COURT OF APPEAL FOR ONTARIO

CITATION: Yaiguaje v. Chevron Corporation, 2017 ONCA 827

DATE: 20171031

DOCKET: M48342 (C63309 and C63310)

Hoy A.C.J.O., Cronk and Hourigan JJ.A.

BETWEEN

Daniel Carlos
    Lusitande Yaiguaje, Benancio Fredy Chimbo Grefa, Miguel Mario Payaguaje
    Payaguaje, Teodoro Gonzalo Piaguaje Payaguaje, Simon Lusitande Yaiguaje,
    Armando Wilmer Piaguaje Payaguaje, Angel Justino Piaguaje Lucitante, Javier
    Piaguaje Payaguaje, Fermin Piaguaje, Luis Agustin Payaguaje Piaguaje,  Emilio
    Martin Lusitande Yaiguaje, Reinaldo Lusitande Yaiguaje, Maria Victoria Aguinda
    Salazar, Carlos Grefa Huatatoca, Catalina Antonia Aguinda Salazar, Lidia
    Alexandria Aguinda Aguinda, Clide Ramiro Aguinda Aguinda, Luis Armando Chimbo
    Yumbo, Beatriz Mercedes Grefa Tanguila, Lucio Enrique Grefa Tanguila, Patricio
    Wilson Aguinda Aguinda, Patricio Alberto Chimbo Yumbo, Segundo Angel Amanta
    Milan, Francisco Matias Alvarado Yumbo, Olga Gloria Grefa Cerda, Narcisa Aida
    Tanguila Narvaez, Bertha Antonia Yumbo Tanguila, Gloria Lucrecia Tanguila
    Grefa, Francisco Victor Tanguila Grefa, Rosa Teresa Chimbo Tanguila, Maria
    Clelia Reascos Revelo, Heleodoro Pataron Guaraca, Celia Irene Viveros Cusangua,
    Lorenzo Jose Alvarado Yumbo, Francisco Alvarado Yumbo, Jose Gabriel Revelo
    Llore, Luisa Delia Tanguila Narvaez, Jose Miguel Ipiales Chicaiza, Hugo Gerardo
    Camacho Naranjo, Maria Magdalena Rodriguez Barcenes, Elias Roberto Piyahuaje
    Payahuaje, Lourdes Beatriz Chimbo Tanguila, Octavio Ismael Cordova Huanca,
    Maria Hortencia Viveros Cusangua, Guillermo Vincente Payaguaje Lusitande,
    Alfredo Donaldo Payaguaje Payaguaje
and
Delfin Leonidas Payaguaje Payaguaje

Plaintiffs (Appellants)

and

Chevron Corporation
,
Chevron Canada Limited
and
Chevron
    Canada Finance Limited

Defendants (Respondents)

Alan Lenczner, Brendan Morrison, Kirk Baert and Celeste
    Poltak, for the appellants (see Schedule I)

Peter Grant, for the appellants (see Schedule II)
[1]

Benjamin Zarnett, for the respondent Chevron Canada

Larry Lowenstein, for the respondent Chevron Corporation

Heard: October 11, 2017

On motion to vary the security for costs order
    of the motion judge, dated September 21, 2017, with reasons reported at 2017
    ONCA 741.

REASONS FOR DECISION

Introduction

[1]

The appellants bring a motion to vary the order of the motion judge requiring
    them to post $942,951 as security for costs of the proceeding and the appeals in
Yaiguaje v. Chevron Corporation
(C63309 and C63310), both now pending
    in this court, prior to the hearing of the appeals.

[2]

For the reasons that follow, we grant the motion and vacate the order of
    the motion judge.

Facts

[3]

The dispute among the parties has a long and complex history.  For
    present purposes, the following brief factual summary provides sufficient
    context.

[4]

The appellants are residents of Ecuador who hold a judgment of US$9.5
    billion against Chevron Corporation obtained in 2011.  The judgment was the
    result of a claim for environmental damage that the appellants allege was
    caused by Texaco Inc., a company that later merged with Chevron Corporation.
    The appellants are representative plaintiffs for approximately 30,000
    indigenous Ecuadorian villagers who have been affected by the environmental
    pollution.

[5]

The appellants first commenced proceedings against Texaco Inc. in 1993
    in New York. That proceeding was eventually dismissed on
forum non
    conveniens

and international comity grounds. The decision was
    upheld on appeal, in part, because Texaco Inc. had agreed to submit to the
    jurisdiction of the Ecuadorian courts.

[6]

The appellants commenced proceedings against Chevron Corporation in
    Ecuador in 2003. By then, Texaco Inc. had merged with Chevron Corporation.  It
    was in that proceeding that the appellants obtained their judgment. Chevron
    Corporation has resisted enforcement of the judgment in courts around the world
    on the basis of the assertion, among others, that the judgment was obtained by
    fraud.

[7]

In 2012, the appellants commenced an action in the Ontario Superior
    Court of Justice for the recognition and enforcement of the Ecuadorian judgment
    against Chevron Corporation and Chevron Canada, a seventh level, indirect
    subsidiary of Chevron Corporation.

[8]

In the Ontario proceeding, Chevron Corporation and Chevron
    Canada challenged the jurisdiction of the Superior Court of Justice to
    recognize and enforce the Ecuadorian judgment.  Justice David Brown (as he then
    was) dismissed that motion and concluded that the Ontario court had
    jurisdiction to recognize and enforce the judgment against these defendants. However,
    Brown J. also concluded that this was an appropriate case in which to exercise
    the courts power to stay the proceedings pursuant to s. 106 of the
Courts
    of Justice Act,
R.S.O. 1990, c. C.43.

