COURT OF APPEAL FOR ONTARIO

CITATION:
Richards v. Rainy
    River Cattlemens Association, 2012 ONCA 260

DATE: 20120424

DOCKET: C53278

Lang, Epstein and Hoy JJ.A.

BETWEEN

Russel Richards

Plaintiff
    (Appellant/                                                                                Respondent
    by way of cross-appeal)

and

Rainy River Cattlemens
    Association
, Ken McKinnon, Amos
    Brielmann, Shawn Hyatt, Jeff Pollard, Jason
    Teeple, Herb Govier and Aarne Hahkala

Defendants (
Respondent/Appellant by way of cross-appeal
)

Roderick W. Johansen, for the appellant

Bradley A. Smith, for the respondent

Heard: April 4, 2012

On appeal and cross-appeal from the judgment of Justice D.C.
    Shaw of the Superior Court of Justice, dated December 29, 2010.

Lang
    J.A.:

INTRODUCTION

[1]

The appellant appeals the trial judges dismissal of his claim for
    damages for breach of a written contract for services.  The appellant, Russel
    Richards, entered into a contract with the respondent, a non-profit
    organization called the Rainy River Cattlemens Association.   The Association
    conducts cattle auctions two to four times a year.  These auctions give local
    cattle producers the opportunity to sell cattle through the Associations sales
    barn.  The Association does not have regular full-time employees or a regular
    operation.  It has a part-time Secretary-Treasurer and a part-time sales barn manager.

[2]

The appellant held the position of sales barn manager and was
    responsible for organizing and conducting the Associations periodic cattle
    auctions.  In 1997, the appellant and the Association began their relationship
    with an oral agreement.  In 2004, the appellant and the Association entered
    into a written, fixed-term contract that was to run until 2010. The Association
    terminated the contract by notice in writing on May 21, 2007.  The appellant
    sued the Association for breach of contract.  Certain Board members of the
    Association counterclaimed against the appellant for slander.

[3]

The trial judge, Shaw, J., dismissed the appellants action on the basis
    of his conclusion that the appellants conduct, most significantly the conduct
    surrounding his behaviour towards the Associations President, amounted to a
    repudiation of the parties contract. The trial judge allowed the counterclaim
    for slander and awarded modest damages to the respondents Ken McKinnon, the
    President and a director of the Association, and Amos Brielmann, a director.
    The appellant does not appeal this aspect of the trial judges decision.

[4]

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

TRIAL JUDGES REASONS

[5]

In comprehensive reasons, the trial judge considered the nature of the
    relationship between the parties and determined that the appellant was a
    dependent contractor.  Since the contract between the parties was for a fixed
    term with no express provision for early termination, the trial judge held
    that, unless the Association had sufficient reason to terminate the contract,
    the appellant would be entitled to all reasonable losses suffered during the
    remainder of the term, subject to his duty to mitigate.

[6]

Virtually all the Associations allegations of misconduct in terms of refusal
    to accept direction from the Board arose from the appellants behaviour during 2006
    which, the trial judge found, accelerated after the re-election of Mr. McKinnon
    as President in 2007 and the election of the Board, which brought in new
    directors.  At that point, the Board wanted to implement changes to the way
    cattle sales were handled.

[7]

Those changes included holding cheques payable to the consignors of the
    cattle until after the buyers cheques had cleared the Associations bank
    account.  They also included matters such as implementing the use of radio
    frequency identification tags, charging higher tagging fees, and keeping
    permanent log books recording the particulars of buyers and sellers.  The
    appellant was resistant to these changes, as he was to the control of the operation
    that the Board expressed an intention to exert.  The appellant wanted to
    continue managing the auctions his way, including the auction scheduled for
    April 28, 2007.

[8]

The trial judge considered allegations that were abandoned or withdrawn
    shortly before trial as part of the background. He then turned to consider a number
    of specific allegations that the Association made at trial and concluded they were
    insufficient to justify the appellants termination.

[9]

One such allegation concerned animals that went missing at auction in
    2006.  One of those animals was left in the Associations pen unattended for
    three weeks.  However, the trial judge concluded, based on the evidence, that
    missing animals were not a marked departure from what appears to have been the
    past experience and did not constitute a breach of contract by the appellant.

[10]

The
    appellant allegedly failed to maintain and provide the Board with a log book
    recording buyer and seller information.  However, the trial judge held, even if
    this amounted to a breach of the appellants responsibilities, that it was not
    sufficiently serious to justify his termination.  While the appellant cancelled
    a radio frequency tagging demonstration scheduled for October 2006, the trial
    judge accepted the appellants testimony that he did so for safety reasons.  He
    also noted that the Board never censured the appellant for the cancellation
    and never re-scheduled the demonstration. Finally, the appellant released
    consignors cheques in 2006 even though the buyers cheques had not yet cleared
    the bank.  Although the trial judge called the appellants conduct ill
    advised, he concluded that in releasing the cheques the appellant had followed
    past practice and had not purposely ignored the direction of the Board. The
    trial judge concluded that the appellants refusal to charge the fees was not a
    breach of contract, as the Board had not in fact required the imposition of the
    new fee.

[11]

While
    the trial judge held that these specific incidents did not justify the
    appellants termination, he took a different view of the appellants other
    behaviour, including his refusal to work with the President.  The trial judge
    observed that, on February 1, 2007, the day that Mr. McKinnon resumed the chair
    as President, the appellant delivered to the Board a list of complaints,
    including his written statement that if Mr. McKinnon were the President, he
    would NOT deal with him.

[12]

At
    trial, the appellant explained his inability to work with Mr. McKinnon on the
    basis that the President had tried to start a fight with him in 2006.  However,
    Mr. McKinnon testified that the appellant was the one who tried to start a
    fight. The trial judge concluded that he preferred the evidence of Mr. McKinnon
    on this point.  In arriving at this assessment of credibility, the trial judge compared
    the loud, often rude, and excitable appellant with the quieter, calmer, more
    understated Mr. McKinnon.  The trial judge also pointed out that the appellant
    was both larger and younger.  Mr. McKinnon was approximately 70 at the time and
    the appellant was 57 years of age. Having rejected the explanation of the
    appellant and having considered the conduct at issue, the trial judge concluded
    that his refusal to work with the President could not reasonably be
    tolerated.

[13]

Indeed,
    the trial judge observed that the appellants conduct went well beyond one
    instance of defiance.  He behaved in a generally hostile and aggressive manner
    at the Board meetings.  He also repeatedly referred to the President and the
    Secretary-Treasurer using extremely derogatory descriptors.  The appellant
    employed this contemptuous and vulgar language not only at Board meetings but
    also in discussions with consignors and buyers of cattle.

[14]

In
    addition, the appellant repeatedly and openly accused the President and the
    Secretary-Treasurer of conduct that amounted to theft or fraud and of cooking
    the books.

[15]

Even
    after the auction was held, the appellant attended the May 3 Board meeting,
    uninvited, and again aggressively accused the President of stealing and the
    Secretary-Treasurer of a cover-up.  The trial judge found that these were
    serious and unfounded allegations about underhanded and dishonourable conduct
    made to the Board as well as to outsiders.

[16]

The
    trial judge concluded that the appellants conduct went well beyond any
    reasonable boundaries and amounted to repudiation of his contract.  On May 21,
    2007, the Association delivered its termination letter, which relied on the
    appellants refusal to work with the President, as well as his insubordination
    to the Board.  The trial judge held that the Association was entitled to
    terminate the appellants services.

