COURT OF APPEAL FOR ONTARIO

CITATION: Wall v. Office of the
    Independent Police Review Director, 2014

ONCA 884

DATE: 20141211

DOCKET: C58189

Feldman, Blair and Pepall JJ.A.

BETWEEN

Jason Wall

Respondent

and

Office of the Independent Police Review Director

Appellant

Heather Mackay, for the appellant

Clayton C. Ruby and Nader R. Hasan, for the respondent

Heard: September 12, 2014

On appeal from the order of the Divisional Court
    (Justices Anne M. Molloy, David Aston and Alison Harvison Young), dated June 6,
    2013, with reasons reported at 2013 ONSC 3312, 362 D.L.R. (4th) 687, allowing
    an appeal from a decision of the Office of the Independent Police Review
    Director, dated February 2, 2012.

Blair J.A.:

Background

[1]

On June 27, 2010, Jason Wall was walking along Yonge Street near Gerrard
    Street in the City of Toronto when he was arrested by two officers of the
    Toronto Police Services.  His apparent crime was that he was wearing a bandana around
    his neck during the tense days of the G20 Summit of world leaders held in
    Toronto.  He was released without charges the next day, after 28 hours in
    custody.

[2]

Like several hundred of the more than 1,100 protesters arrested during
    the Summit, Mr. Wall filed a complaint with the Office of the Independent
    Police Review Director (OIPRD).  The Director screened in the complaint for
    investigation pursuant to the
Police Services Act
, R.S.O. 1990, c. P.15,
    and after investigation found that the allegation of misconduct was
    substantiated against the arresting police officers and that it was of a
    serious nature.  Disciplinary hearings under the
Police Services Act
proceeded
    against the officers and a civil action has been settled.

[3]

The circumstances leading up to the present appeal arise out of the investigative
    report that was prepared in relation to the two arresting officers as part of
    the process of investigating Mr. Walls complaint.  Portions of that report
    indicated that the arrest may have occurred as a result of orders from higher
    ranking officers.  Those orders are said to have directed that anyone dressed
    in certain get-up (including the wearing of a bandana) was to be arrested and
    charged with being disguised with the intent to commit an indictable offence
    (the charge on which the appellant was arrested).  The report revealed that the
    orders may have been conveyed to the higher ranks at a meeting at which the
    Chief of the Toronto Police Services, William Blair, had attended.

[4]

Mr. Wall received a copy of the investigative report shortly after its
    release on September 7, 2011.  On January 25, 2012, he filed a follow-up
    complaint (or, alternatively, a second complaint) against Chief Blair and any other
    officers involved in or having knowledge of the meeting.

[5]

The January 25 complaint was filed in this alternative fashion because
    of a potential difficulty posed by s. 60(2) of the
Police Services Act
,
    which provides that the Director may refuse to deal with a complaint that is
    filed more than six months after the facts on which it is based occurred.  Mr.
    Wall and his counsel recognized there was a risk that, if the subsequent
    complaint were considered a new complaint, as opposed to a follow-up complaint,
    s. 60(2) could create a timing problem.  While his first complaint had been
    filed on December 28, 2010 within the six-month period after the G20 Summit
    the January 25, 2012 complaint was not; the facts on which it was based (albeit
    unknown to Mr. Wall until shortly before) had all occurred well outside the
    six-month period.

[6]

Their concerns proved well-founded.  On February 2, 2012, the Director
    advised that he was not going to proceed with the complaint because it was out
    of time.

[7]

Mr. Wall sought judicial review of that decision.  The Divisional Court
    quashed the Directors decision not to proceed and remitted the matter back to
    the Director for his reconsideration whether to proceed.  The OIPRD appeals
    that decision, with leave.

[8]

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

The Complaint(s) and the Directors Decisions

[9]

On December 28, 2010, Mr. Wall filed his complaint with the OIPRD
    outlining his version of what had happened.  In his affidavit, he stated that
    he requested
a full investigation into [his] illegal arrest
, the
    illegal searches of [his] person, shoulder bag, and cellular telephone, as well
    as [his] subsequent mistreatment in the Prisoner Processing Centre (emphasis
    added).

[10]

Eight
    months later, the Director issued his investigative report concluding that Mr. Walls
    allegations were substantiated and serious in nature.  He found there was a
    sufficient body of evidence to establish reasonable grounds to believe that
    misconduct had occurred in connection with the complaint.

[11]

The
    arresting officers  Constables Vincent Wong and Blair Begbie  were
    subsequently prosecuted for disciplinary offences under the
Police Services
    Act
.  On December 13, 2013, the Honourable Walter S. Gonet, Hearing
    Officer, found that Cst. Wong  who had conducted the actual arrest  had
    committed police misconduct by making an unlawful and unnecessary arrest
    without good and sufficient cause.  He dismissed the allegations against Cst.
    Begbie who was with Cst. Wong at the time.

[12]

The
    Directors investigative report was very thorough insofar as it dealt with the
    allegations concerning the two arresting officers.  For the first time,
    however, it revealed that Constables Wong and Begbie were (or were under the
    impression they were) acting on instructions from higher command.  The Director
    took no steps to inquire into any such instructions.

[13]

Cst.
    Begbie is said in the report to have stated that:

·

[H]e was briefed by Sergeant Gibb, who had never briefed them
    before.  Sergeant Gibb advised Constable Begbie that he had just come from a
    meeting with the Chief of Police and he had specific instructions for that day.

·

the instructions [from command] were

that anybody
    wearing a bandana or mask or gas mask concealing their identity were to be
    arrested for disguise with intent and I specifically wrote that in my book that
    morning
.
[Emphasis in  original.]

[14]

The
    report also noted that:

Constable Begbie was asked by O.I.P.R.D. Investigators
If
    you werent given the orders or werent given the information that you received
    from Sergeant Gibb, during your parade, would you have laid that same charge
    against the complainant?
 to which Constable Begbie stated
No. There
    were other charges that we considered during that time, for example Breach of
    the Peace or Participate in a Riot, but having come directly from that briefing
    and told that this is sort of the order of the day and this is what we want to
    happen today, thats why we went with that charge.
 [Emphasis in original.]

[15]

Cst.
    Wong is said in the report to have stated that:

[W]e were given instruction in regards to what had happened on
    the Saturday which was the day before and presumabl[y] over night as well and
    we were given specific direction in regards to people that were wearing
    banners, gasmask[s], [and] goggles and that they were going to be arrestable or
    that they were to be arrested for Disguise with Intent, which is a Criminal
    Code Offence and as well anyone with a backpack was to be searched and if they
    refused to be search[ed] then they would be arrestable for obstruct police which
    is a Criminal Offence and as well as people, weapons including bottles and
    canisters of liquid were to be investigated and arrested for Possession of
    Weapons. [Emphasis omitted.]

[16]

Both
    Cst. Wong and Cst. Begbie are reported to have stated that these instructions
    were from Upper Command.

[17]

Mr.
    Wall first learned of the instructions from higher command when he received the
    report on September 7, 2011. He filed his follow-up or second complaint on
    January 25, 2012.

[18]

Eight
    days after receipt of the follow-up or second complaint, the Director advised
    Mr. Wall that he would not proceed with it.  His decision in its entirety reads
    as follows:

The Office of the Independent Police Review Director (OIPRD)
    has carefully reviewed your complaint about the conduct of Chief William Blair
    of the Toronto Police Service.

The OIPRD is aware of your concerns.  S. 60(2) of the
Police
    Services Act
permits the Director not to deal with a complaint if the
    complaint is made more than six months after the facts on which it is based
    occurred.  Taking all the information into consideration, I have decided not to
    proceed with the complaint as it was made more than six months after the facts
    on which it is based occurred.

To find out more about OIPRD screening process and the
Police
    Services Act
, please visit our website at
www.oiprd.on.ca
.

The Divisional Court Decision

[19]

In
    a careful and thorough decision on behalf of the Divisional Court, Molloy J.
    reviewed the factual circumstances underlying Mr. Walls arrest, the nature of
    his complaint, and the relatively new statutory framework that was enacted to
    deal with complaints against the police and to establish the OIPRD, in response
    to the recommendations in the 2005 report of the Honourable Patrick LeSage.
[1]
She concluded that the Directors decision must be quashed on, broadly, two
    bases.

[20]

The
    first turned on the Directors treatment of the six-month period for the filing
    of a complaint, as set out in s. 60(2) of the
Police Services Act
.  She
    concluded that the Director erred in treating that provision as a limitation
    period, and compounded the error by failing to apply the discoverability
    principle in making his decision not to proceed.
[2]

[21]

The
    second error revolved around the reasons provided by the Director.  In the Divisional
    Courts view, the Director breached the statutory requirement that he give
    reasons and breached the principles of procedural fairness and natural justice
    in failing to do so.  In addition, the Directors decision was unreasonable
    both because of the lack or inadequacy of the reasons and because as a result,
    it was not possible to determine whether the Director considered the relevant
    factors in exercising his statutory discretion not to screen in the
    complaint.

[22]

These
    two grounds overlap.  In effect, Molloy J. concluded that fairness and the
    provisions of the
Police Services Act
required that the Director take
    into account both (a) the fact that Mr. Wall was unaware of the potential
    involvement of higher ranks in the orders leading to his arrest until after the
    six-month period had elapsed, and (b) his obligation to provide adequate
    reasons explaining why he was not extending the s. 60(2) time period in all the
    circumstances.

[23]

Molloy
    J. declined to grant an order of
mandamus
requiring the Director to
    refer the complaint against Chief Blair for investigation, as sought by Mr.
    Wall.  She reasoned that the Director had not demonstrated a closed mind nor
    had he used up his discretion, and that
mandamus
was not necessary.  There
    is no cross-appeal from that decision.

[24]

She
    also awarded costs in favour of
pro bono
counsel for Mr. Wall in the
    amount of $20,000.  The Director seeks to set aside that order as well.

Analysis

[25]

The
    Director argues that the Divisional Court erred in three ways:

(a) by
    applying the concept of discoverability to s. 60(2) of the
Police
    Services Act
when there was clear legislative intention to the contrary;

(b) by
    finding that the Director failed to provide reasons for his decision and that
    he was required to provide detailed reasons for his screening decision; and

(c) by ordering
    the Director to pay costs or, in the alternative, excessive costs, to Mr. Wall.

[26]

Although
    there is some overlap between (a) and (b), I will deal with each of these
    grounds in turn.

