COURT OF APPEAL FOR ONTARIO

CITATION: THMR Development Inc. v. 1440254 Ontario Ltd., 2018
    ONCA 954

DATE: 20181128

DOCKET: C65116

Lauwers, Hourigan and Pardu JJ.A.

BETWEEN

THMR Development Inc.

Applicant (Appellant)

and

1440254 Ontario Ltd.

Respondent (Respondent)

Gregory M. Sidlofsky, for the appellant

Micheal Simaan, for the respondent

Heard: November 5, 2018

On appeal from the order of Justice A. Pollak of the Superior
    Court of Justice, dated February 6, 2018.

By the Court:

[1]

The application judge dismissed the appellants application for specific
    performance of an agreement of purchase and sale between it, as the buyer, and
    the respondent, as the seller, of a mixed commercial/residential use property
    in Port Perry.

[2]

For the reasons that follow, we would allow the appeal and order the specific
    performance of the agreement of purchase and sale.

A.

The Factual Context

[3]

The application judges decision turned on her interpretation of the
    mortgage assumption provision in the agreement of purchase and sale, which
    required the approval of the mortgagee, Alterna Savings, to the assumption of
    the mortgage, on terms acceptable to the buyer. Because the Alterna mortgage
    was closed, the parties wished to keep the mortgage in place and avoid the
    prepayment penalty of $258,000.

[4]

The mortgage assumption condition provided:

The completion of this transaction
    is conditional until the 40th business day following the date upon which this
    Agreement is fully executed (the Assumption Approval Period) on the Buyer
    being approved by Alterna Savings and Credit Union Limited (Alterna) to
    assume the existing first mortgage on the Property (the Alterna Mortgage) on
    terms acceptable to the Buyer.
The foregoing condition is a true condition
    precedent and cannot be waived.
The buyer shall proceed diligently and
    expeditiously following the execution of this Agreement to seek approval of
    Alterna for the said assumption.  In the event that said condition precedent
    relating to the assumption of the Alterna Mortgage is not satisfied within the
    Assumption Approval Period this Agreement shall be at an end and the Deposit
    together without interest earned thereon shall be returned to the Buyer in full.
If the Buyer at Buyers sole and absolute discretion is not satisfied with
    the terms of the existing first mortgage or the terms of the said assumption of
    the existing first mortgage within the Assumption Approval Period
this
    Agreement of Purchase and Sale shall become null and void (Emphasis added.)

[5]

Alterna consented to the appellants assumption of the mortgage by
    letter, dated May 24, 2017. The letter was also addressed to the respondent,
    whose principal, William Zigomanis, denied having received it. However, he
    admitted he was told about Alternas approval during a meeting with the
    appellants manager, Ran Zha, on May 29, 2017.

[6]

Alternas approval letter listed a number of terms and conditions which
    had to be fulfilled before the closing date. The conditions were acceptable to
    the appellant, but there were two issues with Alternas letter that required
    correction.

[7]

The first, as Mr. Zigomanis admitted in cross-examination, was that the
    June 30 closing date in Alternas approval letter was incorrect; he expected
    the agreement to close by August 2, 2017. He testified that he personally was
    not in a particular rush to close the deal and that the closing date would
    not have been a deal breaker [f]or anyone. The uncontroverted evidence of the
    appellants lawyer was that Alterna agreed to correct the closing date and
    simply wanted to be notified once the closing date was finalized. There was
    also some ambiguity as to the appropriate interest rate for the mortgage
    assumption. The appellant resolved both issues by direct communications with
    Alterna.

[8]

Mr. Zigomanis admitted in cross-examination that by the middle of June,
    the appellant was asking for dates from the respondent to complete the final
    inspection of the property, although that was not required until July 2, 2017.

[9]

However, on June 20, 2017, counsel for the respondent wrote to counsel
    for the appellant, taking the position that the agreement of purchase and sale
    was at an end because the appellant had not formally accepted Alternas terms
    approving the mortgage assumption by signing and returning the approval letter before
    the end of the assumption approval period on June 6, 2017, together with the
    various fees that Alterna demanded.

[10]

Alternas
    approval letter also required the respondent and related guarantors, Mr.
    Zigomanis and his spouse, to sign. During oral argument counsel for the
    respondent raised the prospect that they might not sign because the assumption
    conditions left them responsible for the mortgage, which counsel suggested was
    not consistent with the basic concept of a mortgage assumption.

[11]

The
    difficulty with this suggestion is that it is not consistent with the facts.
    Alterna had advised Mr. Zigomanis by email, in February 2017, months before the
    agreement of purchase and sale was signed, that: on an assumption, Alterna
    does not release the existing guarantees. They will remain in place for the
    balance of the term. This explains why the mortgage assumption condition in
    the agreement of purchase and sale provided that acceptance was at Buyers
    sole and absolute discretion, referring both to satisfaction with the terms
    of the existing first mortgage or the terms of the said assumption of the
    existing first mortgage. The respondent did not have similar protection in the
    agreement of purchase and sale.

B.

The Decision under Appeal

[12]

The
    application judge described the mortgage assumption condition as a true
    condition precedent, which she found had not been satisfied by the parties by
    June 6, 2017, rendering the agreement null and void. She interpreted the
    wording of the condition:

[T]he only reasonable
    interpretation that the court can place on the obligations of the parties
    pursuant to that wording [of the mortgage assumption condition] is that, as a
    condition precedent,
the purchaser had to have accepted in a legal way to be
    bound by the terms and conditions proposed by Alterna.
It did not do so. I
    therefore find that I agree with the submissions of the respondent that the
    condition precedent was not satisfied and that the agreement of purchase and
    sale became null and void as of June 6, 2017. (Emphasis added.)

[13]

This
    interpretation rested on the application judges finding that the buyer had in
    no way agreed to be legally bound or had legally accepted the terms of the
    mortgage which Alterna was giving its approval to. She based this
    determination on the appellants failure to sign and return Alternas offer to
    approve the assumption. There is no evidence, she said, that the buyers did
    agree to be bound in any way by those terms. The application judge added in
obiter
:
    I would not have ordered specific performance of the agreement.

C.

Issues

[14]

There
    are two issues to be addressed on this appeal:

1.

Did the application judge err in
    determining that the agreement of purchase and sale was null and void because
    the condition precedent in the mortgage assumption provision had not been satisfied?

2.

Did the application judge err in
    finding that an order for specific performance would not be available to the
    appellant?

D.

Analysis

(1)

Did the breach of a condition precedent vitiate the contract?

[15]

A
    true condition precedent exists where the rights and obligations of the
    contracting parties under the contract depend on a future uncertain event, the
    happening of which is beyond the control of the parties and which depends
    entirely on the will of a third party. Until the event occurs, neither party to
    the contract has a right to performance: See
Zhilka v. Turney
,
[1959] S.C.R. 578, at pp. 583-584, and
Barnett
    v. Harrison
,
[1976] 2
    S.C.R. 531.

[16]

The
    application judge found that the jurisprudence on true conditions precedent was
    not applicable because the parties have clearly addressed their minds on what
    they want the consequences of a failure of the condition precedent to be by
    agreeing that this condition is a true condition precedent and cannot be
    waived.

[17]

In
    this case, the only third party was Alterna and the only true condition
    precedent was Alternas approval of the appellants assumption of the mortgage.
    This is the only part of the mortgage assumption provision that could properly be
    identified as a true condition precedent, and it was in place so that both the
    appellant, as buyer, and the respondent, as seller, were not penalized by the
    prepayment fee. The condition precedent was satisfied when Alterna sent its
    approval letter that was then altered slightly to the appellants satisfaction.
    In our view the appellant was then bound to close the transaction with the
    respondent, subject to any other conditions such as the possible fallout from
    possible surprises revealed by the property inspection refused by the
    respondent. Consequently, the application judge erred in concluding that the
    appellant was required to confirm its acceptance formally by signing and
    returning the assumption approval letter to Alterna to satisfy the condition
    precedent.

(2)

Was specific performance appropriate?

[18]

The
    application judge stated: I would not have ordered specific performance of the
    agreement as I find that, on the basis of the evidence, the applicant has not
    met its burden of establishing that the factors which are set out in the
    jurisprudence referred to by the applicant have been satisfied. She concluded
    that the value of that property to the applicant was for investment purposes,
    so that damages would be an appropriate remedy. She referred to
801 Assets
    Inc. v. 605446 Ontario Ltd.
, 2016 ONSC 2772, 71 R.P.R. (5th) 260 and
Campbell
    Pools Inc. v. Seville Group Inc.
, 2015 ONSC 2314, 44 B.L.R. (5th) 312. The
    application judges obiter analysis is limited to the few words that we have
    quoted. She did not address the evidence or the law in any detail. Her reasons
    are inadequate for appellate review within the meaning of
R. v. Sheppard
,
    2002 SCC 26, [2002] 1 S.C.R. 869.

[19]

The
    appellant submits that the application judge misconstrued the law relating to
    specific performance, and points out that in both
801 Assets Inc.
and
Campbell Pools Inc.
specific performance was granted in commercial
    circumstances.

[20]

The
    evidence in this case established that there were no suitable alternative commercial
    properties available in the Port Perry area. This is significant to the
    appellant because its other properties, employees, staff and contractor are
    located in the town. This is why, because of its unique attributes, the
    appellant has been trying to purchase the property since 2015.

[21]

This
    court is in as good a position as the application judge to deal with the issue
    of remedy because this case was argued on a paper basis without the involvement
    of live witnesses. In our view, the appellant has demonstrated the legal
    prerequisites for an order for specific performance and we would so order, subject
    to the following paragraph.

E.

Disposition

[22]

Alternas
    mortgage assumption approval has long since lapsed. If, in light of this
    decision, Alterna renews its approval on terms substantially similar to those
    in its previous approval letter, then an order for specific performance of the
    agreement of purchase and sale should issue. The appellant shall advise the
    court of Alternas position within 30 days of the date of release of this
    judgment. If Alterna refuses to approve the assumption of the mortgage by the
    appellant on terms substantially similar to those in its previous approval
    letter, then the appellant shall advise the court and make written submissions
    as to the appropriate disposition of this appeal, and the respondent may
    respond in writing within 14 days.