ANALYSIS

[17]

The
    appellant raises two grounds of appeal, which I will discuss in turn in the
    context of the principles set out by Gillese J.A. in
Dowling v. Ontario
    (Workplace Safety and Insurance Board)
(2004), 192 O.A.C. 126 and in
Roden
    v. The Toronto Humane Society (
2005), 202 O.A.C. 351.  At para. 49 of
Dowling
,
    Gillese J.A. explains that in employment,
the core question for
    determination is whether an employee has engaged in misconduct that is
    incompatible with the fundamental terms of the employment relationship.  She
    further explains that the sanction imposed for misconduct is to be
    proportional  dismissal is warranted when the misconduct is sufficiently
    serious that it strikes at the heart of the employment relationship.  The
    inquiry is a factual one to be determined by a contextual examination of the
    nature and circumstances of the misconduct.

[18]

Dowling

describes the trial judges task as follows:

1.       determining
    the nature and extent of the misconduct;

2.       considering
    the surrounding circumstances; and,

3.       deciding
    whether dismissal is warranted (i.e. whether dismissal is a proportional
    response).

[19]

In
Dowling
, at para. 72, Mr. Dowling was
    found to have repudiated his employment contract by repeatedly engaging in
    dishonest conduct that was incompatible with that contract.
In
Roden,
two employees were dismissed for their unequivocal refusal to perform their
    assigned duties.  Gillese J.A. explains that their refusal amounted to
    repudiation and at para. 46 that the employer is entitled to accept the
    repudiation and treat the employment relationship as terminated because the
    parties no longer agree on the fundamental terms of the contract.

[20]

Mindful
    of these principles, which apply equally to dependant contractors such as the
    appellant, I turn to his grounds of appeal.

[21]

In
    his first ground, the appellant argues that the trial judge erred in coming to
    the conclusion that the appellants conduct amounted to a repudiation of the
    contractual relationship, in particular because the trial judge failed to
    consider the misconduct in context and the proportionality of the sanction
    imposed.  I do not accept this argument.

[22]

The
    trial judge both expressly and implicitly referred to the context of the
    appellants behaviour, including the fact that the appellant was working for a
    cattlemens association.  He also specifically noted that some latitude must
    be allowed for disputes between parties and that language should be viewed in
    the context of the workplace.  Moreover, the trial judge considered whether
    the appellants conduct was objectively reasonable. The trial judges
    contextual approach is evident from a reading of his extensive and thorough
    reasons considering the circumstances of the appellants conduct.

[23]

The
    trial judge properly identified the appellants misconduct, considered the
    surrounding circumstances and decided that his termination was warranted.  I would
    not give effect to this ground of appeal.

[24]

Second,
    the appellant argues that the trial judge failed to consider the Associations
    duty to warn.  The appellant is correct that the trial judge did not separately
    address this issue.  In my view, that is because the issue was not
    contentious.  If the Association was entitled to dismiss the appellant for
    repudiation of the contract, the appellant was not entitled to warning.  The
    contract was at an end.

[25]

The
    trial judge knew there was a duty to warn in certain circumstances.  For
    example, when he considered the issue of the cancellation of the tagging demonstration,
    the trial judge expressly noted that the Board never censured the appellant
    about this issue.

[26]

However,
    the conduct that the trial judge found justified the appellants termination
    was of a different class.  It was an outright refusal to work with the
    President of this small organization. Working with the President was an
    essential part of the job.  Another essential part of the job was not to make
    unsupported allegations about the President and the Secretary-Treasurer
    stealing and manipulating the books.

[27]

The
    appellant had to have known his conduct was unacceptable.  At the February 28,
    2007 meeting, the appellant threatened to walk from his contract and one of
    the directors, Amos Brielmann, asked him not to hold the board hostage.  The April
    28 sale had to go on.  One of the directors pointed out that the Association
    needed representation at the sale and a Sales Barn Committee was struck to
    deal with some of these issues of conflict pending the auction.

[28]

Once
    the auction was over, the appellants vitriol only increased.  At the very next
    Board meeting, the appellant attended uninvited and stated aggressively that he
    did not want to put up with the President. Moreover, he reiterated his
    unfounded allegations of fraud and cover-up against the President and the
    Secretary-Treasurer.

[29]

A
    fair reading of the trial judges reasons supports his conclusion that the
    appellant was not entitled to any warning in light of his conduct in
    repudiating the contract.

[30]

I
    would not give effect to this ground of appeal.

RESULT

[31]

Accordingly,
    I would dismiss the appeal, which makes it unnecessary to deal with the
    cross-appeal regarding mitigation and damages.

[32]

I
    would award the respondent costs fixed in the amount of $10,000, inclusive of
    disbursements and applicable taxes.

Released: Apr. 24, 2012                                                  S.E.
    Lang J.A.

SEL                                                                  I
    agree G.J. Epstein J.A.

I
    agree Alexandra Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Schutzman (Re), 2012 ONCA
    229

DATE: 20120411

DOCKET: C54180

Goudge, Feldman and Blair JJ.A.

IN THE
    MATTER OF: Scott J. Schutzman (a.k.a. Professor Starson)

An
    appeal under Part XX.1 of the Criminal Code

Scott J. Schutzman (a.k.a. Professor Starson), appearing
    in person

Anita Szigeti,
amicus curiae

Holly Loubert, for the respondent

Janice Blackburn, person in charge of Centre for Addiction
    and Mental Health

Heard: March 30, 2012

On appeal against the disposition of the Ontario Review
    Board dated April 7, 2011.

ENDORSEMENT

[1]

In our view, the conclusion reached by the Board that Professor
    Starson remained a significant threat to the safety of the public was entirely
    reasonable given the evidence before it.  The order it made as a consequence is
    also reasonable.

[2]

Amicus
argues that the Board erred in saying nothing in
    its reasons to explain its rejection of a conditional discharge.  That would
    have been a less restrictive outcome than the order made.

[3]

We do not agree that this omission constitutes reversible error.
    The reasons of the Board describe the outcome it did reach.  The evidence
    before it was that there was no air of reality to a disposition of a
    conditional discharge.  Hence the trigger in
R. v. Breitweiser
, 2009
    ONCA 784 was not met.

[4]

The discussion at the hearing clearly shows that the Board was
    alive to the possibility of a conditional discharge.  Viewed functionally and
    in that context, the Boards reasons are sufficient to allow the necessary
    inference that a conditional discharge was rejected as not sufficiently
    protecting the public.  This argument must therefore be dismissed.

[5]

We would add however, that in our view, it would have been better
    if the Boards reasons had more explicitly explained why a conditional
    discharge was rejected.  In a case like this, where a less restrictive outcome
    is fully discussed at the hearing but not ordered, the person concerned should
    be able to understand clearly from the reasons themselves why it was rejected.
    That is what best maintains public confidence in the justice system.

S.T.
    Goudge J.A.

K.
    Feldman J.A.

R.A.
    Blair J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Shrivastava v. Bank
    of Nova Scotia, 2012 ONCA 233

DATE: 20120411

DOCKET: C54012

Laskin, Simmons and Cronk JJ.A.

