COURT OF APPEAL FOR ONTARIO

CITATION: Earhart v. Canada (Attorney General), 2019 ONCA 980

DATE: 20191213

DOCKET: C66491

Hourigan, Brown and Paciocco JJ.A.

BETWEEN

Donald Earhart

Applicant (Appellant)

and

The Attorney General of Canada

Respondent (Respondent)

Ian B. Kasper, for the appellant

Derek Edwards, for the respondent

Heard: September 20, 2019

Appeal for the order
    of Justice Kenneth G. Hood of the Superior Court of Justice dated November 29,
    2018, with reasons reported at 2018 ONSC 7160.

Brown J.A.:

I.

OVERVIEW

[1]

In late May 2018, the appellant, Donald Earhart, was serving a life
    sentence for first degree murder at the Bath Institution (the Institution), a
    medium security prison. Two fellow inmates complained that Earhart assaulted
    them on May 25 and 26, 2018.

[2]

As a result, on May 28, 2018 Earhart was transferred on an emergency
    basis to Millhaven Institution, a maximum security institution, pursuant to s.
    29 of the
Corrections and Conditional Release Act
, S.C. 1992, c. 20
    (the
CCRA
) and s. 13 of the
CCRA Regulations
, SOR/92-620.
    Earhart was also given notice that a recommendation had been made to raise his
    security classification from medium to maximum security.

[3]

Earhart was then given the opportunity to make representations regarding
    his involuntary transfer, as required by the
CCRA
legislative regime:
CCRA
    Regulations
, s. 13.

[4]

On July 10, 2018 the Warden of the Institution rendered two decisions:
    one increased Earharts security classification from medium to maximum security;
    the other approved his emergency involuntary transfer to Millhaven Institution.

[5]

On September 11, 2018, Earhart commenced an application for
habeas
    corpus
, with
certiorari
in aid, seeking an order that he be
    returned to a medium security prison. The application judge dismissed Earharts
    application.

[6]

Earhart appeals. He argues that the application judge committed two
    reversible errors: (i) in respect of Earharts claims that the Institution
    acted unfairly by breaching the
CCRA
s information disclosure
    requirements, the application judge applied the wrong legal test and failed to
    rule on some of the Institutions privilege claims; and (ii) the application
    judge erred in concluding that the Wardens reclassification decision was
    reasonable.

[7]

For the reasons set out below, I would dismiss the appeal.

II.

THE EVENTS AT THE BATH INSTITUTION

[8]

The application judges reasons provide a succinct and accurate summary
    of events. I shall draw on them, inserting at points an explanation of elements
    of the
CCRA
statutory regime that guided the process leading up to the
    Wardens decisions.

[9]

As described by the application judge at para. 12, in late May 2018 the
    staff of the Institution were advised that Earhart had assaulted two other
    inmates:

On May 27, 2018 an inmate at Bath Institution [hereafter
    Inmate 1] contacted security staff advising that he had been assaulted by Mr.
    Earhart on May 25, 2018. Mr. Earhart was placed in voluntary lockup while [the
    Correctional Service of Canada (CSC)] investigated. During the course of
    CSCs initial investigation into the first assault a second inmate [hereafter
    Inmate 2] said that he had been assaulted by Mr. Earhart on May 26, 2018.

[10]

An
    investigation into the allegations was launched. The initial stages involved
    the following events, described at paras. 13-16:

CSC determined during the course of this initial investigation
    that there were reasonable grounds to conclude Mr. Earhart had committed these
    two assaults, his security classification should be increased to maximum and
    that as a result he be transferred to Millhaven Institution, the only viable
    maximum security institution in Ontario.

On May 29, 2018 Security Intelligence Officer Stratford
    conducted an investigation and prepared a summary of this investigation or gist
    to CSC which gist was included in the Assessment for Decision dated May 29,
    2018 whereby Mr. Earharts security classification was increased to
    maximum. As part of the process, Mr. Earhart was interviewed by his parole
    officer. He denied committing any assaults.

Also, as disclosed in the Assessment for Decision, not only
    were the two alleged assaults considered, Mr. Earharts criminal history,
    institutional adjustment and history at various institutions including his
    interaction with staff and other inmates, and his involvement in various
    programs were also considered. The Assessment for Decision is detailed and
    consists of 25 pages of text, along with a four page addendum.

The Assessment for Decision was provided to Mr. Earhart on May
    30, 2018 along with a Notice of Involuntary transfer [dated May 30, 2018] which
    in effect provided a synopsis of the Assessment for Decision and the steps
    taken by CSC in concluding that Mr. Earharts security classification should be
    increased.

[11]

The
    Assessment for Decision included a summary of the allegations of assault made
    by the two inmates, Earharts Aboriginal social history, a risk assessment
    analysis, and a lengthy inmate security level review that canvassed his
    behaviour and program activities while detained at various federal
    penitentiaries across the country. The Assessment for Decision recommended
    increasing Earharts Institutional Adjustment score from moderate to high,
    indicating that he requires a high degree of supervision and control within the
    penitentiary. The Assessment left unchanged his scores for Escape Risk
    (moderate) and Public Safety (high). The Assessment stated:

EARHART requires a high degree of supervision and control
    within an institutional setting and has demonstrated difficulties in the area
    of institutional adjustment. Due to his problematic and violent behaviour which
    is suggestive that he is currently engaged in his offence cycle, the open
    egress, responsibility based environment at Bath Institution does not offer the
    highly structured environment that EARHART requires. Maximum security inmates
    are expected to interact effectively and responsibly while subject to constant
    and direct supervision and demonstrate a minimum interest in participating in
    their Correctional Plan. An emergency involuntary transfer to Millhaven
    Institution for the purpose of ensuring the institutional security is being
    recommended at this juncture and Millhaven Institution is the only viable
    maximum security institution in Ontario.

[12]

The
    Notice of Involuntary Transfer summarized the circumstances of the assaults
    alleged by the two other inmates and the recommendation of the Institutions
    Case Management Team to increase Earharts security classification to maximum.

[13]

Section
    13(2) of the
CCRA Regulations
establishes a process by which an inmate
    transferred on an emergency basis to a higher-security prison can make
    after-the-fact representations about his transfer. It provides:

13(2)
Where the Commissioner or a staff member
    designated in accordance with paragraph 5(1)(b) determines that it is necessary
    to immediately transfer an inmate for the reasons set out in subsection (1),
    the institutional head of the penitentiary to which the inmate is transferred
    or a staff member designated by that institutional head shall

(a)
meet with the inmate not more than two
    working days after the transfer to explain the reasons for the transfer and
    give the inmate an opportunity to make representations with respect to the
    transfer in person or, if the inmate prefers, in writing;

(b)
forward the inmates representations to
    the Commissioner or to a staff member designated in accordance with paragraph
    5(1)(b); and

(c)
give the inmate, within five working
    days after the final decision, written notice of the final decision respecting
    the transfer and the reasons for the decision.

[14]

For
    any process in which an inmate is entitled to make representations, such as a
    transfer to a higher-security prison,
CCRA
s. 27 creates information
    disclosure requirements. Whether the Institution complied with those
    requirements lies at the heart of Earharts claim of procedural unfairness. Sections
    27(1) and (2) state:

27(1)
Where an offender is entitled by this
    Part or the regulations to make representations in relation to a decision to be
    taken by the Service about the offender, the person or body that is to take the
    decision shall, subject to subsection (3), give the offender, a reasonable
    period before the decision is to be taken, all the information to be considered
    in the taking of the decision or a summary of that information.

(2)
Where an offender is entitled by this Part
    or the regulations to be given reasons for a decision taken by the Service
    about the offender, the person or body that takes the decision shall, subject
    to subsection (3), give the offender, forthwith after the decision is taken,
    all the information that was considered in the taking of the decision or a
    summary of that information.

[15]

Earhart
    provided a 21-page handwritten rebuttal on June 4, 2018, and on June 10, 2018,
    his counsel provided a five-page opinion letter to Legal Aid Ontario concluding
    that the increase to Earharts security classification was unlawful. Earhart
    included this letter as part of his ongoing rebuttal.

[16]

In
    his rebuttal, Earhart: (i) denied hitting Inmate 1; (ii) admitted striking
    Inmate 2 but stated it was done in self-defence; (iii) stated that CCTV video
    footage would corroborate his story; and (iv) identified a number of other
    inmates whom Institution staff should interview as they would support Earharts
    version of events. Earhart also complained that the Assessment for Decision did
    not include reliability indicators, or codes, for the information obtained
    during the investigation.

[17]

On
    June 20, 2018, a Security Intelligence Officer at the Institution, Charles Stratford,
    prepared Memo #21, which was 13 pages in length. Memo #21 repeated the
    information obtained from Inmates 1 and 2 (whom it named), set out the
    information obtained from the interviews conducted with inmates identified by
    Earhart in his rebuttal, together with the writers assessment as to whether
    the information from the other inmates supported Earharts version of events,
    and provided a summary of Stratfords review of CCTV footage. Memo #21 also
    assigned to the information obtained from all inmates one of the four
    reliability codes set out in Commissioners Directive 568-2, Recording and
    Sharing of Security Information and Intelligence: Unknown Reliability;
    Doubtful Reliability; Believed Reliable; and Completely Reliable. I will return
    to this Directive later in these reasons. Memo #21 was given to Earhart.

[18]

In
    Memo #21, SIO Stratford stated that: [T]he offenders that EARHART requested
    statements from, provided no supporting evidence to his claim of innocence.
    Additionally, the statements offender EARHART made within his written rebuttal,
    contradict his original statement of events.

[19]

The
    final steps in the process leading up to the Wardens final decision were
    described as follows by the application judge, at paras. 18 and 19:

On June 28, 2018 Mr. Earhart provided a second rebuttal. This
    one was again handwritten and consisted of 12 pages. In it Mr. Earhart, among
    other things, complained of the CSC investigation and the information provided
    to him. He suggested others to be interviewed, commented on the lack of
    appropriate exculpatory CCTV footage and critiqued the stories given by others.
    On June 28, 2018 the warden had a meeting with Mr. Earhart where he provided a
    verbal rebuttal to his increased security classification and transfer.

On July 5, 2018 SIO Stratford prepared Memo #22, which was 2½
    pages in length and responded to some of the matters raised in Mr. Earharts
    second rebuttal.

