COURT OF APPEAL FOR ONTARIO

CITATION: Awan v. Levant, 2016 ONCA 970

DATE: 20161222

DOCKET: C59810

Feldman, Simmons and Rouleau JJ.A.

BETWEEN

Khurrum Awan

Plaintiff (Respondent)

and

Ezra Levant

Defendant (Appellant)

Iain MacKinnon, for the appellant

Brian Shiller and Angela Chaisson, for the respondent

Heard: May 16, 2016

On appeal from the judgment of Justice Wendy M. Matheson
    of the Superior Court of Justice, dated November 27, 2014, with reasons
    reported at 2014 ONSC 6890.

Feldman J.A.:

A.

Introduction

[1]

The appellant published nine posts to his online blog, which the trial
    judge found were libellous of the respondent. Any defences that might have been
    available were negated by the trial judges finding that the appellant was
    motivated by malice. She awarded $50,000 in general damages and $30,000 in
    aggravated damages. The appellant appeals both the finding that the blog posts
    were libellous and the quantum of the damages award.

B.

FActs

[2]

The statements that form the basis of this litigation arose out of a
    hearing before the British Columbia Human Rights Tribunal (BCHRT), which
    itself arose out of a protracted dispute between Macleans magazine on one
    side, and the respondent and some of his colleagues on the other. To understand
    the defamation claim, it is first necessary to set out the history leading to
    the human rights complaint.

(1)

The Macleans Article and Meeting

[3]

On October 23, 2006, Macleans magazine published a cover story entitled
    The future belongs to Islam. The article was an excerpt from a book by
    journalist Mark Steyn entitled
America Alone
. The sub-headline
    captures the central theme of the piece: The Muslim world has youth, numbers
    and global ambitions. The West is growing old and enfeebled, and lacks the will
    to rebuff those who would supplant it. Its the end of the world as weve known
    it.

[4]

The respondent became aware of the article shortly thereafter from a press
    release by the Canadian Council on American Islamic Relations, which expressed
    concern about the content of the article.

[5]

At the time the article was published, the respondent was a student at
    Osgoode Hall Law School. Following discussions with some friends and colleagues,
    a group of four law students (Naseem Mithoowani, Muneeza Sheikh, Ali Ahmed and the
    respondent) decided to approach Macleans with their concerns.

[6]

The students contacted various Muslim organizations for support, and
    ultimately decided to work with the Canadian Islamic Congress (CIC).

[7]

The respondent had prior involvement with the CIC. He had served as a Youth
    Chapter President, written papers, and testified before government committees
    on behalf of the CIC. He had also received a modest scholarship from the
    organization, in exchange for performing 150 hours of community service for the
    CIC.

[8]

When one of the students requested a meeting to discuss their concerns, Macleans
    agreed.

[9]

Prior to the meeting, the students met to discuss their strategy. They decided
    to ask for publication of a reply article in Macleans by a mutually acceptable
    author. The students also planned to ask for a donation to a charitable
    organization in the area of race relations. They discussed an amount between
    $5,000 and $10,000.

[10]

The meeting took place on March 30, 2007. In attendance along with the
    students were Julian Porter, Q.C., counsel for Macleans, Ken Whyte,
    Editor-in-Chief, and Mark Stevenson, Deputy Editor.

[11]

The meeting began with the students presenting their concerns and their
    proposal for resolving them. After a few minutes, Mr. Whyte spoke up and
    disagreed with the students characterization of the article. He noted that the
    author was a reputable journalist and the article itself was nuanced. He also
    added that after the article was published, Macleans published several letters
    to the editor in response.

[12]

The meeting ended abruptly after Mr. Whyte said that he would rather go
    bankrupt than print an article by an author of the students choice.

(2)

Subsequent Events and Media Coverage

[13]

Following the meeting, the students regrouped and discussed how to
    respond.

[14]

The students first response was in April 2007. Since Macleans was a
    Rogers publication, they wrote to Ted Rogers. Brian Segal, President and CEO of
    Rogers, responded, indicating that Rogers would not interfere with the
    editorial views expressed by its magazines. He also stated that the article
    raised issues that were legitimate matters for publication in a national
    magazine.

[15]

The students responded to Mr. Segal, stating that they would go public
    with their concerns if attempts to resolve the matter were unsuccessful.

[16]

Believing their concerns had not been addressed, the students launched a
    series of human rights complaints. This decision proved to be controversial and
    resulted in significant criticism in the media. Many commentators were of the
    view that the Macleans article was well-suited to public dialogue and if the
    students were concerned about its contents, they ought to have entered that
    dialogue.

[17]

The complaint to the Ontario Human Rights Commission was prepared by the
    respondent and was brought by the four students as complainants. The other two
    other complaints, to the Canadian Human Rights Commission and the British
    Columbia Human Rights Commission, were brought by Dr. Mohamed Elmasry who was
    the President of the CIC at the time, as a complainant. The students were not
    complainants in those two complaints.

[18]

Faisal Joseph, a lawyer at the London office of Lerners LLP, agreed to
    assist by acting
pro bono
for the complainants at the Ontario and British
    Columbia tribunals.

[19]

On December 4, 2007, Mr. Joseph spoke at a press conference about the
    failed attempt to resolve the issue with Macleans. He said that the students
    were seeking equal space to respond to what they perceived as an Islamophobic article.

[20]

Macleans responded immediately with a statement on its website by Mr.
    Whyte to clarify what occurred at the meeting. It stated that Macleans was
    willing to consider a reasonable request for a response, but did not consider the
    students proposal for an article written by an author of their choice to be a
    reasonable request for response.

[21]

It was at this point that the students realized there were different perceptions
    of what happened at the March 2007 meeting. According to the students, they
    were unaware that Macleans was willing to consider a reasonable response.

[22]

The students responded with a press release on December 7, 2007,
    released under the auspices of the CIC, which said that at the meeting with
    Macleans, they asked for a balanced response from a mutually acceptable
    author and attempted to discuss a resolution. The respondent was quoted in the
    press release as saying that Mr. Whytes recent statement suggesting that he
    offered to consider a reasonable request, but we wanted to pick an author of
    our choice, is a complete fabrication.

[23]

In the following months, the respondent co-authored several letters to
    the editor and articles that appeared in major Canadian newspapers: the Globe
    and Mail (December 8, 2007); the National Post (December 20, 2007 and May 10,
    2008); the Ottawa Citizen (December 21, 2007); the Montreal Gazette (February
    24, 2008); and the Waterloo Record (April 18, 2008).

[24]

In these letters, the students discussed the meeting with Macleans. They
    emphasized that at the meeting, the students proposed that Macleans publish a
    response from a mutually acceptable author. According to them, Macleans
    rejected this proposal.

[25]

The students held another press conference on April 30, 2008, and issued
    a press release the same day where they reiterated their position that in the
    meeting, Macleans had refused to publish a response of any kind, and they also
    offered to settle the matter with Macleans if it would publish a mutually
    acceptable response from an agreed-upon author.

(3)

Human Rights Proceedings

[26]

Both the Ontario and Canadian Human Rights Commissions decided against
    proceeding with the complaints. The British Columbia Human Rights Commission
    held a hearing, but it dismissed the complaint.

[27]

The British Columbia hearing took place from June 2 to 6, 2008. The witnesses
    who testified for the complainants were the respondent, one of the complainants,
    Dr. Habib, and three expert witnesses. Dr. Elmasry did not testify. The
    respondents (Rogers Publishing Ltd. and Macleans publisher Ken MacQueen)
    called no evidence.

[28]

At the time of the hearing, the respondent was working as a law clerk to
    the Ontario Superior Court, and had secured an articling position at the
    Lerners firm in Toronto.

[29]

It was at this stage that the appellant entered the picture. The
    appellant attended the hearing for the first two days and live-blogged its
    events. These blog posts form the subject matter of the respondents libel
    claims.

[30]

At the time of the hearing, the appellant was known to be a harsh critic
    of human rights commissions. His publication, the Western Standard, had been the
    subject of two complaints under Alberta human rights legislation, both of which
    were ultimately dismissed.

[31]

As a result of the appellants experiences with human rights
    commissions, he commenced a campaign to, in his words, denormalize them. He
    published a book in 2008 describing his ordeal with the Alberta human rights
    commission, and at trial, called human rights commissions kangaroo courts. The
    appellant was particularly critical of the British Columbia Human Rights Tribunal.

[32]

The appellant also had connections to the subject matter of the Macleans
    complaint. He knew Mr. Steyn and held him in high regard. Mr. Steyn wrote
    regularly for the appellants publication and ultimately contributed the
    foreword of the appellants book. The appellant also admired Mr. Whyte of
    Macleans.

