic beverages on the
    day of the arrest and did not have a knife in his possession. The video shows
    that, at the time of booking, Mr. Scala stated that he had a glass of wine with
    his lunch, and a small knife was found in his possession;

(vi)

Mr. Scala
    testified that he did not have any medical issues with his back or leg prior to
    the arrest and denied that he had undergone any medical diagnostic assessments
    in relation to any such issues. The medical records show that Mr. Scala
    complained to his physicians of back pain and left leg pain as much as three
    years before the arrest, and had previously undergone a nerve conduction study
    to assist in the diagnosis of these issues; and,

(vii)

Mr. Scala testified
    that he had never been convicted of a criminal offence. Police records show
    that he was convicted, on June 1, 2009, for failing to comply with a peace bond
    and, on June 3, 2010, for failing to comply with a recognizance.

[20]

Lastly,
    he held that Mr. Scalas evidence was not corroborated by the booking video or
    the photographs, neither of which support the extent of injury that he alleges.

[21]

By
    contrast, the trial judge found the evidence of the several police officers to
    be credible and reliable, corroborated by the testimony of the other police
    officers, internally consistent, plausible and consistent with the recorded
    evidence.

[22]

The
    trial judge therefore found that the officers did not punch, kick, knee, or
    beat Mr. Scala; that they told Mr. Scala he was under arrest and why; that Mr. Scala
    resisted arrest; and that the officers executed a takedown and controlled fall,
    pulled Mr. Scalas hands out to handcuff him, and drove him directly to the
    police station. He found that Mr. Scala was not denied access to a washroom, but
    rather that he was accompanied to the washroom, he was not ordered to clean up
    urine, and he was not deprived of medications. The trial judge accepted that,
    in the course of the arrest, Mr. Scala had suffered some trauma that resulted
    in bruising on his right thigh and calf, which were the only injuries caused by
    the officers during the arrest.

[23]

The
    trial judge also held that the takedown would not have been required but for
    the lack of compliance, handcuffing Mr. Scala was reasonable, and the amount of
    force used was necessary, justified, and not excessive.

[24]

While
    not necessary to the determination, the trial judge would have drawn an adverse
    inference from Mr. Scalas failure to call his wife and son, who witnessed the
    arrest.

[25]

The
    trial judge therefore held that, on the evidence before him, Mr. Scalas claims
    of excessive use of force should be dismissed. He also rejected Mr. Scalas
    submission of breach of fiduciary duty, because it was not pleaded and only
    raised in closing submissions. If Mr. Scala had established liability, the
    trial judge would have awarded general damages of $15,000 for pain and
    suffering.

[26]

The
    trial judge also considered all of the arguments made by the parties on the
    issue of costs and exercised his discretion in awarding costs of the trial to
    the police respondents.

Conclusion

[27]

The
    trial judges conclusion to dismiss the claim for excessive force and damages resulting
    therefrom was based largely on his findings of fact and credibility which are
    reviewed on a standard of palpable and overriding error.

[28]

The
    appellant claims that most of the important aspects of the story as recounted
    by police should not have been accepted and that the trial judge erred in rejecting
    most of his evidence as being neither credible nor reliable.

[29]

We
    disagree.

[30]

The
    trial judge carefully evaluated the evidence led at trial, made determinations
    as to which witnesses he found credible and which witnesses he did not,
    properly instructed himself as to the applicable law and then applied that law
    to the facts as found by him. In so doing, he committed no reviewable error. His
    findings were amply supported by the evidence and there is no basis to overturn
    those conclusions.

[31]

As
    noted at the outset, the appellant also raised the issue of trial costs in his
    notice of appeal and during his oral submissions. He claims this is public interest
    litigation and that the quantum of costs ordered by the trial judge is
    unreasonable and unfair in these circumstances given Mr. Scalas medical
    conditions and the allegation that he did not resist arrest, and that it would
    be inconsistent to hold Ms. Scala jointly and severally liable for the
    costs while also ordering her alone to pay $5,000 in costs.

[32]

We
    note that the trial judge did not in fact hold Ms. Scala jointly and severally
    liable.

[33]

The
    trial judge ordered Mr. Scala pay costs in the amount of $50,000, inclusive of
    HST, and $17,419.40 in disbursements; and Ms. Scala pay costs in the amount of
    $5,000, all inclusive.

[34]

We
    see no basis to interfere with the exercise of the trial judges discretion in making
    this award.

[35]

For
    these reasons the appeal is dismissed.

[36]

Partial
    indemnity costs are payable to the police respondents by the appellant, Felice
    Scala, in the amount of $10,000 inclusive of HST and disbursements.

K. Feldman J.A.

A. Harvison Young
    J.A.

J.A. Thorburn J.A.

[1]

Catarina Scala withdrew her claims at trial and did not
    participate in the trial.


COURT
    OF APPEAL FOR ONTARIO

CITATION: Segura Mosquera v. Ottawa Public
    Library, 2021 ONCA 275

DATE: 20210428

DOCKET: C67308

Huscroft, Nordheimer and Harvison
    Young JJ.A.

BETWEEN

Gladys
    M. Segura Mosquera

Appellant

and

Ottawa
    Public Library

Respondent

Gladys M. Segura Mosquera, in person

Stuart J. Huxley, for the respondent

Heard: April 26, 2021 by video
    conference

REASONS FOR DECISION

[1]

Ms. Segura Mosquera appeals from the order of
    Parfett J. of the Superior Court of Justice dated July 2, 2019 that dismissed
    her application for directions along with other interlocutory and injunctive
    relief. The appellant had brought a Notice of Application seeking directions and
    relief respecting a proposed class action that had yet to be commenced.

[2]

A preliminary jurisdiction issue arose. After
    hearing submissions from the parties, we quashed the appeal for lack of
    jurisdiction, with reasons to follow. We now provide our reasons.

[3]

This court has jurisdiction to hear appeals from
    final orders of the Superior Court of Justice, with certain exceptions,
    pursuant to s. 6(1)(b) of the
Courts of Justice Act
, R.S.O. 1990, c.
    C.43.

[4]

The order in issue here is not a final order. It
    did not dispose of a proceeding nor did it finally determine an issue in a
    proceeding:
Ball v. Donais
(1993), 13 O.R. (3d) 322 (C.A.). The order
    simply dismissed the appellants request for directions and other relief under
    r. 37.17 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194 in
    advance of commencing a proceeding. The appellant submits that this is a mere technicality,
    but it is not. It goes to the central issue whether this court has jurisdiction
    to hear the matter. We do not.

[5]

Consequently, the appeal is quashed. The
    respondent did not seek costs and no costs are ordered.

Grant
    Huscroft J.A.

I.V.B.
    Nordheimer J.A.

A. Harvison
    Young J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Shaver-Kudell Manufacturing Inc. v. Knight
    Manufacturing Inc., 2021 ONCA 202

DATE: 20210330

DOCKET: M52214, M52240

van Rensburg J.A.
    (Motions Judge)

BETWEEN

Shaver-Kudell
    Manufacturing Inc.

Plaintiff

(Respondent/Responding Party on M52214/

Moving Party on M52240)

and

Knight
    Manufacturing Inc., Lucy Shaver, Dusko Ballmer and

Alexander
    Knecht

Defendants

(
Appellant
/
Moving Party
on M52214/

Responding Party
on M52240)

Ian Klaiman, for the appellant

Charles Hammond, for the respondent

Heard: March 11, 2021 by video conference

REASONS FOR DECISION

I

Introduction

[1]

The appellant, Alexander Knecht, is an
    undischarged bankrupt. He moved for an extension of time to file a notice of appeal
    from the order of M. Smith J. (the motion judge), dated December 9, 2020.
    That order declared that his debts and liabilities in certain proceedings with
    the respondent, Shaver-Kudell Manufacturing Inc. (Shaver-Kudell), would
    survive his discharge from bankruptcy. It also lifted the stay of proceedings
    to permit Shaver-Kudell to continue proceedings against him. Knecht required an
    extension of time as a result of an administrative issue that arose when he
    tried to file his notice of appeal.

