COURT OF APPEAL FOR ONTARIO

CITATION: Mega International Commercial
    Bank (Canada) v. Yung, 2018 ONCA 429

DATE: 20180507

DOCKET: C64010

Doherty, Paciocco and Nordheimer JJ.A.

BETWEEN

Mega International Commercial Bank (Canada)

Plaintiff

and

Tony Man Tung Yung (also known as Man Tung Yung)
    and Yvonne Pui Ling Lai

Defendants (Appellants)

and

Jimmy K. Sun and Sun & Partners

Third Parties (Respondents)

Eliot N. Kolers and Zev Smith, for the appellants

M. Scott Martin and Marco P. Falco, for the respondents

Heard: February 6, 2018

On appeal from the order of Justice Laurence A. Pattillo
    of the Superior Court of Justice, dated May 17, 2017, with reasons reported at 2017
    ONSC 1005.

Paciocco J.A.:

OVERVIEW

[1]

This is an appeal from a summary judgment dismissing the appellants third
    party claims for contribution and indemnity against the respondent lawyer and
    law firm as statute-barred.

[2]

Mr. Tony Man Tung Yung and Ms. Yvonne Pui Ling Lai commenced the
    underlying third party claims against their former lawyer, Mr. Jimmy K. Sun and
    his law firm, Sun & Partners, after Mega International Commercial Bank
    (Canada) (Mega International) sued Mr. Yung and Ms. Lai on personal guarantees
    they provided to Mega Internationals predecessor, International Commercial
    Bank of Cathay (Canada) (International Commercial). Those personal guarantees
    were given to secure financing for a Toronto development property that Mr. Yung
    and Ms. Lai were involved in. Mr. Yung and Ms. Lai claim that their lawyer, Mr.
    Sun, was instructed to obtain releases from those personal guarantees, but
    failed to do so  hence their claims for contribution and indemnity.

[3]

Mr. Yung and Ms. Lai did not sue Mr. Sun and his law firm until more
    than two years after Mega International served Ms. Lai with a claim against her
    on her personal guarantee. The motion judge held that s. 18 of the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sched. B establishes an absolute two-year
    limitation period for contribution and indemnity claims, which commenced when
    Ms. Lai was served with Mega Internationals claim. Hence, he found that Mr.
    Yungs and Ms. Lais third party claims were statute-barred.

[4]

There are two grounds of appeal. The first challenges the motion judges
    interpretation of s. 18 of the
Limitations Act, 2002
. The second
    contends that the motion judge erred in exercising his fact-finding powers
    under r. 20 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194
    (the
Rules
). Mr. Yung and Ms. Lai argue that because of this second
    error, findings of fact made by the motion judge should not be relied upon in
    this appeal to overcome the motion judges error in interpreting s. 18.

[5]

For the reasons that follow, I agree that the motion judge
    misinterpreted s. 18. That section does not displace the discoverability
    principles found in ss. 4 and 5 of the
Limitations Act, 2002
.

[6]

I would further hold that the motion judges decision to grant summary
    judgment was made in error. As a result of his misunderstanding of s. 18, he
    did not have a full appreciation of the significance of the conflicting
    evidence and the facts central to the discoverability issue when he decided to
    grant summary judgment. Consequently, the findings of fact he made in his
    summary judgment cannot be relied upon to resolve the s. 18 discoverability
    issue against Mr. Yung and Ms. Lai.

[7]

I would therefore allow the appeal and remit the case to the Superior
    Court of Justice to proceed in accordance with these reasons and the
Rules
.

THE MATERIAL FACTS

A.

The Parties and the Project

[8]

Mr. Yung and Ms. Lai are married. From 1991 to 1995, the couple lived
    together in Toronto. However, since 1995, Mr. Yung has lived in Hong Kong while
    Ms. Lai continued to live in Toronto. They then separated in 1998 and have
    continued to live on separate continents since.

[9]

Mr. Sun had been doing legal work for Mr. Yung and Ms. Lai since the
    early 1990s. It is not contested that Mr. Yung, an experienced businessperson in
    Hong Kong, knew little English. He relied upon Mr. Sun to translate and explain
    relevant legal documents. Nor is it contested that Ms. Lai had few direct
    dealings with Mr. Sun. She depended largely on Mr. Yung to deal with Mr. Sun on
    her behalf.

[10]

In
    1993, Mr. Sun acted for Mr. Yung and Ms. Lai when they began to develop a mixed
    use, commercial and residential building at 207-209 Yonge St. (the Property).

[11]

The
    Property was owned by 1036846 Ontario Inc. The corporation was a bare trustee
    for the Yonge Trust. The trustee of the Yonge Trust was a British Virgin Islands
    corporation, Hastings Services Limited. The beneficiaries of the Yonge Trust
    were Mr. Yung, Ms. Lai, and certain of their family members. Mr. Yung and Ms.
    Lai were directors and officers of 1036846 Ontario Inc., the Yonge Trust, and
    Hastings Services Limited at various times.

B.

Four Material Events

[12]

Four
    events linked to the Property are relevant to this appeal: (1) the acquisition;
    (2) the International Commercial refinancing; (3) the 2006 restructuring; and
    (4) the power of sale and the Mega International claims on the personal
    guarantees.

(1)

The Acquisition

[13]

Few
    facts relating to the acquisition matter. It is sufficient to note that the development
    of the Property was initially financed by Grand Pacific Finance Corp. (Grand
    Pacific) and 366 Madison Inc. (Madison), two related corporations the
    principals of which were Mr. Michael Lin and Ms. Anne Chen, who Mr. Sun also
    acted for.

(2)

The International Commercial Refinancing

[14]

By
    2002 to 2003, the project was in financial difficulty. Mr. Yung and Ms. Lai had
    to refinance. They secured further funding from International Commercial in the
    form of a $10,400,000 loan to 1036846 Ontario Inc. and the Yonge Trust (the Mortgage).

[15]

Mr.
    Yung and Ms. Lai say that Mr. Sun provided legal advice to them in connection
    with this refinancing.

[16]

Mr.
    Sun disagrees. He contends that Mr. Yung and Ms. Lai negotiated the financing
    terms with International Commercial without his assistance. He claims that he
    acted solely for International Commercial on the refinancing after being asked
    by Mr. Yung and Ms. Lai to do so.

[17]

Some
    of the money obtained from International Commercial was used to partially repay
    the money owed to the original financiers, Grand Pacific and Madison. In
    return, Grand Pacific and Madison subordinated their mortgage security in
    favour of International Commercial. Mr. Yung and Ms. Lai also provided personal
    guarantees to International Commercial as additional security.

(3)

The 2006 Restructuring

[18]

The
    International Commercial refinancing did not solve the financial pressure on
    the development project. By October 2003, negotiations were underway between
    Mr. Sun and Mr. Lin to change the Grand Pacific and Madison arrangement. By
    December 2004, terms had been reached, leading to a restructuring in June of
    2006.

[19]

Mr.
    Sun acted as lawyer for all of the parties in this restructuring.

[20]

On
    April 6, 2006, Mr. Yung met with Mr. Eddie Ho Chow Mui, a Hong Kong lawyer
    licenced to practice in Ontario, and signed an Acknowledgment of Conflict of
    Interest and Consent relating to Mr. Suns role in the restructuring. Mr. Yung
    also signed a Certificate of Independent Legal Advice confirming that he fully
    understood the nature and effect of the transaction, and that he was signing
    the documents freely and voluntarily. Mr. Yung claims, however, that Mr. Mui
    did not translate the documents for him, and that he signed the documents under
    the direction of Mr. Sun.

[21]

Mr.
    Yung and Ms. Lai do not agree with Mr. Sun about the nature of the 2006
    restructuring that took place.

[22]

Mr.
    Yung and Ms. Lai claim that they transferred their beneficial interest in the
    project to Grand Pacific and Madison. Mr. Yung claims that it was his
    understanding that, in return, the personal guarantees he and Ms. Lai signed in
    favour of International Commercial would be replaced by personal guarantees
    from Mr. Lin and Ms. Chen, the principals of Grand Pacific and Madison. He says
    that these were the instructions he gave to Mr. Sun. Mr. Yung says that he
    understood that Grand Pacific and Madison were going to secure financing to
    repay International Commercial, thus nullifying the guarantees.

[23]

Mr.
    Yung claims that instead of paying off International Commercial as originally
    planned, Grand Pacific and Madison advised him that they had received
    International Commercials consent to be assigned the Mortgage such that they
    would take over the responsibility of repaying the loan advanced to 1036846
    Ontario Inc. and the Yonge Trust, and that Mr. Lin and Ms. Chen would take over
    the personal guarantees. Mr. Yung claims it was his understanding that this
    happened. He believed that the personal guarantees to International Commercial
    that he and Ms. Lai had signed were no longer in effect.

[24]

Mr.
    Sun does not accept this. He describes a more complex restructuring in which a
    new company, Yonge Linkage Limited, was created with Mr. Lin and Mr. Yung as
    its signing officers. Mr. Sun claims that 1036846 Ontario Inc. transferred its
    interest in the Property to Yonge Linkage Limited. The trust beneficiary did
    not change, but in this way control of the Property and the income generated
    therefrom was transferred to Grand Pacific through Mr. Lin. In return, Grand
    Pacific and Madison released Mr. Yung and Ms. Lai from the personal guarantees
    that Mr. Yung and Ms. Lai owed to Grand Pacific and Madison, but this had
    nothing to do with the personal guarantees that they provided to International
    Commercial.

[25]

More
    significantly, Mr. Sun disputes Mr. Yungs and Ms. Lais claims that he was
    instructed to secure releases of their personal guarantees to International
    Commercial. He says that such releases were never contemplated, and at no time
    did Mr. Lin or Ms. Chen provide replacement guarantees to International
    Commercial.

(4)

The Power of Sale and the Mega International Action

[26]

Whatever
    the restructuring arrangement was intended to be, it did not solve the
    projects financial challenges. By the summer of 2008, the Mortgage was in
    default. On July 16, 2008, Mega International, International Commercials
    successor corporation, issued a Notice of Sale under the Mortgage.

[27]

Soon
    after, Mr. Yung and Ms. Lai became aware that Mega International was claiming
    the right to come after them on their personal guarantees for any shortfall in
    the sale price achieved under a power of sale.

