COURT OF APPEAL FOR ONTARIO

CITATION:
    Soboczynski v. Beauchamp, 2015 ONCA 282

DATE: 20150423

DOCKET: C58106

Hoy A.C.J.O., Epstein and Hourigan JJ.A.

BETWEEN

Adam Soboczynski and Olga Soboczynski

Respondents

and

Don Beauchamp and Louise Beauchamp

Appellants

Benjamin G. Blay, for the appellants

W. Scott Gallagher, for the respondents

Heard: November 4, 2014

On appeal from the order of the
    Divisional Court (Justices James C. Kent, Thea P. Herman and Alison Harvison
    Young), dated May 28, 2013, allowing the appeal from the judgment of Justice
    T.D. Little of the Superior Court of Justice, dated November 17, 2011, with
    reasons reported at 2011 ONSC 6791.

Epstein J.A.:

I.

OVERVIEW

[1]

The appellants, Don and Louise Beauchamp, sold their home to the
    respondents, Adam and Olga Soboczynski.

[2]

The issue at the centre of this appeal is the legal effect of an entire
    agreement clause in an agreement of purchase and sale. Specifically, does the
    clause preclude a purchasers action in negligent misrepresentation against a
    vendor for non-contractual representations made subsequent to entering into the
    agreement but before closing?

[3]

The appellants and respondents entered into the agreement of purchase
    and sale (the APS) on November 21, 2007. The purchase price was $290,000. Following
    the execution of the agreement, but before the transaction closed, the
    appellants, at the respondents request, completed and signed a Seller Property
    Information Statement (the SPIS). In the SPIS, the appellants stated that the
    property was not subject to flooding. They also undertook to inform the
    respondents of any important changes to the information contained in the SPIS
    based on events, if any, that took place prior to closing.

[4]

On January 9, 2008, the basement of the house flooded, causing
    relatively minor damage. The appellants fixed the damage but did not disclose
    the incident to the respondents. The transaction closed as scheduled on January
    18, 2008.

[5]

On February 6, 2008, the basement flooded again. After learning of the pre-closing
    flood, the respondents sued the appellants for damages based on negligent
    misrepresentation, arguing that the SPIS required the appellants to disclose
    the January 9 flood to them.

[6]

The trial judge concluded that the entire agreement clause in the APS
    acted as a bar to the respondents action. Notwithstanding this conclusion, the
    trial judge proceeded to assess damages. He found that if the respondents had
    been successful, they would have been entitled to $25,000 in damages for
    negligent misrepresentation.

[7]

The Divisional Court disagreed with the trial judges conclusion that the
    entire agreement clause precluded the respondents tort action. The SPIS required
    the appellants to tell the respondents about the pre-closing flood. They failed
    to do so. And the other elements of the tort of negligent misrepresentation had
    been made out. Therefore, the Court awarded damages to the respondents in the
    amount assessed by the trial judge.

[8]

The appellants appeal on two main grounds. First, the Divisional Court
    erred in finding that the entire agreement clause in the APS does not preclude
    a claim based on representations made in the SPIS. Second, the court erred in
    holding that the tort of negligent misrepresentation had been made out.

[9]

I would allow the appeal. I agree with the Divisional Court that the
    representations the appellants made in the SPIS are actionable notwithstanding
    the entire agreement clause in the APS. However, in my view, the evidence does
    not support a finding that the respondents relied on the representations that
    form the basis of their claim for negligent misrepresentation. In the absence
    of reliance, the respondents claim must fail.

II.

FACTUAL BACKGROUND

(i)

The APS and the SPIS

[10]

The
    APS was subject to two conditions  satisfactory financing, and a satisfactory
    home inspection. The APS also contained an entire agreement clause. It read:

[The APS] including any Schedule attached hereto, shall
    constitute the entire Agreement between Buyer and Seller. There is no
    representation, warranty, collateral agreement or condition, which affects [the
    APS] other than as expressed herein.

[11]

On
    November 22, 2007, the day after the APS was signed, Mr. Soboczynski gave the
    appellants the SPIS to fill out. After consulting their lawyer, the appellants
    completed and signed the SPIS. In the document, the appellants indicated that:
    (i) the property was not subject to flooding, (ii) they were not aware of any
    moisture or water problems, and (iii) they were not aware of any damage due to
    wind, fire, water, insects, termites, rodents, pets or wood rot. The SPIS
    concluded with the following statement:

Any important changes to this information known to the sellers
    will be disclosed by the sellers prior to closing.

[12]

As
    previously noted, the APS was conditional on the [r]esults of an inspection
    from an inspector of [the respondents] choice. On November 28, 2007, the
    respondents obtained a satisfactory home inspection from their chosen
    inspector. As Mr. Soboczynski testified, We received the inspection report.
    There was nothing significant there to be concerned about that we thought. My
    wife saw the inspection report as well and I took it home to her. Having
    obtained a satisfactory home inspection, the respondents waived the home
    inspection condition. They also secured financing and waived the financing
    condition. As of November 28, 2008, the APS was no longer conditional.

[13]

The
    SPIS was not incorporated into the terms of, or otherwise referenced in, the
    APS.

(ii)

The Two Floods

[14]

On
    January 9, 2008, the basement of the house flooded after a period of heavy
    rainfall and melting snow. Water entered the basement through the window wells.
    The carpet was saturated with water. The appellants repaired the damage by
    drying out the rug and replacing the under pad. The repairs cost $1,648.59.

[15]

The
    appellants consulted their lawyer about the flood but did not inform the
    respondents of the incident. The appellants evidence was that they believed
    the flood was an isolated occurrence and was not an important change
    requiring them to give notice to the respondents under the terms of the SPIS.

[16]

The
    sale closed on January 18, 2008. The respondents were unaware of the January 9
    flood. On February 6, 2008, after another period of heavy rainfall, the
    basement flooded again. The respondents repaired the damage and took steps to
    prevent further flooding. The respondents hired an expert and discovered that
    the backyard was ponding and the window wells were lower than the surrounding
    land. The remedial steps the respondents took cost $22,598.17.

[17]

The
    respondents eventually found out about the January 9 flood. By statement of
    claim dated November 17, 2009, they commenced this action against the
    appellants. The respondents sued only in tort. They claimed damages based on
    alleged fraudulent or negligent misrepresentations made in the SPIS.

III.

DECISIONS BELOW

(i)

Superior Court of Justice

[18]

The
    trial judge dismissed the respondents claim.

[19]

He
    was not satisfied that the respondents had demonstrated that the property had
    been subjected to any flooding prior to the January 9 flood. He found that the
    cause of the flood was not clearly established but reasoned that after a period
    of heavy rainfall and melting snow, water had entered through the window wells.
    He further found that the appellants made a conscious decision not to disclose
    the January 9 flood to the respondents because they thought it was a one off
    occurrence.

[20]

Citing
Krawchuk v. Scherbak
, 2011 ONCA 352, 106 O.R. (3d) 598, leave to
    appeal to S.C.C. refused, 2011 S.C.C.A. No. 319, the trial judge reasoned that
    statements in an SPIS can amount to non-contractual representations and can
    give rise to the tort of negligent misrepresentation. However, here, the SPIS
    was not part of or otherwise connected with the APS. The trial judge concluded
    that, as a result, the entire agreement clause in the APS prevails to exclude
    the representations in the SPIS. The respondents could therefore not rely on
    them.

[21]

The
    trial judge expressed some reluctance about whether the tort would be made out
    if he had reached a different conclusion about the effect of the entire
    agreement clause. At para. 62, he wrote:

[I]t is doubtful that the incident, which I find the Beauchamps
    believed to have been a one off incident, was an important change to the
    information requiring disclosure to the purchasers as per the wording of the
    S.P.I.S.

[22]

Notwithstanding
    this reluctance, the trial judge dealt with the respondents damages. He
    assessed them at $25,000  an amount that included $22,598.17 for the costs of
    fixing the damage and preventing further flooding. The balance was intended to compensate
    the respondents for mental distress and loss of enjoyment. The amount of
    damages was not in issue before the Divisional Court and is not in issue before
    this court.

[23]

The
    trial judge died shortly after releasing his decision in this matter but before
    deciding the issue of costs. The appellants suggested that costs be referred to
    another judge of the Superior Court or be determined by the Divisional Court.
    The respondents suggested that costs be determined by the Divisional Court.

(ii)

Divisional Court

[24]

The
    Divisional Court allowed the respondents appeal.

[25]

First,
    I note that at the conclusion of the hearing before the Divisional Court,
    counsel were asked the following question. If the Court determined that the
    trial judge had erred by reviewing the appellants conduct on a subjective
    rather than an objective standard, were the parties content that the Court make
    findings of fact on the correct standard rather than send the matter back to
    trial? Both counsel agreed with the Divisional Courts proposal.

The Entire Agreement Clause and an Action in Tort

[26]

The
    Divisional Court held, at para. 40, that the trial judge erred in law when he
    concluded that the [respondents] could not rely on the representation in the
    SPIS because of the entire agreement clause in the [APS]. The Court reasoned
    that the entire agreement clause in the APS did not interfere with the
    respondents claim based on a negligent misrepresentation made in the SPIS, even
    though it was signed after the APS was entered into but before closing.

[27]

In
    coming to this conclusion, Herman J., writing for the Court, noted that in
Dzourelov
    v. T.B. Bryk Management & Development Ltd.
(2004), 190 O.A.C. 321
    (Div. Ct.), Dawson J. interpreted the first sentence of a comparable entire
    agreement clause as deal[ing] with the situation at the time the agreement was
    signed. It has the effect of excluding the possibility of any representation,
    warranty or collateral agreement at that time, that was not included in the
    written agreement: para. 13.
[1]
Justice Dawson concluded that the entire agreement clause did not preclude a
    claim arising out of the formation of a subsequent oral agreement.

[28]

The
    Court also pointed to several decisions in which courts have held that
    representations in an SPIS can give rise to an action in tort for negligent
    misrepresentation.
[2]
The Court noted, however, that in each case the completed SPIS was provided to
    the purchaser before the agreement of purchase and sale was entered into.

