COURT OF APPEAL FOR ONTARIO

CITATION: Kerzner v. American Iron & Metal Company Inc.,
    2018 ONCA 989

DATE: 20181207

DOCKET: C64238

Simmons, Huscroft and Miller JJ.A.

BETWEEN

Steven Kerzner

Plaintiff
    (Appellant/

Respondent by way of cross-appeal)

and

American Iron & Metal Company Inc.

Defendant (Respondent/

Appellant by way of cross-appeal)

Alan Riddell and Kyle Van Schie, for the
    appellant/respondent by way of cross-appeal

Peter MacTavish and Brittany Hinds, for the
    respondent/appellant by way of cross-appeal

Heard: June 21, 2018

On appeal from the order of Justice
    Graeme Mew of the Superior Court of Justice, dated July 17, 2017, with reasons
    reported at 2017 ONSC 4352, 41 C.C.E.L. (4th) 142.

Huscroft J.A.:

OVERVIEW

[1]

This is an appeal from an order granting summary judgment in favour of
    the appellant in his wrongful dismissal action against the respondent, American
    Iron & Metal Company Inc. (AIM).

[2]

The appellant, who was awarded six months pay in lieu of notice
    pursuant to the termination clause in his 2014 Executive Employment Agreement
    with AIM (the 2014 Agreement), submits that he is entitled to additional
    damages. The respondent cross-appeals from an order dismissing its counterclaim
    for breach of restrictive covenants and breach of fiduciary duties.

[3]

The wrongful dismissal action arose in the context of the sale of
    Bakermet Inc. (Bakermet) in 2008 to ArcelorMittal Montréal Inc. (ArcelorMittal).
    The appellant was a co-owner and employee of Bakermet at the time of the sale.

[4]

The motion judge concluded that the sale agreement and its accompanying
    release had the effect of releasing AIM from all claims relating to the
    appellants employment prior to the sale in 2008. Further, he interpreted the
    employment agreements following the sale  between the appellant and AIMs
    predecessor, ArcelorMittal Ottawa Inc. (ArcelorMittal Ottawa)  as a series
    of fixed-term contracts rather than a period of continuous service. Thus, he
    held that the appellants right to termination and severance pay under the
Employment
    Standards Act
,
S.O. 2000, c. 41 (ESA), was to be calculated only
    from 2008 forward. The motion judge found that the termination clause provided
    for notice that exceeded the minimum notice requirements under the ESA and was
    enforceable.

[5]

The motion judge rejected AIMs counterclaim, concluding that the
    restrictive covenants contained in the 2014 Agreement were temporally and
    geographically unreasonable. He concluded that the record was insufficient to
    demonstrate that the appellant had breached any ongoing fiduciary obligations
    he may have owed to AIM.

[6]

The appellant says that the motion judge erred in concluding:

(1)

that he validly
    waived his ESA entitlement to accrued termination and severance pay;

(2)

that the termination
    clause complied with the ESA

and was therefore valid and enforceable;
    and

(3)

that his employment
    relationship with the respondent and its predecessor was structured as a series
    of fixed-term contracts rather than as continuous service.

[7]

AIM cross-appeals, submitting that the motion judge erred by:

(1)

concluding that the
    restrictive covenants were unreasonable, and therefore unenforceable;

(2)

failing to assess
    whether the appellant had breached the restrictive covenants;

(3)

concluding that the
    appellant did not breach fiduciary duties owed to AIM; and

(4)

failing to assess
    whether the appellant was entitled to contractual termination payments in light
    of his post-termination conduct.

[8]

I have concluded that although the motion judge properly found
    that the appellant waived his entitlement to common law notice for service
    prior to 2008, he erred in concluding that the appellant released his pre-2008
    employment for the purposes of determining his ESA entitlements. The motion
    judge erred, further, in concluding that the termination clause was
    enforceable. In addition, the motion judge erred in concluding that the
    appellant entered into fixed-term employment in 2011 and 2014.

[9]

Consequently, the appellant is entitled to ESA termination and
    severance pay based on the whole period of his employment, and to common law
    notice for the 2008-2015 period. As I will explain, in the unusual
    circumstances of this case, the appellants total ESA entitlements exceed his
    common law damages. As a result, he is entitled only to statutory termination
    and severance pay and any benefits payable under the ESA.

[10]

For the reasons that follow, I would allow the appeal and dismiss
    the cross-appeal.

BACKGROUND

[11]

The
    appellant was hired in 1980 by Bakermet, a buyer and seller of various types of
    metals and steel products. He went on to become a one-third owner of Bakermet
    and president of the company.

[12]

In
    2008, ArcelorMittal purchased Bakermet for $45 million. The appellant received
    $17,162,637 in consideration for the sale of his one-third share of the
    company.

[13]

The
    2008 Share Purchase Agreement (the SPA) provided that no Key Employee  a
    term defined to include the appellant  had given notice of an intention to
    cease being employed with the [c]orporation and that the [c]orporation does
    not currently intend to terminate the employment of any officer, Key Employee
    or group of Key Employees.

[14]

A
    release in favour of Bakermet and its successors (the Release) was executed
    concurrently with the SPA. It provided that the appellant released Bakermet and
    its successors in accordance with the terms of the Release. Released Claims
    was defined as meaning:

[a]ny and all Claims which any of
    the undersigned has now, or may have in the future, against any Released
    Person, for any fact, act or omission up to and including the date hereof,
    including without limitation by reason of, or in connection with, any Released
    Persons position as a shareholder, director, officer, employee or creditor of
    Bakermet Inc.at any time up to and including the date hereof.

The 2008 Agreement

[15]

The
    2008 Executive Employment Agreement between the appellant and Bakermet (the
    2008 Agreement) recognized in its recitals that the appellants employment
    would continue following the share sale. The following are the key features of
    the agreement:

·

the appellant was to be employed as General Manager at a base
    salary of $250,000 per year with annual bonuses of $200,000 in the first three
    years;

·

the appellant agreed to work for Bakermet for a minimum period of
    three years;

·

the agreement was for an indeterminate period of time unless
    terminated;

·

Bakermet could terminate the appellants employment at any time,
    without cause, on written notice;

·

if the appellant was terminated without cause on written notice,
    he was entitled to 12 months of annual base salary, inclusive of ESA
    entitlements, as well as defined basic payments and continued protection
    under group insurance benefits for 12 months;

·

the agreement included non-competition and non-solicitation
    clauses; and

·

the terms of the agreement replaced and superseded all the terms
    in previous arrangements and agreements and the appellant released any and all
    claims relating to same.

[16]

Two
    subsequent employment agreements were made between the appellant and ArcelorMittal
    Ottawa, the validity of which was not challenged in these proceedings.

The 2011 Agreement

[17]

The
    2011 Executive Employment Agreement (the 2011 Agreement) was virtually
    identical to the previous 2008 Agreement, except that it purported to create a
    fixed-term contract and reduced the appellants compensation (base salary and
    bonuses). The 2011 Agreement took effect on August 6, 2011 and would terminate
    on August 6, 2014 unless earlier terminated. It also included a clause
    requiring ArcelorMittal Ottawa to advise the appellant in writing at least six
    months before August 6, 2014 if it intended not to renew the agreement. The
    2011 Agreement continued to permit termination without cause, provided that
    notice was given to the appellant. It reduced the amount payable following
    termination without cause to an amount equal to six months of annual base
    salary inclusive of ESA entitlements, along with basic payments and continued
    protection under group insurance benefits for six months.

The 2014 Agreement

[18]

The
    key change from the 2011 Agreement was that the 2014 Agreement established a
    two-year fixed term subject to early termination. The 2014 Agreement also
    reduced the appellants annual base salary to $185,000 and reduced his annual
    bonus to $46,250. The 2014 Agreement continued to require ArcelorMittal Ottawa to
    advise the appellant in writing of its intent not to renew the agreement at the
    end of the term, but the length of required notice was reduced to three months.
    Early termination on a without-cause basis continued to be permitted and in
    such a case the appellant remained entitled to an amount equal to six months of
    annual base salary inclusive of ESA entitlements, along with basic payments and
    continued protection under group insurance benefits for six months.

