WARNING

The Judge hearing this motion
    directs that the following should be attached to the file:

An order restricting
    publication in this proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or
    (4) or 486.6(1) or (2) of the
Criminal Code
shall continue.  These
    sections of
the Criminal Code
provide:

486.4(1)       Subject
    to subsection (2), the presiding judge or justice may make an order directing
    that any information that could identify the victim or a witness shall not be
    published in any document or broadcast or transmitted in any way, in
    proceedings in respect of

(a)     any of the
    following offences;

(i)      an offence
    under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1,
    172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02,
    279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or

(ii)      any offence
    under this Act, as it read at any time before the day on which this
    subparagraph comes into force, if the conduct alleged involves a violation of
    the complainants sexual integrity and that conduct would be an offence
    referred to in subparagraph (i) if it occurred on or after that day; or

(iii)     REPEALED: S.C.
    2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49).

(b)     two or more offences being dealt
    with in the same proceeding, at least one of which is an offence referred to in
    paragraph (a).

(2)     In proceedings
    in respect of the offences referred to in paragraph (1)(a) or (b), the
    presiding judge or justice shall

(a)     at the first
    reasonable opportunity, inform any witness under the age of eighteen years and
    the victim of the right to make an application for the order; and

(b)     on application
    made by the victim, the prosecutor or any such witness, make the order.

(2.1) Subject to
    subsection (2.2), in proceedings in respect of an offence other than an offence
    referred to in subsection (1), if the victim is under the age of 18 years, the
    presiding judge or justice may make an order directing that any information
    that could identify the victim shall not be published in any document or
    broadcast or transmitted in any way.

(2.2) In proceedings in
    respect of an offence other than an offence referred to in subsection (1), if
    the victim is under the age of 18 years, the presiding judge or justice shall

(a) as soon as feasible,
    inform the victim of their right to make an application for the order; and

(b) on application of
    the victim or the prosecutor, make the order.

(3)     In proceedings
    in respect of an offence under section 163.1, a judge or justice shall make an
    order directing that any information that could identify a witness who is under
    the age of eighteen years, or any person who is the subject of a
    representation, written material or a recording that constitutes child
    pornography within the meaning of that section, shall not be published in any
    document or broadcast or transmitted in any way.

(4)     An order made
    under this section does not apply in respect of the disclosure of information
    in the course of the administration of justice when it is not the purpose of
    the disclosure to make the information known in the community. 2005, c. 32, s.
    15; 2005, c. 43, s. 8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25,
    ss. 22, 48; 2015, c. 13, s. 18.

486.6(1)       Every
    person who fails to comply with an order made under subsection 486.4(1), (2) or
    (3) or 486.5(1) or (2) is guilty of an offence punishable on summary conviction.

(2)     For greater
    certainty, an order referred to in subsection (1) applies to prohibit, in
    relation to proceedings taken against any person who fails to comply with the
    order, the publication in any document or the broadcasting or transmission in
    any way of information that could identify a victim, witness or justice system
    participant whose identity is protected by the order. 2005, c. 32, s.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. S.M., 2020 ONCA 610

DATE: 20200928

DOCKET: M51788 (C67806)

Paciocco
    J.A. (Motion Judge)

BETWEEN

Her
    Majesty the Queen

Respondent
(Respondent)

and

S.M.

Appellant
(Applicant)

Christen Cole, for the appellant

Molly Flanagan, for the respondent

Heard: September 28, 2020 by video conference

REASONS
    FOR DECISION

[1]

On June 26, 2020, I denied an application by
    S.M. for release pending appeal. I ordered his continued detention on the
    tertiary ground because, in the unique circumstances of the case, he had not
    met his burden of satisfying me that his detention is not necessary in the
    public interest. Those circumstances included that his grounds of appeal did
    not appear to be strong; that pending trial he had breached interim judicial
    release conditions imposed on the same charges; and that one of the convictions
    being appealed is for obstruction of justice relating to a demand he made to
    the complainant that she recant.

[2]

S.M. has now renewed his application for release
    pending appeal based on what the Crown concedes to be a material change in
    circumstances. Specifically, S.M. now appeals on the additional ground that the
    trial judge erred in relying on s. 276 of the
Criminal Code
to prevent
    him from engaging in relevant cross-examination of the complainant regarding
    her prior experience as a sex worker, when s. 276 does not apply to the
    offences being prosecuted, specifically human trafficking and charges related
    to the commodification of sexual services. He contends that the trial judges
    ruling prevented him from effectively defending those charges on the theory
    that the complainant, as an experienced sex worker, was the one who conducted
    the sexual services business. S.M. also contends that this ruling prevented him
    from demonstrating that violence previously experienced by the complainant in
    her work as a sex worker gives credence to his claim that the complainants
    practice of checking in and out with him before and after providing sexual
    services related to her personal safety and did not reflect his involvement in
    the business.

[3]

The Crown accepts that the application of s. 276
    in this prosecution is controversial but argues that this is a new issue on appeal
    that S.M. should not be permitted to raise. The Crown may well prove to be
    correct but their argument is also contentious. In my view, it can no longer be
    said that S.M.s grounds of appeal lack strength. There is a realistic prospect
    that his appeal could succeed.

[4]

This elevates the importance of reviewability
    and changes the balance in this case. S.M.s bail release plan has also
    solidified now that the owner of the residence where he proposes to serve the
    house arrest condition of his planned release has given her approval. In the
    circumstances, S.M. has met the burden of establishing that his continued
    detention is no longer required on the tertiary ground.

[5]

I am prepared to release S.M. on appropriate
    conditions with the sureties proposed. Those conditions must include both house
    arrest and electronic surveillance. The parties should strive to agree upon an
    appropriate order and submit it for my approval or notify me of the need for a
    further hearing.

David
    M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Sarjoghian, 2020 ONCA 550

DATE: 20200902

DOCKET: C64912

Juriansz, Tulloch and Jamal
    JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Hassan Sarjoghian

Appellant

Mark Halfyard and Colleen McKeown, for
    the appellant

David Quayat, for the
    respondent

Heard: in writing

On appeal from the conviction entered on
    July 6, 2017 by Justice Michael G. Emery of the Superior Court of Justice,
    sitting with a jury.

REASONS FOR DECISION

[1]

Mr. Sarjoghian appeals his conviction for
    importing opium into Canada contrary to the
Controlled Drugs and Substances
    Act
, S.C. 1996, c. 19, s. 6(1). For the reasons below, we allow the
    appeal.

[2]

At trial, Mr. Sarjoghian denied knowing that the
    air compressor he had shipped to Canada from Iran contained opium in a hidden
    compartment. The Crowns expert witness on drug importation and concealment,
    while under cross-examination, testified that, in his experience, it was one
    hundred percent true in every investigation the person who brought the
    shipment to Canada had knowledge of the illicit substance. He explained the
    importing organization will maintain positive control of a high-value shipment
    at all times.

[3]

Mr. Sarjoghian appeals on the ground that the
    Crown experts anecdotal evidence of the knowledge of drug couriers ran afoul
    of the decisions of the Supreme Court of Canada in
R. v. Sekhon
, 2014
    SCC 15, [2014] 1 S.C.R. 272, at paras. 49-51, and of this Court in
R. v.
    Burnett
, 2018 ONCA 790, 367 C.C.C. (3d) 65, at paras. 75 and 80, which
    ruled that such evidence lacks relevance and is not probative of an accuseds
    knowledge. Such anecdotal evidence is highly prejudicial and therefore
    inadmissible.

[4]

The Crown concedes that the appeal should be
    allowed. In this case, as in
Burnett
, the trial judge failed to instruct
    the jury to disregard the inadmissible evidence. Here, as in
Burnett
,
    [t]he prejudice remained unabated:
Burnett
, at para. 78.

[5]

On this ground alone, we allow Mr. Sarjoghians
    appeal and order a new trial. We need not address the other grounds raised by
    Mr. Sarjoghian.

R.G. Juriansz J.A.

M. Tulloch J.A.

M. Jamal J.A.


WARNING

The President of the panel hearing this
    appeal directs that the following should be attached to the file:

An order restricting publication in this
    proceeding under ss. 486.4(1), (2), (2.1), (2.2), (3) or (4) or 486.6(1) or (2)
    of the
Criminal Code
shall continue.  These sections of
the Criminal
    Code
provide:

486.4(1)       Subject to subsection
    (2), the presiding judge or justice may make an order directing that any
    information that could identify the victim or a witness shall not be published
    in any document or broadcast or transmitted in any way, in proceedings in
    respect of

(a)     any of the following offences;

(i)      an offence under section 151,
    152, 153, 153.1, 155, 159, 160, 162, 163.1, 170, 171, 171.1, 172, 172.1, 172.2,
    173, 210, 211, 213, 271, 272, 273, 279.01, 279.011, 279.02, 279.03, 280, 281,
    286.1, 286.2, 286.3, 346 or 347, or

(ii)      any offence under this Act, as
    it read at any time before the day on which this subparagraph comes into force,
    if the conduct alleged involves a violation of the complainants sexual
    integrity and that conduct would be an offence referred to in subparagraph (i)
    if it occurred on or after that day; or

(iii)     REPEALED: S.C. 2014, c. 25,
    s. 22(2), effective December 6, 2014 (Act, s. 49).

(b)     two or more
    offences being dealt with in the same proceeding, at least one of which is an
    offence referred to in paragraph (a).

(2)     In proceedings in respect of the
    offences referred to in paragraph (1)(a) or (b), the presiding judge or justice
    shall

(a)     at the first reasonable
    opportunity, inform any witness under the age of eighteen years and the victim
    of the right to make an application for the order; and

(b)     on application made by the
    victim, the prosecutor or any such witness, make the order.

(2.1) Subject to subsection (2.2), in
    proceedings in respect of an offence other than an offence referred to in
    subsection (1), if the victim is under the age of 18 years, the presiding judge
    or justice may make an order directing that any information that could identify
    the victim shall not be published in any document or broadcast or transmitted
    in any way.

(2.2) In proceedings in respect of an offence
    other than an offence referred to in subsection (1), if the victim is under the
    age of 18 years, the presiding judge or justice shall

(a) as soon as feasible, inform the
    victim of their right to make an application for the order; and

(b) on application of the victim or the
    prosecutor, make the order.