Was the Tort Made Out?

[29]

The
    Divisional Court then proceeded to determine whether the respondents had
    established a claim for negligent misrepresentation on the basis of the appellants
    failure to advise them of the pre-closing flood.

[30]

After
    concluding that the appellants owed the respondents a duty of care, the Court
    found that the January 9 flood constituted an important change and, under the
    terms of the SPIS, the appellants were required to notify the respondents of
    the occurrence. Their failure to do so constituted an untruth.

[31]

The
    Court then held that the trial judge erred in law by applying a subjective test
    to the appellants obligations under the SPIS by focusing on their honest
    belief that the incident did not amount to an important change. In keeping
    with the approach set out in
Krawchuk
, an objective standard must be
    applied. The question is whether a reasonable person in the circumstances would
    have disclosed the flood.

[32]

The
    Court found that it was not reasonable for the appellants to not advise the
    respondents of the change. Therefore, the appellants acted negligently in not
    disclosing the change in the situation: para. 59.

[33]

In
    considering the issue of reliance, the Court started with the proposition that
    purchasers are entitled to rely on representations in an SPIS. The Court then
    wrote, at para. 61:

Had the [respondents] known about the flood, they might well
    have retained their own expert to investigate the situation to determine the
    cause of the problem. If it was determined that the problem was significant and
    was more than a one-time event, the contractual options of rescission or
    abatement might have been available to them.

[34]

In
    concluding its analysis of the tort of negligent misrepresentation, the
    Divisional Court found that the respondents sustained damage as a result of the
    misrepresentation and gave judgment to the respondents in the unchallenged
    amount of $25,000.

Costs Award

[35]

After
    considering written costs submissions, the Divisional Court rejected the
    appellants argument that costs should be reduced because the respondents had
    pleaded but did not establish fraud. The Court found that the fraud allegations
    had not been actively pursued at trial. The central issue at trial was
    negligent misrepresentation.

[36]

The
    Court awarded the respondents their trial costs fixed in the amount of $15,000,
    plus $10,171.69 in disbursements. The Court also awarded the respondents costs
    of the appeal in the amount of $7,500.

IV.

ISSUES ON APPEAL

[37]

The
    appellants advance three main grounds of appeal. They submit that the
    Divisional Court erred:

1.

by finding that the entire agreement clause in the APS did not preclude
    a claim in tort based on an alleged negligent misrepresentation made in the
    SPIS;

2.

by concluding that the respondents had made out a claim for damages
    based on negligent misrepresentation; and

3.

in its trial costs award to the respondents.

V.

ANALYSIS

(i)

Did the Divisional Court err by finding that the entire agreement clause
    in the APS did not preclude a claim in tort based on an alleged negligent misrepresentation
    made in the SPIS?

[38]

The
    appellants submit that the entire agreement clause, which expressly stated that
    there are no representations affecting their agreement other than as expressed
    in the APS, precludes the respondents from advancing a claim in tort based on
    representations in the SPIS. The appellants point out that the respondents
    could have avoided the consequences of the entire agreement clause by
    incorporating the SPIS into the APS, but did not do so.

[39]

It
    is well-settled that contract and tort duties may arise concurrently. In
BG
    Checo International Ltd. v. British Columbia Hydro & Power Authority
,
    [1993] 1 S.C.R. 12, the Supreme Court wrote, at p. 26, where a given wrong
prima
    facie
supports an action in contract and in tort, the party may sue in
    either or both, except where the contract indicates that the parties intended
    to limit or negative the right to sue in tort. The Court continued, at p. 27,
    In so far as the tort duty is not contradicted by the contract, it remains
    intact and may be sued upon.

[40]

Accordingly,
    the key question is whether the entire agreement clause in the APS negatives the
    respondents right to sue in tort based on misrepresentations made in the SPIS
     a document completed after the APS was entered into.

[41]

In
    my view, the answer to the question is that, in the circumstances of this case,
    any consequences flowing from representations made in the SPIS were outside the
    reach of the entire agreement clause. The entire agreement clause in the APS
    operates retrospectively, not prospectively. In other words, the application of
    the clause is restricted to limit representations, warranties, collateral
    agreements, and conditions made
prior to or during
the negotiations leading
    up to the signing of the APS. When the appellants made representations in the
    SPIS, a document completed
after
the APS had been signed by all
    parties, the entire agreement clause was spent.

[42]

This
    conclusion is supported by the general purpose of entire agreement clauses,
    jurisprudence from this court, the plain meaning of the entire agreement clause
    at issue in this case, and the post-contractual conduct of the parties.

General Purpose of Entire Agreement Clauses

[43]

An
    entire agreement clause is generally intended to lift and distill the parties
    bargain from the muck of the negotiations. In limiting the expression of the parties
    intentions to the written form, the clause attempts to provide certainty and
    clarity.

[44]

In
Inntrepreneur Pub Co. Ltd. v. East Crown Ltd.
, [2000] 41 E.G. 209
    (U.K. Ch.), Lightman J. colourfully described the purpose of an entire
    agreement clause as follows:

The purpose of an entire agreement clause is to preclude a
    party to a written agreement threshing the undergrowth and finding
in the course of negotiations
some (chance) remark or
    statement (often long forgotten or difficult to recall or explain) on which to
    found a claim such as the present to the existence of a collateral warranty For
    such a clause constitutes a binding agreement between the parties that the full
    contractual terms are to be found in the document containing the clause and not
    elsewhere. [Emphasis added.]

[45]

Legal
    commentators appear to be united in their view that entire agreement clauses
    are, generally speaking, retrospective in nature. According to Angela Swan, An
    entire agreement clause deals only with what was done or said
before
the agreement was made and seeks to exclude those statements and acts from
    muddying the interpretation of the agreement; it is a contractual invocation of
    the parol evidence rule:
Canadian Contract Law
, 3d ed. (Markham:
    LexisNexis Canada, 2012), at p. 600 (emphasis in original); see also John D.
    McCamus,
The Law of Contracts
, 2d ed. (Toronto: Irwin Law Inc., 2012),
    at p. 733.

[46]

Justice
    P.M. Perell agrees. He says that [t]he parol evidence rule then directs that
    the written contract may not be contradicted by evidence of the oral and
    written statements made by the parties
before
the
    signing of the contract. The entire agreement clause is essentially a
    codification of the parol evidence rule: A Riddle Inside an Enigma: The
    Entire Agreement Clause (1998) The Advocates Q. 287 at 290-91 (emphasis
    added).

[47]

And
    according to Professor M.H. Ogilvie, entire agreement clauses are patently not
    applicable where the representation
postdates
the
    contract: Entire Agreement Clauses: Neither Riddle Nor Enigma (2009) 87 The
    Canadian Bar Review at 642 (emphasis added).

Jurisprudence From This Court

[48]

While
    there appears to be little jurisprudence on the effect of an entire agreement
    clause on representations made
after
the contract containing the
    clause is entered into, some assistance can be found in this courts decision
    in
Shelanu Inc. v. Print Three Franchising Corp.
(2003), 64 O.R. (3d)
    533 (C.A.), subsequent proceedings, (2006) 19 B.L.R. (4th) 19 (Ont. C.A.).

[49]

Shelanu
involved a contractual dispute in which the question was whether an entire
    agreement clause in a written agreement rendered unenforceable a subsequent
    oral agreement between the parties. Justice Weiler, writing for the court,
    concluded it did not.

[50]

Shelanu
clarified certain points about entire agreement clauses.

[51]

First,
    an entire agreement clause does not prevent the parties from amending the terms
    of their agreement. In other words, post-contract events can affect both the
    enforceability of the obligations in the agreement and add new obligations to
    those imposed by its terms.

[52]

Second,
    and relatedly, entire agreement clauses do not apply prospectively unless the
    wording expressly so provides. In the words of Weiler J.A., at paras. 49-50:

[A]n exception to the parol evidence rule is the existence of
    any subsequent oral agreement to rescind or modify a written contract provided
    that the agreement is not invalid under the Statute of Frauds:
Ellis v.
    Abell
(1884), 10 O.A.R. 226 (Ont. C.A.) at para. 85.

Clauses such as the entire agreement
    clause in issue here are normally used to try to exclude representations made
    prior to the signing of the written agreement
. See P.M. Perell, A
    Riddle Inside an Enigma: The Entire Agreement Clause (1998)
The Advocates
    Q
. 287. Nothing in [the entire agreement clause] suggests that an oral
    agreement to surrender the franchise several years later would be of no effect.
    It cannot be said the entire agreement clause was clearly intended to cover any
    and all future contractual relations between Shelanu and Print Three. [Emphasis
    added.]

[53]

Both
    the general purpose of entire agreement clauses set out above and the approach
    to their application evident in this courts decision in
Shelanu
support
    the conclusion that, subject to express wording to the contrary, these clauses
    do not apply to agreements or representations that post-date the contract in
    which the clause is found.

[54]

I
    now turn to the specific circumstances in this case.

Specific Words Used in the Entire Agreement Clause in the APS

[55]

A
    consideration of the precise words the parties used to record their bargain is
    central to the interpretation of the entire agreement clause in the APS. For
    convenience, I again set out the text of the entire agreement clause in issue:

This Agreement including any Schedule attached hereto, shall
    constitute the entire Agreement between Buyer and Seller. There is no
    representation, warranty, collateral agreement or condition, which affects this
    Agreement other than as expressed herein.

[56]

The
    clause is worded in the present tense  [t]here
is
no representation affecting the APS (emphasis added). On their face, the words
    of the clause do not preclude an action for negligent misrepresentation based
    on a representation made post-contract. The words that reflect the parties
    bargain are therefore consistent with the general legal principles animating
    entire agreement clauses.

[57]

This
    interpretation of the clause is also consistent with the Divisional Courts analysis
    in
Dzourelov
 a case relied upon by the Divisional Court in this
    case. In
Dzourelov
, the entire agreement clause was very similar to
    the one in this case. It read: The parties acknowledge that there
is no
representation, warranty, collateral agreement or
    condition, affecting the Agreement except as contained in this agreement. This
    agreement may not be amended other than in writing (emphasis added). In
    interpreting this clause, Dawson J. wrote:

The exclusive agreement clause in question consists of two sentences.
    I agree with the appellant's submission that the first sentence
deals with the situation at the time the agreement was signed
.
    It has the effect of excluding the possibility of any representation, warranty
    or collateral agreement
at that time
, that was not
    included in the written agreement. [Emphasis added.]

