COURT OF APPEAL FOR ONTARIO

CITATION: 2089322 Ontario Corporation v. Des Roches, 2019
    ONCA 355

DATE: 20190502

DOCKET: C66238

Doherty, Paciocco and Zarnett JJ.A.

BETWEEN

2089322 Ontario Corporation

Applicant (Respondent in Appeal)

and

Luc W. Des Roches
,
    Nicole L. Des Roches and
Rezmart Gas and Tobacco

Respondents (
Appellants in Appeal
)

Christopher J. Sparling, for the appellant, Luc W. Des
    Roches and Rezmart Gas and Tobacco

Warren S. Rapoport and Nicholas Macos, for the
    respondent

Heard: April 16, 2019

On appeal from the order of Justice Edward J. Koke of the
    Superior Court of Justice, dated October 9, 2018 with reasons reported at 2018
    ONSC 5972.

REASONS FOR DECISION

[1]

In 2006, the appellant, Luc Des Roches (Mr. Des Roches), and the
    respondent, 2089322 Ontario Corporation (208 Ontario), entered into an
    agreement which provided that Mr. Des Roches would operate a convenience store
    and gas bar (Rezmart) on Wasauksing First Nation (WFN). 208 Ontario is
    wholly owned by Wasauksing Lands Inc. (WLI), a not-for-profit economic
    development corporation incorporated to promote the interests of WFN. 208
    Ontario provided funding and oversight.

[2]

The venture did not go well almost from the beginning. In August 2007,
    208 Ontario brought an application for a determination of the parties rights
    under the agreement. 208 Ontario alleged that Mr. Des Roches was operating
    Rezmart without regard to either his obligations under the agreement or 208 Ontarios
    rights under the agreement. That application remained before the courts for
    many years.

[3]

Ultimately, in early 2018, 208 Ontario sought an order enforcing the terms
    of the agreement and an order finding Mr. Des Roches in civil contempt for
    breaching three prior court orders made in the course of the application. Those
    orders related to the preservation and production of documents relating to the
    business operation of Rezmart.
[1]

[4]

At the hearing in April 2018, the motion judge concluded that Mr. Des Roches
    was bound by the agreement with 208 Ontario in respect of the operation of
    Rezmart. The motion judge also found that Mr. Des Roches was in breach of
    several terms of that agreement and had been for many years. The motion judge
    made an order declaring that the agreement was enforceable against Mr. Des
    Roches. He placed 208 Ontario in complete control of the Rezmart business
    operation and the premises. The motion judge also ordered Mr. Des Roches to
    fully cooperate in the transfer of the business premises and assets to 208
    Ontario.

[5]

The motion judge further ordered:

This application is adjourned until October 1, 2018 at which
    time the parties are to appear before me for the continuation of the
    application and to discuss and determine the ultimate relief which should be
    granted by this court.

[6]

The motion judge also addressed the contempt allegations in his reasons.
    He found that Mr. Des Roches was in contempt of prior orders and that his
    non-compliance of those orders was wilful and deliberate. The motion judge
    indicated that a short prison sentence would be appropriate. However, he
    declined to make any order in respect of the contempt and adjourned that matter
    to the October 1 date as well. The motion judge indicated that the adjournment
    of the sentencing on the contempt would give Mr. Des Roches a chance to
    rectify his breach by demonstrating he is prepared to follow court orders.

[7]

Mr. Des Roches was self-represented at the April proceedings.

[8]

Neither party appealed the April order.

The October 1, 2018 Proceedings

[9]

On the return of the motion, 208 Ontario sought an order winding up the
    affairs of Rezmart or an order allowing 208 Ontario to sell the assets of
    Rezmart. Mr. Des Roches, who was represented by counsel at this time, brought a
    preliminary motion asking the court to suspend its determination that the
    agreement was enforceable against Mr. Des Roches pending a forensic examination
    of the document that the motion judge had found to be the joint venture
    agreement (the February 3
rd
agreement) in the April proceeding. Mr.
    Des Roches proposed to have that document and two others examined by a forensic
    document examiner.

[10]

The
    motion judge, following the approach taken by counsel for Mr. Des Roches,
    treated the motion as one brought under rule 59.06(2) for an order setting
    aside a prior order on the basis of fresh evidence showing that the order was
    obtained by fraud. In our view, this was a mischaracterization of the request.
    The order made in April concerning the enforceability of the agreement against
    Mr. Des Roches, when considered in the context of the rest of the order,
    applied pending the return of the motion in October. In our view, it was open
    to Mr. Des Roches to raise arguments pertaining to the enforceability of the
    agreement at the October proceeding.

[11]

The
    motion judge declined to allow Mr. Des Roches to explore the legitimacy of the
    document, concluding that there was no merit to the suggestion that the
    agreement had been fraudulently altered and somehow signed without Mr. Des
    Roches knowledge or consent. In coming to that conclusion, the motion judge
    relied on the following:

·

The provenance of the document, dated February 3, 2006, had been
    established by the representations of counsel for 208 Ontario when he tendered
    the document in the April proceedings;

·

Mr. Des Roches did not expressly challenge the
bona fides
of the February 3
rd
document in the April proceedings.

·

Mr. Des Roches suggestion that the agreement had been altered
    and his signature forged was inconsistent with the position he took in April.
    At that time, he claimed he acted under duress;

·

Mr. Des Roches conduct subsequent to February 2006 confirmed
    that he had acted in accordance with the terms and conditions of the agreement
    in many respects; and

·

Mr. Des Roches conduct, most notably his repeated contempts,
    raised serious concerns about his credibility and good faith.

[12]

The
    motion judge dismissed the appellants preliminary motion. He then went on to
    hold that 208 Ontario could either windup the business of Rezmart or sell it as
    it saw fit. The motion judge also ordered Mr. Des Roches to pay fines totalling
    $6,000 for his three prior contempts.

The Merits of the Appeal

[13]

Mr.
    Des Roches appeals from the October order. The appeal focusses on the motion
    judges dismissal of Mr. Des Roches preliminary motion seeking an opportunity
    to challenge the
bona fides
of the February 3, 2006 agreement. Mr. Des
    Roches does not appeal the other aspects of the October order. Most notably, he
    does not challenge the penalties imposed as a consequence of the contempt
    findings. Nothing said in these reasons affects the enforceability of those
    penalties.

[14]

We
    are satisfied that the appeal must be allowed. First, as indicated above, the
    motion judge mischaracterized the nature of the preliminary motion. The motion
    did not suggest that the April order was obtained by fraud. The motion was
    premised on the contention that Mr. Des Roches could question the
bona
    fides
of the document said to represent the agreement. The April proceeding
    had determined that issue, but only for the purpose of the operation of the
    business pending the October proceeding. Mr. Des Roches sought to pursue that
    issue by way of forensic examination of certain documents.

[15]

The
    motion judge also made two material factual errors in considering Mr. Des
    Roches motion. First, he indicated that Mr. Des Roches had advanced a duress
    defence in response to the February 3
rd
document at the April
    hearing. The motion judge indicated that a duress defence was entirely
    inconsistent with Mr. Des Roches claim that the document was forged.

[16]

Mr.
    Des Roches was not represented by counsel in the April proceeding. In the
    course of his dialogue with the motion judge, Mr. Des Roches did indicate that
    he felt at various times that he had little choice in the course of the
    negotiations. He did not, however, suggest that he signed any document under
    duress. In his discussions with the motion judge, Mr. Des Roches purported to
    have little or no recollection of the February 3
rd
document, how it
    came to be in the condition it was in at the time of the motion, or how he came
    to sign it. Mr. Des Roches position in the April proceeding was essentially
    that he believed the negotiations were ongoing and that a finalized agreement
    had not been reached.

[17]

The
    motion judge also wrongly relied on the fact that the February 3
rd
document had been produced in court by counsel for 208 Ontario, as affording support
    for the authenticity of the document. No one suggests that counsel for 208
    Ontario had any reason to believe that the document was anything other than
    what it appeared to be, or that he was in anyway misleading the court about
    where the document came from. However, the issue was not what counsel for 208
    Ontario believed or where counsel got the document. The issue was whether the
    document was genuine. The manner in which it came before the court did not
    assist in determining its genuineness. In fact, a stronger case for its
    genuineness could have been made had the document, as normally occurs, come
    before the court through a witness with firsthand knowledge of the document.

[18]

Mr.
    Des Roches should have an opportunity to present his case for challenging the
    authenticity of the February 3
rd
document. At the same time, the
    manner in which Mr. Des Roches has conducted himself throughout these
    proceedings gives real cause to doubt the
bona fides
of any position
    he advances. Mr. Des Roches should have 30 days from the release of these
    reasons to bring a motion in the Superior Court seeking the order concerning
    the examination of the relevant documents. If no such motion is brought, 208
    Ontario may move for whatever relief it deems appropriate in the application.

[19]

To
    facilitate the bringing of the motion by Mr. Des Roches, but also to preserve
    the
status quo
as it relates to the business, we make the following
    order:

·

paragraphs 1, 2, 3 and 4 of the October 9, 2018 order are set
    aside; and

·

pending any further order of the Superior Court, paras. 2, 3, 4,
    5, 6, 7, 8, 9, 10 and 11 of the April 27, 2018 order are reinstated.

[20]

To
    be clear, it is our intention to emulate the April 27, 2018 order insofar as the
    control of the business and business premises are concerned. 208 Ontario shall
    have possession and control of the business premises and assets of Rezmart
    pending any further order of the Superior Court.

[21]

One
    final point. The appellant has also raised the question of the enforceability
    of the agreement in light of the terms of s. 28 of the
Indian Act
,
    R.S.C. 1985, c. I.5. This argument was raised in Mr. Des Roches affidavit
    filed prior to the April 2018 hearing. The argument was not addressed insofar
    as we can tell in the course of either the April or October hearing.

[22]

Counsel
    for the appellant and 208 Ontario in this court made brief submissions on the
    effect of s. 28 of the
Indian Act
on the agreement. They disagree. As
    we are satisfied that the appeal must be allowed to the extent outlined above,
    we think it appropriate that Mr. Des Roches raise any issue concerning the
    impact of the
Indian Act
when he brings his motion in respect of the
bona
    fides
of the February 3
rd
agreement. Both parties will have a
    full opportunity at that time to put their positions forward.

Costs

[23]

Although we
    have allowed the appeal, 208 Ontario should still have its costs on the motion
    as ordered by the application judge in para. 7 of the October 9, 2018 order.
    208 Ontario had to bring the matter back before the application judge. Mr. Des
    Roches had not purged his contempts or cooperated in any way with 208 Ontario in
    respect of the concerns raised in the April proceedings. Mr. Des Roches
    conduct precipitated the October proceedings.