The appellants termination

[19]

In
    2015, ArcelorMittal Ottawa was acquired by AIM in an asset sale. The
    appellants employment contract was assigned to AIM. Six months later, on
    September 11, 2015, AIM terminated his employment with one weeks working
    notice. In accordance with the 2014 Agreement, the appellant was offered six
    months salary ($92,500) and continuation of benefits for six months, amounts
    that AIM asserted were inclusive of [his] entitlements under the
Employment
    Standards Act
. He was, at that time, 58 years old.

[20]

The
    appellant brought a wrongful dismissal action seeking 24 to 30 months pay in
    lieu of notice, based on 35 years of continuous employment with AIM and its
    predecessors. AIM argued that the appellants entitlement to compensation was
    limited by the terms of the 2014 Agreement.

[21]

Within
    two months of his termination, the appellant commenced employment with Palmer
    Recycling Inc., an Ottawa-based competitor of AIM. Subsequently, the appellant
    became president of Palmer and purchased the company. AIM counterclaimed for
    damages based on the appellants alleged breach of the restrictive covenants in
    the 2014 Agreement, as well as his alleged breach of fiduciary duty.

[22]

Given
    the appellants alleged breaches, AIM invoked its right under the 2014
    Agreement to suspend or terminate remaining payments and benefits protection
    and refused to pay the appellant pursuant to the termination clause.

THE MOTION JUDGES DECISION

[23]

The
    motion judge reviewed the requirements of the ESA governing written termination
    notice and severance pay and the decision of this court in
Covenoho v.
    Pendylum Ltd.
, 2017 ONCA 284, 43 C.C.E.L. (4th) 99. He concluded that, if
    the release in the 2008 Agreement re-set the clock, the termination provision
    in the 2014 Agreement would violate the ESA only if the appellants combined
    notice and severance entitlements exceeded 27 weeks (i.e. one week of working
    notice plus six months notice or pay in lieu as provided for in the 2014
    Agreement). This would not occur until 2035, when the appellant would be 78
    years old. Given the context of the three successive employment agreements
    between 2008 and 2015, the motion judge found that the potential for the
    termination provision to violate the ESA was too remote. He concluded that the
    termination provision of the 2014 Agreement would violate the ESA only if the
    appellant had not released AIM from including his pre-2008 service with
    Bakermet in the calculation of his statutory entitlements.

[24]

The
    motion judge found that appellant was employed pursuant to a fixed-term
    contract rather than a contract of indefinite hire. This was not a case
    involving a series of virtually identical contracts renewed year after year, as
    in
Ceccol v. Ontario Gymnastic Federation
(2001), 55 O.R. (3d) 614
    (C.A.). The motion judge noted that the appellants employment had to be
    considered in the context of the transactions involving the purchase and sale
    of the business.

[25]

The
    motion judge found that the appellant sold his shares to ArcelorMittal in 2008
    on terms that included generous compensation and a release of all claims
    relating to his previous employment with Bakermet. The Release, he said, was
    intended to wipe the slate clean. There was no issue of inequality of
    bargaining position between the appellant and the companies (ArcelorMittal and
    Bakermet), each of whom was represented by counsel. Accordingly, the motion
    judge concluded that any claims the appellant had under the ESA or at common
    law ran from the date of the 2008 Agreement.

[26]

The
    six months notice entitlement in the 2014 Agreement was more generous than the
    appellants entitlements under the ESA. Thus, the motion judge ordered that the
    appellant be paid $92,500  in accordance with the notice entitlement in the
    2014 Agreement  and compensation for employee benefits unpaid over the notice
    period.

The counterclaim

[27]

The
    motion judge found that the reasonableness of the non-competition and
    non-solicitation provisions in the 2014 Agreement should be assessed having
    regard to the agreement itself, not to the longer-term relationship between the
    appellant and the respondents predecessors  including the appellants sale of
    his shares in Bakermet. He concluded that, having regard to the two-year fixed
    term of the agreement, the restrictive covenants of 18 months and two years,
    respectively, were temporally unreasonable. He concluded, further, that the
    restrictive covenants were geographically unreasonable  they prevented the
    appellant from working in Quebec, Ontario, and the Atlantic Provinces in the
    only industry in which he had ever worked.

[28]

The
    motion judge found that the record was insufficient to demonstrate that the
    appellant had breached any ongoing fiduciary obligations he may have owed to
    AIM by commencing employment with a competitor. He rejected the appellants
    claim that AIMs failure to pay him his six months notice amounted to a
    repudiation of the agreement. Finally, he concluded that the appellant was not
    under a duty to mitigate damages arising from the respondents breach of the
    fixed-term contract.

DISCUSSION

The Appeal

Issue 1:       The appellants ESA
    entitlements could not be waived

[29]

I
    set out the relevant provisions of the ESA below:

5(1) Subject to subsection (2), no employer or agent
    of an employer and no employee or agent of an employee shall contract out of or
    waive an employment standard and any such contracting out or waiver is void.

(2) If one or more provisions in an employment
    contract or in another Act that directly relate to the same subject matter as
    an employment standard provide a greater benefit to an employee than the
    employment standard, the provision or provisions in the contract or Act apply
    and the employment standard does not apply.

9(1) If an employer sells a business or a part of a
    business and the purchaser employs an employee of the seller, the employment of
    the employee shall be deemed not to have been terminated or severed for the
    purposes of this Act and his or her employment with the seller shall be deemed
    to have been employment with the purchaser for the purpose of any subsequent
    calculation of the employees length or period of employment.

65(8) Only the following set-offs and deductions may
    be made in calculating severance pay under this section:

1. Supplementary
    unemployment benefits the employee receives after his or her employment is
    severed and before the severance pay becomes payable to the employee.

2. An amount paid to an
    employee for loss of employment under a provision of the employment contract if
    it is based upon length of employment, length of service or seniority.

3. Severance pay that was previously paid to the
    employee under this Act, a predecessor of this Act or a contractual provision
    described in paragraph 2.

[30]

The
    appellant argues that s. 9 of the ESA provides for continuity of accrued
    service in the event that an employer sells a business and the purchaser of the
    business employs an employee of the seller. Accordingly, the appellants
    employment continued without interruption following the sale of Bakermet in
    2008 and AIM was required to include his pre-2008 years of service when
    computing his ESA entitlements. He also argues that s. 5(1) of the ESA

invalidates
    any provision purporting to contract out of ESA

entitlements, and that
    the exception in s. 5(2) does not apply. Further, s. 65 of the ESA

prohibits
    setoff of an employees statutory entitlement to be paid severance pay, except
    in limited circumstances, none of which is applicable here. In any event, there
    was no evidence that the 2008 Release was ever intended to effect a waiver. The
    evidence proffered demonstrated that the Release related to the sale of the
    appellants shares rather than to any pending termination of his employment,
    and the 2008 Agreement contemplated his employment continuing indefinitely.

[31]

AIM
    argues that the appellant waived his pre-2008 common law and statutory
    termination entitlements by signing the Release in exchange for substantial
    consideration as part of the SPA. It describes the Release as an
    all-encompassing settlement agreement  a package deal the parties were free
    to enter into in the context of a share sale, citing this courts decisions in
Biancaniello
    v. DMCT LLP
, 2017 ONCA 386, 138 O.R. (3d) 210 and
Cosentino v.
    Sherwood Dash Inc.
, 2014 ONCA 843. AIM adds that the motion judges
    interpretation of the Release is entitled to deference, following
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633.

[32]

The
    respondents position as it relates to the ESA must be rejected.

[33]

Although,
    in general, contractual interpretation involves questions of mixed fact and law
    and so mandates a deferential standard of review, the interpretation of the ESA
    is an extricable question of law to which the correctness standard applies:
Sattva
,
    at para. 53.

[34]

Regardless
    of whether the Release is a stand-alone agreement or part of a package deal,
    it must comply with the ESA. The relevant provisions of the ESA are neither
    ambiguous nor vague. Section 9(1) is mandatory: employment is deemed not to
    have been terminated or severed by the sale of the employers business in whole
    or in part, and employment with the seller is deemed to be employment with the
    purchaser for the purpose of calculating the employees length or period of
    employment. Moreover, s. 5(1) prohibits contracting out of or waiving any
    statutory obligations and voids any agreement purporting to do so.

