COURT OF APPEAL FOR ONTARIO

CITATION: Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149

DATE: 20190225

DOCKET: C65790

Hourigan, Miller and Paciocco JJ.A.

BETWEEN

Salvatore Benedetto

Plaintiff (Appellant)

and

2453912 Ontario Inc.

Defendant (Respondent)

AND BETWEEN

2453912 Ontario Inc.

Plaintiff by Counterclaim (Respondent)

and

Salvatore Benedetto
and Re/Max West Realty
    Inc., Brokerage

Defendants to the Counterclaim (
Appellant
)

Arieh Bloom, for the appellant

Vladimira M. Ivanov, for the respondent

Heard: February 8, 2019

On appeal from the order of Justice Benjamin T. Glustein
    of the Superior Court of Justice, dated July 24, 2018, with reasons reported at
    2018 ONSC 4524.

B.W. Miller J.A.:

I.        Overview

[1]

This appeal addresses the legal question of how the law governing
    deposits that secure contracts for the purchase and sale of real property
    interacts with section 21 of Ontarios
Business Corporations Act
, R.S.O.
    1990, c. B.16 (
OBCA
), which governs pre-incorporation contracts. On
    a motion for summary judgment, the motion judge found that the appellant
    forfeited the deposit when the transaction did not close, even though the
    pre-incorporation contract stated that the appellant was signing the contract without
    any personal liabilities. At the conclusion of the hearing of the appeal, the
    court announced that the appeal was dismissed with reasons to follow. These are
    those reasons.

II.       Background

[2]

The appellant signed an agreement for purchase and sale of real property,
    stipulating that he was signing as a buyer in trust for a company to be
    incorporated without any personal liabilities. The appellant provided a
    deposit of $100,000 to secure the purchase. Subsequently, he advised the vendor
    that he would not be closing the transaction, and he sought the return of the
    deposit. The respondent refused. The appellant brought an action. The
    respondent brought a motion for summary judgment.

[3]

The motion judge held that the provisions of the
OBCA
addressing pre-incorporation contracts do not displace the common law rules
    governing deposits in real estate transactions, and found that the deposit was
    forfeited to the respondent.

[4]

The appellant appealed on the basis that the motion judge erred in his interpretation
    of s. 21(4) and in his interpretation of the contract.

III.      Analysis

(1)

The law with respect to deposits

[5]

Where a payer (usually the purchaser) gives a vendor a deposit to secure
    the performance of a contract for purchase and sale of real estate, the deposit
    is forfeit if the purchaser refuses to close the transaction, unless the
    parties bargained to the contrary: see
Howe v. Smith
(1884), 27 Ch. D.
    89 (C.A.);
March Bothers & Wells v. Banton
(1911), 45 S.C.R. 338.  In
Howe v. Smith
, Fry L.J. stated at p. 101:

Money paid as a deposit must, I conceive, be paid on some terms
    implied or expressed. In this case no terms are expressed and we must therefore
    inquire what terms are to be implied. The terms most naturally to be implied
    appear to me in the case of money paid on the signing of a contract to be that
    in the event of the contract being performed it shall be brought into account,
    but if the contract is not performed by the payer it shall remain the property
    of the payee. It is not merely a part payment, but is then also an earnest to
    bind the bargain so entered into, and creates by the fear of its forfeiture a
    motive in the payer to perform the rest of the contract.

[6]

The deposit stands as security for the purchasers performance of the
    contract. The prospect of its forfeiture provides an incentive for the
    purchaser to complete the purchase. Should the purchaser not complete, the
    forfeiture of the deposit compensates the vendor for lost opportunity in having
    taken the property off the market in the interim, as well as the loss in
    bargaining power resulting from the vendor having revealed to the market the
    price at which the vendor had been willing to sell:
H.W. Liebig Co. v.
    Leading Investments Ltd.
, [1986] 1 S.C.R. 70, at pp. 86-87.

[7]

The motion judge provided a helpful summary of the law: a deposit is not
    part of the contract of purchase and sale, but stands on its own as an
    ancient invention of the law designed to motivate contracting parties to carry
    through with their bargains, something which binds the contract and
    guarantees its performance, and is an earnest to bind the bargain so entered
    into, and creates by the fear of its forfeiture a motive in the payer to
    perform the rest of the contract: see
Tang v. Zhang
, 2013 BCCA 52,
    41 B.C.L.R. (5th) 69;
Comonsents Inc. v. Hetherington Welch Design Ltd.
,
    2006 CanLII 33779 (Ont. S.C.);
Howe v. Smith
.

(2)

Pre-incorporation contracts and s. 24 of the
OBCA

[8]

At common law, a purchaser who breaches a contract of purchase and sale
    by electing not to complete the purchase will generally be liable to the
    vendor, who can pursue damages or other remedies. But contracts that are
    executed by a person acting as a promoter or functionary  that is, executed on
    behalf of a company intended to be incorporated later  have an added
    complexity. Section 21 of the
OBCA
modifies the common law of contract
    to facilitate such transactions, clarifying the rights and obligations parties assume
    in pre-incorporation contracts.

[9]

The default rule is provided by s. 21(1) of the
OBCA
:

Contract prior to corporate existence

21
(1) Except as provided in this section, a
    person who enters into an oral or written contract in the name of or on behalf
    of a corporation before it comes into existence is personally bound by the
    contract and is entitled to the benefits thereof.

[10]

This
    court stated in
Szecket v. Huang
(1998), 42 O.R. (3d) 400 (C.A.), at
    para. 33 that, personal liability of the promoter is established by s. 21(1)
    and prevails unless either contracted out of pursuant to s. 21(4), or displaced
    by the adoption of the contract by the company subsequent to its incorporation
    pursuant to s. 21(2).

[11]

The
    default rule of personal liability is thus subject to an opt-out under s.
    21(4), where the parties make it clear that is what they have chosen:

Exception to subs. (1)

(4) If expressly so provided in the oral or written contract
    referred to in subsection (1), a person who purported to act in the name of or
    on behalf of the corporation before it came into existence is not in any event
    bound by the contract or entitled to the benefits thereof.

[12]

In
    the event of a breach of a pre-incorporation contract where s. 21(4) applies  such
    as in this case, where the promoter advised the vendor he would not be
    completing the purchase  the vendor has no remedy for the breach:
1394918
    Ontario Ltd. v. 1310210 Ontario Inc
(2002), 57 O.R. (3d) 607
.
The
    vendor cannot obtain damages against the intended corporation because the
    intended corporation  if it even came into existence - did not adopt the
    contract: para. 9. Neither can the vendor seek damages against the promoter
    because the vendor and the promoter contracted to the contrary: para. 7.

(3)

The application of s. 21(4) to a deposit

[13]

Does
    a deposit stand on a different footing? We were not directed to any authority
    directly on point. The appellant argued that under s. 21(4), where a contract
    provides that a promoter is not bound by the contract, neither can the promoter
    be bound by a deposit given to secure the performance of the contract. That is,
    if a promoter has no personal obligation to perform a contract, this
    necessarily entails the promoter is not bound by the terms of the deposit either.

[14]

The
    motion judge made no error in rejecting this argument. As stated above, a
    forfeited deposit does not constitute damages for breach of contract, but
    stands as security for the performance of the contract. A purchasers obligations
    under a contract of purchase and sale are thus distinct from the obligation
    incurred by the payer of the deposit. An implied term of a deposit is that on
    breach of the contract by the purchaser (or, in the case of a pre-incorporation
    contract, by the promoter on behalf of the intended purchaser), the deposit is
    forfeited to the vendor.

[15]

Of
    course, parties can contract otherwise with respect to the deposit. The appellant
    argues that in this case, where the contract expressly provides that the appellant
    was signing the contract without any personal liabilities, the language was
    broad enough to exclude personal liability not only for damages for breach of
    contract, but also with respect to the deposit.

[16]

It
    was reasonable for the motion judge to interpret the phrase without any
    personal liabilities in the context of the contract as a whole, as not
    applying to the deposit. As he noted, the contract had no express provisions
    concerning the deposit. In particular, (t)he terms of the Deposit do not
    include a provision that if the contract is not performed, the Deposit is to be
    returned to [the appellant]. Under settled law, such a contrary intention
    must be expressly stated if the deposit is not to be forfeited upon the failure
    of the purchaser to perform his or her obligations under the agreement of
    purchase and sale. As the motion judge found, the interpretation offered by
    the appellant would render a deposit meaningless, providing no incentive to
    close the transaction, and no compensation to the vendor for failure to close.

[17]

The
    motion judge also put some stock in the interpretation given to nearly identical
    contractual language in
Adamis v. Aviks
, 1983 CarswellOnt 3436 (Ont. Co.
    Ct.). That case, a decision of the County Court, addressed the liability of a
    trustee in a real estate contract of purchase and sale, who signed a contract with
    no personal liability. The trial judge in
Adamis
held that the trustee
    was not liable for damages for the breach of the contract, but forfeited the
    deposit.

[18]

The
    appellant argues that it was an error to rely on
Adamis
, as the
    transaction arose in a significantly different legal context: the purchaser was
    a trustee as opposed to a promoter, and the case pre-dated the enactment of s.
    21 of the
OBCA
.
Adamis
, however, was not binding on the
    motion judge and the motion judge did not suppose that it was. The motion judge
    made no error in taking comfort from the fact that the trial judge in
Adamis
interpreted similar contractual language  given in a different but
    similar context  in a similar manner.