BETWEEN

Arun Kumar Shrivastava, Arun K Shrivastava, In
    Trust, and Mrs Rita Shrivastava

Plaintiffs (Appellants)

and

Bank of Nova Scotia, David Mandel and First
    Equity Corp., Jack Press, Fred Yak, Adam Altemed, and Stoneridge Enterprises
    & R A Cruse, and R. Cruse & Associates Ltd, Mohisin Mir

Defendant (Respondent)

No one appearing for the appellants

No one appearing for the respondents

Heard: April 10, 2012

On appeal from the judgment of Justice George R. Strathy
    of the Superior Court of Justice, dated June 27, 2011.

APPEAL BOOK ENDORSEMENT

[1]

It is now 11:20 a.m.  The appellant has not appeared.

[2]

The appeal is dismissed as abandoned.


COURT OF APPEAL FOR ONTARIO

CITATION:
Soteropoulos v. Charles, 2012
    ONCA, 252

DATE: 20120419

DOCKET: C54686

Laskin, Rosenberg and Goudge JJ.A.

BETWEEN

Vasiliki Soteropoulos

Plaintiff (Appellant)

and

Michael Charles

Defendant (Respondent)

David A. Balaban, for the appellant

Sean Dewart, for the respondent

Heard and released orally: April 11, 2012

On appeal from the judgment of Justice Sidney N. Lederman
    of the Superior Court of Justice, dated November 10, 2011.

ENDORSEMENT

[1]

The appellant argues a single ground of appeal: the motion judge failed
    to consider s. 7 of the
Limitations Act
,

and specifically
    whether the limitation period stopped running because of the appellants mental
    and psychological condition.  The appellant submits that having regard to s. 7,
    it is not plain and obvious that her claim should be dismissed.

[2]

We agree with this submission.  However, in fairness of the motion judge,
    we note that s. 7 was not raised before him.

[3]

The appellant acknowledges that her claim was discoverable in March
    2009.  She began this action in May 2011.  Therefore, if s. 7 stopped the running
    of the limitation period for two months the appellants claim is not statute
    barred.  Especially considering the appellants allegation in paras. 7, 39 and
    41 of her statement of claim, and reading her pleadings generously as we are
    required to do, we conclude that it is not plain and obvious the claim is
    statute barred.  It is at least arguable on the basis of the statement of claim
    alone that the appellants mental and psychological condition stopped the
    running of the limitation period for at least two months from March 2009
    onward.

[4]

Accordingly, the appeal is allowed, the order of the motion judge is set
    aside and the defendants Rule 21 motion is dismissed.   The appellant will
    have her costs of the motion in the amount of $500, inclusive of disbursements
    and applicable taxes, and $1,500 for the appeal, inclusive of disbursements and
    applicable taxes.

John Laskin
    J.A.

M. Rosenberg
    J.A.

S.T. Goudge
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Universal Settlements International
    Inc. v. Duscio, 2012 ONCA 215

DATE: 20120404

DOCKET: C54454

OConnor A.C.J.O., Simmons J.A., and Perell J. (
ad
    hoc
)

BETWEEN

Universal Settlements International Inc., The
    Brokerwise Group Inc. and 1508211 Ontario Inc.

Respondents (Appellants)

and

Antonio Duscio and Martina Capital Corporation

Applicants (Respondents)

William W. McNamara and Nicholas D.W. Daube, for the
    appellants

Kevin D. Sherkin, for the respondents

Heard: March 13, 2012

On appeal from the order of Justice T.R. Lederer of the Superior
    Court of Justice, dated May 16, 2011, with reasons reported at 2011 ONSC 968.

Perell, J. (ad hoc):

A.

INTRODUCTION

[1]

In the decision below, relying on sections 17 and 46 of the
Arbitration
    Act, 1991
, S.O. 1991, c. 17, Justice Lederer allowed an application to set
    aside the award of an arbitrator. In so doing he set aside three interlocutory
    orders, an order striking out statements of defence, and the arbitrators final
    award. Justice Lederers order also removed the arbitrator.

[2]

For the reasons that follow, I conclude that the application
    judge erred in setting aside the arbitrators interlocutory orders; however, I agree
    with his decisions to set aside the arbitrators order striking the pleadings and
    the arbitrators final award. I also agree that the arbitrator should be
    removed.

[3]

In the result, I would allow the appeal, in part.

B.

FACTUAL BACKGROUND

[4]

The ill-starred history of the arbitration involving Universal
    Settlements International Inc. (Universal), The Brokerwise Group Inc. (Brokerwise),
    Geoffrey Panos, 1508211 Ontario Inc. ("1508211"), Christopher Halas, Martina
    Capital Corporation ("Martina Capital"), and Antonio Duscio, is set
    out in the application judges reasons. To explain my reasons, it is sufficient
    to summarize that history and to focus on the circumstances around the time of the
    various arbitral orders and awards that were challenged.

[5]

Universal is a financial services company. Before January 2007, it
    was owned by: (1) Martina Capital, whose principal is Mr. Duscio; (2) Brokerwise,
    whose principal is Mr. Panos; and (3) 1508211, whose principal is Mr. Halas.
    The individuals and the corporations were parties to a shareholders' agreement.

[6]

In November 2006, Messrs. Panos and Halas accused Mr. Duscio of
    misappropriating Universals funds, and he responded by triggering the
    shotgun-provision in the shareholders' agreement. They countered by commencing
    an action seeking, among other things, relief from oppression.

[7]

On December 19, 2006, Justice Thorburn stayed the action, and, pursuant
    to the shareholders agreement, the dispute was submitted to arbitration. E.
    Lorne Morphy was appointed arbitrator. In the arbitration, Universal,
    Brokerwise, and 1508211 were the claimants and Mr. Duscio and Martina Capital
    were the respondents.

[8]

The parties signed an arbitration agreement. The subject matter
    of the arbitration was: the disputes between the parties concerning the
    holdings of, operations of, breach of duties to and relationship between the
    shareholders of Universal. The arbitration agreement provided that the arbitrator
    had the authority to make any and all interim, interlocutory, and final orders
    as if he were a judge of the Superior Court.

[9]

On January 16, 2007, the arbitrator made an interim award that
    permitted Brokerwise and 1508211 to be the purchasers of Mr. Duscios and Martina
    Capitals interest in Universal, and on January 25, 2007, the parties entered
    into an escrow agreement that required Brokerwise and 1508211 to pay the $1
    million (USD) purchase price into an escrow account pending the disposition of
    the arbitration.

[10]

In November 2007 and March 2008, Mr. Duscio and Martina Capital
    brought motions seeking the release of a portion of the escrow funds in order
    to pay their lawyers and to provide Mr. Duscio with funds for living expenses. The
    motions were granted, and the arbitrator released $290,000 to Mr. Duscio and
    Martina Capital.

[11]

However, in March 2008, Brokerwise and 1508211 brought a motion (the
    repayment motion) seeking an order requiring the funds to be repaid. They alleged
    that Mr. Duscio had provided false evidence to support the request for the
    release of the money held in escrow.

[12]

Following a series of delays, the repayment motion was argued in November
    2008. At this time, both Mr. Duscio and his corporation, Martina Capital, were
    in bankruptcy; however, orders had been made in both bankruptcy proceedings
    lifting the automatic stays of the arbitration.

[13]

During the repayment motion, Brokerwise and 1508211 asked the arbitrator
    to find that Mr. Duscio and Martina Capital had obtained the funds
    fraudulently. If such a finding was made, the repayment order would survive a
    discharge of the bankruptcies pursuant to s. 178(1) of the
Bankruptcy and
    Insolvency Act
,
R.S.C. 1985, c. B-3.