[23]

We
    reserve the costs decision pending the outcome of the actions ordered in the
    previous paragraph.

Released: November 28, 2018 PL

P.
    Lauwers J.A.

C.W.
    Hourigan J.A.

G.
    Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Thunder Bay (City) v. Canadian National Railway
    Company, 2018 ONCA 919

DATE: 20181116

DOCKET: M49452 (C64026)

Simmons J.A. (Motion Judge)

BETWEEN

The Corporation of the City of Thunder Bay

Applicant (Appellant/ Responding Party)

and

Canadian National Railway Company
and
Fort
    William First Nation

Respondents (
Respondent
/
Moving Party and Responding
    Party
)

Guy J. Pratte and Duncan A.W. Ault, for the moving party,
    Canadian National Railway Company

Christopher J. Matthews and Sanj Sood, for the
    responding party, The Corporation of the City of Thunder Bay

Samuel W. Crowe, for the responding party, Fort William
    First Nation

Heard: November 2, 2018

REASONS FOR DECISION

A.

Introduction

[1]

The Canadian National Railway Company moves for a stay of this courts
    order made in June 2018, which required CN to reopen the James Street Bridge in
    Thunder Bay for vehicle traffic and maintain the Bridge in accordance with a
    1906 agreement.

[2]

CN owns the Bridge, which traverses the Kaministiquia River in Thunder
    Bay. Most of Thunder Bay lies to the north of the Bridge; the Fort William
    First Nation lies to the south.

[3]

The Bridge was built under the terms of a 1906 agreement between the
    Grand Trunk Pacific Railway Company, a predecessor of CN, and the Town of Fort
    William, which was later amalgamated into the City of Thunder Bay.

[4]

Under s. 3 of the 1906 agreement, Grand Trunk gave Fort William the
    perpetual right to cross said bridge for street railway, vehicle and foot
    traffic. Under s. 5, Grand Trunk agreed to maintain the bridge in
    perpetuity.

[5]

The Bridge is unique in CNs railway network, in that it is a combined
    railway, vehicle and pedestrian bridge. Single vehicle lanes straddle both
    sides of the centre railway line and a pedestrian sidewalk flanks the outside
    of each vehicle lane.

[6]

Following a fire in 2013, CN closed the Bridge to vehicle traffic,
    claiming it was unsafe and could only be made safe through structural repairs
    that were beyond the scope of its maintenance obligation under the 1906
    agreement. As matters developed, the key safety concern was that an errant
    vehicle could leave the roadway, cross the sidewalk  which could not bear its
    weight  and fall into the river.

[7]

In 2017, Smith J. dismissed Thunder Bays application for a declaration
    that CN is obliged to maintain the Bridge in perpetuity and required to reopen
    the Bridge for vehicle traffic. He concluded that it was the intention of the
    parties to the 1906 agreement that the Bridge be maintained for the type of
    bridge traffic that existed when the agreement was made, namely streetcar and
    horse and cart traffic. Further, he found that CN had consistently taken the
    position that it was not obliged to make structural changes to the Bridge that
    would permit modern motor vehicle traffic. Finally, he concluded that Thunder
    Bay, as the applicant, had the onus to clearly define the relief it was seeking
    and the changes necessary to make the Bridge safe for motor vehicles and that
    it had failed to do so.

[8]

On June 11, 2018, this court set aside the application judges order and
    made the order CN seeks to stay. Among other things, this court found that the
    application judges conclusion concerning the parties intentions was
    unreasonable and tainted by extricable errors of law. On its application of the
    principles of contractual interpretation, this court concluded that vehicle
    traffic in the 1906 agreement means any kind of vehicle traffic, including car
    and truck traffic. Further, CN was obliged to maintain the Bridge in perpetuity
    for any kind of vehicle that used it. Finally, this court held that the
    application judge erred by placing an onus on Thunder Bay to provide a proposal
    to make the Bridge safe for motor vehicles as it is up to CN to determine what
    maintenance is needed to alleviate any safety concerns.

[9]

In reaching its conclusions, this court found that CNs attempt to
    distinguish structural repairs from its maintenance obligation was both of
    little practical consequence and legally irrelevant  the latter because an
    action in which CN claimed a declaration that its contractual maintenance
    obligation was extinguished had been stayed.

[10]

CN
    filed a notice of application for leave to appeal this courts order to the
    Supreme Court of Canada on August 20, 2018. The application was subsequently
    completed in mid October. In its leave application, CN submits that this courts
    decision raises two issues of public importance that warrant granting leave to
    appeal:

1.

Whether an appellate court can impose a perpetual maintenance obligation
    that it refuses to define without affording basic procedural fairness.

2.

Whether a minimal level of specificity is required for a mandatory
    order.

[11]

On
    this motion, CN seeks a stay for an estimated period of about two months. It asserts
    that it has taken reasonable steps to comply with this courts order and that
    it will continue to do so up until December 15, 2018  the date on which it
    anticipates delivery of issued for construction drawings for reconstruction
    work it proposes to undertake. It estimates that a decision from the Supreme
    Court of Canada on its leave application would likely be forthcoming within
    about two months after December 15, 2018.

[12]

Thunder
    Bay and the Fort William First Nation oppose the granting of a stay.

[13]

For
    the reasons that follow, I decline to grant a stay.

B.

Background

(1)

The 1906 Agreement

[14]

The
    1906 agreement was preceded by an agreement made in 1905 in which Grand Trunk
    and Fort William agreed to the construction of a branch line that would connect
    the Town to a transcontinental railroad. Section 6 of the 1905 agreement
    provided that Fort William would pay Grand Trunk a $50,000 bonus if Grand Trunk
    agreed to construct a bridge over the river and give the Town the perpetual
    right to cross the bridge for street railway, vehicle and foot traffic.

[15]

Under
    the 1906 agreement, Grand Trunk agreed to build the Bridge. As noted above, s.
    3 of the 1906 agreement gave Fort William the perpetual right to cross the
    Bridge for street railway, vehicle and foot traffic:

The Company will give the
    Municipal Corporation the perpetual right to cross said bridge for street
    railway, vehicle and foot traffic on roadways supported by brackets on each
    side of the railway bridge substantially as shown on Plate C, and this
    portion of the bridge shall be for the Town and any person or corporation
    authorized by the Town.

[16]

Section
    5 of the 1906 agreement set out Grand Trunks obligation to maintain the Bridge
    in perpetuity:

The Company will maintain the
    bridge in perpetuity without costs to the Town except the cost and maintenance
    of street car rails and trolley wires which will be furnished by the Town or
    Electric Railway Company using the bridge; and that the space allowed for Town
    traffic on each side of the bridge, be sufficient to accommodate street car,
    vehicular traffic and separate passage for foot passengers.

(2)

The Bridge

[17]

Construction of the Bridge was completed in 1909.
Between
    1909 and 2013 the Bridge operated for rail, vehicle and pedestrian traffic.

After 1950, the vehicle lanes were no longer
    used for street railway; instead, they were used exclusively for vehicle
    traffic, including both car and truck traffic. Prior to closure, the speed
    limit on the Bridge was reduced to 20 km/h and three speed bumps were
    installed. As of 2007 (the most recent statistics available), annual daily
    traffic was estimated at 8,871 motor vehicles per day.

(3)

CN closes the Bridge to vehicle traffic

[18]

CN
    closed the Bridge on October 29, 2013 because of a fire. However, when it
    reopened the Bridge three days later, it reopened it only for trains and
    pedestrians, claiming it was not safe for motor vehicles. CN asserted that the
    Bridge could not be made safe for motor vehicles without structural changes
    and it claimed it was not required to make structural changes under its
    obligation to maintain the Bridge in the 1906 agreement.

(4)

The 2015 Litigation

[19]

In
    February 2015, CN issued a statement of claim in which it claimed, among other
    things, declarations that it was not contractually obligated to reopen, rebuild
    or replace the roadway bridge and that any obligation to maintain the roadway
    bridge had been extinguished. Three days later, Thunder Bay issued an
    application, naming both CN and Fort William First Nation as respondents, in
    which it sought, among other things, a declaration that CN is obliged to
    maintain in perpetuity a combined railway and highway bridge and that such
    obligation includes maintaining the bridge to current standards and
    regulations. Thunder Bay also sought an order staying CNs action or, in the
    alternative, consolidating the two proceedings.

(5)

CNs action is stayed

[20]

On
    January 20, 2016, Fregeau J. stayed CNs action, holding that it was
    appropriate that the matter proceed by way of Thunder Bays application.

(6)

Thunder Bays application is dismissed

[21]

On
    June 9, 2017, the application judge dismissed Thunder Bays application based
    on his interpretation of the 1906 agreement. He concluded, based on the words
    used, the subsequent conduct of the parties and the context in which the
    agreement was made, that it was the intention of the parties that CN would
    maintain the Bridge for the type of bridge traffic that existed at the time of
    the 1906 agreement, namely streetcar and horse and cart traffic.

[22]

Further,
    the application judge found that the record did not support Thunder Bays
    position that CN had maintained the Bridge to the extent of making structural
    changes necessary to comply with modern safety codes.

[23]

Finally,
    the application judge concluded that Thunder Bay had the onus of clearly
    defining the relief it was seeking and of providing cogent evidence of the
    changes necessary to make the Bridge safe for motor vehicles and that it had
    failed to do so. He said that without such evidence, it was not possible to
    determine whether the work required to open the Bridge safely was within the
    scope of what was intended by the parties when they signed the 1906 agreement.

(7)

This court orders CN to reopen the Bridge

[24]

In
    its June 11, 2018 judgment, this court set aside the application judges
    decision. This court held that, under the 1906 agreement, vehicle traffic means
    any kind of vehicle traffic, including car and truck traffic. Accordingly, at
    para. 69 of its reasons, this court stated:

Under the Agreement cars and
    trucks have a perpetual right to cross the Bridge, and to ensure that right is
    preserved, CN has a corresponding obligation to keep open and maintain the
    Bridge in perpetuity. To terminate its obligation CN would have to seek a court
    order that its obligation to maintain is incapable of being performed.