[27]

I
    note at the outset that the standard of review for the Divisional Courts
    determination that s. 60(2) incorporates discoverability principles is
    correctness, as it raises a question of law. The standard of review for the
    Directors decision not to deal with the appellants complaint is
    reasonableness, as it was a discretionary decision.

Discoverability

[28]

As
    explained below, I am persuaded that the Director is required by the scheme and
    language of the
Police Services Act
and principles of fairness to take
    into account discoverability principles when exercising his s. 60 function.

[29]

Discoverability
    is the term used  usually in the limitation period context  to describe the
    principle that a time limit ought not to begin to run against a complainant
    until the moment when the complainant knew, or ought reasonably to have known,
    that he or she had the basis for a complaint.  In essence, it is a fairness
    principle, designed to balance the need for finality against exposure to
    liability by potential defendants, and the need to avoid an injustice to the
    individual seeking to assert legitimate claims that were unknown to him or her before
    the time expired.

[30]

The
    Director argues that the Divisional Court erred by incorporating this concept
    into the operation of s. 60(2) of the
Police Services Act
.

[31]

I
    disagree. There are three principal reasons why the timing of when a
    complainant knew (or ought reasonably to have known) that there was a basis for
    a complaint is a factor the Director is required to consider when exercising
    his functions under s. 60(2) of the Act.  First, there is nothing in the Act
    that indicates discoverability is excluded from the Directors consideration.
    Secondly, the overall scheme of Part V of the Act favours the notion that
    complaints are generally to be dealt with.  Thirdly, s. 60(3) of the Act
    requires the Director to consider the public interest.

[32]

The
    view that discoverability must be taken into account is consistent with the
    scheme set out in Part V of the
Act.
Part V provides for the supervision and treatment of complaints made to the
    Director by members of the public concerning police policies, services or
    conduct, and the disciplinary proceedings that may or may not flow from those
    complaints.  Section 26.2(a) of the Act mandates the Director to manage
    complaints made to him or her by members of the public.  Part V lays down the
    procedure for doing so.

[33]

Any
    member of the public may make a complaint to the Director under Part V about
    the policies of or services provided by a police force, or about the conduct of
    a police officer: s. 58(1).  Sections 59 and 60 of the Act set out the
    parameters of the Directors review of such complaints.  Their full text is
    attached as an appendix to these reasons.

[34]

In
    brief, however, the Director is required by s. 59 to review every complaint
    made, to classify it (as a complaint about policies or services or the conduct
    of a police officer), and to ensure that it is dealt with in accordance with
    the mechanisms set out in ss. 61 and following.
[3]

[35]

However,
    to shield the police against an avalanche of frivolous or improper complaints,
    s. 60(1) provides that the Director
may
, in accordance with this
    section, decide not to deal with a complaint made to him or her by a member of
    the public under this Part (emphasis added). Under s. 60(4), the Director may
    decide not to deal with a complaint if it is frivolous, vexatious or made in
    bad faith, could more appropriately be dealt with under another statute, or if
    in the circumstances, dealing with the complaint would not be in the public
    interest. The Director also has the discretion to decide not to deal with a
    complaint in cases where, generally speaking, the complainant is not directly
    affected by the police policy, services or conduct: s. 60(5)-(6).

[36]

Section
    60(2), discussed above, enables the Director to decide not to deal with a
    complaint made more than six months after the facts on which it is based occurred.
    The Director is required by the terms of s. 60(3) to consider a number of
    factors when deciding not to deal with a complaint filed after the six-month
    period. The Director must consider whether the complainant is a minor or a
    person with a disability, whether the complainant is or was subject to criminal
    proceedings relating to the events forming the basis for the complaint, and
    whether in the circumstances it would not be in the public interest to deal
    with the complaint.

[37]

As these provisions indicate, the default scenario under the Act is that
    the Director is obligated to screen in a complaint for review and to have it
    dealt with in accordance with Part V
unless
one of the saving factors
    in s. 60 applies.  The Director
shall
ensure that every complaint
    reviewed  is referred or retained and dealt with: s. 59(2) (emphasis added).
    But the Director
may
, in accordance with [s. 60], decide not to deal
    with a complaint: s. 60(1) (emphasis added).  This default paradigm is
    significant, in my view, in determining whether and, if so, to what extent,
    discoverability factors into the exercise of the Directors discretion not to
    proceed with a complaint.  It also bears on the scope of the requirement to
    give reasons, which I deal with below.

[38]

Although
    the six-month period provided for in s. 60(2) is often loosely referred to as a
    limitation period, the parties all agree that it is not a limitation period
    in the formal legal sense.  The Divisional Court adopted that interpretation as
    well, stating, at para. 35:

The six month period referred to in s. 60(2) is not a
    limitation period, but rather a guideline  a point in time at which the
    Director may wish to consider not dealing with the complaint, depending on
    various factors including the reasonableness of the delay and the specific
    factors the Director is directed to take into account under s. 60(3).  All
    counsel at the hearing essentially agreed with that interpretation.

[39]

Although
    the parties agree that s. 60(2) does not contain a limitation period, they have
    differing views on where that interpretation leads them.  Mr. Wall argues that
    the six-month period is a presumptive period that must yield to the interests
    of justice and the public interest. The Director says it is not a limitation
    period, but simply provides the Director with the discretion to screen in a
    complaint that has been received by his office six months after the facts on
    which the complaint was based occurred. The Director submits that he is not
    mandated to take into account notions of discoverability in exercising his
    discretion not to screen in the complaint.  In doing so, he adopts an analysis
    that leans towards treating s. 60(2) as a limitation period.

[40]

The
    Director submits that nothing in the language of s. 60(2) or in the provisions
    of s. 60(3) outlining the factors the Director is to consider in exercising his
    discretion to screen in the complaint or not to do so, mandates that he take
    into account whether or not six months have elapsed since the complainant knew
    or ought to have known that he or she had grounds for a complaint.  He
    concedes, however, that he has discretion to consider whether discoverability
    in that sense is a factor in the appropriate case.

[41]

The
    Director seeks to rely on the principle of implied exclusion to argue that if
    the legislature had intended discoverability to apply, it would have said so
    expressly.  That principle is explained by Ruth Sullivan in
Sullivan on the
    Construction of Statutes
, 6th ed. (Markham: LexisNexis Canada, 2014), at §
    8.90, as follows:

An implied exclusion argument lies whenever there is reason to
    believe that if the legislature had meant to include a particular thing within
    its legislation, it would have referred to that thing expressly.  Because of
    this expectation, the legislatures failure to mention the thing becomes
    grounds for inferring that it was deliberately excluded.  Although there is no
    express exclusion, exclusion is implied.  The force of the implication depends
    on the strength and legitimacy of the expectation of express reference.  The
    better the reason for anticipating express reference to a thing, the more
    telling the silence of the legislature.

[42]

In
    this vein, the Director points out that s. 4(1) of the
Limitations Act,
    2002
, S.O. 2002, c. 24, Sched. B, expressly states that a proceeding
    shall not be commenced in respect of a claim after the second anniversary of
    the day on which the claim was discovered.  Counsel points to s. 96 of the
Employment
    Standards Act, 2000
, S.O. 2000, c. 41, in support of the argument that where
    discoverability was not meant to apply, the legislature did not include it.

[43]

The
    Director also relies on the decision of the Alberta Court of Appeal in
Engel
    v. da Costa et al.
, 2008 ABCA 152, 429 A.R. 184, leave to appeal to S.C.C.
    refused, 460 A.R. 400 (note). There the Court considered a provision in the
    Alberta
Police Act
, R.S.A. 2000, c. P-17, s. 43(11), dealing with
    complaints made more than one year after the events on which they were based.
    The Court concluded, at para. 31, that [d]iscoverability is not a principle
    which must necessarily apply to complaints under s. 43 of the Police Act.

[44]

I
    do not find these submissions persuasive in the context of the Ontario
    legislation.  First, it is agreed that s. 60(1) of the
Police Services Act
,
    does not provide for a limitation period.  It is therefore unnecessary to be as
    concerned with shoring up the goals of finality underpinning limitation period
    legislation.  Second, s. 60(2) expressly provides the Director with
discretion
 the Director
may
decide not to deal with a complaint  which
    implies in itself a more flexible approach to screening post-six month
    complaints in or out (emphasis added).  The legislation considered in
Engel
is quite different: it
requires
the decision maker to dismiss a late
    complaint
shall
dismiss any complaint that is made [outside of the
    time period] (emphasis added).  Third, even if the principle of implied
    exclusion is applicable, I am satisfied, for the reasons outlined below, that
    the language of the Act gives rise to little expectation that discoverability
    principles were to be excluded by implication.

[45]

It
    is true that s. 60(3), prescribing the factors the Director is to consider when
    exercising his or her discretion to screen in a complaint post-six months, does
    not specifically refer to discoverability principles.  However, it would be odd
     given that s. 60(2) does not provide for a limitation period, and given the
    default paradigm in the scheme favouring complaints being dealt with  if the
    Legislature intended to exclude discoverability principles from the Directors
    consideration.  In my view, there is nothing expressed or implied in the
    language of the Act to support such an intention.  Indeed, s. 60(3)(c) requires
    the Director to consider whether, having regard to all the circumstances, it
    is in the public interest for the complaint to be dealt with.  The Director
    has a discretion, but it is not an unfettered discretion.  To the contrary, it
    is a discretion to be exercised within the confines of the factors set out in
    s. 60(3) and the bounds of procedural fairness.

[46]

Complaints
    regarding police misconduct raise issues that are important to society, both
    from the perspective of the complainant and that of the police services.  It is
    generally in the public interest that complaints which are not frivolous or
    vexatious or made in bad faith  grounds upon which any complaint, timely or
    not, may be screened out  be reviewed.  I am satisfied that the public
    interest factor the Director is required to consider under s. 60(3)(c) of the
    Act encompasses an obligation to consider discoverability issues in deciding
    whether or not to deal with a post-six month complaint under s. 60(2).

[47]

For
    these reasons, I would not give effect to the Directors argument that the
    Divisional Court erred by importing notions of discoverability as a factor to
    be considered in the discretionary s. 60(2) exercise.

Reasons

[48]

The
    Divisional Court concluded (a) that the Director had failed to give reasons as
    required by s. 60(7), and (b) in any event, that he had failed to provide Mr.
    Wall with reasons that complied with the principles of procedural fairness
    both leading to the added consequence that the decision was thus rendered
    unreasonable.

