COURT OF APPEAL FOR ONTARIO

CITATION: Orr v. Metropolitan Toronto Condominium Corporation
    No. 1056, 2015 ONCA 407

DATE: 20150608

DOCKET: C54309, C54310, C54311, C54315 & C54320

Feldman, Tulloch and Lauwers JJ.A.

BETWEEN

C54309

Kelly-Jean Marie Orr also known as Kelly-Jean
    Rainville

Plaintiff (Appellant)

and

Metropolitan Toronto Condominium Corporation No.
    1056, Gowling, Strathy & Henderson, Brookfield LePage Residential Management
    Services a division of Brookfield Management Services Ltd., Patrick Post,
    Pamela Cawthorn, Bruce Ward, Larry Boland, Francine Metzger, Michael Kosich and
    Richard Dorman

Defendants (Respondents)

and

Richard Weldon

Third Party (Respondent)

C54310

Kelly-Jean Marie Orr

Applicant (Appellant)

and

Metropolitan
    Toronto Condominium Corporation No. 1056

Respondent (Respondent)

C54311

Metropolitan Toronto Condominium Corporation No.
    1056

Plaintiff (Respondent)

and

Kelly-Jean Marie Orr

Defendant (Appellant)

C54315

Kelly-Jean Marie Orr also known as Kelly-Jean
    Rainville

Plaintiff (Respondent)

and

Metropolitan Toronto Condominium Corporation No.
    1056,
Gowling, Strathy & Henderson
, Brookfield
    LePage Residential Management Services a division of Brookfield Management
    Services Ltd., Patrick Post, Pamela Cawthorn, Bruce Ward, Larry Boland,
    Francine Metzger, Michael Kosich and Richard Dorman

Defendants (
Appellant
/Respondents)

and

Richard Weldon

Third Party (Respondent)

C54320

Kelly-Jean Marie Orr also known as Kelly-Jean
    Rainville

Plaintiff (Respondent)

and

Metropolitan Toronto
    Condominium Corporation No. 1056
, Gowling, Strathy & Henderson,
    Brookfield LePage Residential Management Services a division of Brookfield
    Management Services Ltd., Patrick Post, Pamela Cawthorn, Bruce Ward, Larry
    Boland, Francine Metzger, Michael Kosich and Richard Dorman

Defendants (Respondent)

and

Richard Weldon

Third Party (Appellant)

Geoffrey D.E. Adair, Q.C., for Kelly-Jean Marie Orr,
    also known as Kelly-Jean Rainville

Barry A. Percival, Q.C. and Theodore B. Rotenberg, for
    Metropolitan Toronto Condominium Corporation No. 1056, Bruce Ward, Larry Boland
    and Richard Dorman

Robert J. Clayton, for Brookfield LePage Residential Management
    Services, a division of Brookfield Management Services Ltd., Patrick Post and Pamela
    Cawthorn

David Gadsden, J. Brian Casey and Matt Saunders, for
    Gowling, Strathy & Henderson

Thomas W. Arndt, for Richard Weldon

By way of written submissions

Supplement reasons to reasons
    dated December 2, 2014. On appeal from the judgment of Justice Darla A. Wilson
    of the Superior Court of Justice, dated August 18, 2011, with reasons reported
    at 2011 ONSC 4876.

Lauwers J.A.:

[1]

These reasons address two sets of issues arising from the appeal
    decision of this court which was released on December 2, 2014, and is reported
    at 2014 ONCA 855. The first concerns the implementation of the decision. The
    second concerns costs, on which the parties were unable to agree. Each is
    addressed in turn.

A.

Implementation Issues

[2]

The panel agreed to accept further submissions on the following implementation
    and related issues outlined in a letter from counsel for the appellant to the
    courts Senior Legal Officer:

1.       Valuation
    of the difference between a two-storey and a three -    storey townhouse unit:
    There is no process in place for     determining the value as at December 2,
    2014, as ordered by        the Court;

2.       Entitlement
    to prejudgment/postjudgment interest on the third     floor valuation: The
    parties are at issue over whether the      valuation amount when ultimately
    determined is to bear       prejudgment interest or not.

3.       Commencement
    date from which both prejudgment and post      judgment interest on the other
    damages awarded are to run:            The parties are in agreement that the
    respective rates are      3.4 per cent and 3 per cent but are at issue over
    when           entitlement to prejudgment and postjudgment interest       commence.

4.       Plaintiffs
    entitlement to compensation during period of     restoration from three-storey
    unit to two-storey unit.

5.       Changes,
    if any, required to be made to the orders by      Wilson J. referring
    certain matters to the Master to conduct       references.

6.       Changes
    to the judgment against Weldon.

[3]

I address each issue in turn.

1.       The process for the
    determination of the difference in value between      a two-storey and three-storey
    townhouse unit.

[4]

Paragraph 140 of the reasons of this court provides:

I would set damages for negligence and negligent misstatement,
    for which Gowlings and MTCC 1056 are jointly and severally liable, as the
    difference between the value of townhouse 113 as a two-storey unit and a
    three-storey unit with the valuation date set as the date this decision is
    released.

[5]

The parties have requested that the value of the townhouse should be
    determined by way of the trial of an issue before the trial judge under s. 134(4)(c)
    of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43
.  I agree with this proposal, and would so order.

[6]

In relation to the damages award, Gowlings has requested the court to re-allocate
    fault, arguing that it should be apportioned 25 per cent to Gowlings and 75 per
    cent to MTCC 1056, given Gowlings narrow involvement in litigation and MTCC
    1056s combative interactions and acrimonious relationship with the Plaintiff [appellant]
    that unnecessarily lengthened and complicated the litigation.  This is
    effectively a request to re-open an issue that has been determined, as set out
    in para. 140 of the appeal reasons.  I would decline to do so. Gowlings and
    MTCC 1056 remain jointly and severally liable for the damages awarded for
    negligence and negligent misstatement.

2.       Interest on the damages award from the townhouse
    valuation

[7]

The appellant argues that, in addition to postjudgment interest, she is
    entitled to prejudgment interest on the valuation amount, from January 16, 1998
    to August 18, 2011, less a one-year period between October 1998 and October
    1999, relying on the
Courts of Justice Act
, s. 128(1).

[8]

The respondents, Gowlings and MTCC 1056, agree that the appellant is
    entitled to postjudgment interest, but argue that she is not entitled to
    prejudgment interest. The courts reasons provide that the loss respecting the
    value of the townhouse unit only crystalized on December 2, 2014, unlike the
    other damages that were incurred in 1998. Gowlings and MTCC 1056 argue that by
    moving the valuation date from the date of closing in 1998 to the date of the
    decision in 2014, the court fully valued the loss of the appellants opportunity
    to resell the townhouse as three-storey unit. They submit that both ascribing
    present-day value and also awarding interest for the past 17 years would
    over-compensate the appellant.

[9]

I agree with the respondents. In accordance with para. 148 of the appeal
    reasons, postjudgment interest is to be calculated in the manner set by the
    trial judge. No prejudgment interest will be payable on the damages relating to
    the valuation of the unit.

3.       The date from which both
    prejudgment and postjudgment interest on     the other damage awards are to run

[10]

As
    noted in para. 148, the general principle in this courts reasons is that interest
    is payable on the awards, calculated in the manner set by the trial judge. With
    respect to the legal fees, as the trial judge ordered, at para. 314,
    interest is to be paid from March 2001.

Prejudgment interest

[11]

With
    respect to the award for common element repairs, the trial judge ordered, at
    para. 369, that prejudgment interest would start in October 2006.

[12]

With
    respect to the end date, s. 128(1) of the
Courts of Justice Act
stipulates that prejudgment interest is calculated from the date the cause of
    action arose to the date of the order, defined in s. 127(1) as the date the
    date the order is made, even if the order is not entered or enforceable on that
    date, or the order is varied on appeal. Accordingly, prejudgment interest on
    the damages awarded for common element repairs ends on August 18, 2011  the
    date of the trial judges order awarding such damages, together with prejudgment
    interest.

[13]

The
    appellant seeks interest on the close-up costs. The respondents, Gowlings and
    MTCC 1056, argue that close-up costs were not awarded by this court and do not
    attract postjudgment interest.

[14]

At
    para. 147 of the appeal reasons, it was ordered that [t]he trial judges
    damage awards that are not consistent with these reasons would be set aside. The
    question about whether close-up costs were to be incurred was left to MTCC 1056
    to decide, as noted at para. 120, simply because one option for MTCC 1056 was
    to the third floor intact, thereby obviating close-up costs. This court found,
    at para. 117, that the appellant had no obligation to close up the third floor,
    and did not award close-up costs to the appellant, so there is no award of
    close-up costs to her that would attract interest.

Postjudgment interest

[15]

Postjudgment
    interest commences on August 19, 2011, as agreed by the parties.

4.       Is the appellant entitled
    to compensation while the townhouse is   restored from a three-storey unit to a
    two-storey unit?

