COURT OF APPEAL FOR ONTARIO

CITATION: United Food and Commercial Workers Canada, Local
    175, Region 6 v. Quality Meat Packers Holdings Limited, 2018 ONCA 671

DATE: 20180727

DOCKET: C63620 & C63635

LaForme, Rouleau and van Rensburg JJ.A.

C63620

BETWEEN

Sam Caetano,

as representative of the
    members of the United Food and Commercial Workers Canada, Local 175, Region 6
    who were employed by the Quality Meat Packers Limited, Toronto Abattoirs
    Limited, Great Lakes Specialty Meats of Canada and/or any of the Defendants in
    this Action in 2014

Plaintiffs (Appellants)

and

Quality Meat Packers
    Holdings Limited
,
    Quality Meat Packers Limited, Toronto Abattoirs Limited, Great Lakes Specialty
    Meats of Canada Inc., 2268204 Ontario Inc.,
Two Tecumseth
    Street Inc., Tasty Chip (2008) Inc., BNJ Cold Storage Inc., Franklyn Bernard
    Company Limited, 1581337 Ontario Inc., David Schwartz
, Franklyn
    Schwartz,
Brian Schwartz and Sheldon Garfinkle

Defendants (
Respondents
)

C63635

BETWEEN

Debbie Abreu, in their
    personal capacity and as the proposed representative of all non-union
    terminated employees and retirees of Quality Meat Packers Limited under Rule 10
    of the
Rules of Civil Procedure
, Alex
    Abreu, in their personal capacity and as the proposed representative of all
    non-union terminated employees of Toronto Abattoirs Limited and Great Lakes Specialty
    Meats of Canada Inc., under Rule 10 of the
Rules of Civil Procedure

Plaintiffs (Respondents)

and

Quality Meat Packers
    Holdings Limited
,
    Quality Meat Packers Limited (in bankruptcy), Toronto Abattoirs Limited (in
    bankruptcy), Great Lakes Specialty Meats of Canada Inc. (in bankruptcy),
    2268204 Ontario Inc. (under receivership),
Two Tecumseth
    Street Inc., Tasty Chip (2008) Inc., BNJ Cold Storage Inc., Franklyn Bernard
    Company Limited, 1581337 Ontario Inc., David Schwartz
, Franklyn
    Schwartz, and
Brian Schwartz

Defendants (
Appellants
)

Andrew J. Hatnay, Demetrios Yiokaris and Amy Tang, for
    the appellants (C63620) and for the respondents (C63635)

Jeffrey E. Goodman, Frank Cesario and Dianne Jozefacki, for
    the appellants (C63635) and for the respondents (C63620), Quality Meat Packers
    Holdings Limited, BNJ Cold Storage Inc., Two Tecumseh Street Inc., Tasty Chip
    (2008) Inc. and David Schwartz

Matthew P. Gottlieb and Brad Vermeersch, for the appellants
    (C63620) and for the respondents (C63635), Brian Schwartz and Franklyn Bernard
    Company Limited

Kyla Mahar, for the respondent, 1581337 Ontario Inc.

Heard: January 31, 2018

On appeal from the orders of Justice Edward Belobaba of
    the Superior Court of Justice, dated March 17, 2017, with reasons reported at
    2017 ONSC 1199.

H.S. LaForme J.A.:

OVERVIEW

[1]

A family-owned meat processing business went bankrupt in 2014 and some
    800 employees were terminated without notice or severance. Two separate actions
    were commenced on behalf of the terminated employees. The first was brought by
    Sam Caetano as the representative of the 700 or so unionized employees (the
    Caetano action). The second was brought by Debbie Abreu and Alex Abreu as the
    proposed representatives of the 100 or so non-unionized employees (the Abreu
    action).

[2]

The defendants in both actions are: (i) the bankrupt companies; (ii) the
    other purportedly related family-owned companies  Quality Meat Packers
    Holdings Ltd., Two Tecumseth Street Inc., Tasty Chip (2008) Inc., BNJ Cold
    Storage Inc., Franklyn Bernard Company Limited, 1581337 Ontario Inc.; and (iii)
    two individuals  David Schwartz and Brian Schwartz. Together, they are alleged
    to have been the common employer of the terminated employees and thus jointly
    and severally liable for the unpaid severance.

[3]

The defendants in both the Abreu and Caetano actions have not filed a
    statement of defence. Instead, the non-bankrupt defendants brought two motions
    under Rule 21 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194
:

1.       In the Caetano action, they
    requested under Rule 21.01(3)(a) that the Caetano action be stayed on the basis
    of jurisdiction (the jurisdiction motion); and

2.       Under Rules 21.01(1)(a) and
    (b) they requested that the representative elements of the Caetano and Abreu actions
    be struck because the claims of the individuals sought to be represented are
    time-barred and thus fail to disclose a reasonable cause of action (the limitations
    motion).

[4]

On the jurisdiction motion, the motion judge stayed the Caetano action.
    On the limitations motion, he agreed that the representative aspect of the
    Caetano action was statute-barred. In contrast, he concluded it was not plain
    and obvious that the representative aspect of the Abreu action was
    statute-barred.

[5]

In the Caetano action, Caetano appeals, whereas in the Abreu action it
    is the defendants who appeal. In my discussion below, in both appeals I will
    refer to the respective parties as Caetano, the Abreus and the Defendants.

[6]

For the reasons that follow, I would dismiss the Caetano appeal and
    allow the Abreu appeal.

DISCUSSION

(1)

Caetano Appeal  Jurisdiction

(a)

Motion Judges Reasons

[7]

The issue on this motion was whether the Ontario Labour Relations Board
    (OLRB) had exclusive jurisdiction to determine the claims asserted in the Caetano
    action.

[8]

The motion judge concluded that the court had no jurisdiction to decide
    the matter since the essence of the claim - the wrongful dismissal of unionized
    employees - is subject to the exclusive jurisdiction of the provincial labour
    relations regime. The collective agreements between the former unionized employees
    that Caetano purports to represent and the bankrupt employers comprehensively
    dealt with the terms of employment. As a matter of law, the collective
    agreements incorporated provincial employment standards law. The collective
    agreements also set out a detailed dispute resolution procedure that must be
    followed to resolve grievances arising out of the collective agreements. He
    found, at para. 21:

The core dispute in Caetanos claim is wrongful dismissal and
    unpaid severance. The claim is directly connected with their employment at [the
    bankrupt employers], the terms and conditions of which are governed by
    comprehensive collective agreements. Since the essential character of the
    dispute arises out of the interpretation, application, administration or
    violation of the collective agreements, the dispute falls within the exclusive
    jurisdiction of an arbitrator and the OLRB.

Accordingly, the motion judge stayed the Caetano
    action.

(b)

Submissions

[9]

Caetano argues that the motion judge erred in concluding that he did not
    have jurisdiction. The Supreme Court in
Weber v. Ontario Hydro
, [1995]
    2 S.C.R. 929 clarified the respective jurisdiction of courts, labour
    arbitrators, and labour tribunals when dealing with disputes arising from a
    collective agreement. To determine jurisdiction in this context the court must
    consider whether the dispute arises from the interpretation, application,
    administration, or violation of the collective agreement. Caetano submits the
    motion judge erred in applying these factors.

