COURT OF APPEAL FOR ONTARIO

CITATION:
Weller v. Reliance
    Home Comfort Limited Partnership, 2012

ONCA 360

DATE: 20120531

DOCKET: C53910

Rosenberg, Juriansz and Rouleau JJ.A.

BETWEEN

Scott Weller

Applicant (Appellant)

and

Reliance Home Comfort Limited Partnership

Respondent (Respondent)

Martin Teplitsky and Bradley Teplitsky,
    for the appellant

Barry Bresner and Brendan Wong, for the respondent

Heard: January 31, 2012

On appeal from the judgment of Justice George Strathy of
    the Superior Court of Justice dated May 24, 2011, with reasons reported at 2011
    ONSC 3148, 335 D.L.R. (4th) 690.

Rosenberg J.A.:

[1]

This appeal from the judgment of Strathy J. requires an interpretation
    of the
Consumer Protection Act, 2002
,
    S.O. 2002, c. 30, Sched. A (the Act)
, and a regulation to that
    Act,
General
, O. Reg. 17/05 (the Regulation). The principal issue is
    the right to amend the terms and conditions of an existing consumer contract,
    in this case, a contract for rental of a water heater. Although presented as a
    consumer protection issue, this particular application is part of an ongoing
    dispute between two competitors, the respondent Reliance Home Comfort Limited
    Partnership and National Energy Corporation (National). The application judge
    found that the proposed amendments to the contract comply with the applicable
    regulation and he dismissed the application. In the alternative, the
    application judge would have dismissed the application on the basis of s. 93(2)
    of the
Act,
which allows a
    court to order that a consumer be bound by a defective consumer agreement if it
    would be inequitable for the consumer not to be bound.

[2]

For the following reasons, I would dismiss the appeal.

THE FACTS

[3]

The appellant rents a water heater from the respondent pursuant to what
    the Act refers to as a remote agreement, being a consumer agreement entered
    into when the consumer and supplier are not present together: see the
Consumer
    Protection Act, 2002
, s. 20. The respondent wants to amend its agreement
    with the appellant. As the application judge pointed out, to understand this
    litigation it is necessary to refer to the history of litigation between the
    respondent and National or its proxies. It appears that National mounted a
    campaign to take customers from the respondent. National would have the
    customer sign a document appointing it as the customers agent to carry out the
    termination of the customers contract with the respondent. In response, the
    respondent instituted a policy requiring customers wishing to terminate their
    rental agreements to first telephone the respondent to obtain a Removal
    Reference Number. In this way, the respondent would have the opportunity to
    speak directly to its customer before the customer terminated the contract. A
    customer of the respondent and now a vice-president of National, Douglas
    MacGregor brought an application, at the behest of National, challenging this
    new policy. In 2010, Echlin J. held that MacGregor was entitled to appoint an
    agent to fulfill the contractual obligation of contacting the respondent. His
    reasons are reported at
MacGregor v. Reliance Home Comfort Ltd. Partnership
,
    2010 ONSC 6925. Echlin J. did, however, suggest that it would be open to the
    respondent to amend its contract.

[4]

The respondent attempted to do so and it is that attempt that led to
    this litigation. The appellant is married to a vice-president of Nationals
    parent company. In 2007, he purchased a home which contained a water heater
    owned by the respondent. The previous owner had terminated the agreement. The
    appellant received a package from the respondent that set out the terms and
    conditions and rates and methods of payments. The appellant has been paying the
    rental fees since that time. In February 2011, obviously in response to the
MacGregor
decision, the respondent attached the following notice to the appellants
    account:

Important Information About Your Water Heater Rental Agreement

The Terms & Conditions under which you rent your water
    heater will be amended to include the following paragraph as the last paragraph
    under the heading "Termination of the Rental Agreement": "Any
    return of your water heater must occur in accordance with the return processes
    and procedures as set by Reliance Home Comfort from time to time. Reliance Home
    Comfort may in its sole discretion refuse to deal with any agent or delegate
    you appoint to comply with any such processes and procedures." All of your
    other Terms & Conditions will remain unchanged except as otherwise
    provided. If you do not agree to this amendment, please call us at
    1-866-RELIANCE prior to this amendment taking effect in order to terminate your
    rental. If you do not respond to this notice, this amendment will take effect
    automatically on April 1, 2011.

[5]

The appellant then began the application at the behest of National. In
    his application he sought a declaration that the proposed amendment is invalid
    because it does not comply with the Regulation under the
Consumer
    Protection Act
.

THE ACT AND REGULATIONS

[6]

The Regulation governing amendments to rental agreements reads, in part,
    as follows:

42(2) A consumer agreement mentioned in subsection (1) that
    provides for amendment, renewal or extension may, in addition to being
    amendable, renewable or extendable under section 41, be amended, renewed or
    extended if the following conditions are satisfied:

1. The agreement indicates what elements of the agreement
    the supplier may propose to amend, renew or extend and at what intervals the
    supplier may propose an amendment, renewal or extension.

2. The agreement gives the consumer at least one of the
    following alternatives to accepting the supplier's proposal to amend, renew or
    extend:

i. terminating the agreement, or

ii. retaining the existing
    agreement unchanged.

3. The agreement requires the supplier to give the consumer
    advance notice of a proposal to amend, renew or extend.

(3) The amendment, renewal or extension takes effect on the later
    of,

(a) the date specified in the notice; and

(b) the date that is 30 days after the day on which the
    consumer receives the notice.

(4) The amendment, renewal or extension does not retroactively
    affect rights and obligations acquired by the consumer before the effective
    date of the amendment, renewal or extension.

[7]

Section 93 of the
Consumer Protection Act
provides as follows:

(1)
    A consumer agreement is not binding on the consumer unless the agreement is
    made in accordance with this Act and the regulations.

(2) Despite
    subsection (1), a court may order that a consumer is bound by all or a portion
    or portions of a consumer agreement, even if the agreement has not been made in
    accordance with this Act or the regulations, if the court determines that it
    would be inequitable in the circumstances for the consumer not to be bound.

[8]

The original agreement between the appellant and respondent sets out the
    conditions under which the agreement may be terminated:

You may (so long as you are not in default under this
    agreement) terminate this agreement at any time. You agree to return the water
    heater to us in the same condition that it was delivered to you, normal wear
    and tear (reflecting its age, normal use and local water conditions and
    assuming that it has been maintained as required by this agreement) excepted.
    At your option, you may request us to remove the water heater or, at your own risk,
    have your own qualified contractor remove it ... If you choose to terminate
    this agreement or if we terminate this agreement because you have breached any
    term of this agreement, you will pay us our standard removal charges as
    follows: (i) our account closure charge (currently $200, if the water heater is
    one year old or less, or $40, if the water heater is over one year old, or $0
    if the water heater is over 10 years old) plus (ii) if we remove the water
    heater, our drain and disconnect charge (currently $125) or, if the water
    heater is drained and disconnected by your own qualified contractor ... our
    water heater pick-up charge (currently $65 for a gas water heater or $125 for
    an electric water heater). You will pay such charges when billed by us.

REASONS OF THE APPLICATION JUDGE

[9]

The application judge dealt with a number of arguments that have not
    been raised on this appeal. I will summarize only those parts of the reasons
    that respond to the issues raised on the appeal. The application judge held
    that as remedial legislation, the
Consumer Protection Act
must be
    given a broad and liberal interpretation to ensure the attainment of its
    objects. He considered that s. 42 of the Regulation seeks to achieve a
    fair balance between the interests of the supplier and the consumer. It does
    this by preventing a supplier from forcing an amendment on an unwilling
    consumer. The consumer must be given the right to either terminate the
    agreement or retain the existing agreement, unamended. The agreement in this
    case complies with this requirement because the agreement imposes reasonable
    terms and conditions to terminate the agreement, namely that the consumer not
    be in default and pay the suppliers standard removal charges. Otherwise,
    consumers could seize upon an inconsequential amendment to avoid their
    contractual obligations (at para. 41).

[10]

In any
    event, from the consumers point of view, the proposed amendment is innocuous.
    It imposes no additional burden on the consumer other than requiring the
    consumer to call the respondent to terminate the contract. In fact, the
    amendment may benefit consumers since it provides some counter-balance to the
    entreaties of the door-knockers (at para. 44). The protection of consumers
    is not advanced by the interpretation advanced by the appellant. The
    application judge also noted that this was really a dispute between two
    suppliers and not a real consumer protection dispute. For that reason, if he
    was wrong in holding that the proposed amendment and agreement complied with
    the Regulation, this was a case where s. 93(2) of the Act should be applied and
    the appellant bound by the proposed amendment. It would be inequitable in the
    circumstances for the appellant not to be bound by the amendment.