[58]

Thus,
Dzourelov
confirms that entire agreement clauses drafted in the present
    tense look backwards, not forwards.

[59]

The
    entire agreement clause in this case is saying, These are the terms of our
    agreement and nothing that was said beforehand is relevant.  You have no basis
    for relying on anything other than the terms of the agreement. The agreement
    stands on its own.

Post-Contractual Conduct of the Parties

[60]

Finally,
    Canadian courts often look to the post-contractual conduct of the parties to
    shed light on what they intended the words enshrined in their written agreement
    to mean. The trend in Canada toward analyzing the subsequent actions of the
    parties is captured by G.H.L. Fridman in
The Law of Contract in Canada
,
    6th ed. (Toronto: Carswell, 2011), at pp. 450-51:

Canadian courts have adopted the view that subsequent conduct
    can be a useful guide to the interpretation of a written contract In one case,
    concerned with whether a restrictive covenant in a contract was personal to the
    parties or went with the land, Thomson J. of the Supreme Court of Saskatchewan,
    said that in cases involving an ambiguity in an agreement, there is no better
    way of determining what the parties intended than to look to what they did
    under it [
Bank of Montreal v. Univ. of Saskatchewan
(1953), 9 W.W.R.
    (N.S.) 193 (Sask. Q.B.), at 199]. There is much to be said for this approach,
    as many Canadian judges since 1970, have declared. In Canada it seems clear
    that the subsequent actions of the parties may be admissible to explain the
    true meaning and intent of their agreement. [Citations omitted.]

[61]

An
    examination of the conduct of the parties to the APS after they entered into
    their agreement supports the conclusion that they intended that the appellants
    obligations under the SPIS would be enforceable.

[62]

It
    was not necessary for the appellants to complete the SPIS. If one contracting
    party asks, post contract, for a representation or warranty, the other does not
    have to give it: he or she can say, No, the contract expresses the limit of my
    obligations. But that is not what transpired in this case. The fact that the
    appellants completed the SPIS, after consulting their lawyer, provides insight
    into their intentions in relation to the entire agreement clause. It reveals
    that the appellants considered the SPIS seriously.

[63]

Moreover,
    in the SPIS, the appellants undertook to inform the respondents of any
    important changes to the information they provided in the document. This
    ongoing obligation to which the appellants committed themselves indicates that
    all parties considered the SPIS as affecting their relationship.

[64]

For
    these reasons, I agree with the Divisional Court that the entire agreement
    clause, properly interpreted, does not preclude the respondents claim for
    damages based on negligent misrepresentation. In my view, the appellants should
    be held to any consequences that flow, in law, from the representations they
    made in the SPIS. To conclude otherwise would render the entire SPIS exchange
    meaningless.

The Doctrine of Caveat Emptor

[65]

Before
    proceeding, I pause to briefly address the doctrine of
caveat emptor
(let
    the buyer beware).

[66]

The
    appellants submit that circumventing the parties intentions as expressed by
    the entire agreement clause in the APS erodes the doctrine of
caveat emptor
.
    I disagree with the premise of this submission. Having concluded that the
    entire agreement clause in this case operates retrospectively, not
    prospectively, it cannot be said that the respondents claim for negligent
    misrepresentation has the effect of circumventing the parties intentions or
    the entire agreement clause.

[67]

At
    para. 38 of its reasons, the Divisional Court quoted from Killeen J.s decision
    in
Kaufmann
, at para. 119, for the proposition that, once a vendor
    "breaks his silence" by signing the SPIS, the doctrine of
caveat
    emptor
falls away as a defence mechanism and the vendor must speak
    truthfully and completely about the matters raised in the unambiguous questions
    at issue. Although the SPIS at issue in
Kaufmann
was expressly
    incorporated into the agreement of purchase and sale, I agree with the thrust
    of Killeen J.s remarks. So long as a purchasers action is not precluded by
    the agreement of purchase and sale, the vendor cannot hide behind the doctrine
    of
caveat emptor
if he or she breaks the silence by signing a SPIS.

[68]

I
    would not give effect to this argument.

(ii)

Did the Divisional Court err by concluding that the respondents had made
    out a claim for damages based on negligent misrepresentation?

[69]

Despite
    my conclusion that the entire agreement clause does not prevent the respondents
    from advancing a claim in negligent misrepresentation, in my view, their claim
    still fails because they have not established the fourth element of negligent
    misrepresentation  reasonable reliance.

[70]

The
    tort of negligent misrepresentation has five elements:
Hedley Byrne &
    Co. v. Heller & Partners Ltd.
(1963), [1964] A.C. 465 (U.K. H.L.);
Queen
    v. Cognos Inc.
, [1993] 1 S.C.R. 87, at p. 110. These elements are: (1) a
    duty of care based upon a special relationship between the plaintiff and
    defendant; (2) an untrue, inaccurate or misleading statement by the defendant;
    (3) negligence on the part of the defendant in making the statement; (4)
    reasonable reliance by the plaintiff on the statement; and (5) damage suffered
    by the plaintiff as a result.

[71]

On
    appeal, the parties made no written or oral submissions on the first element,
    the duty of care. My analysis proceeds on the assumption that the appellants
    owed the respondents a duty of care in these circumstances. I accept the
    Divisional Courts finding that the appellants were negligent in failing to advise
    the respondents of the pre-closing flood.

[72]

Reasonable
    reliance is fundamental to the tort of negligent misrepresentation. The
    reasonable reliance element states a factual test for causation: Allen Linden
    and Bruce Feldthusen,
Canadian Tort Law
, 9th ed. (Canada: LexisNexis
    Canada Inc., 2011), at p. 473.

[73]

In
Farmer v. H.H. Chambers Ltd.
, [1973] 1 O.R. 355 (C.A.), McGillvary
    J.A. wrote, at p. 357: To recover under the rationale of the
Hedley Byrne
case, representation must not only be made but it has to be such as to cause
    the plaintiff, as a result, to do some act to his detriment. Although reliance
    can be inferred in certain circumstances, such an inference must be supported
    by the facts and evidence:
Strand v. Emerging Equities Inc.
, 2008 ABCA
    23, 37 B.L.R. (4th) 44, at para. 6

[74]

The
    problem here is that it is far from clear that the respondents would have had a
    remedy even if the January 9 water incident had been disclosed prior to
    closing. Put another way, the misrepresentation did not cause the respondents
    to do some act to [their] detriment:
Farmer
, at p. 357.

[75]

As
    noted above, the respondents sued in tort. They claim damages for negligent
    misrepresentation. However, there is no allegation of reliance in their
    statement of claim.

[76]

Notwithstanding
    the state of the respondents pleading, in their closing submissions at trial,
    the respondents advanced two arguments on the reliance issue. They argued that
    they relied on the misrepresentation in the SPIS because they waived the home
    inspection condition after receiving the SPIS. The respondents also argued that
    they relied on the misrepresentation in the SPIS because they were deprived of
    the opportunity to seek remedies available to them under the APS.

[77]

I
    address each submission in turn.

[78]

There
    are two difficulties with the respondents submission that they relied on the
    SPIS in waiving the home inspection condition in the APS. First, when the
    respondents waived the home inspection condition, there was nothing for the
    appellants to disclose. They waived the condition prior to the January 9 water
    incident. Second, and more significantly, there is no evidence that the
    inspector who performed the home inspection on behalf of the respondents relied
    on the SPIS in conducting his home inspection or even knew that it existed. Further,
    the trial judge rejected Mr. Soboczynskis testimony that the SPIS was part of
    the property inspection process. He also expressly found, at para. 30, that
    the SPIS was unrelated to the results of an inspection. In the light of these
    findings, I would not give effect to this submission.

[79]

This
    takes me to the respondents argument that had the appellants advised them of
    the January 9 flood they would have taken advantage of remedies available to
    them under the APS. In terms of the available remedies, the respondents turn to
    s. 14 of the APS, which provided:

INSURANCE
: All buildings on the property and
    all other things being purchased shall be and remain until completion at the
    risk of Seller. Pending completion, Seller shall hold all insurance policies,
    if any, and the proceeds thereof in trust for the parties as their interests
    may appear and
in the event of substantial damage
,
    Buyer may either terminate this Agreement and have all monies paid returned
    without interest or deduction or else take the proceeds of any insurance and
    complete the purchase. No insurance shall be transferred on completion. If
    Seller is taking back a Charge/Mortgage, or Buyer is assuming a
    Charge/Mortgage, Buyer shall supply Seller with reasonable evidence of adequate
    insurance to protect Sellers or other mortgagees interest on completion.
    [Emphasis added.]

[80]

The
    APS does not define substantial damage.

[81]

The
    respondents argument is problematic as it is unclear what rights would have
    been available to them under this provision. And the Divisional Courts
    somewhat conclusory statement, at para. 61, that the contractual options of
    rescission and abatement might have been available to [the respondents] does
    little to clarify the situation.

[82]

The
    respondents access to the remedies available under s. 14 depended on a finding
    of substantial damage. The difficulty the respondents face is that no finding
    was made as to whether the property sustained substantial damage as a result of
    the January 9 flood. In my view, on this record, the trial judge would likely
    have concluded that the January 9 flood did not constitute substantial damage
    in the light of the observation he made, at para. 62 of his reasons reproduced
    above, that it is doubtful the January 9 flood was an important change as
    contemplated by the SPIS. The point is, however, that no finding was made.

[83]

In
    any event, at the time the property changed hands on January 18, 2008, the
    $1,648.59 worth of damage caused by the January 9 flood had been repaired.
    There was no damage to speak of, substantial or otherwise.