[20]

Memo
    #22 contained a description and explanation of the reliability codes set out in
    the Commissioners Directive 568-2.

III.

THE WARDENS DECISIONS

[21]

On
    July 9, 2018 the Warden issued two decisions. In her Offender Security Level (or
    security reclassification) decision, the Warden was satisfied that the evidence
    demonstrated Earhart had physically assaulted the two inmates. Although the
    security assessment test suggested a medium security classification, the Warden
    approved maximum security given case specifics with ratings of High
    Institutional Adjustment, Moderate Escape Risk and High Risk to Public Safety.
    She concluded:

[T]here are no reasonable alternatives to transfer to maximum
    security at this juncture. EARHART has physically assaulted two offenders in a
    responsibility-based, small-group living environment where the behavioural
    expectations [are] the capacity to manage responsibility for their own
    behaviour with minimal staff.

[22]

The
    Wardens decision regarding Earharts involuntary transfer to Millhaven
    Institution considered the same information set out in her security
    reclassification decision, albeit in more detail. The Warden was satisfied the
    evidence demonstrated that Earhart had physically assaulted the two inmates.
    She continued:

This conduct does not meet the behavioural norms expected of
    inmates at medium security. His reassessed security requirements indicate that
    he requires an institutional environment which is highly structured in which
    individual or group interaction is subject to constant and direct supervision.

Therefore, I am approving the emergency involuntary transfer to
    Millhaven Institution. Emergency Involuntary Transfer is Approved.

[23]

I
    will consider the decisions in more detail during the analysis of Earharts
    specific grounds of appeal.

IV.

THE
CCRA
REGIME FOR WITHHOLDING INFORMATION FROM AN INMATE

[24]

One
    final piece of background information is required to provide the context for
    some of Earharts grounds of appeal.

[25]

The
    decisions of the Warden, as well as Memos #21 and 22, state that some
    information was withheld from Earhart pursuant to
CCRA
s. 27(3), which
    forms part of the statutory regime dealing with the information to be provided
    to offenders. That sub-section states:

27(3)
Except in relation to decisions on
    disciplinary offences, where the Commissioner has reasonable grounds to believe
    that disclosure of information under subsection (1) or (2) would jeopardize

(a)
the safety of any person,

(b)
the security of a penitentiary, or

(c)
the conduct of any lawful
    investigation,

the Commissioner may authorize the withholding from the
    offender of as much information as is strictly necessary in order to protect
    the interest identified in paragraph (a), (b) or (c).

[26]

In
Mission Institution v. Khela
, 2014 SCC 24, [2014] 1 S.C.R. 502, the
    Supreme Court observed that if a prison chooses to withhold from an inmate information
    upon which it relies in making a decision, the onus is on the decision-maker to
    invoke
CCRA
s. 27(3) and justify its invocation: at para. 86. If it
    fails to do so, and the decision-maker relies on withheld information without
    justifying its non-disclosure under s. 27(3), the decision likely will be procedurally
    unfair and unlawful: at paras. 89, 92.

V.

ISSUES ON APPEAL

[27]

Earhart
    submits that the Wardens decisions were based on key information kept secret
    from him. Although the Institution made sweeping, non-specific privilege claims
    on virtually every piece of evidence, it never offered case-specific reasons
    for withholding the information. As a result, it was impossible for Earhart to
    challenge the claims made against him or discern how the Warden came to accept
    that the assaults occurred, rendering her decisions unfair and unreasonable.

[28]

More
    specifically, Earhart contends that the application judge erred by:

(i)

applying an incorrect legal test for determining whether a breach of the
    statutory disclosure obligation under
CCRA
s. 27 had occurred;

(ii)

failing
    to analyze or rule on whether the Institution had proven that its claims of
    privilege under s. 27(3) of the
CCRA
were justified; and

(iii)

concluding
    that the reclassification decision was reasonable as he misapprehended the
    evidence on the Wardens reasons for decision.

[29]

As
    the first two grounds of appeal concern the adequacy of the Institutions
    disclosure under
CCRA
s. 27, I will deal with them together.

VI.

STANDARD OF REVIEW

[30]

The
    question for this court to decide is whether the application judge identified
    the appropriate standard of review and applied it properly. This court, in
    effect, steps into the shoes of the lower court to focus on the administrative
    decision:
Agraira v. Canada (Public Safety and Emergency Preparedness)
,
    2013 SCC 36, [2013] 2 S.C.R. 559, at paras. 45-47.

[31]

In
    the context of an application for
habeas corpus
, once the inmate has
    demonstrated that there was a deprivation of liberty and casts doubt on the
    reasonableness of the deprivation, the onus shifts to the respondent
    authorities to prove that the transfer was reasonable given all the
    circumstances:
Khela
, at para. 77. The standard for determining
    whether the decision-maker complied with the duty of procedural fairness is
    correctness:
Khela
, at para. 79.

VII.

FIRST ISSUE: DID THE INSTITUTION COMPLY WITH THE DISCLOSURE REQUIREMENTS
    OF
CCRA
s. 27?

A.

The governing principles

[32]

An
    unlawful deprivation of liberty for purposes of habeas corpus may result if
    there has been a breach of procedural fairness leading to the decision to
    transfer the inmate to a higher security prison or if the decision is not
    reasonable:
Khela
, at paras. 52 and 65. To ensure that such a transfer
    decision is procedurally fair, the correctional authorities must meet the
    statutory disclosure requirements: at para. 98.

[33]

CCRA
s. 27(1) provides that where an inmate is entitled by regulations to make
    representations, as Earhart was entitled to do in this case, the decision-maker
    must give him all the information to be considered in taking a final decision
    regarding the transfer, subject only to s. 27(3):
Khela
, at para. 81.
    Section 27 guides the decision maker and elaborates on the resulting
    procedural rights: at para. 82.
Khela
highlights three distinctive
    characteristics of the
CCRA
s. 27 disclosure regime:

(i)

CCRA
s. 27 disclosure is not tantamount to the disclosure
    required by
R. v. Stinchcombe
, [1991] 3 S.C.R. 326. The section does
    not require correctional authorities to produce evidence in their possession
    that was not taken into account in the transfer decision, only the evidence
    that was considered: at para. 83; see also
May v. Ferndale Institution
,
    2005 SCC 82, [2005] 3 S.C.R. 809, at para. 91;

(ii)

The requirement that the inmate be provided with all the information
    can be satisfied by providing him with a summary of that information, as
    provided by
CCRA
s. 27(1): at paras. 81 and 83; and

(iii)

If
    the warden withholds information from the inmate on the basis of s. 27(3), the
    onus is on the decision-maker to invoke the provision and prove that there were
    reasonable grounds to believe that disclosure of the information would
    jeopardize the security of the prison, the safety of any person, or the conduct
    of an investigation. Where s. 27(3) is invoked, the warden is in the best
    position to determine whether such a risk could in fact materialize and, as a
    result, is entitled to a margin of deference on this point:
Khela
, at
    paras. 86 and 89.

[34]

If
    correctional authorities fail to comply with the s. 27 regime, a reviewing
    court may find that the transfer decision was procedurally unfair, and the
    deprivation of the inmates liberty will not be lawful: at para. 85. This is a
    legitimate ground upon which an inmate may apply for
habeas corpus
:
Khela
,
    at para. 85. Nevertheless, not all breaches of the
CCRA
or its
    regulations will be unfair: at para. 90. It will be up to the reviewing
    judge to determine whether a given breach has resulted in procedural unfairness:
    at para. 90. For instance, if s. 27(3) has been invoked erroneously or if there
    was a strictly technical breach of the statute, the reviewing judge must
    determine whether that error or that technicality rendered the decision
    procedurally unfair: at para. 90.

[35]

Earharts
    submissions concerning procedural unfairness must be assessed in the light of
    these principles.

B.

Application of the gOVERNING principles

Earharts first argument: The application judge applied the
    wrong legal test

[36]

Earhart
    first argues that the application judge used the wrong legal test to assess his
    complaint about the inadequacy of the Institutions disclosure of information
    to him. Instead of considering whether the Institution breached
CCRA
s. 27s disclosure requirements, the application judge only considered whether
    Earhart had received sufficient information to respond to the case the prison
    chose to tell him about. According to Earhart, that was an error of law.

[37]

I
    am not persuaded by this submission. It is true that at para. 7 of his reasons,
    the application judge wrote: If the decision-maker fails to provide
    information sufficient to allow an offender to know the case they have to meet
    to challenge a deprivation of liberty, the decision will be void for lack of
    jurisdiction. In support of that proposition, the application judge cited
May
,
    in which the Supreme Court stated, at para. 92:

In the administrative context, the duty of procedural fairness
    generally requires that the decision-maker discloses the information he or she
    relied upon. The requirement is that the individual must know the case he or
    she has to meet. If the decision-maker fails to provide sufficient information,
    his or her decision is void for lack of jurisdiction.

[38]

While
    the application judges reason did not incorporate the first sentence of para.
    92 in
May
,
that
    omission does not lead to the conclusion that the application judge employed
    the wrong legal test in his review exercise. When his reasons are read as a
    whole, it is clear they were written to address Earharts key argument
    namely, that the process was procedurally unfair because the Institution
    withheld information considered by the Warden in her decisions without meeting the
    test in
CCRA
s. 27(3) for justifying the withholding of such
    information. Accordingly, I am not persuaded that the application judges
    analysis rested on incorrect legal principles.

[39]

Moreover,
    by acknowledging that Earhart had received adequate information to respond to
    the case against him, the application judge was not importing an erroneous
    principle into his decision. One goal of procedural fairness is to ensure that that
    an individual knows the case he must meet:
May
, at para. 92;
Khela
,
    at para. 94.

Earharts second argument: The disclosure of reliability assessments

[40]

The
    Assessment for Decision contained information obtained from Inmates 1 and 2.
    Memo #21 also included such information, together with information from the
    inmates whom Earhart asked the Institution to interview. The Assessment did not
    assign any reliability codes to the information; Memo #21 did.

[41]

Earhart
    contends that the Institution failed to provide him with sufficient information
    to challenge the reliability assessments made by the Institution with respect
    to the information relied upon by the Warden, thereby breaching the informational
    disclosure requirements of
CCRA
s. 27.