[11]

Given his
    findings, the application judge did not find it necessary to address the
    respondents argument that the application should be dismissed because it was
    launched for a collateral purpose.

THE POSITIONS OF THE PARTIES

[12]

The
    principal submission by the appellant is that the proposed amendment is invalid
    because it does not comply with s. 42(2)2 of the Regulation. That provision
    requires that an agreement cannot be amended unless the agreement gives the
    consumer the option to either terminate the agreement or retain the existing
    agreement unchanged. More specifically, since the agreement does not give the
    consumer the option to retain the existing agreement unchanged, the issue is
    whether it allows the consumer to terminate the agreement. The appellant
    submits that this must be an unconditional right to terminate; it is not open
    to the supplier to attach conditions or consequences, no matter how reasonable
    they might be.

[13]

As to s.
    93(2) of the Act, the appellant submits that s. 93(2) does not apply in this
    case because the appellant never said that he was not bound by the agreement,
    only the amended agreement. Alternatively, s. 93(2) should only apply to
    technical oversights, not a complete failure to comply with the Regulation.

[14]

The
    respondent supports the application judges reasons.  It submits that there is
    nothing in the Regulation requiring that the right to terminate be without any
    consequences. As to the application of s. 93(2), this is a discretionary
    decision and is entitled to substantial deference. In any event, it would
    plainly be inequitable to not require that the appellant be bound by the
    agreement and the proposed amendment.

ANALYSIS

Interpretation of the Regulation

[15]

The
    main objective of consumer protection legislation such as the
Consumer
    Protection Act
is to protect consumers: see
Richard v. Time Inc
.
,
    2012 SCC 8, at para. 50. Thus, while this particular litigation in reality pits
    two suppliers against each other, the Act and Regulation must be interpreted in
    a manner that furthers the consumer protection objective. The Act and Regulation
    contain special protections for consumers who are bound by remote agreements.
    Among those protections is the protection against unfair unilateral amendments
    of the agreement set out in s. 42 of the Regulation. Central to this protection
    is s. 42(2)2, which requires the supplier to give the consumer the option
    to either terminate the agreement or retain the existing agreement unchanged as
    alternatives to accepting the proposed amendment. As indicated, this agreement
    does not give the consumer the right to retain the existing agreement
    unchanged. The issue is therefore whether the agreement allows the consumer to
    terminate the agreement.

[16]

I agree
    with the appellant that the right to terminate must be unconditional. An
    agreement that attaches conditions to the right to terminate does not provide
    the consumer with a true alternative to accepting the amendment. Depending upon
    the conditions for termination, the consumer could effectively be coerced into
    accepting the proposed amendment. Such an interpretation would be inconsistent
    with the consumer protection objective of the legislation. It follows that I
    agree with the appellant that the application judge erred in holding that the
    agreement complied with s. 42(2)2 because the conditions for termination were
    reasonable. Allowing the supplier to attach reasonable conditions would add a
    level of uncertainty. The consumer would often not know for sure whether or not
    he or she was required to comply with the conditions imposed by the agreement
    as the cost of opting out of the proposed amendment. Such an interpretation
    would encourage litigation and undermine the consumer protection objectives of
    the provisions.

[17]

The
    agreement in this case attaches at least two conditions to the consumers
    ability to terminate the contract: (1) the consumer must not be in default
    under the agreement; and (2) the consumer must pay the standard removal
    charges. These conditions may well be reasonable but in the result the right to
    terminate is not unconditional. The agreement therefore does not comply with s.
    42 of the Regulation and was not binding on the consumer.

[18]

This
    holding, however, does not leave the supplier without remedies. Section 42(4)
    of the Regulation provides that any amendment does not retroactively affect
    rights and obligations acquired by the consumer before the effective date of
    the amendment. The supplier can still pursue the consumer in court for
    obligations previously incurred such as unpaid rental fees.

Application of s. 93(2) of the Act

[19]

However, I
    would not interfere with the application judges holding that this is a proper
    case to invoke the proviso in s. 93(2) of the Act. I agree with the application
    judge that s. 93(2) applies even though the appellant was not attempting to
    resile from the entire agreement, only the proposed amendment. There is nothing
    in s. 93 to so limit the reach of the provision. To the contrary, s. 93(2)
    refers to a court ordering that the consumer be bound by all or a portion or
    portions of a consumer agreement. This wording is broad enough to include a
    proposed amendment to the agreement. Similarly, there is nothing in s. 93(2)
    that limits its reach to technical oversights. The test for application of the
    proviso is not the nature of the defective compliance but whether it would be
    inequitable for the consumer not to be bound. Obviously, in deciding whether it
    would be inequitable, the court will take into account the nature of the
    non-compliance, and the more substantial the deviation from the legislative
    scheme the more likely it will be that the court will find it would not be
    inequitable for the consumer not to be bound to the agreement. I therefore turn
    to whether the application judge erred in finding that it would be inequitable
    for the appellant not to be bound to his agreement with the respondent.

[20]

Section
    93(2) involves the exercise of discretion and is entitled to deference on
    review by this court. The application judge held that it would be inequitable
    in the circumstances for the consumer not to be bound by the defective
    agreement. In reaching that conclusion, he took into account that no consumer,
    including the appellant, would be prejudiced by the proposed amendment and that
    the application had been brought for a collateral purpose. These were proper
    considerations and I can see no basis for interfering with the application
    judges disposition.

DISPOSITION

[21]

Accordingly,
    I would dismiss the appeal with costs fixed at $7,500 inclusive of
    disbursements and H.S.T.

Signed:        M. Rosenberg J.A.

I agree R. G. Juriansz J.A.

I agree Paul Rouleau J.A.

Released: MR May 31, 2012


COURT OF APPEAL FOR ONTARIO

CITATION:
Zelsman v. Meridian
    Credit Union Limited, 2012 ONCA 358

DATE: 20120530

DOCKET: C54434

Weiler, Blair and Juriansz JJ.A.

BETWEEN

Francine Zelsman also known as Francine Kerdman also known as Francine Zelsman-Kerdman

Plaintiff (Appellant)

and

Meridian Credit Union Limited and  The Great-West Life Assurance Company

Defendants (Respondents)

David M. Midanik, for the appellant

Scott McTaggart, for the respondent

Heard: May 18, 2012

On appeal from the order of Justice Kendra Coats of the Superior
    Court of Justice, dated September 7, 2011, and reported at 2011 ONSC 1680
    (CanLII).

ENDORSEMENT

[1]

This appeal questions the enforceability of a release clause in an
    agreement between the appellants former employer, the College of Family
    Physicians of Canada (the College) and herself.  The appellant contends that
    the effect of the release, which was for the benefit of a third party, Great
    West Life Insurance (GWL), infringes sections 54 and 57 of the
Employment
    Standards Act,
S.O. 2000, c. 41, (ESA) and that, as a result, GWL cannot
    enforce the clause.

[2]

Sections 54 and 57 of the
Employment Standards Act
(ESA) provide
    that an employer cannot terminate the employment of an employee who has been
    employed for more than three months without giving notice in writing and in
    this case, the required period of notice was a minimum of two weeks. During
    this period, an employer cannot alter any terms and conditions of employment
    and must continue to make whatever benefit plan contributions are required to
    maintain the employees benefits until the end of the notice period. The
    employee cannot bargain away this right to coverage.

[3]

The appellant submits that the effect of waiving her right to receive
    benefits under such coverage is the same as agreeing to waive the right to
    maintain such coverage. The appellant claims that she should not be able to
    circumvent the clear intention of the ESA that the college maintain the
    coverage in place by foregoing her the right to receive the benefit of such
    coverage.

[4]

In addition the appellant submits that the clause in question is
    ambiguous.  Finally, the appellant submits that the motion judge erred in holding
    that GWL could enforce or rely on the terms of the Minutes.

[5]

The facts underlying the appeal and the reasons of the motion judge
    dismissing the appellants application for a declaration that the Minutes did
    not have the effect of releasing any claims she had against GWL are reported at
    2011 ONSC 1680 (CanLII) and we do not propose to detail them here.

