COURT OF APPEAL FOR ONTARIO

CITATION: Rausch v. Pickering  (City), 2013 ONCA 740

DATE: 20131209

DOCKET: C56543

MacFarland, Watt and
    Epstein JJ.A.

BETWEEN

James Rausch

Plaintiff (Respondent)

and

The Corporation of the City of Pickering

Defendant (Appellant)

Stuart Zacharias, for the appellant

Yan David Payne and Andrew D. Pelletier, for the
    respondent

Heard: June 25, 2013

On appeal from the order of the Divisional Court (Justices
    Alison Harvison Young and David Aston, Justice John C. Murray dissenting),
    dated August 22, 2012, with reasons reported at 2012 ONSC 4688, dismissing the
    appeal from the order of Justice Elizabeth M. Stewart of the Superior Court of
    Justice, dated June 28, 2011, with reasons reported at 2011 ONSC 2797.

Epstein J.A.
:

INTRODUCTION

[1]

This appeal involves the relationship between statutory authority
    and civil liability. The respondent, James Rausch, raised a herd of wild boars
    on property he occupied within the jurisdiction of the appellant, the City of
    Pickering.  The City, relying on a by-law that restricted keeping certain types
    of animals within its limits, forced Mr. Rausch to get rid of his herd. Mr.
    Rausch sued the City for damages suffered as a result of the loss of his wild
    boar business.  Initially, his claim was advanced on the basis of trespass,
    abuse of process and malicious prosecution. Mr. Rausch later obtained an order,
    subsequently affirmed by an order of the Divisional Court, allowing him to add
    a claim in negligence.  The City appeals this order, arguing that the negligence
    claim is not tenable and should not be allowed to proceed to trial.

[2]

The viability of Mr. Rauschs negligence claim turns on three
    issues: first, whether the City may be said to owe either a statutory or common
    law duty of care; second, if a common law duty of care may be said to exist,
    whether Mr. Rausch has pleaded such a duty; and, third, if so, whether it is
    statute-barred.  In my view, the statutory framework imposes no explicit duty
    of care.  That said, I would not foreclose the possibility that Mr. Rausch may
    be able to establish an implied statutory duty of care.  I am also of the view
    that Mr. Rauschs amended pleading advances a viable common law duty of care
    one that is not out of time.  I would therefore confirm the order of the
    Divisional Court and dismiss the Citys appeal.

Mr. Rauschs Pleading

[3]

In 2007, Mr. Rausch brought this action against the City seeking
    a remedy for the financial loss he suffered as a result of the Citys alleged
    wrongful enforcement of By-law No. 1769/83, (17 September 1984) (the By-law),
    which restricted having certain categories of animals on property within its
    limits.
[1]

[4]

The allegations in Mr. Rauschs original statement of claim can
    be summarized as follows:

·

Mr. Rausch is a tenant on 10 acres of land within the Citys
    boundaries (para. 2).

·

Pursuant to the
Municipal Act
, 2001
, S.O. 2001,
    c. 25, the City has jurisdiction to enact by-laws, including those relating to
    animals being kept on land within its boundaries (para. 3).

·

Between 1997 and 2006, Mr. Rausch invested time and money raising
    premium wild boars for human consumption (paras. 4-7).

·

Late in January 2006, the City advised Mr. Rausch that his
    enterprise violated the By-law and that if he did not immediately remove the
    wild boars from his property, the City would issue an order to comply, charge
    Mr. Rausch for violating the By-law and forcibly remove the animals (paras.
    9-10).

·

Mr. Rausch protested the application of the By-law.  The City refused
    to change its position and Mr. Rausch, under protest, got rid of his animals
    (paras. 10-11).

·

The City then charged Mr. Rausch for breaching the By-law and
    proceeded with its investigation. In so doing, City representatives came onto
    Mr. Rauschs property without permission (paras. 12, 16).

·

A few days before Mr. Rauschs trial for breaching the By-law,
    the City withdrew the charges without explanation (para. 14).

·

Mr. Rausch later learned that the City acted on the advice of
    Transport Canada in taking these steps against him.  The City conducted no
    investigation of its own (para. 15).

·

The City charged him without reasonably believing it would obtain
    a conviction; rather, its goal was to remove him from the property (para. 17).

[5]

Following examinations for discovery, Mr. Rausch brought a motion
    to amend his pleading to add a claim in negligence.  In the proposed amendments
    Mr. Rausch alleged that the City owed him a duty of care pursuant to s. 6 of
    the
Farming and Food Production Protection Act, 1998
, S.O. 1998, c. 1
(the
FFPPA
),
    a provision that prevents a municipal by-law from restricting a normal farm
    practice that is part of an agricultural operation.

[6]

The Master granted an order allowing Mr. Rausch to amend his
    pleading.  However, in his endorsement, the Master did not explicitly rule on
    whether the negligence pleading was a legally tenable cause of action.

[7]

As a result of the Masters order, the following paragraphs were
    added to the statement of claim:

18A.   Further, or in the alternative, the Plaintiff states
    that the said by-laws as referenced herein are not applicable to him pursuant
    to the provisions of s. 6 of the
Farming and Food Production Protection Act
.
    Specifically, the Plaintiff states that his raising of wild boars as
    hereinbefore described constitute a normal farm practice as defined under the
    provisions of the Act and accordingly, pursuant to s. 6 thereof, the by-laws in
    question would not apply to him or to his property.

18B. The failure of the Defendant to comply with the terms of
    s. 6 of the Act rendered any enforcement proceedings as against the Plaintiff
ultra
    vires
of the Defendant. Additionally, by taking enforcement procedures as
    hereinbefore described as against the Plaintiff, the Defendant was in breach of
    the terms of the Act, as the by-laws in question did not apply in the
    circumstances.

18C. The Plaintiff states that the Defendant knew, or ought to
    have known, that the by-laws in question did not apply to him given the
    provisions of the Act and that they should not have taken any enforcement
    proceedings as hereinbefore described, whether advising him to remove the wild
    boars from his property as set out in the correspondence from Brad Suckling,
    dated January 20, 2006, charging him under any or all by-laws, or proceeding
    with the prosecution of him under the said by-laws.

18D. The Plaintiff states that the said statutory breach is a
    direct cause of damages as set out herein for which the Defendant is liable in
    negligence.

[8]

The City then brought a Rule 21 motion to strike out the
    amendments as disclosing no cause of action. The motion judge dismissed the
    motion on the basis that the City may owe a duty under the
FFPPA
, and
    that it was therefore not plain and obvious that Mr. Rauschs claim was doomed
    to fail.  The majority of the Divisional Court dismissed the Citys appeal from
    the motion judges order and the City, with leave, appeals that decision to
    this court.

THE STATUTORY FRAMEWORK

[9]

As the City is a statutory actor, any allegation of negligence
    against it must be analyzed in the context of the statutory scheme comprised of
    the
Municipal Act
, the
FFPPA
and the By-law.

[10]

The main source of the Citys powers is the
Municipal Act
,
    which states that its purpose is to create municipalities that are responsible
    and accountable governments with respect to matters within their jurisdiction
    and that the powers given to municipalities under the
Municipal Act
and other provincial legislation is for the purpose of providing good
    government with respect to those matters: see s. 2. Section 8 makes it clear that
    municipalities have broad powers. These powers are enforced through various provisions,
    including those that permit the City to require a person who contravenes a
    by-law to discontinue the contravening behaviour: see s. 444.

[11]

The Citys jurisdiction is, however, circumscribed by s. 14 of
    the
Municipal Act
, which states that a municipal by-law is ineffective
    to the extent of any conflict with a provincial or federal statute. Section
    14(2) provides that a conflict exists if a by-law frustrates the purpose of the
    provincial or federal statute.

[12]

Finally, the
Municipal Act

addresses the question
    of liability. Section 448 relieves a municipality from liability for damages
    that result from acts or neglect in exercising its authority in good faith.
    However, the municipality remains liable in tort: see s. 448(2). The statute
    also relieves the municipality of liability for the good faith exercise or
    non-exercise of discretion, so long as it is the result of a policy decision:
    see s. 450.  Thus, while the
Municipal Act
grants the City immunity for
    many acts, it expressly
does not

relieve it of liability for
    torts, for damage that results from acts done in bad faith or for the exercise
    of discretion with respect to operational decisions.

[13]

The purpose of the
FFPPA
is as narrow as the purpose of
    the
Municipal Act
is broad.  As described in the preamble of the
FFPPA
,
    its goal is to promote normal farm practices in agricultural areas and to
    balance the needs of the agricultural community with provincial health, safety
    and environmental concerns.   To further its goal of protecting farming
    operations, the
FFPPA
removes municipalities jurisdiction to enforce
    by-laws that interfere with normal farm practices.  Specifically, s. 6(1)
    provides that [n]
o
    municipal by-law applies to restrict a normal farm practice carried on as part
    of an agricultural operation.

In the event of a
    dispute as to whether a particular operation constitutes a normal farm
    practice, the
FFPPA
establishes a tribunal, the Normal Farm Practices
    Protection Board, which is authorized to determine this issue.

[14]

Significantly, there is neither an obligation on any party to
    bring an application to the Board for a determination nor any presumption as to
    whether a particular farming operation is or is not a normal farm practice.

[15]

The Board has no authority to grant a remedy for damages and
    there is no compensation fund established in the statute: the Boards powers
    are limited to determining whether a given operation is or is not a normal farm
    practice.

[16]

The final relevant law is the By-law, passed pursuant to s. 11(3)
    of the
Municipal Act
, which authorizes the City to deal with animals.
    Under the terms of the By-law, residents are

prohibited from keeping
    certain types of animals. Section 8 of the By-law creates a provincial offence
    for any breach of its provisions and provides that anyone who is guilty of
    violating its terms may be fined.

