COURT OF APPEAL FOR ONTARIO

CITATION: David S. LaFlamme Construction Inc. v. Canada
    (Attorney General), 2014 ONCA 775

DATE: 20141106

DOCKET: C58608

Strathy C.J.O, Feldman and Lauwers JJ.A.

BETWEEN

David S. LaFlamme Construction Inc.

Plaintiff (Appellant)

and

Attorney General of Canada

Defendant (Respondent)

Ronald W. Price and Chris Merrick, for the appellant

Andrew Gibbs and Leah Garvin, for the respondent

Heard: October 30, 2014

On appeal from the order of Regional Senior Justice Charles
    T. Hackland of the Superior Court of Justice, dated March 7, 2014, with reasons
    reported at 2014 ONSC 1379.

ENDORSEMENT

[1]

The appellant, the successful bidder on a federal contract for a dam to
    be built in northern Quebec, seeks damages from the respondent for negligent
    misstatement and breach of contract on the basis that there were material
    misrepresentations in the tender documents.

[2]

The appellant started lawsuits in Ontario and Quebec. The Quebec action has
    been stayed pending the outcome of this appeal.

[3]

The Attorney General of Canada
    moved for an order striking this action on two bases. First,
it was plain and obvious that General Conditions (GC)
    6 and 35 of the contract extinguished the appellants right to claim in tort
    against the respondent. Second, the Ontario court did not have subject-matter
    jurisdiction over the Crown under
s. 21(1) of the
Crown Liability
    and Proceedings Act
,

R.S.C. 1985, c. C-50 (
CLPA
),
because the
    claim arose in Quebec.

[4]

Section 21(1) of the
CLPA
provides for concurrent subject-matter jurisdiction
    over claims against Her Majesty in right of Canada in either the Federal Court
    or in the superior court of the province in which the claim arises.

[5]

The motion judge struck the action
    for lack of subject-matter jurisdiction. He found that the claim in tort would
    have arisen in Ontario, where the tort is alleged to have occurred, but that it
    was plain and obvious that the appellant had contracted out of any right to claim
    in tort. After applying the correct test for determining where the contract
    claim arose, as set out in the leading case of
Rowe v. Canada
    (Attorney General
) (2004), 186 O.A.C. 106
    (C.A.), he determined that the claim arose in Quebec and not Ontario. As a
    result, the court did not have jurisdiction to hear the action.

[6]

The appellant submits that the
    motion judge erred in law by failing to find th
at, for the purposes of
    s. 21(1) of the
CLPA
, the appellants claim in contract against the
respondent

arose
    in Ontario, so that the Ontario court had subject-matter jurisdiction over the

appellants
    claim.

[7]

We disagree. Whether a court has
    jurisdiction over a matter under the
CLPA
is a question of law on which the judge must be
    correct. In
Rowe
, in order to
    determine jurisdiction under s. 21(1) of the
CLPA
, this court examined where the substance of the claim
    occurred and found that the motion judge erred in his conclusion on that issue.
    The court is required to examine the facts surrounding the claim in the light
    of the elements of the alleged cause of action in order to decide where the
    substance of the claim arose.

[8]

In this case, the motion judge found,
    at para 4:

I think it is quite clear that the contractual claim arises in
    Quebec. This is the only conclusion that can be reasonably drawn from a
    fact-specific analysis of the substance of the claim, see
Rowe v. Canada
    (Attorney-General)
, (2004) 186 O.A.C. 106 (C.A.). This was a major
    construction project to build a dam in Northern Quebec. [The appellants]
    project manager was on site directing the work over the course of the project.
    Although [the appellants] offices were situated in Stittsville, a suburb of
    Ottawa, the contract was administered out of the offices of [Public Works and
    Government Services Canada] in Gatineau, Quebec.

[9]

He applied the correct test and
    did not err in his conclusion.

[10]

The appellant also argues that
the motion judge erred in law in finding, pursuant to
    rule 21.01(1)(a) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194,
that it was plain and obvious that GCs 6 and 35 of the contract
    extinguished the appellants right to assert a claim in tort. If he has a valid
    claim in tort that arose in Ontario, then the court in Ontario would have
    jurisdiction over that claim.

[11]

W
e agree with the motion judge on the effect of GC 35, which merges the
    Crowns concurrent tort liability into the contract by providing an exclusive contractual
    mechanism for resolving the appellants claims, including a claim for negligent
    misstatement.

[12]

As the appellant therefore cannot
    assert a claim in tort, that claim does not assist to give the court subject-matter
    jurisdiction over this action.

[13]

The
    appeal is therefore dismissed, with costs fixed in the agreed amount of $17,500
    inclusive of disbursements and HST.

G.R. Strathy C.J.O.

K. Feldman J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Dick v. McKinnon, 2014 ONCA 784

DATE: 20141107

DOCKET: C58362

Strathy C.J.O., Feldman and Lauwers JJ.A.

BETWEEN

Richard
    Dick,
Steve Marek by his Litigation Guardian,

David Marek
and
    John Kuca

Plaintiffs (
Appellant
)

and

Robert Duncan McKinnon, Tubular Steel Inc. and
    1086668 Ontario Inc.

Defendants (Respondents)

Daniel J. Dochylo, for the appellant

R. Jonathan McKinnon, for the respondents

Heard: October 31, 2014

On appeal from the judgment of Justice E.M. Morgan of the
    Superior Court of Justice, dated January 17, 2014 and February 7, 2014, with
    reasons reported at 2014 ONSC 342 and 2014 ONSC 917.

ENDORSEMENT

[1]

The motion judge made an order under rule 49.09 of the
Rules of
    Civil Procedure
, R.R.O. 1990, Reg. 194, enforcing a settlement made in
    2005 between the appellant and the respondents. The settlement called for the
    payment of $700,000 by the respondents in exchange for the appellants interest
    in shares of the corporate respondent, Tubular Steel Inc. The appellant resists
    enforcement of the settlement on the ground that at the time of the settlement
    in 2005 he lacked mental capacity to consent to the settlement and to instruct
    counsel.

[2]

Before the motion judge, and in this court, the appellant argued the
    issue must be addressed under rule 7.08 of the
Rules
, dealing with the
    approval of a settlement made by a person under a disability. We agree with the
    motion judge that rule 7.08 does not apply, because the appellant had not been
    found to be under a disability and no litigation guardian had been appointed.

[3]

A person who is eighteen years of age or more is presumed to be capable
    of entering into a contract:
Substitute Decisions Act, 1992
, S.O.
    1992, c. 30, s. 2(1).

[4]

This court has observed that it is well-established law that a
    solicitor of record has the ostensible authority to bind his or her clients and
    that opposing counsel are entitled to rely upon that authority in the absence
    of some indication to the contrary:
Oliveira v. Tarjay Investments Inc.
,

[2006] O.J. No. 1109, at para. 2 (C.A.), referring to
Scherer v.
    Paletta
, [1966] 2 O.R. 524 (C.A.) and
Mohammed v. York Fire and
    Casualty Insurance Co
.,

[2006] O.J. No. 547
,
    at para. 20 (C.A.).

[5]

The motion judge found the appellant had received both legal and
    accounting advice and the settlement was negotiated and finalized by his
    solicitor of record. He clearly found the appellant had not discharged the onus
    of proving:

·

that he lacked capacity;

·

that his solicitor acted without instructions;

·

that the respondents were aware of any lack of capacity or of any
    limits on the solicitors authority; or

·

that the settlement was unfair.

[6]

The motion judges conclusions on the latter two issues are dispositive
    and were open to him on the evidence. There is no basis on which we can
    interfere. We therefore dismiss the principal ground of appeal.

[7]

We do, however, allow the appeal from the disallowance of interest on
    the purchase price of the appellants shares. The respondents have had the
    benefit of the shares in the intervening years. Mr. McKinnon candidly
    acknowledged the shares had appreciated in value, a circumstance that appears
    not have been brought to the attention of the motion judge. The appellant is
    entitled to interest on the sum of $700,000 at the rate of 2.8% per annum.

[8]

In light of the divided success on the appeal, we are not inclined to
    award costs. If, however, the parties wish to make submissions, they may do so in
    writing, within 15 days.

G.R. Strathy C.J.O.

K. Feldman J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Economopoulos (Re), 2014 ONCA 773

DATE: 20141105

DOCKET: C58177

Hoy A.C.J.O., Gillese and Lauwers JJ.A.

RE:

Constantine (Gus)
    Economopoulos
,
1551666 Ontario Inc.
, Anjoca Holdings Inc., Heritage
    Pancake House Ltd.,
Vida Prijic
, Peter Nicolopoulos and Aristides
    Nicolopoulos

And in the matter of an
    application for petition [sic] and sale and an order of judicial sale of
    certain property known municipally as 815 Juliana Drive, Woodstock, Ontario

(
Appellants
) (
Respondent
)

Montgomery Shillington, for the appellants Constantine (Gus)
    Economopoulos and 1551666 Ontario Inc.

Sean Flaherty, for the respondent Vida Prijic

Heard: July 16, 2014

On appeal from the order of Justice Kelly A. Gorman of
    the Superior Court of Justice, dated February 14, 2014.

COSTS ENDORSEMENT

[1]

In reasons dated October 7, 2014, the court allowed the appeal in this
    matter and, among other things, set aside the costs order below.  This courts reasons
    indicated that if the parties were unable to resolve the matter of the costs
    below, they could make brief written submissions on the matter.

[2]

We have now received and considered such submissions.

[3]

In setting costs of the motion below, we note that much of the time
    claimed by the appellants related to necessary housekeeping matters regarding the
    ultimate sale of the Property.  Further, we accept the respondents submission
    that making the costs payable from the proceeds of the sale of the Property is
    not only fair, in the circumstances of this case, but should also encourage
    both the sale of the Property and resolution of the underlying proceeding.

[4]

Accordingly, costs of the motion below are ordered in favour of the
    appellants, fixed in the amount of $4,500, inclusive of disbursements and all
    applicable taxes, such costs to be payable out of the proceeds of the sale of
    the Property.

Alexandra Hoy
    A.C.J.O.

E.E. Gillese
    J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Gallos v. Toronto (City), 2014 ONCA 818

DATE: 20141120

DOCKET: M44169

(C49733)

Feldman, Juriansz and MacFarland JJ.A.

BETWEEN

William Gallos

Moving Party

and

City of Toronto

Respondent

William Gallos, in person

Heard: In Writing

Motion heard in writing under rule 2.01.02(1) of the
Rules
    of Civil Procedure
.

