COURT OF APPEAL FOR ONTARIO

CITATION: Collins v. Cortez, 2014 ONCA 685

DATE: 20141007

DOCKET: C58279

Weiler, Laskin and van Rensburg JJ.A.

BETWEEN

Judy Collins

Plaintiff/Appellant

and

Gerry Cortez
and

State Farm Mutual Automobile
    Insurance Company

Defendant/
Respondent

William G. Scott, for the appellant

Arthur Camporese, for the respondent

Heard: September 5, 2014

On appeal from the order of Justice Donald J. Gordon of
    the Superior Court of Justice, dated July 29, 2013.

van Rensburg J.A.:

[1]

The appellant appeals from an order granting summary judgment and
    dismissing her action for damages following injuries sustained in a motor
    vehicle accident.

[2]

The respondent asserted that the action had been commenced more than two
    years after the accident, and was statute-barred under the
Limitations Act,
    2002
S.O. 2002, c. 24, Sched. B.

[3]

The motion was determined on the basis that there was no genuine issue
    requiring a trial because the appellant had not pleaded the facts relevant to
    discoverability of her cause of action in her statement of claim. No motion for
    leave to amend having been served, an amendment to the pleading was denied.

[4]

For the reasons that follow, I would allow the appeal, set aside the
    order granting summary judgment, extend the time to file a reply and grant
    leave to the appellant to deliver a reply with respect to when the cause of
    action was discovered.

[5]

The motion was brought by the respondent after discoveries and, as the
    motion judge observed, when the action was close to being set down for trial.
    The respondent filed an affidavit relying upon the timing of the issuance of
    the statement of claim on September 9, 2011, more than two years after the
    motor vehicle accident in which he and the appellant were involved. He noted
    that the statement of claim failed to plead when the plaintiff discovered the
    cause of action. The respondent relied on the expiry of the two year limitation
    period under the
Limitations Act, 2002
.

[6]

The appellant, in her affidavit responding to the motion, stated that,
    while the accident in which she had been injured took place on August 17, 2009,
    she had only become aware of the severity of her injuries on September 21, 2009,
    after an X-ray of her cervical and lumbar spine. The appellant would have a
    claim against the respondent for non-pecuniary loss in respect of injuries from
    the accident only if she met the threshold requirement that the injuries she
    sustained were serious and permanent as set out in s. 267.5(5) of the
Insurance
    Act
,

R.S.O. 1990, c. I.8. Her evidence was that she had realized
    her injuries would be permanent after her X-ray on September 21, 2009.

[7]

Instead of determining the motion based on the evidence, the motion
    judge granted summary judgment dismissing the claim because the appellant had
    not pleaded the discoverability facts in her statement of claim. He then gave
    effect to the presumptive limitation period of two years from the date of the
    accident, in accordance with s. 5(2) of the
Limitations Act, 2002
.

[8]

The cases relied upon by the motion judge in arriving at that conclusion
    and again by the respondent in this appeal deal with motions to add third
    parties as defendants to the action and to amend a statement of claim, after
    the alleged expiry of a limitation period: see
Wong v. Adler
(2004),
    70 O.R. (3d) 460 (S.C.), affd (2005), 76 O.R. (3d) 237 (Div. Ct.),
R.S v.
    A.W.T., No. 3 Corp.
, [2002] O.J. No. 5053 (S.C.), C
hesnie v. Snider
(2004), 73 O.R. (3d) 426 (S.C.) and
Parsons v. Deutscher Estate
,
    [2008] O.J. No. 3014 (Div. Ct.). These cases arose out of pleadings motions. For
    the most part, they stand for the principle that a motion to add a new party
    after the alleged expiry of a limitation period should in the normal course be
    considered based on the allegations in the proposed amended pleading, without
    the need to consider an evidentiary record on the limitation issue. They do not
    apply here.

[9]

This motion was for summary judgment dismissing a claim against an
    existing defendant, and not a motion to amend a claim after the expiry of a
    limitation period. It was a motion for judgment, not a pleadings motion.

[10]

In
    the normal course, if a limitations defence is raised, as here, in a statement
    of defence, and the plaintiff relies on the discoverability principle, the
    material facts relevant to discoverability should be pleaded in reply. I disagree
    with the conclusion of the motion judge that the appellant was required to
    plead the facts relevant to discoverability in her statement of claim. The
    expiry of a limitation period is a defence to an action that must be pleaded in
    a statement of defence: see
Beardsley v. Ontario
, [2001] O.J. No. 4574
    (C.A.), at para. 21 and
S.(W.E.) v. P.(M.M.)
(2000), 50 O.R. (3d) 70
    (C.A.), at paras. 37-38. As such, discoverability, which is relevant to the
    limitations defence, need not be anticipated by a plaintiff and addressed in
    her statement of claim: see
Huang v. Mai,
2014 ONSC 1156, 119 O.R.
    (3d) 117, at para 27 and
Metropolitan Toronto Condominium Corp. No. 1352 v.
    Newport Beach Development Inc
., [2012] O.J. No. 5682, at para. 116.

[11]

The
    proper course for a summary judgment court in determining a motion based on a
    limitations defence is set out in
Huang
, following the approach
    mandated by the Supreme Court of Canada in
Hryniak v. Mauldin
, 2014
    SCC 7. The court must consider the evidence in the motion record to determine
    whether there is a genuine issue requiring a trial, and, if so, determine
    whether it is in the interest of justice to use the enhanced powers under rules
    20.04(2.1) and (2.2) to determine the issue without a trial.

[12]

In
    the present case, the motion judge erred in failing to base his decision on the
    evidence on the motion and instead relying upon the failure of the plaintiff to
    plead discoverability facts in her statement of claim, which the judge
    described as a fatal mistake. Again, this was a summary judgment motion, the
    resolution of which depended on a consideration of the evidence adduced by the
    parties, and not their pleadings.

[13]

The
    respondent asserts that, even if the evidence on the motion were considered, it
    is insufficient to meet the requirements of s. 5(1) of the
Limitations Act,
    2002.
However, at this stage the question is whether there is a genuine
    issue respecting discoverability requiring a trial, and not whether the
    limitations defence is sure to fail. In my view, the evidence of the appellant,
    which was not contradicted, reveals such an issue. Indeed, the motion judge
    observed that the date when the appellants claim was discovered was less than
    clear.

[14]

I
    would therefore allow the appeal and set aside the order of the motion judge.

[15]

The
    appellants counsel sought an order from this court permitting an amendment to
    the statement of claim to plead the facts relevant to discoverability. As I
    indicated earlier, until the limitations issue is raised in defence, the
    plaintiff is not obliged to address discoverability. While a plaintiff may well
    decide to plead facts relevant to discoverability in her statement of claim, in
    the present case the issue is best joined through the delivery of a reply. No
    reply having been delivered, the appellant will have ten days from the date of
    this decision to deliver a reply setting out the material facts relied upon on
    the issue of discoverability.

[16]

The
    parties agreed on the disposition of costs depending on the outcome of this
    appeal. In accordance with their agreement, the appellant is entitled to costs
    of the appeal fixed at $5,000 inclusive of disbursements and applicable taxes,
    and there will be no costs of the motion before the motion judge.

Released: OCT 7, 2014                                                   K.
    van Rensburg J.A.

JL
    I agree K.M. Weiler J.A.

I agree John Laskin J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: De Beers Canada Inc. v. Ootahpan Company Limited, 2014 ONCA 723

DATE: 20141021

DOCKET: C57122

Strathy C.J.O., Rouleau and Hourigan JJ.A.

BETWEEN

De Beers Canada Inc.

Plaintiff (Appellant)

and

Ootahpan Company Limited and 473464 Ontario Ltd.,
    d.b.a. Topax Export Packaging Systems and R.L.P. Machine & Steel
    Fabrication Inc. and AMEC Americas Limited

Defendants (Respondents)

and

Firstbrook, Cassie & Anderson Limited, Ace Ina Insurance
    and

Aviva
    Canada Inc.

Third Parties (Respondents)

Shawn K. Faguy, for the appellant

Christopher R. Dunn and Joanna F. Reznick, for the respondents
    Ootahpan Company Limited and R.L.P. Machine & Steel Fabrication Inc.

Heard: October 9, 2014

On appeal from the judgment of Justice J. Patrick Moore
    of the Superior Court of Justice, dated April 30, 2013.

ENDORSEMENT

[1]

The motion judge dismissed the appellants claims on summary judgment on
    alternate grounds: (a) the respondents could take advantage of the appellants
    insurance coverage as third party beneficiaries on the basis set out in
London
    Drugs Ltd. V. Kuehne & Nagel International Ltd.
,

[1992] 3 S.C.R. 299

and
Fraser River Pile & Dredge v. Can-Dive Services Ltd.
, [1999] 3 S.C.R.
    108; and (b) the contractual arrangements between the parties make it clear
    that the appellants policy of insurance was for the benefit of all those
    engaged in the appellants diamond mine project, on the principles expressed in
Commonwealth Construction Co. v. Imperial Oil Ltd. Et al.
, [1978] 1
    S.C.R. 317.

