COURT OF APPEAL FOR ONTARIO

CITATION:

Amato v. Welsh, 2013 ONCA 258

DATE: 20130424

DOCKET: C55635

OConnor A.C.J.O.
*
,
    Simmons and Cronk JJ.A.

BETWEEN

Davide Amato and S.A. Capital Growth Corp.

Plaintiffs (Respondents)

and

Peter R. Welsh,
Aylesworth
    LLP and Julia Dublin

Defendants (Appellants)

Peter C. Wardle and Simon Bieber, for the appellants

Alan B. Merskey and Rahool P. Agarwal, for the
    respondents

Heard: November 14, 2012

On appeal from the order of the Divisional Court (Justices
    Alexandra Hoy and Michael R. Dambrot, Justice Peter B. Hockin dissenting), dated
    January 12, 2012, with reasons reported at 2012 ONSC 334, dismissing an appeal
    from the order of Justice David R. Aston, of the Superior Court of Justice,
    dated March 1, 2011, with reasons reported at 2011 ONSC 1314.

Cronk J.A.:

I.        Introduction

[1]

The common law doctrine of absolute privilege protects judges, counsel,
    jurors, witnesses and parties from any action for words spoken in the ordinary
    course of any proceedings before any court or judicial tribunal recognised by
    law, so long as the words sought to be cloaked with the privilege were uttered
    for the purposes of judicial proceedings by someone who has a duty to make
    statements in the course of the proceedings.
[1]

[2]

This case involves an apparent clash between a lawyers right to invoke
    the absolute privilege doctrine to shield the lawyer and her law firm from
    possible liability in a civil action initiated by former clients, and the
    clients right to assert a claim against the lawyer and her law firm for
    alleged breaches of fiduciary duty and the duty of loyalty based on statements
    made or omitted by the lawyer and the law firm while representing different
    clients in a quasi-judicial proceeding.  The sole issue for determination by
    this court is whether it is plain and obvious that the doctrine of absolute
    privilege operates to preclude such a claim.

[3]

This is a matter of first impression for this court.  A majority of the
    Divisional Court upheld the motion judges refusal to strike certain paragraphs
    in the clients statement of claim detailing the alleged statements and
    omissions.  The appellant lawyer, Julia Dublin, and her law firm, Aylesworth
    LLP, argue that the impugned paragraphs should be struck because they offend
    the doctrine of absolute privilege.

II.       Factual Background

[4]

The respondents, Davide Amato and S.A. Capital Growth Corp., sued
    Aylesworth LLP and two of its lawyers, Peter R. Welsh and Julia Dublin, for
    damages in the amount of $14 million allegedly occasioned by the lawyers
    negligence and breaches of fiduciary duty and the duty of loyalty during their
    legal representation of the respondents.

[5]

In their statement of claim, the respondents relied in part on
    statements allegedly made or omitted by Dublin during the examinations of two
    other Aylesworth clients conducted by Ontario Securities Commission (OSC) representatives
    in the course of a formal OSC investigation.

[6]

After the action was initiated, the appellants Aylesworth and Dublin
[2]
moved to strike certain paragraphs of the respondents pleading under rule
    21.01(1)(b) or, alternatively, rule 25.11 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.  They argued that the impugned paragraphs disclose no
    reasonable cause of action (rule 21.01(1)(b)) or, alternatively, are scandalous,
    frivolous and vexatious (rule 25.11), because the matters alleged in those
    paragraphs are protected by absolute privilege and, hence, are not actionable.

[7]

On a motion to strike of this type, the facts as pleaded are taken to be
    true.  The following is a brief summary of the relevant allegations in the
    respondents statement of claim.

(1)

The Allegations

[8]

According to the respondents, Robert Mander, Peter Sbaraglia and
    corporations under their control orchestrated a Ponzi scheme whereby unsecured
    loans were solicited from investors on the promise of, on average, 25 per cent annual
    returns.  Dublin represented Mander and Sbaraglia, as well as several
    affiliated corporations, including C.O. Capital Growth Corp. (collectively, the
    Mander Group).  The respondents claim that the Mander Group used the
    appellants to facilitate the Ponzi scheme.

[9]

In about July of 2009, the OSC commenced an investigation of Mander and
    others.  As part of that investigation, OSC representatives examined Mander and
    Sbaraglia.  Dublin represented both men at their OSC examinations.

[10]

Prior
    to the OSC examinations, the respondents had also retained the appellants, at
    Manders urging.  The respondents told Dublin that their company, S.A. Capital,
    had invested more than $10 million, which Mander traded through his various
    corporations. They sought Dublins opinion on whether the existing arrangements
    between S.A. Capital, its clients and the Mander Group complied with applicable
    securities laws.

[11]

As
    a result of their solicitor-client relationship, the appellants owed fiduciary
    duties and duties of care and loyalty to the respondents.  The respondents
    claim that the appellants breached these duties in several ways: (1) they knew
    of Manders activities and those of the respondents; (2) they knew or should
    have known that the respondents business interactions with Mander exposed the
    [respondents] to significant and unusual financial and legal risks; (3) they failed
    to advise the respondents of those risks or otherwise suggest steps to mitigate
    those risks; and (4) they placed themselves in a conflict position by acting
    for both the respondents and the Mander Group, who had conflicting interests.

[12]

The
    respondents statement of claim includes the following Challenged Paragraphs
    that the appellants sought to strike:

39. At the [examinations in aid of the OSC investigation],
    Dublin, along with another member of Aylesworth denied or acquiesced in the
    denial that Mander or the entities he controlled had any obligations to any
    parties other than C.O. [C.O. Capital Growth Corp.], Peter Sbaraglia and Mandy
    Sbaraglia.  This denial was contrary to Dublins direct knowledge.

40.     At the above examinations, Dublin also represented or
    acquiesced in the following re-presentations outlining the signs that the
    C.O./Mander arrangement was likely a ponzi scheme:

(a)     people
    would lend C.O. money and C.O. was free to do whatever they want with the
    money;

(b)     the
    interest rates promised by C.O. seemed ridiculously high; and

(c)     it
    was important that the money of investors in C.O. cease to be traceable or
    trackable the moment it got slipped into C.O..

....

43.     Notwithstanding her recent meeting with Amato, Dublin
    denied the existence of the relationship between the [respondents and the
    Mander Group], before the OSC, and took steps to attempt to retroactively
    create a trust for the benefit of C.O. and to the detriment of the
    [respondents].

...

45.     Dublin was obliged to disclose the existence of the
    [respondents] to the OSC but failed to.  That failure was caused by conflicts
    between the collective interests of the Mander [Group] and the interests of the
    [respondents].  Failure to disclose the existence of the [respondents] was a
    breach of Dublins fiduciary duties and duties of loyalty to the [respondents] and
    resulted in substantial losses.

....

50.     Aylesworths:

....

(d)     failure
    to make proper disclosure to the OSC;

...

[is] the direct cause of the [respondents alleged] losses.

[13]

In
    these paragraphs, the respondents effectively allege that the appellants were obliged
    to tell the OSC about their involvement as investors in the Ponzi scheme and
    that the appellants failed to do so, instead misrepresenting the facts to the
    OSC.  The respondents contend that if the appellants had properly disclosed the
    respondents participation, the OSC would have realized that the Ponzi scheme
    was larger than represented and might have chosen to act.  If this had
    occurred, the respondents say, their chances of recovering their investment would
    have been much greater.  They also claim that, but for the appellants breaches
    of their duties, the respondents would have taken steps to protect themselves
    from the Ponzi scheme.  Instead, they allege that they suffered damages in the
    amount of their total lost investment of $14 million.

(2)

Court Rulings Below

(a)

Motion to strike

[14]

The
    motion judge accepted that the doctrine of absolute privilege applies to
    communications made during a proceeding before a quasi-judicial body like the
    OSC.  He also recognized, at para. 15: [t]here is no doubt that a client can
    sue his or her former lawyer based upon how that lawyer conducted an earlier
    proceeding.  This statement accords generally with the decision of Krever J. in
Demarco v. Ungaro
(1979), 21 O.R. (2d) 673 (H.C.J.), holding that
    lawyers are not immune from a claim brought by their clients for negligence in
    the conduct of judicial proceedings.  However, what was unclear to the motion
    judge was whether such a claim can be based on statements that the lawyer
    allegedly made in the course of a proceeding and whether absolute immunity applies
    to statements omitted by a lawyer, as opposed to statements said to have been
    uttered by a lawyer, during the proceeding.

[15]

The
    motion judge concluded that the Challenged Paragraphs merely support or
    buttress a cause of action based on other independent facts which have been
    pleaded (at para. 18).  As a result, he held that it was preferable that a
    trial judge deal with this issue as a question of admissibility of evidence
    rather than hiving off part of the [respondents] claims at this early stage
    (at para. 18).
[3]

[16]

Accordingly,
    the motion judge dismissed the appellants motion to strike.

(b)

Leave to appeal application

[17]

The
    appellants sought and obtained leave from Lederer J. of the Superior Court of
    Justice to appeal the motion judges decision to the Divisional Court: 2011
    ONSC 3364.

[18]

The
    leave judge held that the issues before the court were novel and there was
    reason to doubt the correctness of the motion judges decision.  He observed, at
    para. 22, that: [t]here [is] no jurisprudence respecting the question of
    whether [a lawyers] duty of loyalty to a client should take priority over the
    protection afforded to a lawyer by the absolute immunity.  Further, [i]t was
    not clear whether the cause of action could include statements made during a
    proceeding, conduct of which was the basis of the action.

[19]

The
    leave judge also concluded that the motion judges ruling raised a matter of
    importance.  In his view,
Demarco
does not determine whether the
    doctrine of absolute privilege applies to what is said, as opposed to what is
    done, by counsel in the course of a judicial or quasi-judicial proceeding.  He observed,
    at para. 15, that: [t]here is nothing that says that the [duties owed to the
    respondents] should supersede those [owed to the Mander Group] such that the
    absolute privilege is lost and the [respondents] are able to sue over what was
    said in interviews where others were being represented.

(c)

Divisional Court

[20]

A majority of the Divisional Court upheld the motion judges decision.
    Justice Hoy, writing for the majority, rejected the appellants argument, which
    the leave judge had accepted, that Krever J.s decision in
Demarco
is
    distinguishable (at para. 12):

Counsel for the [appellants], and Lederer J. in granting leave
    to appeal, distinguished
Demarco
on the basis that it dealt with the
    manner in which the case was conducted, and not with what was said.  With
    respect, a clear line between what a lawyer does or does not do in court, and
    what a lawyer says or does not say in court, cannot always be drawn.  In my
    view, it is not plain and obvious that
Demarco
does not permit a
    client to sue his or her lawyer for negligence based, at least in part, on what
    the lawyer said, or did not say, in the course of a proceeding.