ENDORSEMENT

[1]

On November 30, 2009, this court dismissed the moving partys appeal
    from the decision of Trotter J. dated November 14, 2008, which dismissed the
    application for an order to issue a building permit for a restaurant that would
    exceed the size permitted by the zoning by-law based on an alleged pre-existing
    legal non-conforming use. On September 12, 2013, the court considered and
    dismissed an application by the moving party to reopen its 2009 decision and to
    file fresh evidence. The basis for the dismissal was: The evidence proposed to
    be filed does not meet the test for the admission of fresh evidence on an
    appeal, nor the criteria for reopening a decision of this court under rule
    59.06 of the
Rules of Civil Procedure
.

[2]

The moving party has now again moved to set aside this courts November
    2009 decision. He filed a motion record and factum. He refers to information he
    received as of May 17, 2014. The source of this information is unclear. On its
    face, the moving party has not established that it meets the test for the
    admission of fresh evidence, including how it would have affected the outcome
    of the appeal.

[3]

The motion does not meet the criteria for re-opening a decision of the
    court under rule 59.06.

[4]

This motion, asking again to reopen a 2009 decision of this court from
    which leave to appeal to the Supreme Court of Canada was denied, is another
    attempt to reargue the same case. It is frivolous and vexatious and constitutes
    an abuse of process of the court.

[5]

The motion is dismissed under rule 2.1.02(1), and the court orders under
    rule 2.1.02(3) that the moving party is prohibited from making any further
    motions in the proceeding without leave of the court. In light of the written
    submissions the moving party filed with the motion, no further notice to the
    moving party is required.

K. Feldman J.A.

R.G. Juriansz J.A.

J. MacFarland J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Grand Financial Management Inc. v. Solemio
    Transportation Inc., 2014 ONCA 829

DATE: 20141121

DOCKET: M44252 (C58867)

Sharpe, Rouleau and Pardu JJ.A.

BETWEEN

Grand Financial Management Inc.

Plaintiff (Respondent)

and

Solemio Transportation Inc., Samu Ullah

and
    Arnold Bros. Transport Ltd.

Defendants (
Appellants
)

Tim Gleason and Rebecca Liu, for the appellants

Terry Corsianos, for the respondent

Heard: November 18, 2014

On a motion for a review of the order of Benotto J.A., dated
    July 24, 2014 dismissing a motion to extend the time for filing a notice of appeal.

ENDORSEMENT

[1]

We agree with the moving party that the motion judge erred in refusing
    to grant an extension of time for filing the notice of appeal.

[2]

In our view, the motion judge erred in finding there was no proper
    evidence that the moving party had formed an intention to appeal before the
    expiry of the appeal period.  The moving partys solicitor swore an affidavit
    to the effect that upon receipt of the trial judgment, the moving party had
    instructed him to appeal immediately.  While that may have been hearsay
    evidence, it was admissible on this motion.

[3]

The respondent offered no evidence or suggestion of prejudice.  This
    case can be readily distinguished from
March
é DAlimentation Denis
    Theriault Lt
ée v. Giant Tiger
(2007), 87 O.R. (3d) 660. The delay in
    this case was short, there was an explanation for the delay and the situation
    was not one where prejudice could be inferred from the mere fact of that short
    delay.

[4]

Finally, we are of the view that the proposed appeal has sufficient
    merit to warrant an extension of time.  It is arguable that the trial judge
    allowed the claim on the basis of an agreement that was not pleaded and for
    which the limitation period may have expired.  We cannot say that the appeal is
    devoid of merit so as not to warrant an extension of time.

[5]

Accordingly, we set aside the order of the motion judge dated July 24,
    2014 and in its place, grant the order extending the time to file a notice to
    appeal to November 28, 2014.

[6]

The moving party is entitled to its costs fixed in the amount of $6,000 inclusive
    of disbursements and taxes, payable in the cause.

Robert
    J. Sharpe J.A.

Paul
    Rouleau J.A.

G.
    Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Gresty v. Howard Mutual Insurance Company, 2014
    ONCA 845

DATE: 20141126

DOCKET: C58679

Simmons, MacFarland and Benotto JJ.A.

BETWEEN

David Gresty

Plaintiff (Respondent)

and

Howard Mutual Insurance Company

Defendant (Appellant)

David M. Miller, for the appellant

James E.S. Allin, for the respondent

Heard and released orally: November 20, 2014

On appeal from the order/judgment of Justice Bruce Thomas
    of the Superior Court of Justice, dated March 24, 2014.

ENDORSEMENT

[1]

Although this point was not argued below and in this court, it was
    raised by the panel, on appeal, the appellant concedes that the limitation
    period for the benefits that may be owing for the two years preceding the
    issuance of the respondents statement of claim has not expired.  However, the
    parties disagree over when the applicable limitation period(s) commence.

[2]

In our view, the motion judge failed to clearly assess this issue of
    whether and when the applicable limitation period(s) commenced in relation to
    the notices that were delivered.  On the record before us, and based on the
    arguments advanced, we are unable to determine this issue or issues.

[3]

Accordingly, the issues are more properly determined in the court below
    on a more fulsome evidentiary record and with the benefit of more focused
    submissions.

[4]

In the circumstances, the appeal is allowed in part and paragraph 1 of
    the motion judges order is set aside.  There will be no order as to costs of
    the appeal.

Janet
    Simmons J.A.

J.
    MacFarland J.A.

M.L. Benotto
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Guerard v. Gray, 2014 ONCA 790

DATE: 20141112

DOCKET: C57900

Blair, Juriansz & Rouleau
    JJ.A.

BETWEEN

Kevin Guerard et al

Appellants (Respondents)

and

Sarah Gray et al

Respondents (Applicants)

Terrance Green, for the appellants

Joseph Y. Obagi, for the respondents

Heard and released orally: October 22, 2014

On appeal from the order of Justice Brian W. Abrams of
    the Superior Court of Justice, dated October 18, 2013.

ENDORSEMENT

[1]

The Grays and the Guerards own adjoining residences on Hope Street in
    Almonte, Ontario.  Their dispute involves a narrow strip of land between the
    two properties to which the Grays claim title by adverse possession.  The strip
    lies between some point on the Grays driveway, and the centre line of a hedge
    separating the properties.

[2]

After a three-day trial, Abrams J. allowed the claim for adverse
    possession.  He granted an order vesting title to the disputed lands in the
    Grays and extinguishing the interest of the Guerards and their mortgagors.  The
    trial judge conducted a thorough review of the evidence, and made clear
    findings of fact that were amply supported on the record.  He applied the
    proper principles of law relating to a claim for adverse possession, and there
    is no basis for interfering with his decision in that regard.

[3]

In particular, the trial judge recognised that only the rights and
    interests of adjoining owners in existence at the time of first registration in
    the Land Title system are protected.  He properly observed that the Grays were
    required to prove that, through the occupation of their predecessors, their
    possession was of the same nature and substance as when the lands were first
    registered in Land Titles.  He held they had done so, rejecting the argument of
    the Guerards that the occupation of Ms. Forster broke the chain of possession.
    There is no basis for interfering with this finding and conclusion.

[4]

On appeal, the appellants raised an argument not made at trial, namely
    that the finding of adverse possession did not justify the granting of title to
    the Grays of the full width of the two 2.03 metres vested in them by the trial
    judges order.  What the precise dimension should be is not addressed by the
    appellant other than Mr. Greens general submission that the Grays only
    required the width of their driveway plus a small grass strip.

[5]

The problem is that this was not the way the case was put to the trial
    judge.  The trial judge was presented with a survey  on consent  showing the
    disputed lands on two bases: (i) the wingspan that would have been necessary
    for both a two-door and a four-door vehicle; and (ii) the centre line of the
    hedge.  As it turns out there is virtually no difference between these two boundaries.
    The dispute at trial was over whether adverse possession had been established
    in relation to the surveyed lands.  No evidence to the contrary as to the
    appropriate width was led.  As we have noted, there was ample support in the
    record for the finding of adverse possession.

[6]

The appeal is therefore dismissed.

[7]

Given this disposition, it is unnecessary to address the argument that
    the appeal was moot.

[8]

In accordance with the agreement of the parties, the respondents are
    entitled to their costs of the appeal fixed at $12,880.15 all-inclusive on a
    partial indemnity basis.

[9]

Mr. Green raised the issue of costs before the trial judge.  No amended notice
    of appeal was filed raising his claim, and the cost order of Abrams J. is not
    before us nor is the questions addressed in the factum.

R.A.
    Blair J.A.

R.G.
    Juriansz J.A.

Paul
    Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hazelton Lanes Inc. v. 1707590 Ontario Limited,
    2014 ONCA 793

DATE: 20141112

DOCKET: C57686, C58205 and C58206

Sharpe, Simmons and Benotto JJ.A.

BETWEEN

Hazelton Lanes Inc. and Stephen Chan

Plaintiffs (Respondents)

and

1707590 Ontario Limited and John Faraci
,
    Adriana Verrelli, Susete Antunes, Rose Sperandeo, 1203279 Ontario Limited, and
    Isis Societe Co. Ltd.

Defendants
    (
Appellants
)

Milton A. Davis, Ronald D. Davis and Robert Macdonald,
    for the appellants

William A. Chalmers, for the respondents

Heard: June 23, 2014

On appeal from the orders and judgments of Justice P.
    Theodore Matlow of the Superior Court of Justice, dated September 16, 2013,
    October 15, 2013 and November 8, 2013 and December 23, 2013.

Simmons
    J.A:

A.

introduction

[1]

This appeal arises out of the trial of a commercial action between the
    respondents, Stephen Chan and Hazelton Lanes Inc. (Hazelton), and the appellants,
    John Faraci and 1707590 Ontario Limited (170). Respondents counsel originally
    estimated that the trial would last three days. Rather than three days, the
    trial consumed about 50 days of court time, consisting of about 30 days of
    evidence and about 20 days of motions.

[2]

Even though the trial had consumed so much court time, the trial judge
    did not decide the case on the merits.

[3]

Instead, on what was to have been day 36 of the trial, he permitted the
    respondents to add several defendants and new causes of action, including fraud
    and conspiracy. In addition, he granted to the respondents an
ex parte
    Mareva
injunction against the appellants and the added parties based on
    findings that all
had engaged
in a fraudulent scheme to hide assets.

[4]

Further, the trial judge ordered the appellants to comply fully within
    six business days with 19 directions that the trial judge had given to Faraci during
    his cross-examination. These directions required Faraci to obtain, produce and
    organize for inspection masses of documents that had never previously been
    requested.

[5]

Although Faraci and 170 produced many documents and made them available
    for inspection, the trial judge made a finding, on a subsequent motion, that
    Faraci and 170 were in contempt for failing to comply
fully

with
    the 19 directions. As a remedy for their contempt, the trial judge ordered Faraci
    and 170 to post $35,000 as security for costs. When that order was not complied
    with, the trial judge struck the appellants statement of defence and
    counterclaim and ultimately granted partial default judgment, by way of two
    judgments and one order, on all major aspects of the respondents original
    claims against the appellants. In addition, the trial judge awarded the respondents
    $650,000 in costs on a substantial indemnity basis.