[33]

Further, the appellant held strong views about one of the complainants
    in the British Columbia proceeding, Dr. Elmasry. Dr. Elmasry was a
    controversial figure who, in 2004, had made a televised statement suggesting
    that all adult Israelis were valid targets of violence. The appellant frequently
    wrote about Dr. Elmasry and referred to him as a Jew-hating bigot.

[34]

At the beginning of the hearing, the Tribunal chair asked counsel to
    introduce themselves. Mr. Joseph identified himself as counsel for the
    complainants and no one else was so identified.

[35]

The respondent was the first witness who testified. His testimony began
    on the first day of the hearing and finished on the second. With one exception,
    the respondent did not return to the hearing after his testimony.

[36]

According to Mr. Joseph, the respondent was a fact witness who was there
    to testify about what happened at the Macleans meeting since neither of the
    complainants in the British Columbia proceeding had been present at the
    meeting.

[37]

In cross-examination, Mr. Porter, who was acting for Macleans at the
    hearing, suggested to the respondent that the students had never said mutually
    acceptable during the meeting. The respondent agreed, saying that they were unable
    to raise this during the meeting because it ended abruptly.

(4)

June 2008 Blog Posts

[38]

It was during Mr. Porters cross-examination of the respondent that the
    appellant posted the majority of the blog posts that form the subject matter of
    this action. The first post, entitled Khurrum Awan is a Serial Liar, was
    published on June 3, 2008, the second day of the BCHRT hearing, at 2:56 p.m. It
    was shortly followed by six other blog posts:

·

Awan
    the liar, part 2 (3:01 p.m.)

·

Awan
    the liar, part 3 (3:04 p.m.)

·

Awan
    the liar, part 4 (3:08 p.m.)

·

Awan
    the liar, part 5 (3:12 p.m.)

·

Awan
    the liar, part 6 (3:17 p.m.)

·

Awan
    the liar, part 7 (3:28 p.m.)

[39]

The blog posts were all fairly short. Although the content varied, they
    generally stated that the respondent was lying about whether the students asked
    Macleans at the meeting to publish a response from a mutually acceptable author.
    They also stated that the respondent was engaged in a shakedown.

(5)

The Libel Action

[40]

The respondent did not sue for defamation in 2008. However, the
    controversy was resurrected the following year. On June 4, 2009, the appellant wrote
    another blog post entitled Awan the liar, part 8, following a letter to the
    editor that the respondent and Ms. Mithoowani wrote to the Toronto Star in
    response to an article written by the appellant. This blog post was longer than
    the ones posted during the June 2008 hearing before the BCHRT and included
    links to the previous seven posts.

[41]

Some of the content of this post (particularly the accusations that the
    respondent was a liar) was similar to the earlier posts. However, in this post,
    the appellant made additional remarks. He referred to Dr. Elmasry as an
    anti-Semite-in-chief and said the respondent was Dr. Elmasrys protégé. Near
    the end of the post, the appellant discussed the respondents testimony before
    the BCHRT. He wrote that the respondent was co-counsel for the complainant and
    a witness. The appellant described this behaviour as the definition of
    conflict of interest.

[42]

The respondent served a libel notice, dated July 14, 2009. Following
    that, he commenced the present action.

[43]

On January 21, 2010, the appellant published a ninth blog post. This
    post is entitled Mark Steyns would-be censor sues me -- and Im going to
    fight back. The statement of claim was amended to include this blog post in
    the libel action.

[44]

This blog post repeats many of the earlier statements about the
    respondents purported lies and shakedown of Macleans. The appellant refers
    to the respondent as a friend of the notorious anti-Semite Greg Falton. The
    appellant said he would quote a Jew now, just because it will irritate Awan.
    He also wrote of illiberal Islamic fascists who were waging war against our
    values.

C.

Decision BELow

[45]

The trial judge began by rejecting the appellants argument that because
    of his reputation as someone who is provocative and controversial, none of the
    words complained of were defamatory. She held that an ordinary, right-thinking
    member of society would readily regard several of the statements as defamatory.

[46]

The trial judge then reviewed each of the nine blog posts that formed
    the subject matter of the action. She concluded that the posts included many defamatory
    statements, including:

·

The
    respondent was a dishonest person and a liar;

·

The
    respondent tried to shake down Macleans;

·

The
    respondent was incompetent, unethical, and unfit to be a lawyer;

·

The
    respondent was an anti-Semite;

·

The
    respondent was in a conflict of interest at the BCHRT hearing;

·

The
    respondent used the courts to bully his opponents; and

·

The
    respondent had extreme, intolerant views.

[47]

Having established that the blog posts were defamatory, the burden
    shifted to the appellant to establish a defence. At trial, the appellant relied
    to varying degrees on the defences of justification, fair comment, and
    qualified privilege. His main defence was fair comment on a matter of public
    interest.

[48]

In
WIC Radio Ltd. v. Simpson
, 2008 SCC 40, [2008] 2 S.C.R. 420,
    at para. 28, the Supreme Court of Canada set out the requirements for the fair
    comment defence:

(a) the comment must be on a matter of public interest;

(b) the comment must be based on fact;

(c) the comment, though it can include inferences of fact, must
    be recognisable as comment;

(d) the comment must satisfy the following objective test:
    could any [person] honestly express that opinion on the proved facts?

(e) even though the comment satisfies the objective test the
    defence can be defeated if the plaintiff proves that the defendant was
    [subjectively] actuated by express malice. [Parenthetical notes in original;
    emphasis removed.]

[49]

The respondent conceded that the blog posts were on a matter of public
    interest. The other factors were in dispute.

Findings by the Trial Judge

[50]

First, with respect to the repeated statements calling the respondent a
    liar, the trial judge held that these were statements of fact, rather than
    comments. She noted that the words were stated as fact in a purported report of
    the hearing and were not recognizable as comment. Further, the word liar
    appeared in the headlines and people might read only the headline, which contained
    no supporting facts. Further, a number of the underlying facts that would
    support the liar comment were not proved to be true, so that the defence of
    fair comment could not succeed in any event.

[51]

Alternatively, the trial judge held that even if these statements were
    comments, the defence of fair comment would fail because the appellant failed
    to prove that the respondent lied deliberately, which was necessary to prove
    that he was in fact a liar.

[52]

Similarly, the trial judge found the accusations of anti-Semitism were
    not stated as matters of opinion but as a fact. She held that based on the
    evidence at trial, the appellant failed to prove that the respondent is or was
    an anti-Semite.

[53]

Third, the trial judge determined that the appellants statement that the
    respondent was in a conflict of interest and co-counsel at the BCHRT hearing
    arose from factual errors, and that the respondent was not counsel at the
    hearing. As the factual underpinnings of the allegation must be true for the
    defence of fair comment to apply, the trial judge concluded that the defence
    was not established.

[54]

Next, the trial judge found that the references to a shakedown could
    be defended on the basis of fair comment. She concluded that the public
    interest requirement was established, the imputation was based on true facts,
    the comment was recognizable as such, and it was a view that could be honestly
    held.

[55]

Any defence of fair comment is defeated by malice on the part of the
    person making the comment. The trial judge found that there was ample evidence
    demonstrating malice by the appellant. She found that the malice arose from the
    appellants strongly held animus towards Dr. Elmasry, which was visited on the
    respondent in the blog postings. She noted that the appellant made little or no
    effort to check his facts or with one exception, make corrections when he
    learned of his mistakes. She found these considerations supported a finding of
    malice.

[56]

Since malice defeats the defences of fair comment and qualified
    privilege, the trial judge concluded that the defence of fair comment that had
    been established with respect to certain statements was defeated.

[57]

In awarding damages, the trial judge noted that the respondent was in a
    vulnerable stage of his career when the posts were published. She held that the
    statements were extremely serious as they went to the heart of the respondents
    reputation as a lawyer and member of society. She also considered the lack of
    mitigation by the appellant. On the other hand, she noted that the readership
    could have been quite modest and there was other negative media coverage at the
    time the blog posts were published which could also have affected his
    reputation.

[58]

After assessing all these considerations, the trial judge awarded $50,000
    in general damages.

[59]

With respect to aggravated damages, the trial judge found that the
    appellants behaviour was motivated by malice, which increased the injury to the
    respondent. She awarded $30,000 in aggravated damages.

[60]

The trial judge declined to award punitive damages. She ordered that the
    defamatory words be taken down from the appellants website.

D.

Issues

[61]

The appellant challenges a number of the trial judges findings and asks
    that this court set aside the judgment or reduce the amount of damages awarded.
    He raises the following six issues:

1)

Is less
    deference owed to a trial judges findings of fact when a
Canadian Charter of
    Rights and Freedoms
right such as freedom of expression is at stake?