[49]

There
    is no dispute that the Director is required to give reasons when deciding not
    to deal with a complaint.  Section 60(7) dictates as much; it requires that the
    complainant is to be notified in writing of the decision,
with reasons

    (emphasis added).  The duty of procedural fairness at common law calls for as
    much as well.

[50]

Nor
    is there any dispute that what will constitute adequate reasons will vary with
    the context and nature of the decision being made. The debate revolves around
    the scope and extent of the reasons requirement in the context of the
    Directors decision not to deal with a complaint under s. 60.

[51]

The
    Director submits that he was making a screening decision rather than a full
    administrative hearing decision, and that his notification letter to Mr. Wall
    complied with his duty to give reasons in those circumstances.  He disputes
    what he says is the Divisional Courts conclusion that he was required to give
    detailed reasons in the screening context.

[52]

I
    disagree.  The statutory and common law prerequisite for reasons  i.e.,
    adequate reasons  in this context acts as a balancing safeguard: the
    legislature has mandated that the Director ensure that every complaint
    reviewed is dealt with (s. 59(2)), but made this requirement subject to the
    discretion to screen out complaints in accordance with s. 60.  The requirement
    in s. 60(7) to give reasons in writing may be viewed as a
quid pro quo
for the exception created by the screening out provision.

[53]

Here,
    the Directors notification to Mr. Wall was  for want of a better description
     underdeveloped and succinct.  I have recited the contents of the February 2,
    2012 decision in their entirety earlier in these reasons.  For ease of
    reference, the operative portion consists of the following three sentences:

The OIPRD is aware of your concerns.  S. 60(2) of the
Police
    Services Act
permits the Director not to deal with a complaint if the
    complaint is made more than six months after the facts on which it is based
    occurred.  Taking all the information into consideration, I have decided not to
    proceed with the complaint as it was made more than six months after the facts
    on which it is based occurred.

[54]

The
    Director argues that the Divisional Court erred in finding that he had given no
    reasons at all for his decision, that is, that the letter of February 2, 2012
    was simply a notification in writing of the decision without any reasons for
    that decision.  Although the Courts decision can be read in that fashion, I
    would not go so far as to say the letter falls into the no reasons at all
    category.  But it comes close.  I do not think it matters to the reasons
    analysis, however, because the same factors emphasized by the Court in stating
    that the letter constituted no reasons also undermine the adequacy of the
    reasons.  I agree with the Divisional Court that in its brevity and lack of explanation,
    the letter is devoid of any reasons adequate to allow for judicial review of the
    Directors decision to screen out Mr. Walls complaint relating to the higher
    ranks of the Police Service.

[55]

Stating
    that [t]he OIPRD is aware of your concerns, as the operative portion of the letter
    begins, is empathetic, but does not provide a reason for the decision. The
    reference in the second sentence to the six-month time frame provided for in s.
    60(2), is merely a reference to the section of the legislation relied upon.
    While it may signal the direction which the reasoning path might follow, it is
    of little further assistance in that regard.

[56]

Only
    the final sentence of the operative portion of the letter could conceivably
    qualify as reasoning and, with respect to it, I agree with the analysis of the
    Divisional Court at paras. 47 to 48:

The [final] sentence states that:

·

Taking all the information into consideration (without any
    reference or explanation as to what information is referred to)

·

the Director has decided not to proceed with the complaint
    (which is the decision, not the reasons for the decision)

·

as it was made more than six months after the facts on which it
    is based.

The only portion of the sentence that could even potentially be
    considered reasons is the clause as it was made more than six months after the
    facts on which it is based.  However, this last clause merely recites the fact
    that the complaint is more than six months after Mr. Walls arrest.
Essentially,
    the l[e]tter says, I have the power to not deal with a complaint which is more
    than six months after the fact, and therefore that is what I am doing.
    Answering the question Why? with the statement Because I can is not
    providing reasons.  It is the opposite of providing reasons
.
[Emphasis added.]

[57]

The
    Directors discretion to deal with, or not to deal with, a complaint that
    brings s. 60(2) into play is not an unfettered discretion as previously noted.
    Section 60(3) mandates that [i]n making a determination under subsection (2),
    the Independent Police Review Director  for purposes of this appeal
shall
    consider
(c) whether, having regard to all the circumstances, it is in
    the public interest for the complaint to be dealt with (emphasis added).

[58]

Did
    the Director apply his mind to this mandatory consideration?  We have no way of
    telling.  Did it matter that a report from his own office contained evidence
    that higher ranking police officers, including possibly the chief of police,
    had given orders to lower ranks (which include the arresting officers in Mr.
    Walls case) to effect illegal arrests?  Surely this must have been of some
    concern to the Director, but we dont know.  Did he consider whether clearing
    the air surrounding such potentially serious allegations was called for in the
    public interest?  Or whether the discoverability factors at play raised
    questions of fairness and openness in that context?  Again, the letter is
    silent.

[59]

We
    are left only with the cursory and generic statement: Taking all of the
    information into consideration, I have decided not to proceed with the
    complaint as it was made more than six months after the facts on which it is
    based occurred.  That is not adequate to meet the Directors obligation to
    provide reasons in such circumstances.

[60]

The
    Director argues that the Divisional Courts decision required him to provide
    detailed reasons when exercising his screening function under s. 60(2) and
    that this will unduly tax the resources of the OIPRD, given the number of
    complaints it receives.  I reject this argument on two grounds.  First, the
    Court did not say at any point in its decision that the Director is required to
    give detailed reasons.  Indeed, the Court recognized that, as the explanation
    for a screening decision, the Directors reasons are subject to less stringent
    requirements than might be the case at other levels of administrative
    decision-making.  Secondly, potentially inadequate resourcing does not provide
    an escape from the Directors duty to give reasons and to comply with the
    requirements of procedural fairness.  Concerns about resourcing are better
    directed elsewhere.

[61]

After
    observing that the decision here, as a screening decision, did not attract the
    highest level of procedural fairness, the Divisional Court went on to state,
    however, at para. 42, that:

[I]t does terminate the ability of the complainant to pursue
    his complaint of mistreatment against the police, and does therefore affect his
    rights.  The public interest mandate of the OIPRD and the importance of
    ensuring public confidence in the scheme for reviewing the conduct of police
    officers are factors supporting greater accountability and transparency than
    might be required of other screening type decisions.  Further, since the
    Director is required by the legislation to take into account certain factors,
    providing reasons would serve to focus the Directors mind on those factors as
    well as reassure both the individual and the public that they have been taken
    into account.  Since these decisions are reviewable on judicial review, it is
    essential for the court to see the reasoning process of the Director and the
    factors he took into account in making his decision. Finally, there is a
    specific legislative requirement to give reasons and therefore a legitimate
    expectation that reasons will be provided.

[62]

I
    agree with this analysis.  Detail is a function of the need to explain the
    exercise of a statutory power of decision; it is not a descriptor
    distinguishing between the types of reasons required.  The Directors reasons
    for screening out a complaint under s. 60(2) of the
Police Services Act
need not be lengthy.  They need not be complex.  But, as the Divisional Court
    observed, they must at least answer the question Why?.  The complainant, and
    the court (for purposes of review), are entitled to know the rudiments of the
    explanation for why the complaint has been screened out.   The Directors
    notification to Mr. Wall fails that test.

[63]

Given
    the Directors failure to comply with his statutory and common law duties to
    provide adequate reasons, the Divisional Court also found that the decision was
    unreasonable.  It did not meet the criteria set out in
Dunsmuir v. New
    Brunswick
, 2008 SCC 9, [2008] 1 S.C.R. 190, for justification,
    transparency and intelligibility within the decision-making process (at para.
    47).  The Directors reasons do not provide any justification for the
    decision, the reasoning is not transparent, and the basis of the decision is
    unknown.  The decision says nothing about why the Director chose to exercise
    his discretion not to proceed in the context of this particular case.  Again,
    the Divisional Court put it well, at para. 64:

I do not know why the Director made the decision that he did.
    I cannot say whether the decision falls within a range of acceptable outcomes,
    because I have no idea what prompted the decision.  I do not know if the public
    interest was considered.  I do not know if the principle of discoverability was
    taken into account. I do not know if the responsibility of senior officers
    other than Chief Blair was even averted to.  I therefore find that the
Dunsmuir
criteria are not met.  This decision cannot be said to be reasonable.

[64]

The
    Director relies heavily on an earlier decision of the Divisional Court,
Gismondi
    v. Human Rights Commission (Ont.) et al.
(2003), 169 O.A.C. 62 (Div.
    Ct.).  However,
Gismondi
is not dispositive.

[65]

First,
    it is distinguishable.  Although the reasons provided by the Human Rights
    Commission in
Gismondi
were similarly succinct to those of the
    Director here, they were found to be adequate in the circumstances because they
    could be considered along with other material that was before the Commission at
    the time of its decision  including the submissions of the other party and the
    Commissions case analysis report  and the complainant had been advised that
    these materials would be considered by the Commission in rendering its
    decision.  That was not the case here.  While the original OIPRD report
    existed, it did not address Mr. Walls complaints about the higher ranks; to the
    contrary, as he submits, it was precisely because that report was incomplete
    that he filed his complaint.

[66]

Second,
    the Court made it clear in
Gismondi
that it would have been preferable
    had the Tribunal given fuller reasons (thereby suggesting that in future cases,
    fuller reasons should be given).  This admonition was not heeded in the present
    case.

[67]

For
    these reasons, the Directors decision cannot stand.

Fresh Evidence

[68]

Finally,
    I do not accept the submission that requiring the Director to give fuller
    reasons will place an unacceptable burden on the resources of the OIPRD.  As
    indicated above, potentially inadequate resourcing does not provide an escape
    from the Directors duty to give reasons and to comply with the requirements of
    procedural fairness, in my opinion.

[69]

In
    an effort to buttress his point, the Director sought to introduce fresh
    evidence consisting of OIPRD reports, designed to demonstrate the economic
    impact of the requirement to give detailed reasons, including various
    statistics about the workload of the OIPRD.  I would not admit this evidence.
    It does not comply with the test for the admission of fresh evidence, as set
    out in
Palmer v. The Queen
, [1980] 1 S.C.R. 759.  Some, at least, could
    readily have been put before the Divisional Court, but was not, because the
    Director chose not to provide a record of proceedings as required by the
Judicial
    Review Procedure Act
, R.S.O. 1990, c. J.1, s. 10: see
Endicott v.
    Ontario (Director, Office of the Independent Police Review)
, 2014 ONCA 363,
    273 D.L.R. (4th) 149.  In any event, the fresh evidence is not particularly
    relevant or likely to affect the result of the appeal because, as noted above,
    the Divisional Court did not require the Director to provide detailed
    reasons.