[6]

The appellants appeal five orders and judgments made by the trial judge:

i)

the order finding the appellants in contempt for failing to comply fully
    with the trial judges mid-trial directions concerning production of documents;

ii)

the order striking out the appellants statement of defence and
    counterclaim;

iii)

two judgments and one order granting the respondents partial default
    judgment on their original claims against the appellants together with $650,000
    in costs on a substantial indemnity basis.

[7]

The appellants raise several issues on appeal, including: loss of
    jurisdiction due to reasonable apprehension of bias; lack of evidence capable
    of proving contempt; misapplication of the rules relating to default judgment;
    insufficiency of reasons; and failure to apply the principles of
    proportionality and reasonableness in awarding costs.

[8]

In my view, the issue of reasonable apprehension of bias is dispositive
    of this appeal.

[9]

Concerning that issue, the appellants submit that the trial judge
    demonstrated a reasonable apprehension of bias through a number of actions,
    including:

·

his interjections during Faracis cross-examination;

·

his suggestion to respondents counsel that he move for a
Mareva
injunction;

·

his mid-trial findings in his reasons on the motion for a
Mareva
injunction and related rulings that Faraci and the added defendants committed
    fraud and that Faracis testimony was not credible;

·

his 19 mid-trial directions to Faraci and 170 to produce masses
    of documents not previously requested and of little or unknown relevance to the
    issues at trial;

·

his mid-trial finding that Faraci and 170 were in contempt for
    failing to comply
fully
with his 19 directions relating to production
    of documents  when he did not advert to Faracis evidence concerning
    substantial compliance with the directions.

[10]

For
    the reasons that follow, I conclude that, when considered cumulatively, the
    trial judges conduct of the trial creates an appearance that he prejudged
    Faracis conduct and credibility and aligned himself with the respondents on
    the issue of mid-trial production in a manner that rendered the trial unfair.

[11]

Accordingly,
    I would allow the appeal on the basis of reasonable apprehension of bias, set
    aside the judgments and orders under appeal and order a new trial before a
    different trial judge.

B.

background

[12]

To
    fully appreciate the allegation of reasonable apprehension of bias, it is
    necessary to have some understanding of the relationship between the parties,
    the issues at trial and the events at trial. After reviewing these matters, I
    will turn to the specific allegations concerning reasonable apprehension of
    bias.

(1)

The Parties and Their
    Relationship

[13]

Faraci
    is a lawyer and the sole shareholder, officer and director of 170.

[14]

Stephen
    Chan is a businessman and the controlling shareholder and directing mind of
    Hazelton.

[15]

Faraci
    and Chan met in 1993 or 1994. For many years, Faraci acted as a solicitor for
    Chan and some of Chans companies.

[16]

In
    1999, Faraci acted for Chan and one of his companies, Combi Capital Group
    Limited (Combi), in connection with the purchase of commercial premises in
    Toronto commonly referred to as Hazelton Lanes.

[17]

It
    is undisputed that Faraci negotiated a 3% interest in Hazelton Lanes for
    himself around the time of Combis purchase of Hazelton Lanes.

[18]

Between
    2001 and 2011, first Faraci, and then 170, leased office space in Hazelton
    Lanes, initially from Combi and later from Hazelton.

(2)

The Relationship
    Between Faraci and Chan Deteriorates

[19]

At
    least according to Faraci, in recent years, the relationship between him and
    Chan had begun to deteriorate. In 2006, another law firm acted when Combi
    transferred Hazelton Lanes to Hazelton. Hazelton and Chan claimed that Faracis
    3% interest in Hazelton was paid out around that time by a net payment of $376,686.45.
    Although Faraci acknowledges receipt of that payment, he claims that his 3%
    interest in Hazelton Lanes continued.

[20]

Faraci
    states that, by June 2011, his relationship with Chan had fallen apart.
    Anticipating a sale of Hazelton Lanes, he sued Chan and Hazelton in another
    proceeding, claiming a 3% ownership interest in the premises.

[21]

In
    that same month, June 2011, Faraci obtained an order in the other proceeding
    requiring that $1,000,000 from the proceeds of the sale of Hazelton Lanes be
    paid into court.

[22]

It
    is undisputed that, on October 17, 2011, Hazelton re-entered 170s rented
    premises and purported to terminate 170s lease for non-payment of rent.

[23]

Nor is it disputed that, on October 19, 2011, Hazleton Lanes was sold
    to First Capital Holdings (Ontario) Corporation (First Capital) for $108,000,000.

[24]

Under the terms of the June 2011 order, $1,000,000 from the proceeds
    of that sale was paid into court to the credit of the other action.

(3)

The Issues at Trial

(a)

Chan and Hazeltons
    Claim Against Faraci and 170

[25]

On
    October 19, 2011, the same day Hazelton Lanes was sold, Hazelton and Chan
    commenced this proceeding against 170 and Faraci
by notice of
    application. On December 23, 2011, a consolidation order was made joining their
    application with other pending proceedings. Under the terms of the
    consolidation order, Hazelton and Chan were to be plaintiffs and 170 and Faraci
    were to be defendants.

[26]

As
    set out in their original statement of claim, Hazelton and Chan claimed, among
    other things, the following relief:

i)

Hazelton Against 170

·

$7,324.94 in rental arrears under a 2006 lease between Hazelton
    and 170 for office space in Hazelton Lanes;

·

a declaration that the version of the lease governing the
    relationship between Hazelton and 170 was that set out in Schedule A to the
    statement of claim (this version contained no handwritten alterations); and

·

a declaration that the 2006 lease between Hazelton and 170 was validly
    terminated on October 17, 2011 for non-payment of rent.

ii)

Chan Against Faraci

·

a declaration that Faraci failed to advise Chan of the
    requirement that certain written fee agreements for legal services entered into
    between Chan and Faraci for all or part of the years 2006 to 2010 required
    approval by an assessment officer and that, in any event, the $375,163.05 in fees
    paid was not fair and reasonable;

·

an order that some portion of the $375,163.05 in legal fees paid
    by Chans companies to Faraci under the fee agreements be repaid to Chan; and

·

a declaration that Chan was entitled to the return of $20,000
    paid to Faraci by one of Chans companies in 1998 in relation to a real estate
    transaction that did not close and which funds Chan claimed Faraci had applied
    on account of legal fees without his consent.

[27]

During
    the trial, Hazelton and Chan amended their statement of claim to add
    allegations that both Faraci and 170 had breached the terms of their leases by
    subletting the rented premises without the landlords consent.

(b)

Faraci and 170s
    Statement of Defence and Counterclaim

[28]

In
    their original statement of defence and counterclaim, 170 and Faraci denied
    that Hazelton and Chan were entitled to any relief. Instead, they advanced the
    following version of the material facts.

(i)

The Lease Arrangements
    and Termination of 170s Tenancy

[29]

In
    2001, at the request of Chan, Faraci relocated his law office to Hazelton
    Lanes. As a result of their relationship and because of Faracis 3% ownership
    interest, Chan advised Faraci that Faraci could lease office space in Hazelton
    Lanes rent free.

[30]

However,
    to implement this arrangement, and to maximize the income of Hazelton Lanes on
    its books and records, Faracis lease required that rent be paid at an inflated
    rate. In addition, Chan directed Faraci to bill him for services in an amount
    equivalent to the monthly rent stipulated in Faracis lease and to use the
    payments on account to pay the rent.

[31]

In
    2006, just before the expiry of Faracis lease, an agreement was made for a new
    five-year lease under which 170 became the tenant. Certain handwritten amendments
    were made to the proposed Hazelton170 lease, adding the following terms:

·

upon the expiry of the initial five-year term, 170 would be
    entitled to renew the lease for a further five-year term at market rent less 20
    percent; and

·

all rental payments under the lease and the renewal term would be
    paid by the landlord.

[32]

Around
    December 2010, Faracis rapport with Chan began to suffer. With the exception
    of one cheque received in February 2011, the payments from Chan and his
    companies to cover 170s rent stopped thereafter.

[33]

On
    two occasions after December 2010, 170 paid (under protest) amounts that Hazelton
    claimed were owing for rental arrears. In addition, 170 purported to exercise its
    option to renew the lease. However, 170 and Faraci declined to pay an amount that
    Hazelton demanded on account of rental arrears on or about October 3, 2011. On
    October 17, 2011, two days before the sale of Hazelton Lanes, Hazelton
    re-entered the rented premises and purported to terminate 170s lease for
    non-payment of rent. However, as Chan and his companies had failed to honour
    their obligations to pay 170s rent, Faraci and 170 claimed that Hazelton had terminated
    170s lease improperly.

(ii)

The Fee
    Agreements

[34]

According
    to Faraci and 170, Faraci stopped providing legal services on a regular basis
    for Chan and his companies around October 2008. Nonetheless, from November 2008
    onward, 170 continued to send monthly statements of account to Chan or his
    companies for rental payments, described as general services, and 170
    continued to apply the payments received on account of monthly rent.

[35]

Among
    other things, Faraci denies that Chan or his companies paid Faraci $375,163.05
    in legal fees. Rather, a large portion of the payments were on account of rent.

[36]

Although
    Faraci acknowledges that there were written Service Contracts for all or part
    of 2006, 2007 and 2008, he denies that any such agreements were in place for the
    balance of 2008 or any part of 2009 or 2010.

[37]

According
    to Faraci, between September 2006 and October 2008 he received $149,248.94 on
    account of legal services from Chan or his companies.

(iii)
The
    $20,000 Deposit

[38]

Faraci
    acknowledges that, on April 15, 1998, Chan advanced $20,000 to him as a deposit
    to be paid to a realtor in relation to a real estate transaction. The
    transaction did not close and litigation against the vendor ensued. According
    to Faraci, on June 5, 1998, Chan instructed him to apply the $20,000 on account
    of Faracis legal fees  which Faraci subsequently did.

(iv)

The Counterclaim

[39]

In
    their counterclaim, Faraci and 170 claim, among other things, the following
    relief:

i)

a declaration that the version of the lease governing the relationship
    between Hazelton and 170 is that set out in Schedule A to the statement of
    defence and counterclaim (this version includes handwritten amendments setting
    out the renewal option and the requirement that the landlord pay the rent);

ii)

declarations and other relief concerning the allegedly improper
    termination of the lease between Hazelton and 170. In particular, 170 claims a
    declaration that it is entitled to monies originally paid into escrow when
    Hazelton Lanes was sold to First Capital to account for its claim for a
    five-year renewal option. The funds were later paid into court to the credit of
    this action.
[1]

(4)

Events at Trial

(a)

The Trial is Scheduled
    for Three Days

[40]

Under
    the terms of the December consolidation order and a subsequent consent order made
    in February 2012, the trial was scheduled for three days.