[35]

In
    short, the ESA is designed to preclude the very thing that AIM argues occurred
    in this case. There could be no valid waiver of the appellants ESA entitlements.

[36]

This
    courts decision in
Biancaniello
is of no assistance to AIM. It speaks
    to the scope of a release that was otherwise permissible. Nor is this courts
    decision in
Cosentino
applicable. That case was concerned primarily
    with whether the appellant had resigned his employment. It is not authority for
    the proposition that ESA obligations may be waived in the context of a larger
    settlement agreement. At para. 9 of its decision, this court specifically
    stated that its reasons were not to be considered an endorsement of the motion
    judges comments with respect to the
Employment Standards Act
.

[37]

In
    summary, the appellants pre-2008 service could not be waived or released for
    the purposes of calculating his ESA entitlements. AIM, as successor to
    ArcelorMittal Ottawa, was required to count the appellants pre-2008 service in
    calculating his ESA entitlements upon termination.

[38]

However,
    this conclusion does not deprive the Release of all effect. Although the
    Release did not address the appellants ESA entitlements and should not have
    been read as purporting to do something it could not lawfully have done, it
    specifically addressed the release of all of the appellants claims in
    connection with his position as an employee. Given the context in which the
    Release was executed and the wording of the Release, it was open to the motion
    judge to find that the appellant had waived his claim to common law notice
    based on his pre-2008 employment. His finding is entitled to deference.

Issue 2:       The termination clause is
    not valid and enforceable

[39]

The
    motion judge held that the termination provision of the 2014 Agreement would
    violate the ESA only if the appellant had not released his pre-August 2008
    service. Because the appellant could not waive his pre-August 2008 service for
    ESA purposes, it follows that the termination provision, which limits the
    appellant to six months notice on termination, violates the ESA because it
    provides a lesser benefit than the 34 weeks termination and severance pay to
    which he is entitled under the ESA. Accordingly, the termination provision in
    the 2014 Agreement, which purports to limit the appellants entitlements to six
    months salary and benefits, is void.

Issue 3:       The appellant was employed on an indefinite
    basis

[40]

In
    light of these conclusions, it is necessary to determine whether the appellant
    was employed on an indefinite or a fixed-term contract basis.

[41]

The motion judges interpretation of the 2011
    and 2014 Agreements as fixed-term contracts
is entitled to deference in
    the absence of an extricable error of law.
In its decision in
Sattva
,
the Supreme Court identified three extricable errors that may be made in the
    course of contractual interpretation: the application of an incorrect
    principle, the failure to consider a required element of a legal test, or the
    failure to consider a relevant factor: at para. 53 (citing
King v.
    Operating Engineers Training Institute of Manitoba Inc.
, 2011 MBCA 80, 270
    Man. R. (2d) 63, at para. 21).

[42]

In
    my view, the motion judge erred in law by failing to consider all of the
    relevant factors in concluding that the appellant was employed for a fixed term
    rather than on an indefinite basis.
There was significant
    evidence indicating that, despite fixed-term language in the 2011 and 2014
    Agreements, the appellant was employed on an indefinite basis.

[43]

Plainly,
    the 2008 Agreement contemplated indefinite employment.  But so too did the 2011
    and 2014 Agreements: despite their fixed terms, both agreements specifically
    required the employer to provide written notice if it intended not to renew or
    continue the agreements. The 2011 Agreement included recitals specifically
    recognizing the appellants continued employment, and in particular stated that
    the parties desired to enter into the agreement for the continuation of the
    employment of the [appellant]. The 2014 Agreement recognized the appellants
    current employment.

[44]

Although
    the motion judge acknowledged the renewal notice provision, he failed to
    analyze its effect and it did not factor into his analysis. Nor did the motion
    judge advert to the recitals.

[45]

As
    this court explained in
Ceccol
, at para. 26:

Employers should
    not be able to evade the traditional protections of the
ESA
and
    the common law by resorting to the label of fixed term contract when the
    underlying reality of the employment relationship is something quite different,
    namely, continuous service by the employee for many years coupled with verbal
    representations and conduct on the part of the employer that clearly signal an
    indefinite term relationship.

[46]

That
    is in essence what we have in this case. Although the motion judge found that
    the appellant had waived his right to any claims arising from his pre-2008
    employment, his prior employment remained a fact and formed part of the context
    for the subsequent agreements governing his continued employment. At the time
    of his termination in 2015, the appellant had been employed continuously since
    1980, and was employed pursuant to an ostensibly fixed-term agreement that
    required the employer to provide written notice if it intended not to renew or
    continue the agreement. Although the motion judge acknowledged that unequivocal
    and explicit language is required to establish a fixed-term contract and that
    any ambiguities will be strictly construed against the employer (citing
Ceccol
,
at paras. 25 and 27), his focus on the transactions involving the purchase and
    sale of the business resulted in a failure to recognize the indefinite nature
    of the appellants employment.

[47]

I
    conclude that the appellant was employed for an indefinite term from 2008
    onwards and, as a result, was entitled to common law notice for the period of
    August 2008 to September 2015.

How much notice was required?

[48]

Fixing
    a period of notice requires an assessment of the character of the employees
    employment, length of service, age and the availability of similar employment,
    having regard to his or her experience, training and qualifications:
Bardal
    v. The Globe & Mail Ltd.
(1960), 24 D.L.R. (2d) 140 (Ont. H. Ct. J.),
    at p. 145.

[49]

In
    my view, given that the appellant was 58 years of age at the time of dismissal,
    held a senior position with the respondent, and obtained similar employment
    within a very short time following termination, seven months is a reasonable
    notice period.

[50]

This
    court was not provided with complete submissions concerning the quantum of the
    appellants compensation for the purposes of calculating damages, and in
    particular whether the appellants damages should include his bonus and benefits
    package. Nor was this courts decision in
Paquette v. TeraGo Networks Inc.
,
    2016 ONCA 618, 34 C.C.E.L. (4th) 26, addressed. Nevertheless, in the
    circumstances of this case it is possible to resolve the matter.

[51]

The
    appellants entitlement to seven months pay in lieu of notice is subject to
    his duty to mitigate his damages, which he did by commencing employment at
    Palmer Recycling within two months of his dismissal by the respondent. The
    entitlement to seven months pay in lieu of notice must be reduced by all
    amounts received in mitigation of loss during the notice period:
Sylvester
    v. British Columbia
, [1997] 2 S.C.R. 315, at paras. 14-17.

[52]

The
    appellant is entitled to the maximum termination and severance pay permitted
    under the ESA  8 weeks termination and 26 weeks severance pay. The
    appellants ESA entitlements, including the value of unpaid benefits, normally
    would be deducted from his common law damages:
Stevens v. Globe and Mail
(1996), 28 O.R. (3d) 481 (C.A.), at p. 493;
Brake v. PJ-M2R Restaurant Inc.
,
    2017 ONCA 402, 135 O.R. (3d) 561, at para. 110. In this case, however, the
    appellants ESA entitlements exceed his common law damages, even assuming that
    common law pay in lieu of notice would include payment of a prorated share of
    the appellants annual bonus and benefits package. As a result, the appellant
    is entitled only to his ESA termination and severance pay, in addition to any
    amounts that may be owing in respect of unpaid benefits.
[1]

The Cross-Appeal

Issue 1:
The
    restrictive covenants are unenforceable

[53]

AIM
    argues that the motion judge erred in failing to assess the enforceability of
    the restrictive covenants in the context of the sale of Bakermet, citing
Payette
    v. Guay inc.,
2013 SCC 45, [2013] 3 S.C.R. 95. The restrictive covenants
    were

fundamental conditions without which the buyer would not have
    completed the transaction. It argues that the motion judge erred, further, in
    declaring that the temporal restriction was overbroad, as he incorrectly based
    his decision on the term of the 2014 Agreement alone. The motion judge also
    erred in assessing the reasonableness of the geographic scope of the covenants
    by comparing it to the area in which the appellant conducted business on behalf
    of AIM, instead of comparing it to the area in which AIM actually conducts
    business. Non-solicitation clauses in particular no longer require geographic
    limitations at all where they apply to all or some of a vendors customers:
Payette
,
at para. 73. Finally, AIM submits that the motion judge erred in failing to
    consider severing any unreasonable portion of the restrictive covenants,
    pursuant to the severability clause in the 2014 Agreement.