[42]

The
CCRA
s. 27 disclosure regime includes an information reliability
    assessment scheme. Commissioners Directive 568-2 creates standards and codes
    for the evaluation of information in a security intelligence report, such as
    Memo #21 authored by SIO Stratford. The Directive provides that the evaluation
    of information for intelligence purposes consists of a process whereby the
    reliability of information is examined on the basis of the credibility of the
    source and the validity of the information: at Annex B, para. 1. As well,
    [i]n addition to assessing the reliability of the information, an assessment
    of the reliability of each source will be made utilizing the codes outlined
    below, namely: Unknown Reliability; Doubtful Reliability; Believed Reliable;
    and Completely Reliable: at Annex B, para. 4.

[43]

Directive
    568-2 explains the standard, or basis, underlying the assignment of a
    particular code to specific information, at Annex B, para. 5:

The reliability standards and the codes to be used on the
    Security Intelligence Reports are as follows:

a. Unknown Reliability (Court) U/R or U/R/C

The Security Intelligence Officer, at the time of recording
    the information, is unable to assess the reliability of the information
    received.

b. Doubtful Reliability (Court) D/R or D/R/C

Refers to information which is believed unlikely at the
    time, although the element of possibility is not excluded.

c. Believed Reliable (Court) B/R or B/R/C

Refers to information that gives every indication that it is
    accurate, but has not been confirmed. The information somewhat agrees with the
    general body of intelligence, is reasonable and consistent with other
    information on the same subject.

d. Completely Reliable (Court) C/R or C/R/C

Refers to information that is substantiated or confirmed by
    one or more independent sources. The information is logical and consistent with
    other corroborated information on the same subject.

[44]

As
    noted, Memo #21 assigned reliability codes to the information disclosed, and
    Memo #22 reproduced the explanation of the reliability codes set out in
    Commissioners Directive 568-2. Both were given to Earhart. As a result, with
    the exception of information withheld pursuant to
CCRA
s. 27(3), Earhart was provided with the information
    obtained from inmates during the investigation, or summaries thereof, together with
    the reliability code assigned to the information.

[45]

Nevertheless,
    Earhart contends that that level of disclosure did not meet the requirements of
    the
CCRA
s. 27 regime because he was entitled to know on what basis a
    reliability code was assigned to specific information.

[46]

In
    fact, Earhart was provided with such information. Commissioners Directive
    568-2 explains the basis, or standard, upon which a particular reliability
    code is assigned to specific information. Memo #22 provided Earhart with
    complete information about those standards. Disclosure of the reliability code
    assigned to specific information, as was done in Memo #21, enables an inmate to
    challenge the reasonableness of a decision based, in part, on the reliability
    codes assigned to the various pieces of information the decision-maker relied
    upon. Earhart was aware of the reliability codes assigned to the information
    obtained from the inmates and, in his rebuttals, he disputed the reliability of
    much of their information.

[47]

Earhart
    advances a second argument, which is a specific instance of the first: the
    Institution failed to provide him with the evidence and reasons supporting the
    Believed Reliable reliability code assigned to some of Inmate 1s
    information. Since the Wardens decision to believe Inmate 1s version of
    events over Earharts played a central role in her ultimate decisions, Earhart
    submits that procedural fairness required disclosure to him of the basis for
    the reliability assessment assigned to Inmate 1s information. In addition,
    Earhart argues that the Institution failed to justify under
CCRA
s.
    27(3) the withholding of information about how the reliability code for Inmate
    1s statement was determined.

[48]

I
    am not persuaded by these submissions. My first reason repeats the one just
    given: Commissioners Directive 568-2 explains the standard, or basis, for the
    assignment of a particular reliability code to specific information from an
    inmate.

[49]

However,
    Earhart accurately points out that Memo #21 invokes s. 27(3) in respect of the
    reliability code assigned to some information from Inmate 1. To put the issue
    in context, Memo #21 provides the most comprehensive record of the information obtained
    from Inmate 1. The memo assigned a reliability code of Unknown Reliability to
    information provided by Inmate 1 about the assault during the two interviews
    conducted with him on May 27, 2018. In respect of that information, Memo #21
    states:

Some of the information that was shared during this interview
    is being withheld as per subsection 27(3) of the CCRA, Commissioner[]s
    Directive (C.C) 701 and Policy Bulletin 451 because there are reasonable
    grounds to believe that disclosure of that information would jeopardize the
    safety of one or more persons and the security of the institution.

[50]

A
    third interview of Inmate 1 was conducted by SIO Stratford on May 28, 2018. The
    information provided by Inmate 1 at that time was assigned a reliability code
    of Believed Reliable. Section 27(3) was again invoked, but in different
    terms:

Some of the information shared during this interview and the
    process in determining the Reliability Code of [Inmate 1s] statement, is being
    withheld as per subsection 27(3) of the CCRA, Commissioner[]s Directive (C.C)
    701 and Policy Bulletin 451 because there are reasonable grounds to believe
    that disclosure of that information would jeopardize the safety of one or more
    persons and the security of the institution.

[51]

Earhart
    argues that the application judge failed to determine whether the Institution
    had justified its invocation of s. 27(3) in accordance with the process set out
    in
Khela
, at paras. 86 to 89.

[52]

I
    disagree.

[53]

In
    accordance with the procedure directed in
Khela
at para. 87, the
    respondent filed with the application judge a confidential affidavit from Gail
    Shkwarek, an SIO at the Institution who had supervised the work of SIO
    Stratford. Her affidavit identified information withheld pursuant to
CCRA
s. 27(3). The withheld information was contained in Statement/Observation
    2018-423-182 prepared by SIO Stratford and referred to by the Warden in her
    decisions. Most of the withheld information identified in the confidential
    affidavit concerned information obtained by SIO Stratford in his interviews
    with Inmates 1 and 2, as well as his review of some CCTV footage.

[54]

The
    application judge reviewed the confidential affidavit and the withheld
    information, and wrote, at para. 21:

While some specific information was withheld from Mr. Earhart,
    such as the CCTV footage itself and specifics of some of SIO Stratfords
    investigations this was done pursuant to s. 27(3) of the [
CCRA
] (the Act).
    Under s. 27(3) of the Act the Commissioner, or his or her representative, may
    withhold information if they have reasonable grounds to believe that disclosure
    of information would jeopardize the safety of any person or the security of a
    penitentiary. They are in the best position to determine whether a risk could
    in fact materialize to the security of the prison or to any person through the
    release of information. As a result the warden is entitled to a margin of
    deference on this:
Khela
, ibid, at para. 89.

[55]

Contrary
    to the submissions of Earhart, I read this portion of the application judges
    reasons as directly considering and accepting the Institutions invocation and
    proof of the information exceptions contained in
CCRA
s. 27(3). Having
    reviewed the confidential affidavit, I see no reversible error in the
    application judges analysis.

[56]

That
    said, the confidential affidavit of SIO Shkwarek could have been better
    drafted. As
Khela
explains, for the Institution to rely on
CCRA
s. 27(3), it must invoke the section  which was done in this case  and prove
    that the withholding of any information related to concerns arising from the
    interests protected by s. 27(3), in this case that there were reasonable
    grounds to believe that disclosure of the information would jeopardize the
    safety of one or more persons and the security of the institution. A
    confidential affidavit filed on a
habeas corpus
application to justify
    an institutions invocation of
CCRA
s. 27(3) should identify the piece
    or group of withheld information, followed immediately by the evidence justifying
    its non-disclosure, instead of separating the withheld information from the
    justificatory evidence, as was done in this case.

[57]

Commissioners
    Directive 701 provides, in Annex C, that an institution may only withhold as
    much information as is strictly necessary to protect the interests identified
    in
CCRA
s. 27(3): at para. 3. Where information is withheld, an inmate
    should be provided a gist of the withheld information: at paras. 1-2, 4. The
    Directive states, at para. 2:

A gist conveys the essence of the information to be considered
    by decision makers and provides sufficient detail to allow the offender to know
    what the information is about. It must give as much of the information as
    possible without disclosing information which can legitimately be withheld under
    the specified criteria for non-disclosure.

[58]

The
    application judge specifically considered whether the Institution had provided
    Earhart with an adequate gist of the withheld information. He concluded, at
    para. 22, that it had:

In any event, Mr. Earhart was provided with a gist in Memo #21
    of what was withheld so as to enable him to respond. He was also provided with
    a gist of the other concerns with his prison behavior based upon his security
    file history as set out in Memo #21 at pages 12 and 13. I have reviewed the
    confidential affidavit of Ms. Shkwarek and Exhibits B and E to J inclusive upon
    which the gist of the two altercations was based and the gist of this prison
    behavior was based. The gists given are in my view more than adequate in order
    to allow Mr. Earhart to know what was alleged against him and for him to
    respond.

[59]

I
    agree with the application judge that the gists of the withheld information contained
    in Memo #21 were more than adequate to allow Earhart to know what was alleged
    against him and to respond. I would also observe that the substance of much of
    the withheld information in fact was disclosed in the latter part of Memo #21,
    albeit originating from sources other than Inmates 1 and 2.

[60]

The
    present case differs markedly from the quality of the disclosure at issue in
Khela
,
    which the Supreme Court described as [v]ague statements regarding source
    information and corroboration: at para. 94. Here, the disclosure made to
    Earhart identified who made which statements, together with the reliability
    codes assigned to the information.

[61]

As
    a result, I am satisfied that the Institution met its statutory disclosure
    obligations regarding the information obtained from inmates and the reliability
    it attributed to that information.

The CCTV footage and photographs

[62]

In
    Memo #21, SIO Stratford reported that [a]fter viewing the CCTV footage in
    relation to [Inmate 1s] statement of an assault occurring in the Unit 1
    entrance, it was found that there was no CCTV footage of that area. As to the
    location where Inmate 2 said he was assaulted, SIO Stratford wrote:

[T]he writer was able to verify that EARHART and [Inmate 2]
    were in the kitchen/washroom area on North A range at the same time between
    1230 hrs. and 1330 hrs. [Inmate 2] can be seen entering this area fully clothed,
    then a brief time later, exited with his shirt and belt now in his left hand
    with his facial area visibly red. [Inmate 2] then turned around and entered the
    kitchen/bathroom area again, where he then exited approximately 30 seconds
    later and proceeded to his cell.