[2]

We dismiss the appeal. In so doing, we do not find it necessary to
    address the third party beneficiary issue as the appeal can be addressed as a
    matter of contract interpretation and on settled authority.

[3]

In interpreting the contractual arrangements between the parties,
    including their arrangements for insurance, we apply the principles of contract
    interpretation set out in
Bell Canada v. The Plan Group
, 2009 ONCA 548,
    96 O.R. (3d) 81 at paras. 37-38. These include: (a) interpreting the contract
    as a whole, with a view to giving meaning to all its terms; (b) determining the
    intentions of the parties in accordance with the words they have used; (c)
    having regard to the factual matrix; and (d) interpreting the contract in a
    manner that accords with sound commercial principles and good business sense.

[4]

The motion judges reasons demonstrate that he correctly applied these
    principles and his decision is entitled to deference: see
Sattva Capital
    Corp. v. Creston Moly Corp.
, 2014 SCC 53, 373 D.L.R. (4
th
) 393.

[5]

The contracts between the appellant and the respondents required the
    appellant to obtain insurance to protect it and its contractors and
    subcontractors against, among other things, risks of transportation in respect
    of property whilst being transported on land. The insurance was to include
    contractors and subcontractors as additional named insureds. It was also to
    include a waiver of subrogation against any entity connected with the project.

[6]

These provisions can only be understood as an undertaking to obtain
    insurance for the benefit of the appellants contractors and subcontractors and
    a waiver of claims in respect of losses covered by such insurance: see
St.
    Lawrence Cement Inc. v. Wakeham & Sons Ltd.
(1995), 26 O.R. (3d) 321
    (C.A.), leave to appeal to S.C.C. refused, [1995] S.C.C.A. No. 553. On their
    own, these provisions would be a defence to the claim advanced in this action,
    even if the appellant had not purchased the insurance.

[7]

To complete the circle, the policy of insurance procured by the
    appellant, which underlies the subrogated claim being pursued here, provided
    that the insurer would acquire no rights of recovery expressly waived by the
    insured prior to the loss. This gave full effect to the appellants contractual
    undertaking.

[8]

As the appellant has waived liability for losses covered by the policy
    of insurance, with the agreement of the insurer, the insurer has no right of
    subrogation.

[9]

We do not accept the submission of the appellant that other provisions
    of the contract between the appellant and the respondents show a contrary
    intention. We agree with the motion judge that those provisions do not override
    the waiver of subrogation: see
Fraser River
,

at para. 42. They are consistent with other
    responsibilities of the respondents, such as a duty of care in the performance
    of their work, a responsibility for liabilities not covered by the appellants
    insurance, and a responsibility for deductibles under the policies.

[10]

Reading
    the contract as a whole, with a view to giving effect to all its terms and
    seeking harmony between those terms, the insurance and waiver provisions can be
    read in a manner consistent with the provisions referred to by the appellant.
    We agree with the respondents that the appellants interpretation of those
    provisions is unreasonable because it would strip the insurance and waiver
    provisions of all meaning. The interpretation advanced by the respondents and
    accepted by the motion judge promotes business efficacy and certainty in an
    important commercial project involving multiple parties. It is intended to
    avoid the sort of expensive, time-consuming and commercially disruptive
    litigation that has occurred here.

[11]

For
    these reasons, the appeal is dismissed, with costs fixed at $14,000, all
    inclusive.

G.R. Strathy C.J.O.

Paul Rouleau J.A.

C.W. Hourigan J.A.


COUR DAPPEL DE LONTARIO

REFERENCE : Dezzou-Koulombo (Re) 2014 ONCA
    686

DATE: 20141006

DOSSIER : C58364

La juge en chef adjointe Hoy, les
    juges van Rensburg et Benotto

DANS LAPPEL DE SIMON
    DEZZOU-KOULOMBO

UN APPEL EN VERTU DE LA
    PARTIE XX.1 DU CODE

Jean Richer,
amicus curiae
,
    pour lappelant

Philippe G. Cowle, pour lintimée la
    Procureure générale de lOntario

Michelle OBonsawin, pour lintimé le
    Centre de santé mentale Royal Ottawa

Date de laudience : 25 septembre 2014

Décision rendue séance tenante

En appel de la
    décision imposée par la Commission ontarienne dexamen en date du 20 janvier
    2014.

INSCRIPTION

[1]

Lappelant a fait lobjet dun verdict de
    non-responsabilité criminelle (« NRC ») pour cause de troubles
    mentaux à la suite dune agression sexuelle en 2007.

[2]

Il interjette appel de sa dernière revue
    annuelle de la Commission ontarienne dexamen. Entre autres, il fait valoir que
    la composition de la Commission soulève une crainte raisonnable de partialité.

[3]

Dans une procédure parallèle à la cour
    supérieure à Ottawa, lappelant vient de réussir à faire renverser le verdict
    de NRC à cause de procédures fautives. La cour supérieure a ordonné un nouveau
    procès.

[4]

Il est clair que cet appel est maintenant dun
    caractère théorique. Nous ne sommes pas persuadées que nous devrions quand même
    lentendre.

[5]

Notre réponse à la question de savoir si la
    composition de la commission soulève une crainte de partialité serait basée sur
    les faits de lespèce, donc lutilisation des ressources judiciaires
    nécessaires pour trancher la question ne serait pas justifiée.

[6]

Cet appel est alors rejeté en raison de son
    caractère théorique.

« Alexandra Hoy j.c.a.o. »

« K. van Rensburg j.c.a. »

« M.L. Benotto j.c.a. »


COURT OF APPEAL FOR ONTARIO

CITATION: Economopoulos (Re), 2014 ONCA 687

DATE: 20141007

DOCKET: C58177

Hoy A.C.J.O., Gillese and Lauwers JJ.A.

RE:

Constantine (Gus)
    Economopoulos
,
1551666 Ontario Inc.
, Anjoca Holdings Inc., Heritage
    Pancake House Ltd.,
Vida Prijic
, Peter Nicolopoulos and Aristides
    Nicolopoulos

And in the matter of an
    application for petition [sic] and sale and an order of judicial sale of
    certain property known municipally as 815 Juliana Drive, Woodstock, Ontario

(
Appellants
) (
Respondent
)

Montgomery Shillington, for the appellants Constantine (Gus) Economopoulos
    and 1551666 Ontario Inc.

Sean Flaherty, for the respondent Vida Prijic

Heard: July 16, 2014

On appeal from the order of Justice Kelly A. Gorman of
    the Superior Court of Justice, dated February 14, 2014.

Gillese J.A.:

OVERVIEW

[1]

Constantine (Gus) Economopoulos has been involved in operating the
    Heritage Pancake House restaurant in Woodstock, Ontario, since the mid-1990s.
    He has been embroiled in legal proceedings involving the restaurant virtually
    ever since.

[2]

Gus Economopoulos, as tenant of the restaurant premises, entered into a
    lease with the landlords, Anjoca Holdings Inc. (Anjoca) and 15516666 Ontario
    Inc. (155 Ontario), (the Lease).  The Lease was dated December 1, 2006, but
    was not registered on title until 2012.

[3]

By order dated February 10, 2014 (the Order under Appeal), among other
    things: (1) the Lease was set aside on the basis that it was fraudulent and
    void
ab initio
; (2) the Land Registrar was ordered to remove the Notice
    of Lease from the title to the Property; and, (3) Gus Economopoulos, Anjoca, 155
    Ontario, and the restaurant were ordered to pay costs of the motion on a substantial
    indemnity basis.

[4]

In short, the effect of the Order under Appeal was that the Property
    could be sold free of the Lease.

[5]

Gus Economopoulos and 155 Ontario (the appellants) appeal.

[6]

For the reasons that follow, I would allow the appeal.

BACKGROUND IN BRIEF

[7]

The facts in this case are extremely complicated and convoluted.  I set
    out the following, very abbreviated, factual summary for a single reason:  it
    is necessary to give context to, and make intelligible, the issues raised on
    appeal and the analysis of those issues.  The limited record provided to this
    court is incomplete and rife with factual disputes which cannot be resolved by
    this court.  In fact, on the record, it is not even possible to identify the
    parties to the underlying proceeding or to make a list of the factual matters
    in dispute.  Thus, I wish to emphasize, the following summary is not intended
    to, nor does it, constitute findings of fact.

[8]

In the mid-1990s, Gus Economopoulos and his cousin, Peter Nicolopoulos,
    owned the property located at 815 Juliana Drive in Woodstock (the Property),
    on which the restaurant is located.

[9]

Gus Economopoulos originally operated the restaurant in partnership with
    Peters father, Aristides (Art) Nicolopoulos.  Later, Gus Economopoulos ran the
    restaurant on his own.

[10]

A
    dispute between Gus Economopoulos and Art Nicolopoulos about the management of
    the restaurant led to each of them commencing legal proceedings for the
    recovery of money damages related to the restaurants operation (the Two
    Actions).

[11]

On
    March 5, 1999, Gus Economopoulos granted a mortgage over his half-interest in
    the Property in favour of Nicholas Bulut.