[54]

I
    would reject these submissions.

The non-compete obligation

[55]

The
    motion judges conclusion that both restrictive covenants were temporally
    disproportionate to the length of the appellants contract was based on the
    erroneous conclusion that the appellant was employed pursuant to a fixed-term
    employment contract. However, it is not necessary to determine whether the
    temporal restrictions were reasonable in the context of the contract of
    indefinite hire that was created, because the motion judge also found that the
    covenants were unreasonable because of the broad geographic limitations they
    imposed.

[56]

The
    core of the non-competition clause at issue was negotiated in the context of
    the SPA and the accompanying 2008 Agreement. The reasonableness of restrictive
    covenants is tested on a more lenient standard in the context of a sale of a
    business as compared to a pure employment contract:
MEDIchair LP v. DME
    Medequip Inc.
, 2016 ONCA 168, 129 O.R. (3d) 161, at para. 33;
Payette
,
at paras. 35, 39. However, the 2011 and 2014 Agreements contemplated similar
    but expanded restrictive covenants, in particular expanding the area in which
    the obligations applied to the Atlantic Provinces as well as Ontario and
    Quebec. The appellant submits that because these expanded obligations were
    introduced several years following the SPA, their reasonableness should be
    subject to the more onerous employer/employee test:
Elsley v J.G. Collins
    Ins. Agencies
, [1978] 2 S.C.R. 916.

[57]

I
    agree. Although the 2011 and 2014 Agreements can be considered as maintaining
    an indefinite period of employment for the purpose of common law notice
    entitlements, the motion judge properly reasoned that the restrictive covenants
    in the 2014 Agreement should be subject to the more exacting reasonableness
    test from the employment context. The covenants expanded considerably in scope
    over the course of the successive employment contracts; they were distinct
    provisions, part of stand-alone contracts within an ongoing employment relationship.

[58]

The
    clauses allegedly breached following the appellants termination are contained
    in the 2014 Agreement, which was negotiated and entered into with the appellant
qua
employee rather than
qua
seller. This is analogous to the
    situation in
Elsley
, and as such the restrictive covenants in the
    governing 2014 Agreement must be interpreted without regard to the SPA.
Payette

does not apply where a subsequent, stand-alone employment contract contains
    its own covenants, particularly where it expressly replace[s] and supersede[s]
    all the terms which were set forth under any previous arrangement and/or
    agreement.

[59]

The
    motion judges conclusion that the non-compete obligation was unreasonably
    broad was amply supported by the record and is entitled to deference. The
    appellant was 58 years of age at the time of termination and the scrap metal
    industry is essentially the only industry in which he has ever worked.
    Furthermore, as the appellant notes, the restrictions extend into territories
    in which the appellant did not himself do any business when the clause was
    negotiated and agreed to. The restrictions prohibit him from engaging in
    business operations in which he was not involved, and of which he had no
    knowledge, at the time of the 2014 Agreement.

Severance

[60]

Although
    the parties contemplated severance in the 2014 Agreement, this is not a case in
    which any aspect of the non-compete obligation should be severed. Traditional,
    blue-pencil severance is to be resorted to rarely, and only when the words
    being severed are clearly severable, trivial and not part of the main purport
    of the restrictive covenant:
Shafron v. KRG Insurance Brokers (Western)
    Inc.
, 2009 SCC 6, [2009] 1 S.C.R. 157, at para. 36. Using blue-pencil
    severance to cross out the geographic restrictions in this case would
    interfere with the main purport of the non-competition clause, and in any event
    would be counterproductive without accompanying amendment.

[61]

In
    that vein, using notional severance to read down the non-compete obligation
    unjustifiably would redistribute the risks assumed by the parties in the 2014
    Agreement, and would amount to this court imposing a covenant it considers
    reasonable. It is not appropriate for courts to interfere with contractually
    allocated risks in an employment relationship in this way:
Shafron
, at
    paras. 39-42.

[62]

In
    all of the circumstances, I would not interfere with the motion judges
    conclusion that the non-compete obligation is unreasonable, and so there is no
    need to determine whether it is ambiguous. I would not use the remedial
    severance tool provided by the 2014 Agreement.

The non-solicit obligation

[63]

The
    respondent notes that lack of territorial boundary in a non-solicit obligation
    is not, of itself, a reason to find that covenant unreasonable:
Payette
,
    at para. 73. However, it does not follow from
Payette
that
    non-solicitation clauses never can be found unreasonable based on geographic
    scope. The motion judges conclusions were based on the specific context of the
    scrap metal industry, and any parsing of the non-solicitation provisions to
    disentangle non-geographically bounded obligations only could strengthen his
    conclusion that the restrictive covenant was untenably broad.

[64]

However,
    ultimately it is not necessary to determine the reasonableness of the
    non-solicit obligation, because there was no breach. The motion judges factual
    finding  that AIM presented no evidence to counter the appellants assertion
    that he has scrupulously refrained from soliciting any and all customers of
    AIM  is entitled to deference.

Issue 2:       Did the motion judge err in failing to assess whether
    the appellant had breached the restrictive covenants?

[65]

In
    light of these conclusions, it is not necessary to determine whether AIMs
    refusal to pay the appellant his statutory entitlements after termination
    released him from the non-competition clause, or whether he breached that
    covenant in any event.

[66]

As
    noted, there is no reason to interfere with the motion judges factual finding
    that there is no evidence of solicitation.

Issue 3:       The appellant did not breach fiduciary
    duties

[67]

The
    motion judge was prepared to accept that the appellant owed fiduciary duties to
    AIM, duties that had not ended automatically with the termination of
    employment. However, he found that the evidentiary record was insufficient to
    support a finding that the appellant had breached any continuing fiduciary
    obligations. In essence, the motion judge found that AIM failed to put its best
    foot forward on the motion; it presented no evidence to counter the appellants
    evidence that he refrained from soliciting AIMs customers.

[68]

The
    motion judges analysis is a question of mixed fact and law and is entitled to
    deference, and I see no basis for this court to interfere with the motion
    judges findings on appeal.

Issue 4:       Was
    the appellant entitled to contractual termination payments in light of his
    post-termination conduct?

[69]

In
    light of the conclusion that the contractual termination clause is void, it is
    not necessary to determine whether the appellants post-termination conduct
    disentitled him from receiving payments under the 2014 Agreement.

CONCLUSION

[70]

I
    would allow the appeal and vary the award of damages. The appellant is entitled
    to 34 weeks termination and severance pay as set out above. The parties can
    calculate the quantum of any additional unpaid ESA entitlements that may be
    owing. I would dismiss the cross-appeal.

[71]

The appellant is entitled to costs on the appeal and the
    cross-appeal. If the parties cannot agree on costs, they may make brief
    submissions (3-4 pages) to the Registrar of this court within 30 days of this decision.

Released: December 7, 2018 (G.H.)

Grant Huscroft J.A.

I agree.  Janet
    Simmons J.A.

I agree.  B.W.
    Miller J.A.

[1]
The termination and severance pay entitlements are calculated as follows:
    $231,250/yr ($185,000 + $46,250 bonus) = $4,447.12/week x 34 weeks. There is
    insufficient information in the record before this court as to the value of any
    amount that may be owing in respect of unpaid benefits pursuant to ss. 60 and
    61 of the ESA.


COURT OF APPEAL FOR ONTARIO

CITATION: Koolatron v. Synergex Corporation, 2018 ONCA 1058

DATE: 20181219

DOCKET: C65122

Juriansz, Brown and Roberts JJ.A.

BETWEEN

Koolatron
    Corporation

Plaintiffs

(Respondent)

and

Synergex Corporation, Synergex De Mexico S.A.
    de C.V., David Aiello
, David Aello, Tom Davidson, Neil Fleshner, John Smith
    and Philip Walton

Defendants

(
Appellants
)

No one appearing for the appellants

Gerry Smits, for the respondent

Heard: December 5, 2018

On appeal from the judgment of Justice Jamie K. Trimble of
    the Superior Court of Justice, dated February 16, 2018.

APPEAL BOOK ENDORSEMENT

[1]

No one appeared for the appellants. The appeal is dismissed. Costs fixed
    in the amount of $6830.52 inclusive.