[14]

On December 16, 2008, the arbitrator released his decision on the
    repayment motion. He directed that the $290,000 be repaid, together with
    interest. In making his order, the arbitrator declined Brokerwise and 1508211s
    request that he make findings of fraud, and he concluded that such findings
    were not necessary for the repayment order.

[15]

On January 7, 2009, Brokerwise and 1508211 submitted claims for
    costs for the repayment motion, and in their submissions, they, once again,
    asked that the arbitrator make findings of fraud with respect to the repayment.

[16]

On December 1, 2009, the arbitrator made his decision as to costs.
    He awarded Brokerwise and 1508211 costs of $275,000 for fees and $24,989.96 for
    disbursements. He made no findings of fraud against Mr. Duscio or Martina
    Capital.

[17]

On December 17, 2009, counsel for Mr. Duscio and Martina Capital
    wrote to the arbitrator. In the letter he asserted that, absent a finding of
    fraud, any obligation to return the money to escrow was subject to the
    bankruptcy of Mr. Duscio.

[18]

On December 31, 2009, Mr. Duscio and Martina Capital commenced an
    application in the Superior Court to have the arbitrator removed and to set
    aside the repayment order and the associated costs order. The notice of
    application was subsequently amended twice, as discussed further below, and
    eventually led to the present appeal.

[19]

On January 28, 2010, Brokerwise and 1508211 delivered a notice of
    motion in the arbitration for an order striking Mr. Duscios and Martina
    Capitals statements of defence and noting them in default. The motion to
    strike the pleadings was argued on February 12, 2010.

[20]

It is important to note that the grounds for the motion to strike
    the statements of defence were that Mr. Duscio and Martina Capital had not
    complied with the repayment order and the associated costs orders.

[21]

Mr. Duscio and Martina Capital delivered written submissions on
    the motion to strike. They argued the arbitrator did not have jurisdiction to
    enforce repayment because that was a matter for the trustees in bankruptcy and
    the Bankruptcy Court.

[22]

On March 16, 2010, the arbitrator released his decision on the
    motion to strike the statements of defence. In his decision, he observed that:
    rule 60.12 of the
Rules of Civil Procedure

provides that a
    statement of defence may be struck out when a party fails to comply with an
    interlocutory order; and, rule 19.01(2) provides that a party may be noted in
    default when its defence has been struck. At paras. 5, 6 and 13 of his reasons,
    he stated that in order to grant the rule 60.12 order, he had to find that Brokerwise
    and 1508211 had been prejudiced by the non-compliance and that Mr. Duscio and
    Martina Capital had acted in a way so as to cause or bring the arbitral process
    into disrepute. He concluded that these criteria had been satisfied, and he
    struck the statements of defence and noted Mr. Duscio and Martina Capital in
    default.

[23]

On April 14, 2010, Mr. Duscio and Martina Capital filed an amended
    notice of application in the Superior Court. They added a request that the
    order striking their statements of defence be set aside. In May 2010, this application
    was scheduled to be heard in November, 2010.

[24]

In the meantime, relying on rule 19.02 (1) of the
Rules of
    Civil Procedure

and without notice to Mr. Duscio and Martina
    Capital, Brokerwise and 1508211 moved for a default award in the arbitration.
    The arbitrator proceeded in the absence of Mr. Duscio and Martina Capital. He heard
viva voce
evidence from Mr. Panos and Mr. Halas and from the Trustee in
    Bankruptcy of Martina Capital.

[25]

On August 23, 2010, the arbitrator released his final award. Relying
    on the evidence on the default award motion and on the allegations of fact in
    the statement of claim deemed to have been admitted as true, the Arbitrator found
    that Mr. Duscio, together with Martina Capital, had abused his fiduciary duty
    and fraudulently converted money from Universal to his own use. The arbitrator awarded
    damages of $5,511,160.85. He added pre-judgment interest of $673,343.06, for a
    total award of $6,184,503.91. Finally, he ordered that the money that was being
    held in escrow be paid to Universal.

[26]

On September 15, 2010, Mr. Duscio and Martina Capital further
    amended their previous notice of application, adding a plea requesting that the
    arbitrators final award be set aside.

[27]

The enforcement of the arbitral award was stayed by the order of
    Justice Stinson dated October 1, 2010:
Universal Settlements International
    Inc. v. Duscio
, 2010 ONSC 5438.

[28]

On January 18-20, 2011, Justice Lederer heard Mr. Duscio and
    Martina Capitals amended application, which had originally been scheduled for November,
    2010.

[29]

The application judge released his decision on May 16, 2011. As
    noted above, he allowed the application. He set aside the repayment order, the
    associated costs orders, the order striking out the statements of defence, and
    the final arbitral award. He also ordered that the arbitrator be removed.

[30]

Leave to appeal having been granted, Brokerwise and 1508211
    appeal to this Court.

C.

DISCUSSION

[31]

In

Inforica
    Inc. v. CGI Information Systems and Management Consultants Inc.
, 2009
    ONCA 642, 97 O.R. (3d) 161, this Court held that judicial intervention in
    arbitration is to be strictly limited to those few circumstances identified
    by the
Arbitrations Act
. At paragraph 14 of his judgment, Sharpe J.A.,
    writing for the court, stated:

It is clear from the structure and purpose of the Act in
      general, and from the wording of s. 6 in particular, that judicial intervention
      in the arbitral process is to be strictly limited to those situations
      contemplated by the Act. This is in keeping with the modern approach that sees
      arbitration as an autonomous, self-contained, self-sufficient process pursuant
      to which the parties agree to have their disputes resolved by an arbitrator,
      not by the courts. As Inforica states in its factum, "arbitral proceedings
      are presumptively immune from judicial review and oversight." The Act
      encourages parties to resort to arbitration, "require[s] them to hold to
      that course once they have agreed to do so", and "entrenches the
      primacy of arbitration over judicial proceedings ... by directing the court,
      generally, not to intervene":
Ontario Hydro v. Denison Mines
        Ltd
.,
[1992]
          O.J. No. 2948
(Gen. Div.), Blair J.

[32]

The
Inforica

decision also provides that the
    court does not have jurisdiction to overturn interlocutory decisions of an
    arbitrator. Sharpe J.A. stated at para. 18:

A significant feature of the modern approach limiting access to
      the courts to review decisions of arbitrators is that there are no appeals from
      procedural or interlocutory orders. In
Environmental Export International
        of Canada Inc. v. Success International Inc.
, [1995] O.J. No. 453 (Gen.
      Div.), at para. 14, MacPherson J. held: "There is nothing in the
Arbitration
        Act
providing for appeals from, or applications to set aside, decisions of
      arbitrators on procedural points. It would be wrong ... for the courts to
      invent such a remedy and inject it into the arbitration process". This
      principle is reiterated in
Tescor Energy Services Inc. v. Toronto District
        School Board
, [2002] O.J. No. 74 (S.C.), at para. 30, where Lane J. held:
      "there is nothing in the Act to permit appeals from or the setting aside
      of decisions of arbitrators on procedural points". This is a deliberate
      policy, "not a lacuna in our law", to protect the autonomy of the
      arbitral process. The creation of a power by the courts to intervene on interlocutory
      rulings by arbitrators "would constitute a most serious reproach to the
      ability of our system of arbitration to serve the needs of users of the
      arbitral process":
K/S A/S Biakh v. Hyundai Corp
.
, [1988]
      1 Lloyd's Rep. 187 (Q.B. Com. Ct.) at p. 189, Steyn J.