[24]

We make no
    order as to costs on the appeal.

[25]

Any amount held
    as security for costs of the appeal should be paid to 208 Ontario to go towards
    the $6,000 costs awarded by the application judge.

Doherty J.A.

D.M. Paciocco J.A.

B. Zarnett J.A.

[1]

The application was also brought against Nicole Des Roches,
    Mr. Des Roches sister. The motion judge determined that she was not a party to
    the business arrangement between Mr. Des Roches and 208 Ontario and dismissed
    the application against her. There is no appeal from that part of the order and
    she is not a party to this appeal. Nothing said here affects the dismissal of
    the application as against her.


COURT OF APPEAL FOR ONTARIO

CITATION: 2386240 Ontario Inc. v. Mississauga (City), 2019
    ONCA 413

DATE: 20190521

DOCKET: C65592

Simmons, Tulloch and Brown JJ.A.

BETWEEN

2386240 Ontario Inc.,
    o/a Al-Omda Lounge, Habibi Lounge, Fusion Lounge, Saima Rogna Inc., o/a El
    Fishawy, 84921231 Canada Inc., o/a Mazaj Lounge and Shisalicious Café

Applicants (Appellants)

and

The City of Mississauga and
The Regional Municipality of Peel

Respondents (
Respondent
)

Ryan P. Zigler, for the appellants

Barnet H. Kussner and Sylvain R. Rouleau, for the
    respondent

Heard: February 28, 2019

On appeal from the judgment of Regional Senior Judge Peter
    A. Daley of the Superior Court of Justice, dated June 5, 2018, with reasons
    reported at 2018 ONSC 3162, and from the costs order, dated August 9, 2018,
    with reasons reported at 2018 ONSC 4797.

REASONS FOR DECISION

Introduction

[1]

The appellants are the owners of several hookah lounges located within
    the Regional Municipality of Peel. In their lounges, the appellants supply
    waterpipes and smoking products (including herbal shisha, a legal substance) to
    their customers to be consumed on site, while the customers socialize on their
    premises.

[2]

On April 28, 2016, the
Region passed by-law No. 30-2016,
Peel Waterpipe Smoking By-law
(the By-law), which,
    among other things, prohibits smoking waterpipes in
specified places
    that would include the appellants lounges
.

[3]

The appellants applied under s. 273 of the
Municipal Act, 2001
,
    S.O. 2001, c. 25, for a declaration that ss. 2(a), (b), and (c) as well as s. 5
    of the By-law are illegal and should be quashed. Sections 2(a), (b) and (c) prohibit
    waterpipe smoking in
an enclosed public place, an
enclosed
    workplace and a restaurant or a bar patio. Section 5 prohibits a proprietor, an
    employer, or an employee from permitting waterpipe smoking in the locations
    specified in ss. 2(a), (b) and (c).

[4]

The appellants argued that the Region acted outside the scope of its
    powers because the By-law targeted their businesses and would ultimately result
    in closure of their lounges and substantial economic loss. They maintained that
    the Region does not have the power to prohibit a business. Further, they argued
    that the By-law is inconsistent with provincial legislation and that the
    Region, though purportedly acting to protect employees, failed to consult with
    hookah lounge employees, and therefore acted in bad faith.

[5]

The application judge dismissed the appellants
    application. In his view, most of the issues raised had been canvassed in a
    case involving a City of Toronto by-law prohibiting waterpipe smoking in
    premises Toronto had licensed to carry on business. The challenged by-law was
    held valid and that decision was upheld by this court:
2326169
    Ontario Inc. v. Toronto (City)
, 2016 ONSC 6221, 59 MPLR
    (5th) 279, affd 2017 ONCA 484, 67 MPLR (5th) 183 (the City of Toronto case).

[6]

In this case, the application judge found that
    the
Municipal Act 2001
conferred powers on the
    Region resembling the powers conferred on Toronto under the
City of
    Toronto Act
, S.O. 2006, c. 11. Similar to the conclusion
    reached in the City of Toronto case, the application judge found there was
    ample evidence to support the conclusion that the purpose of the By-law was protection
    of public health and safety, which is a purpose specifically authorized by
    section 11(2) subparagraph 6 of the
Municipal Act, 2001
. Further, relying in part on the City of Toronto case, the application
    judge concluded that the By-law did not conflict with the
Occupational
    Health and Safety Act
, R.S.O. 1990, c. O.1 (the
OHSA
), contrary to what the applicants had argued. Finally, he found diligent
    and thorough levels of consultation, research, and inquiry by the Region and no
    evidence of malicious or purposeful conduct in failing to consult the
    appellants employees. He rejected the appellants claim of bad faith.

[7]

The application judge therefore dismissed the
    application with costs to the Region on a partial indemnity basis, totaling
    $86,580.99.

[8]

The appellants raise three issues on appeal and seek
    leave to appeal costs. For the reasons that follow, we dismiss the appeal and
    deny leave to appeal costs.

Discussion

(i)

The application judge did not err in failing to
    find the By-law
ultra vires
the Region

[9]

First, the appellants submit that the
    application judge erred in failing to find the By-law
ultra vires
the Region. They say he erred in law in characterizing the subject
    matter of the By-law as the protection of public health and safety when the
    sole effect of the By-law was to prohibit their businesses. The appellants say
    that, on the record before council, waterpipe smoking was occurring in only 24
    enclosed public places, all of which were waterpipe establishments. On these
    facts, the sole purpose of the By-law could only have been to prohibit the
    appellants businesses. The appellants submit that the
Municipal Act,
    2001
does not grant municipalities the power to prohibit
    businesses and that the By-law was therefore beyond the Regions powers.

[10]

Further, the appellants argue that the
    application judge erred in law in relying on the City of Toronto case for the
    broad proposition set out at para. 84 of his reasons that it was unnecessary to
    consider the ultimate effect of the By-Law on the economic interest of the
    applicants  when determining whether the By-Law was lawfully enacted having
    regard to its purpose.

[11]

The appellants rely on this courts decision in
Canada
    Post Corp. v. Hamilton (City)
, 2016 ONCA 767, 134 O.R.
    (3d) 502, as establishing that it is necessary to consider not only the
    purpose, but also the effects of a by-law to determine if it is
intra vires
.
    They contend that the application judge erred in distinguishing
Canada
    Post Corp.
on the basis that the primary issues in that
    case were constitutional law issues, including conflict between federal and
    provincial legislation as well as the doctrine of paramountcy.

[12]

We do not accept these submissions. The broad
    statutory authority conferred on the Region and the evidentiary record in this
    case amply support the application judges conclusions that the purpose of the
    By-law was to protect public health and safety, a purpose authorized by s.
    11(2)(6) of the
Municipal Act, 2001
, and that
    the By-law is therefore
intra vires
.

[13]

Section 8(1) of the
Municipal Act,
    2001
requires that the powers of a municipality under the
    act be interpreted broadly so as to confer broad authority on the municipality
    to enable the municipality to govern its affairs as it considers appropriate
    and to enhance the municipalitys ability to respond to municipal issues.

[14]

Section 11(2) of the
Municipal Act,
    2001
permits a municipality to pass by-laws respecting
    specified matters. Subparagraph 6 of s. 11(2) specifies one such matter as:
    Health, safety and well-being of persons. Section 8(3)(a) of the
Municipal
    Act, 2001
provides that a by-law under s. 11 respecting a
    matter may regulate or prohibit respecting the matter.

[15]

As in the City of Toronto case, in determining
    the purpose of the By-law, the application judge reviewed the process that led
    to its enactment.

[16]

In particular, the application judge noted that
    concerns had been raised relating to the harmful effects of waterpipe use by
    the Public Health Division of the Regions Health Services Department (Peel
    Public Health) in a 2012 report entitled Burden of Tobacco: the Use and
    Consequences of Tobacco in Peel. Subsequently, in February 2015, Peel Public
    Health issued a further report entitled Health Effects from the Uses of, and
    Exposure to, Tobacco and Non-tobacco Waterpipes. The latter report included
    various recommendations, such as the possible development of a by-law
    prohibiting waterpipe smoking in enclosed public spaces and workplaces,
    including restaurants and bar patios.

[17]

Further, as the result of a November 2015 report
    from the Medical Officer of Health and the Commissioner of Health Services, the
    Region conducted stakeholder consultations with a view to determining how the
    Region could best address public health risks associated with waterpipe smoking
    in public places.

[18]

Following these consultations, in April 2016,
    the Medical Officer of Health and the Commissioner of Health Services submitted
    a report to council concerning the consultations, in which they recommended the
    enactment of a by-law prohibiting waterpipe smoking of both tobacco and
    non-tobacco products in enclosed public places, enclosed workplaces, and
    specified outdoor locations within the Region. After hearing submissions and
    receiving delegations relating to the recommendations in the April 2016 report,
    the Region enacted the By-law at the April 28, 2016 council meeting.

[19]

Based on the evidence concerning this process as
    well as evidence concerning certain testing that had been conducted at
    waterpipe establishments, the application judge concluded that there was no
    evidence to support the submission that the purpose of the By-law was to
    prohibit business. He stated, [i]ts true purpose was to prohibit a specific
    activity, namely smoking with waterpipes on the grounds that it posed a risk to
    public health and safety.

[20]

While cognizant of the appellants evidence of
    the potential economic impact of the By-law on their businesses, the
    application judge concluded that, just as this court held in the City of
    Toronto case, that [potential impact on the operation of the appellants
    businesses] is only an unfortunate incidental result of the By-law and not
    determinative of its purpose.

[21]

The respondent disputes the appellants
    submissions concerning whether
Canada Post Corp.
requires a court to consider the effects of a By-law when assessing
    whether the By-law is
ultra vires
. Like the
    application judge, the respondent relies on the fact that the primary issues in
    the
Canada Post Corp.
case involved questions
    of constitutional law in order to distinguish it.

[22]

We are skeptical of the application judges view
    that this courts discussion of
vires
in
Canada
    Post Corp.
can be distinguished only because, overall,
    that case addressed conflict between federal and provincial law and paramountcy.
    However, it is unnecessary that we determine that question for the purposes of
    this case.

[23]

Assuming the effects of a by-law may be relevant
    to determining its purpose  or the matter of the by-law  we see no error in
    the conclusion that, on the facts of this case, the potential economic impact
    on the appellants businesses is but an unfortunate incidental result of the
    By-law and not determinative of its purpose.

