COURT OF APPEAL FOR ONTARIO

CITATION: Gillani v. Karmali, 2014 ONCA 325

DATE: 20140425

DOCKET: C56943

Epstein, Pepall and van Rensburg JJ.A.

BETWEEN

Navroz Gillani

Plaintiff (Respondent)

and

Shiraz Karmali

Defendant (Appellant)

H. James Marin, for the appellant

Michael McQuade, for the respondent

Heard: March 18, 2014

On appeal from the judgment of Justice James M. Spence of
    the Superior Court of Justice, dated March 21, 2013, with reasons reported at
    2013 ONSC 1691.

Pepall
    J.A.:

[1]

The appellant appeals from a judgment awarding damages of $57,000 to the
    respondent based on breach of a constructive trust by the appellant.

Background

[2]

In 2001 and 2002, Salim Damji promoted a fraudulent investment scheme
    involving the sale of shares in corporations referred to collectively as STS.  STS
    was engaged in selling a teeth whitening product that apparently, Colgate Palmolive
    was going to purchase.  Investors were given the opportunity to subscribe for
    STS shares that would be issued when they were offered to the public.  The
    share subscriptions were offered by individuals known as collectors.

[3]

Many members of the Ismaili community, to which the parties belonged,
    were eager to buy shares in STS.  Prior to the events in issue in this
    litigation, the respondent had made three investments and subscribed for $45,500
    worth of STS treasury shares.  To effect the third of these investments, he
    wrote a cheque for $35,000 in favour of Mr. Damji, the promoter. The cheque was
    clearly stated to be in trust.  Later, the respondent sought to obtain more shares
    in STS.  This latter share subscription is the focus of the judgment under
    appeal.

[4]

The respondent, age 45, is related by marriage to the appellant, age 69:
    the respondents wife is the stepdaughter of the appellants brother.  The
    appellant and the respondent discussed the proposed share subscription.  The
    appellant was not a collector himself, but arranged for the respondent to meet
    with Mr. Suleman, who was a collector
[1]
.
    Mr. Suleman, age 67, had been a friend of the appellant for about 35 years;
    indeed, they had held a joint bank account together since the late 1980s.  According
    to the trial judge, Mr. Suleman was in a position to arrange to place a
    subscription through Kassam Juma
[2]
(who served as an intermediary for Mr. Damji) and to settle the terms that
    would be acceptable (at para. 29).

[5]

The trial judge rejected the respondents testimony that he did not meet
    with Mr. Suleman, that his purchase was to be of the appellants personal shares,
    with the purchase monies to be held in trust, and that the appellant would
    guarantee any loss.  Indeed, the trial judge specifically found that there was
    no evidence that the appellant agreed to hold the purchase funds in trust or
    that he guaranteed against any loss on the shares.  Rather, the trial judge concluded
    that the respondent obtained an agreement to enable him to purchase shares of
    STS at $1.50 per share when the STS shares were issued.  The amount that he was
    to be able to invest was to be $35,000 or, implicitly, whatever other amount
    Mr. Suleman might negotiate (at para. 35).

[6]

The respondents wife provided a cheque to Mr. Suleman for the purchase
    of STS shares.  It was dated November 9, 2001 and was in the amount of $57,000.
    The cheque was made payable to the appellant.  Unlike the respondents earlier
    cheque for $35,000 in favour of Mr. Damji, this cheque was not stated to be in
    trust, and the trial judge found that the money was not to be held in trust.  That
    said, the trial judge found that the appellant, the respondent and Mr. Suleman
    understood that the $57,000 cheque was for the purpose of subscribing for the
    purchase of STS shares.

[7]

There was no evidence or finding that suggested that the $57,000 was not
    to be intermingled with other funds.  There was no evidence or finding as to
    when the subscription had to be effected.

[8]

Mr. Suleman testified that he tried to give the cheque to Mr. Damjis
    intermediary, Kassam Juma, so that it could be put towards the purchase of STS
    shares on behalf of the respondent, but it was refused.  Mr. Suleman notified
    the appellant.  The two men decided to hold on to the funds in the hope that Mr.
    Juma would ultimately accommodate the investment and the shares could be subscribed
    for at a later date.  On November 9, 2001, the appellant deposited the cheque
    and four other cheques for a total aggregate amount of $115,500 into the joint
    bank account he shared with Mr. Suleman.

[9]

Soon after, the joint account was reduced to approximately $20,000.
    However, the funds in the account were later replenished.  According to Mr.
    Suleman, funds were regularly transferred back and forth between his line of
    credit account and the joint account.  The trial judge concluded that many
    and, perhaps virtually all of the transactions recorded in the bank statement
    for the joint account were for Mr. Suleman alone.

[10]

Mr.
    Suleman testified that subsequently, Mr. Juma agreed to sell more shares.  That
    said, Mr. Suleman also testified that he learned that Mr. Juma would not accept
    the $57,000 cheque for a purchase on behalf of the respondent.  On December 24,
    2001, Mr. Suleman wrote a cheque for $115,000 payable to Salim Damji I/T,
    which the trial judge concluded probably meant in trust.  The cheque was
    signed by the appellant.  It cleared the joint account on December 28, 2001.  The
    signature for deposit on the back of the cheque was that of Salim Damji.

[11]

Mr.
    Suleman testified that the cheque for $115,000 incorporated the $57,000 payment
    by the respondent to subscribe for the shares.  The trial judge did not reject
    that evidence.  He concluded, however, that because the cheque recited Mr.
    Sulemans name on the memo line, any claim against Mr. Damji and STS would
    belong to Mr. Suleman.  At para. 66 of his reasons, the trial judge determined that
    the respondent was entitled to believe that Mr. Suleman would apply the $57,000
    to purchase for him an entitlement to receive shares from STS, but that the
    $57,000 was never applied in that way.  On the other hand, at para. 79 of his
    reasons, he determined that on December 24, 2001, the appellant paid to
    subscribe for shares in STS for the respondent on the terms of his arrangement.

[12]

Before the
    fraud was discovered, Mr. Suleman prepared a distribution list for the STS
    shares that described the investors and the particulars of each investment.
    This list itemized the respondents investment of $57,000.

[13]

The
    initial public offering never occurred and no shares were ever issued by STS.  The
    fraudulent investment scheme promoted by Mr. Damji was discovered in April
    2002.  It was said to have defrauded investors of amounts approaching $100
    million.  Mr. Suleman testified that he personally lost $1.5 million and the
    appellant testified that he lost $250,000.  In April 2002, Mr. Damji pleaded
    guilty and was convicted of fraud.

[14]

The
    respondent never recovered his $57,000 investment.  At trial, he sought to find
    the appellant liable for this loss.

[15]

The trial
    judge did not suggest in his reasons that either Mr. Suleman or the appellant
    knew of, or were complicit in, Mr. Damjis fraud.

Trial Judges Reasons

[16]

The trial
    judge found the appellant liable on the following basis:

·

there was a constructive trust between Mr. Suleman and the respondent;

·

the appellant shared with Mr. Suleman the responsibility for
    purchasing and delivering the STS shares to the respondent;

·

the appellant agreed with Mr. Suleman to the plan to deposit the
    cheque in their joint bank account and await a later opportunity to deal with
    the purchase of shares;

·

when he learned that the subscription would not be accepted right
    away and neither he nor Mr. Suleman could tell how long it would be until the
    funds could be applied to the subscription, the appellant took no steps to cause
    the funds to be returned to the respondent and his wife, nor did he do anything
    to ensure that the funds were kept available for the purchase;

·

although the joint account was replenished, most of the funds
    were applied by Mr. Suleman to other purposes; and

·

the appellant therefore facilitated the breach by Mr. Suleman of
    the constructive trust and was therefore also responsible for that breach. The
    doctrine of trustee
de son tort
 applied to the appellants conduct.
    He became a constructive trustee and his conduct constituted a breach of that
    constructive trust.

Analysis

[17]

The
    appellant advanced five grounds of appeal; however, in my view in order to
    dispose of the appeal, only two of these grounds need to be addressed.

(a)

The Pleadings

[18]

The
    appellant submits that the respondent did not plead a theory of constructive
    trust in his statement of claim, and the trial judge erred in finding liability
    and awarding damages on the basis of a theory that was not pleaded.

[19]

The
    version of events proffered by the respondent on the one hand, and the
    appellant on the other, differed significantly.

[20]

The version
    of events pleaded by the respondent was as follows:

·

Mr. Damji wrongfully and fraudulently made misrepresentations, or
    caused them to be made, with a view to fraudulently inducing members of his
    community and others to purchase shares. He represented and assured them that
    their payments would be received and held in trust.

·

Mr. Damji misappropriated the trust monies.

·

The appellant approached the respondent and, as a favour to the
    respondent, offered to sell his own personal shares in STS at the rate of $1.14
    per share, a family price and less than the prevailing rate.

·

The appellant promised to reimburse the respondent for any loss.

·

The respondent agreed to purchase the shares. His $57,000 was to
    be held in trust by the respondent pending receipt of the appellants shares.

·

The respondent did not receive the shares.

·

When the respondent discovered Mr. Damjis fraud, he confronted the
    appellant, who disclosed that the $57,000 had been used for other business
    ventures.

