COURT OF APPEAL FOR ONTARIO

CITATION: Wittington Properties Limited v. Goodlife Fitness
    Centres Inc.,

2018 ONCA 52

DATE: 20180123

DOCKET: C63842

Simmons, Roberts and Nordheimer JJ.A.

BETWEEN

Wittington Properties Limited

Applicant
(Respondent on the appeal)

and

Goodlife Fitness Centres Inc.

Respondent
(Appellant)

John K. Downing and Brian Whitwham, for the appellant

Wolfgang Kaufmann and Daniel Waldman, for the respondent

Heard:  January 16, 2018

On appeal from the judgment of Justice Andra Pollak of
    the Superior Court of Justice sitting without a jury, dated May 2, 2017.

REASONS FOR DECISION

[1]

The appellant appeals from the
    judgment declaring that it does not have the right to extend its commercial
    lease with the respondent, and has lost its entitlement to exercise the option
    to extend the lease for an additional five years
.

[2]

At the hearing, we dismissed the appeal with reasons to follow. These
    are those reasons.

[3]

For many years, the appellant
    has leased premises from the respondent for the operation of a fitness club
    called the St. Clair Club. Under the provisions of the lease as set out in a
    lease amending and extension agreement, the appellant was entitled to extend
    the lease for an additional five years, provided the appellant was not in
    default of the Lease and has not regularly been in default during the Extended
    Term beyond any applicable cure periods.

[4]

The application judge
    determined that the appellant had breached the lease as follows:

i.

the appellants
    operation of its club at Park Road breached the geographic restrictions of the
    non-compete clause of the lease; and

ii.

the appellant had not
    calculated and reported its gross revenue to the respondent, which formed the
    basis for the calculation of its percentage rental payments under the lease, in
    accordance with the lease provisions.

[5]

The application judge also
    found that the appellant had been given ample notice to cure its defaults under
    the lease, but had not done so. Specifically, the respondent had advised the
    appellant of the defaults in issue by letter dated December 29, 2014, but the
    appellant did not change its calculation or manner of reporting gross revenue
    to the respondent and maintained the Park Road Club within the prohibited
    radius.

[6]

The appellant submits that the
    application judge made overriding and palpable errors in her interpretation of
    the meaning of the non-compete provisions of the lease. In particular, the
    appellant argues that the application judge erred in failing to find that the
    geographic restrictions did not apply to the Park Road Club because, first, it
    was a regular and not a premier club; and, second, it fronted onto Bloor
    Street and therefore met the exemption provided for in the non-compete clause.

[7]

We reject these submissions. The
    application judges conclusions about the breach caused by the operation of the
    Park Road Club were open to her based on her interpretation of the lease and the
    other evidence before her. The appellants submissions that all of its clubs
    are regular clubs run contrary to the requirement under the lease that the
    St. Clair Club be operated as a premier club and to its concession that the Park
    Road Club is comparable to the St. Clair Club. Further, the application judges
    determination that the Park Road Club did not front onto Bloor Street was
    reasonable and founded on the uncontested evidence that there was no signage or
    other evidence of the appellants presence on Bloor Street and that the only
    sign for the Park Road Club is above the direct entrance to the club, on Park
    Road that is also the clubs municipal address.  There is no basis to interfere
    with these conclusions.

[8]

The appellant submits that the
    application judge erred in determining that the admitted failure to accurately report
    gross revenue in accordance with the calculation required in the lease
    constituted a breach of the lease. Again, there is no basis to interfere with
    the application judges determination that is firmly rooted in the evidence.

[9]

This evidence included the report
    of the accountant retained by the respondent under the audit provisions of the
    lease and the admissions made by the appellants Vice President of Accounting. Specifically,
    the appellant had used an internal accounting method of designating gross
    revenue to its members home clubs, and in certain instances, the appellant had
    submitted net as opposed to gross figures as required under the lease. While
    this calculation of the appellants gross revenue followed generally accepted
    accounting principles, its manner of reporting was not in accordance with the
    lease provisions, which required the reporting of all gross income originating
    from the St. Clair Club.  These conclusions were open to the application judge
    and, absent palpable and overriding error, should not be interfered with. We
    see no error here.

[10]

The appellant submits that the application
    judge erred in failing to find that the doctrine of promissory estoppel and
    waiver applied in this case. Specifically, the appellant argues that
    respondents failure to make any objection during the appellants long history
    of submitting its reports of gross revenue and payment of rent, and its open
    and notorious operation of the Park Road Club, precludes the respondent from
    relying on the breaches in issue.

[11]

We do not accept these submissions.

[12]

In this case, the applicability of the
    doctrines of promissory estoppel and waiver depended on proof by the appellant
    of a course of conduct over an extended period that showed an intention by the
    respondent not to rely on the strict terms of the lease with respect to the reporting
    requirements and geographic non-compete prohibition:
Med-Chem Health
    Care Inc.
,
Re
, 2000 CarswellOnt 3820, at para. 10. As
    the application judge correctly concluded, there was no evidence to support the
    appellants waiver argument. In particular, there is no evidence that the
    respondent knew about the problems with the appellants manner of calculating
    and reporting its gross revenue before receipt of its accountants report, nor
    that it was aware that the appellant was operating a club in contravention of
    the geographic non-compete provisions of the lease. The same considerations
    apply to the promissory estoppel argument.

[13]

Finally, the appellant argues that the
    application judge erred in failing to grant it relief from forfeiture of its
    option to extend the lease because any breaches were technical in nature. We
    disagree.

[14]

Relief from forfeiture is a highly discretionary,
    fact-specific remedy. We see no error in the application judges application of
    the relevant legal test to the evidence before her. Specifically, the evidence
    did not satisfy a necessary condition for relief from forfeiture, namely,
    evidence that the tenant has made diligent efforts to comply with the terms of
    the lease which are unavailing through no default of his or her own: see
1383421
    Ontario Inc. v. Ole Miss Place Inc
. (2003), 67 O.R. (3d) 161 (C.A.), at para. 80.

[15]

The appellants continuing failure to cure
    its defaults in the more than two years following notice of them was
    intentional. Most notably, first, the appellant purported to cure its reporting
    default by proffering a cheque to the respondent at the hearing of the
    application; however, the amount proffered was not calculated in accordance
    with the lease. Further, there was no offer or undertaking to close the Park
    Road Club. As the application judge noted, the onus was on the appellant to
    prove that its ongoing breaches of fundamental terms of the lease were technical
    and immaterial. It failed to do so.

[16]

There is no basis to interfere with the
    application judges discretionary decision not to grant the appellant relief
    from forfeiture.

[17]

Accordingly, the appeal is dismissed.

[18]

As agreed, the respondent is entitled to
    its partial indemnity costs in the amount of $29,500, inclusive of
    disbursements and applicable taxes.

Janet Simons J.A

L.B. Roberts J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Wong v. Canada (Attorney General), 2018 ONCA 68

DATE: 20180125

DOCKET: C63325, C62584

Doherty, LaForme and Paciocco JJ.A.

BETWEEN

Anthony Wong

Appellant

and

The Attorney General of Canada

Respondent

Ian B. Kasper, for the appellant

Sanam Goudarzi and Korinda McLaine, for the respondent

Heard:  January 15, 2018

On appeal from the order of Justice Tranmer of the Superior
    Court of Justice, dated September 15, 2016, dismissing an application for
habeas
    corpus
.

REASONS FOR DECISION

[1]

The parties agree that this appeal is moot. The appellant submits that
    the court should exercise its discretion and hear the appeal on the merits.

[2]

The appellant was serving a lengthy sentence for manslaughter. In June
    2015, he was reclassified as a maximum security offender. He had previously
    been classified as medium security. In October 2015, he was ordered transferred
    to a different penitentiary outside of Ontario. The appellant challenged both
    decisions by way of
habeas corpus
.

[3]

The
habeas corpus
application was dismissed in September 2016. The appellant appealed.

[4]

The appellant was transferred back to medium security in May 2017 while
    this appeal was pending. He did not challenge that decision. He was released on
    parole in the fall of 2017, again while this appeal was pending.

[5]

The appellant has no remaining legal interest, direct or indirect, in
    these proceedings.

[6]

In urging the court to hear the appeal, despite its mootness, counsel
    raises two issues. The first relates to the scope of the disclosure obligation
    placed on the correctional authorities by s. 27(1) of the
Corrections and
    Conditional Release Act
, S.C. 1992, c. 20. The second relates to the
    operation of the exception to the disclosure obligation set out in s. 27(3) of
    the same Act.

[7]

Both provisions were examined by the Supreme Court of Canada in
Mission
    Institution v. Khela
, 2014 SCC 24. It is clear from the record in this
    case that
Khela
led the correctional authorities to significantly
    alter their approach to the requirements of s. 27. Counsel for the appellant
    submits that this case, and the companion case of
Earhart v. The Attorney
    General of Canada
(C62584) afford this court the opportunity to confirm what
    the appellant submits are the clear statements in
Khela
. He argues
    that the submissions of the respondent in this case suggest that
Khela
has been misunderstood. Alternatively, counsel submits that if
Khela
is unclear, this case and its companion case afford an excellent opportunity
    for this court to build on and explain
Khela
.