IV.     Disposition

[19]

The
    appeal is dismissed. Costs are payable to the respondent in the amount of
    $10,000, inclusive of disbursements and HST.

Released: BWM FEB 25 2019

B.W. Miller J.A.

I agree. C.W. Hourigan J.A.

I agree. David M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Bonello v. Gores Landing Marina (1986) Limited,
    2019 ONCA 127

DATE: 20190220

DOCKET: C65271

Brown, Paciocco and Zarnett JJ.A.

BETWEEN

Timothy Bonello, Ted
    Bonello, Anne Cutajar Wagner, Andrew Bonello and Mark Bonello

Plaintiffs

and

Gores Landing Marina (1986) Limited, Joseph
    Davies
and Murray E. Carslake and Joseph Davies Jr. also known as Joey
    Davies

Defendants (
Appellants
)

and

Chris Kane, Chris Ryan,
Anthony Cook, Gabe
    Mansueto, Gerald Chestnut, Jeff Jaglel, Frank Buttigieg
, Dan Rule and
Mike
    Buttigieg

Third Parties (
Respondents
)

R. Steven Baldwin
, for the appellants,
    Gores Landing Marina (1986) Limited and Joseph Davies

Nadine Nasr
, for the
    respondent Gerald Chestnut

Nestor Kostyniuk and Jeffrey
    Pasternak,
for the respondents Frank Buttigieg and Mike Buttigieg

Lianne Sharvit
, for the
    respondent Jeff Jaglel

A. C. Gluek,
for the
    respondent Gabe Mansueto

Russell Tilden
, for the
    respondent Anthony Cook

Heard: January 17, 2019

On appeal from the order
    of Justice Peter J. Cavanagh of the Superior Court of Justice, dated April 6,
    2018, with reasons reported at 2018 ONSC 2237.

BROWN
    J.A.:

I.

OVERVIEW

[1]

In August 2007, the plaintiff, Timothy Bonello, was seriously injured
    during a recreational game of tug-of-war at a campground operated by the
    appellant, Gores Landing Marina (1986) Limited, of which the appellant, Joseph
    Davies Sr., is a principal. The rope used during the game contained several
    loops. Mr. Bonello put his left arm through a loop. There were about 20 adult
    males on each side of the rope. When the pull started, the loop tightened on
    Mr. Bonellos arm. The resulting injury was so severe that his left forearm
    ultimately was amputated.

[2]

In 2009, Mr. Bonello commenced an action against Gores Landing and its two
    owners, Mr. Davies Sr. and Murray Carslake. The action was dismissed against
    the latter in 2012. Following examinations for discovery, Mr. Bonello amended
    his claim to add as a defendant Joseph Davies Jr., the son of Mr. Davies Sr.

[3]

In his Amended Statement of Claim, Mr. Bonello advances two types of
    claims against Gores Landing, Joseph Davies, Sr. and his son, Joseph Davies,
    Jr. First, he pleads that the defendants breached their duties under the
Occupiers
    Liability Act
, R.S.O. 1990. c. O.2, to ensure that their premises, and the
    activities carried on there, were reasonably safe. Second, he alleges the
    defendants were negligent. The particulars of the negligence pleaded against
    Mr. Davies Jr. include that: he obtained the rope for the tug-of-war; knew
    loops in the rope posed a hazard to participants; failed to ensure the loop did
    not pose a danger to participants; failed to warn Mr. Bonello not to place his
    hand in a loop; and failed to supervise properly Mr. Bonellos participation in
    the activity.

[4]

Mr. Bonello did not sue any of the other participants in the tug-of-war
    game. However, in 2010 the defendants initiated a Third Party Claim against the
    respondent third parties, all of whom participated in the tug-of-war.

[5]

In 2016, the appellant defendants moved for summary judgment to dismiss
    Mr. Bonellos action. The third parties moved for summary judgment dismissing
    the Third Party Claim; those motions were held in abeyance until the
    disposition of the appellants motion to dismiss the main action. By order
    dated August 25, 2016, Perell J. dismissed the action: 2016 ONSC 5372. This
    court set aside his order on the ground that consideration was not given to Mr.
    Bonellos claim in negligence. As a result, there was a genuine issue requiring
    a trial as to whether the defendants were vicariously liable for any negligence
    on the part of Mr. Davies Jr.: 2017 ONCA 632.

[6]

Another round of summary judgment motions ensued in early 2018. The
    appellants moved again for summary judgment dismissing the action. The motion
    judge dismissed their motion: 2018 ONSC 2211. Based on his interpretation of
    this courts 2017 decision, the motion judge concluded the defendants were
    precluded by operation of the doctrine of issue estoppel from moving a second
    time for summary judgment: at para. 10. Although I have serious reservations
    about that interpretation, it is of no consequence to the issues on this
    appeal. No appeal was taken from that decision

[7]

The third parties motions for summary judgement were heard at the same
    time. The motion judge granted them, dismissing the Third Party Claim: 2018
    ONSC 2237. The appellants appeal.

[8]

The appeal was dismissed following oral argument, with reasons to
    follow. These are those reasons.

II.

FACTS

[9]

Gores Landing operates a campground and marina on Rice Lake where it
    rents cottages, sites for vacation trailers, and boat slips. In 2007, renters
    at the campground held a Jimmy Buffet Day. Several of them organized the
    culminating event  a tug-of-war pitting the cottagers against the trailer
    renters. Those organizers went around the grounds inviting adult males to join
    one of the teams. Ultimately about 20 cottagers squared off against an equal
    number of trailer renters.

[10]

At
    the time, Mr. Davies Jr. was at the site. The tug-of-war organizers asked him
    for a rope. He obtained one from a shed on the property and made it available
    for use in the game.

[11]

The
    rope had several loops in it. Some of the participants in the event tried to
    untie the loops. They succeeded in removing some; a few remained.

[12]

Mr.
    Bonello joined one of the teams. He placed his arm in one of the loops, which
    tightened, resulting in the injury once the teams started pulling the rope.

[13]

The
    key facts about the third parties involvement in the game are not in dispute:

(i)      None
    of the third parties organized the game;

(ii)      None
    of them provided the rope used for the game;

(iii)     Four
    of the participant third parties saw loops in the rope before the game started:
    Gerald Chestnut, Frank Buttigieg, Mike Buttigieg, and Jeff Jaglel;

(iv)     Two
    of them attempted to remove or untie some of the loops: Gerald Chestnut and
    Frank Buttigieg;

(v)     Two
    did not see any loops in the rope or attempt to remove them; they simply picked
    up the rope and pulled when the signal was given: Anthony Cook and Gabe
    Mansueto; and

(vi)     One
    of them warned Mr. Bonello not to put his hands in the loops: Mike Buttigieg.
    Mr. Bonello testified that he did not recall any such warning.

III.

FIRST GROUND OF APPEAL

[14]

As
    their first ground of appeal, the appellants submit that the motion judge
    failed to recognize that in its 2017 reasons this court implicitly accepted
    that Mr. Davies Jr. owed a duty of care to Mr. Bonello. According to the
    appellants, the only issue this court left for trial was whether Mr. Davies Jr.
    had breached the standard of care for that duty. Since the acts or omissions of
    the third parties were similar to those of Mr. Davies Jr., it follows,
    according to the appellants, that the third parties owed a duty of care to Mr.
    Bonello. The motion judge erred in departing from that implied holding of this
    court.

[15]

No
    such holding, implicit or otherwise, is apparent in this courts 2017 decision.
    There, this court held, at paras. 37 to 39, that a genuine issue requiring a
    trial existed as to whether Gores Landing and Mr. Davies Sr. were vicariously
    liable for the actions of Mr. Davies Jr. The determination of that issue will
    require an inquiry into whether any duty of care existed, whether it was
    breached, as well as the nature of the relationship between Mr. Davies Jr. and
    the appellants.

IV.

SECOND GROUND OF APPEAL

[16]

The
    appellants second submission is a variation of their first. They argue that even
    if in its 2017 decision this court did not find that a duty of care existed, it
    did hold that there was a genuine issue requiring a trial as to whether Mr.
    Davies Jr. ought to have foreseen the risk of injury to Mr. Bonello posed by his
    provision of the looped rope for the tug-of-war. The appellants submit that the
    third parties had more involvement than Mr. Davies Jr. in causing the injury
    sustained by Mr. Bonello. Consequently, the motion judge erred in not finding
    that there was a genuine issue requiring a trial regarding the alleged
    negligence of the third parties.

[17]

The
    motion judge did not err. The evidence disclosed differences between the
    conduct of Mr. Davies Jr. and that of the third parties. Unlike the third
    parties, Mr. Davies Jr. assisted his father with tasks at Gores Landing and on
    the day of the event he scoured the grounds until he found a rope belonging
    to Gores Landing, which he provided to those organizing the tug-of-war.
    Moreover, in assessing whether the Third Party Claim gave rise to a genuine
    issue requiring a trial, the motion judge was satisfied that the evidentiary
    record enabled him to reach a fair and just determination on the merits of the
    third parties liability. He thoroughly considered the largely undisputed evidence
    about the acts and omissions of the third parties in light of the allegations
    advanced in the Third Party Claim and the applicable legal principles. In
    short, the motion judge assessed the liability of the third parties in light of
    the evidence relating to the third parties; at the trial of the main action,
    the liability of the defendants will be assessed in light of the entirety of
    the evidence relating to the defendants.