[63]

Memo
    #21 went on to state that some of the CCTV footage information about the
    reported incidents was being withheld pursuant to
CCRA
s. 27(3) as
    there are reasonable grounds to believe that disclosure of that information
    would jeopardize the security of the institution.

[64]

Earhart
    submits that the summary of the contents of the CCTV footage breached the
    disclosure requirements of s. 27 because no case-specific reason was given for
    withholding the videos, nor did the prison summarize the entirety of the video
    footage available.

[65]

The
    application judge rejected Earharts submission, holding at para. 23:

I have also reviewed the CCTV footage which was withheld from
    Mr. Earhart for general prison security reasons, namely, the position of the
    CCTV blind spots. While it appeared to me that [Inmate 2] carried his
    shirt and belt in his right hand as opposed to his left, the balance of the
    description as contained in Memo #21 at page 5 and summarized in the wardens
    decision is reasonable when compared against the CCTV footage. Mr. Earhart,
    despite not seeing the actual video, was able to respond to it.

[66]

Having
    reviewed the CCTV footage filed with the respondents confidential affidavit, I
    agree with the application judges assessment of the adequacy of the gist of
    the CCTV footage provided to Earhart. As well, the justification offered by the
    respondent in Memo #22 and its public affidavit for withholding CCTV footage
    was a reasonable one  i.e., disclosure would reveal camera blindspots that
    would pose a risk to the institutional security as inmates with knowledge of
    the blind spots could act away from the supervision of Institution staff. The
    reasonableness of that justification was underlined by Earharts sketch of the
    Unit 1 vestibule area that he included in his first rebuttal. In his sketch,
    Earhart noted that he did not know if there were cameras pointed in certain
    directions, underscoring the point made in the confidential affidavit that
    inmates are often keen to collect information about the camera system. I see no
    reversible error in the application judges finding that the respondent made
    out its
CCRA
s. 27(3) justification in respect of the CCTV footage.

[67]

Dealing
    with the photographs taken of Inmates 1 and 2, the Assessment for Decision
    states that when the inmates were interviewed by Institution staff, they had
    visible signs of an assault and pictures were taken for the incident file. In
    her security reclassification decision, the Warden noted that SIO Stratford
    observed injuries on the two victims when taking their official statements
    regarding the assaults and that he took photos. A similar statement can be
    found in her Institutional Transfer decision, as well as a statement that a
    staff member had observed Inmate 2 had a black eye.

[68]

As
    part of his broader submissions before the application judge that it was unfair
    he was provided with only summaries of much of the evidence, Earhart observed that
    the pictures of the injuries were only described. However,
CCRA
s.
    27(1) permits disclosure to be made by way of a summary of information.
Khela
holds that a summary suffices for purposes of assessing the procedural adequacy
    of disclosure: at para. 83. Given the statutory availability of providing a
    summary of information in the photographs, I see no breach of the
CCRA
s. 27(1) duty of disclosure. I would also note that in the case of Inmate 2,
    reliance was placed on how Inmate 2 looked on the CCTV footage. As I have
    stated, I agree with the application judge that the gist of that information
    was adequate.

Information obtained from Earhart and inmates other than
    Inmates 1 and 2

[69]

Earhart
    advances one additional submission concerning the inadequacy of the
    Institutions information disclosure. Memo #21 records that some information
    obtained during interviews with Earhart and several of the other inmates whom
    he asked the Institution to interview was being withheld pursuant to
CCRA
s. 27(3)(a) and (b). Earhart submits it was wrong to withhold from him
    information disclosed during his interview, as obviously he is aware of the
    information. As well, the other inmates were told that their information would
    be shared with Earhart, so the Institution could not invoke
CCRA
s.
    27(3) to withhold it.

[70]

In
    her confidential affidavit, Ms. Shkwarek does not set out any information
    obtained from Earhart or the other inmates interviewed at his request that the
    Institution was withholding pursuant to
CCRA
s. 27(3). That leads me
    to query whether the insertion in Memo #21 of references to
CCRA
27(3)
    at the end of the sections setting out information from other interviewed
    inmates was boilerplate, not references to information actually withheld. In
    the result, I am satisfied that nothing turns on this point. The Warden did not
    indicate that she was relying on any such information in making her decisions.
    Given that state of the record, I am not persuaded that any procedural
    unfairness resulted in practice from the
CCRA
s. 27(3) references
    included in Memo #21 on this point.

Conclusion

[71]

For
    the reasons set out above, I do not accept Earharts submission that the
    application judge erred in concluding that the decision was reached in a
    procedurally fair manner: at para. 30.

VIII.

SECOND
    ISSUE: DID THE APPLICATION JUDGE ERR BY CONCLUDING THAT THE WARDENS RECLASSIFICATION
    DECISION WAS REASONABLE?

A.

The issue stated

[72]

On
    this second ground of appeal, Earhart advances two arguments.

[73]

First,
    he contends that the application judge misapprehended the Wardens reasons.

[74]

Second,
    Earhart submits that the Wardens reclassification decision was unreasonable
    because she failed to explain why she preferred the information given by
    Inmates 1 and 2 about the assaults over his explanation of events. Since the
    Warden had described the two assaults as lying [a]t the root of the decision
    to remove Earhart from the Institution, her failure to explain her credibility
    assessment in respect of the assaults fatally taints her decisions.

[75]

Although
    Earharts appeal challenges the reasonableness of only the reclassification
    decision, that decision and the transfer decision inform one another and draw
    upon the same evidentiary foundation. Some further description of both
    decisions is required.

B.

The Wardens decisions

[76]

In
    her security reclassification decision, the Warden noted that [a]t the root of
    the decision to remove EARHART from Bath is whether he physically assaulted two
    inmates during the weekend of May 25. In considering that issue, the Warden
    relied on: the statements of the Inmates 1 and 2; the observations of SIO
    Stratford, who saw injuries on the two victims when he interviewed them and
    took photos of the injuries; Earharts denial of any assault on Inmate 1 but
    his admission that he struck Inmate 2 in self-defence, after initially denying
    that he struck Inmate 2 at all; a security risk assessment test that produced a
    score suggestive of medium security; written submissions from Earhart and his
    lawyer; SIO Stratfords two memos (Memos #21 and #22), which included
    information from interviews with several inmates whom Earhart had asked be
    interviewed; the absence of CCTV footage of the vestibule area where the
    alleged assault of Inmate 1 took place; what the CCTV footage showed of Inmate
    2 leaving the kitchen/bathroom area after the second alleged assault; the
    failure of the broader interview process to locate any other inmate who
    witnessed either assault; and an in-person discussion the Warden held with
    Earhart. The Warden noted that the interviews with other inmates confirmed that
    Earhart had been inciting [Inmate 1] on Friday evening.

[77]

The
    Warden then set out her analysis, credibility assessments, and conclusion:

In review of information available, I am satisfied that the
    evidence has demonstrated that EARHART physically assaulted two offenders as
    noted above. I have relied on the statements of the two victims who both reported
    that EARHART assaulted them. I note that the A/SIO observed injuries on the two
    victims when taking their official statements regarding the assaults and that
    he took photos. I note that some information has been withheld from EARHART due
    to the belief that the disclosure of that information would jeopardize the
    safety of any person as per CCRA section 27(3)(a). EARHART has denied
    assaulting [Inmate 1] and indicates that his physical assault of [Inmate 2] was
    done in self-defence. EARHART has attempted to offer a very intricate and
    convoluted explanation as to how he could not have possibly assaulted [Inmate 1].
    This is typical of his pattern of behaviour where he usually minimizes, denies
    and rationalizes his negative actions. This conduct does not meet the
    behavioral norms expected of inmates at medium security. His reassessed
    security requirements indicate that he requires an institutional environment
    which is highly structured in which individual or group interaction is subject
    to constant and direct supervision. Institutional Adjustment is now clearly
    High.

[78]

Although
    the security assessment test suggested a medium security classification, the
    Warden approved maximum security given case specifics with ratings of High
    Institutional Adjustment, Moderate Escape Risk and High Risk to Public Safety.
    She referred to the Aboriginal history of Earharts family. The Warden then concluded:

These circumstances are noted but unfortunately, there are no
    reasonable alternatives to transfer to maximum security at this juncture. EARHART
    has physically assaulted two offenders in a responsibility-based, small-group
    living environment where the behavioural expectations [are] the capacity to manage
    responsibility for their own behaviour with minimal staff.

[79]

The
    Wardens decision regarding Earharts involuntary transfer to Millhaven
    Institution considered the same information referenced in her security
    reclassification decision, albeit in more detail. The Warden was satisfied the
    evidence demonstrated that Earhart had physically assaulted the two inmates.
    She continued:

This conduct does not meet the behavioural norms expected of
    inmates at medium security. His reassessed security requirements indicate that
    he requires an institutional environment which is highly structured in which
    individual or group interaction is subject to constant and direct supervision.

Therefore, I am approving the emergency involuntary transfer to
    Millhaven Institution. Emergency Involuntary Transfer is Approved.

C.

Analysis

First argument: The application judge misapprehended the
    Wardens reasons

[80]

Earhart
    submits that the application judge misapprehended the Wardens reasons for
    reclassifying his security level by ignoring her statement that the assaults
    were at the root of the decision to remove Earhart.

[81]

I
    see no merit in this submission. It ignores the plain language of the
    application judges reasons. The application judge commenced his reasonableness
    review by addressing, at paras. 25 to 27, how the Warden dealt with the issue
    of the assaults. He did not misapprehend her reasons.

Second argument: The Wardens decisions were unreasonable

[82]

The
    deferential reasonableness standard applies to a review of the Wardens
    decisions because security reclassification and involuntary transfer decisions
    are administrative decisions made by a decision-maker with expertise in the
    environment of a particular penitentiary. To apply any standard other than
    reasonableness in reviewing such administrative decisions could well lead,
    inappropriately, to the micromanagement of prisons by the courts:
Khela
,
    at para. 75.

[83]

Given
    that deferential standard of review, I am not persuaded by Earharts second
    argument that the Wardens explanation about why she concluded that Earhart had
    assaulted Inmates 1 and 2 did not meet the reasonableness requirements of
    justification, transparency, and intelligibility.