[33]

The arbitrators order on the repayment motion and the associated
    costs orders were interlocutory or procedural orders, and in my opinion, it was
    an error to set those orders aside.

[34]

The situation, however, is different with respect to the application
    judges decision to set aside the arbitrators order striking out the
    statements of defence and the final arbitration award, which was made without
    notice and without the participation of Mr. Duscio and Martina Corporation.

[35]

An order striking a statement of defence is a final, not an
    interlocutory, order: see
Four Seasons Travel Ltd. v. Laker Airways Ltd.
(1974), 6 O.R. (2d) 453 (Div. Ct.); also see
Canadian Imperial Bank of
    Commerce v. Lido Drywall Inc
.
(1995), 87 O.A.C. 197 (Div. Ct.). The
    final arbitration award is obviously a final determination of the dispute
    between the parties.

[36]

In the circumstances of the case at bar, the application judge
    had the jurisdiction to set aside the order striking the statements of defence
    and the final arbitral award pursuant to s. 46 (1)  of the
Arbitration Act
.
Section 46(1)

states:

Setting aside award

46. (1) On a partys application, the court may set aside an
      award on any of the following grounds:

6. The applicant was not treated equally and fairly, was not
        given an opportunity to present a case or to respond to another partys case,
        or was not given proper notice of the arbitration or of the appointment of an
        arbitrator.

[37]

In the case at bar, I see no error in the exercise of the courts
    jurisdiction under s. 46 of the
Arbitration Act
. In other words, there
    were circumstances where judicial intervention was permitted by the
Arbitrations
    Act
.

[38]

In this regard, I agree with the application judges finding at
    para. 134 of his reasons that the arbitrators decision to strike the pleading
    was based on Mr. Duscios and Martina Capitals non-compliance with the
    repayment order and the associated costs orders. I also agree with his conclusion
    at para. 113 of his reasons, that because of the respective bankruptcies, there
    was a legal impediment to Mr. Duscio and Martina Capital complying with the
    repayment order and the associated costs orders. As the application judge
    stated at para. 113:

If the money ordered paid was in the estate of a bankrupt, it
      would not be available to be used to comply with the order. If it was not in
      the estate, but was in the hands of the bankrupts, they would, pursuant to the
BIA
,
be obliged to deliver it to the trustees. It would not be that they did not
      comply with the order, but that, under the law, they could not. The orders that
      were made after the order to re-pay all relied on the order to re-pay and the
      failure to comply that followed was a result that, pursuant to the law, the
      respondents could not avoid.

[39]

In the result, I agree with the application judge that the impact
    of the arbitrators order striking the statement of defence and the default
    award was unfair. Mr. Duscio and Martina Capital were denied an opportunity to respond
    to Universal, Brokerwise and 1508211s case because of their failure to comply
    with orders when compliance was neither possible nor lawful.

[40]

I disagree with Universal, Brokerwise, and 1508211s argument
    that because of the orders lifting the automatic stays of the arbitration
    imposed by the
Bankruptcy and Insolvency Act
and an order made in
    April 2009 permitting Mr. Duscio to assume Martina Capitals defence at
    his own expense that it would have been lawful to use funds that either were or
    ought to have been in the hands of the trustee in bankruptcy to comply with the
    repayment order and the associated costs orders.

[41]

The orders lifting the stay only meant that if Universal,
    Brokerwise, and 1508211 were successful in the arbitration, then they would
    become unsecured judgment creditors with a claim that might survive a discharge
    from bankruptcy if fraud by the bankrupt had also been established. The orders
    lifting the stay did not authorize payments to Universal, Brokerwise, and
    1508211 that would be preferences over other creditors.

[42]

To be clear, I do not see the arbitrator as having made a
    jurisdictional error in striking out the statements of defence or in proceeding
    with the arbitration. Rather, I regard his order and his final award as
    reversible under s. 46(1)(6) of the
Arbitration Act
on the grounds of
    unfairness. In the circumstances, it was not fair to strike the statements of
    defence, nor was it fair to proceed to make a final award.

[43]

Unlike the application judge, however, I do not see the order
    striking out the statements of defence and the final arbitration award as
    tainting the repayment order and the costs orders. As I stated above, these
    orders were interlocutory and ought not to have been set aside. They should remain
    in place and their enforceability will depend on the bankruptcy proceedings and
    possibly upon the outcome of the arbitration.

[44]

This brings me to the issue of the removal of the arbitrator. Section
    15(1) of the
Arbitration Act
authorizes the court to remove an
    arbitrator if, among other reasons, he or she does not conduct the arbitration
    in accordance with s. 19. Section 19 of the Act states:

19.  (1) In an arbitration, the parties shall be treated
      equally and fairly.

(2)  Each party shall be given an opportunity to present a case
      and to respond to the other parties cases.

[45]

I see no error in the application judges decision under s. 19.

[46]

It is, nevertheless, regrettable that the arbitrator must be
    removed, because, but for the order striking out the statements of the defence
    and the aftermath of that order, the arbitrators conduct of the arbitration
    was laudatory. This was a difficult case. Throughout, the arbitrator showed
    extraordinary patience and judiciousness. He is to be commended for his
    efforts, but in the circumstances, like the situation when a new trial is
    ordered, it is appropriate that the issues of the arbitration be decided by
    another arbitrator.

[47]

If the parties cannot agree on the appointment of a new arbitrator,
    an application for a court appointed arbitrator may be made pursuant to s. 16
    of the
Arbitration Act
.

[48]

Before concluding, there is one last matter that requires
    comment. In his reasons, the application judge expressed the opinion that Universal,
    Brokerwise, 1508211, their counsel, and (by inference) the arbitrator had been
    disrespectful to the court by continuing with the arbitration once the court
    had scheduled dates for Mr. Duscios and Martina Capitals application pursuant
    to s. 17 and s. 46 of the
Arbitration Act
.

[49]

I note that this opinion was not necessary for the decision
    below, and it plays no part in this courts decision. I add, moreover, that
    while there is a convention that once a notice of motion or notice of
    application is served, a party ought not to take steps that prejudicially
    affect the rights of the other parties to the motion or application and the
    parties should maintain the
status quo
at the time of the service of
    the notice, this convention does not apply to stop an ongoing arbitration
    proceeding. That the convention does not apply is made clear by s. 17(10) of
    the
Arbitration Act
, which provides that [w]hile an application is
    pending, the arbitral tribunal may continue the arbitration and make an award.

D.

CONCLUSION

[50]

I would allow the appeal, in part. I would revise the application
    judges order in accordance with these Reasons for Decision.

[51]

As success on the appeal was divided, I would make no order as to
    costs of the appeal. I would not disturb the costs order of the application
    judge, which remains appropriate.

Released: April 4, 2012 (D.OC.)

Perell J. (
ad hoc
)

I
    agree D. OConnor A.C.J.O.

I
    agree Janet Simmons J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Wodzynski v. Wodzynski, 2012
    ONCA 272

DATE: 20120430

DOCKET: C54005

Feldman and Hoy JJ.A. and Spence J. (
Ad Hoc
)

BETWEEN

Anna Wodzynski

Applicant (Appellant)

and

Krzysztof Wodzynski

Respondent (Respondent)

Michael Czuma, for the
    appellant

Cezary Paluch, for the respondent

Heard:  February 15, 2012

On appeal from the order of Justice Allan R. Rowsell of
    the Superior Court of Justice, dated November 27, 2009.