(3)     In proceedings in respect of an
    offence under section 163.1, a judge or justice shall make an order directing
    that any information that could identify a witness who is under the age of
    eighteen years, or any person who is the subject of a representation, written
    material or a recording that constitutes child pornography within the meaning
    of that section, shall not be published in any document or broadcast or
    transmitted in any way.

(4)     An order made under this section
    does not apply in respect of the disclosure of information in the course of the
    administration of justice when it is not the purpose of the disclosure to make
    the information known in the community.
2005, c.
    32, s. 15; 2005, c. 43, s. 8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014,
    c. 25, ss. 22,48; 2015, c. 13, s. 18.

486.6(1)       Every person who fails to
    comply with an order made under subsection 486.4(1), (2) or (3) or 486.5(1) or
    (2) is guilty of an offence punishable on summary conviction.

(2)     For greater certainty, an order
    referred to in subsection (1) applies to prohibit, in relation to proceedings
    taken against any person who fails to comply with the order, the publication in
    any document or the broadcasting or transmission in any way of information that
    could identify a victim, witness or justice system participant whose identity
    is protected by the order. 2005, c. 32, s. 15.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. T.S., 2020 ONCA 594

DATE: 20200918

DOCKET: C67074

Roberts, Miller and Trotter JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Timothy S.

Appellant

Timothy S., acting in person

Amy Ohler, appearing as duty counsel

Mark Luimes, for the respondent

Heard and released orally: August 13, 2020 by
    videoconference

On appeal from the sentence imposed on June 6, 2019 by
    Justice Rommel G. Masse of the Ontario Court of Justice.

REASONS FOR DECISION

[1]

The appellant limits his sentence appeal to the propriety of the condition
    in the s.161 prohibition order made by the trial judge, specifically the
    provision that he have no contact with J.S. or R.S., the parents of the now
    adult complainant.

[2]

He is very concerned about being breached on the condition if he
    accidently bumps into J.S. or R.S. He has had no contact for many years with
    the complainant or her parents, nor intends to have any future contact with the
    complainant or her parents.

[3]

In our view, a prohibition order under s. 161(1)(a.1) should not have
    been made in respect of J.S. and R.S. Section 161(1)(a.1) speaks to the victim
    of the offence to which the order attaches. Neither J.S. nor R.S. fall within
    that definition.

[4]

The appeal is allowed on this narrow ground and the s. 161 order is
    amended accordingly.

[5]

All other aspects of the sentence remain unchanged.

L.B.
    Roberts J.A.

B.W.
    Miller J.A.

Gary
    Trotter J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: S.B. v. J.M., 2020 ONCA 575

DATE: 20200911

DOCKET: M51692

Brown
    J.A. (Motion Judge)

BETWEEN

S.B.

Moving Party

and

J.M.

Responding Party

S.B., acting in person

Adam Prewer, for the responding party

Heard: in writing

REASONS
    FOR DECISION

[1]

This motion in writing involves a request by the
    moving party, S.B., a senior member of the family law bar, for an order
    extending the time to file a notice of motion for leave to appeal the costs
    order of Fryer J. dated February 27, 2020.

[2]

S.B. brought a motion
    to remove Epstein Cole LLP (the Firm) as solicitors of record for his
    ex-wife, J.M. By order dated October 22, 2019 Fryer J. dismissed S.B.s motion.
    S.B. did not appeal that order.

[3]

By costs endorsement
    dated February 27, 2020 Fryer J. ordered S.B. to pay the Firm its costs of the
    motion fixed in the amount of $40,000.00 (the Costs Order).

[4]

On March 4, 2020 S.B.
    served a Notice of Appeal of the Costs Order, receipt of which was acknowledged
    the same day by the Firms counsel, the Lax OSullivan firm. However, the Notice
    of Appeal served by S.B. was a Form 38 Notice of Appeal under the
Family Law Rules
, which is used for appeals from the Ontario Court of Justice to the
    Superior Court of Justice, not for appeals from the Superior Court of Justice
    to the Court of Appeal.

[5]

S.B. had no right of
    appeal. Section 133(b) of the
Courts of Justice Act
, R.S.O. 1990, c. C.43,
provides that no appeal lies without leave of the court where the appeal
    is only as to costs that are in the discretion of the court that made the order
    for costs.

[6]

Rule 61.03.1(3) of the
Rules of Civil Procedure
requires that a notice of motion for leave to appeal
    to the Court of Appeal be served within 15 days after the making of the order
    from which leave to appeal is sought and filed with the court within five days
    after service. In accordance with that rule, S.B. was required to serve a
    notice of motion for leave to appeal by Friday, March 13, 2020.

[7]

S.B. did not serve a
    notice of motion for leave to appeal by March 13, 2020.

[8]

On March 19, 2020 the
    Firm informed S.B. that he had not followed the proper appeal route and that
    his appeal was out of time.

[9]

Effective Monday, March
    16, 2020 O. Reg. 73/20 suspended the time periods contained in the
Rules of Civil Procedure
for any step in a proceeding. For proceedings before
    the Court of Appeal, the suspension expired effective July 16, 2020.

[10]

On July 20, 2020 S.B.
    served on the Firm a notice of motion for an extension of time to bring a
    motion for leave to appeal.

[11]

The Firm opposes the
    motion for an extension of time on several grounds, two of which are
    jurisdictional in nature. The Firm contends that S.B. has gone to the wrong
    court and should bring his motion for leave to appeal before the Divisional
    Court for two reasons.

[12]

First, the Firm submits
    that S.B.s motion properly belongs before the Divisional Court because, where
    only costs are under appeal, appellate jurisdiction depends upon the nature of
    the predicate order. Accordingly, the appeal of a costs order flowing from an
    interlocutory order of a Superior Court judge lies to the Divisional Court:
Godard v. Godard
, 2015 ONSC 3114, [2015] O.J. No. 2484, at para. 7. The Firm contends
    that an order dismissing a motion to remove a solicitor of record is
    interlocutory in nature.

[13]

Second, if the order is
    a final one, then the Firm argues the Costs Order constitutes a single
    payment order for less than $50,000, within the meaning of
CJA
ss.
    19(1)(a) and 19(1.2)(a). Since the Costs Order was for $40,000, an appeal (or request
    for leave to appeal) lies to the Divisional Court.

[14]

If the Firm is correct
    on either ground, then I lack the jurisdiction to make any order. In this
    court, decisions on jurisdictional questions are generally made by a panel of
    three judges, not by a single judge sitting in Chambers.

[15]

Consequently, I direct
    that this motion in writing be placed before a panel of three judges for
    consideration.

David
    Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sewbans v. Sewbans, 2020 ONCA 559

DATE: 20200904

DOCKET: C67030

van Rensburg, Pardu and Huscroft JJ.A.

BETWEEN

Fameeda Sewbans

Applicant (Respondent)

and

Sylvan Sewbans

Respondent (Appellant)

Sylvan Sewbans, acting in person

Sukhjinder Bhangu, for the respondent

Heard: September 1, 2020 by videoconference

On appeal from the order of Justice Judy A. Fowler Byrne
    of the Superior Court of Justice, dated May 24, 2019.

REASONS FOR DECISION

[1]

This is an appeal of certain aspects of a final order made after the
    trial of matrimonial proceedings. We dismissed the appeal, with reasons to
    follow. These are our reasons.

[2]

The appellant and the respondent married in 1989. They have two
    children, one of whom was no longer a child of the marriage at the time of
    trial. In August 2014, the parties separated, but continued to live separately
    at the matrimonial home until that propertys sale in February 2015. In April
    2015, the parties signed a separation agreement purporting to deal with support
    obligations and property issues. The separation agreement provided for child
    support obligations, a waiver of spousal support for both parties and the
    requirement that the respondent transfer her interest in an investment property
    to the appellant. The parties continued to cohabit at a rented property until
    November 2015, at which point the respondent moved out with the children.

[3]

At the trial in January 2019 there were five issues: (1) whether the
    separation agreement was enforceable; (2) what retroactive and ongoing child
    support was owed by the appellant to the respondent; (3) whether the appellant
    owed any retroactive and/or ongoing spousal support to the respondent; (4)
    whether an equalization payment was owed by one party to the other; and (5) the
    post-separation adjustments, if any, to be made to the equalization payment.

[4]

After concluding that the separation agreement was not enforceable (a
    finding that was not challenged on appeal), the trial judge ordered that the
    appellant pay the respondent: (i) $47,075 in spousal support arrears; (ii)
    $10,741.60 in child support arrears and $1,798.47 for s. 7 expenses under the
Child
    Support Guidelines
, O. Reg. 391/97; (iii) ongoing child support of $556
    per month for one child; (iv) ongoing spousal support of $311 per month; and
    (v) an equalization payment of $255,819.23, accounting for all post-separation
    adjustments. The application judge ordered that substantially all of the
    equalization payment and spousal and child support arrears be satisfied by
    transferring an investment property from the appellant to the respondent.

[5]

The appellant raised three issues on appeal.

[6]

First, the appellant asserted that the trial judge erred by failing to
    grant his request that the trial be adjourned for three weeks because he had
    consulted with a lawyer who could not be prepared for trial on short notice. He
    submitted that if he had the benefit of counsel either to represent him or to
    give him advice, he would have been better equipped to assemble his evidence
    and to advance his interests at trial.

[7]

This argument must be rejected. The trial judge carefully considered the
    relevant circumstances, including that the appellant had known about the trial
    date for six months, that he was aware that his former counsel would no longer
    be acting for him more than two months earlier, that he had contacted the
    lawyer he wished to retain only the day before the trial was to commence, and
    that, because of the trial list, any adjournment would mean that the trial
    would not be heard for approximately one year. A review of the record discloses
    that the appellant, notwithstanding that he represented himself at trial,
    brought forward appropriate documents, testified, called and cross-examined
    witnesses, and made submissions. The trial judge, in refusing an adjournment,
    took into account the relevant considerations in balancing the competing
    interests and made a decision that was in keeping with the interests of
    justice. As such, there is no basis to interfere: see
Toronto-Dominion Bank
    v. Hylton
, 2010 ONCA 752, 270 O.A.C. 98, at para. 36.