[8]

There is merit to the appellants submissions. He also correctly
    notes that the case law in this area demonstrates that the status of prisoners
    often changes before the prisoner is able to fully pursue his
habeas corpus
rights. The difficulty in effecting timely review
    supports the argument that the court should hear the appeal even though it is
    moot.

[9]

In this case, however, the issues which the appellant now seeks to raise
    were not raised before the application judge. The applicants material and his
    written argument before the application judge say virtually nothing about
    either issue. The proper application of s. 27(3) and, in particularly, the
    practice of filing sealed affidavits to demonstrate compliance with s. 27(3)
    was mentioned, but only peripherally in argument before the application judge.
    Consequently, not only does the appellant ask the court to hear a moot appeal,
    he asks the court to entertain arguments that were not raised in the record or proceeding
    giving rise to the order under appeal.

[10]

In
    the course of oral submissions, the court heard arguments on the merits. Those
    arguments left us convinced that any attempt to go beyond the legal guideposts
    in
Khela
, absent a proper record and factual foundation, would at best
    provide limited assistance, and at worst set the law off in the wrong
    direction. We are not persuaded that we should exercise our discretion in
    favour of hearing this appeal, despite its mootness.

[11]

The
    appeal is dismissed as moot.

Doherty J.A.

H.S. LaForme J.A.

David M. Paciocco
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: York (Regional Municipality) v. Tomovski, 2018 ONCA
    57

DATE: 20180124

DOCKET: M48650

Juriansz J.A. (In Chambers)

BETWEEN

The Regional Municipality of York

Moving Party

and

Steve Tomovski

Responding
    Party

and

The Attorney
    General for Ontario

Intervener

Chris G. Bendick, for the moving party

Robert Tomovski, for the responding party

Luke Schwalm, for the intervener

Heard: January 17, 2018

On a motion for leave to appeal the
    judgment of Justice John McInnes of the Ontario Court of Justice, dated
    November 21, 2017, with reasons for judgment reported at 2017 ONCJ 785.

REASONS FOR
    DECISION

[1]

The Attorney General for Ontarios application for intervener status on
    this motion is granted.

[2]

The moving party (York), supported by the Attorney General, seeks leave to
    appeal a judgment in its favour. This unusual circumstance creates a
    significant procedural issue and arises because of the following history.

[3]

The responding party, Mr. Tomovski, was charged with speeding  142
    km/hr in a 100 km/hr zone  on December 30, 2014 contrary to s. 128 of the

Highway
    Traffic Act
, R.S.O. 1990, c. H.8. The police officer laid a charge
    pursuant to Part I of the
Provincial Offences Act
, R.S.O. 1990, c.
    P.33 (
POA
). The responding party decided to contest the charge and
    filed a notice of intention to appear on January 9, 2015. The trial date was
    originally scheduled for May 22, 2015.

[4]

The trial date was adjourned multiple times due to certain disclosure
    requests and the failure to provide notice of a s. 11(b)
Canadian Charter
    of Rights and Freedoms

application to the Attorneys General for
    Canada and Ontario under s. 109 of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43.

[5]

The s. 11(b)
Charter
application was finally heard on February
    10, 2016. The Justice of the Peace hearing the application released his
    decision on June 21, 2016. The Justice of the Peace applied the analytical
    framework from
R. v. Morin
, [1992] 1 S.C.R. 771, held that the delay
    breached s. 11(b), and stayed the proceedings.

[6]

York appealed the stay of proceedings pursuant to s. 135 of the
POA
.
    When the matter came before the provincial court appeal judge on February 17,
    2017, the Supreme Court of Canada had released its decision in
R. v. Jordan
,
    2016 SCC 27. The provincial court appeal judges decision was released on November
    21, 2017.

[7]

In his decision,
the provincial court appeal
    judge held, at para. 158, that the 18 month presumptive delay ceiling set out
    in
R. v. Jordan

was too high to adequately protect Part I [of the
POA
] defendants constitutional right to be tried within a
    reasonable time. At para. 149, he found the appropriate presumptive ceiling
    for Part I proceedings is in the 13 to 15 month range and applied a 14 month presumptive
    ceiling to this case. Nevertheless, t
he provincial court appeal judge
    found that Mr. Tomovskis s. 11(b)
Charter
right was not breached
    because a significant portion of the delay was attributable to Mr. Tomovski.
    The provincial court appeal judge found the net delay was 10 months and 22 days.
    He
allowed Yorks appeal and ordered a new trial.

DISCUSSION

[8]

York proposes that leave to
    appeal should be granted on the following questions of law:

(a)

What should the presumptive delay ceiling
    be?

(b)

How should s. 11(b) of the
Charter
be applied for Part I
POA
proceedings commenced by a certificate of offence?

[9]

There is no question that the proposed questions
    of law transcend the immediate case and pertain to the administration of
    justice generally in the province. The issue is whether York is seeking leave
    to appeal from a judgment of the provincial court appeal judge rather than
    his reasons and thus whether this court has jurisdiction to hear the appeal. It
    is well established that
[a]n appeal lies from the judgment, not the
    reasons for judgment:
R. v. Sheppard
, 2002 SCC 26, [2002] 1 S.C.R.
    869, at para. 4.

[10]

The relevant parts of ss. 135, 138, and
    139 of the
POA
state as follow:

Appeals, proceedings commenced by certificate

135(1) A defendant or the prosecutor or the Attorney General by
    way of intervention is entitled to appeal an acquittal, conviction or sentence
    in a proceeding commenced by certificate under Part I or II and the appeal
    shall be to the Ontario Court of Justice presided over by a provincial judge.

[]

Powers of the court on appeal

138(1) Upon an appeal, the court may affirm, reverse or vary
    the decision appealed from or where, in the opinion of the court, it is
    necessary to do so to satisfy the ends of justice, direct a new trial.

[]

Appeal to Court of Appeal

139(1) An appeal lies from the judgment of the Ontario Court of
    Justice in an appeal under section 135 to the Court of Appeal, with leave of a
    judge of the Court of Appeal, on special grounds, upon any question of law
    alone.

Grounds for leave

(2) No leave to appeal shall be granted under subsection (1)
    unless the judge of the Court of Appeal considers that in the particular
    circumstances of the case it is essential in the public interest or for the due
    administration of justice that leave be granted.

[]

[Emphasis in original.]

[11]

York and the Attorney General submit that the word
    judgment in s. 139 is broad enough to allow an appeal of the provincial court
    appeal judges determination that the presumptive delay ceiling for
Part I
POA
proceedings
    is in the 13 to 15 month range.

[12]

York
    points out that s. 135 of the
POA
only provides a right of appeal from
    an acquittal, conviction or sentence entered by a Justice of the Peace to a
    judge of the Ontario Court of Justice whereas s. 139 allows leave to appeal
    from any judgment. York submits that the legislature would have expressly
    restricted the appellate jurisdiction of the Court of Appeal to affirming,
    modifying, or varying verdicts, if it so intended. Instead, the legislature
    used the word judgment in s. 139, which the applicant submits is of such
    broad connotation that it embraces not only verdicts, but decisions and the
    reasoning that led to the verdict.

[13]

In
    addition, the Attorney General submits that the word judgment in s. 139
    includes decisions made by a provincial court appeal judge. The Attorney
    General argues that the provincial court appeal judges decision that a lower
    s. 11(b) presumptive delay ceiling applies falls within the meaning of a
    judgment under s. 139.

[14]

Mr.
    Tomovski made no submissions and took no position on this motion.

[15]

I
    do not find the text of s. 135 helpful. True, s. 135 provides an appeal from
    an acquittal, conviction or sentence, but s. 138 provides that on an appeal
    the court may affirm, reverse or vary the decision appealed from. The term
    decision appealed from in s. 138 relates back to the phrase an acquittal,
    conviction or sentence in s. 135. Based on Yorks reasoning, this text would
    equally suggest that the word decision should be understood narrowly as an
    acquittal, conviction, or sentence imposed.

[16]

Nor did I find the authorities submitted by York and the Attorney
    General, and the subsequent case law, to be persuasive.
R. v. Valente
(1982), 40 O.R. (2d) 535 (C.A.),
R. v. Inco Ltd
.
(1999), 139
    C.C.C. (3d) 477 (Ont. C.A.),
R. v. Belanger
, [2006] O.J. No. 3453
    (C.A.),
R. v. E. (A.)
, 2016 ONCA 243, and
Quinte West
    (Municipality) v. Balroop
, 2016 ONCA 657 were all cases in which a party sought
    to vary some aspect of the decision below.
R. v. Inco
is also
    distinguishable in that the Crown sought leave to appeal an unfavourable
    judgment and Inco, effectively, sought leave to cross-appeal an issue that
    could have affected the disposition of the appeal if the Crown were successful.
    None of these cases concerned appeals under Part I of the
POA
.

[17]

York argues it is seeking leave to appeal from the provincial court appeal
    judges decision that the presumptive delay ceiling for Part I
POA
proceedings is 13 to 15 months. While I accept that a judgment appealable
    under s. 139 may in some circumstances be described as a decision, I am not
    persuaded that s. 139 extends to a decision in the sense York suggests.