[6]

For purposes of this appeal the following is sufficient. The appellant
    was insured for long term disability benefits by GWL under a policy of group
    insurance provided by her former employer, the College (the Policy). Her
    employment with the College was terminated in April 2008; however, her coverage
    under the Policy was continued for a month. In June 2008, the appellant filed a
    claim for such benefits. GWL sought information from the appellant and the
    College, adjudicated the claim for long term disability benefits and rejected
    it in November 2008. It resent the letter to the appellants current address in
    December, 2008.

[7]

In the meantime, the appellant also filed a complaint with the Human
    Rights Tribunal against the College, claiming that her employment was
    terminated on the basis of her disability and as retaliation for seeking
    accommodation.  In August 2009 the appellant entered into Minutes of Settlement
    with the College.

[8]

Article 6 of the Minutes contains the release as set out below.  The
    last sentence of article six, shown in italics, is a handwritten addition to
    the Minutes inserted by the appellants counsel prior to the parties signing
    them.

In consideration of the Respondents' agreement to enter into
    these Minutes, the Complainant acknowledges and agrees that upon payment of the
    amounts set out in paragraph 1 hereof she shall have no further entitlement to
    any further payments or benefits and fully and finally releases and forever
    discharges the College and its past, present and future affiliates, successors,
    assigns, officers, directors, employees and agents, including, without
    limitation, Dr. Bernard Marlow and Great West Life Assurance Company from any
    and all actions, causes of actions, claims, demands or proceedings, whether
    statutory, contractual or common law, arising in any way out of or in relation
    to the Complainant's employment with the College or the cessation of said
    employment, including, without limitation, any and all claims relating to
    wages, hours of work, overtime, vacation pay, holiday pay, benefits (including
    short-term and long-term disability benefits), pension or any other past,
    present or future claims relating to any express or implied right under any
    contract, common law or under any statute or regulation, including, without
    limitation, the
Employment Standards Act, 2000
(Ontario),
Human
    Rights Code
(Ontario) or any other statute or regulation, or any other
    claim which forms part of HRTO File No. 2008-00361-1 or could reasonably have
    formed part of HRTO File No. 2008-00361-1.
This release does not in any
    way affect any claims against Great West Life Assurance Company or benefits
    arising out of policies purchased or premiums paid by the Complainant after
    April 24, 2008.

[9]

After signing the Minutes, the appellant appealed from the denial of her
    claim for long term disability benefits in October, 2009.  In November GWL
    denied her appeal but advised that the decision would be reviewed if there was
    further medical information to be considered.  The appellant submitted a
    further letter from her family physician on February 3, 2010, which led to her
    claim for long term disability benefits being approved on February 10, 2010.

[10]

On
    February 22, after GWL had paid the claim retroactive to August, 2008,
    (following the 105 calendar day waiting period) GWL learned of the 2010
    settlement to which it had not been a party and of the clause in issue.

[11]

In
    the end the appellant brought the application for a declaration that gives rise
    to this appeal.

[12]

The
    appellant contends that the effective date of her disability was April 24,
    2008, during the two week period mandated by the ESA and that her claim
    crystallized at this point. The appellant submits that, by purporting to
    include a release of claims for benefits in the Minutes, the College was in
    effect requiring her to waive her rights to the benefit of her coverage during
    the statutory notice period.

[13]

At
    the time the appellant entered into the Minutes of Settlement in August, 2009,
    she had made a claim for LT disability benefits that had been denied in
    November, 2008.  There is no evidence that GWL was acting in bad faith in doing
    so. Her complaint before the Human Rights Tribunal included a submission that
    she was able to work with accommodation. The appellants submission would
    require us to use hindsight, namely the further evidence submitted by her
    family physician and GWLs decision (without knowledge of the settlement) to
    award her long term disability on February 10, 2010, to conclude that she was
    not able to work and that one portion of the settlement is not enforceable.  We
    cannot do this:  see
Cain v. Clarica Life Insurance Co.
, 263 D.L.R. (4th)
    368 (Alta. C.A.) at para 54.

[14]

The
    College did not deny the appellants right to coverage. Coverage was
    maintained.  The appellant made a claim for benefits within the period of
    coverage and it was initially denied and subsequently allowed. The ESA is
    minimum standards legislation.  It is not benefits legislation. Once the
    appellant was entitled to benefits she could compromise the amount, if any, she
    was entitled to.  The benefit of the coverage was quantified as part of the
    settlement agreement on the basis of the factual situation at the time.

[15]

In
    relation to the appellants final argument, principally set out in its factum,
    namely, whether GWL should be able to enforce or rely on the terms of the
    Minutes, we agree with the very thorough and well-reasoned analysis of the
    motion judge.  GWL is entitled to rely on the Minutes.

[16]

Accordingly,
    the appeal is dismissed.

[17]

Costs
    of the appeal are to the respondent, if demanded, and are fixed in the amount
    of $7000 inclusive of disbursements and all applicable taxes.

Karen M. Weiler J.A.

R.A. Blair J.A.

R.G. Juriansz J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
1725445 Ontario Inc. v. CIBC
    Investor Services Inc., 2012 ONCA 440

DATE: 20120621

DOCKET: C54188

Gillese, Rouleau and Epstein
    JJ.A.

BETWEEN

1725445 Ontario Inc.

Applicant (Appellant)

and

CIBC Investor Services Inc. and Larry Levine
    Professional Corporation

Respondents (Respondents)

Hagit Genossar, for the appellant

Laura Paglia and Larry J. Levine, Q.C., for the
    respondents

Heard: June 18, 2012

On appeal from the order of Justice Frank J.C. Newbould
    of the Superior Court of Justice, dated June 22, 2011.

APPEAL BOOK ENDORSEMENT

[1]

After the partial abandonment, the only issue that remains is that of
    costs awarded below. The appellant acknowledges that the test for granting
    leave is a stringent one. She maintains it has been met in this case as the
    award of $75,000 is not reasonable nor made with reference to the reasonable
    expectations of the parties.

[2]

We disagree. We would not grant leave to appeal costs as we see nothing
    in the costs award that warrants review by this court. Given the complexity of
    the matter and the extremely large sums in question, a costs award of this size
    should come as no surprise.

[3]

The appeal is dismissed with costs to the respondent fixed at $9000, all
    inclusive.


COURT OF APPEAL FOR ONTARIO

CITATION:
2130489 Ontario
    Inc. v. Philthy McNasty's (Enterprises) Inc., 2012 ONCA 381

DATE: 20120606

DOCKET: C54736

MacPherson, Gillese and Ducharme JJ.A.

BETWEEN

2130489 Ontario Inc., Jegatheeswaran
    Sivasothirajah and Thanusha Jegatheeswaran

Applicants (Respondents in Appeal)

and

Philthy McNastys (Enterprises) Inc., Philthy
    McNastys Restaurants Inc., and Terry Tsianos

Respondents (Appellants)

Gregory Govedaris, for the appellants

David Altshuller and Kristina Davies, for the
    respondents

Heard: May 11, 2012

On appeal from the order of Justice Kevin Whitaker of the
    Superior Court of Justice, dated November 18, 2011.

MacPherson J.A.
:

A.

INTRODUCTION

[1]

In 2007, the parties entered into two franchise agreements.  In
    September 2009, the respondents attempted to rescind the agreement.  In
    November, 2009, the appellants disputed the purported rescission.  In November
    2010, the respondents brought an application seeking a declaration that they
    were entitled to rescind the agreement.

[2]

In two sets of reasons dated October 11 and November 18, 2011, the
    application judge held that: (1) it was appropriate to resolve the dispute by
    way of application; (2) the second Franchise Agreement was a franchise
    agreement within the meaning of s. 1(b) of the
Arthur Wishart Act
    (Franchise Disclosure), 2000
, S.O. 2000, c. 3 (the
Wishart Act
);
    and (3) the respondents application was brought in a timely fashion; it was
    not outside the time lines of either the
Wishart Act
or the
Limitations
    Act, 2002
, S.O. 2002, c. 24 (the
Limitations Act
).

[3]

The appellants appeal the application judges decision.  They contend
    that all three of his conclusions are erroneous.

B.

FACTS

(1)

The parties and events

[4]

The appellant Philthy McNastys (Enterprises) Inc. (PME) is an Ontario
    corporation that carries on business as a franchisor of restaurants/pubs.  The
    appellant Philthy McNastys Restaurants Inc. is an Ontario corporation that
    carries on business as a sublessor of restaurants/pubs.  The appellant Terry
    Tsianos (Tsianos) is the sole director/principal of the appellant corporations.

[5]

The respondent Jegatheeswaran Sivasothirajah (JS) is a businessman
    with experience in several businesses, including a bar and a Pizza Pizza
    franchise.