[18]

The
    sequence of adjudicating the main action and Third Party Claim in this proceeding
    departs from the norm for third party claims seeking contribution and
    indemnity. The
Rules of Civil Procedure
require that a third party
    claim be tried at or immediately after the trial of the main action, unless the
    court orders otherwise: r. 29.08(2). That sequence serves two of the policy
    objectives of the third party procedure  binding the third parties to the
    results of the final determination on the merits as between the plaintiff and
    defendant, together with avoiding inconsistent outcomes in factually related
    proceedings:
Barclays Bank v. Tom
(1992)
,
    [1923] 1 K.B. 221 (C.A.), at p. 224, quoted in W.B. Williston & R.J. Rolls,
The Law of Civil Procedure
(Toronto: Butterworth, 1970), at p. 426;
    Holmested & Watson,
Ontario Civil Procedure,
loose-leaf (2018-Rel. 5) ed by
Garry D.
    Watson and Derek McKay (Toronto: Thomson Reuters, 1984), at p. 29-11. Those
    same policy considerations apply to the sequencing of summary judgment motions
    in respect of a main action and a third party claim.

[19]

Here,
    the dismissal of the Third Party Claim has been upheld before the trial of the
    main action, scheduled for later this fall. That said, in the present case the
    plaintiff is represented by a law firm well-experienced in the personal injury
    field. The plaintiff did not name the third parties as defendants in his
    action. Nor has the plaintiff claimed any procedural unfairness from the
    sequence of the dispositions: the plaintiff was represented by counsel before
    the motion judge but did not formally appear on this appeal. In those
    circumstances, no prejudice arises from the sequence of the final dispositions
    of the main action and Third Party Claim.

V.

THIRD GROUND OF APPEAL

Statement of the issue

[20]

There
    is no dispute that the motion judge correctly articulated the principles
    involved in the two-stage duty of care analysis laid out in the
Anns/Cooper
test
Anns v. Merton London Borough Council
(1977), [1978] A.C. 728
    (U.K.H.L.);
Cooper v. Hobart
, 2001 SCC 79, [2001] 3 S.C.R. 537  which
    were summarized recently by the Supreme Court of Canada in
Deloitte &
    Touche v. Livent Inc. (Receiver of)
, 2017 SCC 63, [2017] 2 S.C.R. 855 and
Rankin
    (Rankins Garage & Sales) v. J.J.
, 2018 SCC 19, [2018] 1 S.C.R. 587.

[21]

As
    well, the appellant agrees that the motion judge properly identified the legal principles
    applicable to an allegation of failure to act, as set out in
Childs v.
    Desormeaux
, 2006 SCC 18, [2006] 1 S.C.R. 643, at paras. 31 to 44.

[22]

However,
    the appellants argue that the motion judge misapplied those principles in the
    circumstances of this case, especially with respect to the proximity and
    foreseeability elements of the first branch of the
Anns/Cooper
test.

[23]

The
    appellants acknowledge that an impromptu and friendly tug-of-war by tenants of
    a community is not a high risk adventure, echoing the motion judges finding
    that a tug-of-war game is not an inherently risky activity: at para. 38.
    However, they argue that a game of tug-of-war becomes hazardous when the
    participants have actual knowledge of the presence of a loop in the rope. They
    contend that the motion judge erred by failing to address the evidence of
    actual knowledge of the risk by the participants.

The principles in the first step of the
Anns/Cooper
test

[24]

Under
    the
Anns/Cooper
test, demonstrating the existence of a
prima facie
duty of care requires establishing two elements: reasonable foreseeability of
    harm and proximity:
Rankins Garage
, at para. 21.

[25]

The
    principle of reasonable foreseeability of harm requires an inquiry into whether
    there was reason for a defendant to have contemplated that his or her conduct
    could result in the harm complained of:
Rankins Garage
, at para. 22. When
    determining whether reasonable foreseeability is established, the proper
    question to ask is whether the plaintiff has offered facts to persuade the
    court that the risk of the type of damage that occurred was
    reasonably foreseeable to the class of plaintiff that was damaged:
Rankins
    Garage
, at para. 24.

[26]

Foreseeability
    alone is not enough to establish a
prima face
duty of care; proximity
    also must be established:
Livent
, at para. 23. The proximity analysis
    ascertains whether the parties are in such a close and direct relationship
    that it would be just and fair having regard to that relationship to impose a
    duty of care in law:
Livent
, at para. 25. Courts must examine all
    relevant factors arising from the relationship between the plaintiff
    and the defendant:
Livent
, at para. 29. Those factors include the
    expectations, representations, reliance, and the property or other interests
    involved as between the parties:
Livent
, at para. 29;
Rankins
    Garage
, at para. 23.

The negligent acts pleaded against the third parties

[27]

Assessing
    the motion judges reasons first requires a clear understanding of the basis
    upon which the appellants seek contribution and indemnity from the third
    parties. Their Third Party Claim pleads allegations of both wrongful acts and
    wrongful omissions.

[28]

As
    to the wrongful acts, the Third Party Claim first pleads that the Third Parties
    were responsible for arranging, convening and causing the game of tug of war. However,
    the motion judge found that there was no evidence that any of the third parties
    was an organizer or supervisor of the game and that none of the third parties
    intentionally attracted and invited persons to an inherent and obvious risk
    that he created or controlled: at para. 38. The appellants have not
    demonstrated that the motion judge made a palpable and overriding error in so
    finding.

[29]

The
    Third Party Claim goes on to plead, as an additional wrongful act, the third
    parties participation in the game: It was [for] the Third Parties, as adult
    men organizing and participating in a tug of war, to ensure that the tug of war
    would be accomplished in a manner that was safe to all participants. But, as
    participants in the tug-of-war, they permitted an open loop in the rope and
    commenced the tug of war with a loop being in the rope. Although this
    allegation is framed in language of a wrongful act, in substance it alleges a
    wrongful omission by the third parties  i.e., having seen loops in the rope
    provided for the event, they failed to remove the loops before starting the
    tug-of-war.

[30]

As
    well, the Third Party Claim expressly pleads wrongful omissions by the third
    parties: they did not prevent Mr. Bonello from putting his left hand arm
    through the loop before commencing the tug of war. Accordingly, the third
    parties failed in their duties owed to each other to ensure that the tug of
    war was accomplished in a safe fashion and [this] resulted in injury to [Mr.
    Bonello].

Analysis

[31]

The
    motion judge considered the allegations made against the third parties from two
    perspectives: as allegations of a failure to act: at paras. 37 to 39; and as
    the commission of overt acts: at paras. 40 to 42.

[32]

Treating
    the allegations as ones of a failure to act, the motion judge considered the decision
    of the Supreme Court of Canada in
Childs
. There, the court stated, at
    paras. 31 and 34, that where the conduct alleged against a defendant is a
    failure to act, foreseeability alone may not establish a duty of care  the
    nature of the relationship must be examined to determine whether there is a
    nexus, special link or proximity between the parties.

[33]

In
Childs
, the court identified three circumstances in which a positive
    duty to act had been imposed: (i) where a defendant intentionally attracts and
    invites others to an inherent and obvious risk that he or she has created or
    controls; (ii) where there exists a paternalistic relationship of supervision
    and control; and (iii) where the defendant either exercises a public function
    or engages in a commercial enterprise that includes implied responsibilities to
    the public at large: at paras. 35-37. The thread running through these
    situations is the defendants material implication in the creation of risk or
    his or her control of a risk to which others have been invited: at para. 38.

[34]

The
    motion judge concluded that the evidence of the third parties involvement in
    the tug-of-war did not fall into any of the three circumstances identified in
Childs
.
    In the course of his analysis, the motion judge specifically took into account
    the evidence that some of the third parties observed loops in the rope and one,
    Mr. Mike Buttigieg, testified that he had warned Mr. Bonello not to put his
    hand through a loop. His finding that the third parties did not invite or
    attract Mr. Bonello to an inherent and obvious risk that they had created or
    controlled was amply supported by the evidence, as were his conclusions that
    none of the participants stood in a special relationship with Mr. Bonello, such
    as a relationship of a paternalistic character, or was engaging in a commercial
    activity with implied responsibilities to the public at large. This situation
    involved the voluntary participation by members of a community of campers and
    cottagers in an outdoor recreational activity, which engaged two teams of
    competent adults: at para. 39.

[35]

Applying
    the principle set out at para. 39 of
Childs
that the law does not
    impose a duty to eliminate risks and accepts that competent persons have the
    right to engage in risky activities, the motion judge concluded:

This is a situation where the autonomy of the participants in
    the game of tug-or-war should not be impinged by the imposition of a duty of
    care on each participant requiring him to take positive actions that would
    minimize or eliminate the possible risks to other participants in the game,
    including Mr. Bonello.

[36]

I
    see no error in his conclusion.

[37]

The
    motion judge then examined the claim against the third parties as one asserting
    the commission of an overt negligent act. He described the alleged overt act of
    the participants as engaging in the tug-of-war without ensuring that the game
    would be accomplished in a manner that was safe to all participants.