[24]

Contrary to the appellants argument, the sole
    effect of the By-law is not its potential economic impact on the appellants
    businesses. Rather, the overriding effect of the By-law is prophylactic. It
    prevents the harmful effects of waterpipe smoking, both at the time of its
    enactment and into the future, in many specified places within the Region. Under
    s. 2 of the By-law, these places include not only the appellants businesses,
    but also any location that is:

(a)

an Enclosed Public Place;

(b)

an Enclosed Workplace;

(c)

a Restaurant or Bar Patio;

(d)

a Playground;

(e)

a Sporting Area;

(f)

a Spectator Area adjacent to a Sporting Area;

(g)

a School; or

(h)

any area
    under public ownership that is within 20 metres of any point on the perimeter
    of a Playground, Sporting Area or Spectator Area adjacent to a Sporting Area.

[25]

This prophylactic effect of the By-law is
    entirely in keeping with the application judges finding that the true purpose
    of the By-law was to protect public health and safety from the risks posed by
    waterpipe smoking, a purpose authorized under s. 11(2) of the
Municipal
    Act, 2001
. Considering the By-law as a whole, we agree
    with the application judges conclusion that, as in the City of Toronto case,
    while the By-law may have an economic impact on the operation of the
    appellants businesses, that is only an unfortunate incidental result of the
    By-law and not determinative of its purpose.

(ii)

The application judge did not err in failing to
    find the By-law conflicts with the
OHSA

[26]

The appellants second argument is that the
    application judge erred in failing to find that the By-law conflicts with the
OHSA
. They rely on
Control of Exposure to Biological or
    Chemical Agents
, R.R.O. 1990, Reg. 833 (Regulation
    833), which was made under the
OHSA
. The
    appellants contend that Regulation 833 comprehensively addresses the protection
    of Ontario workers from hazardous agents in the workplace, including carbon
    dioxide and particulate matter, the substances identified by the Region as
    posing a danger in this case. They say that, under s. 2(2) of the
OHSA
, Regulation 833 prevails over the By-law and the By-law is
    therefore void.
[1]
In the alternative, they say the By-law is incompatible with the purpose of
    Regulation 833 and is therefore void under s. 14 of the
Municipal
    Act, 2001
.
[2]
Finally, the appellants contend that the application judge erred in relying on
    this courts rejection of a similar argument in the City of Toronto case. That
    is because, say the appellants, the City of Toronto case focused only on the
OHSA

itself and did not address the appellants arguments
    concerning conflict with Regulation 833.

[27]

We reject these submissions. In the City of
    Toronto case, this court noted that the by-law at issue in that case
    protect[ed] the health and safety of patrons as well as employees of
    businesses. Further, this court found the by-law at issue complementary to
    both the purpose and the provisions of the
OHSA
. Importantly, this court concluded, [c]ontrary to the appellants
    submission,
the
OHSA
does not require the City to adopt measures
    short of a prohibition on hookah smoking
in order to protect employment in
    hookah lounges (emphasis added).

[28]

The appellants have identified nothing in
    Regulation 833 that suggests this courts conclusions concerning conflict with
    the
OHSA
are not equally applicable to it.

(iii)

The application judge did not err in failing to
    find the Region acted in bad faith

[29]

The appellants third argument is that the
    application judge erred in failing to find that the Region acted in bad faith
    in enacting the By-law. The appellants contend that bad faith in this context
    does not require wrongdoing or personal advantage to a member of council. All
    that is required is that a municipality act arbitrarily and without the
    required degree of fairness, openness, and impartiality. The appellants submit
    that because their employees economic interests were affected by the By-law,
    the employees were entitled, as a matter of procedural fairness, to be
    consulted concerning its impact. Further, the appellants point to the application
    judges statement in his reasons that [m]ere inadvertence of council to invite
    employees does not make out bad faith. They submit that the reason for a
    denial of procedural fairness is immaterial to the issue of bad faith.

[30]

We do not accept the appellants submissions. As
    we have said, the application judge found that the record disclosed very
    diligent and thorough levels of inquiry, research and consultation by the
    Region prior to the enactment of the subject By-Law. He noted that a public
    meeting was held to allow members of the public and stakeholders to make their
    concerns known to the Regional council. His comment about inadvertence was made
    in the context of observing that it was open to the appellants employees to
    attend the public meeting. In the circumstances, we see no basis on which to
    interfere with the motion judges finding that the appellants failed to meet
    the heavy burden of establishing the presence of bad faith in the enactment of
    the By-law.

(iv)

Leave to appeal costs is denied

[31]

The application judge denied the Regions
    request for substantial indemnity costs. He also reduced its claim for partial
    indemnity costs by $10,000 by eliminating the claimed junior counsel fee,
    resulting in a total costs award of $86,580.99 on a partial indemnity basis.

[32]

We reject the appellants argument that the
    application judge should have followed the lead of the application judge in the
    City of Toronto case and made no order as to costs. The issues raised in this
    case bore substantial similarity to the issues already fully litigated in the
    City of Toronto case. As such, this case did not raise a matter of first
    impression and the appellants had no reason to expect that the Regions
    taxpayers should bear the burden of the appellants legal challenge.

[33]

An order for leave to appeal costs requires
strong
    grounds upon which the appellate court could find that the judge erred in
    exercising his discretion:
Brad-Jay Investments Ltd. v. Szijiarto
(2006), 218 O.A.C. 315, (C.A.), at para. 21. We see no such grounds in this
    case.

(v)

Disposition

[34]

Based on the foregoing reasons, the appeal is
    dismissed and the request for leave to appeal costs is denied. Costs of the
    appeal are to the respondent on a partial indemnity scale fixed in the amount
    of $10,000 inclusive of disbursements and HST.

Janet Simmons J.A.

M. Tulloch J.A.

David Brown J.A.

[1]

This subsection provides that [d]espite anything in any
    general or special Act, the provisions of this Act and the regulations prevail.

[2]

This section provides:

(1) A by-law is without effect to the extent of any conflict with,

(a) a provincial or federal Act or a regulation made under such an
    Act; or

(b) an instrument of a legislative nature, including an order,
    licence or approval, made or issued under a provincial or federal Act or
    regulation.

(2) Without restricting the generality of subsection (1), there is a
    conflict between a by-law of a municipality and an Act, regulation or
    instrument described in that subsection if the by-law frustrates the purpose of
    the Act, regulation or instrument.


COURT OF APPEAL FOR ONTARIO

CITATION: Alharayeri v. Wilson, 2019 ONCA 438

DATE: 20190524

DOCKET: C66180

Tulloch, Benotto and Huscroft JJ.A.

BETWEEN

Ramzi Alharayeri

Plaintiff/Creditor (Respondent)

and

Andrus Wilson

Defendant/Debtor

and

Wi2Wi Corporation

Garnishee (Appellant)

Karen Phung, for the appellant

Daniel Rosenbluth, for the respondent

Heard: May 22, 2019

On appeal from the judgment of Justice Markus Koehnen of
    the Superior Court of Justice, dated October 25, 2018.

APPEAL BOOK ENDORSEMENT

[1]

Counsel for the appellant appears and indicate to the court that the
    parties have now settled the appeal. Accordingly the appeal is marked as
    abandoned.

[2]

The parties have agreed that the judgement below is to be set aside.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Amyotrophic Lateral Sclerosis Society of Essex
    County v.

Windsor (City), 2019 ONCA 344

DATE: 20190501

DOCKET: C65871, C65870

Lauwers, Pardu and Nordheimer JJ.A.

BETWEEN

Amyotrophic Lateral
    Sclerosis Society of Essex County

Plaintiff (Respondent)

and

The Corporation of the
    City of Windsor

Defendant (Appellant)

AND BETWEEN

Belle River District
    Minor Hockey Association Inc. and Essex County Dancers Incorporated

Plaintiffs (Respondents)

and

The Corporation of the Town
    of Tecumseh

Defendant (Appellant)

Brendan van Niejenhuis and Fredrick Schumann, for the
    appellants

Brian Radnoff and Alex Sharpe, for the respondents

Heard: April 11, 2019

On appeal from the order of the Divisional Court (Harper,
    Myers and Newton JJ.), dated April 11, 2018, with reasons reported at 2018 ONSC
    2350, allowing an appeal from the order of Justice Terrence L.J. Patterson of
    the Superior Court of Justice, dated January 13, 2017, with reasons reported at
    2017 ONSC 310.

Nordheimer J.A.:

[1]

The defendants appeal, with leave, from the order of the Divisional
    Court allowing an appeal from the order of the class actions judge, Patterson
    J., dated January 13, 2017. The Divisional Court ordered that the deemed
    undertaking in r. 31.1.01(3) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194, applies to the names of the opt-outs, and the number of
    opt-outs, disclosed by respondents counsel to appellants counsel in these class
    proceedings.

[2]

For the reasons that follow, I would allow the appeal and set aside the
    order of the Divisional Court.

Background

[3]

Over many years, charitable and religious groups paid fees to the City
    of Windsor and the Town of Tecumseh for licenses to hold fund-raising lottery
    events (e.g. bingo games). In 2008, two companion class actions (one against
    each municipality) were commenced for the return of those fees. The two class
    actions have been jointly case-managed by Patterson J.

[4]

On December 31, 2012, the class actions were certified. The
    certification orders were varied by this court on August 12, 2015:
Amyotrophic
    Lateral Sclerosis Society of Essex County v. Windsor (City)
, 2015 ONCA
    572, 337 O.A.C. 315. Following that decision, the opt-out period ran for 120
    days from January 15, 2016 to May 15, 2016. The court-approved Notices of
    Certification directed that class members could opt-out by sending an opt-out
    form to class counsel, by mail, fax, or email, or by completing the opt-out
    form online.

[5]

During the opt-out period, the appellants engaged in a public campaign in
    an effort to convince class members to opt-out of the class actions. The campaign
    emphasized the potential harm to municipal finances from the class actions, including
    that taxes would have to be increased and services cut to pay any damage award.
    The campaign also encouraged members of the public to urge the charities and
    religious organizations that they supported to opt-out.

[6]

The respondents brought a motion challenging the propriety of the appellants
    campaign. On January 29, 2016, the class actions judge, while acknowledging
    that the appellants had the right to communicate with class members, found that
    the campaign went over the line and created "undue influence:
Amyotrophic
    Lateral Sclerosis Society of Essex County v. Windsor (City),
2016 ONSC 676,
    58 M.P.L.R. (5th) 127, leave to appeal dismissed 2016 ONSC 1929, 58 M.P.L.R (5th)
    137 (Div. Ct.). Among other things, he ordered that there would be a
    reconsideration period for class members who opted-out. The reconsideration
    period ran from August 11, 2016 to October 10, 2016. Both sides sought to
    appeal this decision, but the Divisional Court denied leave to appeal.