[28]

Mr.
    Yung claims that he was not alarmed when he learned that the guarantees might
    not have been cancelled by Mr. Sun since he thought the Property was worth much
    more than the outstanding mortgage amount. He claims that he asked Mr. Sun why
    the bank was unaware that the guarantees had been cancelled and that Mr. Sun
    told him he would check and get back to him, but never did.

[29]

Mr.
    Yung also claims that Mr. Sun advised him that he could protect himself by
    redeeming the Mortgage or purchasing the Property. As a result, Mr. Yung wrote
    to Mega International expressing interest in acquiring the Property, but no
    concrete offer was ever made.

[30]

Mr.
    Sun denies that Mr. Yung ever asked him about the cancellation of the
    guarantees. He acknowledges that he had advised Mr. Yung that he could protect
    himself from Mega Internationals claim by redeeming the Mortgage or acquiring
    the Property.

[31]

On
    December 11, 2009, Mega Internationals lawyers notified Mr. Yung and Ms. Lai
    about an impending sale to another purchaser. On December 18, 2009, Mega
    Internationals lawyers sent a letter to Ms. Lai outlining the proposed sale
    price and the amount owing on the Mortgage, making it clear that there would be
    a shortfall in the sale. The letter stated in material part, You and all other
    encumbrancers and guarantors have had a significant period of time in which to
    redeem, but have shown absolutely no indication of your ability or desire to
    redeem the mortgage.

[32]

In
    a December 22, 2009 letter signed by Ms. Lai under Mr. Yungs direction, Ms.
    Lai responded, Please clarify in the event that the property has been sold
    based on the terms that you referred to in your letter dated December 18, 2009,
    as a guarantor, am I liable for the shortfall of the actual outstanding amount
    of the mortgage? Ms. Lai and Mr. Yung claim that Mr. Sun drafted this December
    22, 2009 letter. Mr. Sun denies that he did.

[33]

Mr.
    Sun produced a document signed by Ms. Lai confirming that Mr. Suns firm did no
    more than translate the December 22, 2009 letter and could not provide her with
    legal advice. Ms. Lai claims that she signed this document because she was
    instructed by Mr. Yung to sign the documents that Mr. Sun presented to her.

[34]

On
    January 15, 2010, the Property was sold to another buyer for $8,000,000.00. By
    contrast, the amount required to redeem the Mortgage was $9,138,963.03.

[35]

On
    December 20, 2010, Mega International commenced the underlying action against
    Mr. Yung and Ms. Lai on their personal guarantees for the shortfall.

[36]

On
    January 6, 2011, Ms. Lai was served with a statement of claim against her as a
    guarantor of the Mortgage for $1,216,101.78. Mr. Yung, living out of the
    country, was not served.

[37]

Mr.
    Yung admits that he was made aware that Ms. Lai had been served. He says that
    he communicated with Mr. Sun about this. Mr. Yung claims that he relied on Mr.
    Suns advice that: (1) he and Ms. Lai had no exposure because the sale price
    was an improvident one given that the property was worth much more than the
    sale price and the property had never been listed for sale on MLS (Multiple
    Listings Service); (2) his own offer to purchase the property would insulate
    him from liability; and (3) that since he had never been served with a
    statement of claim, any judgment could be enforced only against Ms. Lai and she
    did not have assets in her name. Mr. Yung claims that Mr. Sun nonetheless
    advised that Ms. Lai, an Ontario resident, should defend the suit.

[38]

Mr.
    Sun denies that he told Mr. Yung not to worry about the personal guarantees.
    Mr. Sun says that he was not involved in giving advice on the power of sale
    after he advised Mr. Yung that he could protect himself by redeeming the Mortgage
    or purchasing the Property. He also says that he sent Ms. Lai to a litigation
    lawyer.

[39]

On
    March 2, 2011, Ms. Lai filed a statement of defence and cross-claim after
    consulting her litigation lawyer. She cross-claimed against Mr. Yung but made
    no third party claim against Mr. Sun or his firm.

[40]

Two
    years later, Mega International secured an order to serve Mr. Yung. Pursuant to
    that order, service was to be accomplished by substituted service by April 30,
    2013 through publication in the Toronto Star, in English in a Hong Kong
    newspaper, and by letter to Mr. Yung in care of Ms. Lai. Mr. Yung denies ever
    learning of the substituted service.

[41]

Mr.
    Yung claims that in October or November 2013, unprompted, Mr. Sun delivered his
    entire legal file to him and Ms. Lai, but it was missing documents relating to
    the 2004 agreement and the 2006 restructuring transaction. This caused Mr. Yung
    to be suspicious of Mr. Sun.

[42]

Based
    on the substituted service that was effected in April 2013, a default judgment
    was secured against Mr. Yung in 2015.

C.

The Claims Against Mr. Sun

[43]

Mr.
    Yung claims that he sought legal advice when he learned that a default judgment
    had been obtained against him. He says that it was only when he spoke to a lawyer
    that he learned he had been served by substituted service, and that he was informed
    for the first time that he had a cause of action against Mr. Sun and his firm
    for failing to follow his instructions, for improper legal advice, and for
    acting in a conflict of interest. It was after this occurred that Ms. Lai
    learned, through him, that she too had an action against Mr. Sun and Sun &
    Partners.

[44]

The
    parties agree that at no time had Mr. Sun told Mr. Yung that he might have a
    cause of action against him. Of course, Mr. Suns position is that Mr. Yung has
    no such cause of action, so why would he tell him that he did? Similarly, there
    is no suggestion that Mr. Sun advised Ms. Lai that she had a potential cause of
    action against him.

[45]

Mr.
    Yung managed to get the default judgment set aside, and on September 1, 2015,
    Mr. Yung and Ms. Lai instituted the underlying third party claims against Mr.
    Sun and his firm for contribution and indemnity. They allege that Mr. Sun
    and/or his firm, among other things:

(a)

had a conflict of interest in acting for both Grand Pacific and Madison
    at the same time as Mr. Yung and Ms. Lai;

(b)

failed to advise Mr. Yung and Ms. Lai of the conflict;

(c)

failed to replace or cancel Mr. Yungs and Ms. Lais personal guarantees
    to International Commercial as instructed and promised; and

(d)

failed to accurately and fairly advise Mr. Yung and Ms. Lai as to their
    potential liability under their personal guarantees, and the nature and value
    of the guarantees.

D.

The Summary Judgment

[46]

Mr.
    Sun and his firm moved for summary judgment seeking to dismiss the third party
    claims. Mr. Sun, Mr. Yung, and Ms. Lai presented affidavit evidence along with
    supporting documents. Transcripts of the cross-examination of Mr. Sun and Ms.
    Lai were put before the motion judge, along with Questions and Answers on
    Written Examination from Mr. Yung. No oral testimony was presented before the
    motion judge.

[47]

At
    para. 31 of his reasons, the motion judge recognized that the motion record
    contains conflicting evidence from Sun on the one hand and Yung and Lai on the
    other concerning their relationship and what took place between them in respect
    of the 2006 Restructuring and the Banks subsequent Action. He went on to find
    that summary judgment was nonetheless appropriate since the issues could be
    resolved based on the undisputed evidence and through the utilization of the
    powers under r. 20.04(2.1) to assess Mr. Yungs and Ms. Lais evidence.

[48]

The
    motion judge went on to make significant credibility findings against Mr. Yung
    and Ms. Lai. These included findings that, contrary to their claims:

(i)

Mr. Yung understood and consented to Mr. Sun acting for all parties in
    the 2006 restructuring (reasons, at para. 53);

(ii)

Mr. Yung and Ms. Lai knew by December 2009 that their personal guarantees
    to International Commercial had not been extinguished (reasons, at paras. 55
    and 58);

(iii)

Mr. Yung was an experienced developer and businessman who would have
    clearly known (and Lai by extension) that they had a claim against Sun for not
    following his instructions (reasons, at para. 56);

(iv)

Mr. Sun had not assured them that they had no liability concerning their
    personal guarantees (reasons, at paras. 59-63); and

(v)

Ms. Lai would have told Mr. Yung about his substituted service on or
    around April 29, 2013, the date she received the substituted service letter
    (reasons, at para. 63).

[49]

Based
    on these findings the motion judge ruled, at para. 49, that both Mr. Yungs and
    Ms. Lais third party claims were statute-barred by the absolute limitation
    period provided for in s. 18 of the
Limitations Act, 2002
:

The Statement of Claim was served on Lai sometime in early 2011,
    more than four years before the Third Party Claim was issued. It was served on
    Yung effective April 29, 2013, more than two years, four months prior to the
    Third Party Claim being issued. While, in my view, s. 18 provides that the date
    when the time begins to run is from the date of service of the Statement of
    Claim on Lai (the first wrongdoer), in either case the Third Party Claim was
    commenced more than two years from the service of the Statement of Claim and is
    accordingly statute barred.

[50]

He
    then went on to hold that there was no fraudulent concealment that would enable
    Mr. Yung and Ms. Lai to avoid the two-year limitation period. He reasoned that since
    Mr. Yung and Ms. Lai became aware in December 2009 of the facts material to
    their cause of action, nothing was concealed from them.

[51]

On
    that basis, summary judgment dismissing Mr. Yungs and Ms. Lais third party
    claims for contribution and indemnity was granted.

THE ISSUES

[52]

Mr.
    Yung and Ms. Lai appeal the summary judgment against them. Two general issues must
    be determined to resolve this appeal:

A.

Does s. 18 of the
Limitations Act, 2002
establish an absolute
    two-year limitation period or does it incorporate discoverability principles?

B.

If the discoverability principles under ss. 4 and 5 of the
Limitations
    Act, 2002
apply, should the motion judges findings relating to Mr. Yungs
    and Ms. Lais knowledge of their claims against Mr. Sun, made in the context of
    the fraudulent concealment determination, be relied upon to resolve the
    discoverability issue?

[53]

In
    resolving this latter issue it is also necessary to decide whether the motion
    judge erred in the way he used his summary judgment fact-finding powers.