[21]

The
    majority also rejected the argument that
Demarco
is distinguishable
    because it does not deal with a situation where a lawyer is being sued by a
    client based on her representation of another client (at paras. 13-16):

Counsel for the [appellants] and Lederer J. also focus on the
    fact that when the [appellants] are alleged to have made the statements at
    issue they were representing Mander, and not the [respondents], before the
    OSC.  They argue that if
Demarco
applies, then it applies only to
    permit a client to sue his or her lawyer in respect of statements made when
    representing the client, and not to permit another client, not represented in
    the proceeding, to sue based on such statements.  Moreover, they say that the
    [appellants] cannot be required to have preferred the interests of one client
    the [respondents]  over that of the other, namely Mander.

Demarco
speaks to the special relationship of lawyer

and

client.
    The [respondents] and the [appellants] had such a special relationship.

The Supreme Court of Canada in
R. v. Neil
, [2002] 3
    S.C.R. 631, at para. 12, described the duty of loyalty that a lawyer owes to
    his or her client as the defining principle, and as essential to the
    integrity of the administration of justice.

It is not plain and obvious to me that a court would not
    conclude that, in limited circumstances, the defining principle

of the duty of loyalty trumps the
    indispensable attribute of lawyers immunity.

[22]

The
    majority, therefore, concluded that it is not plain and obvious that the
    Challenged Paragraphs disclose no reasonable cause of action.  The majority dismissed
    the appeal and allowed the respondents claim to proceed to trial, to be
    determined on a full record.

[23]

Justice
    Hockin dissented.  He distinguished
Demarco
from this case, at para.
    34, on the basis that it holds only that absolute privilege cannot protect the
    lawyer from claims of negligence or breach of fiduciary duty in the
    representation of a client, if it is that client whom the lawyer represented
    before the tribunal or court.  In contrast, this case involves claims advanced
    by clients based on alleged conduct by the lawyer during her representation of
    other clients.

[24]

Justice
    Hockin was also of the view that a lawyers fundamental duty of loyalty to a
    client, especially a lawyers duty of commitment to the clients cause, required
    Dublin to provide her undivided attention to Mander and Sbaraglia during the
    OSC investigation.  He concluded that in order to ensure that her
    representation was effective, the absolute privilege rule attached to grant
    her immunity from action for what was said during the OSC proceeding (at para.
    31).  Were it otherwise, and the application of the absolute privilege doctrine
    were left to be determined by the trial judge on the basis of evidentiary
    principles, then the rule and importantly, the objective of maintaining the publics
    confidence in the administration of justice would be lost (at para. 32).

[25]

The
    dissenting judge concluded that the law which surrounds the absolute privilege
    rule is settled law and it is plain and obvious that the Challenged Paragraphs
    are incapable of supporting a cause of action and should be struck (at para.
    37).

III.      Issue

[26]

I
    would frame the issue on appeal in this fashion: is it plain and obvious that
    the absolute privilege doctrine precludes a client from asserting a cause of
    action against his or her lawyer for alleged breaches of fiduciary duty and the
    duty of loyalty based on statements made or omitted by the lawyer while
    representing different clients in a quasi-judicial proceeding?

IV.     Analysis

[27]

The
    appellants make three related submissions on this appeal.  First, and foremost,
    they argue that there are no exceptions to the absolute privilege that attaches
    to a lawyers statements in court proceedings, regardless of the importance of the
    duty that is said to have been breached in a particular case by the statements
    at issue.

[28]

Second,
    the appellants submit that, as a matter of public policy, there is no
    justification for the recognition of any exception to the privilege.

[29]

Third,
    the appellants contend that the majority of the Divisional Court erred by
    holding that it is not plain and obvious that the appellants statements or
    omissions in the OSC proceeding on behalf of one group of clients are protected
    by the doctrine of absolute privilege and may not form the basis of claims against
    the appellants brought by other clients.  In effect, the appellants contend
    that the majority of the Divisional Court erred by unjustifiably recognizing an
    exception to the absolute privilege doctrine.

[30]

For
    the reasons that follow, I conclude that these arguments must fail at this
    stage of the respondents action.   I begin by addressing the legal principles
    that are relevant to the issue on this appeal.

(1)

Rule 21.01(1)(b) Test

[31]

The
    pleading issue was dealt with by the parties and the courts below based on rule
    21.01(1)(b) of the
Rules
.  On a motion to strike under this rule, the
    court must answer the following question: assuming that the facts as stated in
    the statement of claim can be proved, is it plain and obvious that the
    plaintiffs statement of claim discloses no reasonable cause of action?:
Hunt
    v. Carey Canada Inc.
, [1990] 2 S.C.R. 959, at  980.

[32]

Under
    this stringent test, only those claims that are certain to fail should be
    struck at the pleadings stage.  If a plaintiffs claim has a chance of success
    or is fit to be tried, it should be determined at trial with the benefit of a
    full factual record:
Hunt
, at p. 980.  Further, neither the complexity
    of the issues, the novelty of the cause of action raised, nor the potential for
    the defendant to present a strong defence will prevent a plaintiff from
    proceeding with his or her case.  Only where the action is certain to fail
    because it contains a radical defect should the impugned parts of a
    plaintiffs statement of claim be struck:
Hunt
, at p. 980;
Reynolds
    v. Kingston (City) Police Services Board
, 2007 ONCA 166, 84 O.R. (3d) 738,
    at para. 10.

[33]

Thus,
    the threshold to be met by a moving party on a rule 21.01(1)(b) motion is very
    high.  In this case, to succeed on their motion to strike, the appellants bore
    the burden of establishing that the doctrine of absolute privilege applies to
    indisputably immunize them from potential liability for the matters alleged in
    the Challenged Paragraphs of the respondents pleading.

(2)

Doctrine of Absolute Privilege

[34]

The
    nature and scope of the doctrine of absolute privilege lies at the heart of
    this appeal.  That this doctrine is well-established at common law is beyond
    dispute.  This court has repeatedly endorsed the definition of the doctrine set
    out in
Halsburys Laws of England
, vol. 28, 4th ed. (London, U.K.:
    Butterworths, 1997), at para. 97, which reads:

97.
Absolute
    privilege.
 No action lies, whether against judges, counsel,
    jury, witnesses or parties, for words spoken in the ordinary course of any
    proceedings before any court or judicial tribunal recognised by law.  The
    evidence of all witnesses or parties speaking with reference to the matter
    before the court is privileged, whether oral or written, relevant or
    irrelevant, malicious or not.  The privilege extends to documents properly
    used and regularly prepared for use in the proceedings.  Advocates, judges and
    juries are covered by this privilege.  However, a statement will not be
    protected if it is not uttered for the purposes of judicial proceedings by
    someone who has a duty to make statements in the course of the proceedings.

A separate action for malicious prosecution or the malicious
    institution or abuse of civil proceedings may lie independently of the law of
    defamation.  [Citations omitted.]

This definition was adopted in
Samuel Manu-Tech
,
    at para. 19;
Lowe v. Guarantee Co. of North America
(2005), 80 O.R.
    (3d) 222 (C.A.), at para. 57; and
Reynolds
, at para. 14.

[35]

The
    doctrine has its roots in the early development of the law of defamation.
    However, in its modern form, its reach is considerably broader.  Relying on
Hargreaves
    v. Bretherton and Another
, [1958] 3 All E.R. 122 (Q.B.D.), at 123, Feldman
    J.A. for this court in
Samuel Manu-Tech
confirmed, at para. 20, that:  [t]he
    immunity extends to any action, however framed, and is not limited to actions
    for defamation.  See also
Lowe
, at para. 58.

[36]

Historically,
    public policy considerations, including the need to foster confidence in the
    administration of justice, have been viewed as justifying an absolute privilege
    protecting counsel and others from suits based on what is said by them in
    court.  There is authority for the proposition that the justification for
    absolute privilege is acute in cases involving statements made by counsel: see
Dooley
    v. C.N. Weber Ltd.
(1994), 19 O.R. (3d) 779 (Ont. Ct. (Gen. Div.)),
per
Reilly J., at 784  785;
More v. Weaver
, [1928] 2 K.B. 520, [1928] All
    E.R. Rep. 160 (Eng. C.A.),
per
Scrutton L.J., at 522;
Munster v.
    Lamb
(1883), 11 Q.B.D. 588 (Eng. C.A.),
per
Brett M.R., at 603
    605.

[37]

Protection
    of the integrity of the justice system lies at the core of the public policy
    rationales for absolute privilege.  As explained by the majority of the High
    Court of Australia in
Mann v. ONeill
, [1997] H.C.A. 28, 71 A.L.J.R.
    903, at 907:

[A]bsolute privilege attaches to statements made in the
    course of judicial proceedings because it is an indispensable attribute of the
    judicial process.
It is necessary that persons involved in judicial
    proceedings, whether judge, jury, parties, witnesses or legal re-presentatives,
    be able to discharge their duties freely and without fear of civil action for
    anything said by them in the course of the proceedings.
Were civil
    liability to attach or be capable of attaching, it would impede inquiry as to
    the truth and justice of the matter and jeopardise the safe administration of
    justice
.  [Citations omitted.  Emphasis added.]

[38]

Thus,
    where applicable, the doctrine of absolute privilege affords complete immunity
    to advocates and others for statements made by them in the course of judicial
    or quasi-judicial proceedings.  This extraordinary protection operates to bar a
    cause of action otherwise available at law:
i.e.
, a claim for relief by
    a client who has suffered loss through the negligence of his or her counsel.  For
    this reason, the High Court of Australia has warned that any extension of the
    privilege is viewed with the most jealous suspicion, and resisted, unless its
    necessity is demonstrated:
Mann
, at p. 907, citing Williams,
Absolute
    Privilege for Licensing Justices
, (1909) 25
Law Quarterly Review
188 at 200 (other citations omitted).  I would echo these words of caution.

[39]

In
    this case, the parties accept that the OSC examinations were quasi-judicial for
    the purpose of the application of the absolute privilege doctrine.

(3)

The Ruling in
Demarco
: Advocates Have No Immunity from
    Professional Negligence Suits

[40]

The
    respondents claims against the appellants sound in negligence, breach of
    fiduciary duty and breach of the duty of loyalty owed by a lawyer.  As pleaded,
    these claims implicate the principle of an advocates immunity from
    professional negligence suits.