[84]

The
    application judge directly addressed this argument at paras. 26 and 27 of his
    reasons, where he wrote, in part:

The wardens decision does not rely solely on the information
    categorized as Believed Reliability. Memo #21, which the warden reviewed in
    coming to her decision, sets out what is considered reliable and the level of
    reliability. Not everything is categorized. Not all of the information is
    either of Unknown or Doubtful Reliability. The warden in her decision set out
    what evidence she relied upon in coming to her decision. Mr. Earhart was unable
    to show any authority to support the proposition that she was restricted to
    considering only information of Believed Reliability. Even if he had such
    authority the information of Believed Reliability, as set out in Memo #21,
    supported the first assault and, as acknowledged by Mr. Earhart in argument before
    me, a finding that Mr. Earhart committed the first assault was enough for his
    increased security classification even if the second assault was rejected by
    the warden. It is for the warden to weigh all the evidence in the exercise of
    her discretion. The warden is entitled to deference on the issue of determining
    whether a given source is reliable:
Khela
, ibid, para[.] 89.

Mr. Earhart makes a similar argument in saying that the
    wardens decision is unreasonable because there was no logical reasoning chain
    in how she came to the conclusion that Mr. Earhart assaulted two inmates. However,
    she did state how she reached this conclusion. She relied on the statements
    from the two victims, the fact they both had injuries and Mr. Earharts
    intricate and convoluted explanation with respect to [Inmate 1] and Mr.
    Earharts changing story with respect to [Inmate 2].

[85]

The
    application judges reasons incorporate
Khela
s
recognition of the comparative
    expertise of courts and wardens on the issue of whether an inmate poses a
    threat to the security of the penitentiary or of the individuals who live and
    work within it. On this point, wardens possess greater knowledge and practical
    experience than courts because they have intimate knowledge of that
    penitentiarys culture and of the behaviour of the individuals inside its
    walls: at para. 76. As well, the reasons apply
Khela
s
recognition that a warden is in the
    best position to determine whether a given source is reliable and some
    deference is owed on this point: at para. 89.

[86]

While
    at the end of the day a warden must explain her determination that results in a
    restriction of an inmates residual liberty interest, I agree with the
    application judge that the Warden did so and that her reasons met the
    justification, transparency, and intelligibility requirements of the
    reasonableness standard. Could the Warden have written better sets of reasons?
    Perhaps. But the legal standard is not perfect reasons, but reasonable ones. As
    well, when reviewing the way in which the Warden expressed her reasoning, it
    must be recalled that administrative decision-making is only one of several
    operational tasks that the Warden is called upon to perform as part of her daily
    job. Unlike members of administrative tribunals, the Warden is not a full-time adjudicator.
    Accordingly, I see no basis for appellate interference with the application
    judges conclusion that Wardens decisions were reasonable.

IX.

DISPOSITION

[87]

For
    the reasons set out above, I would dismiss the appeal.

Released: DB DEC 13 2019

David Brown J.A.

I agree. C.W. Hourigan
    J.A.

I agree. David M.
    Paciocco J.A.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Eggiman v. Martin, 2019 ONCA 974

DATE: 20191212

DOCKET: C66745

Simmons, Pardu and Nordheimer JJ.A.

BETWEEN

Christina Eggiman and
    Christina T.H. Corp.

Plaintiffs
(Respondents)

and

Shawn Daniel Martin,
    Trisha Dollie Martin, TS Martin Inc.,
and the TDL Group Corp./Groupe TDL Corporation

Defendants
(
Appellants
)

Andy Seretis, for the appellants

Todd D. Storms and Zach Flemming-Giannotti, for the
    respondents

Heard: November 8, 2019

On appeal from the order of Justice Wolfram Tausendfreund
    of the Superior Court of Justice, dated February 27, 2019, with reasons
    reported at 2019 ONSC 1388.

REASONS FOR DECISION

A.

OVERVIEW

[1]

The motion judge dismissed the appellants motion seeking a stay of the
    underlying action. The appellants sought the stay pursuant to an arbitration
    agreement they had entered into with the respondents. For the following reasons,
    we conclude that the appeal from the motion judges decision is barred by
    statute. The appeal is therefore dismissed.

B.

BACKGROUND

[2]

The appellants and respondents are parties to an arbitration provision
    that is part of the contractual arrangements by which the appellants operate
    two Tim Hortons franchises on behalf of the respondents. The Operating Agreements
    each contain broadly-worded arbitration provisions in the following terms:

All matters in difference between the parties in relation to
    this Agreement shall be referred to the arbitration of a single arbitrator
    appointed by TDL, which shall either be an employee of TDL or a third party
    arbitrator, at TDL's discretion. The award and determination of the arbitrator
    shall be binding upon the parties and their respective heirs, executors,
    administrators and assigns.

[3]

The respondents purported to terminate the Operating Agreements after
    becoming aware of certain conduct of the appellant, Shawn Martin. The
    respondents then commenced the within action against the appellants and the
    other defendant in which they seek damages for breach of contract, intentional
    interference with economic relations, and conversion.

[4]

In response, the appellants brought their motion to stay the action in
    favour of the arbitration process. The motion judge dismissed their motion. In
    doing so, the motion judge recognized that the action could only be stayed
    against the appellants and not the other defendant, who was not subject to the
    arbitration clause. The motion judge held that a partial stay was not a
    reasonable result since it would lead to a multiplicity of proceedings. The
    motion judge also noted that the other defendant,
TDL, actually had the authority, under the arbitration clause, to appoint
    the arbitrator. The motion judge held that this unique aspect of the case also
    led to the potential for unfairness in the arbitration process.

[5]

The appellants appeal from the motion judges decision. They contend
    that s. 7(1) of the
Arbitration Act
, 1991
, S.O. 1991, c. 17,
    requires that the action be stayed and that none of the exceptions to that
    mandatory stay, set out in s. 7(2), apply in this case. The appellants also say
    that the motion judge erred in finding that s. 7(5) of the

Arbitration
    Act
, 1991
, permitted him to refuse to grant a stay on the grounds that
    it would lead to a multiplicity of proceedings.

C.

ANALYSIS

[6]

At the conclusion of the hearing, the court directed the parties to file
    written submissions on whether this court had jurisdiction to hear an appeal
    from the motion judges order in light of s. 7(6) of the
Arbitration Act
,
    1991
. This issue was raised by the respondents, for the first time, at the
    hearing. Section 7(6) reads simply: There is no appeal from the courts
    decision.

[7]

We have now received and reviewed the parties submissions on this
    point.

[8]

There is no appeal to this court from the order of the motion judge.
    Section 7(6) is very clear on this point. If it is determined that the
    arbitration provision applies to the issue that is raised in the proceeding, and
    thus s. 7 is invoked, then s. 7(6) precludes any appeal from the decision
    rendered respecting the motion to stay, whether that order grants or refuses
    the stay:
Brown v. Murphy
(2002), 59 O.R. (3d) 404 (C.A.), at para. 8.

[9]

This same point is made in
Radewych v. Brookfield Homes (Ontario)
    Ltd.
,
2007 ONCA 721, where the court said, at para. 4: [The motion
    judges] decision  falls squarely within s. 7(5) of the
Arbitration Act
and as such, s. 7(6) of that Act applies and renders his decision unappealable.

[10]

As a consequence, this appeal must be dismissed. In reaching that conclusion,
    we are not to be seen as agreeing with the analysis engaged in by the motion
    judge. Rather, we simply do not reach his analysis as any review of it is
    precluded by s. 7(6).

[11]

The respondents are entitled to their costs of the appeal fixed in the
    agreed amount of $6,500 inclusive of disbursements and HST.

Janet Simmons J.A.

G. Pardu J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Firstonsite Restoration Limited v.
    4049 River Road GP Inc., 2019 ONCA 1007

DATE: 20191219

DOCKET: C67025

Trotter, Zarnett and Jamal JJ.A.

BETWEEN

Firstonsite Restoration Limited

Plaintiff

(Respondent)

and

4049 River Road GP Inc., 4049 River Road LP
,

Debbie Bush, Andrezej Kenpnski

and Hunter Milborne

Defendants

(Appellants)

Robert J. Kennaley, for the appellants,
    4049 River Road GP Inc., 4049 River Road LP

Raymond M. Slattery and Sepideh K.
    Nassabi, for the respondent

Heard and released orally: December 16, 2019

On appeal from the judgment of Justice
    Edward M. Morgan of the Superior Court of Justice, dated July 23, 2018.

REASONS FOR DECISION

[1]

The motion judge granted summary judgment for
    payment of invoices the respondent issued to the appellants for demolition and
    clean-up work performed by the respondent on the appellants property, which had
    been damaged by fire.

[2]

The respondent had been selected by the appellants
    insurer, but it is not disputed that the appellants are responsible for
    payment. The appellants position on the appeal is that the motion judge erred
    in not finding a genuine issue requiring a trial concerning the amount properly
    owing. We disagree.

[3]

The motion judge was entitled to find that there
    was no genuine issue requiring a trial with respect to the amount. The
    respondent led evidence of the contract, its performance, the expenses it
    incurred, the supplies it delivered and the labour it performed. The motion judge
    found that the respondent had produced every receipt, suppliers invoice,
    workers timesheet and other documentation to back up its invoices. The final
    amount was set after a company appointed by the appellants insurer audited the
    invoices, and it was set taking into account the reduction the auditor had suggested.

[4]

The appellants did not cross-examine. The motion
    judge was entitled to find their efforts to raise doubt about the amount owing
    to be insufficient to raise a genuine issue requiring a trial. His decision is entitled
    to deference.

[5]

The appeal is accordingly dismissed.

[6]

The respondent is entitled to its costs in the
    amount $20,000, inclusive of all taxes and disbursements.

Gary Trotter J.A.

B. Zarnett J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: The Floor Show Ltd. v. Man-Shield
    (NWO) Construction Inc., 2019 ONCA 954

DATE: 20191203

DOCKET: M50742 & M50918 (C66150)

M50743 &
    M50916 (C66149)

Simmons, Pardu and Nordheimer
    JJ.A.

DOCKET: M50742 & M50918 (C66150)

BETWEEN

The
    Floor Show Ltd.

Plaintiff

(Respondent/Moving Party)

and

Man-Shield
    (NWO) Construction Inc.

Defendant

(Appellant/Responding Party)

and

2363267
    Ontario Inc. and Allure Condominiums LP

Third Parties

DOCKET: M50743 & M50916 (C66149)

AND BETWEEN

The Floor Show Ltd.