[16]

Based
    on the reasons given under the previous issue, the appellant is not entitled to
    compensation for the expenses associated with any close-up.

5.       What
    changes, if any, are required relating to the orders by the trial judge
    referring certain matters to the Master to conduct references?

[17]

Paragraph
    147 of the appeal reasons set aside the trial judges damage awards that were
    not consistent with this courts reasons.

[18]

The
    trial judge ordered two references, at para. 421 (d),

*the close up costs of the third floor, in a sum to be
    determined by the Master; and

*the decorating/renovation costs to the third floor, in a sum
    to be determined by the Master pursuant to Rule 54.02(1)

[19]

These
    references are no longer necessary. The close up costs of the third floor are
    MTCC 1056s responsibility to incur or to avoid. The appellant was awarded the
    difference in the value between a two-storey and a three-storey unit. The fact
    that she spent money converting a two-storey unit into a three-storey unit will
    only be compensated, if at all, in the notional sale price of the townhouse as
    a three-storey unit; that is the fair measure of her damages. She is not
    entitled to separate compensation for expenditures on the decorating and
    renovation of the third floor; these were a matter of personal taste which the
    market may not value in the sale price of the unit. Therefore, no references
    are necessary.

6.       Changes to the Judgment against Weldon

[20]

The
    trial judge fixed the amount of damages to be paid to the plaintiff by MTCC 1056
    at half of the cost of repairs to the common elements, or $20,840.50. This
    court, at para. 142, found that MTCC 1056 should compensate the appellant for all
    of the common element repair costs in the full amount of $41,681.00.

[21]

MTCC
    1056 urges this court to increase the amount that Weldon is to pay to indemnify
    MTCC 1056 for the entire cost of the common element repairs awarded on appeal,
    or $48,650.44, under the courts jurisdiction in s. 134(5) of the
Courts of
    Justice Act
.

[22]

Weldon
    argues that his liability should not be increased because MTCC 1056s notice of
    cross-appeal did not seek to vary the judgment on the third party action if the
    appeal succeeded. Accordingly, Weldon had no opportunity to participate in the
    argument on that issue.

[23]

MTCC
    1056 was clearly exposed to an additional award of damages to the appellant on
    this head, and failed to seek indemnity in its notice of cross-appeal.  I would
    not make a change in the judgment against Weldon.

[24]

Finally,
    MTCC 1056 points out that the start date for postjudgment interest for costs
    should be changed from August 19, 2012 to August 19, 2011, being the day after
    the release of the reasons in the main action. I would make this change.

B.

Costs Issues

1.

Costs of the
    Appeal

The Appellants Appeal Costs

[25]

The
    parties have agreed that the appellant should be awarded the costs of the
    appeal in the amount of $75,000 (inclusive of taxes) plus $13,341.63 in
    disbursements. The total is $88,341.63. While the parties have agreed on
    quantum, they have not agreed on who should pay.

[26]

Gowlings
    argues that, based on the time allocated to the various issues on appeal, MTCC 1056
    should pay 75 per cent of the appellants costs and Gowlings should pay the
    remaining 25 per cent. MTCC 1056 argues that the liability for the appellants
    costs should be divided equally between it and Gowlings, and adds that
    Brookfield should then be required to indemnify MTCC 1056 for its portion under
    the provision in the Management Agreement referred to in this courts decision
    at para. 45.

[27]

Considering
    the issues at trial and on appeal, not from the viewpoint of time spent, but in
    terms of the monetary recovery of the affected parties on appeal, I would
    divide the appellants appeal costs equally between Gowlings and MTCC 1056 in
    the amount of $44,170.81 each.

[28]

MTCC
    1056s claim that Brookfield must indemnify it for its cost liability to the
    appellant is a contractual claim based on the Management Agreement. The trial
    judge did not decide this issue since she found that neither MTCC 1056 nor Brookfield
    were negligent in preparing the estoppel certificate. On appeal, MTCC 1056 was
    found liable for negligent misrepresentation, but was entitled to
    indemnification by Brookfield for the resulting damages owed to the appellant. Whether
    Brookfields indemnification obligation extends to costs is now a live issue. In
    my view, this matter should be remitted to the trial judge to be determined as
    a trial of an issue under s. 134(4)(c) of the
Courts of Justice Act
.
    This will permit the parties to make full submissions on the scope of
    Brookfields liability for costs under the Management Agreement.

Brookfields Appeal Costs against the Appellant

[29]

This
    court concluded that Brookfield was not liable for negligent misrepresentation.
    Accordingly, Brookfield claims it is entitled to its appeal costs from the
    appellant in the amount of $45,302.49 (inclusive of taxes). No party contests
    the quantum of Brookfields costs claim.

[30]

The
    appellant brought the negligent misrepresentation claim against Brookfield. The
    usual result would be for the appellant to pay Brookfields costs. As the trial
    judge noted, a Sanderson order may be appropriate where it was reasonable for a
    plaintiff to bring an action against several defendants. If the plaintiff is
    successful against one or some of the defendants but unsuccessful against
    others, the resulting cost order against the plaintiff may lead to unjust
    results. She issued a modified Sanderson order requiring that the appellant pay
    75 percent of Brookfields costs and that Gowlings pay the remaining 25 percent
    on the ground that the appellants claim against Brookfield should have been
    resolved prior to trial.

[31]

I
    agree with the trial judge that a modified Sanderson order should be issued to mitigate
    the unfairness that would result from ordering the appellant to pay the
    entirety of Brookfields costs. While I agree with the trial judge that there
    was no rationale for the appellant to persist with some of her arguments against
    Brookfield and its employees, this does not apply to the negligent
    misrepresentation claim. There is force to the appellants submission that the
    result is a Pyrrhic victory for Brookfield. It was reasonable for the appellant
    to advance this argument against both Brookfield and MTCC 1056. As a result, I
    would modify the Sanderson order to provide that the appellant is responsible
    for 50 percent of Brookfields appeal costs, in the amount of $22,651.25.

[32]

In
    light of the outcome on appeal, a further modification to the Sanderson order
    is necessary. While MTCC 1056 was successful in defending against the
    appellants misrepresentation claim at trial, it was unsuccessful on appeal. As
    a result, it is no longer a successful defendant and should not be sheltered
    from liability under the Sanderson order. I would therefore divide the balance
    of Brookfields costs equally between Gowlings and MTCC 1056, in the amount of
    $11,325.62 each. Whether MTCC 1056s liability for this amount falls within the
    scope of any indemnity under the Management Agreement will be determined by the
    trial judge after the trial of the issue discussed in the preceding section.

MTCC 1056s Appeal Costs against Brookfield and Gowlings

[33]

MTCC
    1056 claims $117,312 in total, divided equally between the appellants appeal
    and the Gowlings appeal. As between MTCC 1056s insured interests and its
    uninsured interests, MTCC 1056 argues the ratio should be about two-thirds
    (2/3) for its insured interests and one-third (1/3) for its uninsured interests.
    This allocation is consistent with the decision of the trial judge that it was
    appropriate for both of MTCC 1056s interests to be separately represented.
    Accordingly, MTCC 1056 seeks $39,990.60 for its insured interests and
    $18,664.78 for its uninsured interests in respect of each of the appeals. It
    asserts that Brookfield should pay MTCC 1056s costs for the appellants appeal
    based on the Management Agreement and Gowlings should pay MTCC 1056s costs for
    the Gowlings appeal.

[34]

Gowlings
    argues that the quantum of MTCC 1056s costs claim for the appeal is excessive
    and beyond Gowlings reasonable expectations, taking into account the
    principles in
Boucher v. Public Accountants Council for the Province of Ontario
(2004), 71 O.R. (3d) 291 (C.A.).

[35]

I
    agree that the amount claimed by MTCC 1056 is excessive, particularly having
    regard to the amount claimed by the appellant to which the parties have agreed
    ($75,000 inclusive of taxes). I would therefore set total appeal fees for MTCC 1056
    at $80,000 (inclusive of taxes). MTCC 1056s insured interests are also
    entitled to their claimed disbursements in the amount of $4,981.20. This amount,
    totalling $84,981.20, should be divided equally between the appellants appeal
    and the Gowlings appeal, consistent with MTCC 1056s allocation.

[36]

MTCC
    1056 claims it is entitled to recover its costs for the appellants appeal from
    Brookfield under the Management Agreement.

[37]

Brookfield
    notes that although MTCC 1056 was successful in obtaining indemnification from
    Brookfield for its damages for negligent misrepresentation, this court
    determined that the appropriate measure of damages was the loss of the value of
    the third floor. Brookfield argues that its proportional liability for costs
    should be measured solely against this amount as a proportion of the total
    damages awarded to the appellant. It should not be required to pay MTCC 1056s
    costs related to issues such as the common element repairs, which were solely
    MTCC 1056s responsibility and had nothing to do with the estoppel certificate
    or the negligent misrepresentation claim.