[18]

The
    decision of the provincial court appeal judge in this case was that the stay
    of proceedings should be set aside because there was no breach of s. 11(b).
    Given his factual finding that the net delay was 10 months and 22 days, the
    decision below would have been the same had the appeal judge not opined that
    a shorter presumptive delay ceiling applied for Part I
POA
proceedings. The proposed appeal seeks an advisory opinion of this court that
    is detached from the underlying facts. Ontario courts have repeatedly held that
    appeals cannot be based on a disagreement with certain determinations within
    the reasons for judgment:
Canadian Express Ltd. v. Blair
(1991), 6
    O.R. (3d) 212 (Div. Ct.);
Aetna Life Insurance Co. of Canada v. Ungerman
(1992), 17 C.P.C. (3d) 383 (Ont. Gen. Div.),
Grand River Enterprises v.
    Burnham
, [2005] O.J. No. 952 (C.A.), at para. 10; and
Almrei v. Canada
    (Attorney General)
, 2012 ONCA 779, at paras. 7-10.

[19]

This
    court can address the important question of the appropriate presumptive delay
    ceiling for Part I
POA
proceedings in another case in which the appeal
    is properly constituted.

[20]

The
    motion for leave to appeal is dismissed. In dismissing this motion, I should
    not be understood as approving the provincial court appeal judges view that
the appropriate presumptive ceiling for Part I proceedings
    is in the 13 to 15 month range
.

R.G. Juriansz J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Aird & Berlis LLP v. Oravital Inc., 2018 ONCA
    164

DATE: 20180220

DOCKET: C64038

Hourigan, Roberts and Nordheimer JJ.A.

BETWEEN

Aird & Berlis LLP

Plaintiff/Defendant by Counterclaim
(Respondent)

and

Oravital Inc. and Alliance H. Inc.

Defendants/Plaintiffs by Counterclaim
(Appellant)

Geoff R. Hall and Anu Koshal, for the appellants

Michael Kestenberg and Marc Kestenberg, for the
    respondent

Heard:  February 14, 2018

On appeal from the judgment of Justice Elizabeth Stewart of
    the Superior Court of Justice, dated June 15, 2017, with reasons reported at
    2017 ONSC 3391.

REASONS FOR DECISION

[1]

The appellants appeal from the judgment
    in favour of their former solicitors, the respondent law firm, Aird &
    Berlis, and from the dismissal of their counterclaim for damages for
    professional negligence against them.

[2]

For almost five years, Aird & Berlis
    was retained by the appellants to represent the appellant, Oravital Inc., in
    what the motion judge aptly described as acrimonious and protracted
    litigation commenced in June 2010 (the Oravital action).

[3]

After the appellants changed lawyers, Aird
    & Berlis commenced an action against the appellants to recover payment of
    its unpaid accounts in the amount of $182,569.63.  The appellants
    counterclaimed for $1,000,000, alleging that Aird & Berlis was negligent in
    its carriage of its retainer.  In particular, the appellants alleged that Aird
    & Berlis had failed to provide them with a meaningful assessment of the
    potential damages in the Oravital action, which would have allowed for an
    earlier conclusion of the litigation and avoided the incurrence of most of Aird
    & Berlis billed fees and disbursements.

[4]

Aird & Berlis successfully moved for
    summary judgment.  The motion judge found that there was no causal link between
    Aird & Berlis failure to obtain a formal damages assessment at an earlier
    stage and the continuation of the Oravital action by the appellants.

[5]

We agree that the appeal should be
    allowed and that the judgment and dismissal of the counterclaim be set aside.
    As we are of the view that there are genuine issues requiring a trial, we will
    limit our reasons for allowing the appeal.

[6]

In our view, the motion judge erred in law
    in finding that the appellants principals as sophisticated business people were
    aware of the value of the damages and risks of litigation. This finding
    reflects a misapprehension of the solicitors duty of care to advise the
    clients about the legal basis for the damages and the risks of litigation.

[7]

We are also of the view that the motion
    judge erred in determining the claim and the counterclaim on a motion for
    summary judgment.  In particular, the motion judges disposition of the issue
    of causation was not open to her to make on the record before her.  Her
    findings concerning the appellants dominant purpose for carrying on the
    litigation and the assessment of their damages claim were not available on this
    record, even under the courts enhanced powers pursuant to r. 20.04(2.1) of the
Rules of Civil Procedure
, given
    the highly contentious inconsistencies about these issues that required a trial
    to resolve.

[8]

To be fair to the motion judge, the
    parties took the position that the issues in the action and the counterclaim
    could be resolved on a motion for summary judgment.  They were mistaken.

[9]

Accordingly, we allow the appeal, set aside the judgment and dismissal
    of the counterclaim, and remit the claim and counterclaim to trial.

[10]

As agreed, the appellants are entitled to
    their partial indemnity costs in the amount of $22,500, inclusive of
    disbursements and applicable taxes.

C.W. Hourigan J.A.

L.B. Roberts J.A

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Bain v. UBS Securities Canada Inc., 2018 ONCA 190

DATE: 20180227

DOCKET: C63051

LaForme, Rouleau and van Rensburg JJ.A.

BETWEEN

David Bain

Plaintiff/Respondent

and

UBS Securities Canada
    Inc. and UBS Securities LLC

Defendants/Appellants

Dan J. Shields and Hendrik Nieuwland, for the appellants

Chris G. Paliare and Tina Lie, for the respondent

Heard: February 1, 2018

On appeal from the judgments of Justice Darla A. Wilson
    dated November 4, 2016, reported at 2016 ONSC 5362 and March 3, 2017, reported
    at 2017 ONSC 1472.

REASONS FOR DECISION

[1]

This is an appeal of a judgment following a trial
    in a wrongful dismissal action. The respondent David Bain was an investment
    banker employed by the appellant UBS Securities Canada Inc. (UBS). Bain was
    dismissed without cause on February 28, 2013, which UBS concedes, as a result
    of the closure of UBSs Canadian Mergers & Acquisitions arm, in which Bain
    held the position of Managing Director and Head. The trial judge fixed the
    reasonable notice period at 18 months, and awarded damages (inclusive of
    amounts for cash and deferred bonuses and an amount for vacation pay),
    prejudgment interest and costs.

[2]

A number of issues raised at trial are not in
    dispute in this appeal. In particular, the appellant does not contest the trial
    judges determination of the period of reasonable notice, her finding that
    Bains bonus was an integral part of his compensation, the calculation of the
    annual bonuses that Bain would have earned for 2012 and during his reasonable
    notice period (and the comparators used), or her conclusion that Bain was
    entitled to damages for the loss of the cash portion of his bonus for 2012 and
    the cash bonus he would have received if his employment had continued during
    the reasonable notice period.

[3]

The principal issue on this appeal is whether
    the trial judge erred in awarding Bain damages that included amounts in respect
    of the loss of the deferred portions of his bonus. UBS also appeals the amounts
    awarded, but not Bains entitlement, in respect of vacation pay, prejudgment
    interest and costs. We deal with each issue in turn.

The Deferred Portion of Bains Bonus

[4]

From the time he was first employed by UBSs
    predecessor Bain earned annual compensation consisting of salary and bonus. For
    the first eight years Bains bonus was paid entirely in cash. From 2008
    onwards, UBS determined the amount of bonus for the year, and if the amount
    exceeded the equivalent of 250,000 Swiss Francs, 40% was paid in cash and the
    other 60% was placed into an account in the form of notional shares in UBS AG
[1]
, which would fluctuate over
    time as the value of global UBSs share price changed, and which would vest
    in equal amounts over a number of years. The deferred portion of the bonus was
    allocated and paid under UBSs Equity Ownership Plan (the EOP).

[5]

Once the decision was made to terminate his
    employment, Bain was not allocated or paid any bonus for 2012. After considering
    the bonus allocation process, Bains performance in 2012, the bonuses awarded
    to certain other UBS employees considered comparators, and how UBS would
    reasonably have exercised its discretion in the bonus process, the trial judge determined
    the amounts of Bains bonus for the 2012 year, for the stub year of 2013
    preceding the termination of his employment, and for the bonus Bain would have
    earned had he remained employed during the 18 month notice period.

[6]

On appeal UBS does not dispute the bonus amounts
    the trial judge concluded that Bain would have earned. UBS only contests the
    inclusion in those amounts of the deferred portion; that is, the amounts that
    Bain would have been allocated by way of notional shares, which would have
    vested in the future, after the expiry of the notice period. The amount in
    dispute is 60% of the bonus, approximately $1.2 million.

[7]

UBS makes two arguments with respect to the
    deferred portion of Bains bonus. First, it asserts that Bain was entitled to
    damages for lost bonus only in respect of amounts he would have
received
prior to his termination and during the notice period. Second, UBS
    relies on the wording of certain provisions of the EOP to exclude from Bains
    damages the deferred portion of his bonus.

[8]

We do not give effect to these arguments.