[12]

On
    July 22, 1999, Gus Economopoulos transferred his half-interest in the Property
    to Mr. Bulut, with the result that the Property was jointly owned by Mr. Bulut
    and Peter Nicolopoulos.  Apparently Mr. Bulut continued to hold a mortgage over
    the Property, despite the transfer of the half-interest in the Property to him.

[13]

On
    July 27, 1999, Art Nicolopoulos and Peter Nicolopoulos started an application
    for, among other things, the sale of the Property pursuant to the
Partition
    Act
, R.S.O. 1990, c. P.4 (the Application).

[14]

By
    order dated October 1, 1999, the Application was consolidated with the Two
    Actions (the Consolidated Proceeding).

[15]

On
    December 12, 2000, in response to the Application but within the Consolidated
    Proceeding, Granger J. issued an order (the 2000 Order).  Among other things,
    the 2000 Order prohibited Mr. Bulut (and his agents and assigns) from going onto
    the Property and appointed a referee to sell the Property.  In para. 3 of the
    2000 Order, the court ordered that the Property be sold, under the direction of
    the referee, on such terms as the referee deemed appropriate and,

free of the claims of encumbrancers if any, who have consented
    to the sale, and subject to the claims of encumbrancers who have not consented
    to the sale .

[16]

As
    will be seen, one of the critical issues raised on this appeal is how the word
    encumbrancers in the above-quoted provision of the 2000 Order should be
    interpreted.

[17]

The
    2000 Order was never registered on title and no party has ever applied for a
    certificate of pending litigation based on it.

[18]

Peter
    Economopoulos (Gus Economopoulos brother) had a mortgage over Mr. Buluts ownership
    interest in the Property.

[19]

On
    June 20, 2003, Peter Economopoulos enforced his mortgage by selling Mr. Buluts
    ownership interest in the Property by power of sale.  The purchaser was 155
    Ontario.  Thus, 155 Ontario and Peter Nicolopoulos became the co-owners of the
    Property.

[20]

Art
    Nicolopoulos died on May 24, 2006.

[21]

On
    October 8, 2006, Gus Economopoulos, Peter Nicolopoulos and Angela Nicolopoulos,
    in her capacity as executrix and trustee for Arts estate, entered into minutes
    of settlement (the Settlement).

[22]

Two
    of the preambles in the Settlement are significant.  The first recites that Gus
    Economopoulos, Art Nicolopoulos and Peter Nicolopoulos are parties to numerous
    outstanding proceedings in respect of their involvement in the operation and
    management of Heritage Pancake House and the purchase and development of the
    Property.  The numerous outstanding proceedings are not identified in the
    Settlement.

[23]

The
    second preamble of significance recites that the parties to the Settlement wished
    to settle their long standing disputes.

[24]

As
    part of the Settlement, Gus Economopoulos agreed, among other things, to pay
    Peter Nicolopoulos $100,000 and to assume full and sole liability for debts
    relating to the operation of the restaurant in the approximate amount of
    $320,000.

[25]

In
    consideration for the $100,000 payment, Peter Nicolopoulos agreed to transfer
    to Gus Economopoulos, or such person as he should designate, his one-half
    ownership interest in the Property.  Pursuant to Gus designation, Peter
    Nicolopoulos transferred his interest in the Property to Anjoca.

[26]

In
    para. 9 of the Settlement, the estate trustee agrees and does transfer to Gus,
    or as Gus may direct in writing, all its right, title and interest in and to
    the Heritage Pancake House restaurant business, assets, and undertaking.

[27]

Paragraph
    17 of the Settlement recites that the parties agreed to

forever release and discharge one another from all matters
    relating in any manner whatsoever to the Property and the Heritage Pancake
    House and without limitation any matter which form[s] the subject matter of all
    legal proceedings in existence between them .

[28]

And,
    in para. 18 of the Settlement, the parties agreed that all aforementioned legal
    proceedings shall be discontinued or dismissed, without costs, and all Court Orders
    be set aside.

[29]

As
    previously mentioned, Gus Economopoulos entered into the Lease with Anjoca and
    155 Ontario on December 1, 2006.  However, Anjoca was not formally incorporated
    until January 2007.  Anjoca is controlled by Gus Economopoulos three
    daughters.

[30]

In
    2008, Mr. Bulut assigned his mortgage over the Property to Norman van Roboys,
    who subsequently assigned the mortgage to Mr. Buluts spouse, Vida Prijic, in
    2009.  Ms. Prijic is the respondent in this appeal (the respondent or Ms.
    Prijic).

[31]

In
    2011, 155 Ontario brought a motion for summary judgment, within the
    Consolidated Proceeding, seeking a declaration that the mortgage formerly held
    by Mr. Bulut (but by that point held by Ms. Prijic), had been paid.

[32]

The
    motion was heard by the late Justice T. David Little. In an endorsement dated
    October 12, 2011, Little J. said that he would dismiss the motion.  While the parties
    and the motion judge treat Little J.s endorsement as if it were an order, it
    does not appear that an order was ever issued.

[33]

In
    his endorsement, at para. 36, Little J. states that a full hearing is required
    in order to assess the relative credibility, if any, of either party.  He also
    spent some time in the endorsement outlining various legal proceedings
    involving the Property and the legal problems that flowed from having a myriad
    of proceedings with a myriad of different parties.

[34]

Justice
    Little concluded his endorsement with a series of recommendations, including
    that: 1) the referee appointed pursuant to the 2000 Order should quickly
    dispose of the Property; 2) a trial date should be fixed where all issues can
    be disposed of at one time in any of the actions; 3) the various actions
    should be consolidated, which would include determining who the interested
    parties are, the proper identification of plaintiffs and defendants, preparing
    a single style of cause, and outlining the issues that had to be resolved; 4) no
    further steps should be taken by any party until the preceding things had taken
    place; and 5) an application should be made to have a case management judge
    appointed.

[35]

I
    understand that in late 2011, Gus Economopoulos acquired control of 155 Ontario
    which at that time, it will be recalled, owned a one-half interest in the
    Property.

[36]

On
    January 19, 2012, the Lease was registered on title to the Property.

[37]

155
    Ontario brought a motion in the Consolidated Proceeding, which led to an order
    dated February 16, 2012, appointing a single judge as case management judge
    pursuant to rule 37.15 of the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194.

[38]

It
    will be recalled that Little J. had recommended that the sale of the Property proceed.
    Apparently the parties to this appeal wished to follow that recommendation but
    shared a common concern about the ambiguity in the meaning of the word
    encumbrancers in para. 3 of the 2000 Order.  This ambiguity led them to
    disagree about which encumbrances would attach to title on sale of the
    Property.  I understand that the parties agreed that a motion would be brought
    before the case management judge for directions as to the meaning of the word
    encumbrancers in the 2000 Order.

[39]

Ms.
    Prijic then brought a motion asking for a declaration that the vesting order
    arising from the sale of the Property would convey the Property free and clear
    of encumbrances registered subsequent to the 2000 Order.

[40]

However,
    in an Amended Amended Notice of Motion dated November 25, 2013, Ms. Prijic added
    a request for a determination of the appropriateness and validity of the
    registration of the Lease on title.

[41]

At
    the oral hearing of this appeal, counsel for the appellants advised that his
    position on the motion had always been that the sole issue to be decided in
    respect of the Lease was whether the unregistered 2000 Order had the effect of
    extinguishing it.  The appellants position on that issue was that the word
    encumbrancers in para. 3 of the 2000 Order encompassed later-filed
    encumbrances and, thus, the Property could be sold only subject to the Lease.  The
    appellants say that they consented to having the motion heard by the case
    management judge on that basis.  They also say that they made it clear that if
    Ms. Prijic wanted to have the Lease declared to be fraudulent, within the
    meaning of the
Fraudulent Conveyances Act
, R.S.O. 1990, c. F.29 (the
FCA
),
    she should commence a proceeding under the
FCA
.  And, if she wanted to
    obtain a traditional mortgage enforcement remedy, she should commence appropriate
    proceedings pursuant to the mortgage.

[42]

The
    case management judge heard the motion.  She found the Lease to be fraudulent,
    within the meaning of the
FCA
, and declared the Lease to be void
ab
    initio
.
She issued the Order under Appeal, which requires that the
    Lease be set aside and the Property be sold free and clear of it.

[43]

In
    finding the Lease to be fraudulent, the motion judge stated that the Lease had
    been registered on title in clear violation of Little J.s order (para. 10),
    as a manoeuver to frustrate the sale of the Property (para. 17), and only when
    sale of the Property became imminent (para. 21).  She found that the
    presumption of fraud had been made out and that no cogent explanation had
    been offered for the timing of the Lease and its registration (para. 20).  She
    also relied on the fact that Anjoca was not a corporate entity when the Lease
    was entered into (para. 21).

[44]

The
    motion judge also considered what meaning should attach to the word
    encumbrancers in the 2000 Order.  She found that it was meant to refer to only
    then-existing encumbrancers.  She stated that to interpret encumbrancers to
    include after-filed encumbrances would be illogical because an owner of the
    Property who did not want the sale to proceed could undermine the 2000 Order
    simply by granting a new encumbrance (para.16).