ANALYSIS

A.      The Effect of the
Limitations
    Act, 2002
, Section 18

[54]

In
    my view, the motion judge erred in law in holding that the
Limitations Act,
    2002
, s. 18 creates an absolute limitation period of two years for the
    commencement of contribution and indemnity claims. Properly interpreted, s. 18
    works with other provisions of the
Limitations Act, 2002
to create a
    presumed start date for the running of the limitation period. That presumed
    limitation period start date will result in a claim for contribution or
    indemnity being statute-barred two years after the party seeking contribution
    or indemnity is served with a claim in the proceeding in which contribution or
    indemnity is sought, unless that party proves that the claim for contribution
    or indemnity was not discovered and was not capable of being discovered through
    the exercise of due diligence until some later date.

[55]

The
    scheme of the
Limitations Act, 2002
is important to this conclusion. Subject
    to a few exceptions, s. 4 creates a basic limitation period of two years
    commencing on the date the claim was discovered. Section 5(1) goes on to define
    when a claim was discovered, and s. 5(2) creates a rebuttable presumption to
    assist in applying discoverability principles. If a claim is not commenced within
    15 years of the day on which the wrong occurred, the ultimate limitation period
    defined in s. 15(2) will expire. Section 18 operates within this general
    scheme. These are the material provisions:

4 Unless this Act provides otherwise, a proceeding shall not be
    commenced in respect of a claim after the second anniversary of the day on
    which the claim was discovered.

Discovery

5(1) A claim is discovered on the earlier of,

(a)

the day on which the person with the claim first knew,

(i)

that the injury, loss or damage had occurred,

(ii)

that the injury, loss or damage was caused or contributed to by an act
    or omission,

(iii)

that the act or omission was that of the person against whom the claim
    is made, and

(iv)

that, having regard to the nature of the injury, loss or damage, a
    proceeding would be an appropriate means to seek to remedy it; and

(b)

the day on which a reasonable person with the abilities and in the
    circumstances of the person with the claim first ought to have known of the
    matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of
    the matters referred to in clause (1)(a) on the day the act or omission on
    which the claim is based took place, unless the contrary is proved.

[]

Ultimate limitation periods

15(1) Even if the limitation period established by any other
    section of this Act in respect of a claim has not expired, no proceeding shall
    be commenced in respect of the claim after the expiry of a limitation period
    established by this section.

General

(2) No proceeding shall be commenced in respect of any claim
    after the 15th anniversary of the day on which the act or omission on which the
    claim is based took place.

[56]

Section
    18 of the
Limitations Act, 2002
, the section directly in issue in this
    appeal, provides:

Contribution and indemnity

18(1) For the purposes of subsection 5(2) and section 15, in
    the case of a claim by one alleged wrongdoer against another for contribution
    and indemnity, the day on which the first alleged wrongdoer was served with the
    claim in respect of which contribution and indemnity is sought shall be deemed
    to be the day the act or omission on which that alleged wrongdoers claim is
    based took place.

Application

(2) Subsection (1) applies whether the right to contribution
    and indemnity arises in respect of tort or otherwise.

[57]

Decisions
    of the Ontario Superior Court of Justice are split on the proper interpretation
    of s. 18. The leading case favouring the absolute two-year limitation period
    interpretation preferred by the motion judge is
Miaskowski (Litigation
    guardian of) v. Persaud
, 2015 ONSC 1654, 51 R.P.R. (5th) 234, at paras.
    94-97, reversed in part 2015 ONCA 758, 393 D.L.R. (4th) 237. To the contrary,
Demide
    v. Attorney General of Canada et al.
, 2015 ONSC 3000, 47 C.L.R. (4th) 126,
    at paras. 84-95 is the most fully reasoned case holding that s. 18 simply
    identifies the presumptive trigger date for the limitation period for
    contribution and indemnity claims, subject to discoverability principles.

[58]

This
    court has not yet settled the matter. There are passages in
Canaccord
    Capital Corp. v. Roscoe
, 2013 ONCA 378, 115 O.R. (3d) 641 that appear to
    favour the absolute limitation period interpretation. By contrast, there are passages
    in

Placsek v. Green
, 2009 ONCA 83, 307 D.L.R. (4th) 441,
Waterloo
    Region District School Board v. Truax Engineering Ltd.
, 2010 ONCA 838, 103
    O.R. (3d) 81, and
Levesque v. Crampton Estate
, 2017 ONCA 455, 136 O.R.
    (3d) 161, reconsideration refused 2018 ONCA 75 that seem to support the
    presumptive trigger date interpretation. None of these cases, however, engage
    or purport to resolve the question of how s. 18 is to be interpreted.

[59]

The
    interpretation of s. 18 therefore falls to be determined by applying the
    principles of statutory interpretation affirmed in
Rizzo & Rizzo Shoes
    Ltd. (Re)
, [1998] 1 S.C.R. 27, at para. 21, citing E. A. Driedger,
Construction
    of Statutes
, 2nd ed. (Toronto: Butterworths, 1983), at p. 87:

Today there is only one principle or approach, namely, the
    words of an Act are to be read in their entire context and in their grammatical
    and ordinary sense harmoniously with the scheme of the Act, the object of the
    Act, and the intention of Parliament.

See also
Bell ExpressVu Ltd. Partnership v. Rex
,
    2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26;
Indalex Ltd., Re
, 2013 SCC
    6, [2013] 1 S.C.R. 271, at para. 136; and
Schnarr v. Blue Mountain Resorts
    Limited
, 2018 ONCA 313, at para. 23.

[60]

I
    note that, as this issue involves a question of law with respect to statutory
    interpretation on appeal from a judicial decision, the standard of review is
    correctness:
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235,
    at para. 8;
Harvey v. Talon International Inc.
, 2017 ONCA 267, 137
    O.R. (3d) 184, at para. 32; and
Blue Mountain
, at para. 22.

[61]

The
    words in s. 18, interpreted in their grammatical and ordinary sense, do not establish
    an absolute limitation period. The provisions in the
Limitations Act, 2002

that do establish finite limitation periods, such as ss. 4, 15(1), 15(2),
    and 15(3), direct that a proceeding shall not be commenced or no proceeding
    shall be commenced after a described limitation period. Section 18, on the
    other hand, does not use such language or speak in any other terms that can be
    read as imposing an absolute limitation period, nor does it even identify a
    time span that could serve as a limitation period.

[62]

On
    its face, s. 18 does no more than deem a fact without disclosing the
    significance of that deemed fact. Specifically, it directs that the day on
    which a party is served with the claim in respect of which they seek
    contribution or indemnity, is deemed to be the day the act or omission on which
    that alleged claim is based took place. As this court similarly described in
Levesque
,
    at para. 39, s. 18 is obviously intended to work harmoniously along with other
    provisions of the
Limitations Act, 2002

to give this deemed
    fact meaning.

[63]

In
    my view, s. 18 takes on meaning when it is linked to the
Limitations Act,
    2002
, s. 5(2). Subject to the absolute 15-year limitation period in s. 15(2),
    ss. 5(2) and 18 together establish the presumptive limitation period for
    contribution and indemnity claims

a presumptive limitation period that incorporates the
    discoverability principles outlined in ss. 4 and 5(1). I emphasize the
    interaction between ss. 5(2) and 18 for two reasons.

[64]

First,
    s. 18 is linked expressly to s. 5(2) in its opening phrase, For the purposes
    of subsection 5(2) and section 15. In my view, this opening phrase cannot be
    read as a direction to exclude contribution and indemnity claims from the
    operation of ss. 5(2) and 15, as was suggested in
Hughes v. Dyck
, 2016
    ONSC 901, 129 O.R. (3d) 495, at para. 37. The clause for the purposes of
    invokes these provisions. It simply cannot properly be read as dispensing with these
    provisions as if it said, Notwithstanding subsection 5(2) and section 15.

[65]

Second,
    the thing or fact that s.18 deems to have occurred is the same thing or fact that
    is used in s. 5(2) as the trigger for the presumptive limitation period in ss. 4
    and 5. Section 18 deems the day on which the first alleged wrongdoer was
    served with the claim in respect of which contribution or indemnity is sought
    [to be]
the day the act or omission on which the alleged
    wrongdoers claim is based took place
. Meanwhile, s. 5(2) treats
the day the act or omission on which the claim is based took
    place
 to be the day on which a person with a claim is presumed to know that
    they have a claim within the meaning of s. 5(1). Section 5(2) is the only other
    provision in the
Limitations Act, 2002
apart from s. 18 that uses the
    operative phrase that I have underlined in the preceding sentences. The two
    sections are clearly meant to intersect and work together. In effect, s. 18
    provides the variable used in s. 5(2) as the trigger for the presumed
    limitation period for contribution and indemnity claims.

[66]

Put
    more directly, and incorporating s. 18s deemed fact into the text of s. 5(2):

A person with a claim [for contribution and indemnity] shall be
    presumed to have known of the matters referred to in clause (1)(a) on the day
    [on which that person was served with the claim in respect of which
    contribution or indemnity is sought], unless the contrary is proved.

[67]

Sections
    18 and 5(2), in my view, work hand in glove in contribution or indemnity claims.
    Together, these two provisions identify the presumptive limitation period that
    applies in contribution and indemnity claim cases.

[68]

In
    this way, s. 18 works not as an exception to the basic limitation period in
    s. 4 of the
Limitations Act, 2002
, but as part of the integrated
    scheme established by ss. 4 and 5.

[69]

The
    claim that s. 18 establishes an absolute limitation period also encounters
    difficulty, in my view, when its connection to s. 15 is considered. Section 15,
    of course, is the other
Limitations Act
, 2002
provision apart
    from s. 5(2) that s. 18 invokes expressly in its opening phrase, For the
    purposes of subsection 5(2) and section 15. As indicated, s. 15 imposes a
    15-year cap on all limitation periods, regardless of discoverability concerns. The
    difficulty is that if s. 18 does establish an absolute two-year limitation
    period, then s. 15s ultimate limitation period would not be relevant. Why then
    would s. 18 cross-reference s. 15? As a majority of the Supreme Court recently
    reaffirmed in
British Columbia Human Rights Tribunal v. Schrenk
, 2017
    SCC 62, [2017] 2 S.C.R. 795, at paras. 45-46, it is presumed that the
    Legislature avoids superfluous or meaningless words. There is a presumption
    that the words of a statute are to be interpreted in a way that avoids a mere
    surplusage of words.