[9]

In
Paquette v. TeraGo Networks Inc.
, 2016 ONCA 618, 352 O.A.C. 1, at paras. 29-31, this court
    articulated a two-part test that is applicable here. In order to determine
    whether a terminated employee is entitled to damages on account of a lost bonus,
    first, the court must determine whether the plaintiff has a common law right to
    damages for breach of contract that would include compensation for a lost
    bonus. Second, the court must consider whether there is language in the bonus
    plan that unambiguously alters or removes the common law entitlement. See
    also
Taggart

v. Canada Life Assurance Co.
(2006),

50
    C.C.P.B. 163

(Ont. C.A.),
    at para. 12.

[10]

With respect to the first part of the test, UBS
    accepts that, if Bain had remained employed during the period of reasonable
    notice, he would have been awarded bonuses in the amounts determined by the
    trial judge.

[11]

UBS asserts however that while Bain was entitled
    to the cash amount of the bonus that he would have received during the
    reasonable notice period, he was not entitled to any portion that he would not
    have received during his employment and the notice period.

[12]

First we note that Bain had a contractual right
    to receive compensation that included bonus in the event of his termination
    without cause. His letter of hire, which continued in force, provided that in
    the event of his termination, Bain would receive not less than six (6) months
    notice or compensation in lieu thereof, and that for greater clarity, the
    amount of equivalent compensation [would] be determined by reference to salary
    and bonuses. His letter of termination offered to pay Bain the sum of $495,133
    as the equivalent of 14 months notice. The amount corresponds with the average
    of Bains total compensation for the prior two years, calculated by UBS as including
    both the cash and deferred portions of the bonus.

[13]

Notwithstanding UBSs own contractual documents, it asserts that it
    was not required to pay Bain compensation for any deferred portion of any bonus
    notwithstanding that the deferred portion would have been earned by Bain during
    his employment and during the reasonable notice period. This is contrary to
    settled law. As this court noted in
Taggart
at
    para. 13, where an employer terminates an employee without cause, the employer
    is liable for damages for breach of contract, measured by the loss of wages or
    salary and other benefits that would have been earned during the reasonable
    notice period. In that case the terminated employee was entitled to damages
    that included his pension accrual during the notice period. See also
Arnone
    v. Best Theratronics Ltd.
, 2015 ONCA 63, 329 O.A.C. 284,
    at paras. 30-32.

[14]

UBS points to the references in
Paquette
to bonuses that the appellant in that case would have
    received (at paras. 23 and 30) in support of its argument that Bains damages
    should not include any amount for the deferred portion of his bonus. In
Paquette
the bonus claim was for what the appellant would have
    earned and received during the notice period. There was no deferred portion of
    a bonus, nor was there a claim for the loss of opportunity to earn a bonus in a
    partial year during the reasonable notice period. Paragraph 17 of that case
    correctly states the law: [d]amages for wrongful dismissal may include an
    amount for a bonus the employee would have received had he continued in his
    employment during the notice period, or damages
for
    the lost opportunity to earn a bonus
 (emphasis added).
    Similarly, in
Lin v. Ontario Teachers Pension Plan Board
, 2016 ONCA 619, 352 O.A.C. 10, another case relied on by UBS, this
    court held, at para. 89, that the opportunity to earn a bonus was relevant to
    damages. There was no claim to or award of damages for bonus amounts that would
    have been paid to the plaintiff outside the notice period because of the terms of
    the agreement in that case, which provided for grants not vested at the time of
    termination to be forfeited without right of compensation.

[15]

Here, while the notional shares would not have
    vested before the end of the reasonable notice period, there is no question
    that the bonus was earned by Bain during that period.

[16]

UBSs second argument with respect to the
    damages award for the deferred portion of Bains bonus relies on the wording of
    the bonus plan. UBS argues that s. 2.2 of the 2012/13 EOP and certain clauses
    of s. 7.1 of the plans Common Terms meet the second part of the test in
Paquette
in that they unambiguously alter or remove the
    entitlement.

[17]

We disagree. The reference in s. 2.2 to awards
    being granted to employees does not disentitle a terminated employee from
    having the deferred portion of his bonus included as part of a wrongful
    dismissal award. As this court noted in
Paquette
at para. 35,

a
    requirement that the recipient be employed in order to receive a bonus, does
    not prevent the [recipient] from receiving, as part of his wrongful dismissal
    damages, compensation for the bonuses he would have received had his employment
    continued during the period of reasonable notice.

[18]

Nor do the provisions of s. 7.1 unambiguously
    exclude Bains claim for damages for the deferred part of his bonus. Section
    7.1.6 purports to exclude a claim or right of action in respect of UBSs
    exercise of discretion. Section 7.1.7 excludes an employees right to
    compensation for any loss in relation to a plan. The claim here is not for
    compensation for a loss in relation to a plan, or for the improper exercise of
    discretion. The claim is to have included in his compensation on termination
    the amounts of the deferred part of his bonus  amounts that pursuant to the
    plain terms of his employment contract, he would be entitled to expect. Neither
    provision clearly disentitles Bain to a right to damages for his lost bonus on
    termination.

[19]

This conclusion is reinforced by s. 5.2 of the
    2012/13 EOP which provides that unvested awards will not be forfeited and will
    continue to vest in accordance with the terms of the EOP and Common Terms, if
    employment is terminated (as here) due to redundancy. The trial judge
    reasonably concluded that, had Bain been awarded a bonus in 2013 for his 2012
    performance, which included stock options that would have vested in the future,
    such options would have continued to vest and would not have been forfeited (at
    para. 128).

[20]

For these reasons the trial judge did not err in
    including the deferred portions of Bains bonus for 2012, the stub year 2013
    and the reasonable notice period in Bains damages award.

Vacation Pay

[21]

At trial the parties agreed that Bain was
    entitled to compensation for a total of 20.10 vacation days, which included
    vacation he had not taken in 2012, and vacation accrued during his statutory
    notice period. They disagreed about whether vacation pay should be based on
    Bains salary or, as the trial judge found, his overall compensation including
    bonus.

[22]

The trial judge awarded vacation pay of $87,472,
    after deducting the amount Bain received for vacation pay when his employment
    was terminated. The amount was based on Bains salary and the average bonus of
    the comparators for 2013. On appeal UBS says that the amount ought to have been
    $5,700, and based on Bains salary only.

[23]

An employees entitlement to vacation pay under
    the
Employment Standards Act, 2000
, S.O. 2000, c. 41,

is determined
    as a percentage of the employees wages. Wages is defined as monetary
    remuneration payable by an employer to an employee under the terms of an
    employment contract but does not include sums paid as gifts or bonuses that
    are dependent on the discretion of the employer and that are not related to
    hours, production or efficiency.

[24]

The trial judge considered the evidence, which
    included a description of the detailed and methodical approach of UBS to
    determining bonuses, and the acknowledgment of its witness that bonus was tied
    to production and efficiency. She reasonably concluded that the bonuses
    here were based in part on how an employee produced and how diligent he or she
    was in their work at UBS and that while the bonus was discretionary, there
    were definite factors on which it was based, including performance (at paras.
    153 and 154). We see no reason to interfere here, or, as proposed by UBS, to
    read into the exception in the definition of wages the requirement that
    numerical targets would be required before a bonus could be considered to be
    related to hours, production or efficiency.

Prejudgment Interest

[25]

The trial judge awarded prejudgment interest on
    the entire net amount of Bains damages commencing at the date of his
    termination (the lump sum basis). She rejected UBSs argument, which is renewed
    on appeal, that prejudgment interest ought to have been calculated on the
    payments Bain would have received had he worked during the notice period (the
    instalment basis). The difference is $44,585.81.

[26]

The appellant accepts that a trial judges approach
    to determining how prejudgment interest should be calculated under s. 130 of
    the
Courts of Justice Act
, R.S.O. 1990, c. C.4,
    including in wrongful dismissal cases, is an exercise of discretion and
    entitled to deference. UBS also acknowledges that this court has affirmed the
    use of both approaches in wrongful dismissal cases. UBS argues however that
    this court should endorse, on a principled basis, the instalment approach in
    wrongful dismissal cases.

[27]

We are not prepared to interfere with the trial
    judges determination of prejudgment interest in this case. In
Chang
    v. Simplex Textiles Ltd.
(1985), 7 OA.C. 137, this court
    adverted to the debate between the instalment approach and the lump sum
    approach to awards of prejudgment interest on damages for wrongful dismissal,
    and stated, at para. 16, that the trial judges exercise of discretion should
    not be interfered with provided it had a logical basis and [was] in general
    accord with similar but not identical dispositions in other unjust dismissal
    cases. This approach was cited with approval by this court in
Stevens
    v. Globe & Mail
(1996)
, 28 O.R. (3d) 481 (C.A.), at para. 33.

[28]

As in
Lowndes v. Summit Ford Sales
    Ltd
. (2006), 206 O.A.C. 55, it is unnecessary for the
    disposition of the appeal to determine whether an award of prejudgment interest
    on a lump sum basis is generally appropriate in a wrongful dismissal case (at
    para. 23).