(b)

The Trial Quickly Exceeds the Three-Day Estimate

[41]

Following the commencement of the trial on April 16, 2012, the three-day
    estimate for trial was quickly exceeded.

[42]

The appeal record does not include transcripts of the proceedings
    prior to November 21, 2012.
However, according to Hazelton and Chan,
    their witnesses began testifying on April 18, 2012 and continued over 11 days
    (April 19, 20, 23, 24, June 4, 5, 6, 7, 12, 13, and October 9, 2012). Chans
    examination-in-chief consumed 4.5 hours over two court days; he was cross-examined
    for 18.6 hours over seven court days. Six other witnesses testified for the
    respondents.

[43]

According
    to Hazelton and Chan, the case for Faraci and 170 began on October 10, 2012. Faracis
    examination-in-chief consumed 27.1 hours over eight court days (October 10, 12,
    15, 17, 18, 19, November 19, 20 and 21, 2012); his cross-examination occurred
    over 10 days between November 2012 and February 2013 (
November
    21, 22, 27, 28 and 30, 2012; January 28, 30 and 31 and February 1 and 4, 2013)
.

(c)

The Trial Judge Comments
    on Faracis Evidence

[44]

On
    November 21, 2012, soon after Faracis cross-examination began, the trial judge
    interjected and made comments to the effect that Faracis evidence defie[d]
    common sense and was gobbledygook. I will describe these interjections in
    greater detail in the analysis section of these reasons.

(d)

The Trial Judge Makes
    Mid-Trial Directions

[45]

Although
    many factors undoubtedly contributed to the length of this trial, at least part
    of the explanation lies in the fact that, prior to trial, Hazelton and Chan
    took the position that many events preceding 2006 on which Faraci and 170
    relied were irrelevant. Hazelton and Chan therefore refused production in
    relation to those issues. At trial, the trial judge ruled against the
    respondents position, leading respondents counsel to seek and obtain
    directions for production of documents during Faracis cross-examination that
    had not previously been requested during the pre-trial production and discovery
    process.

[46]

Another
    factor is that, during Faracis cross-examination, the trial judge permitted
    respondents counsel to conduct what was effectively a judgment-debtor
    examination of Faraci because Faraci acknowledged that other parties had paid
    some of 170s rent and because Faraci claimed that 170 could have paid the
    rental arrears Hazelton had demanded on October 3, 2011.

[47]

In
    the result, during his cross-examination of Faraci, respondents counsel sought
    and obtained, over the objections of appellants counsel, 19 directions from
    the trial judge requiring the appellants to obtain, produce and organize for
    respondents counsels inspection masses of documents that had never
    previously been requested.

[48]

Many
    of the directions overlapped. A consolidated summary of all the directions is
    included in Appendix A to these reasons.
[2]
However, the following examples illustrate the breadth of the production
    directions the trial judge gave to Faraci during his cross-examination. Among
    other things, the trial judge ordered Faraci to:

·

produce his personal income tax returns from 1998 to 2009, and,
    if necessary, make enquiries of his accountant to obtain copies of the same,
    and, if still necessary, request complete copies of all tax returns since 1998
    from the Canada Revenue Agency;

·

produce copies of any information and documents used in the
    preparation of his 2010 and 2011 tax returns, if he took any steps to file them
    before the trials conclusion;

·

produce all documentation relating to his trust accounts,
    including bank account statements, ledgers, and reconciliations, from 1998 to
    the date of trial;

·

produce copies of any bank documents in his possession that
    pertain to his personal and corporate bank accounts, from the beginning of 1998
    to the date of trial; and

·

produce copies of all statements, invoices, bills, and all other
    documents pertaining to payments received and expenses incurred by Faraci in
    his provision of legal services to clients in 2010 and 2011.

(e)

The Trial Judge Suggests that the Respondents Bring a Motion for a
Mareva
Injunction

[49]

On
    Friday, February 1, 2013, respondents counsel indicated that he intended to
    complete his cross-examination of Faraci on Monday, February 4, 2013 and that,
    in addition, he intended to bring a mid-trial motion for costs.

[50]

Although
    the trial judge had previously said he was not prepared to make a mid-trial
    order for costs, respondents counsel asserted that evidence given by Faraci
    suggesting that he and 170 had made themselves judgment proof warranted a
    reconsideration of the issue.

[51]

In
    response, the trial judge said that an order that would impede Mr. Faracis
    apparent efforts to divest himself of assets] might be more appropriate.

[52]

Faracis
    cross-examination was not completed on Monday, February 4, 2013, and the motion
    for costs was not addressed.

(f)

The Trial Judge Makes the February 7, 2013 Order for a
Mareva
Injunction,
    for Compliance with the Directions and Related Relief

[53]

On
    the next court date, Wednesday, February 6, 2013, Hazelton and Chan brought a
    motion seeking to amend their statement of claim by adding five new defendants
    and several new causes of action, a
Mareva
injunction against all
    defendants and an order bifurcating the current trial from the trial of the
    amended claims. The motion was brought without notice to the new defendants.
    Because notice to 170 and Faraci had been given only minutes before the hearing
    commenced, the trial judge treated the motion as
ex parte
with respect
    to all defendants.

[54]

On
    February 7, 2013, the trial judge released an endorsement permitting Hazelton
    and Chan to amend their statement of claim and granting their request for a
    temporary
ex parte Mareva
injunction against all defendants. I will
    return to this endorsement in the analysis section of these reasons. However,
    in essence, the trial judge made findings that Faraci and the added defendants
    had engaged in a fraudulent scheme to hide assets and that, in these
    circumstances, Faracis participation in the trial was an abuse [of] the civil
    justice system because he was engaging it without any financial risk.

[55]

In
    his endorsement, the trial judge adjourned any issues relating to the conduct
    of the balance of the trial. He also reserved all claims for costs for
    consideration at the conclusion of the trial. He denied Hazelton and Chans
    request for certificates of pending litigation against properties owned by the
    added defendants. However, he ordered Faraci to comply fully with all orders
    directed to him throughout the trial.

[56]

Paragraph
    7 of the formal order flowing from the trial judges endorsement reads as
    follows:

7. THIS COURT ORDERS that
Faraci and 170 shall comply fully
    with all orders directed to him throughout the trial of this proceeding no
    later than on February 15, 2013
, failing which, the plaintiffs may renew
    the pending motion brought on February 6, 2013, for an order finding Faraci and
    170 to be in contempt of court. [Emphasis added.]

(g)

Chronology of Subsequent
    Events

[57]

The
    following chronology sets out the subsequent events at the trial that
    culminated in the default judgments:

·

On February 15, 2013, Faraci and 170 served a notice of motion
    for leave to appeal the February 7, 2013 order.

·

On March 8, 2013, Faraci and 170 served a notice of motion for a
    stay of the February 7, 2013 order.

·

On April 2, 2013, the stay motion was dismissed.

·

Also on April 2, 2013, Faraci and 170 Ontario changed counsel.

·

On April 4, 2013, Faraci and 170 served a notice of motion
    seeking, among other things: i) an order setting aside the February 7, 2013
    order; ii) an order directing the trial judge to recuse himself; and iii) a
    mistrial.
[3]
According to Faraci and 170, they requested that this motion be heard by a judge
    other than the trial judge, but the trial judge refused.

·

On April 25 and 26, and May 1, 2013, the Faraci-170 motion was
    heard. At the conclusion of the hearing, the trial judge dismissed the motion
    with reasons to follow.

·

June 19, 2013 was the first return date of the contempt motion.
    The respondents relied on Faracis cross-examination as well as a Plaintiffs
    Brief of Outstanding Directions and a Plaintiffs Brief of Attempted
    Compliance. In response, Faraci filed an affidavit sworn May 27, 2013 claiming
    that he had complied with the directions [t]o the extent that it is possible.
    The trial judge adjourned the contempt motion to August 27, 2013 to permit the
    respondents to file an amended notice of motion to show that the underlying
    basis of the motion  include[ed] all of [the trial judges] orders directed to
    Faraci.

·

August 27, 2013 was the second return date of the contempt motion.
    In response to the amended notice of motion, Faraci filed a further affidavit
    sworn July 30, 2013 setting out particulars of the documents he had supplied,
    the efforts he had made to obtain other documents and the documents he had been
    unable to find or obtain.

·

On September 16, 2013, the trial judge ordered that the
Mareva
injunction should continue as against one of the added defendants. In his
    endorsement, he commented adversely on Faracis credibility and that of the
    added defendant.

·

Also on September 16, 2013, the trial judge found 170 and Faraci
    in contempt for failing to comply with his previous orders listed in the chart
    at tab A of The Plaintiffs Brief of the Outstanding Directions. Rather than
    striking their statement of defence and counterclaim, as had been requested,
    the trial judge ordered that 170 and Faraci pay $35,000 into court on or before
    October 4, 2013 as security for costs of the motion and steps taken in relation
    to it.

·

On September 27, 2013, the appellants delivered a notice of
    appeal from the September 16, 2013 order. In their notice of appeal, the
    appellants asserted that the trial judge lost jurisdiction due to a reasonable
    apprehension of bias prior to making the September 16, 2013 order. Among other
    grounds, the appellants asserted that the trial judge failed to give reasons
    for dismissing the mistrial/recusal motion.

·

October 7, 2013 was the return date of the respondents motion to
    strike out the appellants amended statement of defence and counterclaim for
    failing to comply with the September 16, 2013 order. The respondents motion record
    included a copy of the appellants notice of appeal from the September 16, 2013
    order.

·

On October 10, 2013, the trial judge released reasons for dismissing
    the mistrial/recusal motion. In his reasons, he noted that it might well have
    been better had [he] used different language [in his ruling on the
Mareva
injunction] to dispel any inference that [he] had made a finding of fraud
    against Faraci. However, he said his intention was to convey only that there
    was strong
prima facie
evidence of a fraudulent scheme by Faraci. On
    October 15, 2013, the trial judge struck out the appellants statement of
    defence and counterclaim for failing to make the payment into court required
    under his order of September 16, 2013.

·

On November 8, 2013, the trial judge granted to the respondents
    partial default judgment on the following claims: i) Hazeltons claims against 170
    and Faraci in relation to their tenancies at Hazelton Lanes; ii) Chans claim
    against Faraci for $20,000 paid to Faraci in 1998 in relation to a real estate
    transaction; and iii) Chans claim for the return of client documents.
[4]

·

Also on November 8, 2013, the trial judge ordered that the money
    paid into court in relation to the Hazelton-Capital One escrow agreement be
    paid out to Hazelton.