[10]

The
    collective agreement, Caetano points out, is silent on severance pay. The
    employees entitlement to severance is based in the
Employment Standards
    Act, 2000,
S.O. 2000, c. 41 (the ESA). Further, Caetano and the other
    unionized employees seek payment of severance pay from third parties to the
    collective agreement. Therefore, Caetano submits that the essential character
    of the dispute has nothing to do with the collective agreement  this action is
    essentially an enforcement action for the severance owing.

[11]

Caetano
    relies on jurisprudence such as
Ritchie v. Canadian Airlines International
    Ltd.
(2001)
, 13 C.P.C.
    (5th) 368, where the Superior Court applied the test in
Weber
and
    declined to dismiss an action for want of jurisdiction. In
Ritchie
,
    union members, as a class, claimed unpaid severance pay from companies other
    than their bankrupt employer. As in this case, the defendant in
Ritchie
was not a party to the collective agreement. Caetano argues that since the
    court in
Ritchie
had jurisdiction over the subject matter of the
    dispute, the court has jurisdiction in this case.

[12]

Caetano
    also submits that this case is similar to
Logue Mechanical Services Ltd. v.
    UA, Local 787,
[2016] O.L.R.B. Rep. July/August 691, in which the OLRB
    noted that it does not have jurisdiction over enforcement proceedings against
    related employers when the original employer is bankrupt. Caetano submits that
    the jurisdiction of the court is clearer in the case at bar for a number of
    reasons: the businesses are shut down, the property has been sold, there are no
    employees, and there is no bargaining unit.

(c)

Analysis

[13]

The
    motion judge was correct to conclude that he did not have jurisdiction over the
    Caetano proceeding. He properly conducted the
Weber
analysis. It is
    the substance of a dispute that governs this analysis. If the dispute, in its
    essential character, arises from the interpretation, application,
    administration or violation of the collective agreement, the dispute falls
    within the exclusive jurisdiction of the labour arbitrator:
Weber
, at
    p. 957.

[14]

The
    core of Caetanos claim is wrongful dismissal and unpaid severance of unionized
    employees in the context of a common employer. These claims are directly tied
    to the employees employment and the terms and conditions of their employment.
    These terms and conditions were comprehensively governed by the collective
    agreement, whether explicitly or through incorporation of provincial employment
    standards. The types of claims raised by Caetano can be, and have been in the
    past, resolved within the labour arbitration process.

[15]

As
    explained by the motion judge, Caetanos reliance on
Ritchie
is
    misplaced as that case involved a breach of contract claim separate and apart
    from the collective agreement, not a common employer claim.

[16]

Similarly,
    the decision in
Logue
does not go as far as Caetano submits. The Chair
    of the OLRB in
Logue
was concerned that the declaration the union
    sought smells too much like interference (if not an attempt to gain a
    priority outside of the bankruptcy) in the orderly and fair distribution of a
    bankrupt's property among the creditors of the bankrupt:
Logue
,

at
    para. 34. Unlike in
Logue,
Caetano is not making an end-run around the
    provisions of the
Bankruptcy and Insolvency Act
, R.S.C., 1985, c. B-3,
    to undermine the orderly distribution of the bankrupts property to creditors.

[17]

Further,
    the Chair was hesitant to act in
Logue
as it is not normally the
    Board's function to actually enforce  its orders or declarations:
Logue
,
    at para. 35. Caetano draws comparisons between this proceeding and enforcement
    proceedings, but Caetanos statement of claim makes clear that the analogy only
    goes so far. Caetano seeks wrongful dismissal damages, a common employer
    declaration, and aggravated and punitive damages. Caetano also makes oppression
    and conspiracy claims, within the context of the employment relationship,
    against the Defendants. Unlike in
Logue
, this is not a proceeding
    where the OLRB is being asked to essentially enforce its own orders against a
    defendant.

[18]

For
    these reasons, I would uphold the motion judges order staying the proceeding
    on jurisdictional grounds.

(2)

Caetano Appeal - Rule 12.08

[19]

Given
    my conclusion on the jurisdiction issue, it is not strictly necessary to decide
    the Rule 12.08 issue raised by Caetano. However, I believe it is an important
    question that should be commented on for future consideration.

(a)

Motion Judges Reasons

[20]

The issue on the limitations motion was whether  as required
    under Rules 21.01(1)(a) and (b)  it was plain and obvious that the representative
    aspects of the two actions
[1]
were
    certain to fail because no representation orders were obtained within the two-year
    limitation period. Indeed, Caetano did not bring a motion for a representation
    order within the limitation period.

[21]

The
    motion judge, in the alternative to his jurisdiction analysis, concluded that
    the representative aspect of the Caetano action must be dismissed pursuant to Rule
    21.01(1) on the basis that the failure to obtain the required representation
    order within the two-year limitation period was fatal.

[22]

In
    reaching this conclusion, the motion judge found that Rule 12.08 applied. He
    noted that while there was no reference to Rule 12.08 in the statement of
    claim, Caetano agreed in his factum that he proceeded under Rule 12.08.

[23]

Focussing
    on the plain meaning of Rule 12.08, the motion judge interpreted the Rule as
    follows, at para. 31:

Note the precision in the statutory language: a proposed
    representative may be authorized by the court
to bring a proceeding
on
    behalf of or for the benefit of all. In my view, this only can be read in one
    way. A representation order authorizing the plaintiff to commence a
    representative proceeding under Rule 12.08 must be obtained
before
the
    proposed representative proceeding is actually commenced. It is not enough to
    commence an individual action, add a representative component in the style of
    cause and then, perhaps years later, seek the required court order. Under Rule
    12.08, a court order is needed to authorize the initiation of the
    representative action. And the initiation of the representative action will
    only be authorized by the court if the plaintiff can show that a proceeding
    under the
Class Proceedings Act, 1992
would be an unduly
    expensive or inconvenient means for determining [his] claim. [Italics in
    original.]

[24]

He also added, at paras. 39-40:

Whether or not the required representation order  must be
    obtained within an applicable limitation period is a question that does not
    turn on any notion of adding parties. Both sides spent some time in their
    written material and oral submissions advancing or refuting lower-court
    decisions that appeared to undertake an added parties analysis under Rule
    5.03 or s. 21(1) of the
Limitations Act.

It is important to remember both in the context of class
    proceedings and representative proceedings that the only parties to the
    action are the certified or court-appointed representative plaintiffs and the
    named defendants. The class members that are represented under the
Class
    Proceedings Act
or the class of persons that is represented under
    Rules 10.01 and 12.08 are not parties. It causes unnecessary confusion
    in the case law to suggest otherwise. [Footnotes omitted.]

[25]

As I read the motion judges reasons, since he did not find a
    limitations problem based on adding parties under s. 21(1) of the

Limitations
    Act, 2002,
S.O. 2002, c. 24, Sched. B (
Limitations
    Act
), he must have concluded that there was a
    limitations problem based on s. 4 of the
Limitations Act
, which precludes the commencement of a proceeding in respect of a
    claim after the second anniversary of the day on which the claim was
    discovered.