Spence J.
    (
Ad Hoc
):

[1]

The appellant asks that the order of Rowsell J. dismissing the
    application of the appellant be set aside. The application sought an order to
    transfer property and an order for child support. The appellant requests that
    the matter be sent back to be heard by a different judge, with permission to provide
    further material.

[2]

The issues on the appeal concern the conduct of the trial and the
    disposition made by the trial judge of the issue as to the effect of the
    agreement allegedly made between the parties on April 23, 2001 (the Separation
    Agreement). In her amended application, the appellant asked the court to
    uphold the provision of the Separation Agreement under which she submits she is
    entitled to acquire the property owned jointly by the parties at 73 Ontario
    Street, Oshawa. In the reasons for judgment the trial judge determined that the
    court could not give effect to the Separation Agreement.

The Conduct of the Trial

[3]

The appellant represented herself.

[4]

The appellant objects that at the outset of the trial, the judge did not
    ask her if she wished an adjournment. However, the appellant did nothing to
    indicate that she was not ready to proceed or to suggest that she did not wish to
    proceed.  She told the court that she had her other witness in court.  She told
    the court that it was not her choice to represent herself but that she had been
    left without representation two months earlier and had been unable to find
    another lawyer. There was no reason to construe these remarks as indicating a
    wish for further time to seek a lawyer.

[5]

The appellant objects to the courts having accepted the document books
    of the respondent for filing as exhibits at the outset of the trial. The judge
    asked the appellant if she had any objection to their filing and she said she
    did not.

[6]

The appellant said that she had other documents that were not included
    in the document books filed by the respondent. The judge said that the court
    would deal with any such documents as and when it became appropriate to do so.
    It does not appear that the judge acted inappropriately in regard to these
    documents of the parties.

[7]

The appellant objects to the court having accepted exhibits 6 and 7 for
    filing as exhibits when they were only documents prepared by counsel for the
    respondent. However, the court made it clear that it was prepared to receive
    them only for the purpose of any assistance they might provide in understanding
    and assessing the evidence. The exhibits were filed with descriptions that they
    were only documents prepared by counsel for the assistance of the court. In
    effect, they were filed as exhibits merely for identification and ease of
    reference.

[8]

In the factum of the appellant, she objects that the judge allowed her presentation
    of her evidence to become nearly incomprehensible. The appellant did not seek
    to stop the presentation of evidence. Apart from the matter considered below
    relating to the Separation Agreement, there is no suggestion as to what in
    particular the judge ought to have done to assist the appellant in the
    presentation of her evidence or that the appellant was prejudiced by not having
    received such assistance.

[9]

The appellant objects that the judge did not explain what was involved
    in making final submissions in advance.  However, the judge did so prior to the
    lunch break on the day on which the submissions were to be made and, without
    being requested to do so, extended the lunch break period until 2:30 p.m.  The
    appellant made her final submissions after the break.  There is no submission
    as to what the appellant would have said that she had not already said if she
    had received further instruction from the judge. There was nothing unsatisfactory
    about the way the judge dealt with the transition to the final submissions.

[10]

With
    respect to the Separation Agreement, the appellant objects that the judge did
    not ask the son of the appellant, when he was giving his evidence, whether his
    mother and father had signed the Separation Agreement as the appellant said
    they had done.  The appellant could have put that question to the witness
    herself.  If she had done so, and his answer had been affirmative, that
    evidence would have been relevant although, for the reasons set out below, it
    would not have been determinative. The respondent might well have objected to
    the judge putting that question on the basis  that it would amount to assisting
    the appellant leading evidence as to the merits of her case. The evidence of
    the witness might not have been favourable to the appellant or it might have
    opened an avenue for cross-examination that could have led to unforeseeable
    results.  Whether or not to ask such a question in such circumstances can only
    be a matter for the exercise of discretion of the trial judge. There is no
    reason to find that the judge acted inappropriately in this regard.

[11]

The
    appellant objects to the judge having told her that he did not think she needed
    to call as a witness a lawyer, Ms. Krystkowicz. The appellant had taken the
    Separation Agreement to Ms. Krystkowicz for her notarial seal. The trial judge
    suggested that the lawyer was not going to assist the court because the
    notarial seal was not an issue.

[12]

The
    trial judge made this comment at the end of a series of questions and answers that
    occurred towards the end the cross-examination of the appellant. The appellant
    had earlier concluded the evidence in chief without calling the lawyer as a
    witness. Counsel for the respondent asked her whether she was planning on
    calling the lawyer as a witness. The question was asked with reference to the
    fact that a name, address, and telephone and fax numbers purporting to be those
    of the lawyer appeared on the Separation Agreement together with what appears
    to be a signature and a notarial seal. The appellant said the judge had to say
    whether the lawyer should be called. The judge said it was for the appellant to
    decide what evidence she was calling. The appellant said that the lawyer was not
    on the witness list. The series of questions and answers continued as follows:

THE COURT:        Okay.  So  what is she going to say in any
    event?

A.

Pardon me?

THE COURT:        Whats she going to say?  She didnt see
    anybody sign this agreement; did she?  That was your evidence; right?  That
    this document was signed before?

A.

We were there and we
    sign it.

THE COURT:        Okay.  But I want to be clear; where was this
    document signed?

A.

When?

THE COURT:        Where?

A.

Where? This document was signed in April 25
th
, 2001, in  oh,
    because we sign it, this document, I sign it, he sign it and witnesses and
    after we went to  .

THE COURT:  Okay.  And where did
    that take place?

A.

In 59 Daines Drive.

THE COURT:        Right.  All
    right.
So Ms. Krystkowicz can only say somebody brought this to me and I
    put my seal on it; right?

A.

Yes
.

THE COURT:        So I dont think
    that helps anybody; does it?

MR. JAGIELSKI:    No.

A.

I dont know. I dont
    know but we went there.

THE COURT:        Mam, do you
    understand

A.

Yes, I understand.

THE COURT:         just a minute.
    With regard to a separation agreement?

A.

Yeah.

THE COURT:        There are some
    specific legal requirements.
Having a lawyer put a notarial seal on a document
    after its been signed doesnt make the document any more or less valid, so I
    dont think you need to call this lawyer with regard to this agreement because
    shes not going to assist the court.
Do you understand that?

A.

Yeah.

THE COURT:        Okay.

A.

Then agreement is not
    valid?

THE COURT:        I didnt say that.

A.

Okay.

THE COURT:        Thats a matter
    for argument and I want to hear from both parties with regard to that.  Im not
    going to decide on this document at this point but the fact that the lawyers
    sealed doesnt make it any more or less valid; right?

A.

Yeah, okay.  Yeah,
    yeah, okay.

THE COURT:        I dont think we
    need to worry about that.  [Emphasis added.]

[13]

What
    is important here are the parts of the exchange that are emphasized above.

[14]

Based
    on the answer given by the appellant as to the facts that the lawyer could
    testify to, there was nothing objectionable in the advice the judge gave the
    appellant.

[15]

The
    respondent denied signing the Separation Agreement or attending at Ms.
    Krystowicz's office. After the respondent testified, the judge asked the
    appellant if she had any additional evidence that she wished to call in reply
    to any issues raised by the respondent. The appellant declined to call any
    evidence in reply.