Costs

[70]

The
    Divisional Court ordered that the Director pay costs to Mr. Wall.  The Director
    submits that it erred in making that determination and, in any event that the
    costs awarded  $20,000  were excessive.

[71]

I
    would not give effect to either of these submissions.

[72]

As
    he did below, the Director argues that this is public interest litigation and
    that he was required to participate because [the litigation] raised issues of
    first instance for the Divisional Court regarding [the Directors] constituent
    statute and involved significant and novel legal issues.  The participation of
    a public party in such situations benefits the public generally.  Further, Mr.
    Walls counsel were acting on a
pro bono
basis and there is therefore
    no hardship to him in bearing his own legal costs.  The proper order in such
    circumstances is for each party to bear their own costs, the Director
    concludes.

[73]

The
    Divisional Court recognized these considerations, yet exercised its discretion
    to order costs in favour of Mr. Wall.  I see no error in principle or in law in
    this disposition.

[74]

The
    Director was an adversarial litigant in the process even though he had a public
    interest mandate to pursue.  At the same time, the public generally had an
    interest in learning more about what may have gone wrong with policing at the
    higher levels in relation to the G20 summit, and it was Mr. Wall who successfully
    pursued that issue.  And did so with the assistance of
pro bono
counsel.

[75]

As
    the Divisional Court said, at para. 88:

Mr. Wall is a private citizen.  The law firm of Ruby Shiller
    Chan Hasan has acted for Mr. Wall in this matter on a
pro bono
basis,
    with their only chance of any recovery being a cost award in the discretion of
    the court.  The issues involved in this proceeding are complex.  Mr. Wall would
    not have been able to present his case effectively without the able assistance
    of his counsel.  It is of considerable benefit to the public and to this court
    that public interest issues of this nature be brought forward.  Unless firms
    such as this one are prepared to assist, many issues of importance to the
    public generally and also to specific individuals simply could not proceed.
    This is an access to justice issue.  In my view, the law firm should be
    entitled to recover costs in the normal course, on the same basis as is granted
    to counsel for clients with significant corporate interests every day in our
    courts.

[76]

There
    is no basis for interfering with that conclusion.

[77]

The
    Director also contests the amount awarded  $20,000.  However, the Divisional
    Court reviewed the law firms bill of costs including the division of labour
    between senior and junior counsel.  It made a downward adjustment from the nearly
    $28,000 claimed on the basis of some duplication of time.  I agree that $20,000
    represented a fair and reasonable award for costs given the public nature of
    the respondent, the time spent by counsel, the nature of the case, the
    complexity of the issues and the public interest in encouraging experienced and
    competent counsel to take on these kinds of cases (at para. 89).

Disposition

[78]

I
    would therefore dismiss the appeal, affirm the decision below, and remit the
    matter to the Director for reconsideration in accordance with para. 2 of the
    order of the Divisional Court.  I note that the Directors counsel assured us
    that the Director will reconsider as directed, should that be the case, as it
    is.

[79]

While
    I would grant leave to appeal the costs award, I would dismiss the appeal as to
    costs as well.

[80]

Mr.
    Wall is entitled to his costs of the proceedings in this Court, fixed in the
    amount of $13,500 all inclusive.

Released: K.F.  December 11, 2014

R.A. Blair J.A.

I agree K.F. Feldman
    J.A.

I agree S.E. Pepall
    J.A.

APPENDIX

POLICE SERVICES
    ACT
, R.S.O. 1990, c. P.15

59.
(1)  The
    Independent Police Review Director shall review every complaint made to him or
    her by a member of the public under this Part, and shall determine whether the
    complaint is about the policies of or services provided by a police force or
    about the conduct of a police officer. 2007, c. 5, s. 10.

(2)  Subject
    to section 60, the Independent Police Review Director shall ensure that every
    complaint reviewed under subsection (1) is referred or retained and dealt with
    in accordance with section 61. 2007, c. 5, s. 10.

60.
(1)  The
    Independent Police Review Director may, in accordance with this section, decide
    not to deal with a complaint made to him or her by a member of the public under
    this Part. 2007, c. 5, s. 10.

(2)  The
    Independent Police Review Director may decide not to deal with a complaint made
    by a member of the public if the complaint is made more than six months after
    the facts on which it is based occurred. 2007, c. 5, s. 10.

(3)  In
    making a determination under subsection (2), the Independent Police Review
    Director shall consider,

(a) whether the complainant is a
    minor or is under a disability within the meaning of the
Accessibility for
    Ontarians with Disabilities Act, 2005
;

(b) whether the complainant is or was
    subject to criminal proceedings in respect of the events underlying the
    complaint; and

(c) whether, having regard to all the
    circumstances, it is in the public interest for the complaint to be dealt with.
    2007, c. 5, s. 10.

(4)  The
    Independent Police Review Director may decide not to deal with a complaint made
    by a member of the public if, in his or her opinion, one of the following
    applies:

1. The complaint is frivolous or
    vexatious or made in bad faith.

2. The complaint could be more
    appropriately dealt with, in whole or in part, under another Act or other law.

3. Having regard to all the
    circumstances, dealing with the complaint is not in the public interest. 2007,
    c. 5, s. 10.

(5)  The
    Independent Police Review Director may decide not to deal with a complaint made
    by a member of the public about a policy of or service provided by a police
    force if the policy or service did not have a direct effect on the complainant.
    2007, c. 5, s. 10.

(6)  The
    Independent Police Review Director may decide not to deal with a complaint made
    by a member of the public about the conduct of a police officer if the
    complainant is not one of the following:

1. A person at whom the conduct was
    directed.

2. A person who saw or heard the
    conduct or its effects as a result of being physically present at the time and
    place that the conduct or its effects occurred.

3. A person who,

i. was in a personal relationship
    with a person described in paragraph 1 at the time that the conduct occurred,
    and

ii. suffered loss, damage, distress,
    danger or inconvenience as a result of the conduct.

4. A person who has knowledge of the
    conduct, or has in his or her possession or under his or her control anything
    relating to the conduct, if, in the Independent Police Review Directors
    opinion, the knowledge or thing constitutes compelling evidence that the
    conduct complained of is misconduct as defined in section 80 or unsatisfactory
    work performance and the evidence would likely be admissible in a court
    proceeding. 2007, c. 5, s. 10.

(7)
    If the Independent Police Review Director decides not to deal with a complaint
     in accordance with this section, he or she shall notify the complainant and
    the chief of police to which the matter relates in writing of the decision with
    reasons

[1]
The Hon. Patrick J. LeSage, Q.C.,
Report on the Police Complaints System in
    Ontario
(April 2005).

[2]
Discoverability is the principle that a time limit ought not to run against a
    complainant until that period has passed following the moment when the
    complainant knew, or ought reasonably to have known, that he or she had the
    basis for a complaint.

[3]
The particulars of these mechanisms are not important for the purposes of the
    appeal.


COURT OF APPEAL FOR ONTARIO

CITATION: Zabanah v.
    Capital Direct Lending Corp., 2014 ONCA 872

DATE: 20141205

DOCKET: C58755

Blair, Watt and Lauwers JJ.A.

BETWEEN

Diana Zabanah

Plaintiff

(Appellant)

and

Capital
    Direct Lending Corp.,

Anderson
    Sinclair LLP, Constantine Glinos and

Chicago
    Title Insurance Company

Defendants

(Respondents)

Antonio Conte, for the appellant

Anthony Cole and Kim T. Duong, for the respondent,
    Capital Direct Lending Corp.

Ted Evangelidis, for the respondent, Chicago Title
    Insurance Company

Heard: November 27, 2014

On appeal from the order of Justice Susan G. Himel of the
    Superior Court of Justice, dated April 22, 2014, with reasons reported at 2014
    ONSC 2219.

By the Court:

[1]

In 2007 the appellant purchased a second
    mortgage on a home from the respondent, Capital Direct Lending Corp., as an
    investment. The mortgagor, Patricia Kabongo, had fraudulently informed Capital
    Direct that the balance of the first mortgage on her home was about $83,000,
    when in reality it exceeded $200,000. The appellant advanced about $83,000 to
    the mortgagor through the brokering effort of Capital Direct. Capital Direct bought
    title insurance on the second mortgage from the respondent Chicago Title
    Insurance Co., and assigned the insurance policy to the appellant when she
    purchased the mortgage.

[2]

The appellant became aware of the mortgagors fraud in early 2008, but
    renewed the second mortgage nonetheless in 2008, 2009 and 2010. The mortgagor
    made an assignment in bankruptcy in 2010. The first mortgagee advised the
    appellant in February 2011 that sale of the home under power of sale had
    yielded insufficient proceeds to pay off the first mortgage, leaving nothing
    for the appellant.

[3]

The appellant issued the statement of claim on November 23, 2011,
    seeking damages for negligence, breach of contract and breach of fiduciary duty
    against Capital Direct, and an order that Chicago Title cover her loss under
    the title insurance policy. Capital Direct moved for summary judgment on the
    basis that the action was started after the two-year limitation period in the
Limitations
    Act
, 2002
, S.O. 2002, c. 24, Sched. B
.
Chicago Title
    moved for summary judgment under rule 20 of the
Rules of Civil
    Procedure
on the basis that the appellants
    title insurance policy specifically excluded recovery for any loss or damage
    that arose under the first mortgage. The motion judge granted summary judgment
    to both parties and dismissed the action against Capital Direct and Chicago
    Title.

[4]

There are two issues on this appeal.

[5]

The first is whether the appellants loss
    was covered by the Chicago Titles insurance policy. The motion judge concluded
    that there was no genuine issue requiring a trial with respect to the claim under
    the policy. She found, at
para. 83
:

The clear language of the policy of insurance excludes the
    Maple Trust mortgage. The CTIC policy was intended to cover the validity and
    priority of the second mortgage (neither of which are challenged in this
    action) and cannot be construed as "investment" insurance.  CTIC had
    no role in giving the plaintiff assurances concerning the first mortgage before
    any advances of funds were made.

[6]

The motion judge did not err in her interpretation of the policy and in
    dismissing the claim against Chicago Title.