[7]

During the reconsideration period, and on the consent of the parties, the
    class actions judge made what was described as a protection order preventing
    the appellants counsel from passing along, to their clients, the number or
    identity of the opting-out members. He made the order to prevent undue
    influence during the reconsideration period.

[8]

After the reconsideration period, the appellants moved to lift the protection
    order. The respondents sought a revised protection order. Alternatively, the
    respondents sought a declaration that the deemed and/or implied undertaking
    rules applied to the identities and number of opt-outs.

[9]

The class actions judge granted the appellants motion and lifted the protection
    order:
Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor
    (City),
2017 ONSC 310. He rejected the respondents submissions in support
    of a modified protection order. He did not make a declaration, either way,
    about the deemed and/or implied undertaking issue. In reaching his decision,
    the class actions judge relied on
Sierra Club of Canada v. Canada (Minister
    of Finance),
2002 SCC 41, [2002] 2 S.C.R. 522

and found that
    there was "insufficient evidence that there is a serious threat to the
    commercial interest of the [respondents] in this case. On the evidence, the
    risk is not real and substantial and well-grounded": at para. 29. He also
    concluded that the open court principle outweighs the potential class members
    request for confidentiality: at para. 34.
[1]

[10]

The
    respondents sought leave to appeal to the Divisional Court. The Divisional
    Court granted leave "on only the following issue: did the Case Management
    Judge err in law in failing to consider whether the deemed and/or implied
    undertaking rules apply to information regarding the identities of the
    opt-outs?.

The decision below

[11]

The
    Divisional Court pointed out that the class actions judge had failed to address
    the alternative submission of the respondents that the deemed undertaking rule
    applied to the information regarding the opt-outs.
[2]
It also found that the class actions judge had erred in treating the request
    for a protection order as if it was a motion for a sealing order. While the
    latter conclusion is arguable, given the very narrow issue upon which leave to
    appeal had been granted, it was an error for the Divisional Court to have
    embarked on a consideration of that issue.

[12]

The
    Divisional Court reviewed the genesis of the deemed undertaking rule and
    correctly noted that the rule only applies to the specific circumstances set
    out in r. 30.1.01(1). More specifically, the rule applies only to information
    obtained through the discovery process: at paras. 26-30.

[13]

The
    Divisional Court concluded that the information regarding the opt-outs was
    information that would be available through the discovery process and there was
    no proper basis to distinguish the opt-out information, disclosed earlier in
    the litigation process, from that class of discoverable information. Thus, the
    Divisional Court concluded that the deemed undertaking rule applied to the
    opt-out information: at paras. 37, 44-47.

Analysis

[14]

The
    issue before this court is, as it was before the Divisional Court, a very
    narrow one. It has only to do with whether the deemed undertaking rule applies
    to the opt-out information.

[15]

In
    my view, the Divisional Court made two errors in its analysis. First, it
    incorrectly concluded that, because members of a class are not parties to the
    litigation, they are entitled, in some fashion, to maintain their anonymity at
    least up to the stage where they have to individually prove any claim that they
    may have: see paras. 8-11. Second, the Divisional Court incorrectly concluded
    that the opt-out information was equivalent to information properly produced
    pursuant to the discovery process and thus fell within the scope of the deemed
    undertaking rule: see paras. 37, 44-47.

(i)

Class members as parties

[16]

On
    the first error, I accept that, in the very technical sense, members of a class
    in a certified class action are not parties to the action:
Dabbs v. Sun
    Life Assurance Co. of Canada
(1998), 41 O.R. (3d) 97 (C.A.), leave to
    appeal dismissed [1998] S.C.C.A. No 372. However, once the opt-out period has
    expired, and a putative class member has not opted-out of the proceeding, they become
    part of the class of plaintiffs who are advancing a claim against the
    defendant(s). They have submitted to having their rights in relation to the
    issues raised in the class action determined by the court. I note, on this
    point, that s. 27(3) of the
Class Proceedings Act, 1992,
S.O. 1992, c.
    6 (
CPA
) expressly provides that a judgment on common issues of a
    class binds every class member who has not opted out of the class proceeding.
    I also note the observation in Warren K. Winkler et al.,
The Law of Class
    Actions in Canada
(Toronto: Thomson Reuters Canada, 2014) where the
    authors say, at p. 194:

Although a putative class member has certain statutory rights,
    he or she is not a party to the litigation
until the
    opt-out period has terminated
. [Emphasis added.]

[17]

While
    class members may technically not be parties to the action, they are very much
    akin to parties. For example, they are, potentially, subject to discovery. The
CPA
permits a party to seek leave, following the examination of the representative
    party, to examine a class member for discovery:
CPA
, s. 15(2).

[18]

This
    understanding that class members have a status akin to parties is also consistent
    with the fact that the
CPA
requires, as a condition for certification,
    that there be a representative plaintiff (or defendant). Axiomatically, the
    fact that there is a representative plaintiff means that that individual is
    representing the other plaintiffs, i.e., the other members of the plaintiff
    class.

[19]

Contrary
    to the respondents submission, this understanding of class members as akin to
    parties is not inconsistent with the decision in
Haddad v. Kaitlin Group
    Ltd.,
2012 ONSC 4515, where Perell J. noted that class members are not parties
    to the litigation in the normal sense: at para. 18. I agree. Class members are
    not parties in the normal sense because they have no right to participate in
    the underlying litigation  except with the permission of the court under s. 14
    of the
CPA.

[20]

However,
    the fact that the
CPA
creates a distinction between class members
    and parties does not change the fact that they should be treated as akin to
    parties when issues affecting their rights arise in the proceeding. It also
    does not mean that the actual parties to the litigation  and the public  are
    not entitled to know the identities of those class members that have submitted
    their rights for adjudication in the class proceeding.

(ii)

The deemed undertaking rule

[21]

In
    terms of the application of the deemed undertaking rule, in my view the opt-out
    information  largely a simple list - is not, and cannot be, properly
    characterized as being evidence covered by r. 30.1.01(1). It would be helpful
    on this question to reproduce the actual wording of the deemed undertaking
    rule. Rule 30.1.01 reads, in part:

(1) This Rule applies to,

(a) evidence obtained under,

(i) Rule 30 (documentary
    discovery),

(ii) Rule 31
    (examination for discovery),

(iii) Rule 32
    (inspection of property),

(iv) Rule 33 (medical
    examination),

(v) Rule 35 (examination
    for discovery by written questions); and

(b) information obtained from evidence referred to
    in clause (a).

(2) This Rule does not apply to evidence or
    information obtained otherwise than under the rules referred to in subrule (1)

[22]

The
    opt-out list is, in essence, statutorily created information. The list is information
    that is created as a result of the terms of the order upon which the court
    certifies the class action. As s. 9 of the
CPA
mandates, any member of
    the class may opt-out, and the terms and conditions of the opt-out process must
    be set out in the certification order. It is that process that creates the
    opt-out information. Consequently, the opt-out information is not the private
    information of any party. And it is information that all parties are entitled
    to have.

[23]

As
    the parties here acknowledged, the certification order could have directed that
    the opt-out forms be sent to the appellants as easily as to the respondents. Indeed,
    opt-out forms might, in some cases, be directed to a third party: Eizenga et al.,
Class Actions Law and Practice,
loose-leaf, 2nd ed. (Toronto:
    LexisNexis, 2008), §5.75. Regardless, both sides of the action would be
    entitled to the information, as would the court itself. It is important, on
    this point, to reiterate that r. 31.01.1(2) expressly provides that the deemed
    undertaking rule does not apply to evidence or information obtained otherwise
    than under the rules referred to in subrule (1).

[24]

The
    core purpose of the deemed undertaking rule is to protect the use to which the
    compelled production of a partys private information can be put:
Goodman
    v. Rossi
(1995), 24 O.R. (3d) 359 (C.A.);
Juman v. Doucette
, 2008
    SCC 8, [2008] 1 SCR 157. The opt-out information is not captured by that
    purpose. Rather, the opt-out information is information that relates to the
    identities of the class members who have agreed to be bound by the
    determinations made in the context of the class proceedings.

[25]

Courts
    in Canada operate on the openness principle. A person who chooses to commence a
    court proceeding must do so publicly, subject only to exceptional circumstances
    where a pseudonym or initials may be used:
C.G. v. Ontario (Health
    Insurance Plan General Manager),
2014 ONSC 5392, 327 O.A.C. 53 (Div. Ct.),
    at para. 7. The overarching principle applicable to all court proceedings is
    that the public is entitled to know what proceedings are commenced in our courts,
    along with the particulars of those proceedings, and whose rights are being
    submitted for adjudication. Any member of the public is entitled to have access
    to the court file, and to review all of the material that is filed with the
    court. In the same way, a defendant is entitled to know who is using the court
    process to advance a claim against it.

[26]

The
    respondents, and the Divisional Court, rely on my endorsement in
Markle v.
    Toronto (City),
[2004] O.J. No. 3024(S.C.J.) in support of their position.
    With respect, both mischaracterize my decision along with the nature of the
    information that was involved. In
Markle
, the information sought by
    the representative plaintiff was the private information of the City of
    Toronto. It was a list of the names and addresses of individuals who had been
    employed by, but were now retired from, the City. If the action proceeded to
    discovery, it would have been appropriate for counsel for the representative
    plaintiff to ask the Citys representative for a list of the retired persons
    whose claims would be covered by the class action. This request would be
    consistent with the requirement that rested on the City as a party, by virtue
    of s. 5(3) of the
CPA
, to provide its best information on the number
    of members of the proposed class as part of the certification process. Because
Markle
was being certified as a class action on consent, in order to ensure that
    notice of the class action was given in the most effective manner to the
    members of the class, I ordered that the City produce the detailed information
    in advance of the discovery process.

[27]

In
    its reasons, the Divisional Court said, at para. 44, that [t]he submission by
    the government defendants that the deemed undertaking applies only where a
    party is compelled to disclose its own private information in discovery is
    inconsistent with my decision in
Markle
. To the contrary, that
    submission is entirely consistent with the decision, properly understood.

[28]

As
    the class actions judge pointed out in his reasons, at para. 8:

As a result of an application under the
Municipal Freedom
    of Information and Protection of Privacy Act
, R.S.O. 1990, c. M56
    (MFIPP) a list of all 850+ potential class members is publicly available on
    more than one web site.