[38]

As
    noted above, the difference in value between the townhouse as a two-storey unit
    and as a three-storey unit will be determined by the trial judge after a trial
    of an issue (in the absence of any more cost effective consensual mechanism
    that the parties may agree on). Even if Brookfields argument were accepted, it
    would be impossible to quantify Brookfields liability for MTCC 1056s costs
    until the damage award for negligent misrepresentation is determined, along
    with the proper application of the Management Agreement. As a result, Brookfields
    liability for MTCC 1056s costs on the appellants appeal should also be remitted
    to the trial judge.

[39]

Gowlings
    argues that it should only be required to pay the costs of MTCC 1056s
    uninsured interests on the basis that only the uninsured interests were
    involved in the Gowlings appeal.  In my view, the appeal argument did not
    divide out between MTCC 1056s various interests as cleanly as Gowlings suggests.

[40]

It
    was reasonable for both MTCC 1056s insured and uninsured interests to
    participate in the Gowlings appeal because there would have been consequences
    for both interests had Gowlings been successful. In the circumstances, Gowlings
    is liable for the full amount ($42,490.60), to be allocated between MTCC 1056s
    insured and the uninsured interests in the ratios of two-thirds ($28,327.07)
    and one-third ($14,163.53), respectively.

2.

Costs of the
    Trial

The Appellants Trial Costs

[41]

The
    appellant seeks to recover her trial costs in the amount of $300,000. The other
    parties do not challenge the quantum but disagree about who should pay.

[42]

Gowlings
    argues that it should only be liable for 25 per cent of the appellants costs
    due to its limited involvement in the trial. MTCC 1056 argues that it is not
    liable for any of the appellants trial costs due to its pre-trial offers to
    contribute. Variations on both of these arguments were rejected by the trial
    judge, and I see no reason to depart from her conclusions on these points.

[43]

In
    my view, liability for the appellants trial costs should be allocated in the
    same manner as her appeal costs. MTCC 1056 and Gowlings are each liable for 50
    per cent, which translates to $150,000 each. For the reasons noted above with
    respect to the appellants appeal costs, whether Brookfield must indemnify MTCC
    1056 for any portion of MTCC 1056s cost obligation to the appellant will be
    determined by the trial judge following the trial of the issue.

MTCC 1056s Trial Costs against Brookfield and Gowlings

[44]

MTCC
    1056 claims its trial costs in the amount of $500,000. The trial judge issued a
    Sanderson order requiring that Gowlings pay MTCC 1056s costs. Given the
    outcome on appeal, MTCC 1056 is no longer a successful defendant and the
    Sanderson order must be set aside. There is no basis to hold Gowlings liable
    for any portion of MTCC 1056s trial costs.

[45]

MTCC
    1056 sought leave to appeal the trial judges refusal to award MTCC 1056 its
    costs on a substantial indemnity basis. No error in principle has been
    identified and I would not grant MTCC 1056s request for leave.

[46]

MTCC
    1056 argues that due to its success on its cross-claim against Brookfield,
    Brookfield would normally be responsible for MTCC 1056s trial costs. However,
    MTCC 1056 argues that this liability is displaced by Brookfield and MTCC 1056s
    offers to contribute. MTCC 1056 argues that as a result of these offers, Gowlings
    should pay MTCC 1056s trial costs. As noted above, a similar argument regarding
    the effect of offers to contribute was rejected by the trial judge, and I see
    no basis to depart from her conclusion on this point.

[47]

As
    for whether Brookfield is responsible for any portion of MTCC 1056s trial
    costs based on the Management Agreement, this will be determined by the trial
    judge for the reasons set out above with respect to MTCC 1056s appeal costs.

Brookfields Trial Costs against the Appellant and Gowlings

[48]

Brookfield
    argues that the trial judges order that Gowlings pay 75 per cent of its costs and
    the appellant pay the remaining 25 per cent, for a total of $200,000, should be
    upheld.

[49]

In
    light of the outcome on appeal, I would modify the Sanderson order to allocate
    Brookfields costs in the same manner set out above with respect to
    Brookfields appeal costs. As a result, liability breaks down as follows: 50
    per cent to be paid by the appellant ($100,000); 25 per cent to be paid by
    Gowlings ($50,000); and 25 per cent to be paid by MTCC 1056 ($50,000). Whether
    MTCC 1056 can recover this portion of its liability from Brookfield under the
    Management Agreement will be determined by the trial judge after the trial of the
    issue discussed above.

3.

Summary of Cost
    Obligations

Appeal Costs

[50]

In
    summary:

The appeal costs shall be paid as follows:

·

$44,170.81 to the appellant by MTCC 1056 (para. 27);

·

$44,170.81 to the appellant by Gowlings (para. 27);

·

$42,490.60 to MTCC 1056 by Gowlings (para. 40);

·

$22,651.25 to Brookfield by the appellant (para. 31);

·

$11,325.62 to Brookfield by MTCC 1056 (para. 32); and

·

$11,325.62 to Brookfield by Gowlings (para. 32).

The trial cost awards shall be paid as follows:

·

$150,000 to the appellant by MTCC 1056 (para. 43);

·

$150,000 to the appellant by Gowlings (para. 43);

·

$100,000 to Brookfield by the appellant (para. 49);

·

$50,000 to Brookfield by MTCC 1056 (para. 49); and

·

$50,000 to Brookfield by Gowlings (para. 49).

[51]

I
    attach a schedule summarizing the costs awards.

Released:  June 8, 2015 KF

P.
    Lauwers J.A.

I
    agree K. Feldman J.A.

I
    agree M. Tulloch J.A.

Schedule
Summary of Cost
    Awards
*

PARTY

TRIAL
          COST ENTITLEMENT

TRIAL
          COST OBLIGATIONS

APPEAL
          COST ENTITLEMENT

APPEAL
          COST OBLIGATIONS

TOTAL
          ENTITLEMENT

TOTAL
          OBLIGATION

TOTAL

Appellant

·

$150,000
          from Gowlings (para. 43)

·

$150,000
          from MTCC 1056 (para. 43)

Total
          = $300,000

·

$100,000
          to Brookfield (para. 49)

Total
          = $100,000

·

$44,170.81
          from Gowlings (para. 27)

·

$44,170.81
          from MTCC 1056 (para. 27)

Total
          = $88,341.63

·

$22,651.25
          to Brookfield (para. 31)

Total
          = $22,651.25

$388,341.63

$122,651.25

Recovers
          $265,690.38

MTCC
          1056

Total
          = $0

·

$150,000
          to the appellant (para. 43)

·

$50,000
          to Brookfield (para. 49)

Total
          = $200,000

·

$42,490.60
          from Gowlings (para. 40)

Total
          = $42,490.60

·

$44,170.81
          to the appellant (para. 27)

·

$11,325.62
          to Brookfield (para. 32)

Total = $55,496.43

$42,490.60

$255,496.43

Owes
          $213,005.83

Gowlings

Total
          = $0

·

$150,000
          to the appellant (para. 43)

·

$50,000
          to Brookfield (para. 49)

Total
          = $200,000

Total
          = $0

·

$44,170.81
          to the appellant (para. 27)

·

$42,490.60
          to MTCC 1056 (para. 40)

·

$11,325.62
          to Brookfield (para. 32)

Total
          = $97,987.03

$0

$297,987.03

Owes
          $297,987.03

Brookfield

·

$100,000
          from the appellant (para. 49)

·

$50,000
          from Gowlings (para. 49)

·

$50,000
          from MTCC 1056 (para. 49)

Total
          = $200,000

Total
          = $0

·

$22,651.25
          from the appellant (para. 31)

·

$11,325.62
          from Gowlings (para. 32)

·

$11,325.62
          from MTCC 1056 (para. 32)

Total
          = $45,302.49

Total
          = $0

$245,302.49

$0

Recovers
          $245,302.49

*As
    between Brookfield and MTCC 1056, these awards are subject to the decision of
    the trial judge regarding the scope of Brookfields obligations under the
    Management Agreement.


COURT OF APPEAL FOR ONTARIO

CITATION: Osztrovics Estate v. Osztrovics Farms Ltd., 2015
    ONCA 463

DATE:  20150622

DOCKET: M45166 (C60373)

Brown J.A. (In Chambers)

In the Matter of the Bankruptcy
    of Victor Osztrovics of the Town of Burford, in the Province of Ontario

BETWEEN

PricewaterhouseCoopers Inc. in its capacity as
    Trustee of the Estate of Victor Osztrovics, a Bankrupt

Responding Party

and

Osztrovics Farms Ltd., Elysia Osztrovics and
    Violet Osztrovics

Moving Parties

Alastair J. McNish, for the moving parties

Christopher Horkins, for the responding party

Heard: June 12, 2015

ENDORSEMENT

OVERVIEW

[1]

The applicants, Osztrovics Farms Ltd. (OFL), Elysia Osztrovics and
    Violet Osztrovics (collectively the Osztrovics Applicants), seek leave
    pursuant to s. 193(e) of the
Bankruptcy and Insolvency Act
, R.S.C.
    1985, c. B-3, to appeal from the order of Wilton-Siegel J. dated April 9, 2015
    (the Order) (reasons reported at 2015 ONSC 2079). The Order dismissed the
    Osztrovics Applicants appeal from the order of Registrar Short dated August 6,
    2014 (reasons reported at 2014 ONSC 4405), and granted the cross-appeal of PricewaterhouseCoopers
    Inc., the Trustee in bankruptcy of the estate of Victor Osztrovics, who held
    shares in OFL.