[7]

The second issue concerns the limitation
    period. The first sub-issue is when the claim against Capital Direct was discovered.
    The second sub-issue is whether the limitation period applicable to the claim
    against Capital Direct was two years, as prescribed by the
Limitations
    Act, 2002
, or ten years, as prescribed by
    the

Real Property Limitations Act
, R.S.O. 1990, c. L.15 (
RPLA
).

[8]

The appellants discoverability argument was that she did not know who
    was responsible for her loss, injury or damage until 2011. In addressing this
    argument, the motion judge concluded that by April 2008, the appellant had the
    knowledge to infer that Capital Direct may have been the cause of her loss. She
    relied on this courts statement in

Kowal v. Shyiak
, 2012 ONCA
    512, 13 C.L.R. (4th) 7, at para. 18, that:

Certainty of a defendant's responsibility for the act or
    omission that caused or contributed to the loss is not a requirement. It is
    enough to have
prima facie
grounds to infer that the acts or omissions
    were caused by the party or parties identified.

[9]

The motion judge found that the appellant must be taken to have
    discovered her claim on or before April 3, 2008. She found, at para. 56:

Zabanah knew, by February 27, 2008, that the second mortgage
    was not adequately secured because there was insufficient equity in the
    property. She knew that Capital Direct was the party who had failed to inform
    her of these facts. By April 3, 2008, her husband was told that Capital Direct
    or CTIC might be liable and the possibility of retaining legal counsel had been
    raised. Yet she chose to renew the mortgage with the borrower three times
    (2008, 2009, and 2010), without making any further inquiries about what was
    being done to protect the investment or whether the insurance policy would
    provide coverage for the known problem.

[10]

These
    are factual findings and the appellant has not demonstrated that the motion
    judge made a palpable and overriding error. We agree with the motion judge that
    there is no basis to conclude that a solicitor-client relationship existed
    between the appellant and Capital Direct, or that their relationship gave rise
    to fiduciary responsibilities.

[11]

An
    important factor in the motion judges decision was her finding, at para. 13,
    that [i]t is undisputed that, in February 2008, Capital Direct offered to
    reimburse Mr. Zabanah for up to $500 in fees if he chose to consult with or
    obtain a lawyer. Mr. Zabanah and the plaintiff did not consult with counsel.

[12]

The
    appellant has not demonstrated that the motion judge made a palpable and
    overriding error with respect to when the appellants cause of action against
    Capital Direct was discoverable.

[13]

With
    respect to the applicable limitation period, the appellant submits that the motion
    judge erred in determining that the two-year limitation period prescribed by the
Limitations Act, 2002
, applies. Instead, she argues that s. 43 of the
RPLA
applies and sets a ten-year limitation period.

[14]

The
    appellant relies on this courts decision in
The Equitable Trust Co. v.
    Marsig
, 2012 ONCA 235, 109 O.R. (3d) 561, for the proposition that the
Limitations
    Act, 2002
deals with limitation periods for claims other than those
    affecting real property. She draws particular support from a few lines in
Marsig
,
    at paras. 27 and 30, where Perell J. (
ad hoc
) stated:

Put simply, the
Limitations Act, 2002
, was enacted to
    deal with limitation periods other than those affecting real property.

It has been the case historically that guarantees associated
    with land transactions have different limitation periods from guarantees
    associated with contract claims. Moreover, as already noted, it is my view that
    the Legislature intended that all limitation periods affecting land be governed
    by the
Real Property Limitations Act
.

[15]

The
    appellant argues that the motion judge erred in concluding, at para. 46, that Zabanahs
    claims do not affect any land, because the loss she suffered was the reduced
    value of her security interest in the land.

[16]

We
    disagree. The appellants claim against Capital Direct is based in negligence
    and in contract.  The negligence relates to what Capital Direct is alleged to
    have done and to what its representative said to her, and assurances that were
    given following discovery of the fraud.  The contract relates to the
    transaction whereby the appellant acquired the second mortgage in question.
    Neither of these claims constitutes an action upon a covenant contained in an
    indenture of mortgage or any other instrument . to repay the whole or part of
    any money secured by a mortgage, which is what is required for the application
    of s. 43 (1) of the
Real Property Limitations Act
.

[17]

Marsig
involved a guarantee covenant contained in a mortgage and is distinguishable
    on that basis: see
Marsig
, at paras. 19-21 and 23.  The motion judge
    recognized this. Admittedly, the potential reach of the language in the last
    sentence in para. 30 of
Marsig
, that the Legislature intended that
    all limitation periods affecting land be governed by the
Real Property
    Limitations Act
, is very broad. But, in our view, these words must be
    interpreted in the context of Perell J.s immediately preceding point: It has
    been the case historically that guarantees associated with land transactions
    have different limitation periods from guarantees associated with contract
    claims.

[18]

We
    agree with the motion judges qualification regarding s. 43 of the
RPLA
,
    that [t]o the extent that language could be read as encompassing every action
    in which a mortgage or piece of real estate is in any way involved, I do not
    believe that it accurately describes the present state of the law. The motion
    judges statement at the end of para. 46 is unassailable, and makes all the
    difference: Nothing that this court decides will affect any party's
    relationship to the second mortgage or the property. The appellants action,
    as against Capital Direct, is simply a negligence and contract claim, and is not
    a claim to an interest in land, as in
Marsig
.

[19]

Accordingly,
    we agree with the motion judge that the
Limitations Act, 2002
governs
    the appellants claims against Capital Direct, and the
RPLA

does
    not apply. The action against Capital Direct is time-barred and the motion
    judge correctly dismissed it.

[20]

The
    appeal is dismissed, with costs payable by the appellant, in the amount of
    $7500 to Chicago Title, and $12,500 to Capital Direct, both all-inclusive.

Released: December 5, 2014 RAB

R.
    A. Blair J.A.

David
    Watt J.A.

P.
    Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Zeppieri & Associates v.
    Cascio, 2014 ONCA 915

DATE: 20141219

DOCKET: C59039

Hoy A.C.J.O., Simmons and Tulloch JJ.A.

BETWEEN

Zeppieri & Associates

Respondent

and

Michele Cascio

Appellant

Allison Pyper and Jean-Alexandre De
    Bousquet, for the appellant

Gregory Gryguc, for the respondent

Heard and released orally: December 15, 2014

On appeal from the order of Justice David L. Corbett of
    the Superior Court of Justice, dated June 10, 2014.

ENDORSEMENT

[1]

The appellant Michele Cascio appeals the June 10, 2014 order of the
    motion judge dismissing the appellants motion for an order setting aside the
    Consent Certificate of Assessment dated June 7, 2013, declaring the associated
    Minutes of Settlement void and directing an assessment of costs.

[2]

In the Consent Certificate of Assessment, the assessment officer
    certified that the appellant owed his former counsel  the respondent, Zeppieri
    & Associates  $7,500.

[3]

The respondent argues, and the appellant now concedes, that the motion
    judges decision which dismisses the appellants challenge to a Certificate and
    Minutes of Settlement providing for the payment of $7,500 to the respondent is
    a final order of a judge of the Superior Court of Justice for a single payment
    of not more than $50,000, exclusive of costs. Accordingly pursuant to s.
    19(1.2)(a) of the
Courts of Justice Act
, the appellants appeal lies
    to the Divisional Court and not this court.

[4]

This appeal is accordingly quashed.

[5]

If so advised, the appellant shall be at liberty to appeal to the
    Divisional Court. The respondent shall be entitled to costs in the amount of
    $1,500 inclusive of HST and disbursements.

Alexandra Hoy
    A.C.J.O.

Janet Simmons J.A.

M. Tulloch J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:

719083 Ontario Limited v. 2174112
    Ontario Inc., 2013 ONCA 11

DATE: 20130114

DOCKET: C55785

MacPherson, Cronk and Lauwers JJ.A.

BETWEEN

719083 Ontario Limited

Applicant

(Respondent in Appeal)

and

2174112 Ontario Inc.

Respondent

(Appellant in Appeal)

Bernard B. Gasee, for the appellant

Jane E. Sirdevan, for the respondent

Heard: January 8, 2013

On appeal from the judgment of Justice P. Moore of the
    Superior Court of Justice, dated June 28, 2012.

By the Court:

I.        Background

[1]

This appeal concerns competing claims to ownership of a condominium unit
    in Scarborough.  The background facts are unusual.

[2]

On August 5, 2008, the appellant, 2174112 Ontario Inc. (217),
    purchased numerous condominium units in Scarborough from L. Chung Development
    Co. Ltd. (Chung Ltd.), a condominium developer, for a global purchase price
    of $12 million.  On closing, at 217s request, separate transfers of the relevant
    units were registered on title under the
Land Titles Act
, R.S.O. 1990,
    c.L.5 (the Act).  One of the registered transfers pertained to the unit in
    contention  Unit 95.

[3]

It later emerged that approximately 21 years earlier, in February 1987,
    a predecessor corporation in interest to the respondent, 719083 Ontario Limited
    (719)
[1]
,
    had entered into an agreement of purchase and sale with Chung Ltd. for the
    purchase of several condominium units in the same condominium complex,
    including Unit 95.  However, because the condominium units were then under
    construction and the condominium corporation had yet to be registered in
    accordance with the
Condominium Act
, R.S.O. 1980, c. 84, the sale
    agreement between 719 and Chung Ltd. provided for possession or occupancy of
    the relevant units by 719, effective June 1, 1987.

[4]

It is undisputed that 719 took occupancy of the relevant units,
    including Unit 95, in June 1987 for the purpose of operating a medical clinic
    on some of the premises, including Unit 95.  It has operated the clinic at that
    location to date.

[5]

The necessary declaration and condominium plan for the condominium
    development were not registered until December 1993.  The closing of the sale agreement
    between 719 and Chung Ltd. took place on May 16, 1994, after registration of
    the condominium plan.  However, through solicitor inadvertence or negligence,
    the conveyance registered on closing in favour of 719 failed to include Unit
    95.

[6]

The parties disagree as to when 719 first learned of the registration
    defect regarding Unit 95 and of 217s ownership claim regarding the unit.  719
    maintains that it was unaware of 217s ownership claim until November 2011,
    when 217 contacted it, alleging that it owned Unit 95 and seeking rent from 719
    for its use of the unit.