All that the opt-out information does is permit someone
    to reduce the publicly known 850+ potential class members to the actual class
    members. Both the public and the appellants are entitled to know the identities
    of the class members who are advancing the claims unless a confidentiality
    order is made pursuant to s. 12 of the
CPA
.

[29]

Underlying
    this appeal is an evident concern that the appellants might misuse the opt-out
    information because of the earlier issues surrounding the opt-out process. The
    class action judge declined to continue the earlier protection order he had
    made arising out of those earlier issues, although in so doing he applied the
    stricter test for the granting of a sealing order dictated by
Sierra
,
    rather than determining whether, at that stage, a confidentiality order should
    be made pursuant to s. 12 of the
CPA
to preserve the integrity of the
    class proceedings.

[30]

In
    any event, to the degree that any such concern might arise, s. 12 of the
CPA
gives a class action judge all of the authority that he or she needs to address
    that issue. Indeed, the section could not be more broadly worded. Section 12
    reads:

The court, on the motion of a party or class member, may make
    any order it considers appropriate respecting the conduct of a class proceeding
    to ensure its fair and expeditious determination and, for the purpose, may impose
    such terms on the parties as it considers appropriate.

[31]

If
    such a concern does arise, s. 12 is the proper route to be used to address it. There
    is no doubt that this class actions judge was well aware of the authority he
    had under that section as he expressly referred to it in his reasons dealing
    with the issues that arose over the original opt-out period. To the degree that
    the respondents feel that the class actions judge did not turn his mind to using
    that authority to address their expressed concerns regarding the lifting of the
    protection order, there is nothing that prevents the respondents from returning
    before the class actions judge to seek a remedy. That is the proper approach to
    take. The plain wording of r. 31.01.1 should not be distorted in order to
    effect such a remedy.

Conclusion

[32]

The
    appeal is allowed and the order of the Divisional Court is set aside. The
    appellants are entitled to their costs of the appeal fixed in the agreed amounts
    of $5,000 for the motion for leave to appeal, and $10,000 for the appeal, both
    inclusive of disbursements and HST.

Released: GP May 1, 2019

I.V.B.
    Nordheimer J.A.
I agree. P. Lauwers J.A.
I agree. G. Pardu J.A.

[1]
Here the application for a sealing order may have been a misnomer. The parties
    were not seeking to seal documentary information that had been filed with the
    court. Rather the parties sought in substance, a confidentiality order: see
Elbakhiet
    v. Palmer
, 2019 ONCA 333.

[2]

Despite the specific wording of the endorsement granting leave
    to appeal to the Divisional Court, only the issue of the application of the
    deemed undertaking rule was considered and determined. Consequently, these
    reasons also only deal with the application of the deemed undertaking rule.


COURT OF APPEAL FOR ONTARIO

CITATION: The Bank of Nova Scotia v. 1860384 Ontario Inc.,
    2019 ONCA 445

DATE: 20190527

DOCKET: C65869

Tulloch, Benotto and Huscroft JJ.A.

BETWEEN

The Bank of Nova Scotia

Plaintiff/Defendant by
    Counterclaim

(Respondent)

and

1860384 Ontario Inc., Kathy Wilkes and
    Christopher Wilkes

Defendants/ Plaintiffs
    by Counterclaim

(Appellant)

Kathy Wilkes, in person

Daniel K. Reason, for the respondent

Heard: May 23, 2019

On appeal from the judgment of Justice Joseph M. Donohue
    of the Superior Court of Justice, dated August 8, 2018.

APPEAL BOOK ENDORSEMENT

[1]

The motion judge found there was no genuine issue for trial and made an
    order for summary judgment in favour of the respondent bank for approximately $275,000,
    a debt owed by 1860384 Ontario Inc. and guaranteed by the appellants on a joint
    and several liability basis.

[2]

The appellants acknowledge the debt. All that was at issue before the
    motion judge was their counterclaim.

[3]

The appellants repeat arguments that they made before the motion judge,
    all of which are based on the premise that they relied on advice given to them
    by the respondents small business advisor, and that she failed to warn them of
    various problems they encountered in establishing and operating their Second
    Cup franchise.

[4]

The motion judge found that the respondents small business advisor
    played a limited role, that the appellant did not rely on the business advisor
    exclusively, and that the appellants signed documentation limiting the banks
    liability to them. The motion judge found, further, that the appellants
    provided no support for an argument that the bank was responsible in a similar
    situation. In short, the appellants could not establish that the failure of
    their business was causally related to any failures by the respondent bank.

[5]

These findings were open to the motion judge and we see no error in
    them. The appeal is dismissed.

[6]

The respondent is entitled to costs in the amount of $5,000.


COURT OF APPEAL FOR ONTARIO

CITATION: Baxter v. Winter, 2019 ONCA 428

DATE: 20190522

DOCKET: C65161

Tulloch, Benotto and Huscroft JJ.A.

BETWEEN

Christine Baxter

Applicant (Respondent)

and

Robert Winter

Respondent (Appellant)

W. Gerald Punnett, for the appellant

No one appearing for the respondent

Heard: May 21, 2019

On appeal from the judgment of Justice G.D. Lemon of the Superior
    Court of Justice, dated January 8, 2018.

APPEAL BOOK ENDORSEMENT

[1]

Counsel for the appellant appeared and indicates that on consent, this
    matter has been resolved. As such, the appeal is abandoned, without costs.


COURT OF APPEAL FOR ONTARIO

CITATION: Birchcliffe Core-Harbour Inc. v. Pinnock, 2019 ONCA
    417

DATE: 20190521

DOCKET: C66184

Doherty, Benotto and Huscroft JJ.A.

BETWEEN

Birchcliffe Core-Harbour
    Inc.

Plaintiff (Appellant)

and

Stella Pinnock, Stainton
    Pinnock
and Homelife/Romano Realty Ltd.

Defendants (Respondents)

David Taub and Jonathan Preece, for the appellant

Osborne G. Barnwell, for the respondents

Heard and released orally: May 15, 2019

On appeal from the judgment
    of Justice Dietrich of the Superior Court of Justice, dated October 26, 2018.

REASONS FOR DECISION

The Main Appeal

[1]

The motion judge found that the respondents (Vendors) could not
    deliver unencumbered title as they had promised in the Agreement of Purchase
    and Sale, and were therefore in breach of the agreement with the appellant (Purchaser):
    see reasons, para. 46. We see no error in that finding.

[2]

The motion judge acknowledged that the respondent Vendors breach gave
    rise to a claim for damages. She, however, limited the damages to the amount of
    the deposit ($25,000). She refused to award damages to the appellant for loss
    of bargain, indicating:

The remedy of damages for a breach of contract causing a loss
    of bargain presupposes that there was a bargain to be had and that it was
    wrongfully withheld from the innocent party. For Birchcliffe, the economic
    consequences of this failed agreement of purchase and sale caused the illusion
    of a loss of bargain but no actual loss of bargain.

In summary, there was no wrongful appropriation of a benefit by
    the Pinnocks. The benefit that Birchcliffe assumed it was denied was illusory
    and did not in fact exist. Accordingly, the Pinnocks have no liability to
    Birchcliffe for loss of bargain.

[3]

With respect, there was no illusion of a bargain between the appellant
    and the respondents. There was a real bargain. There was an agreement to sell
    the property at an agreed-upon price. When the respondents did not close the
    transaction, despite several extensions, the appellant lost the benefit of that
    agreement.

[4]

We do not agree with the motion judge that, as a condition of recovering
    damages for the difference in the price agreed upon with the respondents and
    the higher price eventually paid to the mortgagee, the appellant was required
    to show that the respondents appropriated the benefit otherwise available to
    the appellant. The damages for the loss of benefit are measured by the higher
    price paid by the appellant for the property and are not dependent on any
    benefit that may have flowed to, or been bestowed upon, the respondent Vendors.

[5]

The appellant was entitled to judgment for the difference between the
    purchase price agreed upon and the price eventually paid for the same property.
    That amount is $187,500. The appeal is allowed by deleting para. 2 of the
    judgment as it presently stands and adding a provision awarding damages to the
    appellant for the amount of $187,500. The provision in para. 1, in respect of
    the $25,000, remains in place.

Cross-Appeal

[6]

We do not accept the arguments advanced by the cross-appeal. Those
    arguments are all premised on the assertion that the appellants conduct,
    especially in respect of its dealings with the mortgagee in the months prior to
    the eventual termination of the agreement, was improper and caused the
    respondents to be unable to close the transaction with the appellant under the
    terms of the Agreement of Purchase and Sale. All of these arguments run aground
    on the motion judges finding of fact, at para. 70:

The Pinnocks were never realistically in a position to provide
    clear title to Birchcliffe. The actions of the solicitors for Birchcliffe and
    the mortgagee respectively, while deceptive, were not the cause of the
    Pinnocks failure to close the transaction. Given the Pinnocks negative equity
    in the property and the mortgagees desire to ensure the property was sold at
    its fair market value, the true vendor of the property was going to be the
    mortgagee.

[7]

The appellant on the cross-appeal submits that this finding demonstrates
    a clear and palpable error. We do not agree. The finding is fully justified on
    the record and we must defer to that finding.

[8]

The cross-appeal is dismissed.

The Application for Leave to Appeal Costs

[9]

The respondents have sought leave to appeal the costs order made by the
    motion judge. As we would allow the main appeal and vary the judgment below,
    the issue of costs of the motion must be addressed in light of our disposition
    of the main appeal. Consequently, the motion for leave to appeal the costs
    order by the motion judge is moot and need not be addressed on the merits.

Costs

[10]

We
    are satisfied that the appellant is now the successful party and should have
    its costs on the summary judgment motion. In the circumstances, and having
    regard to the limited material we have, we think the quantum of costs awarded
    by the motion judge offers a good barometer of the appropriate amount. We award
    costs to the appellant of the motion in the amount of $20,000, inclusive of
    disbursements and all relevant taxes.

[11]

Insofar
    as the appeal is concerned, the appellant is entitled to costs on a partial
    indemnity basis. The appeal was relatively straightforward. However, there was
    a cross-appeal, on which the appellant was also successful. It was somewhat
    more factually difficult than the appeal itself. In our view, an award of costs
    on a partial indemnity basis in respect of the appeal and the cross-appeal to
    the appellant in the amount of $20,000, inclusive of disbursements and all
    relevant taxes, is appropriate.

Doherty J.A.

M.L. Benotto J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Brown v. Hanley, 2019 ONCA 395

DATE: 20190515

DOCKET: C65155/C66387

Rouleau, van Rensburg and Benotto JJ.A.