[2]

Back in November, 2012, the Trustee requested from OFL certain
    information that it required to value the bankrupts shares in the corporation.
    To date, OFL has refused to provide this information.  The effect of the Order
    is to require OFL to disclose to the Trustee a list of documents pursuant to
BIA
s. 164 and to require Elysia, the bankrupts wife, and Violet, the bankrupts
    mother, to submit to oral examinations pursuant to
BIA
s. 163.

[3]

As a preliminary matter, the Trustee submits that the Osztrovics
    Applicants missed, by one day, the deadline for bringing their leave motion
    specified by the
BIA
and its rules.  Given that it was obvious the
    Osztrovics Applicants intended to appeal the Order, in my view the justice of
    the case supports granting the applicants an extension of time so that this
    matter can be dealt with on its merits:
Bankruptcy and Insolvency General
    Rules
, C.R.C. 1978, c. 368, s. 31(1).  For the reasons that follow, the
    application for leave to appeal is dismissed.

BACKGROUND FACTS

[4]

OFL is incorporated under the Ontario
Business Corporations Act
,
    R.S.O. 1990, c. B.16, and operates a tobacco farm. Elysia and Violet are directors
    of OFL, as was the bankrupt prior to his bankruptcy on June 21, 2011.

[5]

Violet owns 51.7% of OFLs Class A voting shares. Prior to his
    bankruptcy, the bankrupt owned 51 OFL common shares and 48% of the companys Class
    A voting shares. Those shares are now registered in the name of the Trustee.

[6]

On November 20, 2012, the Trustee wrote to OFLs counsel requesting all
    information and documents relating to OFLs operations. In its First Report
    dated July 11, 2013, the Trustee reported that it needed documents about OFLs
    business affairs in order to value the bankrupts shares in OFL. Those shares
    constitute the bankrupts most significant asset. The Trustee reported that OFL
    had refused to provide the requested information and documents. In its Report,
    the Trustee stated that it was seeking an order under
BIA
s. 164(1)
    compelling OFL to provide the requested documents, and orders under
BIA
s. 163(1) compelling Elysia and Violet to attend examinations under oath.

[7]

The Trustees motion initially was heard by the Registrar. Wilton-Siegel
    J. summarized the Registrars decision at para. 7 of his reasons:

In his reasons dated August 6, 2014, (the "Reasons")
    the Registrar concluded that the language of ss. 163 and 164 was sufficiently
    broad to encompass documents of a corporation respecting its business and
    affairs, i.e. that such documents may also relate "in whole or in part to
    the bankrupt, his dealings or property. The Registrar further concluded in
    paragraph 73 of the Reasons that, in this case, the Trustee had demonstrated
    the necessary link between the Information and the Bankrupt, his dealings or
    property. On this basis, he ordered the disclosure of the Information. He also
    ordered the examinations of Elysia and Violet for the same reason, although he
    considered that the "proportionality principle" required a
    "hybrid solution" to the order sought under s. 163 in respect of
    Violet, being the delivery of responses to written interrogatories.

The Registrar ordered that each party should bear its
    own costs of the motion.

[8]

The Osztrovics Applicants appealed the Registrars order, and the
    Trustee cross-appealed that part of the order which required Violet to answer
    written interrogatories instead of submitting to an oral examination. The
    motion judge dismissed the Osztrovics Applicants appeal, granted the Trustees
    cross-appeal, and set aside the Registrars cost order, instead awarding the
    Trustee its partial indemnity costs.

[9]

The Osztrovics Applicants seek leave to appeal the Order, submitting
    that the motion judge erred by:

(i)

interpreting the Trustees right to access under
BIA
ss. 163
    and 164 as one which entitled the Trustee to disclosure from a private
    corporation of such information as is relevant to permit a valuation of shares
    of a bankrupt in such corporation;

(ii)

setting aside a confidentiality term the Registrar had attached to OFLs
    disclosure of information pursuant to
BIA
s. 164;

(iii)

authorizing the
BIA
s. 163 examination of Violet and requiring
    that the examination be an oral one, instead of one conducted by way of written
    interrogatories; and,

(iv)

interfering with the Registrars cost decision.

APPLICABLE TEST

[10]

Section
    193 of the
BIA
provides that in any case other than those enumerated
    in
BIA
ss. 193(a) to (d), an appeal lies to the Court of Appeal only
    with leave of a judge of the Court of Appeal. In
Business Development Bank
    of Canada v. Pine Tree Resorts Inc.
, 2013 ONCA 282, 115 OR (3d) 617, at
    para. 29, Blair J.A. summarized the principles applicable on a leave to appeal
    motion under
BIA
s. 193(e):

Beginning with the overriding proposition that the exercise of
    granting leave to appeal under s. 193(e) is discretionary and must be exercised
    in a flexible and contextual way, the following are the prevailing
    considerations in my view. The court will look to whether the proposed appeal,

a)

raises an
    issue that is of general importance to the practice in bankruptcy/insolvency
    matters or to the administration of justice as a whole, and is one that this
    Court should therefore consider and address;

b)

is
prima
    facie
meritorious, and

c)

would
    unduly hinder the progress of the bankruptcy/insolvency proceedings.

[11]

In
    respect of the merits of an appeal, an applicant must be able to convince the
    court that there exist legitimately arguable points so as to create a
    realistic possibility of success on the appeal:
Re Ravelston Corp.
,
    24 C.B.R. (5th) 256, [2005] O.J. No. 5351 (C.A.), at paras. 28-29;
Re
    Ravelston Corp. Ltd.
, 2007 ONCA 268, 31 C.B.R. (5th) 233, at para. 12.

ANALYSIS

The Trustees power to demand documents

[12]

The
    Osztrovics Applicants submit that the motion judge erred in concluding that
BIA
s. 164 authorized the Trustee to demand internal corporate records from a
    privately-held corporation in which the bankrupt owned shares. They contend
    that
BIA
s. 164 only permits a trustee to gain access to records in
    the hands of third parties that pertain directly to a bankrupts business and
    dealings, such as the records of the auditors and accountants of the bankrupt.

[13]

The
    general importance and merit of the issue, the applicants argue, is supported
    by the Trustees inability to cite a single case where a corporation in which
    a bankrupt individual owned shares was ordered to produce its internal
    corporate records. They contend that the determination of the proper scope of
BIA
s. 164 would be of significant interest to the practice in bankruptcy/insolvency
    matters, as would the issue of whether the motion judge erred in finding that
    no operational conflict existed between
BIA
ss. 163 and 164 and the duties
    of care imposed on directors by
OBCA
s. 134.

[14]

In
    the specific circumstances of this case, I do not regard the issue raised by
    the applicants concerning the scope of
BIA
s. 164 as
prima facie
meritorious.
BIA
s. 164(1) authorizes a trustee to require a person to
    produce any documents or records in his possession of any kind relating in
    whole or in part to the bankrupt, his dealings or property. After noting that
    the Registrar had concluded that the information sought by the Trustee was
    relevant to the valuation of the bankrupts shares in OFL, the motion judge
    stated, at paras. 13 through 16 of his reasons:

The disclosure contemplated by ss. 163 and 164 of the
BIA
is
    directed toward ensuring that the trustee can fulfill its responsibilities to
    investigate and value, or otherwise establish, the assets and the liabilities
    of the bankrupt. In this regard, the valuation of any shares owned by a
    bankrupt is an important element, particularly where, as in the present
    circumstances, such shares represent the most significant asset of the estate.

Accordingly, while there may be issues regarding the relevance
    of particular documents of a corporation for any valuation of the shares of
    such corporation, I think that the principle is clear. A trustee in bankruptcy
    is entitled to disclosure from a private corporation of such information as is
    relevant to permit a valuation of shares of a bankrupt in such corporation. Further,
    I do not accept the implicit premise of the Appellants' argument  that
    corporate documentation pertains solely to the business and affairs of the
    corporation. In the present circumstances, where the former shares of the
    Bankrupt in OFL constitute the most significant asset of his estate and
    represent a significant shareholding in OFL, there is no reason why the
    Information cannot pertain to both the Bankrupt and OFL for the purposes of s.
    164 of the
BIA
.