[2]

Shaver-Kudell opposed the motion primarily on
    the basis that there is no right to appeal without leave under s. 193 of the
Bankruptcy
    and Insolvency Act
, R.S.C. 1985, c. B-3
(the BIA). Shaver-Kudell also argued that the extension should be
    refused because the appeal is lacking in merit.

[3]

Knecht asserted that he had the right to appeal
    and, in the alternative, sought leave to appeal under s. 193(e) of the BIA. He
    argued that he had met the test for an extension of time. At the conclusion of
    the oral hearing of the motion I granted the requested extension, with
    reasons to follow. These are my reasons.

[4]

These are also my reasons in respect of Shaver-Kudells
    cross-motion for security for costs. For the reasons that follow, that motion
    is dismissed.

II

Relevant Facts

[5]

The parties were involved in litigation in the
    Superior Court (the Action). On August 7, 2018, following a trial on
    liability, R. Smith J. concluded, among other things, that Knecht and other
    defendants committed a breach of confidence and misappropriated Shaver-Kudells
    trade secrets. He awarded costs against the defendants for a prior summary
    judgment and costs of the trial (a total of $390,521).

[6]

The Action was scheduled to continue with a
    trial on the issue of damages in April 2020. In the interim, on March 2, 2020,
    Knecht filed a Notice of Intention to Make a Proposal under s. 50.4(1) of the
    BIA. The proposal was refused by his creditors, and he was assigned into
    bankruptcy on April 27, 2020. Pursuant to s. 69(1) of the BIA, all
    proceedings against Knecht are stayed during the bankruptcy.

[7]

Shaver-Kudell brought a motion for an order
    declaring that Knechts discharge from bankruptcy would not release any debts or
    liabilities arising from its claims against him in the Action, including any
    outstanding or future costs awards. Shaver-Kudell relied on s. 178(1)(e) of the
    BIA, which provides that an order of discharge does not release the bankrupt
    from any debt or liability resulting from obtaining property or services by
    false pretences or fraudulent misrepresentation.... Shaver-Kudell also sought
    an order under s. 69.4 of the BIA lifting the stay.

[8]

The motion judge found that R. Smith J.s
    findings in the trial on liability pointed to Knechts deceitful and dishonest
    conduct which engages section 178(1)(e). Knecht participated in a scheme to
    copy Shaver-Kudells trade secrets and make unauthorized use of this property
    for his financial gain. In this way, he had obtained property by false
    pretences. Accordingly, the motion judge found that Knechts debts arising from
    claims in the Actionincluding the outstanding costs awardwould survive his
    bankruptcy discharge.

[9]

Having found that Knechts debts and liabilities
    in the Action would not be released by his bankruptcy discharge, the motion
    judge determined that Shaver-Kudell would be prejudiced if it could not proceed
    to judgment against Knecht regarding damages. On this basis, the motion judge also
    declared that the stay under s. 69(1) of the BIA would no longer operate with
    respect to the Action.

[10]

Knecht served his notice of appeal of the motion
    judges order on December 17, 2020. Assuming that the order under appeal was an
    order under the BIA, Knechts counsel attempted to file the notice of appeal
    with the Registrar of the court appealed from, the Superior Court in Ottawa, in
    accordance with the
Bankruptcy and Insolvency General Rules
, C.R.C., c. 368, r. 31(1). The Ottawa court refused to accept the
    filing because there was no bankruptcy court file number. While attempting to
    sort out this administrative problem, Knechts counsel tried to file the notice
    of appeal directly in this court. However, because more than ten days had
    passed from the date of service of the notice of appeal, an extension of time
    was required.

III

The Extension of Time Motion

[11]

The test for an extension of time is whether it
    is in the interests of justice that the extension be granted. Relevant factors
    include: whether there was a
bona fide
intention
    to appeal during the appeal period; the length of and explanation for the
    delay; prejudice to the opposing party; and the merits of the proposed appeal.
    The enumerated factors are not exhaustive and may vary in importance depending
    on the circumstances. The overriding consideration is whether the justice of
    the case requires an extension:
Denomme v. McArthur
, 2013 ONCA 694 (In Chambers), at para. 7.

[12]

As I have indicated, the motion for an extension
    was opposed by Shaver-Kudell primarily on the basis that there is no appeal as
    of right. I turn to consider this issue first.

Does the appellant have the right to appeal
    the motion judges order?

(1)

The governing appeal route

[13]

If the motion judges order was made under the
    BIA, the appeal route would be governed by s. 193 of the BIA, which provides for
    appeals as of right in some cases and requires leave to appeal in others. Section
    193 provides as follows:

193
Unless otherwise expressly provided, an appeal lies to the Court of Appeal from
    any order or decision of a judge of the court in the following cases:

(a) If the point at issue
    involves future rights;

(b) If the order or decision is
    likely to affect other cases of a similar nature in the bankruptcy proceedings;

(c) If the property involved in
    the appeal exceeds in value ten thousand dollars;

(d) From the grant of or refusal
    to grant a discharge if the aggregate unpaid claims of creditors exceed five
    hundred dollars; and

(e) In any other case by leave of
    a judge of the Court of Appeal.

[14]

The proper appeal route is under s. 193 where
    the order sought to be appealed is granted in reliance on jurisdiction under
    the BIA:
Business Development Bank of Canada v. Astoria Organic
    Matters Ltd.
, 2019 ONCA 269, 69 C.B.R. (6th) 13, at para.
    21. If the motion judges order was not made in reliance on jurisdiction under
    the BIA, it would be appealable to this court under s. 6(1) of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43.

[15]

The question of jurisdiction arises in this case
    because the motion judges order has two components: the declaration under s.
    178(1)(e) of the BIA and the lift-stay order. The lift-stay order could only be
    made under s. 69.4 of the BIA. By contrast, declaratory orders under s. 178(1)
    do not engage the exercise of a power under the BIA. They are made in the
    exercise of the courts general jurisdiction: see e.g.
Water Matrix
    Inc. v. Carnevale
, 2018 ONSC 6436, 65 C.B.R. (6th) 109, at
    para. 22;
Beneficial Finance Co. v. Durward
(1961)
, 2 C.B.R. (N.S.)
    173 (Ont. Co. Ct.), at para. 14; and
Graves v. Hughes
, 2001 NSSC 68, 25
C.B.R.
    (4th) 255, at paras. 3-12. As such, orders declaring that a debt or liability
    survives a bankruptcy discharge typically are appealed directly to the Court of
    Appeal, without leave under the BIA: see e.g.
Gray (Re)
, 2014 ONCA 236, 119 O.R. (3d) 710;
Korea Data Systems
    (USA), Inc. v. Aamazing Tehnologies Inc.
, 2015 ONCA 465, 126
    O.R. (3d) 81;
H.Y. Louie Co. Limited v. Bowick
,
    2015 BCCA 256, 25 C.B.R. (6th) 221; and
Lawyers Professional Indemnity
    Company v. Rodriguez
, 2018 ONCA 171, 139 O.R. (3d) 641,
    leave to appeal refused, [2018] S.C.C.A. No. 128.

[16]

The determination of whether a debt survives
    bankruptcy can also be made in bankruptcy proceedings and not in a separate
    civil action, particularly where the moving party also seeks leave to commence
    or continue an action against the bankrupt: see
Re McKee
(1997), 47 C.B.R. (3d) 70 (Alta. Bankruptcy Registrar), where such
    a declaration was made while bankruptcy proceedings were pending, but prior to
    the discharge hearing. See also
Re Mariyanayagam

(1998), 10 C.B.R. (4th) 105 (Ont. Gen. Div.), at para. 4;
Re
    Bissonette
, 2006 CarswellOnt 7023 (Bankruptcy Registrar),
    at para. 3;
Re Di Paola

(2006), 84 O.R.
    (3d) 554 (C.A., In Chambers), at para. 5;
Re Berger
, 2010 ONSC 4376, 70 C.B.R. (5th) 225, (Bankruptcy Registrar), at
    para. 2.