BETWEEN

Tracey
    Brown, Angela Clark,
Dennis Boland and Cornelius Keigher

Plaintiffs (Respondents/

Appellants by way of
    cross-appeal)

and

Lawrence
    J. Hanley on his own behalf and on behalf of all
members of the Amalgamated Transit Union (International)
and

Amalgamated
    Transit Union (ATU), Local 113

Defendants (
Appellant/

Respondent by way
    of cross-appeal
)

John McLuckie and Alycia Shaw, for the appellant/respondent
    by way of cross-appeal

Sean Dewart, Tim Gleason and Adrienne Lei, for the
    respondents/appellants by way of cross-appeal

Brian Shell, for the Amalgamated Transit Union (ATU),
    Local 113

Heard: January 24, 2019

On appeal from the judgment of Justice Paul M. Perell of
    the Superior Court of Justice, dated February 15, 2018, with reasons reported
    at 2018 ONSC 1112, 2018 C.L.L.C. 220-031.

Benotto J.A.
:

[1]

The Amalgamated Transit Union (International) (the International) is an
    international trade union headquartered in the United States. The appellant, Lawrence
    J. Hanley, is the Internationals president. The respondents are four rank and
    file members of the Internationals Toronto-based affiliate, the Amalgamated
    Transit Union (ATU), Local 113 (Local 113).

[2]

Relations between the members of Local 113 and the International are
    governed by the Internationals
Constitution and General By-Laws of the
    Amalgamated Transit Union
(the
Constitution
). The respondents
    brought an action in the Superior Court of Justice seeking, among other things,
    a declaration that certain sections of the
Constitution
are void for
    unconscionability. In response, the appellant brought a motion to strike or
    stay the action on various grounds under r. 21.01 of the
Rules of Civil
    Procedure,
R.R.O. 1990, Reg. 194
.
    Local 113, which received leave to intervene as an added defendant to the
    action, supported the appellants motion.

[3]

The motion judge granted a temporary stay of the action but dismissed
    the balance of the motion. He found that the action presented arguable issues
    which the respondents had capacity to raise and which the court had
    jurisdiction to determine. However, the motion judge held that the action was
    premature and that the respondents must first exhaust the Internationals constitutional
    amendment process before seeking relief in the court. The action was
    temporarily stayed on this basis.

[4]

Mr. Hanley, on his own behalf and on behalf of all members of the International,
    appeals the dismissal of the motion to strike. The respondents cross-appeal the
    temporary stay. Local 113 supports the position of the appellant on both the
    appeal and cross-appeal.

I.

FACTS

[5]

The International was established in 1892 and currently represents over 200,000
    transportation workers across 240 local union chapters in the United States and
    Canada. Local 113 was formed in Toronto in 1899 through a charter issued by the
    International. Local 113 currently represents approximately 11,000 employees of
    the Toronto Transit Commission and 200 employees of Veolia Transportation in
    collective bargaining.

[6]

Members of Local 113 are also members of the International. As such,
    they are bound both by Local 113s internal by-laws and by the
Constitution
.
    The
Constitution
is capable of amendment at the Internationals
    Convention by a two-thirds majority vote.

[7]

The respondents, individual members of Local 113, filed a statement of
    claim in the Superior Court of Justice seeking a declaration that nine sections
    of the
Constitution
are void for unconscionability.
[1]
They also sought an injunction enjoining the appellant from taking any
    reprisals against them for having brought the action.

[8]

The respondents argued that the impugned provisions of the
Constitution
prevent members of Local 113 from freely deciding whether or not to disaffiliate
    from the International and should therefore be declared unconscionable and of
    no force or effect. In their view, the provisions achieve this effect by:

1.

allowing 10 members of Local 113 to block a disaffiliation vote (s.
    17.1);

2.

requiring Local 113 to forfeit its property to the International in the
    event of disaffiliation (s. 13.4); and

3.

imposing sanctions against Local 113 or its members for expressing
    dissent or attempting to disaffiliate (s. 13.17, 22.1).

[9]

In the result, the respondents argued, the disaffiliation of Local 113 from
    the International is rendered practically impossible. The provisions are
    therefore unconscionable as a matter of contract law and run afoul of statutory
    and constitutional principles protecting the right of Canadian workers to
    freely choose their own union.

[10]

The
    appellant, with the support of Local 113, filed a notice of motion to strike or
    stay the claim pursuant to r. 21.01 of the
Rules of Civil Procedure
. He
    argued that:

·

The court lacked jurisdiction over the action because disputes of
    this kind are to be dealt with at the Ontario Labour Relations Board (the
    Board).

·

The respondents lacked capacity to commence the action in the
    absence of a representative order, because the relief they sought would bind
    thousands of other members of Local 113.

·

The statement of claim disclosed no reasonable cause of action
    because (a) it failed to plead the necessary elements of a claim of
    unconscionability, and (b) an actionable
lis
or dispute between the
    parties had not yet developed, such that the claim was not justiciable.

[11]

In
    the alternative, the appellant sought a stay of the action and an order
    requiring the respondents to exhaust all internal rights and remedies under the
Constitution
to resolve the dispute prior to seeking relief in the
    court.

II.

DECISION
    BELOW

[12]

The
    motion judge dismissed the appellants motion to strike the action. However, he
    granted a stay of the action pending the respondents pursuit of amendments to
    the
Constitution
through the
    International
s amendment
    process
. Further, the motion judge enjoined both the International
    and Local 113 from imposing any form of discipline in response to the respondents
    pursuit of such amendments. He held that, following exhaustion of the amendment
    process, the stay could be lifted by any party, but that if the respondents chose
    not to engage that process, their action would be permanently dismissed.

[13]

In
    dismissing the motion to strike, the motion judge rejected each of the arguments
    advanced by the appellant on the issues of jurisdiction, capacity and no
    reasonable cause of action. His ruling on each issue is summarized below.

With respect to jurisdiction

[14]

The
    motion judge rejected the appellants claim that the court lacked jurisdiction
    to grant the relief sought. He reviewed developments in the law applicable to
    labour unions. While unions were once treated as mere associations whose members
    were connected directly to one another by a web of individual contracts, the
    Supreme Court of Canadas decision in
Berry v. Pulley
, 2002 SCC 40, [2002]
    2 S.C.R. 493 recognized that unions possess a discrete legal identity in their
    own right. When a person joins a union, they are now regarded as contracting directly
    with the union as such, pursuant to terms codified in the unions constitution
    or founding charter. The act of membership thus creates a relationship in the
    nature of a contract between the member and the union, capable of enforcement
    by either party:
Berry v. Pulley,
at para. 48.

[15]

In
    light of the change augured by
Berry v. Pulley
,

the motion
    judge held that, as a matter of contract law, individual union members could
    sue their union for declaratory relief with respect to the union constitution.
    To obtain relief, however, a member would have to show that a significant right
    or interest was at play, and that internal means to remedy the issue had been
    exhausted. Provided that those two conditions were met, the court could
    exercise its jurisdiction to rule on the issue, unless its jurisdiction was
    ousted by the legislature. The motion judge held that no such ouster applied in
    this case, as the terms of the
Labour Relations Act, 1995
, S.O. 1995,
    c. 1, Sched. A (the
LRA
) did not confer jurisdiction on the Board to
    determine the legality of union constitutions. The court therefore had
    jurisdiction to grant the respondents request for relief.

With respect to capacity

[16]

The
    motion judge also rejected the appellants submission that the respondents
    lacked capacity to bring the action. Under the law of contract, parties to a
    contract may sue to enforce its terms and determine the extent to which the
    contract creates enforceable promises. In the motion judges view, the fact
    that the respondents are four rank and file members lacking the representative
    capacity to bind other members of Local 113 was of no moment. Their status as
    parties to the contract established their capacity to file suit.

Regarding the cause of action

[17]

Finally,
    the motion judge rejected the appellants argument that the respondents
    statement of claim disclosed no reasonable cause of action. Citing this courts
    decision in
Birch v. Union of Taxation Employees, Local 70030
, 2008
    ONCA 809, 93 O.R. (3d) 1, the motion judge
concluded that
    the respondents correctly pleaded the necessary elements of a claim of
    unconscionability: that the
Constitution
, as an adhesion or
    take-it-or-leave-it contract, is forged through a pronounced inequality of
    bargaining power, which the International abused by including terms that thwart
    any prospect of Local 113s disaffiliation. The claim of unconscionability was
    therefore arguable and should not be struck at the pleadings stage.

[18]

The
    motion judge further rejected the contention that the claim disclosed no cause
    of action because there was no actionable
lis
or dispute between the
    parties. To the contrary, he observed that the parties were actively disputing
    the legality of the contract binding them together. In his view, the dispute
    was neither academic nor hypothetical, but real and immediate, and thus it was
    justiciable.

III.

EVENTS AFTER
    THE ORDER

[19]

The
    motion judges order staying the action and dismissing the motion to strike contained
    both interlocutory and final portions. In general, where an order has both
    interlocutory and final portions, the appeal lies to this court only from the
    final portion of the order:
Cole v. Hamilton (City)

(2002),
60 O.R. (3d) 284
    (C.A.), at para. 9
. Leave to appeal from the interlocutory portion
    must be obtained from the Divisional Court, at which point a party may move to
    have the appeals heard together in this court:
Azzeh v. Legendre,
2017
    ONCA 385, 135 O.R. (3d) 721, at para. 25;
Courts of Justice Act,
R.S.O.
    1990, c. C.43, ss. 6 and 19(1)(b).

[20]

The
    parties to this appeal pursued their appeals at first instance in the proper
    courts. The appellant filed a notice of appeal in this court against the motion
    judges final order dismissing the motion to strike.
[2]
The respondents sought and were granted leave by the Divisional Court to appeal
    the motion judges interlocutory stay order. Shortly after the Divisional Court
    granted leave, Hourigan J.A. granted the appellants request to consolidate the
    Divisional Court appeal with the appeal in this court. Both appeals are
    therefore properly before this court.

[21]

The
    appellant seeks to rely on fresh evidence detailing the steps taken by the
    parties, since issuance of the motion judges order, to amend the
Constitution
through internal union channels. The evidence reveals that on or about March
    18, 2018, the membership of Local 113 approved a motion to amend those
    provisions of the
Constitution
that the respondents argue are
    unconscionable. This motion, brought by the respondents and adopted by Local
    113 as a resolution, was forwarded to the Internationals offices in Maryland
    as required by the internal procedures of the International. It will be
    considered at the Internationals Triennial Convention scheduled for September
    23-27, 2019 in Las Vegas, Nevada. Following a period of debate, it will be
    voted on. In the meantime, the International has retained a Canadian labour law
    expert, Professor Brian Langille, to provide advice on amending the
Constitution
in light of the requirements of Ontario and Canadian labour law.