COURT OF APPEAL FOR ONTARIO

CITATION: Lacey v. Kakabeka Falls Flying Inc., 2018 ONCA 1007

DATE: 20181211

DOCKET: C65348

Doherty, van Rensburg and Hourigan JJ.A.

BETWEEN

Robin Lacey and Jennifer
    Lacey

Applicants

(Appellants)

and

Kakabeka Falls Flying Inc.

Respondent

(Respondent)

Michael Cupello, for the appellants

Jordan R.D. Lester and Warren A. Mouck, for the
    respondent

Heard: November 1, 2018

On appeal from the judgment of Justice W. Danial Newton
    of the Superior Court of Justice, dated April 6, 2018, with reasons reported at
    2018 ONSC 2239.

REASONS FOR DECISION

[1]

The appellants Robin Lacey and Jennifer Lacey brought an application for
    a declaration that a lease registered in 1972 against property they had
    purchased some seven years earlier (with notice of the lease) was void. The
    lease is between the respondent Kakabeka Falls Flying Inc. and the appellants
    predecessor in title, Robert Spence. The lease, which was signed on November
    20, 1968, is for a term of 99 years from January 1, 1967 to December 31, 2066.
    The appellants alleged that, at the time it was entered into, the lease
    violated s. 26(2) of the
Planning Act
,
    R.S.O. 1960, c. 296
(now s. 50(3) of the
Planning Act
,
    R.S.O. 1990, c. P.13)
,
which prohibits the subdivision of a property,
    including by a lease of only part of a property for a term exceeding 21 years.

[2]

Until May 2, 1968, s. 26(3)(a) of the
Planning Act
provided an
    exemption from the subdivision prohibition where both the subdivided land and
    the abutting lands had an area of ten acres or more (as is the case here). The
    application judge determined that the parties to the lease entered into an oral
    lease and that there had been part performance before May 2, 1968, such that
    the lease continued to be subject to the statutory exemption. This finding was
    determinative of his conclusion that there was a valid lease. The application
    judge therefore did not address any other arguments that were raised in
    response to the application.

[3]

The appellants raise three arguments on appeal.

[4]

First, the appellants argue that they were denied procedural fairness
    when they were refused leave to provide evidence on the question of whether
    there had been part performance of an oral agreement. This issue was only
    raised by the application judge at the conclusion of argument, and he permitted
    only written argument to be provided on this matter.

[5]

Second, the appellants submit that the application judge erred in law in
    finding part performance when there was no evidence to reasonably support such
    a finding.

[6]

Third, the appellants argue that the application judge erred in his
    application of the test for part performance.

[7]

We are satisfied that this appeal can be determined on the first ground.
    A fair reading of the record that was before the application judge indicates
    that no one had anticipated the need to address whether there was an oral lease
    and the question of part performance, before these issues were raised by the
    application judge at the conclusion of oral argument.

[8]

Indeed, in response to the application, the respondents affidavit
    evidence confirmed that the written lease was entered into in November 1968
    (that is, after the
Planning Act
amendments came into effect). It also
    (1) asserted that the
Planning Act
did not apply because the leased
    premises are an aerodrome, governed by the
Aeronautics Act
, R.S.C.
    1985, c. A-2, and not subject to provincial planning legislation (the
    jurisdiction issue); (2) relied on s. 26(3)(a) of the 1960
Planning Act
,

without reference to the statutory amendment by which that exemption was removed;
    and (3) argued that the relief sought was barred by the appellants delay, as
    they purchased the land with notice of the lease and accepted rent payments for
    a period of seven years (the laches issue).

[9]

At the conclusion of oral argument when the application was heard on September
    26, 2017, the application judge adjourned the hearing and directed that the
    parties provide written submissions to address two matters: whether a
    subsequent purchaser with notice could attack the validity of the prior lease, and
    whether there was an oral agreement prior to the written agreement dated
    November 20, 1968. The appellants then prepared an affidavit to address the
    matters raised by the motion judge, and served the affidavit on opposing
    counsel. The respondents counsel objected to the new evidence, and there was
    an exchange of correspondence about a possible motion to introduce the
    affidavit. Ultimately, the parties found themselves before the application
    judge on January 26, 2018 to address the two additional issues he had raised.
    The application judge granted the respondents motion to strike the new
    affidavit, granted leave to the respondent to deliver a reply factum, and
    adjourned the application to a new date.

[10]

After
    hearing further submissions on the two additional issues on March 5, 2018, the
    application judge released his reasons for dismissing the application on April 6,
    2018. As already noted, he concluded that there was an oral lease agreement and
    part performance before May 2, 1968 (the effective date of the amendment to the
Planning Act

removing the relevant exemption).

[11]

In
    our view, the evidence before the court to support a finding of part
    performance before May 2, 1968

was thin. Although the lease is dated November
    20, 1968 and was for a stated term commencing on January 1, 1967, the
    respondent lessee was only incorporated on February 19, 1969. There was
    evidence that the club started using the land after the lease was registered on
    title in 1972, but no evidence before the application judge about whether it
    was used before that time. There was some evidence that the land had been
    cleared of trees in 1968, however it is unclear when that occurred, or who did
    it. Although the written lease provided for rent payable commencing in January
    1968, there was no evidence about whether rent was actually paid. The application
    judge referred to a survey completed on February 22, 1968 and dated April 17,
    1968. A copy of the survey, with cross-hatching showing the leased area, was
    attached to the appellants initial affidavit. There was no evidence of the
    purpose of the survey, or when the cross-hatching was added.

[12]

In
    short, we agree with the appellants that the evidence that was before the court,
    without more, was not persuasive on the question of part performance and, more
    importantly, that, after raising this issue, the application judge erred in
    refusing to permit further evidence to be received.

[13]

We
    disagree with the respondent that the appellants failure to bring a motion
    specifically seeking to file a further affidavit is fatal. The affidavit had
    been served and filed with the court. The question of the admissibility of the
    affidavit was squarely before the application judge on January 26, 2018, when
    he ordered that fresh evidence could not be received. Nor was this a case where
    r. 39.02(2) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194 (to
    prohibit, without leave, the filing of an affidavit by a party who has
    cross-examined on an affidavit delivered by an adverse party) was in play. In
    our view, the application judges refusal to permit the filing of fresh
    evidence to properly respond to an issue that he had raised, especially when
    the record provided so little evidence on that issue, was unfair to both
    parties.

[14]

The
    other defences to the application raised by the respondent, namely the jurisdiction
    and laches issues, were argued before the application judge but not determined
    by him. The respondent invites this court to decide these issues. We are not
    prepared to do so. The record before this court is incomplete and does not
    permit us to arrive at any determination of these issues. Further, as the
    jurisdiction issue raises the constitutional applicability of the
Planning
    Act

to the subject property, this issue cannot be determined until
    the Attorney General of Canada and the Attorney General of Ontario have
    received notice of a constitutional question in accordance with s. 109 of the
Courts
    of Justice Act
, R.S.O. 1990, c. C.43. No such notice has been provided.

[15]

For
    these reasons, the appeal is allowed, and the judgment of the application judge
    is set aside. The application is referred back to another judge of the Superior
    Court for a determination on the merits, including any directions that judge
    may provide with respect to the evidentiary record. The costs award of the
    application judge is set aside. Costs of the application, including the
    proceedings before the first application judge, are to be determined by the new
    application judge hearing the matter.

[16]

The
    respondent shall pay the appellants their costs of the appeal in the sum of
    $12,000, inclusive of disbursements and applicable taxes.

Doherty
    J.A.

K.
    van Rensburg J.A.

C.W.
    Hourigan J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Lauzon v. Fortier, 2018 ONCA 1086

DATE: 20181228

DOCKET: C64865

Rouleau, van Rensburg and Roberts JJ.A.

BETWEEN

Julie Lauzon

Appellant

and

Lionel Fortier

Respondent

J. Summers, for the appellant

Y. Guilbault and Jessica Houle, for the respondent

Heard: December 13, 2018

On appeal from the
    judgment of Justice M.P. Shelston of the Superior Court of Justice, dated December
    21, 2017.