[15]

Without
    accepting the breadth of the principle articulated by the motion judge, I see
    no viable argument that he erred in affirming the Trustees authority to demand
    the information sought from OFL in the specific circumstances of this case
    i.e. where the bankrupt held a significant number of the issued shares of OFL,
    those shares constitute the most significant asset of the bankrupts estate,
    and the information sought from OFL is necessary to value the bankrupts
    shares. The position advanced by the applicants  that the Trustees power to
    demand documents under
BIA
s. 164 does not extend to disclosure from a
    private corporation of information relevant to permit a valuation of the bankrupts
    shares in OFL  asks the court to read into the section limiting language not
    suggested by s. 164 nor which finds any support in the case law. Moreover, such
    a limitation on the powers of the Trustee under s. 164 would frustrate its
    ability to discharge its duty to the bankrupts creditors to value and realize
    upon the most significant asset in his estate  his shares in OFL.

[16]

As
    to the applicants argument that the motion judge erred in finding no
    operational conflict existed between
OBCA
s. 134 and
BIA
ss.
    163-164, apparently it was the Registrar who first raised the issue of the
    possible application of the doctrine of federal paramountcy, but he concluded
    that no operational conflict existed. Putting to one side the question of why
    the applicants would wish to raise this as an issue on appeal when a finding of
    operational conflict would result in the federal legislation  i.e.
BIA
s. 164  prevailing, I see no viable argument that the motion judge erred in
    principle when he concluded, in paras. 29 through 31 of his reasons, that:

I am not persuaded that the Registrar erred in law in
    concluding that there was no operational conflict between s. 134 of the
OBCA
and ss. 163 and 164 of the
BIA
.

The Appellant's argument incorrectly posits a conflict between
    the directors' duty or discretion, on the one hand, and a trustee's power to
    investigate. The real operational question is between the trustee's right to
    disclosure as a shareholder and its right to disclosure as a trustee in
    bankruptcy. The former is complementary to the latter, not in conflict with it.

There is also no conflict between the provisions of s. 134 of
    the
OBCA
and the
BIA
. As the Appellants note, s. 134 merely
    codifies the obligations of directors to act in the best interests of a corporation.
    Any determination that directors may make regarding the best interests of a
    corporation is necessarily restricted by the obligation of the corporation to
    comply with statutorily mandated powers, whether derived from federal or
    provincial statutes.

[17]

I
    conclude that there is no realistic possibility that the Osztrovics Applicants
    could succeed on appeal were leave to appeal granted on this issue.

The remaining grounds of appeal
    involving
BIA
ss. 163 and 164

[18]

The
    Osztrovics Applicants seek leave to appeal on two other
BIA
ss. 163
    and 164 issues:

(i)

the decision of the motion judge to set aside para. 2 of the Registrars
    order, which had stipulated that commercially sensitive information of OFL
    that is disclosed to the Trustee, and corporate records of OFL which disclose
    such commercially sensitive informationshall not be disclosed to the creditors
    or the inspectors that have been appointed by the creditors; and,

(ii)

the order that Violet submit to a
BIA
s. 163 examination by way
    of oral examination.

[19]

As
    to the first ground, the applicants submit that the motion judge exceeded his
    jurisdiction as an appeal judge under
BIA
s. 192(4) by dealing with
    para. 2 of the Registrars order because that term of the order was not under
    appeal. I see no merit in this argument: the Osztrovics Applicants Notice of
    Motion by way of Appeal asked to set aside the Registrars decision in its
    entirety.

[20]

As
    to the
BIA
s. 163 examination of Violet, the bankrupts mother and a
    director of OFL, the motion judge quite reasonably observed, at para. 50 of his
    reasons, that the Registrar had determined Violet was a person who had
    knowledge of the affairs of [the] bankrupt, and the applicants advance no
    argument as to how the Registrar erred in making that finding of fact.  Given the
    Registrars finding of fact, it is difficult to see how Violet can fashion a
    viable argument resisting submitting to a
BIA
s. 163 examination.

[21]

The
    Osztrovics Applicants submit that the Registrar possessed the power to impose
    confidentiality conditions on the disclosure of information to the Trustee and
    to direct that the examination of Violet proceed by way of written
    interrogatories, and the motion judge therefore erred in setting aside those
    portions of the Registrars order.

[22]

Irrespective
    of the strength or weakness of the merits of those arguments, to grant leave to
    appeal on these issues in the specific circumstances of this case would unduly
    hinder the progress of this bankruptcy proceeding. The Trustee made its initial
    demand for information about OFL on November 20, 2012. Over the past 2.5 years
    the Osztrovics Applicants have refused to provide the requested information.
    Their refusal has prevented the Trustee from valuing the most important asset
    in the bankrupts estate  his shares in OFL. To permit an appeal would further
    delay the administration of an estate whose affairs already have been impeded
    unduly by the applicants refusals.

Leave to appeal the costs award

[23]

The
    Registrar ordered that each party bear their own costs notwithstanding that the
    Trustee had succeeded in obtaining generally what it was seeking. The motion
    judge set aside that order and awarded the Trustee partial indemnity costs. The
    Osztrovics Applicants submit that there was no basis for the motion judge to
    interfere with the Registrars discretionary costs order. Regardless of any
    merits in that argument, the correctness of the costs award does not raise an
    issue that is of general importance to the practice in bankruptcy/insolvency
    matters or to the administration of justice as a whole, and I am not satisfied
    that leave to appeal that issue should be granted.

DISPOSITION

[24]

I
    dismiss the Osztrovics Applicants motion for leave to appeal. I agree with the
    applicants that the partial indemnity costs of $12,180.68 sought by the Trustee
    on this leave motion are too high. In my view, a fair and reasonable award of
    costs to the Trustee would be $6,000, which I order the Osztrovics Applicants
    to pay to the Trustee within 10 days of the date of this order.

David Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 459

DATE: 20150622

DOCKET: C58689

Cronk, Gillese and Rouleau JJ.A.

BETWEEN

P.A.R.C.E.L.
    Inc., Bijan Pardis and

P.A.C.I.F.I.C.
    Inc.

Defendants (Appellants)

and

Sam Acquaviva and Premier Homes Realty Ltd.

Plaintiffs (Respondents)

Howard Crosner, for the appellants

Domenic Saverino, for the respondents

Heard: November 12, 2014

On appeal from the judgment of Justice Peter A. Douglas of
    the Superior Court of Justice, dated January 31, 2014.

COSTS ENDORSEMENT

[1]

This court released its judgment in this appeal on May 12, 2015.  For
    reasons given, the appeal was allowed in part and the parties were directed to
    deliver their submissions concerning the costs of the appeal within timelines
    set by the court.

[2]

The court has now received and reviewed those submissions.

[3]

Based on the written submissions received, the costs claimed, the
    motions in this court resulting in orders dated June 12 and July 7, 2014, the
    issues raised on appeal and this courts disposition of the appeal, the
    appellants are entitled to their costs of the appeal and the motions in this
    court, fixed in the total amount of $25,000, inclusive of disbursements and all
    applicable taxes.

E.A. Cronk J.A.

E.E. Gillese J.A.

Paul Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: PDM Entertainment Inc. v. Three
    Pines Creations Inc., 2015 ONCA 488

DATE: 20150629

DOCKET: C60024

MacPherson, Epstein and Roberts JJ.A.

BETWEEN

PDM Entertainment Inc.

Applicant (Respondent)

and

Three Pines Creations Inc. and Louise Penny

Respondents (Appellants)

Kenneth Prehogan and Hilary Book for the appellants

M. Scott Martin, for the respondent

Heard: June 12, 2015

On appeal from the judgment of Justice Kevin W. Whitaker
    of the Superior Court of Justice, dated January 23, 2015.

MacPherson
    J.A.:

A.

Overview

[1]

The appellant, Louise Penny, is an award-winning Canadian mystery
    writer. In 2011, she optioned certain rights to her books to a television
    production company, the respondent PDM Entertainment Inc. (PDM). Through her
    company, the appellant Three Pines Creations Inc. (Three Pines), Ms. Penny granted
    PDM the option to purchase the rights to her works for the purpose of producing
    made-for-television movies.

[2]

The option agreement had an initial two-year term. It also provided for extensions.
    When PDM gave notice that it was invoking the extension clause, Ms. Penny and
    Three Pines asserted that PDMs rights under the agreement had ended.

[3]

The parties brought duelling applications, which the application judge
    heard together on January 22, 2015. He found for PDM the next day.

[4]

Ms. Penny and Three Pines appeal.

B.

Facts

(1)

The parties and events

[5]

Louise Penny is a wonderful writer. She is the author of a series of ten
    novels featuring Chief Inspector Armand Gamache of the Sûreté de Québec and the
    imaginary, bucolic Quebec village of Three Pines. These books are, in a word,
    delightful. (I have read them all, usually by a fireplace on Boxing Day.)

[6]

The first novel in the series,
Still Life
, was published in
    2005. The second,
Dead Cold
, followed in 2007 and the tenth,
The
    Long Way Home
, in 2014. The novels have been a huge success; more than
    three million copies have been sold in 30 countries and 23 languages. They have
    appeared on the bestseller lists of the
Globe and Mail
, the
London
    Times
and the
New York Times
.