THE DECISIONS BELOW

The Master

[17]

In granting Mr. Rausch leave to amend his pleading, the Masters
    analysis focused on whether the proposed amendments were precluded by the
Limitations
    Act, 2002
, S.O. 2002, c. 24, Sch. B.  The Master concluded that the
    negligence claim arose out of facts already contained in Mr. Rauschs pleading
    and that the amendments were therefore not statute-barred.  He did not deal
    with whether the proposed amendments disclosed a cause of action.  Rather, he
    left that issue open by expressing the view that allowing the amendments did
    not preclude the Citys bringing a motion challenging them under Rule 21.

The Motion Judge

[18]

The City subsequently brought a motion to strike the amendments.
    The motion judge, at para. 7 of her brief endorsement, described the amendments
    as asserting a claim in negligence against the [City] for conduct which
    includes an alleged breach of s. 6 of the [
FFPPA
].  Relying on
Her
    Majesty the Queen in Right of Canada v.

Saskatchewan Wheat Pool
, [1983] 1 S.C.R. 205, the motion judge observed
    that a breach of statute does not give rise to a separate cause of action, but
    is subsumed in the law of negligence.  She concluded that whether or not the
    City actually breached the
FFPPA
and whether the City is therefore
    liable in negligence are questions that depend on the determination of what
    constitutes a normal farm practice under the
FFPPA
and whether Mr.
    Rauschs operation falls within this definition.

[19]

The motion judge went on, at para. 9, to say that [i]f [Mr.
    Rausch] is able to prove at trial that the [City] breached the [
FFPPA
]
    by prosecuting him under the By-law when it knew or ought to have known that it
    did not apply to him and was negligent in so doing, [Mr. Rausch] may succeed in
    his claim.

[20]

On this basis, the motion judge held that it was not plain and
    obvious that Mr. Raushs claim in negligence was doomed to fail and dismissed
    the Citys motion.

The
    Divisional Court

[21]

Three different sets of reasons emerged from the Divisional
    Courts decision to uphold the motion judges order.

[22]

In dismissing the Citys appeal, Harvison Young J. reasoned that
    there may be an implicit statutory duty of care and that it was therefore not
    plain and obvious that the action could not succeed. She also found that the facts,
    as pleaded, may give rise to a common law duty of care on the part of the
    City, even in the absence of a statutory duty of care.

[23]

Harvison Young J. considered this possibility using the test in
Anns
    v. Merton London Borough Council
,
[1978] A.C. 728 (H.L.). The first
    branch of the test examines whether the relationship between the plaintiff and
    the alleged tortfeasor discloses sufficient foreseeability and proximity to establish
    a
prima facie
duty of care.   Harvison Young J. answered this question
    in the affirmative.  She held that Mr. Rausch was individualized by the
    City.  Specifically, City representatives visited his property, took photos of
    his premises, corresponded directly with him and ultimately charged him under
    the By-law.  She therefore concluded that it was not plain and obvious that
    there is no
prima facie
duty of care.  Harvison Young J. also held
    that because there were no compelling policy reasons that negated the duty of
    care, the second branch of the test was satisfied.  She explained her
    reasoning, in paras. 32-34, as follows:

Concerns about potentially overbroad liability may be addressed
    by the formulation of the standard of care. Mr. Rausch alleges that the City,
    in enforcing the By-law, had a duty to
consider
whether the By-law
    actually applied to him before charging him and\or advising him to get rid of
    his animals. In essence, the allegation is that a reasonable by-law enforcement
    officer should, in the circumstances, have considered whether s. 6(2) of the
FFPPA
applied. This will be a question of fact, as the issue of standard of care
    always is. If, at trial, Mr. Rausch establishes that the operation appeared
    farm-like, in other words, that the City knew that he was raising the animals
    with a view to slaughter them for commercial sale, the trial judge might
    conclude that the City knew or ought to have known that Mr. Rausch's operation
    could be a normal farm operation within the meaning of s. 6(2), and that the
    City failed to meet the standard of care when it did not consider referring the
    matter to the Board for determination.

I wish to be clear that I am not
    suggesting that, because the City has a duty to reasonably enforce the By-law,
    it will always have a duty to refer every single matter to the Board. What will
    be required of the City to meet its standard of care will be dependent on the
    particular facts of each situation. For this reason, it is not obvious to me
    that a floodgates argument could justify negating the duty of care,
    particularly at this preliminary stage. [Emphasis in original.]

[24]

Harvison Young J. therefore found that the City may owe Mr.
    Rausch a common law duty of care.  Examining the amended claim she held that, with
    one exception, Mr. Rauschs pleadings were broad enough to cover such a duty.
    The exception was paragraph 18D, which explicitly referred to a statutory
    breach.  Harvison Young J. therefore held that she would grant leave to amend  paragraph
    18D to remove  the word statutory from the allegation of statutory breach,
    without prejudice to any argument under the
Limitations Act, 2002
.

[25]

Aston J. (concurring with Harvison Young J. in the result) was
    not prepared to endorse her conclusion that the City owed Mr. Rausch a common
    law duty of care when that alternative theory was never part of Mr. Rauschs
    submissions before the motion judge or the Divisional Court.

[26]

While Aston J. found that the
FFPPA

imposed no
    positive obligation on the City, he concluded that the City may still have an
    obligation under it.  Aston J. held that the
FFPPA
may sometimes
    impose a duty on the City to refrain from enforcing its by-laws on the basis
    that an activity is part of a normal farm practice carried on as part of an
    agricultural operation. Based on this conclusion, he found that s. 6(1) of
    the
FFPPA
may create a relationship of proximity sufficient to support
    a duty of care in particular cases. He concluded that a generous reading of the
    amended pleading alleged a valid cause of action in negligence.

[27]

In dissent, Murray J. held that it was plain and obvious that a
    claim in negligence could not succeed. He shared Aston J.s view that the
    amendments were not based on any common law duty. He viewed Mr. Rauschs claim
    in negligence as being inextricably tied to an alleged breach of the [
FFPPA
].

[28]

Murray J. found that the
FFPPA
imposed no duty of care on the
    City. If that conclusion were wrong, Murray J. identified two policy
    considerations negating the
prima facie

duty of care.  First,
    he held that Mr. Rausch had an adequate alternative remedy: he could apply to
    the Board for a determination that he was engaged in a normal farm practice.  Second,
    citing
Pyke v. Tri Gro Enterprises Ltd.
(2001), 55 O.R. (3d) 257
    (C.A.), leave to appeal to S.C.C. refused, [2001] S.C.C.A. No. 493, Murray J.
    concluded that the question of whether an operation is a normal farm practice
    ought generally to be determined by the Board and that the existence of this
    specialized tribunal provided a further policy reason to negate a duty of
    care.

ISSUES

[29]

There are three issues on appeal:

1.
          Should the appeal be dismissed as a collateral attack on the Masters
    order allowing the amendments?

2.       Did
    the majority of the Divisional Court err in refusing to strike the impugned paragraphs
    in the statement of claim by improperly concluding that Mr. Rauschs pleading
    asserts a viable claim in negligence for

i.
    the breach of a statutory duty; or

ii.
    the breach of a common law duty?

3.       Are
    the impugned amendments to the statement of claim barred by the
Limitations
    Act, 2002
?

ANALYSIS

(1)

Should the appeal be dismissed on the basis that it amounts to a
    collateral attack on the Masters order?

[30]

Mr. Rausch argues that the Rule 21 motion is a collateral attack on
    the Masters order and should be dismissed. Mr. Rausch relies on the basic
    premise that on a motion to amend pleadings under Rule 26, the court is not
    permitted to allow the proposed amendment unless it asserts a tenable cause of
    action:
Teva Canada Ltd. v. Bank of Montreal
, 2012 ONCA 486, 294
    O.A.C. 323; and
Carom v. Bre-X Minerals Ltd.
(1998), 41 O.R. (3d) 780 (Gen.
    Div.), at p. 784.  Mr. Rausch therefore submits that the Master, by granting
    leave to add the claim in negligence, implicitly found that the amendments disclose
    a valid cause of action.  As a result, Mr. Rausch argues that any subsequent
    challenge to the viability of the negligence claim is barred by the doctrine of
res judicata
.

[31]

The City relies on a sentence in the Masters reasons in which he
    specifically purported to leave the door open to a further legal challenge. For
    reasons the Master did not explain, near the end of his endorsement the Master
    said, [c]ounsel [for the City] indicated that he was contemplating bringing a
    Rule 21 motion in the event that I permitted any of these amendments.  I see no
    reason why these reasons in any way prevent his taking that step, if he chooses
    to do so.

[32]

In my view, the collateral attack argument is not properly before
    this court as it was neither raised before nor dealt with by the Divisional
    Court.

[33]

I would therefore not give effect to this argument except to make
    the following comment. In my view, a disposition that allows amendments that
    raise a cause of action the tenability of which is in dispute and leaves the
    door open to a subsequent Rule 21 challenge of the amendments is a disposition
    that is internally contradictory and legally not available.

(2)

Did the majority of the Divisional Court err by refusing to grant the
    motion to strike?

The Rule 21 test

[34]

There is no dispute as to the test and associated principles that
    apply to a motion to strike pleadings for not disclosing a reasonable cause of
    action.  The test is stringent, and the moving party must satisfy a very high
    threshold in order to succeed:
Amato v. Welsh
, 2013 ONCA 258, 305
    O.A.C. 155, at paras. 32-33. Unless it is plain and obvious that there is no
    chance of success, a claim, even a novel one, ought to be allowed to proceed:
Hunt
    v. Carey Canada Inc.
, [1990] 2 S.C.R. 959, at p. 980; and
Odhavji
    Estate v. Woodhouse
, 2003 SCC 69, [2003] 3 S.C.R. 263, at para. 15.  The
    motion proceeds on the basis that the facts pleaded are true unless they are
    manifestly incapable of being proven:
Operation Dismantle Inc. v. The Queen
,
    [1985] 1 S.C.R. 441, at p. 455.  While the facts pleaded are the basis upon
    which the possibility of success must be evaluated, the pleading must be read as
    generously as possible, erring on the side of permitting an arguable claim to
    proceed to trial.