2)

Did the trial
    judge err in holding that when the appellant called the respondent a liar, that
    was a statement of fact and not opinion and that the appellant had to prove
    that the impugned lie was made deliberately by the respondent?

3)

Similarly, did
    the trial judge err in holding that the allegation that the respondent is one
    of a group of anti-Semites is a statement of fact and not comment or opinion?

4)

Did the trial judge
    err in finding that the respondent did not act as co-counsel at the BCHRT hearing?

5)

Did the trial
    judge err in law by finding that the appellant was actuated by malice against
    Dr. Elmasry and that that malice vitiated the fair comment defence?

6)

Did the trial
    judge err in the calculation of general damages and in also awarding aggravated
    damages?

E.

Analysis

(1)

Standard of Review

[62]

The appellant makes the overall submission that a less deferential
    standard of review of a trial judges factual findings should be accorded on
    appeal where the
Charter
right to freedom of expression (s. 2(b)) is
    engaged. He refers to the decision of the Supreme Court of Canada in
Grant
    v. Torstar Corp.
, 2009 SCC 61, [2009] 3 S.C.R. 640, at paras. 47-51, where
    the court commented on the relationship between the
Charter
protection
    of free expression and defamatory communications on matters of public interest:

The guarantee of free expression in s. 2
(b)
of the
Charter

has three core rationales, or purposes: (1) democratic discourse; (2)
    truth-finding; and (3) self-fulfillment. These purposes inform the content of
    s. 2
(b)
and assist in determining what limits on free expression can
    be justified under s. 1.

Of the three rationales for the constitutional protection of
    free expression, only the third, self-fulfillment, is of dubious relevance to
    defamatory communications on matters of public interest. This is because the
    plaintiffs interest in reputation may be just as worthy of protection as the
    defendants interest in self-realization through unfettered expression. We are
    not talking here about a direct
prohibition

of expression by
    the state, in which the self-fulfillment potential of even malicious and
    deceptive expression can be relevant, but rather a means by which individuals
    can hold one another civilly accountable for what they say.
Charter

principles do not provide a licence to damage another persons reputation
    simply to fulfill ones atavistic desire to express oneself. [Citations omitted;
    emphasis in original.]

[63]

This guidance from the Supreme Court explains that the protection of
    free speech is not intended to be at the expense of a wrongfully defamed
    persons ability to obtain a civil remedy for the tort of libel. The two rights
    live together under our law and are to be interpreted and applied by judges at
    both the trial and appeal levels. I cannot see any basis for applying a less
    deferential standard of review to the findings of fact of a trial judge in this
    context than in any other.

(2)

Statements of Fact versus Opinion or Comment

[64]

The appellants main defence in this action was fair comment on a matter
    of public interest. The appellant was blogging from a human rights tribunal
    hearing on a matter that had been the subject of much public comment: Mark
    Steyns article in Macleans, the backlash to it coordinated by the respondent
    and his colleagues, and Macleans response to that backlash. The appellant used
    an aggressive, no-holds-barred writing style. The trial judge found that a
    number of things the appellant said about the respondent were defamatory. On
    appeal, the appellant submits that the trial judge erred by rejecting his
    defence of fair comment.

a)

Fact
    versus Comment - Calling the Respondent a Liar

[65]

One of the defamatory statements made in every blog post was the description
    of the respondent as a liar or a serial liar. The trial judge found that those
    words were factual statements, not comments, and that the appellant was
    therefore required to prove that the respondent had an intention to deceive.
    She also stated that even if those words were comments, the appellant was
    required to prove as a foundational fact that the respondent made an incorrect
    statement deliberately. The appellant challenges these findings.

[66]

The trial judge made the finding in the context of the first blog post,
    which reads in full:

Khurrum Awan is a serial liar

Julian Porter himself was at the meeting where Khurrum Awan and
    his junior Al Sharptons tried to shake down Ken Whyte and Macleans for cash
    and a cover story.

Porter asked Awan point blank if the CICs proposed
    counter-article was to be mutually acceptable to Whyte or of the CICs own
    choosing.

After obfuscating for a few rounds, Awan acknowledged that he
    never in fact offered a mutually acceptable article -- that was simply an after-the-fact
    lie, a little bit of

taqqiya

that
    Awan et al. has told the press.

Awan admitted that he made no such offer of a mutually
    acceptable author. It was to be the CICs own choice.

[67]

The word taqqiya was hyperlinked in this blog post to an article
    entitled Islamic Tactics of Taqqiya teaches [
sic
] Muslims to Practice
    Deception, Fraud and Double Standards to Spread Islam. The trial judge
    accepted that on the evidence before her, taqqiya
[1]
at least means deception, and is defamatory.

[68]

The appellants position at trial was that his characterization of the
    respondent as a liar was based on the respondents testimony at the BCHRT
    hearing, compared to the prior signed or by-lined publications by the group of
    students, including the respondent. In those letters to the editor and press
    releases, the students stated that at the meeting their request was that
    Macleans publish a responding article written by a mutually acceptable
    author. They refuted Mr. Whytes version of the Macleans meeting where he
    said that the students proposal was for a five-page article by an author of
    their choice.

[69]

However, on his cross-examination at the BCHRT hearing, the respondent
    agreed with Mr. Porter that the students never said mutually acceptable at
    the meeting. The respondent said they never had a chance to propose the terms
    of a response because both Mr. Whyte and Mr. Porter made it clear that Macleans
    was not interested in publishing one.

[70]

It was in response to this testimony that the appellant called the
    respondent a liar in his first blog, and repeated it in his subsequent blog
    posts.

[71]

In her reasons, at para. 124, the trial judge concluded that:

[T]he reasonable reader of this blog post would regard the use
    of the words liar and lie as statements of fact. Quite simply, they are
    stated as fact. They are stated as fact in a purported report of an ongoing
    hearing. Those words are not recognizable as comment in the blog post, readily
    distinguishable from facts, as would be required to assert that they are
    comment.

[72]

As support for her conclusion, the trial judge relied on two further
    factors. She noted that while not determinative, it was relevant that the
    appellant did not preface his remarks by saying in my view or I come to the
    conclusion that. She also found it relevant that the word liar was used in
    the headline, which might be the only thing some people would read. The
    headline contained none of the supporting facts that were in the blog post
    itself.

[73]

Finally, the trial judge concluded that because the statements were fact
    and not comment, or alternatively, as the basis for the statement if it was a
    comment, the appellant had to prove that the respondents incorrect statements
    in all the press releases and letters had been made deliberately. On that
    issue, she found, based on the trial evidence, that it was only upon being
    cross-examined by Mr. Porter at the BCHRT hearing, that the respondents
    memory (or lack thereof) crystalized on this point.

Discussion

[74]

In
WIC
, under the heading, Distinguishing Fact from Comment,
    Binnie J. outlined the test to be applied and explained his conclusion, at
    paras. 26 and 27:

In
Ross v
.
New Brunswick Teachers Assn.
(2001),
    201 D.L.R. (4th) 75, 2001 NBCA 62, at para. 56, the New Brunswick Court of
    Appeal correctly took the view that comment includes a deduction, inference,
    conclusion, criticism, judgment, remark or observation which is generally
    incapable of proof.  Browns
The Law of Defamation in
    Canada
(2nd ed. (loose-leaf)) cites ample authority for the proposition
    that words that may appear to be statements of fact may, in pith and substance,
    be properly construed as comment.  This is particularly so in an editorial
    context where loose, figurative or hyperbolic language is used in the context
    of political debate, commentary, media campaigns and public discourse.

[75]

In the leading libel decision of
Keays v. Guardian Newspapers Ltd.
,
    [2003] EWHC 1565 (Q.B.D.), Eady J. explained that as motives are generally
    incapable of proof, a statement on a matter of public interest that suggests a
    motive will likely be a comment rather than a fact, at paras. 49 and 50:

Anyone who chooses to enter the public arena invites comment
    and often this will include scrutiny of and comment about motives. Such persons
    cannot expect as of right to be taken at face value. It is sufficient
    protection in such circumstances for personal reputation that any adverse
    comments should be made in good faith, and that the words should be subjected,
    at the appropriate stage, to the objective test of whether the inferences or
    deductions
could
be drawn by an honest person with knowledge of the
    facts. [Emphasis in original.]