THE ISSUES

[45]

The
    numerous grounds of appeal raised by the appellants can be summarized as
    follows.  Did the motion judge err in:

1.  setting
    aside the Lease on the basis that it was fraudulent, within the meaning of the
FCA
?
    and

2.  interpreting
    encumbrancers in the 2000 Order, as referring to only then-existing
    encumbrancers?

ISSUE #1:  Did the motion judge
    err in setting aside the Lease as fraudulent,      within the meaning of the
FCA
?

The Parties Positions

[46]

In
    their factum, the appellants challenged the motion judges finding that the
    Lease was fraudulent on three bases.

[47]

First,
    while conceding (for the purposes of this appeal only) that the non-arms
    length nature of the Lease raised an inference of fraud sufficient to place the
    burden of explanation on the appellants, they submit that the motion judge
    erred in finding that no such cogent explanation had been given.  They say
    that Gus Economopoulos provided an explanation that was sufficient to either
    meet the burden of explanation or to raise a genuine issue, necessitating
    findings of credibility, sufficient to require the trial of an issue.

[48]

In
    this regard, the appellants point to Gus Economopoulos affidavit evidence
    about the circumstances surrounding the Lease.  In a nutshell, that evidence is
    to the effect that the Lease was executed as part of the series of events
    arising from the Settlement in 2006.  Under the Settlement, the disputes
    between the parties  including the dispute that led to the 2000 Order  were
    resolved.  Furthermore, pursuant to the Settlement, Gus Economopoulos became
    personally liable for hundreds of thousands of dollars of liabilities in
    respect of the restaurant, a matter they say goes to the question of the
    adequacy of the rent paid pursuant to the Lease and to the timing of its
    execution.

[49]

Second,
    the appellants submit that the motion judge misinterpreted Little J.s recommendation
    that no further steps should be taken by any party until other things, such as
    the sale of the Property, had taken place.  Consequently, the appellants say, the
    motion judge erred in viewing the registration of the Lease on title to the
    Property as a violation of that recommendation.

[50]

Third,
    the appellants submit that the motion judge erred in finding the Lease to be
    fraudulent because in making that finding, the motion judge relied on a number
    of unwarranted negative inferences.  Among others, the appellants point to the
    negative inferences that the motion judge drew from the timing of the
    registration of the Lease, and the fact that the Lease was entered into with Anjoca,
    as landlord, prior to the date that Anjoca was formally incorporated.

[51]

At
    the oral hearing of the appeal, the appellants made a further and quite
    different submission on this issue.  They argued that not only did the motion
    judge err in finding the Lease to be fraudulent but she erred in deciding the
    issue.

[52]

The
    appellants gave two reasons for saying that the motion judge ought not to have
    entertained the question of whether the Lease was fraudulent, within the
    meaning of the
FCA
.  First, they say that they did not have proper
    notice that such a determination would be made.  Second, the appellants submit that
    as they did not consent to such a determination being made, in light of the
    role played by a case management judge, it was inappropriate for her to hear
    and decide the matter.

[53]

The
    respondent submits that the motion judge did not err in concluding that the
    appellants had provided no cogent explanation for the timing of the Lease and
    that this court should defer to her finding on that matter.  She further
    submits that it was open to the motion judge to make a finding that the Lease
    was fraudulent, within the meaning of the
FCA
.  The respondent says that
    the appellants were not taken by surprise and did not ask that the matter be
    decided by way of a trial of the issue.  The respondent adds that there is
    nothing in the record before this court to suggest that the motion judge did
    not have all of the necessary evidence to permit her to decide whether the Lease
    was fraudulent.

Analysis

[54]

In
    my view, the motion judge erred in deciding whether the Lease was fraudulent, within
    the meaning of the
FCA
.  I reach this conclusion for three reasons.

[55]

First,
    I would accept the appellants submission that they did not receive proper
    notice that a determination would be made under the
FCA
.  There is no
    mention of the
FCA
in the Amended Amended Notice of Motion or the
    predecessor notices of motion.  Although the Amended Amended Notice of Motion
    asks for [a] determination of the issue as to the appropriateness and validity
    of the registration of the two Notices of Lease, in the circumstances of this
    case, that did not constitute sufficient notice to the appellants that the
FCA
would be in issue on the motion.  In this regard, it is noteworthy that the
    appellants contend that they made it clear to the respondent throughout that if
    she wished such a determination, it would have to be done through an
    appropriate proceeding under the
FCA
, and not in a motion for
    directions.  The record supports the appellants contention on this point.

[56]

Second,
    in the circumstances of this case, a determination of whether the Lease was fraudulent,
    within the meaning of s. 2 of the
FCA
, required a trial.

[57]

Section
    2 of the
FCA
requires a finding that a conveyance was made with the intent
    to defeat, hinder, delay or defraud creditors or others.  It reads as
    follows:

2.
Every conveyance
of real property or personal
    property and every bond, suit, judgment and execution heretofore or hereafter
made
    with intent to defeat, hinder, delay or defraud creditors or ot
hers of
    their just and lawful actions, suits, debts, accounts, damages, penalties or
    forfeitures are void as against such persons and their assigns.  [Emphasis
    added.]

[58]

Neither
    party disputes that the Lease is a conveyance within the meaning of s. 2 of the
FCA
.  Thus, the question was whether the Lease had been entered into with
    the intent to defeat, hinder, delay or defraud creditors or others.  Indeed,
    the crucial question in any fraudulent conveyance action is whether the
    plaintiff has proved the fraudulent intent of the debtor:
FL Receivables
    Trust 2002
, 2007 ONCA 425, at para. 39.

[59]

Gus
    Economopoulos explanation of the circumstances surrounding the Lease raises a
    triable issue on that matter.

[60]

It
    will be recalled that his explanation was that the Lease was entered into as
    part of the series of events arising from the Settlement. The Settlement is
    dated October 8, 2006.  The Lease is dated December 1, 2006.  It is clear from
    the terms of the Settlement that it was made in contemplation of Gus
    Economopoulos continuing to operate the restaurant on the Property.  One of the
    recitals states AND WHEREAS Gus has continued operating the [restaurant].
    Further, under the terms of the Settlement, Gus Econompoulos assumed liability
    for hundreds of thousands of dollars of debts relating to the restaurant.  As
    the Lease was entered into shortly after the Settlement and all parties to the
    Settlement were aware that Gus was going to continue operating the restaurant,
    this explanation had to be considered when determining intent for the purposes
    of s. 2 of the
FCA
.  No such consideration was undertaken.

[61]

Furthermore,
    in para. 17 of the Settlement, the parties agreed to release and discharge one
    another from all matters and legal proceedings relating in any manner
    whatsoever to the Property and the restaurant.  In light of that exchange of promises,
    it is not clear what part, if any, of the 2000 Order was still operative
vis-à-vis
Gus Economopoulos and his operation of the restaurant.  Again, this is a
    matter going to intention, for the purpose of s. 2.

[62]

Moreover,
    the factual backdrop to the 2000 Order had dramatically changed by the time the
    Lease was entered into in 2006.  The 2000 Order was made when the joint owners
    of the Property were adversarial in nature.  After the Settlement was
    implemented, that was no longer the case because Peter Nicolopoulos had
    transferred his interest in the Property to Anjoca.  Again, this consideration
    is relevant to the question of intent, for the purposes of s. 2 of the
FCA
.

[63]

Third,
    as I explain below, there is a real question as to the validity of the badges
    of fraud relied on by the motion judge.

[64]

In
    conclusion, in the circumstances of this case, I do not see how, in the absence
    of a trial, the requisite determination of intent could be made.  It is clear
    that, among other things, credibility findings are required in order to make
    the requisite findings on intent.

[65]

In
    light of the foregoing, it is unnecessary to decide whether the appellants are
    correct in their submission that because of the role of a case management
    judge, it was inappropriate for her to have decided the
FCA

issue
    in the absence of their consent.  The question of a case management judges
    jurisdiction is one that I would leave to a case in which it has been squarely
    raised and fully argued.

[66]

Because
    I am of the view that the issue of whether the Lease was fraudulent, within the
    meaning of s. 2 of the
FCA
, ought not to have been decided on the
    motion, I will say little as to the merits of that determination.  I would
    note, however, that two of the negative inferences which the motion judge
    relied on in reaching that determination are troubling.

[67]

First,
    on the record before this court, there is nothing about the timing of the
    execution of the Lease by Anjoca that should lead to a negative inference in
    relation to the question of intent, for the purposes of s. 2 of the
FCA
.

[68]

The
    Settlement was entered into on October 8, 2006.  Peter Nicolopoulos lawyer was
    directed to transfer his (Peter Nicolopoulos) interest in the Property to
    Anjoca by means of a direction dated November 29, 2006.  Anjoca executed the
    Lease in December of 2006 and was incorporated shortly thereafter in January of
    2007.  By its subsequent actions, Anjoca adopted the Lease.