[17]

This court has previously considered the question
    of jurisdiction where the order under appeal was made only partly in reliance
    on jurisdiction under the BIA. In
Dal Bianco v. Deem Management
    Services Limited
, 2020 ONCA 585, 82 C.B.R. (6th) 161,
    part of the order under appeal (indeed the substantive issue on the appeal)
    would have been appealable directly to this court under the
Construction
    Act
, R.S.O. 1990, c. C.30, but the order was made in an
    application for directions in a receivership. This court held that the
    substance of the order was in proceedings authorized by the BIA: it responded
    to a motion for the courts directions brought under s. 249 of the [BIA] to
    help the receiver distribute the remaining funds in the receivership. Because
    the BIA was a source of jurisdiction for the courts order, the appeal route
    was under s. 193: at para. 12. See also
Third Eye Capital
    Corporation v. Ressources Dianor Inc./Dianor Resources Inc.
, 2019 ONCA 508, 70 C.B.R. (6th) 181, at para. 129 (where jurisdiction
    for an appeal from an order approving a receivers sale of assets, of which a
    vesting order was a component, was under the BIA).

[18]

Applying these authorities, I conclude that the appeal
    route for the motion judges order is under s. 193 of the BIA. The order was
    made on a motion during the currency of Knechts bankruptcy, and, as part of
    the order the motion judge lifted the stay under s. 69(1) of the BIA to permit the
    Action to continue against the bankrupt.

[19]

I turn now to consider whether there is an
    appeal as of right of the order or whether leave to appeal is required.

(2)

Does a right to appeal lie under s. 193?

[20]

Knecht submits that he has a right to appeal the
    motion judges order under ss. 193(a), (b) and (c). I agree that the order is
    appealable under s. 193(c). While it is unnecessary to consider other provisions
    of s. 193, I suggest that the order is also appealable under s. 193(a).

[21]

Section 193(c) provides for a right of appeal
    if the property involved in the appeal exceeds in value ten thousand dollars.
    I recognize that the scope of that provision is a matter of debate among
    appellate courts. In
2403177 Ontario Inc. v. Bending Lake Iron Group
    Ltd.
, 2016 ONCA 225, 35 C.B.R. (6th) 102 (In Chambers),
    Brown J.A. construed s. 193(c) narrowly, and held that it would not provide a
    right of appeal from orders that (i) are procedural in nature; (ii) do not
    bring into play the value of the debtors property; or (iii) do not result in a
    gain or loss (in the sense of involving some element of a final determination
    of the economic interests of a claimant in the debtor): at paras. 53, 61. This
    approach has been followed by a number of decisions of this court, but has been
    called into question in the decisions of some other appellate courts: see e.g.,
MNP Ltd. v. Wilkes
, 2020 SKCA 66, 80 C.B.R.
    (6th) 1, interpreting s. 193(c) as applying when, on the evidence, there is at
    least $10,000 at stake in the appeal: at para. 63.

[22]

I am satisfied that, irrespective of the
    approach taken, the motion judges order falls within s. 193(c). In the circumstances
    of this case, I would follow the approach taken by Nordheimer J.A. in
Royal
    Bank of Canada v. Bodanis
, 2020 ONCA 185, 78 C.B.R. (6th)
    165 (In Chambers). He distinguished cases like
Bending Lake
that involved proposed appeals of orders made in receivership proceedings,
    and he determined that an appeal of bankruptcy orders in two proceedings where
    the debts relied on exceeded $10,000 fell under s. 193(c). Nordheimer J.A.
    explained that s. 193(c) clearly applies where the appellants entire
    property ha[s] been taken out of their control and placed into the hands of a
    Trustee in Bankruptcy, who has the right to dispose of that property and
    distribute it among the creditors, without further court intervention: at
    para. 9.

[23]

Similarly, the debts and liabilities that will
    survive Knechts discharge under the motion judges order exceed $10,000. And the
    effect of the order under appeal is that Knechts property exceeding $10,000 in
    value will be subject to Shaver-Kudells enforcement of its judgment in the
    Action, including the costs order already made, following his discharge from
    bankruptcy.

[24]

In short, the property involved in the appeal of
    the motion judges declaration under s. 178 exceeds in value $10,000. Since the
    lift-stay provision is part of the motion judges order and dependent on that
    declaration, the entire order is subject to appeal as of right under s. 193(c).

[25]

The conclusion that s. 193(c) applies can also
    be reached by applying the approach in
Bending Lake
. The motion judges order is not procedural in nature, it brings
    into play the value of Knechts property that will or will not be available to
    satisfy Shaver-Kudells claims as his creditor, and it makes a final
    determination of Shaver-Kudells economic interests, resulting in a gain to
    that party in excess of $10,000.

[26]

I am also of the view that the order under
    appeal falls within the scope of s. 193(a) of the BIA. Section 193(a) provides
    for a right of appeal if the point at issue involves future rights. Future
    rights have been described as rights which could not at the present time be
    asserted but which will come into existence at a future time:
Elias
    v. Hutchison
, 1981 ABCA 31,
121 D.L.R. (3d) 95, at para. 28, cited with approval in
Ravelston
    Corp., Re
(2005), 24 C.B.R. (5th) 256, (Ont. C.A.), at
    para. 19. The pertinent question is whether the rights engaged in the appeal
    are future rights or presently existing rights that are exercisable in the
    future:
Business Development Bank of Canada v. Pine Tree Resorts
    Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617 (In Chambers), at
    para. 16.

[27]

Shaver-Kudell submits that its rights arose as
    soon as R. Smith J. determined the liability issues in the Action. All of the
    circumstances were present such that s. 178, by operation of law, would ensure
    that the debts and liabilities arising therefrom would survive Knechts
    bankruptcy discharge. This is a question of present rights that can be
    exercised in the future.

[28]

I disagree. While s. 178 operates as a matter of
    law, it is necessary for a creditor to obtain a court declaration that a debt
    survives bankruptcy:
Canada (Attorney General) v. Bourassa (Trustee
    of)
, 2002 ABCA 205, 312 A.R. 19, at para. 5. Shaver-Kudell
    did not obtain the s. 178 declaration until December 2020.

[29]

In my view, the motion judges order involves
    the future rights of both parties: Knechts right to be discharged from the
    debts and liabilities arising out of the judgments in the Action and Shaver-Kudells
    right, as a creditor of the bankrupt, to enforce the judgments following his discharge
    from bankruptcy.

[30]

While Shaver-Kudell is able to continue
    proceedings against Knecht, it does not have a present right to enforce the
    judgment of R. Smith J. against Knecht. This right is suspended by the
    bankruptcy and will be eliminated by the discharge, absent the order declaring its
    survival. In light of the motion judges order, this right will arise in the
    future, upon Knechts discharge. As lower courts have noted, [a] creditors
    right of action for a debt not released by the debtors discharge arises upon
    the discharge of the debtor:
Lang v. Soyatt

(1988), 68 C.B.R. (N.S.) 201, (Ont. Sup. Ct.), at para. 13;
Re
    Wilson
(1930), 11 C.B.R. 425 (Ont. Sup. Ct.). See also
Re
    Cameron
, 2002 ABCA 183, 37 C.B.R. (4th) 78 (In Chambers),
    at paras. 5-6.

Extension of Time

[31]

Apart from arguing the jurisdiction point, Shaver-Kudell
    asserted that the extension of time should be refused because the appeal lacks
    merit. Shaver-Kudell did not dispute that Knecht formed a
bona fide

intention to appeal within the relevant timeframe, nor did
    it oppose the requested extension on the basis of the length of or explanation
    for the delay in filing the notice of appeal.

[32]

Turning to the merits of the appeal, the
    question is only whether there is so little merit in the proposed appeal that
    the appellant should be denied [his] important right of appeal:
40
    Park Lane Circle v. Aiello
, 2019 ONCA 451 (In Chambers),
    at para. 8. It is sufficient to say that the appeal has at least an arguable
    chance of success.

[33]

Among other things, the appeal raises legitimate
    questions about the interpretation of obtaining property by false pretences
    within s. 178(1)(e), and whether the test under that provision was properly
    applied in the circumstances in this case. In finding that Knechts conduct
    fell within s. 178(1)(e), the motion judge declined to adopt the
Criminal
    Code
definition of false pretences, which he found would amount to a
    requirement of fraudulent misrepresentation.
As Knecht points
    out, there are cases that follow the definition of false pretences in the
Criminal
    Code
, or at least suggest that there
    must be a finding of fraud or an actionable misrepresentation (which were not
    present in this case):
see e.g.
H.Y.
    Louie Co. v. Bowick
, 2015 BCCA 363, 28 C.B.R. (6th) 1;
Celanese
    Canada Inc. v. Murray Demolition Corp.
, [2010] O.J. No.
    6347 (S.C.), at para. 22; and
Toronto Dominion Bank v. Cushing
, 2007 BCSC 1581, 37 C.B.R. (5th) 60.