(b)

Legal Context

[26]

Before
    turning to the question at hand, I will provide some legal context. I begin by
    considering the wording of Rule 12.08 and how limitations issues have been
    dealt with in the context of class actions. Finally, I consider the question at
    issue  whether a representation order may be obtained after the expiry of the
    limitation period in the circumstances of this case, or whether it is plain and
    obvious that such an order is statute-barred.

(i)

Rule 12.08

[27]

Rule
    12.08 states:

Where numerous persons are members of an unincorporated
    association or trade union and a proceeding under the
Class
    Proceedings Act, 1992
would be an unduly expensive or inconvenient
    means for determining their claims, one or more of them may be authorized by
    the court to bring a proceeding on behalf of or for the benefit of all.

[28]

There
    is little reported case law dealing with the application of Rule 12.08. Indeed,
    the parties did not point to any cases that directly deal with the issue here,
    namely, whether a representation order can be obtained under Rule 12.08
    following the expiry of a limitation period.

[29]

However,
    there are several points worth mentioning about Rule 12.08.

[30]

First,
    Rule 12.08 falls under Rule 12, which is entitled Class Proceedings and Other
    Representative Proceedings.

[31]

Second,
    it is engaged where a person or persons seek to bring a claim on behalf of or
    for the benefit of all members of an unincorporated association or trade union.
    The rule addresses the problems facing unincorporated associations and trade
    unions seeking to sue in their own names.

[32]

Third,
    Rule 12.08 is meant to provide for a less costly and more convenient procedure
    than the
Class Proceedings Act, 1992
, S.O. 1992, c. 6 (
CPA

). Indeed, in determining whether to
    authorize a representative action under Rule 12.08, the court will take a
    similar approach to that taken in determining whether a class action should be
    certified under the
CPA
: see
Ginter v. Gardon
(2001), 53 O.R.
    (3d) 489 (S.C.), at para. 14;
Ottawa (City) Police Assn. v. Ottawa (City)
    Police Services Board
, 2014 ONSC 1584, 55 C.P.C. (7th) 183, at para. 38
    (Div. Ct.).

[33]

Fourth,
    the rule is discretionary. One or more members of an unincorporated association
    or trade union
may
be
    authorized by the court to bring a proceeding on behalf of or for the benefit
    of all. Thus, unless and until authorization is granted, no representative
    proceeding may be brought.

[34]

Fifth,
    the rule is silent on the question of limitation periods.

(ii)

Limitation Periods and Class Proceedings

[35]

As
    Rule 12.08 provides an alternative to a representative proceeding under the
CPA
,
    it is instructive to consider how the
CPA
deals with the question of
    limitation periods.

[36]

Section
    2(1) of the
CPA
permits a class member to commence a proceeding on
    behalf of the class:

One or more members of a
    class of persons may commence a proceeding in the court on behalf of the
    members of the class.

[37]

Section
    20 of the
Limitations Act
recognizes that a limitation period may be extended,
    suspended or otherwise varied by or under another Act. Section 28(1) of the
CPA
does exactly that:

Subject to
    subsection (2),
any limitation period applicable to
    a cause of action asserted in a class proceeding is suspended in favour of a
    class member on the commencement of the class proceeding
and resumes
    running against the class member when,

(a) the member opts
    out of the class proceeding;

(b) an amendment that
    has the effect of excluding the member from the class is made to the
    certification order;

(c) a decertification
    order is made under section 10;

(d) the class
    proceeding is dismissed without an adjudication on the merits;

(e) the class
    proceeding is abandoned or discontinued with the approval of the court; or

(f) the class
    proceeding is settled with the approval of the court, unless the settlement
    provides otherwise. [Emphasis added.]

[38]

Section
    28(1) suspends the limitation period from the time the proceeding is commenced,
    not from the time the proceeding is certified as a class action:
Logan v.
    Canada (Minister of Health)
(2004), 71 O.R. (3d) 451 (C.A.).

[39]

As
    noted by Karakatsanis J. in
Canadian Imperial Bank of
    Commerce v. Green
, 2015 SCC 60, [2015] 3 S.C.R. 801, at para. 175:

Without s. 28 [of the
CPA
] the commencement of a
    proceeding by a representative plaintiff would only suspend the limitation
    period with respect to that plaintiff; the limitation period governing all
    other potential class members would continue to run during the certification proceedings.

Côté J., who wrote separate reasons, agreed with that
    statement at para. 74. (See also:
Coulson v. Citigroup Global Markets
    Canada Inc.
, 2010 ONSC 1596, 92 C.P.C. (6th) 301, at para. 49, affd 2012
    ONCA 108, 288 O.A.C. 355, at para. 11.)

(c)

Submissions

[40]

Caetano
    submits that the motion judge erred in concluding that he relied on Rule 12.08
    and that he could only seek a representation order in a future motion under
    Rule 12.08 and not Rule 10.01. In the circumstances, I need not decide whether
    Rule 10.01 was available. As I will explain below, the result in the
    circumstances of this case would be the same under either Rule. Thus, I will
    proceed on the assumption that Caetano relied on Rule 12.08.

[41]

Turning
    to Caetanos other arguments, he submits that under the
Limitations Act
,
    a
proceeding
need only
    have been commenced within two years and a representation motion is not a
    proceeding. He points to Rule 1.03(1), which defines a proceeding as an
    application or action.

[42]

In
    Caetanos view, a court may issue a representation order under Rule 12.08 at
    any stage of a proceeding, which promotes flexibility and fairness.

[43]

In
    the alternative, he says that s. 28 of the
CPA
should apply by analogy
    to suspend the limitation period.

[44]

He
    also argues that a representation order can be made
nunc pro tunc
.

(d)

Analysis

[45]

In
    my view, there are several problems with Caetanos arguments.

[46]

First,
    under Rule 12.08, authorization is required to bring a
proceeding
on behalf of or for the
    benefit of all members of a trade union or unincorporated association. As I
    noted earlier, under s. 4 of the
Limitations Act
, a
proceeding

shall not be
    commenced in respect of a claim after the second anniversary of the day on
    which the claim was discovered. Reading Rule 12.08 harmoniously with s. 4, the
    limitation period does not stop running for the claims of class members until a
    proceeding has been brought on their behalf and that does not happen unless and
    until court authorization has been granted under Rule 12.08.

[47]

Second,
    Caetano is effectively arguing that Rule 12.08 suspends the limitation period
    that once a
proposed
representative commences a
proposed
representative proceeding, the limitation period is suspended on behalf of all
    members of the trade union or unincorporated association. That, as explained
    above, is the situation under the
CPA
where s. 28 expressly suspends
    any limitation period applicable to a cause of action asserted in favour of
    class members on the commencement of a proceeding. In contrast, Rule 12.08 is
    silent on the question of limitation periods and does not purport to extend,
    suspend or otherwise vary any limitation period applicable to claims asserted
    in favour of class members.

[48]

Third,
    the Supreme Courts decision in
Green
supports the view that, without
    a tolling provision, any limitation period applicable to the claims advanced on
    behalf of class members continues to run until the court authorizes the claims
    to be brought by the representative plaintiff:
Green
, paras. 74,
    174-175.