[25]

This
    court held that CN breached the 1906 agreement by failing to reopen the Bridge
    for motor vehicle traffic. Further, it found that CN is obliged to reopen the
    Bridge for vehicle traffic and to determine what maintenance is needed to
    alleviate any safety concerns.

[26]

In
    reaching these conclusions, this court held that the application judges
    finding concerning the parties intentions regarding the use of the Bridge was
    unreasonable and tainted by extricable legal error.

[27]

In
    particular, the application judges finding was unreasonable because it failed
    to take account of the full context in which the 1906 agreement was made, was
    contrary to the parties reasonable expectations, and was at odds with the
    express words of the 1906 agreement.

[28]

Further,
    the finding was tainted by two extricable legal errors.

[29]

First,
    the application judge failed to give any effect to the words perpetual and
    in perpetuity. Second, the application judge erred in taking into account the
    parties subsequent conduct when the meaning of the 1906 agreement was not
    ambiguous. Alternatively, even if the meaning was ambiguous, the application
    judge failed to consider the parties relevant subsequent conduct.

[30]

Finally,
    this court concluded that the application judge erred by placing an onus on
    Thunder Bay to provide a proposal to make the Bridge safe for motor vehicles.

[31]

In
    the context of discussing these errors, this court found the distinction CN
    sought to draw between maintenance obligations and structural repairs of little
    practical consequence and legally irrelevant.

[32]

The
    distinction was of little practical consequence because the maintenance CN had
    performed until 2013 had been sufficient to allow cars and trucks to safely
    cross the Bridge prior to its closure. It was undisputed that the fire caused
    minimal damage to the Bridge. Instead, the key safety issue that CN had
    identified was the risk of an errant vehicle leaving the roadway, crossing the
    sidewalk and falling into the river. However, that risk had never manifested
    itself in over 100 years of operation and was minimized by the speed limit and
    speed bumps on the Bridge.

[33]

The
    distinction was legally irrelevant because it was, in substance, an argument
    that CN should be relieved of its obligation to maintain the Bridge  relief CN
    had claimed in its action  and its action had been stayed.

C.

THE TEST FOR GRANTING A STAY

[34]

The
    basic test for granting a stay pending leave to appeal is the same as the test
    for granting an interlocutory injunction. The moving party must demonstrate: i)
    a serious issue to be adjudicated on appeal; ii) that it will suffer
    irreparable harm if a stay is not granted; and iii) that the balance of
    convenience favours granting a stay: see
Yaiguaje v. Chevron Corporation
,
    2014 ONCA 40, 315 O.A.C. 109, at para. 3;
RJR-MacDonald Inc. v. Canada
    (Attorney General)
, [1994] 1 S.C.R. 311, at p. 314.

[35]

However,
    these factors are not watertight compartments; the strength of one factor may
    compensate for the weakness of another. Overall, the court must decide whether,
    taking all relevant considerations into account, the interests of justice
    warrant granting a stay:
Circuit World Corp. v. Lesperance
(1997), 33
    O.R. (3d) 674 (C.A.), at p. 677.

[36]

Although
    ordinarily the threshold for establishing a serious issue to be adjudicated is
    low, the criteria for granting leave to the Supreme Court of Canada add another
    layer to the test:
BTR Global Opportunity Trading Ltd. v. RBC Dexia
    Investor Services Trust
, 2011 ONCA 620, 283 O.A.C. 321, at para. 16.

[37]

Under
    s. 40(1) of the
Supreme Court Act
, R.S.C. 1985, c. S-26 leave may be
    granted where any question involved is one that ought to be decided by the
    Supreme Court by reason of its public importance or the importance of any issue
    of law or any issue of mixed fact and law or for any other reason of such a
    nature and significance as to warrant a decision by the Supreme Court.

[38]

The
    stay test requires that a judge hearing a stay motion consider not only whether
    the proposed appeal raises a serious issue to be adjudicated under
RJR-Macdonald
.
    The judge must also consider the factors in s. 40(1) and assess whether there
    is some merit in the leave application:
Yaiguaje
,
at para. 4.

D.

Discussion

(1)

Serious issue to be adjudicated and s. 40(1) criteria

[39]

I
    conclude it is unlikely that CN will succeed in its application for leave to
    appeal to the Supreme Court of Canada.

[40]

As
    noted above, CN submits this courts decision gives rise to two issues of
    public importance that warrant granting leave:

1. Whether an appellate court can
    impose a perpetual maintenance obligation that it refuses to define without
    affording basic procedural fairness.

2. Whether a minimal level of
    specificity is required for mandatory order.

(a)

The maintenance obligation

[41]

Concerning
    the first issue, CN submits that the imposition of a maintenance obligation
    unbounded in scope and duration is a departure from established jurisprudence
    holding that maintenance obligations should be constrained. It contends that this
    courts decision thus creates uncertainty in contracts and statutory provisions
    under which parties are obliged to provide (or enjoy the benefit of)
    maintenance. Further, CN submits that this court imposed this maintenance
    obligation by erroneously finding that its scope was irrelevant to the
    proceeding because of a stay imposed in relation to CNs original action against
    Thunder Bay. CN says this finding was contrary to both parties position that
    determining the scope and content of the maintenance obligation was a key issue
    to be decided. Moreover, the finding of irrelevance based on the prior order
    for a stay deprived CN of procedural fairness because the issue was never
    raised in argument nor did the court afford CN an opportunity to address it.

[42]

As
    a starting point, I see little merit in CNs submissions about the scope of
    maintenance obligations and the impact of this courts decision on other
    contracts or statutory provisions imposing maintenance obligations.

[43]

It
    was the 1906 agreement, not this court, that created a perpetual right to cross
    the Bridge and that imposed a maintenance obligation in perpetuity.

[44]

This
    courts interpretation of the 1906 agreement was driven by established
    principles of contractual interpretation, including: (1) an analysis of the
    contextual factors relating to the formation of the contract (the purpose of
    both the 1905 and 1906 agreements, the reasonable expectations of the parties
    in entering into the 1906 agreement and the coming of the automobile era), (2)
    the language of the 1906 agreement (including the use of the terms perpetual
    and in perpetuity) and, (3) the fact that, if subsequent conduct was
    relevant, which this court concluded it was not, CN had been able to make
    repairs and upgrades falling within its acknowledged maintenance obligation
    sufficient to allow cars and trucks to safely cross the Bridge for many years.

[45]

As
    noted by CN in its appeal factum in this court, the Supreme Court of Canada has
    held that a contractual maintenance obligation varies according to the
    specific terms of each contract:
T
hunder Bay (City) v. Canadian
    National Railway Company
, 2018 ONCA 517, 424 D.L.R. (4th) 588 (Factum
    of the Respondent at para. 65).

[46]

Thus,
    rather than being a departure from existing jurisprudence, this courts
    interpretation is consistent with it. Moreover, I fail to see how this courts
    interpretation of the specific provisions of this rather unique contract is
    likely to have an impact on the interpretation of other contracts or statutes.

[47]

Similarly,
    I see little merit in CNs arguments that this court erred in finding that the
    distinction CN draws between its maintenance obligation and making structural
    changes to the Bridge was irrelevant in the context of the within proceeding.

[48]

As
    I have said, CN makes two points in this regard. First, CN argues this finding
    was contrary to both parties position that determining the scope and content
    of the maintenance obligation was a key issue to be determined. I reject this
    submission. In its factum filed on the appeal to this court, Thunder Bay took
    the position that CNs stance in this litigation is akin to a party seeking to
    rely on the doctrine of frustration to excuse its breach of contract:
Thunder
    Bay (City) v. Canadian National Railway Company

(Factum of the
    Appellant at para. 86).

[49]

That
    is the precise basis on which this court concluded that the distinction CN
    sought to draw between maintenance and structural changes is irrelevant in this
    proceeding. This court also noted that the application judge did not make a
    finding that the 1906 agreement was at an end and stated at para. 59, nor
    could he. Further, this court stated the application judge did not even make a
    finding that CN was incapable of performing its contractual obligation. In adopting
    Thunder Bays submission, this court concluded that CN was seeking to be relieved
    from its contractual obligation based on a claim (frustration) it had not
    formally advanced.

[50]

CNs second point is that
this courts finding concerning the effect of the 2016 stay of its action
    deprived it of procedural fairness because the effect of the 2016 stay order
    was never raised during argument of the appeal. Nor did the court afford CN an
    opportunity to address the effect of the 2016 stay order.

[51]

Even
    assuming the specific argument about the effect of the 2016 stay order on which
    this court relied was never raised, the fact remains, as Thunder Bay pointed
    out during this motion, that CN did not advance a claim to be discharged from
    its contractual obligations in this proceeding by way of counter-application. In
    addition to pointing to the 2016 stay order, this court was clear in stating,
    at para. 69 of its reasons, that, to be discharged from its contractual
    obligation, CN would require a court order that its obligation to maintain is
    incapable of being performed  in other words, that this aspect of the 1906
    agreement is frustrated. I see nothing procedurally unfair about CN being
    precluded from advancing arguments relevant to a claim it did not advance.

[52]

In
    the circumstances, if this ground of appeal surpasses the serious issue
    threshold, it does so barely.

[53]

In
    any event, this is not the type of case in which the Supreme Court of Canada is
    likely to grant leave to appeal. As I have said, this case involves the
    interpretation of a private contract in which established legal principles were
    applied. It is therefore not the type of case in which the Supreme Court
    typically grants leave to appeal. For the reasons I have explained, I do not
    accept CNs argument that this courts interpretation of CNs maintenance
    obligation in the 1906 agreement is likely to have far-reaching implications on
    the interpretation of other contracts or statutory provisions.

(b)

The Mandatory Order

[54]

Concerning
    the second issue, CN asserts that this court erred by ordering CN to reopen and
    maintain the Bridge without giving any direction as to when the Bridge is to be
    reopened, how the Bridge is to be maintained or what the duty to maintain
    consists of. CN submits this is inconsistent with existing jurisprudence on
    both maintenance obligations and mandatory orders. It says guidance from the
    Supreme Court is required where this court has refused to interpret the content
    or scope of the key obligation a party is ordered to perform, thus leaving the
    content and scope of the maintenance obligation unlimited and potentially
    exposing CN to contempt proceedings.