[34]

For these reasons the motion to extend time to
    file the notice of appeal was granted.

IV

Motion for Security for Costs

[35]

An order for security for costs may be made
    under r. 61.06(1) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, where (a) there is good reason to believe
    that the appeal is frivolous and vexatious and that the appellant has
    insufficient assets in Ontario to pay the costs of the appeal; (b) an order for
    security for costs could be made against the appellant under r. 56.01; or (c)
    for other good reason. Rule 61.06(1) is permissive, not mandatory. In
    determining whether an order should be made for security for costs, the
    overarching principle to be applied to all the circumstances is the justness
    of the order sought:
Yaiguaje v. Chevron Corporation
, 2017 ONCA 827, 138 O.R. (3d) 1, at para. 19.

[36]

Shaver-Kudell moves for security for costs of
    the appeal under r. 61.06(1)(c). It argues that security under this provision
    is warranted because the appeal has little merit and it will be difficult to
    recover costs of the appeal from Knecht, who is bankrupt. Shaver-Kudell points
    to the unpaid costs award of almost $400,000, that has been outstanding since
    2019, and contends that Knecht should not be able to litigate with impunity
    where the reasonable inference is that someone else is paying the costs of his
    appeal.

[37]

In response to the motion, Knecht asserts that
    his appeal has merit. He has not paid the outstanding costs because he is bankrupt,
    and if he is successful in his appeal he will be discharged from
    Shaver-Kudells claims. Knecht contends that he is impecunious and unable to
    pay security for costs; he has provided copies of the Creditors Package in his
    bankruptcy and information about his earnings and expenses. His assets are
    vested in the trustee, and although he is working and earning income, any
    surplus income he earns will vest in the trustee.

[38]

To grant security for costs under r. 61.06(1)(c),
    the other good reason must be compelling. Resort is to this provision when
    the respondent has been unable to obtain security under the other two
    categories, and security for costs under r. 61.06(1)(c) should not be made
    routinely:
Combined Air Mechanical Services Inc. v. Flesch
, 2010 ONCA 633, 268 O.A.C. 172 (In Chambers), at para. 8. Security
    for costs has been awarded under this provision where an appeal has a low
    prospect of success and the appellant has the ability to pay costs, but it
    would be nearly impossible to collect such costs:
Perron v. Perron
, 2011 ONCA 776, 286 O.A.C. 178 (In Chambers), at para. 23;
Henderson
    v. Wright
, 2016 ONCA 89, 345 O.A.C. 231 (In Chambers), at
    para. 27. Other examples include circumstances where there has been a finding
    that the appellant committed fraud, particularly if coupled with a finding that
    the appellant took steps to put his assets out of the reach of his creditors:
York
    University v. Markicevic
, 2017 ONCA 651 (In Chambers), at
    para. 58.

[39]

This is not such a case. I have determined that Knecht
    has a right of appeal, and that the appeal is of arguable merit. Furthermore, there
    has not been any finding that Knecht committed fraud or tried to put his assets
    out of reach of his creditors. His failure to pay the outstanding costs order of
    R. Smith J. is not (as in some cases) evidence of intransigence or contempt for
    orders of the court. Knecht is bankrupt and but for the order under appeal, his
    debts and liabilities in the Action, including the outstanding costs order,
    will not survive his discharge from bankruptcy.

[40]

In these circumstances, Shaver-Kudell has not met the test for
    security for costs and its motion is dismissed.

V

Disposition

[41]

For
    these reasons, Knechts motion for an extension of time was granted and
    Shaver-Kudells motion for security for costs is dismissed.
If
    the parties are unable to agree on the costs of the motions, they may provide
    their written submissions not exceeding three pages each (and filed
    electronically at coa.e-file@ontario.ca), within ten days of these reasons.

K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Spadacini Kelava v. Kelava, 2021
    ONCA 345

DATE: 20210519

DOCKET: M52443 (M52096)

Jamal
    J.A. (Motions Judge)

BETWEEN

Joelle
    Spadacini Kelava

Responding Party

and

David George
    Kelava

Moving Party

Donna Wowk, for the moving party

Martha McCarthy, for the responding
    party

Heard: May 17, 2021 by video conference

REASONS
    FOR DECISION

[1]

The moving party husband (husband) moves to stay
    portions of the order of Kurz J. of the Superior Court of Justice made on
    December 17, 2020 (Order) declaring that the responding party wife (wife)
    is a 50% joint owner of the matrimonial home and directing it to be listed for
    sale by March 1, 2021.

[2]

The husbands materials on the motion for the
    stay were unclear as to whether he sought a stay pending only the decision on his
    motion for leave to appeal to this court from the Order, or whether, if leave was
    granted, he sought a stay pending the decision on any appeal. In oral
    submissions, however, counsel for the husband clarified that he seeks a stay pending
    only the decision on his motion for leave to appeal.

[3]

The husband tried in mid-February 2021 to obtain
    the wifes consent to stay the Order pending a decision on his motion for leave
    to appeal, but she did not consent. The husband has thus been in breach of the
    Order for about 11 weeks.

[4]

For the reasons that follow, the motion to stay
    the Order is dismissed.

Background

[5]

The parties married in 2000. They have two
    children of the marriage, aged 12 and 11. Both children have special needs. The
    younger child has severe autism, while the older child has Attention Deficit
    Hyperactivity Disorder or ADHD.

[6]

In 2006, the parties bought a five-bedroom matrimonial
    home in Oakville. The wife contributed $120,000 of her savings towards the purchase
    price and was jointly on the mortgage covenant. For a long time, both the
    husband and wife believed they jointly owned the matrimonial home.

[7]

In 2014, the wife relocated with the children to
    Indianapolis to obtain specialized treatment for their younger childs autism.
    The husband stayed in Ontario. About a year later, the parties separated and
    the wife began family law proceedings in Ontario.

[8]

The husband and wife arbitrated their family law
    dispute before an arbitrator. In their financial statements filed with their
    pleadings, both parties listed the matrimonial home as jointly owned. Both
    continued to believe this and represented this position in the family law
    proceedings until about the end of May 2019. At that time, when refinancing the
    matrimonial home, the husband learned that it was registered in his name alone.
    The weekend before the arbitration began in July 2019, the husband now claimed
    that the matrimonial home was his alone and that only he should benefit from
    any post-separation increase in value during the four years since the parties separation.

[9]

The arbitrator rendered an award dated September
    10, 2019, addressing both parenting and financial matters. He ordered the
    children returned to the Toronto area. He rejected the wifes argument that the
    husband should be estopped from claiming that the matrimonial home was his alone
    and decided that it should be treated as solely the husbands asset for equalization
    purposes.

[10]

Both parties appealed the arbitrators award.
    The wifes appeal focussed on the return of the children to Ontario and the
    treatment of the matrimonial home as solely the husbands asset.

[11]

The appeal was heard by Kurz J. (appeal judge)
    of the Superior Court of Justice. He decided the more pressing parenting issues
    in reasons dated September 16, 2020, reported as
Spadacini-Kelava v. Kelava
,
    2020 ONSC 5561, upholding the arbitrators order that the children be returned
    to Ontario. He then decided the financial issues in reasons dated December 17,
    2020, reported as
Spadacini-Kelava v. Kelava
, 2020 ONSC 7907, 52
    R.F.L. (8th) 143, finding that the matrimonial home should be treated as
    jointly owned. Since the husband had taken the property off the market, the
    appeal judge ordered that it be listed for sale by March 1, 2021.

[12]

As ordered by the appeal judge, the wife returned
    to Ontario in December 2020. Her unchallenged evidence on this motion is that,
    for the past five months, she and the children have been living in her parents
    bungalow. One child shares a bed with his grandmother, while the wife and the
    other child sleep on a couch in the basement. The wife cares for the children
    full-time. Without the balance of the equalization payment owed to her or
    access to the equity in the matrimonial home, she cannot afford a down payment
    or qualify for a mortgage.