REASONS FOR DECISION

[1]

This is an appeal of a judgment after trial following marriage
    breakdown.  The appellant contends that the trial judge erred in ordering that
    the respondent pay her an equalization payment of $166,674.64 by way of pension
    rollover, and in ordering that she pay the respondent the sum of $128,560 plus
    interest for his interest in the matrimonial home. The parties had agreed to
    the transfer of the matrimonial home after separation. In October 2016, the
    court ordered the transfer of the home further to the agreement and dispensed
    with the requirement for the respondents signature. The appellant asserts that
    the trial judge ought to have set off the value of the respondents interest in
    the matrimonial home against the equalization payment that was owed, with the
    balance payable by pension rollover. Her position is that the trial judges
    order to the contrary was made without jurisdiction. In the alternative, she
    asserts that even if the order could have been made, it should not have been
    since the trial judge failed to consider all relevant factors.

[2]

For the reasons that follow we dismiss the appeal.

[3]

The relevant facts are as follows.

[4]

The parties separated in October 2014 after 15 years of marriage. By
    mid-April 2015 the respondent had moved out and the appellant was paying all
    expenses associated with the matrimonial home. The respondent commenced his
    application at that time, seeking various relief, including equalization of net
    family property and the immediate sale of the matrimonial home. The appellant asked
    for the equalization of net family property and exclusive possession of the matrimonial
    home and its contents. She also specifically asked that she have exclusive
    possession of the matrimonial home and its contents until the equalization of
    net family property and
until she could
    obtain refinancing of the matrimonial home to pay the [respondent] for his
    share
.

[5]

A temporary consent order on October 21, 2016 provided for child
    support, access and that the children would reside with the appellant at the
    matrimonial home.

[6]

On June 9, 2016 the parties signed interim minutes of settlement which
    were incorporated into an interim order of the same date. Among other things
    they agreed as follows:

5. The matrimonial home shall be transferred to the
    mother on the following conditions:

(a) the father shall obtain an appraisal with
    Independent Appraisers at his cost. The father shall be allowed to attend with
    the appraiser, but he shall not bring any one with him. The mother may have any
    third-party present. The father will not communicate with the mother during the
    appraisal. The appraisal will be either on the weekend or in the evening after
    5:30 p.m.

(b) The mother shall forthwith apply to the bank for
    approval to remove the father from the mortgage;

(c) Subject to the ability of the bank to comply and
    the consent of counsel, should the mother not be approved within 30 days of the
    minutes, the home shall be listed for sale by Mario Lemieux on the following
    conditions:

(i)
    the listing price will be as recommended by Mario Lemieux; and

(ii)
    the parties shall accept any offer that is at least 95% of the listing price.

(d) Provided the mother is approved, the house shall
    be transferred into the mothers name alone within 60 days of the appraisal.
    The cost of the transfer shall be shared by the parties.

6. The equalization of the net family properties
    shall be addressed at a later date.

[7]

The parties subsequently agreed that the equity in the matrimonial home
    was $256,519 and that the respondents share for his equity was $128,260.

[8]

On October 13, 2016 the parties were in court, each seeking a finding of
    contempt against the other. The appellant sought an order that the respondent
    was in contempt for failing to transfer to her his interest in the matrimonial
    home. The respondent alleged that the appellant was in contempt for failing to
    obtain the necessary financing to purchase his interest or to sell the
    matrimonial home. Labrosse J. dismissed both motions. He granted summary
    judgment in favour of the appellant to dispense with the respondents consent
    to transfer his interest in the matrimonial home. At that time Labrosse J.
    identified that the respondent wished to satisfy the equalization payment by
    way of a pension transfer but that that issue should be reserved for the trial
    judge.

[9]

The respondents half-interest in the matrimonial home was transferred
    to the appellant on November 3, 2016.

[10]

By
    the time the application proceeded to trial in September 2017, the parties had
    settled the issues of custody, access and support on a final basis, and the
    trial judge incorporated the terms of their settlement into his final order.

[11]

The
    central issues at trial were as follows:

·

The respondents claim for occupation rent from April 2015 until
    November 3, 2016 when title to the home was transferred;

·

Equalization of net family property;

·

The respondents claim for payment for his interest in the
    matrimonial home;

·

The amount of the equalization payment owed by the respondent to
    the appellant and how equalization would be satisfied; and

·

Whether the respondent was entitled to an order for the sale of
    the matrimonial home.

[12]

The
    respondents claim for occupation rent was dismissed. The parties disagreed
    about the value of a savings account in the appellants name. The trial judge
    accepted the appellants evidence that the account was joint with her father,
    and included only one half the value of the account for equalization purposes.
    Neither of these conclusions is challenged by the respondent in the appeal.

[13]

The
    trial judge then calculated the equalization payment owed by the respondent to
    the appellant as $144,934.47. He observed that the question of how the
    equalization payment was to be made was disputed between the parties. The
    appellant submitted that the equalization payment should be satisfied by the
    respondent receiving a credit of $128,260, representing his equity in the
    matrimonial home, and that the balance be paid by a transfer from the
    respondents pension plan grossed up by 15% for income tax. The respondent
    sought an order that he be paid the equity in the matrimonial home and that if
    the appellant was unable to make the payment, that the home be sold. The
    respondent proposed that the equalization be satisfied by a pension rollover.

[14]

The
    trial judge had to determine how the equalization payment was to be made. The
    appellants position was that the parties had agreed that the respondent would
    receive a credit against equalization for his interest in the matrimonial home.
    The trial judge noted that this was denied by the respondent, who was
    consistent in his position that the appellant should buy out his interest in
    the matrimonial home.

[15]

The
    trial judge observed that, although the parties were represented by counsel at
    the time, the interim minutes of settlement did not address how the respondent
    was to be paid his equity or how equalization was to be determined. The parties
    did not agree on the effect of the transfer on the equalization calculation and
    payment or on how the equalization payment was to be made.

[16]

In
    the absence of an agreement, the trial judge determined the issue after
    considering the provisions of the
Family Law Act
and relevant
    jurisprudence. He noted that he had considered the following factors:

·

the respondents pension comprised 59% of his assets at the date of
    separation;

·

at separation the two largest assets were the matrimonial home
    with equity of $256,519 and the respondents pension valued at $331,759;

·

at separation, the parties total net liquid assets were
    $9,063.38;

·

the respondent has always requested that he be bought out of his
    interest in the matrimonial home;

·

the respondent had purchased his own residence post-separation;

·

the interim minutes of settlement do not assist either party in
    their position that either there is to be a credit for the respondent or that the
    appellant owes the respondent a payment for his equity in the home;

·

the maximum transferable amount under the terms of the
    respondents pension plan was $180,529.48 accumulated from July 19, 1999 to
    October 11, 2014.

[17]

After
    referring to the preamble of the
Family Law Act
, its primary goal as a
    division of assets that is fair to both spouses, the fact that the parties
    worked hard throughout their marriage, and that their largest asset, other than
    the respondents pension, was the matrimonial home, the trial judge concluded
    that it would be unfair to the respondent to leave the marriage after 15 years
    with what amounted to a single asset  his pension  that he could not access
    for many years. He therefore ordered that the equalization payment be made by a
    pension rollover, a decision he observed was in keeping with the primary goal
    of the
Family Law Act
that the division of assets be fair to both
    spouses.

[18]

The
    trial judge held that the appellant owed the respondent the sum of $128,560 for
    his share in the matrimonial home. After reviewing the relevant statutory
    provisions, he concluded that he could not order the sale of the matrimonial
    home to enforce the payment of this post-separation adjustment as it was not
    related to the equalization payment which the respondent, not the appellant,
    was required to make.

[19]

The
    final order therefore required the respondent to pay an equalization payment of
    $166,674.64 (which included a 15% gross-up for income tax) by way of rollover
    of his pension, and the appellant to pay the respondent $128,560 for his share
    in the matrimonial home, with interest at 3% effective the date of the
    transfer.

[20]

On
    appeal there is no dispute about the amounts owed by way of equalization or the
    value of the respondents interest in the matrimonial home. The sole question
    is whether the trial judge erred in refusing to address the respondents
    entitlement as a set-off against the equalization payment he owed to the
    appellant.