[41]

In
    England, for some 200 years, the common law conferred immunity on barristers
    for liability in negligence suits brought by a client in respect of a
    barristers conduct of civil or criminal litigation.  As with the doctrine of
    absolute privilege, judicial recognition in England of this immunity was
    anchored in the public interest in the integrity of the administration of
    justice.

[42]

In
Rondel v. Worsley
, [1969] 1 A.C. 191, the House of Lords re-examined the
    immunity of barristers in England after the decision in
Hedley Byrne &
    Co. v. Heller & Partners
, [1964] A.C. 465 H.L. (Eng.), which
    recognized liability in tort for negligent advice.  In
Rondel
, the immunity
    for counsel was reaffirmed but confined to claims regarding counsels work in
    the conduct and management of a case in court.
[4]
The Law Lords viewed the continuation of the immunity, on this modified basis, as
    serving the public interest in at least four principal ways:

·

by preventing the fear of subsequent litigation from eroding the
    barristers independent duties to the court where those duties conflict with
    the clients interests, and by preventing wasteful defensive litigation tactics;

·

by avoiding re-litigation, other than on appeal, of controversies
    already resolved by court decisions, which would unsettle public confidence in
    outcomes and prolong litigation;

·

by recognizing that barristers cannot select their clients to
    minimize the risk of future recrimination and to promote the representation by
    counsel of anyone who needs representation, however difficult the person or
    distasteful the cause; and

·

as an essential part of a wider scheme of immunity that applies
    to judges, jurors, and witnesses in court proceedings.

[43]

The
    last consideration identified by the Law Lords in effect acknowledged that the
    public interest aims of the doctrine of absolute privilege supported the retention
    of advocates immunity from professional negligence claims.  In the view of the
    Law Lords, it would be incongruous if counsel were immune from action by anyone
    in respect of his or her conduct in court, yet liable to be sued by clients for
    negligence.

[44]

In
    the 1980s, the approach of the English courts to advocates immunity from
    professional negligence claims began to shift significantly.  In
Saif Ali
    v. Sydney Mitchell & Co.
, [1980] A.C. 198, a majority of the House of
    Lords clarified that the immunity extends only to the conduct of the clients cause
    in court, and to pre-trial work intimately connected with it:
per
Lord
    Wilberforce, at p. 215, citing
Rees v. Sinclair
, [1974] 1 N.Z.L.R. 180
    (C.A.), at 187.

[45]

About
    two decades later, in
Arthur J.S. Hall & Co. v. Simons
, [2002] 1
    A.C. 615, the House of Lords held that there are no public interest grounds
    including those identified in
Rondel
 that justify retention of
    advocates immunity from suit for the negligent conduct of civil proceedings.  A
    majority of the Law Lords also rejected the principle of advocates immunity in
    respect of the negligent conduct of criminal proceedings.

[46]

A
    similar development soon occurred in New Zealand.  In
Chamberlains v. Lai
,
    [2006] N.Z.S.C. 70, Elias C.J., writing for the majority of the Supreme Court, explained,
    at para. 1, that any immunity from legal suit must be based on some public
    policy consideration sufficiently compelling to outweigh the public policy
    interest in preserving access to the courts:

Access to the courts for vindication of legal right is part of
    the rule of law.  Immunity from legal suit where there is otherwise a cause of
    action is exceptional. ... All cases of immunity require justification in some
    public policy sufficient to outweigh the public policy in vindication of legal
    right.

[47]

Like
    the House of Lords in
Arthur J.S. Hall
, the majority of the Supreme
    Court of New Zealand held in
Chamberlains
, at para. 80, that there is no
    longer sufficient public policy justification for continuing an anomalous
    immunity for one occupational group protecting advocates from negligence
    claims in civil or criminal litigation.  In so holding, the majority endorsed
    these comments by Lord Salmon in
Saif Ali
, at p. 230:

Once it is clear that the circumstances are such that no
    question of public policy is involved, the prospects of immunity for a
    barrister against being sued for negligently advising his client vanish into
    thin air, together with the ghosts of all the excuses for such immunity which
    were thought to exist in the past.

[48]

Importantly,
    the majority in
Chamberlains
explained, at para. 54, that the
    rationale for the doctrine of absolute privilege is animated by different
    policy considerations than those that had been used previously to justify
    advocates immunity from negligence claims:

The absolute privilege which precludes defamation liability is
    limited to what is said in court and is directed to a different policy: the
    candour of participants in court proceedings.  The immunities of other
    participants in court proceedings are not analogous because witnesses and the
    judge do not assume duties of care to a party. ... The case of the advocate who
    assumes the conduct of litigation on behalf of a client to whom he owes duties
    of care (often as a matter of contractual undertaking) is entirely different.

[49]

The
    positions in England and New Zealand on advocates immunity from professional
    negligence suits are now aligned with the pre-existing law in Ontario.
[5]
In this province, the courts have never recognized immunity from client
    negligence claims in respect of an advocates conduct of litigation.  The
    seminal authority in this jurisdiction remains
Demarco
, which was
    cited with approval by this court in
Wong v. Thomson, Rogers
, 1994
    CanLII 841 and in
Wernikowski v. Kirkland, Murphy & Ain
(1999), 50
    O.R. (3d) 124.
Demarco
was also cited by several of the Law Lords in
Arthur
    J.S. Hall
in support of rejecting a public policy-based justification for
    the continuance of advocates immunity, as had been endorsed in
Rondel
.

[50]

In
Demarco
, the plaintiff alleged that his lawyers were negligent in
    their conduct of the defence of a civil debt action on his behalf by reason of
    failing to lead evidence at trial that they allegedly knew was available and that
    would have supported the plaintiffs position that no debt was owed.  On a
    motion to strike the offending paragraphs in the statement of claim, the lawyers
    argued that the historical common law immunity enjoyed by English barristers
    from an action for negligence in the conduct of a trial, as reconfirmed in
Rondel
,
    was also the law in Ontario.

[51]

In
Demarco
, Krever J. posed the central question on the motion in these
    terms, at para. 2: [t]he question is whether a lawyer, in the conduct of a
    trial, or other proceeding in Court, is, alone among all other professional
    persons, incapable of being sued by the client for negligence.

[52]

Justice
    Krever concluded that to deprive clients of recourse for the negligent conduct
    of a civil case is inconsistent with the public interest.  As later explained
    by Doherty J.A. of this court in
Wernikowski
, at para. 39, Krever J.
    regarded the following policy concerns as mandating that a client has the right
    to sue his or her lawyer for the negligent conduct of the clients civil case
    in court:

·

accountability
: lawyers should be as accountable as
    anyone else for their misdeeds;

·

fairness
: those who suffer loss as a result of a
    lawyers negligence should be entitled to compensation through the tort system;

·

the maintenance of minimum standards of competence
: the
    potential exposure to negligence claims serves as a deterrent against
    incompetent representation; and

·

the integrity of the justice system
: lawyers should not
    appear to be given favoured treatment which is not extended to other
    professionals who have, arguably, at least as good a claim to immunity from
    negligence claims as do lawyers.  [Emphasis added.]

[53]

In
Demarco
, the court also rejected the premise that the doctrine of
    absolute privilege is inconsistent with a clients claim against a lawyer for
    the negligent conduct of legal proceedings.  Justice Krever stated, at pp.
    695-96:

The last consideration to be dealt with is the perceived
    anomaly related to the absolute privilege enjoyed in respect of anything said
    in Court by a lawyer.  I confess that I am unable to appreciate why it should
    follow from the existence of that privilege that a lawyer may not be sued by
    his or her client for the negligent performance of the conduct of the clients
    case in Court.  The privilege, a fundamental aspect of the law of slander, is
    not concerned with relationships among persons.  It relates to legal
    proceedings in open Court.  The special relationship of lawyer and client is
    not involved as it is, of course, when one is considering the law of
    negligence.

[54]

The
    current law on the doctrine of absolute privilege in Ontario and the other
    Commonwealth jurisdictions to which I have referred, may be summarized as follows.
    In this province, the doctrine of absolute privilege has never been treated as
    a rationale for protecting lawyers from negligence suits by their own clients.
    In Ontario, lawyers can be sued by their clients for their negligent conduct of
    both civil and criminal litigation.

[55]

The
    House of Lords previously accepted, in
Rondel
, that the doctrine of
    absolute privilege supports preserving advocates immunity for negligence in
    the conduct of litigation.  However, in the years that followed, the House of
    Lords and the Supreme Court of New Zealand each refused to treat absolute
    privilege as a basis for maintaining advocates immunity from negligence suits
    by their own clients.  Even in Australia, where the immunity continues to be
    recognized, the High Court of Australia anchored the rationale for advocates
    immunity in the public interest in the finality of judicial proceedings.  That
    court squarely rejected absolute privilege as a public policy reason for
    upholding advocates immunity: see
DOrta-Ekenaike
.

[56]

In
    this case, the appellants do not question the respondents right to sue in
    negligence for the appellants alleged breaches of their duty of care to the
    respondents, including for an alleged conflict of interest.  Nor do they attack
    the respondents claims of breaches of fiduciary duty and the duty of loyalty
per
    se
.  Rather, they submit that the latter causes of action may be founded
    only on the fact of the appellants alleged competing retainer.  They argue
    that it is not open to the respondents to found these claims on statements made
    or omitted by the appellants during the OSC proceeding, and that nothing in
Demarco
holds to the contrary.

[57]

The
    appellants further submit that the lawyers duty of loyalty cannot be seen to
    abrogate the protection afforded by the doctrine of absolute privilege.  They
    maintain in their factum that, there is no basis to overturn a century of
    jurisprudence to except claims for breach of fiduciary duty [and claims for
    breach of the duty of loyalty] from the doctrine of absolute privilege.  In
    order to assess the merits of the appellants argument, it is necessary to
    address the legal principles concerning the lawyers duty of loyalty.

(4)     Lawyers Duty of Loyalty

[58]

The
    jurisprudence of the Supreme Court of Canada has repeatedly endorsed the
    importance to the administration of justice of the lawyers duty of loyalty to
    his or her client.  In particular, the Supreme Court has emphasized the lawyers
    obligation to avoid conflicts of interest.