[9]

This court overruled the imposition of the stay and upheld the decision
    on the jurisdictional issue:
Yaiguaje v. Chevron Corporation
,
2013

ONCA 758. The Supreme Court of Canada affirmed this courts decision with
    respect to the Ontario courts jurisdiction:
Chevron Corporation v.
    Yaiguaje
,
2015 SCC 42
.

[10]

Following
    the Supreme Courts decision, Chevron Corporation and Chevron Canada filed
    defences in the action. The defences raised by Chevron Corporation include that
    the Ecuadorian judgment cannot be recognized or enforced in Ontario because, as
    the United States District Court for the Southern District of New York found in
    2014, it was obtained by fraudulent means.
[2]

[11]

Chevron
    Corporation and Chevron Canada then moved for summary judgment, submitting that
    the shares and assets of Chevron Canada are not exigible pursuant to the
Execution
    Act
,
R.S.O. 1990, c. E.24 and that there is no basis to pierce the
    corporate veils between Chevron Canada and its indirect parent Chevron Corporation
    so that Chevron Canadas shares and assets become available to satisfy the
    Ecuadorian judgment against Chevron Corporation. Justice Glenn Hainey accepted
    these submissions, granted summary judgment in favour of Chevron Corporation
    and Chevron Canada, and dismissed the plaintiffs claim against Chevron Canada:
Yaiguaje v. Chevron Corporation
, 2015 ONSC 135.

[12]

The
    appellants have appealed the order of Hainey J. to this court, and Chevron
    Corporation and Chevron Canada brought a motion for security for costs of the
    proceeding and the appeals.

[13]

Whether
    the Ecuadorian judgment can or should be recognized or enforced in Ontario
    remains to be determined.

Decision of the Motion Judge

[14]

The
    motion judge granted the motion and ordered security for costs be posted before
    the appeals could be heard.

[15]

In
    so ruling, the motion judge found that the appellants had not established that they
    were impecunious or that third party litigation funding was unavailable.
    Because she found that impecuniosity had not been established, the motion judge
    ruled that the appellants had to demonstrate that their claim has a good chance
    of success. On a review of the merits of the claim, she found that the
    appellants had not met that onus.

[16]

The
    motion judge went on to reject the appellants other submissions, including
    that the order should not be made on the basis that this is an action for the
    enforcement of a foreign judgment or because it is essentially a class
    proceeding.

Analysis

(i)

Standard of Review

[17]

Chevron
    Corporation and Chevron Canada relied on rules 61.06(1)(b) and 56.01(1)(a) of
    the
Rules of Civil Procedure
, R.R.O 1990, Reg. 194, in support of
    their motion for security for costs. In an appeal, rule 61.06(1)(b) authorizes
    this court to make such an order for security for costs of the proceeding and
    the appeal as is just where an order for costs could be made under r. 56.01.

[18]

Rule 61.06 is permissive, not mandatory. In an appeal,
    there is no entitlement as of right to an order for security for costs. Even
    where the requirements of the rule have been met, a motion judge has discretion
    to
refuse to make the order:
Pickard
    v. London Police Services Board
, 2010 ONCA
    643,
268 O.A.C. 153,
at
para. 17.

[19]

In
    determining whether an order should be made for security for costs, the
overarching principle to be applied to all the
    circumstances is the justness of the order sought:
Pickard
,
at para.
    17

and

Ravenda Homes Ltd. v. 1372708 Ontario Inc.
, 2017 ONCA 556, at para. 4.

[20]

The
    appellants move pursuant to s.
7(5) of
Courts
    of Justice Act
to review and vary the
    motion judges order. In fact, although the motion uses the term vary, they
    ask the court to set aside the order. No evidence of change in circumstances
    was tendered. The appellants acknowledge that the impugned order was
    discretionary. Therefore, the motion judges decision is afforded deference:
DeMarco
    v. Nicoletti
,
2017 ONCA 417, at para. 3.

[21]

The
    appellants raise numerous grounds in support of their motion. For present
    purposes, it is only necessary to consider one: whether the motion judge erred
    in principle in determining the justness of the order sought. An error in
    principle is one of the bases on which this court may interfere with a
    discretionary order:
DeMarco
, at para.3.

[22]

In
    deciding motions for security for costs judges are obliged to first consider
    the specific provisions of the Rules governing those motions and then
    effectively to take a step back and consider the justness of the order sought
    in all the circumstances of the case, with the interests of justice at the
    forefront. While the motion judge concluded that an order for security for
    costs would be just, with respect, she failed to undertake the second part of
    that analysis. The failure to consider all the circumstances of the case and conduct
    a holistic analysis of the critical overarching principle on the motion before
    her constitutes an error in principle. It therefore falls to this panel to
    conduct the necessary analysis of the justness of the order sought.

(ii)

Justness of the Order

[23]

The
    Rules explicitly provide that an order for security for costs should only be
    made where the justness of the case demands it. Courts must be vigilant to
    ensure an order that is designed to be protective in nature is not used as a litigation
    tactic to prevent a case from being heard on its merits, even in circumstances
    where the other provisions of rr. 56 or 61 have been met.

[24]

Courts
    in Ontario have attempted to articulate the factors to be considered in
    determining the justness of security for costs orders. They have identified
    such factors as the merits of the claim, delay in bringing the motion, the
    impact of actionable conduct by the defendants on the available assets of the
    plaintiffs, access to justice concerns, and the public importance of the
    litigation.  See:
Hallum v. Canadian Memorial Chiropractic College

(1989), 70 O.R. (2d) 119 (H.C.);
Morton v. Canada (Attorney
    General)

(2005), 75 O.R. (3d) 63 (S.C.);
Cigar500.com
    Inc. v. Ashton Distributors Inc.