[21]

First,
    the appellant asserts that the trial judge did not have jurisdiction to make
    the order he did. The appellant contends that the effect of the interim minutes
    of settlement is that the parties had reached a final agreement on the transfer
    of the home and that the only financial issue left to be determined was
    equalization. The appellant argues that under the
FLA
it is not open
    to the court to order the payment for the transfer of an asset that does not
    directly satisfy equalization. That is, her position is that the only question for
    the court is how the equalization payment is to be satisfied by the payor.

[22]

We
    disagree. The appellants jurisdiction argument is based on an interpretation
    of the parties agreement that was not accepted, and was specifically rejected,
    by the trial judge. The trial judge concluded that the parties were not in
    agreement as to how the equalization payment was to be made or as to how the
    respondent was to be compensated for transferring his interest in the
    matrimonial home to the appellant. The inclusion of the words the equalization
    of the net family properties shall be addressed at a later date, without more,
    did not mean that the respondent would be entitled to payment for his share of
    the matrimonial home only by way of set-off against the equalization payment,
    once the amount was determined. As the trial judge noted, if the parties
    intended that result, the minutes should have said so. He concluded that the
    parties agreed to defer that issue to trial.

[23]

Indeed,
    the appellants position at trial was not that the parties had reached a final
    agreement about the transfer of the matrimonial home, so that the only issue
    left to be determined was equalization. The agreement was silent as to how the respondent
    was to be compensated for the transfer of his equity in the home which had
    occurred between the date of separation and the trial. And since the appellant rightfully
    acknowledged that the respondent was entitled to some form of compensation for
    the transfer (whether by payment or by set-off), both parties effectively
    agreed that there was an issue beyond the value of the equalization payment
    always calculated as at the date of separation  that was left to be resolved.
    That is, for the court to grant either partys request an order was required
    that went beyond the value of the equalization payment owing
at the time of
    separation
and how it was to be paid.

[24]

When
    looked at this way, it is clear that the court had jurisdiction to make the
    order it did. Both parties had requested orders beyond what was required only
    to equalize their net family properties. And the court routinely makes such
    orders to account for post-separation adjustments. In the absence of an
    agreement between the parties to that effect, the trial judge was not obliged
    to order the payment to be made by way of set-off against the equalization
    payment owed to the appellant by the respondent. It was open to him to make the
    order that he did.

[25]

As
    the second ground of appeal, the appellant asserts that even if there was
    jurisdiction to make the order, the trial judge did not consider all relevant
    factors when he refused to set off the respondents value in the matrimonial
    home against the equalization payment that was owed. In particular, she points
    to the trial judges reference to the respondent having always requested that
    he be bought out of his interest in the matrimonial home, which was included
    in his list of enumerated factors and his failure to mention in the same list
    the fact that she had always requested a set-off against equalization. She also
    contends that the trial judge failed to take into consideration the fact that ordering
    her to pay the respondent for his share would require her to sell the home in
    which she lives with the children and from which she operates a home day-care.

[26]

We
    do not give effect to this ground of appeal. We are satisfied, on a review of
    the record, that the trial judge was aware of these circumstances, and took
    them into consideration when he balanced the parties interests. We note that
    the trial judge was only presented with options at two extremes: that the
    entire value of the respondents interest in the house be set off against the
    equalization payment he owed, or that the equalization payment be satisfied
    entirely by a pension rollover. The result does not reflect an unreasonable
    exercise of discretion, and there is accordingly no basis to interfere.

[27]

For
    these reasons the appeal is dismissed. The respondent shall have his costs of
    the appeal in the sum of $3,500, inclusive of disbursements and HST. The appellant
    owes the respondent the net amount of $2,500 after setting off the costs
    awarded in favour of the appellant in the sum of $1,000 in respect of the
    respondents unsuccessful motion to this court.

Paul
    Rouleau J.A.

K.
    van Rensburg J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Law Society of Ontario v. Leahy, 2018 ONCA 1010

DATE: 20181210

DOCKET: C65203 and C65808

Juriansz, Brown and Roberts JJ.A.

BETWEEN

Law Society of Ontario

Applicant (Respondent)

and

Timothy Edward Leahy

Respondent (Appellant)

Timothy Edward Leahy, acting in person

Simon Bieber and Alex Fidler-Wener, for the respondent

Heard: December 6, 2018

On appeal from the order of Justice Victoria R.
    Chiappetta of the Superior Court of Justice, dated March 7, 2018, and from the
    order of Justice E. Morgan of the Superior Court of Justice, dated August 1,
    2018, with reasons reported at 2018 ONSC 4722.

REASONS FOR DECISION

[1]

The appellant appeals from two orders that permanently enjoin him from
    advertising, holding himself out and practising as a lawyer in Ontario.

[2]

The appellant sought to file fresh evidence.  Other than the transcript
    of the March 7, 2018 hearing before Chiappetta J., we do not admit the
    appellants affidavit evidence.  It does not meet the criteria for the
    admission of fresh evidence on appeal because it mainly consists of argument.

[3]

Section 26.1(1) of the
Law Society Act
prohibits a non-licensee
    from providing legal services or holding himself out as a lawyer in Ontario.
    The appellants licence to practise law in Ontario was revoked on December 10,
    2014 and has not been reinstated.  He did not appeal his disbarment.
    Accordingly, he has no licence to practise law in Ontario.

[4]

The appellant complains about various steps in the proceedings at which
    he perceives he was treated unfairly. He ascribes ill will to the Law Society
    and its counsel and former counsel, whom he accuses of deliberately
    manipulating the process against him. We see no merit in the appellants
    submissions that he was not treated fairly or that the respondent committed
    multiple abuses of process.  Neither the record nor the motion judges reasons
    support it. Moreover, if there were any procedural irregularities in the March
    7
th
hearing, they were cured in the July 25
th
hearing. We
    note that the motion judge on the July 25
th
hearing explicitly
    incorporated the March 7, 2018 order into his of August 1, 2018, as an omnibus
    order.

[5]

The appellants criticism of isolated items of evidence during his
    submissions could not refute the overwhelming evidence before the two motion
    judges.  This evidence clearly demonstrated that following the revocation of
    his licence, the appellant continued to hold himself out as a lawyer entitled
    to practise law in Ontario on various websites, in other media, and through
    corporations, which he controlled, and continued to offer legal services to
    clients for remuneration. The appellant, in the earlier proceedings, had not
    only admitted he was practicing law but had claimed the right to do so.

[6]

Before us the appellant stated that he had not practised law during the
    preceding fourteen months. If true, this does nothing to undermine the basis on
    which the injunctive orders were made and the Law Societys entitlement to a
    permanent injunction.

[7]

Morgan J., in careful reasons, analysed each of the several bases upon
    which the appellant claims the right to practice law and to appear in the
    Federal Court. We agree with his reasons for rejecting each of these claims.

[8]

We conclude that the motion judges correctly found the appellant was in
    clear breach of s. 26.1 of the
Law Society Act
. It was therefore open
    to them to grant permanent injunctive relief under s. 26.3 of the Act to bring
    an end to the appellants prohibited conduct.

[9]

The appeals are dismissed.

[10]

The
    respondent is entitled to its costs on a partial indemnity basis in the amount
    of $22,000.

R.G. Juriansz J.A.

David Brown J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Lee v. Ponte, 2018 ONCA 1021

DATE: 20181213

DOCKET: C64794

Juriansz, Brown and Roberts JJ.A.

BETWEEN

Orlena Lee, in her capacity as Estate Trustee for
    the Estate of Shui Yee Lee, Deceased

Plaintiff (Appellant)

and

Cesar Ponte

Defendant (Respondent)

Howard Markowitz, for the appellant

Patrick J. Morrissey, for the respondent

Heard: December 7, 2018

On appeal from the judgment of Justice Arthur M. Gans of
    the Superior Court of Justice, dated November 30, 2017.

REASONS FOR DECISION

[1]

The issue on appeal is whether s. 7 of the
Limitations Act, 2002
,
    S.O. 2002, c. 24 applies to extend the time within which an estate trustee can
    bring a claim that the deceased person had before death.