[6]

The respondent Thanusha Jegatheeswaran (TJ) is married to JS.  She
    immigrated to Canada in 2006, married JS at age 19, and has no prior business
    or work experience.

[7]

The respondent 2130489 Ontario Inc. (213) is the company incorporated
    by JS.

[8]

In January 2007, JS, acting through an intermediary, approached Tsianos
    about purchasing a franchise.  On February 23, 2007, Tsianos provided JS with a
    purported disclosure document.

[9]

On March 20, 2007, PME entered into a franchise agreement with 213.  JS
    signed the agreement on behalf of 213 and in his personal capacity as
    guarantor.

[10]

Under
    the auspices of PME, the parties attempted to obtain a small business loan for
    213.  Their negotiations with the Bank of Montreal ultimately proved fruitless.

[11]

In
    August 2007, JS gave PME $100,000 pursuant to the first Franchise Agreement.

[12]

The
    parties shifted gears in their attempt to secure a small business loan for the
    respondents.  In early October 2007, TS, JSs wife, obtained a loan for $240,000
    from the Royal Bank of Canada (RBC).  At the same time, TS replaced JS as
    sole director and principal of 213.

[13]

On
    October 9, 2007, TJ, on behalf of 213 and in her personal capacity as guarantor,
    signed the second Franchise Agreement.  The appellants did not provide either
    213 or TS with a second disclosure document.

[14]

On
    October 25, 2007, RBC transferred $240,000 to PME pursuant to the small
    business loan to TS.

[15]

The
    franchise failed from the outset.  On September 23, 2009, 213 served a Notice
    of Rescission of the second Franchise Agreement and demanded a return of the
    franchise fees it had paid.

[16]

On
    November 3, 2009, PME responded to the Notice of Rescission and denied
    liability.  PME stated,
inter alia
, that your Notice of Rescission is
    out of time.

[17]

The
    respondents commenced their application on November 29, 2010.

C.

ISSUES

[18]

The
    issues on the appeal are:

(1)

Did the application judge err by
    determining that there were no genuine issues requiring a trial?

(2)

Did the application judge err by
    determining that the Second Franchise Agreement was a franchise agreement
    within the meaning of s. 1(b) of the
Wishart Act
?

(3)

Did the application judge err by
    determining that the respondents application was not barred by the interaction
    of the limitation periods in the
Wishart Act
and the
Limitations
    Act
?

D.

ANALYSIS

(1)

Application or action

[19]

Rule
    14.05(3)(d) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194,
    provides:

14.05(3) A proceeding may be brought by
    application... where the relief claimed is,

(d) the determination of
    rights that depend on the interpretation of a... contract ....

[20]

The
    application judge held that the issues in dispute were rather narrow and
    could be resolved as an application based on material facts not contested.

[21]

The
    appellants contend that the application judge erred in reaching this
    conclusion.  They say that because there were two franchise agreements in play,
viva voce
evidence was required to determine the intention of the
    parties concerning both agreements.  This would have included all the evidence
    concerning the execution of both agreements as well as the conduct of both
    parties before and after the execution of the agreements.

[22]

I
    do not accept this submission.  The application judge determined that the
    essence of the legal dispute was centered on two issues: (1) whether 213 and TS
    could rescind the second Franchise Agreement, which included consideration of
    the statutory definition of franchise agreement; and (2) whether the
    respondents had brought their application in a timely fashion in light of
    relevant time lines in both the
Wishart Act
and the
Limitations
    Act
.  In light of the uncontested facts, which he set out in paragraphs
    10-19 of his reasons, the application judge determined that there was a
    sufficient foundation of undisputed material facts on which to ground his legal
    analysis and conclusions relating to these two issues.  I agree with his
    assessment.  The two issues were essentially legal issues appropriate for
    resolution on an application.

(2)

The second Franchise Agreement

[23]

There
    are two Franchise Agreements involving the parties.  In the first Franchise
    Agreement on March 20, 2007, JS signed on behalf of 213 and in his personal
    capacity.  In the second Franchise Agreement on October 9, 2007, TS signed on
    behalf of 213 and in her personal capacity.  The appellants provided 213 and JS
    with the statutory disclosure document in advance of the first Franchise
    Agreement.  The appellants did not provide 213 and TS with the statutory disclosure
    document in relation to the second Franchise Agreement at any time.

[24]

The
    application judge concluded that the second Franchise Agreement was a
    franchise agreement within the meaning of s. 1(b) of the
Wishart Act
,
    thus triggering a disclosure obligation on the appellants.  He reasoned:

Applying the very broad language of section 1 of the
Act
which defines the term franchise agreement I can come to no other conclusion
    than the document executed on October 9, 2007 must be a franchise agreement as
    that term is understood and described in the legislation.  The document is an
    agreement between a franchisor (the respondents) and a franchisee (213) that
    relates to a franchise between them.  These seem to be the three criteria which
    are to be used to identify a franchise agreement.

As the document is a franchise agreement that was entered into
    voluntarily by the respondents, the disclosure document obligations under
    section 5.1 of the
Act
are triggered.

I conclude that the responding
    parties failed to provide a disclosure document with respect to the franchise
    agreement entered into on October 9, 2007 and for this reason, 213 was entitled
    to issue a Notice of Rescission no later than 60 days after October 9, 2009.

[25]

The
    appellants challenge this analysis.  They submit that the application judge
    failed to find, as was clear from the evidence, that the only purpose of the
    second Franchise Agreement was to obtain financing from RBC.  Accordingly, the
    application judge should have found that the common intention of the
    contracting parties at all material times was that the first Franchise
    Agreement governed their commercial relationship.  The second Franchise
    Agreement was not a fresh agreement; it was merely a document to provide to
    RBC to evidence the involvement of TS in the franchise business.

[26]

I
    do not accept this submission.  The umbrella under which this issue needs to be
    addressed is a recognition that the purpose of the
Wishart Act
is the
    protection of franchisees: see
405341 Ontario Ltd. v. Midas Canada Inc.
,
2010 ONCA 478, 264 O.A.C. 111, at
    para. 30.  As expressed by Winkler C.J.O. in
Salah v. Timothys Coffees of
    the World Inc.
, 2010 ONCA 673, 268 O.A.C. 279, at para. 26:

The
Wishart Act
is
sui
    generis
remedial legislation.  It deserves a broad and generous interpretation.
    The purpose of the statute is clear: it is intended to redress the imbalance of
    power as between franchisor and franchisee; it is also intended to provide a
    remedy for abuses stemming from this imbalance.

[27]

In
    this context, the disclosure requirement in the
Wishart Act
is a
    crucial one.  As explained by MacFarland J.A. in
6792341 Canada Inc. v.
    Dollar It Ltd.
2009 ONCA 385, 95 O.R. (3d) 291, at para. 72:

The purpose of the legislation is
    to protect franchisees and the mechanism for so doing is the imposition of
    rigorous disclosure requirements and strict penalties for non-compliance.  The
    legislation must be considered and interpreted in light of this purpose.

[28]

The
    contents of the disclosure requirement have been clearly stated by MacFarland J.A.
    in
1490664 Ontario Ltd. v. Dig This Garden Retailers Ltd.
, (2005)
256 D.L.R. (4th) 451
(Ont. C.A.),
    at paras. 18-19:

There is no issue of substantive versus procedural
    compliance.  The requirement that disclosure occur in the form of a single document
    is not an empty formal requirement.  The legislature clearly envisioned that
    the purpose of the legislation  i.e. ensuring that a decision to enter into a
    franchise agreement is an informed one  would best be fulfilled by giving
    prospective franchisees the opportunity to review a single document or
    documents, so that all the information is before them at the same time.  It is
    simple commonsense that people have more difficulty processing and assessing
    information given at different times, some of it orally, than they do
    information provided in a single, written document.

The language of the Act is
    unambiguous, and it is mandatory.  It prescribes in clear and precise terms
    what is required.

[29]

Against
    this backdrop, it is clear that the second Franchise Agreement was not, as the
    appellants assert, merely a document designed to give comfort to the lender
    RBC.

[30]

In
    the first Franchise Agreement, TS was invisible.  She was not involved in the
    enterprise or legal document in any way.  In the second Franchise Agreement,
    the picture changed completely.  213 remained as the franchisee, but TS became
    the sole director of 213.  TS executed the second Franchise Agreement on behalf
    of 213.  The appellants required TS to execute a new sublease agreement with PM
    Restaurants Inc.  TS became a guarantor of 213s obligations under the second
    Franchise Agreement.