[21]

Based on
    this version of events, the respondent pleaded that the appellant wrongfully breached
    their agreement; fraudulently misappropriated or wrongfully converted the
    $57,000 for his own benefit and that of Mr. Suleman; unjustly enriched himself
    by using the $57,000; and breached his duty to the respondent to hold the
    $57,000 in trust, as described.  The respondent also pleaded that the appellant
    owed him a fiduciary duty and breached it by misappropriating the $57,000 and
    using it for one or more business ventures without the respondents knowledge
    or consent.  The remedies the respondent sought included a tracing order and the
    imposition of a constructive trust in his favour against the corporations or
    business ventures in which his $57,000 was in any way used or invested.

[22]

The trial
    judge did not find that any of the allegations the respondent made were proven,
    with the exception of the allegations he made about Mr. Damji, who was not a
    party to the action.

[23]

Consistent
    with his pleading, the respondents opening statement did not refer to liability
    based on a constructive trust:

My client essentially pleads that he made a contract with this
    man, pursuantarrangement [
sic
], pursuant to which he agreed to acquire
    from him some shares in the STS fraudulent entity of Mr. Damji, from [the
    appellant] personally.  That his monies were to be held in trust pending
    receipt of the shares, and that [the appellant] guaranteed to him that he would
    not suffer any loss by reason of this transaction its a credibility case, youll
    have to decide between Mr. Gilliani, on the one hand and on the other hand Mr.
    Karmali.

[24]

The trial
    judge found that, contrary to the assertions and testimony of the respondent, there
    was no agreement to buy the shares from the appellant, no agreement to hold the
    $57,000 in trust, and no guarantee against the risk of loss.  There was no express
    finding of a breach of fiduciary duty or that the appellant had misappropriated
    the respondents funds and used them in one or more business ventures.  Nor was
    there a finding that the appellant had been unjustly enriched at the
    respondents expense.  Nonetheless, the trial judge went on to find that the
    claim the respondent had made out against the appellant was a claim of breach
    of constructive trust based on the doctrine of trustee
de son tort
.

[25]

I agree with
    the appellant that the theory of liability relied upon by the trial judge was
    not pleaded.  The only reference to a constructive trust is in the request for
    relief found in paragraphs 1(b) and 24(d) of the statement of claim, and this
    relates to the imposition of a constructive trust as a remedy and not as a basis
    for liability.  There is no reference whatsoever to trustee
de son tort
.

[26]

Moreover,
    the appellant was caught by surprise as the theory of the case on which the
    trial judge found liability was similarly not advanced in the respondents
    opening submissions.  In my view, the trial judge erred in deciding liability
    and awarding damages on a basis that was not pleaded.  It is fundamental to the
    litigation process that lawsuits be decided within the boundaries of the
    pleadings so that the parties know the case they have to meet and can address
    the issues through their evidence at trial: see
Wilson v. Beck
, 2013
    ONCA 316, 307 O.A.C. 10, at para. 27, citing
Rodaro v. Royal Bank of Canada
(2002), 59 O.R. (3d) 74 (C.A.), at para. 60.

[27]

I would
    therefore give effect to this ground of appeal.

(b)

Breach

[28]

The
    appellant also submits that even if breach of constructive trust had been
    pleaded, the trial judge erred in finding such a breach by the appellant.

[29]

I agree.

[30]

Even if
    for the purposes of this appeal I assume, without deciding, that there was a
    trust, there was no evidentiary basis for finding any breach.

[31]

The trial
    judge found that the appellant facilitated the breach by Mr. Suleman of the
    constructive trust by agreeing to the plan to deposit the cheque in the joint
    bank account and await a later opportunity to deal with the purchase of the
    shares.  In doing so, the appellant took no step to cause the funds to be
    returned to the Gillanis when it turned out that the subscription would not be
    accepted right away and neither he nor Mr. Suleman could tell how long it might
    be until the funds could be subscribed (at para. 72).  The trial judge
    concluded that since the appellant did nothing to ensure that the funds were
    kept available for the subscription, he thereby facilitated Mr. Sulemans
    withdrawal of the funds from the joint account.

[32]

The breach
    of trust the trial judge identified was the failure to return the money.
    However, there was no finding that there was an express or implied term that
    the money would be returned. There was no evidence that either Mr. Suleman or
    the appellant failed to carry out any obligation under any terms of a trust or
    other arrangement.  There was no restriction on where the funds were to be
    deposited.  The trial judge stated, at para. 79, that on December 24, 2001, the
    appellant paid to subscribe for shares in STS for the respondent on the terms
    of his arrangement.

[33]

The
    appellant did not guarantee delivery of the shares, nor was there any agreement
    as to when the share subscription was to occur.  There was no evidence that Mr.
    Suleman or the appellant were required to keep the funds separate. Indeed, Mr.
    Suleman testified that he only received a commission if and when the Colgate
    transaction went through.  Whatever he collected, he sent to Mr. Damji.

[34]

There is
    nothing in the record that would suggest that the appellant participated in any
    wrongdoing by Mr. Suleman or did anything wrong himself.  Moreover, as
    mentioned, both the appellant and Mr. Suleman suffered significant losses
    themselves.  Based on
Air Canada v. M & L Travel Ltd.
,
[1993] 3 S.C.R. 787, at p. 789, whether
    personal liability may be imposed on a stranger to a trust depends on whether the
    strangers conscience is sufficiently affected to justify the imposition of
    liability.  Here, the record could not sustain such a conclusion.  The money
    was delivered to subscribe for shares and any trust purpose was achieved.  The
    loss arose not because of anything the appellant did, but because of the fraud
    perpetrated by Mr. Damji.

[35]

I would
    therefore also give effect to this ground of appeal.

Disposition

[36]

I would
    allow the appeal, set aside the judgment and dismiss the action.  I would
    reverse the costs award below and order the respondent to pay the appellants
    costs of this appeal in the amount of $24,000 inclusive of disbursements and
    applicable taxes.

Released:

SEP                                       S.E. Pepall
    J.A.

APR 25 2014                          I agree Gloria
    Epstein J.A.

I
    agree K. van Rensburg J.A.

[1]
The Ontario Securities Commission had advised Mr. Suleman that his involvement
    with the distribution of STS shares may trigger the application of the
    registration and/or prospectus requirements under the
Securities Act
,
    R.S.O. 1990, c. S. 5.

[2]
He is occasionally referred to as Kassu in the record.


COURT OF APPEAL FOR ONTARIO

CITATION:
Gladuhov v. Stanislaw, 2014 ONCA 304

DATE: 20140417

DOCKET: C57371

Feldman, Rouleau and Hourigan JJ.A.

BETWEEN

Mixail
    Gladuhov

Plaintiff (Appellant)

and

Borawski Stanislaw, Kalatcheva Ioulia and Sylvia
    Swider

Defendants (Respondents)

Mixail Gladuhov, acting in person

Michele Brady, for the respondent Sylvia Swider

Heard and released orally: April 2, 2014

On appeal from the judgment of Justice John A.B.
    Macdonald of the Superior Court of Justice, dated June 26, 2013.

ENDORSEMENT

[1]

The appellant appeals the decision of the motion judge on a Rule 21
    motion dismissing his claim as against P.C. Sylvia Swider.

[2]

The appellant sued P.C. Swider alleging that he had suffered damages as
    a result of alleged false testimony provided by P.C. Swider in a criminal case
    against him. The motion judge correctly set forth the test under Rule 21 and
    properly applied that test.

[3]

There was no basis to conclude that the appellant, who was acquitted of
    the charges, suffered damages by reason of P.C. Swiders alleged false
    testimony on a collateral issue at trial.

[4]

The appellant has failed to establish any error in the motion judges
    analysis and there is no basis for intervention by this court.

[5]

The appeal is dismissed.

[6]

Costs fixed at $750 inclusive of disbursements and HST.

K. Feldman
    J.A.

Paul
    Rouleau J.A.

C.W. Hourigan J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Gotlieb v. Abols, 2014 ONCA 343

DATE: 20140430

DOCKET: C57339

Juriansz, Tulloch and Strathy JJ.A.

BETWEEN

Risha Gotlieb

Appellant

and

Gesta Abols, Elise Pulver, Cummings Cooper
    Schusheim Berliner LLP

Respondents

Alexander Gillespie, for the appellant

Susan Sack, for Elise Pulver, and Cummings Cooper
    Schusheim Berliner

Sarah Glickman, for Shibley Righton LLP

Heard: April 30, 2014

On appeal from the order of Justice Eva Frank of the Superior
    Court of Justice, dated May 31, 2013.

APPEAL BOOK ENDORSEMENT

[1]

The meaning the motion judge attached to appellant counsels letter
    dated October 17, 2012 was reasonable. In that letter counsel stated he was
    confirming he had instructions to settle the matter with the release attached
    to defendant counsels letter dated September 20, 2012.

[2]

Neither the appellant nor her counsel offered any evidence that counsel
    had acted without her instructions. No objection was taken to the settlement
    until months later, and as the motion judge noted, the same counsel continues
    to act for the appellant. We have not been persuaded there is any basis for
    interfering with the motion judges decision to enforce the settlement and the
    appellant has demonstrated no prejudice from the enforcement of the release.