·

On December 23, 2013, the trial judge granted to Chan and
    Hazelton partial default judgment setting aside the fee agreements, reducing the
    amount payable by Chan under the fee agreements to $13,399.04 and requiring
    that Faraci repay $350,000 to Chan. In addition, the trial judge awarded the
    respondents costs of the action fixed on a substantial indemnity basis in the
    amount of $650,000.
[5]

C.

Reasonable apprehension of bias

[58]

The
    test for reasonable apprehension of bias is that set out in de Grandpré J.s
    dissenting opinion in
Committee for Justice and Liberty v. Canada
    (National Energy Board)
(1976), [1978] 1 S.C.R. 369 (S.C.C.), at
    pp. 394-95, which reads as follows:

[T]he apprehension of
    bias must be a reasonable one, held by reasonable and right minded persons,
    applying themselves to the question and obtaining thereon the required
    information. [The] test is what would an informed person, viewing the matter
    realistically and practically  and having thought the matter through  conclude.
    Would he think that it is more likely than not that [the decision-maker],
    whether consciously or unconsciously, would not decide fairly.

[59]

The
    Supreme Court of Canada has repeatedly endorsed this test. In his reasons in
R.
    v. S. (R. D.)
, [1997] 3 S.C.R. 484, Cory J. explained, at para. 111, that
    the test set down by de Grandpré J. in
Committee for Justice and Liberty
contains a two-fold objective element: not only must the person considering
    the alleged bias be reasonable, but the apprehension of bias itself must also
    be reasonable in the circumstances of the case.

[60]

It
    has also been held that, in order to maintain public confidence in the
    administration of justice, the appearance of judicial impartiality is as important
    as the reality. In

Metropolitan Properties Co. (F.G.C.) Ltd. v. Lannon
,
    [1968] 3 All E.R. 304 (C.A.), at p. 310, Lord Denning M.R. stressed the
    importance of the appearance of judicial impartiality. He said:

[I]n considering whether there was a real likelihood of bias,
    the court does not look at the mind of the justice himself.... It does not look
    to see if there was a real likelihood that he would, or did, in fact favour one
    side at the expense of the other. The court looks at the impression which would
    be given to other people. Even if he was as impartial as could be,
    nevertheless, if right-minded persons would think that, in the circumstances,
    there was a real likelihood of bias on his part, then he should not sit. And if
    he does sit, his decision cannot stand.

[61]

This
    passage was cited with approval by Major J. in his dissenting reasons in
S.
    (R. D.)
, at para. 11, and by this court in
Benedict v. Ontario
(2000), 51 O.R. (3d) 147.  In
Benedict
, this court added, at para. 20:

We note that while Lord Denning M.R. spoke in terms of a real
    likelihood rather than a reasonable apprehension, in
National Energy
    Board
de Grandpré J. took care to state that such variations in the
    expression used should not generally be treated as involving any substantive
    difference in the approach to be taken.  Reasonable apprehension, real
    likelihood, reasonable likelihood and reasonable suspicion amount to the
    same standard.

[62]

This
    reasoning accords with the decision of Lord Nolan in
R. v. Bow Street
    Metropolitan Stipendiary Magistrate et al.
, [1999] 1 All E.R. 577 (H.L.),
    at p. 592: [I]n any case where the impartiality of a judge is in question the
    appearance of the matter is just as important as the reality.

[63]

The
    appearance of impartiality was emphasized in
Wewaykum Indian Band v. Canada
,
    [2003] 2 S.C.R. 259, at para. 66:

[W]here disqualification is argued, the relevant inquiry is not
    whether there was
in fact
either conscious or unconscious bias on the
    part of the judge, but whether a reasonable person properly informed would
    apprehend that there was.

[64]

A
    review of this courts recent statements in

Chippewas of Mnjikaning
    First Nation v. Ontario
, 2010 ONCA 47, 265 O.A.C. 247, leave to appeal
    to S.C.C. refused, [2010] S.C.C.A. No. 91, at paras. 229-30, and
Marchand
    (Litigation Guardian of) v. Public General Hospital Society of Chatham
(2000), 51 O.R. (3d) 97, leave to appeal to S.C.C. refused, [2001] S.C.C.A. No.
    66, at para. 131, reveals the following principles for assessing a claim of
    reasonable apprehension of bias that are particularly applicable in this case:

·

Impartiality reflects the state of mind in which the judge is
    disinterested in the outcome and is open to persuasion by the evidence and
    submissions. In contrast, bias reflects a state of mind that is closed or
    predisposed to a particular result on material issues:
Marchand
, at
    para. 131.

·

The threshold for a finding of reasonable apprehension of bias is
    high. Courts presume that judges will carry out their oath of office:
Marchand
,
    at para. 131.

·

To determine that a reasonable apprehension of bias exists
    requires a fact-specific inquiry that considers the facts and circumstances
    of a particular trial:
Chippewas
, at para. 230.

·

The party alleging reasonable apprehension of bias has the onus
    of proving it on the balance of probabilities:
Marchand
, at para.
    131.

·

The grounds for finding a reasonable apprehension of bias must be
    substantial; establishing an allegation of judicial bias requires cogent
    evidence:
Marchand
, at para. 131.

[65]

If
    a judges words or conduct give rise to a reasonable apprehension of bias, it
    colours the entire trial. Therefore, on appeal, a finding of actual or
    apprehended bias will ordinarily result in a new trial:
Marchand
, at
    para. 131.

D.

Analysis

[66]

In
    my view, an informed person, viewing the trial judges conduct realistically
    and practically, would reasonably conclude that at least three aspects of that the
    trial judges conduct, taken together, give rise to a reasonable apprehension
    of bias:

i)

statements and findings made during the trial indicating that the trial
    judge had prejudged Faracis conduct and credibility  namely, the trial
    judges interjections and adverse comments on Faracis credibility during
    Faracis cross-examination; his suggestion that plaintiffs counsel bring a
Mareva
injunction motion; and his findings on the
Mareva
injunction motion
    and a related ruling that Faraci had engaged in a fraudulent scheme to divest himself
    of assets;

ii)

the 19 directions for mid-trial production of masses of documents that
    had not previously been requested and the relevance and probative value of
    which had not been established; and

iii)

the finding that Faraci and 170 were in contempt for failing to comply
    fully with the 19 mid-trial directions, where the ruling contained no analysis
    of the extent to which Faraci and 170 had complied or of the validity of their
    reasons for any non-compliance.

(1)

Statements and Findings Made During the Trial Concerning Faracis Conduct
    and Credibility

(a)

Interjections
    and Comments During Faracis Cross-Examination

[67]

On
    November 21, 2012, soon after Faracis cross-examination began, the trial judge
    interjected and made comments to the effect that Faracis evidence defie[d]
    common sense and was gobbledygook.

[68]

The
    first interjection occurred after Faraci acknowledged that he had paid higher
    than market rent for the office space he occupied at Hazelton Lanes to create
    artificial income for Hazelton. Faraci maintained that this arrangement was not
    illegal so long as it was disclosed to prospective lenders or purchasers. According
    to him, the key was how the document was used and whether it was disclosed
    to third parties.

[69]

In
    response to this evidence, the trial judge challenged Faracis explanation:

THE COURT:
Mr. Faraci,
    your explanation, with respect, defies common sense
. Now, I want to give you a chance to re-think it.

What would be the point of setting
    up, what I think is a scheme, if it werent to deceive somebody with the
    information that appears in financial records or statements and things like
    that.
There would be no point, would there, in setting up this kind
    of scheme and then going and telling the lender or the purchaser what the true
    facts are
.

So you knew, Im sure  I shouldnt
    put it that strongly
I put it to you that you must have known that
    Mr. Chan was going to use this for an improper purpose
.

THE WITNESS: I knew I was paying a
    higher rent, Your Honour

THE COURT:
Come on, Mr.
    Faraci, think about it carefully
. This wasnt done
    for some business reason or tax reason or some other
bon[a] fide
reason. This was done to set the table so that Mr. Chan
could
    mislead other people about what the true income of Hazelton Lanes was
.

THE WITNESS: According to my lease,
    if he used it for those purposes, thats fine, thats fine.

THE COURT: Mr. Faraci, I give up. I
    wont pursue it with you. [Emphasis added.]

[70]

After
    this exchange, the trial judge put it to Faraci that the whole purpose of the
    inflated rental scheme would fail if Chan disclosed it to lenders or
    purchasers. Faraci agreed. The trial judge then suggested there was no reason
    for Faraci to engage in the scheme unless he was prepared to close [his] eyes
    to what Chan was doing. In response, Faraci maintained that his role was to
    tell Chan whether a particular tenant was a strong tenant or a weak tenant. The
    trial judge described explanation as gobbledygook, not making sense, and
    not addressing the point. Excerpts of these portions of Faracis
    cross-examination are included in Appendix B to these reasons.

[71]

Considered
    in isolation, these comments could be viewed as reflecting nothing more than a trial
    judges exasperation with a difficult witness. However, considered in the context
    of the trial judges other conduct that suggests that he prejudged Faracis conduct
    and credibility, they form part of a pattern that gives rise to a reasonable
    apprehension of bias.

(b)

The Suggestion that Plaintiffs Counsel Bring a
Mareva
Injunction
    Motion

[72]

I
    have reviewed the genesis of the
Mareva
injunction motion above. I
    note simply that, whenever granted, a
Mareva
injunction is an
    extraordinary remedy. It provides a moving party with broad relief before the
    issues in the case are determined. The granting of such relief is exceptional.
    Granting such relief mid-trial is even more exceptional.

[73]

Here,
    the trial judge suggested that a mid-trial
Mareva
injunction motion would
    be appropriate. The suggestion that the respondents might reasonably bring a mid-trial
    motion for such extraordinary relief creates an appearance that the trial judge
    had prejudged Faracis conduct and that he was aligning himself the respondents.
    This conduct by the trial judge contributes to the appearance of a reasonable
    apprehension of bias. Further, as I will explain, this appearance of bias is
    confirmed by the trial judges reasons for granting the
Mareva
injunction
    he had suggested.

(c)

The Trial Judges Mid-Trial Findings Concerning Faracis Conduct and Credibility

[74]

In
    his reasons for granting the
Mareva
injunction, excerpts of which are
    set out below, the trial judge found that Faraci had engaged in a fraudulent scheme
    to divest himself of assets. As the trial judge himself later noted in his
    reasons for denying the recusal/mistrial motion (which were delivered after the
    appellants filed their notice of appeal of the contempt motion), he should have
    done no more in his reasons on the Mareva injunction motion than state that the
    evidence gave rise to a
prima facie
case. By going further and making
    findings, the trial judge effectively prejudged at least some of the issues on
    the added claims and commented adversely on Faracis honesty and credibility:

During his cross-examination  [Faraci] described how he has,
    since about 2001,
systematically divested himself of his assets and has
    become judgment proof. His scheme for achieving this objective was carried out
    in concert with the new defendants with whom he engaged in numerous non-arms
    length transactions and to whom he effectively transferred large sums of money.
    As part of their role in Faracis fraudulent scheme
, the new defendants
    provided Faraci with cash from time to time for his personal day to day needs
    as he request[ed] it.
I am persuaded that those payments were really a
    return to Faraci of his own money by those to whom he transferred it to hold
    for him in order to conceal the extent and whereabouts of his own wealth
.