[35]

I do not accept the Citys submission that in determining the
    issues raised, the analysis is restricted to a consideration of whether the
    amendments, taken in isolation, raise a tenable cause of action.  The
    amendments are part of the amended claim and the legitimacy of the claim or
    claims they advance must be considered in the context of the amended pleading
    as a whole:
Canada v. J.D. Irving Ltd.
, [2000] F.C.J. No. 558 (C.A.),
    at paras. 3-6.

[36]

It is with this test and these principles in mind that I turn to
    the main issue on this appeal  whether the amended claim alleges that the City
    owed Mr. Rausch a duty of care recognized by law.

The legal principles regarding the duty of care

[37]

The foundation of a claim in negligence is the recognition of a
    duty of care owed by the defendant to the plaintiff. A duty of care is not a
    duty to do anything specific: the duty is to take reasonable care to avoid causing
    foreseeable harm to those with whom one is in a relationship of proximity.

[38]

An error frequently made is conflating the duty of care with the
    standard of care.  They are discrete concepts.  As the Supreme Court of Canada
    wrote in
Stewart v. Pettie
, [1995] 1 S.C.R. 131, at para. 32, the
    question of whether a duty of care exists is a question of the relationship
    between the parties, not a question of conduct. The question of what conduct
    is required to satisfy the duty is a question of the appropriate standard of
    care. This important point is expressed in Carolyn Sappideen & Prue Vines,
Flemings
    The Law of Torts
, 10th ed. (Sydney: Thomson Reuters, 2011), at pp. 123-24:

The general standard of conduct required by law is a necessary
    complement of the legal concept of "duty". There is not only the
    question "Did the defendant owe a duty to be careful?" but also
    "What precisely was required of the defendant to discharge it?" Indeed,
    it is not uncommon to encounter formulations of the standard of care or of some
    particular precaution that an actor in the defendants position should take in
    terms of "duty", as when it is asserted that a motorist is under a
    duty to keep a proper lookout or that a person has (or has not) a duty to warn
    another of a certain risk. But this method of expression is best avoided. In
    the first place, the duty issue is already sufficiently complex without
    fragmenting it further to cover an endless series of details of conduct.
    "Duty" is more appropriately reserved for the problem of whether the
    relation between the parties (like manufacturer and consumer or occupier and
    trespasser) warrants the imposition upon one of an obligation of care for the
    benefit of the other, and it is more convenient to deal with individual conduct
    in terms of the legal standard of what is required to meet that obligation.
    Secondly, it is apt to obscure the division of functions between judge and jury
    or the distinction between questions of law and fact. It is for the court to
    determine the existence of a duty relationship and to lay down in general terms
    the standard of care by which to measure the defendant's conduct; it is for the
    jury or judge sitting alone to translate the general into a particular standard
    suitable for the case in hand and to decide whether that standard has been
    attained or the duty breached.

[39]

The existence of a duty of care simply means that the defendant
    is in a relationship of sufficient proximity with the plaintiff that he or she
    ought to have the plaintiff in mind as a person foreseeably harmed by his or her
    wrongful actions. It is not a duty to do anything specific; it is a duty to
    take reasonable care to avoid causing foreseeable harm:
Ryan v. Victoria (City)
,
    [1999] 1 S.C.R. 201, at paras. 25-27.

[40]

If a duty of care is recognized, then the standard of care
    necessary to discharge the duty and whether it has been breached will be
    determined at trial.

Could the City owe a statutory duty of care under the
FFPPA
?

[41]

The Citys basic argument, with which Murray J. agreed in his
    dissenting reasons, is that since Mr. Rauchs negligence action is based on a breach
    of the
FFPPA
and since that statute imposes no explicit duty on the
    City, there can be no breach and therefore no claim in negligence.

[42]

I agree that the
FFPPA
does not explicitly impose a duty
    on the City to do anything relevant to Mr. Rauschs complaint. There is nothing
    in s. 6(1) of the
FFPPA
that specifies that a municipality has a duty to
    take or refrain from taking any action.  Under s. 6(2), a municipality may
    apply to the Board for a determination as to whether a practice is a normal
    farm practice for purposes of the non-application of a municipal by-law.  But,
    the legislation does not require the municipality to make such an application.
    In fact, the only requirement s. 6 of the
FFPPA
explicitly imposes on
    a municipality is found in s. 6(13).  It requires municipalities to provide the
    Board with landowners addresses to enable the Board to give notice of a
    hearing.  This obligation has no relevance to the negligence alleged against
    the City.

[43]

The absence of a specific statutory duty of care imposed by the
FFPPA
means that a negligence claim based on the breach of a duty explicitly set out
    in the statute has no chance of success and should not be allowed to proceed to
    trial.

[44]

Before I turn to the other aspect of the majority decision,
    Harvison Young J.s conclusion that the City may owe Mr. Rausch a common law
    duty of care, I feel it is necessary to make one additional comment about a
    statutory duty of care.  A statutory duty of care may be explicit or implied. I
    have found that in these circumstances, the legislation imposed no explicit statutory
    duty on the City.  However, while not raised in the courts below or on appeal, in
    my view this decision does not foreclose the possibility that there may be an
    implied statutory duty of care arising out of the statutory scheme.

Could the City owe a common law duty of care?

[45]

Although I would reject Mr. Rausch
s claim that
    there is an explicit statutory duty of care
, I do not agree with the
    City that this is the end of the matter.  In my view, when negligence is
    alleged against a government actor, the reach of the duty of care divining rod is
    not restricted to the legislative scheme and whether it imposes a statutory duty
    of care.
In
R. v. Imperial Tobacco
, 2011
    SCC 42, [2011] 3
S.C.R. 45, at paras. 43-45, the Supreme Court
    recognized that in addition to a statutory duty of care set out in the
    governing legislation, there may be a common law duty of care that arises by
    virtue of interactions between the statutory actor and a private individual.

[46]

Before analyzing whether there may be a common law duty of care,
    the statutory scheme must be examined to determine whether it forecloses such a
    duty.

[47]

In my view, the statutory scheme in play in this case does not preclude
    the recognition of a common law duty of care.  I see nothing in either the
FFPPA
or the
Municipal Act
that impedes a finding that such a duty may exist
    in appropriate circumstances.

[48]

As I noted earlier, while the
Municipal Act
relieves the
    City from liability for many acts, it expressly does not relieve it of
    liability for torts, for damage that results from acts done in bad faith or for
    the exercise of discretion with respect to operational decisions: see ss.
    448-450.

[49]

It is true that the
FFPPA
created a tribunal to
    determine whether a farm operation is protected by s. 6.  However, this court
    has held that the
FFPPA
does not preclude a courts making the
    determination, if warranted by the circumstances:
Pyke
, at para. 55.

[50]

Having concluded that the statutory scheme does not foreclose the
    existence of a common law duty of care, two issues must be determined in order
    to resolve the question of whether Mr. Rauschs negligence claim based on such
    a duty is viable and should otherwise be allowed to proceed to trial, subject
    to the limitation period issue.  First, in these circumstances, can it be said
    that the City may owe a common law duty to Mr. Rausch?  Second, does the
    amended pleading, read generously, advance such a claim?

[51]

The parties take the position, and I agree, that in the context
    of by-law enforcement actions, the relationship between municipal by-law enforcement
    officers and farmers against whom they are enforcing a by-law is not a settled or
    analogous category that automatically gives rise to a common law duty of care.
    Therefore, to determine whether a cause of action in negligence based on a
    common law duty of care has a reasonable prospect of success in these
    circumstances, consideration must be given to whether the general requirements
    for liability in tort are met according to the two-stage
Anns
test, as
    honed and consistently applied by the Supreme Court in subsequent decisions,
    most notably,
Cooper v. Hobart
,
2001 SCC 79, [2001] 3 S.C.R.
    537; and
Edwards v. The Law Society of Upper Canada
, 2001 SCC 80, [2001]
    3 S.C.R. 562.

[52]

In the first step of the
Anns
test, the plaintiff must
    establish a
prima facie
duty of care by demonstrating reasonable
    foreseeability of harm and a proximate relationship between the plaintiff and
    the defendant.  At this stage, the court must also examine whether policy
    considerations arising out of the relationship support a finding of proximity.
    If the court finds both foreseeability and proximity, it then proceeds to the
    second step, in which the evidentiary burden shifts to the defendant to raise additional
    policy factors that should eliminate or limit the
prima facie
duty
    found under the first branch of the test.

[53]

While they differ in nature, policy considerations are relevant
    to both steps in the analysis.  In

Syl Apps Secure Treatment Centre
    v. B.D.
, 2007 SCC 38, [2007] 3 S.C.R. 83, at para. 32, Abella J. explained
    that policy factors in the first step pertain to the relationship between the
    parties whereas at the second step they address broader issues reflecting the
    need to shield specific activities from judicial control or to prevent the
    floodgates of litigation from opening into areas of potentially unlimited
    liability.  That said, so long as the relevant factors are considered at some
    point in the analysis, it may not matter at which stage any particular policy
    consideration is examined:
Cooper
, at para. 27.

Step one  does
    the relationship establish a
prima facie
duty of care?

[54]

In this appeal, we are considering the relationship between a
    municipalitys by-law enforcement officer and a farmer against whom a by-law
    was enforced.  The requirement of foreseeability is clearly made out.  A by-law
    enforcement officer who takes steps to ensure a farmers compliance with a by-law,
    the effect of which may be to restrict a farm operation, must surely be aware that
    any missteps carry a real potential of harm to the farmer.

[55]

Therefore, the only remaining issue at this stage is whether Mr.
    Rausch is able to establish a relationship of proximity.