(2009), 99 O.R. (3d) 55
    (S.C.);
Wang v. Li
,

2011 ONSC 4477
    (S.C.); and
Brown v. Hudsons Bay Co.
,
2014 ONSC 1065
,
318 O.A.C. 12
(Div
. Ct.).

[25]

While
    this case law is of some assistance, each case must be considered on its own facts.
    It is neither helpful nor just to compose a static list of factors to be used
    in all cases in determining the justness of a security for costs order. There
    is no utility in imposing rigid criteria on top of the criteria already provided
    for in the Rules. The correct approach is for the court to consider the justness
    of the order holistically, examining all the circumstances of the case and
    guided by the overriding interests of justice to determine whether it is just
    that the order be made.

[26]

Having
    undertaken that analysis, we conclude that the unique factual circumstances of
    this case compel the conclusion that the interests of justice require that no
    order for security for costs be made.  To conclude otherwise, in our view,
    would result in an unjust order for security for costs. The pertinent
    circumstances include the following:

(a) The appellants are
    seeking to enforce a judgment in which they have no direct economic interest.
    Funds collected on the judgment will be paid into a trust and net funds are to be
    used for environmental rehabilitation or health care purposes. This is public
    interest litigation.

(b) Although there was no direct
    evidence of impecuniosity before the motion judge, it would be highly
    impractical to obtain this evidence from the representative plaintiffs, let
    alone the 30,000 people who would indirectly benefit from the enforcement of
    the judgment. There can be no doubt that the environmental devastation to the appellants
    lands has severely hampered their ability to earn a livelihood. If we accept
    the findings that underlie the Ecuadorian judgment  findings that have not yet
    been undermined in our courts  Texaco Inc. contributed to the appellants
    misfortune.

(c) In contrast to the
    position of the appellants, Chevron Corporation and Chevron Canada have annual
    gross revenues in the billions of dollars. It is difficult to believe that either
    of these two corporations, which form part of a global conglomerate with approximately
    1,500 subsidiaries, require protection for cost awards that amount or could
    amount to a miniscule fraction of their annual revenues.

(d) While the question
    whether the Ecuadorian plaintiffs have third party litigation funding available
    to them was left unanswered, there should be no bright line rule that a
    litigant must establish that such funding is unavailable to successfully resist
    a motion in an appeal for security for costs. This is especially so in this
    case, where counsel for the appellants has advised the court he is operating
    under a contingency arrangement and where there is evidence that Chevron
    Corporation has sued some of the appellants former third party funders, and
    the funders withdrew their financial support.

(e) It cannot be said, at
    this stage, that this is a case that is wholly devoid of merit. The motion
    judge herself acknowledged, at para. 51 of her reasons, that it might be
    possible to establish that Chevron Canadas shares are exigible under the
Execution
    Act
.

(f) There is no doubt that
    the legal arguments asserted by the appellants are innovative and untested,
    especially with regard to piercing the corporate veil. But this does not
    foreclose the possibility that one or more of them may eventually prevail. That
    is how the common law evolves. Innovative or novel arguments are made and the
    law develops, either gradually or in leaps and bounds. For obvious reasons, substantive
    changes in the law usually take place in our intermediate appeal courts and at the
    Supreme Court. Lower courts are often bound by precedent that restrains them
    from changing the common law. It is hardly just that potential advancements in or
    restatements of the law be thwarted for procedural or tactical reasons.

(g) The history of this
    litigation, which has been ongoing for almost twenty-five years, makes clear
    that Chevron Corporation has and, it may be anticipated, will employ all
    available means to resist enforcement of the Ecuadorian judgment. This, of
    course, is within its rights. However, this reality makes it difficult to
    accept that the motion for security for costs was anything more than a measure intended
    to bring an end to the litigation.

Disposition

[27]

For
    all these reasons, the motion is granted and the order of the motion judge
    requiring the appellants to post security for costs and pay costs of the motion
    for security for costs is set aside.

[28]

The
    appellants are entitled to their costs of the motion for security for costs and
    this motion in the agreed all-inclusive sums of $4,000 and $7,500,
    respectively, payable by Chevron Corporation and Chevron Canada.

Alexandra Hoy A.C.J.O.

E.A. Cronk J.A.

C.W. Hourigan J.A.