[76]

In my view, based on these principles, calling someone a liar when
    discussing a matter of public interest or discourse would more likely be found
    to be a comment rather than a fact. However, in this case it was open to the
    trial judge to conclude that the appellants characterization of the respondent
    as a liar was stated as a matter of fact, not comment. She properly instructed
    herself that the distinction between what is fact and what is comment must be
    determined from the perspective of a reasonable reader (
WIC
, at para.
    27). She was also mindful that context is important to the analysis. She
    concluded that the appellants description of the respondent as a liar was stated
    as a fact in the context of a report of a hearing, and that it was not
    recognizable as comment. Nor did the appellant add words such as in my view
    to suggest that the words were intended as comment. I see no basis for this
    court to interfere with the trial judges conclusion.

[77]

In any event, even if the appellants characterization of the respondent
    as a liar was comment, not fact, the defence of fair comment would fail.  As
    the trial judge found, the appellant failed to prove the truth of many of the
    underlying statements contained in the blog post, such as the reference to taqiyya
    (deception), and the statement that the students said at the meeting that the
    author of the proposed response was to be of the CICs own choice. Also, any
    potential defence of fair comment was defeated by the finding of malice. The
    trial judge found that the appellant was motivated by malice. As I will
    explain, there is no basis for this court to interfere with that finding.

b)

Fact
    versus Comment - Calling the Respondent an Anti-Semite

[78]

The eighth blog post came about a year after the BCHRT hearing, following
    a back-and-forth exchange between the appellant and the respondent in the
    Toronto Star. This blog opened with the following three paragraphs:

Ive been blogging for about a year and a half, and by far the
    most enjoyable days of it were the ones I spent live-blogging Mark Steyns show
    trial at the B.C. Human Rights Tribunal last June.

I didnt enjoy the trial, of course -- its not joyful to witness
    the Canadian legal system be brought into disrepute. I sat in a court house
    crowded with journalists who were stunned by the sham they were watching. As
    the Vancouver Suns Ian Mulgrew wrote at the time, The B.C. Human Rights
    Tribunal is murdering its own reputation. Yet the three kangaroos running the
    show were oblivious to the scandal they were participating in. Or they knew,
    but they just didnt give a damn.

One of the reasons I enjoyed blogging from that trial was that
    it was the first time that the anti-Semites at the Canadian Islamic Congress
    had to face cross-examination for their conduct. Their anti-Semite-in-chief,
    Mohamed Elmasry -- who had boasted on national TV that all adult Israelis were
    legitimate targets for terrorist murders -- refused to take the witness stand,
    the coward. But bizarrely, his young protege, a Toronto law student named
    Khurrum Awan, took the stand in his place.

[79]

The trial judge found that calling the respondent an anti-Semite was
    defamatory. In a brief paragraph in the reasons, the trial judge found that the
    statement was not stated as a matter of opinion, and that the appellant had not
    proved at trial that the respondent was an anti-Semite. She noted that in
    cross-examination, the appellant did not say that the respondent was an anti-Semite
    but relied on his connections to Dr. Elmasry and the CIC, although the words
    complained of were specific to the respondent.

[80]

The appellant submits that the trial judge erred by finding that calling
    the respondent an anti-Semite in the context of the human rights proceeding,
    because of his association with Dr. Elmasry, was a statement of fact that had
    to be proved true, rather than a comment or opinion to which the defence of
    fair comment could apply.

Discussion

[81]

I accept this submission. Unlike in her fact versus opinion analysis of
    the liar statements, the trial judge did not apply the reasonable person
    test, nor did she consider whether the statement was a conclusion or judgment
    formed by the appellant based on the respondents association with Dr. Elmasry.
    She also did not consider that it was stated in an editorial blog discussing a
    controversial matter of public interest.

[82]

Applying that test, in my view, it is clear that a reasonable reader of
    the appellants blog would understand that the appellant was stating his view
    of the respondent, based on his association with Dr. Elmasry and Dr. Elmasrys
    public statements, including that all adult Israelis are legitimate targets of
    violence. The respondent had numerous connections with the CIC, and coordinated
    with the CIC and Dr. Elmasry to prepare for the meeting at Macleans and to
    bring the BCHRT complaint with Dr. Elmasry as a complainant.

[83]

A similar conclusion that the characterization of comments as anti-Semitic
    was a matter of opinion, was reached by the court in
Shavluk v. Green Party
    of Canada
, 2010 BCSC 804, affd 2011 BCCA 286, at paras. 71-72. The
    defendant characterized comments made by the plaintiff as anti-Semitic and the
    court concluded the characterization was an opinion.

[84]

Calling someone prejudiced will normally be a conclusion or opinion
    based on the persons conduct or statements. Justice Binnie observed in
WIC
that the cases establish that the notion of comment is generously
    interpreted (para. 30). A defendant must then prove that the comment could be honestly
    expressed, that it was based on true facts and that it met all the other
    criteria for the defence of fair comment on a matter of public interest. The
    characterization as comment gives the greatest scope for freedom of expression
    and the preservation of
Charter
values, while giving full legal
    protection to the important interest of individuals in their reputation as part
    of their dignity and self-worth.

[85]

Although  the trial judge erred in her characterization of the
    appellants blog statement that the respondent was an anti-Semite as a statement
    of fact rather than opinion, the defence of fair comment cannot apply if the
    statement was made, as the trial judge found, with malice. I will discuss that
    issue after addressing the third ground of appeal.

(3)

Asserting that the Respondent was Co-Counsel at the BCHRT Hearing and a Witness
    and Therefore in a Conflict of Interest

[86]

This ground of appeal relates to the allegation in the eighth post that
    the respondent was in a conflict of interest by acting as an articling student
    and co-counsel at the BCHRT hearing, while also being called as a witness. The
    appellant relied on the evidence that the respondent was seen sitting at the
    counsel table with Mr. Joseph and the trial judges finding that the respondent
    was briefly at the counsel table helping with photocopies, as the factual basis
    for his comment that the respondent was in a conflict of interest.

[87]

However, the trial judge found that the underlying fact of the comment
    was that the respondent was acting as co-counsel, and that fact was not true.
    The trial judge found that the respondent was not co-counsel. She based that
    finding on the evidence that at the opening of the hearing, Mr. Joseph
    identified himself as the only counsel on the record. The two other students
    were identified as assisting, but the respondent was not. The trial judge did
    not consider the respondents role helping with photocopies as elevating him to
    the role of co-counsel. She also found that because the appellant was a lawyer,
    his readers would understand him to be using the term co-counsel with its legal
    meaning. In any event, even as only a descriptive term, co-counsel would not
    have only the limited role of helping with photocopies.

[88]

The standard of review accorded by a court of appeal to a trial judge on
    findings of fact is a deferential one. The appellant is effectively asking the
    court to find that the trial judge made a palpable and overriding error in her
    finding on this issue or misperceived the evidence. In my view, the trial judge
    was entitled to come to the conclusions she did based on the record. There is
    no basis to interfere.

(4)

Finding of Malice

[89]

The trial judges finding of malice was critical to her conclusion that
    the appellant libelled the respondent, and to her assessment of damages.

[90]

First, the finding of malice defeated the defence of fair comment to the
    extent it was available on the findings of the trial judge or where it
    potentially could have applied to the statement that the respondent was an
    anti-Semite.

[91]

In
Hill v. Church of Scientology of Toronto
, [1995] 2 S.C.R.
    1130, the Supreme Court described malice in the context of a claim for libel as
    follows, at para. 145:

Malice is commonly understood, in the popular sense, as spite
    or ill‑will.  However, it also includes, as Dickson J. (as he then
    was) pointed out, any indirect motive or ulterior purpose that conflicts with
    the sense of duty or the mutual interest which the occasion created. Malice
    may also be established by showing that the defendant spoke dishonestly, or in
    knowing or reckless disregard for the truth. [Citations omitted.]

[92]

The trial judge also referred to
WIC
, where Binnie J. noted
    that proof of objective honest belief will not negate a finding of malice if
    the trial judge finds that subjective malice was the dominant motive of a
    particular comment (para. 53).

[93]

The trial judge found that the appellant was motivated by express malice
    against Dr. Elmasry, and that he viewed the respondent and Dr. Elmasry for all
    intents and purposes, as one and the same. The trial judge referred to the
    eighth blog post as intrinsic evidence that the appellant equated the
    respondent with Dr. Elmasry. Here, although the appellant had a reason to
    dislike Dr. Elmasry and to believe that the respondent was aligned with his
    views, the trial judge concluded that the appellants dominant motive in making
    the disparaging comments was malice.

[94]

The trial judge also found that the appellant made numerous errors in
    his blog posts that spoke to malice by showing a reckless disregard for the
    truth. He did little or no fact-checking, his reports of the hearing were not
    accurate, and with one exception, he did not correct inaccurate facts that he
    learned about.