[56]

Since
Cooper
, proximity has been the focus of the
    analysis of whether a public body owes a common law duty of care.  Because the
    City may only exercise powers delegated to it by statute, the legislative
    scheme is at the core of the proximity analysis: see
Cooper
, at para.
    43; and
Edwards
, at para. 9.  As previously noted, the
Municipal
    Act
, the
FFPPA
and the By-law affect the Citys responsibilities
    to Mr. Rausch by defining the parameters of its jurisdiction to enforce by-laws
    against farming operations.  Consequently, and as I will discuss below, they
    all provide context to the proximity analysis: see
River Valley Poultry
    Farm Ltd. v. Canada (Attorney General)
, 2009 ONCA 326, 95 O.R. (3d) 1,
    leave to appeal to S.C.C. refused, [2009] S.C.C.A. No. 259; and
Attis v.
    Canada (Minister of Health)
, 2008 ONCA 660, 93 O.R. (3d) 35, leave to
    appeal to S.C.C. refused, [2008] S.C.C.A. No. 491.

[57]

The existence of a close and direct relationship between the
    wrongdoer and the victim is a basic factor relevant to proximity. The presence
    or absence of a personal relationship between the parties is an important  but
    not determinative  consideration:
Hill v. Hamilton-Wentworth Regional
    Police Services Board
, 2007 SCC 41, [2007] 3 S.C.R. 129, at paras. 29-30; and
Fullowka v. Pinkertons of Canada Ltd.
, 2010 SCC 5, [2010] 1 S.C.R.
    132, at para. 40.

[58]

Here, we are not concerned with every resident in the
    municipality.  The by-law enforcement officer approached Mr. Rausch after
    receiving a complaint. His attention was focused on Mr. Rausch in the same way
    as the attention of the police was focused on the suspect in
Hill
- not
    as one of a universe of all potential suspects or city residents potentially
    in contravention of a by-law, but as a particular person being specifically
    investigated.  The City communicated directly with him regarding his alleged breach
    of the By-law, threatened to issue an order to comply and informed him that it
    would lay provincial offence charges and remove his wild boars if he did not do
    so himself. In so doing, the City targeted Mr. Rausch.

[59]

The finding of a close and direct relationship is bolstered by
    the type of steps open to the City to ensure compliance with the By-law.  Among
    other powers, the City has the ability to restrain activities that violate
    by-laws; to issue orders to comply; to order remedial action; and, in the case
    of this By-law, to levy a fine and lay provincial offence charges: see
Municipal
    Act
, ss. 440-46; and the By-law, s. 8.  These are all actions
    particularly the order to comply  that carry the potential of seriously
    damaging a farmer.  In this case, at stake was a business Mr. Rausch had spent
    almost a decade developing.  This high interest supports a finding of a
    proximate relationship giving rise to a duty of care: see
Hill
, at
    para. 34.

[60]

Reliance is another factor that affects the proximity analysis.
    Here, I am referring to Mr. Rauschs reliance on the Citys taking precautions
    to avoid the harm he suffered:
Fullowka
, at para. 30. In my view, a reasonable
    citizen would assume that if a by-law enforcement officer decided to enforce a
    by-law that had the potential to destroy a business or create other serious
    consequences, the officer would first put his or her mind to whether there was jurisdiction
    to do so.  Mr. Rauschs actions are consistent with this proposition. Based on
    the Citys insistence that he had violated the By-law and in reliance on its
    jurisdiction to enforce compliance, Mr. Rausch took steps that caused him to
    lose his animals, his business and his investment of considerable time and
    money.

[61]

Another consideration relevant to proximity is whether there are adequate
    alternative remedies for the wrongful enforcement of the By-law:
Hill
,
    at para. 35.  I do not agree with Murray J.s conclusion that Mr. Rauschs
    ability to apply to the Board for a determination that he was engaged in a
    normal farm practice constituted an adequate alternative remedy.

[62]

When Mr. Rausch received the Citys letter alleging that he was
    in violation of the By-law and ordering him to get rid of his herd, he was
    faced with only two options apart from complying with the order: (i) apply to
    the Board for a determination that his operation was a normal farm practice
    and therefore exempt from the By-law, or (ii) bring an application for judicial
    review of the Citys decision, seeking a declaration, injunction or order of
    prohibition.

[63]

Inherent in these options is the assumption that Mr. Rausch was
    aware of his legal rights.  The amended claim is pleaded on the basis that he
    was not.  It follows that because the Citys letter gave Mr. Rausch just a
    little over a week to comply with its order, to obtain meaningful relief, in
    short order he would have had to secure legal advice from someone familiar with
    this area of the law.    Moreover, absent the Citys consent to forestall
    enforcement while he established his rights, Mr. Rausch would have had to bring
    an urgent motion for a stay of the enforcement of the By-law.

[64]

However, after Mr. Rausch complied with the Citys sudden demands
    and got rid of his herd, his only meaningful avenue of redress for his
    financial loss was a civil action, given that neither the Board nor a court
    conducting judicial review has the jurisdiction to award damages. I agree with
    Feldman J.A.s comments in
Haskett v. Equifax Canada Inc.
(2003), 63
    O.R. (3d) 577 (C.A.), at para. 50, that a legislative scheme that does not
    provide a remedy in damages may not be an adequate alternative to recognizing a
    cause of action.

[65]

The absence of an adequate remedy means that unless a duty of
    care is recognized, Mr. Rausch will have no recompense for the harm he suffered
    because of the Citys taking potentially unwarranted steps.  To deny a remedy
    in tort would deny justice.  This supports recognition of the tort of negligent
    assumption of jurisdiction to enforce a by-law that may result in the
    restriction of a farming operation.

[66]

In considering the issue of alternative remedies, the real
    question is whether there is anything in the
FFPPA
that suggests that
    tort liability should not exist alongside the statutory scheme at issue.  As I
    see it, the answer is no.

[67]

One final relevant factor is whether the recognition of a
prima
    facie
duty of care would conflict with an overarching statutory or public
    duty:
Syl Apps
, at para. 28; and
Cooper
, at para. 44.  It may
    be argued that recognizing a duty of care in this case would conflict with the
    Citys duty to the public by rendering it more difficult to enforce by-laws.
    However, as emphasized in
Hill
, at para. 43, a
prima facie
duty of care will be negated only when the conflict, considered together with
    other relevant policy considerations, gives rise to a real potential for
    negative policy consequences.

[68]

The Supreme Court considered this issue in
Hill
, in which it
    was argued that if police officers owed a duty to take reasonable care toward a
    suspect, it would conflict with their crime prevention duties. The Supreme
    Court was not persuaded that this was a policy reason sufficient to negate the
    duty of care.  The Chief Justice found, at para. 41, that [t]he officers duty
    to the public is not to investigate in an unconstrained manner. It is a duty to
    investigate in accordance with the law.  The implication is that the duties to
    the public and to the suspect are not at odds; rather, they are consistent with
    each other.

[69]

The same logic applies here. The by-law enforcement officers
    duties to the municipality and its residents will not be affected by recognizing
    a duty of care between officers and farmers whom they are investigating for
    possible violation of a by-law that may restrict their farming operation. These
    are co-extensive duties. It is in everyones interest that by-laws not be
    enforced in an unconstrained manner.

[70]

Furthermore, I note that s. 444 of the
Municipal Act
begins
    the section on remedial actions and orders premised on the municipalitys being
    satisfied that a contravention has occurred. A satisfaction requirement in
    the context of contraventions may add support for the argument that the City
    has a duty to take reasonable steps to satisfy itself that there has been a
    violation of such a by-law before taking enforcement steps.

[71]

I therefore do not see a serious potential for conflicting duties
    in this case. As set out in the
Municipal Act
, the purpose of
    delegating powers to municipalities is to promote good government over areas
    within their jurisdiction. When warranted, holding municipalities to an obligation
    to take reasonable steps to consider whether they have jurisdiction before
    enforcing a by-law furthers this goal.

[72]

These factors lead me to conclude that a municipality considering
    whether to enforce a by-law that may restrict a farm operation is in a
    relationship that is close and direct such that a
prima facie
duty of
    care should be recognized.

Step two  do
    policy considerations negate the
prima facie
duty of care?

[73]

The second stage of the
Anns

test requires an
    examination of whether the City is able to establish that there are any policy
    concerns that negate or limit the
prima facie
duty of care. As the
    Supreme Court stated in
Cooper
, at para. 37, the policy considerations
    at this stage are not concerned with the relationship between the parties, but
    with the effect of recognizing a duty of care on other legal obligations, the
    legal system and society more generally. Policy concerns raised against a duty
    of care must raise a real possibility of negative consequences: such concern
    cannot be speculative:
Hill
, at para. 48.

[74]

I note at the outset that because this appeal arises out of a
    Rule 21 motion and is therefore based on a limited motion record, this court
    should be reluctant to find that policy reasons conclusively negate a duty of
    care at this early stage:
Equifax
, at para. 52.

[75]

Although there are several potentially relevant policy
    considerations, in my view, they do not militate against recognizing a duty of
    care.  On the contrary, they support the recognition of a duty of care.

[76]

Whenever a government or statutory actor is alleged to owe a duty
    of care, the court must consider whether the decision in issue is an
    operational or policy decision. It is generally considered inappropriate to
    hamper legislative action by imposing liability in negligence for policy
    decisions; however, statutory actors may be liable for operational decisions:
Cooper
,
    at para. 38. Policy decisions are dictated by financial, economic, social or political
    factors or constraints, while operational decisions are based on
    administrative direction, expert or professional opinion, technical standards
    or general standards of reasonableness:
Brown v. British Columbia
    (Minister of Transportation and Highways)
, [1994] 1 S.C.R. 420, at p. 434.
    In keeping with this general approach, s. 450 of the
Municipal Act

protects
    the City from liability arising out of policy decisions but not out of
    operational decisions.