[8]

As his second ground of appeal the appellant submitted that the trial
    judge misapprehended the evidence when she determined child and spousal support.
    The appellant made two arguments here: he asserted that the trial judge relied
    on hearsay to conclude that he had a college education, when in fact he
    attended a retraining course after suffering a workplace injury, and he claimed
    that the trial judge erred in her assessment of the evidence when she refused
    to impute income to the respondent based on her ability to run a home daycare.

[9]

On the first point, the trial judge reasonably concluded on the evidence
    before her that the appellant had a college education. The respondent testified
    that when they married, she was working while the appellant was attending
    college, and the appellant did not challenge this evidence in his own
    testimony. The appellant testified that he had attended the Toronto School of
    Business for retraining, after a workplace accident. In any event, whether the
    appellants return to school for retraining was part of a college program, or
    not, the trial judges conclusion that the respondent was entitled to spousal
    support and her imputation of income to the appellant were fully supported by
    the evidence. The appellants opportunity to pursue further education, while
    the respondent did not, was only one of a number of factors taken into
    consideration by the trial judge in concluding that the respondent was entitled
    to spousal support on both a compensatory and non-compensatory basis. And, in
    imputing income to the appellant, who was not working at the time of the trial,
    the trial judge referred to a number of factors apart from the appellants
    education: his age, health, work and earnings history, as well as his spending
    habits. Whether or not the appellant had a college education, in the sense of
    having earned a college diploma, was not the issue; rather the appellant, until
    2017, had a long track record of gainful employment that was indicative of his
    income-earning capacity, and the trial judge reasonably concluded that, relying
    on his savings, investments, and a disproportionately large share of the
    marital assets, the appellant had not made sufficient efforts to become
    re-employed.

[10]

As
    for the refusal to impute income to the respondent with respect to a home
    daycare, the trial judge carefully reviewed the evidence brought forward by
    both parties on this issue. She concluded that the appellant had failed to
    establish that the respondent could earn more running a home daycare than in her
    employment outside the home. Moreover, the trial judge observed that the house
    in which the respondent had been operating a home daycare at the date of
    separation had been sold, and she was living in rented accommodation after the
    house had been sold, where it was unlikely she would be permitted to operate a
    home daycare. There was no error in the trial judges determination that
    support should be based on the respondents actual income from employment
    (which was $33,600 in 2018), rather than an imputed amount as proposed by the
    appellant.

[11]

Finally,
    the appellant asked that this court order a new trial so that he can put
    forward additional evidence both on the issue of imputing income to the
    respondent, and on the question of the disposition of the proceeds of the
    matrimonial home, which is relevant to equalization. A new trial can be ordered
    when an appeal is allowed and the court is satisfied that some substantial wrong
    or miscarriage of justice has occurred:
Courts of Justice Act
, R.S.O.
    1990, c. C.43, s. 134.

[12]

We
    are not prepared to order a new trial. All of the issues that had to be
    determined in the parties matrimonial proceedings were addressed during the
    five-day trial, with evidence and argument. As noted, the trial judge made a
    reasonable assessment of the respondents earning capacity based on the
    evidence of the parties and other witnesses. As for the proceeds of the
    matrimonial home, which the appellant retained after its sale, the trial judge
    deducted the amounts the appellant paid for the parties joint debt and their
    daughters student loans, and she noted that the appellant had acknowledged
    keeping the balance and depositing around $113,000 into his RRSP or trading
    account. Her treatment of the matrimonial home proceeds was fully supported by
    the evidence; indeed the appellant did not argue on appeal that the trial judge
    misapprehended or overlooked evidence on this issue. It is too late for the
    appellant, now, to assert that, if given the opportunity, he could bring
    forward more or different evidence respecting the respondents income or his disposition
    of the proceeds of sale of the matrimonial home.

[13]

For
    these reasons the appeal was dismissed. Costs to the respondent fixed at
    $5,000, inclusive of applicable taxes and disbursements.

K. van Rensburg J.A.

G. Pardu J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sky Clean Energy Ltd. (Sky Solar
    (Canada) Ltd.) v. Economical Mutual Insurance Company, 2020 ONCA 558

DATE: 20200909

DOCKET: C67289

Strathy C.J.O., Lauwers and van
    Rensburg JJ.A.

BETWEEN

Sky Clean Energy Ltd
., formerly

known as Sky Solar (Canada) Ltd.

Plaintiff (Appellant)

and

Economical Mutual Insurance Company
and

Firstbrook, Cassie & Anderson Limited

Defendants (
Respondent
)

Rebecca Huang, for the appellant

Marcus B. Snowden and Pearl Rombis, for
    the respondent

Heard: June 4, 2020 by video conference

On appeal from the judgment of Justice
    Peter J. Cavanagh of the Superior Court of Justice, dated July 9, 2019, and
    from the costs order, dated October 9, 2019, with reasons reported at 2019 ONSC
    4165 and 2019 ONSC 5835.

Strathy C.J.O.:

[1]

This appeal concerns a form of insurance commonly
    used in the construction industry. It permits a contractor to add the project
    owner as an additional insured under its liability insurance policy, to cover
    the owners liability arising out of the operations of the contractor. This
    appeal focuses on the requisite connection between the contractors operations
    and the owners liability.

A.

OVERVIEW

[2]

The following overview will provide context to
    the issues. I will add detail later, as required.

[3]

The appellant, Sky Clean Energy Ltd. (Sky), is
    a developer of solar energy projects, including rooftop solar systems that
    supply electricity to the power grid. Marnoch Electrical Services Inc.
    (Marnoch) is an electrical contracting company. Sky entered into contracts
    with Marnoch for the construction of two such projects. On completion of the
    projects, Sky sold them to Firelight Solar Limited Partnership (Firelight).

[4]

Under these contracts, Marnoch agreed to
    indemnify Sky against Marnochs failure to perform its contractual obligations
    and for the negligent acts of Marnoch, its subcontractors, or other parties for
    whom it was liable. Marnoch also agreed to name Sky as an insured under its comprehensive
    general liability insurance policy with the respondent, Economical Mutual
    Insurance Company (Economical), but only with respect to liability, other
    than legal liability arising out of [Skys] sole negligence, arising out of the
    operations of [Marnoch] with regard to the
Work
. Marnochs insurance
    broker, Firstbrook, Cassie & Anderson Ltd. (FCA), issued two insurance
    certificates to Sky, confirming that it was entitled to coverage pursuant to an
    Additional Insured Endorsement under Marnochs commercial general liability
    policy. That endorsement provided that Marnochs liability insurance applied to
    Sky but only with respect to liability arising out of the operations of
    [Marnoch].

[5]

Fires occurred at both installations. They
    originated in the electrical transformers and resulted in damages to both
    transformers. A third transformer, identical to the other two, was replaced
    because it was considered to be too great a risk to remain in service. As a
    result of these events, Sky incurred liabilities to Firelight for remediation
    costs and loss of revenue. It settled with Firelight and then sought to recover
    those damages, first against Marnoch, then against Economical.

[6]

Sky commenced an arbitration against Marnoch, as
    required by their contract. The claim was based on both the contractual
    indemnity and on warranties given by Marnoch. The arbitrator, C.C. Lax, Q.C.,
    dismissed Skys claims. He found that the transformers had been selected by Sky
    and that Marnoch had played no role in the choice of either the supplier of the
    transformers or the transformers themselves: Marnochs role was simply to
    implement Skys decision. The arbitrator dismissed Skys warranty claims for
    similar reasons: Sky did not rely on Marnochs skill and judgment with respect
    to the suitability of the transformers and Sky cannot hold Marnoch responsible
    or liable for the consequences of Skys own decisions. An appeal to the
    Superior Court from the arbitration award was dismissed:
Sky Solar (Canada)
    Ltd. v. Marnoch Electrical Services Inc.
, 2016 ONSC 1295.

[7]

Sky then commenced this action against
    Economical and against Marnochs insurance broker, FCA. To simplify the
    proceedings, the parties agreed that the findings of fact made by the arbitrator
    would be binding on the trial judge. After a ten-day trial, the trial judge
    dismissed the claim against FCA, an order Sky does not appeal.

[8]

The trial judge also dismissed Skys claim
    against Economical. I will explain his reasons, with which I am in substantial
    agreement, in the "Analysis section, below. In summary, he found that the
    design of the solar systems, including the wiring and the choice of equipment,
    were Skys responsibility. Marnoch played no role in the decisions to purchase
    or install the transformers used at the two project locations. He concluded that
    Skys liability did not arise out of the operations of Marnoch.

[9]

The trial judge also found that Sky had breached
    Condition Four of the insurance policy by settling with Firelight without Economicals
    consent and that Sky was not entitled to relief from forfeiture. Finally, the
    trial judge dismissed Skys claim against Economical for punitive damages for
    breach of the duty of good faith.

B.

ISSUES ON APPEAL

[10]

Sky raises the following grounds of appeal:

(1)

the trial judge erred in interpreting the
    insurance policy and in finding that Skys liability did not arise out of the
    operations of Marnoch;

(2)

the trial judge erred in finding that Skys claim
    was barred by a breach of Condition Four of the policy or, alternatively, in
    failing to grant relief from forfeiture;

(3)

the trial judge erred in finding that Economical
    had not breached its duty of good faith and declining to award punitive damages;
    and

(4)

the trial judge erred in awarding excessive costs.

[11]

For the reasons that follow, I would dismiss the
    first ground of appeal. Given my conclusion on the first ground, it is not
    necessary to consider the second ground. I would also dismiss the third ground.
    Finally, I would not grant leave to appeal costs.

C.

ANALYSIS

(1)

First issue: Did the trial judge err in
    interpreting the insurance policy and in finding that Skys liability did not
    arise out of the operations of Marnoch?

[12]

The analysis of this issue requires a more
    detailed explanation of the events giving rise to Skys claim under Economicals
    insurance policy and an examination of the relevant provisions of both the policy
    and the construction contract.

(a)

The events giving rise to Skys claim

[13]

In 2010, Sky entered into contracts with Ontario
    Power Authority to provide electricity generated by rooftop solar projects to
    be constructed on two buildings, one on Whybank Street in Brampton, Ontario
    (Whybank) and the other on Manchester Street in Bolton, Ontario
    (Manchester).