[55]

As
    I see it, the flaw in this argument is that this courts order does no more
    than order CN to continue performing a contract that it had been performing,
    without apparent difficulty, for more than 100 years. This court interpreted
    the 1906 agreement as creating a perpetual right for cars and trucks to cross
    the Bridge and as creating a corresponding obligation on CN to open and
    maintain the Bridge in perpetuity to allow that to happen. This court stated
    that to terminate that obligation, CN would have to seek a court order that its
    obligation to maintain is incapable of being performed  which CN did not do.
    Accordingly, this court did no more than order CN to continue doing what it
    knew how to do and had successfully done for more than 100 years.

[56]

Even
    assuming this issue gives rise to a serious question to be adjudicated, I
    conclude this is not the type of case in which the Supreme Court is likely to
    grant leave to appeal for the same reasons I reached that conclusion in
    relation to the first issue.

(2)

Irreparable Harm

[57]

I
    am satisfied that CN would suffer irreparable harm in the following
    circumstances: i) a stay is not granted; ii) the Supreme Court does not deliver
    its decision on the leave motion before the date on which CN is in a position
    to undertake the tendering process in relation to proposed reconstruction work;
    and iii) CN is ultimately successful in its appeal.

[58]

As
    noted above, since this courts decision was delivered, CN has undertaken
    certain steps towards doing the work it considers necessary to enable it to
    reopen the Bridge. More specifically, CN sought proposals from three
    engineering firms and entered into an agreement with one of those firms.   Under
    that agreement, the selected engineering firm has provided a report on
    alternatives and will deliver issued for tender drawings by November 15, 2018
    and issued for construction drawings by December 15, 2018.

[59]

After
    December 15, 2018, presumably CN will have to arrange for tender documents to
    be prepared and thereafter undertake the tendering process. CN submits the
    latter step could lead to irreparable harm because CN would become
    contractually committed to paying for the reconstruction work for which it
    invites bids. CN has an estimate for this cost at between four and six million
    dollars. I accept CNs submission that if its leave application and appeal are
    ultimately successful, it is doubtful that CN would have any recourse against
    Thunder Bay for this amount.

[60]

Thunder
    Bay responds that it would be open to CN to make its tender and any contract
    conditional on denial of the request for leave to appeal. However, Thunder Bay
    provided no support for its submission that such a conditional tender would be
    practically feasible.

[61]

As
    a matter of common sense, bidders are unlikely to expend the time and money to
    submit a serious bid where a condition means the project may never proceed.

[62]

A
    review of a number of cases relating to tenders provides no support for the
    proposition that making a contract conditional on denial of a request for leave
    to appeal is likely to be practically feasible:
Surespan Construction Ltd.
    v. Saskatchewan
, 2013 SKQB 23, 10 B.L.R. (5th) 117;
Trevor Nicholas
    Construction Co. v. Canada
(2000), 2 C.L.R. (3d) 176 (F.C.T.D.)
;
Foundation
    Building West Inc. v. Vancouver (City)

(1995), 22 C.L.R. (2d) 94
    (B.C.S.C.);
Admiral Roofing Ltd. v. Prince George School District No. 57
,
    2010 BCSC 1394, 85 B.L.R. (4th) 87;
G.J. Cahill & Co. (1979) v.
    Newfoundland & Labrador
, 2005 NLTD 129, 250 Nfld. & P.E.I.R. 145;
St.
    Lawrence Cement Inc. v. Ontario (Minister of Transportation)

(1991),
    3 O.R. (3d) 30, 50 B.L.R. 319 (Ct. J. (Gen. Div.). Unlike Thunder Bays proposal,
    the conditions found in these cases do not negate the possibility the project
    will proceed.

[63]

Thunder
    Bay also argued that it was up to CN to show that a conditional tender is not
    feasible. I reject that submission. In my view, Thunder Bays proposal lacks an
    air of reality; I see nothing for CN to negate.

(3)

The Balance of Convenience

[64]

As
    I have said, I am satisfied CN may suffer irreparable harm in the form of incurring
    financial commitments for which it will not be compensated if a stay is not
    granted and CN ultimately succeeds on its appeal.

[65]

On
    the other hand, Thunder Bay and the Fort William First Nation have filed
    evidence that the 10-kilometre detour vehicular traffic must make because of
    the Bridge closure causes more than inconvenience. They contend it creates higher
    risks to motorists using the detour route because of significantly increased
    traffic, increased response times for emergency personnel coming to the First
    Nation from Thunder Bay, and negative financial consequences for the First
    Nation economy. Further, in the event of a road closure on the alternate route,
    the First Nation becomes temporarily inaccessible by road. Thunder Bay also
    raises the spectre that even a two-month interruption in CNs planned
    reconstruction effort could have the impact of delaying reopening of the Bridge
    from the current schedule of sometime in 2019 to the spring of 2020 or later,
    because construction cannot occur during winter weather.

[66]

While
    I have no doubt that the Bridge closure has had negative impacts beyond
    inconvenience during the more than five years it has been closed, I find the
    evidence of specific financial impacts unreliable. Further, I observe that
    there is no evidence before me concerning the cause of the accidents on the
    detour route on which Thunder Bay and the First Nation rely. I observe as well
    that Thunder Bay waited almost a year and five months before bringing its
    application to obtain a remedy for the Bridge closure. Although it appears
    Thunder Bay was attempting to negotiate a resolution with CN, the fact of this
    lengthy delay diminishes the force of the arguments about harm. Moreover, the
    expected delay between December 15, 2018 and the anticipated date of a decision
    on the leave application is relatively short  likely no more than two months. I
    do however acknowledge that, in any particular case, delay in emergency
    response times could lead to catastrophic results.

[67]

To
    these considerations, I add the observation that had CN filed its leave
    application more expeditiously, the requirement for a stay may not have arisen.
    This courts decision was released on June 11, 2018; CN took until August 20,
    2018 to file its leave application.  Although I cannot characterize such a
    delay as unreasonable in the abstract, in my view, it does not reflect the
    conduct of a litigant concerned about irreparable harm and for whom time is of
    the essence. To that extent, I consider that CN has contributed to the
    situation it is in.

[68]

Finally,
    the evidence relevant to the impact of an estimated two-month delay in
    tendering on the timing of the eventual reopening of the Bridge does not make
    it clear that the delay in reopening the Bridge will be restricted to two
    months. Based on evidence that the reconstruction CN proposes could take four
    to eight months and the uncontested fact that winter weather can impact
    construction, I cannot be satisfied that granting the stay would not have the
    effect of delaying the reopening of the Bridge until 2020 if leave is not
    granted. As CN is seeking a stay, it had the onus of demonstrating the extent
    to which granting the stay would delay the reopening of the Bridge.

[69]

Overall,
    I conclude that the balance of convenience favours CN, but only modestly. The
    potential harm to CN is quantified at four to six million dollars if leave is
    granted and its appeal is ultimately successful. Balanced against that are the
    facts that CN contributed to the possibility of irreparable harm by failing to
    move more expeditiously for leave and that the potential for serious impacts on
    Thunder Bay and the First Nation increases the longer the reopening of the
    Bridge is delayed.

(4)

The Interests of Justice Do Not Favour Granting a Stay

[70]

Overall,
    I am not satisfied that the interests of justice favour granting a stay. The
    second and third factors favour CN. Nonetheless, I am not satisfied CNs leave
    application has sufficient merit to warrant granting a stay. In my view, CN has
    not identified a serious issue to be adjudicated that meets the criteria for
    granting leave under s. 40 of the
Supreme Court Act
. I conclude it is
    not reasonably arguable that CN will obtain leave.

E.

disposition

[71]

CNs motion for a stay is dismissed. If the parties are unable to
    agree on costs, Thunder Bay and the First Nation may make brief submissions,
    not to exceed three pages, within 10 days from the release of these reasons; CN
    may respond within 10 days thereafter.

Janet Simmons J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Van Halteren v. De Boer Tool Inc., 2018 ONCA 960

DATE: 20181129

DOCKET: C65232

Hoy A.C.J.O., Feldman and Huscroft JJ.A.

BETWEEN

Jacob Van Halteren

Plaintiff (Appellant)

and

De Boer Tool Inc.

Defendant (Respondent)

Anton M. Katz, for the appellant

Tyler H. McLean, for the respondents Gary De Boer,
    Marcia De Boer and De Boer Tool Inc.

Heard: November 16, 2018

On appeal from the order of Justice James A. Ramsay of
    the Superior Court of Justice, dated March 6, 2018, with reasons reported at
    2018 ONSC 1554, [2018] O.J. No. 1226 (Sup. Ct.).

REASONS FOR DECISION

Overview

[1]

This is an appeal from an order denying the appellant, Jacob Van
    Halteren, leave to amend his statement of claim.

[2]

The motion judge dismissed the appellants motion for leave to amend his
    statement of claim for two reasons, either of which would be a sufficient basis
    for dismissing the appellants motion. First, the motion judge found that the
    proposed amendments raised causes of action that were statute-barred by s. 4 of
    the
Limitations Act
, 2002, S.O. 2002, c. 24, Sched. B. Second, he
    found that the motion for leave to amend the statement of claim was an abuse of
    process. The appellant argues that both findings are tainted by reversible
    error.

[3]

The appellant also seeks leave to appeal the motion judges costs order.

[4]

For the reasons that follow, the appeal is dismissed and leave to appeal
    the costs order is denied.

Background

[5]

Some context is helpful before addressing the issues on appeal.

[6]

This litigation arose out of the appellants attempt to recover the $500,000
    he advanced to the respondent De Boer Tool Inc. (the Corporation) in 2002.

[7]

The appellant commenced his action by Notice of Action on October 17,
    2012. He issued his statement of claim on November 6, 2012.

[8]

The appellant initially based his action on a promissory note said to
    have been executed in 2008 (the 2008 Note). The appellants position, at this
    point in the litigation, was that he was a creditor of the Corporation and had
    not become a shareholder. In its statement of defence dated January 11, 2013,
    the Corporation took the position the 2008 Note was a forgery.