[13]

On January 6, 2021, the husband filed his notice
    of motion for leave to appeal to this court from the Order of the appeal judge.
    He seeks leave to appeal on various grounds, including alleged procedural
    unfairness, errors of law, and errors of mixed fact and law.

[14]

On April 28, 2021, the husband moved to stay the
    appeal judges Order requiring that the matrimonial home be listed for sale by
    March 1, 2021.

[15]

The husband has no statutory right to appeal to
    this court. He has exercised a first right of appeal to the Superior Court, without
    leave, as provided under the parties mediation-arbitration agreement:
Arbitration
    Act, 1991
, S.O. 1991, c. 17, ss. 45(2), (3) and (6). A second appeal
    requires leave of this court:
Arbitration Act, 1991
, s. 49.

The
    Test for a Stay

[16]

To obtain a stay of a judgment pending a motion
    for leave to appeal, a moving party must meet the three-part test for an
    interlocutory injunction: (1) a serious question to be determined on the motion
    for leave to appeal; (2) the moving party will suffer irreparable harm if the
    stay is denied; and (3) the balance of convenience favours granting the stay:
RJR
     MacDonald Inc. v. Canada (Attorney General)
, [1994] 1 S.C.R. 311, at p.
    334.

[17]

In applying this test, the court is mindful that
    [t]hese three criteria are not watertight compartments. The strength of one
    may compensate for the weakness of another. Generally, the court must decide
    whether the interests of justice call for a stay:
Circuit World Corp. v.
    Lesperance
(1997), 33 O.R. (3d) 674 (C.A.), at p. 677.

Application to This Case

(1)

Serious question to be determined

[18]

The threshold to establish a serious question to
    be determined is low. The court must make a preliminary assessment of the
    merits of the case and determine whether the issues are neither frivolous nor
    vexatious:
RJR  MacDonald
, at p. 337;
Circuit World
, at
    p. 677.

[19]

The husbands notice of motion for leave to
    appeal raises several grounds, including alleged procedural unfairness, errors
    of law, and errors of mixed fact and law. He asserts that the appeal judge
    erred because the wife did not apply for ownership of the matrimonial home at
    the arbitration or plead material facts supporting such an application and that
    she made these arguments for the first time on appeal. He also claims that the
    appeal judge decided new arguments on appeal relating to issue estoppel,
res
    judicata
, and proprietary estoppel, largely on his own initiative.

[20]

During the oral argument, the wifes counsel fairly
    conceded that the question of whether the court should grant leave to appeal
    from the order declaring the wife the half-owner of the matrimonial home is not
    frivolous or vexatious, although she contended other aspects of the leave
    motion are baseless.

[21]

I accept and agree with the wifes concession.
    Although I have serious doubts about whether the husband can meet the stringent
    test for leave to appeal, the motion for leave to appeal is neither frivolous
    nor vexatious. The husband thus meets the low threshold to raise a serious
    issue.

(2)

Irreparable harm

[22]

Irreparable harm is harm which either cannot be
    quantified in monetary terms or which cannot be cured, usually because one
    party cannot collect damages from the other:
RJR  MacDonald
, at p.
    341.

[23]

The husband asserts that he will suffer
    irreparable harm in two respects if the stay is denied.

[24]

First, he says that the Order requires that he
    list for sale an asset  the matrimonial home  that he does not want to list for
    sale and that he would not have to list for sale if he obtains leave to appeal
    and then wins the appeal.

[25]

I do not accept this submission. On the evidence
    before me, the husband has not established irreparable harm. There is no
    evidence that the matrimonial home is unique or otherwise irreplaceable, and I
    am not satisfied on the evidence before the court that the husband could meet
    his equalization obligations without selling the house, even if he obtains
    leave to appeal and wins the appeal. Because the husband seeks a stay, he bears
    the evidentiary burden of establishing that he would not have to sell the
    matrimonial home if he succeeds on the motion for leave to appeal and on the appeal.
    He has not met this burden. By contrast, the wife adduced compelling evidence
    on this motion that her husband has been unable to manage his financial
    obligations since they separated. She provided evidence of his conduct in reducing
    and then defaulting on his mortgage payments, informing her they were at risk
    of losing the matrimonial home, defaulting on payment of property taxes, and
    defaulting on his child support obligations until the wife moved to compel payment.

[26]

Based on the record before me, I conclude that the
    first category of harm that the husband claims in being required to sell the matrimonial
    home is essentially harm that can be quantified in monetary terms. If he obtains
    leave to appeal and then wins the appeal, there can be a financial adjustment
    if necessary.

[27]

Second, the husband asserts that the matrimonial
    home is the only home the children have known and that given their special
    needs it would disrupt them to require them to visit him in a new home.

[28]

I do not accept this submission. There is no
    cogent and persuasive evidence before the court that the children would be
    harmed, far less harmed irreparably, if the matrimonial home is listed for
    sale.

The children have lived
    in Indiana for the last seven years. They visit their father only a few days a
    month and spend most of their time with their mother, living in difficult
    conditions in their grandparents bungalow. In these circumstances, as the wife
    contends, the children's interests would be far better served by selling the
    matrimonial home, as this would allow the wife to access the necessary capital
    to buy a home for herself and the children where the children would spend most
    of their time.

[29]

The husband has thus not met his burden of
    establishing irreparable harm.

(3)

Balance of convenience

[30]

Finally, the balance of convenience involves a
    determination of who would suffer the greater harm from granting or refusing
    the stay, pending a decision on the merits:
RJR  MacDonald
, at p.
    342.

[31]

I find that the wife will suffer greater harm if
    a stay is granted than the husband will suffer if the stay is refused.

[32]

Without access to the equity in the matrimonial
    home  to which a court has found she is legally entitled  the wife cannot
    purchase a home to provide the children with stable and comfortable living
    accommodation. The fathers response to this is to assert that at the time of
    the arbitration the wife intended to rent. But that was two years ago. The wife
    is now back in Ontario, as ordered by the arbitrator, and wishes to buy a home,
    as is her right. On the other side of the scale, I see no harm to the husband
    beyond the inconvenience of selling the house, which is not his preference. On
    these facts, I find the balance of convenience tips decisively in the wifes
    favour.

[33]

The wife has complied with the appeal judges
    order regarding parenting by returning to Ontario. It is only fair  and in the
    interests of justice  that the husband now immediately comply with the appeal
    judges order to list the matrimonial home for sale.

Disposition

[34]

The motion is dismissed.

[35]

If the parties cannot agree on costs, they may file
    brief written submissions of no more than 3 pages, with a bill of costs, within
    15 days.

M.
    Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sparr v. Downing, 2021 ONCA 40

DATE: 20210119

DOCKET: C67981

van
    Rensburg, Benotto and Thorburn JJ.A.

BETWEEN

Bernard
    René Jean Sparr

Applicant (Appellant)

and

Denise
    Lee Downing

Respondent (Respondent)

Karen Kernisant, for the appellant

Ian C. Vallance
, for the respondent

Heard: December 3, 2020 by video conference

On
    appeal from the orders of Justice Michelle OBonsawin of the Superior Court of
    Justice, dated May 24, and June 20, 2019.

COSTS ENDORSEMENT

[1]

The appellant shall pay the respondent costs
    fixed in the amount of $20,000 inclusive of HST and disbursements. These costs
    may be considered as support payments for purposes of the Family Responsibility
    Office.

K.
    van Rensburg J.A.

M.L.
    Benotto J.A.

J.A.
    Thorburn J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Spiridakis v. Li, 2021 ONCA 359

DATE: 20210526

DOCKET: C68570

Juriansz, van Rensburg and
    Sossin JJ.A.

BETWEEN

Gus Spiridakis and Carmela
    Spiridakis

Plaintiffs (Respondents)

and

Guifang Li
,
Wanchun Jia
, and

Zolo Realty, Brokerage

Defendants (
Appellants
)

Vivian Leung and Cheryl Lau, for the
    appellants

Alan Price and Mel Aronoff, for the
    respondents

Heard: May 7, 2021 by video
    conference

On appeal from the order of Justice R.
    Cary Boswell of the Superior Court of Justice, dated April 15, 2020, with
    reasons reported at 2020 ONSC 2173.