[14]

In February and April 2012, Sky contracted with
    Marnoch to construct the two projects.

[15]

In November and December 2012, Sky transferred
    ownership of the projects to Firelight. The sale agreements contained
    warranties and indemnities given by Sky to Firelight. The agreements also
    assigned to Firelight the benefits of the warranties given by Marnoch to Sky in
    the construction contracts.

[16]

In explaining the events giving rise to the
    claim, the trial judge set out the findings of the arbitrator at para. 48 of
    his reasons. I will summarize those findings, borrowing from the arbitrators
    language.

[17]

The initial scope of Marnochs work under the
    two contracts was limited to the installation of a solar power system that had
    been designed by Sky using equipment that had been selected and sourced by Sky.
    Sky contracted with equipment suppliers to provide the main components for the
    system, including two critical components, the inverter and the transformer. It
    was Marnochs responsibility to install the components in the projects.

[18]

Whybank was the first of the two sites to be prepared
    for construction. Before commencing the installation, Marnochs foreman noticed
    that the transformer delivered to the site by Skys supplier did not conform to
    the design parameters specified in Sky's drawing.

[19]

The delivery of the wrong type of transformer to
    Whybank (with another scheduled for delivery to Manchester) threatened the
    construction schedules for both projects. The manufacturer advised that it
    would need approximately six weeks to build the appropriate transformer. The delay
    was unacceptable to Sky, which had sold the projects and their income streams
    to Firelight and was anxious to get them operating.

[20]

Faced with the risk of a significant delay, Sky asked
    Marnoch for assistance in sourcing replacement transformers for the two project
    locations.

[21]

While not contractually obligated to source the
    transformers, Marnoch agreed to ask its own equipment supplier to search for a
    suitable replacement. Sky provided Marnoch with the technical description of
    the correct transformer and with this information in hand, Marnochs supplier
    located a transformer manufactured by Marcus Transformers of Canada Ltd.
    ("Marcus"). Marcus could deliver a transformer that met Sky's
    specifications within five days of receipt of approved shop drawings.

[22]

It was Skys decision whether or not to accept
    the Marcus transformer. Marnoch was not asked for its opinion on the
    suitability of the Marcus transformer, nor did it have the technical expertise
    to make that assessment. Marnoch was neither an electrical engineer nor an
    electrical consultant, but an electrical contractor with considerable
    experience as an installer, trying to assist its client, Sky, out of a jam that
    Marnoch had no role in creating.

[23]

Sky confirmed its approval of the Marcus
    transformer for the Whybank and Manchester projects, and the construction
    contracts for both projects were amended to provide for the supply and
    installation of the Marcus transformers by Marnoch.

[24]

The Whybank project was the first to be
    completed. It was connected and energized on August 16, 2012. As the arbitrator
    noted, when that occurred, representatives of Sky and its supplier witnessed
    what should have been a disturbing phenomenon. The Marnoch electrician at the
    site recorded that with no power flowing from the solar panels, the transformer
    was still drawing power. This could only have originated from the hydroelectric
    grid. The Marnoch electrician suggested to the Sky representative that the
    system should be shut down until a satisfactory explanation for the anomaly
    could be determined. But the Sky representative, apparently concerned about the
    loss of revenue if the system were shut down, decided to leave the system
    energized for observation and Sky formally took over control of the facility
    from Marnoch.

[25]

Unfortunately, three days later, the transformer
    overheated and burned.

[26]

The arbitrator found that the Whybank fire was
    due to Skys decision to leave the system energized. Marnoch was contractually
    responsible to indemnify Sky for Marnochs own negligence and for the
    negligence of any other party for whom Marnoch might be liable. But Marnoch was
    not required to indemnify Sky for matters that were not within Marnochs
    control or for which it was not responsible. It was not required to indemnify
    Sky for Skys own foolhardy decision.

[27]

After investigating the Whybank fire, Sky
    determined that the Marcus transformer was suitable for the projects, as long
    as a technical adjustment was made to one of its connections. Sky approved a
    change order to authorize Marnoch to replace the Whybank transformer with
    another Marcus transformer. Marnoch also supplied and installed a Marcus
    transformer at the Manchester project.

[28]

The Manchester project was completed in October
    2012. In November and December 2012, Sky transferred ownership of the Whybank
    and Manchester projects to Firelight.

[29]

On March 14, 2013, after the transfer to
    Firelight, a fire broke out at the Manchester project and the transformer was
    destroyed. As a result, the two systems were temporarily shut down for
    investigation and repair. Sky decided to use another manufacturer to provide
    replacement transformers at both sites and retained Marnoch to undertake the
    work.

[30]

Firelight made claims against Sky for lost
    revenues due to the shut downs at the projects and for remediation costs. Sky
    agreed to pay for the remediation costs and loss of revenue, in the total
    amount of $591,596.22. Firelight then reassigned its warranty claims against
    Marnoch to Sky. Skys claim against Economical in this action includes the amounts
    it paid to settle Firelights claim.

[31]

Sky then commenced arbitration against Marnoch
    for indemnity under the construction contracts, as well as pursuant to
    Marnochs warranties. It also commenced a product liability action against the
    manufacturer, Marcus.

[32]

The arbitrator found that the decision to
    acquire the Marcus transformer was solely that of Sky: Marnoch played no role
    in the decision to initially purchase the Marcus transformer for Whybank, or in
    the subsequent decision to use the Marcus transformers at Manchester and as the
    replacement at Whybank. Marnochs role was simply to implement Skys decision.
    Merely implementing Skys choice of the Marcus transformer did not make Marcus
    a supplier of Marnoch within the meaning of the construction contract, nor
    could any alleged negligence of Marcus be imputed to Marnoch. The arbitrator
    dismissed Skys claim against Marnoch, concluding: Sky cannot hold Marnoch
    responsible or liable for the consequences of Skys own decisions. The
    arbitrator made no finding concerning the cause of the March 14, 2013 fire at
    Manchester.

[33]

There was no evidence before the trial judge
    concerning the outcome of Skys action against Marcus.

(b)

The contractual provisions

[34]

The construction contracts between Sky and
    Marnoch for the Whybank and Manchester projects were stipulated price contracts,
    based on the standard CCDC2 form of the Canadian Construction Documents Committee,
    with some modifications.

[35]

The parties amended the standard indemnification
    clause in the CCDC2 form, clause 12.1.1, to provide as follows:

Contractor shall defend, indemnify and hold
    harmless the Owner  against any suits, claims, damages, losses, liabilities,
    judgments, costs, or expenses  caused by (i) the Contractors failure to
    perform its obligations under this Agreement or (ii) the negligent acts or omissions
    of Contractor, its employees, agents, Subcontractors, Sub-subcontractors, or
    suppliers
or any other party for whom the Contractor may
    be liable
, in the Contractors performance of the Work under this
    Agreement, provided that such Loss results from bodily injury, sickness,
    disease or death or damage to property, including loss of use resulting
    therefrom. [Emphasis added.]

[36]

As the arbitrator noted, the inclusion of the words
    for whom the Contractor may be liable suggests that there could be suppliers
    for whom Marnoch may not be liable, otherwise the agreement would simply have
    referred to all suppliers.

[37]

Marnoch also issued written warranties to Sky on
    June 6, 2012, warranting materials and labour required to replace or repair any
    faulty electrical material due to the manufacturers defects or caused by
    defective installation by Marnoch.

[38]

In addition to the indemnity in clause 12, the CCDC2
    contract provided, in clause 11.1.1, that Marnoch was required to provide,
    maintain and pay for various types of insurance, as set out in another CCDC
    standard form (Form CCDC 41, Insurance Requirements), including:

General liability insurance in the name of the
    Contractor and include, or in the case of a single, blanket policy, be endorsed
    to name, the
Owner
and the
Consultant
as insureds but
only with respect to liability, other than legal liability
    arising out of their sole negligence, arising out of the operations of the
Contractor
with regard to the
Work
.
    [Italics in original; underlining added.]

(c)

The insurance provisions

[39]

Economical issued an Expert Contractors Policy
    to Marnoch on September 20, 2011, providing, among other things, commercial
    general liability coverage for the period in question.

[40]

Subsequently, FCA, as it had been authorized by
    Economical to do, issued two certificates of insurance to Sky, one dated
    January 30, 2012 and the other September 19, 2012. The certificates identified
    the insurance policies issued by Economical to Marnoch, including a commercial
    general liability policy with limits of $5 million per occurrence. They also identified
    Sky as an additional insured under that policy. Economical acknowledges that
    Sky was entitled to coverage pursuant to an Additional Insured Endorsement to
    the policy, which provided that:

This insurance applies to those stated on the
    Declaration as Additional Insureds but only with respect to
liability

arising out of the
    operations of the Named Insured
. [Emphasis added.]

[41]

This endorsement did not precisely track the
    language of clause 11.1.1 of the CCDC2 contract, as it omitted the
    qualification, other than legal liability arising out of [Skys] sole
    negligence.

[42]

Policy Condition Four required that the insurer
    be given prompt notice of any claim and prohibited the insured from voluntarily
    making a payment, assuming any obligation, or incurring any expense, except
    with the insurers consent. Economical claimed Sky breached this condition by
    settling Firelights claim against it without Economicals consent.

(d)

The trial judges reasons

[43]

The trial judge observed that the arbitrator
    made no findings as to the cause of the March 14, 2013 fire at Manchester,
    noting that Marcus was not a party to the arbitration and that, in its absence,
    the arbitrator was unable to determine ultimate responsibility. However, both
    parties adduced expert evidence on the issue at trial. Skys expert concluded
    that the Marcus transformer had an inherent defect, while Economicals expert
    opined that it was unreliable and inappropriate for use in the solar power
    systems at issue. The trial judge held that it was unnecessary to determine the
    precise cause, as it was sufficient to simply conclude that the fire was caused
    by a failure of the Marcus transformer.