[59]

In
R. v. Neil
, 2002 SCC 70, [2002] 3 S.C.R. 631, at paras. 12 and 16,
    Binnie J., writing for the Supreme Court, described a lawyers duty of loyalty
    to a client as a defining principle that is intertwined with the fiduciary
    nature of the lawyer-client relationship.  As he observed, at para. 16, loyalty
    is frequently cited as one of the defining characteristics of a fiduciary.  Justice
    Binnie explained, at para. 12, that the duty of loyalty has endured for almost
    two centuries precisely because it is essential to the integrity of the
    administration of justice and it is of high public importance that public
    confidence in that integrity be maintained.  He elaborated:

Unless a litigant is assured of the undivided loyalty of the
    lawyer, neither the public nor the litigant will have confidence that the legal
    system, which may appear to them to be a hostile and hideously complicated
    environment, is a reliable and trustworthy means of resolving their disputes
    and controversies. [Citations omitted.]

[60]

The
    content of the duty of loyalty is broad.
Neil
holds, at para. 19,
    that in addition to protecting confidential information, the duty of loyalty
    has three other dimensions:

(i)
the duty to avoid conflicting interests
... including the lawyers personal interest;

(ii)
a duty of commitment to the
    clients cause
(sometimes referred to as zealous representation) from
    the time counsel is retained, not just at trial,
i.e.
ensuring that a
    divided loyalty does not cause the lawyer to soft peddle his or her defence
    of a client out of concern for another client; and

(iii)
a duty of candour
with
    the client on matters relevant to the retainer. ... If a conflict emerges, the
    client should be among the first to hear about it.  [Citations omitted.  Emphasis
    in original.]

[61]

To
    give effect to the duty of loyalty and the broad principle of avoiding
    conflicts of interest in which confidential information may or may not play a
    role, Binnie J. specified a bright line rule for avoiding conflicts.  He
    stated, at para. 29:

[I]t is the firm not just the individual lawyer, that owes a
    fiduciary duty to its clients, and a bright line is required.  The bright line
    is provided by the general rule that a lawyer may not represent one client
    whose interests are directly adverse to the immediate interests of another
    current client
even if the two mandates are unrelated
 unless both
    clients consent after receiving full disclosure (and preferably independent
    legal advice), and the lawyer reasonably believes that he or she is able to
    represent each client without adversely affecting the other.  [Emphasis in
    original.]

[62]

In
    addition, Binnie J., at para. 31, adopted the formulation of a conflict set
    out in s. 121 of the American Law Institutes
Third Restatement, The Law
    Governing Lawyers
(2000), vol. 2, at 244-45, as a substantial risk that
    the lawyers representation of the client would be materially and adversely
    affected by the lawyers own interests or by the lawyers duties to another
    current client, a former client, or a third person.

[63]

More
    recently, the lawyers duty to avoid a conflict of interest was considered by
    the Supreme Court in
Strother v.

3464920 Canada Inc.
, 2007
    SCC 24, [2007] 2 S.C.R. 177.  In
Strother
, the Supreme Court
    reaffirmed the bright line rule for the avoidance of conflicts articulated in
Neil
but concluded that it is inapplicable where there is no legal
    dispute between the competing clients.  Instead, the court invoked the
    substantial risk principle discussed in
Neil
to ground its
    conclusion that the defendants financial interest in one of two
    business-competitor clients created a substantial risk that his representation
    of the client in which he was not so interested would be materially and
    adversely affected by consideration of his own interests (at para. 69).
[6]

(5)

Discussion

[64]

In
    this case, the majority and the dissenting judges in the Divisional Court
    regarded the interplay between a lawyers obligations arising from his or her
    duty of loyalty to a client and the protection afforded to a lawyer by the
    doctrine of absolute privilege as central to the appellants attack on the
    Challenged Paragraphs.  I agree.

[65]

The
    appellants recognize the fundamental importance and necessity to the
    administration of justice of the lawyers duty of loyalty to his or her
    client.  However, in contrast to their position concerning the doctrine of
    absolute privilege, they argue that this duty is not absolute and cannot be
    expanded so as to interfere with what they term the unqualified nature and
    ambit of the doctrine of absolute privilege.  They further submit that their
    duty of loyalty to the Mander Group should not be weighed against the competing
    duty of loyalty arguably owed to the respondents.  To do so, they maintain,
    would render meaningless their duty of loyalty to the Mander Group, thereby
    diminishing the administration of justice and creating an unwarranted and
    unprecedented exception to the absolute privilege doctrine.

[66]

In
    my view, at this early stage of the respondents action, these arguments cannot
    succeed.  I say this for the following reasons.

(a)

The appellants proposed application of the absolute privilege doctrine
    is novel in the circumstances

[67]

First,
    the appellants point to no authority for the proposition that absolute
    privilege applies to immunize statements made in judicial or quasi-judicial
    proceedings by a lawyer who is alleged, in the making of the statements, to
    have breached his or her duty of loyalty and fiduciary duties to
another
client.

[68]

Moreover,
    in my view, the boundaries of the absolute privilege doctrine are not firmly
    set.  As with other long-standing common law principles, although the absolute
    privilege doctrine has deep roots in the history of the common law, its scope
    and application continue to evolve.  Indeed, when absolute privilege  an indispensable
    attribute of the judicial process (
Mann
, at p. 907)  is set on a
    potential collision course with the defining principle of a lawyers duty of
    loyalty (
Neil
, at para. 12), as in this case, I do not think that the
    outcome can be said to be a matter of settled law.  To the contrary, the
    outcome of a competition between these foundational principles in a given case
    is far from certain.

[69]

Thus,
    as essentially held by the majority of the Divisional Court, it is at least
    arguable that, in a proper case and on a full factual record, the duty of
    loyalty could be held to trump the immunity afforded by the doctrine of
    absolute privilege.  In my opinion, when these two important principles come
    into conflict, the conclusion that absolute privilege necessarily overtakes the
    lawyers duty of loyalty is not inevitable.

[70]

I
    find support for this conclusion in the stated reluctance of appellate courts to
    expand the reach of the absolute privilege doctrine.  Recall again the
    admonition expressed by the High Court of Australia in
Mann
, at p. 907,
    that any extension of the doctrine is viewed with the most jealous suspicion,
    and resisted, absent a clear showing of its necessity.

(b)

There is no authority for the application of absolute privilege to a
    lawyers omissions or silence

[71]

Second,
    the facts alleged in the Challenged Paragraphs include assertions that rest in
    part on the appellants alleged omissions or silence, that is, on their
    non-disclosure of material facts in their dealings with the OSC.

[72]

Even
    assuming that the doctrine of absolute privilege is available to the appellants
    in this case, they offer no authority to support its application to a lawyers
    omissions or silence.  The doctrine is intended to ensure that counsel are able
    to zealously advocate on behalf of their clients without fear of recrimination
    or liability for doing so.  As classically articulated in
Halsburys Laws
    of England
, at para. 97, and in
Munster
, at pp. 602  604, the
    doctrine applies to statements spoken or uttered in the ordinary course and
    for the purposes of any judicial proceeding.

[73]

Given
    the doctrines origins in the law of defamation, the emphasis on what is said
    in a judicial proceeding is hardly surprising.  Thus, on the current state of
    the law concerning absolute privilege, it cannot be said that it is plain and
    obvious that the respondents claims will be defeated by a defence of absolute
    privilege relating to the appellants alleged omissions or silence, as distinct
    from statements actually made by them, during the OSC proceeding.
[7]

(c)

The appellants interpretation of
Demarco
is overly restrictive

[74]

Third,
    I regard the appellants urged interpretation of the principles articulated in
Demarco
as overly restrictive.

[75]

The
    appellants seek to distinguish
Demarco
on two grounds: (1)
Demarco
recognizes only that a client can bring a negligence claim based on his or her
    lawyers
conduct of the case
, as opposed to what the lawyer said in
    court; and (2)
Demarco
stands for the proposition that an advocates
    immunity does not bar a client from suing his or her lawyer based on negligent
conduct
while representing
that same client
in court (emphasis
    by the appellants).

[76]

The
    facts in
Demarco
involved an aspect of the actual conduct of a trial
    a lawyers failure to call an allegedly material, available defence witness in
    the debt action against the defendants client.  But, as the majority of the
    Divisional Court pointed out, at para. 12, a clear line between what a lawyer
    does or does not do in court, and what a lawyer says or does not say in court,
    cannot always be drawn.

[77]

This comment accords with common sense and the dynamics of a contested
    proceeding.  Often, steps taken by counsel to advance his or her clients cause
    are manifest only through words uttered, orally or in writing, in preparation
    for or during the proceeding.  To confine the concept of the conduct of a case
    to procedural steps or advocacy tactics evidenced by steps actually taken
    during the progress of the case diminishes the breadth of counsels role and
    the realities of an adversarial proceeding.  I therefore agree with the view
    expressed by the majority of the Divisional Court, at para. 12, that: it is
    not plain and obvious that
Demarco
does not permit a client to sue his
    or her lawyer for negligence based, at least in part, on what the lawyer said,
    or did not say, in the course of a proceeding.

[78]

The leading decisions that have considered the doctrine of advocates
    immunity from suit, discussed above (including
Demarco
), do not
    suggest that a client who sues his or her lawyer for negligence is precluded by
    the doctrine of absolute privilege from grounding the claim on words spoken by
    the lawyer: see
Wernikowski
;
Arthur J. S. Hall
;
Chamberlains
;
    and
DOrta-Ekenaike
.

[79]

The decision of this court in
Wernikowski
is illustrative.  In
    that case, this court allowed an appeal from an order under rule 25.11 striking
    a plaintiffs negligence claim against a law firm, a member of which had
    defended the plaintiff on charges of sexual interference and sexual assault.
    The plaintiff alleged, among other matters, that his trial counsel advanced a
    hopeless defence on the sexual interference charge, instead of the defence that
    the plaintiff had instructed counsel to advance.

[80]

This court held, at para. 43, that the principles articulated in
Demarco
apply to the alleged negligent conduct of the defence of a criminal case.  In
    allowing the plaintiffs claim concerning the sexual interference defence to
    proceed as pleaded, Doherty J.A. reviewed at some length Krever J.s decision
    in
Demarco
, as well as some of the Commonwealth jurisprudence that I
    have mentioned.  Notably, Doherty J.A. made no reference to the doctrine of
    absolute privilege.  This is significant because, for the plaintiffs
    allegations to be proven, evidence of the lawyers oral submissions at trial on
    the defence to the sexual interference charge would need to be admitted.  Yet,
    on the appellants argument, these statements would be protected by absolute
    privilege.

[81]

I
    also do not agree with the appellants contention that
Demarco
necessarily applies only if the client bringing the professional negligence
    suit is also the client who was represented in the proceeding at issue.  In my
    view, it cannot be said that this contention is plainly beyond dispute.