[95]

The appellant challenges the trial judges conclusion that he was
    motivated by malice against the respondent. First, he says that it was an error
    for the trial judge to transpose any ill-will he might have borne against Dr.
    Elmasry to his feelings regarding the respondent, whom the appellant did not
    know. Nor did the respondent plead in his statement of claim that the
    appellants malice against him was transposed from Dr. Elmasry. Second, the
    trial judge ignored the appellants testimony that his purpose or motive in
    publishing his blog was to give his unique perspective on human rights
    commissions. This was substantiated by his history of criticism of them. Third,
    the trial judge erred by finding that his negligence in failing to correct the
    blog posts amounted to malice when he had an honest belief in what he said.

[96]

The force of the appellants submission is that the trial judge was
    mistaken when she concluded that he was motivated by malice. However, this was
    a finding of fact. The respondent pled malice. Based on the record, the trial
    judge concluded that the appellant transferred his animosity toward Dr. Elmasry
    to the respondent. The trial judge was entitled to make that finding. She was
    well-aware of the appellants long-held view that human rights tribunals should
    not be adjudicating issues of free speech and that he wanted to report on the
    BCHRT hearing on his blog from that perspective. However, she concluded that
    his dominant motive was ill-will. Finally, the trial judges finding that the
    appellants failure to correct errors was evidence of malice reflected her
    conclusion that this conduct was not a mere mistake or negligence on his part.
    Although the appellant may believe that the trial judge misunderstood his
    motives, her findings were based on her view of the record. There is no basis
    to interfere.

(5)

Damages

[97]

As the respondent brought this action under the simplified rules, the
    trial judge was cognizant that the maximum possible damage award was $100,000. She
    also noted that awards of general damages in libel cases should be relatively
    modest.

a)

General
    Damages

[98]

The trial judge awarded $50,000 in general damages. She took into
    account: that the respondent was at an important juncture in his legal career
    and that his job search after his articling term was up may have been impacted
    by the online posts that were easily accessible through Internet search tools;
    that the defamatory statements were serious, undermining his reputation both
    professionally and personally; and that the extent of the publication could not
    be known because the posts were made online.

[99]

She also considered the appellants argument that the respondents
    reputation could also have been harmed by the public criticism of his role in
    approaching Macleans, but rejected it as an important factor because the other
    criticism mainly focused on freedom of the press, not dishonesty or the other
    imputations the appellant made. The trial judge also took into account the
    appellants reputation as a right-wing provocateur as a factor favouring a
    lower damages award because it would affect the impact of his statements. The
    trial judge also noted that the appellant had done nothing to mitigate or
    reduce the respondents damages, such as publishing an apology or retraction.

[100]

On this appeal,
    the appellant argues that the damage award was too high, challenging some of
    the findings by the trial judge. In particular, he argues that the respondent in
    fact enjoys an excellent reputation in the community, having won a Saskatchewan
    Future 40 award in 2013 recognizing up and comers in various fields.

[101]

I would not
    give effect to this ground of appeal. A trial judges assessment of damages is
    accorded significant deference on appeal. She is not required to mention every
    factor that may have affected the calculation. She was well-aware of the
    respondents circumstances and cautioned herself to make a relatively modest
    award.

b)

Aggravated
    Damages

[102]

The trial judge
    also added $30,000 for aggravated damages. The appellant submits that the trial
    judge erred by awarding aggravated damages, which duplicated the general
    damages award and resulted in double counting.

[103]

The trial judge
    recognized that like general damages, aggravated damages are also compensatory
    in nature. In
Hill
, at paras. 188-189, Cory J. explained the rationale
    for an award of aggravated damages as follows:

Aggravated damages may be awarded in circumstances where the
    defendants conduct has been particularly high‑handed or oppressive,
    thereby increasing the plaintiffs humiliation and anxiety arising from the
    libellous statement.  The nature of these damages was aptly described by
    Robins J.A. in
Walker v. CFTO Ltd.
,
supra
, in these
    words at p. 111:

Where the defendant is guilty of insulting, high‑handed,
    spiteful, malicious or oppressive conduct which increases the mental distress ‑‑
    the humiliation, indignation, anxiety, grief, fear and the like ‑‑
    suffered by the plaintiff as a result of being defamed, the plaintiff may be
    entitled to what has come to be known as aggravated damages.

These damages take into account the additional harm caused to
    the plaintiffs feelings by the defendants outrageous and malicious
    conduct.  Like general or special damages, they are compensatory in
    nature.  Their assessment requires consideration by the jury of the entire
    conduct of the defendant prior to the publication of the libel and continuing
    through to the conclusion of the trial.  They represent the expression of
    natural indignation of right‑thinking people arising from the malicious
    conduct of the defendant.

[104]

Justice Cory
    also acknowledged the likelihood of some overlapping factors when assessing both
    types of damages. He stated, at para. 183, [t]here
will
    of necessity be some overlapping of the factors to be considered when
    aggravated damages are assessed.

[105]

This potential
    for overlap and therefore double counting is controversial and has led some to
    call for the abolition of separate awards of aggravated damages in defamation
    actions. See Brown, at pp. 25-79 to 25-84, where the author states that [a]
    separate award of aggravated damages is a pernicious development in the law; it
    is absurd in theory and mischievous in practice. He notes that an overlapping
    of factors will necessarily occur where aggravated damages are recognized as
    just another aspect of compensatory damages, and there is also considerable
    overlap with punitive damages, which similarly require evidence of malicious
    conduct. See also
Brown v. Cole
(1998), 61 B.C.L.R. (3d) 1, leave to
    appeal to S.C.C. refused, [1998] S.C.C.A. No. 614 and
Campbell v. Tremblay
,
    2010 NLCA 62, 305 Nfld. & P.E.I.R. 1.

[106]

The Ontario Law
    Reform Commission also recommended abolishing a separate award for aggravated
    damages in all damage awards. Ontario Law Reform Commission,
Report on
    Exemplary Damages
(Toronto, 1991) at pp. 27-30, 103.

[107]

In this case,
    the trial judge noted a number of factors that led her to increase the damages
    award under the heading aggravated damages, including:

·

the appellant was motivated by malice;

·

the respondents injury was increased because of the malice;

·

the repetition of the word liar in the headlines of the blogs
    and the fact that the headlines would show up in Internet searches by potential
    employers;

·

the references to lying in later blogs and including hyperlinks
    in the eighth blog back to the others;

·

the failure to correct most of the errors; and

·

the fact that the appellant was a lawyer himself made him more
    aware of the serious ramifications of his allegations on the professional
    reputation of the respondent.

[108]

I agree that some
    of the listed factors were also the factors that founded the award of general
    damages, such as calling the respondent a liar, and doing so in the headlines,
    and the effect on his job prospects because of Internet dissemination. However,
    some overlap was contemplated by Cory J. in
Hill
. The trial judge made
    no error by awarding $80,000 to fully compensate the respondent for the damages
    she found that he suffered from the malicious conduct of the appellant, whether
    the amount included for aggravated damages is viewed separately or as part of
    the general damages award.

F.

Result

[109]

I would dismiss
    the appeal. As agreed by the parties, I award costs of the appeal to the
    respondent fixed at $15,000 inclusive of disbursements and HST. I would not
    interfere with the costs order made below.

Released: December 22, 2016 (K.F.)

K. Feldman J.A.

I agree. Janet Simmons J.A.

I agree. Paul Rouleau J.A.

[1]

The trial judge noted that the word is more usually spelled
    taqiyya.


COURT OF APPEAL FOR ONTARIO

CITATION: Balmoral Custom Homes Ltd. v. Biggar, 2016 ONCA 967

DATE: 20161221

DOCKET: C62221

Cronk, Juriansz and Roberts JJ.A.

BETWEEN

Balmoral Custom Homes Ltd.

Plaintiff (Respondent)

and

Mary Louise Biggar

Defendant (Appellant)

Marvin J. Huberman, for the appellant

Neal H. Roth, for the respondent

Heard: December 16, 2016

On appeal from the order of Justice Wendy Matheson of the
    Superior Court of Justice, dated May 11, 2016, confirming the Report of Master
    Carol Albert, dated January 14, 2016.

ENDORSEMENT

[1]

The appellant appeals from the motion judges
    confirmation of the masters report allowing the respondents action and
    dismissing the appellants counterclaim.

[2]

The respondent was retained by the appellant
    pursuant to a fixed price contract to carry out renovations and an addition to
    her home. When the scope of the construction project grew, the parties agreed
    on fixed prices for each of the extra items of work to be performed. Their
    relationship broke down and the respondent brought an action, claiming that the
    amount of $108,554.34 was owing under their contract. Following a hearing for
    directions and a trial by way of a reference, the master found that the
    respondent was entitled to payment of the reduced amount of $94,031.36, plus
    interest, for its services and materials rendered to the appellant, dismissed
    the appellants counterclaim in the amount of $69,580.69 for alleged misrepresentations,
    overpayments, deficiencies and completion costs, and awarded costs to the
    respondent in the amount of $69,561.45.