Plaintiff

(Respondent/Moving Party)

and

Man-Shield (NWO) Construction
    Inc.

Defendant

(Appellant/Responding Party)

and

2353268 Ontario Inc. and Aurora
    Condominiums LP

Third Parties

Melanie Mayhew-Hammond, for the moving
    party (M50918 & M50916) and the responding party (M50742 & M50743)

Amanda Verhaeghe, for the moving party
    (M50742 & M50743) and the responding party (M50918 & M50916)

Heard: November 4, 2019

On appeal
    from the judgment of Justice F. Bruce Fitzpatrick of the Superior Court of
    Justice, dated October 12, 2018, with reasons reported at 2018 ONSC 6077, and from
    the costs order, dated November 22, 2018.

APPEAL BOOK ENDORSEMENT

[1]

All parties now agree the motion judges refusal
    to grant a stay of the partial summary judgment he granted is an interlocutory
    order such that any appeal lies to the Divisional Court with leave. We agree.

[2]

In our view, rather than transferring these
    appeals, the matter should more properly proceed by way of leave application to
    the Divisional Court. The appeals are quashed.

[3]

The request for transfer is denied. Costs of all
    motions and both appeals to The Floor Show Ltd. on a partial indemnity scale
    fixed in the amount of $7,500 inclusive of disbursements and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Gajewski (Re), 2019 ONCA 1009

DATE: 20191220

DOCKET: C67007

Hoy A.C.J.O., Simmons and Nordheimer JJ.A.

IN THE MATTER OF:  BARTOSZ GAJEWSKI

AN APPEAL UNDER PART XX.1 OF THE
CODE

Anita Szigeti, for the appellant

Joanne Stuart, for the respondent, Attorney General of
    Ontario

Michele Warner, for the respondent, the Person in Charge
    of the Centre of Addiction and Mental Health

Heard: December 9, 2019

On appeal against the disposition of the Ontario Review Board,
    dated May 23, 2019.

REASONS FOR DECISION

[1]

Bartosz Gajewski, appeals the disposition of the Ontario Review Board,
    dated May 23, 2019, ordering that he be detained at the General Forensic Unit
    of the Centre for Addiction and Mental Health (CAMH or the Hospital), with
    conditions including allowing the person in charge to permit him to live in the
    community in accommodation approved by the person in charge.

[2]

The appellant seeks an order discharging him subject to conditions,
    including that he reside with his mother. In the alternative, he asks that the
    matter be returned to the Board for a re-hearing.

[3]

For the reasons that follow, we would allow the appeal and return the
    matter to the Board for re-consideration with the guidance provided below.

Background

[4]

The appellant suffers from what the Crown characterizes as an
    intractable delusion that K.N. unlawfully interfered with his life.

[5]

The appellant had done some work on a renovation for K.N. and, in 2003,
    became infatuated with her. At that time, he was charged with criminal
    harassment and threatening bodily harm. The charges were withdrawn in 2004,
    when the appellant entered into a Peace Bond.

[6]

The appellant had no further contact with K.N. until September 17, 2009,
    when he approached her while she was sitting in her car and informed her that
    he was placing her under arrest in the name of Jehovah. He pulled her from the
    car and dragged her 40 metres down the street despite an attempted intervention
    by K.N.s colleague. The police were called and the appellant was arrested. K.N.
    sustained torn ligaments in her foot.

[7]

The appellant was charged with forcible confinement and assault. At his
    bail hearing, the appellant testified that his plan was to take K.N. back to
    his apartment, bind her in nylon ties, contact the Attorney General, and hand K.N.
    over.

[8]

The appellant was found not criminally responsible by reason of mental
    disorder (NCR) and transferred to CAMH on March 24, 2011, and came under the
    Boards jurisdiction. His major mental diagnosis is delusional disorder,
    persecutory type. His mother is his substitute decision maker.

[9]

The appellant has been very stable for two years. He is compliant with
    taking injectable medication (Paliperidone) and in the reporting period had no
    episodes of violence, inappropriate behaviour, or psychotic decompensation. The
    appellant was not on medication at the time of the index offences. However,
    even with the injectable Paliperidone, his delusions have remained intact since
    2002.

[10]

The Board concluded that the appellant continues to pose a significant
    risk to public safety. The appellant does not challenge that finding on appeal.

[11]

For a couple of years, the appellant had been residing with his mother,
    beginning Thursday evening and ending Sunday evening, without incident.  On the
    other days, he spent his time at his mothers or with his Jehovahs Witnesses
    congregation, only returning to the Hospital to sleep. The appellants
    treatment team would have approved a residence in the mothers house, but the
    Office of the Person in Charge for CAMH (OPIC) had not approved it. The
    appellants treating physician, Dr. Iosif, testified that the OPIC did not
    provide reasons for its decision.

[12]

As to the necessity for a detention order, Dr. Iosif testified that she
    had concerns about managing risk under a conditional discharge if the appellant
    were to decompensate. Dr. Iosif was not concerned that the provisions of the
Mental
    Health Act
, R.S.O. 1990, c. M.7 (
MHA
)
would be insufficient to bring the
    appellant back to the Hospital if he decompensated. Rather, her concern was
    that, if involuntarily admitted, the Box B criteria under ss. 15(1.1) and
    20(1.1) of the
MHA
might not operate to keep him there for as long as
    appropriate because the attending physician might not understand the fixed and
    specific nature of the appellants delusional disorder and its significance in
    terms of the risk to K.N.

[13]

Section 20(1.1) of the
MHA
authorizes the attending physician to
    complete a certificate of involuntary admission to a psychiatric facility where
    an individual incapable of consenting to his or her own treatment, who
    previously received effective treatment for a mental disorder that could result
    in harm if untreated, is suffering from the same mental disorder and given his
    or her history and current condition is likely to cause harm to himself or
    herself or others or suffer substantial deterioration. Under s. 20(4) of the
MHA
,
    a certificate of involuntary admission is valid for 14 days and can be renewed
    for periods that escalate in length with each renewal, up to three months after
    a third certificate of renewal or a certificate of continuation. Each renewal
    requires another assessment under s. 20(1.1).

[14]

The Board accepted Dr. Iosifs evidence on this point and rejected the
    appellants request for a conditional discharge:

We considered the mechanism of Box B
    criteria contained in forms 1, 3 and 4 of the
Mental Health Act
and
    concluded that, while the process might work to admit [the appellant] to
    hospital, it would be unlikely to keep him detained in a manner necessary to
    protect the victim and public. On this point, we accept the uncontroverted
    evidence of Dr. Iosif.

[15]

The Board rejected the Crowns request for a
    boundary limitation to protect K.N. and her family. The appellant had not had
    any boundary limitations for over a year. Given that there had been no attempt
    to contact K.N. and a detention order would permit the Hospital and the police
    to move quickly if there were any such attempt, the Board concluded that it was
    unnecessary to include such a restriction. Dr. Iosif, who recommended a
    detention order, was also of the view that geographical boundary limitations
    were unnecessary.

[16]

The Board decided that the detention order
    should be maintained. However, it did ask OPIC to reconsider its decision
    regarding the appellant residing at his mothers house and, if of the view it was
    inappropriate for the appellant to reside at his mothers house, to provide
    reasons to the treatment team that could be conveyed to the Board at the next
    years hearing.

[17]

At the hearing of the appeal, counsel advised
    that the appellant was approved to reside with his mother and has been residing
    with her since October 10, 2019.

The Appellants Position on Appeal

[18]

The appellant argues that the Board erred in its
    analysis of the suitability of a conditional discharge in two respects.

[19]

First, the Board misapprehended the evidence of
    Dr. Iosif. She did not go so far as to say that, if the appellant were
    involuntarily admitted to a hospital under the Box B criteria of the
MHA
,
it was
likely
that the attending physician would fail to keep the appellant
    detained for as long as was warranted. She simply expressed concern that this
might
occur. The possibility that this
    might occur was not enough to make a detention order, the minimal necessary disposition
    in the circumstances.

[20]

Second, the possibility that an attending
    physician at CAMH might not get it right and fail to complete a certificate
    of involuntary admission, a certificate of renewal, or a certificate of
    continuation under s. 20 of the
MHA
when warranted cannot be a reason for
    denying a conditional discharge. The attending physician would have access to
    the whole of the appellants health record and details of the nature of the
    appellants delusional disorder are presumably in that record. The Board should
    assume the competence of attending physicians.

[21]

The appellant also argues that, because he had
    resided at his mothers for part of the week for a couple of years, without
    incident, and the treatment team approved of his mothers residence, the
    Boards reliance on the OPICs decision not to permit him to reside at his mothers
    residence, which was unsupported by reasons, was unreasonable.

Analysis

[22]

We agree with the appellant that aspects of the
    Boards decision are troubling.

[23]

R
.
v. Winko
, [1999] 2 S.C.R. 625, at
    para. 54, instructs that the system in Part XX.1 of the
Criminal Code
is inquisitorial, and that the Board has a duty to search out and consider
    evidence favouring an NCR accuseds absolute discharge or release, subject to
    the minimal necessary constraints. The burden of justifying a restrictive
    disposition remains with the Board. If the Board is uncertain, resolution
    defaults in favour of the liberty of the individual.

[24]

In our view, the Board failed in its
    inquisitorial duty in two respects.

[25]

First, it did not inquire if Dr. Iosifs concern
    that an attending physician at CAMH might not appreciate the fixed and specific
    nature of the appellants delusional disorder and its significance in terms of
    the risk to K.N. could be alleviated through a note or cautionary flag in the
    appellants file, coupled with a term requiring that the appellant be returned
    to CAMH, or by some other means.  Further, the Board did not explore the extent
    of the risk. As the appellant argues, Dr. Iosif did not go so far as to say
    that it was
likely
that an
    attending physician would fail to appreciate the nature of the risk that the
    appellants mental disorder entails, just that it was a possibility.