[9]

On May 28, 2013, the appellant sought leave to amend his statement of
    claim (the 2013 Statement of Claim). In particular, he sought to: (1) add the
    respondents Gary De Boer and Marcia De Boer (the directors, officers and shareholders
    of the Corporation) as defendants; and (2) in the alternative to his claim on
    the 2008 Note, plead entitlement to relief under the oppression remedy as a
    creditor or a security holder of the Corporation. The appellant further alleged
    that the De Boers paid themselves dividends on their shares of the Corporation
    to the exclusion of the appellant.

[10]

On
    December 2, 2013, Glithero J. denied the appellants motion for leave to amend
    his statement of claim on the basis that the appellants claims based on
    oppression were statute-barred by the
Limitations Act
,
2002
:
Van
    Halteren v. De Boer Tools Inc.,
2013 ONSC 6736, [2013] O.J. No. 5540 (Sup.
    Ct.).

[11]

Glithero
    J. held that there were no facts pled in the original statement of claim that
    could support a claim for relief in the nature of the oppression remedy. He
    noted that the appellant had taken the position throughout the lawsuit that he
    had never received any shares and relied on a promissory note. He wrote, at
    para. 26:

In my opinion, this is a case where a plaintiff faced with a
    denial of the promissory note upon which the action was originally based, seeks
    to avoid any problems which may arise from alleged forgery of the note, and
    instead switch to a new cause of action in respect of which the
Limitations
    Act
has expired.

[12]

The
    appellant did not appeal the order of Glithero J.

[13]

On
    August 20, 2014, Parayeski J. granted the appellant leave to amend his
    statement of claim, in order to advance a claim based on a separate promissory
    note issued by the Corporation in 2003 (the Original Note), which was re-signed
    by the parties on November 21, 2005. The Original Note was stated to be due on
    demand or by September 1, 2006, whichever came earlier. It was also stated to
    be in force until a share agreement is put in place. No shareholders
    agreement was put in place.

[14]

On
    August 5, 2015, Parayeski J. dismissed the appellants motion for summary
    judgment:
Van Halteren v. De Boer Tool Inc.
, 2015 ONSC 4939, [2015]
    O.J. No. 4136 (Sup. Ct.). He found that the action on the Original Note was
    statute-barred and that the 2008 Note was a forgery and could not ground a
    cause of action or serve as an acknowledgement of the underlying debt. Parayeski
    J.s order was upheld by this court on appeal:
Van Halteren v. De Boer Tool
    Inc.
, 2016 ONCA 559, [2016] O.J. No. 3709 (Sup. Ct.).

[15]

Parayeski
    J. had not dismissed the action. On September 13, 2016, the Corporation moved
    for summary judgment dismissing the action, based on the findings of Parayeski
    J.

[16]

In
    response to the Corporations motion for summary judgment, the appellant moved
    on October 7, 2016 to amend his statement of claim (the 2016 Statement of
    Claim) in order to add Gary De Boer as a defendant, to claim damages for
    fraud, and to seek a declaration that he owns 25% of the common voting shares
    of the Corporation.

[17]

In
    February 2018, before the motion was heard, the appellant sought to further
    amend his proposed statement of claim (the 2018 Statement of Claim). In the
    2018 Statement of Claim, the appellant seeks to add both Gary and Marcia De
    Boer as defendants and seeks a declaration that he is the owner of 12.5% of the
    common shares of the Corporation. He alleges that the respondents deceitfully
    concealed that he was a shareholder. He alleges that had he known he was a
    shareholder, he would not have elected to sue on the basis of a loan. He also
    alleges, seemingly in the alternative, that the De Boers falsely represented to
    him that they would recognize his interest as a shareholder. He repeats the
    allegation in the 2013 Statement of Claim that the Corporation paid dividends,
    but not to him, and again seeks relief under the oppression remedy provisions
    of the
Business Corporations Act
, R.S.O.
    1990, c. B. 16.

[18]

In
    particular, he pleads that the Corporations tax filings for the years 2004
    through 2010, which were disclosed to him on August 22, 2017, show that he is a
    shareholder, but that the Corporations tax returns for 2011 through 2016 show
    that he is no longer a shareholder. He also alleges that, some time after 2010,
    the De Boers converted, or caused the Corporation to convert, his shares.

[19]

The
    motion judge considered the 2018 Statement of Claim.

The Limitation Issue

[20]

The
    appellant asserts  both on this appeal and the motion below  that he only
    discovered his claim to an equity interest in the Corporation, and that his
    interest was converted by the respondents, when the Corporations tax filings
    for the 2004 to 2010 years were disclosed to him on August 22, 2017.
    Accordingly, he maintains that the shareholder based claims in the 2018
    Statement of Claim are not statute-barred.

[21]

The
    motion judge held that s. 16(1)(a) of the
Limitations Act
,
2002,
which
    provides that there is no limitation period in respect of a proceeding for a
    declaration if no consequential relief is sought, did not apply. In the motion
    judges view, the pith and substance of the claim is damages or a property
    interest in shares to compensate for the $500,000 advanced: at para. 6.
    Accordingly, the motion judge held that the applicable prescription was the
    general limitation period of two years after the cause of action is discovered
    or discoverable, pursuant to s. 4 of the
Limitations Act
,
2002
.
    The appellant does not challenge this finding.

[22]

The
    motion judge also found that the appellant discovered that his right to an
    interest in the Corporation, in any form, was disputed no later than later than
    April 8, 2014, when the appellant swore an affidavit in which he acknowledged
    the respondents admission that no shares had been issued to him: at para. 7.
    Since the appellant did not move until October 7, 2016 (more than two years
    after April 8, 2014) to amend his statement of claim to seek a declaration that
    he is or was a shareholder, and to seek consequential relief, his action was
    statute-barred.

[23]

Further,
    in the portion of his reasons addressing the issue of abuse of process, the
    motion judge held that it was
res judicata
that the cause of action
    with respect to the shares had been discovered by December 2, 2013, when
    Glithero J. dismissed the appellants earlier motion for leave to amend to seek
    relief as a shareholder under the oppression remedy: at para. 9.

[24]

On
    appeal, the appellant argues that the motion judge erred by considering the
    appellants own affidavit evidence in rejecting the appellants position that
    he did not discover his possible claim as a shareholder, within the meaning of
    s. 5 of the
Limitations Act
,
2002,
until the Corporations
    tax filings were produced to him in 2017.

[25]

We
    reject this argument. In any event, the motion judges finding was amply
    supported by more than the appellants affidavit evidence.

[26]

As
    the motion judge found, it is clear that the appellant had discovered that he
    had a possible claim as shareholder by December 2, 2013, when he brought his
    motion for leave to amend before Glithero J. to seek relief as a shareholder of
    the Corporation. Further, in his 2016 Statement of Claim, the appellant alleged,
    among other things, that: from 2003 to 2010 the Corporation had provided him
    with financial statements that did not disclose any indebtedness owing to him;
[1]
on November 5, 2010, Gary De Boer confirmed that the appellant had an equity
    interest in the Corporation; and, in 2016, the Corporations bankers had told
    him there was nothing in their files to indicate that he had any interest in
    the Corporation. Thus, based on the appellants own pleadings, he had
    discovered that he had a possible, but disputed, claim as a shareholder arising
    out of the non-payment of the $500,000 before August 22, 2017, when the
    Corporations tax filings were produced to him.

[27]

Given
    our conclusion that the motion judge correctly found that the proposed
    amendments raised causes of action that were statute-barred by s. 4 of the
Limitations
    Act
,
2002
, we need not address the motion judges finding that
    the appellants motion for leave to amend was an of abuse of process.

The Costs Order

[28]

As
    noted above, the appellant also seeks leave to appeal from the motion judges
    costs order.

[29]

Three
    motions were initially before the motion judge: (1) the appellants motion for
    leave to amend his statement of claim; (2) the Corporations motion to stay the
    action for non-payment of costs and/or for security for costs; and (3) the
    Corporations motion for summary judgment, dismissing the appellants action
    against it. The appellant paid the outstanding costs, and the Corporation
    accordingly did not proceed with the motion for security for costs.

[30]

Before
    the remaining motions were heard, the parties agreed that if the appellants
    motion for leave to amend were dismissed, his action would also be dismissed.
    Accordingly, having dismissed the motion for leave to amend, the motion judge
    dismissed the appellants action. The motion judge was left to address the
    issue of costs for the three motions, as well as the costs of the action.

[31]

The
    motion judge found that the appellant was unsuccessful and should pay the costs
    of the action and the three motions. He also concluded that the respondent was
    entitled to costs on a substantial indemnity scale, because the appellant had
    advanced unfounded allegations of fraud and attempted to bring claims that were
    obviously statute-barred. He noted that the respondents had made attempts to
    settle the case, even after the limitations period had expired. Further, he
    noted that the parties had appeared in court 12 times since this court upheld
    the order of Parayeski J. As a result, he concluded substantial indemnity costs
    were required to vindicate the integrity of the administration of justice. The
    motion judge considered the fact that money was advanced by the appellant and
    not repaid, but concluded that costs of $100,000 (less than the full amount
    claimed) were nonetheless appropriate.

[32]

On
    appeal, the appellant argues that the costs awarded were grossly excessive,
    particularly given that the money he advanced to the Corporation was not repaid.
    He also argues there is duplication across the respondents bills of costs for
    the various motions and for the action. He concedes that he had made
    allegations of fraud against the respondents,
[2]
and does
    not argue that the motion judge erred in principle in awarding costs on a
    substantial indemnity scale.

[33]

In
    exercising his discretion, the motion judge specifically considered that the
    money advanced by the appellant was not repaid. The motion judge also reduced
    the substantial indemnity costs the respondent sought by approximately 25%. In
    our view, that reduction must be attributable to, and is a reasonable reduction
    for, duplication of time across the various bills of costs that were before the
    motion judge. The appellant has not identified any error of principle or
    satisfied us that the costs award is plainly wrong. Accordingly, leave to
    appeal the costs order is denied.