SCHEDULE
    I

LENCZNER
    SLAGHT ROYCE SMITH GRIFFIN LLP/
KOSKIE MINSKY LLP

37
    plaintiffs

Daniel Carlos Lusitande Yaiguaje

Benancio Fredy Chimbo Grefa

Miguel Mario Payaguaje Payaguaje

Teodoro Gonzalo Piaguaje Payaguaje

Simon Lusitande Yaiguaje

Armando Wilmer Piaguaje Payaguaje

Angel Justino Piaguaje Lucitante

Javier Piaguaje Payaguaje

Fermin Piaguaje

Luis Agustin Payaguaje Piaguaje

Emilio Martin Lusitande Yaiguaje

Reinaldo Lusitande Yaiguaje

Maria Victoria Aguinda Salazar

Carlos Grefa Huatatoca

Catalina Antonia Aguinda Salazar

Lidia Alexandria Aguinda Aguinda

Clide Ramiro Aguinda Aguinda

Luis Armando Chimbo Yumbo

Beatriz Mercedes Grefa Tanguila

Lucio Enrique Grefa Tanguila

Patricio Wilson Aguinda Aguinda

Patricio Alberto Chimbo Yumbo

Francisco matias Alvarado Yumbo

Olga Gloria Grefa Cerda

Narcisa Aida Tanguila Narvaez

Bertha Antonia Yumbo Tanguila

Gloria Lucrecia Tanguila Grefa

Celia Irene Viveros Cusangua

Lorenzo Jose Alvarado Yumbo

Francisco Alvarado Yumbo

Luisa Delia Tanguila Narvaez

Elias Roberto Piyahuaje Payahuaje

Lourdes Beatriz Chimbo Tanguila

Octavio Ismael Cordova Huanca

Guillermo Vincente Payaguaje Lusitande

Alfredo Donaldo Payaguaje Payaguaje

Delfin Leonidas Payaguaje Payaguaje

SCHEDULE II

GRANT HUBERMAN
    BARRISTERS & SOLICITORS

10 plaintiffs (as per
    Notice of Change of October 4, 2017)

Segundo Angel Amanta Milan

Heleodoro Pataron Guaraca

Hugo Gerardo Camacho Naranjo

Maria Clelia Reascos Revelo

Maria Magdalena Rodriguez Barcenes

Francisco Victor Tanguila Grefa

Rosa Teressa Chimbo Tanguila

Maria Hortencia Viveros Cusangua

Jose Gabriel Revelo Llore

Jose Miguel Ipiales Chicaiza

[1]

Mr. Grant filed a Notice of Change of Lawyers on October 5,
    2017. He purported to represent 10 of the 47 representative plaintiffs and
    sought to make brief oral submissions to supplement those of Mr. Lenczner. As
    an indulgence, the court permitted him to do so, without determining that a
    sub-group of representative plaintiffs, all of who advance the same claim, can
    be represented by different counsel.

[2]

As the motion judge noted, the decision f the United States
    District Court for the Southern District of New York was upheld by the United
    States Court of Appeal for the Second Circuit, and the Supreme Court declined
    to grant
certiorari
for a further appeal.


COURT OF APPEAL FOR ONTARIO

CITATION: 1162251 Ontario Limited v. 833960 Ontario Limited
    (M-Plan Consulting), 2017 ONCA 854

DATE: 20171107

DOCKET: C62761

Laskin, Lauwers and Brown JJ.A.

BETWEEN

1162251 Ontario Limited

Plaintiff (Respondent/

Appellant by way of cross-appeal)

and

833960 Ontario Limited carrying on business as
    M-Plan Consulting

Defendant (Appellant/

Respondent by way of cross-appeal)

Ronald G. Slaght and Patrick Healy, for the appellant

Sean Zeitz, for the respondent

Heard: May 4, 2017

On appeal from the judgment of Justice Paul M. Perell of
    the Superior Court of Justice, dated September 8, 2016.

Laskin J.A.:

[1]

The appellant 833960 Ontario Limited (M-Plan) loaned $500,000 to a
    company called Danbury Sales. Years later the respondent 1162251 Ontario
    Limited (116)  whose shareholders are the wives of the two principals of
    Danbury Sales  guaranteed repayment of the loan. M-Plan sued to enforce the Guarantee
    but its action was dismissed by summary judgment. The main question on the appeal
    is whether the motion judge erred by holding that M-Plans loan had been
    discharged, even before 116 gave the Guarantee, because the loan had been
    converted into a beneficial interest in another company, Danbury Financial.

A.

overview

[2]

Jeffrey Shankman and David Ordon had been close friends for over 50
    years. Shankman is a litigation lawyer; Ordon is the majority owner of Danbury
    Sales, which is a successful appraiser, auctioneer, and liquidator. Over the
    years Shankman and Ordon did business together many times.

[3]

In 2005, Ordon, his minority partner Barry Lockyer, and a third man,
    Frank Spain, started a new business, Danbury Financial, which was to be an
    asset-based lender. Shankman wanted to acquire an ownership interest in Danbury
    Financial. Shankmans company, M-Plan, loaned Danbury Sales $500,000, which
    Danbury Sales then used to make a shareholders loan of $750,000 to Danbury
    Financial. The motion judge found as a fact  at least three times in his
    lengthy reasons  that the $500,000 advanced by M-Plan would be a loan to
    Danbury Sales until shares in Danbury Financial were delivered to [M-Plan] and
    registered on the books of the company. In other words, M-Plan was to receive registered
    shares in Danbury Financial as consideration for its loan to Danbury Sales.
    Otherwise, the loan would remain unpaid.

[4]

M-Plan never obtained registered shares on the books of Danbury
    Financial, principally because Spain did not want any other shareholders in
    Danbury Financial. And, under the Shareholder Agreement between Spains company
    Invar and Danbury Sales, Invar had a veto over the transfer of shares to
    another party.

[5]

In 2010, Danbury Financial began to fail, after its principal lender
    refused to renew its line of credit. M-Plan, having tried without success to
    obtain registered shares in Danbury Financial, then pressed Danbury Sales for security
    for its loan.

[6]

In June 2010, amidst Danbury Financials difficulties, Danbury Sales
    entered into a Trust Agreement, which provided M-Plan with a beneficial
    interest in a portion of Danbury Sales shares in Danbury Financial. The 2010
    Trust Agreement lies at the heart of this appeal and, as I will discuss, is the
    basis for the motion judges decision.