Accordingly, I have concluded that I must take what may be seen
    as a very unusual, perhaps unprecedented, step in the interests of justice by
    granting the order that is described below.
Otherwise, Faraci will likely
    continue to abuse the civil justice system by engaging it without any financial
    risk
.
[Emphasis added.]

[75]

The
    trial judges subsequent statements, in an endorsement dated September 16, 2013,
    concerning whether the
Mareva
injunction should continue as against
    the added defendant Susete Antunes only add to the perception that the trial
    judge had drawn adverse conclusions about Faracis conduct and credibility:

The evidence of Antunes and Faraci, viewed separately and
    together,
has no air of reality
and, when compared, are in conflict on
    many important factual issues.
Both Antunes and Faraci will have to deal
    with serious issues relating to credibility if this action is ultimately tried.
    As well, all of their evidence must be viewed in light of Faracis earlier
    admission, made without any reasonable explanation, that he has already
    dissipated all of his assets and survives only with the generosity of persons
    such as Antunes
who are willing to provide him with money from time to
    time when he requests it. [Emphasis added.]

[76]

Taken
    together, these comments add to the perception of a reasonable apprehension of
    bias. In my view, a reasonable person would inevitably conclude that the trial
    judge granted and continued the injunction because he had prejudged the conduct
    and credibility of Faraci and those associated with him.

(2)

The 19 Mid-Trial
    Directions for Production of Documents

[77]

According
    to respondents counsel, his cross-examination of Faraci was longer than it
    should have been for two reasons, both of them Faracis fault. First, Faraci
    was evasive, unresponsive and generally uncooperative in his cross-examination.
    Second, respondents counsel was required to address with Faraci in his
    cross-examination various extraneous issues that Faraci attempted to add to the
lis
between the parties in the action. To deal with these issues,
    respondents counsel was required to obtain production of related documents.

[78]

While
    acknowledging that most, if not all, of the productions sought were for the
    purpose of challenging Faracis credibility, respondents counsel submits that
    a review of Faracis cross-examination demonstrates that the 19 directions for
    mid-trial productions were appropriate and necessary.

[79]

I
    agree that a review of Faracis cross-examination reveals that he was an
    evasive, unresponsive and generally uncooperative witness. Otherwise, I reject
    respondents counsels submissions.

[80]

On
    my review of the transcript, respondents counsel launched into many areas of
    cross-examination that were extraneous to the issues at trial. Moreover, in
    many, if not most instances, the documents he requested were of little, no or
    unknown relevance to the issues at the trial. Where the requested documents may
    have been of some relevance  generally to Faracis credibility  much more
    modest directions for production would have sufficed. If such documents were
    not produced, then it would have been open to the trial judge to draw an
    adverse inference from their non-production.

[81]

Instead
    of taking a realistic and proportionate approach to production (or curtailing the
    various lines of cross-examination), the trial judge directed and oversaw production
    of masses of documents mid-trial, without analyzing the potential relevance or
    probative value of the documents at issue and without considering the impact of
    his directions on trial efficiency and fairness.

[82]

Considered globally, in my opinion, the number, breadth and
    fundamental lack of relevance of the documents that were the subject of the 19
    directions for production create an appearance that the trial judge was
    disdainful of Faraci and 170 and that he was prepared to accede unquestioningly
    to respondents counsels production requests. In effect, the trial judge
    aligned himself with the respondents on the production issue and lost all sense
    of what was proportionate and necessary to preserve trial fairness and
    efficiency.
Two examples will suffice to illustrate these
    points.

[83]

The first example begins with respondents counsels cross-examination
    of Faraci about
Faracis understanding of 170s obligation to pay rent
    to Hazelton.

[84]

Faraci claimed that 170 was not obliged to pay rent if it did
    not receive funds from Chan or his companies
. Respondents
    counsel pointed out that

rent had been paid in response to notices of default issued
    by Hazelton

on
    two occasions in 2011, albeit under protest, which was after Faraci claimed that
    Chan and his companies had stopped sending rent monies.

[85]

As part of the flow of this
    cross-examination, Faraci revealed that the funds to pay the rent had been
    supplied by others. On receiving this information, respondents counsel began
    questioning Faraci about how he had arranged his affairs.

[86]

This in turn, led to questions about
    Faracis ability to pay the amount demanded for rent immediately prior to
    Hazelton re-entering 170s premises and terminating its tenancy.

[87]

As a result of this questioning,
    respondents counsel requested, and the trial judge directed that Faraci
    produce, numerous documents relating to his personal financial affairs. For
    example, Faraci was directed to:

·

contact his former counsel and obtain details of all judgments
    filed against him of which his former counsel is aware;

·

produce all bank documents pertaining to his personal and
    corporate bank accounts, from the beginning of 1998 to the date of trial; and

·

produce copies of all statements, invoices, bills, and all
    other documents pertaining to payments received and expenses incurred by Faraci
    in his provision of legal services to clients in 2010 and 2011.

[88]

The
    trial judge gave these directions before Chan and Hazelton had amended their
    pleadings to allege fraud and conspiracy.
In the
    circumstances, the documents had no apparent relevance to the issues then pleaded.
    In effect, the trial judge permitted
respondents counsel to turn
    Faracis cross-examination into a judgment-debtor examination. As I have said,
    by doing so, the trial judge appears to have aligned himself with the
    respondents, which contributed to the appearance of a reasonable apprehension
    of bias.

[89]

The
    second example involves the trial judges direction to Faraci to produce all
    documentation relating to his trust accounts, including bank account
    statements, ledgers, and reconciliations, from 1998 to the date of trial.

[90]

The request for the direction arose initially out of Faracis
    evidence that he may have deposited a cheque he received in June 2006 for
    $376,686.45 in relation to his 3% interest in Hazelton Lanes into his trust
    account.

Respondents
    counsel wanted an explanation of how Faraci disbursed those funds. The
    requested direction expanded further so that respondents counsel could explore
    the flow of funds into and out of Faracis trust account relating to Chans
    claim for the return of $20,000 paid to Faraci in 1998 for a deposit on a real
    estate transaction. The direction was further expanded so that respondents
    counsel could verify whether Faraci had received any funds from Chan to pay as
    inducements to other tenants.

[91]

The problem with
respondents counsels
    requests is twofold. First, the documents had not been requested in advance of
    trial as part of the normal process of production and discovery. Second, with
    limited exceptions, the requested documents could not assist in resolving the
    issues at trial.

[92]

What Faraci did with the
$376,686.45 he received in
    2006 was irrelevant to the issues at trial.

[93]

As
    for the $20,000 advanced by one of Chans companies to serve as a deposit,
    Faraci acknowledged receiving the funds but claimed that Chan had authorized
    him to apply them to his legal fees. It was up to Faraci to show when and based
    on what authorization the funds were disbursed from his trust account. How a
    broad review of the flow of funds into and out of his trust account might
    assist the respondent is not apparent. A direction requiring Faraci to produce
    the trust ledger and any related documents demonstrating when the trust funds
    were disbursed and how this was authorized would have been sufficient. Had
    Faraci failed to produce documents relevant to proving his case, it was open to
    the trial judge to draw an adverse inference.

[94]

Concerning
    the possibility that Faraci had received funds from Chan, deposited them into
    his trust account and then paid them out as tenant inducements, it was Faraci
    who was claiming that Chan had paid tenant inducements. Accordingly, it was up
    to Faraci to prove it. Moreover, other than perhaps in relation to one
    transaction, Faraci did not assert that Chan had given him money for tenant
    inducements that he deposited into trust and then paid out. It was therefore
    unnecessary for
respondents counsel
to
    disprove such an allegation.

[95]

Based
    on the breadth and scope of this direction, it is apparent that it required
    production of a significant number of documents. The trial judge himself
    acknowledged that the documents he was directing Faraci to produce were of
    uncertain relevance. As he stated in making this direction, I want Mr. Faraci
    to come with [a] large box of trust related records tomorrow  [a]nd well see
     if they are admissible, relevant and all that.

[96]

The
    fact that the trial judge would make a direction involving such extensive
    production with no apparent purpose related to resolving the issues at trial
    contributes to the appearance that he had aligned himself with the respondents,
    and to the creation of a reasonable apprehension of bias.

(3)

The Trial Judges
    Contempt Ruling

[97]

In
    his September 16, 2013 endorsement finding the appellant in contempt, the trial
    judge noted factors indicating that 170 and Faraci were fully aware of the
    trial judges directions for production and what they required. He gave the
    following additional reasons for his finding of contempt:

I am persuaded beyond a reasonable doubt that the Faraci
    defendants have wilfully engaged in ongoing efforts throughout this trial to
    delay it and impede the efforts of the plaintiffs to bring this action to the
    moment of judgment. The failure of Faraci to comply with my orders has been
    part of that strategy. He has partially complied, in drips and drabs, only when
    pressured by my orders and the prospect of being found in contempt and
    punished. He has rarely done what he has been ordered to do within the time
    limits prescribed. To the extent that he has complied, he has routinely done so
    in a way that makes it difficult to examine the fruits of his efforts.

When Faraci was cross-examined by [counsel for Hazelton and
    Chan], he was questioned on issues related to the extent of Faracis compliance
    with my orders. Many of those questions were met with Faracis refusal to
    answer on the advice of his present counsel. That advice, and Faracis
    refusals as disclosed in the transcript of evidence, were not only wrong but
    unreasonable. In these circumstances, I draw an inference adverse to the Faraci
    defendants. This conduct supports my findings that the conduct on the part of
    Faraci that constitute contempt was wilful and deliberate. There is no other
    reasonable inference that can be made.

Faracis conduct throughout this trial has been consistent with
    his strategy to obstruct and delay this trial.

Faracis strategy must not be allowed to succeed. His ongoing
    efforts to hijack this trial are an affront to the administration of justice.
    Unless I interfere, they will also threaten the plaintiffs right to a fair
    trial.

[98]

In
    addition to the contempt finding, the trial judge stated that, even if he had
    not found Faraci and 170 in contempt, he would have made an order for security
    for costs under rule 60.12(c) of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194, which permits a court to make such other order as is just,
    where a party has failed to comply with an interlocutory order.