[7]

The novels have also achieved significant critical acclaim. Ms. Penny
    has won awards for her books, including the Arthur Ellis Award (Canada), the
    Dagger Award (United Kingdom) and the Agatha Award (United States). She is the
    only writer ever to have won the Agatha Award five times.

[8]

Three Pines is a Canadian company and the assignee of Ms. Pennys rights
    in the Gamache novels. Ms. Penny is its sole officer, director and shareholder.

[9]

PDM is an Ontario company that produces television programs. It was
    formed in 2011 by Phyllis Platt, Brian Dennis and Peter Moss, all of whom have
    substantial experience in the production of television movies.

[10]

In
    September 2011, PDM as Producer and Three Pines as Owner entered into an
    Option/Purchase Agreement (Option Agreement). It gave PDM an exclusive option
    to acquire certain rights in the Gamache novels, including the exclusive right
    to make made-for-television movies based on the novels.

[11]

Section
    2.1 of the Option Agreement required PDM to pay Three Pines $16,000 for an
    option on an initial set of two books (the First Set Option Fee). PDM paid
    this fee.

[12]

The
    Option Agreement provides that the option for the initial two books terminates
    after two years unless extended:

2.2     Unless
    extended as provided for in Section 2.3 or Section 2.3B, the Option for the
    initial two Books (the First Set Option) will terminate on the day that is 24
    months from the date of execution of this Agreement (the Initial First Set
    Option Period).

[13]

Sections
    2.3 and 2.3B, which are at the heart of this litigation, enable PDM to extend
    the initial two-year term:

2.3 Provided
    that Producer remains in active development with respect to one or both
    Productions based on the initial two Books, Producer will be entitled to extend
    the Initial First Set Option Period for a further 12-month period (the
    Extended First Set Option Period) upon payment to Owner of the sum of C$8,000
    (the First Set Option Extension Fee) on or before the last day of the Initial
    First Set Option Period. The First Set Option Extension Fee will not be
    applicable against the purchase price payable for any set of Books.

B.      Notwithstanding
    the foregoing, if the initial production order received by Producer is for one
    Production and not two, then, upon payment of the purchase price for the
    initial Book, Producer shall have the right to further extend the First Set
    Option Period with respect to the other Book that is the subject of the First
    Set Option upon payment of the sum of C$4,000 (the First Set Additional Option
    Extension Fee) on or before the last day of the Extended First Set Option
    Period. The First Set Additional Option Extension Fee will not be applicable
    against the purchase price payable for that remaining Book.

[14]

Section
    5.1B was added to the Option Agreement pursuant to an Amending/Confirmation
    Agreement executed in 2012. It provides, in part:

5.1B   if
    despite the best efforts of Producer the initial production order received by
    Producer for the initial set of two Books is for only one Production and not
    two as contemplated in Section 5.1, Producer shall have the right to exercise
    the Option for the initial Book .

Provided that Producer has paid
    Owner the sum of C$16,000 representing the First Set Option Fee as contemplated
    in Section 2.1 above, Producer shall be entitled to extend the First Set Option
    Period for the other Book that is the subject of the First Set Option as contemplated
    in Section 2.3B above.

[15]

The
    Option Agreement also gives PDM rolling rights to cover additional sets of
    Gamache novels. (When the Option Agreement was signed, there were six novels in
    the series. There are now ten.)

[16]

In
    October 2012, PDM purchased the television movie rights to
Still Life
,
the first book in the Gamache series, and
    paid Three Pines $104,625 in accordance with s. 5.1(i) of the Option Agreement.
    The movie aired on CBC on September 15, 2013. It was the highest rated
    television movie for the year on CBC and was nominated for several Directors
    Guild of Canada Awards including best television movie and best director (Peter
    Moss). CBC funded the preparation of a script for a movie based on the second
    Gamache novel,
Dead Cold
, but ultimately did not order the production
    of the movie.

[17]

Thus,
    in September 2013, as the second anniversary of the Option Agreement neared, PDM
    had exercised its option to purchase the rights to the first two books in the
    Gamache series  namely,
Still Life
and
Dead Cold
. It had
    purchased the television movie rights to
Still Life
and produced the
    movie. It had not taken these additional steps with respect to
Dead Cold
.

[18]

On
    September 4, 2013, Brian Dennis of PDM sent an email to Ms. Pennys agent
    giving notice that PDM was extending the Option Agreement pursuant to s. 2.3B:

I am writing to notify you that, in accordance with Clause 2.3B
     we are extending the First Set Option Period for one more year.

Pursuant to Clause 9.1 of the Agreement, we made payment today
    by electronic transfer of $4,000 Cdn to the Knight Hall Agency.

[19]

A
    year later, in September 2014, PDM still had not finalized a production order
    for
Dead Cold
. On September 18, Mr. Dennis sent an email purporting to
    extend the Option Agreement for a fourth year:

I am writing to notify you that, in accordance with Clause 2.3B
     we are extending the Extended First Set Option Period with respect to Dead
    Cold for one more year.

Pursuant to Clause 9.1 of the Agreement, we made payment today
    via electronic transfer of $4,000 Cdn to the Knight Hall Agency.

[20]

On
    October 8, 2014, Ms. Pennys agent, Knight Hall Agency, sent an email to Mr.
    Dennis informing PDM that the agency was not accepting PDMs proposed extension
    of the Option Agreement:

Upon legal advice, we have determined that PDM holds no such
    right to any extension of the Extended First Set Option Period.

More specifically, when PDM gave notice on September 5, 2013,
    that it was extending the First Set Option Period it did not pay C$8,000 for
    that extension as required by clause 2.3. PDMs notice at that time
    specifically invoked clause 2.3B to permit PDM to extend the First Set Option
    Period by payment of only C$4,000. In doing so, PDM interpreted clause 2.3B in
    the same manner in which we too had understood it: as permitting the reduction
    by half of the First Set Option Extension Fee since PDM had then produced one
    of the two titles in the first set.

Clause 2.3B was only intended for the purpose to which it has
    already been invoked. It was never intended to accord, and is not drafted in
    such a way as to accord, any option term additional to the Extended First
    Option Period.

[21]

In
    the same email, Ms. Pennys agent also declared that PDM had no further right
    to purchase
Dead Cold
or any other books in the Gamache series. The
    agency returned PDMs payment.

(2)

The application judges decision

[22]

On
    November 10, 2014, PDM brought an application seeking a declaration that the
    Option Agreement remained in effect and, if necessary, granting relief from
    forfeiture due to its payment of $4,000, rather than the $8,000 required by s.
    2.3 of the Option Agreement.

[23]

On
    December 22, 2014, Three Pines commenced its own application seeking a
    declaration that any option rights PDM may have had pursuant to the Option
    Agreement, save for the option with respect to
Still Life
that had
    already been exercised, had ended.

[24]

The
    application judge heard the duelling applications together on January 22, 2014.
    He released brief reasons (11 paragraphs) the next day. He accepted PDMs
    interpretation of the Option Agreement and concluded that the option agreement
    allows for an extension of a fourth year by the clearest language and which
    makes the most commercial sense.

[25]

The
    application judge also granted PDM relief from forfeiture. He noted that, if
    PDMs interpretation of ss. 2.3 and 2.3B of the Option Agreement was correct, then
    PDM had underpaid Three Pines by $4,000 on the first extension. The question thus
    became: should relief from forfeiture be granted and PDM permitted to pay an
    additional $4,000 to comply with s. 2.3 of the Option Agreement? The
    application judge answered this question in the affirmative. He reasoned:

I accept the suggestion that there is no restriction on the use
    of the equitable relief. I would suggest that the gross disproportionate
    outcome, if no relief is granted, is a significant part of the context to be
    considered. It is a comparison of the two values: a payment of $4,000 and the
    loss of opportunity to create and produce a very valuable and successful film
    property.

I agree that the relief should be used sparingly however, this
    is  a case where it should appropriately be used.

I agree with the factors set out in the applicants factum
    good faith on the part of PDM, the breach of the options was trivial and based
    on a common mistake, there will be significant consequences for PDM.

[26]

Three
    Pines and Ms. Penny appeal.

C.

Issues

[27]

The
    appellants raise three issues on appeal and frame them as follows:

(1)

Did the application judge provide
    adequate reasons for judgment?

(2)

Did the application judge err in
    finding that the Option Agreement provides for two one-year extensions of the
    Initial First Set Option Period?

(3)

Did the application judge exceed
    his jurisdiction or otherwise err in granting the respondent relief from
    forfeiture?

D.

Analysis

(1)

Sufficiency of reasons

[28]

The
    appellants contend that the application judges reasons are wholly inadequate.
    They attach this description to the application judges reasons on both the
    contract and relief from forfeiture issues.

[29]

On
    the contract issue, the appellants submit that, although the application judge
    held that the Option Agreement in the clearest language permitted an extension
    for a fourth year, he did not say anything about the actual wording of the two
    key provisions, ss. 2.3 and 2.3B. Nor did he even mention a third relevant
    provision, s. 5.1B.