[16]

The
    appeal book and compendium contain a copy of an affidavit purportedly sworn by Ms.
    Krstowicz on December 4, 2009, close to a month after the trial.  There was no
    evidence before this court about this document. There was no motion before the
    court for the introduction of fresh evidence.

[17]

The
    appellant objects that during the tendering of the evidence, the trial judge
    said that the
Family Law Act
required the property to be sold because
    it was jointly owned. No objection is taken to the statement as a matter of law
    concerning the treatment of jointly-owned property generally under the
Family
    Law Act
. The trial judge did not make the comment during the presentation
    of the evidence of the appellant. It was said later, about halfway through the
    cross-examination of the appellant. The trial judge made the remark while he
    was seeking to clarify whether the respondent was seeking an order for the sale
    of the property. It was relevant to seek this clarification because counsel for
    the respondent had directed a series of questions to the appellant about the
    value of the property and the judge sought to determine how the value of the
    property could be relevant if the order which the respondent sought was for
    sale.  At the end of the exchange on this subject, the judge concluded that the
    value of the property was not the issue.

[18]

In
    the course of the exchange on this subject the appellant interjected, without
    having been asked any question, that she wanted to keep the property.  The
    point of the remark of the judge was that that was not an option in respect of
    family property that was jointly-owned.  The judge was not directing his remark
    to the separate question whether the Separation Agreement was enforceable. In
    her final submissions, the appellant relied upon the Separation Agreement as
    she had done before. There is no evidence to suggest that the appellant
    considered that the remark of the judge had foreclosed her doing so.

[19]

In
    summary, from my review of the transcript, the trial judge attempted throughout
    the trial to assist the appellant, as needed, and to ensure that the trial was
    conducted in a manner that was fair to both parties.

[20]

For
    the above reasons the objections of the appellant with respect to the conduct
    of the trial are without merit.

The Decision about the Separation Agreement

[21]

The
    decision about the Separation Agreement must be understood and assessed in the
    context of the application of the appellant and the evidence and the
    submissions in the course of the trial.

[22]

In
    paragraph 8c of her amended application, the appellant characterized the
    Separation Agreement as a separation agreement and asked the court to uphold the
    Separation Agreement. In her initial submissions to the court the appellant characterized
    the Separation Agreement as a separation agreement and she did so again in
    cross-examination.

[23]

The
    Separation Agreement, which is dated April 23, 2001, does not meet the
    requirements for a separation agreement under s. 54 of the
Family Law Act
,
    R.S.O. 1990, c. F.3. That provision requires that the parties to a separation agreement
    must, at the time of entering into it, be living separate and apart. The judge
    found that the date of separation was January 1, 2002, and not January 1, 2001
    as the appellant had submitted. That finding is not challenged.

[24]

Moreover,
    it is apparent from the terms of the Separation Agreement, which provides that
    its disposition of property is to apply in case of separation and divorce, that
    it was not made after the parties had separated, but rather beforehand.

[25]

The
    appellant objects that the court wrongly ended its analysis with a conclusion
    that amounted only to saying that the Separation Agreement was not a valid
    separation agreement when the court should instead have continued the analysis
    to determine whether the Separation Agreement was valid as a marriage contract
    under s. 52 of the
Family Act
.  Section 52(1) provides as follows:

52(1)  Two persons who are married to each other or
    intend to marry may enter into an agreement in which they agree on their
    respective rights and obligations under the marriage or on separation, on the
    annulment or dissolution of the marriage or on death, including,

(a)     ownership in or division of property;

(b)     support obligations;

(c)     the right to direct the education and
    moral training of their children, but not the right to custody of or access to
    their children; and

(d)     any other matter in the settlement of
    their affairs.

[26]

The
    appellant did not make any submissions at trial that her use of the term separation
    agreement was meant to refer, not only to a separation agreement under s. 54
    of the Act, but also to a marriage contract under s. 52.  Nor did the trial
    judge have any reason from the materials before the court to address the
    possibility. The term Separation Agreement was used in the amended
    application of the appellant.  The appellant said throughout the trial that the
    separation date was January 1, 2001, which was consistent with her claim that
    the Separation Agreement dated April 23, 2001 was a separation agreement.

[27]

In
    the reasons for judgment the judge did not restrict his consideration only to
    matters which related to the status of the Separation Agreement as a separation
    agreement. The judge gave other reasons for his conclusion that the purported
    Separation Agreement is not a valid Agreement.

[28]

In
    particular, the judge found that the appellant had not paid the $100,000 amount
    that the Separation Agreement provided was to be paid to the respondent in
    order for the appellant to be entitled to acquire the assets mentioned in the
    Separation Agreement.

[29]

This
    finding was important because the contention of the appellant at trial was that
    she had paid the $100,000 and she was therefore now entitled to acquire 73
    Ontario Street. The appellant was unable to provide details of how she had paid
    the $100,000 to the respondent. The finding is not raised as an issue in the
    notice of appeal or in the factum of the appellant. Counsel for the appellant
    made no submission about it. Accordingly, the finding, with which I in any
    event agree, cannot be disturbed. That means that even if the Separation Agreement
    otherwise constituted a valid marriage contract, the court could not grant the
    relief that was sought by the appellant in her application.

[30]

In
    her evidence the appellant appeared to concede that she knew that the
    Separation Agreement may not be valid.

[31]

The
    appellant testified that she wrote the Separation Agreement. It provides that
    the respondent will accept $100,000, and will leave all assets (including both
    properties owned by the parties and the delicatessen operated by the parties)
    to the appellant. The $100,000 amount appears to have been determined without
    regard to the value of the parties' assets and liabilities.

[32]

According
    to the appellant, when they took the Separation Agreement to Ms. Krystkowicz, Ms.
    Krystkowicz told them that she would have to prepare a "legal" agreement.
    She subsequently did so, and advised the parties to obtain independent legal
    advice. The appellant testified that the respondent refused to sign the
    agreement drafted by Ms. Krystkowicz. Also according to the appellant, the two
    different lawyers who represented her in this matter were aware of the Separation
    Agreement. In her words, "Nobody wanted to show."

[33]

Moreover,
    the appellants conduct was inconsistent with the existence of a binding agreement.
    While the Separation Agreement also provides that the respondent will not be
    required to pay child support, the appellant sought and, on February 1, 2005,
    obtained an order requiring the respondent to pay child support. The respondent
    paid child support for some four years and ten months before the appellant took
    the position at trial that the Separation Agreement was valid.

Conclusion

[34]

For
    the reasons set out above, I would dismiss the appeal.  At the hearing, it was
    agreed that the successful party would be entitled to costs in the amount of $5,000.
    The respondent is therefore entitled to costs in the amount of $5,000,
    inclusive of disbursements and HST.

Released: Apr. 30, 2012

KF                                                                    Spence
    J. (ad hoc)

I
    agree K. Feldman J.A.

I
    agree Alexandra Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
1067609 Ontario Inc. (Turner's
    Garage) v. Schell, 2012 ONCA 310

DATE: 20120511

DOCKET: C54809

MacPherson, Gillese and Blair JJ.A.

BETWEEN

1067609 Ontario Inc., o/a Turners Garage

Plaintiff (Respondent)

and

Lyndel Schell and BDO Canada Limited, Trustee in
    Bankruptcy for David Schell

Defendants (Appellants)

D. Andrew Thomson, for the appellants

David A. Morin, for the respondent

Heard and released orally: May 9, 2012

On appeal from the order of Justice Edward J. Koke of the
    Superior Court of Justice, dated December 5, 2011.