[44]

The trial judge noted that Sky had the burden of
    proving that its liability to Firelight fell within the coverage for liability
    arising out of the operations of the Named Insured in the Additional Insured
    Endorsement. He accepted that this language must be read broadly. Coverage
    under the Additional Insured Endorsement was not limited to Skys vicarious
    liability arising from the negligence of Marnoch.

[45]

Referring to other decisions involving
    additional insured coverage, he observed, at para. 70 of the reasons, that the
    degree of proximity between the event giving rise to the liability of the
    additional insured and the operations of the named insured falls along a
    spectrum: referring to
Waterloo (City) v. Economical Mutual Insurance Co.,
2006 CanLII 43498 (Ont. S.C.);
Great Atlantic & Pacific Co. of Canada
    Ltd. v. Economical Mutual Insurance Co.
, 2013 ONSC 7200, 28 C.C.L.I. (5th)
    191, affd 2014 ONCA 350;
Oliveira v. Aviva Canada Inc.
, 2017 ONSC
    6161, 139 O.R. (3d) 618, affd 2018 ONCA 321, 79 C.C.L.I. (5th) 65; and
Vernon
    Vipers Hockey Club v. Canadian Recreation Excellence (Vernon) Corp.
, 2012
    BCCA 291, 352 D.L.R. 57.

[46]

Referring specifically to
Vernon
, the
    trial judge noted that arising out of means more than simply a but for test
    and requires an unbroken chain of causation and a connection that is more
    than merely incidental or fortuitous. As I will explain below, at para. 79,
    the determination of causation in the insurance coverage context sometimes differs
    from its determination in negligence. While the terminology is sometimes
    common, its application is not necessarily so.

[47]

Applying this test, he found that:

·

the scope of Marnochs operations included
    ordering, supplying and installing the Marcus transformers, which had been
    selected by Sky, in accordance with Skys directions;

·

after the fire at Whybank, Sky made the decision
    to continue to use the Marcus transformers and this decision was not part of
    Marnoch's operations;

·

the failure of the Marcus transformer at
    Manchester and the fire on March 14, 2013 was not caused by any decision taken
    by Marnoch in the course of its operations or by any action of Marnoch in the
    discharge of its contractual obligations;

·

the event that gave rise to Skys liability to
    Firelight was Skys decision to continue to use the Marcus transformer at the
    Whybank and Manchester locations after the Whybank fire, a decision in which
    Marnoch had no involvement;

·

the fact that the Manchester fire would not have
    occurred but for the installation of the Marcus transformer, was not, in
    itself, sufficient to establish that Skys liability to Firelight was liability
    arising out of the operations of Marnoch; and

·

there was insufficient proximity between Skys
    decision to continue to use the Marcus transformer and the failure on March 14,
    2013, on the one hand, and Marnoch's operational actions to order and install
    the Marcus transformer, on the other hand, to allow him to conclude that Skys liability
    to Firelight arose out of Marnoch's operations.

[48]

The trial judge thus found that the fact that
    the Manchester fire would not have occurred but for the installation of the
    Marcus transformer was not, in itself, sufficient to establish that Skys
    liability to Firelight arose out of Marnochs operations. Using the language of
    the British Columbia Court of Appeal in
Vernon
, he found that
    Marnochs connection with the failure of the Marcus transformer and the fire at
    the Manchester location on March 14, 2013 was merely incidental. Sky had
    failed to establish that its liability to Firelight fell within the grant of
    coverage under the Additional Insured Endorsement.

[49]

Although not required to do so in light of this
    conclusion, the trial judge went on to find that, in any event, Sky had
    breached Condition Four of the policy by admitting liability to Firelight,
    settling Firelights claim, and voluntarily paying its remediation costs and
    loss of revenue without Economicals consent. He also found that Sky was not
    entitled to relief from forfeiture, under either s. 98 of the
Courts of
    Justice Act
, R.S.O. 1990, c. C.43 (the
CJA
) or s. 129 of the
Insurance
    Act
, R.S.O. 1990, c. I.8. Even if Sky were entitled to coverage under the Additional
    Insured Endorsement, it had breached Condition Four and was not entitled to
    coverage.

[50]

The trial judge also dismissed Skys claim for
    breach of the duty of good faith in the investigation and assessment of the
    claim.

[51]

He also dismissed Skys claim against Marnochs
    broker, FCA.

(e)

Analysis

(1)

Standard of review

[52]

This appeal focuses on the interpretation of the
    words arising out of the operations in the Additional Insured Endorsement.
    This language is a common feature of insurance arrangements in construction and
    other businesses. Such contracts are usually in the insurers standard form and
    are generally not negotiated. In this case, the contractual matrix between Sky
    and Marnoch did not play a role in the formation of the insurance contract.

[53]

The interpretation of the standard form contract
    is a question of law and is subject to a correctness standard of review:
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC 37,
    [2016] 2 S.C.R. 23, at para. 4. The interests of certainty and predictability require
    that such policies be interpreted consistently:
Co-operators Life Insurance
    Co. v. Gibbens
, 2009 SCC 59, [2009] 3 S.C.R. 605, at para. 27;
Progressive
    Homes Ltd. v. Lombard General Insurance Co. of Canada
, 2010 SCC 33, [2010]
    2 S.C.R. 245, at para. 23.

(2)

Principles of interpretation

[54]

The principles of interpretation applicable to
    insurance policies are well settled. The primary principle is that when the
    language of the policy is unambiguous, the court should give effect to its
    clear language, reading the policy as a whole:
Progressive Homes
, at
    para. 22, referring to
Non-Marine Underwriters
,
Lloyds of London
    v. Scalera
, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 71.

[55]

Where the policy language is ambiguous, the general
    rules of contract interpretation provide guidance, including the rule that
    effect should be given to the reasonable expectations of the parties, as long
    as the interpretation is supported by the text of the policy:
Progressive
    Homes
, at para. 23. Similar insurance policies should be construed
    consistently. These rules should be applied to resolve an ambiguity, not to
    create one.

[56]

Where ambiguity remains after the application of
    these rules, the
contra proferentem
rule applies to construe the
    policy against the maker, the insurer. This gives rise to the precept that
    coverage provisions are interpreted broadly and exclusion clauses narrowly:
Progressive
    Homes
, at para. 24.

(3)

The context  the CCDC2 construction contract

[57]

While the insurance contract at issue was not
    the product of negotiation, it is appropriate to consider the commercial
    setting in which it was procured  pursuant to the contractors obligations
    under the CCDC2 form, a construction contract in wide use.

[58]

As noted above, the CCDC2 form contains both an
    insurance clause (clause 11) and an indemnification clause (clause 12). Clause
    11 requires the contractor to provide, among other things, general liability
    insurance, but only with respect to liability, other than legal liability
    arising out of [the Owners] sole negligence, arising out of the operations of
    the
Contractor
with regard to the
Work
. That clause
    contemplates that the contractors policy will be endorsed to name the owner as
    an additional insured under the policy.

[59]

Clause 12, specifically clause 12.1.1, contains
    a reciprocal indemnity against losses suffered by either party and against
    claims by third parties that arise out of, or are attributable in any respect
    to their involvement as parties to this
Contract
, provided that the
    claims are caused by: (1) the negligent acts or omissions of the other party or
    anyone for whose acts that party is liable; or (2) a failure of the other party
    to fulfill the terms of the contract.

[60]

In the present case, Marnoch and Sky modified
    clause 12.1.1, such that it was only the contractor, Marnoch, which was
    required to indemnify the owner, Sky, provided that the liability was caused by
    Marnochs failure to perform its obligations under the agreement, its own
    negligence, or the negligence for those whom they were liable.

[61]

In the case of losses that are covered by the
    insurance required by clause 11, clause 12.1.2.1 limits the indemnity
    obligation. In these circumstances, the indemnity obligation is limited to the
    amount of the insurance referred to in the CCDC41 form at the time of bid
    closing. Where clause 11 insurance applies, the insurance serves, in part, as a
    backstop to the contractors contractual commitment in clause 12 to indemnify
    the owner against losses or third party claims.

[62]

The inclusion of the owner under the
    contractors commercial general liability policy is an efficient and
    cost-effective way of allocating risks that arise out of the contractors
    operations under the contract. Being named as an additional insured allows the
    owner to claim under the insurance policy irrespective of the contractors
    potential breach of the policy conditions: D. Cheifetz & W.T. McGrenere,
    Aspects of Commercial Insurance in
Insurance Law: Special Lectures of the
    Law Society of Upper Canada
(Don Mills, Ont.: Richard De Boo Publishers,
    1987) 43, at p. 48. This is accomplished through a separation of interests
    clause or severability of interest clause, as there was in this case,
    providing that the insurance applies as if each named insured were the only
    named insured.

[63]

If a third party claim arises, the owner can
    obtain a defence and indemnity under the contractors policy, eliminating the
    need to claim under its own liability insurance. Both parties can be defended
    by the same insurer against third party claims arising out of the contractors
    operations. This avoids disputes and potential litigation between the owner and
    the contractor and allows them to proceed with the construction work without
    interruption or disruption of their commercial relationship.

(4)

Additional insured coverage

[64]

It is common for additional insureds to be added
    by an endorsement to the policy, setting out the risks for which the additional
    insured is covered: Gordon Hilliker,
Liability Insurance Law in Canada
,
    6th ed., (Markham, Ont.: LexisNexis Canada Inc., 2019), at
para.
6.34. When this occurs, the broker may
    issue a certificate of insurance to the additional insured. But the certificate
    is typically evidence of the policy only. The actual terms of the policy
    govern: Hilliker, at
para. 6.36.

(a)

The relationship between the named insured, additional insured, and
    insurer

[65]

As between the additional insured and the
    insurer, it is the language of the insurance policy that governs. If that
    coverage is not as broad as what the contract called for, the owners remedy
    may be against the contractor, either for indemnity under the contract or for
    breach of the contractual promise to obtain the specified coverage.

[66]

The appellant submits that the trial judge erred
    in his interpretation of the policy by failing to consider the language of the
    insurance provision in clause 11 of the underlying CCDC2 contract, which
    referred to liability, other than legal liability arising out of their sole
    negligence, arising out of the operations of the
Contractor
with
    regard to the
Work
. Work is a defined term under the CCDC2 contract
    and means the total construction and related services required by the contract
    documents. Specifically, the appellant argues that since the CCDC2 only carved
    out liability arising out of the owners sole negligence and Sky has not been
    found negligent, there must be coverage.