[49]

Finally,
    I would reject the argument that a
nunc pro tunc
order would be
    available in the circumstances of this case where leave was not sought prior to
    the expiry of the limitation period: see
Green
, at paras. 94-111.

[50]

I
    recognize that a representative action under Rule 12.08 is meant to provide a
    less onerous and less expensive alternative to bringing a class action and yet
    a proposed representative plaintiff may feel it is necessary to proceed under
    the
CPA
instead of Rule 12.08
to
    avoid any limitations problems even if it would be more expensive and less convenient
    to do so. My interpretation, therefore, may seem to be at odds with concerns
    about expense and convenience. However, as Côté J. observed in
Green
,
    at para. 75, policy concerns, as compelling as they are, do not override the
    plain meaning of the text and the intent of the Ontario legislature.

[51]

In
    conclusion, even if the Superior Court were the correct forum for pursuing the
    claims of terminated union members, the representative aspect of the Caetano
    action would be statute-barred.

(3)

Abreu Appeal - Rule 10.01

[52]

This
    appeal by the Defendants focuses on one issue: is it plain and obvious that a
    representation order cannot be made under Rule 10.01 in respect of the claims
    of the individuals sought to be represented by the Abreus after the expiry of
    the limitation period in the circumstances of this case? As I will explain, my
    answer to this questions is yes.

(a)

Motion Judges Reasons

[53]

The
    motion judge concluded that the Abreu action was not statute-barred and could
    proceed. He reasoned that there was nothing in Rule 10.01 that plainly and
    obviously required that a motion for a representation order be brought within
    the two year limitation period when the proceeding within which it was brought
    was properly commenced within that limitation period. He noted that a Rule
    10.01 representation order can only be obtained after the initial proceeding
    has commenced.

(b)

Submissions

[54]

The
    Abreus argue that since Rule 10.01 representation orders are brought within an
    already commenced proceeding, and the representation order sought does not seek
    to add new parties, the
Limitations Act
poses no barrier to a
    representation order.

[55]

They
    further submit that this courts decision in
Lawrence v. International Brotherhood
    of Electrical Workers
, 2017 ONCA 321, 138 O.R. (3d) 129, affd 2018 SCC
    11, 16 C.P.C. (8th) 1, is authority for permitting a representation order to be
    made outside of a two year limitation period. The Abreus additional
    submissions are similar to those advanced by Caetano and are addressed by my
    Rule 12.08 analysis above.

(c)

Analysis

(i)

Can a representation order be granted to add statute barred claims?

[56]

Rule
    10.01 provides as follows:

In a proceeding concerning,

(a) the interpretation of a deed, will, contract or other
    instrument, or the interpretation of a statute, order in council, regulation or
    municipal by-law or resolution;

(b) the determination of a question arising in the
    administration of an estate or trust;

(c) the approval of a sale, purchase, settlement or other
    transaction;

(d) the approval of an arrangement under the
Variation of
    Trusts Act
;

(e) the administration of the estate of a deceased person; or

(f) any other matter where it appears necessary or desirable to
    make an order under this subrule,

a judge may by order appoint one or more persons to represent
    any person or class of persons who are unborn or unascertained or who have a
    present, future, contingent or unascertained interest in or may be affected by
    the proceeding and who cannot be readily ascertained, found or served.

[57]

In
    this case, the proceeding does not concern any of the matters listed in (a) to
    (e). Rather, the Abreus are relying on (f)  that in their motion for a
    representation order they will be able to persuade a judge that the proceeding
    concerns any other matter where it appears necessary or desirable to make an
    order under this subrule and that they otherwise meet the criteria for an
    order to be made.  It is apparent that the Abreus seek to rely on Rule 10.01 as
    a class action alternative.

[58]

I
    note that courts have used Rule 10.01 as a class action alternative. However, the
    proper scope of Rule 10.01 has not been delineated by this court, and it need
    not be addressed to determine this appeal. The resolution of the limitations
    issue is driven by a consideration of what the Abreus are seeking to achieve
    through this litigation in respect of the claims of other terminated non-union
    employees of the Defendants. I will explain why such individual claims are
    already statute-barred, and why a representative order under Rule 10.01 would
    not avoid this limitation period problem.

[59]

First,
    I agree with both the motion judge and the Abreus that s. 21(1) of the
Limitations
    Act
, which prevents adding parties to an existing action after the expiry
    of a limitation period, has no direct application here. As the motion judge
    stated at para. 40 of his reasons, [i]t is important to remember both in the
    context of class proceedings and representative proceedings that the only
    parties to the action are the certified or court-appointed representative
    plaintiffs and the named defendants. The Abreus are not seeking to add
    plaintiffs. Their argument is that their statement of claim already seeks
    relief on behalf of the persons they seek to represent under Rule 10.01.

[60]

The
    concern in this case is the application of s. 4 of the
Limitations Act
:

Unless this Act provides otherwise, a proceeding shall not be
    commenced in respect of a claim after the second anniversary of the day on
    which the claim was discovered.

[61]

While
    the Abreus do not seek to add parties to their action, the question is whether
    they can assert claims, through the device of a representation order, on behalf
    of persons who are not plaintiffs in the proceeding, after the limitation
    period in respect of such claims has already expired. The Abreus statement of
    claim seeks termination pay under the ESA and wrongful dismissal damages, as
    well as common employer and other declarations, and aggravated and punitive
    damages for themselves. It purports to assert claims for monetary amounts for approximately
    125 other non-unionized former employees of the Defendants, relying on Rule 10.

[62]

Here
    it must be recalled that the limitation periods for certain individual claims
    expired on May 6, 2016, and for others on June 9, 2016. The Abreu action was
    commenced on May 6, 2016. Although the statement of claim refers to the
    plaintiffs status as proposed representatives under Rule 10, no motion was
    brought for a representation order within the two year limitation period
    applicable to the wrongful dismissal claims.

[63]

The
    Abreus note that a representation order under Rule 10.01 is made [i]n a
    proceeding. This is in contrast to the wording of Rule 12.08 which contemplates
    that proposed representatives will bring a proceeding on behalf of or for the
    benefit of all. On this line of reasoning they assert that, since s. 4 of the
Limitations
    Act
bars commencing a proceeding, and under Rule 10.01 the proceeding has already
    begun before a representation order is sought, the limitation period is of no
    moment.

[64]

This
    court, however, has repeatedly held that parties cannot circumvent the
Limitations
    Act
by amending their pleadings to add additional claims: see
Frohlick
    v. Pinkerton Canada Ltd
. (2008), 88 O.R. (3d) 401;
Dee Ferraro Ltd. v.
    Pellizzari
, 2012 ONCA 55, 346 D.L.R. (4th) 624;
1100997 Ontario
    Limited v. North Elgin Centre Inc.
, 2016 ONCA 848, 409 D.L.R. (4th) 382.
    The addition of new statute-barred claims by way of an amendment to a statement
    of claim is conceptually no different than issuing a new and separate statement
    of claim that advances a statute-barred claim:
Frohlick
,
at para. 24. An amendment will be
    statute-barred if, after the expiry of the limitation period, it seeks to
    advance a fundamentally different claim based on facts not originally
    pleaded:
North Elgin Centre,
at para. 23.