[70]

In
    saying this, I am mindful that ss. 15(4) to 15(6) refine when limitation
    periods run, and that these provisions could work with an absolute two-year
    limitation period. In my view, it is unlikely that the Legislature would have
    invoked s. 15 in its entirety in s. 18 if it simply wanted these select
    subsections of s. 15 to apply to s. 18. The most logical conclusion is that all
    subsections of s. 15 that are capable of being interpreted harmoniously with s.
    18 were intended to work with s. 18.

[71]

The
    integrated legislative scheme I have just described is not only driven by the
    language of s. 18 and the
Limitations Act, 2002

taken as a
    whole, it is also in keeping with the object of the Act.

[72]

I
    appreciate that the
Limitations Act, 2002
was passed to promote
    certainty and finality, and that certainty and finality could better be
    achieved by a fixed limitation period in s. 18:
Miaskowski
, at para.
    95; and
Hughes
, at para. 37. As Sharpe J.A. pointed out in
Canaccord
    Capital
, at para. 17, however, the reform of the law of limitations in
    Ontario was aimed at creating a clear and cohesive scheme for addressing
    limitation issues, one that balances the plaintiffs right to sue with the
    defendants need for certainty and finality. As the basic limitation period
    in s. 4, combined with the discoverability principles in s. 5 demonstrate, that
    balance is generally achieved in the
Limitations Act, 2002
by adopting
    short limitations periods triggered by presumed knowledge of a claim, but
    subject to rebuttal based on the discoverability principles. There is no reason
    why a similar balance would not have been intended for contribution and
    indemnity claims.

[73]

Indeed,
    I agree with the observations of Leach J. in
Demide
, at para. 88.
    There is an element of injustice in using a limitation period to deny a claim
    that could not have been discovered with reasonable diligence, and the court
    should be reluctant to adopt a legislative interpretation that permits the
    possibility of such an injustice, unless that is the outcome clearly dictated
    by the legislation. In my view, that outcome is not clearly dictated by s. 18.
    On the contrary, the opposite outcome is indicated.

[74]

I
    would therefore hold that the motion judge erred in his interpretation of s.
    18. The two-year limitation period prescribed by ss. 4, 5(2), and 18 for
    contribution and indemnity claims presumptively begins on the date of service
    of a claim in respect of which contribution and indemnity is sought. That
    presumptive limitation period start date, however, can be rebutted by the
    discoverability principles prescribed in s. 5 of the
Limitations Act, 2002
.

[75]

There
    is a further problem with the motion judges interpretation of s. 18 that
    requires mention. At para. 49 of his reasons, he stated that the date when the
    time [against both Mr. Yungs and Ms. Lais claims] begins to run is from the
    date of service of the Statement of Claim on Lai (the first wrongdoer). The
    suggestion that the limitation periods for both Mr. Yung and Ms. Lai commenced
    with the service of Mega Internationals statement of claim upon Ms. Lai is incorrect.
    Mr. Yungs presumptive limitation period commences when he was served, not when
    Ms. Lai was served.

[76]

It
    is likely that the motion judge made this error by misinterpreting the
    reference in s. 18 to the first alleged wrongdoer. Properly understood, this
    is not a reference to the first wrongdoer to be served by a plaintiff in a case
    involving multiple wrongdoers. The term first alleged wrongdoer is meant to identify
    which of the two wrongdoers already mentioned in s. 18  the wrongdoer claiming
    contribution and indemnity and the wrongdoer that the contribution and
    indemnity claim is brought against  is being referred to in the balance of s. 18.
    It is helpful to reproduce and emphasize the relevant terms in s. 18 to make
    this point:

18(1) For the purposes of subsection 5(2) and section 15,
in the case of a claim by one alleged wrongdoer against another
for contribution and indemnity,
the day on which the
    first alleged wrongdoer was served
with the claim in respect of which
    contribution and indemnity is sought shall be deemed to be the day the act or
    omission on which that alleged wrongdoers claim is based took place.

[77]

The
    motion judge therefore erred when he stated that Mr. Yungs and Ms. Lais
    claims were barred by an absolute two-year limitation period that was triggered
    when Ms. Lai was served. He should have held that the presumptive limitation
    periods against Mr. Yung and Ms. Lai run separately, depending on when each of
    the them was served, and he should then have gone on to resolve the
    discoverability issue.

B.      Can the Motion Judges Fraudulent Concealment
    Findings be used as Indirect Discoverablity Findings such that Mr. Yungs and
    Ms. Lais claims are statute-barred?

[78]

In
    law, fraudulent concealment differs from discoverability in its focus and its
    requirements: compare,
e.g., Giroux Estate v. Trillium Health Centre
(2005), 74 O.R. (3d) 341 (C.A.), [2005] O.J. No. 226, at para. 29
per
Moldaver J.A. (as he then was), affirming (2004), 69 O.R. (3d) 689 (S.C.),
    [2004] O.J. No. 557 (describing fraudulent concealment); and
Lawless v.
    Anderson
, 2011 ONCA 102, 276 O.A.C. 75, at para. 22, citing
Aguonie v.
    Galion Solid Waste Material Inc.
(1998), 38 O.R. (3d) 161 (C.A.), [1998]
    O.J. No. 459, at p. 170 (describing the principle of discoverability). The motion
    judge nonetheless made a finding while addressing the fraudulent concealment
    claim that Mr. Sun relies on as resolving the discoverability issue in his
    favour. Specifically, the motion judge found, at para. 57 of his reasons, that
    there was no fraudulent concealment because Mr. Yung and Ms. Lai were aware of
    the essential facts giving rise to a claim against the alleged wrongdoer, Mr.
    Sun.

[79]

In
    my view, the finding that Mr. Yung and Ms. Lai were aware of the essential
    facts giving rise to a claim against Mr. Sun is not a finding of
    discoverability, within the meaning of the
Limitations Act, 2002
, s.
    5(1). I would not, therefore, utilize this holding to dismiss this appeal on
    the basis that the motion judge resolved the discoverability issue indirectly.

[80]

The
    reason the motion judges knowledge finding is not the same as a
    discoverability finding is because the knowledge finding does not resolve the discoverability
    consideration in s. 5(1)(a)(iv) of the
Limitations Act, 2002
with
    respect to whether the party with the claim knew that bringing the claim was
    legally appropriate:
Brown v. Baum
, 2016 ONCA 325, 397 D.L.R. (4th)
    161, at paras. 20-21; and
Prudential MSH Corporation v. Marr Foster &
    Co. LLP
, 2017 ONCA 325, 135 O.R. (3d) 321, at para. 54. This can be an
    important consideration where, as here, a party claims to be relying on the
    superior knowledge and expertise of the defendant [] in a professional
    relationship:
Prudential MSH Corporation
, at para. 26. The law is
    sensitive to the risks in solicitor-client cases that a lawyer can forestall or
    hide a cause of action against themselves through the advice they give:
Ferrara
    v. Lorenzetti
,
Wolfe Barristers and Solicitors
, 2012 ONCA
    851, 113 O.R. (3d) 401;
Lauesen v. Silverman
, 2016 ONCA 327, 130 O.R.
    (3d) 665. Indeed, this is the very claim that Mr. Yung and Ms. Lai are making.

[81]

It
    would not be appropriate in these circumstances to treat a finding that the
    defendants had knowledge of the main action as a finding that a third party
    claim against their lawyer was discoverable. The motion judge has not overtly
    addressed whether Mr. Yung or Ms. Lai knew it to be legally appropriate to
    bring their third party claims against Mr. Sun. This, in my view, is enough to
    dispose of the appeal.

[82]

However,
    even if it is implicit in the motion judges finding, that Mr. Yung and Ms. Lai
    knew about their claim and that they also knew it to be legally appropriate to
    sue Mr. Sun, I would not import the motion judges factual findings to resolve
    this appeal. In my view, the motion judge erred in principle in deciding to
    conduct the summary judgment motion in the way that he did. As a result, no deference
    is owed to the findings made.

[83]

Before
    identifying and explaining the error in principle I have referred to it is
    important to reaffirm that summary judgment motions under r. 20 are a
    significant alternative model of adjudication, available to improve access to
    justice:
Hryniak

v. Mauldin
, 2014 SCC 7, [2014] 1
    S.C.R. 87, at paras. 34-44. Indeed, where a summary judgment is sought, judges
    are obliged to grant summary judgment where they are satisfied that there is no
    genuine issue requiring a trial:
Hryniak
, at para. 68. There will be
    no genuine issue requiring a trial if the summary judgment process provides
    [the judge] with the evidence required to fairly and justly adjudicate the
    dispute and is a timely, affordable and proportionate procedure:
Hryniak
,
    at para. 66. Moreover, the fact-finding powers in rr. 20.04(2.1) and (2.2)  to
    weigh evidence, evaluate credibility, draw reasonable inferences, or receive
    selected oral evidence  are presumptively available to a summary judgment motion
    judge to use to fairly and justly adjudicate a claim at a motion for summary
    judgment:
Hryniak
, at para. 45.

[84]

Significantly,
    a motion judges exercise of the summary judgment rules attracts deference. Whether
    there is a genuine issue requiring a trial, or whether the fact-finding powers
    in rr. 20.04(2.1) and (2.2) should be used are questions of mixed fact and law.
    Unless the motion judge applies an incorrect principle of law or errs with
    respect to an extricable question of law, these decisions are reviewable only
    for palpable and overriding error:
Hryniak
, at paras. 81-83.

[85]

In
    spite of the deference owed to summary judgment motion judges, this may be one
    of those uncommon cases where, given the nature of the issues and the evidence
    required, the [motion judge] cannot make the necessary findings of fact, or
    apply the legal principles to reach a just and fair determination in a summary
    judgment motion:
Hryniak
, at para. 51. On the motion judges own assessment,
    it was not possible to resolve all the conflicting evidence in the summary judgment
    motion, including, for example, whether Mr. Sun wrote the December 22, 2009
    letter. The conflicting evidence spanned the entire relationship of the
    parties, involved successive complex corporate transactions, cast doubt on the
    content of client instructions, and went to the core of the nature and duration
    of a solicitor-client relationship.