[69]

The
    formation of pre-incorporation contracts is common practice.  Ontarios
Business
    Corporations Act
, R.S.O. 1990, c. B.16, clearly contemplates such contracts
    and provides, in s. 21(2), that

A corporation may, within a reasonable time after it comes into
    existence, by any action or conduct signifying its intention to be bound
    thereby, adopt an oral or written contract made before it came into existence
    in its name or on its behalf.

[70]

Second,
    the motion judge found that registering the Lease on title was done in clear
    violation of Little J.s order.  As indicated earlier, there is no order by Little
    J. in the record before this court.  There is only his endorsement dated
    October 12, 2011, which concluded with a series of recommendations.  Thus, the
    motion judge erred in treating the registration of the Lease as a violation of
    a court order.

[71]

Further
    and in any event, it is not readily apparent that registering the Lease on
    title violated Little J.s recommendation.   The recommendation in question is
    found in para. 41 of Little J.s endorsement.  It reads as follows:

No further steps should be taken by any of the parties until
    the above [recommendations are] completed.

[72]

The
    Lease was entered into in 2006, long before the recommendation was made in
    2011.  Obviously, therefore, the act of entering into the Lease could not be
    contrary to the recommendation.  The question is whether its registration on
    title was contrary to the recommendation.  In this regard, it is not clear
    whether the recommendation is a general prohibition against any party doing
    anything in relation to the Property or a direction that the parties were to
    take no further steps in the proceeding until the various other recommendations
    had been complied with.  It is not readily apparent to me that the registration
    of an existing Lease on title is a step in a proceeding.

[73]

For
    these reasons, the motion judges finding that the Lease was registered on
    title in violation of Little J.s order cannot stand.

[74]

Accordingly,
    I would allow this ground of appeal.

ISSUE #2:   Did
    the motion judge err in her interpretation of the word encumbrancers in the 2000
    Order?

The Parties Positions

[75]

The
    appellants submit that the motion judge erred in interpreting the word
    encumbrancers in the 2000 Order as referring to only encumbrancers in
    existence at the time the 2000 Order was issued.  They say that the 2000 Order
    must be interpreted as having contemplated the continued operation of the
    restaurant because the restaurant had been in continuous operation since the
    early 1990s, its continuation was not prohibited by the terms of the 2000
    Order, and, at the time the application which led to the 2000 Order was
    commenced, it was in the best interests of all parties that the restaurant
    continue to occupy the premises.  Accordingly, the appellants submit, the 2000
    Order must have contemplated that a lease would come into existence that
    enabled the continued use of the Property by the restaurant.  As a lease is an
    encumbrance, the word encumbrancers in the 2000 Order must have been intended
    to encompass a later-filed lease.

[76]

The
    respondent submits that the motion judge correctly interpreted encumbrancers
    so that the sale of the Property would be subject only to the claims of
    encumbrancers in place at the time that the 2000 Order was made.  The
    respondent argues that the motion judges interpretation is consistent with the
    objective of a sale under the
Partition Act
which, she contends, is to
    permit the expeditious judicially supervised sale of land for the benefit of
    all parties while protecting the rights of existing encumbrancers.  The
    respondent submits that it would be illogical and contrary to the objective of
    the
Partition Act
for the 2000 Order to apply to encumbrances that
    neither existed nor were in the contemplation of the parties at the time that
    the 2000 Order was made.

Analysis

[77]

In
    my view, the motion judge erred in interpreting the word encumbrancers in para.
    3 of the 2000 Order as referring to only encumbrancers then in existence.

[78]

Paragraph
    3 of the 2000 Order reads as follows:

THIS COURT OR
D
ERS that
    the lan
d be sold under the direction of the
    Re
feree on such terms as the Referee deems appropriate, free of the
    claims of encumbrancers if any, who have c
on
sente
d
to the sale, an
d
subject to the claims of encumbrancers who
    have not c
on
sente
d
to the sale, an
d
that the purchaser pay the purchase m
on
ey into court to the cre
d
it of this procee
d
ing, subject to the or
d
er of the Court.

[79]

The
    source of the wording in para. 3 is significant.

[80]

It
    will be recalled that the 2000 Order was made pursuant to an application for
    sale under the
Partition Act
.  Rule 66.02 of the
Rules of Civil
    Procedure
provides that a judgment for partition or sale shall be in (Form
    66A).  The relevant provision in Form 66A reads as follows:

THIS COURT OR
D
ERS AN
D
A
D
JU
D
GES that the lan
d
, or such part of it as the referee thinks
    fit, be sol
d
un
d
er the
d
irecti
on
of the referee, free of the claims of
    encumbrancers, if any, who have c
on
sente
d
to the sale, an
d
subject to the claims of encumbrancers who
    have not c
on
sente
d
to the sale, an
d
that the purchaser pay the purchase m
on
ey into court to the cre
d
it of this procee
d
ing, subject to the or
d
er of the court.

[81]

A
    comparison of the wording in para. 3 of the 2000 Order with the relevant provision
    in Form 66A reveals that the two are virtually identical.  This is not
    surprising, given the mandatory wording in rule 66.02 which requires that an
    order for partition or sale shall be in Form 66A.

[82]

Turning
    then to the interpretation of encumbrancers, I begin by noting that there is
    nothing in the wording of Form 66A or para. 3 of the 2000 Order that restricts encumbrancers
    to only those in existence at the time the order of partition or sale is made.
    On a plain reading of both provisions, the word encumbrancers would encompass
    both existing and subsequent encumbrancers.

[83]

However,
    that does not end the matter.  In determining what meaning attaches to the word
    encumbrancers, it is vital to recognize that Form 66A is the source of para.
    3 of the 2000 Order.

[84]

Rule
    66.02 mandates that Form 66A is to be used for orders of partition and sale.
    Because Form 66A is a mandated standard form of order, the interpretation of
    its wording has the potential to affect a great many people other than the
    parties to this dispute.  Moreover, because the
Rules of Civil Procedure

are the source of Form 66A, Form 66A is essentially subordinate
    legislation.

[85]

Consequently,
    in my view, it would be incorrect in law to interpret the word encumbrancers
    in para. 3 of the 2000 Order by reference to the intention of the parties at
    the time that the 2000 Order was made.  Instead, the word encumbrancers should
    be interpreted within the legislative context in which Form 66A was developed,
    which brings us to ss. 2 and 3 of the
Partition Act
.

[86]

Sections
    2 and 3 of the
Partition Act

give persons interested in land in
    Ontario the right to seek a court-ordered partition or sale of that land.  For
    ease of reference, I will refer to such persons as co-owners.  Sections 2 and 3
    read as follows:

2.  All joint tenants, tenants in common, and coparceners, all
    doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees
    or other creditors having liens on, and
all parties interested in
, to or
    out of,
any land in Ontario, may be compelled to make or suffer partition or
    sale of the land
, or any part thereof, whether the estate is legal and
    equitable or equitable only.

3.  (1)
Any person interested in land in Ontario,
or
    the guardian of a minor entitled to the immediate possession of an estate therein,
may bring an action or make an application for the partition of such land or
    for the sale

thereof
under the directions of the court if such sale
    is considered by the court to be more advantageous to the parties interested.
    [Emphasis added.]

[87]

The
    right to seek partition or sale is limited to those who have possession, or an
    immediate right to possession, of the land:
909403 Ontario Ltd. v.
    DiMichele
, 2014 ONCA 261, 319 O.A.C. 72, at para. 79;
Nobis
    Investments Ltd. v. Atlantic Metal Spinning Co.
, 1988 CarswellOnt 1708,
    [1988] O.J. No. 335, at para. 1 (C.A.);
Morrison v. Morrison
(1917),
    39 O.L.R. 163, at pp. 168 and 171-72 (C.A.).

[88]

Prior
    to the passage of legislation, co-owners of land did not have the right to
    compel partition or sale of land  only coparceners could invoke the writ
de
    partitione facienda

to compel partition.
[1]
In giving co-owners the
prima facie
statutory right to compel partition
    or sale, the
Partition Act

(and its predecessor legislation)
    conferred a powerful right upon them.

[89]

This
    court has affirmed the strength of that
prima facie

statutory
    right, holding that the courts have only a narrow discretion to refuse to make
    such an order.  The scope of the courts discretion to refuse to make an order
    of petition or sale is limited to circumstances of malice, oppression and
    vexatious intent.  See
Greenbanktree Power Corp. v. Coinamatic Canada Inc.
(2004), 75 O.R. (3d) 478, 193 O.A.C. 204 (C.A.), at paras. 1-2.

[90]

It
    goes without saying that the rights of other parties interested in the land can
    be affected by the partition or sale of the land.  Nonetheless, in the words of
    s. 2 of the
Partition Act
, they may be compelled to suffer partition
    or sale.

[91]

Form
    66A provides some protection for those other parties interested in the land who
    are encumbrancers, by making the sale of the land subject to their claims, if
    they do not consent to the sale.