[3]

The appeal is dismissed. Costs are fixed in the amount of $3,500 all
    inclusive for each of the respondents.


COURT OF APPEAL FOR ONTARIO

CITATION: Henrietta-Harvey
    Estate v. Homer, 2014 ONCA 262

DATE: 20140402

DOCKET: C57050

Feldman, Rouleau and Hourigan JJ.A.

BETWEEN

Shenelle Holm, trustee for the estate of Karnetto
    Henrietta-Harvey and Antonio Spaziano

Plaintiff (Appellant)

and

J. Wayne Homer

Defendant (Respondent)

Chris Agriropoulos, for the appellant

Scott W. Beattie, for the respondent

Heard: March 31, 2014

On appeal from the order of Justice James Ramsay of the Superior
    Court of Justice, dated April 16, 2013.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals the discretionary order of the motion judge who
    denied an adjournment after allowing counsel to be removed from the record and
    when the appellant was not there in person to address the court on the summary
    judgment motion. Although in other circumstances it might be appropriate to set
    aside the summary judgment, we would not do so in this case.

[2]

The motion judge noted that the claim was clearly statute-barred. There
    is nothing on the record before this court to suggest any basis for setting
    aside that finding. In those circumstances, we would not interfere with the
    order made by the motion judge granting summary judgement dismissing the
    action.

[3]

The appeal is therefore dismissed with costs fixed at $2,500 inclusive
    of disbursements and HST, in light of earlier costs orders.


COURT OF APPEAL FOR ONTARIO

CITATION: Hollinger Inc. (Re),
2014 ONCA 282

DATE: 20140414

DOCKET: M42678

Feldman, MacPherson and Rouleau JJ.A.

In
    the matter of the
Companies Creditors Arrangement Act,
R. S. C. 1985,
    c. C-36, as amended

And
    in the Matter of a Proposed Plan of Compromise or Arrangement with respect to
    Hollinger Inc., 4322525 Canada Inc., and Sugra Limited

David C. Moore, for the moving party, Catalyst Fund
    General Partner I Inc.

John Finnigan and Leanne Williams, for the responding
    party, Hollinger Inc.

Heard in writing

On appeal from the order of Justice C. Campbell of the Superior
    Court of Justice, dated June 24, 2014, with reasons reported at 2013 ONSC 5431.

ENDORSEMENT

[1]

Leave to appeal is denied.

[2]

It is well-settled that in the
CCAA
context, leave to appeal is
    to be granted sparingly where there are serious and arguable grounds that are
    of real and significant interest to the parties. In determining whether leave
    ought to be granted, this court is required to consider the following four-part
    inquiry:

1)

whether the point on the proposed appeal is of significance to the
    practice;

2)

whether the point is of significance to the action;

3)

whether the proposed appeal is
prima facie
meritorious or
    frivolous; and

4)

whether the appeal will unduly hinder the progress of the action.

Re Timminco Ltd.,
2012 ONCA 552, at para. 2.

[3]

In our view this motion for leave fails on the third point. It lacks
    sufficient merit.

[4]

The moving partys proposed appeal would ask:

1)

Whether the motion
    judge erred in law by failing to conclude that the principles applicable to
    Solicitors Liens should be applied to the priority claim asserted by Catalyst
    Fund General Partner I Inc. (Catalyst) for reimbursement from Hollinger Inc.
    for the payment of fees paid by Catalyst to Voorheis & Co.; and

2)

Whether the motion
    judge erred in law by failing to conclude that the court should apply equitable
    principles and the principles of unjust enrichment and impose a constructive
    trust in favour of the Catalyst claim.

[5]

While the issues Catalyst seeks to raise on the proposed appeal are of
    significance to the parties, they lack sufficient merit to meet the test for
    granting leave in the
CCAA
context. Additionally, the issues Catalyst
    seeks to raise involve matters of law that are well-settled and are therefore not
    of significance to the practice.

[6]

The motion is dismissed with costs to the responding party fixed at $1500,
    inclusive of disbursements and HST.

K. Feldman J.A.

J.C. MacPherson J.A.

Paul Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Howard v. Martin, 2014 ONCA 309

DATE: 20140417

DOCKET: M43502

Gillese J.A. (In Chambers)

BETWEEN

Jane Howard

Applicant (Respondent)

and

Anthony Michael Martin

Respondent (Applicant)

Michael Stangarone, for the applicant

E.L. Nakonechny, for the respondent

Heard: April 15, 2014

Application for an extension of time in which to appeal from
    the order of Justice Victor Paisley of the Superior Court of Justice, dated
    February 25, 2013, and the orders of Justice Peter G. Jarvis of the Superior
    Court of Justice, dated June 24, 2013, and January 8, 2014.

Gillese J.A.:

[1]

Anthony Michael Martin moves for an extension of time to file his notice
    of appeal of the order of Paisley J., dated February 25, 2013 (the Paisley
    Order) and the orders of Jarvis J., dated June 24, 2013 (the Jarvis Order),
    and January 8, 2014 (the Costs Order).

[2]

Jane Howard, his former spouse, opposes the motion.

[3]

For the reasons that follow, the motion is dismissed.

BACKGROUND IN BRIEF

The Paisley Order

[4]

Ms. Howard brought an application for a divorce, and associated relief,
    in June 2012.  The application was uncontested and resulted in the Paisley Order.

[5]

Two terms of the Paisley Order are relevant to this motion.  The first
    is that Mr. Martin and Ms. Howard are to share equally in their two childrens
    special and extraordinary expenses.  The second gave Mr. Martin the right to retain
    the matrimonial home, provided that he made a specified payment to Ms. Martin.
    The payment included a sum for equalization plus an adjustment to reimburse Ms.
    Martin for 50% of the increase in the parties joint line of credit that Mr.
    Martin had unilaterally made during the marriage.  The Paisley Order provided
    that if Mr. Martin failed to make the payment, the home would be listed for
    sale and sold by March 1, 2013.

[6]

It is important, for the purposes of this motion, to understand why the
    application before Paisley J. proceeded on an uncontested basis.

[7]

In June 2011, Ms. Howards lawyer wrote to Mr. Martin, suggesting that
    he retain counsel, provide his financial disclosure, and begin negotiation of a
    separation agreement.

[8]

In September 2011, she served him with Ms. Howards sworn financial
    statement and a disclosure brief.

[9]

After these and other unsuccessful attempts to obtain financial
    disclosure, Ms. Howard initiated the court proceeding in June of 2012.

[10]

Mr.
    Martin ignored the 30-day deadline to provide responding materials after being served
    with Ms. Howards application.

[11]

On
    September 14, 2012, Penny J. ordered Mr. Martin to:

·

serve and file his sworn financial statement and specific
    financial documentation by September 24, 2012;

·

serve and file his answer on or before 5:00 p.m. on September 28,
    2012; and

·

pay costs of $500.

[12]

The
    order also provided that if Mr. Martin failed to comply with it, Ms. Howard
    could proceed to an uncontested trial of the issues.

[13]

This
    order was made on consent.  However, Mr. Martin failed to comply with it.  He
    did not produce pay stubs, relevant bank statements, Visa statements, mortgage
    statements, or evidence of income tax arrears. He also failed to file his
    answer on time. His cheque for the costs bounced.

[14]

At
    a case conference held on October 12, 2012, Mesbur J. gave Mr. Martin another
    chance.  She ordered him to comply strictly with Penny J.s order by noon on
    October 26, 2012, failing which Ms. Howard could proceed with an uncontested trial.

[15]

Mr.
    Martin failed to comply with Mesbur J.s order. A few hours after the deadline,
    he delivered some material, much of which simply duplicated that previously provided.
    He did deliver a financial statement, purportedly sworn in front of a
    commissioner for oaths.  However, the commissioners signature was an
    illegible star-shaped scribble and the name of the commissioner was not printed
    underneath.

[16]

As
    a result of Mr. Martins failure to comply, the application before Paisley J.
    proceeded on an uncontested basis.

The Jarvis and Costs Orders

[17]

Mr.
    Martin moved to set aside the Paisley Order on essentially the same grounds as
    he seeks to raise on appeal.

[18]

Justice
    Jarvis found that Mr. Martins health problems and alleged lack of financial
    resources did not justify his failure to comply with the various court orders
    and, in any event, ought to have been raised earlier in the proceedings.  In
    his view, Mr. Martins arguments about Paisley J.s treatment of the value of
    the matrimonial home amounted to an assertion that he would have raised other
    facts and made other arguments had he been able to participate before Paisley
    J.  However, the evidence was available and known to Mr. Martin before that
    hearing, and it was his failure to comply with court orders that led to his
    inability to participate.

[19]

The
    Jarvis Order, dated June 24, 2013, dismissed the motion.  The Costs Order
    required Mr. Martin to pay costs of $10,321.31.

After the Paisley Order

[20]

The
    Paisley Order enabled Mr. Martin to stay in the matrimonial home, if he made
    the specified payment to Ms. Martin.  He did not make the payment.  Thus, in
    accordance with the terms of the Paisley Order, the house was to be listed for
    sale.