[31]

Combining
    the umbrella of the relevant franchise case law and the constellation of facts
    relating to the second Franchise Agreement and TSs role in it, it seems to me
    that the application judges conclusion that the second Franchise Agreement was
    a franchise agreement within the meaning of s. 1(b) of the
Wishart Act
is clearly correct.  If follows that the appellants breached the Act by not
    providing TS with a disclosure document.

(3)

The limitation issue

[32]

The
    appellants submit that the application judge erred by determining that the
    respondents application was not barred by the interaction of the relevant
    limitation periods in the
Wishart Act
and the
Limitations Act
.

[33]

The
    basic limitation period is set out in s. 4 of the
Limitations Act
:

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

[34]

The
    relevant provision of the
Wishart Act
is s. 6, which provides:

6.
(1)
A franchisee may rescind the franchise
    agreement, without penalty or obligation, no later than 60 days after receiving
    the disclosure document, if the franchisor failed to provide the disclosure
    document or a statement of material change within the time required by section
    5 or if the contents of the disclosure document did not meet the requirements
    of section 5.

(2)
A
    franchisee may rescind the franchise agreement, without penalty or obligation,
    no later than two years after entering into the franchise agreement if the
    franchisor never provided the disclosure document.

...

(6)
The
    franchisor, or franchisors associate, as the case may be, shall, within 60
    days of the effective date of the rescission,

(a) refund to the franchisee any money received from
    or on behalf of the franchisee, other than money for inventory, supplies or
    equipment;

(b) purchase from the franchisee any inventory that
    the franchisee had purchased pursuant to the franchise agreement and remaining
    at the effective date of rescission, at a price equal to the purchase price
    paid by the franchisee;

(c) purchase from the franchisee any supplies and
    equipment that the franchisee had purchased pursuant to the franchise
    agreement, at a price equal to the purchase price paid by the franchisee; and

(d) compensate the
    franchisee for any losses that the franchisee incurred in acquiring, setting up
    and operating the franchise, less the amounts set out in clauses (a) to (c).

[35]

Because the appellants
    provided no disclosure document relating to the second Franchise Agreement, the
    relevant rescission provision is s. 6(2) of the
Wishart Act
, not s.
    6(1): see
4287975 Canada Inc. v. Imvescor Restaurants Inc.
, 2009 ONCA
    308, 247 O.A.C. 391, at paras. 27-29, leave to appeal refused [2009] S.C.C.A.
    No. 244.

[36]

The
    application judge dealt with the interplay among ss. 6(2) and (6) of the
Wishart
    Act
and s. 4 of the
Limitations Act
in this fashion:

With respect to the
Limitations Act
argument, section
    6(2) of the
Act
permits the franchisee to rescind the agreement no
    later than two years after entering into the agreement, where as here, no
    disclosure has been provided.

Section 6(6) of the
Act
obliges the franchisor to meet
    its statutory obligations to the franchisee, within a period of 60 days
    following the effective date of rescission.

As the franchise agreement was rescinded on September 23, 2009,
    the franchisor had a further period of 60 days  to November 23, 2009  in
    which to satisfy its obligations.  Until the expiry of this 60 day period, the
    franchisee could not know with certainty whether the franchisor would comply
    with section 6(6).

On November 3, 2009, counsel for the respondents advised the
    applicants that the notice of rescission was disputed.  It is fair to say that
    at this point, the applicants were on notice that the respondents were not
    prepared to satisfy their obligations on rescission.

I conclude that the claim was discovered on receipt of this
    letter from counsel.  The two year limitation period for purposes of section 4
    of the
Limitations Act
began to run from November 3, 2009, ending on
    November 3, 2011.

As this application was commenced
    on November 29, 2010, it is not barred by the
Limitations Act
.

[37]

The
    appellants contend that the application judge erred by stating that the claim
    was discovered on receipt of this letter from counsel.

[38]

I
    disagree.  Pursuant to s. 6(6) of the
Wishart Act
, once the franchisee
    delivers a Notice of Rescission, the franchisor has 60 days from the effective
    date of rescission in which to fulfil its statutory obligations.  It is the
    Notice of Rescission, nothing else, that triggers these obligations.

[39]

Once
    the Notice of Rescission is delivered, the ball moves to the franchisors side
    of the court.  Until the franchisor decides to not fulfil the obligations in s.
    6(6), the franchisee has no cause of action for compensatory damages; at most,
    the franchisee has a latent or potential cause of action.  Accordingly, the
    franchisee only has a cause of action at the earlier of (a) when the franchisor
    fails to pay compensation pursuant to s. 6(6) by the end of the 60 day period
    following the effective date of the Notice of Rescission or (b) when the
    franchisor communicates its refusal to do so at some point before expiry of the
    60 days, as happened in this case on November 3, 2009.

[40]

In
    sum, I agree with the application judges reasoning and conclusion on this
    issue.

E.

DISPOSITION

[41]

I
    would dismiss the appeal.  The respondents are entitled to their costs of the
    appeal which I would fix at $10,000 inclusive of disbursements and applicable
    taxes.

Released: June 6, 2012 (J.M.)

J.C. MacPherson J.A.

I agree. E.E. Gillese J.A.

I agree. E. Ducharme J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: 2155091 Ontario Limited v. 379014
    Ontario Limited, 2012 ONCA 446

DATE: 20120625

DOCKET: C53206

OConnor A.C.J.O., Rosenberg and Simmons JJ.A.

BETWEEN

2155091 Ontario Limited c.o.b. Rockfords Bar
    & Grill

Applicant (Appellant)

and

379014 Ontario Limited and Vincent Forgione

Respondents

Riaz S. Ahmed, for the Appellant

Lori Marzinotto, for the Respondents

Heard and released orally: June 19, 2012

On appeal from the judgment of Justice Anne Mullins of
    the Superior Court of Justice, dated December 17, 2010.

ENDORSEMENT

[1]

The principle issue on this appeal is whether the work performed by the
    tenant fell within clause 11 of the lease as leasehold improvements or clause
    18 as repairs.  If the former, the costs were to be borne by the tenant.  If the
    latter, and if the repairs were structural, then the costs were to be borne by
    the landlord.

[2]

It is apparent from paragraph 41 of the reasons that the trial judge
    found that the work done was for leasehold improvements. This is a finding that
    was open to her given that the premises were taken on an as is basis and some
    of the work was done well before the as is lease was signed. We also note
    that the tenant carried out the work without complying with its obligations in
    clause 11 to obtain the approval of the landlord.

[3]

The reasons were sufficient given the issueS raised, which turned simply
    on the application of the wording of terms commonly found in commercial leases.
    The finding by the trial judge that the work done was renovations was
    determinative of that issue.

[4]

As to the patio, the formal order does not deal with this issue and
    accordingly this matter may be pursued as part of the trial of the issue or
    otherwise as the appellants may be advised.

[5]

Accordingly, the appeal is dismissed.

[6]

Costs to the respondent are fixed in the amount of $10,000, inclusive of
    H.S.T. and disbursements.

Signed:        D. OConor A.C.J.O.

M.
    Rosenberg J.A.

Janet
    Simmons J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
719299
    Ontario Inc. v. West, 2012 ONCA 406

DATE:  20120612

DOCKET: C54561

Doherty, Juriansz and Ducharme JJ.A.

BETWEEN

719299 Ontario Inc.

Plaintiff (Respondent)

and

Ella Marie West and Stan West

Defendants (Appellants)

Aaron Lundrigan, for the defendants (appellants)

Angelo C. DAscanio, for the plaintiff (respondent)

Heard:  June 11, 2012

On appeal from the order of Justice J.A. Desotti of the Superior
    Court of Justice, dated August 15, 2011.

APPEAL BOOK ENDORSEMENT

[1]

The arguments about the deficiencies in the notice of sale proceedings
    are irrelevant to the appeal.  The motion judge declared the notice of sale
    issued under the
Mortgage Act
void.

[2]

The appellant argues that it was an implied term of the overall lending
    arrangement that the respondent was required to advance the entire amount of
    the loan ($200,000) before moving against the appellant for any alleged default.
    We disagree.  The
General Security
    Agreement
provides that the respondent could withhold payments in
    the event of a default.  Paragraph 9 of the
General
    Security Agreement
provides that bankruptcy is an event of
    default.  The borrowing company voluntarily petitioned itself in bankruptcy on
    April 27, 2007.  There is no evidence that the remaining funds ($50,000) were
    due to be advanced before the default occurred.  The respondent was entitled to
    move for possession under the terms of the mortgage.  The motion judge properly
    granted summary judgment.