[7]

After the 2010 Trust Agreement was signed and Danbury Financial had
    failed, M-Plan began to demand repayment of its loan. In 2013, in exchange for
    M-Plans agreement to forbear from suing for recovery of its loan, 116 agreed
    to guarantee Danbury Sales debt to M-Plan and to enter into a General Security
    Agreement with M-Plan. David Ordon and Barry Lockyer are the sole officers and
    directors of 116, and their wives Martine Ordon and Sonia Lockyer are the sole
    shareholders.

[8]

116 did not pay under its Guarantee. Instead it started an action
    against M-Plan and brought a motion for summary judgment for a declaration that
    the Guarantee and the General Security Agreement were unenforceable because the
    2010 Trust Agreement had discharged Danbury Sales debt to M-Plan. In turn,
    M-Plan started an action to enforce its Guarantee and brought a cross-motion
    for summary judgment.

[9]

The motion judge found in favour of 116. In apparent contradiction to
    his finding that M-Plan was to obtain registered shares in Danbury Financial as
    consideration for its $500,000 loan, the motion judge concluded that the 2010
    Trust Agreement discharged the loan by providing M-Plan with a beneficial
    interest in shares of Danbury Financial. Therefore M-Plan had obtained what it
    paid for. The motion judge also concluded that when the parties entered into
    the Guarantee and General Security agreement in 2013, they were oblivious to
    the fact Danbury Sales was no longer indebted to M-Plan.

[10]

On its appeal, M-Plan submits that the motion judges conclusions
    contradict his own principal finding, misconstrue the purpose and effect of the
    2010 Trust Agreement, do not reflect the reasonable intentions of the parties,
    and produce a commercially absurd result. In response, 116 submits that the motion
    judges conclusions rest on findings of fact and inferences from the evidence
    supported by the narrative put forward by both parties, and thus appellate intervention
    is not justified.

[11]

Alternatively,
    116 cross-appeals and argues that its Guarantee and General Security Agreement
    are unenforceable because M-Plan knew that both of 116s shareholders had
    refused to consent to either document. In response to the cross-appeal, M-Plan
    points out that the motion judge considered this argument in his reasons, and
    concluded that the General Security Agreement and Guarantee were enforceable
    under Ontarios
Business Corporations Act
[1]
.
    M-Plan asks this court to uphold that conclusion.

[12]

Although
    this appeal and cross-appeal turn mainly on the 2010 Trust Agreement, the Guarantee,
    and the General Security Agreement, the appeal also raises a subsidiary issue.
    In 2011 and 2012, Danbury Financial made three payments totalling $130,000 to
    M-Plan. The motion judge found that Danbury Financial made these three payments
    to reduce the perceived but mistaken indebtedness of its majority shareholder
    Danbury Sales to [M-Plan]
[2]
.
    M-Plan submits that the payments were made to reduce Danbury Financials debt
    on a different transaction. 116 submits that the motion judges finding was
    reasonable and that we should not interfere with it.

[13]

Broadly
    stated then, the three issues on the appeal and the cross-appeal are the
    following:

1.

Did the motion
    judge err in holding that the 2010 Trust Agreement discharged M-Plans $500,000
    loan to Danbury Sales?

2.

If the answer to
    question 1 is yes, are the Guarantee and General Security Agreement
    unenforceable because M-Plan knew that neither shareholder of 116 consented to either
    document?

3.

Did the motion
    judge commit a palpable and overriding error in finding that Danbury Financial
    mistakenly paid M-Plan $130,000 to reduce Danbury Sales indebtedness to M-Plan?

[14]

I
    would answer the questions raised by these three issues yes, no and yes.
    Thus, I would allow M-Plans appeal and dismiss 116s cross-appeal.

B.

the issues

(1)

Did the motion judge err in holding that the 2010 Trust Agreement
    discharged M-Plans $500,000 loan to Danbury Sales?

Factual Background

[15]

To
    put this issue and the parties positions in context, I will review the
    following:

·

The incorporation of Danbury Financial and the Shareholder Agreement
    between Danbury Sales and Invar;

·

M-Plans $500,000 loan to Danbury Sales and the motion judges
    finding of fact on the consideration for the loan;

·

Ordons misrepresentations to Shankman and Spain;

·

The 2010 financial crisis of Danbury Financial and the subsequent
    2010 Trust Agreement;

·

The recitals in the Share Pledge and Assignment Agreement, the Guarantee,
    the General Security Agreement, and the 2013 Revised and Restated Promissory Note;

·

The motion judges credibility findings; and

·

The motion judges reasons for holding that the 2010 Trust Agreement
    discharged M-Plans loan.

(a)

The
    incorporation of Danbury Financial and the Shareholder Agreement between
    Danbury Sales and Invar

[16]

In
    April 2005, Ordon incorporated Danbury Financial. When it was incorporated, 100
    common shares were issued: 57 to Danbury Sales, 33 to Invar, and 10 to a
    consulting firm, which plays no role in this litigation. Danbury Financials
    main financier was CIT Business Credit Canada Inc. The new venture was
    capitalized by a $750,000 loan from Danbury Sales and a $1,000,000 loan from
    Invar. Danbury Financial gave Danbury Sales a General Security Agreement for
    its loan.

[17]

In
    November 2005, Danbury Sales and Invar signed a Shareholder Agreement. Two
    articles of the Agreement are relevant: article 3.2 and article 6.01.

[18]

Article
    3.2 provided that Danbury Sales and Invars loans would each be secured on a
    pari passu basis subject to the security granted by [Danbury Financial] to
    CIT. Importantly, article 3.2 also provided that no amount of the principal of
    Danbury Sales loan would be repaid until Invars loan had been repaid in full.