Disposition

[34]

The
    appeal is dismissed and leave to appeal the costs order is denied.  The
    respondents shall be entitled to the costs of the appeal, fixed in the agreed
    amount of $12,000, inclusive of HST and disbursements.

Alexandra
    Hoy A.C.J.O.

K.
    Feldman J.A.

Grant
    Huscroft J.A.

[1]
Rather, the financial statements, at least for some years, showed the $500,000
    as forming part of shareholders equity.

[2]
In his 2018 Statement of Claim, the appellant acknowledges that, in addition to
    alleging fraud in his pleadings, he caused the De Boers to be criminally
    charged with fraud. The Crown subsequently dropped the charges.


COURT OF APPEAL FOR ONTARIO

CITATION: Wall v. Shaw, 2018 ONCA 929

DATE: 20181121

DOCKET: C65164

Doherty, Brown and Trotter JJ.A.

(sitting as Divisional Court)

BETWEEN

Elizabeth Wall

Applicant (Respondent)

and

Ian Paul Shaw, in his capacity as Estate Trustee
    of the Estate of Marjorie Ann Wall, and in his personal capacity

Respondent (Appellant)

Raymond G. Colautti and Susan Easterbrook, for the Appellant

Christopher Graham and Andrew Bala, for the Respondent

Heard: October 26, 2018

On appeal from the order of Justice Gregory M. Mulligan
    of the Superior Court of Justice, dated March 14, 2018, with reasons reported
    at 2018 ONSC 1735, 38 E.T.R. (4th) 38.

Brown J.A.:

I.

OVERVIEW

[1]

This appeal raises a narrow issue. It involves an application by an
    estate trustee to pass accounts, some of which pre-date the issuance of the
    application by more than two years. In response to this application, a
    beneficiary filed a notice of objection to accounts that included objections to
    the accounts pre-dating the issuance of the application by more than two years.
    After having applied to pass those accounts, can the estate trustee move to
    strike out the objections pertaining to them on the basis that they are barred
    by the basic two-year limitation period in s. 4 of the
Limitations Act,
    2002
, S.O. 2002, c. 24, Sched. B (the
Limitations Act
)?

[2]

I conclude that the estate trustee cannot. By filing a notice of
    objection to accounts in response to an estate trustees application to pass
    accounts, a beneficiary is not commencing a proceeding in respect of a claim
    within the meaning of s. 4 of the
Limitations Act
. I would dismiss the
    appeal.

II.

JURISDICTION

[3]

This appeal involves an order made in a passing of accounts proceeding
    under s. 49 of the
Estates Act
, R.S.O. 1990, c. E. 21. Section 10(1)
    of that Act provides that the appeal from the order of the motion judge lies to
    the Divisional Court, not to the Court of Appeal. However, this panel of the
    Court of Appeal has been authorized by the Chief Justice of the Superior Court
    of Justice to reconstitute itself as a panel of the Divisional Court to hear
    the appeal:
Courts of Justice Act
, R.S.O. 1990, c. C.43, ss. 13(2) and
    18(2). The parties had no objection to the panel so doing. Consequently, the
    panel heard the appeal as a panel of the Divisional Court.

III.

FACTS

A.

The will
    and the administration of the estate

[4]

The appellant, Ian Paul Shaw, a lawyer, acted as estate trustee of the
    estate of the late Marjorie Ann Wall from the date of her death, August 11,
    2005, until his resignation pursuant to the order of DiTomaso J. dated August
    4, 2016.

[5]

In her will, the deceased provided for two bequests. She directed her
    estate trustee to divide the residue into two equal shares to be held in trust
    for her daughter, the respondent, Elizabeth Ann Wall, and her son, Bruce Edgar
    (Ted) Wall. The motion judge described the trusts at para. 5 of his reasons:

[The deceased] left the bulk of her estate to her two children
    in trust, until they attained the age of 60 years.  The will further
    provided that the trustee had absolute discretion to pay funds to these two
    beneficiaries during their lifetime prior to reaching age 60.  At the time
    of Marjories death, both children were under the age of 60.  It is not
    disputed that the estate trustee paid certain sums to these two beneficiaries
    over the years.  The will further provided that if both these
    beneficiaries did not reach the age of 60 years, then the residue of the estate
    was to be divided among Marjories nieces and nephews (the contingent
    beneficiaries).  Bruce Edgar Wall passed away before reaching the age of
    60.  Elizabeth Wall is 54 and remains the sole vested beneficiary.
    If she reaches the age of 60, the discretionary trust will be collapsed and she
    will become the beneficiary of the entire estate.  If she passes away
    before the age of 60, the trust will be collapsed and the nieces and nephews
    will become the sole beneficiaries of the estate.

[6]

At the time of her death, the deceaseds estate had a value of
    approximately $3 million, which included some real estate assets.

[7]

Ted died in January 2014, before turning 60. Under the terms of the
    Will, the monies in trust for him were to be added to those in the trust for
    Ms. Wall.

[8]

In the years following his appointment as estate trustee, Mr. Shaw did
    not apply to pass his accounts. However, he met annually with Ms. Wall and in
    some years with both children. The parties disagree about what took place at
    those meetings. Mr. Shaw deposes that at each annual meeting the beneficiaries
    approved his administration of the estate, including the amount of compensation
    he was taking. Ms. Wall contends the meetings focused on the distributions of
    trust income made to the beneficiaries in the preceding year, not the larger
    administration of the estate or Mr. Shaws compensation.

B.

The
    history of the passing of accounts litigation

[9]

Disputes eventually arose between Mr. Shaw and Ms. Wall about the
    compensation Mr. Shaw was taking as estate trustee.

[10]

In
    October 2014, Ms. Wall issued a notice of application seeking an order
    directing Mr. Shaw to bring an application to pass his accounts for the entire
    period of time since her mothers death in 2005.

[11]

Mr.
    Shaw consented to Pattillo J.s January 15, 2015 order directing him to bring
    an application to pass his accounts for the period from the date of death until
    December 31, 2013. He issued a notice of application to pass accounts on March
    31, 2015, for the period from August 11, 2005, until December 31, 2013.

[12]

Several
    beneficiaries filed notices of objection to the accounts pursuant to r.
    74.18(7) of the
Rules of Civil Procedure
. Ms. Wall filed a June 2,
    2015 notice detailing numerous objections to the accounts. In January 2016, two
    nieces of the deceased, who would benefit under the will in the event Ms. Wall
    died prior to reaching the age of 60, also filed notices of objection to the
    accounts.

[13]

In
    January 2016, Mr. Shaw moved to strike out Ms. Walls notice of objection. This
    elicited a motion from Ms. Wall to remove him as estate trustee.

[14]

By
    order dated February 16, 2016, Eberhard J. adjourned both motions
sine die
and sanctioned a procedure agreed to by the parties to prepare for a contested
    passing of accounts hearing, anticipated to be held towards the end of 2016.

[15]

An
    August 4, 2016, consent order by DiTomaso J. then: (i) replaced Mr. Shaw with
    an institutional estate trustee; (ii) further adjourned Mr. Shaws motion to
    strike
sine die
; (iii) gave directions regarding further steps in the
    passing of accounts application; (iv) directed the parties to attend a
    mediation; and (v) ordered that in the event the parties did not reach a
    mediated settlement, the passing of accounts hearing should be scheduled for
    the earliest date after April 30, 2017.

[16]

No
    settlement was reached. Nor was a hearing held as directed because the estate
    trustee sought a hearing of his motion to strike Ms. Walls notice of objection.

C.

The motion
    to strike

[17]

Mr.
    Shaw sought to strike out Ms. Walls notice of objection in respect of his
    accounts for the period 2005 to 2012 on three grounds: (i) Ms. Walls approval of
    the accounts at the annual meetings amounted to acquiescence; (ii) her claim
    was barred by laches; and (iii) her objections were time-barred by ss. 4 and 5 of
    the
Limitations Act
. He did not seek to strike the nieces two notices
    of objection. The motion judge held, at para. 33, that he was not satisfied the
    doctrine of laches applied or that the annual meetings and initialing of the
    statements by Ms. Wall amounted to acquiescence. Mr. Shaw does not appeal those
    findings.
[1]

[18]

Before
    the motion judge, Mr. Shaw framed his argument based on the
Limitations Act
in the following manner:

Mr. Shaw does not dispute that he is required to pass accounts
    for the period from the date of death in 2005 until the date of his removal in
    2016.  What he does object to is a requirement to address the Objection to
    Accounts which were not filed until June 2, 2015.  He submits that by reason of
    the
Limitations Act, 2002
he is not required to address any
    objection to accounts for the period from the date of death until December 31,
    2012.

[19]

The
    motion judge did not accept that submission. He held, at para. 31:

Based on the facts in [
Armitage v. The Salvation Army
,
    2016 ONCA 971, 406 D.L.R. (4th) 563], Hourigan J.A. found that the passing of
    accounts does not fit within the definition of a claim within the
Limitations
    Act,
2002.  In my view, if the passing of accounts does not constitute a
    claim, I am not satisfied that a Notice of Objection is a claim.

[20]

Mr.
    Shaw appeals.

IV.

ISSUE

[21]

Mr.
    Shaw advances a single ground of appeal: the motion judge erred by refusing to
    apply the two-year basic limitation period in s. 4 of the
Limitations Act
to bar Ms. Walls notice of objection in respect of the accounts for the period
    August 11, 2005 to December 31, 2012. Mr. Shaw submits that Ms. Wall seeks to assert
    claims against him because she is seeking a remedy in the passing of
    accounts proceeding  i.e. a reduction in his compensation from the estate.

[22]

As
    I will explain, I do not accept Mr. Shaws submission. I will begin by considering
    the legislative provisions governing an estate trustees application to pass
    accounts. I will then consider the application of the
Limitations Act
to
    those provisions, first as a matter of statutory interpretation and then as a
    matter of policy.

V.