[21]

Mr.
    Martin refused to list the house for sale.

[22]

Ms.
    Howard was forced to bring a motion in September 2013 so that the house could be
    sold (the sale order).  Contrary to the terms of the sale order, Mr. Martin failed
    to keep the house clean and presentable for all showings. Ms. Howard, along
    with six of her family members and friends, worked for about 200 hours to clean
    and repair the house for showings.  She also incurred costs of approximately
    $1,770 to make it presentable.

[23]

Mr.
    Martin also breached the sale order by failing to vacate the home on December
    6, 2013.

[24]

Ms.
    Howard had to spend additional legal fees to arrange for the Sheriff to remove Mr.
    Martin before the closing.  At that point it was discovered that Mr. Martin had
    failed to leave the property in broom swept condition, contrary to the terms
    of the sale order.  Ms. Howard spent an additional $1400 and she and her crew
    of family and friends spent another four days cleaning the house, to ensure
    that the house was in a state to close.

[25]

Mr.
    Martin has also failed to comply with four separate costs orders, totalling
    over $20,000, and continues to be in breach of the Paisley Order requiring him
    to pay one-half of the childrens extraordinary expenses. While he has provided
    some cheques towards these costs, most of them have bounced.

THE TEST FOR EXTENDING TIME

[26]

The
    test on a motion to extend time for filing a notice of appeal is well-settled.
    The overarching principle is whether the justice of the case requires that an
    extension be given.  Each case depends on its own circumstances, but the court
    is to take into account all relevant considerations, including:

1.           whether the moving
    party formed a
bona fide
intention to appeal within the relevant period;

2.           the length of,
    and explanation for, the delay in filing;

3.           any prejudice
    to the responding party that is caused, perpetuated or exacerbated by the delay;
    and,

4.           the merits of
    the proposed appeal.

See
Enbridge Gas Distribution Inc. v. Froese
,
    2013 ONCA 131, at para. 15, and
Rizzi v. Mavros
, 2007 ONCA 350, 85
    O.R. (3d) 401, at para. 16.

APPLICATION OF THE TEST

1.       Intent to
    appeal

[27]

I
    accept, for the purposes of this motion, that Mr. Martin had the requisite
    intention.

2.       Length of,
    and explanation for, the delay

[28]

The
    Paisley Order is dated February 25, 2013.  Mr. Martin moved to have the Paisley
    Order set aside.  The Jarvis Order dismissed that motion on June 24, 2013.  Mr.
    Martin did not attempt to file his notice of appeal until February 27, 2014,
    some eight months after the Jarvis Order was made.

[29]

Mr.
    Martin offers two explanations for the delay in filing, following the Jarvis
    Order:  health problems and lack of legal representation.

[30]

In
    my view, neither adequately explains the delay.

[31]

Mr.
    Martin suffers from chronic pain syndrome and sometimes has difficulty
    concentrating. These difficulties are not new, as he had them throughout these
    proceedings.  The record shows that they did not interfere with Mr. Martins ability
    to engage in the litigation process.  Moreover, the record shows that Mr.
    Martin has continued to work throughout as a business writer, speaker and
    educator, and that he has led an active social life.  I do not doubt that the medications
    and other treatments he receives are of assistance to him.  I simply note that
    his medical problems do not excuse or explain his failure to file in a timely
    fashion.

[32]

As
    for the absence of legal representation, there is no evidence that Mr. Martin lacked
    the resources to retain counsel to help him with this appeal.  At various times
    throughout these proceedings, including this motion, he has had counsel.

3.       Prejudice to the responding party

[33]

It
    is an unfortunate reality that a respondent will often suffer some degree of emotional
    and financial stress when an appeal is delayed. In this case, however, the
    ramifications for Ms. Howards health go well beyond the norm and amount to
    prejudice.

[34]

Ms.
    Howard suffers from Type I diabetes, an irregular heartbeat, and Graves
    disease. She must inject herself with insulin at least five times a day. The medical
    evidence makes it clear that prolonging this litigation will impact negatively
    on her health.  Her family physician, Dr. S. Friedman, advises that the ability
    to manage Ms. Howards health problems and get her blood sugars into the
    recommended range is not possible when she is under extreme stress, such as
    that which is caused, or contributed to, by this litigation.  Dr. Friedman goes
    on to identify the long term consequences of poorly managed diabetes, which include
    kidney failure, heart disease, peripheral vascular disease, visual impairment,
    and increased susceptibility to infection.

[35]

Dr.
    Friedman has also recently advised Ms. Howard to work only part time, as
    opposed to full time.  Ms. Howard is unable to follow that advice because of financial
    pressures.

4.       Merits of the proposed appeal

[36]

The
    merits of a proposed appeal can be decisive on a motion to extend the time for
    filing.  Even if the other factors militate against extending time, the merits
    may be so significant as to justify extending time.

[37]

That
    is not this case.

a.

The
    Childrens Interests

[38]

The
    first proposed ground of appeal is that Paisley J. failed to consider the childrens
    best interests when he ordered that the matrimonial home be sold.  This ground
    has no merit.

[39]

It
    will be recalled that the Paisley Order permitted Mr. Martin to retain the
    matrimonial home.  However, he did not make the required payment with the
    result that the home was sold.  Thus, if it was in the childrens best interests
    that they remain in the home, the reason they could not was his actions and not
    an error in the Paisley Order.

[40]

I
    note that if the childrens best interests were served by remaining in the same
    neighborhood as the matrimonial home, that was achieved because Ms. Howard
    obtained rental accommodation for herself and the children very close to the
    matrimonial home.

b.

The
    line of credit

[41]

The
    second proposed ground of appeal pertains to the line of credit.  Mr. Martin
    says that he used the money in question to pay family expenses and that Paisley
    J. erred by finding otherwise.

[42]

This
    is a question of fact: did Mr. Martin use the money from the line of credit for
    his own purposes or for the family?  As a question of fact, it is reviewable on
    the standard of palpable and overriding error.  There is nothing in the
    materials before me to indicate any such error.  On the contrary, the record
    overwhelmingly supports Paisley J.s conclusion that Mr. Martin used the funds
    from the line of credit for his own purposes. A very brief review of key facts
    will demonstrate this.

[43]

In
    November 2012, while this litigation was ongoing, Ms. Howard went to her bank to
    obtain copies of documents related to the parties joint line of credit. She
    learned that in August 2007, Mr. Martin had forged her signature on bank and
    real estate documents to obtain an increase in the joint line of credit secured
    against the matrimonial home, from $175,000 to $373,607.  Mr. Martin then
    proceeded to take advances on that increased line of credit, beginning the
    following day when he transferred $60,000 to a TD Waterhouse account and
    purchased shares in four mining and mineral stocks totalling $74,326.20. Those
    investments did not exist at the date of separation.

[44]

There
    is nothing in this proposed ground of appeal.

c.

Value
    of the matrimonial Home

[45]

The
    third proposed ground of appeal pertains to the matrimonial home.

[46]

Justice
    Paisley valued the matrimonial home at $737,000.  He had before him Ms.
    Howards material which contained the opinions of two real estate agents,
    employed by different companies, as to the value of the home as of March 1,
    2011.  The house sold for $727,500.

[47]

Mr.
    Martin claims that Paisley J. should have used a value of $655,000 for the matrimonial
    home.  To the extent his claim is based on an appraisal that he had prepared on
    December 13, 2013  ten months after the Paisley Order, and five months after
    the Jarvis Order  I see nothing in it.  As fresh evidence, it is not clear to
    me that it would be admitted if the appeal were to be permitted to proceed.
    Setting that to the side, however, Mr. Martin has pointed to no error in Paisley
    J. relying on the evidence before him.  The fact that Mr. Martin disagrees with
    the estimate and the fact that the home ultimately sold (subsequent to the
    Paisley Order) for a slightly lower price than the estimate does not make it a
    mistake for Paisley J. to have relied on the estimate.

[48]

Mr.
    Martin also claims that Paisley J. used an inflated value for the home because
    he brought the home to the marriage, therefore any increase in its value after
    the date of separation until the point of sale should have accrued solely to
    his benefit.

[49]

While
    I cannot say that there is no merit whatsoever in this claim, it is very
    tenuous indeed.  Ms. Howard put a very complete record before Paisley J., which
    included a 262 page affidavit.  The values in her Net Family Property Statement
    were all supported by documentary evidence.  The materials disclosed the facts upon
    which Mr. Martin relies for this claim.  If Paisley J. had any concerns about
    how to fairly treat the matrimonial home, he had methods for exploring those
    concerns.  He invoked none of them.  Further, this claim ignores any right that
    Ms. Howard might claim based on constructive trust principles.

[50]

Accordingly,
    I see very little prospect of success on this issue.  I note also that the dollar
    amount in question is small, particularly when viewed against all the
    outstanding amounts that Mr. Martin owes Ms. Howard.

The overall justice of the case

[51]

In
    my view, the overall justice of the case dictates that no extension of time
    should be granted.

[52]

As
    I have explained, there is no adequate explanation for the delay in filing the
    notice of appeal; an appeal would result in serious prejudice to Ms. Howards
    health; and the sole arguable ground of appeal is for a small sum and unlikely
    to succeed.  To these factors, I would add the following two considerations.