[19]

Article
    6.01 provided that no shares in the capital of Danbury Financial could be
    transferred without the consent of the holders of not less than 80% of the
    issued and outstanding shares of the company. As Danbury Sales held 57% of the
    shares and Invar held 33% of the shares, each effectively had a veto, which
    meant that Invar could block any proposed transfer of shares to M-Plan.

(b)

M-Plans
    $500,000 loan to Danbury Sales and the motion judges finding of fact on the
    consideration for the loan

[20]

In
    2005, M-Plan loaned Danbury Sales $500,000. The loan is evidenced by a Promissory
    Note, which Danbury Sales signed on November 29, 2005. Danbury Sales used the
    $500,000 for its $750,000 loan to Danbury Financial.

[21]

M-Plan
    made the loan to Danbury Sales because Shankman wanted an equity interest in
    Danbury Financial. Early in his reasons, the motion judge noted that between
    Mr. Shankman and Mr. Ordon, there was an understanding that the $500,000
    unsecured loan would remain a debt until [M-Plan] got an ownership interest in
    Danbury Financial.

[22]

Later
    in his reasons, at para. 29, the motion judge made a finding of fact that a 22%
    ownership interest (or 22 shares) in Danbury Financial was intended to be consideration
    for the loan:

I also find as a fact that in 2005, Mr. Ordon and Mr. Shankman
    orally agreed that the ultimate goal was to use [M-Plans] $500,000 loan as
    consideration for [M-Plan] being allocated a 22% interest (22 common shares) in
    Danbury Financial. From the outset, Mr. Shankmans primary aspiration was that [M-Plan]
    acquire an ownership interest in Danbury Financial.

[23]

Two
    paragraphs later, the motion judge specified that the $500,000 would remain a
    loan until shares in Danbury Financial were delivered to M-Plan and registered
    on the books of the company:

Mr. Ordon and Mr. Shankman agreed that the [M-Plans] $500,000
    would be a loan to Danbury Sales until shares in Danbury Financial were
    delivered to [M-Plan] and registered on the books of the company.

[24]

At
    para. 38, the motion judge repeated this specific finding of fact:

I find as a fact that the situation from 2005 to 2010 was that
    Danbury Sales was indebted to [M-Plan] for $500,000 pending delivery of an
    ownership interest in Danbury Financial registered in the book of that company.

[25]

And
    he did so again at para. 45 of his reasons:

However, I find that  the status quo remained that the
    $500,000 loan would remain a loan until an ownership interest was registered on
    the books of Danbury Financial. This, in turn, required that Mr. Spain would
    agree that [M-Plan] was a partner in Danbury Financial.

[26]

But
    M-Plan never received registered shares in Danbury Financial.

(c)

Ordons
    misrepresentations to Shankman and Spain

[27]

Ordon
    misled both Shankman and Spain in the setting up and early management of
    Danbury Financial.

[28]

Most
    important, Ordon did not disclose to Shankman that Invar had a veto over the
    transfer of shares to M-Plan, or give Shankman a copy of the Shareholder Agreement
    setting out this veto, until well after M-Plan loaned Danbury Sales the $500,000.
    Ordon did not tell Shankman about Invars veto because he knew Spain would only
    deal with Danbury Sales and did not want another investor in Danbury Financial.
    Instead, Ordon used his friendship to placate Shankman by promising that he
    would find the right time to persuade Spain to bring M-Plan on board. For a
    number of years, Ordon also did not disclose to Shankman that Danbury Financial
    had given Danbury Sales a General Security Agreement.

[29]

Ordon
    did not disclose to Spain that $500,000 of Danbury Sales $750,000 loan to
    Danbury Financial had come from M-Plan. Instead, Ordon told Spain that the
    entire $750,000 had come from Danbury Sales own resources.

(d)

The
    2010 financial crisis of Danbury Financial and the subsequent 2010 Trust
    Agreement

[30]

When
    Shankman eventually learned that Ordon had been misleading him about Invars
    veto, he became concerned about M-Plans unsecured loan. He began seeking
    security from Ordon. Then, in early 2010, Danbury Financials major financier,
    CIT, announced that it would not renew Danbury Financials line of credit. This
    announcement placed M-Plans unsecured loan at further risk.

[31]

In
    the face of the financial crisis of Danbury Financial precipitated by CITs withdrawal,
    and after Shankman learned about Invars veto, M-Plan and Danbury Sales signed the
    2010 Trust Agreement
[3]
.
    The Agreement was signed around June 2010, but was backdated to November 29,
    2005 to coincide with the date Danbury Sales signed the Promissory Note in
    favour of M-Plan.

[32]

By
    its terms, the 2010 Trust Agreement did three things for M-Plan. First, it
    expressly acknowledged that a portion of Danbury Sales loan to Danbury
    Financial came from M-Plan and that M-Plans $500,000 loan was still
    outstanding. Second, it expressly acknowledged that M-Plan had a beneficial
    interest in 22 of Danbury Sales 57 shares in Danbury Financial. And third, it
    provided that M-Plan had an interest to the extent of its $500,000 loan in the
    General Security Agreement given by Danbury Financial to Danbury Sales.

[33]

The
    2010 Trust Agreement also provided that Danbury Sales held the 22 shares for
    M-Plan as a bare trustee and that on the written direction of M-Plan, Danbury
    Sales would transfer or convey title of the shares to M-Plan. As I will discuss,
    the motion judge relied on these two provisions in holding that the 2010 Trust
    Agreement discharged M-Plans $500,000 loan.