[3]

The appellant submits that the motion judge
    erred in confirming the masters report. As argued, she advances two arguments
    on appeal.

[4]

First, she submits that the motion judge erred
    by finding that the master provided cogent reasons for her decision. In
    particular, the appellant says, the master failed in her reasons to deal with
    the appellants allegations that the respondent had made post-contractual
    misrepresentations about its billing for the extra work agreed upon by the
    parties; and that the respondent had breached its duty of honesty in carrying
    out its contract with the respondent by lying to the appellant about extra
    charges and dishonestly inflating its billings for the extra work performed.

[5]

Second, she submits that the motion judge erred
    in finding that the entire agreement clause in the parties contract disposed
    of any claim regarding the respondents alleged post-contractual misrepresentations
    and breach of its overriding duty of honesty. The appellant concedes that this
    clause excludes her allegations of prior misrepresentations, as the motion
    judge found.

[6]

We do not accept these submissions.

[7]

The appellant does not take issue with any of
    the masters factual findings.  As the motion judge noted, in the masters very
    careful and thorough reasons, she disposed of all the parties allegations of
    contractual breaches, including the deficiencies, overpayments and completion
    costs claimed by the appellant in her statement of defence and counterclaim. Specifically,
    for the reasons explained in her report, the master preferred the respondents
    evidence over the appellants evidence, and found that the appellant had agreed
    to the charges for the extra work to be completed when the construction project
    grew, as well as the $5,100.00 for electrical work, which she now impugns as
    dishonest charges. The appellants post-contractual misrepresentation claim and
    allegations of breaches of the respondents contractual duty of honesty
    dissolve in the face of the masters explicit findings on the contested items
    said to be relevant to those claims.

[8]

With respect to the contractual interpretation
    issues, we agree with the appellants submissions that the particular wording
    of the entire agreement clause of this contract does not exclude a claim based
    on any post-contractual misrepresentations. Nor does it exclude the parties
    duty of honesty not to lie or otherwise knowingly mislead each other about
    matters directly linked to the performance of the contract; this duty operates
    as a general doctrine of contract law, like unconscionability, that applies to
    the parties contract and that the parties are not free to exclude:
Bhasin
    v. Hrynew
, 2014 SCC 71, at paras. 73-75.

[9]

While the master did not explicitly address these
    issues in her reasons, this case was presented in terms of the alleged
    deficiencies, overpayments and completion costs, to which the appellants allegations
    of post-contractual misrepresentations and breach of the respondents duty of
    honesty were tied.  The master dealt with these claims as they were advanced at
    trial. As a result, the masters comprehensive findings on these issues,
    specifically, that the parties had agreed to these charges, disposes of the
    factual underpinnings of the appellants claim for set-off and counterclaim. As
    the master found, having agreed to the charges in question, the appellant
    complains after the fact that the respondent overcharged for the extra work
    performed and that she had the right to choose the price for each extra. There
    was no evidence that the parties agreed to any specific mark-up on the extra
    work or that the respondent had lied; the contract did not entitle the
    appellant to know the respondents pricing structure. The master did not agree
    with the appellants position. We see no basis to interfere.

[10]

For these reasons, the appeal is dismissed.

[11]

The parties have agreed that the respondent is
    entitled to its partial indemnity costs of the appeal, in the amount of $8,000.00,
    inclusive of disbursements and all applicable taxes, and we so order.

E.A.
    Cronk J.A.

R.G.
    Juriansz J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Beard Winter LLP v. Shekhdar, 2016 ONCA 927

DATE: 20161208

DOCKET: M46666 (M46520)

Sharpe, Pepall and Hourigan JJ.A.

BETWEEN

Beard Winter LLP

Responding Party

and

Kersasp Shekhdar

Moving Party

Kersasp Shekhdar, in person

Rob Winterstein, for the responding party

Heard and released orally: December 2, 2016

ENDORSEMENT

[1]

The appellant seeks to review the order of Justice Doherty dismissing
    the appellants motion to extend the time to file an application for leave to
    appeal from the Divisional Court.

[2]

Justice Doherty focused on the fourth and crucial factor as to whether
    an extension of time should be granted, namely, the merits of the proposed
    leave to appeal motion.

[3]

We agree with Justice Doherty that there is no prospect of success.

[4]

Accordingly, the justice of this case does not warrant the granting of
    an extension. The motion is dismissed.

[5]

Costs to the respondent fixed at $5000, inclusive of disbursements and
    taxes.

Robert J. Sharpe
    J.A.

S.E. Pepall J.A.

C.W. Hourigan
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cahill v. Cahill, 2016 ONCA 962

DATE: 20161220

DOCKET: C61942

Simmons, Pepall and Huscroft JJ.A.

BETWEEN

Patrick Cahill

Applicant

(Respondent)

and

Kevin
    Cahill in his personal capacity and as

Estate
    Trustee of the Estate of Thomas Michael Edward Cahill,

Sheila Kehoe in her personal capacity and as

Estate Trustee of the Estate of Thomas Michael Edward Cahill
,

Tom
    Cahill Memorial Fund, Alcoholics Anonymous,

Jessica
    Kehoe, Craig Kehoe, Calvin Cahill, Kevin Douglas Olson

and
    Corey Robert Olsen

Respondents

(Appellant)

William R. Hunter, for the appellant Sheila Kehoe

Miriam Vale Peters, for the respondent

Heard: November 15, 2016

On appeal from the judgment of Justice Sylvia Corthorn of
    the Superior Court of Justice, dated February 25, 2016, with reasons reported
    at 2016 ONSC 1385, 129 O.R. (3d) 401.

Pepall J.A.:

A.

Introduction

[1]

Thomas Cahill died in March 2010. In his will, he appointed his
    daughter, the appellant, Sheila Kehoe, and his son, Kevin Cahill, as executors
    and trustees of his estate. They were directed to set aside $100,000 in a trust
    fund for the benefit of their brother, Patrick Cahill, with the remainder to
    the testators grandchildren. They failed to do so.

[2]

The will directed that Patrick was to receive a payment of $500 each
    month from the trust fund. Kevin was to be the trustee of the trust fund with sole
    discretion as to the investment of the monies in the fund. However, Kevin used
    most of the $100,000 for his own benefit. Patrick then sued the two executors
    and trustees and claimed breach of trust.

[3]

The application judge found in Patricks favour. Sheila appeals from
    that judgment.  Sheila submits that the application judge erred in concluding
    that she did not establish a trust fund, in holding her liable for losses
    caused by Kevin, and in failing to relieve her from liability pursuant to s.
    35(1) of the
Trustee Act
, R.S.O. 1990, c. T.23.

[4]

For the reasons that follow, I would dismiss the appeal.

B.

Background Facts

(i)

The Will

[5]

Paragraphs 2 and 3(g) of the testators will provided:

2.     I
    HEREBY NOMINATE, CONSTITUTE AND APPOINT my daughter, SHEILA M.L. KEHOE, and my
    son, KEVIN T. CAHILL, to be the Estate Trustees, Executors of and Trustees
    under this my last Will and Testament and I shall hereinafter refer to them as
    my Trustees.

3.     I GIVE,
    DEVISE AND BEQUEATH all my real and personal estate of any kind whatsoever and
    wheresoever situate of which I may die possessed, including any property over
    which I may have a general power of appointment, unto my Trustees upon the
    following trusts, namely:

(g) To
    set aside the sum of ONE HUNDRED ($100,000.00) in a trust fund for the benefit
    of my son, PATRICK E. CAHILL, during his lifetime (hereinafter referred to as
    Patricks Trust Fund). I DIRECT that my son, KEVIN T. CAHILL, shall be the Trustee
    of Patricks Trust Fund, and shall have sole discretion as to the investment of
    monies thereunder. I FURTHER DIRECT that my son PATRICK E. CAHILL, shall
    receive the sum of FIVE HUNDRED ($500) DOLLARS per month out of Patricks Trust
    Fund during his lifetime, or until such fund is exhausted, whichever shall
    first occur.

UPON
    the death of my son, PATRICK E. CAHILL, or in the event that he shall have
    predeceased me, then I DIRECT that Patricks Trust Fund, or any amount
    remaining therein, shall be divided equally amongst those of my blood
    grandchildren who are living at the date of Patrick E. Cahills death, or at
    the date of my death if Patrick has predeceased me, as the case may be, share
    and share alike.