[77]

In my view, the decision to enforce the By-law against Mr. Rausch
    is operational in nature. It involved a decision to enforce a specific by-law
    against him: it was not motivated by broader policy concerns. There is
    therefore no concern that imposing a duty of care in this situation would
    undermine the Citys ability to legislate or set policy.

[78]

A common policy consideration under the second stage of the
Anns
test is whether there is a risk of overbroad or indeterminate liability.  It
    was on this basis that the Supreme Court held that a government actor did not
    owe a duty of care to ensure it acted within the law in
Holland v.
    Saskatchewan
, 2008 SCC 42, [2008] 2 S.C.R. 51. The City argues that there
    is no material distinction between Mr. Rauschs claim and the one advanced in
Holland
;
    it therefore submits that
Holland
is dispositive of the issue.

[79]

However,
Holland

is distinguishable.  In that
    case, the plaintiff argued that acting without statutory authority constituted
    negligence in and of itself, an argument that had already been rejected in
Saskatchewan
    Wheat Pool
because a cause of action in negligence on this basis would open
    the door to liability based on nothing more than the fact that the impugned
    action was
ultra vires
.  Such a proposition would dramatically revise
    the law that applies to the consequences of
ultra vires
action: see
Holland
,
    at paras. 10-11. Here, the proposed common law duty of care is not based on the
    Citys acting without statutory authority.  It is based on its failing to take
    care in considering whether it had statutory authority.  Such a duty would not
    have the far-reaching consequences that were of concern in
Holland
: it
    would arise in limited situations involving municipalities enforcing by-laws
    against farmers in the context of a statutory scheme that precludes the
    enforcement of by-laws that restrict normal farm practices.

[80]

In addition, any concerns about overbroad liability may be
    addressed by the formulation of the standard of care. For example, if the
    standard of care is ultimately defined as an obligation to consider the
    provisions of the
FFPPA

when enforcing a by-law against an
    operation that appears farm-like, there will be no risk of indeterminate
    liability.  Such a formulation would limit liability to a narrow range of
    situations in which there is some uncertainty over whether the targeted farming
    operation constitutes a normal farm practice.

[81]

Finally, it is not clear that in a situation in which enforcement
    officers are investigating potential by-law contraventions, indeterminate
    liability could be thought to exist in any event. The duty of care only exists
    between the municipality and the limited class of people that it is
    investigating at any given time.  Therefore, the class of persons to whom the
    duty would be owed is a group that is not only wholly within the knowledge, but
    also the control of the municipality:
Equifax
, at para. 45; and
Hercules
    Managements Ltd. v. Ernst & Young
, [1997] 2 S.C.R. 165, at pp. 197-98.
    In a situation such as this, in which the class of defendants and their
    identity is known, indeterminate liability does not arise.

[82]

The argument that recognizing a duty of care would have a
    chilling effect on by-law enforcement is based on the proposition that if the
    City can be sued in negligence, it will be overly restrained in enforcing its
    by-laws against farmers.  It will have no choice but to refer every case to the
    Board.  This would be costly and time-consuming and may also arguably impose a
    duty on the municipality that could have been specified in the
FFPPA
but
    was not.

[83]

In my view, this argument does not justify refusing to recognize
    a duty of care in these circumstances.  In many cases, whether the use of the
    property constitutes a normal farm practice will be clear and the City will
    have no trouble determining whether or not it can enforce its by-laws.  It is
    antithetical to good government to suggest that in those few cases in which it
    is unclear whether the property is being used in a manner that constitutes a
    normal farm practice, there is no duty to conduct some form of jurisdictional
    due diligence before taking steps to enforce a by-law that could cause
    reasonably foreseeable harm.

Conclusion on the common law duty of care

[84]

In my view, no compelling reason has been shown to negate a
prima

facie
common law duty of care.  I therefore conclude that the City may
    owe Mr. Rausch a common law duty of care to exercise its considerable powers over
    farmers in a manner that reduces risk of unwarranted harm.

The standard of care

[85]

This naturally takes me to the issue of the standard of care.

[86]

Although the arguments with respect to the sufficiency of Mr.
    Rauschs negligence pleadings were properly confined to the question of whether
    the City owes a duty of care, various analyses in the decisions below considered
    the standard of care as well.

[87]

The approach to determining the standard of care in these
    circumstances would be to assess what a reasonable by-law enforcement officer
    would have done in considering whether to enforce the By-law against Mr. Rausch.
    It is at this stage of the analysis that the court must define the conduct
    required to satisfy this standard, bearing in mind that the
FFPPA
imposes no obligation on the City to apply to the Board for a determination as
    to whether a targeted farming operation is a normal farm practice.

[88]

Municipalities are presumed to know the law:
Boundary Bay
    Conservation Committee v. British Columbia (Agricultural Land Commission)
,
    2008 BCSC 946, [2008] B.C.J. No. 1369, at para. 71. Further, this court has
    held that enforcement officers are obliged to (i) act in good faith in relation
    to their decisions as to how a by-law will be enforced, and (ii) act with
    reasonable care in any steps they take to enforce a by-law:
Foley v.
    Shamess
, 2008 ONCA 588, 297 D.L.R. (4th) 287, at para. 29; see also
Butterman
    v. Richmond (City)
, 2013 BCSC 423, [2013] B.C.J. No. 461,

at para.
    38.  The combination of these two factors  presumed knowledge of the law and an
    obligation to act reasonably and in good faith in enforcing it  and the wording
    of s. 444 of the
Municipal Act
mentioned above, may be relevant to the
    determination of the standard of care. Specifically, it may permit a finding
    that when attending at Mr. Rauschs premises and observing livestock in
    circumstances that appeared farm-like, the by-law enforcement officer ought to
    have considered the implications of the
FFPPA
before proceeding with
    enforcement steps.

[89]

As already discussed, the question of the type of conduct
    necessary to meet the standard of care is a matter for trial as it is a
    fact-driven assessment.  In
Ryan
, at para. 28, the Supreme Court
    stated that when determining the conduct required to satisfy the standard of
    care, courts must consider the likelihood of a known or foreseeable harm
    occurring, the gravity of that harm and the cost that the defendant would incur
    in preventing the harm.  Here, relevant factors that might be raised include the
    ease with which the foreseeable risks may have been avoided (i.e. by informing
    Mr. Rausch of the opportunity to seek judicial review or apply to the Board); the
    relevant policy decisions of the municipality with respect to by-law
    enforcement; and the Citys internal standards, guidelines or directives pertaining
    to the enforcement of by-laws.

[90]

I emphasize that it is both for the sake of completeness and to
    respond to the Citys concern that recognizing a duty may conflict with the
FFPPA
that imposes no duty on the City to seek a determination of the Board that I
    have briefly addressed the standard of care.

Are Mr. Rauschs pleadings broad
    enough to support a negligence claim based on a common law duty of care?

[91]

The City argues that the question of whether Mr. Rauschs
    negligence claim is tenable must be approached on the basis of the true character
    of the amended pleading, which grounds the negligence claim against the City in
    a breach of s. 6 of the
FFPPA
.

[92]

I agree that the thrust of the negligence alleged in the amended
    pleading is based on the breach of a statutory duty under the
FFPPA
.
    However, in my view, when read generously, the amended statement of claim also
    advances a claim based on the breach of a common law duty of care owed by the
    City to Mr. Rausch. I refer to the following aspects of the amended claim:

·

The Citys jurisdiction to enact and enforce by-laws is found in
    the
Municipal Act
(para. 3).

·

This jurisdiction is circumscribed by s. 6 of the
FFPPA
.
    Specifically, no by-law applies to restrict a normal farm practice (para.
    18A).

·

The City enforced the By-law against Mr. Rausch without taking
    any steps to determine whether the By-law could be enforced against his
    operation.  In fact, the City relied solely on the advice of representatives of
    Transport Canada (paras. 15, 18).

·

The City enforced the By-law against Mr. Rausch when it knew, or
    ought to have known, that the By-law did not apply to his farming operation
    (para. 18C).

·

The steps the City took to enforce the By-law singled Mr. Rausch
    out for enforcement and involved personal and direct contact with him (paras.
    9-14).

·

Mr. Rausch removed the wild boars from his property because of
    the Citys insistence that he was violating the By-law and its threat that it
    would charge him under the By-law and forcibly remove the wild boars if he
    refused to comply (paras. 9-11).

·

For nearly a decade, Mr. Rausch invested a great deal of time and
    money in cultivating his wild boar herd, and because of the Citys actions, he
    now has to begin cultivating his herd from scratch.  As a result, he has lost
    the revenue that he would have been able to earn from his herd (paras. 4-7,
    21-22).

[93]

It is true that Mr. Rauschs amended claim is faulty in many respects.
    It is also true that his negligence claim focuses on the breach of a duty of
    care imposed by the
FFPPA
. However, in my view, the amended pleading also
    contains allegations sufficient to support a negligence claim based on the
    breach of a common law duty of care.

[94]

I appreciate that this interpretation of Mr. Rauschs amended
    statement of claim requires a charitable reading of the pleading.  However, as
    I have said, the Supreme Court has mandated that pleadings are to be construed
    as generously as possible with a view to accommodating any inadequacies in the
    form of the allegations due to drafting deficiencies:
Operation Dismantle
,
    at p. 451.  This mandate advances the fundamental objective that guides the
    application of rule 1.04 of the
Rules of Civil Procedure

 the
    just determination of cases on their merits.