[3]

The appeal is dismissed.  The stay of order granted by Cronk J.A.
    expires.

[4]

Pursuant to para. 8 of the standard charge terms, the costs of the
    appeal shall be to the plaintiff (respondent) to be added to any amount found
    owing under the mortgage.  For clarity, the relevant standard terms are those
    set out at Tab 17 of the respondents compendium (#200033).


COURT OF APPEAL FOR ONTARIO

CITATION:
Baglow v. Smith, 2012
    ONCA 407

DATE: 20120614

DOCKET: C54350

Goudge, Sharpe and Blair JJ.A.

BETWEEN

John Baglow a.k.a.Dr. Dawg

Plaintiff (Appellant)

and

Roger Smith a.k.a. Peter ODonnell, Connie
    Fournier and Mark Fournier

Defendants (Respondents)

Peter F. Burnet, for the appellant

Barbara Kulaszka, for the respondents Mark and Connie
    Fournier

Heard: March 13, 2012

On appeal from the order of Justice P. Annis of the Superior
    Court of Justice, dated August 30, 2011, with reasons reported at 2011 ONSC
    5131, 107 O.R. (3d) 169.

R.A.
    Blair J.A.:

Overview

[1]

Commentators engaging in the cut and thrust of political discourse in
    the internet blogosphere can be fervent, if not florid, in the expression of
    their views.  This appeal arises out of such an exchange.

[2]

Mr. Baglow owns and operates a blog called Dawgs Blawg on which he
    posts left-wing opinions on various political and public interest issues using
    the pseudonym Dr. Dawg.  Mark and Connie Fournier operate and moderate a message
    board called FreeDominion, a site described as a venue for expressing
    conservative viewpoints.  Roger Smith, whose nom de plume in the blogosphere is
    Peter ODonnell, is a right-wing commentator who comments frequently on
    FreeDominion and other blogs, including the appellants.
[1]
Dr. Dawg and Peter ODonnell are vigorously critical of each others points
    of view.

[3]

Mr. Baglow freely acknowledges that debates on political blogs can be
    caustic, strident or even vulgar and insulting at times.  However, he
    maintains that Mr. Smith went too far in labelling him one of the Talibans
    more vocal supporters during one of their blogging altercations.  The comment
    was posted on the Fourniers FreeDominion site on August 10, 2010, and was made
    during a robust exchange concerning Canadas Conservative government and the
    validity of the detention of Omar Khadr  the young Canadian held by American
    authorities in Guantanamo Bay. Mr. Baglow objected to the commentary as being
    defamatory, and sued.

[4]

On a motion for summary judgment, Justice P. Annis dismissed the claim.
    For the reasons that follow, I would allow the appeal and direct that the
    action proceed to trial.

Facts

[5]

Although the appellant posts his views under the moniker Dr. Dawg and
    his blog is called Dawgs Blog, his true identity as John Baglow is not
    hidden and is well-known among political bloggers.  A retired public servant
    who earns his income through short-term contracts with a variety of clients,
    including government agencies, the appellant has published opinion pieces in
    newspapers, and is recognized in the political blogging world for his left-wing
    beliefs and frequent criticism of right-wing views and policies.  He has
    actively opposed Canadas engagement in the war in Afghanistan and has
    supported the repatriation of Mr. Khadr from Guantanamo Bay to Canada on the
    grounds that he is entitled to be treated as a child soldier and in accordance
    with the rule of law.

[6]

The impugned remark was made during the back and forth that arose out of
    several postings written by the appellant on his own blog on August 8, 10 and
    13, 2010.  The motion judge had the entire record of that exchange before him,
    as do we.  Without reciting the details of the electronic dialogue in its
    complete detail, the following will provide the context and some insight into
    the flavour of the debate.

[7]

In the first posting, entitled Off with his head, the appellant called
    for a federal election and referred to supporters of the Conservative
    government as yokels with pitchforks, his particular appellation for those
    holding right-of-centre views.  He also posted a comment on blogger Jay
    Curries site, saying, Most of us have had our fill of slack-jawed yokel
    government.

[8]

Mr. Smith picked up the yokels with pitchforks theme, apparently with
    some sense of relish as he subsequently adopted the moniker Yokel with
    pitchfork in other unrelated blog postings.  In the exchange with Dr. Dawg,
    he posted a series of responses to the Off with his head commentary on Jay
    Curries blog over the next two days, speaking, as he said, on behalf of
    slack-jawed yokels (he means western Canadians, right?).  In the process, he
    raised the Omar Khadr issue:

Yokels with pitchforks ... sounds like beer and popcorn to me.
    Where does Omar Khadr fit into your world view?  Now I would say psychopath
    with a rifle there.  But I understand he is on the short list for G-G in 2015
    once you get rid of us yokels and such.

[9]

After a further barbed exchange on Jay Curries blog, the appellant
    posted an entry on Dawgs Blawg, entitled The Gitmo Kanga-Ruse, in which,
    amongst other things, he referred to the trial of Mr. Khadr as a judicial
    lynching and added some further Canadian flavour:

And Stephen Harper and his minions, who have been praying for
    this moment to arrive, will be delighted ... Good luck with that.  Parrish (the
    person presiding at the Khadr trial) is already twisting the hemp in his
    hands.  And our own Prime Minister is part of the mob.

[10]

Rising
    to the bait, Mr. Smith responded in kind:

When you say Canadian you really mean Ontario Liberal.  Why
    dont you secede and form your own country?  Nobody else wants to share your
    country, you think that your town house socialist lifestyle is what everyone
    else wants, but its not  and you should get over yourselves and stop
    supporting the 7th century religious fundamentalist Taliban who think its cool
    to throw acid in womens faces if they dont obey their menfolk.  Is that now a
    Canadian value too?  I have zero sympathy for the Khadrs, the whole lot of them
    should be deported.

In the moral sphere, you seek complicity with the recent
    murders of American aid workers under the spurious (if outrageous) charge of
    spreading Christianity, when you sign up to support Omar Khadr.  I think such
    public declarations of support of Al Qaeda and the Taliban amount to treason,
    given that we are engaged in a war against them.  Its really only because the
    war is contained and not likely to be lost on our soil that these normal laws
    do not apply, or shall I say, are not being applied.  But the government of
    Canada would be quite within its legal rights to arrest the lot of you for
    treason.

[11]

Not
    finished for August 10th, Peter ODonnell wrote the complained of posting on
    the FreeDominion site under the heading Hey yokels with pitchforks, there is
    no libertarian base.  In it, he made the following remarks, including the
    allegedly defamatory statement that is bolded:

I think Canadas long-simmering cultural war is about to go
    viral.  I base this on two rather unrelated eruptions of Liberal/progressive
    angst (why cant they see that we are their natural superiors?) in the past
    few days.  On Monday, Liberal talking head Scott Reid, commenting on Harpers
    recent announcements concerning the long-term census, said he was pandering to
    the libertarian base, but that there is no libertarian base.  I will return to
    that rather astounding claim but first, the other salvo in the offensive.  Dr.
    Dawgs colourfully illustrated op-ed that describes the conservative base (for
    which nobody has claimed non-existence) amounts to yokels with pitchforks.
This coming from one of the Talibans
    more vocal supporters.
I suppose they are super-yokels with
    Kalashnikovs.

Later in the same posting, he
    continued:

Now, as to yokels with pitchforks, just one thing about that
    ... we have the pitchforks for a reason, to keep mad dogs at bay.  Or Bay and
    Bloor.  We also have virtual control over western Canada where all the money
    is, so if you elitists down there in Ontari-ari-ario want to retire before you
    are 87 and avoid a total economic collapse, then it might be smart to stop
    insulting everyone in western Canada every time you get anxious about having to
    live in the adult world, and perhaps think less about who we are and more about
    who you are, as in TRAITORS (collaboration with the enemy being the essential
    nature of TREASON, and treason being your apparent lack of concern for our
    national security and the safety of our fighting forces in the field of
    battle).  Or, perhaps you should just ship off to the nearest Al Qaeda training
    camp like your hero young Khadr did (with his traitor-familys blessing) and
    take up arms against the hated Western civilization that you so obviously
    detest.