[84]

A
    consideration of the role damages play in tort cases illuminates why the
    respondents did not rely on the appellants negligent misrepresentations. In
Rainbow
    Industrial Caterers Ltd. v. Canadian National Railway
, [1991] 3 S.C.R. 3, at
    p. 14, the Supreme Court outlined how to assess damages in a negligent
    misrepresentation action: The plaintiff seeking damages in an action for
    negligent misrepresentation is entitled to be put in the position he or she
    would have been in if the misrepresentation had not been made.

[85]

Here,
    had the appellants told the respondents of the January 9 flood, the respondents
    position in relation to their obligations under the APS would not have changed.
    The respondents would have been obliged to complete the transaction under the terms
    of the APS. The fact that the respondents did not suffer any damage compensable
    in tort solidifies their inability to prove reliance.

[86]

To
    prove reasonable reliance, it was incumbent on the respondents to adduce
    evidence sufficient for the court to conclude that the misrepresentation
    somehow caused them to act to their detriment. This they did not do. Although
    reasonable reliance can be inferred from the circumstances, there is not, in my
    view, sufficient evidence upon which to base such an inference.

[87]

I
    conclude the respondents have not established the fourth element of negligent
    misrepresentation. Their tort claim must therefore fail.

(iii)

Did the Divisional Court err in its trial costs award?

[88]

The
    appellants argue that the Divisional Court erred in assessing the trial costs
    instead of referring them to the Superior Court. They say that proceeding in
    this fashion deprived them of a right of appeal.

[89]

They
    also contend that the Court erred in assessing costs on the basis that the
    respondents allegation against them in fraud was not actively pursued. They
    say the unsuccessful allegation of fraud was pursued through to the end of
    trial and that the costs award should reflect the extent to which these
    allegations increased trial costs.

[90]

The
    appellants seek costs payable by the respondents on a substantial indemnity
    basis. The appellants argue that even if they are unsuccessful in this appeal,
    they should still be entitled to substantial indemnity costs of the action
    because the respondents made completely unsubstantiated accusations of fraud
    against them. Unproven allegations of fraud attract this kind of costs award
    because they go to the root of a persons integrity.

[91]

In
    my view, in the light of the trial judges death, and the parties submissions
    set out above, the Divisional Court was fully entitled to assess costs. The
    Divisional Court found as a fact that the plaintiffs did not actively pursue
    the fraud allegation at trial. The trial was about negligence, not fraud. The
    appellants were not entitled to substantial indemnity costs.

[92]

I
    see no reason to interfere with the Courts decision regarding the costs of the
    trial. The Courts assessment of the trial costs is entitled to deference.

VI.

DISPOSITION

[93]

For
    these reasons, I would allow the appeal, set aside the decision of the
    Divisional Court, and restore the decision of the trial judge dismissing the
    action.

[94]

I
    would award the appellants their costs of this appeal in the agreed-upon amount
    of $5,000, including disbursements and applicable taxes.

Released: April 23, 2015 (A.H.)

Gloria
    Epstein J.A.

I
    agree Alexandra Hoy A.C.J.O.

I
    agree C.W. Hourigan J.A.

[1]
The entire agreement clause at issue in
Dzourelov
stated: The parties acknowledge that there is no representation,
    warranty, collateral agreement or condition, affecting the Agreement except as
    contained in this agreement. This agreement may not be amended other than in
    writing.

[2]
The Divisional Court cited the following three cases for this proposition:
Krawchuk
;
Kaufmann v. Gibson
(2007), 59 R.P.R. (4th) 293 (Ont. S.C.); and
Usenik
    v. Sidorowicz
, [2008] O.J. No. 1049 (S.C.).


COURT OF APPEAL FOR ONTARIO

CITATION: TRS Components Ltd. v. Devlan Construction Ltd.,
    2015 ONCA 294

DATE: 20150429

DOCKET: M44694 (C59293)

Gillese, van Rensburg and Pardu JJ.A.

In
    the Matter of the

Construction Lien Act
,
    R.S.O. 1990, Chapter C.30, as amended

BETWEEN

TRS Components Ltd.

Plaintiff (Appellant/Responding Party)

and

Devlan
    Construction Ltd.
, the Trustees of Knox

Presbyterian
    Church, Waterloo, Pace Savings &

Credit Union Limited and
    Education Credit Union Limited

Defendants (Respondents/
Moving Party
)

Robert J. Kennaley and Darcia Perry, for the moving
    party

John Margie, for the responding party

Heard: April 2, 2015

On a motion to quash an appeal from the judgment of Justice
    Patrick J. Flynn of the Superior Court of Justice, dated July 30, 2014, with
    reasons reported at 2014 ONSC 4528.

By the Court:

Introduction

[1]

This is a motion to quash an appeal for want of jurisdiction. For the
    reasons that follow, we conclude that, as the judgment under appeal is a
    judgment under the
Construction Lien Act
, R.S.O. 1990, c. C.30 (the
    Act), the proper route for appeal is to the Divisional Court. We are
    exercising our discretion to transfer the appeal to that court pursuant to s.
    110 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43.

Facts

[2]

On October 15, 2010, the appellant TRS Components Ltd. (TRS)
    registered a construction lien in relation to unpaid invoices for labour and
    materials supplied for the construction of a church in Waterloo, Ontario. It
    then commenced an action against the respondent Devlan Construction Ltd.
    (Devlan), seeking to enforce the lien claim under the Act. Devlan delivered a
    statement of defence and counterclaim, in which it alleged that TRSs work was
    incomplete or deficient, and claimed damages for breach of contract and
    negligence. The action was listed for trial and scheduled to be tried for three
    weeks in November 2013.

[3]

Devlan brought a motion to have TRSs claims dismissed as a result of
    its failure to answer undertakings and refusals. On September 6, 2013,
    Parayeski J. ordered that TRSs lien be discharged and its action dismissed.
    The order provided that it was without prejudice to Devlans rights to proceed
    to enforce its counterclaim in the trial herein, and ordered that the
    counterclaim be allowed to proceed andnot be struck from the trial list
    without further Order of [the] Court unless discontinued by Devlan.

[4]

The trial of the counterclaim took place over two days in November 2013
    and continued for four days in June 2014. On July 30, 2014, Flynn J. granted
    judgment on the counterclaim in the sum of $69,432 plus interest.

[5]

TRS appealed the judgment on the counterclaim to this court, perfecting
    its appeal in January 2015. Devlan brought this motion to quash the appeal for
    want of jurisdiction.

Issue on the Motion

[6]

Section 6(1)(b) of the
Courts of Justice Act
provides that an
    appeal lies to the Court of Appeal from a final order of a judge of the Superior
    Court of Justice, except an order from which an appeal lies to the Divisional
    Court under another Act. Section 71(1) of the Act provides that an appeal lies
    to the Divisional Court from a judgment or an order on a motion to oppose
    confirmation of a report under [the] Act.

[7]

Accordingly, the issue is whether Flynn J.s judgment on the
    counterclaim is a judgmentunder the Act
.
If it is, the appeal lies
    to the Divisional Court, and was not properly brought in this court.

Positions of the Parties

[8]

Devlan submits that the judgment under appeal was a judgmentunder [the]
    Act because it was obtained in construction lien proceedings. The Act provides
    that all claims asserted by a party will proceed in the same construction lien
    proceedings. The discharge of the lien and the dismissal of the lien claim did
    not change the character of the proceedings; indeed, the title of proceedings
    remained the same. The matter proceeded on the construction lien track, as
    there was no order transferring the matter to the ordinary track, to be
    determined in accordance with the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194 (Rules), instead of the specialized and summary construction
    lien procedure.

[9]

TRS contends that, once its lien was discharged and its lien action dismissed,
    the proceedings were no longer governed by the Act, and the judgment obtained
    on Devlans counterclaim was not a judgment under the Act. At trial, no relief,
    remedy or determination was requested by either party under the Act. Neither
    the judgment nor the reasons for judgment refer to the Act. TRS points to the
    fact that certain steps typically required prior to a construction lien trial
    were not taken: Devlan did not deliver a notice of trial as required by s. 60(4)
    of the Act; and no one filed an up-to-date abstract of title showing all
    deleted instruments or execution or bankruptcy searches.

Analysis

[10]

In
    our view, the judgment under appeal is a judgmentunder [the] Act, and is
    subject to appeal to the Divisional Court. We reach this conclusion on the
    following analysis.

[11]

Part
    VIII of the Act provides for a summary procedure for the determination of
    construction lien proceedings. As Carthy J.A. noted in
Teepee Excavation
    & Grading Ltd. v. Niran Construction Ltd
. (2000), 49 O.R. (3d) 612
    (C.A.), at para. 12:

The
Construction Lien Act
serves a specialized purpose
    in a narrow field. A lien claimant may commence an action, provide shelter for
    other claimants, obtain a form of execution before judgment, and proceed to
    trial in summary fashion without production of documents, discovery or other
    interlocutory steps except by leave. A plaintiff may join with a lien claim a
    claim for breach of contract and a defendant may counterclaim in respect of any
    claim against the plaintiff. There may also be cross-claims and third party
    claims. There are no appeals from interlocutory orders.

[12]

The
Courts of Justice Act
and Rules apply to pleadings and proceedings under
    the Act, except to the extent they are inconsistent with the Act: s. 67(3).

[13]

In
    response to an action to enforce a lien, a defendant may assert a counterclaim,
    crossclaim or third party claim. Section 55(2)(a) of the Act provides that a
    defendant in an action may counterclaim against the person who named the
    defendant as a defendant in respect of any claim that the defendant may be
    entitled to make against that person, whether or not that claim is related to
    the making of the improvement. Devlan asserted its counterclaim in the
    construction lien proceedings commenced by TRS. It did not seek the enforcement
    of a lien; rather, it claimed damages for breach of contract and negligence.

[14]

Under
    s. 51 of the Act, the court hearing the action has broad authority to try the
    action, including anycounterclaim, and to do everything necessary to finally
    dispose of it. In accordance with these provisions, Devlans counterclaim, which
    was asserted in response to TRSs lien claim, proceeded within the lien action,
    to be tried and disposed of within that action.