[7]

In contrast, 217 alleges that it sought rent from 719 for its use of
    Unit 95 several years earlier.  217 acknowledges that it took no steps at any
    time to enforce a rent claim against 719.  Thus, on 217s version of events, it
    allowed 719 to occupy and use Unit 95, rent free, for several years.

[8]

In January 2012, 719 applied to the Superior Court of Justice for title
    rectification under the Act concerning Unit 95.  The relief sought included a
    declaration that it is the legal and sole owner of Unit 95 and an order
    directing the necessary title adjustments to reflect its ownership interest.

[9]

By judgment dated June 28, 2012, the application judge granted the
    relief sought by 719, including a declaration that it is the legal and sole
    owner of Unit 95 and vesting title to Unit 95 in 719.

[10]

217
    appeals.  Its main ground of appeal is that the application judge erred in
    finding that 217 was not a
bona fide
purchaser for value without
    notice of Unit 95.  The legal result of this finding, if sustained, is that 217
    cannot rely on any priority of interest in Unit 95 acquired by the 2008
    registration of the transfer of Unit 95 from Chung Ltd. to 217.

[11]

For
    the following reasons, we conclude that the appeal must be dismissed.

II.       Discussion

[12]

The
    parties accept that indefeasibility of title is an essential feature of the
    land titles system established by the Act.  However, as the application judge
    recognized, the statutory protection of indefeasibility of title is available
    only to
bona fide
purchasers for value without notice: see for
    example,
Durrani v. Augier
(2000), 50 O.R. (3d) 353 (S.C.), at para.
    49.  The application judge put it this way, at para. 34:

[T]he rights of a
bona fide
purchaser trump those of
    an innocent party deprived of an interest in the property by registration in
    the land titles system where there is a meeting of the minds between buyer and
    seller and an agreement supporting the registration of title at issue.

[13]

And
    it is on this well-established principle that 217s appeal founders.  The
    application judge held, at para. 35, that there was no agreement between Chung
    Ltd. and 217 regarding the purchase and sale of Unit 95 and that there was no
    consideration for the conveyance of Unit 95 to 217.  He elaborated, at para.
    38:

There was no meeting of the minds to include the subject unit
    in [the sale agreement between Chung Ltd. and 217] or the 2008 sale, no
    intention on the part of Chung to sell the subject unit again (having already
    sold its interest in the unit to 719 in 1994), no written agreement, no
    consideration and therefore no sale transaction supporting the transfer of the
    subject unit recorded in land title records on 5 August 2008.

[14]

These
    key findings were open to the application judge on the evidentiary record. For example,
    there was evidence before the application judge that: (1) the 1987 sale
    agreement between 719 and Chung Ltd. specifically referenced the property that
    eventually became known as Unit 95; (2) in contrast, the 2008 sale agreement
    between Chung Ltd. and 217 made no mention of Unit 95 and contained no
    reference to it in those parts of the sale agreement that identified the units
    to be purchased by 217; and (3) although 217 paid a global purchase price of
    $12 million for the units it purchased, the sale agreement provided no
    allocation of the purchase price as among the units purchased.  We also note
    that there was no evidence before the application judge of any negotiations,
    discussions or agreements between 217 and the principals of Chung Ltd.
    regarding a sale of Unit 95 to 217.

[15]

We
    see no basis for appellate interference with the application judges findings,
    quoted above.  They provide ample support for his impugned holding that 217 was
    not a
bona fide
purchaser for value without notice of Unit 95.

[16]

217
    argues that the 2008 registration of a transfer to it of Unit 95 was neither
    accidental nor inadvertent.  It points out that Chung Ltd.s solicitors
    acknowledged that Unit 95 was in issue, prepared and registered a transfer in
    favour of 217 regarding Unit 95, and also registered a vendor-take-back
    mortgage on the property, which was later discharged.  These acts by Chung
    Ltd.s solicitors, 217 says, bind Chung Ltd. and evidence an intention by Chung
    Ltd. to convey Unit 95 to 217.

[17]

We
    reject this argument.  The acts of Chung Ltd.s solicitors relied on by 217 confirm
    only that these solicitors proceeded on the basis that Unit 95 was to be
    transferred to 217 under the sale agreement between Chung Ltd. and 217.  They
    are not determinative of whether Chung Ltd. agreed or intended to sell Unit 95
    to 217.  Nor do they establish that Chung Ltd. authorized its solicitors to transfer
    Unit 95 to 217.  We do not accept that Chung Ltd.s solicitors could bind Chung
    Ltd. to sell Unit 95 to 217 in the absence of any evidence that Chung Ltd.
    intended and agreed to do so.  In any event, the simple fact is that when Chung
    Ltd. concluded the 2008 sale agreement with 217, it had no proprietary interest
    in Unit 95 capable of being transferred to 217.  The sale of its interest in
    the property had been concluded by, at the latest, 1994, when it sold Unit 95
    to 719.

[18]

In
    all these circumstances, we see no reversible error in the application judges
    discretionary ruling to grant rectification of the title to Unit 95 in favour
    of 719.

[19]

It
    is appropriate to briefly address two additional matters raised by 217.

[20]

First,
    217 contends that it should not be deprived of the ownership of Unit 95 without
    compensation.  As 719 is the only other party to this litigation, that
    compensation, 217 says, should be paid by 719.  217 maintains that it paid both
    a purchase price and land transfer tax in respect of Unit 95 and it should be
    compensated by 719 at least for these expenditures.

[21]

We
    do not agree.  On the application judges findings, which we have concluded
    were firmly anchored in the evidentiary record, Chung Ltd. was not entitled to
    purport to convey Unit 95 to 217, having earlier sold its interest in the
    property to 719.  If 217 sustained losses as the result of the improper or
    negligent registration under the Act of a transfer of Unit 95 in its favour, it
    is free to pursue its remedies in damages against those responsible for its losses,
    if so advised.  The fact of those losses and 217s potential recourse against
    third parties provides no basis in law for recognizing in 217s favour a
    proprietary interest in Unit 95 to which it is not otherwise legally entitled.

[22]

Second,
    217 argues that since it was an innocent party without prior notice of 719s
    interest in Unit 95, the application judges award of costs against it was
    unjust and should be set aside.

[23]

Again,
    we disagree.  The application judge enjoyed a wide discretion under s. 24(2) of
    the Act to determine an appropriate costs disposition.  His award reflects no
    error in principle, nor is it plainly wrong.  We see no basis on which to
    interfere with his discretionary costs ruling.

III.      Disposition

[24]

For
    the reasons given, the appeal is dismissed.  719 is entitled to its costs of
    the appeal, fixed in the amount of $6,700, inclusive of disbursements and all
    applicable taxes.

Released:

JCM                                                J.C.
    MacPherson J.A.

JAN 14 2013                          E.A. Cronk J.A.

P.
    Lauwers J.A.

[1]
719 and its predecessor in interest are referred to in these reasons as 719.


COURT OF APPEAL FOR ONTARIO

CITATION:
1003280
Ontario Inc. v. Canac, A Kohler Company, 2013 ONCA 69

DATE: 20130131

DOCKET: C55191

Epstein, Pepall and Tulloch JJ.A.

BETWEEN

1003280 Ontario Inc.,
o/a Canac Kitchens (Oakville) and 967655 Ontario Inc. o/a Canac
Kitchens (Hamilton)

Plaintiffs (Appellants)

and

Canac, A Kohler Company

Defendant (Respondent)

Sergio Grillone, for the appellants

Yalda Riahi, for the respondent

Heard and released orally: January 25, 2013

On appeal from the order of Justice James W. Sloan of the
Superior Court of Justice, dated February 15, 2012.

ENDORSEMENT

[1]

The appellants are custom kitchen distributors. On July 29, 2011, they
issued a statement of claim claiming damages for breach of contract by the
respondent manufacturer and supplier of custom kitchens.

[2]

The appellants pleaded that in or about the end of 2008, the respondent,
without prior notice, advised that it was closing its business and would accept
no new orders after October 2008.

[3]

The respondent requested particulars of all of the terms of the
agreement with the appellants and for the exact terms that were breached.

[4]

In paragraph 1 of their response to the demand for particulars, the
appellants stated that they had an exclusive contract with the respondent,
whereby the appellants would secure orders for custom-made kitchens from
builders and/or homeowners. The orders were written up on the respondents
documents; the appellants then installed and distributed the respondents
products. As the contracts were paid, the appellants were paid a commission. The
agreement was entered into in or about the fall of 1987 between Brent Martin,
on behalf of the appellants and Karl Markus on behalf of the respondent.

[5]

Paragraph 2 of the response to the demand for particulars stated that the
parties had an exclusive contract.  The respondent failed to continue
distribution of its products to the appellant without explanation and without
proper notice. The appellants were advised that if the contract was to end,
then the respondent would provide the appellants with enough notice to find an alternate
supplier and they would be properly compensated for any losses resulting therefrom.

[6]

The respondent filed a statement of defence and moved pursuant to Rule
21.01(1)(a) to dismiss the appellants claim on the ground that the action was
barred by the two-year limitation period prescribed by s. 4 of the
Limitations
Act
,
2002
, S.O. 2002, c.24, Sch. B. On the motion, the parties
agreed that two years was the applicable limitation period, but disagreed on
when it started to run. The appellants argued that the limitation period issue
should be addressed at trial.

[7]

The motion judge, Sloan J., concluded that discoverability was not in
issue and dismissed the appellants action on the grounds that it was commenced
after the expiry of the two-year limitation period.

[8]

The appellants appeal from that order. They submit that the motion judge
erred in concluding that the appellants had admitted that the respondent had
breached the contract in 2008 and in dismissing the action on the basis of the
limitation period.

[9]

We disagree.

[10]

The
statement of claim, read together with the demand and the response to the
demand for particulars, supports the motion judges conclusion that the cause
of action for breach of contract arose no later than the end of 2008. Given
that the action was commenced more than two years later on July 29, 2011, the limitation
period had expired.

[11]

On
the facts as pleaded, including the demand and the response to the demand for
particulars, in our view discoverability was not an issue. The motion judge
made no error in coming to that conclusion.

[12]

The
appeal is accordingly dismissed.

[13]

The
respondent is entitled to costs of the appeal in the agreed-upon amount of
$4,000 inclusive of disbursements and applicable taxes.

Gloria J. Epstein J.A.

S.E. Pepall J.A.