[38]

Here,
    the motion judges analysis focused on whether the appellants had demonstrated the
    reasonable foreseeability of the harm suffered by Mr. Bonello. The motion judge
    relied upon the decision in
Garratt v. Orillia Power Distribution Corporation
,
    2008 ONCA 422, 90 O.R. (3d) 161, where this court stated, at para. 48:

Foreseeability of the
possibility
of resultant harm is
    inadequate to establish a duty of care. We do not expect omniscience,
    prescience or clairvoyance, or impose a duty of care on all who fall short of
    any such standard. Foreseeability of the probability of resultant harm involves
    the
likelihood
that such harm will result from the alleged wrongdoer's
    conduct. Said in different words, a duty of care is established only where what
    happened was a natural and probable result of what the alleged wrongdoer did or
    failed to do.

[39]

This
    principle was echoed by the Supreme Court in
Rankins Garage
where the majority stated
, at para. 46:
    The fact that something is
possible
does not mean that it is
    reasonably foreseeable. Obviously, any harm that has occurred was by definition
    possible. Thus, for harm to be reasonably foreseeable, a higher threshold than
    mere possibility must be met.

[40]

Applying
    those principles, the motion judge held, at paras. 41-42:

In my consideration of whether the third parties participation
    in the tug-of-war game directly caused foreseeable injury to Mr. Bonello, I am
    mindful of the statements made by the Court of Appeal in
Garratt
[at
    para. 48]

that foreseeability of the
possibility
of harm
    resulting from commission of an overt act is inadequate to establish a duty of
    care. Many activities that are common, everyday, recreational activities
    involve the possibility of harm or injury.
Mere
    participation in a recreational tug-of-war game would not involve the
likelihood
that harm will result
.
Even if a
    participant observed loops in the rope to be used for a tug-of-war game, and
    even if steps were unsuccessfully taken to try to remove loops, the injury
    suffered by Mr. Bonello is not a natural and probable result of participation
    in a tug-of-war game using a rope with loops. To impose a duty of care on the
    participants would, in my view, require an expectation of prescience or
    clairvoyance on their parts. The Court of Appeal in
Garratt
has held
    that there is no duty of care in such circumstances.

It would not have been
    within the reasonable contemplation of any of the participants in the
    tug-of-war game that the injury suffered by Mr. Bonello would be a natural and
    probable result of carelessness on the part of each participant in relation to
    what he did or did not do
.
[Underlining added; Italics in
    original.]

[41]

That
    conclusion regarding the reasonable foreseeability of harm is fully supported
    by the evidence in respect of the third parties who did not see any loops or
    who saw others trying to remove loops: Anthony Cook, Gabe Mansueto, and Jeff
    Jaglel.

[42]

The
    evidence concerning the three other third parties is different. Gerald Chestnut
    saw loops in the rope, removed one of them, and knew others remained. Frank
    Buttigieg deposed that he saw knots in the rope and was concerned that the knot
    would give in. However, he did not think anyone would put their hand in the
    loop because that would be a foolish thing to do. Michael Buttigieg thought
    putting ones hand through the loop would be a bad idea. He recalled telling
    Mr. Bonello not to do so but, given that he was standing behind Mr. Bonello, he
    did not see Mr. Bonellos hand in the loop.

[43]

This
    evidence could support an inference that these three third parties had some
    foresight of the possibility of injury from the presence of loops in the rope.
    The motion judge found the degree of foresight did not rise to the level of
    establishing reasonable foreseeability of harm.

[44]

Given
    that the issue of the existence of a duty of care involves a question of law,
    deference is not owed to that conclusion of the motion judge. However, I would
    not interfere with it. As mentioned earlier in these reasons, the appellants
    pleading of a wrongful act is, in substance, an allegation of a positive duty
    to act  either to warn Mr. Bonello or to remove the loops. In those
    circumstances, the proximity element plays a significant role in the duty of
    care analysis. And, as I have stated, the motion judge did not err in
    concluding that none of the circumstances identified in
Childs
as giving
    rise to a positive duty to act are present in the circumstances of this case.

VI.

DISPOSITION

[45]

For
    these reasons, I would dismiss the appeal.

[46]

The
    respondent third parties are entitled to their costs of the appeal. Based upon
    the agreement of the parties, each respondent third party is entitled to costs
    of the appeal from the appellants fixed in the amount of $5,000, inclusive of
    disbursements and applicable taxes.

Released: DB Feb 20, 2019

David Brown J.A.
I agree. David M. Paciocco J.A.
I agree. B. Zarnett J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Brunning v. Fontaine, 2019 ONCA 98

DATE: 20190211

DOCKET:
    M49852 (C65737) & M49512

Feldman,
    Lauwers and Nordheimer JJ.A.

BETWEEN

Fay
    Brunning

Requestor/Responding Party

(Appellant)

and

Larry Philip Fontaine, et al.

Plaintiffs

and

The
    Attorney General of Canada
, et al.

Defendants/
Moving Party

(Respondent)

Catherine A. Coughlan
    and Brent Thompson, for the moving party

Lawrence Greenspon, for the
    responding party

Heard:
    February 1, 2019

On appeal
    from the order of Justice Paul M. Perell of the Superior Court of Justice,
    dated July 4, 2018, with reasons reported at 2018 ONSC 4182.

REASONS FOR DECISION

[1]

The moving party brings this motion to quash the responding partys
    appeal from the order of Perell J. dated July 4, 2018, wherein he dismissed the
    respondents motion to recuse himself from making a decision regarding costs of
    a prior motion (the recusal order). The moving partys position is that the recusal
    order is interlocutory, not final, and is only appealable to the Divisional
    Court with leave.

Background

[2]

This issue arises in the context of the Indian Residential School Settlement
    Agreement claims process.
On January 4, 2018,
    the motion judge released reasons addressing various issues raised in a Request
    for Directions brought by the responding party on behalf of her client. The
    decision went largely, but not entirely, against the responding partys client:

Fontaine v.
    Canada (Attorney General)
, 2018 ONSC 103
.

[3]

On January 15, 2018, the motion judge issued a Direction addressing
the contents of various
    emails sent by the responding party to the court in which she expressed,
    in part, her disagreement with the January 4 decision:
Fontaine v.
    Canada (Attorney General),
2018 ONSC 357 (the January 15 Direction)
.
The motion judge
    then invited costs submissions with respect to the January 4 decision. The
    moving party submitted that costs should be paid personally by the responding
    party.

[4]

The responding party asked the motion judge to recuse himself from the
    determination of the costs issue on the basis that there was a reasonable
    apprehension of bias arising from some comments that the motion judge had made respecting
    the responding party in the course of his reasons that led to the January 15
    Direction. The motion judge refused to recuse himself:
Fontaine v. Canada
    (Attorney General)
, 2018 ONSC 4182. The motion judge then proceeded to
    deal with the costs. In doing so, he ordered the responding party to pay costs personally
    in the amount of $25,000:
Fontaine v. Canada (Attorney General)
,

2018 ONSC 4195 (the costs
    order).

[5]

It is the recusal order that forms the subject matter of the appeal to
    this court. The moving party contends that the recusal order is an
    interlocutory order and therefore any appeal lies to the Divisional Court with
    leave:
Courts of Justice Act
, R.S.O. 1990, c. C.43, s. 19(1)(b). The
    responding party contends that the recusal order is final as it finally decides
    that the motion judge would decide the costs issue; thus the appeal lies to
    this court:
Courts of Justice Act
, s. 6(1)(b).

Analysis

[6]

One of the leading cases on the difference between final and
    interlocutory orders is
Hendrickson v. Kallio
, [1932] O.R. 675 (C.A.).
    In that decision, Middleton J.A. said, at p. 678:

The interlocutory order from which
    there is no appeal is an order which does not determine the real matter in
    dispute between the parties  the very subject matter of the litigation, but
    only some matter collateral. It may be final in the sense that it determines
    the very question raised by the applications?, but it is interlocutory if the
    merits of the case remain to be determined.

[7]

In support of her position, the responding party pointed to the oral
    endorsement of this court in
Catford v. Catford
, 2013 ONCA 56 where it
    appears that an appeal from a refusal by a judge to recuse herself was heard.
    We do not view that decision as determining the issue that is before us. The
    issue of jurisdiction was neither raised nor determined by the panel that heard
    that appeal.

[8]

The responding party also points to the decision of this court quashing
    the appeal of the January 15 Direction:
Brunning v. Canada (Attorney
    General)
, 2018 ONCA 1009. In the reasons, Doherty J.A. said, at para. 27:

As counsel for the appellant
    acknowledged in oral argument, the comments made by the Eastern Administrative
    Judge about the appellant's conduct in his January 15 Direction will be front
    and centre on the appeal from the recusal motion. They will also figure in the
    costs appeal, if leave is granted. The appellant will have her opportunity to
    challenge in this court the fairness of the process leading to the January 15
    Direction and the merits of the comments made by the Eastern Administrative
    Judge about the appellant's conduct.

[9]

The responding party submits that, in this passage, Doherty J.A.
    implicitly found that the appeal from the recusal order is properly before this
    court. We do not agree. The issue of the jurisdiction of this court to hear the
    appeal of the recusal order was not before the court and was not the subject of
    submissions by counsel, as counsel acknowledged.

[10]

All
    that Doherty J.A. was pointing out was that there were other avenues that were
    potentially available to the responding party to seek review of the merits of
    the comments made about her conduct. On that point, we note that the issues
    surrounding the recusal order, particularly the allegation of a reasonable
    apprehension of bias, are all grounds that she has properly raised  in her
    motion for leave to appeal from the costs order, and which the court deciding
    whether to grant the leave will have to consider.