[29]

Here the trial judge carefully considered the
    particular circumstances of the case, including what should have been done,
    what actually was done, and how to restore [Bain] to the same position [he]
    would have been in had the proper payments been made at the time of
    termination (at para. 36). She considered relevant the fact that Bain had
    received an offer of a lump sum payment, and that there was no option of salary
    continuance. Interest on the 2012 bonus ran from the end of February 2013,
    which was when Bain would have been paid the bonus. Interest on the stub
    portion of the bonus for 2013, the compensation to which Bain was entitled for
    the period of reasonable notice and vacation pay, would run from March 22,
    2013, the date he left UBS. There is no reason to interfere with this exercise
    of discretion, which was supported by the evidence considered by the trial
    judge.

Costs

[30]

The appellant seeks a
    reduction of approximately $70,000 in the costs of the action. Its argument is
    essentially that the trial judge ought to have used the partial indemnity grid
    rates set out in the preamble to Rule 57, Information for the Profession, rather
    than basing partial indemnity costs on 60% of the actual rates charged by the
    respondents counsel.

[31]

This
    court should interfere with a
costs order
    only if the trial judge
made an
    error in principle, or the award was plainly wrong:
Hamilton v. Open Window
Bakery Ltd.
, 2004
    SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[32]

We see no such error here. There is no requirement to apply
    the grid rates, which are out of date, rather than 55 to 60% of a reasonable
    actual rate:
Inter-Leasing
    Inc. v. Ontario (Minister of Revenue)
, 2014 ONCA
    683, at para. 5.
Akagi v. Synergy
    Group (2000) Inc.
, 2015 ONCA 771,
128 O.R. 64,
a case
    relied on by the appellant, does not reject an approach to partial indemnity
    costs based on 60% of the actual rate charged. After referring to the 60%
    approach, the court stated at para. 55:

fixing costs of a proceeding or of a step
    within a proceeding on a partial indemnity basisis not simply an exercise of
    multiplying hourly rates by the amount of time expended. The court must balance
    the discretionary factors set out in r. 57.01(1) and, in the end, arrive at an
    amount that is reasonable and fair in the circumstances and that bears some
    relationship to the amount that an unsuccessful party could reasonably expect
    to pay.

[33]

This
    is exactly the approach taken by the trial judge in the present case. While she
    accepted partial indemnity fees based on 60% of the actual fees charged as
    reasonable, she considered all of the relevant factors under r. 57.01,
    including the amount in dispute, the outcome of the trial, the conduct of the
    parties, the offers made, and the reasonableness of the hours claimed in
    arriving at an award of costs of $225,000 plus taxes and disbursements.

[34]

There is no reason to
    interfere with the trial judges assessment of Bains costs.

Disposition

[35]

The appeal is therefore dismissed. Costs of the
    appeal to the respondent in the agreed amount of $25,000, inclusive of HST and
    disbursements.

H.S.
    LaForme J.A.

Paul
    Rouleau J.A.

K. van Rensburg J.A.

[1]
Initially, Bains employer, UBS, was a joint venture company effectively owned
    50% by employee shareholders and 50% by UBS AG. In March 2006 UBS AG purchased
    all the employee shareholdings to become the sole owner of UBS.


COURT OF APPEAL FOR ONTARIO

CITATION: Benson v. Walt, 2018 ONCA 172

DATE: 20180222

DOCKET: C64025

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

Bethany Benson and Robert Stenner

Plaintiffs

and

Paul Robert Walt
, Mary La Chapelle-Stenner,

Azhar
    Warraich, Ideal Logistics Group and/or

Ideal
    Logistics Group Fleet 002, 2107622 Ontario Inc.

and/or
    2107622 Ontario Inc. o/a Ideal Logistics Group and/or

2107622
    Ontario Inc. o/a Ideal Logistics Group Fleet 002 and

6305393
    Canada Inc. and/or 6305393 Canada Inc.

o/a
    Ideal Logistics Group Fleet 002

Defendants

(
Appellant
by
    policy of insurance issued by Economical Insurance)

(
Respondent
by
    policy of insurance issued by State Farm)

D. Zuber and D. Fiorita, for the appellant, Paul Robert
    Walt, by policy of insurance issued by Economical Insurance

J. Schrieder and L. Furukawa, for the respondent, Paul
    Robert Walt, by policy of insurance issued by State Farm

Heard: January 29, 2018

On appeal from the order of Justice
J.
    Bryan Shaughnessy
of the Superior Court of Justice, dated June 12, 2017,
    with reasons reported at 2017 ONSC 3612.

Sharpe J.A.:

[1]

The issue on this appeal is the priority as
    between three insurance policies covering the driver of a motor vehicle
    involved in an accident.

[2]

The driver, the defendant Paul Robert Walt, was
    driving the car involved in the accident with the consent of the owner, the
    defendant Mary La Chapelle-Stenner. The car was insured under a State Farm Automobile
    Insurance Policy issued to the owner (policy limit $300,000).The owner was also
    insured under a State Farm Personal Liability Umbrella Policy (PLUP) (policy
    limit $1 million). Walt had his own Economical Insurance Automobile Insurance
    Policy, with a policy limit of $1 million.

[3]

On a Rule 21 motion to determine the priority in
    which these policies would respond to the plaintiffs claim, the motion judge
    ruled that they would respond as follows: first the owners State Farm Auto
    Policy, then the drivers Economical Insurance Auto Policy, and then the State
    Farm PLUP.

[4]

Economical appeals that order, arguing that:

(1)

pursuant to ss.
    277(1) of the
Insurance Act,
R.S.O. 1990, c. I.8, the State Farm PLUP
    is an owners first loss insurance that should respond before the Economical
    Insurance Auto Policy which is excess insurance and should respond only after
    the limits of the other two policies have been exhausted; and

(2)

in the alternative,
    the Economical policy and State Farm PLUP policy are both excess insurance and
    that, pursuant to ss. 277(2), those policies are only required to respond for
    their rateable proportion of any liability exceeding the State Farm Auto Policy
    limits.

[5]

For the following reasons, I would dismiss the
    appeal.

Analysis

(1)

Is the State Farm PLUP an owners first loss
    policy?

[6]

The State Farm and Economical Auto Policies are
    standard form OAP 1 policies covering listed vehicles and other automobiles
    driven by the insured. The defendant Walt was covered as the driver of the
    owners vehicle under the State Farm Auto Policy and as the driver of another
    vehicle under his own Economical Auto Policy. Both the State Farm and the
    Economical Auto policies are primary policies. Liability attaches under both
    policies immediately upon the occurrence of the insured event.

[7]

The State Farm PLUP provides a very different
    form of coverage. It covers general personal liability for personal injury or
    property damage exceeding the coverage provided by the required underlying
    insurance or losses not covered by the underlying policies. The required underlying
    policies include automobile, recreational motor vehicle, comprehensive personal
    liability and watercraft liability policies. In the case of a loss arising from
    an automobile accident, liability under a PLUP attaches only after the coverage
    provided by the required underlying automobile policy has been exhausted.

[8]

The difference between the nature of coverage
    provided by a primary policy and an umbrella policy was explained by Charron
    J.A. in
Trenton Cold Storage Ltd. v. St. Paul Fire and Marine Insurance Co
.
(2001),

[2001]
    O.J. No. 183, 199 D.L.R. (4
th
) 654 at paras. 21-22 (C.A.) and relied
    upon by MacFarland J.A. in
McKenzie v. Dominion of Canada General
    Insurance Company
, 2007 ONCA 480, 86 O.R. (3d) 419, leave
    to appeal refused, [2007] S.C.C.A. No. 471, at para. 39. A primary policy
clearly provides for an obligation to pay and a duty to defend upon
    the happening of a specified occurrence without any reference to, or
    requirement that there be, underlying insurance. An umbrella policy, on the
    other hand, provides coverage with respect to certain risks but limits the
    insurers liability to the loss in excess to that which may be collected by
    the insured under any underlying insurance and the limits of the underlying
    policies  operate as a kind of deductible. Umbrella polices also provide
    drop-down coverage where there is no underlying insurance.

[9]

Subsection 277(1) of the
Insurance Act
provides:

Subject to section 255, insurance under
    a contract evidenced by a valid owners policy of the kind mentioned in the
    definition of owners policy in section 1 is, in respect of liability arising
    from or occurring in connection with the ownership, or directly or indirectly
    with the use or operation of an automobile owned by the insured named in the
    contract and within the description or definition thereof in the policy, a
    first loss insurance, and insurance attaching under any other valid motor
    vehicle liability policy is excess insurance only.

[10]

It is not disputed that, pursuant to ss. 277(1),
    the first policy to respond is the State Farm Auto Policy insuring the owner of
    the vehicle involved in the accident.

[11]

Economical submits that the State Farm PLUP is
    also an owners first loss policy as defined by ss. 277(1).

[12]

In my view, the motion judge correctly rejected this submission.
    While the State Farm PLUP would provide some coverage to the owner or operator
    of a motor vehicle in some circumstances, it is not, within the meaning of ss.
    277(1), an owners policy of the kind mentioned in the definition of owners
    policy in section 1. That definition reads as follows:

owners policy means a motor vehicle
    liability policy insuring a person
in respect of the ownership, use or
    operation of an automobile owned by that person
and within the description
    or definition thereof in the policy and, if the contract so provides, in
    respect of the use or operation of any other automobile [Emphasis added.]