[30]

On
    the relief from forfeiture issue, the appellants assert that, in weighing the
    competing interests relating to this discretionary equitable remedy, the
    application judge disregarded or minimized the creative and reputational
    importance of the Option Agreement to Ms. Penny and Three Pines.

[31]

I
    do not accept this submission. I acknowledge that the application judges
    reasons on the contract issue are conclusory and that his reasons on the relief
    from the forfeiture issue are terse. They do not, however, cross the line and
    fall into the category of insufficient as described in the leading cases: see
R. v. Sheppard
, 2002 SCC 26,
[2002] 1 S.C.R. 869
;
Hill v. Hamilton-Wentworth Regional Police Services Board
,
2007 SCC 41, [2007] 3
    S.C.R. 129
; R
. v. R.E.M.
, 2008 SCC 51,
[2008]
    3 S.C.R. 3
;
F.H. v. McDougall
, 2008 SCC 53,
[2008]
    3 S.C.R. 41
.

[32]

I
    begin with an important contextual point. After the two applications were
    filed, they were scheduled for hearing on an urgent basis on the first
    available date that permitted time for responding materials, examinations and
    facta. In its Notice of Application, PDM said, under a separate heading titled Urgency:

(eee) [I]t is
    imperative that the Application be heard on an urgent basis. PDM has funding
    applications that are presently being considered and, if there is uncertainty
    as to the ownership of the rights, the funding applications may have to be
    withdrawn[.]

[33]

Moreover,
    at the conclusion of argument on January 22, 2015, PDMs counsel advised the
    application judge of the urgency of the matter and requested that, if possible,
    a decision be issued quickly. There is no indication that the appellants took
    issue with that request or with PDMs justification therefor. The application
    judge released his decision the next morning, on January 23, 2015. He gave the
    parties what he had been asked for: an early hearing and an immediate decision.

[34]

In
F.H. v. McDougall
, at para. 98, Rothstein J. summarized the rationales
    underlying the duty to give adequate reasons:

(1)

to justify and explain the result;

(2)

to tell the losing party why he or
    she lost;

(3)

to provide for informed
    consideration of the grounds of appeal; and

(4)

to satisfy the public that justice
    has been done.

[35]

In
    my view, the application judges reasons in this case meet this standard.

[36]

First,
    they justify and explain the result. Although the application judges reasons
    on the contract issue are conclusory, the two main provisions in issue are
    quite short. Moreover, the record before the court was comprehensive, the parties
    having advanced clear  and opposing  positions: see
Hill
, at para. 101.
    On the relief from forfeiture issue, the application judge stated explicitly
    that he agreed with the arguments in PDMs factum, including PDMs good faith,
    the minor nature of PDMs breach of the Option Agreement  that is, paying
    $4,000 instead of the required $8,000  and PDMs great loss if it were not
    granted any relief, namely, the loss of opportunity to create and produce a
    very valuable and successful film property.

[37]

Second,
    from reading the application judges reasons, Three Pines and Ms. Penny would
    know why they lost. The application judge did not agree with their interpretation
    of the contract and thought that PDM deserved equitable relief so that the
    contract could continue to operate.

[38]

Third,
    the application judges reasons, coupled with the record (especially the terms
    of the Option Agreement) and the parties excellent facta and oral submissions
    provide for this courts informed consideration of the grounds of appeal.

[39]

Fourth,
    there is nothing to suggest that a reasonable member of the public would doubt
    that justice has been done. The Superior Court arranged an expedited hearing,
    the application judge heard submissions for several hours and he rendered a
    decision the next day. The public could be satisfied that justice was done.

(2)

The contract issue

[40]

The
    appellants contend that the application judge erred in interpreting ss. 2.3 and
    2.3B of the Option Agreement which, for ease of reference, I set out again:

2.3 Provided
    that Producer remains in active development with respect to one or both
    Productions based on the initial two Books, Producer will be entitled to extend
    the Initial First Set Option Period for a further 12-month period (the
    Extended First Set Option Period) upon payment to Owner of the sum of C$8,000
    (the First Set Option Extension Fee) on or before the last day of the Initial
    First Set Option Period. The First Set Option Extension Fee will not be
    applicable against the purchase price payable for any set of Books.

B.      Notwithstanding
    the foregoing, if the initial production order received by Producer is for one
    Production and not two, then, upon payment of the purchase price for the
    initial Book, Producer shall have the right to further extend the First Set
    Option Period with respect to the other Book that is the subject of the First
    Set Option upon payment of the sum of C$4,000 (the First Set Additional Option
    Extension Fee) on or before the last day of the Extended First Set Option
    Period. The First Set Additional Option Extension Fee will not be applicable
    against the purchase price payable for that remaining Book.

[41]

In
    my view, the appellants accurately and succinctly state the crucial issue in their
    factum, at para. 52:

The difference of interpretation between the parties may be
    simply stated: Was PDM permitted to extend the Option Agreement (a) pursuant to
    s. 2.3
and
s. 2.3B, or (b) pursuant to ss.
    2.3
or
2.3B? [Emphasis in original.]

[42]

The
    Option Agreement is a contract. The respondent asserts that its interpretation
    presents a question of mixed fact and law because, as Rothstein J. stated in
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53 (
Sattva
), at
    para. 55, the goal of contractual interpretation, to ascertain the objective
    intentions of the parties, is inherently fact specific. Accordingly, the general
    rule in favour of deference to first instance decision-makers on points of
    contractual interpretation (
Sattva
, at para. 52) applies on this
    appeal.

[43]

I
    do not accept this submission. In his reasons, the application judge did not
    provide any analysis of ss. 2.3 and 2.3B of the Option Agreement; rather, all
    he said was, I am of the view that the option agreement allows for an
    extension of a fourth year by the clearest language. He said nothing about s.
    5.1 of the Option Agreement, on which the appellants heavily relied. I also
    observe that the decision in this case was made in relation to two
    applications, not a trial; that there are no credibility issues; and that there
    are only two or perhaps three contractual provisions that need to be
    considered. Taking these circumstances together, I think it is appropriate to
    review the decision under appeal on a standard of correctness.

[44]

The
    appellants advance four arguments in support of their position that ss. 2.3 and
    2.3B of the Option Agreement are alternative, not cumulative, sources of an
    extension right.

[45]

First,
    the appellants rely on s. 2.2 of the Option Agreement:

Unless extended as provided for in Section 2.3
or
Section 2.3B, the
    Option for the initial two Books (the First Set Option) will terminate on the
    first day that is 24 months from the date of execution of this Agreement (the
    Initial First Set Option Period). [Emphasis added.]

The appellants contend that the word or is
    disjunctive in this provision; PDM can extend its option, but only once.

[46]

I
    am not persuaded by this submission. In my view, the word or in s. 2.2 cannot
    be interpreted in isolation from ss. 2.3 and 2.3B. Or signals only that there
    are, depending on the facts on the ground with respect to development, two
    possible routes to an extension. PDM could initially choose the s. 2.3 route
    near the end of the original contract period; the s. 2.3B route allows for a
    potential second extension a year later.

[47]

Second,
    the appellants rely on the phrase [n]otwithstanding the foregoing in s. 2.3B of
    the Option Agreement. They say that this phrase indicates that s. 2.3B is an
    alternative, not an addition, to the extension route set out in s. 2.3.

[48]

Again,
    I disagree. When the words of s. 2.3B are considered as a whole, it becomes
    clear that all the notwithstanding phrase does is provide a transition from
    the extension route in s. 2.3 to the extension route in s. 2.3B in
    circumstances where PDM has moved from no production order to an initial
    production order.

[49]

Third,
    the appellants submit that s. 5.1B, which was added to the Option Agreement in
    2012, supports its position. For ease of reference, I set out the relevant part
    of s. 5.1B again:

Provided that Producer has paid Owner the sum of C$16,000
    representing the First Set Option Fee as contemplated in Section 2.1 above,
    Producer shall be entitled to extend the First Set Option Period for the other
    Book that is the subject of the First Set Option as contemplated in Section
    2.3B above.

According to the appellants, this provision makes it
    clear that where PDM has obtained the rights to produce a movie relating to one
    book, but not the second, s. 2.3B (and not s. 2.3) is to be used to extend the
    Initial First Set Option Period.

[50]

I
    do not accept this submission. In my view, s. 5.1B speaks to the timing and
    circumstances (one movie moving forward) relating to the exercise of the
    extension right in s. 2.3B. Section 5.1B says nothing about whether that right
    is alternative or cumulative to the extension right in s. 2.3 of the Option
    Agreement. Rather, s. 5.1B expressly states that the Producers entitlement to
    extend is as contemplated in s. 2.3B, which provides for a further extension
    during the Extended First Set Option Period.