[12]

Apparently
    the appellant is prepared to live with the traitor/treason tag, but he
    objects to the statement: This coming from one of the Talibans more vocal
    supporters.  He argues that it does not follow, simply because he opposes the
    war in Afghanistan and supports the rights of Omar Khadr to a fair trial, that
    he is a supporter of the Taliban.  Indeed, he considers himself to be a proud
    and patriotic Canadian who supports the Canadian Forces and has never argued
    that a victory by the Taliban would be a good thing.  In fact, he has
    criticized the Taliban as a dangerous, theocratic and tyrannical regime in many
    comments and blog postings.

[13]

Here,
    however, the issue is joined.  Mr. Smiths response to a posting written by the
    appellant on FreeDominion on August 11  where the appellant posted under the
    anonymous pseudonym, Ms. Mew  was succinct:

I dont see how its intellectually consistent to support Omar
    Khadr and say youre not supporting the Taliban.

[14]

In
    the posting by Ms. Mew  a not too subtle play on his Dr. Dawg moniker
    the appellant complained of, but republished, the allegedly defamatory
    statement and identified Dr. Dawg as Baglow.  As Ms. Mew he replied to
    the foregoing comment by Mr. Smith:

Omar Khadr hasnt been convicted of anything.  Supporting due
    process and the presumption of innocence are apparently the same thing as being
    a Taliban supporter.  I hope Baglow sues your ass, quite frankly.  Youre
    utterly out of bounds on this.

[15]

Mr.
    Smith had the last word, however.  On August 11 he posted the following:

The false angst about Omar Khadr is disgusting to many
    Canadians who remember what happened to dozens of our fellow citizens on 9-11
    among the large international death toll, and what could easily have happened
    to any of us if we had been travelling in Bali, London or Madrid.  Or Mumbai on
    business for that matter.  People like the Khadrs relished those scenes and
    have chosen the path of terrorism, which is a cowardly and profoundly
    anti-democratic activity  even the Nazis had a state and wore uniforms.  The
    new crop of fascists (and thats who youre supporting, my proggy friends, a
    bunch of Islamo-fascists) dont have the courage to wear real uniforms, or
    fight under any recognized code of military engagement for their demented
    goals.  They choose entirely innocent groups of civilians as their targets.

[16]

On
    August 11, the appellant sent an email to the Fourniers stating that he had
    been libelled as one of the Talibans most vocal supporters and demanding the
    removal of the statement from their site.  The respondents refused.

[17]

The
    argument continued for a brief period following the appellants third Dawgs
    Blog posting on August 13, in which, amongst other things, he accused Mr.
    Smith of McCarthyism.  This generated a litany of additional responses from Mr.
    Smith along the same lines as outlined above concerning the effect of the
    terrorist activities of the Khadrs and their kind and equating support for Mr.
    Khadr with support for the Taliban and the enemies of our country.  The
    appellant closed the debate on August 13 with comments on his They dare call
    it treason posting, signing off with the suggestion: Youre out of your
    mind.  Get help, Roger.

[18]

I
    turn now to a discussion of the issues and why I say the matter must be
    remitted for trial.

Analysis

[19]

As
    the Supreme Court of Canada has recently reaffirmed in
Grant v. Torstar
    Corp.
, 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 28, in order to
    establish a claim for defamation a plaintiff must establish that:

a)

the
    impugned words are defamatory, in the sense that they would tend to lower the
    plaintiffs reputation in the eyes of a reasonable person;

b)

the
    words in fact refer to the plaintiff; and

c)

the
    words were published, i.e., that they were communicated to at least one person
    other than the plaintiff.

Once the plaintiff has established these elements,
    falsity and damage are presumed, and the onus shifts to the defendant to
    advance an appropriate defence to escape liability.

[20]

Here,
    there is no dispute over (b) and (c).  The respondents admit having published
    the impugned statement and it is acknowledged that the statement, although made
    in the context of a debate with Dr. Dawg, was made in reference to the
    appellant.  The issues in the action are whether the statement is defamatory,
    whether the defence of fair comment is open to the respondents and, if the
    statement is defamatory and the defence does not apply, what are the
    appellants damages.

[21]

In
    addressing these issues the motion judge concluded, first, that summary
    judgment was appropriate because no genuine issue for trial arose with respect
    to any of the issues based on what he viewed as the complete record before him;
    secondly, that the impugned words were not capable of being defamatory of the
    appellant because they amounted to comment or a statement of opinion rather
    than a statement of fact, and therefore had a diminished tendency to lower the
    reputation of the appellant in the eyes of a reasonable reader; thirdly, that
    the impugned words were not in fact defamatory of the appellant because they
    lacked the sting of libel in the context of a political blog where insults were
    regularly treated as part of the give and take of debate; and finally, that in
    any event, the words complained of constituted a fair comment on a matter of
    public importance and that no malice had been proved.

[22]

Respectfully,
    the motion judge erred in granting summary judgment in these circumstances. In
    my view, there ought to be a trial.  For this reason, with one exception, I do
    not find it necessary to comment on his decision with respect to the substance
    of the defamatory claim and defences, except as needed to explain my logic for
    sending the matter back for trial.

[23]

The
    issues raised in this action are all important issues because they arise in the
    relatively novel milieu of internet defamation in the political blogosphere.  However,
    they are not issues that lend themselves to determination on a motion for
    summary judgment in circumstances such as this, in my view, particularly where
    the action is being processed in the simplified procedure regime.

[24]

As
    the motion judge readily acknowledged, summary judgment has rarely been granted
    in defamation cases, probably because the courts have recognized that the
    threshold over which a statement must pass in order to be capable of being
    defamatory of a plaintiff is relatively low: see
Cherneskey v. Armadale
    Publishers Ltd
., [1979] 1 S.C.R. 1067, at p. 1095, and because the
    question whether a statement is in fact defamatory has long been considered the
    purview of a trier of fact.  Whether impugned words are defamatory of an
    individual in fact is the type of decision better made on the basis of a full
    factual record with cross-examinations and possibly expert testimony.  Indeed,
    until the
Judicature Act
, R.S.O. 1980, c. 223 was replaced by the
Courts
    of Justice Act
S.O. 1984, c. 11, actions for libel and slander were among
    a small group of claims that the law required to be tried by a jury, unless the
    parties consented to waive such a trial: see
Judicature Act
, s. 57.

[25]

The
    motion judge concluded nonetheless that it was appropriate to grant summary
    judgment here, principally because the factual foundation of the case is
    largely captured in the extensive materials taken from the parties blogs and
    because there seems little in dispute of a factual nature that would be
    different were [the case] to proceed to trial.  On this basis, he concluded
    that there were no genuine issues for trial with respect to the following
    questions:

(a) whether the statement complained of
    was
capable
of being defamatory
    of the appellant;

(b) whether, if the statement were
    capable of being defamatory, it was in fact defamatory of the appellant in the
    context and circumstances in which it was made;

(c) whether the impugned statement
    constituted a statement of fact or a statement reflecting a comment or opinion;
    and

(d) whether the defence of fair comment
    provided a defence to the respondents, including whether malice was
    established.

[26]

The
    motion judge did not have the benefit of this Courts recent decision in
Combined
    Air Mechanical Services Inc. v. Flesch
, 2011 ONCA 764, 108 O.R. (3d) 1, in
    which a new test for summary judgment  the full appreciation test  was
    articulated.  The Court summarized that new test at paras. 54 and 55 as
    follows:

The point we are making is that a motion judge is required to
    assess whether the attributes of the trial process are necessary to enable him
    or her to fully appreciate the evidence and the issues posed by the case. In
    making this determination, the motion judge is to consider, for example,
    whether he or she can accurately weigh and draw inferences from the evidence
    without the benefit of the trial narrative, without the ability to hear the
    witnesses speak in their own words, and without the assistance of counsel as
    the judge examines the record in chambers.

Thus, in deciding whether to use the powers in rule 20.04(2.1),
    the motion judge must consider if this is a case where meeting the full
    appreciation test requires an opportunity to hear and observe witnesses, to
    have the evidence presented by way of a trial narrative, and to experience the
    fact-finding process first-hand. Unless full appreciation of the evidence and
    issues that is required to make dispositive findings is attainable on the
    motion record - as may be supplemented by the presentation of oral evidence
    under rule 20.04(2.2) - the judge cannot be "satisfied" that the
    issues are appropriately resolved on a motion for summary judgment.