[34]

After
    the 2010 Trust Agreement was signed, Danbury Financial continue to flounder.
    Eventually CITs withdrawal and Danbury Financials failure to secure
    alternative financing proved fatal. In the latter half of 2011, Danbury
    Financial stopped operating.

(e)

The
    recitals in the Share Pledge and Assignment Agreement, the Guarantee, the General
    Security Agreement, and the 2013 Revised and Restated Promissory Note

[35]

In
    2013, some three years after the 2010 Trust Agreement was signed, the principal
    parties to this litigation, with the benefit of legal advice, executed four
    documents: a Share Pledge and Assignment Agreement, a Guarantee, a General
    Security Agreement, and a Revised and Restated Promissory Note. The first three
    documents gave M-Plan security for its $500,000 loan to Danbury Sales. All four
    documents recited that the loan was still outstanding.

[36]

In
    February 2013, Danbury Sales and M-Plan signed the Share Pledge and Assignment Agreement,
    which was backdated to November 2005. The purpose of the Assignment Agreement
    was to give M-Plan some security for its $500,000 loan, which the parties
    expressly acknowledged was still owing. Under the terms of this agreement,
    Danbury Sales assigned its shares in Danbury Financial, as well as Danbury
    Financials indebtedness to it, to M-Plan as security for M-Plans loan.

[37]

On
    June 7, 2013, Ordon, on behalf of 116, signed the Guarantee and General Security
    Agreement given to M-Plan. Both documents recited that Danbury Sales was
    indebted to M-Plan in the sum of $500,000. On June 20, 2013, a lawyer
    instructed by Ordon registered the General Security Agreement under the
Personal
    Property Security Act
[4]
.

[38]

The
    Guarantee also recited that the debt was evidenced by a Revised and Restated Promissory
    Note. This Promissory Note was also signed in June 2013, but was backdated to
    October 2006. In it, Danbury Sales acknowledged that the $500,000 had been
    advanced to it, and that the $500,000 continue[d] to be outstanding and
    payable to [M-Plan] under the terms of this Revised and Restated Note.

(f)

The motion
    judges credibility findings

[39]

Early
    in his reasons, the motion judge addressed the credibility of the two principal
    protagonists who gave evidence on the motion: Ordon and Shankman. He said at
    para. 8 that there [we]re reasons not to believe all of the evidence of either.
    He concluded, however, that Mr. Ordons version of the narrative by-and-large
    confirm[ed] Mr. Shankmans version of the factual background.

[40]

But
    the motion judge also found that Ordons conduct was dishonorable:

I find that Mr. Ordons conduct was dishonorable, but there is
    a difference between being dishonourable and being untruthful, and Mr. Ordon
    got himself into a double ethical bind, an unresolvable situation from which
    there was no escape without undesirable consequences. He had a conflict of
    interest, and in the end, he could not be loyal to all of his close friend, Mr.
    Shankman, his business partners wife, Mrs. Lockyer, and his own spouse, Mrs.
    Ordon, who co-owned [116]. Ultimately, Mr. Ordon betrayed both his friend and
    the spouses.

[41]

In
    the next paragraph, the motion judge then said that he mainly believed Mr.
    Shankmans account of the events, and where he did not believe Shankman, it was
    not because he favoured Ordons evidence.

(g)

The
    motion judges reasons for holding that the 2010 Trust Agreement discharged
    M-Plans loan

[42]

The
    motion judge concluded at paras. 57 and 58 of his reasons that the 2010 Trust
    Agreement was a genuine conveyance of an ownership interest and not a security
    interest:

Under the 2010 Trust Agreement there was a conveyance of
    Danbury Sales ownership interest in 22 shares of Danbury Financial to [M-Plan].
    This conveyance of ownership was achieved by Danbury Sales acknowledging that
    it was holding 22 shares as bare trustee for the beneficial owner of those
    shares, [M-Plan]. The Trust Agreement acknowledges that 22 out of the 57 common
    shares held by Danbury Sales were acquired by the advance of funds by [M-Plan].
    The Trust Agreement provides that upon the written direction of the [M-Plan],
    Danbury Sales will execute a transfer, or other documents necessary to convey
    title to the 22 shares.

[43]

And
    so, according to the motion judge, the 2010 Trust Agreement gave M-Plan an
    ownership interest in Danbury Financial. Danbury Sales was no longer indebted
    to M-Plan for $500,000. M-Plan had obtained what it paid for.

[44]

The
    motion judge appeared to buttress his conclusion by noting that in the fall of
    2010, after the 2010 Trust Agreement was signed, Spain told Ordon that Invar
    would be prepared to recognize M-Plans ownership of 22 shares in Danbury
    Financial. Yet the motion judge also noted at para. 74 that negotiations for a
    new shareholder agreement had floundered. They had floundered because Invar
    insisted Danbury Sales vote any shares issued to M-Plan and because Invar
    insisted its percentage shareholding be increased as it had put up the most
    money.

[45]

Still,
    having concluded that the 2010 Trust Agreement had discharged the loan, the
    motion judge had to address why, in 2013, M-Plan and Danbury Sales had signed a
    Share Pledge and Assignment Agreement. He also had to address why 116 had
    agreed to guarantee M-Plans $500,000 loan, which 116 acknowledged remained
    outstanding and unpaid. The motion judges answer, given at para. 103 of his
    reasons, was that Shankman and Ordon were oblivious to the fact M-Plan
    already owned an interest in Danbury Financial.

Discussion

[46]

116s
    basic position rests on the standard of appellate review. It submits that we
    should defer to the motion judges interpretation of the relevant documents and
    the largely uncontradicted narrative of events. Simply because this court might
    weigh the evidence differently or might have drawn different inferences from
    the evidence does not justify our intervention.