[95]

In determining whether pleadings disclose a cause of action, the
    focus must be on the substance of the pleading, not its form:
Jane Doe v.
    Metropolitan Toronto (Municipality) Commissioners of Police

(1990),
    74 O.R. (2d) 225 (Div. Ct.), at p. 239.  Courts have refused to strike
    pleadings even in cases in which the plaintiff has not specifically pleaded all
    elements of the cause of action, so long as those elements are implicit in the
    rest of the pleadings:
Jane Doe
, at pp. 238-39; and
1309489
    Ontario Inc. v. BMO Bank of Montreal
, 2011 ONSC 5505, 107 O.R. (3d) 384,
    at paras. 26-27. As Lauwers J. (as he then was) emphasized in
BMO Bank of
    Montreal
, at para. 27, as long as the existing pleading raises the
    factual matrix of concern to the plaintiff and within which [the defendants]
    possible liability is to be located[,] it successfully asserts a cause of
    action within the meaning of rule 21.01(1)(b).   Thus, even if the plaintiff
    does not explicitly set out the technical cause of action on which it relies,
    if the facts as pleaded implicitly advance such a claim, the court ought not to
    strike the pleadings:
BMO Bank of Montreal
, at paras. 26-27.

[96]

Applying these principles in this case, I conclude that Mr.
    Rauschs amended pleading contains the factual matrix necessary to support a negligence
    claim based on a common law duty of care.  The statutory framework of the
    Citys jurisdiction, including the
Municipal Act
and the
FFPPA
,
    is pleaded.  Certain indicia relevant to establishing a relationship of
    proximity are pleaded.  The fact that the by-law enforcement officer took no
    steps to consider jurisdiction is pleaded.  Reliance is pleaded.  Causal
    damages are pleaded.    To strike his pleading, one that pleads breach of a
    duty of care arising out of a statutory framework because it does not
    explicitly refer to its being a common law duty would be to privilege form over
    substance.  In my view, this narrow approach is not called for here.

[97]

I would therefore not give effect to the argument that Mr. Rauschs
    pleadings do not support a negligence claim based on a common law duty of care.

[98]

For these reasons, I conclude that it is not plain and obvious
    that Mr. Rauschs negligence claim based on a common law duty of care has no
    chance of success.  Subject to the limitation argument to which I now turn, it
    should be allowed to proceed to trial.

(3)

Are the impugned amendments to the statement of claim barred by the
Limitations
    Act, 2002
?

[99]

The City alleges that the statutory limitation period precludes
    Mr. Rausch from claiming negligence based on a common law duty.  Mr. Rausch
    submits that a claim for negligence at common law is simply a claim based on a
    different theory of legal liability that flows from facts already pleaded and that
    it is therefore not statute-barred.

[100]

The law is clear that after the limitation period has expired, amendments
    are permissible if they advance an alternative theory of liability based on the
    same facts whereas they are not permissible if they advance a new cause of
    action: see
BMO Bank of Montreal
.

[101]

There is no issue about whether the negligence claim was added
    after the expiry of the limitation period.  It was.  Therefore, the question is
    whether Mr. Rauschs negligence claim based on a common law duty of care
    advances a new cause of action or merely an alternative theory of liability.

[102]

My answer to that question is the latter. As set out above, the
    Supreme Court in
Imperial Tobacco
recognized two avenues of liability in
    negligence arising out of the interaction between a government actor and a
    private citizen: negligence based on the breach of a statutorily imposed duty
    of care and negligence based on the breach of a common law duty of care arising
    out of conduct within the statutory framework.  Relying on a common law duty as
    opposed to a statutory one is merely relying on a different legal path to reach
    the same conclusion.  Moreover, Mr. Rauschs pleadings already allege the
    material facts necessary to support such a claim.  Thus, in relying on a common
    law duty of care, Mr. Rausch asserts an alternative theory of liability flowing
    from the facts as pleaded.  His claim is therefore not barred by the
    limitations period.

[103]

I would therefore not give effect to this ground of appeal.

CONCLUSION

[104]

In my view, Mr. Rauschs amended claim, read broadly, pleads
    breach of a common law duty of care.  It is not clear that the claim cannot
    succeed, and the claim is not statute-barred. Furthermore, as I previously
    indicated, I would also not foreclose the possibility of an implied duty in the
    statute. The amendments should therefore be allowed to remain part of Mr.
    Rauschs pleading for the purposes of trial.

DISPOSITION

[105]

While my reasoning differs somewhat from those expressed by the
    majority of the Divisional Court, in my view the decision to allow Mr. Rauschs
    negligence claim to proceed to trial was correct.

[106]

I would therefore dismiss the appeal with costs to the respondent
    fixed in the amount of $15,000, including disbursements and applicable taxes.

Released: December 9, 2013 (J. MacF.)

Gloria Epstein J.A.

I agree.  J. MacFarland J.A.

I
    agree.  David Watt J.A.

[1]
The City also advised Mr. Rausch that his herd violated the City of Pickering
    Zoning By-law 3037, (3 August 1965); however, the City ultimately laid charges
    under By-law 1769/83.


COURT OF APPEAL FOR ONTARIO

CITATION: Reeve v. Co-operators Insurance
    Company, 2013 ONCA 752

DATE: 20131216

DOCKET: C57425

Juriansz, Hourigan and Benotto JJ.A.

BETWEEN

Carol Reeve

Plaintiff (Appellant)

and

Co-operators Insurance Company and Unique
    Chrysler

Defendant (Respondent)

Jane Poproski, for the appellant

Donna M. Kraft, for the respondent

Heard and endorsed orally:  December 9, 2013

On appeal from the order of Justice Gerald E. Taylor of
    the Superior Court of Justice, dated March 31, 2013.

ENDORSEMENT

[1]

Carol Reeve appeals the decision of Justice Taylor granting summary
    judgment and denying her claim as against Co-operators Insurance Company for
    disability benefits.

[2]

The appellant submits that the motion judge erred in failing to
    appreciate the duty to inform in insurance law. Specifically, she argues that
    Co-operators had a duty to inform her directly regarding a potential claim for
    benefits and that until such time as they have done so, the limitation period
    for a claim for such benefits does not begin to run.

[3]

We dismiss the appeal for the following reasons.

[4]

There is no common law duty on a group disability insurer to inform an
    insured of each individual potential claim for benefits in these
    circumstances.  The decision in
Smith v. Co-operators Life General
    Insurance Co.
, [2002] 2 S.C.R. 129 relied upon by the appellant in support
    of this proposition was made in the context of the specific language contained
    in s. 71 of the
Statutory Accident Benefits Schedule
. In the present
    case, the policy content and notification obligations of a disability insurer
    are set forth in ss. 296 and 298 of Part VII of the
Insurance Act
. The
    unchallenged evidence of the benefits administrator was that there was
    compliance with those provisions and the appellant does not dispute that the
    insurer is, in fact, in compliance.

[5]

The appeal is dismissed.

[6]

Costs are payable by the appellant to Co-operators and are fixed at
    $7,500 all inclusive.

Juriansz
    J.A.

Hourigan
    J.A.

M.L.
    Benotto J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: York Condominium Corporation No.
    62 v. Superior Energy Management Gas L.P., 2013 ONCA 789

DATE: 20131224

DOCKET: C57181

Sharpe, MacFarland and Watt JJ.A.

BETWEEN

York Condominium Corporation No. 62

Applicant (Appellant)

and

Superior Energy Management Gas L.P. o.a. Superior
    Energy

Respondent (Respondent in appeal)

Michael Campbell, for the appellant

Erik Penz and Ben Frenken, for the respondent

Heard and released orally: December 18, 2013

On appeal from the order of Justice Robert Goldstein of
    the Superior Court of Justice, dated May 6, 2013.

ENDORSEMENT

[1]

The appellant Condominium Corporation brought this application for a
    declaration that the contract entered by its former manager with the respondent
    for five years fixed price natural gas supply was void and for related damages
    arising from monthly payments made pursuant to the contract.

[2]

We see no error on the part of the application judge in finding that the
    appellants claim is barred by the
Limitations Act, 2002,
S.O. 2002, c. 24, Sched. B.
The basis of
    the claim is that the Condominium Board did not approve the contract. We agree
    with the application judge that the appellant was aware of the facts supporting
    its claim by October 2009. This action was commenced in September 2012, more
    than two years after the appellant knew that the injury, loss or damage had
    occurred.

[3]

The contention that the limitation period only began to run from the
    date of the appellants demand letter November 18, 2010 must be rejected. That
    demand or notice was not required to trigger the commencement of the limitation
    period. As the application judge put it, to accept that argument would allow a
    party to pick and choose when the time starts to run under the
Limitations
    Act, 2002
.

[4]

We do not accept the submission that a new claim arose with each invoice
    issued by the respondent and that it is open to the appellant to claim excess
    payments made within two years of the commencement of the application.

[5]

The claim for recoupment of what the appellant alleges are excess
    charges is purely derivative of the claim that the contract is void. The
    appellant can only succeed on that claim if it first establishes the source of
    the alleged injury, loss or damage, namely that the contract should be set
    aside. This is not a claim for recovery of recurring damages for breach of
    contract but rather a claim that the contract never existed. The appellants had
    two years from the date they discovered that claim to assert it and they failed
    to do so.

[6]

Accordingly, the appeal is dismissed with costs to the respondent fixed
    at $10,000 inclusive of disbursements and taxes.

Robert J. Sharpe J.A.

J. MacFarland J.A.

David Watt J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Business
    Development Bank of Canada v. 1626012 Ontario Inc. (Artistic Leather
    Living), 2012 ONCA 56

DATE: 20120130

DOCKET: C53712

Doherty, LaForme and Hoy JJ.A.

BETWEEN

Business Development Bank of Canada

Plaintiff (Respondent)

and

1626012 Ontario Inc. sometimes operating as
    Artistic Leather Living and Jatiner Gohal also known as Jim Gohal

Defendants (Appellants)

John W. Bruggeman, for the appellants

Bart Sarsh, for the respondent

Heard and released orally: January 20, 2012

On appeal from the judgment of Justice Kim A. Carpenter-Gunn
    of the Superior Court of Justice, dated April 13, 2011.