[53]

First,
    it is Mr. Martins own misconduct that resulted in the application before
    Paisley J. proceeding on an uncontested basis.  He was given a number of
    chances to obey the court disclosure orders and warned of the consequences of
    the failure to comply.  Despite that, he did not comply with those orders.  In
    the circumstances of this case, it would be contrary to the interests of
    justice to effectively undo the order precluding him from participating in the proceedings
    by now granting leave.

[54]

Second,
    Mr. Martin is asking this court for an indulgence.  When a person asks the
    court for an indulgence, it is appropriate to consider whether that person has
    respected prior court orders.  Mr. Martin has not demonstrated that respect.
    On the contrary, as the brief recounting of events above shows, Mr. Martin has
    a history of repeatedly failing to comply with court orders and he continues to
    flout them to this day.

DISPOSITION

[55]

Accordingly,
    the motion is dismissed with costs to the responding party, fixed at 5,000,
    inclusive of disbursements and all applicable taxes.

Released:


COURT OF APPEAL FOR ONTARIO

CITATION: Jones (Re), 2014 ONCA 311

DATE: 20140417

DOCKET: C57208

Laskin, Goudge and Hourigan JJ.A.

IN THE MATTER OF: JOANNE JONES

AN APPEAL UNDER PART XX.1 OF THE
CODE

Joanne Jones, appearing in person

Anita Szigeti,
amicus curiae

Lorna Bolton, for the Crown

Melanie de Wit, for the Ontario Shores for Mental
    Sciences

Heard: April 17, 2014

On appeal against the disposition of the Ontario Review
    Board dated, May 16, 2013.

APPEAL BOOK ENDORSEMENT

[1]

Ms. Jones asks for an absolute discharge.  The Board found that Ms.
    Jones is a significant risk to the safety of the public.  In our view the
    evidence supports that finding.  Accordingly Ms. Jones is not entitled to an
    absolute discharge.

[2]

Amicus
makes two submissions: first the Board did not explain
    why Ms. Jones should be detained on the secure unit rather than on the general
    unit; and second the Board did not address why a hybrid order was
    inappropriate.

[3]

Reading the reasons as a whole, we think it is evident why the Board did
    not order Ms. Jones be detained on the general unit.  They were concerned about
    her risk of going AWOL, her assaultive behaviour, and the ability to manage her
    on the general unit.  There was evidence to support these concerns and
    therefore we are not persuaded that the Boards disposition was unreasonable.

[4]

Although the Board did not address the possibility of a hybrid order in
    its reasons, we expect the Board did not make such an order because it wanted
    to maintain oversight over Ms. Jones.  That was a reasonable position for the
    Board to take.

[5]

Finally we note that Ms. Jones annual review is imminent.  The Board will
    therefore have the advantage of an updated medical and risk assessment for Ms.
    Jones.

[6]

The appeal is dismissed.


COURT OF APPEAL FOR ONTARIO

CITATION: Karatopis v. Antoniou, 2014 ONCA
299

DATE: 20140417

DOCKET: C57060

Feldman, Rouleau and Hourigan JJ.A.

BETWEEN

Stefanos Karatopis

Plaintiff (Appellant)

and

Paul Antoniou, My Hanh Tran, Pitsa Panagiota Pett
Antoniou, and Alexandra Hewitt

Defendants (Respondents)

Carlin McGoogan, for the appellant

W. Bruce Drake, for the respondents

Heard and released orally: April 3, 2014

On appeal from the judgment of Justice Linda M. Walters of
the Superior Court of Justice, dated April 23, 2013.

ENDORSEMENT

[1]

The appellant appeals the decision of Justice Walters, dated April 23,
2013, dismissing his claim for malicious prosecution against My Hanh Tran and
Paul Antoniou.

[2]

The appellant submits that the trial judge erred in law in her
consideration of the claim for malicious prosecution and misapprehended the
evidence in this regard. We disagree.

[3]

The trial judge provided detailed reasons for dismissing the appellants
claim. It is evident from those reasons that the trial judge found much of the
testimony of the parties to be not credible and that she found that the
appellant had exaggerated the alleged inappropriate conduct engaged in by the
respondents.

[4]

The trial judge concluded, as she was entitled to do, that the lack of
credible evidence meant that the appellant had not met his onus of establishing
his claim for malicious prosecution on a balance of probabilities. We see no
basis to interfere with those factual conclusions.

[5]

The trial judge correctly identified the elements of a claim for
malicious prosecution. She found that the evidence did not establish that it
was the respondents, rather than the Crown that made the decision to prosecute.
At p. 13 of her reasons, she found:

In considering those three circumstances, I am satisfied that
with respect to the first circumstance, Im not satisfied that the defendants
desired or intended that the plaintiff be prosecuted. Instead, after being the
subject themselves of a number of unfound police attendances, complaints to the
fire department, complaints to the Humane Society and appeals to OMB, the
defendants just wanted the behaviour of the plaintiff to stop.

[6]

That finding is entitled to deference in this court. We do not accept
the submission that the trial judge misapprehended the evidence in reaching
this conclusion.

[7]

Accordingly, the appellant did not establish the first element of the
claim for malicious prosecution and the trial judge did not err in dismissing
the claim.  Given this conclusion, it is not necessary to consider the trial
judges findings on the other requisite elements of the tort.

[8]

The appeal is dismissed.

[9]

Costs fixed at $7500, inclusive of HST and disbursements.

K. Feldman
J.A.

Paul
Rouleau J.A.

C.W. Hourigan J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Katanic v. State Farm Mutual Automobile Insurance
    Company, 2014 ONCA 298

DATE: 20140417

DOCKET: C57590

MacFarland, Pepall and Strathy JJ.A.

BETWEEN

Bojan Katanic

Plaintiff/Appellant

and

State Farm Mutual Automobile Insurance Company

Defendant/Respondent

Jane Poproski, for the appellant

Tanya A. Pagliaroli, for the respondent

Heard:  April 15, 2014

On appeal from the judgment of Justice Jane A. Milanetti
    of the Superior Court of Justice, dated August 2, 2013.

APPEAL BOOK ENDORSEMENT

[1]

Notice of Abandonment having been filed April 10, 2014 costs of the
    appeal to the respondent fixed in the sum of $7500.00 inclusive of
    disbursements and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Kelly (Re) , 2014 ONCA 269

DATE: 20140403

DOCKET: C57844

Sharpe, Cronk and Juriansz JJ.A.

In
    the Matter of Howard Kelly

An
    Appeal under Part XX.1 of the Code

Anita Szigeti, as
amicus curiae

Howard Kelly, in person

G. Choi, for the Crown

E. Krajewska, for Ontario Shores

Heard: March 27, 2014

On appeal from the disposition of the Ontario Review
    Board dated July 8, 2013.

By the Court:

[1]

The appellant appeals the disposition of the Ontario Review Board, dated
    July 8, 2013, ordering that he be detained at the General Forensic Service of
    the Ontario Shores Centre for Mental Health Services with provision for certain
    privileges at the discretion of the person in charge, including passes of up to
    10 hours to enter the community.

[2]

The appellant submitted to us that the Board erred in failing to
    consider an absolute discharge and
amicus
suggested that a conditional
    discharge should have been considered. There is clear evidence that the
    appellant continues to suffer from a serious mental illness and that he
    continues to pose a significant risk to the community. It was not unreasonable
    for the Board to refuse any form of discharge.

[3]

However, we agree with
amicus
that the Board erred in refusing a provision
    requested by the Hospital permitting the person in charge to allow the
    appellant to live in 24-hour supervised accommodation.

[4]

The treatment team did not consider Mr. Kelly ready for discharge into
    the community in the next year but requested the provision for two reasons.

[5]

First, and most significant, the treating psychiatrist testified that
    the treatment team was concerned that the appellant had become
    institutionalized and

in order to try to help Mr. Kelly move into the community, we
    wanted to be able to still have that option open... If the clause was not
    there, it would or could only strengthen Mr. Kellys sense of being discouraged
    to even bother trying, just to become more settled in the hospital. At least
    having this community option open might give us something to help him work
    towards

[6]

We observe that the treating psychiatrists evidence in that regard
    corresponds with the view expressed by this court on two prior appeals by this
    appellant. This court commented that close attention should be paid both by the
    Hospital and by the Board to the objective of the appellants ultimate
    reintegration into the community: See 2010 ONCA 140 at para. 1; 2013 ONCA 142
    at para. 8.

[7]

The second reason for requesting the provision was that as the waiting
    list for such accommodation, in the words of the treating psychiatrist, is
    exceptionally long, the requested provision would allow the treatment team to
    put the appellant on the waiting list and thereby avoid delay when it becomes
    appropriate to move him to such accommodation.

[8]

The Board refused to order the recommended provision for the following
    reason:

As it appears from the evidence, that it is unlikely he will
    become ready for discharge into a 24-hour supervised home during the ensuing
    year; the added provision of community living in approved accommodation would
    be inappropriate, and cannot be justified for the sole reason of placing him on
    a waiting list, for a placement which he will not be able to use.