[82]

Once
    again, no authority has been cited to support the argument advanced by the
    appellants.  I know of no case (and the appellants point to none) that has
    considered or decided whether a client (Client A) may bring a claim against
    his or her lawyer based on the lawyers alleged statements or steps in a
    proceeding on behalf of another client (Client B).  This question was not
    considered in
Demarco
.

[83]

Notably,
    in
Demarco
, Krever J. did address the issue whether the doctrine of
    absolute privilege operates as a shield against negligence claims by clients
    against their lawyers.  His comments in rejecting this proposition, at para.
    29, bear repetition:

The last consideration to be dealt with is the perceived
    anomaly related to the absolute privilege enjoyed in respect of anything said
    in Court by a lawyer.  I confess that I am unable to appreciate why it should
    follow from the existence of that privilege that a lawyer may not be sued by
    his or her client for the negligent performance of the conduct of the clients
    case in Court.

[84]

If,
    as
Demarco
holds, absolute privilege does not immunize Ontario lawyers
    from professional negligence suits by their clients, can it be said that the
    privilege indisputably applies when the suit is brought by Client A in respect
    of conduct by the lawyer on behalf of Client B?  In such circumstances, a
    conflict arises between the public policy goals served by the doctrine of
    absolute privilege and those fostered by the lawyers duty of loyalty.  And
    that conflict leads to my fourth ground for rejecting the appellants attack on
    the Challenged Paragraphs of the respondents pleading.

(d)

There is no authority for the
    claim of the primacy of  absolute privilege

[85]

In this case, the appellants argue that the absolute privilege doctrine
    is absolute, whereas the lawyers duty of loyalty is not.  In contrast, the respondents
    submit that the doctrine of absolute privilege is animated by and is a function
    of the duty of loyalty.  They assert in their factum that the duty of loyalty
    must take priority over absolute privilege.  They submit that otherwise, the
    doctrine of absolute privilege would permit lawyers to ignore conflicts of interest
    with impunity  to act for one client while breaching their duty of loyalty to
    another.

[86]

As
    I have said, there appears to be no authority for the proposition that the
    absolute privilege doctrine extends to statements made by a lawyer on behalf of
    one client (Client B) when another client (Client A) seeks to rely on those
    statements to ground a cause of action against the lawyer.  In the absence of
    settled law on this issue, the primacy of the doctrine of absolute privilege
    over the lawyers duty of loyalty remains an open question.

[87]

Finally,
    and importantly, the jurisprudence on advocates immunity described above instructs
    that immunity from suit must be based on public policy considerations.  For
    example, in
Saif Ali
, Lord Wilberforce explained, at p. 214: [i]n fixing
    [the boundary of immunity from suit], account must be taken of the counter
    policy that a wrong ought not to be without a remedy.  Similarly, the Court of
    Appeal of New Zealand said in
Rees
, at p. 187: [t]he protection [afforded
    by the principle of immunity] should not be given any wider application than is
    absolutely necessary in the interests of the administration of justice.

[88]

In
    my opinion, it is not plain and obvious that compelling public policy
    considerations require applying absolute privilege to prevent the respondents
    from proving that they were denied their lawyers undivided loyalty  not
    merely by reference to the fact of a competing retainer  but by relying on the
    manner in which the appellants conducted the OSC proceeding on behalf of other
    clients with allegedly conflicting interests.

(e)

The rule 21.01(1)(b) test has not been met

[89]

I
    therefore return to where I began

 to the test on a motion to strike
    under rule 21.01(1)(b).  It is not the function of the courts on a pleadings
    motion of this kind to resolve unsettled, complex or novel questions of law.
    In the present context, it is not the role of the courts on such a motion to
    determine a contest between, on the one hand, a defence based on the
    application of the absolute privilege doctrine and, on the other hand, a
    clients right to advance a claim tethered to a lawyers alleged breaches of his
    or her fiduciary duty and duty of loyalty.  As this court stated in
Reynolds
,
    at para. 13, there is abundant authority in Ontario for the proposition that: [a]t
    the interlocutory stage of proceedings, the court should not dispose of matters
    of law that are not fully settled in the jurisprudence.  Such issues should be
    decided at trial on the basis of a full evidentiary record.

[90]

The
    appellants argue that the majority of the Divisional Court erred by, in effect,
    resolving their appeal by recognizing a duty of loyalty exception to the
    absolute privilege doctrine.  I would reject this submission.

[91]

The
    majority did not determine the competition arising in this case between the
    absolute privilege doctrine and a lawyers duty of loyalty.  The majority
    simply identified the contest between the two principles and ruled that the
    outcome of this competition is not plain and obvious.  Accordingly, adjudication
    on the merits is necessary.

[92]

I
    see no error by the majority of the Divisional Court in this ruling.  In my
    opinion, it is not plain and obvious whether the administration of justice
    would be better served by vindicating the Mander Groups right to zealous
    advocacy by the appellants or the respondents right to pursue relief for the
    appellants alleged breaches of their fiduciary duty and their duty of
    undivided loyalty based on statements or omissions in the OSC proceeding.  In
    short, the respondents claims based on the Challenged Paragraphs, although not
    certain to succeed, are also not plainly and obviously destined to fail.

(f)

The suggested solicitor-client privilege implications

[93]

I
    conclude with brief consideration of the appellants claim that the failure to
    strike the Challenged Paragraphs at the pleadings stage will result in serious
    and, implicitly, insurmountable implications for solicitor-client privilege.
    They assert, for example, that the refusal to strike the Challenged Paragraphs
    will render them unable to defend the respondents claims without violating the
    Mander Groups solicitor-client privilege.

[94]

In
    my view, this is not a basis for striking the Challenged Paragraphs.  Allowing
    the impugned paragraphs of the respondents statement of claim to stand at the
    pleadings stage will not necessarily allow the respondents to gain access to
    solicitor-client privileged information.

[95]

It
    is open to the appellants, in defending the respondents action, to invoke
    solicitor-client privilege at the pleadings, production and discovery stages of
    the action.  In order to obtain access to information that attracts solicitor-client
    privilege, the respondents will be obliged to satisfy a court that the
    information sought is relevant and necessary to prove their claim and that it
    falls within one of the recognized exceptions to solicitor-client privilege.
    It is not clear, at this juncture, that any of these exceptions is engaged.
    Further, it has not yet been established whether Mander and Sbaraglia will waive
    solicitor-client privilege.

[96]

Conversely,
    the appellants ability to defend against the respondents allegations of
    breaches of fiduciary duty and the duty of loyalty may not require reliance on
    solicitor-client privileged material.  On the state of the record to date  no
    statement of defence having been delivered and without any evidence  the
    appellants version of the fact, nature and scope of their retainer by the
    respondents is unknown.  The appellants may not need to rely on information
    that is privileged in the Mander Groups hands to establish that their
    relationship with the respondents did not run afoul of the bright line
    conflicts rule established in
Neil
, or to show that their conduct did
    not create a substantial risk of impairing the respondents interests.  These
    are matters to be determined in the usual course as the respondents action
    proceeds.

V.      Disposition

[97]

For
    the reasons given, I conclude that while the respondents claims based on the
    Challenged Paragraphs may not succeed, they should be allowed to proceed to
    trial, to be considered on the basis of a complete factual record and in light
    of the other claims advanced by the respondents in their pleading against the
    appellants.  Accordingly, I would dismiss the appeal.

[98]

I
    would award the respondents their costs of the appeal and of the motion for
    leave to appeal to this court, fixed, as agreed by the parties, in the total
    amount of $13,500, inclusive of disbursements and all applicable taxes.

[99]

I
    do not wish to leave this appeal without expressing appreciation for the able arguments
    of all counsel, which greatly assisted this court in its deliberations.

Released:

APR 24 2013                          E.A. Cronk J.A.

I agree
    Janet Simmons J.A.

*
OConnor A.C.J.O. took no part in the judgment.

[1]

Halsburys Laws of England
, vol. 28, 4th ed. (London, U.K.:
    Butterworths, 1997), at para. 97, adopted by this court in
Samuel Manu-Tech
    Inc. v. Redipac Recycling Corp.
(1991), 124 O.A.C. 125 (C.A.), at para.
    19.

[2]
Welsh does not appear to have participated in the motion to strike, nor is he a
    party to this appeal.  Accordingly, the respondents allegations against him
    are not at issue in this proceeding.

[3]
The motion judge was also not persuaded that the appellants had any duty to
    make any statements during the OSC investigation, or even to attend the OSC
    examinations.  In his opinion, if the appellants voluntarily attended and
    participated in the OSC examinations in a manner that breached their duties to
    the respondents, it was manifestly unjust that they should be able to use the
    doctrine of absolute immunity as a shield (at para. 19).  The respondents do
    not advance this argument as a ground for resisting the appellants appeal.

[4]
This restriction on the scope of the immunity recognized that counsel also
    engage in advisory work or the drafting of documents in circumstances where
    their public duties and their duties to their client are unlikely to conflict:
    see for example, the opinion of Lord Reid in
Rondel
.  The immunity,
    therefore, was seen to be justified in those situations  like litigation
    where counsel may be confronted with a conflict of duties.

[5]
In contrast, the courts in Australia continue to recognize advocates immunity:
    see
DOrta-Ekenaike v. Victoria Legal Aid
, [2005] H.C.A. 12.  However,
    even in Australia, the doctrine of absolute privilege is not regarded as a
    reason for preserving the immunity.  In
DOrta-Ekenaike
, at paras. 40,
    45 and 84, the majority identified the public interest in the finality of legal
    proceedings as the singular rationale for retaining the immunity.

[6]
On January 24, 2013, the Supreme Court heard argument, and reserved its
    decision, in
Canadian National Railway v. McKercher LLP
, 2011 SKCA
    108, leave to appeal to SCC granted, [2011] S.C.C.A. No. 59, which concerns the
    scope of the lawyers duty to avoid conflicts of interest.  The appeal arose in
    the context of a disqualification motion brought by Canadian National Railway
    against its former law firm and lawyer, who were acting as counsel in a
    proposed class action against the railway company.  Based on the facta filed in
    that case, the Supreme Court has been asked to clarify the interaction between
    the bright line rule and the substantial risk principle described in
Neil
and further considered in
Strother
.

[7]
The motion judge was alive to this issue.  He stated, at para. 16 of his
    reasons, that if he had applied the doctrine in this case, he would have struck
    only those parts of the Challenged Paragraphs that pertain to statements
    allegedly uttered by Dublin.


COURT OF APPEAL FOR ONTARIO

CITATION: Argue v. Tay (Township), 2013 ONCA
    247

DATE: 20130419

DOCKET: C55997

Weiler, Sharpe and Rouleau JJ.A.