M.H. Tulloch J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
3574423
    Canada Inc. v. Baton Rouge Restaurants Inc., 2013
ONCA 39

DATE: 20130124

DOCKET: C54761

LaForme and Watt JJ.A. and Lederman J. (
Ad Hoc
)

BETWEEN

3574423 Canada Inc.

Plaintiff (Appellant)

and

Baton Rouge Restaurants Inc./Les Restaurants Baton
Rouge
  Inc.,
Baton Rouge Restaurants Company/Compagnie
Les Restaurants Baton Rouge (now known as Sara-Mammas
Corporation Inc.), John Mavromichalis, Kostas Mavromichalis
, Vasilios
  Varvaris (also known as Billy Varvaris), Anthony Varvaris
  (also known as Tony Varvaris),
4077822 Canada Inc.,
4089537 Canada Inc. and Mikes Restaurants Inc. (now known as
Imvescor Restaurants Inc.
)

Defendants (Respondents)

Paul J. Pape and Nicolas M. Rouleau, for the appellant

Timothy J. Hill and Atoosa Mahdavian, for the respondents
    Baton Rouge Restaurants Company/Compagnie Les Restaurants Baton Rouge (now
    known as Sara-Mammas Corporation Inc.) and Mikes Restaurants Inc. (now known as
    Imvescor Restaurants Inc.)

Bryan B. Skolnik and Rob L. Winterstein, for the
    respondents John Mavromichalis and  Kostas Mavromichalis, 4077822 Canada Inc.,
    and 4089537 Canada Inc.

Heard:  December 14, 2012

On appeal from the judgment of Justice David M. Brown of
    the Superior Court of Justice dated November 14, 2011.

Lederman J. (
ad hoc
):

Overview

[1]

The appellant, 3574423 Canada Inc., became a
    franchisee of the Baton Rouge restaurant franchise in 1999, assuming ownership
    of a franchise in the Eaton Centre in the City of Toronto. It had a contractual
    right of first refusal (ROFR) over the next franchise in the Greater Toronto
    Area.  Over the years, the respondent franchisor, at the time Baton Rouge
    Restaurants Inc (BRRI)
[1]
,
    offered a few franchise locations, including a site in Thornhill in 2000. The
    appellant turned each offer down.  When it was given a second opportunity, in
    2001, to acquire the Thornhill location, the appellant again passed it up
.

[2]

The appellant commenced an action for damages
    on the basis of: (1) breach of a contractual duty of good faith, and (2) breach
    of the statutory duty of fair dealing pursuant to the
Arthur Wishart Act

(Franchise Disclosure), 2000
, S.O. 2000, c. 3 (
AWA
)
. The
    claim in respect of the breach of a contractual duty of good faith was in
    relation to a franchise location in North York; that property is not at issue
    in this appeal.

[3]

In the action, the appellant took the position
    that when it was given the opportunity in 2001 to acquire the franchise at the revived
    Thornhill location, the franchisor failed in its obligation to properly and
    fully notify the appellant in accordance with the
AWA
. The appellant
    claimed that the franchisors notification was premature and that it withheld
    critical information.  As a result, the appellant claimed that it waived its
    ROFR on a franchise that, with full disclosure, it would otherwise have
    purchased. The trial judge dismissed the action, and the appellant now appeals
    from that decision
.

Issues

[4]

The appellant argues that the trial judge
    erred in applying the statutory duty of good faith and fair dealing in s. 3 of
    the
AWA
to the question whether the franchisor provided the appellant
    with sufficient disclosure in respect of the availability of the revived
    Thornhill location.

[5]

The appellant does not take issue with any
    findings of fact made by the trial judge except for the following statement, in
    para. 307 of his reasons: I therefore cannot accept their submission at trial
    that their June 28, 2001 election to pass on the Thornhill location was not an
    informed one.  The issue on appeal, therefore, is narrow: namely, whether the
    trial judge erred in finding no breach of s. 3 of the
AWA
.

[6]

The appellant also argues that the respondents John and Kostas
    Mavromichalis, former owners of BRRI, intentionally interfered with its
    economic relations, due to their role in the provision of insufficient
    disclosure with respect to the revived Thornhill location.

[7]

For the reasons that follow, I disagree with
    the appellants submissions and I would dismiss the appeal
.

The Appellants
    Submissions

[8]

Given the narrow ground of appeal it will not
    be necessary to provide a detailed factual history of this dispute, which is
    long and torturous. I will, however, set out those facts necessary to describe
    the appellants position on appeal; facts which it says go directly to the
    trial judges error.  The appellants core argument is that two types of material
    facts were withheld in the 2001 offer: (1) the final lease for the Thornhill
    property, and (2) the size of the territory for that location.  As a result,
    the appellants decision not to exercise its ROFR with respect to the revived
    Thornhill location was not an informed one. Withholding these material facts,
    it asserts, constituted a breach of s. 3 of the
AWA
.

(i)      The
    differences in the lease

[9]

The appellant submits that the franchisor notified
    it of the revived Thornhill opportunity in June 2001 through an amended offer
    to lease the property. This offer largely tracked an earlier December 6, 1999 offer
    to lease. The appellant submits that it was not advised that the terms of the
    underlying lease were still being negotiated.

[10]

The appellant submits that the terms of the final lease,
    which reflected changes from the amended offer to lease, would have been material
    to the appellants decision whether or not to exercise its ROFR. Therefore, it
    argues, the amended offer to lease was put to it prematurely, and it did not
    constitute sufficient information upon which to make a considered decision.  It
    argues that the situation was fluid and the Thornhill location should not have
    been offered until the terms of the lease were finalized.

[11]

The appellant contends that the amended offer was less
    detailed and less favourable to the appellant than the final lease as signed in
    August 2001.  The lease is said to contain the following material differences
:

(a)     The
    possession date changed from October 30, 2001 to February 21, 2002, giving more
    time for the appellant to move in and make payments;

(b)     The building pictured in the
    offer to lease was different from the building that was developed;

(c)     Detailed provisions on the
    landlords liability for damages were included; and,

(d)     Provisions were made for use of
    common areas on the premises.

[12]

On the basis of these differences, the appellant suggests
    that it may have been in the financial position to pursue a second restaurant
    location, and it would have gained more confidence in the ability of the
    landlord to complete construction on time (lack of confidence in the landlord
    being one reason it gave for turning down the revived Thornhill offer)
.

(ii)    The
    size of the territory

[13]

The trial judge observed that the appellant had the same
    quality of information about the territory size for the Thornhill location in
    June 2001, when it received the second offer, as it had in January 2000, when
    it turned down the first offer.  The trial judge, in para. 305 of his reasons, referred
    to evidence that the issue of territory size was not discussed as a precursor
    to the exercise of the ROFR
:

Regarding the failure to disclose how large the Thornhill
    territory would be, the evidence of the Mavromichalis brothers was that they
    did not discuss precise territory size with the Bozikis brothers.  They
    regarded that as a matter for discussion once the Bozikis brothers had
    expressed an interest in taking the Thornhill location.  Instead, in 2001 the plaintiff
    passed on the location.

[14]

The appellant submits that this cannot be fair dealing. It
    argues that there was an obligation on the franchisor to fully disclose the
    scope and details of the territory, beyond the generality that it was a big
    territory, as the size of the Thornhill exclusive territory was a material fact
.

[15]

The appellant submits that it was entitled to specific
    information, including the fact that the Thornhill locations territory would
    be the largest of all Baton Rouge territories (approximately 320 square
    kilometres in size), and that it would encompass the proposed future site of a North
    York location, a site in which the appellant says it had been interested since
    1999. Without this information, the appellant argues that it did not know it
    was foregoing rights to the eventual North York location by waiving its ROFR on
    the Thornhill location
.

[16]

Although the appellant does not argue that s. 5 of the
AWA
applies, it points out that the contents of a s. 5 disclosure document include
    a description of any exclusive territory granted to the franchisee: O. Reg.
    581/00, s.6(12).  It submits that this should inform the standard of fair
    dealing required by s. 3 of the
AWA
.

Analysis

[17]

Section
    3 of the
AWA
provides as follows:

Fair
    Dealing

3.(1) Every franchise agreement imposes on each party a duty of
    fair dealing in its performance and enforcement.

Right of
    Action

(2) A party to a franchise agreement has a right of action for
    damages against another party to the franchise agreement who breaches the duty
    of fair dealing in the performance or enforcement of the franchise agreement.

Interpretation

(3) For the purpose of this section, the duty of fair dealing
    includes the duty to act in good faith and in accordance with reasonable
    commercial standards.

[18]

Accordingly,
    the provision calls for a balancing of the rights of both franchisees and
    franchisors:
4287975 Canada Inc. v. Imvescor Restaurants Inc.
2009
    ONCA 308, 98 O.R. (3d) 187, at para. 40.

[19]

As
    explained by MacFarland J.A., in
Personal Service Coffee Corp. v. Beer (c.o.b.
    Elite Coffee Newcastle)
, (2005) 256 D.L.R. (4th) 466 (Ont. C.A.), at para.
    29:

[W]hile the Act imposes fairly onerous disclosure requirements
    on franchisors, it is not entirely one-sided.  In particular, s. 3 of the Act
    imposes a duty of fair dealing on each party" to a franchise agreement
    with respect to performance and enforcement and gives the parties a right to
    damages for breaches of this duty of fair dealing. In this way, the Act obliges
    both the franchisor and the franchisee to deal fairly with one another.

[20]

The
    extensive prior dealings between the parties in this case inform the standard
    of fair dealing between them.  I will address each of the appellants two
    assertions of unfair dealing in turn.

(i)      Differences
    in the lease

[21]

The
    appellant was provided with a copy of the amended offer to lease under cover of
    a letter from BRRIs lawyer, Mr. Analytis, dated May 28, 2001. The trial judge
    rejected the appellants contention, at trial, that they never received this
    letter. From that letter, it would have been readily apparent to the appellants
    principals that a final lease document had not yet been negotiated and
    finalized. If they had any interest in the Thornhill location as of June 2001,
    they could have exercised their right of first refusal, subject to final review
    and negotiation of all terms, or requested any further information required.
    Instead, they decided to turn down the opportunity without seeking any further
    information.

[22]

The
    appellants principals were, as the trial judge repeatedly observed,
    sophisticated and practical businessmen. They had considerable experience in
    the restaurant business and in managing an existing Baton Rouge franchise, and
    had sufficient information upon which to make their decision about Thornhill. They
    were not interested in the Thornhill opportunity for other reasons.