THE LEGISLATIVE FRAMEWORK FOR APPLICATIONS TO PASS ACCOUNTS

[23]

As
    noted in Ian M. Hull & Suzana Popovic-Montag,
Macdonell, Sheard and
    Hull on Probate Practice,
5th ed. (Toronto: Thomson Reuters, 2016)
    (hereafter
Probate Practice
), at p. 505:

It is the duty of all estate trustees, executors,
    administrators and guardians of property (as well as all trustees) to keep
    proper books of account and to be ready at all times to account for the trust
    property that they are bound to administer. However, in Ontario, there is no
    statutory requirement to pass accounts, and estate trustees, etc., may choose
    not to pass their accounts unless compelled to do so by the court at the
    instance of or on behalf of a person with an interest.

See also: Brian A. Schnurr,
Estate Litigation
,
    loose-leaf (2018-Rel. 6),

2nd ed. (Toronto: Thomson Reuters, 1994), at
    ch. 5.2;
Estates Act
, s. 50(1).
[2]

[24]

Section
    49(2) of the
Estates Act
empowers a judge on a passing of accounts by
    an estate trustee, to enter into and make full inquiry and accounting of and
    concerning the whole property that the deceased was possessed of or entitled
    to, and its administration and disbursement. Sections 49(3) and (4) further
    describe the procedure and judges powers on an estate trustees passing of
    accounts:

(3) The judge, on passing any accounts under this
    section, has
power to inquire into any complaint
    or claim by any person interested in the taking of the accounts of misconduct,
    neglect, or default on the part of the executor, administrator or trustee
    occasioning financial loss to the estate or trust fund,
and the judge, on proof of such claim,
may order the
    executor, administrator or trustee, to pay such sum by way of damages or
    otherwise
as the judge considers proper and just to the
    estate or trust fund, but any order made under this subsection is subject to
    appeal.

(4)
The judge may
    order the trial of an issue of any complaint or claim under subsection (3)
, and in such case the judge shall make all necessary directions as to
    pleadings, production of documents, discovery and otherwise in connection with
    the issue. [emphasis added]

[25]

The
Rules of Civil Procedure
contain detailed
    rules governing the minimum informational requirements for accounts filed with
    the court by an estate trustee (r. 74.17) and the procedure that a passing of
    accounts application must follow (r. 74.18). Several features of r. 74.18 are relevant
    to the issue on this appeal:

·

The estate trustee brings the application to pass
    accounts (r. 74.18(1)) using a prescribed notice of application, which advises that
    any person with a financial interest in the estate may object to the accounts
    by serving a notice of objection and states that at the hearing of the
    application the only issues upon which the court adjudicates are those raised
    in the notices of objection to accounts: r. 74.18(2);

·

A person with a contingent or vested interest in the
    estate may file a notice of objection to accounts (r. 74.18(7)), using a
    prescribed form, which must specify the grounds for any objection to the
    accounts or the amount of compensation claimed by the estate trustee;

·

Where a notice of objection is filed and not
    withdrawn, the application proceeds as a contested passing of accounts
    requiring a hearing under rr. 74.18(11.5) through (13.2) and the application
    judge may order that the entire application or any issue proceed to trial: r.
    74.18(13.1);

·

Where no notice of objection is filed, the estate
    trustee may seek judgment on the passing of accounts without a hearing: r.
    74.18(8.5) and (9);

and

·

The forms of judgment prescribed by r. 74.18(14)
    (Forms 74.50 and 74.51): (i) declare the estate accounts passed; (ii) declare
    the capital and revenue receipts and disbursements of the applicant estate
    trustee; (iii) order the fair and reasonable compensation to be paid to the
    estate trustee out of the estates assets; and (iv) deal with the costs of the
    application.

VI.

ANALYSIS

[26]

The
    applicability of the
Limitations Act
to a notice of objection served in
    response to a passing of accounts application under the Ontario
Estates Act
and the
Rules of Civil Procedure
is a novel question. The appellant
    contends that this question is answered by the Alberta Court of Appeals
    decision in
Saraceni v. Saraceni
, 2013 ABCA 354, 561 A.R. 187, which
    established that limitations statutes apply to statutes governing estate
    administration in the absence of an express statutory exclusion.

[27]

Saraceni
is distinguishable from this case, in regard to the statutes it
    interpreted and the circumstances in which it applied them. First, s. 38 of the
    Alberta
Administration of Estates Act,
R.S.A. 2000, c. A-2, specifically
    contemplated the application of the Alberta
Limitations Act
, RSA 2000,
    c. L-12, to estate proceedings. Second, the language in s. 3(1) of the Alberta
Limitations
    Act
differs markedly from that in s. 4 of the
Limitations Act
. It
    grants a defendant immunity from liability if the claimant does not seek a
    remedial order within two years. By contrast, the Ontario statute bars the
    commencement of a proceeding in respect of a claim after the expiry of the
    basic limitation period. Finally,
Saraceni
concerned a notice of
    objection to a grant of probate, not a passing of accounts, which was brought
    eight years after the estate had been administered.

[28]

The
    issue raised by the appellant therefore must be resolved by applying the wording
    of s. 4 of the Ontario
Limitations Act
to the regime for the passing
    of an estate trustees accounts established by ss. 49 and 50 of the
Estates
    Act
and rr. 74.17 and 74.18 of the
Rules of Civil Procedure.
Section
    4 of the
Limitations Act
only applies to a (i) proceeding commenced (ii)
    in respect of a claim.

A.

Does a
    Notice of Objection to Accounts commence a proceeding within the meaning of s.
    4 of the
Limitations Act
?

[29]

Section
    4 of the
Limitations Act
states:
Unless this Act
    provides otherwise,
a proceeding shall not be
    commenced
in respect of a claim after the second
    anniversary of the day on which the claim was discovered (emphasis added). A
    notice of objection to accounts does not commence a proceeding.

[30]

Section 49 of the
Estates Act
and
rr.
    74.17 and 74.18 of the
Rules of Civil Procedure
create a passing of
    accounts procedure in which the estate trustee, not a beneficiary, is the
    applicant who commences the proceeding. Section 4 of the
Limitations Act
does not limit the ability of a person to respond to or participate in a
    proceeding commenced by another. That is what happens when a beneficiary files
    a notice of objection to accounts. She responds to a proceeding already
    initiated by the estate trustee.

[31]

Mr.
    Shaw submits that although a beneficiary may respond to an existing proceeding by
    her notice of objection, that response is essentially a counterclaim and
    therefore commences a proceeding. Furrow and Zacks advance a variant of this
    argument in their article, The Limitation of Applications to Pass Accounts. In
    their view, [i]ssuing a notice of application commenced the proceeding on some
    earlier date; filing the notice of objection commenced the proceeding
in
    respect of a claim
: at p. 248.

[32]

I
    am not persuaded by this argument, which founders on the language of s. 1.03 of
    the
Rules of Civil Procedure
. As the
Limitations Act
does not
    define the term proceeding, this court usually takes guidance from the
    definitions found in the
Rules of Civil Procedure
:
Giglio v.
    Peters
, 2009 ONCA 681, 99 O.R. (3d) 129, at para. 21. It is significant
    that the definitions of proceeding, and its constituent terms action and
    application in r. 1.03 of the
Rules of Civil Procedure,
do not
    include a r. 74.18(7) notice of objection. By contrast, a counterclaim falls
    within the definition of an action in r. 1.03 and, thus, within the
    definition of proceeding. Nor does a notice of objection fall within the
    definition of originating process, the document whose issuance commences a
    proceeding.

B.

Is a Notice
    of Objection to Accounts a claim within the meaning of s. 4 of the
Limitations
    Act
?

[33]

As
    a notice of objection does not commence a proceeding within the meaning of s. 4
    of the
Limitations Act,
strictly speaking it is not necessary to
    determine whether a notice of objection is a claim to which s. 4 would
    otherwise apply. However, because Mr. Shaw takes issue with the motion judges
    application of this courts decision in
Armitage
to resolve that
    question, I will address it briefly.

[34]

Section
    4 of the
Limitations Act
bars the commencement of a proceeding
in
    respect of a claim
after the second anniversary of the day on which the
    claim was discovered. Section 1 of that Act defines claim to mean a claim to
    remedy an injury, loss or damage that occurred as a result of an act or
    omission.

Application of
Armitage

[35]

In
Armitage,
this court held that an application by an attorney for
    property to pass accounts under the
Substitute Decisions Act
, 1
992
,
    S.O. 1992, c. 30 (the
SDA
) was not a claim within the meaning of
    the
Limitations Act
. Writing for the court, Hourigan J.A. stated, at
    paras. 27 and 29:

The fact is that in seeking court approval of the passing of
    accounts, an attorney for property is not seeking redress for any loss, injury,
    or damage. Rather, he or she is seeking approval from the court of his or her
    actions in managing the property, including approval for compensation
    previously taken or now sought. A passing of accounts application is the
    opposite of remedial; it is a process that seeks a court order that no remedy
    is necessary with respect to the accounts: see Furrow and Zacks, at pp. 9-10.
    Thus, the passing of accounts does not fit within the first part of the
Limitations Act, 2002
definition
    of claim.

[36]

Drawing
    on
Armitage
, the motion judge reasoned that if an estate trustees
    application to pass accounts is not a claim within the meaning of the
Limitations
    Act
, then neither is a beneficiarys notice of objection filed in response
    to that application. That is because in a notice of objection the beneficiary
    is seeking answers to questions about steps taken by the estate trustee during
    the currency of an administration of an estate: at para. 31. If the objections
    are accepted by the court, no additional funds would be payable immediately to
    Elizabeth as beneficiary of the discretionary trust. However, [t]he corpus of
    the estate would be enlarged  [which] ultimately, could increase the amount
    available to be paid to Elizabeth, but only if she survives to age 60: at para.
    32.

[37]

There
    is force to the argument that if the estate trustees initial application to
    pass accounts is not a claim within the meaning of the
Limitations Act
,
    then neither is a responding objection made by the beneficiary within that
    proceeding.