[13]

The State Farm PLUP does not, by its terms,
    provide primary insurance for liability arising from the use of an automobile.
    The State Farm PLUP, like the umbrella policy at issue in
Keelty v.
    Bernique
(2002), 57 O.R. (3d) 803, [2002] O.J. No. 83 (C.A.), does not
    fall within what the court described, at para. 25, as Ontarios highly regulated
    scheme of motor vehicle insurance. It only responds after the limits of the
    required underlying policy are exhausted, or if the underlying insurance does
    not provide coverage for the loss. Subsection 277(1) deals with the priorities
    as between primary motor vehicle insurance policies and its reach does not
    extend to any and every other type of policy that might have to respond once
    the policy limits of applicable motor vehicle policies are exhausted.

[14]

In support of its submission that the State Farm
    PLUP is primary automobile insurance, Economical relies heavily on the decision
    of this court in
Avis Rent A Car System, Inc. v. Certas Direct Insurance
    Co.
(2005), 75 O.R. (3d) 421, [2005] O.J. No. 1951 (C.A.), leave to appeal
    refused, [2005] S.C.C.A. No. 343. That case involved a commercial umbrella
    insurance policy issued to Avis to provide coverage in excess of two other
    automobile insurance policies. The court held that on the facts of that case,
    the umbrella policy was an owners policy within the meaning of ss. 277(1)
    and therefore responded as first loss insurance.

[15]

In my view, the
Avis
decision is
    readily distinguishable from the case at bar. The umbrella policy at issue in
Avis
was issued in the United States by an American insurer. This courts decision
    that it was an owners policy turned on the fact that the American insurer
    had filed an undertaking pursuant to s. 226.1 of the
Insurance Act
agreeing
    to provide the minimum statutory coverage required by Ontarios automobile
    insurance scheme. The effect of the undertaking was to supercede the language
    of the policy and the coverage it provided and to replace it with the mandated
    terms of the standard Ontario automobile policy. That meant that when it came
    to determine how the policy responded in relation to other policies, the
    wording of the umbrella policy did not govern and the policy had to be treated
    as if it were an owners policy within the meaning of the Ontario automobile
    insurance scheme.

[16]

Economical also relies on
ING Insurance Company
    of Canada v. Lombard General Insurance Company

of Canada
(2009), 94 O.R. (3d) 669 (S.C.), affd 2009 ONCA 570, 98 O.R. (3d)
    522, leave to appeal refused, [2009] S.C.C.A. No. 384. That case involved an
    umbrella policy that incorporated a Standard Excess Automobile Policy SPF No. 7
    endorsement, which provided coverage for excess loss related to the specific
    automobiles covered in the required underlying automobile insurance policies. The
    motion judge found that the endorsement brought the umbrella policy within the
    definition of an owners first loss policy under ss. 277(1). The case at bar is
    distinguishable as it does not involve a Standard Excess Automobile Policy SPF
    No. 7 endorsement that alters the nature of the coverage provided by an
    umbrella policy.

[17]

Accordingly, I would dismiss the appeal from the
    motion judges order that the Economical Auto Policy must respond before the
    State Farm PLUP Policy.

(2)

Are the Economical Auto Policy and the State
    Farm PLUP both excess policies that, pursuant to ss. 277(2), are only required
    to respond for their rateable proportion of any liability exceeding the State
    Farm Auto Policy limits?

[18]

In the alternative, Economical submits that by
    the language of ss. 277(1), the Economical Auto Policy and the State Farm PLUP
    are both excess insurance. Therefore, by virtue of ss. 277(2), Economical should
    respond only for its rateable proportion of any liability exceeding the State
    Farm Auto Policy.

[19]

Subsection 277(2) provides as follows:

Subject to sections 255 and 268 and to
    subsection (1) of this section,
if the insured named in a contract has or
    places any
other
valid insurance
, whether against liability
    for the ownership, use or operation of or against loss of or damage to an
    automobile or otherwise, of the insureds interest in the subject-matter of the
    contract or any part thereof,
the insurer is liable only for its rateable
    proportion of any liability, expense, loss or damage
. [Emphasis
    added.]

[20]

In my view, ss. 277(2) does not apply to the
    Economical Auto Policy. Subsection 277(2) addresses the situation where there
    are overlapping non-primary policies. It does not refer to excess insurance
    in the sense of that term in ss. 277(1) but rather applies to any
other
valid insurance the insured named in a contract has or places. Even though the
    Economical Auto Policy is excess insurance in relation to the State Farm Auto
    Policy by virtue of ss. 277(1), it remains primary first loss insurance and
    does not fall within ss. 277(2). In my view, any
other
valid
    insurance must refer to insurance
other
than that described in ss.
    277(1). The language of ss. 277(2)  any other valid insurance, whether
    against liability for  or damage to an automobile or otherwise  is
    distinguished from the language of ss. 277(1) which uses the term any other
    valid motor vehicle liability policy when determining the priority in which
    those primary policies are to respond.

[21]

As the motion judge correctly held, liability of
    the insurers turns on the wording of the policies as well as on the provisions
    of the Act. The Economical Auto Policy remains, by its terms, primary insurance
    even though ss. 277(1) makes it excess in relation to the State Farm Auto
    Policy. The State Farm PLUP only provides coverage after any other valid and
    collectible first loss insurance has responded in the priority established by
    ss. 277(1). The two policies provide very different coverage and they are not
    required to respond rateably as if they provided the same type of coverage.

[22]

Accordingly, I would not give effect to the
    argument that Economical is only required to respond rateably with the State
    Farm PLUP for any liability exceeding the limits of the State Farm Auto Policy.

Disposition

[23]

For these reasons, I would dismiss the appeal
    with costs to the respondent State Farm in the amount agreed to by the parties,
    namely $15,000 inclusive of disbursements and HST for both the appeal and the
    motion.

Robert J. Sharpe
    J.A.

I agree H.S. LaForme
    J.A.

I agree K. van
    Rensburg J.A.

Released: February 22, 2018


COURT OF APPEAL FOR ONTARIO

CITATION: Blair v. (Re), 2018 ONCA 97

DATE: 20180201

DOCKET: M48545 (C64433)

Doherty, Pepall and Brown JJ.A.

In the Matter of the Notice of Intention to Make a
    Proposal of Michael Finley Lawrence Blair of the Town of Collingwood, in the
    Province of Ontario

Harvey Chaiton, for the moving party, Patricia Virc

Michael Finley Lawrence Blair, the responding party,
    appearing in-person

Heard and released orally: January 26, 2018

REASONS FOR DECISION

[1]

We are told that the debt to Ms. Virc has now been paid in full. The
    subject matter of the bankruptcy proceeding no longer exists and the proposed
    appeal is moot.

[2]

We also agree with the respondents submission that there is no right of
    appeal under the provisions in ss. 193(a)-(d) of the
Bankruptcy and
    Insolvency Act
.

[3]

Mr. Blair referred to para. 4 of the order under appeal and submitted
    that it would have prospective effect and could apply to any future
    indebtedness he may incur to Ms. Virc. He submits that his proposed appeal
    therefore involves future rights under s. 193(a). We do not read the order
    that way. More to the point, counsel for Ms. Virc expressly acknowledged that
    para. 4, which is incidental to the proposal, is spent and that Ms. Virc, who
    was present in court, acknowledges that she cannot rely on that provision of
    the order in respect of any future indebtedness to her that may arise.

[4]

The appeal is quashed. We would not grant leave to appeal and, in any event,
    the matter is moot.

[5]

Costs to Ms. Virc in the amount of $7,500, inclusive of all
    disbursements and relevant taxes.

Doherty J.A.

S.E. Pepall J.A.

D.M. Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cardillo v. Aird & Berlis LLP, 2018 ONCA 186

DATE: 20180226

DOCKET: C63935

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

John Cardillo and Medcap Real Estate Holdings
    Inc.

Appellants

and

Aird & Berlis LLP

Respondent

F. Scott Turton, for the appellants

Pamela Miehls and Danielle Muise, for the respondent

Heard: January 30, 2018

On appeal from the order of Justice James F. Diamond of
    the Superior Court of Justice, dated May 18, 2017, reported at 2017 ONSC 3063.

REASONS FOR DECISION

[1]

Sun Life Assurance Company of Canada (Sun
    Life) entered into a loan agreement with Medcap Real Estate Holdings Inc.
    (Medcap), one of the appellants. The loan was secured by: (i) a mortgage over
    real property, (ii) a general security agreement; and (iii) a personal
    guarantee signed by John Cardillo, the other appellant
.

[2]

Ten years later Sun Life retained the respondent
    law firm to take the necessary steps to enforce the security and to collect the
    amounts due. Ultimately Sun Life and the appellants entered into a Forbearance
    Agreement in connection with Medcaps debt, which was then in excess of $1.5
    million. The appellants, among other things, agreed that Medcap would reimburse
    Sun Life for all reasonable expenses, including legal fees, and that they were
    estopped from disputing the amount owing. Further, the appellants released Sun
    Life and its attorneys, advisors and other representatives from claims in
    connection with the Forbearance Agreement or the original loan agreement.