[9]

We agree with Ms. Szigeti that the Board misapprehended the evidence and
    erred in law in refusing to order the provision recommended by the Hospital.

[10]

It
    was a misapprehension of the evidence to find that the Hospital recommended the
    provision for the sole reason of placing him on a waiting list. It is clear
    from the psychiatrists evidence that the recommendation was also motivated by
    the need from a treatment perspective to motivate the appellant towards
    achieving integration in the community and to discourage his tendency to fall
    back on institutionalization.

[11]

It
    is also our view that the Board erred in law by refusing to consider the provision
    solely on the ground that the appellant would not be able to use it during the
    current year. The Boards refusal was inconsistent with the overriding need to achieve
    a disposition that is the least onerous and least restrictive. As a practical
    matter, there is a shortage of places in supervised accommodation and a significant
    waiting list. In our view, the Board should take that practical reality into
    account, especially where there is evidence that the requested provision is
    also recommended for therapeutic reasons. The inevitable result of the Boards
    refusal to consider the provision recommended by the treatment team would be to
    subject the appellant to a more severe restraint than is warranted by his
    condition. If the Board was concerned that the treatment team might use the provision
    prematurely, it could have made provision for reporting or returning to the
    Board for approval before it was implemented.

[12]

We
    were informed that a hearing pursuant to s. 672.56(2)(b) of the
Criminal Code
on account of the restriction of the appellants liberty having been increased
    significantly was scheduled for April 3. The basis for that request is
    reflected by the fresh evidence presented by the Hospital.

[13]

In
    these circumstances, although it is our view that the Board erred, we make no
    order to alter the disposition under appeal given the fresh evidence and the
    changed circumstances.

Robert J. Sharpe J.A.

E.A. Cronk J.A.

R.G. Juriansz J.A.

Released: April 3, 2014


COURT OF APPEAL FOR ONTARIO

CITATION:
Lacey v. Canada (National Defence), 2014 ONCA 315

DATE: 20140422

DOCKET: C57909

Sharpe, Epstein and Pepall JJ.A.

BETWEEN

Aaron William Lacey (aka AWF)

Plaintiff (Appellant)

and

Her
    Majesty the Queen in the Right of Canada as represented by

The Minister of National
    Defence

Defendant (Respondent)

Aaron William Lacey, in person

Joel Levine, for the respondent

Heard: April 17, 2014

On appeal from the judgment of Justice James Ramsay of
    the Superior Court of Justice, dated November 8, 2013.

APPEAL BOOK ENDORSEMENT

[1]

We are satisfied on the basis of this record and upon reading the
    reasons of the motion judge and the evidence he considered that there was a
    proper basis for him to conclude that the security for costs had not been paid
    into court as required by the order of Crane J. Accordingly, the action was
    properly dismissed and we dismiss this appeal.

[2]

Costs to the respondent fixed at $10,000 inclusive of disbursements and
    taxes. We make that award in view of the repeated unfounded public allegations
    of improper conduct levelled against counsel for the respondent.

[3]

We dispense with the need for the appellant to approve the form and
    content of this courts formal order.


COURT OF APPEAL FOR ONTARIO

CITATION: Lavoie v. T.A. McGill
    Mortgage Services Inc., 2014 ONCA 257

DATE: 20140403

DOCKET: C56909

Epstein, Lauwers and Pardu JJ.A.

BETWEEN

David
    Lavoie, Vickie Lavoie, John Lavoie and

David Lavoie, Estate
    Trustee of the Estate of Helen Lavoie, deceased

Plaintiffs
    (Appellants)

and

T.A.
    McGill Mortgage Services Inc.,

Terrance
    McGill, John Paul Baron, Leeanne Houle,

Maria
    Plishewsky, B2B Trust, C. Ed Gresham,

Pamela J. McLeod, Francesco E. De Sena,

Echelon General Insurance Company
and

LMS
    Prolink Ltd.

Defendants (
Respondent
)

Raymond G. Colautti, for the appellants

Mary Margaret Fox and Paul Emerson, for the respondent

Heard: December 10, 2013

On appeal from the judgment of Justice
Scott
    K. Campbell
of the Superior Court of Justice, dated March 15, 2013.

Pardu J.A.:

[1]

The appellants, the plaintiffs in this action, claim damages arising out
    of alleged fraudulent activities by a mortgage broker. The defendants are the
    mortgage broker, T.A. McGill Mortgage Services Inc. (MMSI), and its associates,
    and the respondent, Echelon General Insurance Company, MMSIs professional
    liability insurer under errors and omissions policies that provided fraud coverage.
    All defendants, except for Echelon, have been noted in default. The motion
    judge granted Echelons summary judgment motion to dismiss the action against
    it on the basis that Echelon had validly rescinded the policies because of
    material misrepresentations and non-disclosures MMSI made in the course of
    applying for coverage.

[2]

The appellants appeal on the following grounds: (1) The motion judge
    erred in holding that any misrepresentations or omissions relating to events
    before fraud coverage was in place were material; (2) Echelons undertaking to
    the FSCO conferred upon the appellants rights that are not voided by the
    rescission of the insurance policies; (3) Echelon should be estopped from
    advancing a legal position that denies coverage to the appellants; (4) The
    appellants are still entitled to relief against forfeiture pursuant to s. 98 of
    the
Courts of Justice Act
, R.S.O. 1990, c. C.43.

[3]

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

The Factual Background

[4]

In early March 2008, MMSI applied to Echelon for professional liability
    errors and omissions coverage. In this application, MMSI denied that it or its
    partners, officers, employees or subsidiaries had ever been the recipient of
    any allegations of professional negligence in writing or verbally which may reasonably
    give rise to a claim. Further, MMSI denied being aware of facts,
    circumstances or situations which may reasonably give rise to a claim, other
    than as advised above. The policy came into force on April 1, 2008. It did not
    provide coverage for fraudulent acts.

[5]

Subsequent amendments to the
Mortgage Brokerages, Lenders and
    Administrators Act, 2006
, S.O. 2006, c. 29 and regulations, required
    insurers that provided professional liability errors and omissions coverage to
    mortgage brokers licensed and carrying on business in Ontario, such as Echelon,
    to add a fraud endorsement to their policies in the form approved by the
    Financial Services Commission of Ontario (FSCO). Effective July 1, 2008, the
    Echelon policy issued to MMSI was amended to add the fraud endorsement.

[6]

Echelon undertook to the FSCO to provide the fraud endorsement on the
    following terms:

4. The policy covers all claims, subject to standard
    exclusions, made during the term of the policy for acts occurring at any previous
    time, providing the insured had no prior knowledge. The policy will not impose
    a retroactive date exclusion.

10.
Injured third parties will have a
    direct right of action against the insurer under the policy, without affecting
    the insurer[]s right to adjudicate the claim in accordance with the policys
    term[s] and conditions and the right of the insurers right of action [sic]
    against the insured.

13. Regarding the Fraud endorsement:

·

The policy certificate will include additional coverage for loss
    resulting from fraudulent acts and will operate to protect the public within
    the minimum limits required for the Errors and Omissions policy

·

Claims under the endorsement may be made in
    the same manner as claims made under the policy, including notice of claim to
    the insurer and a direct right of action for injured third parties
.

14.  [T]he written confirmation received from the Insurer must
    contain several acknowledgements and undertakings, namely:

·

The Insurer must acknowledge that at no time will any policy
    issued fall short of the standards set out in the minimum requirements set out
    in the minimum requirements above, including an acknowledgement that the FSCO
    endorsement will be automatically added to every policy issued.

·

The Insurer must undertake that all
    interpretations of any policy term will never produce a result that is less
    than the minimum requirements set out in this letter
and will always be
    deemed to result in an interpretation in accordance with at least the
    appropriate minimum requirements.

·

The Insurer must acknowledge that, subsequent to approval of its
    policy by FSCO, the Insurer will not make or cause to be made any material
    changes limiting, restricting or reducing the coverage[] in its policy in any
    respect without prior notice to, and the approval of FSCO. [Emphasis added.]

[7]

The actual fraud endorsement provided as follows:

This Policy [d]oes not apply to:

Damages arising out of any act, omission or
    misrepresentation of the Insured that is dishonest, fraudulent, criminal, or
    malicious.

However, this exclusion shall not apply to:

1.Damages arising
    out of any act, omission or misrepresentation of the Insured that is dishonest,
    fraudulent, criminal, or malicious and was committed by the Insured acting
    within the scope of the Insureds Professional Services as defined in the
    policy.

[8]

In March 2009 MMSI applied to renew the policy. In its March 2009
    application, MMSI answered the following question in the negative:

14.     During the past three years, are you, your employees or
    any of your agents aware of any circumstance, allegation, contention or
    incident which may potentially result in a claim for an error or omission in
    the performance of a professional service being made against your entity, you,
    any mortgage broker or agent or employee present or past associated or working
    with your entity?

[9]

In completing the March 2009 application MMSI agreed to the following:

It is understood and agreed that failure to provide true and
    complete response to any of the questions, statements or request for information
    in this Application or to provide any other information material to this Application
    may, at the sole option of the Company, result in the voiding of the insurance
    policy issued in reliance on this Application and/or denial of coverage for
    specific claims asserted against us (the Applicant) or any other insured under
    the policy.