[15]

Both
    parties refer to a decision of this court,
Villa Verde L.M. Masonry Ltd. v.
    Pier One Masonry Inc
. (2001), 54 O.R. (3d) 76 (C.A.), with respect to the
    interpretation of judgment as used in s. 71(1) of the Act. In that case, the respondent
    had obtained judgment on a trust claim asserted under Part II of the Act. Subsection
    50(2) prohibits the joinder of a trust claim with a lien claim, so the trust
    claims were asserted in a separate action, although tried at the same time as
    the related construction lien action. This court held that the judgment
    determining the trust claim was a judgment under the Act for the purpose of s.
    71(1). Rosenberg J.A. stated, at para. 7, I can see no basis for giving the
    word judgment a restrictive meaning so that it relates only to a judgment on
    a lien claim. There is nothing in the
Construction Lien Act
that
    suggests such an unusual interpretation.

[16]

TRS
    contends that
Villa Verde
stands for the proposition that it is the
    substantive claim in the action that determines the route of appeal, and not
    the fact that the proceedings were commenced under the Act.

[17]

We
    do not agree that
Villa Verde
should be interpreted in this narrow
    fashion. The only issue in that case was the route of appeal of a judgment in a
    proceeding involving a trust claim brought under Part II of the Act, which was
    tried at the same time as a lien claim brought under Part III. Because the
    judgment involved substantive claims under the Act, it resulted from a
    proceeding under the Act. While the court observed, at para. 1, that an appeal
    involving only proceedings under the [Act] is to be brought in the Divisional
    Court, the case did not address the full scope of proceedings under the Act.
    In particular,
Villa Verde
did not address whether a judgment on a
    counterclaim in a lien action is a judgment in a proceeding under the Act.

[18]

In
    our view, judgmentunder this Act in s. 71 includes a judgment granted in an
    action commenced and continued under Part VIII of the Act, including any
    counterclaim, crossclaim or third party claim, unless the action or any part of
    the action is removed from the construction lien proceeding, and directed to
    proceed under the Rules.

[19]

This
    interpretation is supported, not only by s. 51 of the Act, referred to above,
    but also by the decision of the High Court of Justice in
Steeplejack
    Services (Sarnia) Ltd. v. Davis
(1990), 43 C.L.R. 66 (Ont. H.C.). That
    case involved the specific provision in the Act that prohibits appeals from
    interlocutory orders (now s. 71(3)(b)). A defendant in a construction lien
    action counterclaimed for goods alleged to have been wrongfully seized. He
    brought a motion for return of the goods, which was dismissed. The defendant
    attempted to appeal, and was confronted with the equivalent of the current s.
    71(3)(b). In quashing the appeal, Austin J. rejected the argument that the
    counterclaim was a separate action outside the construction lien proceedings. He
    stated, at p. 67, that although it is a separate action, by virtue of its
    being brought as a counterclaim in an action under the Act, it is governed by
    the provisions of the Act.

[20]

TRS
    contends that the dismissal of the lien claim removed the counterclaim from the
    construction lien proceedings that were commenced under Part VIII, and from the
    ambit of the Act. We disagree. In our view, where a lien is discharged, the
    court may then order that the remainder of the action proceed on the ordinary
    track. However, unless such an order is made, the trial of the action or any
    part of the action commenced under the Act will proceed under the Act, and will
    result in a judgmentunder [the] Act within the meaning of s. 71(1).

[21]

In
Teepee Excavations
,

the plaintiffs lien claim was dismissed
    as expired, because it was not set down for trial within two years. Under s.
    46(1) of the Act, where the lien has expired, the court is required to dismiss
    the action to enforce that lien. The issue in
Teepee
was whether the
    plaintiffs contract claim could continue under the Act, once its lien claim
    had been dismissed.

[22]

Carthy
    J.A. observed, at paras. 24 and 25:

The broad purpose of the legislation is to provide an efficient
    means of dealing with trade claimants that would otherwise be left behind
    without security if unpaid on a building project where payments typically flow
    from above and follow performance. On a failing or failed project, there may be
    many such claimants. In setting down the rules, the Act does not go so far as
    to restrict claims thereunder to lien claims. Contract claims by the plaintiff
    and counterclaims of any kind are permitted, presumably to avoid duplication of
    proceedings[T]he Act should not be available as a subterfuge for pursuing an
    ordinary action by summary procedure; but where all of the steps have been
    taken and a conclusion reached at a hearing, the court should not dismiss the
    action for lack of a lien claim and thus compel a further proceeding concerning
    the same issue. The same reasoning suggests that the court has available the
    discretion to dismiss or to permit the action to proceed without the lien
    claim, as the circumstances dictate.

All of the arguments against denying a defendant the procedures
    and protections of the usual form of litigation can be answered by the courts
    discretion under s. 47(1)(d) to dismiss the action because the defendant will
    be prejudiced or because little has transpired in the action that would be
    duplicated or by imposing conditions for continuance to assure protection of
    the defendant. The legislature intended more than claims for liens to be
    litigated in lien claim actions and that intention is best served by an
    interpretation of s. 46(1) and s. 47(1)(d) that leaves it to the court to
    monitor the interests of the parties and the procedure to be followed.

[23]

According
    to
Teepee
, when a lien action is dismissed, the court has the discretion
    to determine whether to allow the contract claims to proceed at all, and the
    procedure that will be followed. See also various decisions of Master D.H.
    Sandler, confirming that, where the court allows a contract claim to proceed
    after a lien claim is dismissed, the court may decide whether the Acts
    procedures apply. For instance, in
211417 Ontario Inc. v. Stadia Industries
    Ltd
., 2014 ONSC 3221, 32 C.L.R. (4th) 77, Master Sandler remarked as
    follows, at para. 51:

[I]n such a case, the court could transfer the contract action
    to the Small Claims Court if the claim was under $25,000, or it could direct
    that it proceed as an ordinary Superior Court action but possibly be governed
    by the Rule 76 Simplified Procedure if the claim was between $25,000 and
    $100,000, or it could direct that it proceed as an ordinary action and be
    governed by the general Rules of Civil Procedure without any reference to the
    Simplified Procedure if the claim was in excess of $100,000, or it could even
    direct that the contract claim would continue within the framework of the
    statement of claim in the now-dismissed lien action, with judgment to be given
    pursuant to s. 63, and still to be governed by the procedure under the
    Construction Lien Act, and, in particular, procedural sections 51-63, 67, and
    71.

See also
DCL Management Ltd. v. Zenith Fitness Inc
.,
    2010 ONSC 5915, 97 C.L.R. (3d) 159, at para. 35;
Pineau v. Kretschmar Inc
.
    (2004), 37 C.L.R. (3d) 29 (Ont. S.C.), at para. 82;
Arcon Group Inc. v.
    1371344 Ontario Ltd.
(2004), 36 C.L.R. (3d) 125 (Ont. S.C.), at para. 17; and
986506 Ontario Ltd. v. Pringle
(2003), 30 C.L.R. (3d) 286 (Ont. S.C.),
    at para. 2. These cases contemplate that, when a lien is discharged, and the lien
    action dismissed, the court may make an order to determine whether or not the
    remaining claims will proceed under the Act.

[24]

In
    this case, the action proceeded under the
Acts
regime. When TRS did not provide answers to undertakings, Devlan brought a
    motion, seeking as part of its relief leave to bring the interlocutory motion,
    as required by s. 67 of the Act. When Devlan moved to strike TRSs claim, the
    action was already on the trial list. Parayeski J., in dismissing the lien
    action, ordered that the counterclaim proceed in the trial herein, that is,
    the construction lien

trial that was already scheduled to proceed in
    November. He also ordered that the counterclaim be allowed to proceed, but
    did not order that it would proceed under the Rules. The dismissal of the lien
    claim did not automatically remove the counterclaim from the construction lien
    proceeding; to the contrary, the counterclaim continued in the original
    construction lien action, with the same title of proceedings.

[25]

Finally,
    we turn to TRSs argument that, as certain procedural steps normally taken
    before the trial of a construction lien action were not taken, the matter
    proceeded under the Rules and not under the Act. We agree with Devlan that the failure
    to take certain procedural steps typically required before a construction lien
    trial does not take the matter outside of the construction lien procedure. The
    requirement to deliver a notice of trial is a formality intended to ensure
    notice to the participants at a trial.  In the present case, when the
    construction lien claim was struck, a trial date had already been set, and both
    parties attended at trial. The other two procedural steps referred to by TRS,
    while relevant to a trial of a construction lien claim, would not apply in any
    event to the trial of a counterclaim based on breach of contract and
    negligence, in which no lien rights are asserted.

[26]

It
    is therefore our conclusion that, in the absence of an order directing that the
    proceeding is to continue as an ordinary action, the appeal of a judgment in a
    construction lien proceeding, whether or not in respect of a lien claim, and
    including any counterclaim, is subject to s. 71(1) of the Act. Accordingly, the
    Divisional Court has exclusive jurisdiction over the appeal.

Disposition

[27]

The
    Divisional Court has exclusive jurisdiction over this appeal. In the present
    circumstances, where there was an arguable question on the issue of
    jurisdiction, it is appropriate to transfer the appeal to the Divisional Court
    under s. 110 of the
Courts of Justice Act.
Costs, as agreed between
    the parties, are fixed at $3,000, inclusive of applicable taxes and
    disbursements, in favour of Devlan, the moving party.

Released: April 29, 2015 (E.E.G.)

E.E. Gillese
    J.A.

K. van Rensburg J.A.

G. Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Tran v. University of Western Ontario, 2015 ONCA 295

DATE: 20150430

DOCKET: C58616

Blair, Pepall and Lauwers JJ.A.

BETWEEN

Leanne Tran

Plaintiff (Appellant)

and

The University of
    Western Ontario, Justin Amann,

Christopher Watling,
    Salvatore Spadafora,

Stewart Kribs, Royal
    Etemad-Rezai, David Bach and Terri Paul

Defendants (Respondents)

Michael B. Fraleigh and Martine Garland, for the
    appellant

Sarah Jones, for the respondents

Heard: November 25, 2014

On appeal from the judgment of Justice Edward M. Morgan
    of the Superior Court of Justice dated January 27, 2014, with reasons reported
    at 2014 ONSC 617.