ENDORSEMENT

[1]

In face of the documentary record, the vague assertions by the
    appellants, which are contrary to the documented history of dealings between
    the parties and the chronology established by the documents, and the agreement
    of the parties that any changes to the loan facility required the respondents written
    consent, we are satisfied that the motion judge properly concluded that this
    was an appropriate case to grant summary judgment.

[2]

While not applicable at the time, we are satisfied, given the role
    documentary evidence in this case, that the test in
Combined Air Mechanical
    Services Inc. v. Flesch
,

2011 ONCA 764  namely whether a full
    appreciation of the evidence and issues required to make dispositive findings
    can be achieved by the summary judgment  was met.

[3]

We do not accept the appellants argument that an adverse inference
    should have been drawn against the respondent because it only provided the
    evidence of Ms. Reaume.  The chronology established by the documents
    demonstrates that she was an appropriate affiant.

[4]

In the result, the appeal is dismissed with costs, fixed at $4,000,
    inclusive of disbursements and applicable taxes.

Doherty J.A.

H.S. LaForme
    J.A.

Alexandra Hoy
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Canadian
    Broadcasting Corporation v. Ontario, 2012 ONCA 30

DATE: 20120116

DOCKET: C52813

Laskin, Sharpe and Juriansz JJ.A.

BETWEEN

Canadian Broadcasting Corporation

Applicant (Respondent in Appeal)

and

Her Majesty the Queen

Respondent (Respondent in Appeal)

and

Isahaq Omar

Respondent (Appellant in Appeal)

Dirk Derstine, for the appellant

Gail Glickman, for the respondent, Her Majesty the Queen

Iain A. C. MacKinnon, for the respondent, Canadian
    Broadcast Corporation

Heard: January 11, 2012

On appeal from the order of Justice Mary Lou Benotto of
    the Superior Court of Justice, dated July 28, 2010.

APPEAL BOOK ENDORSEMENT

[1]

We are not persuaded that the motion judge erred in her
    decision.  We agree with her that the
Dagenais
/
Mentuck
test
    applies.  The motion judge took account of Mr. Omar's concerns and balanced
    those concerns against the CBC's right to freedom of the press.

[2]

Her order that the identity of Mr. Omar be obscured coupled with
    the CBC's undertaking that the identities of everyone else on the video will
    similarly be obscured sufficiently protect Mr. Omar's privacy interest and
    concerns.

[3]

The appeal is therefore dismissed.


WARNING

THIS IS AN APPEAL UNDER THE

CHILD AND FAMILY SERVICES ACT

AND IS SUBJECT TO S. 45 OF THE ACT WHICH PROVIDES:

45. (7)
The court may make an
  order,

(a)       excluding a particular media representative from all
        or part of a hearing;

(b)       excluding all media representatives from all or a
        part of a hearing; or

(c)       prohibiting the publication of a report of the
        hearing or a specified part of the hearing,

where the court is of the opinion that the presence of the
    media representative or representatives or the publication of the report, as
    the case may be, would cause emotional harm to a child who is a witness at or a
    participant in the hearing or is the subject of the proceeding.

45. (8)
No person shall publish or make public information that has the
    effect of identifying a child who is a witness at or a participant in a hearing
    or the subject of a proceeding, or the childs parent or foster parent or a
    member of the childs family.

45. (9)

The court may make an order prohibiting the publication of
    information that has the effect of identifying a person charged with an offence
    under this Part.

CITATION:
Childrens Aid Society of Haldimand and
          Norfolk v. L.A.P., 2012 ONCA
15

DATE: 20120111

DOCKET: C54706

COURT OF APPEAL FOR ONTARIO

Laskin, Sharpe and Juriansz JJ.A.

BETWEEN

Childrens Aid Society of Haldimand and Norfolk

Applicant (Respondent)

and

L.A.P.
, and R.J.P.

Respondents (
Appellant
)

Paul J. Osier, for the appellant

Wayne B. Herter, for the respondent

Linda Feldman, for the Office of the Childrens Lawyer

Heard:
January 9, 2012

On appeal from the order of Justice
          James A. Ramsay of the Superior Court of Justice, dated July 29, 2011.

APPEAL BOOK ENDORSEMENT

[1]

We agree with the reasons of Ramsay J.

[2]

We also agree with counsel for the Office of the Childrens Lawyer that
    Ms. P. did not put forward, either before Edward J. or Ramsay J., any evidence
    to show a realistic possibility that contact with J. would be meaningful and
    beneficial and in J.s best interests.

[3]

The fresh evidence tendered before us is of limited assistance because
    of the differences in age between M. and J., and the extensive role Ms. P. has
    had in M.s life, as contrasted with her very limited role in J.s life.

[4]

Thus, we conclude, as did Ramsay J., that Crown wardship without access
    is the only outcome that promotes J.s best interests.

[5]

Accordingly, the appeal is dismissed.


CITATION:
DSouza v. Linton, 2012
          ONCA 11

DATE: 20120109

DOCKET: C54051

COURT OF APPEAL FOR ONTARIO

Sharpe, Blair and Rouleau JJ.A.

BETWEEN

John Joseph aka John DSouza and Peter DGama

Plaintiffs/Appellants

and

Ritchie James
          Linton, Robert Jagielski, Krystyna Woldanska, Isabella Woldanska, Agnieszka
          Woldanska, Karolina Gill, Bobby Mukhtiar Gill,

Polish Credit
          Union, Royal Bank of Canada, A. Farber & Partners Inc.,

The Law Society of Upper Canada
          and  The Superintendent of Bankruptcy

Defendants/Respondents

Joseph Markin, for the appellants

Adrienne Lei, for the respondents

Heard & released orally:
January 5, 2012

On appeal from the judgment of Justice Andra M. Pollak of the
          Superior Court of Justice dated June 15, 2011.

ENDORSEMENT

[1]

The appellants argue that the motion judge erred in striking out the
    statement of claim under Rule 21 as against the Law Society of Upper Canada.
    The appellants claim relates to the actions of lawyers who acted for other
    parties.  They argue that the Law Society of Upper Canada is liable in
    negligence for failing to take appropriate action against those lawyers.  There
    is nothing in the statement of claim or the reply to suggest that the
    appellants had any contact with the Law Society of Upper Canada.  They assert the
    claim as members of the public.

[2]

In our view, the claim is precluded by the decision of the Supreme Court
    of Canada in
Edwards v. Law Society of Upper Canada
, [2001] 3 S.C.R.
    562.

[3]

We do not accept the submission that the later decision of the Supreme
    Court in
Finney v. Barreau du Québec
, 2004 SCC 36 assists the
    appellants.  The decision in
Finney
turned on the fact that the
    plaintiff had filed several complaints against the solicitor and that the
    Barreau dealt with those specific complaints in a seriously careless and
    reckless fashion.  The required element of proximity that arose in
Finney
because of the direct contact between the plaintiff and the Barreau is absent
    in this case.

[4]

There is nothing in the record or the submissions made before us to suggest
    that the proximity issue could be rectified by amending the pleading.  Accordingly,
    this is not a case to grant leave to amend.

[5]

For these reasons, the appeal is dismissed.  Costs to the respondent
    fixed at $4,445.77 inclusive of disbursements and HST.

Robert J. Sharpe J.A.

R.A.
    Blair J.A.

Paul
    Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
DelBianco v. Vrancor
    Hospitality Corp., 2012 ONCA 62

DATE: 20120130

DOCKET: C53517

Cronk and Blair JJ.A. and Strathy J. (
ad hoc
)

BETWEEN

Neil DelBianco

Plaintiff (Respondent)

and

Vrancor Hospitality Corp. and SSM 208 St. Marys River Inc. operating as Holiday Inn Sault Ste. Marie
and Peter Tosh

Defendants (Appellants)

Stephen A. McArthur and Janet M. Callfas, for the
    appellants

Hugh N. MacDonald, for the respondent

Heard and released orally: January 27, 2012

On appeal from the judgment of Justice E.E. Gareau of the
    Superior Court of Justice, dated February 22, 2011 and from his costs judgment
    dated September 20, 2011.

ENDORSEMENT

[1]

The appellants challenge the trial judges holding in this wrongful
    dismissal case that the respondent met his obligation to mitigate his damages.
    They argue, first, that the respondents failure to accept an oral offer of
    re-employment from the appellants in January 2009 was unreasonable.

[2]

The trial judge considered and rejected this argument.  In his reasons,
    he reviewed the evidence on this issue from all the witnesses called at trial.
    Having done so, he held that the respondent did not refuse the re-employment
    offer.  Rather, the respondent said that he wanted the offer to be made in
    writing and wished to speak to his lawyer before making a decision about it,
    the latter as recommended by the Chief Financial Officer of the appellant
    companies.  The trial judge held that this response was not unreasonable
    indeed, that it was the prudent approach to take in the circumstances.  We
    agree.

[3]

This court has limited authority to interfere with the factual findings
    of a trial judge.  Absent palpable and overriding error with respect to those
    findings, appellate intervention is precluded.

[4]

We see no palpable and overriding error by the trial judge in his
    assessment of the reasonableness of the respondents response to the
    re-employment offer.  On the contrary, given the history of the dealings
    between the parties, the circumstances surrounding the making of the offer, and
    the lack of clarity regarding the respondents prospective employment with the
    new operator of the appellants hotel, we agree that the respondents conduct
    was reasonable.

[5]

The appellants also complain that the respondent made inadequate efforts
    overall to obtain new employment and that his failure to attend a job interview
    for a full-time janitorial and maintenance position with a local school board
    was fatal.  We disagree.

[6]

The trial judge described the respondents efforts to find new employment
    during the notice period as extensive, exhaustive and diligent.  The
    record supports that characterization.  Given the respondents overall course
    of conduct in aid of mitigation, we agree with the trial judge that he should
    not be penalized for his perhaps unwise decision to decline to attend one
    particular job interview.