[6]

The will also directed that the testators real estate be sold, and it
    was. The estate received net proceeds of $223,013.75 from the sale of the
    testators house. These funds were deposited in the estates account at
    Scotiabank. Thereafter, Sheila and Kevin both signed a direction to Scotiabank
    to issue a draft for $100,000 from the estates account, payable to London
    Life. The direction did not mention the trust, the trust fund, or Patrick.

[7]

Kevin then opened a non-registered investment plan in the amount of
    $100,000 with London Life. On the application form, he described himself as the
    annuitant and Sheila as the contingent policy holder. The account information
    for Michael Cahill, another brother, was listed under the heading Information
    for Pre-Authorized Payment Agreement  / Direct Deposit. No mention was made of
    any trust, trust fund, or Patrick.

[8]

The payments of $500 per month to Patrick were never paid directly from
    London Life to him.  Rather, they were made payable to Kevin or to Michael, who
    in turn would pay the $500 to Patrick monthly.  Patrick received $500 a month
    from either Michael or Kevin until the spring of 2014, when three consecutive monthly
    cheques were returned for insufficient funds. Patrick has received nothing
    since May 2014.

[9]

Patrick subsequently discovered that in 2012, Kevin had borrowed the
    remaining money in the plan  $92,642.99  as a mortgage for his business
    premises. The business failed, the bank realized on the premises, and there
    were no funds remaining in the London Life plan.

(ii)

The Court Application

[10]

Patrick successfully brought an application for payment of his
    entitlement under the will. He also sought the removal of Sheila and Kevin as
    executors and trustees of the estate and the removal of Kevin as trustee of
    Patricks trust fund, but the application judge adjourned the determination of
    those issues until Sheila and Kevin had provided an accounting of the estate.

[11]

During the course of the litigation, Sheilas lawyer told Patrick to
    communicate with him.  Her lawyer wrote to Patrick stating:

Neither Sheila nor her children received the money from the
    house sale, Kevin did. I do not know what he did with that money. But one thing
    for sure is that Sheila and her two children do not know either. They are not
    liable to you in any way.

[12]

The application judge did not agree with this assessment. She found that
    Sheila was negligent.  Moreover, both Sheila and Kevin had breached their
    fiduciary obligations to the beneficiaries of the estate, including Patrick and
    the testators grandchildren.

[13]

The application judge observed that the executors and trustees of an
    estate, not the beneficiaries, have the onus of establishing that the
    management and distribution of funds is consistent with the terms of the will. She
    concluded that neither Sheila nor Kevin had met that onus. They had failed to
    take the steps necessary to establish the trust fund. She found that a trust
    fund for Patricks benefit was never set aside as directed by the testator. It
    was not enough for Sheila to simply sign the direction to transfer the funds
    from Scotiabank to London Life.

[14]

The application judge noted Sheilas evidence that Kevin had assured her
    that everything was being properly handled.  The application judge rejected
    Sheilas submission that she relied on Kevin because of his qualifications in
    the field of financial management. The evidence did not support her submission
    and, in any event, she made insufficient, if any, inquiries of Kevin or London
    Life as to the details of the $100,000. Sheila acknowledged in her evidence
    that she did not have any knowledge of the administration of the trust fund
    other than her signature on the direction to transfer the funds to London Life.
    In finding that this was inadequate and that Sheila could not simply defer to
    her brother, her co-trustee, the application judge relied on
Fales v.
    Canada Permanent Trust Co.
, [1977] 2 S.C.R. 302; and
The Childrens
    Lawyer v. Penman
, 2013 ONSC 1471, affd (
sub nom. Penman (Litigation
    guardian of) v. Penman
) 2014 ONCA 83, 119 O.R. (3d) 128.

[15]

In essence, Sheila abdicated her duties as executor and trustee of the
    estate. She was required to take real, active steps to ensure that the trust
    fund was set up in accordance with the Will, but she failed to do so. Specifically,
    the application judge stated, at paras. 58-60:

If the Deceased had merely wished Kevin alone to have absolute
    authority and to make all decisions with respect to the Estate, he would not
    have appointed Sheila as an executor and trustee. Sheilas appointment in that
    role must be seen as reflective of the Deceaseds wish that she not simply
    acquiesce to or rubber-stamp anything suggested or done by Kevin. Sheila was
    obligated to exercise her own judgment. She completely failed in that duty.

Sheila had limited information at best and no documentation
    upon which to consider whether the transfer of $100,000 from Scotiabank to
    London Life was sufficient to satisfy the instructions in paragraph 3(g) of the
    Will. Sheila signed a single document, the Direction, which was completely
    uninformative with respect to the terms of the trust.

Sheila assumed solely on the basis of assurances from Kevin
    that the trust fund was set up in accordance with the Will. As an executor and
    trustee of the Estate, Sheila had a duty to the beneficiaries of the Estate to
    do more. She had a duty to make inquiries to satisfy herself that the terms of
    the trust fund were in accordance with the Will. [Citations omitted.]

[16]

The application judge concluded that Sheilas negligence and breach of
    fiduciary duty caused or contributed to the dissipation of the money intended
    for the trust fund pursuant to para. 3(g) of the will.

[17]

The application judge also held that Kevin failed in his duties.
    Moreover, having never established the trust fund, Kevin had no authority to direct
    the investment of the funds.  Further, Sheila and Kevin failed to fulfil their
    obligations to the testators grandchildren, assuming one or more of the
    grandchildren survived Patrick.

[18]

The application judge then considered whether relief was available under
    s. 35(1) of the
Trustee Act
, although neither party had raised the
    issue. Section 35(1) states:

If in any proceeding affecting a trustee or trust property it
    appears to the court that a trustee, or that any person who may be held to be
    fiduciarily responsible as a trustee, is or may be personally liable for any
    breach of trust whenever the transaction alleged or found to be a breach of
    trust occurred, but has acted honestly and reasonably, and ought fairly to be
    excused for the breach of trust, and for omitting to obtain the directions of
    the court in the matter in which the trustee committed the breach, the court
    may relieve the trustee either wholly or partly from personal liability for the
    same.

[19]

The application judge noted that there was no evidence establishing that
    Sheila had failed to act honestly. However, she had not acted reasonably. As
    such, the application judge declined to exercise her discretion to grant relief
    under s. 35(1) of the
Trustee Act
.

[20]

The application judge held that Sheila and Kevin were jointly and severally
    responsible for $80,642.99, being the outstanding principal necessary to fund
    the monthly $500 payments to Patrick, as required under the will.

C.

Grounds of Appeal

[21]

Sheila focused on three grounds of appeal. She submits that the
    application judge erred:

(i)    in finding that a trust was not established;

(ii)    in
    finding that the appellant was liable for any loss occasioned by Kevin; and

(iii)   in
    denying the appellant relief under s. 35(1) of the
Trustee Act
.

D.

analysis

(i)

Failure to Establish the Trust Fund

[22]

Sheila submits that the application judge erred in finding that a trust
    was not established. The three certainties required to establish a trust were
    met by the language of the will, and the trust was constituted when the funds
    were placed with London Life. She argues that the payments to Patrick
    established that the trust was declared, constituted and therefore created, and
    the absence of Patricks name on the documents did not deprive him of his
    beneficial interest.

[23]

As such, the application judge ought not to have concluded that the
    appellant failed in her duties to Patrick and the grandchildren.

[24]

I disagree.

[25]

In
The Law of Trusts
, 3d ed. (Toronto: Irwin Law Inc., 2014),
    at pp. 154-55, Gillese J.A. describes the nature of a trustees role:

Trusteeship is an extremely onerous position. Trustees are
    subject to the specific duties created by the trust instrument and by
    legislation. In addition, they have a great many duties placed upon them by
    equity.

An understanding of the common law duties imposed upon trustees
    has as its starting point the fact that a trustee is a fiduciary. The trustee
    exists to administer the property on behalf of the beneficiary.

Because of the dependency relationship and the fact that the
    trustee controls the beneficiarys property, the trustee is held to the most
    exacting standards of all fiduciaries.

[26]

Justice Gillese goes on to observe that a breach of trust occurs whenever
    a trustee fails to fulfill his or her obligations with respect to the
    administration of the trust, and liability arises whether the breach is
    innocent, negligent or fraudulent. Liability exists even if the loss would
    have occurred without the breach.  In general, liability is imposed not to
    punish trustees but to restore the beneficiaries to the position they would
    have been in had the breach not occurred: p. 178.

[27]

In this case, the will was clear: Sheila and Kevin were to set aside
    $100,000 in a trust fund for the benefit of Patrick. Kevin then was directed to
    invest those funds and make monthly payments to Patrick of $500. In the event
    that Patrick pre-deceased any of the testators grandchildren, the trustees
    were to distribute the remaining trust funds to those beneficiaries.