[65]

An
    amendment will also be statute-barred if it seeks to add a new cause of action:
North Elgin Centre
, at paras. 19-23, 33. A cause of action is a
    factual situation the existence of which entitles one person to obtain from the
    court a remedy against another person:
North Elgin Centre,
at para.
    19. A new cause of action is not asserted if an amendment pleads an alternative
    claim for relief from the same facts, or in other words, if the amendment flows
    directly from the facts already pleaded: see
North Elgin Centre,
at
    paras. 20-21;
Dee Ferraro
, at paras. 13-14

[66]

In
    this case, the Abreus statement of claim sets out facts relevant for all 125 non-union
    employees of the Defendants who were terminated
en masse
on May 6,
    2014 and June 9, 2014. The statement of claim also clearly sets out that it is a
    proposed representative action under Rule 10. At first blush, a representation
    order permitting the Abreus to bring claims on behalf of these employees may not
    appear to be adding new claims. The facts grounding the representation order
    have already been pleaded, and the claims advanced on behalf of the potentially
    represented employees are not fundamentally different than the claims advanced
    by the Abreus.

[67]

The
    reality however is that, while the claims of other terminated employees are
    referred to in the statement of claim, those employees are not parties to the proceeding,
    and their claims cannot be advanced by the Abreus unless or until a
    representation order is obtained. In the interim, the limitation period in
    respect of such claims has continued to run. There is no equivalent to s. 28 of
    the CPA that would toll the operation of the limitation period.

[68]

As
    noted above, representative plaintiffs under s. 2 of the
CPA
commence
    proceedings on behalf of the members of the class, and a certification order is
    sought within the context of that proceeding. Despite a certification motion under
    the
CPA
occurring within the context of an already commenced
    proceeding, individual members of the class require the presence of a tolling
    provision to maintain their claims beyond applicable limitation periods. The
    commencement of a class proceeding is not enough on its own: see
Green
,
    at para. 175.

[69]

Similarly,
    under Rule 10.01 a representation order is sought within the context of an
    already existing proceeding, but there is no tolling provision applicable to
    Rule 10.01. Thus, the logic set out by the Supreme Court in
Green
applies
    and the limitation period continues to run for those individuals on whose
    behalf the Abreus purportedly assert claims. This approach treats limitations
    issues arising in Rule 10.01 proceedings that are akin to class actions in a
    manner consistent with Rule 12.08 and
CPA
proceedings.

[70]

Without
    addressing the question of the various types of proceedings in which a Rule 10
    representation order might be available, I note that courts should be cautious
    to not create limitations issues where none exist.  A representation order
    under Rule 10.01 may be sought in proceedings in a variety of circumstances.  In
    many circumstances limitation period defences may have little or no
    application, and therefore pose no impediment to the making of a representation
    order at any stage in the proceedings. Here, however, it is clear that the
    representation order sought by the Abreus could not have the effect of
    extending the limitation period for claims against the Defendants that have
    already expired. It is plain and obvious that the claims would be defeated by
    the two-year limitation period under the
Limitations Act.

(ii)

Lawrence

[71]

Finally,
    the Abreus submit that this courts conclusion in
Lawrence
is authority for a representation order to be made
    outside the limitation period.
I do not agree with this submission.

[72]

Ms.
    Lawrence brought an action for wrongful dismissal against the International
    Brotherhood of Electrical Workers, Local 773 (Local 773).  She subsequently
    added individuals, all directors of Local 773, as defendants. In its statement
    of defence, Local 773 pleaded that, as a union, it could not be named as a party
    under the
Rights of Labour Act
, R.S.O. 1990, c. R.33. Ms. Lawrence
    successfully moved to amend her statement of claim, after the expiry of the
    limitation period, to add the individuals as representatives of all the members
    of Local 773 by way of a Rule 12.07 representation order. Rule 12.07 provides
    that [w]here numerous persons have the same interest, one or more of them may
    defend a proceeding on behalf or for the benefit of all, or may be authorized
    by the court to do so.

[73]

On
    appeal, this court dismissed Local 773s appeal and upheld the representation
    order despite the expiry of the limitation period. Writing for the majority,
    Sharpe J.A. concluded that the request for a representation order in this case
    could properly be characterized as a request to correct the name of a party
    incorrectly named within the meaning of r. 5.04(2): at para. 27.

[74]

As
    noted by Sharpe J.A., this court explained in
Lloyd v. Clarke
, 2008
    ONCA 343, 52 C.P.C. (6th) 41, at para. 4, where there is a coincidence between
    the plaintiffs intention to name a party and the intended partys knowledge
    that it was the intended defendant, an amendment may be made despite the
    passage of the limitation period to correct the misdescription or misnomer. Subsection
    21(2) of the
Limitations Act
specifically permits the correction of a
    misnaming or misdescription of a party after the expiry of a limitation period.

[75]

The
    Supreme Court affirmed the majoritys reasoning:
Lawrence
SCC, at
    para. 1.

[76]

Lawrence
has no application to the circumstances of this case. Nor does it provide any
    general authority for granting a representation order to permit claims to be pursued
    after a limitation period in respect of such has expired. The case turned on
    the fact that the union was already named as a defendant (although by law it
    could not be sued), and that the representation order could be used, in the
    particular circumstances of the case  where the parties proceeded as though
    the union had been properly sued -  to correct a misnomer.

[77]

For
    these reasons, I would allow this appeal. I would strike references to the
    action proceeding as a representative action under Rule 10 from the Abreu
    statement of claim on the basis that the claims of the persons sought to be
    represented are statute-barred.

DISPOSITION

[78]

In
    the result, I would dismiss the Caetano appeal and award costs to the
    Defendants (respondents) in the amount of $25,000 inclusive of disbursements
    and HST. I would allow the Abreu appeal and award costs to the Defendants
    (appellants) in the amount of $18,500 inclusive of disbursements and HST.

Released: DW JUL 27 2018

H.S. LaForme J.A.

I agree. Paul Rouleau J.A.

I agree. K. van Rensburg J.A.

[1]
There is no dispute that the plaintiffs and the other former unionized and
    non-unionized employees in both actions were terminated on May 6, 2014 and June
    9, 2014, depending on the location of their employment. There is no dispute
    that the limitation period for all claims asserted in the statements of claim
    expired on May 6, 2016 and June 9, 2016, respectively. Specifically, there is
    no issue that both actions were commenced within the two-year limitation period
    and are not time-barred as they relate to claims by the plaintiffs in their personal
    capacities.


COURT OF APPEAL FOR ONTARIO

CITATION: Valdez (Re), 2018 ONCA 657

DATE: 20180720

DOCKET: C64516

Lauwers, Miller and Fairburn JJ.A.

IN THE MATTER OF: Joel
    Valdez

AN APPEAL UNDER PART
    XX.1 OF THE
CODE

Anita Szigeti, for the appellant

Justin Reid, for the respondent Attorney General of
    Ontario

Logan Crowell, for the respondent Person in Charge of Ontario
    Shores Centre for Mental Health Sciences

Heard: June 8, 2018

On appeal from the disposition of the Ontario Review
    Board, dated September 27, 2017, with reasons dated October 12, 2017.