REASONS FOR DECISION

[1]

At the hearing of the appeal, we dismissed the appeal for reasons to
    follow. These are our reasons.

[2]

The appeal arises out of a failed real estate transaction. On June 14,
    2017 the parties entered into an agreement of purchase and sale for a house in
    Stouffville. The purchase price was $1,162,500 and the closing date was
    September 14, 2017.

[3]

There were several missed closing dates and extensions. After having
    agreed to an extension to October 26, 2017, the appellants were unable to close
    on that date, because the purchasers of their own home were unable to close.
    The closing of the Stouffville property purchase was extended to October 30, and
    on that date, the appellants advised they could not close. The respondents
    counsel advised that this was an anticipatory breach. The appellants counsel
    requested a further extension, which the respondents accepted, on proposed
    modest terms. The appellants did not respond and did not complete the purchase.

[4]

The respondents relisted the Stouffville property on November 2, 2017.
    On March 9, 2018, they entered into an agreement to sell the property for $900,000
    with a closing date of June 28, 2018. They had agreed to purchase another
    property, and after the appellants default, used bridge financing to complete
    that purchase.

[5]

The respondents sued the appellants for damages for breach of the
    agreement of purchase and sale. The appellants defended the action and
    counterclaimed for the return of their deposit and a declaration that the
    purchase and sale agreement had expired as of October 30, 2017. They also
    commenced a third party action against their real estate agent and lawyer and
    the parties who had agreed and then failed to complete the purchase of their
    home.

[6]

The respondents moved for summary judgment on their claim in the main
    action and to dismiss the appellants counterclaim. Judgment was granted for
    $298,847.67 ($30,000 of which was ordered to be paid by the release of the
    deposit to the respondents), together with pre-judgment and post-judgment
    interest on the full judgment amount, and costs of $22,340.18. The motion judge
    stayed enforcement of the judgment for a period of six months without prejudice
    to the appellants bringing a motion to extend the stay prior to its expiry.

[7]

On their appeal, the appellants raise substantially the same arguments
    they made in opposition to the summary judgment motion. They assert that the
    motion judge erred: (a) in concluding that there was no genuine issue requiring
    a trial with respect to their defences based on
non est factum
and the
    respondents failure to tender; (b) in granting partial summary judgment in
    the face of an outstanding third party claim; and (c) in his assessment of
    damages, in particular by concluding that the respondents bridge financing
    costs were foreseeable; and in concluding that the respondents took reasonable
    steps to mitigate their damages. The appellants also seek to appeal the costs
    award.

[8]

The exercise of powers under Rule 20 attracts deference. Whether there
    is a genuine issue for trial is a question of mixed fact and law; in the
    absence of an extricable error in principle or palpable and overriding error,
    this determination should not be disturbed on appeal:
Hryniak v. Mauldin
,
    2014 SCC 7, [2014] 1 S.C.R. 87, at para. 81. No such error has been
    demonstrated in this case.

[9]

With respect to the
non est factum
argument, contrary to the
    appellants argument, the motion judge explained his finding that there was no
    genuine issue for trial concerning what the appellants understood about the
    purchase and sale transaction. He accepted that each of the appellants had
    limited education and facility with the English language, and was relatively
    unsophisticated, but he stated, there is no evidence before me that the
    defendants were mistaken, as a result of a misrepresentation or otherwise, as
    to the nature or character of the agreement to purchase the Stouffville
    property. He noted that the only assertion of mistake related to the
consequences
of breach: according to Mr. Jias affidavit, he believed that if he and his
    wife failed to close the purchase, they would only risk losing their deposit
    and financing fees.

[10]

The
    motion judges findings and his rejection of the defence of
non est factum
are entirely supported by the record. As he observed, the appellants who had
    purchased two previous properties, understood they were purchasing the
    Stouffville property, that there was a financing condition, and that the
    agreement of purchase and sale would remain binding after they waived that
    condition.

[11]

With
    respect to the alleged failure to tender, the motion judge noted that, while
    there was a factual dispute about whether the respondents tendered, this was a
    case of anticipatory breach. He stated that the law is quite clear that an
    innocent party need not go through the meaningless exercise of tendering in
    circumstances of anticipatory breach. The parties had agreed that time was of
    the essence, meaning that they agreed that the time limit manifested by the
    fixed closing date was an essential term, such that breach of it would permit
    the innocent party to terminate the agreement. When the appellants lawyer
    communicated that they were unable to close on the scheduled date, the
    respondents lawyer correctly identified that communication as an anticipatory
    breach and the respondents were released thereby from any obligation to tender.

[12]

Contrary
    to the appellants argument, the motion judges finding that the appellants
    manifested an intention not to complete the transaction on October 30 was fully
    supported by the evidence: their lawyer sent a letter advising that they would
    be unable to close that day, prompting a response by the respondents lawyer
    that this was an anticipatory breach. If, as the appellants contend, they did
    not know about some of the lawyers correspondence at the time, that is a
    matter for their third party claim, and does not assist in their defence.

[13]

As
    for the argument that the motion judge erred in granting summary judgment in
    the main action while the third party claim was outstanding, there was no
    error.

[14]

This
    court has cautioned that a motion for
partial
summary judgment should be
    considered to be a rare procedure that is reserved for an issue or issues that
    may be bifurcated from those in the main action and that may be dealt with
    expeditiously and readily in a cost effective manner:
Butera v. Chown,
    Cairns LLP
, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34. Since the
    respondents moved for judgment on their entire claim against the appellants,
    and dismissal of the counterclaim, their motion was not for partial summary
    judgment in the sense described in
Butera.
Although this was not a
    motion for
partial
summary judgment, it was nevertheless appropriate for
    the motion judge to consider whether the issues in the main action and the
    third party action were intertwined, such that there was a potential for
    inconsistent findings if judgment were granted in the main action in favour of
    the respondents, while the third party action proceeded.

[15]

The
    motion judge undertook the appropriate analysis. He concluded that the
    respondents claims against the third parties were distinct and severable from
    the issues in the main action. Indeed, Mr. Jias affidavit in response to the
    summary judgment motion makes it clear that the appellants real concerns are
    with various alleged acts of misconduct of their real estate agent and lawyer
    and the people who failed to complete the purchase of their home, that, among
    other things, led them to believe they would be able to close the purchase of
    the Stouffville property and prevented them from doing so. Contrary to the
    appellants argument, the defences are not inextricably intertwined with the
    claims made in the third party action. There is no risk of an inconsistent
    finding on the issues in the third party claim. The third parties, who did not
    defend the main action, will be bound by the findings in the main action: r. 29.05(5).

[16]

As
    for the question of damages, there is no error in the motion judges conclusion
    that there was no genuine issue for trial concerning the amount of the
    respondents damages, or the issue of mitigation.

[17]

The
    amount included the minimum monthly payments made by the respondents on two
    lines of credit they had accessed for bridge financing to complete the purchase
    of their home at the end of October 2017 until they managed to sell the
    Stouffville property in June 2018. There is no error in the motion judges conclusion
    that such costs were objectively foreseeable in the particular circumstances,
    where both the appellants and the respondents were purchasing a new home at the
    same time that they were selling their respective properties.

[18]

As
    for the question of mitigation, it was not sufficient that Mr. Jias affidavit
    raised a concern that the respondents had not provided evidence regarding
    their efforts to sell the property and to mitigate their loss, including
    listing agreements, marketing materials, offers received, etc. The only
    evidence the appellants offered on mitigation was a letter of opinion from Mr.
    Au, a real estate agent, which spoke to the market value of the Stouffville
    property at the end of October 2017, in March 2018 and in June 2018 when it
    sold. The motion judge considered the limitations of this evidence, which did
    not address the appellants main concern  that it took too long to sell the
    property in a declining market. He reasonably accepted that the price the
    respondents obtained for the Stouffville property (which was 95% of the fair
    market value proposed by Mr. Au), considering their ongoing carrying costs for
    the home and the cost of bridge financing, was reasonable. The motion judge
    properly considered that the appellants had chosen not to cross-examine the
    respondents on why the property was listed for so long, when he concluded that
    mitigation was not a genuine issue for trial.