[7]

The appellants also attack the trial judges finding of the reasonable
    notice period.  Whether that finding is viewed as 22 months in total or 20
    months plus 8 weeks pay on account of the mandatory requirements of the
Employment
    Standards Act
, we are not prepared to interfere with the trial judges
    assessment of what constitutes a reasonable notice period in all the
    circumstances of this particular case.

[8]

Nor do we accept the appellants various grounds of appeal regarding the
    costs awarded at trial.  The trial judges costs reasons indicate that he
    considered and applied the governing legal principles.  He reduced
    significantly the total costs claimed by the respondent (by almost $26,000).
    We are not persuaded that he erred in principle in his costs assessment or that
    his costs award is clearly wrong.

[9]

At the end of the day, we view this appeal  in the main  as an effort
    to relitigate the issues at trial and the trial judges factual findings.  The
    high threshold required to succeed on appeal on the latter ground has simply
    not been met notwithstanding the able efforts of appellants counsel.

[10]

The
    appeal, therefore, is dismissed.  The respondent is entitled to his costs of the
    appeal in the total amount of $15,000, inclusive of disbursements and all
    applicable taxes.

E.A. Cronk J.A.

R.A. Blair J.A.

G.R. Strathy J. (
ad hoc
)


CITATION:
Edell v. Canada Revenue Agency, 2012 ONCA 8

DATE: 20120105

DOCKET: C53613

COURT OF APPEAL FOR ONTARIO

Sharpe, Blair and Rouleau JJ.A.

BETWEEN

Stephen Anthony Edell

Appellant

and

Canada
          Revenue Agency, Industry Canada (Superintendent in

Bankruptcy and Official
          Receiver) and Risman & Zysman Inc.

Respondents

Stephen Edell, in person

Shahana Kar, for the respondent Canada Revenue Agency

Heard & released orally:
December 22,
          2011

On appeal from the order of Justice S.E. Pepall of the Superior
          Court of Justice dated March 28, 2011.

ENDORSEMENT

[1]

The bankruptcy court judge refused to annul the appellants bankruptcy
    and refused to stay the bankruptcy pending the outcome of the appellants
    damages action against the CRA in the Federal Court.

[2]

The appellant appeals that order but in oral submissions asked us to
    stay the bankruptcy and adjourn the appeal against the refusal to nullify the
    bankruptcy pending the decision of the Federal Court in the damages action.

[3]

In our view, the appeal and the request for a stay must be dismissed.
    We see no error on the part of the bankruptcy court judge in concluding that
    there was no basis to set aside the bankruptcy.

[4]

The CRA exercised its statutory right to vote down the appellants
    proposal.  The appellant knew when he made the proposal that there was every
    likelihood that it would be voted down and that bankruptcy would follow.

[5]

The Federal Court of Appeal has concluded that the bankruptcy does not
    prevent the appellant from pursuing his personal claim in the Federal Court.  The
    issue of whether the CRAs action in relation to the proposal warrant
    nullification of the bankruptcy are for the Ontario Bankruptcy Court.  Whatever
    the Federal Court decides in the damages action, that cannot affect the legal validity
    of the bankruptcy.  We see no basis for staying the bankruptcy in the
    circumstances.

[6]

Accordingly, the appeal is dismissed with costs fixed at $5,000
    inclusive of disbursements and applicable taxes.

Robert J. Sharpe J.A.

R.A. Blair J.A.

Paul Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
The
    Equitable Trust Company v. The Rose Corporation, 2012 ONCA 44

DATE: 20120124

DOCKET: C54172

Rosenberg and Hoy JJ.A. and Swinton J. (
Ad
    Hoc
)

BETWEEN

The Equitable Trust Company

Applicant (Respondent)

and

The Rose Corporation

Respondent (Appellant)

James M. Wortzman and Karey Anne Dhirani, for the
    appellant

Daniel S. Murdoch and Kathryn Esaw, for the respondent

Heard: January 17, 2012

On appeal from the order of Justice David M. Brown of the
    Superior Court of Justice, dated July 12, 2011.

ENDORSEMENT

[1]

The Rose Corporation appeals the order of the application judge dated
    July 11, 2012, ordering and declaring that the  Covenant and Postponement of
    Claim (the Covenant) sought to be enforced by the respondent, The Equitable
    Trust Company, is valid and enforceable against the appellant.

[2]

Pursuant to the Covenant, the appellant merchant bank agreed  as
    principal debtor, and not as a surety, as guarantor, and as indemnitor  to
    be liable for $1.5 million of loans advanced by the respondent to three
    corporations (collectively, the Borrower), and secured by first mortgages on
    three hotels owned by a subsidiary of the appellant.  The hotels were sold
    twice with the appellants consent.  Two of the Borrowers remained on the loan
    covenant.  The mortgages fell into arrears.  A Binding Term Sheet Regarding
    Forbearance Agreement was signed by, among others, the appellant.  The respondent
    ultimately appointed a receiver and manager.  Thereafter, the appellant took
    the position that the Covenant was unenforceable.

[3]

The appellant argues that the application
    judge erred in finding that the Covenant is valid and enforceable against the
    appellant and, in the alternative, erred in finding that there were no material
    facts in dispute which require a trial.

[4]

With one exception, the appellant
    advances arguments made before, and fully and ably addressed by, the
    application judge in his reasons.  On this appeal, the appellant relies on
Montreal
    Trust Co. of Canada v. Birmingham Lodge Ltd.
(1995), 24 O.R. (3d) 97 (C.A.),

which
    appears not to have been argued before the application judge.

[5]

We therefore focus our analysis on the argument arising out of
Montreal
    Trust
.

[6]

In
Montreal Trust
,
the mortgaged property was sold with the defendant
    guarantors consent, but the mortgage was subsequently renewed, at an increased
    interest rate, without their consent. It is long established that a surety will
    be discharged if the principal contract which he guaranteed is materially
    varied without his consent.

[7]

Laskin J.A. held that the guarantors were
    released from liability by the renewal agreement; the no prejudice clause in
    the debenture containing the guarantee covenant provided that the guarantors
    were not released from liability if the terms of the mortgage were varied by
    the Corporation or any successor.  The variation was effected by an assignee,
    not a successor.  He also rejected the argument that the effect of the phrase
    the guarantors shall be primarily liable was to convert the guarantee into a
    contract of indemnity and make the defendants liable as primary debtors, even
    if released from liability as guarantors.

[8]

He noted, at para. 21:

All these cases turn on the specific language of the document
    being considered.  The mere inclusion of a phrase such as the guarantors shall
    be considered as primarily liable is not determinative.  The court should
    examine the entire document to ascertain the parties intention.  If the court
    is uncertain about the correct interpretation, it may resort to extrinsic
    evidence to assist it.

[9]

In
Montreal Trust
, the defendants
    were referred to as guarantors throughout the debenture and signed as
    guarantors; Laskin J.A. therefore construed the covenant at issue as a contract
    of guarantee.  His conclusion was buttressed by the parties subsequent
    conduct.  In each of the mortgage renewal offers, and in the statement of
    claim, the defendants were referred to as guarantors.

[10]

Based on
Montreal Trust
, the appellant argues
    that the application judge erred in concluding that the appellant was a
    principal debtor under the Covenant.  While the appellant is referred to
    throughout as a Covenantor, and not as a guarantor, and did not sign as guarantor,
    subsequent documents describe the appellant as guarantor.  All of the common
    law defences to the enforcement of a guarantee are therefore open to the
    appellant, it argues, unless waived in the Covenant.  The appellant notes that
    in paragraph (h) of the Covenant it waives all notices of default,
    non-performance, non-payment and non-observance on the part
of the
    Borrower
of the terms, covenants and
    provisos contained in the Security (emphasis added).  Again relying on
Montreal
    Trust
, the appellant argues that it did not
    waive such notices in respect of the Borrowers assignees, and the general no
    prejudice clauses in the Covenant do not amount to a waiver of its right to
    rely on its failure to receive the demand notice issued by the respondent to
    the ultimate purchaser of the mortgaged property in a timely manner.

[11]

While the application judge concluded that the
    appellant was a principal debtor, that was not determinative of liability. He also
    correctly concluded that the liability of the appellant turned on the language
    of the Covenant.

[12]

Paragraph (f) of the Covenant provides that nothing
    but payment and satisfaction in full of the Indebtedness and the due
    performance and observation of all covenants, agreements and provisos in the
    Security and other security to be given to the Lender shall release the
    Covenantor of this covenant.  As the application judge noted, paragraph (j)
    provides that the liability of each Covenantor under this covenant shall not
    be impaired or discharged  by any other act or thing whereby, as guarantor,
    the Covenantor would or might be released in whole or in part.  The Covenant
    contemplated the sale of the hotels.

[13]

The application judge carefully considered the specific
    language of the Covenant. The language used in the Covenant is different from
    that used in
Montreal Trust.
We agree with his conclusion that the
    appellant contracted out of its ability to rely on its failure to receive a
    demand notice.

[14]

We also agree with the application judges finding
    that the appellant by, among other things, signing the Binding Term Sheet
    Regarding Forbearance Agreement, in which it agreed to sign an acknowledgement
    that its guarantee remained in effect and subsequently dispensing with the need
    for that formality, ratified the events that, but for the no prejudice
    language, might have entitled the appellant to release under the Covenant.

[15]

The material facts which the appellant pointed to in
    his oral submissions on this appeal as in dispute, and requiring a trial, arise
    out of an email exchange between counsel relating to the ratification issue.  The
    application judge rejected the appellants suggestion as to the proper
    interpretation of the emails as contrary to their plain import.  It was open to
    the application judge to rely on the plain meaning of the emails and thus
    determine the matter as an application.

[16]

In the result, the appeal is dismissed.

[17]

The respondent is entitled to its costs of the appeal
    on a partial indemnity scale, which are fixed at $13,000, inclusive of
    disbursements and applicable taxes.

M. Rosenberg J.A.

Alexandra Hoy J.A.

K. Swinton J. (ad hoc)