REASONS FOR DECISION

[1]

On December 3, 2015, Mr. Valdez (the appellant) was found not criminally
    responsible (NCR) by reason of mental disorder on a charge of arson and failure
    to comply with a probation order. Mr. Valdez has since been diagnosed with Schizophrenia,
    undifferentiated subtype. He is treated monthly with injectable medication. Mr.
    Valdez has displayed no signs of psychosis since receiving his treatment and
    has been residing since November 2016 in the community, with his family,
    without incident. Following Mr. Valdezs annual hearing on September 19, 2017,
    the Board ordered him to be detained on the general forensic unit of Ontario
    Shores Centre for Mental Health Sciences under a detention order and continue
    with his same level of privileges.

[2]

Mr. Valdez appeals. He maintains that the Board erred by failing to
    impose an absolute discharge. In the alternative, and at a minimum, Mr. Valdez
    maintains that he should have been conditionally discharged.

[3]

The respondents submit that Mr. Valdez remains a significant threat to
    the public and the majoritys decision not to order a conditional discharge is
    reasonable.

[4]

While we agree with the Board that Mr. Valdez was not entitled to an
    absolute discharge, we would remit for the Boards consideration whether Mr.
    Valdez should receive a conditional discharge.

Index Offence and Detention History

[5]

On December 25, 2014, Mr. Valdez set fire to his parents home,
    including setting fire to three separate couches and three separate beds. He
    was found NCR for these offences on December 3, 2015.

[6]

Mr. Valdez had previously been convicted of forcible confinement,
    uttering threats and assault with a weapon, all directed at his wife.

[7]

On November 1, 2016, Mr. Valdez was moved from the hospital to his
    family home, as permitted at the discretion of the hospital and under the terms
    of his detention order. He has resided there since that time with his wife,
    three children, and his wifes parents. Mr. Valdezs parents live in close
    proximity. Mr. Valdez does some work around the house and has been able to find
    employment from time-to-time. There has been no evidence of psychotic symptoms
    since his return to the family home.

The Decision under Appeal

[8]

The Board unanimously agreed that Mr. Valdez remains a significant
    threat to public safety. Based on Dr. Pearces evidence, the Board found that:

Mr. Valdez has absolutely no insight into his need for
    medication and accept further that if he were not under the Boards
    jurisdiction he would stop medication and within a few months become psychotic
    andlikely to act out in an aggressive manner.

[9]

On this basis, the Board refused to grant Mr. Valdez an absolute
    discharge, which was the remedy he sought.

[10]

However,
    the Board was divided on the issue of the necessary and appropriate
    disposition. Four of the five members of the Board accepted the Crowns
    position that Mr. Valdez should continue to be subject to a detention order, largely
    on the basis that it would be easier to have Mr. Valdez returned to hospital
    under a detention order than under a conditional discharge. The majoritys
    reasoning on this point was brief:

The evidence of Mr. Valdezs stated intention to stop his
    medication as soon as he is no longer under an ORB disposition leads not only
    to the conclusion that he is a significant threat to public safety, but also to
    the conclusion that the necessary and appropriate disposition is a Detention
    Order. In the Boards experience, as confirmed both by Crown counsel and by
    defence counsel, it is substantially easier to bring about a return to hospital
    for individuals who are under a Detention Order. The Board understands that
    there is a warrant that will always be acted upon by the police if the police
    are required to bring about a return to hospital. In the majoritys opinion,
    public safety would be compromised in a situation where Dr. Pearce or any other
    doctor is forced to negotiate with the patient and to threaten hospitalization
    in order to have Mr. Valdez accept his medication. In the majoritys opinion,
    the necessary and appropriate disposition is a Detention Order.

[11]

The
    minority would have accepted the hospitals recommendation of a conditional
    discharge as the least onerous and least restrictive disposition consistent
    with public safety. In reaching this conclusion, the minority relied on Dr.
    Pearces evidence that Mr. Valdez could remain medically compliant without a
    detention order. Dr. Pearce cited several reasons for this opinion including:
    (1) his interactions with Mr. Valdez in the past; (2) the support of Mr. Valdezs
    family; and (3) the available enforcement mechanisms under a conditional
    discharge.

Absolute Discharge

[12]

Before
    us, Mr. Valdez argues that the Board erred in failing to impose an absolute
    discharge. We disagree. That decision was squarely rooted in the evidentiary
    record. Indeed, Dr. Pearce stated that an absolute discharge is likely years
    and years off. The Boards decision that Mr. Valdez remains a significant
    threat to public safety was within the range of reasonable outcomes. We defer
    to that finding.

Conditional Discharge

[13]

Mr.
    Valdez argues alternatively that he should receive a conditional discharge. He
    asserts that the Board is obliged to determine the necessary and appropriate
    disposition and that it failed to do so. The evidence of Dr. Pearce supports
    the conclusion that Mr. Valdezs mental illness is well controlled by
    long-acting injectable drugs. Given his more recent treatment history and his
    strong family support, he is likely to attend at the hospital and receive his
    monthly injection. If Mr. Valdez fails to attend for his monthly injection, the
    hospital would be immediately aware of this; because he would not decompensate
    for one to two months, there would be sufficient time for the hospital to
    respond effectively before decompensation occurs.

[14]

The
    respondent Crown maintains that the majoritys decision is reasonable given:
    (1) Mr. Valdezs lack of insight into his mental illness; (2) his stated desire
    to stop taking medication; (3) the historical difficulties with getting him to
    take his medication; and (4) the danger he presents without medication.

[15]

Although
    the hospital supported a conditional discharge at the hearing, it takes the
    position on appeal that the Boards decision was reasonable and it was within
    its power to conclude that it is easier to return a person to hospital for
    treatment when a warrant of committal under a detention order is in place.

Analysis

[16]

Part
    XX.1 of the
Criminal Code

establishes the legislative regime
    for mental disorders and dealing with NCR accused. As Bastarache J. observed in

Mazzei v. British Columbia (Director of Adult Forensic Psychiatric
    Services)
, 2006 SCC 7, [2006] 1 S.C.R. 326, at para 32: the primary
    purpose of the legislative scheme is to protect the public while minimizing any
    restrictions on the NCR accused's liberty interests.

[17]

The
    Board is charged with the responsibility for determining the necessary and
    appropriate disposition, meaning least onerous and least restrictive
    disposition necessary to protect the public:
R. v. Winko
, [1999] 2
    S.C.R. 625, at para. 47. The Board is a specialized, expert body and its
    decisions are owed a significant degree of deference:
R. v. Owen
, 2003
    SCC 33, [2003] 1 S.C.R. 779, at para. 95. Appellate courts are not [to] be
    too quick to overturn a review boards expert opinion on how best to manage
    a patients risk to the public:
R. v. Conway
,
2010 SCC 22, [2010]
    1 S.C.R. 765 at para. 95. See also,
Owen
,
at para. 69.