[11]

None
    of this changes the fact that the recusal order does not finally determine any substantive
    rights of the parties nor does it determine a substantive claim or defence in
    the matter before the court. It is thus an interlocutory order that may only be
    appealed to the Divisional Court, with leave. The substantive issue is whether
    the responding party ought to personally pay the costs of the January 15
    Direction. That issue has been separately determined by the costs order and is
    the subject of an outstanding motion for leave to appeal to this court.

[12]

During
    the course of the oral hearing, counsel for the moving party raised the issue
    that the motion for leave to appeal the costs order is not properly before this
    court because the amount involved is $25,000, although counsels position was
    that they were not pursuing the jurisdiction issue.

[13]

The
    jurisdiction of this court by way of appeal from orders of the Superior Court
    of Justice is set out in s. 6(1)(b) of the
Courts of Justice Act
. It
    provides that this court has jurisdiction to hear an appeal from a final order
    of a judge of the Superior Court of Justice except an order referred to in
    clause 19(1)(a). That exception applies to final orders, under s. 19(1.2)(a), for
    a single payment of not more than $50,000. The costs order is a final order. Given
    that it is for an amount under $50,000, this court does not have jurisdiction
    to hear the appeal.  Any appeal lies to the Divisional Court. However, because it
    is a costs order, leave to appeal is required under s. 133(b) of the
Courts
    of Justice Act
.

[14]

In
    the end result, both of these proposed appeals must be dealt with first in the
    Divisional Court. Neither of them is properly before this court. Consequently,
    both this appeal and the motion for leave to appeal the costs order must be
    quashed and the responding party must seek leave to appeal both orders from the
    Divisional Court.

Conclusion

[15]

The
    appeal of the recusal order is quashed. The motion for leave to appeal from the
    costs order is also quashed. The moving party did not seek costs and none are
    ordered.

K. Feldman J.A.

P. Lauwers J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Christopher v. Freitas, 2019 ONCA 84

DATE: 20190206

DOCKET: C65390

Hourigan, Miller and Paciocco JJ.A.

BETWEEN

Gerald
    Meshach Christopher

Applicants

(Respondent in Appeal)

and

Ana Maria Freitas

Respondents

(Appellant)

Brian Kelly and Harley Bernard, for the appellant

Barry Paquette, for the respondent

Heard: February 4, 2019

On appeal from the
    order of Justice D.J. Gordon of the Superior Court of Justice, dated May 2,
    2018.

REASONS FOR DECISION

[1]

The appellant and the respondent were in a
    common law relationship for a number of years. The sole issue in this
    litigation involves the family residence, which was acquired in July 2014 and
    was held by the parties as joint tenants.

[2]

There were unequal contributions to the purchase
    price of the residence, with the appellant contributing $5,000 and the
    respondent contributing $116,000. Significant renovations were made to the
    home, paid for from a joint line of credit.

[3]

Following the parties separation, the residence
    was sold and after the payment of various expenses there remained in trust the
    sum of $140,909.20. The appellant submitted at trial that the net proceeds from
    the house sale should be divided equally, while the respondent submitted that
    the parties should receive the return of their initial contributions and any
    increase in equity should be divided equally between them.

[4]

The trial judge found that the appellant did not
    meet her onus of rebutting the presumption of resulting trust. Further, as the
    respondent was not enriched, there was no unjust enrichment.

[5]

We see no basis to interfere with the trial
    judges finding that the appellant did not meet her onus of rebutting the
    presumption of a resulting trust. The trial judge carefully considered the
    parties evidence and concluded that he was
unable to
    determine the respondents intent in making his initial contribution. At its
    highest, the appellants evidence was not that the respondent said he intended
    to gift half the house to her but only that buying the house together was a
    fresh start. While there was an email in evidence indicating that the
    respondent understood that joint tenancy meant that the appellant would get the
    house upon his death, it was not unreasonable to conclude on this evidence that
    the appellant had failed to meet her onus to establish that the respondent intended
    to gift her half the house at the time of purchase.

[6]

With respect to the claim for unjust enrichment,
    the trial judge found that for the period prior to July 2014 the appellant was
    contributing to the household expenses but that the benefits she received
    outweighed her contributions. That finding was well rooted in the evidence and
    the trial judge did not err in concluding that in those circumstances there was
    no unjust enrichment prior to July 2014.

[7]

For the period from July 2014 to October 2016, the
    parties deposited their net income into a joint bank account from which all
    expenses were paid. The trial judge held that the parties were engaged in a
    joint family venture during this period. However, he concluded, rightly in our
    view, that the only enrichment in issue was the increase in the parties equity
    in the home. The respondent was content to split that increase in equity
    equally with the appellant. Accordingly, the trial judge was correct in finding
    that there was no unjust enrichment.

[8]

The appeal is dismissed. The appellant shall pay
    the respondent his costs of the appeal fixed in agreed upon the all-inclusive
    amount of $12,500.

C.W. Hourigan J.A.

B.W. Miller J.A.

David M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cobalt (Town) v. Coleman (Township), 2019 ONCA 134

DATE: 20190222

DOCKET: C65608

Pepall, Trotter and
    Harvison Young JJ.A.

BETWEEN

Town of Cobalt

Applicant (Appellant)

and

Township of Coleman

Respondent (Respondent)

Michael F. Sirdevan, for the appellant

Raivo Uukkivi and Adrianna Pilkington, for the
    respondent

Heard: February 8, 2019

On appeal from the judgment of Justice James A.S. Wilcox of
    the Superior Court of Justice, dated June 14, 2018, with reasons reported at
    2018 ONSC 3713, 76 M.P.L.R. (5th) 166, and the order dated September 10, 2018,
    with reasons reported at 2018 ONSC 5297.

Trotter J.A.:

A.

introduction

[1]

This appeal concerns a tract of land (the property) situated in the
    Township of Coleman (Coleman), in the District of Timiskaming. The property
    is owned by the nearby Town of Cobalt (Cobalt). Recently, Cobalt has been
    using the property to conduct a large-scale aggregate extraction operation.
    Coleman objects to this use, alleging that it is not compliant with its current
    zoning by-law.

[2]

Cobalt brought an application seeking a declaration that its use of the
    property for aggregate extraction is a permitted use. The application was dismissed.
    The application judge found that the extraction operation is not a permitted
    use under Colemans zoning by-law and is not a legal non-conforming use
    pursuant to s. 34(9) of the
Planning Act
, R.S.O. 1990, c. P.13. In a
    separate ruling, he awarded Coleman costs, on a partial indemnity scale, in the
    amount of $85,000 (inclusive of fees, disbursements and taxes).

[3]

Cobalt appeals from both orders.

B.

background

(1)

The Property and its Historical Use

[4]

The property is 114.67 acres in size. A road runs through the property,
    cutting it into west and east portions, which are zoned differently. The
    property was transferred by the Province of Ontario to Cobalt on July 4, 1972
    by Letters Patent. The Letters contained the following restriction: IT IS A
    CONDITION of these Letters Patent that the Land shall be used only as a
    municipal park. This restriction was removed in 2002.

[5]

From 1972 to 1997, Cobalt used the property as a municipal park and
    campground, known as Sharpe Lake Park. While there may have been some quarrying
    on the property prior to it being acquired by Cobalt, the extent of this
    activity was unclear. Nevertheless, it had ceased by 1970. As discussed below,
    any aggregate extraction after 1970 was secondary and incidental to the primary
    use of the property as a park. The aggregate was used to service the needs of
    the park, such as creating an entrance road, parking areas, internal roads and
    camp sites, and for other municipal uses in Cobalt outside of the park (i.e.,
    winter sand).

[6]

Following the closure of the park in 1997, Cobalt was unsure about what
    it wanted to do with the property. At one point, it considered selling it.  In
    2013, Cobalt entered into an agreement with Miller Paving Ltd. (Miller) for
    Miller to extract aggregate from the property. A large-scale aggregate
    extraction operation is currently ongoing.

(2)

Applicable Zoning By-Laws

[7]

Coleman passed its first zoning by-law in 1985 (85-9). Under this
    by-law, the entirety of the property was zoned as Open Space, with specified
    residential and non-residential uses. Coleman passed another zoning by-law in
    2006 (06-01), replacing the 1985 by-law. Under the 2006 by-law, the western part
    of the property is zoned as Development and only permitted existing
    non-residential uses in the Development zone. The eastern part of the property
    is zoned Shoreline Residential. The only permitted non-residential use is a
    marine facility. This is the portion of the property where commercial aggregate
    extraction currently takes place.

(3)

The Application Judges Reasons

[8]

The application judge provided detailed reasons for his decision. I
    review only those parts of his decision that are necessary to dispose of this
    appeal.

[9]

The application judge held that the 2006 by-law does not permit the
    operation of a pit or quarry on either of the zoned parts of the property.

[10]

After
    conducting a thorough review of the historical use of the property, the
    application judge explained why Cobalt failed to establish that its current use
    of the property is a legal non-conforming use. In 1970, before the property was
    acquired by Cobalt, there was some indication of quarrying having taken place
    at an earlier time, but this activity had ceased. Referring to the meagre evidence
    concerning unworked and terminated gravel pits, the application judge said,
    at para. 33: When they were used, by whom, to what extent they were used, and
    for what purpose are unknown.