[51]

Fourth,
    the appellants submit that, since part of the basic test for contractual
    interpretation is to ascertain the objective intentions of the parties (
Sattva
,
    at para. 55), PDMs own actions support the appellants reading of the
    provisions at issue. The appellants note that PDM sought legal advice when it
    extended its option in 2013. Based on that advice, it specifically invoked s.
    2.3B of the Option Agreement, not s. 2.3. It paid a fee of $4,000, not $8,000.
    In short, say the appellants, PDM knew that there were two potential routes for
    extending its option. It sought and obtained legal advice in choosing between
    them. It accepted and acted on that advice. PDMs eyes were wide open
    throughout the extension process and it arrived, in 2013, at an interpretation
    of the contract opposite to the one it advanced before the application judge in
    January 2015.

[52]

I
    agree with this submission. It is a strong point in the appellants favour.

[53]

However,
    in the end, I think that the wording of ss. 2.3 and 2.3B, taken together, supports
    the respondents interpretation of the Option Agreement. Section 2.3 provides
    for an extension of the contract into a third year. Section 2.3B provides for a
    further extension, albeit in more limited circumstances.

[54]

Section
    2.3 applies when, after almost two years of effort, the Producer (PDM) is, at a
    minimum, in active development with respect to at least one of the two books
    in its First Set Option. In 2013, PDM was easily inside that requirement; it
    had developed the project to the point of purchasing the movie rights to
Still
    Life
from Three Pines for $104,625. So PDM could have invoked s. 2.3 at
    this juncture to obtain an extension of the Option Agreement for a third year.
[1]

[55]

To
    obtain a further extension thereafter, under s. 2.3B, it would not have been enough
    for PDM merely to have been engaged in the active development of the project.
    Rather, PDM would have needed to have received an initial production order to
    trigger the extension. This was precisely the lay of the land in September 2014;
    PDM had obtained a production order from CBC. Section 2.3B had been triggered.

[56]

What,
    then, does s. 2.3B say?

[57]

In
    my view, the wording of s. 2.3B strongly supports an additional extension. It provides
    the Producer with the right to further extend the First Set Option Period
    with respect to the second book in the First Set Option. It requires payment of
    a fee of $4,000 and calls it the First Set Additional Option Extension Fee.
    It requires that the option be exercised on or before the last day of the
    Extended First Set Option Period. All of these words and titles  especially
    the words further and [a]dditional and the explicit link to the expiration
    of the third-year extension in s. 2.3  support the conclusion that, against
    the backdrop of a major new development in year three (a production order), s.
    2.3B allows an extension of the Option Agreement for a fourth year.

[58]

Finally,
    I think there is commercial sense in the above interpretation. Section 2.3
    deals with a commercial scenario in which, after two years under the Option
    Agreement, the Producer has engaged in genuine active development of the
    project but has not obtained a production order. Section 2.3 gives the Producer
    a third year to try to fulfil its contractual obligations to the Owner. Section
    2.3B deals with a different factual scenario  one in which, by the end of the
    third year, the Producer has obtained a production order for a movie relating
    to one of the two books. In other words, the Producer has achieved a huge
    success, not only for itself but also for the Owner. Section 2.3B, as
    interpreted above, recognizes this success and grants the Producer a second
    (and final) extension to try to obtain a production order for a movie relating
    to the second book. This strikes me as commercially reasonable and fair.

[59]

For
    these reasons, my answer to the clear and succinct question posed by the
    appellants in their factum is: PDM was permitted to extend the Option Agreement
    pursuant to s. 2.3 and s. 2.3B, cumulatively. The application judge correctly
    interpreted the Option Agreement.

(3)

Relief from forfeiture

[60]

PDM
    now admits that it erred in citing s. 2.3B as the basis for the first extension
    of the Option Agreement. It sought relief from forfeiture to avoid the harsh
    consequences of this error. The application judge exercised his equitable
    discretion to grant that request.

[61]

The
    appellants submit that, in doing so, he erred. They say that the application
    judge did not have jurisdiction to grant relief from forfeiture because this
    remedy can only be granted where the party seeking relief has breached a
    contract and the breach gives rise to a right to forfeiture essentially to
    secure payment of money. PDM did not breach the Option Agreement; it chose to
    extend the option under a contractual provision (s. 2.3B) which caused it to
    lose its extension right a year earlier than if it had extended the option
    under a different provision (s. 2.3).

[62]

I
    do not accept this essentially technical argument. A court has a broad
    discretion to award relief from forfeiture under s. 98 of the
Courts of
    Justice Act
, R.S.O. 1990, c. C.43:

A court may grant relief against penalties and
    forfeitures, on such terms as to compensation or otherwise as are considered
    just.

[63]

Relief
    from forfeiture is available in a wide range of cases, including cases
    involving a failure to renew a lease: see, for example,
120 Adelaide
    Leaseholds Inc. v. Oxford Properties Canada Ltd.
, [1993] O.J. 2801 (C.A.),
    at para. 9;
1383421 Ontario Inc. v. Ole Miss Place Inc.
(2003), 67
    O.R. (3d) 161 (C.A.), at para. 80. I am not prepared to draw a bright line
    distinction between breach and loss to avoid considering the merits of
    granting relief from forfeiture in this case.

[64]

The
    appellant contends that, even if the application judge had the jurisdiction to
    grant relief from forfeiture, he erred in doing so.

[65]

The
    test for granting relief from forfeiture was recently restated by LaForme J.A.
    in
Kozel v. Personal Insurance Co.
, 2014 ONCA 130, 119 O.R. (3d) 55, at
    para. 31:

In exercising its discretion to grant relief from forfeiture, a
    court must consider three factors: (i) the conduct of the applicant, (ii) the
    gravity of the breach, and (iii) the disparity between the value of the
    property forfeited and the damage caused by the breach.

[66]

Although
    his reasons are brief, the application judge touched on all of these factors.
    He found that PDM acted in good faith in the contract extension process; that
    its breach (mistake)  the payment of $4,000 instead of $8,000  was trivial in
    relation to a contract on which it had already paid well over $100,000; and
    that forfeiture would be a grossly disproportionate outcome in light of PDMs
    mistake  namely, the loss of opportunity to create and produce a very
    valuable and successful film property.

[67]

Relief
    from forfeiture is a discretionary equitable remedy. A judges decision in this
    domain is entitled to considerable deference. I see no basis for interfering
    with the application judges exercise of discretion in this case.

E.

Disposition

[68]

I
    would dismiss the appeal. The respondent is entitled to its costs of the appeal,
    which I would fix at $20,000, inclusive of disbursements and HST.

Released: June 29, 2015 JCM

J.C.
    MacPherson J.A.

I
    agree Gloria Epstein J.A.

I
    agree L. B. Roberts J.A.

[1]
In its September 2013 email to Ms. Pennys agent, set out above, PDM actually
    stated that it was extending the Option Agreement pursuant to s. 2.3B, not s.
    2.3. PDM now acknowledges that this was an error. This is the basis for PDMs claim
    for relief from forfeiture.


WARNING

THIS
    IS AN APPEAL UNDER THE

YOUTH
    CRIMINAL JUSTICE ACT

AND
    IS SUBJECT TO:

110. (1)
Subject to this section, no person shall publish the
    name of a young person, or any other information related to a young person, if
    it would identify the young person as a young person dealt with under this Act.

111. (1)
Subject to this section, no person shall publish the
    name of a child or young person, or any other information related to a child or
    a young person, if it would identify the child or young person as having been a
    victim of, or as having appeared as a witness in connection with, an offence
    committed or alleged to have been committed by a young person.

138. (1)
Every person who contravenes subsection 110(1) (identity
    of offender not to be published), 111(1) (identity of victim or witness not to
    be published), 118(1) (no access to records unless authorized) or 128(3)
    (disposal of R.C.M.P. records) or section 129 (no subsequent disclosure) of
    this Act, or subsection 38(1) (identity not to be published), (1.12) (no
    subsequent disclosure), (1.14) (no subsequent disclosure by school) or (1.15)
    (information to be kept separate), 45(2) (destruction of records) or 46(1)
    (prohibition against disclosure) of the
Young Offenders Act
, chapter Y-1
    of the Revised Statutes of Canada, 1985,

(a)     is guilty of an indictable offence
    and liable to imprisonment for a term not exceeding two years; or

(b)     is guilty of an offence punishable
    on summary conviction.

COURT OF APPEAL FOR ONTARIO

CITATION: R. v. A.W.B., 2015 ONCA 476

DATE: 20150625

DOCKET: C60061

Laskin, Gillese and van Rensburg JJ.A.

BETWEEN

Her Majesty the Queen

Appellant

and

A.W.B.                                                             (a young
    person within the meaning of the
Youth Criminal Justice Act
)

Respondent

Amy Rose, for the appellant

E. Dawn McCaig, for the respondent

Heard in writing

On appeal from the refusal to make a DNA data bank order
    pursuant to s. 487.05(1) of the
Criminal Code
on January 28, 2015, by
    Justice Lawrence Klein of the Ontario Court of Justice.

APPEAL BOOK ENDORSEMENT

[1]

On consent, the order sought by the Crown may issue.