[92]

An
    encumbrancer does not cease to acquire a valid interest in the land simply
    because the encumbrance arises, or is registered, after the land is subject to an
    order for partition or sale.  A significant period of time might elapse between
    the granting of such an order and the eventual sale of the land.  Indeed, that was
    the case here, with the sale order being made in 2000 and fourteen years later,
    the Property not yet sold. In the interval between a sale order being made and
    the sale taking place, any number of encumbrances might arise. For example, a municipality
    might become entitled to register an encumbrance if property taxes on the land
    go unpaid and creditors might wish to register judgments against an owner of
    the land.  The fact that such encumbrances arise and/or are registered after a
    sale order has been made does not render them unworthy of the protection
    afforded by Form 66A.  Interpreting the word encumbrancers to encompass
    subsequent encumbrancers gives them that measure of protection.

[93]

Moreover,
    the motion judges interpretation of encumbrancers would confer a new right on
    co-owners of land by shielding their land from valid encumbrances that arise
    after the order for partition or sale has been granted. That was not the
    purpose of ss. 2 or 3 of the
Partition Act
.

[94]

In
    conclusion, when considered within the legislative context of ss. 2 and 3 of
    the
Partition Act
, the correct interpretation of encumbrancers in
    para. 3 of the 2000 Order accords with its plain meaning, namely, as
    encompassing all encumbrancers, whether in existence at the time the 2000 Order
    was made or subsequently.

[95]

For
    these reasons, I would allow this ground of appeal.

DISPOSITION

[96]

Accordingly,
    I would allow the appeal with costs to the appellants fixed at $10,000, all
    inclusive.  I would set aside paras. 1 and 2 of the Order under Appeal.  I
    would direct the parties to revise para. 3a of the Order under Appeal, as
    necessary, to make it consistent with these reasons.  I would make no order in
    respect of para. 3b of the Order under Appeal because that relief was not requested
    and because I understand that para. 3b was made on consent of the parties.
[2]

[97]

In
    light of the result on appeal, the costs order below made in respect of the
    parties to this appeal, namely para. 4 of the Order under Appeal, cannot stand
    and I would set it aside.  If the parties are unable to resolve the matter of
    costs of the motion, I would permit them to make brief written submissions on
    the matter, to a maximum of three pages, within fourteen days of the date of
    release of this judgment.

Released: October 7, 2014 (A.H.)

E.E. Gillese J.A.

I agree Alexandra Hoy
    A.C.J.O.

I agree P. Lauwers J.A.

[1]
John Irvine, A House Divided: Access to Partition and Sale under the Laws of
    Ontario and Manitoba (2011), 35:1 Man. L.J. 217, at 219-20.  See also
Re
    Hutcheson and Hutcheson
, [1950] O.R. 265, at 268 (C.A.).  And, more
    generally on the
Partition Act
, see Paul Perell, A Partition Act Primer

(2005), 30 Advocates Q. 251.

[2]
See para. 2 of the motion judges Supplementary Endorsement dated February 10,
    2014.


COURT OF APPEAL FOR ONTARIO

CITATION: Everingham (Re), 2014 ONCA 743

DATE: 20141027

DOCKET: C58363

Cronk, LaForme and Hourigan JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Brockville
    Mental Health Centre

Royal
    Ottawa Health Care Group

Respondent

and

Donald Everingham

Appellant

Michael Davies, for the appellant

Maura Jetté, for the respondent, Her Majesty the Queen

Michelle OBonsawin, for the respondent Brockville
    Mental Health Centre  Royal Ottawa Health Care Group

Heard: October 20, 2014

On appeal from conditions imposed under the disposition
    of the Ontario Review Board, dated November 27, 2013, with reasons reported at
    [2013] O.R.B.D. No. 3236.

Cronk J.A.:

I.        Introduction

[1]

By disposition dated
    November 27, 2013, the Ontario Review Board (the Board) ordered the appellant,
    Donald Everingham, detained within the Secure Forensic Unit of the Brockville
    Mental Health Centre (the Hospital).  As part of its disposition, the Board
    also ordered that: 1) the appellant refrain from the use of computer devices,
    unless he gives permission to hospital staff to monitor their use for content
    and messaging (the Computer Condition); and 2) with the approval of the Person-in-Charge
    of the Hospital, the appellant be permitted to enter the community of
    Brockville, escorted by staff (the Community Access Condition).

[2]

The appellant does not
    challenge his continued detention at the Hospital or the Boards conclusion that
    he continues to represent a significant threat to the safety of the public.
    Instead, he seeks to set aside the Computer and Community Access Conditions
    imposed by the Board.

II.       Background in Brief

[3]

The appellant is a
    dual-status offender.  He was found not criminally responsible (NCR) on
    October 1, 1975 on charges of assault and assault causing bodily harm.  He is
    also serving two life sentences imposed on May 5, 1975 for convictions for
    forcible seizure, rape and the attempted murder of an 8-year old girl.  He has
    been under the jurisdiction of the Board for approximately 37 years.

[4]

The appellant was detained
    at Waypoint Mental Health Centre (Waypoint) from 1975 to March 28, 2012, when
    he was transferred to the Hospital.  Both Waypoint and the Hospital are designated,
    secure forensic psychiatric facilities.

[5]

The appellants current
    diagnoses include various sexual-related disorders (paraphilia: sexual sadism;
    and pedophilia: heterosexual type), as well as antisocial personality disorder,
    polysubstance abuse and various diseases associated with aging (for example,
    coronary artery disease and degenerative disc disease).  The appellant is
    approximately 66 years old and, much of the time, uses a wheelchair.

[6]

Prior to his transfer to the
    Hospital in March 2012, the appellants actuarial risk assessment on the Sexual
    Offender Risk Assessment Guide (SORAG) was updated.  The appellant scored in
    the highest of nine ascending categories of actuarially measured risk on this
    test.

[7]

As a result of his index
    offences, described above, and his scores on the SORAG and other phallometric
    tests, the appellants treatment team considers that he continues to be a high
    risk for future sexual violence despite his advanced age.

[8]

While at Waypoint and
    continuing at the Hospital, the appellant has maintained contact with a person,
    described by him as an adult woman in New Mexico, named Patricia.  The
    evidence as to whether the appellant had access to the internet, and hence to
    email (online) communications with Patricia while at Waypoint is unclear.
    Similarly, the record does not establish precisely when the appellants contact
    with Patricia commenced.

[9]

However, there is no dispute
    that the appellant had access to a computer in his living quarters at Waypoint
    and that he spent most of his free time on the ward occupied with the computer.
    He acquired considerable computer-related knowledge in the process.

[10]

On
    the appellants transfer from Waypoint to the Hospital, his Waypoint treatment
    term identified computer use and internet access as a risk factor of concern,
    in light of the potential victims [that] could be accessed via this tool.
    The Hospital report filed with the Board contains this warning from the
    appellants Waypoint treatment team regarding both computer and community
    access:

The Team does recommend a cautious progression and stresses
    [the appellant] will require escorted privileges in any less secure setting.
    In addition, it is important that he not have access to vulnerable females or
    children.  Any internet access would also be a concern as [the appellant] is
    quite adept and knowledgeable with respect to computers and it is possible
    potential victims could be accessed via this tool.

[11]

Nonetheless,
    following his transfer to the Hospital and prior to the Boards November 2013 disposition,
    the appellant was permitted to use a Hospital computer, with internet access,
    in the Hospital library under very limited supervision.  The Hospital report
    states:

While on the ward, [the appellant] spends his time playing
    video games or speaking with some of the co-patients on the ward.  He has been
    actively involved with recreational activities to the extent he is able to with
    his current level of privileges.  This includes playing the organ once a week
    under the supervision of Recreational Therapist, Ken Rossetti,
and using
    the computer to surf the internet and email social contacts, once or twice a
    week, again under the supervision of Ken Rossetti.  Mr. Rossetti monitors, from
    a distance,  [the appellants] use of the internet and thus is able to see in
    a general sense what content he is viewing on the internet.  Although Mr.
    Rossetti is able to see that he is sending emails, he would not be aware of the
    content of the emails or who they are sent to.  [The appellant] himself said
    that he sends emails to an adult female in New Mexico named Patricia.  [The
    appellant] would not allow the treatment team to contact her for any collateral
    information.  He told the treatment team that she is aware of his index
    offences and the fact that he is residing in a psychiatric hospital.  He said
    the relationship is not the treatment teams business
.  [Emphasis added.]

[12]

Thus,
    Hospital staff have no information or knowledge about Patricia, including her
    age, save for the appellants self-report that Patricia is an adult woman who
    lives in New Mexico.

III.      Discussion

(a)

Computer Condition

[13]

In
    his factum, the appellant raised various complaints concerning the Computer Condition.
    However, during oral argument, the focus of his complaints was narrowed significantly.
    Through counsel, he clarified that he does not challenge the Hospitals
    authority to monitor his access to various websites available on the internet.
    Rather, he objects to the restriction on his ability to communicate via email
    on a Hospital computer, without monitoring of the content of his emails by
    Hospital staff.  He submits that this restriction was neither anticipated nor
    sought by any party at the hearing.  He says that the Computer Condition is unreasonable
    and overbroad, and that it offends his rights under the
Mental Health Act
,
    R.S.O. 1990, c. M.7 (the Act) and s. 8 of the
Canadian Charter of Rights
    and Freedoms
.
[1]

[14]

I
    would not accede to these submissions.