Pepall J.A.:

[1]

The appellant, Leanne Tran, sued the University of Western Ontario
    (UWO) and several members of the faculty of medicine after she was dismissed
    from a medical residency programme. The respondents successfully moved to
    strike all her claims against the individual faculty members, and against UWO
    for intimidation.  Ms. Tran appeals.

[2]

For the reasons that follow, I would allow the appeal to the extent that
    the appellant is granted leave to amend her statement of claim within 20 days
    from the date hereof.

BACKGROUND

[3]

The appellant is a medical doctor and was a radiology resident in the
    Diagnostic Radiology programme of the Schulich School of Medicine and Dentistry
    at UWO.  She experienced difficulties throughout the programme and was
    eventually dismissed for unprofessional conduct.  She brought claims against
    UWO and the individual respondents, who were administrators and supervisors in
    the residency programme.  Her statement of claim raised causes of action in
    negligence, negligent misrepresentation, intimidation, breach of trust, breach
    of fiduciary duty and duty of good faith, breach of contract, inducing breach
    of contract, interference with economic relations and conspiracy.  She argued
    that unfair treatment by the respondents ultimately led to her being unable to
    complete the programme and to practise as a radiologist.  She sought damages
    totalling more than $20 million.

[4]

In her statement of claim, the appellant pled that, at all material
    times, the individual appellants were employees, agents, principals and/or
    legal representatives of UWO.  Alternatively, they exercised actual or
    apparent authority given to them by UWO.  The appellant pled that, in any
    event, UWO was vicariously liable for the acts and omissions of the individual
    respondents.

[5]

The appellant also advanced claims of conspiracy and intimidation.  She
    alleged that the individual respondents acted outside the scope of their
    authority in committing these torts.

[6]

The individual respondents did not serve and file a statement of
    defence.

[7]

In its statement of defence, UWO admitted that the individual
    respondents were employees, agents, or legal representatives of the
    university. It denied any wrongdoing.

[8]

In her reply to UWOs statement of defence, the appellant pled that the
    individual respondents were not, at all material times, acting within the
    scope of their duties and authority on behalf of UWO.

[9]

The respondents brought a motion pursuant to rule 21.01(1)(b) of the
Rules
    of Civil Procedure
, R.R.O. 1990, Reg. 194, to strike all claims against
    the individual respondents on the basis that they disclosed no reasonable cause
    of action and to strike the claim of intimidation against all respondents due
    to a failure to plead facts in support of the essential elements of the cause
    of action.

MOTION JUDGES REASONS

[10]

The
    motion judge addressed the claims against the individual respondents and
    applied
ScotiaMcLeod Inc. v. Peoples Jewellers Ltd.
(1995), 26 O.R.
    (3d) 481 (C.A.), and
Lobo v. Carleton University
, 2012 ONSC 254, affd
    2012 ONCA 498.  He observed that the actions of the individual respondents must
    themselves be tortious or exhibit a separate identity or interest from that of
    UWO so as to make the acts or conduct complained of their own.  He noted that,
    in a pleading, the suggestion of a separate identity must be more than window
    dressing: at paras. 14-15.

[11]

The
    motion judge concluded that the acts of the individual respondents described in
    the statement of claim  teaching, mentoring, supervising, designing and
    administering an educational programme  were indistinguishable from those of
    UWO.  The appellants attempt to isolate personal acts amounted to little more
    than window dressing.  Furthermore, the pleadings contained internal
    contradictions, particularly on the question of whether the individual respondents
    were acting within their authorized capacity.  The motion judge was of the view
    that the internal contradictions on the issue of authority made it impossible
    for the claims against the individual respondents to succeed: at paras. 25-26.

[12]

The
    motion judge also concluded that the appellant had failed to plead all of the
    requisite elements of the tort of conspiracy, most notably the facts in support
    of an agreement to act and that the offending conduct resulted from an
    agreement.  Absent a pleading of these elements, there could be no conspiracy:
    at paras. 37-44.

[13]

On
    the issue of intimidation, both as against the individual respondents and UWO,
    the motion judge concluded that the appellant had failed to plead all of the
    requisite elements of the tort.  In particular, the appellant had failed to
    plead that any of the individual respondents or UWO had threatened to commit an
    unlawful act.  Further, neither the individual respondents nor UWO had demanded
    that the appellant do any specific act or follow any specified course of
    conduct that redounded to her detriment or that caused her any loss: at paras.
    50-56.

[14]

The
    motion judge accordingly struck out the entire statement of claim as against
    the individual respondents and the claim of intimidation as against UWO.   He
    refused to grant the appellant leave to amend but gave no rationale for that
    refusal: at paras. 57-58.

GROUNDS OF APPEAL

[15]

The
    appellant submits that the motion judge erred in striking out her claims.  She
    argues that her pleadings disclose reasonable causes of action, do not preclude
    personal liability on the part of the individual respondents, and in any event,
    conspiracy and intimidation are tortious acts and are inherently outside the
    scope of the individual respondents authority.  She asserts that all the
    requisite elements of the various causes of action relied upon were pleaded.
    Furthermore, even if her pleadings contain imperfections, these amount to
    drafting deficiencies and leave to amend should have been granted.

ANALYSIS

(1)

General principles

Striking claims
    under rule 21.01(1)(b)

[16]

The
    test on a rule 21.01(1)(b) motion to strike is whether it is plain and obvious
    that the statement of claim discloses no reasonable cause of action:
Hunt
    v. Carey Canada Inc.,
[1990] 2 S.C.R. 959, at p. 960.  In
McCreight v.
    Canada (Attorney General)
, 2013 ONCA 483, 116 O.R. (3d) 429, at para. 39,
    this court explained that on a rule 21.01(1)(b) motion to strike: (1) all
    essential elements of a cause of action are to be pleaded, and (2) the pleading
    must be read generously with allowances for drafting deficiencies.

Individual
    liability of employees

[17]

While
    the scope of individual liability as distinct from corporate liability is not
    always clear, it is undisputed that when a plaintiff purports to sue both a
    corporation and individuals within that corporation (whether officers,
    directors or employees), the plaintiff must plead sufficient particulars which
    disclose a basis for attaching liability to the individuals in their personal
    capacities:
Normart Management Ltd. v. West Hill Redevelopment Co.
(1998), 37 O.R. (3d) 97, at p. 102.  As Labrosse J.A. explained in
460635
    Ontario Ltd. v. 1002953 Ontario Inc
. (1999), 127 O.A.C. 48, at para. 8:
    [P]roperly pleaded as it relates to personal liability of corporate
    directors, officers and employees must be read as specifically pleaded, a
    separate claim must be stated against the individual in his personal capacity.

(2)

Application to this case

Individual liability

[18]

The
    appellants statement of claim fails to distinguish the acts of each of the
    individual respondents from those of each other and from those of their
    employer, UWO.  The appellant simply enumerates the [d]efendants
    [f]ailures.

[19]

Furthermore,
    the global failures enumerated in the statement of claim do not reflect
    elements of any cause of action.  They include such things as failure to assign
    a mentor, failure to ensure integration and training of the appellant, and
    failure to provide regular feedback.  I agree with the motion judge that these
    pleadings are inadequate to sustain a cause of action.

Conspiracy and intimidation

[20]

I
    also agree with the motion judge that the appellant failed to plead the
    essential elements of both the claims of conspiracy and intimidation.

[21]

In
Normart,
at p. 104, this court held that a statement of claim alleging
    conspiracy should:

[D]escribe who the several parties are and their relationship
    with each other.  It should allege the agreement between the defendants to
    conspire, and state precisely what the purpose or what were the objects of the
    alleged conspiracy, and it must then proceed to set forth, with clarity and
    precision, the overt acts which are alleged to have been done by each of the
    alleged conspirators in pursuance and in furtherance of the conspiracy; and
    lastly, it must allege the injury and damage occasioned to the plaintiff
    thereby.

[22]

If
    read generously, some facts supporting these elements may be identified in the
    statement of claim.  However, an agreement to conspire, its objects and the
    overt acts of each of the individual respondents have not all been pled.

[23]

The
    tort of intimidation requires: a threat by the defendant to commit an unlawful
    act; an intention by the defendant that injury will result to the plaintiff;
    submission to the threat by the plaintiff; and actual damage suffered by the
    plaintiff:
Kisin v. Netron
, 2000 CarswellOnt 1149, at para. 23 (S.C.),
    see also
Roehl v. Houlahan
(1990), 75 O.R. (2d) 482, leave to appeal
    to S.C.C. refused, [1990] S.C.C.A. No. 518 and
Central Canada Potash Co. v.
    Saskatchewan
,

[1979] 1 S.C.R. 42.  Again, read generously, some
    of these elements may be identified in the appellants statement of claim.
    However, the presence of a threat is nowhere to be found.

[24]

I
    conclude that the motion judge made no error in striking the appellants claims
    both as against the individual respondents and as against UWO for the torts of
    conspiracy and intimidation.

Leave to amend

[25]

Lastly,
    the appellant submits that the motion judge erred by failing to exercise his
    discretion in not granting leave to amend.  I agree.

[26]

In
    deciding whether to grant leave to amend, the motion judge gave no reasons for
    denying the appellants request for leave.  Leave to amend should be denied
    only in the clearest of cases:
South Holly Holdings Ltd. v. The Toronto-Dominion
    Bank
, 2007 ONCA 456, at para. 6.

[27]

While
    a party should not be given unlimited scope to amend its pleading, no prior
    amendments to the statement of claim had been made in this case.  Furthermore,
    in the absence of any articulated basis on which leave was denied, the appellant
    should not be deprived of the opportunity to attempt to remedy her deficient
    pleadings.

DISPOSITION

[28]

For
    the reasons given, I would allow the appeal to the extent that the appellant is
    granted leave to amend her statement of claim within 20 days from the date
    hereof in accordance with these reasons.  In light of the divided success on
    appeal, I make no order as to costs.

Released: RAB  APR 30, 2015

S.E. Pepall J.A.