[3]

A Forbearance Extension Agreement which extended
    the time for payment contained an identical release. Contemporaneous with the
    payment of the amounts due the parties entered into an Assignment Agreement,
    assigning the debt, loan agreement and underlying security to 2503866 Ontario
    Ltd. Schedule A to this agreement set out a summary of Medcaps indebtedness
    to Sun Life, which included specific amounts for legal fees and disbursements:
    $89,065.68, which was capitalized and included in Medcaps debt to Sun Life,
    and $14,671.12 for further legal fees. The Assignment Agreement also contained
    a comprehensive release in essentially the same terms as the first two
    releases. Sun Life paid each of the four accounts that were rendered by the
    respondent.

[4]

Subsequently, the appellants obtained a
    registrars order for the delivery and assessment of the respondents accounts.
    Eventually the respondent moved for an order declaring that the three releases
    precluded the assessment of the various legal accounts rendered to Sun Life.
    The motion judge granted the motion and declared that the Releases forever
    preclude the assessment of, or any other mater pertaining to, the [four
    accounts of Aird & Berlis LLP]. This order is the subject of this appeal.

[5]

The primary issue before the motion judge was
    whether the releases were effective to preclude the assessment of the
    respondents accounts on the basis that they attempted to contract out of the
Solicitors
    Act
, R.S.O. 1990 c. S.15. The motion judge noted that in
Jean
    Estate v. Wires Jolley LLP
,
2009
    ONCA 339, 96 O.R. (3d) 171 this court held that parties cannot contract out of
    the Act for public policy reasons. However, he held that the rationale in
Jean
    Estate
did not apply to the case at bar where the parties
    were sophisticated commercial parties acting with the benefit of legal advice.
    He concluded that the parties were not seeking to contract out of the
Solicitors
    Act
, but that they had agreed that the appellants would be
    precluded from challenging its payment to Sun Life, which included the legal
    fees.

[6]

The appeal is dismissed. We have serious
    concerns about the correctness of the motion judges opinion about the
    application of
Jean Estate
and the extent to
    which he countenanced what amounted to an attempt to contract out of the
Solicitors
    Act
. Nevertheless, we agree with his conclusion but for
    different reasons.

[7]

The respondents accounts rendered to Sun Life
    and reimbursed by the appellant Medcap are subject to the assessment provisions
    of the
Solicitors Act.
Because the accounts
    have already been paid by Sun Life and the appellant Medcap, who became liable
    for their payment and is not the client but a third party to the
    solicitor-client relationship, an order for assessment had to be obtained under
    s. 9(1) of the
Solicitors Act
, which required
    the appellant to  demonstrate special circumstances justifying the assessment
    following payment pursuant to s. 11:
Plazavest Financial Corporation
    v. National Bank of Canada
(2000), 47 O.R. (3d) 641
    (C.A.), at paras. 33-35
.

[8]

Section 11 refers to "special
    circumstances", which "in the opinion of the court appear, to require
    the assessment." And, it contemplates that in doing so, the court has a
    broad discretion to be exercised on a case-by-case basis and with an eye to all
    of the relevant circumstances:
Plazavest
, at
    para. 33. S
pecial circumstances will tend to either
    undermine the presumption that the account was accepted as proper or show that
    the account was excessive or unwarranted:
Echo Energy Canada Inc. v.
    Lenczner Slaght Royce Smith Griffin LLP
, 2010 ONCA 709,
104 O.R. (3d) 93, at para. 31.
Under s.
    9(2), the special circumstances to be considered include any additional special
    circumstances applicable to the third party who made the payment.

[9]

This is the analytical approach the motion judge
    should have followed in this case, which was also advanced by the appellants on
    the motion. Having considered the record in this case, and the arguments
    advanced by the parties on appeal, we are not satisfied that there are special
    circumstances that would warrant an order directing an assessment of the
    respondents legal accounts. We reach this conclusion for several reasons.

[10]

First, the appellants were at all material times
    represented by legal counsel. They were indebted to Sun Life, and they
    negotiated and concluded a commercial agreement to satisfy their debt. The
    appellants confirmed their obligation to pay the total indebtedness to Sun
    Life, including the respondents fees and disbursements, which were disclosed
    at Schedule A to the Assignment Agreement, to which they were parties. They
    made no attempt to reserve their right to assess the accounts, nor did they
    request details of the legal expenses or copies of the accounts.

[11]

Second, the terms of an agreement can figure
    prominently in the determination of whether special circumstances exist:
Plazavest
, at para. 17
. Here, the appellants
    expressly acknowledged in the Assignment Agreement that they had had an
    adequate opportunity to read and consider it and to obtain independent legal
    advice before executing it. They knew that Sun Life was entitled to its
    reasonable expenses, including legal fees. They were fully informed of the
    legal fees and disbursements that were included in the amount paid to Sun Life.
    And, they signed three documents containing a comprehensive release that by its
    terms extended to Sun Lifes legal counsel and their accounts.

[12]

In all the circumstances of this case, the appellants have failed to
    rebut the presumption that they accepted the respondents legal accounts as
    reasonable when they agreed to pay them. They have also failed to demonstrate
    that the accounts were grossly excessive. In sum, they
have not
    established special circumstances which, in the exercise of judicial
    discretion, would justify an order of assessment of the respondents legal
    accounts.

[13]

The
    appeal is dismissed. The respondents are awarded costs in the agreed upon
    amount of $7,500 inclusive of disbursements and HST.

Robert J. Sharpe J.A.

H.S. LaForme J.A.

K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cana International Distributing Inc. v. Standard

Innovation Corporation, 2018 ONCA 145

DATE: 20180214

DOCKET: C63087

Laskin, Sharpe and Fairburn JJ.A.

BETWEEN

Cana International Distributing Inc. c.o.b. Sexy
    Living

Plaintiff

(Appellant)

and

Standard Innovation Corporation

Defendant

(Respondent)

AND BETWEEN

Standard Innovation
    Corporation

Plaintiff by
    Counterclaim

(Respondent)

and

Cana International Distributing Inc. c.o.b. as Sexy Living
    and

Micheline Ciolli

Defendants by
    Counterclaim

(Appellants)

Shaun Laubman and Laura M. Wagner, for the appellants

Peter Mantas and Tala Khoury, for the respondent

Heard: January 23, 2018

On appeal from the judgment of Justice P. Smith of the Superior
    Court of Justice, dated November 18, 2016, with reasons reported at 2016 ONSC
    7197.

REASONS FOR DECISION

[1]

The appellants submit that the trial judge erred in finding that there
    were no agreements reached between the appellant, Cana International Distributing
    Inc. (Cana), and the respondent, Standard Innovation Corporation (SIC), for
    exclusive rights to distribute SICs product, a sex toy called the We-Vibe.
    The appellants also argue that the trial judge erred by failing to consider
    their alternate claim for
quantum meruit
and by refusing to deal with
    the defence of qualified privilege to the respondents defamation counterclaim.

The alleged agreements

[2]

Cana is a distributor of adult sexual health and wellness products. The
    parties had extensive discussions relating to the distribution of SICs
    We-Vibe. These discussions involved two streams of distribution. The first was
    the mainstream industry targeting retail outlets such as food and drug stores.
    The second was the adult industry, also referred to as the sex toy industry.
    The appellants assert that separate agreements were reached giving them
    exclusive distribution rights for the We-Vibe in both streams. The trial judge
    rejected both contractual claims, finding that no binding agreement was reached
    for either stream.

[3]

For the following reasons, we conclude that the trial judge erred in
    finding no mainstream industry agreement and that a binding agreement was made
    and subsequently breached by the respondent. We do not, however, accept the
    submission that the trial judge erred in finding that no agreement was reached
    for the adult industry stream. We also reject the submission that he erred in
    failing to consider the alternate claim for
quantum meruit
and the
    defence of qualified privilege.

The mainstream agreement

[4]

The trial judges finding that no agreement was reached was a finding of
    fact or mixed fact and law attracting a deferential standard of review in this
    court. However, we are satisfied that the trial judge made palpable and
    overriding errors of fact and an extricable error of law that justifies
    appellate intervention with respect to the mainstream agreement.

[5]

The terms of the agreement were negotiated by Nelson Wood, president of
    SIC, and Micheline Ciolli, owner and president of Cana. On August 18, 2009,
    they exchanged emails requesting signatures on a written term sheet.  Wood
    asked Ciolli to sign the signature page and fax it back and stated I will sign
    and fax back a copy to you. He added I look forward to growing the mainstream
    market with you and noted [n]ow we can do a term sheet for the Sex Toy Industry.
    Ciolli signed the term sheet and mailed it as requested. Wood was away from the
    office at the time but on September 22, 2009 returned by email a scanned
    signature page of what he described as our mainstream agreement.

[6]

Internal SIC emails and memoranda indicate that SIC was proceeding on
    the basis of a concluded agreement. Both parties conducted themselves in this manner
    until their relationship broke down in May 2010. Cana performed its obligations
    as exclusive distributor, secured new customers and dealt with warranty claims.
    In November 2009, SIC notified its Canadian customers that Cana was the
    exclusive distributor for the We-Vibe in Canada. SIC and Cana issued a joint
    press release to the same effect.