[86]

I
    need not resolve whether this case was unsuitable for summary judgment, because
    even if it was a matter fit for summary judgment, in my view the motion judge committed
    an error of principle making it inappropriate for this court to rely on his
    factual findings about Mr. Yungs and Ms. Lais knowledge of their third party
    claims as dispositive of this appeal.

[87]

Specifically,
    the decision of the motion judge to grant summary judgment was undermined by
    his misinterpretation of the
Limitations Act, 2002
, s. 18. Simply put,
    that error clouded the motion judges understanding of the nature and
    complexity of the case he was being asked to resolve on summary judgment. Had he
    appreciated the nature of the dispute before him,
i.e.
, when Mr. Yung
    and Ms. Lai discovered that it was legally appropriate to commence a third
    party claim against their own lawyer, he may have found a genuine issue
    requiring a trial.

[88]

The
    application of an absolute limitation period, the primary issue the motion
    judge thought he was adjudicating, is generally a relatively straightforward
    factual issue. In contrast, determining discoverability, the issue the motion
    judge should have been adjudicating, is not a relatively straightforward factual
    issue. Indeed, it was believed for a time that, as a general rule,
    discoverability cases should not be decided using summary judgment because of
    their complexity:
Aguonie
, at para. 36. There is no longer a general
    rule to this effect after
Hryniak
,

given the more robust
    approach now being taken to summary judgment:
Charette v. Trinity Capital
    Corporation
, 2012 ONSC 2824, at paras. 69-70,
per
Strathy J. (as he
    then was); and
Kassburg v. Sun Life Assurance Co. of Canada
, 2014 ONCA
    922, 124 O.R. (3d) 171, at para. 52. Still, the basic point remains true.
    Discoverability cases do tend to be contentious and complex, and this can,
    depending on the circumstances, affect their suitability for summary judgment.

[89]

As
    I have indicated, this may be particularly so in claims brought by a client
    against their lawyer where reliance on the lawyer and the risk of abuse of
    power can make clients vulnerable to delaying legal action:
Ferrara
; and
Lauesen
.

[90]

While
    the motion judge did not expressly state that the absolute limitation period he
    believed to apply made the matter conducive to summary judgment, his introductory
    overview to his decision suggests that he took comfort from the absolute nature
    of the limitation period:

Based on the material filed, I am satisfied that the Third
    Party Claim can be determined by way of summary judgment. Section 18 of the Act
    sets out an absolute two year limitation period in respect of Yung and Lais
    Third Party Claim which begins to run from the time the defendants were served
    with the Statement of Claim in the action. As both Lai and Yung were served
    with the Statement of Claim more than two years before the Third Party Claim
    was commenced, the Third Party Claim was commenced after the limitation period
    had expired and cannot succeed.

[91]

Failing
    to appreciate the factual demands of a statutory provision when deciding to
    proceed by summary judgment can be an error in principle. For example, in
Miaskowski
    v. Persaud
, 2015 ONCA 758, 393 D.L.R. (4th) 237, at paras. 42-56,
    reversing in part 2015 ONSC 1654, 51 R.P.R. (5th) 234, the motion judge was
    found to have erred in principle in granting summary judgment without
    appreciating the full demands of the statutory provisions at issue. In that
    case, he did not properly consider the standards imposed by a relevant
    regulation, or whether a landlords statutory duty could be removed by the
    lease. These errors clouded his decision that there was no genuine issue requiring
    a trial.

[92]

The
    same is true here. In my view, the finding that Mr. Yung and Ms. Lai had
    knowledge of their causes of action against Mr. Sun was arrived at in a summary
    judgment motion held without a full appreciation of the complexity of the
    issues at stake. That finding of fact should therefore not be relied upon or
    equated to a finding that could dispose of the issue of discoverability for the
    purposes of the
Limitations Act, 2002
on summary judgment.

CONCLUSION

[93]

I
    would allow the appeal, set aside the summary judgment dismissing Mr. Yungs
    and Ms. Lais third party claims for contribution and indemnity, and order that
    the matter proceed in accordance with the
Rules
.

[94]

The
    parties have agreed on costs. In keeping with their agreement, I would reverse
    the costs order made by the motion judge, and order costs in the motion below
    to the appellants, together, in the amount of $25,000, inclusive of
    disbursements and applicable taxes. I would also award costs of this appeal to
    the appellants, together, in the amount of $25,000, inclusive of disbursements
    and applicable taxes.

Released: May 7, 2018 (D.D.)

David M. Paciocco J.A.

I agree. Doherty J.A.

I agree. I.V.B. Nordheimer
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Mohamed v. Information Systems Architects Inc.,
    2018 ONCA 428

DATE: 20180507

DOCKET: C64503

Feldman, Watt, Paciocco JJ.A.

BETWEEN

Mitchum Mohamed

Plaintiff (Respondent)

and

Information Systems Architects Inc. (ISA)

Defendant (Appellant)

James A. LeNoury and Raymond MacKinnon, for the
    appellant

Lorne Sabsay, for the respondent

Heard: March 14, 2018

On appeal from the judgment of Justice Paul M. Perell of
    the Superior Court of Justice, dated September 26, 2017, with reasons reported
    at 2017 ONSC 5708.

Feldman J.A.:

A.

Background

[1]

The appellant engaged the respondent to provide technological consulting
    services under an Independent Consulting Agreement (ICA) for a six-month
    project that had an anticipated start date of November 2, 2015 and an
    anticipated end date of May 31, 2016. In the ICA, the parties agreed that the
    respondent would be an independent contractor. The project was with Canadian
    Tire, whose agreement with the appellant included a term that the appellant
    would not send any consultant who had a criminal record, except with Canadian
    Tires consent. After agreeing to work full-time under the ICA, the respondent
    resigned from his permanent, full-time employment.

[2]

Around November 2, 2015, the respondent told the appellant  before he signed
    the ICA and before was assigned to the Canadian Tire project  that he had a
    dated criminal record from high school. He also agreed to a background security
    check. On November 4, he again disclosed his criminal record to the appellant
    in a declaration of criminal record form. On November 5, he began work at
    Canadian Tire, but when the security check report came back one month later disclosing
    the criminal record, Canadian Tire received a copy and, as a result, asked the
    appellant to replace the respondent. Although the respondent asked the
    appellant to consider him for other roles, the appellant terminated the respondents
    engagement on December 10, 2015, relying on para. 11.III of the ICA, which
    states:

This agreement and its Term shall terminate upon the earlier
    occurrence of:

I. ISA, at their sole discretion,
    determines the Consultants work quality to be substandard.

II. ISAs project with Customer
    gets cancelled, experiences reduced or altered scope and/or timeline.

III.
ISA determines it is in
    ISAs best interest to replace the Consultant for any reason
.

IV. Immediately, upon written
    notice from ISA, for any breach of this Agreement by the Consultant. [Emphasis
    added.]

[3]

The respondent sued the appellant for breach of the ICA, claiming six
    months remuneration, that is, the full amount that would have been paid had
    the contract been completed, on the basis that the ICA is a fixed term contract
    where the respondent had no duty to mitigate his damages. Both parties moved
    for summary judgment, where the respondent asked the court to award damages for
    breach of contract, and the appellant asked the court to dismiss the action.
    Neither side took the position that a trial of any issue was required.

[4]

The motion judge awarded judgment to the respondent in the full amount
    of $82,540.92 plus $25,000 in costs. He made the following findings: 1) the
    appellant breached the duty of good faith performance of contracts by failing
    to use the termination clause in good faith; 2) in the alternative, the
    termination clause was void for vagueness; 3) the respondent was an independent
    contractor; and 4) the ICA was a fixed term contract, and based on this courts
    decision in
Howard v. Benson Group Inc. (The Benson Group Inc.)
, 2016
    ONCA 256, 129 O.R. (3d) 677, the respondent was entitled to damages based on
    the balance of the fixed term contract with no duty to mitigate.

[5]

The appellant appeals on the basis that the motion judge made extricable
    errors of law in his approach to the interpretation of the contract, and that
    he erred in law in finding that the termination clause was void for vagueness
    and in concluding that the respondent did not need to mitigate his damages or
    account for monies earned in mitigation.

B.

Issues

[6]

The appellants submissions raise three issues:

(1)

Did the motion judge make
    extricable errors of law in his approach to the interpretation of the termination
    clause of the ICA?

(2)

Did the motion judge err in
    finding that the appellant was entitled to terminate the ICA under para. 11.III
    but that it did not do so in good faith?

(3)

Did the motion judge err in law in
    finding that the ICA was a fixed term contract, and by applying the principle
    from this courts decision in
Howard v. Benson
that the measure of the
    respondents damages is the amount owing for the unexpired term of the contract
    with no duty to mitigate?

C.

Analysis

(1)

Did the motion judge err in his interpretation of the termination clause?

[7]

Because the issue before the court was the interpretation and
    enforcement of a non-standard form contract between the parties, on appeal, the
    principles articulated by the Supreme Court of Canada in
Sattva Capital
    Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 SCR 633 apply.
[1]
In
Sattva
, Rothstein J. explained at para. 50 that:

Contractual interpretation involves issues of mixed fact and
    law as it is an exercise in which the principles of contractual interpretation
    are applied to the words of the written contract, considered in light of the
    factual matrix.

[8]

As a result, significant deference is owed to the trier of fact on the
    findings regarding the interpretation of the particular contract. Justice
    Rothstein allowed, however, that there can be an extricable question of law,
    including the application of an incorrect principle, the failure to consider a
    required element of a legal test, or the failure to consider a relevant factor,
    that would still have to be answered correctly by the trier of first instance.

[9]

In this case, the motion judge found at para. 39 that: Read literally,
    it appears that under the termination provision, ISA has an unfettered right to
    terminate Mr. Mohameds contract. However, the motion judge then went on to
    say that by adding the
contra proferentem
rule to the contractual
    interpretation analysis, and by considering the doctrine of good faith in the
    performance of contracts from
Bhasin v. Hrynew
, 2014 SCC 71, [2014] 3
    S.C.R. 494, it was unclear whether the appellant could exercise its rights
    under the termination clause in an unfettered manner. He further found that the
    clause was vague and uncertain and therefore unenforceable, because it was
    illogical that the appellant would be required to give notice of termination if
    it was terminating the contract for breach, but not if it was terminating for
    one of the other reasons.