[28]

The application judge made a finding that the trust fund was never
    established. I see no reason to interfere with that finding.

[29]

The will described the trust, but it was incumbent on Sheila and Kevin
    to establish the trust
fund
. They failed to do so. The record
    disclosed that:

-

the direction to Scotiabank did not mention any trust, trust fund, or Patrick;
    and

-

neither did the application to London Life.

[30]

Although payments of $500 were made to Patrick, these came from either Michael
    or Kevin. There was a dearth of evidence showing that a trust fund had been
    established.

[31]

Based on the record before her, it was open to the application judge to make
    the finding that a trust fund had never been established.

(ii)

The Appellants Liability

[32]

Sheila submits that once the trust was established, she had no further
    obligation with respect to its management. The will was clear in giving Kevin
    sole discretion over the investment of the trust funds, and any liability for
    the loss rested with him. Similarly, Sheila argues that it was Kevins duty to
    distribute any remainder in the trust to the testators grandchildren who had
    been designated beneficiaries, and Kevins personal representative would assume
    his duties if something happened to him.

[33]

The obligation of a co-trustee is well established and described in
    numerous textbooks on trusts and trustees. David Hayton, Paul Matthews and
    Charles Mitchell write in
Law of Trusts and Trustees
, 8th ed.
    (Markham: LexisNexis, 2010), at p. 839:

It is not unusual to find one of several trustees spoken of as
    the acting trustee, meaning the trustee who actively interests himself in the
    trust affairs, and whose decisions are merely endorsed by his co-trustees. The
    court, however, does not recognize any such distinction; for the settlor has
    trusted
all
his trustees and it beholds each and every one of them to
    exercise his individual judgment and discretion on every matter, and not
    blindly to leave any questions to his co-trustees or co-trustee.

[34]

Similarly, Carmen S. Thériault, in
Widdifield on Executors and
    Trustees
, looseleaf (2016-Rel. 9), 6th ed. (Toronto: Thompson Reuters,
    2016), at para. 8.7.2, states:

Not only must trustees be unanimous in the exercise of their
    powers, but each trustee must actively consider his discretion and will not be exonerated
    for passively acquiescing in the actions of the co-trustee.

[35]

Lastly, Donovan W.M. Waters writes in
Waters Law of Trusts in
    Canada
, 4th ed. (Toronto: Carswell, 2012), at p. 43:

[A trustee] is not entitled to shrug off the wrongful actions
    of a co-trustee on the basis that he knew nothing of what the other was doing;
    as a fiduciary, he is responsible for all acts of trusteeship, and he therefore
    carries a several, as well as a joint, liability for all that is done in the
    name of the trust or through the exercise of the office of trustee.

[36]

These principles are also reflected in the applicable jurisprudence: see
Mickleburgh v. Parker
(1870), 17
    Gr. 503 (Ont. Ch.),
and
Fales
.

[37]

The application judge found that Sheila failed to discharge her
    obligations as an executor and trustee of the estate, because the trust fund
    for Patrick was never established. The application judge found, at para. 56,
    that by her own admission, Sheila had virtually no involvement in the
    administration of the estate. Sheila had abdicated her duties. Again, the
    record supports that key finding. The fact that Sheila thought that she was
    acting responsibly does not excuse her inaction. Doing nothing was not a luxury
    available to her as a co-trustee. Justification supporting this conclusion is
    readily available.

[38]

First, the will reflects the testators testamentary intention, and he appointed
    and entrusted two executors and estate trustees, not one. As the application
    judge noted, Sheilas appointment as executor and estate trustee reflects the
    testators wish that
both
she and Kevin administer his estate.

[39]

Second, an executor or estate trustee is entitled to remuneration for
    his or her services, either pursuant to the terms of the will or, if the will
    is silent, under s. 61(1) of the
Trustee Act
. The existence of a
    statutory entitlement to compensation further demonstrates that an executor or
    estate trustees responsibilities are to be taken seriously.

[40]

Third, if a party who is named as executor and trustee is unable,
    unwilling or incapable of accepting the responsibility, it is open to him or
    her to renounce the appointment. As Sheila did not renounce the appointment,
    she was obligated to properly fulfill her duties as executor and estate
    trustee.

[41]

Although the will did provide Kevin with the responsibility for investing
    the monies in the trust fund, this did not absolve Sheila, as co-trustee, of
    her responsibility to ensure that the trust fund was properly set up. Further,
    the testator directed that Patricks trust fund be divided amongst his grandchildren
    who are living at the time of Patricks death. This obligation to divide any
    remainder of the trust fund among the grandchildren was a continuing one; it bound
    Sheila and was not confined to Kevin (or his personal representative, should he
    die).

[42]

For these reasons, I would not give effect to this ground of appeal.

(iii)

Section 35(1) of the
Trustee Act

[43]

The appellant brought a motion for leave to file a supplementary notice
    of appeal and factum so as to pursue an additional ground of appeal relating to
    s. 35(1) of the
Trustee Act
. Feldman J.A. heard that motion and
    determined that the panel hearing the appeal should decide whether or not to
    allow Sheila to raise the issue on appeal.

[44]

The decision of whether to grant leave to allow an appellant to advance
    a new argument on appeal is a discretionary decision, guided by the balancing
    of the interests of justice as they affect all parties:
R. v. Wasing
[1998] 3 S.C.R. 579, pp. 590-92;
Kaiman v. Graham
, 2009 ONCA 77, 245
    O.A.C. 130, at para. 18.

[45]

The application judge acknowledged that s. 35(1) of the
Trustee Act

was not raised in argument before her, but she considered it nonetheless. She
    stated, at para. 64 of her reasons:

There is no evidence to support a finding that Sheila failed to
    act honestly. However, as noted above, I find that Sheila breached her
    fiduciary obligations to the beneficiaries of the estate. She did not act
    reasonably. As a result, she is not entitled to relief pursuant to
    s. 35(1) of the
Trustee Act
.

[46]

While I would permit Sheila to advance this ground of appeal, for the
    reasons that follow, I would not give effect to this ground.

[47]

Sheila submits that she should be afforded relief under s. 35(1) of the
Trustee
    Act
,
because any breach by
    her was neither dishonest nor unreasonable, but rather reflected an honest
    mistake.

[48]

Section 35(1) of the
Trustee Act
provides an opportunity for
    court-sanctioned relief where the trustee has acted honestly and reasonably,
    and ought fairly to be excused for the breach of trust.

[49]

That said, s. 35(1) is discretionary. Absent any palpable and overriding
    error, deference is owed to the application judges exercise of discretion.

[50]

The trustee has the burden of proof with respect to the three elements
    in s. 35(1): (1) that he or she acted honestly; (2) that he or she acted
    reasonably; and (3) that he or she ought fairly to be excused.

[51]

Whether a trustee has acted honestly and reasonably will depend on the facts
    of the particular case. In
The Law of Trusts
, Gillese J.A. notes, at
    p. 190, Generally, the courts have interpreted honestly as an active
    involvement in the affairs and decisions of the trust administration. Whether
    a trustees conduct is reasonable is generally determined on the basis of
    what an ordinary prudent business person would have done in the circumstances.

[52]

Courts are to consider a trustees breach of trust in the light of all
    of the circumstances. The relevant factors will include whether the breach was
    technical in nature or a minor error in judgment; whether the trustee was paid;
    and whether the trustee is a professional: see
Fales
, p. 319; Gillese,
    J.A., p. 191.

[53]

In
Penman
, at para. 86, the application judge held that the
    trustee had not acted reasonably:

[The trustee] failed to consider all relevant criteria in
    determining whether the proposed investments were appropriate; she completely
    delegated the exercise of her discretion to [her co-trustee]; and she failed to
    make any reasonable inquiries about the proposed investments or to follow up
    regarding their status. Section 35 of the
Trustee Act
does not excuse
    a person who does nothing.

[54]

For similar reasons, the application judge in this case found that Sheila
    did not act reasonably.  Sheila made no inquiries and took no steps to fulfill
    her duties owed to the beneficiaries. The application judge gave extensive and
    thoughtful reasons and was alert to the factual context. I see no basis on
    which to interfere with the application judges decision.

[55]

Accordingly, while I would permit Sheila to advance the ground of appeal
    involving s. 35(1)
Trustee Act
, I would not give effect to it.

Disposition

[56]

For these reasons, I would dismiss the appeal. I would order Sheila to pay
    the respondents costs fixed in the amount of $10,000, inclusive of
    disbursements and applicable tax.

Released:

DEC 20 2016                                    S.E.
    Pepall J.A.

SEP                                                            I
    agree Janet Simmons J.A.

I
    agree Grant Huscroft J.A.