IV.

ISSUES

[22]

The
    issues are:

1.

by
    way of appeal, whether the motion judge erred in dismissing the motion to
    strike; and

2.

by way of cross-appeal, whether the motion judge erred in temporarily
    staying the action.

[23]

The
    standard of review of the motion judges decision to dismiss the motion to
    strike is correctness, as the decision determined questions of law:
Attis
    v. Canada (Health)
, 2008 ONCA 660, 93 O.R. (3d) 35, at para. 23;
Canadian
    Union of Postal Workers v. Quebecor Media Inc
., 2016 ONCA 206, 129 O.R.
    (3d) 711, at para. 2.

[24]

By
    contrast, the motion judges decision to impose a temporary stay of the action
    was discretionary in nature. The cross-appeal thus attracts a deferential
    standard of review. The court will only intervene if the exercise of the motion
    judges discretion was based on a wrong principle, a failure to consider a
    relevant principle or a misapprehension of the evidence:
Aldo Group Inc. v.
    Moneris Solutions Corporation,
2013 ONCA 725, 118 O.R. (3d) 81, at para.
    30.

V.

ANALYSIS

The appeal of the dismissal of the motion to strike

[25]

I
    begin with a reference to the relevant portions of r. 21.01:

21.01 (1) A party may move before a judge,

(a) for the determination, before trial, of a
    question of law raised by a pleading in an action where the determination of
    the question may dispose of all or part of the action, substantially shorten
    the trial or result in a substantial saving of costs; or

(b) to strike out a
    pleading on the ground that it discloses no reasonable cause of action or
    defence,

and the judge may make an order or grant judgment
    accordingly.

[]

(3) A defendant may move before a judge to have an
    action stayed or dismissed on the ground that,

(a) the court has no jurisdiction over the subject
    matter of the action;

(b) the plaintiff is
    without legal capacity to commence or continue the action or the defendant does
    not have the legal capacity to be sued;

[26]

Against
    these parameters, I will deal with each of the appellants submissions.

No reasonable cause of action r. 21.01(1)(b)

(i)

Unconscionability

[27]

The
    appellant submits that the statement of claim failed to plead the requisite
    elements of unconscionability, which in his view are: (i) a pronounced
    inequality of bargaining power, (ii) a substantially improvident bargain, and
    (iii) abuse of the inequality of power. He submits that the claim merely
    alleges an inequality of bargaining power and this does not in itself render a
    contract unconscionable. In his view, the motion judge erred in finding that
    additional facts, though not pleaded, somehow arose from vulnerabilities supposedly
    inherent to union membership itself. In particular, the appellant points to the
    motion judges reasons at para. 71:

I disagree with the Defendants
    submission that the Plaintiffs have only pleaded an adhesion contract and no
    facts upon which an abuse of power could be established. Those facts arise from
    the circumstance that the union members are notoriously in a situation of
    dependency, vulnerability, lack of independent representation, peer pressure,
    and reliance on the collective constituted by the union. And, as Justice
    Iacobucci noted in
Berry v. Pulley
(SCC), it must be
    borne in mind that a statutory labour relations scheme is superimposed over the
    contract between the member and the union and can create legal obligations. The
    contract, its terms, and the notion of the bargaining associated with
    membership must be viewed in this overall statutory and historic context.

[28]

The
    appellant submits that this is a remarkably pejorative analysis that reflects
    derogatory assumptions about unions that were not expressly pleaded.

[29]

Local
    113 adopts the submissions of the appellant. In addition, it submits that the
    court should recognize that union constitutions are not ordinary commercial
    contracts, but are instead developed democratically over time by the members
    whom they bind. These constitutions should not be subject to the common law
    doctrine of unconscionability, because application of the doctrine would
    undermine their democratic, evolutionary nature.

[30]

I
    do not agree. There is no reason to eliminate the doctrine of unconscionability
    in the context of this case. This court has previously held that the doctrine
    of unconscionability applies in disputes between a union and its members. In
Birch
,
    at para. 39, Armstrong J.A. said:

I can discern nothing in the
    unique contractual relationship between a union member and his or her union
    which would suggest to the court that we should refuse to apply the doctrine of
    unconscionability in appropriate circumstances. To suggest otherwise would be
    to deny the exercise of the equitable jurisdiction of the court to provide a
    remedy to individual members who have suffered an injustice at the hands of
    their union.

[31]

In
    Ontario, the test for unconscionability contains four elements, as set out in
Heller
    v. Uber Technologies Inc.,
2019 ONCA 1, 52 C.C.E.L. (4th) 10, at para. 60:

1.   a grossly unfair and improvident transaction;

2.   a victim's lack of independent legal advice or other
    suitable advice;

3.   an overwhelming imbalance in bargaining power caused by
    the victim's ignorance of business, illiteracy, ignorance of the language of
    the bargain, blindness, deafness, illness, senility, or similar disability; and

4.   the other party's knowingly taking advantage of this
    vulnerability.

[32]

As
    confirmed by the Supreme Court in
Berry v. Pulley
, union contracts, as
    contracts of adhesion, entail an inherent inequality of bargaining power. The respondents
    allege that the International took advantage of this dynamic by incorporating into
    the
Constitution
what they describe as three fundamentally inequitable
    provisions: the 10-member veto on disaffiliation; the forfeiture of assets upon
    disaffiliation; and the suppression of disaffiliation-related activities
    through the threat of internal discipline. There is no indication that the
    respondents received legal advice or that they would have been able to
    negotiate the terms of the union contract had they received it: see
Uber,
at
    para. 68. The claim of unconscionability was therefore arguable and should not have
    been struck at the pleadings stage. The motion judge correctly disposed of this
    issue.

(ii)

Justiciability

[33]

The
    appellant submits that the motion judge further erred in his r. 21.01(1)(b) analysis
    by finding the existence of a justiciable dispute between the parties, despite
    the fact that the respondents failed to plead the infringement of any
    individual right or entitlement. Absent an allegation that the International disciplined
    or otherwise took action against the respondents for attempting to pursue
    disaffiliation, the appellant argues the claim is not justiciable.

[34]

I
    reject this submission. The respondents sought declaratory relief concerning
    the legality of specific provisions in the
Constitution
. Courts have
    jurisdiction to grant such relief under their inherent jurisdiction and
    pursuant to
s. 97
of
    the
Courts of Justice
Act
.

[35]

A
    declaratory judgement by a court is a formal statement.pronouncing upon the
    existence or non-existence of a legal state of affairs: Zamir &
    Woolf,
The Declaratory Judgment
,
    3rd ed. (London: Sweet & Maxwell, 2002), at para. 1.02. It does not require
    an injury or wrong to have been committed or even threatened. Rather, it is
    available where the dispute before the court is real and not theoretical,
    where the party raising the issue has a genuine interest in its resolution, and
    where the respondent has an interest in opposing the declaration sought:
Ewert
    v. Canada
, 2018 SCC 30, [2018] 2 S.C.R. 165, at para. 81.

[36]

Here
    there is a real question as to the legality of various provisions in the
Constitution
.
    The question is

raised by the respondents who have an interest in raising
    it. The appellant, on the other hand, has a clear interest in opposing the
    declaration sought. The court has discretion to resolve the dispute by
    declaration. If the declaration is granted, the dispute will be settled between
    the parties. In my view, the motion judge therefore correctly found the dispute
    to be justiciable.

Lack of capacity r. 21.01(3)(b)

[37]

The
    appellant, supported by Local 113, submits that the motion judge erred in
    misconstruing the issue with respect to capacity. The motion judge concluded
    that the respondents had capacity to sue as parties to the contract. He went on
    to hold, at para. 65, that [w]hether a formal representative order is required
    to bind the Defendants to this action in contract is just a procedural
    technicality. The appellant submits that the issue under r. 21.01(3)(b) was
    not about the appellant or Local 113. Rather, it was about the respondents and
    whether they lacked capacity to file suit on behalf of all other members of
    Local 113 in the absence of a representative order under r. 12.08. The
    appellant refers to paragraph (1)(a) of the Amended Amended Statement of Claim,
    which asks the court to deem the sections of the
Constitution
void
    and of no force or effect insofar as the plaintiffs and other members of Local
    113 of the Amalgamated Transit Union are concerned. The impugned sections
    provide for forfeiture of the Locals property upon disaffiliation and the
    power to place the Local in trusteeship.

[38]

The motion judge relied on
Berry v. Pulley
in concluding that the respondents had standing to
    bring their action
.
I
    agree that, pursuant to
Berry v. Pulley
the respondents would have the right to bring an action
    against their union to assert their individual claims.

[39]

There, the matter involved an intended
    action by pilots against their own trade union. The issue before the Supreme
    Court was whether individual union members may be personally liable to other members
    for breach of contract. The court held, at para. 48, that when a member joins a
    union, a relationship in the nature of a contract arises between the member
    and the trade union, such that the member can sue the union for an alleged breach.
    However, the unions liability in this context is limited to its own assets and
    cannot extend to its members personally.
In
    reaching this conclusion
, the court discarded the notion that every union
    member has a contract with the other members, in favour of a common sense
    approach that each union member has a contractual relationship with the union
    itself: at para. 5.

[40]

The
    court in
Berry v. Pulley
also recognized, at para. 48, that the contractual
    relationship between a union and its members is unique:

this relationship is in the
nature
of a contract because it is unlike a typical commercial contract.  Although the
    relationship includes at least some of the indicia of a common law contract
    (for example offer and acceptance), the terms of the contractual relationship
    between the union and the member will be greatly determined by the statutory
    regime affecting unions generally as well as the labour law principles that
    courts have fashioned over the years. [Emphasis in original.]

[41]

The
    court went on at para. 49 to note a number of distinguishing features of the typical
    union contract:

First, it is essentially an adhesion contract as, practically
    speaking, the applicant has no bargaining power with the union.  Moreover, in
    many situations, union membership is a prerequisite to employment, leaving the
    individual with little choice but to accept the contract and its terms.
    Finally, it must be borne in mind that a statutory labour relations scheme is
    superimposed over the contract between the member and the union, and can create
    legal obligations. Consequently, the contract must be viewed in this overall
    statutory context.