[11]

The
    application judge reviewed Cobalts plans to develop the property after the
    park closed in 1997. Initially, at least, commercial aggregate extraction was
    not on Cobalts radar. By way of example, in its 2001 Sharpe Lake Proposal,
    the Cobalt Economic Development and Planning Committee made no mention of a pit
    or quarry being on site. A subsequent appraisal obtained by Cobalt for the
    purpose of potentially selling the property did not mention workable gravel pits
    or extractive activity. Affidavits from long-time residents, some of whom were
    involved in municipal affairs, were collectively equivocal. As the application
    judge said, at para. 42:

the affidavits were contradictory as to whether there had
    been a pit on or extraction from the property. What they reveal is that, if any
    extraction took place, it was small scale, such that some people were not aware
    of it, and [it] was done for purposes related to the park or for other
    municipal purposes. Furthermore, I find that the evidence shows that the
    extraction was done  in what is now the R4 [Shoreline Residential] zone.

[12]

In
    reviewing correspondence between Cobalt and Coleman about the proposed use of
    the land, which included Colemans opposition to aggregate extraction, the
    application judge referred to an August 23, 2005 letter from Cobalt asserting that
    there was an existing aggregate pit on the property, and that it appeared to be
    a legal non-conforming use. The application judge observed, at para. 53: This
    appears to be the first time that Cobalt alleged there was an existing pit and
    that it qualified as a non-conforming use.

[13]

Ultimately,
    the application judge found that there was no evidence of prior aggregate
    extraction in the Development zone. With respect to the Shoreline Residential
    zone, he held that there was evidence of at least a minimal amount of historical
    extraction: at para. 55. This was sufficient to require an assessment to determine
    whether the current operation is a legal non-conforming use under s. 34(9) of the
Planning Act
.

[14]

In
    undertaking the legal non-conforming use analysis, the application judge applied
    the relevant authorities, including the leading case of
Saint-Romuald
    (City) v. Olivier
, 2001 SCC 57, [2001] 2 S.C.R. 898. He concluded that
    Cobalt failed to discharge its onus of proving that the commercial extraction
    operation is a legal non-conforming use.

[15]

The
    application judge found that historically there was limited and small scale
    extraction for municipal purposes that was conducted on a small part of the
    whole property, leaving the rest essentially untouched and available for uses
    such as the park: at para. 66. He concluded that: The use of the property for
    extraction was secondary and incidental. The essential character of the
    property was preserved.

[16]

The
    application judge contrasted this historical use with the current commercial
    operation, which he characterized as consuming the property. Importantly, applying
Saint-Romuald
, he found, at para. 67, that the present use extends
    beyond a mere intensification of a pre-existing use: It is a use of a
    different kind. It is not just a reasonable evolution of a prior activity.

[17]

Lastly,
    he concluded that the affidavit evidence established the diminution of
    peoples enjoyment of the property and of Sharpe Lake itself: at para. 68.

[18]

As
    the successful party, Coleman sought costs on a full indemnity scale, in the
    amount of $199,329.84. The application judge accepted Cobalts submission that
    Coleman was attempting to recoup fees over the full course of the long-standing
    dispute between the parties. Based on the costs associated only with the
    application, he awarded costs of $85,000, on a partial indemnity scale.

C.

analysis

(1)

The Legality of the Aggregate Extraction Operation

[19]

The
    appellant accepts that the application judge properly identified the legal
    principles concerning legal non-conforming uses. However, it alleges that the application
    judge failed to properly apply those principles to the facts of this case. I disagree.

[20]

The
    appellant contends that the application judge erred by failing to first
    determine whether the activity presently conducted on the property is permitted
    by the 2006 by-law before moving to the question of whether the activity is a
    legal non-conforming use. He made no such error. As noted in para. 7 of these
    reasons, the only permitted non-residential use in the Shoreline Residential
    zone is a marine facility. In the Development zone, the by-law permits only
    existing non-residential uses. Thus, interpreting the by-law leads directly to
    an examination of the historical use of the property. The application judges
    reasons at paras. 25 and 69 directly conclude that the current extraction
    activity is not permitted by the 2006 by-law based on his findings regarding
    the historical use of the property, and the language of the by-law.

[21]

On
    the issue of whether the extraction activity is permitted as a legal
    non-conforming use, this case involves a straightforward application of
Saint-Romuald
.
    Cobalt had the onus of establishing the requirements for a legal non-conforming
    use: see
Feather v. Bradford (Town)
, 2010 ONCA 440, 268 O.A.C. 239, at
    paras. 26-27; and
Lee v. 1435375 Ontario Ltd
.
, 2013 ONCA 516, 310
    O.A.C. 187, at para. 46. The application judge found that Cobalt failed to do
    so.

[22]

As
    the application judge recognized, the historical record was far from clear.
    There were many uncertainties and unanswered questions. There was an
    evidentiary basis for the application judge to find that, when the 1985 by-law
    was passed, the essential purpose of the property was its use as a municipal
    park. Any aggregate extraction was ancillary to this purpose.

[23]

There
    was evidence that, once the property was no longer used as a park (post-1997,
    but prior to the 2006 by-law), Cobalt may have expressed a desire to conduct
    aggregate extraction. However, it is not the intended use of a property that is
    important. To prove a legal non-conforming use, it must be shown that the land was
    actually used for this purpose. As Binnie J. explained in
Saint-Romuald
,
    at para. 5: It does not protect a potential or contemplated use that has never
    materialized...The acquired right is no more than a right to carry on using the
    land for the purpose to which it was
in fact
previously being put
    (emphasis in original).

[24]

There
    is no basis to disturb the application judges findings that, until 2013, any
    aggregate extraction that had occurred on the property was minor and
    incidental, being ancillary to the essential character of the property as a
    municipal park and campground. On the record before him, the application judge
    was entitled to reach this conclusion. In doing so, he committed no palpable
    and overriding error.

[25]

The
    central issue in this case is whether the commencement of a large-scale
    commercial extraction operation was a mere intensification of an existing use
    or use of a different kind. As Binnie J. held in
Saint-Romuald
, at
    para. 25: In general, merely continuing the precise pre-existing activity,
    even at an intensified level, is clearly protected, but the intensification may
    be of such a degree as to create a difference in kind. In more general terms,
    Binnie J. explained, at para. 34:

The Courts objective is to maintain a fair balance between the
    individual landowners interest and the communitys interest. The landowner
    overreaches itself if (i)
the scale or intensity of the activity can be said
    to bring about a change in the type of use
, as mentioned above, or if (ii)
    the addition of new activities or the modification of old activities (albeit
    within the same general land use purpose), is seen by the court as too remote
    from the earlier activities to be entitled to protection, or if (iii)
the
    new or modified activities can be shown to create undue additional or
    aggravated problems for the municipality, the local authorities, or the
    neighbours, as compared with what went before
. The factors are balanced
    against one another. [Emphasis added.]

Binnie J. added that this assessment must be grounded
    in objective facts: at para. 39.

[26]

The
    application judges conclusion that Cobalt had failed to discharge its onus
    turned on item (i), and to a lesser degree item (iii), in the above-quoted
    passage from
Saint-Romuald
. The evidentiary record permitted the
    application judge to find that the change in use of the property  from a
    municipal park and campground (with some incidental extraction of sand and
    gravel) to a large-scale commercial extraction operation  was a change in the
    type of use. He also observed that the change impacted on the community in an
    adverse way. Although the evidentiary foundation for this second finding was
    not nearly as robust, I am not able to conclude that the application judge
    erred in the balancing required by
Saint-Romuald
.

[27]

The
    situation in this case is analogous to the example provided by Binnie J. at
    para. 25 of
Saint-Romuald
:

A family farm which has a few pigs on the fringe of a town may
    continue as a legal non-conforming use, but the result may be otherwise if it
    is sought to expand its pork operation into a factory in the country type
    intensive pig farming.  While in one sense the use has continued, in
    another sense its
character
has been so altered as to become,
    in terms of its impact on the community, an altogether different use. [Emphasis
    in original.]

This example helps to illustrate where the line should
    be drawn. A determination of whether there is a change in the type of use is
    not a matter of simply identifying the precise pre-existing use. The character
    of that use must also be considered. Just as a family pig farm expanded into a pork
    factory in the country becomes a different use, in this case too, the
    expansion from incidental extraction for municipal purposes to large-scale
    commercial extraction has altered the character of the use such that it has become
    a different use altogether.

[28]

The
    application judge did not err in concluding that the extraction operation is
    not a permitted use under Colemans zoning by-law and is not a legal
    non-conforming use under the
Planning Act
. I would dismiss the appeal
    from the application judges refusal of Cobalts request for a declaration.

(2)

Appeal from the Costs Order

[29]

As
    noted above, the application judge awarded Coleman $85,000 in costs, inclusive.
    Cobalt argues that the proper award is in the range of $40,000.

[30]

I
    am not persuaded that the application judge made any error in principle, or
    that the costs order is plainly wrong: see
Hamilton v. Open Window Bakery
    Ltd
.
, 2004 SCC 9, [2004] 1 S.C.R 303, at para. 27.