[67]

Similar arguments are made by Mark G. Lichty and
    Marcus B. Snowden in
Annotated Commercial General Liability Policy
, loose-leaf
    (Aurora, Ont.: Canada Law Books, 2019) who state at
para.
    35:20.7(2)
:

Where parties have agreed to a form of risk
    transfer through an insurance clause and for other methods in an underlying
    contract, it is necessarily the underlying contract which best discloses the
    insuring intent, not the policy wording.

[68]

While this statement may be true as between the
    owner and the contractor, the insurer is not privy to the construction
    contract. It typically does not know what the particular parties agreed to and does
    not underwrite different risks with each new contract entered into by its
    insured. While an insurer could, if asked to do so, create bespoke language to
    reflect the insureds contractual undertaking in a particular case, there is no
    evidence it was requested here. It follows that I reject the appellants
    submission that the language of the contract between Sky and Marnoch should
    affect the interpretation of Economicals policy, other than to explain the
    commercial context.

[69]

That said, the Additional Insured Endorsement in
    the present case does provide insurance with respect to liability arising out
    of the
operations
of the named insured. The
    contractors contractual obligations, including the scope of the work, are part
    of the inquiry into whether the owners liability arises out of the
    contractors operations. The work the contractor actually performs or is
    alleged to have failed to perform, may also be part of that inquiry.

(b)

Common conflicts arising from additional insured endorsements

[70]

The reported cases demonstrate that contractual
    insurance obligations and additional insured endorsements are a frequent source
    of litigation between owners, contractors, and their insurers.

[71]

Conflicts may occur because the contractor
    obtained insurance that does not track the language of the contractual
    indemnity. The wording of the insurance policy may either be broader or more
    restrictive than what the contractor agreed to obtain. Another source of
    conflict may arise when the additional insured fails to obtain and read the
    policy of insurance and simply relies on the receipt of the insurance
    certificate, which simply confirms that the contractor has insurance without
    providing evidence of the terms that protect the owner. An owner who expects to
    be an additional insured should obtain a copy of the insurance policy and the
    endorsement to ensure that the appropriate coverage has been obtained: Cheifetz
    and McGrenere, at p. 48. And if a potential claim arises, the owner should
    ensure that it complies with the policys requirements.

[72]

Disputes have also frequently arisen because of
    uncertainty concerning the requisite connection between the liability incurred
    by the owner and the operations of the contractor in the additional insured
    endorsement. I turn to that issue, which is at the core of this appeal.

(5)

Arising out of the operations

[73]

The appellant submits that the trial judge
    adopted an unduly narrow construction of the words arising out of the
    operations and that his interpretation is out of step with Ontario precedent in
    cases such as
Waterloo, Great Atlantic
, and
Oliveira
. It
    submits that the trial judge erred in finding that Skys approval of the Marcus
    transformer took Skys liability to Firelight outside the scope of coverage.

[74]

For the reasons that follow, I do not accept
    this submission. First, the trial judge applied the correct approach to the
    issue of whether Skys liability to Firelight arose out of the operations of
    Marnoch. He properly followed the approach set out by Finch C.J.B.C. in
Vernon
,
    which I respectfully agree with and adopt. Second, the cases relied upon by the
    appellant are consistent with the trial judges conclusion.

(a)

The approach in
Vernon

[75]

In
Vernon
, the plaintiff had attended
    the Multiplex arena in Vernon, British Columbia to watch a hockey game. The
    game was hosted by a hockey club called the Vernon Vipers (the Vipers). The
    plaintiff left the game to buy refreshments at a store across the street. On his
    return, he slipped and fell in what was described as the Boulder Zone, a
    strip of land abutting the arenas parking lot. He sued the owner and the
    manager of the Multiplex facility (the defendants).

[76]

The defendants had been named as additional
    insureds on the Vipers comprehensive liability policy. They brought third party
    proceedings against the Vipers and their liability insurer, contending that
    they were entitled to a legal defence, as well as contribution and indemnity
    for any amounts found owing to the plaintiff, who had not sued the Vipers. The
    defendants argued that the comings and goings of spectators at a hockey game
    were part of the operations of a hockey club. The Vipers and their insurer then
    applied to summarily dismiss the third party proceedings and sought a
    declaration that they had no duty to defend or indemnify.

[77]

The application judge dismissed the claim and the
    Court of Appeal affirmed her decision. Finch C.J.B.C. identified the key issues
    as the same ones in this case: (i) the meaning to be given to arising out of;
    and (ii) the meaning of the word operations in this context.

(i)

Interpreting arising out of

[78]

Finch C.J.B.C. considered several leading Supreme
    Court decisions that interpreted the words arising out of and arising from,
    including:
Amos v. Insurance Corp. of British Columbia
, [1995] 3
    S.C.R. 405;
Lumbermens Mutual Casualty Co. v. Herbison
, 2007 SCC 47,
    [2007] 3 S.C.R. 393; and
Citadel General Assurance Co. v. Vytlingam
,
    2007 SCC 46, [2007] 3 S.C.R. 373. In those cases, the Supreme Court consistently
    interpreted arising from and arising out of to require more than a but
    for connection between the liability of the additional insured and the
    operations of the named insured. While a but for test is necessary, it is not
    sufficient. Specifically, there must be "an unbroken chain of causation
    and a connection that is more than merely incidental or fortuitous. While
    those cases involved automobile insurance legislation, Finch C.J.B.C.
    determined that the words arising from and arising out of should be
    interpreted the same way when they appear in the context of insurance
    contracts, such as additional insured endorsements.

[79]

To be clear, while the language of but for and
    causation originally emerged from the law of negligence, these concepts have
    since developed separately in the context of interpreting insurance coverage. In
    the field of negligence, the but for test of causation is used to determine
    whether the loss suffered occurred as a result of the
wrongdoing
of the defendant:
Clements v. Clements
, 2012 SCC 32, [2012] 2 S.C.R.
    181. But in the insurance interpretation context, fault is not required for
    coverage to be engaged, unless specified in the policy. In fact, many insurance
    policies provide coverage for losses even when no party is identified as being
    at fault, as is the case here.

[80]

I will now explain how these principles were
    developed and how they came to be applied in the context of interpreting insurance
    contracts.

[81]

In
Amos
, the Supreme Court interpreted
    the scope of coverage provided by no-fault motor vehicle insurance, as set out
    in British Columbias insurance legislation. The legislation stipulated that insurance
    benefits would be paid for death or injury caused by an accident that
arises out of
the ownership, use or operation of a vehicle
    (emphasis added). The Supreme Court set out a two-part test for interpreting that
    provision, at para. 17:

1.
Did the accident result from the ordinary and well-known activities
    to which automobiles are put?

2.
Is there
some

nexus or causal
    relationship
(not necessarily a direct or proximate causal relationship)
    between the appellant's injuries and the ownership, use or operation of his
    vehicle, or is the connection between the injuries and the ownership, use or
    operation of the vehicle
merely incidental or fortuitous
? [Underlining
    in original; italics added.]

[82]

The Supreme Court then extended the principles
    set out in
Amos
to two subsequent companion cases involving automobile
    liability insurance:
Herbison
and
Citadel
. In these cases,
    the Supreme Court interpreted s. 239(1)(a) of the Ontario
Insurance Act
,
    R.S.O. 1990, c. I.8, which stipulates that motor vehicle insurance policies will
    cover loss or damage
arising from
the ownership
    or directly or indirectly from the use or operation of any such automobile
    (emphasis added).

[83]

Again, the Supreme Court interpreted arising
    from to mean an unbroken chain of causation, which is more than merely
    incidental or fortuitous:
Citadel
, at para. 12;
Herbison
, at
    para. 12. In
Citadel
, the insured used his vehicle to transport a
    boulder onto a highway overpass, he then dropped the boulder onto oncoming
    traffic. The claimant was struck and injured. In
Herbison
, the insured
    drove his truck to a hunting site. On the way, he got out of the truck to shoot
    what he thought was a deer. Unfortunately, he shot another hunter, who sought
    indemnity from the drivers insurer.

[84]

In both cases, the Supreme Court found that the
    injuries did not arise from the operation of the vehicles. While the vehicles
    were necessary in the but for sense  neither insured would otherwise have
    been at the location of the accident  the injuries arose from other distinct acts.
    In
Citadel
, the injury arose from the insured throwing the boulder,
    and in
Herbison
, the injury resulted from the insured shooting into
    the distance.

[85]

Given the Supreme Courts consistent
    interpretation of arising from and arising out of in this line of authority,
    Finch C.J.B.C. concluded that these words should carry the same meaning,
    regardless of whether they appear in a statute or in a contract. He explained
    that it would not further the objectives of certainty and consistency in the
    law if the terms arising from or arising out of were to carry different
    meanings in analogous circumstances: at para. 42.

[86]

Finch C.J.B.C. went on to consider the diverging
    authorities in the United States, noting that some states found a but for link
    between the liability in question and the named insureds operations to be sufficient,
    while others required a greater connection.

[87]

Having considered both Canadian and American
    authorities, Finch C.J.B.C. concluded that the phrase arising out of imposes a
    greater requirement than a but for test; it should be construed as requiring
    an unbroken chain of causation and a connection that is more than merely
    incidental or fortuitous: at para. 52.

(ii)

The Meaning of Operations

[88]

Finch C.J.B.C. then considered the meaning of
    operations and, at para. 54, found that it is a word of sufficiently broad
    meaning as to include the creation of a situation, or circumstance, that is
    connected in some way to the alleged liability. It does not necessarily imply
    an
active
role by the named insured in creation of
    the liability event (emphasis in original).

[89]

He also explained that operations is broader
    than activities, which was the term used in
Saanich (District) v. Aviva
    Insurance Company of Canada
, 2011 BCCA 391, 23 B.C.L.R. (5th) 272. Specifically,
    [o]perations can include the occupation and use of premises or other passive
    conduct that might not be included within the meaning of the word activities:
    at para. 54.