[10]

The
    appellant submits that the motion judge erred in law by referring to the
contra
    proferentem
rule and the good faith performance obligation in interpreting
    the termination clause, after finding that its meaning was clear when read
    literally. I would agree that this would have been an extricable error of law
    had the motion judge taken that approach.

[11]

However,
    a close reading of the reasons shows that in the impugned paragraphs (paras.
    39-40), the motion judge was not interpreting the termination clause to change
    its literal meaning. Rather, he was assessing the main issue in the action,
    whether the appellant failed to exercise its right to terminate under the
    clause in good faith, applying the organizing principle of good faith
    performance of contracts from
Bhasin
.

[12]

At
    para. 39 of his reasons, the motion judge specifically identified the principle
    of good faith as an operative principle in the performance of contracts  not
    a principle applicable to the interpretation of contracts. Applying the
    principle of good faith to the performance of the termination provision, he
    concluded at paras. 39-40 that the principle qualifies ISAs rights to
    terminate without cause, such that the appellant could not simply, and in an
    unfettered way, determine that it is in their best interest to replace Mr.
    Mohamed and then terminate the contract. He added at para. 42 that the
    appellant was mistaken in thinking that it had an unfettered right to
    terminate Mr. Mohameds contract because the caselaw supported the
    respondents understanding that there was some element of good faith or trust
    in the exercise of the provision. The motion judge then went on to find that
    the appellant breached the ICA by not acting in good faith when it exercised
    its rights under the termination provision.

[13]

Having
    made the finding of breach, the motion judge nevertheless went on to find,
    essentially in the alternative, that the termination clause was void for
    vagueness. I would agree with the appellant that the motion judge made two
    extricable errors of law in the application of the principles of contractual
    interpretation in reaching this conclusion.

[14]

First,
    having found that the meaning of the termination provision was clear when read
    literally, there was no basis to apply the
contra proferentem
rule.
    That rule may be used only to resolve an ambiguity (see:
Consolidated-Bathurst
    v. Mutual Boiler
, [1980] 1 S.C.R. 888, at pp. 899-900), not to create one.

[15]

Second,
    having found the meaning of the termination clause to be clear, the subsequent
    conclusion that the clause is vague and uncertain because of the differing
    notice requirements is inconsistent, and does not bear logical scrutiny. The
    motion judge identified no basis on the record for concluding that it was not
    the intention of the parties to require notice of termination only where the respondents
    engagement was being terminated for breach of the ICA, or that the clause could
    not be implemented as it reads.

[16]

The
    result of finding two extricable errors of law in the motion judges finding
    that the termination clause is unenforceable is that the finding cannot stand
    and must be set aside. However, nothing ultimately turns on this conclusion,
    because of the motion judges other finding that the appellant was obliged to
    exercise its rights under para. 11.III of the ICA in good faith and that it
    breached the agreement by failing to do so.

(2)

Was the appellant entitled to terminate the agreement on the basis of
    para. 11.III of the ICA?

[17]

At
    para. 11, the motion judge accepted the evidence of the respondent on the
    motion that he understood the meaning of the termination clause and accepted it
    because he trusted ISA not to terminate the contract for a frivolous reason.
    In his discussion of good faith as an organizing principle in the performance
    of contracts, the motion judge referred to the respondents understanding that there
    would be an element of good faith in the exercise of the provision by the
    appellant, and found that this understanding was supported by the law from the
Bhasin
decision of the Supreme Court. He concluded that the appellant breached the ICA
    by terminating it in the way and the circumstances that he did.

[18]

I
    agree that although the appellant had a facially unfettered right to terminate
    the contract, it had an obligation to perform the contract in good faith and
    therefore to exercise its right to terminate the contract only in good faith.
    Although the motion judge did not state explicitly the basis for concluding
    that the appellant breached its good faith obligation, he had reviewed the
    facts and circumstances earlier in his reasons. I see no error in his
    conclusion.

[19]

Because
    the respondent disclosed his criminal record to the appellant right at the beginning,
    before signing the ICA and before commencing the project with Canadian Tire,
    and complied with all the requirements of the security check, the appellants
    reliance on the criminal record to terminate the contract one month later was
    not a good faith exercise of its rights under the termination clause of the
    ICA. In my view, the motion judge made no error in concluding that the
    appellant breached its obligation to perform the ICA in good faith by
    terminating it under para. 11.III on the basis of the criminal record, without
    trying to secure Canadian Tires agreement to the respondent continuing on the
    project, and by not offering him any other consulting project.

(3)

Did the motion judge err by awarding damages based on the fixed term of
    the contract with no duty to mitigate?

[20]

This
    court recently held in
Howard v. Benson
that an employee under a fixed
    term contract whose employment is terminated without cause has no duty to mitigate.
    The court stated at para. 39 that where a contract provides either expressly or
    by implication for a penalty for early termination of the contract, that is the
    amount that is payable with no duty to mitigate, and in a fixed term contract
    of employment, absent a provision that provides otherwise, the penalty for
    early termination i
s by default the wages and benefits for the
    unexpired term of the contract
.

[21]

In
    his reasons, the motion judge found that the respondent was an independent
    contractor, not a dependent contractor or an employee, but that no matter his
    status, because the ICA is a fixed term contract, damages are based on the unexpired
    term of the contract with no duty to mitigate.

[22]

On
    the appeal, the appellant disputes that the ICA is a fixed term contract. It
    argues secondarily that the principle from
Benson
does not apply to an
    independent contractor. In response, the respondent renews his submission that
    he was not an independent contractor, as he had agreed in the ICA, but was instead
    an employee or a dependant contractor.

[23]

The
    motion judge specifically found that the respondent was an independent
    contractor, referring to the analysis in his recent reasons in the case of
Fisher
    v. Hirtz
, 2016 ONSC 4768. He was of the view, however, that regardless of
    how the respondents status as a worker may be characterized, the principle in
Benson
,
which followed and applied
Bowes v.
    Goss Power Products Ltd.
, 2012 ONCA 425, 293 O.A.C. 1, applies in the
    circumstances, because the ICA is a fixed term contract and the damages should
    therefore be based on the fixed term of the contract with no duty on the
    respondent to mitigate.

[24]

The
    appellants main argument is that the principle from
Benson
does not
    apply because the term of the ICA is not unambiguously framed as a fixed term contract:
    the start and end dates have some flexibility built in, plus the ICA was
    terminable by the appellant if Canadian Tire discontinued the project. I see no
    basis to find unreasonable the motion judges conclusion that neither the minor
    contractual flexibility in the commencement and end dates of the ICA, nor the
    possibility that the project could be discontinued, make the ICA a contract of
    indefinite duration. There is therefore no basis to interfere with his finding that
    it is a fixed term contract.

[25]

The
    next issue is, what flows from that finding in law? Should the damages in this
    case, where the respondent agreed to be hired as an independent contractor and
    not an employee, still be based on the fixed term provision with no duty to
    mitigate?

[26]

Without
    deciding whether the principle from
Benson
would apply to all fixed
    term contracts of independent contractors, I agree with the motion judge that
    it applies in the respondents specific circumstances. One of the rationales
    from
Bowes
and
Benson
for finding that the parties intended
    that compensation for breach of the agreement would be paid for the fixed term
    with no duty to mitigate is by analogy to a liquidated damages clause. A second
    rationale is ensuring fairness and certainty for workers.

[27]

In
    my view, those two rationales also apply on the facts of this case. As in
Benson
,
    the agreement that the parties made did not contemplate the situation that
    occurred. In
Benson
, the termination clause that the employer had
    relied on was struck out based on ambiguity, leaving the court to determine the
    intention of the parties on termination, based on the balance of the contract. Similarly
    in this case, the appellant had broad grounds under which it could terminate
    the ICA so that no damages would ever be payable. But what occurred instead was
    that the appellant breached the ICA by failing to terminate in good faith,
    thereby triggering a right to damages that was not contemplated by the
    agreement. The court is therefore again left to discern the intentions of the
    parties from the remaining provisions of the ICA and the surrounding
    circumstances.

[28]

The
    respondent gave up his permanent full-time job to accept the fixed term contract
    with the appellant, which provided full-time work but for six months. By specifically
    agreeing that his engagement could be terminated without any compensation when
    the appellant deemed it to be in its best interests to do so, the respondent was
    giving up his right to damages for termination without cause, just as the
    employee in
Benson
did by agreeing to a fixed term contract.

[29]

Although
    he was willing to accept that his engagement could be terminated with no
    payment when the appellant deemed it to be in its best interests to do so, the
    respondent expected, as he was entitled to do, that the appellant would only
    exercise its rights under the termination clause in good faith. When that did
    not occur, the respondent was entitled to damages. Although the contract does
    not provide for what damages would flow from a failure to terminate in good
    faith, based on the specific terms and circumstances of this contract, it is
    reasonable to infer that the parties intended that if the power to terminate
    was not exercised in good faith, then damages for breach would be based on the wages
    owed for the remaining term of the agreement, without a duty to mitigate.

[30]

I
    would therefore find no error in the motion judges decision to apply
Benson
in the circumstances of this case, or to award damages based on the balance of
    the term of the contract with no duty to mitigate.

D.

Result

[31]

For
    these reasons, I would find that while the conclusion reached by the motion
    judge that the termination clause is void for vagueness should be set aside,
    the result he reached that the appellant breached the ICA, that it is a fixed
    term contract, and that damages for breach are the amount owing for the unexpired
    term of the contract without deduction for mitigation, should all be affirmed.

[32]

I
    would therefore dismiss the appeal with costs fixed in the agreed amount of
    $10,000 for fees and disbursements, plus HST.

Released: K.F. May 7, 2018

K. Feldman J.A.

I
    agree. David Watt J.A.

I
    agree. David M. Paciocco J.A.

[1]

The
    motion judge referred to the ICA as a standard form contract, referring to a
    standard form used by the appellant. However, the ICA is not an industry-wide standard
    form contract within the meaning of
Ledcor Construction Ltd. v. Northbridge
    Indemnity Insurance Co.
, 2016 SCC 37, [2016] 2 SCR 23, at para. 25. The
    appellant conceded in oral argument that the contract is properly governed by
    the standard of review set out in
Sattva
.