[26]

Second, the Board was presented with evidence
    that the appellant had been residing with his mother several days a week for a
    couple of years without incident, and that the treatment team approved the
    appellant residing with his mother. In the face of this information, the Board
    did not require evidence as to why the OPIC did not approve the appellant
    residing with his mother before the Board refused the appellants request to
    reside with his mother. In our view, the Boards reliance on the fact that the
    OPIC had not approved the appellant residing with his mother, in the absence of
    any reasons for that determination, and in face of the evidence from the team favouring
    such a term, resulted in an unreasonable restriction on the appellants
    liberty. However, as the OPIC has now approved the mothers residence, this
    issue is moot.

[27]

The appellant provided a draft order, providing
    for his conditional discharge, on terms, for the courts consideration. We
    decline to order the conditional discharge that the appellant requests. Among
    other reasons, we note that one of the Boards reasons for declining to impose
    the boundary limitation term was that a detention order would allow the
    Hospital and the police to move quickly if there were any attempt to contact
    K.N. Instead, we return this matter to the Board for a re-hearing on an
    expedited schedule. The Hospital should be prepared to address what can be done
    to mitigate the risk of an attending physician not appreciating the nature of
    the appellants mental disorder, and the risk that poses to K.N. and revisit
    whether, if this risk can be mitigated, a conditional discharge is then
    appropriate.

Disposition

[28]

The appeal is allowed, and this matter is returned to
    the Board for re-hearing on an expedited schedule.

Alexandra Hoy
    A.C.J.O.

Janet Simmons J.A.

I.V.B. Nordheimer
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Glen Schnarr & Associates Inc. v. Vector
    (Georgetown) Limited, 2019 ONCA 1012

DATE: 20191223

DOCKET: C66557

MacPherson, Pepall and Lauwers JJ.A.

BETWEEN

Glen Schnarr & Associates Inc. and Herbert T.
    Arnold

Plaintiffs (Appellants)

and

Vector (Georgetown) Limited, William Alfred James
    Allison, Robert Thomas Allison, The Estate of Isla Raymonde Allison, Deceased,
Lormel Developments (Eighth Line)
    Ltd.
,
Lormel Developments (Georgetown) Ltd.

and Shelson Properties Limited

Defendants (
Respondents
)

Thomas M. Arnold, for the appellants

Michael Simaan, for the respondents

Heard: October 24, 2019

On appeal from the judgment of Justice Michael R. Gibson
    of the Superior Court of Justice, dated January 18, 2019, with reasons reported
    at 2019 ONSC 519.

Pepall J.A.:

A.

Background

[1]

William Alfred James Allison, Robert Thomas Allison, and the Estate of Isla
    Raymonde Allison, (the Allisons), owned 121.4 acres of land in the Town of Halton
    Hills (the Allison lands), and Vector (Georgetown) Limited (Vector) owned
    103.6 acres (the Vector lands). They and four other landowners retained the
    appellants, Glenn Schnarr & Associates Inc. (GSAA) and Herbert T. Arnold (Arnold),
    as consultants to assist in obtaining government approval so that their land
    could be developed for urban use. GSAA provides land-use planning services and
    Arnold is a lawyer who specializes in the practice of land development.

(i)

The Agreement

[2]

On January 31, 2002, the landowners and the appellants entered into a Cost
    Sharing Agreement (the Agreement) relating to approximately 1,000 acres of
    land.

[3]

The Agreement provided:

-

that the landowners wished to engage the consultants to assist in
    obtaining necessary approvals for the land to be developed for urban use;

-

the Allisons, Vector, four other landowners, the appellants, and
    a trustee were identified as parties of the First to Seventh parts. In the preamble,
    parties of the First to Seventh parts were defined as the Owners or Owner
    of the lands and, in Article 4.1, the Owners were described as those parties
    referenced in the recitals of this Agreement as the parties of the first-part
    to the seventh-part;

-

the cost of the consultants services would be charged to the Owners
    based on prevailing hourly rates, such rates to be adjusted annually;

-

a bonus payment of $3,000 per developable acre approved would be
    paid to the consultants when land was approved, meaning that a report
    recommending inclusion of the lands in the Georgetown Urban Area had been
    adopted by the Regional Council. However, the bonus would only be due and
    payable upon the formal adoption of the Applicable Regional Office Plan
    Amendment, all appeal processes having been exhausted. Specifically, Article 5.1
    of the Agreement stated:

The bonus shall be earned upon the formal adoption of such
    report but shall be due and payable only upon the formal adoption of the
    Applicable Regional Official Plan Amendment, all appeal processes having been
    exhausted.

-

the costs of the consultant services and the payment of the bonus
    were to be shared by the Owners on a pro-rata basis, with each Owners
    proportionate share being determined based on its net developable area. The
    obligation of any Owner was limited to each Owners proportionate share;

-

the consultants covenanted and agreed that during the term of the
    Agreement, they would not act for any party seeking to add any lands to the
    Georgetown Urban Area. That said, other landowners could be added as parties to
    the Agreement and the consultants could then act for them;

-

Article 9.1 stated that all matters in difference between or
    among all or any of the parties in relation to the Agreement were to be
    referred to arbitration. It stated:

All matters in difference between or among all or any of the
    parties in relation to this Agreement shall be referred to the arbitration of a
    single arbitrator, if such parties agree on one, otherwise to three
    arbitrators, one to be appointed by each party and a third to be chosen by the
    first two named before they enter upon the business of the arbitration. The
    award and determination of the arbitrator or arbitrators or any two of the
    three arbitrators shall be binding upon such parties and their respective
    heirs, executors, administrators and assigns.

-

Article 11.1 addressed termination of the Agreement. It provided:

It is agreed that the Owners may terminate this Agreement on 30
    days written notice to the Consultants. Notwithstanding such termination, the
    payment of bonus provisions contained in Article 5 herein shall continue to
    apply on the following basis:

(a)

if a report shall have been adopted by Regional Council recommending
    inclusion of the such lands in the Georgetown Urban Area within one (1) year
    from such termination  100% of the bonus shall be due and payable on the terms
    set out in Article 5;

(b)

if a report shall have been adopted by Regional Council recommending
    inclusion of the such lands in the Georgetown Urban Area within two (2) years
    from such termination  75% of the bonus shall be due and payable on the terms
    set out in Article 5;

(c)

if a report shall have been adopted by Regional Council recommending
    inclusion of such lands in the Georgetown Urban Area within three (3) years
    from such termination  50% of the bonus shall be due and payable on the terms
    set out in Article 5; and

(d)

If a report shall have been adopted by Regional Council recommending
    inclusion of the such lands in the Georgetown Urban Area within four (4) years
    from such termination  25% of the bonus shall be due and payable on the terms
    set out in Article 5.

(e)

if a report is
    not adopted by Regional Council recommending inclusion of the subject lands in
    the Georgetown Urban Area within four (4) years from such termination, no bonus
    shall be due and payable
.

-

budgets were to be prepared by the consultants annually for
    approval of the Owners;

-

the Agreement was binding on successors and assigns and also
    included an entire agreement provision.

(ii)

Subsequent Events

[4]

The Allison lands were transferred to the respondents Lormel
    Developments (Georgetown) Ltd. (LDGL) and Lormel Developments (Eighth Line)
    Ltd. (Eighth Line) in 2003 and 2015 respectively. The Vector lands were
    transferred to Shelson Properties Limited (Shelson) in 2005. At issue on this
    appeal is LDGLs portion of the Allison lands.

[5]

On October 8, 2004, counsel for
LDGL
wrote to Arnold in connection
    with the Agreement. Counsel advised that LDGL had purchased property from the Allisons
    and while the Allisons were parties to the Agreement, there had been no
    assignment of that Agreement to LDGL. As a result, counsel claimed that LDGL
    was not a party to or bound by the Agreement. Counsel went on to state that as
    a courtesy to the other landowners, they were advising that
LDGL
was
    terminating their involvement with the costs sharing group.

[6]

On October 27, 2004, Arnold wrote back confirming that it was the
    consultants view that the Agreement clearly affected and ran with the lands
    and that
LDGL
had taken title with full notice of the Agreement. He stated that he would
    discuss the matter further with the other consultants and landowners and
    provide a further and more detailed response.

[7]

Arnold wrote to counsel for LDGL again on December 12, 2004, advising
    that he had made inquiries of the affected landowners. He wrote that
LDGL
had
    agreed to assume the Agreement and to make all the future payments thereunder
    from the closing date. He asked counsel for LDGL to advise if their position
    remained as stated in the October 8, 2004 letter. Thereafter, the parties had
    no further contact.

[8]

Before this court and the court below, all parties took the position
    that the correspondence of October 8, 2004 from
LDGLs
counsel amounted to notice of
    termination of the Agreement by the respondents. The issue was whether an
    individual owner could terminate the Agreement or whether the owners had to act
    collectively for a termination to be effective.

[9]

The Regional Official Plan Amendment which expanded the Georgetown Urban
    Area to include the Owners lands was adopted in December 2009 and subsequently
    appealed by several parties. All appeal processes were exhausted following the
    Ontario Municipal Board's (OMB) decision of March 17, 2015.

(iii)

Statement
    of Claim and Statement of Defence

[10]

Relying
    on Article 5.1 of the Agreement that provided for the payment of a bonus on the
    formal adoption of the applicable Regional Official Plan Amendment, and all
    appeal processes having been exhausted, the appellants commenced an action
    claiming damages for breach of contract and unjust enrichment against the
    respondents and other owners. The action was commenced on November 5, 2015. The
    claim against LDGL, Eighth Line, and the Allison parties amounts to $327,600, and
    the claim against Vector and Shelson amounts to $297,600.
[1]

[11]

The
    respondents defended the claim on the basis that they had provided 30 days
    written notice of termination of the Agreement in October 2004, and as such,
    their involvement with the Agreement terminated in November 2004. Pursuant to Article
    11.1(e) of the Agreement, as no report was adopted by Regional Council within
    four years of termination of the Agreement, no bonus was payable, and all
    obligations under the Agreement ceased in November 2008. The respondents relied
    on the
Limitations Act
, 2002
, S.O. 2002, c. 24, Sched. B, as
    amended. They also pleaded that they derived no value or benefit from the
    Agreement.

(iv)

Motions

[12]

The
    respondent LDGL moved for determination of a question of law pursuant to Rule
    21.01(1)(a) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, or
    in the alternative for summary judgment, to dismiss the appellants action on
    the basis that the limitation period for bringing the action had expired.