(iii)

Application to the facts in Vernon

[90]

Applying the test, Finch C.J.B.C., at para. 65,
    determined that the link between the plaintiffs injuries and the hockey clubs
    operations were too tenuous. At most, the hockey clubs operations caused the
    plaintiff to be in a place where, for unrelated reasons, he was injured.

[91]

Overall, the judgment of Finch C.J.B.C. commends
    itself as a thoughtful and comprehensive analysis of the jurisprudence, which
    sets a practical and predictable standard. While it is highly persuasive in its
    own right, I also note the desirability, identified earlier, of consistency in
    the interpretation of standard forms of insurance.

(b)

Ontario precedents are consistent with the trial judges approach

[92]

The approach in
Vernon
, which the trial
    judge adopted, is also consistent with the authorities relied on by the
    appellant. I do not accept the appellants submission that the trial judges
    approach was too narrow and contrary to Ontario precedents, such as: (i)
Waterloo
;
    (ii)
Great Atlantic
; and (iii)
Oliveira
. I will now consider
    each of those cases in turn.

(i)

Waterloo

[93]

In
Waterloo
, the City of Waterloo (the
    City) was named as an additional insured on the commercial general liability
    policy of the operator of an Oktoberfest parade. The plaintiffs were injured
    at a train crossing near where they were watching the parade. The City sought
    an order compelling the insurer to provide a defence to the plaintiffs action.
    The additional insured endorsement provided coverage for the City as an
    additional insured but only with respect to liability arising out of the
    operations of the named insured.

[94]

The court held that there were no factual
    allegations in the pleadings to suggest that the Citys liability arose out
    of the operations of the parade operator, using that term in the sense of
    originating from, growing out of, flowing from, incident to or having
    connection with. The plaintiffs had not even sued the parade operator and the
    parade was only the site or occasion of the plaintiffs accident. The parade
    operators insurer had no duty to defend the City.

[95]

This result is consistent with
Vernon
. At
    its highest, but for the parade, the plaintiffs would not have been standing
    near the railway tracks and the accident would not have happened. This was not,
    however, sufficient. What was lacking was a connection between the operation of
    the parade and the Citys alleged liability to the plaintiffs that was more
    than incidental or fortuitous.

(ii)

Great Atlantic

[96]

In
Great Atlantic
, a grocery store
    customer was injured when she slipped on an allegedly wet floor. The store
    owner had contracted with a janitorial service to wash the floors and keep them
    clean. A&P, the store owner, was added as an additional insured on the
    contractors policy, but only with respect to liability arising out of the
    operations of the Named Insured. The judge described it as a simple slip and
    fall alleged to have occurred as a result of negligent janitorial operations:
    at para. 49. The plaintiff alleged that A&P had breached its obligation to
    keep the floor safe. The trial judge held that the insurer had a duty to defend
    the store owner. The factual allegations of negligence against A&P were in
    respect of unsafe conditions left by the floor-cleaning operator. There were no
    other allegations of negligence against A&P. Therefore, A&Ps liability
    resulted from the contractors alleged failure to perform its contractual
    obligations.

(iii)

Oliveira

[97]

In
Oliveira
, the hospitals insurance
    policy covered employees as additional insureds while acting under the
    direction of the hospital, but only in respect of liability arising from the
    operations of the hospital. A patient brought a claim against a nurse,
    claiming that she had improperly accessed her medical records. The policy in
    question covered claims for invasion of privacy. The nurse sought a declaration
    that the hospitals insurer had a duty to defend. The insurer argued, however,
    that the claim did not arise from the operations of the hospital; rather, it arose
    from the nurse allegedly accessing the medical records of a patient who was not
    under her care. The trial judge found that the policy insured claims for breach
    of privacy and that the collection and maintenance of medical records was part
    of the operations of the hospital. The judge, adopting the definition of
    operations in
Vernon
, found that the insurer had a duty to defend.
    This court affirmed the decision.

[98]

Again,
Oliveira
is a case in which there
    was a clear connection between the plaintiffs allegations against the nurse
    and the hospitals operations, which included the keeping of medical records.
    This connection was bolstered by the terms of the insurance policy, which specifically
    provided coverage for invasions of privacy  the very act that the nurse was
    alleged to have committed.

(c)

The appropriate interpretation of arising out of the operations

[99]

The arising out of the operations issue can be
    addressed by answering the question: why did the additional insureds
    liability arise?

·

In
Great Atlantic
, the claim was a slip
    and fall arising out of the condition of the floor, and the cleaner (the named
    insured) hired by the store owner (the additional insured) did not keep the
    floor clean.

·

In
Oliveira
, the claim was for
    intrusion into the privacy of medical records and the hospital (the named
    insured) collected and maintained records, which the nurse (the additional
    insured) was able to access in the course of her employment.

·

In
Waterloo
, in contrast, the claim against
    the City (the additional insured) was in respect of its failure to keep people
    safe and not in respect of the operation of the parade (the named insured).

[100]

In sum, I agree with the articulation in
Vernon
of the requisite connection between the named insureds operations and the
    liability of the additional insured, in respect of which it seeks insurance
    coverage. It provides certainty and predictability for all parties by requiring
    more than an incidental or fortuitous connection between the liability of the
    additional insured and the named insureds operations. This limitation is
    consistent with both the reasonable expectations of the parties to the
    construction contract and that of their liability insurers.

[101]

To summarize, the phrase arising out of the
    operations requires more than a but for connection between the liability of
    the additional insured and the operations of the named insured. There must be
    "an unbroken chain of causation and a connection that is more than
    merely incidental or fortuitous:
Vernon
, at para. 52. Furthermore,
    the word operations includes the creation of a situation, or circumstance,
    that is connected in some way to the alleged liability. It does not necessarily
    imply an
active
role by the named insured in
    creation of the liability event:
Vernon
, at para. 54.

(6)

Application to this case

[102]

I agree with the trial judge that Marnochs
    connection with the failure of the Marcus transformer was merely incidental. The
    trial judge found that the fire was caused by the failure of the Marcus
    transformer. The fire would not have occurred but for the fact that Marnoch
    ordered and installed the transformers in the course of Marnochs operations
    under its contracts with Sky. But
Vernon
requires a stronger connection.
    Marnochs operations under the contracts did not require it to select the
    transformers to be installed in the projects. That was up to Sky. And Sky chose
    the Marcus transformers that failed.

[103]

Marnochs position in this case is similar to
    that of the hockey club in
Vernon
and of the operators of the
    Oktoberfest parade in
Waterloo
. It was effectively a bystander to the decisions
    of the additional insured. Its operations had a but for connection to Skys
    liability, but nothing more.

[104]

For these reasons, I would not give effect to
    the appeal regarding the first issue.

(2)

Second issue: Did the trial judge err in finding
    that Skys claim was barred by a breach of Condition Four of the policy or,
    alternatively, in failing to grant relief from forfeiture?

[105]

As a result of my conclusion on the first issue,
    it is unnecessary to consider whether the trial judge erred with respect to the
    breach of Condition Four and in denying relief from forfeiture.

(3)

Third issue: Did the trial judge err in finding
    that Economical had not breached its duty of good faith and declining to award
    punitive damages?

[106]

Sky contended that Economical breached its duty
    of good faith by: (a) initially denying coverage without conducting an
    investigation; (b) interpreting the Additional Insured Endorsement too narrowly
    and ignoring the judicial interpretation in cases like
Great Atlantic
;
    and (c) failing to follow its own claims procedures, as it did not appoint an
    adjuster or investigate Skys losses. This is a separate cause of action,
    distinct from the coverage claim. In my view, however, the trial judge did not
    err in dismissing the claim for punitive damages.

[107]

First, the trial judge found that Economicals delay
    of 13 days in acknowledging that Sky was an additional insured did not rise to
    the level of bad faith.

[108]

Second, he found that the
Great Atlantic
case, relied upon by the appellant, was materially different from this case,
    and that Economical did not act in bad faith in interpreting that decision.
Great
    Atlantic
involved allegations of negligence against the additional insured
and
the named insured. In the present case, Sky
    does not allege negligence against Marnoch, the named insured.

[109]

Third, he found that Economical did not act in
    bad faith in denying coverage to Sky without appointing an adjuster or
    investigating Skys claim. By the time Sky made a claim under the policy,
    Economical knew that the transformers had been selected by Sky and that Marnoch
    had not made the decision. Economical had an objectively reasonable basis on
    which to deny coverage and was not required to make further investigations.

[110]

In addressing the issue of good faith, the trial
    judge referred to the decision of this court in
702535 Ontario Inc. v.
    Non-Marine Underwriters, Lloyds London England
(2000), 184 D.L.R. (4th)
    687 (Ont. C.A.), at paras. 27-33, leave to appeal refused, [2000] S.C.C.A. No.
    258. The Supreme Court of Canada referred to
702535 Ontario
with
    approval in the leading case of
Fidler v. Sun Life Assurance Co. of Canada
,
    2006 SCC 30, [2006] 2 S.C.R. 3. In
Fidler
, the Supreme Court quoted
    from the decision of OConnor J.A. in
702535 Ontario
, at para. 29
,
as follows:

The duty of good faith also requires an
    insurer to deal with its insured's claim fairly. The duty to act fairly applies
    both to the manner in which the insurer investigates and assesses the claim and
    to the decision whether or not to pay the claim. In making a decision whether
    to refuse payment of a claim from its insured, an insurer must assess the
    merits of the claim in a balanced and reasonable manner. It must not deny coverage
    or delay payment in order to take advantage of the insured's economic
    vulnerability or to gain bargaining leverage in negotiating a settlement. A
    decision by an insurer to refuse payment should be based on a reasonable
    interpretation of its obligations under the policy. This duty of fairness,
    however, does not require that an insurer necessarily be correct in making a
    decision to dispute its obligation to pay a claim. Mere denial of a claim that
    ultimately succeeds is not, in itself, an act of bad faith.

[111]

I have concluded, as the trial judge did, that
    Economical was entitled to deny Skys claim under the policy. This conclusion
    takes some of the wind out of the sails of Skys claim for punitive damages. I
    agree with the trial judge that Economicals initial rejection of coverage,
    while perhaps precipitous, was soon corrected and did not amount to bad faith. As
    in
Fidler
, the trial judge had the benefit of a fairly lengthy trial,
    which included evidence from Economicals claims adjuster. The trial judge found
    that there was no reason to continue to investigate when there was an
    objectively reasonable basis on which to deny coverage. He considered all the
    evidence and his conclusions are entitled to deference.