COURT OF APPEAL FOR ONTARIO

CITATION: Mori Essex Nurseries Inc. v. Northbridge General
Insurance Corporation, 2018 ONCA 452

DATE: 20180514

DOCKET: C64520

Rouleau, Roberts and Fairburn JJ.A.

BETWEEN

Mori Essex Nurseries Inc. and Mori-Vines Inc.

Plaintiffs (Appellants)

and

Northbridge General Insurance Corporation and
Lombard General Insurance Company of Canada

Defendants (Respondents)

Anne Juntunen, for the appellants

William Chalmers, for the respondents

Heard: May 11, 2018

On appeal from the judgment of Justice Markus Koehnen of
    the Superior Court of Justice, dated October 3, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appeal was argued principally on the basis that the care custody or
    control exclusion did not apply so as to justify the respondents refusal to
    provide a defence to the appellant Mori Essex Nurseries (Essex).

[2]

The motion judge found that the insurer had no duty to defend because of
    the exclusions contained in the Essexs Commercial General Liability Policy. Essex
    appeals arguing that the claim includes damage that may have occurred after the
    vines left the care custody or control of Essex. As a result, Essex maintains
    that the care custody or control exclusion in the policy does not apply to some
    of the damage being claimed and the insurer must provide a defence.

[3]

We disagree. The motion judge properly focussed on the pleadings and the
    policy. He carried out a careful review and correctly found that, as they
    relate to Essex, the pleadings allege that any defect in the vines resulting in
    the damage claimed was caused by Essex negligent treatment of the vines when
    they were in its care custody or control. This triggers the care custody or
    control exclusion of the policy.

[4]

In any event, the motion judge also considered Pellers claim, as set
    out its pleading. As he explained in his reasons, Pellers allegation is that
    the damage was caused by fungus that affected 100% of the vines. This triggers
    a second exclusion in the policy, the exclusion for damage resulting from fungi
    or spores.

[5]

In conclusion, we see no error in the motion judges decision and the
    appeals are dismissed. The cross-appeal is dismissed as moot. Costs to the
    respondent fixed at $10,000 inclusive of disbursements and applicable taxes.


COURT OF APPEAL FOR ONTARIO

CITATION: Ontario (Ministry of the Environment and Climate
    Change) v. Sunrise Propane Energy Group Inc., 2018 ONCA 461

DATE: 20180515

DOCKET: M48649

Trotter J.A. (Motions Judge)

BETWEEN

Her Majesty the Queen in Right of Ontario
    (Ministry of the Environment and Climate Change)

Respondent

and

Sunrise Propane Energy Group Inc., 1367229
    Ontario Inc., Shay Ben-Moshe and Valery Belahov

Applicants

Leo Adler, for the applicants

Nicholas Adamson and Justin Jacob, for the respondent

Heard: April 26, 2018

Trotter J.A.:

A.

introduction

[1]

On August 10, 2008, a series of explosions rocked the north end of
    Toronto. They occurred at a propane gas facility operated by Sunrise Propane
    Energy Group Inc. (Sunrise).
[1]
A Sunrise employee, Parminder Singh Saini, was killed. The blasts caused
    structural damage to many surrounding buildings. Residents within a 1.6-kilometre
    radius of the facility were evacuated to enable a major environmental clean-up.

[2]

The applicants were charged under ss. 186(1), 186(2), and 194(2) of the
Environmental
    Protection Act
, R.S.O. 1990, c. E.19 (
EPA
) for discharging
    contaminants into the environment (in violation of s. 14) and failing to comply
    with lawful orders issued to address the clean-up. They were also charged under
    ss. 25(2)(a) and (h) of the
Occupational Health and Safety Act
, R.S.O.
    1990, c. O.1 (
OHSA
) for failing to properly train and ensure the
    safety of its employees.

[3]

After a 14-day trial, the applicants were convicted of nine provincial
    offences. Substantial fines were imposed. Appeals of both the convictions and
    sentences were dismissed.

[4]

The applicants seek to invoke the jurisdiction of this court to review
    their convictions and sentences.
[2]
However, they must first seek leave to appeal. Leave to appeal to this court in
    the provincial offences context is only permitted on questions of law that are
    essential in the public interest or for the due administration of justice in
    the province. As explained below, neither requirement has been met in this
    case. The application must be dismissed.

B.

background

[5]

The evidence at trial was lengthy. However, for the purposes of this
    application, the underlying facts can be stated briefly.

[6]

The explosions happened during a so-called truck-to-truck transfer
    (TTT) of propane at the Sunrise facility, while transferring propane from a
    larger propane truck to a smaller one. The spread of heat caused other propane
    tanks at the facility to explode. This resulted in numerous contaminants being
    discharged into the environment including heat, vibration, sound, gas vapour,
    asbestos, smoke, dust, metal fragments, and other debris. It forced the immediate
    evacuation of approximately 12,000 people from their homes while the fire
    persisted at the facility. Displaced residents suffered lost wages and had to
    pay for temporary shelter and clothing. The explosions caused major structural
    damages to homes and businesses in the area. In addition to the death of Mr.
    Saini, others were also injured.

[7]

The initial explosion was the result of a propane leak that occurred
    during the TTT. The two possible sources for the leak, which were not disputed
    at trial, were the transferring hose or the bypass system of the pump affixed
    to one of the receptacles used to transfer the propane.

[8]

On August 13, 2008, Sunrise became subject to a Provincial Officers
    Order, made under the
EPA
, requiring it to clean up the damage caused
    by the explosion so that local residents could return to their homes. They were
    charged with multiple counts of failing to comply with this Order.

[9]

The applicants trial took place before a judge of the Ontario Court of
    Justice. The trial judge convicted the applicants of numerous offences under
    both the
EPA
and the
OHSA
: see
Ontario (Ministry of
    Labour and Ministry of the Environment) v. Sunrise Propane Energy Group Inc. et
    al
, 2013 ONCJ 358, 229 A.C.W.S. (3d) 442
.
Over two years after the
    convictions were registered, the applicants were collectively ordered to pay
    fines totalling $5.3 million: see
R. v. Sunrise Propane Energy

(2016),
    129 W.C.B. (2d) 182 (Ont. C.J.).

[10]

The
    applicants appealed all of their convictions to a judge of the Superior Court
    of Justice (the appeal judge). The applicants raised numerous grounds of
    appeal. None found favour in that court, and the appeal was dismissed: see
R.
    v. Sunrise Propane Energy Group Inc
.,
2017 ONSC 6954, 142 W.C.B. (2d)
    379.

C.

the application for leave to appeal

(1)

The Test for Leave to Appeal

[11]

The
    applicants seek to appeal their convictions under the
EPA
(but not the
OHSA
). Before addressing the merits of the grounds of appeal, it is
    helpful to set out the statutory and jurisprudential framework for determining
    whether leave to appeal should be granted.

[12]

The
    applicants have already had a full appeal to the Superior Court of Justice. A
    further appeal to this court is not automatic. Leave to appeal is required
    under s. 131 of the
Provincial Offences Act
, R.S.O. 1990, c. P.33 (
POA
),
    which sets the bar very high:

131(1) A defendant or the prosecutor or the Attorney General by
    way of intervention may appeal from the judgment of the court to the Court of
    Appeal, with leave of a judge of the Court of Appeal
on special grounds,
    upon any question of law alone
or as to sentence.

(2) No leave to appeal shall be granted under subsection (1)
    unless the judge of the Court of Appeal considers that in the particular
    circumstances of the case it is
essential in the public interest or for the
    due administration of justice that leave be granted
. [Emphasis added.]

[13]

Historically,
    leave to appeal has been granted sparingly under this section. In the leading
    case of
R. v. Zakarow
(1990), 74 O.R. (2d) 621, Carthy J.A. described
    the test for leave in the following way, at pp. 625-626:

However, s. 114 of the
Provincial Offences Act
sets a
    very high threshold for granting leave to appeal. There must be special grounds
    on a question of law and it must be essential in the public interest or for the
    due administration of justice that leave be granted. No matter how wrong the
    judgment under appeal may be, these other criteria must be met. The section was
    clearly drafted to eliminate all but appeals on the most significant issues.
[3]

The high standard established in
Zakarow
has
    been applied regularly by judges of this court.

[14]

As
    a first step, s. 131(1) of the
POA
requires the identification of a
    pure question of law; not one of fact, nor of mixed fact and law: see
R. v.
    Krukowski
(1991), 2 O.R. (3d) 155 (C.A.), at p. 159;
Ontario (Labour)
    v. Enbridge Gas Distribution Inc
.
, 2011 ONCA 13, 272 O.A.C. 347, at
    para. 35.

[15]

Section
    131(2) broadens the inquiry significantly by engaging the concepts of the
    public interest and the due administration of justice. In
R. v. Rankin
,
    2007 ONCA 127, 216 C.C.C. (3d) 481, Gillese J.A. held, at para. 26, that [p]rovincial
    offences appeal judgments are intended to be final, and leave should only be
    granted in exceptional cases raising issues of broad importance. This
    approach is echoed in
Ontario (Ministry of Labour) v. Guelph (City)
,
    [2013] O.J. No. 6031 (C.A.), in which Watt J.A. held, at para. 39, that the
    inclusion of statutory terms like special grounds and essential mean that further
    appeals should be restricted to exceptional cases where the public interest or
    the due administration of justice makes it absolutely indispensable or
    necessary for the Court of Appeal to decide the issues raised.

[16]

In
    applying this aspect of the test under s. 131 of the
POA
, the focus is
    not on whether the subject matter of the case is of interest or importance to
    the public. In this case, clearly it is  the incident at Sunrise was a
    dramatic, historical event in Toronto. A man lost his life. Many others were
    affected. Rather, s. 131 focuses on the significance of the legal issues raised
    on appeal:
Rankin
, at para. 30.

(2)

The Proposed Grounds of Appeal

[17]

The
    Notice of Application for Leave to Appeal raises numerous grounds of appeal.
    However, in oral argument, only two emerged as serious contenders. As discussed
    below, neither identifies a pure question of law. Both grounds of appeal are
    fact-laden. The legal issues embedded in the grounds fail to transcend the
    unique factual circumstances of this case.