[18]

The
    issue on this appeal is whether the Boards decision falls within a range of
    reasonable outcomes:
Owen
, at para. 33. A decision will be considered
    unreasonable when the reasons do not bear even a somewhat probing
    examination:
Saikaley Re
, 2012 ONCA 92, 287 O.A.C. 200, at para. 35;
Mazzei
,
at para. 17.  Our task is somewhat hampered by the Boards reasons, which
    are sparse in their application of the least onerous/restrictive test:
Re Marchese
,
    2018 ONCA 307, at paras. 16-23.

[19]

In
    our view the majoritys decision is unreasonable.

[20]

The
    Board was right to be concerned that Mr. Valdez would decompensate if he failed
    to take his medication. We accept the Boards finding, based on Dr. Pearces evidence,
    that if Mr. Valdez were not under the Boards jurisdiction he would stop
    medication and within a few months become psychotic and likely  act out in an
    aggressive manner.

[21]

However,
    we have difficulty with the majoritys cursory consideration of whether Mr.
    Valdezs risk to the public could be managed under a conditional discharge. The
    majority reasoned that it is substantially easier to bring about a return to
    the hospital for individuals who are under a Detention Order and that a
    warrant will always be acted upon to bring a person back to the hospital if
    necessary. However, this would always be true and could always be used to
    justify the refusal of a conditional discharge. But, given the least onerous
    and least restrictive test, something more is required than mere convenience to
    the hospital.

[22]

The
    ease of returning an individual to hospital will not always justify a detention
    order as the necessary and appropriate disposition. As discussed in
Young
    Re
,
2011 ONCA 432, 278 O.A.C. 274,

at para. 26, there are
    multiple ways in which to secure someones attendance at the hospital when they
    fail to comply with a condition of their discharge. For instance, the person
    could be returned: (1) by convening a new hearing under s. 672.82(1) of the
Criminal
    Code
; (2) by resorting to the breach provisions of the
Criminal Code
;
or (3) through the committal provisions available under the
Mental
    Health Act
,
R.S.O. 1990, c M.7.

[23]

The
    Board had a duty to assess the evidentiary record in context, including taking
    into consideration in this case: (1) the risk of non-attendance for medication;
    (2) the mechanisms for securing someones attendance at hospital under the
    conditional discharge framework; (3) the length of time that any such steps may
    take; (4) the effect of that delay on Mr. Valdezs mental health; and (5) the
    risk to public safety posed by any delay in treatment.

[24]

The
    majoritys reasoning does not demonstrate that it took these considerations
    into account. Although Mr. Valdez appears to be a significant risk to public
    safety when off of his medication, the Board found he would not decompensate
    for at least a month, if not more, from the time of him missing an injection.
    This is not a case like
R. v. Breitwieser
, 2009 ONCA 784, 99 O.R. (3d)
    43, in which the appellant was responsible for administering his own
    medication, which could therefore not be monitored, and failing which, he would
    quickly decompensate. There is no evidence here that any short delay in the
    administration of Mr. Valdezs medication would be critical to public safety.
    The evidence on the record is to the contrary.

[25]

For
    these reasons, we return the matter to the Board to consider whether, in light
    of all of the relevant factors, Mr. Valdez should be subject to a conditional
    discharge rather than a detention order.

P. Lauwers J.A.

B.W. Miller J.A.

Fairburn J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Williams v. Young, 2018 ONCA 611

DATE: 20180705

DOCKET: M49155 (C64314)

Feldman, Hourigan and Brown JJ.A.

BETWEEN

Shannon Williams

Applicant

(Respondent in Appeal)

and

Scott Young

Respondent

(Appellant in Appeal)

Benjamin Nielsen, for the moving party/respondent in
    appeal

Shawn Philbert, for the responding party/appellant in
    appeal

Heard and released orally: July 3,
    2018

ENDORSEMENT

[1]

This appeal is properly brought to the Divisional Court under s. 21.9.1
    of the
Courts of Justice Act
. The respondent moves to quash the appeal
    for lack of jurisdiction. The appellant asks that the appeal be transferred to
    the Divisional Court in Oshawa, and has undertaken to try to have the matter
    heard there in September 2018.

[2]

In our view, in light of (1) the complex appeal routes for appeals from
    child custody orders made in the Family Division; and (2) the appeal was
    perfected in a timely way, it is appropriate to transfer the appeal to the
    Divisional Court in anticipation that it will be heard in a timely way there.

[3]

The motion to quash is dismissed and the cross-motion is granted. Costs
    are awarded in the amount of $2,500, in the cause of the merits of the appeal
    in the Divisional Court.

K. Feldman J.A

C.W. Hourigan J.A.

David Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 58 Cardill Inc. v. Rathcliffe Holdings Limited,
    2018 ONCA 672

DATE: 20180802

DOCKET: C64744

Feldman, Hourigan and Brown JJ.A.

BETWEEN

58 Cardill Inc.

Applicant (Respondent)

and

Rathcliffe Holdings Limited

Respondent (Appellant)

Robert Choi, for the appellant

Richard Worsfold, for the respondent

Heard: July 4, 2018

On appeal from the judgment
    of Justice Andrew A. Sanfilippo of the Superior Court of Justice, dated November
    15, 2017, with reasons reported at 2017 ONSC 6828, 55 C.B.R. (6th) 230.

REASONS FOR DECISION

I.

OVERVIEW

[1]

The appellant, Rathcliffe Holdings Limited (Rathcliffe), loaned money
    to the respondent, 58 Cardill Inc. (Cardill), secured by a mortgage on a
    development property (the Mortgage). Cardill defaulted on the loan.

[2]

Rathcliffe, exercising its rights under the Mortgage, appointed a
    receiver over the property. The receiver, Schwartz Levitsky Feldman Inc. (SLF
    Inc.), sold the property and paid part of the sale proceeds to Rathcliffe in
    full satisfaction of the Mortgage debt, including accrued interest. The amount
    paid to Rathcliffe included approximately $351,000, representing an extra three
    months interest on the outstanding principal due under the Mortgage.

[3]

Rathcliffe took the position that it was entitled to the three months
    interest pursuant to one of the additional provisions contained in Schedule B
    of the Mortgage (the Additional Provisions), which states:

12.  The said Chargor covenants with the Chargee that in
    the event of non-payment of the principal amount at the time or times above
    provided in the mortgage then
he shall
    not require the Chargee to accept payment
of the said principal
    amount without first giving three months previous notice in writing, or paying
    a bonus equal to three months interest in advance on the said principal amount.
    [Emphasis added.] [Hereafter the Three-Month Interest Provision]

[4]

Following the payout of the Mortgage, Cardill applied for a declaration
    that Rathcliffe was not entitled to the three months interest and an order
    requiring Rathcliffe to pay the amount to Cardill. The application judge
    granted the relief Cardill sought.

[5]

Rathcliffe appeals. For the reasons that follow, the appeal is
    dismissed.

II.

ANALYSIS

[6]

Rathcliffe does not take issue with the application judges finding, at
    paras. 21-23, that s. 17 of the
Mortgages Act
, R.S.O. 1990, c. M.40,
    does not apply where a mortgagee acts to realize on its security by appointing
    a receiver: see
Ialongo v. Serm Investments Limited
,
54 R.P.R. (4th) 310
(Ont. S.C.), at para. 30. Instead,
    Rathcliffe grounds its claim to interest in the Mortgages Three-Month Interest
    Provision.