I agree.  R.A. Blair
    J.A.

I agree.  P. Lauwers
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: United States v. Huang, 2015 ONCA 266

DATE: 20150416

DOCKET: C58817

Strathy C.J.O., Doherty and Gillese JJ.A.

IN THE MATTER OF an appeal of a committal order pursuant to
    s. 49 of the
Extradition Act
, S.C. 1999, c. 18

BETWEEN

The Attorney General of Canada on behalf of The
    United States of America

Respondent

and

Kai Guo Huang a.k.a. Yu Chen

Appellant

Ravin Pillay, for the appellant

Nancy Dennison, for the respondent

Heard: April 14, 2015

On appeal from the committal order of Justice Harriet E. Sachs
    of the Superior Court of Justice, dated April 23, 2014.

ENDORSEMENT

[1]

Kai Guo Huang (the appellant) appeals an order committing him for
    extradition to the United States to stand trial for the offences of murder and
    interfering with a dead human body.

[2]

The appellant is accused of committing murder in the United States in
    1998. A few days after the murder was committed, the appellants sister and
    brother-in-law (the Witnesses) allegedly gave police statements implicating
    the appellant in the murder. The Witnesses evidence is essential to the
    American murder prosecution. However, the Witnesses have since sworn affidavits
    denying that they made the police statements. They have returned to China and
    have no intention of testifying against the appellant.

[3]

The appellant argued below that he should not be extradited because the
    crucial evidence of the Witnesses is not available for his murder prosecution
    in the United States.

[4]

The United States (the Requesting State) certified that the Witnesses
    evidence is available for trial and gave details as to how.  One argument that
    it gave was that under a treaty it has with China  the Agreement Between the
    Government of the United States of America and the Government of the Peoples
    Republic of China on Mutual Legal Assistance in Criminal Matters (MLAT)  it
    could request that China compel the Witnesses to testify.

[5]

The appellant sought to introduce the expert opinion of a law professor from
    China who stated that under Chinese law, authorities do not have the power to
    compel the Witnesses to testify in the American proceedings.

[6]

The extradition judge held that it was not the role of an extradition
    judge to conduct an inquiry into foreign law to determine whether MLAT will
    enable the Requesting State to obtain the Witnesses evidence.  She found that
    the Witnesses evidence was available for the murder prosecution and ordered
    the appellants committal.

[7]

On appeal, the appellant argues that the extradition judge erred in
    failing to admit the expert opinion.  He further argues that the committal was
    unreasonable.  In this regard, he says that whether the Witnesses can be
    compelled to testify under the MLAT depends on the laws of China.  The expert
    opinion was that Chinese law did not permit Chinese authorities to compel the
    Witnesses to testify at the foreign trial.  Even setting aside the expert
    opinion, he says that the Requesting State has failed to show that the
    Witnesses evidence is available for trial.  Therefore, he contends, the
    Witnesses evidence is unavailable and there is insufficient evidence to
    justify his committal.

[8]

We do not agree.

[9]

It is not the role of the extradition judge to determine issues of
    foreign law, absent exceptional circumstances. In
McVey (Re);
McVey
    v. United States of America
, [1992] 3 S.C.R. 475, at pp. 528-29, a
    majority of the Supreme Court held that, except possibly in rare cases such as
    political offences, the extradition judge is not concerned with foreign law at
    all and requiring proof of foreign law in the extradition hearing beyond the
    documents supplied with the requisition could cripple the operation of the
    extradition proceedings.

[10]

That
    reasoning applies in the present case.

[11]

The
    Requesting State relied on the MLAT in asserting that the Witnesses evidence
    is available for the prosecution. The principles of international comity
    require this court to defer to the Requesting States interpretation of its
    treaty with China. The extradition judge is not in a position to determine
    whether a request under the MLAT will ultimately be successful.  It is beyond
    the scope of the extradition hearing to determine the extent to which Chinese
    authorities, under local Chinese law, could compel the Witnesses to testify in
    the American prosecution.

[12]

Accordingly,
    the extradition judge made no error in refusing to conduct an inquiry into
    foreign (Chinese) law to determine whether the MLAT will allow the Requesting
    State to obtain the Witnesses evidence.

[13]

The
    appeal is dismissed.

G.R.
    Strathy C.J.O.

Doherty
    J.A.

E.E.
    Gillese J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Varajao v.
    Azish, 2015 ONCA 218

DATE: 20150401

DOCKET: C59019

Epstein, Pepall and Benotto JJ.A.

BETWEEN

Michael Varajao

Plaintiff/Defendant by
    Counterclaim

(Respondent)

and

Samaneh
    Azish, Mohammad Reza Eskandari Dorostkar

also
    known as Mohammad Reza Eskandari
, and Kingsbury Realty Ltd.

Carrying
    on business as Royal Lepage Kingsbury Realty

Defendants/Plaintiffs
    by Counterclaim

(Appellants)

Wendy Greenspoon-Soer and David Fenig, for the
    appellants

Scott Rosen, for the respondent

Heard: March 13, 2015

On appeal from the judgment of Justice Victoria R. Chiappetta
    of the Superior Court of Justice, dated May 27, 2014.

ENDORSEMENT

[1]

The appellants agreed to purchase a home from the respondent for $2.9
    million.  The agreement of purchase and sale set the closing date for Saturday,
    July 30, 2011 and time was of the essence. The transaction did not close.  The
    appellants sought return of the $75,000 deposit.  The trial judge found that
    the appellants had repudiated the agreement and were not entitled to return of
    the deposit.  She declined to grant relief from forfeiture.

[2]

Real estate registrations cannot occur in Ontario on Saturdays.  The next
    business day was August 2, 2011.  Neither party was ready, willing and able to
    close on July 30, 2011 or on August 2, 2011.

[3]

On August 2, 2011 the solicitors for the appellants and the respondent
    exchanged correspondence about closing documentation.  There was no suggestion
    that the agreement was at an end if it did not close that day.  On August 3,
    2011 the respondents solicitor provided the appellants with a court order
    which, he asserted, resolved all the title issues. He said the respondent was
    ready to close and suggested that the closing take place the next day.

[4]

On August 4, 2011, the appellants said they did not want to proceed with
    the purchase and demanded return of the deposit. The respondent refused to do
    so and treated the agreement as remaining in force.  The respondent established
    a new closing date and tendered at that time.

[5]

Following a three day trial, the trial judge concluded that the
    appellants had repudiated the agreement on August 4, 2011 and therefore had forfeited
    the deposit. She found as a fact that on July 30, 2011, neither party was ready
    to complete the transaction.  She found that either party was free to
    re-instate time of the essence but did not do so.  The trial judge further
    found that as of August 3, 2011, both parties intended to complete the
    transaction.  The contract was therefore still alive.

[6]

When the appellants advised the respondent on August 4, 2011 that they
    did not intend to close the transaction, they repudiated the contract.  The
    trial judge found that this decision on the part of the appellants did not flow
    from a lack of information from the respondent or his counsel, but from a
    decision to resile from the transaction.  The respondent did not accept the
    repudiation and instead restored the time of the essence by setting a new
    closing date. The respondent tendered correctly on that date. The deposit was
    therefore forfeited.

[7]

The trial judge found no evidence of bad faith on the part of the
    respondent.  Even though the property eventually sold for $3.25 million, she
    refused to grant relief from forfeiture.

[8]

The appellants submit as follows:

1.

The trial judge erred in finding that they had repudiated the agreement
    on August 4, 2011.  It was the respondent who repudiated on August 2, 2011
    the date at law when the closing should have taken place.  Time was of the
    essence and remained of the essence. On August 2, 2011 the respondents were not
    able to deliver clear title.   Furthermore, the lack of communication from the
    respondent disentitled the respondent to rely on the contract.

2.

The trial judge erred in refusing to grant relief from forfeiture.

[9]

We reject both submissions.

[10]

The
    trial judges finding that the appellants repudiated the contract on August 4,
    2011, was supported by the evidence.  The appellants submit that the respondents
    failure to close on August 2 meant that he, not the appellants, repudiated the
    contract.  However, the correspondence between the parties on August 2 and 3
    demonstrates that each side believed the contract remained in force.  On August
    4 the appellants decided not to proceed with the transaction.  This finding of
    repudiation by the appellants is dispositive of the appeal.

[11]

The
    trial judge correctly noted that in order to obtain relief from forfeiture the
    appellants were required to establish that i) the forfeited sum was out of
    proportion to the damages suffered; and ii) it would be unconscionable for the
    vendor to retain the money.  Although the respondent did not suffer damages,
    the trial judge determined that it was not unconscionable for him to retain the
    deposit.  She considered and rejected the submission that the respondents
    counsel used sharp practice.  We would not interfere with this exercise of
    discretion on the part of the trial judge.

[12]

The
    appeal is dismissed with costs payable to the respondent fixed in the amount of
    $11,500, inclusive of disbursements and HST.

Gloria Epstein J.A.

S.E. Pepall J.A.

M.L. Benotto J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Wilkes v. Deep Foundations Contractors Inc., 2015
    ONCA 231

DATE: 20150407

DOCKET: C58074

Feldman, Benotto and Brown JJ.A.

BETWEEN

Ken Wilkes

Respondent (Plaintiff)

and

Deep Foundations Contractors Inc.

Appellant (Defendant)

Thomas A. Stefanik, for the appellant

Paul McKeever, for the respondent

Heard and released orally: March 30, 2015

On appeal from the judgment of Justice Bruce A. Glass of
    the Superior Court of Justice, dated November 25, 2013.

ENDORSEMENT

[1]

The appellant asks the court to set aside the decision of the trial
    judge on the basis that the reasons do not address an important issue of credibility
    and therefore do not tell the parties why the respondent won and the appellant lost.

[2]

The respondent was terminated for alleged cause.  The cause was that he
    did outside consulting work after July 30, 2009, after the employer made it clear,
    and the employee agreed, not to do so.  The alleged transgression was a health
    and safety manual which the respondent prepared for Rockwood General
    Contractors Limited.  There was conflicting evidence regarding when that manual
    was prepared and delivered.  The respondent said it was before July 30, it was
    dated July 2, 2009, and Mr. Hary of Rockwood said it was delivered between
    April and September 2009.  The respondent had sent a September invoice to
    Rockwood and a September date also appeared on a company adoption page in one
    version of the manual.