[38]

Mr.
    Shaw points to a footnote in
Armitage
to resist the force of that
    argument. Having found that a passing of accounts under the
SDA
is not
    subject to the basic two-year limitation period in the
Limitations Act
,
    the court added in a footnote:

I do not mean to categorically provide that the
Limitations Act, 2002
has
    no applicability to the passing of accounts process under the SDA. In
    particular,
it may be that the filing by a beneficiary of
    a notice of objection after an attorney has sought a passing of accounts is a
    claim within the meaning of the
Limitations Act, 2002
.
However, I
    leave this determination to another case where it arises directly on the facts.
    [emphasis added.]

[39]

Mr.
    Shaw submits this footnote established that a notice of objection to accounts
    filed by a beneficiary is subject to the
Limitations Act
if the
    factual circumstances allow it to meet the definition of claim within that
    Act.

[40]

I
    do not read
Armitage
in that way. The footnote is
obiter
,
    doing nothing more than leaving to another case the issue of whether a notice
    of objection could constitute a claim. It does not resolve the matter, nor
    does it detract from the logic of the motion judges reasoning.

The Effect of Pre-Taking of Compensation

[41]

Mr.
    Shaw further contends that because the notice of objection seeks a reduction of
    compensation that he pre-took as estate trustee, which could result in an order
    that he pay money back to the estate, Ms. Wall is seeking to remedy an injury,
    loss or damage that occurred as a result of [his] act or omission. He submits that
    if he had not pre-taken compensation, Ms. Walls notice of objection might not
    be a claim because he would not have to repay any money.

[42]

I
    am not persuaded by this argument.

[43]

Pre-taking
    of compensation refers to an estate trustee taking compensation out of estate
    assets prior to passing his accounts. The general rule is that an estate
    trustee may pre-take compensation only (i) upon agreement of all persons with a
    vested or contingent interest (if they are
sui juris
), (ii) where
    approved by the court, or (iii) where the will so provides:
Probate
    Practice
, at p. 568.

[44]

Although
    the practice of pre-taking compensation is common, an estate trustee that does
    so outside of those three circumstances risks liability for breach of trust:
Probate
    Practice
, at pp. 568-571;
Re Knoch
(1982), 12 E.T.R. 162 (Ont.
    Surr. Ct.), at p. 174. On a passing of accounts, the estate trustee risks court
    approval of a reduced amount of compensation and an order requiring repayment
    of the difference to the estate:
Probate Practice
, at p. 569;
Re
    Pilo Estate
, [1998] O.J. No. 4521 (Ont. Ct. J. (Gen. Div.)), at paras. 56-57.

[45]

Whether
    a notice of objection to accounts constitutes a claim should not depend on
    the pre-taking of compensation. A notice of objection serves the same
    procedural function whether or not compensation has been pre-taken  it
    notifies the judge inquiring into the accounts of objections for which the
    estate trustee must provide explanations. The effect of a court accepting an
    objection to the estate trustees compensation is also the same in both
    circumstances  a reduction in the estate trustees approved compensation
    payable by the estate.

C.

The
    Passing of Accounts Regime

[46]

In
    addition to the language of the
Limitations Act,
the
Estates Act
and the
Rules of Civil Procedure
,
the policy and
    practical implications of subjecting a notice of objection to accounts to the
    basic two-year limitation period in the
Limitations Act

also weigh against accepting the position advanced by Mr. Shaw.

The nature of a passing of accounts application

[47]

As
    this court noted in
Armitage
, an application to pass accounts does not
    possess the remedial characteristics typically associated with a civil
lis
between two parties.
Although s. 49(3) of the
Estates
    Act

refers to the judges power to inquire into any
    complaint or claim of a person interested in the passing of accounts, it also highlights
    a key difference between a passing of accounts application and the typical civil
    proceeding: a passing of accounts initiates a judicial inquiry into the
    affairs of an estate. A conventional civil claim, if successful, results in
    judgment in favour of the claimant. By contrast, after inquiring into a notice
    of objection on a contested passing of accounts, a judge
may order the
    executor  to pay such sum by way of damages or otherwise
to the estate
, but the form of judgment
    prescribed by r. 74.18(14) does not provide for any personal remedy in favour
    of an objecting beneficiary:
Estates Act,
s. 49(3).

Maintaining the balance of power between estate trustee and beneficiary

[48]

Finally,
    interpreting s. 4 of the
Limitations Act
as capturing r. 74.18(7)
    notices of objection to accounts would risk insulating an estate trustees
    management of an estate from effective scrutiny. As mentioned, no Ontario law
    imposes an obligation on an estate trustee to pass accounts at fixed periods of
    time.
Armitage
holds that an application to pass accounts does not
    fall within s. 4 of the
Limitations Act
. As a result, an estate trustee
    can apply to pass accounts that pre-date the issuance of the application by
    more than two years.

[49]

If
    a beneficiary was precluded by s. 4 of the
Limitations Act
from
    objecting to those accounts, an estate trustee who wished to avoid scrutiny would
    have a perverse incentive to simply wait out the two-year limitation period
    knowing that the beneficiarys objections would be statute-barred. The longer
    the estate trustee waited to pass accounts, the greater the period of his
    management of the estate he could remove from a contested hearing. While a
    court possesses the power to inquire into accounts in the absence of a notice
    of objection, as a practical matter the court relies on beneficiaries
    objections to direct its inquiry.

[50]

Such
    an uneven application of the
Limitations Act
would place many
    beneficiaries in the difficult position of having to rebut the presumption in
    s. 5(2) of the
Limitations Act
that they first knew of their claim
    against the estate trustee on the day the act or omission of the estate trustee
     a questioned disbursement or taking of compensation - took place. To avoid
    such a result, beneficiaries would be forced to bring annual applications to
    compel estate trustees to pass accounts, unnecessarily increasing the amount of
    estate litigation in this province.

D.

Conclusion

[51]

I
    conclude that the filing of a r. 74.18(7) notice of objection to accounts in
    response to an application to pass accounts initiated by an estate trustee is
    not captured by s. 4 of the
Limitations Act
. Accordingly, the motion
    judge did not err in dismissing Mr. Shaws motion to strike Ms. Walls notice
    of objection.

VII.

DISPOSITION AND COSTS

[52]

For
    the reasons set out above, I would dismiss the appeal.

[53]

The
    parties agree that they will return before the motion judge to fix the costs of
    the motion. As to the costs of the appeal, the parties agree that in the event
    the appeal is dismissed, Ms. Wall is entitled to costs in the amount of
    $10,000.00, inclusive of applicable taxes and disbursements. They disagree about
    who should pay those costs. Mr. Shaw submits that they should be paid by the
    estate; Ms. Wall argues that they should be the personal responsibility of Mr.
    Shaw.

[54]

In
    my view, Mr. Shaw should be personally responsible for the costs. In bringing a
    motion to strike out the notice of objections he acted unreasonably and in his
    own self-interest. In those circumstances, he is not entitled to
    indemnification by the estate:
Brown v. Rigsby
, 2016 ONCA 521, 350
    O.A.C. 236, at para. 14.

[55]

I
    conclude that Mr. Shaw acted unreasonably for the following reasons. The
Rules
    of Civil Procedure
direct that an estate trustee who seeks to pass his
    accounts must use the summary form of civil proceeding  an application. Rule
    74.18 creates a summary process where, in the event a notice of objection
    necessitates a contested passing of accounts hearing, the application judge can
    give directions for the process to adjudicate the contested issues: r.
    74.18(13.1). Where on-going case management is available, those directions
    often are made by the case management judge:
Re Vano
(2009), 54 E.T.R.
    (3d) 280 (Ont. S.C.).

[56]

Rule
    74.18 was not designed for the summary passing of accounts process to become
    bogged down by time-consuming and cost-imposing pre-hearing motions.
    Appropriate directions for any necessary pre-hearing steps can be obtained from
    the application judge or case management judge in accordance with r.
    74.18(13.1).

[57]

I
    regard Mr. Shaws motion to strike out Ms. Walls notice of objection as
    substantially akin to a motion for partial summary judgment. He sought to
    eliminate the only detailed notice of objection to his accounts by obtaining,
    prior to the hearing, a final evidence-based determination that Ms. Walls
    notice of objection had no effect because of acquiescence, laches or
    prescription. Had he succeeded, he would have cleared the way to seek an
    uncontested judgment on accounts.

[58]

This
    court has held that motions for summary judgment are not available in
    proceedings commenced by way of a notice of application, in the absence of an
    order that converts the application into an action:
Maurice v. Alles
,
    2016 ONCA 287, 130 O.R. (3d) 452, at paras. 32 and 33. Layering a summary
    judgment type motion on top of a summary application generally does nothing
    more than increase costs and delay the final adjudication of the dispute on the
    merits.

[59]

That
    is what has happened in the present case. The order of February 16, 2016,
    directed the parties to follow an agreed-upon process to prepare for the
    passing of accounts hearing, which they were to schedule on the first
    available date after October 31, 2016. That hearing did not take place.

[60]

In
    his consent order for directions dated August 4, 2016, DiTomaso J. ordered that
    the passing of accounts trial be scheduled on the earliest available date
    after April 30, 2017. That did not occur.

[61]

Instead,
    a hearing on the merits was deferred until the motion to strike was argued in
    early 2018. Then this appeal was argued in October 2018. So, here the
    litigation stands, some two years after the hearing on the merits should have
    been held, mired in an unreasonable summary judgment-type motion by the estate
    trustee. That kind of litigation delay by an estate trustee who has been
    ordered to account for his administration of the estate is unacceptable.

[62]

I
    would order that Mr. Shaw pay Ms. Wall costs of the appeal in the amount of
    $10,000, inclusive of disbursements and applicable taxes.

Released: DD Nov 21 2018

David Brown J.A.
I agree. Doherty J.A.
I agree. G.T. Trotter J.A.

[1]
For a description of the doctrines of latches and acquiescence, see Matthew
    Furrow & Daniel Zacks, The Limitation of Applications to Pass Accounts
    (2016) 46 Adv. Q. 230 at 241.

[2]

Estates Act
, s.
50
(1) An executor or
    an administrator shall not be required by any court to render an account of the
    property of the deceased, otherwise than by an inventory thereof, unless at the
    instance or on behalf of some person interested in such property or of a
    creditor of the deceased, nor is an executor or administrator otherwise
    compellable to account before any judge.