[31]

Although
    the award was substantial, approximately $12,000 was consumed by disbursements.
    The fees claimed, when considered on a partial indemnity scale, were not disproportionate
    in the circumstances. I note that the decision resolved a long-standing dispute
    with a great deal at stake, both monetarily for Cobalt and to the community of
    Coleman. The application judges findings and conclusions on the issue of costs
    are entitled to deference on appeal: see
Boucher v. Public Accountants
    Council for the Province of Ontario
(2004), 71 O.R. (3d) 291 (C.A.), at
    para. 19. There is no reason to interfere.

D.

Disposition

[32]

I
    would dismiss the appeal. The parties agreed on the quantum of costs payable to
    the successful party on appeal. Accordingly, I would award costs to Coleman in
    the amount of $25,000, inclusive of disbursements and applicable taxes.

Released: SEP FEB 22 2019

Gary Trotter J.A.

I agree. S.E. Pepall J.A.

I agree. A. Harvison-Young J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Colasanti v. 1808278 Ontario Inc., 2019 ONCA 96

DATE: 20190208

DOCKET: C65020

Hourigan, Miller and Paciocco JJ.A.

BETWEEN

Richard
    R. Colasanti, James A. Colasanti,

W. Kelly
    Colasanti and Tracy Jo Lee Gitke,

Trustees
    of the estate of Ronald Colasanti, deceased

Respondents (Plaintiffs)

and

1808278 Ontario Inc.

Appellant (Defendant)

Myron W. Shulgan, for the appellant

Rodney M. Godard and Angela Kubica, for the respondents

Heard and released orally: February 7, 2019

On appeal from the judgment of Justice Thomas J. Carey of
    the Superior Court of Justice, dated February 2, 2018.

REASONS FOR DECISION

[1]

The appellant 1808278 Ontario Inc. (180) gave a promissory note, in
    the amount of $171,000, to Ronald Colasanti. On default, it took the position
    that the promissory note was void for failure of consideration. Mr. Colasanti
    brought an action in debt. That action was continued by the trustees of his
    estate, which was awarded judgment.

[2]

Mr. Colasanti was a principal of a company that owned a 69 acre parcel
    of land in Kingsville, Ontario. That land parcel was acquired by the appellant
    in 2009, for the purpose of constructing a greenhouse to grow vegetables. When
    the appellant subsequently applied for a building permit, it was advised by
    Kingsvilles Chief Building Official that it needed to first acquire a water
    allocation that Kingsville had made to Mr. Colasanti some years prior. The
    appellant took the position that it acquired the water allocation in its
    purchase of the 69 acre parcel. The Chief Building Official disagreed and
    withheld the building permit.

[3]

The appellant negotiated with Mr. Colasanti to acquire the assignment of
    the water allocation. Ultimately, the appellant gave Mr. Colasanti the
    promissory note in exchange for Mr. Colasanti executing the assignment of part
    of his water allocation, amounting to 400,000 gallons of water per day. The
    trial judge found that Mr. Colasanti acted in good faith. Upon receiving the
    executed assignment, the Chief Building Official issued the building permit and
    the appellant constructed its greenhouses.

[4]

The appellant later refused to make payment as required by the
    promissory note.

[5]

At trial, the appellants principal testified that he had never intended
    to pay on the promissory note, and only signed it to expedite the building
    permit from Kingsville. The appellant took the position that it had already acquired
    the water allocation through its purchase of the 69 acre parcel of land, and
    that the Chief Building Official erred in refusing to recognize this. It
    further argued that Mr. Colasanti never held the water allocation personally,
    and could not transfer what he did not have.  Accordingly, it argued, Mr. Colasantis
    purported transfer to the appellant of the appellants own property  a water
    allocation that in fact never belonged to Mr. Colasanti at any time  could not
    constitute valid consideration for the promissory note.

[6]

The trial judge held that the transfer of the allocation was the
    valuable consideration for the promissory note and granted judgment on the
    debt.

[7]

On appeal, the appellant renews its argument below.

[8]

We do not agree that the trial judge erred.

[9]

In exchange for the promissory note, the appellant obtained an immediate
    resolution of its water supply problem, which enabled it to obtain a building
    permit. The trial judge did not err in finding this to be valid consideration,
    capable of supporting the promissory note. Whether it was legally necessary for
    the appellant to obtain a transfer of the water allocation from Mr. Colasanti,
    and whether Mr. Colasanti held the allocation in his personal capacity, are
    issues that cannot be decided in this forum. Nor need these issues be resolved
    in order to determine whether consideration was received. For its own reasons,
    the appellant did not pursue the available statutory appeal from the decision
    of the Chief Building Official. Furthermore, Kingsville was not made a party to
    this litigation and, as the trial judge noted, (t)his was not the proper forum
    to test the legality of the water allocation scheme.

DISPOSITION

[10]

The
    appeal is dismissed. Costs of the appeal are awarded to the respondent in the
    amount of $13,000 inclusive of disbursements and HST.

C.W. Hourigan J.A.
B.W. Miller J.A.
David M. Paciocco J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Equirex
    Leasing Corp. v.
Medcap Real Estate Holdings
    Inc., 2019 ONCA 152

DATE: 20190228

DOCKET: C
65589

Rouleau, van
    Rensburg and Roberts JJ.A.

BETWEEN

Equirex
    Leasing Corp.

Applicant (Respondent)

and

Medcap
    Real Estate Holdings Inc.
and
Bennington Financial Services Corp.

Respondents
(
Appellant
)

F. Scott
    Turton
, for the appellant

Brian H.
    Somer
, for the respondent

Heard: December 10, 2018

On appeal from the order of Justice
    Douglas K. Gray of the Superior Court of Justice, dated May 18, 2018, with
    reasons reported at 2018 ONSC
3284,
    8 P.P.S.A.C. (4th) 393
.

REASONS FOR DECISION

[1]

The appellant appeals from the order enforcing the respondents rights
    under various fitness equipment leases and general security agreements.

[2]

The respondent owns or has a registered security interest in the fitness
    equipment in issue in these proceedings. It leased fitness equipment to various
    numbered companies that operated fitness facilities in premises owned by the
    appellant. For the purposes of this appeal, the relevant premises are: 3430 Fairview
    Street in Burlington (Fairview); 92-100 Centennial Parkway in Hamilton
    (Centennial); and 635 Upper Wentworth Street in Hamilton (Upper
    Wentworth).

[3]

The respondent entered into equipment leases and general security
    agreements with, and the appellant leased the premises respectively, to: 1860337
    Ontario Inc. (at Fairview); 1860342 Ontario Inc. (at Centennial); and 1860335 Ontario
    Inc. (at Upper Wentworth). The appellant was also an Additional Lessee under
    the equipment leases between these numbered companies and the respondent. The general
    security agreements covered all the assets and undertakings of these numbered
    companies. The equipment leases provided that any default under them constituted
    default under any other agreements between these numbered companies and the
    respondent, which included the general security agreements. The respondent
    perfected its security interests under the equipment leases and general
    security agreements by registration in accordance with the
Personal
    Property Security Act
, R.S.O. 1990, c. P.10 (PPSA).

[4]

The equipment leases went into default which triggered default under the
    general security agreements. The numbered companies  1860337, 1860342 and
    1860335  ceased operations. The respondent sought to repossess fitness
    equipment from the Fairview, Centennial and Upper Wentworth premises. The
    respondents representative, Mike Geroux, entered these premises and prepared
    inventory lists of all the equipment in place. The appellant subsequently prevented
    the respondent from repossessing the equipment. The appellant removed the
    equipment from the Fairview premises to an undisclosed location on its sale of
    the Fairview premises, and refused the respondent access to the Centennial and
    Upper Wentworth premises that the appellant continued to own and lease to
    1927032 Ontario Inc. The sole principal of 1927032, Julie Catenacci, works as a
    school teacher. She is the niece of the principal of the appellant, John Cardillo.

[5]

The respondent
initiated its application against the
    appellant strictly in its capacity as landlord for entry to the properties that
    the appellant owns or controls and for recovery and possession of the
    respondents equipment under the leases and collateral under the general
    security agreements

with 1860337, 1860342, and
    1860335
.

[6]

The application judge granted the application. His order provided for
    broad declaratory and other relief in relation to the equipment covered by the
    equipment leases and the collateral under the general security agreements,
    including the respondents right to enter onto the Fairview, Centennial, and
    Upper Wentworth premises, and any other locations to repossess the fitness
    equipment set out in the equipment and inventory lists attached as schedules to
    the order.

[7]

The appellants principal submissions on appeal focus on the form and
    contents of the order approved by the application judge. The appellant submits
    that the application judge made the following reversible errors: approving the
    draft order provided by the respondent without allowing the appellant the
    opportunity to make submissions; granting relief in the absence of interested
    parties to the application and in light of the multiplicity of proceedings
    dealing with the same subject matter; and attaching the inventory lists
    prepared by the respondent as schedules to the order in the absence of proof
    that those lists contained the respondents equipment or collateral. The
    appellant maintains that the order is inconsistent with the application judges
    reasons, goes beyond the relief sought in the respondents notice of
    application and the evidence, that the application judges reasons are
    inadequate, and the order is incapable of enforcement.

[8]

We do not accept these submissions.

[9]

First, we see no error in the application judges approach to settling
    the terms of the order and his acceptance of the draft order submitted by the
    respondent.

[10]

There
    was no procedural unfairness to the appellant. The application judge was
    entitled to and did fashion a procedurally fair process for his approval of the
    order. He clearly advised the parties that he would entertain draft orders from
    them and determine the form of the draft order. Excepting the schedules that
    are attached to the respondents draft order, there is little substantive difference
    between it and the draft order submitted by the appellant.