[42]

In
    my view, union contracts are distinct from commercial contracts in two
    additional respects. First, union contracts result from a process of
    deliberation among members who share certain interests in common as workers. The
    union as a legal entity plays no oppositional role in this process, even though
    it becomes a party to the resulting contract with its members. This is unlike the
    manner in which commercial contracts are formed or amended, where adverse
    parties are active participants in negotiations.

[43]

A
    second distinguishing feature of union contracts flows from the democratic
    character of union membership. Unlike parties to a typical commercial contract,
    individual parties to a union contract become members of that union. As members
    they acquire the power to conduct the unions affairs collectively, often through
    a system of elected representatives. Union membership confers a range of other rights,
    obligations, and protections, including the right to propose changes to the contract
    through a periodic constitutional amendment process. What lone individuals may
    lack in bargaining power when joining a union thus contrasts sharply with the collective
    power they exercise as equal members.

[44]

While
    the union contract is unique, and while common law contractual principles may
    need to be adapted in this context, none of this changes the fact that the
    respondents are parties to the contract with the capacity to sue. The motion
    judge concluded as much at para. 41:

Parties to a contract have the
    standing to sue to enforce the contract and to determine the extent to which a
    contract creates enforceable promises. In the immediate case, the Plaintiffs
    have standing to bring their action.

[45]

While the motion judges conclusion on this issue seems
    dispositive, he does not appear to have addressed the issue of the respondents
representative
capacity  that is, their capacity to sue
on behalf
of all other members of Local 113,
absent a representative
    order under r. 12.08. Nor did he address the appellants broader concerns,
    including the trusteeship provisions, the Locals property on disaffiliation
    and the fact that these matters cannot be limited to the four claimants. The
    respondents point out that Local 113 has already been added as a defendant and
    will therefore participate in the action and be bound by the result. In oral
    submissions, the respondents proposed to resolve the issues by amending the
    pleadings to remove the words
and other members of Local 113 of the
    Amalgamated Transit Union from paragraph 1(a).
However, as
    the appellant submits, the impugned provisions of the
Constitution
cannot by their nature be declared void for only some members and
    not others. The proposed amendment would not solve this issue thus the
    respondents should not be able to proceed with their action without a
    representative order.

[46]

I agree that these issues were not addressed in
    the court below. Given the novelty of this situation, whether the respondents
    should be required to obtain a representative order in order to bring their
    action and the remedies they can seek without obtaining such an order are issues
    that should be determined in the course of the proceedings. They cannot be
    determined on a final basis at this stage of the appeal and without the
    pleading having been amended.

Lack of jurisdiction r. 21.01(3)(a)

[47]

The
    appellant submits that the motion judge identified several provisions of the
LRA
that were pertinent to many parts of the claim but then erred in subsequently
    determining that the court rather than the Board had jurisdiction over the
    claim.

[48]

I
    do not agree. The Board has previously held that its mandate under the
LRA
does not include overseeing the internal governance of trade unions: see
Ballantyne
    v. Ontario Secondary School Teachers Federation
, 2013 CanLII 41565 (ON
    LRB), at para. 24. In addition, a long line of court jurisprudence confirms
    that, when a member joins a union, a contract is created between the member and
    the trade union, and an action may be brought by a member against the union for
    breach of contract:
Berry v. Pulley
, at paras. 48-49. See
    also:
Lee v. Showmen's Guild of Great Britain
, [1952] 2 Q.B.
    329 (C.A.) at p. 341;
Bonsor v. Musicians' Union
, [1956]
    A.C. 104 (H.L.);
Orchard v. Tunney
1957, 8 D.L.R.
    (2d) 273 (S.C.C.) at p. 278;
Howard v. Parrinton
(1971),
1971 CanLII 394 (ON SC)
, 21
    D.L.R. (3d) 395 (Ont. H.C.J.) at p. 400;
Birch,
at para. 50;
    G.W. Adams,
Canadian Labour Law
(2
nd
ed.)
    (Toronto: Thomson Reuters Canada Ltd., 2011) at para. 14.980.

[49]

I
    therefore see no error in the motion judges decision with respect to
    jurisdiction.

The cross-appeal of the temporary
    stay

[50]

By
    way of cross-appeal, the respondents seek to set aside the motion judges order
    granting a temporary stay of the action. This is directly related to the
    appellants motion to adduce fresh evidence on this appeal.

Fresh evidence

[51]

As
    I noted above, the fresh evidence sets out the steps taken by the respondents to
    amend the
Constitution
to address the issues they raised through their
    court action. They brought a motion to Local 113 in March 2018, which the Local
    adopted as a resolution and forwarded to the International to be debated and
    voted on at the Internationals Triennial Convention in September 2019. In
    addition, the fresh evidence reveals that the International has retained a
    labour law expert to review and provide advice with respect to possible
    amendments of the
Constitution
. The respondents submit that the fresh
    evidence should not be admitted because it is not relevant and would not have
    changed the result on the motion.

[52]

I
    disagree. The events that have taken place speak precisely to why the motion
    judge granted the stay in the first place. He made this clear, at paras. 78-80:

the opposing views of the parties are worthy of a debate in a
    safe space before the parties turn to litigation.

In my opinion, given the courts historic reluctance to involve
    itself in the affairs of an association until after the processes of the
    association are exhausted, the case at bar is an appropriate case to grant a
    temporary stay provided that the Plaintiffs are protected from
    retaliatory action.

For the above reasons, I grant a temporary stay. The terms of
    the temporary stay are that: (a) the Plaintiffs may invoke the amendment
    process of the International Unions
Constitution and General
    Laws
to request amendments to Sections 12, 13.4, 13.5, 13.7, 17,
    21.7, 22.1, 22.2 and 27; (b) the Defendants are enjoined from imposing any form
    of discipline, union charges, or reprisal in response to the Plaintiffs
    request to amend the
Constitution and General Laws;
(c)
    following the exhaustion of the amendment process, the stay may be lifted upon
    application of either party; and (d) if the Plaintiffs do not request
    amendments to the International Unions
Constitution and General
    Laws,
then their action shall be permanently stayed or dismissed.

[53]

The
    fresh evidence describes the unfolding of the constitutional amendment process
    anticipated by the motion judge and is highly relevant to the continuation of
    the stay. It is also credible evidence that could not have been obtained at the
    time of the hearing of the motion, since it relates to events that post-date
    the motion judges decision. I would admit the fresh evidence as it meets the
    test set out in
Sengmueller v. Sengmueller
(1994), 17 O.R. (3d) 208.

Merits of the cross-appeal

[54]

The
    respondents ask this court to set aside the motion judges decision to
    temporarily stay the action. I note that the stay is an interlocutory order
    entitled to significant deference from this court. An appellate court will
    overturn a stay only if the court below erred in principle, failed to consider
    a relevant principle, or misapprehended the evidence:
Aldo Group,
at
    para. 30.

[55]

The
    respondents point to three alleged errors in the motion judges stay decision.
    First, they submit he erred by applying administrative law principles governing
    judicial review of internal union decisions, rather than prejudice-based common
    law principles governing stays of civil actions framed in contract. Second, the
    respondents argue the motion judge misinterpreted the
Constitution
to
    erroneously conclude that it

provides a reasonable internal remedy that
    the respondents could pursue in lieu of a court action. Third, they claim he
    fashioned an inadequate remedy as part of his stay order that fails to protect
    union members other than the respondents from retaliation for pursuing
    disaffiliation.

[56]

I
    reject these submissions.

[57]

With
    respect to the first argument, the respondents draw a distinction between
    challenges to specific union decisions on the one hand, and challenges to the
    legality of union rules on the other. Acknowledging that administrative law
    principles of prematurity and internal remedies apply to the first type of
    challenge, the respondents submit that they should not apply to the second. No
    case law is provided to support this submission. In my view, whether
    administrative law principles or common law principles governing stays of civil
    actions are applied, the result is the same. Given the novelty of the claim
    being advanced, the motion judges decision to impose a temporary stay was
    reasonable in the circumstances. It was also reasonable in light of the uncertainty
    as to the need for a representative order and as to the available remedy should
    such an order not be obtained.

[58]

The
    fresh evidence is directly relevant to the respondents second argument on the
    cross-appeal. As the evidence shows, the respondents successfully advanced a
    motion within Local 113 proposing amendments to the
Constitution
. Local
    113 adopted the motion as a resolution. It will now be discussed, debated and
    voted on at the Internationals Convention in September 2019. If the resolution
    is approved at Convention, the respondents will obtain precisely the relief
    they seek through this court action, which would in turn render the action moot.
    The notion that the
Constitution
provides no reasonable internal remedy
    is belied by these developments and must therefore be rejected.

[59]

With
    respect to the respondents third argument, the motion judge appears to have canvassed
    the terms of the stay with the parties, as indicated in his reasons at para. 75:

As
    it turns out, it is the matter of the threat of retaliatory action that has
    inhibited the Plaintiffs from resorting to the internal processes of the
Constitution
    and General Laws
. It emerged during oral argument that the ancillary
    injunctive relief was perhaps more important than the Plaintiffs request of
    having various provisions of the
Constitution and General Laws
declared
    null and void and unenforceable, which will require a trial to resolve.

[60]

As
    part of his stay order, the motion judge enjoined both the International and
    Local 113 from imposing any form of discipline, union charges, or reprisal in
    response to the [respondents] request to amend the
Constitution:
at
    para. 80. The respondents complain that the order does not protect union members
    other than the respondents from retaliation. While I do not read the motion
    judges order so narrowly, I note that the respondents have not brought forward
    any fresh evidence of actual retaliation suffered by their supporters. Absent
    such evidence, the argument that the stay order provides inadequate protection
    is merely speculative.

[61]

For
    these reasons, I see no basis to interfere with the motion judges exercise of
    his discretion to stay the action. I would uphold the stay on the same terms
    the motion judge imposed.

VI.

CONCLUSION

[62]

I
    would dismiss both the appeal and the cross-appeal. The parties agreed that, in
    the event of divided success, there would be no costs and I would order none.

Released: May 15, 2019

M.L. Benotto J.A.

I agree Paul Rouleau
    J.A.

I agree K. van
    Rensburg J.A.

[1]

Specifically, they challenged the legality of
    sections 12, 13.4, 13.5, 13.17, 17, 21.7, 22.1, 22.2 and 27 of the
Constitution
.

[2]
T
he motion judges finding that the respondents claim
    disclosed a reasonable cause of action in unconscionability was interlocutory.
    However, in the circumstances, the appeal of that finding can be heard in this
    court because of its close connection to the other findings at issue on appeal:
    see
Lax v. Lax
(2002), 70 O.R. (3d) 520 (C.A.), at para. 9.