[7]

In SICs original statement of defence, it admitted that a mainstream agreement
    had been reached. While that admission was withdrawn several years later, it
    corresponds with the tenor of the email exchanges and the way that SIC
    conducted itself up to that point. In an affidavit filed on an interlocutory
    injunction motion in September 2010, Wood swore that [t]he parties entered
    into an agreement in or about August 2009 for the sale of the We-Vibe II into
    the Food and Chain Drugstore market. He also swore: As far as I am aware,
    there is no dispute regarding the Mainstream Agreement. It has operated
    relatively smoothly. It was only well into this litigation in February 2014
    that SIC changed its position and obtained an order permitting it to withdraw
    the admission it had made in its statement of defence.

[8]

In his reasons for judgment, at para. 23, the trial judge described the
    August  September 2009 email exchange and the signing of the term sheet in the
    following way: [A]t best, the two separate signed copies were two unique
    offers, neither having been accepted by the other party. This is evidenced by
    subsequent negotiation of their intended agreement. At para. 124 he stated:
    The emails of August and September 2009, referring to a signed copy of the
    agreement, evidence, at best, two distinct offers, neither of which was
    accepted by the other party. Moreover, the parties continued to negotiate the
    terms of this agreement.

[9]

In our respectful view, these findings reflect both a palpable and
    overriding error and an extricable error of law.

[10]

The
    trial judges characterization of the August and September 2009 exchange of
    emails as an exchange of two unique offers cannot be reconciled with the
    evidence. There were not two unique offers but rather two copies of the same
    document signed in counterpart by both parties. That is borne out not only by
    the fact that Ciolli and Wood both signed the same document but also by the
    subsequent emails and conduct of the parties, particularly that of SIC,
    treating the term sheet they signed as constituting their agreement. The trial
    judge did not consider SICs internal emails indicating that an agreement had
    been reached. Nor did he advert to the fact that SIC had, until late in the
    day, taken the position from the pleading stage and through two interlocutory
    injunction motions that an agreement had been reached.

[11]

If
    the basis for the trial judges finding was that by signing in the way they
    did, the parties had not reached an agreement, he made an extricable error of
    law by ignoring the legal doctrine that an agreement signed in counterparts is
    a binding agreement. As stated in
Foley v. R
., [2000] 4 C.T.C. 2016
    (T.C.C.), at para. 32: Agreements signed in counterpart are a part of
    commercial life.

[12]

The
    trial judge placed considerable weight on the fact that there were ongoing
    negotiations subsequent to August and September 2009. These discussions were
    prompted by Wood in November 2009, who suggested changes to certain details of
    the agreement. The proposed changes were discussed and while the parties never
    signed an amending agreement, they continued to conduct their affairs on the
    basis of the exclusive distribution agreement formed in August  September 2009.
    In our view, these negotiations concerned relatively minor matters of the kind
    that would be expected to arise within the framework of a long-term exclusive
    distributorship agreement. We see nothing in the subsequent dealings between
    the parties that undermines the existence of the agreement they both signed in
    August and September 2009 and under which they operated until their
    relationship broke down in May 2010. Continuing negotiations between
    contracting parties do not necessarily negate or alter the agreement they
    reached, particularly if they continue to conduct themselves on the basis of
    their agreement:  Angela Swan & Jakub Adamski,
Canadian Contract Law
,
    3rd ed. (Markham: LexisNexis Canada, 2012) at p. 254.

[13]

Accordingly,
    we conclude that the trial judges finding that no mainstream agreement was
    reached cannot survive. We are satisfied that on the record, an agreement was
    made out and we so find.

[14]

We
    do not accept SICs submission that the Term/Cancellation term is fatal to
    Canas claim to exclusivity for the three year period following March 31, 2010 The
    term sheet of the mainstream agreement provides as follows under the heading
    Territory, Market Channel:

SEXY LIVING [the name under which Cana operated] will
    have exclusive rights, described herein, to import and redistribute the We-Vibe
    to the Food and Chain Drugstore Channel in Canada (Territory). SEXY LIVING
    and SIC are to develop a marketing and sales plan for the Territory.

[15]

Under
    the heading Term/Cancellation the term sheet provides:

SIC agrees that Sexy Living has the right of first
    refusal for exclusivity in the Territory, until March 31, 2010, subject to
    mutually agreed performance criteria after that, with an initial three-year
    term, following that, and with subsequent renewals for two-year periods after
    the initial three-year term.

[16]

While
    there is no evidence of a formal exercise of the right of first refusal, it is
    clear from the record that the parties proceeded on the basis that Cana did
    have exclusive rights up to March 31, 2010. At that point, the trial period
    ended and the initial three-year term was triggered.

[17]

There
    is no dispute that SIC terminated Canas distribution of the We-Vibe in March
    2012 at the conclusion of the interlocutory injunction proceedings. It follows
    that Cana was denied its exclusive distributorship rights for a period of one
    year up to March 2013. The trial judge made no findings as to Canas damages
    for that breach and we accept Canas submission that the issue of damages ought
    to be remitted to the trial judge.

The adult industry agreement

[18]

We
    are not persuaded that the trial judge made a palpable and overriding error of
    fact or an extricable error of law in finding that no agreement had been
    reached with respect to the adult industry stream. The parties exchanged and
    discussed draft terms but Ciolli admitted they never signed an agreement. The
    draft term sheet they did discuss contained no reference to exclusivity. The
    trial judge characterized the dealings between the parties in relation to the
    adult stream at para. 116 as follows:

Without a document that can be reliably identified as the Adult
    Agreement, the record supports the position of Standard Innovation that the
    parties had a distribution relationship and worked on an
ad hoc
basis from one purchase order to
    the next.

[19]

The
    trial judge recognized, at para. 117, that the absence of a written agreement
    is not necessarily fatal, and that the terms of an oral agreement may be
    sufficiently clear and identifiable to establish an agreement, but concluded at
    para. 120, that in the present case, there were too many conflicting documents
    and emails going back and forth over a lengthy course of time that create
    significant uncertainty.

[20]

In
    our view, there was evidence in the record to support the trial judges findings
    and we see no basis upon which this court should interfere with respect to the
    adult stream.

The
quantum meruit
claim

[21]

At
    trial, Cana alleged that oral discussions had led to an agreement between the
    parties in relation to the international market for the We-Vibe, the first step
    of which was for Canas representatives to attend two U.S. trade shows directed
    at that market. Cana does not appeal the trial judges finding that no
    agreement for the international market was reached. However, Cana does submit
    that the trial judge erred by failing to consider its
quantum meruit
claim for certain expenses Cana incurred in preparing for and attending the
    first trade show.

[22]

Cana
    concedes that the
quantum meruit
claim was not argued before the trial
    judge but points out that the claim was advanced in the statement of claim and argues
    that the trial judge erred in law by failing to consider the claim.

[23]

We
    would not give effect to this submission. The argument advanced on appeal was
    not made at trial and, in any event, we are not satisfied that it is supported
    by the record. SIC did agree to reimburse Cana for certain expenses. Cana
    invoiced SIC for those expenses and SIC paid the invoice. We are not persuaded
    that there is any basis in law to require SIC to pay the additional expenses
    now claimed on appeal.

Qualified privilege

[24]

SIC
    counter-claimed for damages for defamation. After the breakdown of the parties
    relationship, Ciolli wrote a lengthy letter to Health Canada alleging that she
    had received 100  150 letters complaining of defects and safety concerns with
    respect to several We-Vibe products. The trial judge found that Ciollis
    statements to Health Canada were ill-founded and awarded SIC damages for
    defamation.

[25]

The
    trial judge refused to consider the defence of qualified privilege, which was
    raised by Ciolli for the first time during closing argument at trial. The trial
    judge ruled that Ciolli did not plead qualified privilege or the factual basis
    to support the defence.

[26]

Ciolli
    concedes that her pleading does not mention qualified privilege but submits
    that the facts necessary to support the claim are contained in the pleading.

[27]

We
    would not give effect to this argument. In our view, it would take a strained
    reading of the facts pleaded in the reply and defence to counterclaim to
    discern a defence of qualified privilege. Moreover, even if the pleading were
    sufficient, the trial judge made the following finding at para. 204: The
    evidence demonstrates that the statements made are false and were timed and
    intended to cause harm to Standard Innovation and the sale of its products.
    That finding contains all the ingredients necessary for malice, which would
    defeat any possible claim of qualified privilege.

[28]

Accordingly,
    we dismiss the appeal from the judgment on the counterclaim.

Disposition

[29]

For
    these reasons the appeal is allowed in part. The dismissal of the plaintiffs
    claim for breach of the mainstream agreement is set aside and the issue of
    damages for that breach is remitted to the trial judge.

[30]

The
    parties may make written submissions on the appropriate disposition of the
    trial judges order as to the costs of the trial and the costs of this appeal
    in light of these reasons.

John Laskin J.A.:

Robert J. Sharpe J.A.

Fairburn J.A.