(i)

Hearing fairness

[15]

I
    am not persuaded that any hearing unfairness arose as a result of the imposition
    of the Computer Condition.

[16]

The
    transcript of the Board hearing reveals that the issue of the appellants use
    of an internet-connected computer at the Hospital was the subject of
    questioning by Board members.  Both the legal member of the panel and the
    alternate chairperson of the Board questioned the appellants attending
    psychiatrist, Dr. J. Gray, about the appellants use of a Hospital computer,
    and any attendant risk to the public, during Dr. Grays testimony before the
    Board.  As a result of their questions, the prospect of a possible condition
    restricting the appellants computer use, including for the purpose of online exchanges
    over the internet, clearly emerged as a live issue.

[17]

Following
    the Boards questions, counsel for the parties were afforded an opportunity to
    ask further questions of Dr. Gray and to make submissions concerning the
    appellants access to a Hospital computer.  Crown counsel addressed this issue
    in further submissions, requesting that the Board restrict the appellants
    internet access in much the same terms as are reflected in the Computer
    Condition ultimately imposed by the Board.  The appellants counsel elected to
    make only minimal submissions.  No adjournment of the hearing was sought by any
    party.

[18]

In
    the light of the contents of the Hospital report and the nature and gravity of
    the appellants index offences, the question of his access to the internet via
    the use of a Hospital computer  for any purpose  was a highly relevant and
    proper consideration.  Further, the procedures employed by the Board in seeking
    further information from Dr. Gray on this issue, described above, ensured
    procedural fairness.

[19]

In
    my view, therefore, there can be no sustainable complaint that the appellant
    was prejudiced by the fact that this issue emerged at the hearing or by the
    manner in which the Board addressed the issue during the hearing.

(ii)

The Computer Condition is reasonable

[20]

Nor
    am I persuaded that the Computer Condition is unreasonable on the facts of this
    case.  The Board reasoned as follows concerning the imposition of the Computer
    Condition:

It is also a concern of the Review Board that the accused has
    developed a relationship with a woman via internet and that the hospital has no
    information about the nature of that communication or whether this woman is
    potentially at risk of being influenced by the accused or whether the accused
    is communicating sexual fantasies or thoughts that the hospital should know
    about.  Accordingly, the board will require a condition that the accused should
    not have access to the hospital computer unless it can be monitored for content
    by hospital staff.

[21]

I
    agree with the concern expressed by the Board.  In my opinion, there is nothing
    unreasonable about this concern or the imposition by the Board of a condition
    limiting the basis on which the appellant may access an internet-connected
    computer owned by the Hospital.

[22]

The
    Board enjoys broad authority under s. 672.54 of the
Criminal Code
to
    craft conditions to a disposition that it regards as necessary or appropriate
    in the interests of protecting the public from dangerous offenders, while
    treating NCR patients fairly.  The Boards obligation to protect the liberty of
    an NCR accused by fashioning the least onerous and least restrictive
    disposition must be understood in the context of its companion and overarching
    obligation to protect public safety.

[23]

The
    appellants Hospital treatment team and the Board have no information
    concerning the appellants online activities, including the nature of his email
    communications with the person he describes as Patricia or, indeed, with
    anyone else.  Internet access affords a portal to worldwide communications,
    including communications with children and vulnerable adults.  Where an NCR
    offenders index offences and mental disorders are of a serious sexual nature,
    it is squarely within the Boards jurisdiction under s. 672.54 of the
Criminal
    Code
to craft a condition restricting access to the internet and online
    communications to ensure that public safety is protected.

[24]

In
    this case, the evidence of the appellants index offences, the nature of his
    mental illnesses, the concerns expressed by his former treatment team regarding
    his access to the internet, the appellants documented reluctance to disclose
    the nature of his email communications, and the Boards mandate to protect the
    public all strongly supported the imposition of a condition that defined the
    circumstances under which the appellant would be permitted to access the
    internet, for email or other purposes.  The imposition of such a condition, in
    my opinion, was eminently reasonable.  The Hospital cannot be expected to
    manage the appellants risk based solely on his self-reporting of the nature of
    his online communications.

[25]

It
    is also important to note that the Computer Condition does not deny the
    appellant access to a computer or the internet.  The Computer Condition, as
    framed, permits use of computer devices by the appellant, including
    internet-connected computer devices, so long as the appellant first consents to
    the monitoring of his use of such devices by Hospital staff.  It is apparent
    that the Computer Condition was crafted by the Board, quite properly, with a
    view to fashioning the least onerous and least restrictive condition to
    facilitate the appellants use of the internet while also ensuring that the
    public is not put at risk by such use.

[26]

I
    make these additional observations.  First, the Computer Condition does not
    restrict or seek to impose monitoring on all communications by the appellant
    with third parties.  Nothing in the Computer Condition constrains the
    appellants ability to communicate by mail or telephone as he wishes,
    including, for example, with his legal counsel.

[27]

Second,
    during oral argument, the appellants counsel acknowledged that the Board has
    the authority to deny the appellant access to internet-connected devices
    altogether.  The Board chose not to do so.  Instead, it fashioned a condition
    that permits continued computer and internet access by the appellant, subject
    to monitoring in the interests of public and patient safety.

[28]

Third,
    the appellant complains that the Computer Condition is overbroad.  He points
    out, for example, that the condition as framed is not restricted to
    internet-connected computer devices.  However, there is no evidence that any of
    the Hospital computers available to patients lack internet access.  Moreover,
    the appellant has made clear that his objection to the Computer Condition
    relates exclusively to the monitoring of the content of his outgoing and
    incoming emails.  Email communication, like text messaging, is possible only
    with the use of the internet.

(iii)

Charter
and statutory-rights complaints

[29]

I
    also do not accept the appellants complaint that the Computer Condition
    offends his constitutionally-protected rights under s. 8 of the
Charter
or his rights under the Act.  I say this for the following reasons.

[30]

First,
    the Supreme Court has recognized that the Board has the statutory tools under the
Criminal Code
to supervise the treatment and detention of dangerous
    NCR patients in a responsive,
Charter
-compliant fashion and that it
    has a broad power to attach flexible, individualized creative conditions to
    the discharge and detention orders it devises for dangerous NCR patients:
R.
    v. Conway
, 2010 SCC 22, [2010] 1 S.C.R. 765, at paras. 93-4.  It is in
    this context that the Computer Condition must be assessed for
Charter
and statutory compliance.

[31]

Second,
    and critically in my view, as an NCR detainee at a secure forensic psychiatric
    facility, the appellant cannot be said to have an objectively reasonable
    expectation of privacy in his online communications on a Hospital computer.

[32]

Any
    informational privacy concerns relating to the appellants online communications
    arise in a place and in a context governed by a statutory regime that requires
    the curtailing of liberty to the extent necessary to protect the public.

[33]

The
    curtailment of the appellants liberty at the Hospital is manifest in a number
    of respects.  As the Supreme Court held in
Weatherall v. Canada (Attorney
    General)
, [1993] 2 S.C.R. 872, the nature and extent of the
Charter
interests of an inmate of a correctional facility are necessarily informed by
    the inmates institutional setting.  The Supreme Court put it this way in
Weatherall
,
    at p. 877:

Imprisonment

necessarily
    entails surveillance, searching and scrutiny.  A prison cell is expected to be
    exposed and to require observation.  The frisk search, the count and the wind
    are all practices necessary in a penitentiary for the security of the
    institution, the public and indeed the prisoners themselves.  A substantially
    reduced level of privacy is present in this setting and a prisoner thus cannot
    hold a reasonable expectation of privacy with respect to these practices.

[34]

This
    reasoning is apposite here.  The appellant is detained at the Hospital as an
    NCR accused by operation of law.  Detention in a designated forensic
    psychiatric facility, as with detention in a correctional facility, necessarily
    entails surveillance, searching and scrutiny.  The Hospitals fresh evidence
    on appeal, filed on consent, confirms that patients at the Hospital are
    routinely subjected to room searches, visual searches and assessments and
    wanding by Hospital staff, for security and safety purposes.  Thus, as an NCR
    offender, the appellant has a significantly diminished expectation of privacy
    under Part XX.1 of the
Criminal Code
.  In these circumstances, his s.
    8
Charter
rights are not implicated.

[35]

The
    Board has found that the appellant poses a significant threat to public
    safety.  On this basis, his liberty is restricted under the statutory scheme
    for NCR accused codified in Part XX.1 of the
Criminal Code
.  In light
    of the significant limitations on the appellants access to the public by
    reason of his Board-ordered detention, the appellant cannot reasonably expect
    that he will have unsupervised access to the internet and online
    communications, without any oversight as to the contents of those
    communications.

[36]

In
    addition, as I have said, the Computer Condition is crafted so as to ensure
    that any monitoring of the appellants online communications occurs only with
    his consent.  The appellant is free to refrain from accessing internet-connected
    computer devices if he does not wish to consent to this monitoring.