[23]

Further,
    as it turns out, the terms of the final lease document relating to Thornhill
    were not materially different from those contained in the offer and amended
    offer to lease. The final lease had all of the same basic provisions, namely
    term, rent, square footage, renewal terms, minimum rent-free period and tenant
    allowances.  Having regard to commercial sense, the changes were minor and
    would not have made any difference to the appellant.

[24]

As
    the trial judge found, the appellants principals made their own determination
    to pass on the Thornhill location in 2001 because they were not in a financial
    position to pursue the franchise at that time and, in any event, they had no
    confidence in the landlords ability to meet construction deadlines.
    Accordingly, the fact that the final lease pushed back the possession date by a
    further period of three months would not have enhanced the appellants
    confidence in this landlord.

[25]

I
    see no error in the trial judges findings in respect of this issue. Therefore,
    I would reject this submission.

(ii)     The
    size of the territory

[26]

The
    trial judge implicitly found that the appellant knew at the time of the second
    offer that Thornhill would have a much larger territory than the appellants
    existing franchise in the Eaton Centre. As experienced franchise operators, the
    appellants principals knew that franchises located in dense, urban areas would
    likely enjoy smaller territories than those in less-densely populated suburban
    areas; this makes commercial sense.

[27]

Moreover,
    although the Thornhill territory was the largest of the Baton Rouge
    territories, its size was not unusual and was not inconsistent with the size of
    other suburban Baton Rouge locations, including the adjacent Vaughan territory.
    The appellant had previously rejected both the Vaughan and Square One
    opportunities without inquiring into or ascertaining the size of the exclusive
    territory for those locations, and without considering it necessary to receive
    extensive documentation in order to make an informed decision in respect of the
    ROFR. They rejected Square One because there was no external access to the
    restaurant location.

[28]

What
    is clear is that the actual size of the exclusive Thornhill territory was not a
    significant factor, despite what the appellant now contends. If it were
    otherwise, the appellants principals would have followed up regarding the size
    of the territory and obtained further information. Seeking further information
    in this particular relationship would have made commercial sense. In addition, the
    question whether the franchisor acted in good faith and engaged in fair dealing
    must be informed by the fact that the duty is not one-sided.  This argument has
    no merit.

Conclusion

[29]

In
    the end, the appellants principals are essentially asking this court to ignore
    the numerous credibility findings made against them by the trial judge and ask
    that we now accept that, if only they had known the precise size of the
    Thornhill territory and the terms that were ultimately incorporated into the
    final lease document, they would have elected to take the Thornhill location in
    June 2001. Such an inference would defy logic and cannot be drawn in the face
    of the knowledge of the parties and the history of dealings between them.

[30]

The
    trial judge considered all of the evidence, including the history of the
    parties dealings, and found that the appellants principals were unreliable
    witnesses who had changed their evidence to try to support their case. The
    findings of fact made by the trial judge are amply supported by the evidence in
    the record and are entitled to deference.  I see no basis to interfere with his
    conclusion that the franchisor did not breach its duty of fair dealing in
    respect of notifying the appellant of the revived Thornhill opportunity under the
    ROFR, and that the franchisor acted in good faith and in a commercially
    reasonable manner towards the appellant consistent with s. 3 of the
AWA
.

[31]

Absent
    any finding of a breach of the appellants rights, it is unnecessary to
    consider whether the personal respondents may be responsible for intentional
    interference with economic relations due to their role in the provision of
    insufficient disclosure and their interest in obtaining the Thornhill and North
    York locations for themselves.

Disposition

[32]

For
    these reasons I would dismiss the appeal
.
Counsel for the appellant takes no issue with the respondents costs.
    Therefore, the respondents, now known as Sara-Mammas Corporation Inc. and
    Imvescor Restaurants Inc., will have their costs of the appeal fixed at
    $52,102.19, inclusive of disbursements

and all
    applicable taxes, and the respondents, John Mavromichalis, Kosta Mavromichalis,
    4077822 Canada Inc. and 4089537 Canada Inc., will have their costs of the
    appeal fixed at $23,817.68, also inclusive of disbursements and all applicable
    taxes.

Released:
January 24, 2013 HL

S.N.
    Lederman J. (
ad hoc
)

I
    agree H.S. LaForme J.A.

I
    agree David Watt J.A.

[1]
BRRI has now succeeded to the respondent Imvescor Restaurants Inc.


COURT OF APPEAL FOR ONTARIO

CITATION:
Boughner v. Greyhawk Equity
    Partners Limited Partnership (Millenium), 2013 ONCA 26

DATE: 20130118

DOCKET: C55900

MacPherson, Cronk and Lauwers JJ.A.

BETWEEN

James Boughner,
Richard Gibson
and
Jack Waldock

Plaintiffs (
Appellant
) (
Respondent
)

and

Greyhawk Equity Partners Limited Partnership
    (Millenium), Greyhawk Equity Partners Ltd., Bedford and Associates Research
    Group Inc., Terrence M. Bedford and Joanne Harris-Bedford

Defendants

John J. Pirie and David Gadsden, for the appellants,
    Jack Waldock and the Waldock Group

Orestes Pasparakis and Alex Dimson, for the respondent,
    Richard Gibson

Paul Michell and Daniel Z. Naymark, for the receiver, A.
    Farber and Partners Inc.

Heard: January 10, 2013

On appeal from the order of Justice Geoffrey B. Morawetz
    of the Superior Court of Justice, dated July 16, 2012.

By the Court
:

[1]

The
    appellant Jack Waldock and the respondent Richard Gibson were both defrauded in
    an investment scheme called the Greyhawk Fund created and administered by
    Terrence Bedford and Joanne Harris-Bedford.

[2]

Once
    the fraud was discovered, the Greyhawk Fund quickly unravelled. On February 8,
    2011, Morawetz J. of the Superior Court of Justice ordered that A. Farber and
    Partners Inc. be appointed as Receiver over Greyhawk and related entities.
    There is money left in Greyhawk, but its value is far below the amounts various
    people, including Waldock and Gibson, invested in it.

[3]

The
    Receiver identified three methods of allocating the remaining funds to the
    remaining investors:

(1)
pro rata
    allocation
 based
on the
    size of each investors contributions to the Greyhawk Fund. Under this method,
    each investors distribution would be based on a percentage of the fund equal
    to the investors total claim;

(2)
fund unit
    allocation
 based on what each investors unit value in Greyhawk ought to
    have been in light of actual fund performance. Under this method, each
    investors distribution would be based on the performance of the fund during
    the period that the investors money was invested; and

(3)
last in,
    first out
(LIFO)  based on the chronological order of contributions.
    Under this method, the last investors in the fund would be the first to receive
    distributions of the remaining funds.

The Receiver took no position on which of these three distribution
    methods should be employed.

[4]

Waldock
    and Gibson agreed that the LIFO method should not be employed. Unfortunately,
    they could not agree on which of the other two methods was appropriate. Waldock
    supports the original contributions method; Gibson prefers the fund allocation
    method, which he says reflects a modified application of the lowest
    intermediate balance rule (LIBR), also based on the relative value of each
    investors investment in the fund at the time the funds were comingled.

[5]

Waldock
    brought a motion before Morawetz J. to determine the question of allocation
    method. In reasons released on July 12, 2012, the motion judge accepted
    Gibsons position, including his claim that the fund unit allocation method as
    described by the Receiver was a form of LIBR, and ordered that distributions
    be made pursuant to the fund unit allocation method (or
pro rata
on
    the basis of tracing, or LIBR).

[6]

Waldock
    appeals on two grounds.

[7]

First,
    the appellant submits that the motion judge erred in finding that
pro rata
sharing on the basis of tracing or LIBR is the general rule that ought to
    be applied in this case unless it is practically impossible to do so.

[8]

We
    do not accept this submission. In a very careful analysis, the motion judge
    discussed three leading decisions of this court,
Ontario Securities
    Commission v. Greymac Credit Corp.
(1986), 55 O.R. (2d) 673, affd 65 O.R.
    (2d) 479 (SCC);
Law Society of Upper Canada v. Toronto-Dominion Bank
(1998), 42 O.R. (3d) 257; and
Graphicshoppe Ltd. (Re)
, [2005] OJ No.
    5184. The motion judge concluded:

Thus, it seems to me that although the Court of Appeal did not,
    on the facts, apply LIBR in
Law Society
, it was accepted by Moldaver
    J.A. in
Graphicshoppe
. Thus, by virtue of the Supreme Court of
    Canadas affirmation of
Greymac
and the more recent decision in
Graphicshoppe
,
    LIBR is an available mechanism to distribute comingled funds.

The controlling authority,
Greymac
, directs, in my
    view, that
pro rata
sharing based on tracing (LIBR) is the general
    rule that ought to be applied in this case unless it is practically impossible
    to do so.

[9]

We
    agree with this analysis. The general rule, and the preferred allocation
    method, in cases like this is, per
Greymac
, the LIBR method. In some
    cases, as in
Law Society
, this method will not be appropriate because,
    as Blair J.A. (
ad hoc
) said at para. 33, it is manifestly more
    complicated and more difficult to apply. Thus the law in Ontario is as
    expressed by Morden J.A. in
Greymac
at para. 46:

While it might, possibly, be appropriate in some circumstances
    to recognize claims on the basis of a claimants original contribution... I do
    not think that it is appropriate where the contributions to the mixed fund can
    be simply traced, as in the present case.

[10]

Second, the
    appellant contends that the motion judge erred by equating the fund unit allocation
    calculations conducted by the Receiver with the tracing necessary to properly
    apply a LIBR calculation or a
pro rata
sharing on the basis of tracing
    and fund performance.

[11]

We disagree. In
    our view, this is a factual issue. LIBR involves the recalculation of the
    history of an investors contributions, using the actual values of the
    contributions at the time of comingling. The record indicates, and the motion
    judge accepted, that this is what the Receivers fund unit allocation
    calculations sought to do. Moreover, the motion judge concluded: I accept the
    evidence of the Receiver that all steps have been taken to establish that LIBR
    calculations can be made. We see nothing in the record or in the appellants
    submissions demonstrating that the motion judges conclusions on this issue are
    palpable and overriding errors.

[12]

The appeal is
    dismissed. The respondent is entitled to its costs of the appeal fixed at $
    20,000, inclusive of disbursements and applicable taxes, payable out of the
    Fund.

Released: January 18, 2013 (J.C.M.)

J.C. MacPherson J.A.

E.A. Cronk J.A.

P. Lauwers J.A.