[99]

The
    difficulty with the trial judges contempt finding (and his alternative
    security for costs order) is that he conducted no analysis of the extent to
    which Faraci and 170 had complied with his directions or of the extent to which
    any non-compliance was due to factors beyond Faracis and 170s control. The
    trial judge did not advert to Faracis affidavits in which he provided
    particulars of what had, and had not been, produced and the reasons for any
    non-production.

[100]

As I have said,
    my review of the trial judges mid-trial directions leads me to conclude that
    their breadth, scope and lack of relevance to the issues at trial contributes
    to a reasonable apprehension of bias. His willingness to invoke the
    quasi-criminal remedy of contempt in relation to those directions only adds to
    that appearance.

[101]

Moreover, in the
    circumstances of this case, the trial judges failure to consider Faracis
    evidence and his failure to conduct a direction by direction analysis of
    compliance suggests more than mere inadvertence or misapprehension. Rather, his
    treatment of the issue demonstrates he had become aligned with the respondent.

E.

Conclusion

[102]

For the reasons
    I have explained, I conclude that the cumulative effect of the trial judges
    conduct gave rise to the appearance of a reasonable apprehension of bias.

[103]

As part of their
    submissions, the respondents argued that, in the absence of a complete trial
    record, such a finding should not be made. They rely on the fact the appellants
    did not file a full trial transcript with the court; rather, all the appellants
    filed was a copy of Faracis cross-examination.

[104]

In the
    particular circumstances of this case, I would not accept this submission.

[105]

I acknowledge
    that an appeal court will generally look to the trial record in its entirety
    to determine whether a claim for reasonable apprehension of bias has been made
    out:
Chippewas
, at para. 230. In general, it is necessary to consider
    the complete record to determine whether the trial judge deprived a party of
    the ability to advance its case, or treated the parties in such an uneven
    manner that trial fairness was compromised.

[106]

In this case,
    however, no complete trial record exists; the trial was not completed. Rather,
    the appellants pleadings were struck and the respondents moved successfully
    for default judgment.

[107]

The respondents
    claim that the trial judges ruling that pre-2006 issues were relevant and Faracis
    evidence-in-chief somehow justified respondents counsels demands and the
    trial judges actions during Faracis cross-examination. They say this court is
    unable to assess the claim of reasonable apprehension of bias because we do not
    have the full record.

[108]

I would not
    accept this submission. As I have said already, respondents counsel also
    claimed that a review of Faracis cross-examination would demonstrate why the
    19 mid-trial directions were necessary and appropriate. I rejected that
    submission. The respondents have not identified specific aspects of the balance
    of the trial that would justify the trial judges actions or detract from the
    appellants claim of a reasonable apprehension of bias.

[109]

Given the facts
    and circumstances of this particular trial, I am satisfied that the record
    before us provides an adequate basis to assess the trial judges conduct of the
    trial.

F.

Disposition

[110]

For the
    foregoing reasons, I would allow the appeal, set aside the judgments and orders
    under appeal and order a new trial before a different trial judge.

[111]

Although I would
    order a new trial, I have also accepted the respondents submission that the
    personal appellant was a difficult and uncooperative witness. In my view, it is
    apparent, from a review of the record, that all parties contributed to the
    trial spiralling out of control. In the circumstances, I would make no order as
    to the costs of the trial below.

[112]

For the same
    reason, I would make no order as to the costs of the appeal.

Released:

MLB                                       Janet Simmons
    J.A.

NOV 12 2014                          I agree Robert
    Sharpe J.A.

I agree
    M.L. Benotto J.A.

Appendix A

·

Produce his income tax returns from 1998 onward, and, if
    necessary, make enquiries of his accountant to obtain copies of the same, and,
    if still necessary, request complete copies of all tax returns since 1998 from
    the Canada Revenue Agency;

·

Produce copies of any information and documents used in the
    preparation of his 2010 and 2011 tax returns, if he took any steps to file them
    before the trials conclusion;

·

Produce any documents that he provided to his accountant that
    make specific reference to the approximately $7,620 in rent that a  sub-tenant
    allegedly paid to rent office space from Faraci;

·

look through all of his documents pertaining to a separate action
    (the 3-percent action), produce all such documents relevant to the current
    proceeding and prepare a supplemental affidavit of documents accordingly
    though the trial judge later withdrew his direction to prepare a supplemental
    affidavit of documents;

·

fax his former counsel and ask for details of all judgments
    against him of which his former counsel is aware;

·

produce any records relating to the receipt and disbursement of a
    June 19, 2006 HSBC bank draft payable to him in the amount of $376,686.45;

·

produce all trust documentation, including bank account
    statements, ledgers, and reconciliations, from 1998 until the present;

·

provide a list of all new documents produced and allow
    plaintiffs counsel to inspect the originals of all such documents, save for
    those over which Faraci asserted privilege;

·

produce letters sent by Faraci to Chan requesting a reporting
    letter that Faraci believed had been provided to Chan by another law pertaining
    to the Hazelton Lanes refinancing that closed on May 16, 2006;

·

produce copies of any bank documents in his possession that
    pertain to his personal and corporate bank accounts, from the beginning of 1998
    to the present;

·

review and verify charts prepared by plaintiffs counsel
    describing the contents of Faracis bank statements;

·

produce copies of all statements, invoices, bills, and all other
    documents pertaining to payments received and expenses incurred by Faraci in
    his provision of legal services to clients in 2010 and 2011; and

·

write to Faracis accountant and request any documents
    provided by Mr. Faraci to Revenue Canada or its agent, or provided by Revenue
    Canada or its agent, that indicate Faracis professional earned income and
    expenses from 1998 onward.

Appendix B

The
    Court
:
Well, did you follow up on it in any way?
    Did you say, look, if you don't disclose this, you and I could get into big
    trouble? Did you ever do anything like that?

The
    Witness
:
I didn't put it that way. I said, make
    sure you're that you're disclosing everything to the funder, it's important,
    any inducements of any nature.

The
    Court
:
Now, so let me go back to an earlier
    discussion that you and I had this morning. If Mr. Chan were to do what you say
    is the right thing and make disclosure, wouldn't that defeat the whole purpose
    of these schemes?

The
    Witness
: It would.

The
    Court
: So why do it?

The
    Witness
: No. I dont know if he did it or  I dont know.

The
    Court
:
No, but if he were to do what I think
    you implied was the right thing, and that was to make disclosure to lenders or
    purchasers, then those people would know that the income was inflated and the
    whole purpose for which this was designed would fail.

The
    Witness
: Thats correct.

The
    Court
: So if doing it the honest way would result in the failure of
    these schemes, why do them at all unless you were prepared to close your eyes
    and pretend  sort of not look at what Mr. Chan

The
    Witness
: No, no. Thats not true at all, Your Honour. My role was to get
    the tenant who he was satisfied with. I bring the tenant in. A document is
    signed, whether its a lease or otherwise, an offer to lease, okay? At that
    time, when the transaction is done  the time that the transaction is done,
    there are certain numbers. I advised them  for example, with the art gallery,
    I told him right at the beginning, I said, hes very, very weak. I dont know
    if hell last. And he said, fine, Ill take care of it, if I have to.

I did not see any exchange of cheques
    on rent between the art gallery and Mr. Chan. My role was, when the agreement
    was signed, I had to tell him whether he was a strong tenant, weak tenant. I
    did not collect any cheques, I did not issue any cheques, I did not deliver any
    cheques, save and except on the gym. Thats the one he gave me the funds after
    the agreement was signed and I gave it to the gym and they gave it  handed it
    back to him.

So the so-called arrears  I guess if
    I can give an explanation is this

The
    Court
:  Mr. Faraci, I can let you go on, but I tell you this
    respectfully, this is gobbledygook. Youre not making sense and youre not
    addressing the point that Im raising with you. If you want time to address the
    issue that Im raising with you, give you all the time you need, but I dont
    want you to go on now with other stuff.

The
    Witness
:  Fair enough.

The
    Court
:  Do you have anything more to say in response to the point that I
    raised with you, that is, if Mr. Chan were to act honestly and make full
    disclosure, that would defeat the whole purpose of this. I think you agreed
    that it would.

The
    Witness
:  Yes.

The
    Court
:  So then why bother doing it?

The
    Witness
:  He did it. It was done.

The
    Court
:  Okay, thats enough.

The
    Court
:  Continue.

[Respondents
    Counsel]
: Yes. Unfortunately  We were not able to hear the last answer
    that Mr. Faraci gave to you  to Your Honour.

The
    Court
: I dont think it was responsive or of any probative value in any
    way.

Respondents
    Counsel
: Thank you, Your Honour.

The
    Court
: Well, except from the adverse inference that I might be entitled
    to draw from it.

[1]

$300,000 was originally paid into escrow.
Under the
    terms of a February 24, 2012 consent order, $280,000 was paid into court to the
    credit of this action. The balance of the escrowed funds were paid to First
    Capital on account of legal fees.

[2]

Appendix A contains thirteen bullet points. They are a
    consolidated summary of the trial judges nineteen overlapping directions.

[3]
In support of their motion, Faraci and 170 asserted that the trial judge had
    created a reasonable apprehension of bias in two ways: first, through his
    findings of fact made on the motion for a
Mareva
injunction; and,
    second, through his directions for production of documents relating to matters
    not put in issue by the pleadings.

[4]

The trial judges reasons for
    granting this relief read as follows:

Partial default judgment re the
    issue in accordance with the following paragraphs of the draft Judgment marked
    as Schedule A to the notice of motion within returnable on November 6/13:

Paragraphs 1 - 3, inclusive,
    and 20  26, inclusive.

I will hear further submissions
    regarding the other relief claimed on November 12/13. Costs reserved.

[5]

The December 23, 2013
    endorsement reads as follows:

Further partial Judgment is to
    issue in accordance with paragraphs 14 to 19, inclusive of the draft Judgment
    marked as Schedule A to the notice of motion.

The plaintiffs are further
    entitled to the costs of all steps taken in this action, fixed on a substantial
    indemnity level at $650,000, all-inclusive, to be recovered from the defendants
    1707590 Ontario Limited and John Faraci.

I am satisfied that the
    plaintiffs are entitled to costs at that level because of the reprehensible
    conduct of the Faraci defendants throughout this as described by me in the
    previous endorsements made. The measures taken on behalf of the plaintiffs, and
    the time spent by the counsel, were fully justified, fair and reasonable.


COURT OF APPEAL FOR ONTARIO

CITATION: Fischer v. Stewart Title Guaranty Company, 2014
    ONCA 798

DATE: 20141112

DOCKET: C58336

Strathy C.J.O., Feldman and Lauwers JJ.A.

BETWEEN

Frederick Fischer

Appellant

and

Stewart Title Guaranty Company

Respondent

Harvey A. Swartz, for the appellant

Anne M. Kennedy, for the respondent

Heard and released orally: October 30, 2014

On appeal from the judgment of Justice Nancy Mossip of
    the Superior Court of Justice, dated January 14, 2014.