[7]

Rathcliffe submits the application judge erred by interpreting the
    Three-Month Interest Provision as one that is mortgagor-centric, embodying a
    right available to the mortgagor: at para. 35. In Rathcliffes view, the
    provision is mortgagee-centric in that it obligates the mortgagor, upon
    default, either to give the three-month written notice or make a payment in
    lieu of notice. It argues that the receiver, acting as agent for the mortgagor,
    required the mortgagee to accept payment of the Mortgage debt, thereby
    triggering the provision.

[8]

In our view, the application judge made no error in rejecting
Rathcliffes submission.

[9]

First, we agree with the application judge that the language of the Three-Month
    Interest Provision indicates that it is only when the Chargor seeks to require
    the Chargee to accept payment of the principal amount that the Chargor agrees
    either to pay the three months interest or give the three months notice.

[10]

Second,
    we do not accept Rathcliffes argument that the application judge misunderstood
    the jurisprudence when he concluded that the receiver did not act as Cardills
    agent in paying out the Mortgage on the receivers sale. The application judge
    correctly stated the governing general principle, articulated by Houlden J.A. in
Peat Marwick Ltd. v. Consumers Gas Co.
(1980), 29 O.R. (2d) 336
    (C.A.), at p. 344:

It seems to me that the receiver and manager in a situation,
    like the present, is wearing two hats. When wearing one hat, he is the agent of
    the debtor company; when wearing the other, the agent of the debenture holder.
    In occupying the premises of the debtor and in carrying on the business, the
    receiver and manager acts as the agent of the debtor company. In realizing the
    security of the debenture holder, notwithstanding the language of the
    debenture, he acts as the agent of the debenture holder, and thus is able to
    confer title on a purchaser free of encumbrance.

[11]

Nor
    do we accept Rathcliffes argument that the application judge erred in law
    when, at para. 44 of his reasons, he held that [i]t would be a
    mischaracterization of the role of SLF Inc. as the receiver privately appointed
    by Rathcliffe to state that the steps taken by SLF Inc. to realize maximum
    recovery of the Property for the benefit of Rathcliffe were actually taken by
    SLF Inc. on behalf of Cardill for the purpose of requesting a pay-out of the
    Mortgage. As this court stated in
Sperry Inc. v. Canadian Imperial Bank of
    Commerce
(1985), 50 O.R. (2d) 267, at p. 277: It is only in realizing
    that the receiver acts as the creditors agent  to give commercial efficacy to
    the security agreement, i.e., so that title may be conferred on the purchaser
    free of encumbrance.

[12]

In
    the present case, the receivers sale agreement with the third party purchaser
    required the conveyance of title to the purchaser free and clear of all
    encumbrances, including the Mortgage. In order to convert the charged asset
    into cash  i.e., close the sale transaction  the receiver was required to
    discharge the Mortgage. To do that, it had to pay Rathcliffe. That payment was
    not made at the request of Cardill but to complete the sale. As a result, the
    process of realization during which the receiver acted as Rathcliffes agent
    necessarily encompassed the discharge of the Mortgage by payment to the
    mortgagee. Consequently, the application judge did not misunderstand or
    misapply the general principles in the jurisprudence.

[13]

Rathcliffe
    contends that the brief endorsement of this court in
1220510 Ontario Inc.
    v. Radium-O Developments Ltd.
, 2017 ONCA 490, affirms the proposition that
    as a matter of law three months interest can be collected by a mortgagee who
    has commenced receivership proceedings. The decision does not stand for that
    proposition. The case involved the enforcement of a negotiated settlement
    following default on a mortgage and the initiation of receivership proceedings.
    The negotiated settlement included payment of three months interest. This
    court upheld the motion judges enforcement of the settlement. The case did not
    involve the interpretation of the three months interest provision or its
    applicability in contested realization proceedings.

[14]

Further,
    we see no error in the application judges finding that the general principle
    set out in
Peat Marwick
was not displaced by the specific language of
    the Mortgage. He considered s. 5(1)(g) of the Additional Provisions, which
    described one of the powers of the receiver as follows:

To execute and deliver to the purchaser of any part or parts of
    the charged lands, good and sufficient deeds for the same,
the Receiver hereby being constituted the
    irrevocable attorney of the Chargor for the purpose of making such sale and
    executing such deed
, and any such sale made as aforesaid shall be a
    perpetual bar both in law and equity against the Chargor, and all other persons
    claiming the said property or any part of parcels thereof by, from, through or
    under the Chargor, and the proceeds of any such sale shall be distributed
    in the manner hereinafter provided. [Emphasis added.]

[15]

We
    agree with the application judges interpretation of that provision, at para.
    45, as one that limits the appointment of the receiver as agent for the
    borrower to the specified purpose of making such sale [of the Property] and
    executing such Deed [in relation thereto]. This would not support the
    characterization of SLF Inc. as agent for Cardill for the purpose of requesting
    pay-out of the Mortgage.

[16]

In
    his reasons, the application judge did not address s. 5(3) of the Additional
    Provisions, which states:

The Chargee shall not be liable to the Receiver for his
    remuneration costs, charges or expenses, and the Receiver shall not be liable
    for any loss however arising unless the same shall be caused by his own gross
    negligence or wilful default; and he shall, when so appointed, by notice in
    writing pursuant hereto, be deemed to be the agent of the Chargor and the
    Chargor shall be solely responsible for his acts and defaults and for his
    remuneration.

[17]

However,
    the application judges conclusion that s. 5(1)(g) would not support the
    characterization of the receiver as agent for Cardill for the purpose of
    requesting pay-out of the Mortgage would apply equally to the interpretation of
    s. 5(3).

III.

DISPOSITION

[18]

For
    the reasons set out above, the appeal is dismissed.

[19]

Cardill
    is entitled to its costs of the appeal fixed in the amount of $11,500,
    inclusive of disbursements and all applicable taxes.

K.
    Feldman J.A.
C.W. Hourigan J.A.
David Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 2212886 Ontario Inc. v. Obsidian Group Inc., 2018
    ONCA 715

DATE: 20180830

DOCKET: C63617

Pepall, van Rensburg and Trotter JJ.A.

BETWEEN

2212886 Ontario Inc., William Porteous and
    Kirsten Porteous

Plaintiffs (Respondents)

and

Obsidian Group Inc., Obsidian Inc. and Gus
    Karamountzos

Defendants (Appellants)

Geoffrey Adair, for the appellants

Daniel MacKeigan and Cole Vegso, for the respondents

Heard: December 15, 2017

On appeal from the judgment of Justice Marc A. Garson of
    the Superior Court of Justice, dated March 21, 2017, with reasons reported at
    2017 ONSC 1643.

COSTS ENDORSEMENT

[1]

The parties have agreed to the costs of the summary judgment in the
    Superior Court. In accordance with their agreement, the respondents
    (plaintiffs) shall pay the appellants (defendants) forthwith the sum of $25,000
    inclusive of disbursements and HST.

S.E.
    Pepall J.A.

K.
    van Rensburg J.A.

G.T. Trotter J.A.