[2]

In 2007, the deceased person Shui Lee had loaned the respondent $55,000.00
    secured by a promissory note payable on demand or upon the sale of a specified
    piece of property, whichever occurred first. The trial judge found the limitations
    period began to run on June 6, 2013 when Shui Lee became aware the property had
    been sold. The estate trustee of Shui Lee made a demand in May 2015 and then
    commenced an action on July 17, 2015. The motion judge found the action was
    statute barred because it was commenced more than two years after June 6, 2013
    and dismissed the claim on summary judgment.

[3]

On appeal, the appellant submits that s. 7 of the
Limitations Act
applies to extend the limitation period by six months for the estate trustees
    action. Section 7(1) of the
Limitations Act

provides:

7 (1) The limitation period established by section 4
    does not run during any time in which the person with the claim,

(a) is incapable of commencing a proceeding in
    respect of the claim because of his or her physical, mental or psychological
    condition; and

(b) is not represented by a litigation guardian in
    relation to the claim.

Presumption

(2) A person shall be presumed to have been capable
    of commencing a proceeding in respect of a claim at all times unless the
    contrary is proved.

Extension

(3) If the running of a limitation period is
    postponed or suspended under this section and the period has less than six
    months to run when the postponement or suspension ends, the period is extended
    to include the day that is six months after the day on which the postponement
    or suspension ends.

[4]

The appellant submits that this provision should be liberally construed.
    In
Papamonolopoulos v. Toronto (City) Board of Education
, [1987] 75
    O.R. (2d) 388 (leave to SCC denied), Brooke J.A. said:

I think the provisions of a
    statute of limitations should be liberally construed in favour of the
    individual whose right to sue for compensation is in question. Where two
    interpretations of the statute are possible, reason favours the one which
    enables the plaintiff to bring his action

[5]

The appellant urges that s. 7 should be interpreted to apply when the
    person having the claim dies before commencing proceedings. He argues that a
    deceased person is incapable of commencing a proceeding in respect of the claim
    because of his or her physical, mental or psychological condition. He submits
    that the same policy concerns for allowing additional time for a litigation
    guardian to be appointed and take over the management of the affairs of the
    incapable person apply to an estate trustee. He points out that it takes time
    for an estate trustee to review the affairs of the deceased, and to obtain
    probate.

[6]

We are not persuaded the motion judge erred by dismissing the claim as
    statute barred. The grammatical and ordinary sense of the words of s. 7 are
    simply not elastic enough to apply to a deceased person and to construe an
    estate trustee to be a litigation guardian.

[7]

The appeal must be dismissed. The appellant did not rely on s. 38(3) of
    the
Trustee Act
,
R.S.O. 1990, c. T. 23, the application of
    which is preserved by s. 19 of the
Limitations Act
. We have not
    considered whether it has some bearing on the issue raised by this appeal.
    Costs are fixed in the amount of $6,500.00 inclusive.

R.G. Juriansz J.A.

David Brown J.A.

L.B. Roberts J.A.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Leger (Re), 2018 ONCA 1035

DATE: 20181214

DOCKET: C65490

Hoy A.C.J.O., Feldman and Fairburn JJ.A.

IN THE MATTER OF: Michael Leger

AN APPEAL UNDER PART XX.1 OF THE
CODE

Pierre-Luc Fréchette, for the appellant

E. Nicole Rivers, for the respondent Attorney General of
    Ontario

Marie-Pierre T. Pilon, for the respondent Royal Ottawa
    Health Care Group

Heard: December 7, 2018

On appeal against the disposition of the Ontario Review
    Board, dated February 22, 2018, with reasons reported at [2018] O.R.B.D. No
    715.

REASONS FOR DECISION

[1]

The appellant appeals from the February 22, 2018 disposition of the
    Ontario Review Board. The majority of the Board concluded that the necessary
    and appropriate disposition remained a detention order, with privileges up to
    and including living in the community in approved accommodation. However, a
    minority of the Board would have granted the appellant a conditional discharge.
    In the minoritys view, s. 15(1.1) of the
Mental Health Act
, R.S.O.
    1990, c. M. 7 (which the Board referred to as the Box B criteria) would be
    available to re-admit the appellant to the Hospital, should he decompensate and
    not be willing to return to the Hospital voluntarily.

[2]

The appellants position is that the Boards disposition should be set
    aside and a conditional discharge ordered in its place. In furtherance of this
    position, he makes two main submissions.

[3]

First, he argues that the majority of the Board made a palpable and
    overriding factual error in finding that he had a propensity to decompensate
    within hours or days of missed doses of medication.

[4]

We reject this argument. The majoritys finding is rooted in  and amply
    supported by  the evidence of the appellants attending psychiatrist, Dr.
    Strike. There is no basis for this court to interfere with it.

[5]

Second, the appellant argues that the majority of the Board failed to
    adequately consider alternative mechanisms to affect his readmission to the
    Hospital upon decompensation, and that the majoritys conclusion that a
    detention order was the least onerous and least restrictive disposition available
    in the circumstances was therefore unreasonable. He further argues that the
    majority improperly substituted a test of most convenient to the [Hospital]
    for the legal test of least onerous and least restrictive disposition to the
    accused.

[6]

We disagree.

[7]

The appellants current diagnosis is Schizoaffective Disorder, Bipolar
    Type, multiple episodes, in partial remission with medication. He is incapable of
    consenting to treatment. The management of the appellants illness is
    complicated by his deficits in executive functioning. The appellant
    self-administers his daily medication, and has a proclivity to miss doses due
    to his cognitive difficulties.

[8]

He also has a history of rapid decompensation. In one instance of
    decompensation, the appellant threw furniture off his sixth-floor balcony. The
    appellant continued to experience psychotic symptoms over the course of the
    review period.

[9]

In Dr. Strikes opinion, a detention order continued to be required due
    to the risk of rapid decompensation. She reported that the appellant is very
    sensitive to medication changes or missed doses. The appellant can fully
    decompensate in a matter of two or three weeks, but psychotic symptoms that
    put him at an acute risk of violent acts can happen within a shorter period
    such as hours. Although the appellants insight into his illness is generally
    quite good, Dr. Strike testified that this insight is not there when hes
    unwell and, as a result, she was not so confident that the appellant would
    come to the Hospital voluntarily were he to decompensate.

[10]

The
    mechanism under s. 15(1.1) of the
Mental Health Act
was the subject of
    discussion at the hearing, and the majority specifically considered whether it
    was sufficient to manage the appellants risk to public safety in the event of
    decompensation. Section 15(1.1) of the
Mental Health Act
allows a
    physician to bring an application for a psychiatric assessment of a person if,
    among other requirements, the application is signed by a physician within seven
    days after he or she examined the person who is the subject of the examination.

[11]

Dr.
    Strike testified that the appellant is not currently seeing her every seven
    days. In her view, the mechanism under s. 15(1.1) of the
Mental Health Act
would be too onerous on the appellant, presumably because it would entail
    requiring the appellant to see her more frequently in order for it to be a
    viable option.

[12]

The
    majority accepted Dr. Strikes evidence. The majority wrote:

[T]he detention order continues to be required to effect rapid
    readmission to hospital given the very brittle nature of [the appellants]
    illness and his propensity to decompensate within hours or days of missed doses
    of medication. Though the
Mental Health Act
Box B criteria might be
    available to effect involuntary readmission to hospital, the Form 49 under the
    detention order is the most accessible and immediate means of readmission, at
    the first sign of decompensation.

[13]

The
    majoritys conclusion that a detention order was the least onerous and least
    restrictive disposition available, given the need to manage the appellants
    risk to public safety, was reasonable and amply supported by the evidence
    before the Board. We see no basis to interfere with that conclusion.

[14]

Further,
    the majority of the Board did not substitute a test of most convenient to the
    Hospital, as suggested by the appellant. The majority correctly framed the
    legal test at several points in its Reasons for Disposition as being the least
    onerous and least restrictive disposition available to the appellant. The
    portion of the majoritys Reasons impugned by the appellant  namely, its
    reference to Form 49 as being the most accessible and immediate means of
    readmission  was directed towards the need to ensure the appellants timely
    re-admission to the Hospital, given his propensity to decompensate rapidly. On
    the evidence before the Board, this was a legitimate consideration.

[15]

Accordingly,
    the appeal is dismissed.

Alexandra Hoy
    A.C.J.O.

K. Feldman J.A.

Fairburn J.A.