(a)

Officially Induced Error

[18]

The
    first proposed ground relates to the defence of officially induced error. In
    the Applicants Factum, it is posed in the following way:

Can a Judge who finds that the defence of officially induced
    error has been made out by the [applicants] for the regulatory offence charged,
    then impose a deadline that effectively nullifies that very defence  despite
    having accepted that no specific limit was ever set by the official who led the
    [applicants] to believe that they were permitted to continue to conduct
    business by doing truck to truck transfers?

[19]

As
    noted above, the explosions were triggered during a TTT at the Sunrise
    facility. The legality of Sunrise employing TTTs at its facility was an issue
    at trial. However, the applicants were not specifically charged with permitting
    this form of propane transfer; they were charged with discharging contaminants
    into the environment. Nevertheless, the TTT-related issues were important to
    the due diligence defence at trial.

[20]

Well
    before August 10, 2008, the Ontario Technical Standards and Safety Authority (the
    TSSA)
[4]
decided to restrict the practice of TTTs. On October 27, 2006, the TSSA issued
    a Directors Public Safety Order prohibiting this type of transfer, except at a
    licensed bulk plant. The trial judge found that the Sunrise facility did not
    fall under this exception.

[21]

Around
    this time, a TSSA inspector, Donald Heyworth, attended at Sunrise on a couple
    of compliance visits. He ordered Sunrise to comply with the Directors Public
    Safety Order. Discussions were held about upgrading the facility to permit TTTs.
    As he was leaving Sunrise one day, someone asked Mr. Heyworth, Can we continue
    operating? He replied, Yes. At trial he explained that he meant that Sunrise
    could continue to transfer propane from trucks to stationary tanks, and then
    fill cylinders from those tanks. It was not his intention to permit the
    continued use of TTTs. However, the applicants believed that they could
    continue to perform TTTs until its facility was upgraded.

[22]

In
    June 2007, the TSSA issued a Code Adoption Document, which was posted to its
    website on June 14, 2007. The Document prohibited TTTs unless the facility was
    a bulk plant. There was no evidence of anyone purporting to give the applicants
    an exemption from the requirements set out in this Document. The applicants did
    not believe they were bound by this Document, preferring to rely on the (mistaken)
    exchange with Mr. Heyworth, and acting on their understanding that they could
    continue TTTs in the same manner as they had prior to the Directors Public
    Safety Order.

[23]

The
    trial judge found, at para. 539, that Mr. Heyworth either expressly told [the
    applicants] that they could continue to conduct business by doing
    truck-to-truck transfers or that he implied that they could continue to conduct
    business in this manner which led them to be mistaken as to what the situation
    was. Applying
R. v. Jorgensen
, [1995] 4 S.C.R. 55, and

Lévis
    (City) v. Tétreault
, 2006 SCC 12, [2006] 1 S.C.R. 420, the trial judge
    found that the applicants could rely on an officially induced error, but only
    to a point. As the trial judge said, at para. 541:

However, in my view, this defence was only available to themup
    to the date where the code adoption document was issued in June of 2007 which
    prohibited the truck-to-truck transfers.

[24]

The
    appeal judge found no error in the trial judges application of this doctrine. Moreover,
    he concluded that she did not impose an artificial deadline or limitation
    period on the operation of the defence. Placing the issue in wider context, the
    appeal judge said, at para. 63:

The [applicants] were not charged with breaching a regulatory
    practice in conducting truck to truck transfers. The issue of the transfers is
    significant when assessing due diligence. If the [applicants] were expressly
    prohibited from pursuing this practice but continued to do so, any defence of
    due diligence must fail.

[25]

The
    appeal judge concluded, as did the trial judge, that any misconception the
    applicants held about TTTs should have evaporated when the Code Adoption
    Document was posted to the TSSA website on June 14, 2007. As the appeal judge
    concluded, at paras. 66 and 68:

Once the issue had been clarified, it was incumbent upon the [applicants]
    to end the practice or seek approval for an exemption. There is no evidence
    that they did either of these things, or that they sought legal advice on the
    issue.

. . .

For the above reasons, I reject the [applicants] argument that
    the trial judge erred in her assessment of due diligence in the context of
    officially induced error.

[26]

The
    applicants renew this complaint on appeal. I see no error. For the trial judge,
    the issue involved the application of a unique factual set of circumstances to
    a settled body of law: see
Lévis
and
R. v. Bédard
, 2017 SCC
    4, [2017] 1 S.C.R. 89. For the appeal judge, the issue involved an assessment
    of the reasonableness of the trial judges findings. The contours of the
    doctrine of officially induced error were not engaged by the resolution of this
    issue at either level of court.

[27]

The
    applicants submit that further guidance on officially induced error is
    required. Whether or not this is so, the outcome of this case would not be
    affected. Counsel for the applicants did not suggest that an accused person or
    entity is entitled to rely upon erroneous official advice in perpetuity. The
    applicants said that they believed they could do so until they upgraded their
    facility. However, the trial judge found, and the appeal judge affirmed, that
    it was no longer reasonable for the applicants to rely upon the advice after
    the internet posting of the Code Adoption Document.

[28]

Addressing
    the elements of officially induced error in
Lévis
, LeBel J. said, at
    para. 27, it is necessary to establish the objective reasonableness not only
    of the advice, but also of the reliance on the advice. In this case, the trial
    judge was entitled to find that such reliance was not reasonable after the Code
    Adoption Document was posted. The appeal judge found that this conclusion was
    reasonable. I agree with this determination, which is a question of mixed fact
    and law.

(b)

Compliance with the Ministry of the Environment Order

[29]

The
    second ground relates to the enforcement of the Order issued in the aftermath
    of the explosions. In the Applicants Factum, the issue is framed as follows:

Can a Provincial Officers Orderwhich requires a company to
    comply with the Order, unless they provide notice that they cannot, or are
    unwilling, to do so  which notice the trial Judge found that the company did
    provide  nevertheless be convicted for 4 of the 5 counts, after the trial
    Judge ruled that the notice given by the [applicants] only applied to one
    count, and not all?

Even on its face, this is not a question of law. The
    legal question, if there is one, is buried in factual minutiae.

[30]

The
    factual context for this issue arises from a Ministry of the Environment Provincial
    Officers Order, issued on August 13, 2008. The Order was made under the
    authority of the
EPA
. It required the performance of several work
    items to address the fallout of the explosions, as follows:

1. By 5:00 p.m. on August 13, 2008, provide verbal notice
    and written confirmation that Sunrise is able and willing to comply with the
    requirements of the Order;

2. Provide at least 12 hours verbal notice and written
    confirmation if for whatever reason Sunrise cannot or is unwilling to comply
    with the Order;

3. By 5:00 p.m. on August 13, 2008, retain the services of
    one or more qualified persons to carry out the work required by the Order;

4. By 5:00 p.m. on August 13, 2008, provide written
    verification that one or more qualified persons has been retained in accordance
    with item 3;

5. Continue to carry out the cleanup of the residential
    area around 54 Murray Road, effective immediately;

6. By 5:00 p.m. on August 14, 2008, develop and submit to
    the Provincial Officer a Residential Clean-Up Plan;

7. Provide written copies of the sampling results to the Provincial
    Officer and Dr. Shapiro of Toronto Public Health, effective immediately; and

8. Develop a Site Clean-Up Plan for 54 Murray Road within
    24 hours of the Ontario Fire Marshall releasing the site.

[31]

The
    convictions were based on failure to comply with items 1, 4, 5, and 6. The
    applicants were acquitted in relation to item 2  providing notification of an
    inability or unwillingness to comply with the Order, both verbally and in
    writing.

[32]

The
    applicants argue that an acquittal in relation to item 2 means that acquittals
    must follow for all of the non-compliance charges because the items are not
    severable. The trial judge rejected this argument twice. In her reasons for
    judgment at the end of the trial, she said, at para. 570:
The [applicants] did take
    steps to retain counsel and through counsel to notify the Ministry that they
    did not intend to comply with the clean-up order. Given this, the [applicants]
    have established that they were duly diligent regarding this item.
In
    between conviction and sentence, the applicants brought an application to
    re-open the convictions in relation to compliance with the Order. The trial
    judge reiterated that the acquittal in relation to item 2 was based on due
    diligence. She also said: Although there was a verbal notification there never
    was a written notification. Item two was not complied with.

[33]

Although
    numerous complaints about the Order were made to the appeal judge, including
    the assertion that it lacked precision, the applicants did not squarely argue
    this point. This is reason itself to deny leave to appeal.

[34]

Moreover,
    as noted in para. 32 above, the trial judges acquittal of the applicants in
    relation to item 2 was based on an application of the due diligence defence.
    She did not find that the item had been complied with, for the simple reason
    that the applicants failed to provide
written
notification of their
    inability to comply with the Order. In other words, in terms of the
actus
    reus
of the count relating to item 2, the applicants did not comply.

[35]

This
    ground of appeal essentially turns on whether the trial judge properly
    interpreted the Order. This is a question of mixed fact and law, not one of law
    alone. Even if it could be construed as an error of law, it has not been
    demonstrated that the interpretation of the administrative/enforcement Order
    issued in this case is essential in the public interest or for the due
    administration of justice in the province.

[36]

I
    conclude by returning to
Zakarow
. When denying leave to appeal, Carthy
    J.A. said, at p. 626: I see nothing significant about this proposed appeal
    except that a statute appears to have been misinterpreted. Assuming for the
    sake of argument that the trial judge misconstrued the Order as the applicants
    suggest, I would characterize the error in the same way.

D.

Conclusion and disposition

[37]

The
    application for leave to appeal is refused.

Released: GTT MAY 15 2018

G.T. Trotter J.A.

[1]

The other applicants are a related company (1367229 Ontario
    Inc.), as well as two corporate directors, Shay Ben-Moshe and Valery Belahov.

[2]

In their Notice of Application for Leave to Appeal, the
    applicants purport to appeal the fines that were imposed. However, this issue
    was not pursued in its factum, nor was it addressed in oral argument.

[3]
The version of s.114 of the
Provincial Offences Act
, R.S.O. 1980, c.
    400, in that case was identical in the relevant aspects to the current version
    in s. 131.

[4]

This entity, created by the Ontario
Technical Standards and
    Safety Act, 2000
, S.O. 2000, c. 16, delivers public safety services in a
    number of key business sectors, such as fuels (including propane).