ENDORSEMENT

[1]

The motion judge dismissed the appellants claim against his title
    insurer. The parties had agreed that it was appropriate to address the coverage
    issue on summary judgment.

[2]

The policy of insurance covered title risks. Title was defined as the
    ownership of your interest in the land and was described as fee simple vested
    in Frederick Fischer.

[3]

The policy covered among other things, the risk that the appellants
land
was unmarketable for any one of four reasons, all
    of which related to title and none of which applies here. It also covered the
    risk that the appellants
title
was unmarketable,
    allowing another person to refuse to perform a contract to purchase, to lease
    or to make a mortgage loan.

[4]

The motion judge found the previous use of the property as a marijuana
    grow op was not a title defect. That conclusion is unassailable. Even
    assuming the
land
was unmarketable, the
title
was marketable and was unencumbered by defects
    that would permit a purchaser to refuse to perform a contract of sale.

[5]

This conclusion is consistent with the U.S. authority cited by the
    respondent, particularly, the decision of the California Court of Appeal in
Lickmill
    Creek Apartments v. Chicago Title Insurance Company
(1991), 231 Cal. App.
    3
rd
1654.

[6]

In that case, at page 6, the court adopted the observation that:

The purpose of title insurance is not to protect the insured
    against loss arising from physical damage to property; rather, it is to protect
    the insured against defects in the title.

[7]

The appeal is therefore dismissed. Costs fixed at $3,500.00, all
    inclusive.

G.R. Strathy C.J.O.

K. Feldman J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Ho v. World Financial Group Insurance Agency of
    Canada Inc., 2014 ONCA 832

DATE: 20141121

DOCKET: C58669

Sharpe, Rouleau and Pardu JJ.A.

BETWEEN

Helena Ho

Plaintiff (Appellant)

and

WFG
    Insurance Agency and WFG Securities of Canada

(now Transamerica
    Securities Inc.)

Defendants (Respondents)

Helena Ho, acting in person

Doug McLeod, for the respondents

Heard: November 18, 2014

On appeal from the order of Justice Wendy M. Matheson of
    the Superior Court of Justice, dated March 20, 2014.

APPEAL BOOK ENDORSEMENT

[1]

We have reviewed the submissions of the appellant, both her factum and
    her further written submissions in lieu of oral argument. In her submissions,
    she has not identified any error of law or fact that would justify appellate
    review. The motion judge gave careful and thorough reasons for granting summary
    judgment dismissing the claim. In particular, the motion judge found that the
    appellant was not an employee but rather an independent contractor and that
    there could be no claim for wrongful dismissal. Moreover the respondents were
    entitled to terminate the contract. We see no other basis upon which a claim
    could be made out on this record. Accordingly, the appeal is dismissed. No
    costs sought by the respondents.


COURT OF APPEAL FOR ONTARIO

CITATION: Jones v. Jones, 2014 ONCA 822

DATE: 20141120

DOCKET: C58784

Cronk, Gillese and Rouleau JJ.A.

BETWEEN

Mark Lewis Jones

Applicant

(Respondent in Appeal)

and

Mandy Lee Jones

Respondent (Appellant)

Raymond J. Wrubel, for the appellant

Anna Towlson, for the respondent

Heard: November 13, 2014

On appeal from the order of Justice James W. Sloan, dated
    April 3, 2014, with reasons reported at 2014 ONSC 2122 sitting on appeal from
    the order of Justice Paddy A. Hardman of the Ontario Court of Justice, dated June
    12, 2013, with reasons reported at 2013 ONCJ 383.

By the Court:

[1]

The appellant mother appeals the order of Sloan J. of the Superior Court,
    dated April 3, 2014, made on appeal from the order of Hardman J. of the Ontario
    Court of Justice, dated June 12, 2013.

[2]

The Superior Court ordered that the children of the marriage are to move
    from Lindsay, Ontario, to Waterloo, Ontario. The order also provides that their
    primary residence shall be changed from that of the appellant to that of the
    respondent unless the appellant relocates her residence from Lindsay to
    Waterloo.

[3]

Briefly stated, the facts are as follows. The appellant and respondent
    married in October 2004 and separated on October 4, 2010. They have two
    children of the marriage, Megan Isabella Jones, born May 20, 2006, and Evan
    Luis Joseph Jones, born March 13, 2009. Prior to the separation, the parties
    resided in the Waterloo region. Upon separation, the appellant moved with the
    two children of the marriage to Lindsay, to be closer to her extended family
    and so that she could take further education. Megan was four years old and Evan
    was one and a half years old at the time.

[4]

The parties entered into minutes of settlement that were incorporated
    into an October 7, 2011 order. They agreed to joint custody of the children and
    that the childrens primary residence would be with the appellant who then
    resided in Lindsay where she was attending college. The settlement agreement
    also provided that the appellant would attempt to secure employment in the
    Waterloo region upon completion of her schooling. It further provided that the
    order would be reviewable within three months of the appellant completing that
    schooling.

[5]

When the appellant completed her studies, she did not seek employment in
    Waterloo as was contemplated by the minutes of settlement and subsequent order.
    Instead, she found employment in Lindsay and continued to reside there.

[6]

The appellants failure to pursue employment in the Waterloo region led
    to contempt proceedings and motions to change the terms of the October 7, 2011
    order. Those and other proceedings culminated in the decision that is now on
    appeal before us.

[7]

The appellants appeal is focused on two issues. She maintains that
    there has been no material change in circumstances such as to warrant a fresh
    consideration of the primary residence of the children. She further argues
    that, even if there has been a change in circumstances, the Superior Court
    judge erred in ordering a change in primary residence of the children from her
    to the respondent.

[8]

The Superior Courts decision that there has been a material change in
    circumstances warranting a review of the order is, in our view, well supported
    in the record. The terms of the settlement provided for review of the order
    after the appellant had completed her schooling. It was also anticipated that
    after completing those studies, the appellant would seek employment in the
    Waterloo area and, consequently, relocate with the children to Waterloo. It is
    apparent that the appellant has not done so. In these circumstances it was open
    to the court to find that there had been a material change.

[9]

The difficulty with the decision of the court below, however, is the determination
    that the best interests of the children would be served by changing their primary
    residence from that of the appellant to that of the respondent in the event
    that the appellant did not voluntarily relocate to Waterloo. The reasons in
    both the Superior Court and the Ontario Court of Justice contain little discussion
    of why this would be in the best interests of the children. For example, they
    contain no analysis of the impact on the children of changing their primary
    residence.

[10]

Both
    courts appear to have given considerable weight to what may or may not have
    been in the best interests of the children at the date of the separation and to
    what appears to have been agreed to by the parties when the minutes of
    settlement were entered into. Their analysis also focuses on the benefit to the
    children if the appellant and children relocate to the Waterloo area. As
    explained by both judges, this would be in the best interests of the children
    as they would be close to both parents and would no longer have to undertake
    the significant travel between Lindsay and Waterloo to maintain contact with
    both parents.

[11]

Although
    there would be benefit to the children if they lived in the same area as the
    respondent, this does not address the central issue the court had to decide, which
    is whether a change in the childrens primary residence from that of the
    appellant to that of the respondent is in their best interests.

[12]

We
    acknowledge that the appellant has indicated that she would move to Waterloo
    rather than see a change in the childrens primary residence. This, however,
    does not provide a basis for the order under appeal which orders a change in the
    childrens primary residence if the appellant chooses now or later not to
    reside in Waterloo.

[13]

Regrettably,
    in the absence of the fact finding and analysis required to determine whether a
    change in the childrens primary residence is in the best interests of the children,
    we are left with no option but to set aside the orders of the Superior Court and
    the Ontario Court of Justice and remit the matter to the Ontario Court of
    Justice for a new hearing. The determination of whether it is in the best
    interests of the children to order a change in their primary residence from
    living with the appellant to the respondent, must be based on a proper and up
    to date evidentiary record. In addition, it may well be that a trial of that
    issue will be required. The court may also wish to obtain an updated report
    from the Office of the Childrens Lawyer, as the original report is now some
    three years out of date. These, however, are matters to be decided by the
    parties and the Ontario Court of Justice.

[14]

For
    these reasons, the appeal is allowed, the orders of the Superior Court and the
    Ontario Court of Justice are set aside, and the matter is remitted to the
    Ontario Court of Justice for a new hearing. The appellant is entitled to costs
    of the appeal fixed at $5,000, all inclusive. The cost awards in the Superior
    Court and the Ontario Court of Justice are set aside and there shall be no
    order as to costs for those two proceedings. Accordingly, the respondent shall
    return any monies paid by the appellant further to the costs orders in those
    two matters.

Released: NOV 20, 2014

EEG

E.A.
    Cronk J.A.

E.E.
    Gillese J.A.

Paul
    Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Joseph v. Linton, 2014 ONCA 782

DATE: 20141105

DOCKET: C58706

Doherty, Epstein and Tulloch JJ.A.

BETWEEN

John Joseph a.k.a. John DSouza and Peter DGama

Plaintiffs (Appellants)

and

Ritchie James Linton,
    Robert Jagielski, Krystyna Woldanska
, Isabella Woldanska,
Agnieszka Woldanska, Karolina Gill, Bobby Mukhtiar Gill
,
    Polish Credit Union, Royal Bank of Canada, A. Farber & Partners Inc., The
    Law Society of Upper Canada, and The Superintendent of Bankruptcy

Defendants (
Respondents
)

John DSouza and Peter DGama, acting in person

Adam Zasada, for the respondents Karolina Gill and Bobby
    Mukhtiar Gill

David Silver, for the respondents Ritchie James Linton and
    Robert Jagielski

Marek Tufman, for the respondents Krystyna Woldanska and
    Agnieska Woldanska

Heard: October 31, 2014

On appeal from the judgment of Justice David L. Corbett
    of the Superior Court of Justice, dated March 24, 2014.

APPEAL BOOK ENDORSEMENT

[1]

This is an appeal from the order of Mr. Justice Corbett dated March 24,
    2014.  We cannot go behind the findings made in earlier proceedings.  The
    appellants exercised their rights of appeal in relation to those earlier
    proceedings.  We agree with Justice Corbetts analysis of the potential merits
    of the appellants claims.  There is none.  He did not err in the order he
    made.

[2]

The appeal is dismissed.

[3]

In our view, this is a case for substantial indemnity costs.  The
    amounts submitted are reasonable.  Costs to the Gills in the amount of $11,600;
    costs to Linton and Jagielski in the amount of $9,200; and costs to the
    Woldanskas in the amount of $3,750, all inclusive or disbursements and
    applicable taxes.  Order may go dispensing with the requirement as to the approval
    as to form and content of the order flowing from these proceedings.