[27]

In
    this case, the parties have put in play a scenario that, to date, has received
    little judicial consideration: an allegedly defamatory statement made in the
    course of a robust and free-wheeling exchange of political views in the
    internet blogging world where, the appellant concedes, arguments can be at
    times caustic, strident or even vulgar and insulting.  Indeed, some measure of
    what may seem to be a broad range of tolerance for hyperbolic language in this
    context may be taken from the apparent willingness of the appellant to absorb
    the slings and arrows of the traitor and treason labels without complaint.

[28]

Nonetheless,
    although the respondents come close to asserting  but do not quite assert
    that anything goes in these types of exchanges, is that the case in law?  Do
    different legal considerations apply in determining whether a statement is or
    is not defamatory in these kinds of situations than apply to the publication of
    an article in a traditional media outlet?  For that matter, do different
    considerations apply even within publications on the internet  to a
    publication on Facebook or in the Twitterverse, say, compared to a
    publication on a blog?

[29]

These
    issues have not been addressed in the jurisprudence in any significant way.
    The responses may have far-reaching implications. They are best crafted on the
    basis of a full record after a trial  at least until the law evolves and
    crystallizes to a certain point  in my view.  A trial will permit these
    important conclusions to be formulated on the basis of a record informed by the
    examination and cross-examination of witnesses and quite possibly with the
    assistance of expert evidence to provide the court  whose members are perhaps
    not always the most up-to-date in matters involving the blogosphere  with
    insight into how the internet blogging world functions and what may or may not
    be the expectations and sensibilities of those who engage in such discourse in
    the particular context in which that discourse occurs.

[30]

Although
    made against a slightly different background  whether a statement made using a
    microphone at a public rally was in law a libel or a slander  the observations
    of this Court in
Romano v. DOnofrio
(2005), 77 O.R. (3d) 583 confirm
    that novel questions of law or of mixed law and fact in defamation matters
    ought generally to be determined at a trial.  At paras. 7 and 9, the Court,
    citing
R. D. Belanger & Associates Ltd. v. Stadium Corp. of Ontario
    Ltd.
(1991), 5 O.R. (3d) 778, observed that matters of law which have
    not been settled fully in our jurisprudence should not be disposed of at this
    [interlocutory] stage in the proceedings because they involve a type of
    interpretative analysis [that] should only be done in the context of a full
    factual record, possibly including appropriate expert evidence.

[31]

These
    considerations are particularly significant in relation to several of the
    issues here.  First, whether the words this coming from one of the Talibans
    more vocal supporters are in fact defamatory of the appellant depends upon a
    careful analysis of the context in which the statement was made, including not
    just a review of the electronic dialogue between Dr. Dawg and Peter
    ODonnell, which the motion judge had before him, but also an assessment of
    the two individuals and the view they took of the exchange  something that
    requires at least cross-examination on the positions they initially put forward.
    The analysis further requires a consideration of the view that a reasonable
    reader of the exchange may take of the exchange in the context, an issue that
    might well require some expert testimony for resolution as noted above.  For
    similar reasons, I am not convinced that either the issue of whether the
    impugned words constitute comment or fact or the issue of malice in
    relation to the defence of fair comment can be resolved at this stage.  They
    both require a delicate balancing of the factual context in its entirety for
    determination.

[32]

On
    the issue of malice alone, I am not persuaded that the fact Dr. Dawg and Peter
    ODonnell did not know each other personally and only communicated via the
    internet is dispositive.  Determining actual and express malice often requires
    that the trier of fact draw inferences from proved facts. Often, proof of
    malice is found beyond the four corners of the publication at issue.

[33]

In
    the particular circumstances of this case, there is an additional reason why
    summary judgment is not appropriate. I mentioned above the importance of
    examination and cross-examination in building an appropriate record in these
    kinds of cases.  The motion judge placed considerable emphasis on the fact that
    the parties [had] chosen not to exercise their rights of cross-examination on
    the affidavits filed.  In this respect, he misapprehended the proceeding.  The
    parties had no rights to cross-examine.  This action was commenced under the
    Simplified Procedure provisions of Rule 76; cross-examination of a deponent on
    an affidavit is not permitted: rule 76.04(1).

[34]

While
    acknowledging that there will be cases where summary judgment is appropriate in
    simplified rules cases, the Court in
Combined Air Mechanical
was
    nonetheless cautious about resort to such a remedy in such circumstances.  At
    paras. 255-257 it said:

When a judge is faced with a contested motion for summary
    judgment in a simplified procedure action that requires exercising the powers
    in rule 20.04(2.1), the judge will not only have to apply the full appreciation
    test, but will also need to assess whether entertaining the motion is
    consistent with the efficiency rationale reflected in the simplified procedures
    under Rule 76. We make two general observations that will inform this assessment.

First, summary judgment motions in simplified procedure actions
    should be discouraged where there is competing evidence from multiple
    witnesses, the evaluation of which would benefit from cross-examination, or
    where oral evidence is clearly needed to decide certain issues. Given that Rule
    76 limits discoveries and prohibits cross-examination on affidavits and
    examinations of witnesses on motions, the test for granting summary judgment
    will generally not be met where there is significant conflicting evidence on
    issues confronting the motion judge. While the motion judge could order the
    hearing of limited oral evidence on the summary judgment motion under rule
    20.04(2.2), in most cases where oral evidence is needed, the efficiency
    rationale reflected in the rule will indicate that the better course is to
    simply proceed to a speedy trial, whether an ordinary trial or a summary one:
    see rules 76.10(6) and 76.12.

Second, we are not saying that a motion for summary judgment
    should never be brought in a simplified procedure action. There will be cases
    where such a motion is appropriate and where the claim can be resolved by using
    the powers set out in rule 20.04 in a way that also serves the efficiency
    rationale in Rule 76. For example, in a document-driven case, or in a case
    where there is limited contested evidence, both the full appreciation test and
    the efficiency rationale may be served by granting summary judgment in a
    simplified procedure action.

[35]

While
    the motion judge did have an extensive record before him in the form of the
    entirety of the exchanges between the parties, this was not sufficient in my
    opinion.  It cannot be said that this is simply a document-driven case, or
    that this is a case involving limited contested evidence, as contemplated in
    the passage above, such that both the full appreciation test and the
    efficiency rationale may be served by granting summary judgment in a simplified
    procedure action.

[36]

No
    expert evidence was tendered concerning the expectations and understanding of participants
    in blogosphere political discourse. There was simply no evidence as to what the
    right-thinking person in this context would consider would lower the
    appellants reputation in the estimation of a reasonable reader; indeed,
    ladening the record with the possibly contentious type of expert evidence
    needed in a first-impression case of this nature, and then seeking summary
    judgment, would be counter to the rationale underlying the simplified
    procedure.  The motion judge placed considerable weight on Mr. Smiths
    explanation for the comments he made in arriving at the decision that the
    impugned statement involved comment rather than fact and was, therefore, (a)
    less likely to be taken as defamatory, and (b) the basis for a fair comment
    defence.  Yet Mr. Smith was not cross-examined on the various important
    subtleties of that evidence, nor was he cross-examined on the issue of malice
    in the context of fair comment.  These issues need to be threshed out at a
    trial.

[37]

I
    mentioned that, with one exception, I would not deal with the decision of the
    motion judge on the merits of the defamation claim.  One issue requires
    comment.

[38]

In
    the process of arriving at his conclusions, the motion judge found that the
    impugned words were not defamatory because, having been made in the heat of
    what the motion judge saw as the modern-day equivalent to a live debate, a
    reasonable reader would have anticipated a rejoinder by the appellant, and in
    the absence of such a rejoinder, the statement could not be seen to have
    lowered the reputation of the plaintiff in the eyes of such a reader.  I would
    not want the failure to deal with that conclusion to be taken as acceptance of
    it.  That too, it seems to me, is an issue that needs to be fleshed out at
    trial, quite possibly, again, with the assistance of expert testimony.

Disposition

[39]

For
    the foregoing reasons, I would allow the appeal, set aside the order below, and
    direct that the action proceed to trial.

[40]

The
    appellant is entitled to his costs of the appeal, fixed in the total amount of
    $7,500 inclusive of disbursements and all applicable taxes.

[41]

Costs
    below were fixed in the amount of $6,500 in favour of the respondents.  I see
    no reason why the appellant should not be entitled to the costs below in the
    same amount.

R.A. Blair J.A.

I agree S.T. Goudge
    J.A.

I agree Robert J.
    Sharpe J.A.

Released: June 14, 2012

[1]
Mr. Smith, who was self-represented, did not attend the hearing of the appeal
    on March 13, 2012, but the Court was advised he was content to rely on the
    submissions made by respondents counsel.