BETWEEN

Robin Argue

Plaintiff (Appellant)

and

The Corporation of the Township of Tay

Defendant (Respondent)

David A. Morin and Dale W. Lediard, for the appellant

Andra Maxwell-Baker and Zohar Levy, for the respondent

Heard: April 18, 2013

On appeal from the judgment of Justice Guy P. DiTomaso of
    the Superior Court of Justice, dated August 10, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The appellant submits that the motion judge erred in dismissing the
    action of the basis that it was statute barred under s. 44(10) of the
Municipal
    Act
.  We disagree.

[2]

There is no issue that the appellant did not give notice of her claim in
    writing as required within 10 days under s. 44(10).  She, therefore, had the
    onus of establishing a reasonable excuse under s. 44(12) for not doing so and
    that the municipality was not prejudiced.  After considering the evidence, the
    motion judge gave careful and considered reasons for holding that the appellant
    failed to establish a reasonable excuse and that the municipality was not
    prejudiced.

[3]

We see no error in his analysis or in his application of the relevant
    principles.  Nor did he reverse the overall burden of proof on the motion for
    summary judgment.

[4]

Accordingly, the appeal is dismissed.  Costs of the appeal to the
    respondent are fixed in the amount of $7,028, inclusive of disbursements and
    applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Balmoral Developments Hilda
    Inc. v. Orillia (City), 2013 ONCA 212

DATE: 20130405

DOCKET: C56312

MacFarland, Rouleau and Pepall JJ.A.

BETWEEN

Balmoral Developments Hilda Inc.

Applicant (Respondent-in-appeal)

and

The Corporation of the City of Orillia and Kelly
    Smith, Chief Building Official

Respondents (Appellants)

Michael M. Miller, for the appellants

E. Marshall Green and E. Brohm, for the respondents

Heard:  March 25, 2013

On appeal from the judgment of Justice Susan E. Healey of
    the Superior Court of Justice, dated October 24, 2012.

ENDORSEMENT

[1]

The appellants, the City of Orillia and Kelly Smith, Chief Building
    Official, appeal the October 24, 2012 judgment of S. E. Healey J.

[2]

Before the application judge, the City took the position that a proposal
    by the respondent to increase the occupancy of each unit to seven students,
    each with his or her own lease would bring the units within the definition of a
    boarding, lodging or rooming house.  As such, the respondents proposal was
    contrary to the Citys zoning by-law and non-compliant with Ontario Regulation
    350/06 of the
Building Code Act
(the
Building Code
).  The
    application judge found against the City on both issues.

[3]

The appellants appeal the application judges finding that the respondents
    proposal would not result in the units being boarding, lodging or rooming
    houses under the
Building Code
. They argue that as constructed, the
    buildings cannot accommodate the increase to seven without violating the fire exit
    requirements mandated by the
Building Code
for boarding, lodging or
    rooming houses.

[4]

It is conceded on behalf of the respondent that if the townhouse units
    are boarding, lodging or rooming houses, then they would not comply with the
    exit requirements of the
Building Code
.

[5]

It is also conceded that the units meet the requirements of subsections
    (a) and (c) of the definition of boarding, lodging or rooming house found in s.
    1.4.1.2 of the
Building Code
. The only dispute concerns whether the
    proposed use would result in the units meeting the final requirement, the
    requirement in  subsection (b) which reads:

in which lodging is provided for more than four persons in return
    for remuneration or for the provision of services or for both.

[6]

In our view, it is clear that the respondents proposed use of the units
    provides lodging for more than four persons in return for remuneration.  This
    is apparent from the following facts:

·

there will be seven individual leases, one for each of the
    bedrooms, which the occupants of those bedrooms will enter into with the
    landlord

·

the occupants will rent for terms that vary between 10 and 12
    months

·

the individual bedrooms all will have locks on their doors

·

the furniture by and large will be provided by the landlord

·

there is no evidence of any anticipated collective decision
    making among the occupants

·

there is no evidence that the occupants will be required to pay a
    share of the utilities other than as encompassed in the rent

·

although the landlord will take requests into consideration, the
    occupants will be selected by the landlord, and

·

apart from their attendance at university or college there is no
    evidence of any other connection among the seven proposed occupants.

[7]

In our view, the application judge erred in her interpretation of the
Building
    Code
and its application to the facts before her when she determined that
    the proposed use would not result in the units being boarding, lodging or
    rooming houses as defined in the
Building Code
.

[8]

Accordingly, we would allow the appeal, set aside the judgment of the
    application judge and in its place, substitute a judgment in accordance with
    this endorsement.

[9]

In view of the appellants success, they are entitled to costs in this
    court on a partial indemnity scale fixed in the sum of $25,000 inclusive of
    disbursements and applicable taxes.

[10]

In
    view of the divided success in the court below as the result of our decision,
    we accept the appellants submission that there be no costs of the application
    to either party in the court below.

J.
    MacFarland J.A.

Paul
    Rouleau J.A.

S. E.
    Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Brown v. Canada (Attorney
    General), 2013 ONCA 256

DATE: 20130424

DOCKET: C55475

Rosenberg, Gillese and Tulloch JJ.A.

BETWEEN

Marcia Brown and Robert Commanda

Plaintiffs (Appellants)

and

The Attorney General of Canada

Defendant (Respondent)

Jeffery Wilson and Morris Cooper, for the appellants

Owen D. Young, Paul J. Evraire, Q.C., and Michael W. Bader,
    Q.C., for the respondent

Heard: October 25, 2012

On appeal from the order of the Divisional Court
    (Cunningham A.C.J.S.C., Pardu and Mulligan JJ.), dated December 28, 2011, with
    reasons reported at 2011 ONSC 7712, setting aside the order of Justice Paul M.
    Perell of the Superior Court of Justice, dated May 26, 2010, with reasons
    reported at (2010), 102 O.R. (3d) 493.

COSTS ENDORSEMENT

[1]

We have reviewed the costs submissions of the parties. Given the divided
    success, we are of the view that this is a proper case where there should be no

costs of the motion for leave to appeal or of the
    appeal.

M.
    Rosenberg J.A.

E.E.
    Gillese J.A.

M.
    Tulloch J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Business Development Bank of Canada v. Pine Tree
    Resorts Inc., 2013 ONCA 282

DATE: 20130429

DOCKET: M42401, M42383 & M42395 (C56856)

R.A. Blair J.A. (in Chambers)

BETWEEN

Business Development Bank of Canada

Applicant (Respondent)

and

Pine Tree Resorts Inc. and 1212360 Ontario
    Limited

Respondents (Appellants)

Milton A. Davis, for the appellants Pine Tree Resorts
    Inc. and 1212360 Ontario Limited

David Preger, for the appellant Romspen Investment
    Corporation

Harvey Chaiton, for the respondent Business Development
    Bank of Canada

Heard: April 22, 2013

ENDORSEMENT

Overview

[1]

On April 2, 2013, Justice Mesbur granted the application of Business Development
    Bank of Canada (BDC) for the appointment of a receiver over the assets of the
    respondents, Pine Tree Resorts Inc. and 1212360 Ontario Limited (together,
    Pine Tree).  Pine Tree owns and operates the Delawana Inn in Honey Harbour,
    Ontario.

[2]

Pine Tree and the second mortgagee, Romspen Investment Corporation (Romspen),
    seek to appeal from Mesbur J.s order.  At the heart of this motion is whether
    the order should be stayed pending the appeal if there is an appeal.
    Collateral issues include whether the appeal is as of right under s. 193 of the
Bankruptcy Act
, R.S.C. 1985, c. B-3 (BIA).  If the answer to that
    question is yes, should the automatic stay be lifted?  If leave to appeal is
    required, should it be granted and, if so, should the order be stayed pending
    the disposition of the appeal?

[3]

For the reasons that follow, I conclude that the appeal is not as of
    right, that leave to appeal is required and that in the circumstances here
    leave ought not to be granted.  It is therefore unnecessary to deal with the
    specific question of whether a stay should be ordered pending appeal.

Background and Facts

[4]

BDC is owed approximately $2.6 million by Pine Tree and holds first
    security for that indebtedness by way of a mortgage on the Delawana Inn lands
    and, additionally, by way of general security agreements covering both land and
    chattels.  Romspen is the second mortgagee.  Its mortgage, too, is in default.
    Romspen is owed approximately $4.3 million.

[5]

The Inn has been in financial difficulties for several years and
    finally, after a number of negotiated extensions and forbearances, BDC demanded
    payment under both the mortgage and the general security agreements.

[6]

Under its security documents, BDC is contractually entitled to the
    appointment of a receiver.  Instead of appointing a private receiver, however,
    BDC chose to apply for a court-appointed receiver.  Romspen chose to initiate
    power of sale proceedings but, at the time the order was made, was not in a
    position to proceed with the sale because three days remained under the period
    prescribed in the Notice of Power of Sale for redemption.

[7]

Pine Tree and Romspen opposed BDCs application.  That said, all parties
    agree the property must be sold immediately.  Pine Tree does not have the
    financial ability to keep the Inn operating.  In essence, the dispute is over
    which secured creditor will have control over the sale of the property and
    which plan for sale will be implemented.

[8]

Pine Tree supports Romspens plan because it involves re-opening the Inn
    for the upcoming summer season and attempting to sell the property on a
    going-concern basis.  BDC rejects this option as unrealistic because it views
    the Inns operations as being an irretrievably losing proposition.

[9]

Romspen argued before the application judge  and argues here as well
    that it was entitled to exercise its rights as a subsequent mortgagee under s.
    22 of the
Mortgages Act
, R.S.O. 1990, c. M.40, to put BDCs mortgage in
    good standing and take over the sale of the property.  It proposes to put the
    mortgage in good standing by paying all arrears of principal and interest,
    together with all of BDCs costs, expenses, and outstanding realty taxes.  However,
    it does not propose to repay approximately $250,000 in HST arrears.  Those
    arrears constitute a default under the BDC security documents.

[10]

In
    seeking to appeal the order, Romspen and Pine Tree assert a number of grounds
    relating to the exercise of the application judges discretion in granting the
    receivership order, but the centrepiece of their legal argument on appeal concerns
    the exercise of a subsequent mortgagees rights under s. 22 of the
Mortgages
    Act
.  They submit that the arrears of HST do not jeopardize BDCs security
    in any way because they are a subsequent encumbrance, and therefore it is not
    necessary for them to comply with that covenant in order to be able to take
    advantage of a subsequent mortgagees rights under s. 22.  Whether that view is
    correct is the question of law they wish to have determined on appeal.