[11]

Moreover,
    the additional relief granted in the order is no more than a reiteration of the
    respondents rights to the enforcement remedies under the leases, general
    security agreements, and the PPSA.  While stated in broader terms, given the
    relief claimed by the respondent against the appellant specifically as
    landlord,
other locations, in addition
    to the Fairview, Centennial, and Upper Wentworth premises named under the
    leases, can only be reasonably understood in the circumstances of this case as
    referring to the other locations that are owned or controlled by the
    appellant.  This interpretation is supported and in keeping with the other
    provisions of the order in para. 7 that the appellant must provide the
    respondent with the addresses of the other locations where the fitness
    equipment and collateral may be found, if not at the addresses on the leases,
    and in para. 9 that the appellant cannot refuse access to its premises to the
    respondent or its agent for the purpose of its carrying out repossession of
    equipment and collateral.

[12]

In
    particular, under article 20, the leases provided that events of default by the
    lessees included the failure to make monthly rent payments under article 5;
    moving equipment from one location to another in contravention of article 9; or
    otherwise failing to comply with a term or covenant under the leases, such as
    selling or transferring the leased equipment, contrary to article 8 or refusing
    to return the equipment upon termination of the leases as required under
    article 11. Article 21 stipulated that any default under the leases constituted
    defaults under any other agreement between the lessees and the respondent,
    which included the general security agreements. Pursuant to article 20 of the
    leases, the lessees default permitted the respondent to enter and repossess
    the equipment. Articles 6 and 8 of the general security agreements similarly
    authorized the respondent to take possession of the collateral secured under
    the agreements upon any default, as well as any remedies under the PPSA.

[13]

Under s. 62 of the PPSA, in accordance with the terms of the leases
    and general security agreements, the respondent has the following rights to
    possession of the equipment and collateral in which it has a perfected security
    interest:

62

(1) Upon default under a security agreement,

(a) the secured party has, unless otherwise agreed, the right
    to take possession of the collateral by any method permitted by law;

(b) if the collateral is equipment and the security interest
    has been perfected by registration, the secured party may, in a reasonable
    manner, render such equipment unusable without removal thereof from the
    debtors premises, and the secured party shall thereupon be deemed to have
    taken possession of such equipment; and

(c) the secured party may dispose
    of collateral on the debtors premises in accordance with section 63.

[14]

Subsection
    63(4) of the PPSA requires the secured party to give notice to any interested
    persons prior to disposal of the collateral.

[15]

Section
    67 of the PPSA gives the court broad remedial powers to enforce a secured
    partys rights:

67 (1) Upon application to the Superior Court of Justice by a
    debtor, a creditor of a debtor, a secured party, an obligor who may owe payment
    or performance of the obligation secured or any person who has an interest in
    collateral which may be affected by an order under this section, the court may,

(a) make any order,
    including binding declarations of right and injunctive relief, that is
    necessary to ensure compliance with Part V, section 17 or subsection
    34 (3) or 35 (4);

(b) give directions
    to any party regarding the exercise of the partys rights or the discharge of
    the partys obligations under Part V, section 17 or subsection 34 (3) or
    35 (4);

(c) make any order
    necessary to determine questions of priority or entitlement in or to the
    collateral or its proceeds;

(d) relieve any
    party from compliance with the requirements of Part V, section 17 or subsection
    34 (3) or 35 (4), but only on terms that are just for all parties
    concerned;

(e) make any order
    necessary to ensure protection of the interests of any person in the
    collateral, but only on terms that are just for all parties concerned;

(f) make an order
    requiring a secured party to make good any default in connection with the
    secured partys custody, management or disposition of the collateral of the
    debtor or to relieve the secured party from any default on such terms as the
    court considers just, and to confirm any act of the secured party; and

(g) despite subsection 59 (6), if the
    secured party has taken security in both real and personal property to secure
    payment or performance of the debtors obligation, make any order necessary to
    enable the secured party to accept both the real and personal property in
    satisfaction of the obligation secured or to enable the secured party to
    enforce any of its other remedies against both the real and personal property,
    including an order requiring notice to be given to certain persons and
    governing the notice, an order permitting and governing redemption of the real
    and personal property, and an order requiring the secured party to account to
    persons with an interest in the real property or personal property for any
    surplus.

[16]

The
    application judges order was made in conformity with the provisions of the
    leases and general security agreements and in accordance with his powers under
    the PPSA.

[17]

Further,
    we disagree that relief is granted against interested parties who were not parties
    to the application and that the order affects other proceedings. The respondent
initiated its application against the
    appellant strictly in its capacity as landlord for entry to the properties that
    the appellant owns or controls and for recovery and possession of the respondents
    equipment under the leases and collateral under the general security agreements.

T
he order prevents the appellant as
    landlord from continuing to impede the respondents proper exercise of its
    rights under the equipment leases and general security agreements.
The respondent is entitled under the equipment leases and general
    security agreements to enter the leased premises and any of the appellants premises
    where equipment and collateral in which the respondent has a security interest
    can be found, and to repossess it.

[18]

The unchallenged evidence provided by Mr. Geroux and Neil Proctor, a
    former director of
the numbered companies,
established
    that the leases were in default, which triggered the respondents rights to
    entry and immediate possession under the leases and the general security
    agreements. Mr. Gerouxs unchallenged evidence was that t
he appellant removed
    the equipment from the Fairview premises and refused to return it, contrary to article
    9 of the leases. Mr. Proctor testified that the numbered companies ceased
    operations and abandoned the premises, owned nothing, and had no banking
    privileges. Their evidence confirmed that 1860337, 1860342, and 1860335 had
    failed to make the required rental payments, contrary to article 5 of their
    respective leases, and to return the equipment upon termination, contrary to article
    11. In accordance with the provisions of articles 20 and 21 of the leases and articles
    6, 7 and 8 of the general security agreements, upon these defaults, the respondent
    was entitled to enter and repossess its equipment and collateral.

[19]

In
    the application judges endorsement, and as respondents counsel acknowledged,
    the order only permits the respondent to recover equipment and collateral it
    owns and in which it has a registered security interest, as described in the
    schedules to the order. If any tenants claim that the equipment sought to be
    repossessed and sold by the respondent is not covered by the order, they have
    remedies to protect their rights and their personal property.

[20]

The appellants complaint is chiefly directed at the inventory lists
    of the equipment prepared by Mr. Geroux during his attendance at the Fairview,
    Centennial, and Upper Wentworth premises. The appellant maintains that the
    respondent has failed to prove that it owns or is entitled to possession of the
    equipment described in the inventory lists. As a result, the order allows the
    respondent to take possession of equipment in which it has no interest and to put
    the appellants tenants out of business.

[21]

We
    are not persuaded by these submissions.

[22]

First,
    the inventory lists are necessary schedules to the order to ensure that it
    covers the respondents equipment and collateral that the appellant may have
    moved to other locations. The unchallenged evidence of Mr. Geroux establishes
    that the appellant has moved some of the respondents equipment among the
    premises that it owns or controls. This application is one part of myriad
    proceedings arising out of the long-running dispute between the appellant and
    the respondent. The repossession of the respondents equipment from the
    Fairview, Centennial, and Upper Wentworth premises was the latest in a series
    of numerous repossessions carried out by Mr. Geroux on behalf of the respondent
    in relation to equipment and collateral on premises owned by the appellant. Importantly,
    Mr. Geroux testified that in the course of the twenty or so repossessions, he often
    discovered that the appellant moved the respondents equipment among its
    locations with the result that the equipment listed in the equipment schedules
    to the leases was not at the premises described in the leases but at other
    premises owned by the appellant. In the present case, there is no dispute the
    appellant moved the respondents equipment from the Fairview premises to
    another location that it has refused to disclose to the respondent, and it has
    refused to return the respondents equipment that it removed.

[23]

Second,
    the evidence of Mr. Proctor provides the required evidentiary link between the
    respondents equipment covered under the equipment leases and collateral under
    the general security agreements with 1860337, 1860342, and 1860335, and the
    equipment at the Centennial and Upper Wentworth premises that was recorded on
    the inventory lists by Mr. Geroux. Mr. Proctor testified that the fitness clubs
    at the Centennial and Upper Wentworth premises abandoned by 1860342 and 1860335
    were immediately taken up and operated by 1927032, a company whose principal is
    closely related to the appellants principal. Mr. Proctor provides accounting
    services to 1927032 and, as far as he knew, but could not say for sure, 1927032
    continued to use the equipment left behind in the premises by 1860342. In our
    view, it is an equally reasonable inference that 1927032 continued to use the
    equipment left behind by 1860335. Again, the respondent can only seize equipment
    it owns or collateral in which it has a security interest, and if that is not
    the case, 1927032 will have its remedies to protect its rights and personal
    property.

[24]

We
    see no error in the application judges decision to append the schedules to the
    order. In the circumstances of this case, the schedules are necessary in order
    to give full effect to the order.

Disposition

[25]

For these reasons, the appeal is dismissed.

[26]

The respondent is entitled to its partial indemnity costs in the
    amount of $10,000, inclusive of disbursements and applicable taxes.

Paul Rouleau J.A.

K. van Rensburg J.A.

L.B. Roberts J.A.