[13]

The
    appellants countered with a motion for a stay so that the parties could proceed
    to arbitration. In their notice of motion, they relied on s.7(1) of the
Arbitration
    Act,

1991
, R.S.O. 1991, c.17, and s. 106 of the
Courts of Justice
    Act
, R.S.O. 1990, c. c.43 (
CJA
).

[14]

The
    motions judge granted the respondents motion and dismissed that of the
    appellants. He found that the appellants did not reject the termination, bring
    a claim asserting breach of contract, or otherwise seek to prevent the
    respondents from terminating the Agreement. He held that the appellants had
    failed to bring a claim in time. Moreover, if the respondent LDGL had
    improperly terminated the Agreement, the appellants ought to have commenced
    proceedings. Rather, the appellants allowed LDGL to proceed as if the Agreement
    had been terminated. The appellants were also estopped by their conduct and by
    laches. The motions judge also declined to exercise his discretion under s. 106
    of the
CJA
to stay the proceedings.

B.

Appeal

(i)

Grounds Advanced

[15]

On
    appeal, the appellants raise two grounds of appeal. First, they submit that the
    motions judge erred in failing to exercise his discretion under s. 106 of the
CJA
to stay the proceedings and direct the parties to arbitration as required by
    the terms of the Agreement. Second, they submit that the motions judge erred in
    law by failing to determine whether LDGL had an individual right to terminate
    the Agreement, and thus erred in his limitation and laches analysis.

(ii)

Analysis

(a)

Stay of Proceedings

[16]

Section
    7(1) of the
Arbitration Act, 1991
, provides that if a party to an
    arbitration agreement commences a proceeding in respect of a matter to be
    submitted to arbitration under the agreement, the court shall, on the motion of
    another party to the arbitration agreement, stay the proceeding. Before this
    court, both parties agreed that s. 7(1) is inapplicable because it was the
    appellants who commenced court proceedings, and therefore it was not open to
    them to seek relief under s. 7(1).

[17]

The
    appellants also relied on s. 106 of the
CJA
in support of their request
    for a stay of their action in favour of arbitration. That section provides that
    a court, on its own initiative or on motion by any person, whether or not a
    party, may stay any proceeding in the court on such terms as are considered
    just.

[18]

The
    respondents submit that this court must first consider the threshold issue of
    the limitation period to determine whether a stay of proceedings is
    appropriate. I agree.

[19]

In
Haas
    v. Gunasekaram
, 2016 ONCA 744, 62 B.L.R. (5th) 1, at para. 10, Lauwers J.A.
    wrote that the law favours giving effect to arbitration agreements and this is
    evident from both the applicable legislation and jurisprudence.

[20]

However,
    there are exceptions. In
Dell Computer Corp. v. Union des consommateurs
,
    2007 SCC 34, [2007] 2 S.C.R. 801, at paras. 84-85, Deschamps J. stated that as a
    general rule in cases involving an arbitration clause, a challenge to the
    arbitrators jurisdiction must be resolved first by the arbitrator. An
    exception arises if the challenge is based solely on a question of law or one
    of mixed fact and law where the question of law requires for its disposition only
    superficial consideration of the documentary evidence in the record.
[2]

[21]

And
    in
Jean Estate v. Wires Jolley LLP
, 2009 ONCA 339, 96 O.R. (3d) 171, this
    court stated at para. 99:

Only where it is clear that the dispute is outside the terms of
    the arbitration agreement, or that a party is not a party to the arbitration
    agreement, or that
the application is out of time
should the court reach any final determination in respect of such matters on an
    application for a stay of proceedings. [Emphasis in original omitted, emphasis added.]

[22]

Here
    the motions judge found that the appellants action was out of time, and that
    they were estopped by conduct and by laches. He dismissed the action on these
    grounds and declined to exercise his discretion under s. 106 of the
CJA
.
    It follows that if his decision that the action was out of time is correct, there
    is no need to address the stay request. Thus, the real issue is whether the
    motions judge was correct in his conclusion that the appellants action was out
    of time, the issue to which I now turn.

(b)

Limitations Act

[23]

The
    appellants argue that the motions judge failed to decide whether LDGL had an independent
    right to terminate the Agreement when it purported to do so. If it did not have
    such a right, its purported termination was ineffective and any limitation
    period would only begin to run once the appeal to the OMB had been resolved. As
    such, they submit that the motions judge erred in dismissing their action based
    on a limitation defence.

[24]

There
    are two elements to consider in addressing this argument. First, was the
    purported termination ineffective because any termination had to be done
    collectively rather than on an individual basis? Second, even if the
    termination was flawed, were the appellants nonetheless out of time in asserting
    their claim against the respondents?

[25]

The
    motions judge did not provide any detail on the ability of one owner to terminate
    the Agreement independent of the other owners but did conclude that even if it
    was considered that [LDGL] improperly terminated the contract when it was not
    permitted to do so, the [appellants] should have advised of their position then,
    and commenced proceedings. The [appellants] took no steps to complain or to
    prevent termination of the contract, and allowed [LDGL] to proceed as if the
    agreement had been terminated.

[26]

I
    agree with the appellants that Owners and Owner are treated separately in
    the Agreement. For example, Article 1.1 speaks of land uses which are
    supported by a majority of the Owners. Article 4.1 permits the addition of
    other landowners as cost sharing Owners subject to consent of a simple
    majority of the then Owners under the agreement at that time and such consent
    shall be based on a weighted vote based on net developable acres of each Owner
    under the Agreement. Article 7.1 states that the costs of the consultants services
    and the payment of the bonus were to be shared by the Owners on a pro-rata
    basis, with each Owners proportionate share being determined based on its net
    developable area. The obligation of any Owner shall be limited to such Owners
    proportionate share. Then, Article 11.1 provides that the Owners may
    terminate on 30 days written notice.

[27]

Reading
    these provisions and the Agreement as a whole, it would appear that the parties
    to the Agreement made a deliberate distinction between Owners and Owner and
    their respective rights and obligations. The definitions, the treatment of the
    addition of other landowners to the Agreement, and the language of termination
    all support the conclusion that an individual owner such as LDGL did not have
    an independent right to terminate the Agreement. The Agreement had to be
    terminated collectively.

[28]

However,
    that is not the end of the matter. Having determined that LDGL could not independently
    terminate the Agreement, I must then consider whether the appellants could do
    nothing for approximately 11 years after the purported termination or whether they
    were required to take action when confronted with LDGLs purported termination.
    This turns on whether the respondents anticipatorily repudiated the Agreement, how
    the appellants responded, and the applicable limitation period.

[29]

Anticipatory
    repudiation occurs when a contracting party, by express language or conduct,
    or as a matter of implication from what he has said or done, repudiates his
    contractual obligations before they fall due: G.H.L. Fridman,
The Law of
    Contract in Canada
, 6th ed. (Toronto: Carswell, 2011), at p. 585. The
    parties concede that LDGL by its correspondence of October 2004 did just that.

[30]

However,
    an anticipatory repudiation of a contract does not, in itself, terminate or
    discharge a contract; it depends on the election made by the non-repudiating
    party:
Guarantee Co. of North America v. Gordon Capital Corp.
, [1999] 3
    S.C.R. 423, at p. 440;
Brown v. Belleville (City)
, 2013 ONCA 148, 114
    O.R. (3d) 561, at para. 42. As Cronk J.A. stated in the latter decision at
    para. 45:

It appears to be settled law in Canada that where
    the innocent party to a repudiatory breach or an anticipatory repudiation
    wishes to be discharged from the contract, the election to disaffirm the
    contract must be clearly and unequivocally communicated to the repudiating
    party within a reasonable time. Communication of the election to disaffirm or
    terminate the contract may be accomplished directly, by either oral or written
    words,
or may be inferred from the conduct of the innocent party in the
    particular circumstances of the case
: McCamus, at pp. 659-61. [Emphasis
    added.]

[31]

In
Chitty
    on Contracts
, 28th ed. (London: Sweet and Maxwell, 1999), Vol. 1, at p.
    25-012, the authors write:

Acceptance of a repudiation must be clear and unequivocal and
    mere inactivity or acquiescence will generally not be regarded as acceptance
    for this purpose. But there may be circumstances in which a continuing failure
    to perform will be sufficiently unequivocal to constitute acceptance of a
    repudiation. It all depends on the particular contractual relationship and the
    particular circumstances of the case.

[32]

This
    commentary was accepted by this court in
Brown v. Belleville
, at para.
    48,

and by the Nova Scotia Court of Appeal in
White v. E.B.F.
    Manufacturing Ltd.
, 2005 NSCA 167, 239 N.S.R. (2d) 270, at para. 91.

[33]

The
    limitation period then depends on the election that is made in response to an
    anticipatory repudiation:
Ali v. O-Two Medical Technologies Inc.
, 2013
    ONCA 733, 118 O.R. (3d) 321, at para. 22-27;
Hurst v. Hancock
, 2019 ONCA
    483, at para. 19.

[34]

After
    receipt of the correspondence of December 12, 2004, the respondents heard nothing
    from the appellants for 11 years when they were suddenly served with the
    appellants statement of claim. Based on the evidence, it is fair to infer that
    quite apart from the bonus, which is the subject matter of the lawsuit, no budgets
    for annual services as referenced in Article 12.1 of the Agreement were ever
    remitted by the appellants to LDGL. The respondents evidence was that they
    received no benefit from the consulting services and that they performed all of
    the services required under the Agreement themselves as they believed the
    Agreement had been terminated as of 2004. There is no evidence to the contrary
    or that the appellants did anything in that intervening time period. In these
    circumstances, by their conduct, the appellants accepted the anticipatory
    repudiation by LDGL. As a result, by 2015 when the action was started, the
    limitation period had long expired. As such, the motions judges conclusion that
    the appellants action was out of time was correct.

C.

Disposition

[35]

For
    these reasons, I would dismiss the appeal. There is no need to consider the
    alternative arguments based on estoppel and the doctrine of laches. I would
    order the appellants to pay the respondents costs fixed in the amount of $5,000
    inclusive of disbursements and applicable tax.

Released: December 23, 2019 (J.C.M.)

S.E. Pepall J.A.

I agree. J.C. MacPherson J.A.

I agree. P. Lauwers J.A.

[1]

These parties and the appellants have agreed to attend at
    arbitration.

[2]

Although this case involved a Quebec arbitration,
Haas
treated the holding as a principle of general application.