[3]

The trial judge made a specific finding that the appellants evidence
    did not substantiate its allegations and that the respondent did not do outside
    consulting work after July 30.

[4]

There was some conflicting evidence about what the parties recalled they
    had said at the termination meeting of November 30, 2009.

[5]

Although the trial judge did not address those discrepancies directly,
    his finding that the defendants evidence did not substantiate its allegations effectively
    dealt with the issue.

[6]

In our view, there is no basis to interfere with the decision of the
    trial judge.  The appeal is therefore dismissed.  Costs to the respondent fixed
    in the amount of $12,500, inclusive of disbursements and HST.

K. Feldman J.A.

M.L. Benotto J.A.

David Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Allstate Insurance Company of Canada v. Aftab, 2015
    ONCA 349

DATE: 20150515

DOCKET: C59505

Strathy C.J.O., LaForme and Tulloch JJ.A.

BETWEEN

Allstate Insurance Company of Canada

Applicant (Appellant)

and

Sumaira Aftab

Respondent (Respondent)

and

Meng C. Chiu and Honda
    Canada Finance Inc.

Respondents

Sheldon A. Gilbert, Q.C.,
    for the appellant

Louis P. Covens, for the respondents
    Meng C. Chiu and Honda Canada Finance

Dena Oberman, for the
    respondent Sumaira Aftab

Heard: May 11, 2015

On appeal from the order of Justice David Price of the
    Superior Court of Justice, dated October 15, 2014, with reasons reported at
    2014 ONSC 5996.

ENDORSEMENT

[1]

The application judge determined that the appellant Allstate Insurance
    Company of Canada had a duty to defend its insured, Sumaira Aftab, under her
    homeowner insurance policy. The issue on appeal is governed by the decision of
    this court in
Sheppard v. Co-Operators General Insurance Co.; Quick v.
    MacKenzie
(1997), 33 O.R. (3d) 362. The application judge effectively
    found that decision had been displaced by our more recent decision in
Bawden
    v. Wawanesa Mutual Insurance Company
, 2013 ONCA 717, 118 O.R. (3d) 189. We
    disagree, and for that reason allow the appeal.

Background

[2]

Aftabs young son, Sameer, was hit by a car while crossing the road
    after getting out of her van.

[3]

Aftab commenced an action on behalf of Sameer against the respondent Chiu,
    the driver of the car that hit him. Chiu counterclaimed against Aftab for
    indemnification, alleging she had failed to take reasonable steps to ensure her
    sons safety.

[4]

Aftabs auto insurer, Unifund Assurance Company, and her homeowner
    insurer, Allstate, brought separate proceedings for declarations that they had
    no duty to defend the counterclaim or to provide coverage for damages.

[5]

The applications were heard together. Unifund argued that Sameers
    injury did not arise from the use and operation of the van. Allstate argued
    that it did arise from the use of the van and was therefore excluded from
    coverage under the homeowner policy. It also argued that in any event, the homeowner
    policy excluded coverage for bodily injuries to residents of Aftabs household.

[6]

The application judge held that both insurers had a duty to defend Aftab
    from the counterclaim against her. Allstate appeals, asserting that coverage
    for the counterclaim is excluded by its homeowner policy, because it is a claim
    arising from bodily injury to a person residing in Aftabs household.

[7]

The relevant provisions of Allstates policy are as follows:

You are insured
    for claims made against you
arising from
:

1.

Personal
    Liability  Legal Liability arising out of your personal actions anywhere in
    the world.

You are not
    insured for claims made against you
arising from
:

(a)

The ownership, use or operation of any motorized vehicle, trailer, or
    watercraft, except those insured in this policy;

  Bodily Injury to you or to any
    person residing in your household other than a residence employee. [Emphasis
    added.]

[8]

There is no dispute that the counterclaim for inadequate supervision
    falls within the broad scope of coverage and that, absent an applicable
    exclusion, Allstate has an obligation to defend. The issue is whether this
    courts decision in
Quick
, interpreting virtually identical contract
    language, should be applied, or whether
Bawden
represents a change in
    the law, reflecting the purpose of the exclusion and the reasonable
    expectations principle.

Analysis

[9]

The coverage and exclusion provisions in the Allstate policy are
    virtually identical to the provisions of the homeowner policy considered by
    this court in
Quick,
above.

[10]

Quick
,
    heard together with
Sheppard
,

also involved a counterclaim by
    a tortfeasor against a parent for negligent failure to supervise a child. The
    motion judge had held that the claim did not arise from the injury to the
    child, but from the parents lack of supervision. Catzman J.A., speaking for this
    court, rejected this interpretation and allowed the appeal. He held that on the
    plain wording of the policy, the counterclaim against the parents was one
    arising from the childs bodily injury.

[11]

Here,
    the application judge referred to the decision in
Quick
, noting that
    the exclusion clause there was almost identical to the exclusion in this
    case. He stated, however, that the exclusion had been more recently considered
    in
Bawden
, which interpreted the exclusion more narrowly. He noted
    that in that case the court had observed that a narrow interpretation of the
    exclusion was consistent with the purpose of the clause, namely to remove from
    coverage claims that raise a risk of collusion between the claimant and the
    insured family member. Thus, direct claims by a family member against the
    insured homeowner would be excluded, but indirect claims by a third party
    against the homeowner would not be excluded.

[12]

Bawden
is distinguishable because, as this court noted, the ambiguous language of
    the exclusion clause there was quite different from the clause in
Quick
and
    in this case. Here, as in
Quick
, both the coverage clause and the
    exclusion clause use the term arising from. In
Bawden,
the use of the
    word for in the exclusion clause, rather than arising out of, was found to
    limit the scope of the exclusion. Here, in contrast, there is symmetry between
    the coverage on the one hand and the exclusion from the scope of coverage on
    the other.

[13]

A
    reading of the reasons of Sanderson J. of the Superior Court in
Bawden
,
    2013 ONSC 1618, 116 O.R. (3d) 9, at para. 53, serves to distinguish that case
    from
Quick
:

In
Quick
,
    the Court of Appeal considered whether the parents of Laura were entitled to
    coverage for damages for their failure to supervise her despite an exclusion
    clause in their homeowners policy: you are not insured
for claims made against you arising
    from: bodily injury to you or to any person residing in your household
.
    The exclusion clause referred to claims made against the insureds
arising from bodily injury to Laura
.
    The Court of Appeal held the counterclaim was a claim
arising from
Lauras bodily injury within the
    meaning of the clause. In
Quick
,
    the words
arising from
were used in both the coverage provision and the exclusion clause. The scope of
    the wording in the exclusion was clearly as broad as the scope of the coverage
    provision.
Arising from
clearly covers indirect claims. [Emphasis in original.]

[14]

Later
    in her reasons, in language that was specifically approved by this court, Sanderson
    J. noted the absence of the words arising out of in the exclusion clause, in
    contrast with their use in the coverage clause, observing that it was open to
    the insurer to have used the same broad language in the exclusion.

[15]

In
    our view, nothing in
Bawden
supports the interpretation of the policy
    advanced by the respondent. Indeed,
Bawden
supports the appellants
    submission that the language in Allstates policy, like the homeowners policy
    in
Quick
, serves to exclude coverage for the counterclaim because it
    arises from the injury to Sameer.

[16]

There
    is no dispute about the applicable principles of insurance policy
    interpretation, including the principle that coverage provisions should be
    construed broadly and exclusions should receive a narrow interpretation:
Monenco
    Ltd. V. Commonwealth Insurance Co.
, 2001 SCC 49, [2001] 2 S.C.R. 699, at
    para. 31.

[17]

It
    remains the law, however, that the primary interpretative principle in the
    construction of insurance policies is that, where the policy is unambiguous,
    the court should give effect to its clear language, reading the policy as a
    whole:
Progressive Homes Ltd. V. Lombard General Insurance Co. of Canada
,
    2010 SCC 33, [2010] 2 S.C.R. 245, at para. 22;
Non-Marine Underwriters,
    Lloyds of London v. Scalera
, 2000 SCC 24, [2000] 1 S.C.R. 551, at para.
    71.

[18]

Another
    important principle is that the courts should strive to ensure that similar
    insurance policies are construed consistently:
Progressive Homes
,

at
    para. 23;
Co-operators Life Insurance Co. v. Gibbens
, 2009 SCC 59, [2009]
    3 S.C.R. 605, at para. 27. This gives certainty and predictability to insurance
    companies and their customers.

[19]

The
    respondents submit that the application judges interpretation gives effect to
    the reasonable expectation of the parties. In our view, the reasonable
    expectations doctrine has no application where, as here, the policy language is
    unambiguous and where, as here, the plain meaning of that language does not
    strip the policy of all efficacy or deprive the insured of what she bargained
    for.

[20]

Nor
    would we give effect to the appellants reliance on the purpose of the
    exclusion clause discussed in
Bawden
 to prevent collusion between
    family members. That may well have been the purpose of the narrower exclusion
    in that case, but the purpose of the clause here is clear and broader  to
    exclude the risk of claims arising from injuries to the insured or residents of
    her household.

Disposition

[21]

For
    these reasons, the appeal is allowed, the order of the motion judge is set
    aside, and this court declares that the respondent Sumaira Aftab is not
    entitled to coverage from the appellant with respect to the counterclaim in
    Court File CV-11-37117-00.

[22]

We
    see no reason why the respondents should not pay costs in the usual course.
    Their positions were advanced by insurance companies with a direct financial
    interest in the outcome. Costs of the appeal are fixed in the agreed amount of
    $14,389.26, all inclusive, and shall be paid by the respondents, jointly and
    severally. The costs below are fixed at $5,650.00, all inclusive, payable by
    the respondents Chiu and Honda Canada Finance Inc.

G.R.
Strathy C.J.O.

H.S. LaForme J.A.

M. Tulloch J.A.