[112]

I would therefore dismiss this ground of appeal.

(4)

Fourth issue: Did the trial judge err in awarding
    excessive costs?

[113]

The appellant seeks leave to appeal the trial
    judges costs award to Economical and, if leave is granted, asks that it be
    substantially reduced.

[114]

Costs were addressed by all parties in lengthy
    written submissions after the trial judge released his reasons dismissing the
    action against both defendants. The trial judges costs reasons were timely,
    thorough, and lengthy:
Sky Solar (Canada) Ltd. v. Economical Mutual
    Insurance Company
, 2019 ONSC 5835. He fixed the costs payable by Sky to Economical
    at $356,452.49, comprised of $275,000 for fees, HST on the fees of $35,750, and
    disbursements inclusive of HST of $45,702.49. He fixed FCAs costs at $183,979.82,
    comprised of fees of $150,380 plus HST of $19,549.40, and disbursements
    inclusive of HST of $24,050, with $10,000 deducted for costs owed by FCA
    according to another order.

[115]

The appellant submits that the fee portion of
    the costs award should not have exceeded $150,000, approximately the amount
    awarded to FCA.

[116]

A trial judges award of costs is entitled to a
    high degree of deference and should not be taken lightly by reviewing courts:
Boucher v. Public Accountants Council for the Province of Ontario
(2004),
    71 O.R. (3d) 291 (C.A.), at para. 19, referring to
Canadian Pacific Ltd. v.
    Matsqui Indian Band
, [1995] 1 S.C.R. 3,
per
Lamer J., at p. 32.
    Unless the trial judge considered irrelevant factors, failed to consider
    relevant factors, or reached an unreasonable conclusion, an appellate court
    must respect the decision:
Boucher
, at para. 19.

[117]

There is good reason for deference to a trial
    judges award of costs. The trial judge lives the trial experience, hears the
    evidence, considers the issues and arguments as they unfold, and is in a better
    position than this court to answer the ultimate question: what award of costs
    is fair and reasonable in the circumstances?

[118]

The trial judge addressed this very issue at
    paras. 30-32 of his reasons on costs, observing, at para. 31:

This was a relatively complex action involving
    insurance coverage issues and claims based on allegations of bad faith and
    professional negligence. The action was vigorously prosecuted and defended. The
    issues were clearly important to the parties. The trial was held over ten days
    and, although in hindsight some of the evidence may not have been needed, I do
    not consider that any party's conduct tended to shorten or unnecessarily
    lengthen the duration of the action or that any step in the action was
    improper, vexatious or unnecessary, or taken through negligence, mistake or
    excessive caution.

[119]

The trial judge appropriately considered the
    reasonable expectations of the parties, one of the most important factors in
    the assessment of costs: see r. 57.01(1)(0.b) of the
CJA
and
Boucher
,
    at para. 37. As the trial judge noted, the issues were clearly important to the
    parties, and the claim was prosecuted and defended with vigour.

[120]

A plaintiff that advances a claim for indemnity/compensatory
    damages of $750,000, aggravated damages of $100,000, and punitive damages of
    $1,500,000 can reasonably expect the defendant to take the claim very seriously
    and to mount a thorough defence. Just as the plaintiff can expect to receive
    substantial costs if successful on those claims, it can expect to pay a
    substantial costs award if unsuccessful.

[121]

The costs awarded to FCA is not an appropriate
    comparator. The appellants claim against Economical was far more complex,
    raised a wider range of issues, and understandably required considerably more
    effort and resources.

[122]

It is not the responsibility of this court to
    engage in an issue-by-issue and step-by-step analysis of success, as the
    appellant invites us to do. The trial judge was plainly aware of the evolution
    of the litigation and the trial and considered the big picture as well as the
    details.

[123]

The trial judges costs award was based on his
    assessment of the relevant factors and was fair and reasonable. I would not
    grant leave to appeal costs.

D.

DISPOSITION

[124]

For these reasons, I would dismiss the appeal,
    with costs to the respondent in the agreed amount of $45,000, inclusive of
    disbursements and all applicable taxes.

Released: G.R.S.   SEP 09 2020

George
    R. Strathy C.J.O.

I
    agree. P. Lauwers J.A.
I agree. K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Vitucci v. Dimakis, 2020 ONCA 601

DATE: 20200923

DOCKET: M51648 (C67888)

Doherty, Hoy and Jamal JJ.A.

BETWEEN

William Vitucci and Cathleen
    Vitucci

Plaintiffs/Respondents

and

Theoktiti Dimakis

Defendant/Appellant

Michael J. Valente, for the moving
    party (respondents)

K. Dimakis, appearing on behalf of
    Theoktiti Dimakis

Heard: By videoconference

A motion to quash the appeal brought
    from the order of Justice M.J. Donohue of the Superior Court of Justice, dated
    December 3, 2019.

REASONS FOR DECISION

[1]

The moving parties accept the appeal is properly
    brought in this court, but argue some of the relief claimed is not available.
    The moving parties may be correct, however, we see no value in addressing this
    issue separately on a preliminary motion before a panel. The moving parties may
    raise this issue as part of their response on the appeal.

[2]

The security for costs motion brought by the
    moving parties would normally be dealt with by a single judge. The moving parties
    have piggybacked this motion on their unsuccessful motion to quash parts of the
    appeal. We will, nonetheless, address the merits of this motion.

[3]

On the material, the moving parties have made
    out a case for security for costs under r. 61.06(1)(a). The responding party
    admittedly is impecunious. The appeal is from an order allowing the moving parties
    (plaintiffs) to discontinue their action. There is good reason to think the
    appeal is frivolous. Moreover, the various motions brought by the appellant in
    the course of the action, and the spin off litigation commenced by the
    appellant, indicate the appeal is also vexatious.

[4]

We order the appellant to post security for
    costs in an acceptable form in the amount of  $15,000. The security is to be
    posted within 30 days of the release of this endorsement.

[5]

Success on the motions is divided. No costs.

Doherty J.A.

Alexandra Hoy J.A.

M. Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:  Zanewycz (Re), 2020 ONCA 561

DATE: 20200904

DOCKET: C68286 & M51555 (C68286)

van Rensburg, Pardu and Huscroft
    JJ.A.

In
    the Matter of the Bankruptcy of

Walter
    Andrew John Zanewycz

of
    the City of Thunder Bay

in
    the Province of Ontario

BETWEEN

Cheadles
    LLP

Applicant

(Respondent/Moving
    Party)

and

Walter
    Andrew Zanewycz

Respondent

(Appellant/Responding
    Party)

Walter Zanewycz, acting in person

K. Daniel Reason, for the respondent and
    the moving party, Cheadles LLP

Heard: August 31, 2020 by
    videoconference

On appeal from
    the bankruptcy order of Justice John S. Fregeau of the Superior Court of
    Justice dated April 6, 2020, adjudging the appellant, Walter Zanewycz, a
    bankrupt, with reasons reported at 2020 ONSC 2032. Motion by the respondent to
    quash the appeal.

REASONS FOR DECISION

[1]

We dismissed the appellants appeal of an order
    adjudging him bankrupt, with reasons to follow. These are our reasons.

[2]

The appellant retained the respondent law firm
    to represent him in matrimonial litigation. Over time, the appellant became
    indebted to the respondent and other individuals. In 2018, the appellant made a
    consumer proposal under the
Bankruptcy and Insolvency Act
, R.S.C.,
    1985, c. B-3, which was rejected by his creditors. The respondent issued an
    application for a bankruptcy order against the appellant on the grounds that
    the appellants debts exceeded one thousand dollars and that he had ceased to
    meet his liabilities generally as they became due. The appellant opposed the
    application.

[3]

The appellant was adjudged bankrupt. The
    bankruptcy judge found that the bankruptcy application was properly issued and
    served on the appellant. The bankruptcy judge also found that the appellant
    owed debts to the respondent and his former spouse exceeding one thousand
    dollars, pursuant to judgments and costs orders. Moreover, the appellant
    acknowledged his debts to other creditors, including his mother and current
    partner, and conceded that his debts owing to various creditors, including the
    respondent, remained outstanding.

[4]

The bankruptcy judge rejected the appellants
    arguments that due to ongoing litigation with the respondent and his former
    spouse, the appellants debts to the respondent would be set off against any
    damages awards he might receive and that these debts as well as the costs
    orders in favour of his former spouse were not final. He concluded that the
    appellant owed the respondent debts exceeding one thousand dollars and that he
    had committed an act of bankruptcy by failing to meet his liabilities as they
    were due in the six-month period preceding January 15, 2019, the date the bankruptcy
    application was issued.

[5]

The appellant raises a number of the same
    arguments that he raised before the bankruptcy judge in opposition to the
    bankruptcy application. He has not cited any specific errors that would allow
    this court to intervene, nor, having reviewed the record, do we see any such
    error. In particular, there was no error in the bankruptcy judges conclusions
    on the procedural issues respecting the issuance and service of the
    application, or in his substantive determinations with respect to the debts
    owed by the appellant, including the fact that they were outstanding and that the
    appellant had failed to meet his liabilities generally as they became due.

[6]

The appellants ongoing litigation with the respondent
    law firm and his ongoing matrimonial litigation do not affect the fact that the
    debts owed to these creditors were outstanding at the relevant time. Nor is it relevant
    that the appellant may have made offers to settle his debts, which were not
    accepted, or that he believes the debts, even those that have not been paid, to
    have somehow become stale. Finally, there is no merit in the arguments that
    the respondent was using the bankruptcy process for improper purposes, or that
    there were any procedural errors in the hearing that would or could have
    affected the basis on which the bankruptcy order was granted.

[7]

For these reasons the appeal was dismissed. We
    also dismiss, as moot, the motion to quash the appeal. Costs to the respondent
    are fixed in the sum of $5,000, inclusive of disbursements and HST, to be paid
    from the bankrupts estate.

K.
    van Rensburg J.A.

G.
    Pardu J.A.

Grant
    Huscroft J.A.