[11]

On
    behalf of BDC, Mr. Chaiton submits that there is nothing in s. 22 that permits
    a subsequent mortgagee to exercise its s. 22 rights unless it brings the prior
    mortgage into good standing, which involves both paying the amount due under
    the mortgage and  where there are unperformed covenants  performing those
    covenants as well.

Is Leave to Appeal Necessary?

[12]

In
    my view, there is no automatic right to appeal from an order appointing a
    receiver: see
Century Services Inc. v. Brooklin Concrete Products Inc.
(11
    March 2005), Court File No. M32275 (Ont. C.A., in Chambers), Catzman J.A.;
Alternative
    Fuel Systems Inc. v Edo (Canada) Ltd. (Trustee of)
(1997), 206 A.R. 295
    (Alta. C.A., in Chambers)
.

[13]

The
    portions of s. 193 of the BIA relied upon by Romspen and Pine Tree are the
    following:

Unless otherwise expressly provided, an appeal lies to the
    Court of Appeal from any order or decision of a judge of the court in the
    following cases:

(a) if the point at
    issue involves future rights;

(c) if the property
    involved in the appeal exceeds in value ten thousand dollars;

(e) in any other case by leave of a
    judge of the Court of Appeal.

[14]

Neither
    (a) nor (c) applies in these circumstances, in my view.  I will address whether
    leave to appeal should be granted later in these reasons.

[15]

Future
    rights are future legal rights, not procedural rights or commercial advantages
    or disadvantages that may accrue from the order challenged on appeal. They do
    not include rights that presently exist but that may be exercised in the future:
    see
Ravelston Corp., Re
, [2005] O.J. No. 5351 (C.A.), at para. 17.  See
    also
Ditchburn Boats & Aircraft (1936) Ltd., Re
(1938), 19 C.B.R.
    240 (Ont. C.A.);
Dominion Foundry Co., Re
(1965), 52 D.L.R. (2d) 79
    (Man. C.A.); and
Fiber Connections Inc. v. SVCM Capital Ltd.
(2005), 10
    C.B.R. (5
th
) 201 (Ont. C.A., in Chambers).

[16]

Here,
    Romspens legal rights are its right to exercise its power of sale remedy and
    its right to put the first mortgage in good standing under s. 22 of the
Mortgages
    Act
.  The first crystallized on the default under the Romspen mortgage, the
    second on the default under the BDC mortgage.  Both rights were therefore
    triggered before the order of Mesbur J.  They were at best rights presently
    existing but exercisable in the future.

[17]

Nor
    do I accept the argument that the property in the appeal exceeds in value
    $10,000 for purposes of s. 193(c).  As noted by the Manitoba Court of Appeal in
Dominion Foundry Co.
, at para. 7, to allow an appeal as of right in
    these circumstances would require doing so in almost every case because very
    few bankruptcy cases would go to appeal where the value of the bankrupts
    property did not exceed that amount.  More importantly, though, an order
    appointing a receiver does not bring into play the value of the property; it
    simply appoints an officer of the court to preserve and monetize those assets,
    subject to court approval.

[18]

In
    my view, leave to appeal is required in the circumstances of this case.

Should Leave to Appeal Be Granted?

The Test

[19]

In
Fiber Connections Inc.
, Armstrong J.A. (in Chambers) reviewed
    extensively the jurisprudence surrounding the test to be applied for granting
    leave to appeal under s. 193(e).  As he noted at para. 15, there is some
    confusion as to what that test is.  Two articulations of the test have emerged,
    and each has its support in the case law.

[20]

One
    formulation is that set out by McLachlin J.A. (as she then was) in
Power
    Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp.
(1988), 19 C.P.C. (3d) 210.  It asks the following questions:

(i)      Is the
    point appealed of significance to the practice as a whole?

(ii)      Is the
    point raised of significance in the action itself?

(iii)     Is the appeal prima facie meritorious?

(iv)     Will the appeal unduly hinder the progress of the
    action?

[21]

These
    are the criteria generally applied when considering whether to grant leave to
    appeal from orders made in restructuring proceedings under the
Companies
    Creditors Arrangement Act
R.S.C. 1985, c. C-36 (CCAA), although their
    application has not been confined to those types of cases.

[22]

A
    second approach to the test was adopted by Goodman J.A. in
R.J. Nicol Construction
    Ltd. (Trustee of) v. Nicol
, [1995] O.J. No. 48 (C.A., in Chambers), at
    para. 6.  Through this lens, the court is to determine whether the decision
    from which leave to appeal is sought (a) appears to be contrary to law; (b)
    amounts to an abuse of judicial power; or (c) involves an obvious error,
    causing prejudice for which there is no remedy.

[23]

Ontario
    decisions have traditionally leaned toward the
R.J. Nicol
factors when
    determining whether to grant leave to appeal under s. 193(e) of the BIA: see,
    in addition to
R.J. Nicol
, for example,
Re Leard
(1994), 114
    D.L.R. (4th) 135 (Ont. C.A., in Chambers); and
Century Services Inc.

[24]

This
    view has evolved in recent years, however, and three decisions in particular
    have added nuances to the
R.J. Nicol
approach by considering such
    factors as whether there is an arguable case for appeal and whether the issues
    sought to be raised are significant to the bankruptcy practice in general and
    ought to be addressed by this Court: see
Fiber Connections Inc.
, at
    paras. 16-20;
GMAC Commercial Credit Corp. of Canada v. TCT Logistics
,
    [2003] O.J. No. 5761 (C.A., in Chambers); and
Baker, Re
(1995), 22 O.R.
    (3d) 376 (C.A., in Chambers).  These factors echo the criteria set out in
Power
    Consolidated.

[25]

In
Baker, Re,
Osborne J.A. acknowledged the two alternative approaches to
    determining whether leave to appeal should be granted.  He concluded at p. 381
    that the
R.J. Nicol
criteria were generally relevant but observed that
    all factors need not be given equal weight in every case.  For that particular
    case, he emphasized the factor that the issue sought to be appealed was a
    matter of considerable general importance in bankruptcy practice.  In
TCT
    Logistics
, at para. 9, Feldman J.A. listed all of the
R.J. Nicol and
the
Power Consolidated
criteria  without apparently distinguishing
    between them  as matters to be taken into account.  She granted leave holding
    that the issues in that case were significant to the commercial practice
    regulating bankruptcy and receivership and ought to be considered by this court.

[26]

Finally,
    in
Fiber Connections Inc.
, Armstrong J.A. reviewed all of the foregoing
    authorities and, at para. 20, granted leave to appeal because he was satisfied
    in that case that there were arguable grounds of appeal (although it was not
    necessary for him to determine whether the appeal would succeed) and because
    the issues raised were significant to bankruptcy practice and ought to be
    considered by this Court.

[27]

I
    take from this brief review of the jurisprudence that, while judges of this
    Court have tended to favour the
R.J. Nicol
test in the past, there has
    been a movement towards a more expansive and flexible approach more recently
    one that incorporates the
Power Consolidated
notions of overall
    importance to the practice area in question or the administration of justice as
    well as some consideration of the merits.

[28]

That
    being the case, it is perhaps time to attempt to clarify the confusion that
    arises from the co-existence of the two streams of criteria in the
    jurisprudence.  I would adopt the following approach.

[29]

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.

[30]

It
    is apparent these considerations bear close resemblance to the
Power
    Consolidated
factors.  One is missing: the question whether the point
    raised is of significance to the action itself.  I would not rule out the
    application of that consideration altogether.  It may be, for example, that in
    some circumstances the parties will need to have an issue determined on appeal
    as a step toward dealing with other aspects of the bankruptcy/insolvency
    proceeding.  However, it seems to me that this particular consideration is
    likely to be of lesser assistance in the leave to appeal context because most
    proposed appeals to this Court raise issues that are important to the action itself,
    or at least to one of the parties in the action, and if that consideration were
    to prevail there would be an appeal in almost every case.

[31]

I
    have not referred specifically to the three
R.J. Nicol
criteria in the
    factors mentioned above.  That is because those factors are caught by the
prima
    facie
meritorious criterion in one way or another.  A proposed appeal in
    which the judgment or order under attack (a) appears to be contrary to law, (b)
    amounts to an abuse of judicial power, or (c) involves an obvious error causing
    prejudice for which there is no remedy, will be a proposed appeal that is
prima
    facie
meritorious.  I recognize that the
Power Consolidated

prima
    facie
meritorious criterion is different than the arguable point notion
    referred to by Osborne J.A. in
Baker
and by Armstrong J.A. in
Fiber
    Connections
.  In my view, however, the somewhat higher standard of a
prima
    facie
meritorious case on appeal is more in keeping with the incorporation
    of the
R.J. Nicol
factors into the test.

[32]

As
    I have explained above, however, the jurisprudence has evolved to a point where
    the test for leave to appeal is not simply merit-based.  It requires a
    consideration of all of the factors outlined above.

[33]

The
Power Consolidated
criteria are the criteria applied by this Court in
    determining whether leave to appeal should be granted in restructuring cases
    under the CCAA: see
Country Style Food Services (Re)
, [2002] O.J. No.
    1377 (C.A., in Chambers), Feldman J.A., at para 15; and
Blue Range Resources
    Corp. (Re)
(1999), 244 A.R. 103 (C.A.).    The criteria I propose are quite
    similar.  There is something to be said for having similar tests for leave to
    appeal in both CCAA and BIA insolvency proceedings.  Proposed appeals in each
    area often arise from discretionary decisions made by judges attuned to the
    particular dynamics of the proceeding.  Those decisions are entitled to
    considerable deference.  In addition, both types of appeal often involve circumstances
    where delays inherent in appellate review can have an adverse effect on those
    proceedings.

Application
    of the Test in the Circumstances

[34]

I
    am not prepared to grant leave to appeal on the basis of the foregoing criteria
    in the circumstances of this case.

[35]

First,
    Romspen and Pine Tree raise a number of grounds relating to the exercise of the
    application judges discretion.  These include her consideration and treatment
    of: the relative expenses involved in BDCs and Romspens plans for the sale of
    the property; the impact of shutting down the Inn on employees and others and
    upon the potential sale prospects of the property; and her concern for the
    usual unsecured creditors.  These discretionary considerations are all
    entitled to great deference and, in any event, are purely factual and case
    specific, and do not give rise to any matters of general significance to the
    practice in bankruptcy/insolvency matters or to the administration of justice
    as a whole.

[36]

I
    would not grant leave to appeal on those grounds.