ENDORSEMENT

[1]

The appellants were served with the statement of claim on August 12,
    2010.  They delivered, but did not file, a statement of defence.  Ultimately,
    they were noted in default and an undefended trial date was set for September
    12, 2011.

[2]

Shortly before the scheduled trial date, the appellants brought a motion
    in which they sought, among other things, to set aside the noting in default
    and extend the time for filing the statement of defence.

[3]

In detailed reasons for decision, the motion judge carefully went over
    the factual background.  He then articulated the legal principles that govern
    the setting aside of a noting in default.  The appellant accepts that his
    articulation of the governing legal principles is accurate.  Thereafter, the
    motion judge gave extensive reasons for concluding that the appellants failed
    to demonstrate a continuing intention to defend.  In summary, these reasons
    show that despite being repeatedly advised of the need to file the appropriate
    documents or suffer the legal consequences, it was not until August 23, 2011
    some six days before the scheduled trial date and more than a year after having
    been served with the statement of claim  that the appellants retained a lawyer
    and instructed him to bring a motion to set aside the default judgment.

[4]

The motion judge also found that the appellants explanation for their
    failure to file the statement of defence within a reasonable time period was
    both vague and incredible.  Again, he gave thoughtful reasons for this
    finding.

[5]

Further, the motion judge found that the appellants had failed to bring
    their motion to set aside expeditiously.  This finding too, was fully available
    to the motion judge on the record.

[6]

Setting aside is a discretionary order.  We see no error in the motion
    judges exercise of discretion in refusing to set aside the noting in default.
    On the contrary, on the record before us, the motion judge was fully justified
    in dismissing the motion to set aside.

[7]

Accordingly, the appeal is dismissed.  Costs of the appeal to the
    respondent fixed at $8,000, inclusive of disbursements and applicable taxes.

J.C.
    MacPherson J.A.

E.E.
    Gillese J.A.

R.A.
    Blair J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
1720608 Ontario
    Inc. v. Rempel Maximum Ice Services Inc.,   2012 ONCA 306

DATE: 20120514

DOCKET: C52755

MacPherson, Gillese and MacFarland JJ.A.

BETWEEN

1720608 Ontario Inc.

Plaintiff (Respondent)

and

Rempel Maximum Ice Services Inc. and Peter Thomas
    Rempel

Defendant (Appellants)

Steven Nagy, for the appellant

Joseph Gottli, for the respondent

Heard: May 8, 2012

On appeal from the order/judgment of Justice Linda M. Walters
    of the Superior Court of Justice, dated August 19, 2010.

ENDORSEMENT

[1]

On February 1, 2007, pursuant to a written asset purchase agreement, the
    defendant Rempel Maximum Ice Services Inc. (Rempel) sold its refrigeration
    services and repair business to the respondent for $155,000, comprised of
    $55,000 for tangible assets and $100,000 for goodwill.  The agreement required
    that Peter Rempel enter into a five year employment agreement as general
    manager of the business at an annual salary of $50,000 plus potential
    performance bonuses.  The agreement also required that Rempel not compete with
    the respondent and change its name within 60 days.  The agreement also included
    a customary indemnification clause.

[2]

Peter Rempel quit his employment with the respondent on October 26,
    2007.

[3]

On January 28, 2008, the respondent brought an action for damages and
    injunctive relief against the appellants.  On September 30, 2009, the
    respondent obtained summary judgment against the appellants, including a
    finding, reflected in paragraph 2 of the Judgment, that the defendants are in
    breach of and have made false, misleading and fraudulent misrepresentations to
    the plaintiff to induce the plaintiff to enter into the asset purchase
    agreement.

[4]

The motion judge, Walters J., directed a reference to assess damages.
    In a judgment dated August 19, 2010, Walters J. assessed damages at $110,000,
    allocated as follows: $5,000 on consent for disgorged profits; $75,000
    repayment of goodwill; and $30,000 in general damages.

[5]

On September 21, 2010, the motion judge awarded costs to the respondent
    fixed at $60,000 on a partial indemnity basis.

[6]

The appellants appeal and the respondent cross-appeals from various
    aspects of the motion judges damages award.

The appeal

[7]

The appellants contend that there was no basis for an award of loss of
    goodwill.  We disagree.  The appellants counsel on the reference conceded that
    some repayment (he suggested $25,000) for loss of goodwill was in order.  We
    can see no basis, especially given Peter Rempels serious misconduct and his
    early exit from the respondent (only nine months into a five year employment
    contract) for quarrelling with the quantum set by the motion judge, namely,
    $75,000.

[8]

The appellants submit that no award for general damages should have been
    made.  Again, this is directly contrary to the position taken by their counsel
    on the reference, which was that a general damages award on the lower side of
    the $25,000  $50,000 range sought by the respondent was appropriate.  The
    $30,000 award fits comfortably within this submission.  In any event, we see no
    basis for interfering with the quantum set by the motion judge.

[9]

The appellants have not sought leave to appeal the costs order.
    However, in their factum they submit that it should be reduced to $15,000.  We
    see no basis for this submission.

The cross-appeal

[10]

The
    respondent points out that Mr. Rempel was paid a salary of $37,500 during his
    nine months of employment.  The respondent says that he did not devote his full
    time and attention to the business and that often he could not be located.
    Accordingly, the respondent submits that the motion judge erred by not ordering
    a repayment, which the respondent suggests should be 50 per cent, of Mr.
    Rempels received salary.

[11]

We
    do not accept this submission.  Although Mr. Rempel behaved badly and even
    dishonestly, we do not think that the motion judge made a palpable and
    overriding error in concluding that [t]he plaintiffs evidence on this point
    is not sufficient to satisfy the court that Mr. Rempel failed in his duties as
    general manager during the period of time he received compensation.

[12]

The
    motion judge awarded no damages for loss of future profits resulting from
    breaches of the agreement.  The respondent says that she erred in reaching this
    conclusion, especially in light of the appellants false, misleading and
    fraudulent misrepresentations to the respondent.

[13]

We
    disagree.  In our view, it was not a palpable and overriding error for the
    motion judge to conclude that there was insufficient evidence to show that Mr.
    Rempels poor job performance, early resignation and fraudulent
    misrepresentations resulted in lost profits, especially a loss of future
    profits.  As the motion judge pointed out, the business was losing money when the
    respondent purchased it.

[14]

The
    respondent contends that the motion judge erred by not awarding punitive
    damages.  In light of the categories and quantums of damages awarded by the
    motion judge, and recognizing that this is an area in which motion and trial judges
    deserve a wide strike zone, we would not interfere with the motion judges
    decision on this issue.

[15]

Finally,
    the respondent seeks leave to appeal the costs award of $60,000 on a partial
    indemnity basis.  It seeks either a costs award of $95,000 on a full indemnity
    basis, pursuant to the terms of the agreement, or $90,000 on a substantial
    indemnity basis because its damages award was higher than its valid offer to
    settle.

[16]

We
    see no basis for interfering with the trial judges exercise of discretion in awarding
    costs of $60,000 to the respondent.

Disposition

[17]

The
    appeal and cross-appeal are dismissed.  Each party shall bear its own costs of
    the appeal.

J.C.
    MacPherson J.A.

E.E.
    Gillese J.A.

J.
    MacFarland J.A.