[19]

Finally,
    no error in principle is alleged or apparent in respect of the motion judges
    determination of costs.

[20]

The
    motion judges reasons are a model of clarity. He carefully considered all of
    the appellants arguments opposing summary judgment, made findings of fact
    based on the record and explained with reference to the applicable legal
    principles why there was no genuine issue for trial, and why summary judgment
    should issue in the main action. He reasonably granted a stay of enforcement of
    the judgment, the terms of which are not questioned in this appeal.

[21]

For
    these reasons the appeal was dismissed. Costs to the respondents are fixed at $10,000,
    inclusive of HST and disbursements.

R.G.
    Juriansz J.A.

K.
    van Rensburg J.A.

L. Sossin
    J.A.


COURT
    OF APPEAL FOR ONTARIO

CITATION: Stonehouse Group Inc. v. Ontario
    (Finance), 2021 ONCA 10

DATE: 20210111

DOCKET: C67441

Lauwers, Miller and Nordheimer
    JJ.A.

BETWEEN

Stonehouse
    Group Inc.

Appellant/Moving Party

(Appellant)

and

The Minister
    of Finance

Respondent/Responding Party

(Respondent)

Justin Kutyan and Thang Trieu, for the
    appellant

Arnold H. Bornstein and Jesse
    Epp-Fransen, for the respondent

Heard: December 4, 2020 by
    video conference

On appeal from the order of Justice Sean
    F. Dunphy of the Superior Court of Justice dated August 20, 2019, with reasons
    reported at 2019 ONSC 4876, [2020] C.T.C. 21.

Nordheimer J.A.:

[1]

Stonehouse Group Inc. appeals from the order of
    the motion judge who answered the following question of law in the negative:

In determining a corporations entitlement to
    an enhanced refund interest rate under subsection 82(5) of the
Corporations
    Tax Act
, must tax payable take a deduction from a loss carried back into
    account?

[2]

The appeal proceeded pursuant to r. 21 of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194, based on an agreed statement of
    facts.

[3]

The background facts can be stated briefly.

[4]

On July 22, 2013, and as a result of some
    reassessments done by the federal tax authorities, the respondent reassessed the
    appellant, with respect to its 2008 taxation year, to disallow a deduction for
    a loss carried back under the
Corporations Tax Act
, R.S.O. 1990, c.
    C.40 (the
CTA
). This resulted in $560,000 of taxes, plus interest,
    owed by the appellant for the 2008 Taxation Year. On October 11, 2013, the
    appellant paid the $560,000 of taxes, plus interest, as it was statutorily
    required to do regardless of the fact that an objection was outstanding.

[5]

On September 22, 2015, as a result of the
    reversal of the federal reassessments, the respondent reassessed the appellant
    for the 2008 Taxation Year to allow 100% of the loss carry back. On October 4,
    2015, the respondent made a refund payment to the appellant, without any refund
    interest.
[1]

[6]

The appellant objects to the respondents
    failure to pay refund interest on the tax overpayment of $560,000. The
    appellant says that interest ought to be paid calculated at the enhanced rate
    that is applicable when taxes have been overpaid as a result of a compelled
    payment while an objection is outstanding. It is the respondents failure to pay
    that enhanced refund interest that is at the heart of this dispute.

[7]

Two sections of the
CTA
are central to
    the question raised. One is s. 82(5) which reads:

Where, by a decision made under section 84 or
    92 or by a court, it is finally determined that the tax payable under this Act
    by a corporation for a taxation year is less than the amount assessed under
    section 80 to which the objection was made or from which the appeal was taken,
    and as a result of the decision there is a surplus in the corporations tax
    account for a taxation year or in the corporations instalment account for a
    taxation year, the interest rate prescribed by the regulations for the purposes
    of this subsection, and not the rate prescribed for the purposes of subsection
    (4) or 83 (1), as the case may be, shall be used to determine the amount of
    interest for the purposes of those subsections, for each day that the surplus
    in the account is attributable to the decision.

[8]

The other is s. 79(7) which reads;

For the purposes of calculating interest
    payable or allowed under this section or section 82 or 83 in respect of a
    particular taxation year, and for the purpose of determining the amount of a
    penalty, if any, to be assessed under subsection 76 (1) or (2) and the amount
    of tax payable under subsections 78 (4) and (6),

(a) the tax payable by the corporation under
    this Act for a taxation year shall be deemed to be the amount that would
    otherwise be determined if all amounts deducted by the corporation for that
    year under section 111 of the
Income Tax Act
(Canada), as it applies
    for the purposes of this Act, in respect of a loss for a taxation year after
    the particular year (in this section referred to as the loss year) were not
    deducted; and

(b) the amount, if any, by which the tax
    payable by the corporation under this Act for the particular taxation year is
    reduced as a result of a deduction referred to in clause (a) shall be deemed to
    be an amount paid by the corporation on account of its liability under this Act
    for the particular year on the day that is the latest of,

(i) the first day of the taxation year after
    the loss year,

(ii) the day on which the corporations return
    for the loss year is delivered to the Minister, or

(iii) the day on which the Minister receives a
    request in writing from the corporation to reassess the particular taxation
    year to take into account the deduction referred to in clause (a).

[9]

The appellants position is that it is entitled
    to interest calculated at the enhanced rate under s. 82(5) because, after the
    reassessment in 2013, it had a surplus in its tax account, namely, the amount
    of tax that it had been required to pay because of the respondents refusal to
    permit the loss carry back when that tax was not, in fact, properly payable.

[10]

The respondents position is that s. 79(7) is a
    special provision relating to loss carry backs that, according to the respondent,
    takes this situation out of the effect of s. 82(5). It says that the effect of
    s. 79(7) is that the tax payable is deemed to be the same as it was before the
    deduction of the loss.

[11]

The motion judge agreed with the respondent. He concluded,
    at para. 38:

The consequence of applying the deeming
    provision to s. 82(5) of the CTA is that refunds arising from one type of
    successful objection (tax losses) do not receive the benefit of the enhanced
    rate of interest prescribed by s. 82(5) of the CTA while refunds arising from
    other types of successful objections do receive the benefit.

Analysis

[12]

The appeal involves a question of law and thus
    the proper standard of review is correctness:
Housen v. Nikolaisen
,
    2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8.

[13]

It is agreed that there is no longer a special
    rule regarding the interpretation of taxing statutes, that is, such statutes
    are not to be interpreted strictly against the taxing authority as was once the
    case. Rather, taxing statutes are to be interpreted as any other statute would
    be, that is, the words of an Act are to be read in their entire context and in
    their grammatical and ordinary sense harmoniously with the scheme of the Act,
    the object of the Act, and the intention of Parliament:
Placer Dome Canada
    Ltd. v. Ontario (Minister of Finance)
,
2006 SCC 20, [2006] 1 S.C.R.
    715, at para. 21.

[14]

I begin my analysis by noting that s. 79(7) is
    not a model of legislative clarity. If one reads s. 79(7)(a) alone, it would
    tend to support the position of the respondent. Indeed, on its face, s. 79(7)(a)
    would deem the tax payable by a corporation to be the tax payable without taking
    into account any deduction allowed as a result of a loss carry back with the
    result that there would not be any surplus in the taxpayers account on which
    interest would be payable.

[15]

However, the difficulty with that interpretation
    is that it would operate to deny a corporation
any
refund interest, not
    just refund interest at the enhanced rate. On the respondents interpretation,
    the tax payable is deemed not to take into account the deduction of the loss
    carry back and, thus, the tax payable is not reduced from the amount that the
    appellant was compelled to pay. There is, consequently, deemed to be no surplus
    in the appellants tax account resulting from its payment of the $560,000 in taxes.

[16]

That this becomes the result follows from the
    use of the word surplus in s. 82 of the
CTA
. I note that it is s. 82
    that directly addresses refunds within the
CTA
. It provides the
    general right to interest on a refund in s. 82(4), which reads:

Interest at the rate prescribed by the
    regulations shall be calculated and allowed daily to a corporation on the
    surplus in the corporations tax account for a taxation year, for each day
    there is a surplus in the tax account after the end of the instalment period
    for the taxation year

[17]

It is of no consequence how a surplus arises for
    the purpose of the general right to interest under s. 82(4) because that
    subsection only gives a right to interest at the normal rate, which is set at
    below market rates. It is the role of s. 82(5) to provide for the enhanced
    interest rate where the surplus results from a successful objection to an
    assessment. Thus, in order to restrict the operation of s. 82(5) to only those
    cases, it is necessary to refer to the reason why the tax payable under this
    Act by a corporation for a taxation year is less than the amount assessed.