[37]

The
    legal issue raised by Romspen is this: did the application judge err by relying
    on a covenant default that could not prejudice BDC or erode its first-ranking
    security as the basis for her conclusion that Romspen had not complied with the
    requirements for the exercise of a subsequent mortgagees rights under s. 22 of
    the
Mortgages Act
?  The basis for that submission is the argument that
    the outstanding HST arrears  although a default in the observance of a
    covenant under the BDC mortgage  could not in any circumstances constitute a
    claim that would have priority over BDCs security, and therefore Romspen, as a
    subsequent mortgagee, is not required to cure the default by performing that
    covenant in order to be able to exercise its s. 22 rights.

[38]

I
    have serious reservations about the likelihood of success of this submission on
    appeal.

[39]

Romspen
    relies upon the jurisprudence of this Court establishing that a mortgagor  and
    therefore, a subsequent mortgagee  is entitled as of right, upon tendering the
    arrears or performing the covenant in default, to be relieved of the
    consequence of default: see
Theodore Daniels Ltd. v. Income Trust Co.
(1982),

37 O.R. (2d) 316 (C.A.).  The problem is that Romspen has not
    offered to put the BDC mortgage in good standing, but has only offered to do so
    partially.  It proposes to leave unperformed a $250,000 covenant  payment of the
    outstanding HST arrears.

[40]

For
    Romspen to succeed on appeal would require a very creative interpretation of s.
    22 of the
Mortgages Act
[1]
,
and one that would potentially create an undesirable element of uncertainty
    in the field of mortgage enforcement, because no one would know which covenants
    could be left unperformed and which could not, without litigating the issue in
    each case.

[41]

I
    am not persuaded that the s. 22 point crosses the
prima facie
meritorious threshold.  In any event, given my serious reservations about the
    merits, that factor together with the need for a timely sale process leads me
    to conclude that leave to appeal ought not to be granted.

[42]

Interfering
    with the timeliness of that process could potentially impact on the success of
    the sale.  All parties agree the property must be sold.  They only differ over
    who will conduct the sale and how it will be done.  The application judge
    considered the alternative plans at length, and her decision to accept the BDC
    plan was not dependent on her rejection of Romspens s. 22 argument.

[43]

There
    is some need for the sale to proceed expeditiously.  The experienced
    application judge chose between BDCs and Romspens two proposals and favoured
    that of BDC. Any further delay resulting from an appeal could well impact the
    potential sale, since the Inn is a seasonal business that only operates in the
    warm months of the year and those warm months are fast approaching.

[44]

For
    the foregoing reasons, I decline to grant leave to appeal.

Disposition

[45]

There
    is no appeal as of right from the receivership order granted by Mesbur J. under
    s. 193 of the BIA. Leave to appeal is required, but Romspen and Pine Tree have
    not met the test for leave to be granted in these circumstances.  The motions
    of Romspen and Pine Tree are therefore dismissed.  It follows that the
    receivership order is not stayed and that BDCs motion, to the extent it is
    necessary to deal with it, is successful.

[46]

No
    order as to costs is required, since I am advised that BDC is entitled to add
    the costs of this proceeding to its debt under the mortgage.

[1]
Section 22(1) provides:

Despite any agreement to the
    contrary,
where default has occurred
in making any payment of principal
    or interest due under a mortgage or
in the observance of any covenant in a
    mortgage
and under the terms of the mortgage, by reason of such default,
    the whole principal and interest secured thereby has become due and payable,

(a)

at any time before sale under the
    mortgage: or

(b)

before the commencement of an
    action for the enforcement of the rights of the mortgagee or of any person
    claiming through or under the mortgagee,

the mortgagor may perform
    such covenant
or pay the amount due
    under the mortgage, exclusive of the money not payable by reason merely of
    lapse of time, and pay any expenses necessarily incurred by the mortgagee, and
    thereupon the mortgagor is relieved from the consequences of such default.
    [Emphasis added]

It is not disputed that a
    subsequent mortgagee is a mortgagor for purposes of this provision.


COURT OF APPEAL FOR ONTARIO

CITATION: Canada (Justice) v. Scott, 2013 ONCA
    277

DATE: 20130429

DOCKET: C55906

Rosenberg, Watt and Pepall JJ.A.

IN THE MATTER OF an application for judicial review pursuant
    to s. 57 of the Extradition Act, S.C. 1999, c. 18

BETWEEN

The Minister of Justice for Canada

Respondent

and

Donovan Dwight Scott aka Duvaogh Lee Brown

Applicant

James A. Brown, for the applicant

Monika K. Rahman, for the respondent

Heard: April 26, 2013

On application for judicial review of the surrender order
    of the Minister of Justice, dated June 20, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The applicant has not shown that the Ministers decision was
    unreasonable. The applicant alleged that he faced a serious risk of torture if
    returned to Arkansas. The applicant presented no evidence to the Minister to
    show that he was at a serious risk as a result of the use of solitary
    confinement or the potential of sexual assault. The material provided by the
    Arkansas Department of Corrections was a basis, in the absence of anything
    else, for the Ministers opinion to decide to extradite without assurances.

[2]

Accordingly, the application is dismissed.


COURT OF APPEAL FOR ONTARIO

CITATION: Cavanaugh v. Grenville Christian
    College, 2013 ONCA 242

DATE:  20130417

DOCKET: C55627

Doherty and Blair JJ.A.

BETWEEN

Lisa Cavanaugh, Andrew
    Hale-Byrne, Richard Van Dusen, Margaret Granger and Tim Blacklock

Plaintiffs (Appellants)

and

Grenville Christian College, the Incorporated
    Synod of the Diocese of Ontario, Charles Farnsworth, Betty Farnsworth,
Judy Hay
    the Executrix for the Estate of J. Alastair Haig and Mary Haig

Defendants (Respondents in Appeal)

Kirk Baert, Russell M. Raikes, Sean ODonnell, Michael
    Saelhof and Loretta Merritt, appearing for the plaintiffs (appellants)

Steven Stieber and Linda Phillip Smith, appearing for
    the defendants (respondents) the Diocese

Geoffrey D. E. Adair, Q.C. and Alexa Sulzenko, for the
    respondents Grenville Christian College, Charles Farnsworth and Judy Hay the
    Executrix for the Estate of J. Alastair Haig

On appeal from the order of Justice Perell of the
    Superior Court of Justice, dated May 23, 2012.

COSTS ENDORSEMENT

[1]

Costs to the Diocese payable by the plaintiffs in the amount of $20,000,
    inclusive of disbursements and taxes.

Doherty J.A.

R.A. Blair J.A.


WARNING

THIS IS AN APPEAL UNDER THE

CHILD
    AND FAMILY SERVICES ACT

AND IS SUBJECT TO S. 45 OF THE
    ACT WHICH PROVIDES:

45. (7)
The court may
    make an order,

(a)        excluding a
    particular media representative from all or part of a hearing;

(b)        excluding all media
    representatives from all or a part of a hearing; or

(c)        prohibiting the
    publication of a report of the hearing or a specified part of the hearing,

where
    the court is of the opinion that the presence of the media representative or
    representatives or the publication of the report, as the case may be, would
    cause emotional harm to a child who is a witness at or a participant in the
    hearing or is the subject of the proceeding.

45. (8)
No
    person shall publish or make public information that has the effect of
    identifying a child who is a witness at or a participant in a hearing or the
    subject of a proceeding, or the childs parent or foster parent or a member of
    the childs family.

45. (9)
The
    court may make an order prohibiting the publication of information that has the
    effect of identifying a person charged with an offence under this Part.

COURT OF APPEAL FOR ONTARIO

CITATION: Children's Aid Society of the Regional Municipality
    of Waterloo v. C.G., 2013 ONCA 260

DATE: 20130425

DOCKET: C56254

Blair, Juriansz and Tulloch JJ.A.

BETWEEN

The Childrens Aid Society of the Regional
    Municipality of Waterloo

Applicant (Respondent in Appeal)

and

C.G.

Respondent (Appellant)

and

R.R.

Respondent (Respondent in Appeal)

and

M.S. and D.S.

Respondents (Respondent in Appeal)

Brigitte Gratl, for the appellant C.G.

J. Boich, for the respondent Childrens Aid Society of
    Waterloo

Heard and released orally: April 8, 2013

On appeal from the judgment of Justice Stephen Glithero
    of the Superior Court of Justice, dated October 26, 2012.

ENDORSEMENT

[1]

This child protection matter was scheduled to proceed in camera. The
    parties agreed it was not necessary to proceed in camera if an order banning
    publication of information that would identify the child were made. It is so
    ordered.

[2]

The appellant mother seeks to set aside the order of Glithero J. dated
    October 26, 2012, dismissing for delay her appeal from a summary judgment
    granted by McSorley J. of the Ontario Court of Justice. McSorley J. found her child
    in need of protection after concluding that the various plans of care she put
    forward did not disclose a genuine issue for trial.

[3]

Glithero J.s order was made at a status court hearing. The appellant
    has four other children. All have previously been made Crown wards with no
    access to the appellant.

[4]

The legislature has ordained that child protection matters proceed expeditiously.
    Unfortunately, there has been delay in this case. Much of the delay is not attributable
    to the appellant. The appellant though did not comply with rule 38(22). Rule
    38(22) requires the appeal record and factum in appeals under the
Child and
    Family Services Act
to be served and filed within 14 days of the filing of
    the notice of the appeal. Upon being served with the Notice of Appeal on July
    26, 2012, the CAS reminded the appellant of this requirement by letter dated
    July 31, 2012. The appeal was not perfected when the matter came before the
    status court on October 26, 2012.

[5]

We accept that part of the delay is attributable to the processing of
    the appellants legal aid application. The primary cause of the delay however,
    was the appellants mistaken view that the transcript of the submissions made
    at the summary judgment hearing was required. The rules apply to the
    transcript of evidence not to a transcript of submissions. Here there was no
    transcript of evidence. The appellants appeal book and factum had to be filed
    within 14 days of the filing of the Notice of Appeal.

[6]

As the status hearing judge recognized, the paramount consideration is
    the best interests of the child. The Ontario Court had yet to determine the
    placement of the child and issues of access. The trial dates for the
    continuation of the proceeding were fast approaching. It was in the best
    interests of the child that the issues of placement and access be determined as
    early as possible. We are not persuaded that by dismissing the appeal for
    failure to perfect as mandated by the rules, the trial judge committed any
    error in principle that warrants interference.

[7]

The appeal is dismissed.

R.A. Blair J.A.

R.G. Juriansz J.A.

M.H. Tulloch J.A.