[10]

In
    September 2009, the appellants brought an action against MMSI and its associates
    for damages arising out of alleged fraudulent activities. Echelon was named as
    a defendant because it was MMSIs professional liability insurer.

[11]

In
    late 2010, Echelon became aware of Crown disclosure in an unrelated action. Based
    on the documents contained in this disclosure, Echelon concluded that MMSIs
    answers on the applications had not been truthful. By letter dated March 24,
    2011, Echelon advised MMSI that it had elected to rescind the policies on the
    basis of material non-disclosures/misrepresentations in the applications,
    thereby voiding the policies from the beginning.

[12]

On
    March 31, 2010, the FSCO suspended MMSIs mortgage brokerage licence and
    revoked it on April 16, 2010.

[13]

Echelon
    brought a motion for summary judgment seeking the dismissal of the appellants
    action as against it.

The Decision under
    Appeal

[14]

The
    motion judge granted Echelons motion for summary judgment and dismissed the
    appellants action as against Echelon.

[15]

The
    motion judge determined that the relevant facts were largely uncontroversial,
    and that the issues before him could be appropriately resolved on a motion for summary
    judgment since a full appreciation of the facts could be achieved without a
    trial.

[16]

The
    first legal issue the motion judge considered was whether Echelon had the right
    to rescind the policies. He found that MMSI did not disclose the following
    facts in the March 2008 and March 2009 applications for insurance coverage:

1.       On
    October 5, 2007, the solicitors acting for one of the plaintiffs in this
    action, David Lavoie, made a demand for payment of funds and threatened to
    commence a lawsuit.

2.       Counsel
    for Mr. Lavoie, by correspondence dated January 28, 2008, gave MMSI an
    ultimatum demanding payment failing which an action would be commenced alleging
    negligence and misrepresentation.

3.       Between
    January 31, 2008, and the effective date of the first policy, offers of
    settlement were exchanged between MMSI and counsel for Mr. Lavoie.

[17]

The
    motion judge held that MMSIs failure to disclose these facts constituted
    misrepresentations, at paras. 50-52:

Plaintiffs counsel argues that not only was the
    misrepresentation not material, but that there was no misrepresentation. He
    bases that argument on the fact that at the time of the application for
    insurance and the effective date of the policy, fraud was not covered.
    Therefore, on these facts, counsel for the plaintiffs submits to the court that
    questions 9(a) and (b) and the answers to those questions could be reasonably
    interpreted to mean that fraud could not reasonably give rise to a claim
    because fraud was not covered. Counsel argues that the only correct answer was
    No.

I disagree. Counsels position ignores the specific question.
    Was McGill aware of any circumstance, allegation, contention or incident which
    might result in a claim for errors or omissions? Information in the possession
    of McGill and MMSI made a negative response to the question wrong. The
    correspondence from the Lavoies law firm and the draft statement of claim were
    clear and unequivocal. There was a potential claim and indeed a potential claim
    for fraud. At the time the second application was completed and the fraud
    coverage included, McGill and MMSI once again answered the question No in
    response to the question.

I find the answers given by McGill and MMSI were
    misrepresentations. The court then needs to consider whether or not these
    misrepresentations were material.

[18]

The
    motion judge held that MMSIs misrepresentations were material in accordance
    with
Mutual Life Insurance Company N.Y. v. Ontario Metal Products

Co
.,
    [1925] 1 D.L.R. 583 (J.C.P.C.). Relying on
Coronation Insurance Co. v. Taku
    Air Transport Ltd.
, [1991] 3 S.C.R. 622, he also concluded that the
    misrepresentations entitled the insurer to rescind the policies and render the
    policies
void ab initio
, at paras 57 and 58:

I find these misrepresentations were material. It is a fair
    conclusion on the evidence that had McGill and MMSI given correct answers to
    the questions, Echelons decision to accept the risk would have been
    influenced. It is reasonable to conclude that Echelon might have declined the
    risk or requested a higher premium. The issue then becomes what is the effect
    of these material misrepresentations?

Rescission of a policy by an insurer on the basis of a material
    misrepresentation for non-disclosure renders the policy void ab initio

[19]

The
    second legal issue the motion judge considered was whether the undertaking given
    to the FSCO negated Echelons right of rescission.

[20]

The
    motion judge rejected the appellants argument that the undertaking was a self-contained
    policy enforceable on its own terms. Relying on
Pilot Insurance Co. v.
    Sutherland
(2007), 86 O.R. (3d) 789 (C.A.), he held that the undertaking
    was analogous to an endorsement that varies the underlying policy but does not
    have independent existence.

[21]

The
    motion judge considered the impact of the FSCO undertaking on Echelons claim
    to have a right to rescind based on material misrepresentation. At para. 67 he noted
    that [t]here is nothing in the FSCO undertaking/guidelines which addresses the
    subject of misrepresentation in application for E & O insurance or the
    insurers right to rescind such a policy. Significantly, the motion judge went
    on to agree with Echelons argument that the FSCO guidelines assume and are
    predicated upon the existence of a valid policy of insurance.

[22]

The
    motion judge rejected the argument that clause 10 of the undertaking to the
    FSCO gave claimants a direct right of action against the insurer despite the
    insurers right of rescission, stating at para. 69:

Clause 10 of the undertaking states that the injured parties
    will have a direct right of action against the insurer under the policy.
    However, that is stated to be given without affecting the insurers right to
    adjudicate the claim in accordance with the policys terms and conditions and
    the insurers right of action against the insured.

[23]

The
    motion judge concluded, at paras. 72-73, that:

[A]ny direct right of action was subject to the defence
    insurers can raise against the insured.  In this case it is the insureds
    material non-disclosure/misrepresentation that justifies rescissions of the
    policy, rendering them void ab initio.

The defendants affidavit, which is uncontradicted, establishes
    that the subject to language found in clause 10 of the guidelines was added at
    the suggestion of Echelon. This fact further supports the argument that the
    direct right of action does not remove the defences available to the insurer as
    against third parties.

[24]

Finally,
    the motion judge concluded that Echelon was not estopped from rescinding the
    policy because of the FSCO undertaking for two reasons; first, because the
    appellants never relied upon the undertaking, and second, because the
    undertaking was not incompatible with Echelons right to rescind the policy
    because of material misrepresentation.

ISSUES

[25]

The
    appellants argue that the motion judge erred in concluding that their right to
    pursue Echelon directly for losses caused by MMSIs fraud was no longer
    available because of Echelons rescission of the policies based on MMSIs material
    non‑disclosure.

[26]

Their
    arguments can be summarized as follows:

1.

At the time of
    MMSIs first application for insurance in 2008 there was no fraud endorsement
    in the policy. The motion judge erred in holding that any misrepresentations or
    omissions relating to events before fraud coverage was in place were material.

2.

Echelons
    undertaking to the FSCO barred it from refusing the claims of the appellants
    even in the event of material misrepresentation by the insured.

3.

Echelon should
    be estopped from advancing a legal position that denies coverage to the
    appellants.

4.

If Echelon was
    legally entitled to rescind, the appellants are still entitled to relief
    against forfeiture pursuant to s. 98 of the
Courts of Justice Act
.

STANDARD OF REVIEW

[27]

The
    errors the appellants allege do not arise from any findings of fact by the
    motion judge. Rather, the appellants submit that the motion judge erred in
    interpreting the applicable law and relevant legal documents, namely, the
    undertaking to the FSCO, and Echelons contract of insurance with the mortgage
    broker. The parties agree, and I accept, that the standard of review on this
    appeal is therefore correctness:
Housen v. Nikolaisen,
2002 SCC 33,
    [2002] S.C.R. 235, at para. 8;
Bell Canada v. The Plan Group
, 2009 ONCA
    548, 96 O.R. (3d) 81, at paras. 30-31.

ANALYSIS

Did MMSI make material misrepresentations
    or non-disclosures in its insurance applications?

[28]

The
    appellants argue that the information that MMSI did not disclose was irrelevant
    to the coverage being contracted for since the 2008 policy did not, at the time
    the application was completed, include fraud coverage. Therefore, the
    non-disclosed information was not material.

[29]

The
    test of materiality is measured by the standard of a reasonable insurer. An
    inaccuracy in an answer on an application for insurance does not permit the
    insurer to void the policy unless accurate answers would have led a reasonable
    insurer to act differently by refusing to accept the risk or by imposing
    special conditions: see
Sayle v. Jevco Insurance Co.
(1984), 58
    B.C.L.R. 122 (S.C.), at p. 126, affd (1985), 16 C.C.L.I. 309 (B.C.C.A.).

[30]

The
    question of materiality is one of fact. Here, there was uncontradicted
    evidence, provided by a program manager in a senior underwriting position with
    Echelon and by an independent underwriter, indicating that the misstatements
    and non-disclosures in respect of the 2008 and 2009 applications were material
    to the decision to offer insurance.

[31]

The
    motion judge did not err in accepting this evidence, nor in relying on this
    evidence to find that these inaccuracies were material ones that would justify
    rescission of the policies by Echelon.

Was rescission available to Echelon in the light of
    the FSCO fraud coverage undertaking?