[18]

The respondents position is that the appellant
    was entitled to normal interest under s. 82(4) but not to the enhanced interest
    under s. 82(5). However, that is not the logical result of the interpretation of
    these sections that the respondent advances. Rather, as I have said, that
    interpretation would deny interest altogether, because s. 79(7)(a) would deem
    there to be no surplus in the corporations tax account.

[19]

As was observed in
Placer Dome
, at
    para. 22, where the words of a statute give rise to more than one reasonable
    interpretation, the ordinary meaning of words will play a lesser role, and
    greater recourse to the context and purpose of the Act may be necessary. It is
    clear from the argument before us that the words used in these sections,
    especially s. 79(7), give rise to more than one reasonable interpretation.

[20]

The context in which the provisions regarding
    refund interest are to be considered requires us to go back to the report of The
    Ontario Committee on Taxation,
The Provincial Revenue System
, vol. III
    (Toronto: Queens Printer, 1967). It was this report that led to the adoption
    of the legislation that provided taxpayers with the right to receive interest
    on overpayments of tax.
[2]
The report noted, in chapter 25, that under provincial revenue statutes there
    was a very uneven balance between the rights of government and the rights of
    the taxpayer when it came to the obligation to make payments.

[21]

The Committee concluded that it was
    fundamentally unfair for taxpayers not to receive interest on overpayments of
    tax. The Committee also concluded that, where the overpayment was the result of
    a compelled payment arising from a dispute as between the taxpayer and the
    government, the taxpayer should receive interest at an enhanced rate, if the
    taxpayer was ultimately successful in disputing the tax. Regarding the payment
    of interest, the Committee recommended the following, ch. 25 at para. 21:

Where the taxpayer has overpaid, equity
    demands that he receive interest on the amount refunded. If the amount has been
    mutually agreed upon by the taxpayer and the government, the rate of interest
    should be somewhat below current borrowing rates. This is to avoid a situation
    where taxpayers might consider themselves invited to use the government as a
    savings deposit institution by making deliberate overpayments. On the other
    hand, where overpayment is not determined until after a dispute between the
    government and the taxpayer, it is only fair that the taxpayer receive interest
    on overpayment and penalties, if any, at a rate comparable to going market
    rates.

[22]

Thus, it can be seen that the fundamental
    principle put forward by the Committee, and ultimately adopted by the
    government through amendments to the
CTA
, is that a taxpayer should
    receive interest on overpayments of tax. The only difference, in the level of
    interest to be paid, was between overpayments arising from mistake, voluntary
    overpayments, or other ordinary events, and overpayments due to a compelled
    payment arising from a dispute between the taxpayer and the government.

[23]

I have already noted that the interpretation
    advanced by the respondent would, taken literally, preclude any payment of
    interest due to a compelled tax overpayment arising from a loss carry back.
    While the respondent attempts to restrict its interpretation to only a
    difference in the rate of interest, normal versus enhanced, that effort cannot
    be logically rationalized with what the respondent asserts is the effect of s.
    79(7)(a).

[24]

The respondents position also cannot be
    rationalized easily with the presence of s. 79(7)(b). If the respondent is
    correct in what it says is the effect of s. 79(7)(a), then there would appear
    to be little need for s. 79(7)(b), at least as it relates to loss carry backs. If
    the effect of s. 79(7)(a) is that the tax payable is deemed not to be reduced
    by the loss carry back deduction, then one wonders why it is necessary to
    establish a date by which the tax is deemed to have been paid. If, on the other
    hand, s. 79(7) is interpreted as simply a provision, in cases involving loss
    carry backs, that postpones the date when the deduction in the tax payable
    arises, and thus when interest would begin to accrue, then s. 79(7)(a) and (b) work
    together in a harmonious fashion.
[3]

[25]

Yet another problem arises with respect to the
    respondents position. The respondent would carve out of the governments obligation
    to pay interest at the enhanced rate arising from a taxpayers successful objection,
    all situations where the taxpayers success involves the application of a loss
    carry back. Indeed, as I have already said, the respondents position would result
    in this carve out eliminating any right to interest at all. However, the
    respondent is unable to point to any justification offered by anyone anywhere
    that explains why this carve out was considered to be necessary. There is no
    explanatory note to the legislation. There is no report from a legislative or
    other advisory committee. There is no statement by the Minister in the Legislature.
    There is no policy statement from the Ministry. There is nothing that explains
    why this is a desirable result in this one particular situation  a result that
    appears to be directly at odds with the recommendation of The Ontario Committee
    on Taxation regarding the payment of interest that was otherwise adopted
    through amendments to the
CTA
.

[26]

On that point, the respondents reliance on the
    principle that governments have the right to legislate illogically is not a
    persuasive one.
[4]
It is also not a principle of statutory interpretation to be readily invoked.

[27]

The motion judge relied on
Connaught
    Laboratories Ltd. v. Canada
(1994), 94 D.T.C. 6697 (F.C.T.D.), as
    supporting his interpretation of s. 79(7). However, it does not. That decision
    involved a section of the
Income Tax Act
, R.S.C. 1985, c. 1 (5th
    Supp.), not the
CTA
. It was not a section dealing with the payment of
    interest on overpaid taxes. In addition, the concerned section mirrored the
    language of an earlier version of s. 79(7), not the version that is at issue in
    this case. Still further, the decision in
Connaught
addressed the
    liability for tax in the period from the original taxation year, not from the
    later date when the taxpayer sought to apply other deductions. The appellant
    does not seek to take its claim for interest back to that earlier period.
    Simply put, the decision in
Connaught
is not helpful here.

[28]

The motion judge concluded, at para. 40:

It is not my role to second-guess the very
    specific and unambiguous language the Legislature has chosen to use. There is
    neither absurdity nor manifest error that can be pointed to as resulting.

[29]

In fact, as I have already illustrated, there is
    a manifest error in the interpretation urged by the respondent, and adopted by
    the motion judge, and that is that the appellant would be disentitled to
any
interest payment. That result is not only manifestly unfair, it is directly
    contrary to the legislative context in which the interest payment provisions
    were adopted more than 60 years ago. And, as I have already mentioned, there is
    no explanation offered for why the Legislature would have desired that result
    in this particular situation.

[30]

The language in s. 79(7) is not unambiguous when
    read in its entire context. While it is not necessary to resort to it in this
    case, I would note that there remains a residual presumption in favour of the
    taxpayer:
Placer Dome
, at para. 24. Given the history of the
    legislative provisions regarding the payment of interest, an interpretation
    which favours the underlying policy choice of fairness to the taxpayer is to be
    preferred.

Conclusion

[31]

I would allow the appeal, set aside the order
    below, and answer the question posed in the affirmative. The parties advised us
    that they had agreed on the disposition of the costs of the appeal with the
    result that we do not have to address that issue.

Released: January 11, 2021 PL

I.V.B.
    Nordheimer J.A.
I agree. P. Lauwers J.A.
I agree. B.W. Miller J.A.

[1]
For the sake of clarity, I would note that there are two interest
    rates used for the purpose of paying interest on refunds. One is what I will
    refer to as the normal rate of interest and the other is the enhanced rate
    of interest. Because of the current state of low interest rates, the
    calculation of the normal interest rate results in a zero percent rate.

[2]
At common law, absent a statutory or contractual requirement to do
    so, the Crown was not obligated to pay interest on money that it owed:
Whitefish Lake Band of Indians v. Canada (Attorney
    General)
, 2007 ONCA 744, 87 O.R. (3d) 321, at para. 86.

[3]

It should be noted that the appellant is only seeking
    interest for the period from the time that it was compelled to pay the
    additional tax in 2013 and the time when the Government refunded that tax. It
    does not seek interest going back to the 2008 taxation year.

[4]

R. v. McIntosh
, [1995]
    1 S.C.R. 686, at para. 41.