[37]

Third,
    turning to the Act, patients admitted to hospital under the authority of the Act
    have a diminished expectation of privacy in the mail they send and receive by
    reason of s. 26(2) of the statute.  Under that section, hospital officials are
    empowered to open and examine the contents of a patients mail in defined
    circumstances.

[38]

In
    the past, the appellant unsuccessfully challenged the constitutional validity
    of s. 26 of the Act:
Everingham v. Ontario
(1993), D.L.R. (4th) 199
    (Ont. C.J.).  In that case, when upholding the constitutionality of s. 26, the
    court observed, at p. 8: [w]hat is a reasonable expectation of privacy depends
    on the context.  In a context where random searches to ensure safety and security
    are commonplace, the reasonable expectation of privacy is low.

[39]

These
    comments apply, in my view, with equal force to a patients online
    communications in a forensic psychiatric facility.  In the context of the
    living conditions in these secure facilities and in the light of the fresh
    evidence in this case, the appellant has a significantly reduced expectation of
    privacy at the Hospital.  Moreover, I see no evidence of non-compliance by the
    Hospital with the Act.

[40]

Accordingly,
    I would reject the appellants attack on the Computer Condition.

(b)

Community Access Condition

[41]

At
    the Board hearing, the appellant sought a condition permitting him indirectly
    supervised access privileges in the Hospital and grounds, and in the community,
    on an accompanied 1:4 staff to patient ratio.  The Hospital and the Crown
    supported this request.  However, the Board declined this request, instead
    ordering that the appellant be permitted: 1) hospital and grounds privileges,
    escorted by staff; 2) hospital and grounds privileges, on a 1:4 staff-patient
    ratio, accompanied by staff; and 3) access to the community of Brockville,
    escorted by staff (the Community Access Condition), all as the Person-in-Charge
    of the Hospital might approve.

[42]

The
    appellant submits that the Community Access Condition is unreasonable for the
    following reasons: 1) the Board gave no reasons for its rejection of the
    appellants community access request; 2) the evidence indicated that the
    appellants request, if granted, would not add to the risk to the community;
    and 3) since the appellant is confined to a wheelchair, community access on the
    basis proposed by the appellant would not add to the appellants elopement
    risk.

[43]

I
    disagree.

[44]

Contrary
    to the appellants contention, the board rejected his community access proposal
    for numerous cogent reasons.  These included: 1) the significant risk to the
    safety of the public posed by the appellant; 2) the appellants recent
    commitment to take an antiandrogen medication, the effects of which were not yet
    measurable; 3) the appellants elevated risk measurements on phallometric
    testing, which confirmed that he still experiences significant arousal to rape
    scenarios and pre-pubescent situations despite his denial of same; 4) the
    appellants historical high risk conduct for members of the public,
    particularly children and younger people; 5) the appellants lack of personal
    support mechanisms outside the Hospital and of a realistic and feasible
    community access plan; 6) the severity of the appellants index offences; 7) a
    documented incident of violence towards a co-patient in December 2012; and 8)
    the fact that, at the time of the hearing, the appellant had no community
    access privileges at all.

[45]

Based
    on these factors (referred to by the Board as observations), the Board
    concluded that the least onerous and restrictive disposition for the
    [appellant] is a continuation of his detention order with 1:4 hospital and
    hospital grounds supervision and passes into the community, but escorted by
    staff.

[46]

The
    Boards imposition of the Community Access Condition was amply supported by the
    evidence.  It is also consistent with the recommendation of his long-standing
    treatment team at Waypoint, quoted above, that a cautious progression, with
    escorted privileges, be adopted with respect to the appellants reintegration
    into the community.  Finally, there was no clear evidence before the Board
    regarding the extent of the appellants mobility without the use of a
    wheelchair.

[47]

In
    all these circumstances, in my view, the Community Access Condition is
    reasonable.  I see no basis for appellate interference.

IV.     Disposition

[48]

For
    the reasons given, I conclude that the appellants challenges to the Computer
    and Community Access Conditions fail.  I would dismiss the appeal.

[49]

I
    note that the appellants next annual review hearing is scheduled for November
    4, 2014.  It will be for the Board to determine at that hearing whether any
    changes to the conditions of the appellants detention are appropriate or
    necessary, based on the evidence adduced before the Board at the new hearing.

Released:

OCT 27 2014                                   E.A. Cronk
    J.A.

EAC                                                I
    agree H.S. LaForme J.A.

I
    agree C.W. Hourigan J.A.

[1]
Although the appellant argued in his factum that the Board had no jurisdiction
    to impose the Computer Condition, he did not pursue this claim in oral
    argument.


COURT OF APPEAL FOR ONTARIO

CITATION: Fulcher v.
    Conklin, 2014 ONCA 710

DATE: 20141020

DOCKET: C57009

Strathy C.J.O., Rouleau and Hourigan JJ.A.

BETWEEN

Edward
    Bruce Fulcher, Austin Fulcher, by his Litigation Guardian

Edward Bruce Fulcher and
    Novitherm Canada Inc.

Plaintiffs/Respondents

and

Catherine Conklin

Defendant/Appellant

David S. Thompson, for the appellant

Alan L. Rachlin, for the respondents

Heard: October 7, 2014

On appeal from the judgment of Justice Mary A. Sanderson
    of the Superior Court of Justice, dated April 8, 2013, with reasons reported at
    2013 ONSC 2013.

ENDORSEMENT

[1]

The appellant argues that the trial judge erred in her assessment of Mr.
    Fulchers past and future loss of income. Mr. Fulcher worked at Novitherm
    Canada Inc. (Novitherm), before and after suffering a spinal injury in a
    collision with the appellant. In the appellants submission, the trial judge
    should not have made an award on the basis of ownership income since there was
    no evidence that Mr. Fulcher was paid on the basis of his ownership interest in
    the corporation. Further, in the absence of proper financial statements for
    Novitherm and faced with the disorganized records of the corporation, she ought
    to have disallowed any claim for performance and ownership income. The
    appellant also maintains that the lack of evidence about specific lost sales is
    fatal to Mr. Fulchers claim, since it is impossible to correlate his physical
    injuries to any revenue loss.

[2]

The appellant also submits that in the absence of any business valuation
    and the absence of reliable business records, the trial judge could not explain
    how she arrived at her damage award. Without a clear formula to calculate damages,
    Mr. Fulcher should have been limited to nominal damages.

[3]

We disagree. Determining the amount for loss of earning capacity is a
    complex issue of mixed fact and law on which the trial judge is owed
    considerable deference. There was ample evidence allowing the trial judge to
    conclude that Mr. Fulchers compensation correlated with Novitherms overall performance.
    The trial judge found that Mr. Fulchers ability to work had been seriously
    impaired by the accident and she drew the obvious inferences that, as a result,
    Novitherm had lost business, and Mr. Fulcher had suffered a loss of earning
    capacity. These inferences were reasonable given that Mr. Fulcher was one of
    two primary business partners responsible for the corporations growth. The
    evidence established that Novitherm had no direct competitors, it had been
    experiencing exponential growth, and it was considering expansion into large
    potential undeveloped markets.

[4]

We do not consider the absence of a business valuation as preventing the
    trial judge from making a substantial loss of income or loss of earning
    capacity award. On the facts of this case, such a valuation was unnecessary.
    The claim was for Mr. Fulchers loss of earning capacity and not for the loss
    in potential sale value of Novitherm.

[5]

The trial judges damages award should not, in our view, be interfered
    with. The trial judge specifically stated that she rejected the damage
    assessment of both the appellants and Mr. Fulchers experts. However, she
    considered that the experts competing damage assessments provided outer limits
    to what might constitute reasonable compensation. She indicated that her task
    was to find the best damage determination that she could within the reasonable
    range, based on the evidence led at trial. She then set about determining an
    appropriate figure and explained how she arrived at her figure. Her failure to
    adopt and apply a specific formula does not, on the facts of this case,
    constitute an error.

[6]

We also would not give effect to the appellants submission that the
    trial judge ought not to have taken into account Mr. Fulchers ownership
    interest in Novitherm. In coming to an award for loss of earning capacity, the
    trial judge was entitled to take into account the wealth that would have been
    generated and left in the business but for Mr. Fulchers injury. This was one
    of the many factors she took into account. It was reasonable for her to do so.

[7]

The appellant also submits that the trial judge ought not to have
    allowed Novitherms
per quod
claim. In the appellants view, the trial
    judge erred in finding that there was an employer-employee relationship between
    Novitherm and Mr. Fulcher such that a
per quod
claim could be made out.
    We would not give effect to this submission. The characterization of the
    employer-employee relationship is largely a question of fact on which the trial
    judge is owed substantial deference. The trial judge correctly identified the
    law and, having made the necessary factual findings, applied the law to those
    facts. In reaching the conclusion that a
per quod
claim was available,
    the trial judge made no palpable and overriding error.

[8]

For these reasons, the appeal is dismissed. The respondents are entitled
    to costs fixed at $20,000, inclusive of disbursements and all applicable taxes.

G.R.
    Strathy C.J.O.

Paul
    Rouleau J.A.

C.W.
    Hourigan J.A.