[32]

The
    appellants argue that the undertaking to the FSCO vested the appellants with an
    independent direct right of action against Echelon with respect to fraud
    coverage that cannot be voided by the rescission of the insurance policies.

[33]

I
    disagree. The motion judge correctly found that the wording in the FSCO
    undertaking, that: [i]njured third parties will have a direct right of action
    against the insurer
under the policy, without affecting
    the insurer[]s right to adjudicate the claim in accordance with the policys
    term[s] and conditions
 (emphasis added), meant that a third party claim
    depended on the existence of a valid policy. Accordingly, because Echelon was
    entitled to rescind the policies and did so, the appellants do not have a
    direct right of action against Echelon.

[34]

The
    appellants also argue that to allow the insurer to rescind the policies
    effectively nullifies the fraud coverage provided for the benefit of third
    parties, and for that reason it could not have been intended to allow an
    insurer to rescind the policies on the ground of material misrepresentations.

[35]

I
    do not agree. Allowing rescission in these circumstances does not go so far as
    to nullify coverage for the benefit of third parties. If there had been no
    material misrepresentation in the application and a fraud-based claim had been
    made during the currency of the policy, the fraud coverage would have applied for
    the benefit of the third-party plaintiff or plaintiffs.

Should Echelon be estopped from advancing a
    position that denies coverage to the appellants?

[36]

The
    appellants submit that Echelon should be estopped from advancing a position
    that denies coverage based on Echelons undertaking to provide fraud coverage to
    insured parties.

[37]

The
    motion judge was correct to reject the appellants argument that the insurer
    was estopped from relying on the misrepresentations to rescind the policies
    because of the undertaking, in light of the evidence that the appellants had
    not relied on any actions or statements by the insurer, and in light of the
    fact that the undertaking to provide fraud coverage is predicated on the
    existence of a valid policy.

Did the motion judge err in failing to exercise his
    discretion to grant the appellants relief against forfeiture pursuant to s. 98
    of the
Courts of Justice Act
?

[38]

The
    appellants submit that the court has a broad power to relieve against
    forfeiture of fraud coverage caused by McGill and MMSIs misrepresentations
    under s. 98 of the
Courts of Justice Act
, and that it would be
    appropriate to do so in the circumstances of this case.

[39]

It
    is well established that an applicant for insurance must act with the utmost
    good faith. This means that, where the applicant makes a material
    misrepresentation in an application for coverage, the insurer has the right to
    rescind the policy, rendering it void from the outset: see
Lloyds London,
    Non-Marine Underwriters v. National Armoured Ltd
. (1996), 142 D.L.R. (4th)
    506 (Ont. Gen. Div.), affd (1999), 174 D.L.R. (4th) 493 (Ont. C.A.).

[40]

While
    some policies of insurance and some statutory regimes explicitly provide that a
    third party is unaffected by material non-disclosure by the insured, there is
    nothing in the policies relevant to that effect.

[41]

After
    argument of this appeal the court invited submissions from the parties about the
    impact, if any, of the decision in
Kozel v. The Personal Insurance Company,
    2014 ONCA 130
, released after argument of the appeal. In
Kozel,
this
    court held that s. 98 of the
Courts of Justice Act
can operate, in
    addition to s. 129 of the
Insurance Act
, R.S.O. c. I.8, to grant
    relief against loss of a right caused by a failure to perform a covenant or
    condition in a contract of insurance. The motor vehicle insurer argued that
    authorization to drive was a statutory condition precedent to coverage. Since
    the insured had allowed her drivers licence to lapse at the time of the
    accident, the insurer argued there could be no relief from forfeiture.

[42]

This
    court noted, at para. 40 of
Kozel
, that when a breach constitutes
    imperfect compliance with a policy term, relief under s. 98 of the
Courts
    of Justice Act
is available. In contrast, if the breach amounts to
    non-compliance with a condition precedent to the insurance policy, relief under
    s. 98 is not available. This court indicated, at para. 41, that the focus in
    this analysis is on whether the breach of the term is serious or substantial.
    Where the term is incidental, its breach is deemed to be imperfect compliance;
    where the provision is fundamental or integral, its breach is cast as
    non-compliance with a condition precedent. On the facts in
Kozel
, this
    court held that the contractual language describing the term as a condition was
    not conclusive, and that the lapse of the licence amounted to imperfect
    compliance with a policy term rather than non-compliance with a condition
    precedent.

[43]

In
    my view,
Kozel
does not assist the appellants. Assuming that the
    appellants can, pursuant to s. 98 of the
Courts of Justice Act
, apply
    for relief from forfeiture resulting from misrepresentations by the insured,
    relief under s. 98 would not be available to the appellants because the
    breaches in this case constituted non-compliance with a condition precedent.
    The misrepresentations and omissions in the applications were material and went
    to the heart of Echelons decision to provide coverage. The fundamental impact
    of a material misrepresentation in an application for insurance is reflected in
    the jurisprudence entitling an insurer to rescind a policy in these
    circumstances. The motion judge did not err in refusing to grant relief from
    forfeiture pursuant to s. 98 of the
Court of Justice Act
.

DISPOSITION

[44]

For
    these reasons, I would dismiss the appeal. I would award costs to the
    respondent fixed at $33,000, inclusive of HST and disbursements.

(PDL)

Released: April 3, 2014

G. Pardu J.A.

I agree Gloria Epstein J.A.

I
    agree P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Milo-Food Infrastructure & Service Inc. v.
    2255300 Ontario Limited, 2014 ONCA 333

DATE: 20140428

DOCKET: C57946

MacPherson, Blair and Pepall JJ.A.

BETWEEN

Milo-Food Infrastructure & Service Inc.

Plaintiff/Appellant

and

2255300
    Ontario Limited

Michael
    Hillhouse

Albert
    Testa

Defendants/Respondents

Raymond G. Colautti and Anita Landry, for the appellant

Carolyn Brandow, for the respondents

Heard and released orally: April 25, 2014

On appeal from the judgment of Justice Terrence L.J. Patterson
    of the Superior Court of Justice, dated November 8, 2013.

ENDORSEMENT

[1]

The appellant appeals from the November 8, 2013 order of Patterson J. in
    which he dismissed the appellants action against the respondents.

[2]

In our view, this appeal must be allowed.

[3]

There was ample evidence that the Easement and Lake Water Supply
    Agreement dated December 28, 2007 (the Easement Agreement) was conveyed to
    the appellant.

[4]

By an Assignment and Assumption of Contracts Agreement dated August 31,
    2011, the receiver of 1033084 Alta Ltd. (103), the registered owner of the
    Milo Road property and related personal property, expressly assigned and
    transferred all of 103s right, title and interest in the Easement Agreement to
    the appellant.

[5]

This was confirmed in the affidavit filed before the motion judge on
    behalf of the appellant.

[6]

The August 30, 2011 approval and vesting order approves and gives effect
    to the assumption agreement.  The only assumption agreement found in the record
    is that which transferred the Easement Agreement to the appellant.

[7]

The language of the Easement Agreement itself contemplates transfer to a
    successor in title such as the appellant.

[8]

Any absence of registration of the easement against the appellants
    lands does not advance the respondents case.  The estate burdened by the
    easement was that of the respondent.

[9]

The motion judge erred in dismissing the appellants action on the basis
    that the Easement Agreement had not been transferred.

[10]

Moreover,
    there was no genuine issue requiring a trial on the issue of the transfer of
    the Easement Agreement to the appellant and the motion judge erred in not
    granting partial summary judgment to that effect in favour of the appellant.

[11]

In
    conclusion, the appeal is allowed, the order is set aside, and partial summary
    judgment is granted declaring that the Easement Agreement was conveyed to the
    appellant.  It follows that to the extent necessary, the CPLs obtained by the appellant
    are reinstated.

[12]

In
    light of his conclusion, the motion judge did not address the other issues
    raised by the parties.  In our view, any ancillary issues that continue to be
    outstanding may be addressed in whatever proceedings either party considers
    appropriate.

[13]

The
    appellant is entitled to costs fixed in the amount of $12,000 inclusive of
    disbursements and applicable tax.

J.C. MacPherson J.A.

R.A. Blair J.A.

S.E. Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Patruno (Re), 2014 ONCA 310

DATE: 20140417

DOCKET: C57608

Laskin, Goudge and Hourigan JJ.A.

IN THE MATTER OF:  VINCENT PATRUNO

AN APPEAL UNDER PART XX.1 OF THE
CODE

Vincent Patruno, appearing in person

Howard L. Krongold,
amicus curiae

Jason Balgopal, for the Crown

Janice Blackburn, for the Person in charge of Waypoint
    Centre for Mental Health Care

Heard: April 17, 2014

On appeal against the disposition of the Ontario Review
    Board dated, June 13, 2013.

APPEAL BOOK ENDORSEMENT

[1]

Mr. Patruno takes the position that he is entitled to an absolute
    discharge. We recognize the efforts he has made to improve his condition and
    his situation.  However, in the light of the later disposition of the Board,
    his present appeal is moot.

[2]

Accordingly, leave to appeal the fresh evidence is admitted and the
    appeal is dismissed as moot.