[47]

I
    accept that the motion judges findings and his ultimate conclusion on the
    effect of the 2010 Trust Agreement attract a deferential standard of appellate
    review. But if his findings or his conclusion is tainted by palpable and
    overriding error, or more simply is unreasonable, appellate intervention is
    justified. And in my view, though the motion judges reasons are lengthy and
    thoroughly analyze the evidence, his conclusion that the 2010 Trust Agreement
    discharged M-Plans loan is unreasonable.

[48]

It
    is unreasonable for three main reasons: it contradicts the motion judges own
    finding on the consideration for the loan; it fails to take into account all of
    the terms of the 2010 Trust Agreement and importantly the context or
    circumstances in which the Agreement was made; and it disregards the conduct
    and understanding of the parties themselves after they signed the 2010 Trust
    Agreement. These errors yielded a result that is not supportable.

(a)

The
    contradiction between the motion judges finding of fact and his conclusion

[49]

The
    motion judge found as a fact that M-Plans $500,000 loan to Danbury Sales could
    be discharged only by issuing to M-Plan registered shares in Danbury Financial.
    Until then the loan remained a loan. That bargain never changed. And as the
    motion judge recognized at para. 45 of his reasons, M-Plan could obtain
    registered shares in Danbury Financial only if Spain agreed to it.

[50]

Yet
    contrary to his finding of fact, the motion judge concluded that M-Plans
    beneficial interest in 22 shares of Danbury Financial, which was acknowledged
    in the 2010 Trust Agreement, discharged M-Plans loan. The motion judges
    finding of fact on the consideration for the loan and his conclusion on the
    effect of the 2010 Trust Agreement cannot stand together.

[51]

M-Plan
    did not get what it paid for when it received a beneficial interest in the
    shares of Danbury Financial. It was entitled to a legal interest  registered
    shares. With only a beneficial interest M-Plan was denied the most fundamental
    right of share ownership  the right to vote the shares.

[52]

It
    is no answer to M-Plans position that in the fall of 2010, Spain said he would
    recognize M-Plan as an owner of Danbury Financial. His recognition, and that of
    his company Invar, were limited. Invar never agreed to forgo its veto and
    permit the transfer of shares to M-Plan. Invar did not even agree M-Plan could
    vote the shares that it held beneficially. According to Spain and Invar,
    Danbury Sales had to vote those shares. And Spain and Invar would agree to a
    shareholder agreement that included M-Plan only if Invars percentage
    shareholding were increased.

[53]

The
    beneficial interest in the shares of Danbury Financial, which the motion judge
    said M-Plan acquired in the 2010 Trust Agreement, was not a substitute for the
    consideration M-Plan had bargained for when it loaned Danbury Sales $500,000. On
    this ground alone I would set aside the motion judges conclusion.

(b)

The
    terms of the 2010 Trust Agreement and the context or circumstances in which it
    was made

[54]

The
    2010 Trust Agreement is a contract. In interpreting it, ordinary principles of
    contract interpretation apply. To ascertain what the parties meant, the terms
    of the contract must be read as a whole, and they must be read in the context
    or circumstances in which the contract was made: see
Dumbrell v. The Regional
    Group of Companies Inc.
[5]

[55]

The
    motion judge concluded that the 2010 Trust Agreement gave M-Plan a beneficial
    interest in 22 shares of Danbury Financial, which had the effect of discharging
    M-Plans loan to Danbury Sales. In his words at para. 57, the 2010 Trust
    Agreement was a genuine conveyance of an ownership interest in the shares. In
    so concluding, the motion judge focused on two terms of the Agreement: the term
    providing that Danbury Sales held 22 of its shares in Danbury Financial as a
    bare trustee for M-Plan; and the term providing that on a direction from M-Plan,
    Danbury Sales would be required to transfer the shares.

[56]

The
    motion judge, however, did not take account of the 2010 Trust Agreement as a
    whole or the context in which it was made. It is evident from both the 2010
    Trust Agreement itself and the context that the Agreement did not convey
    ownership of the shares to M-Plan. Its purpose, at most, was to give M-Plan
    some security for its loan.

[57]

Nothing
    in the 2010 Trust Agreement itself says that M-Plans beneficial interest in
    the shares satisfied its loan. Nothing in the Agreement says that the shares were
    conveyed to M-Plan. And term 8 of the 2010 Trust Agreement gives M-Plan not an
    ownership interest in the shares, but instead a security interest in the General
    Security Agreement held by Danbury Sales. If the motion judge is correct that
    the 2010 Trust Agreement was a genuine conveyance of an ownership interest in
    the shares, term 8 would have been unnecessary.

[58]

That
    the purpose of the 2010 Trust Agreement was to provide security for M-Plans
    loan, rather than to discharge it, is consistent with the context in which the
    Agreement was made. Shankman had been pressing Ordon for security for his loan
    after he became aware that Ordon had misled him about Invars veto and had
    misled Spain about the nature of M-Plans contribution. Eventually, to give
    Shankman some reassurance, Ordon revealed to him the existence of the General
    Security Agreement between Danbury Sales and Danbury Financial, and offered
    Shankman an interest in that Agreement. The 2010 Trust Agreement is the result
    of that offer.

[59]

The
    2010 Trust Agreement was also made in the context of the Shareholder Agreement
    between Danbury Sales and Invar. The two agreements have to be looked at
    together. By the time Shankman signed the 2010 Trust Agreement, he was aware of
    the Shareholder Agreement. The Shareholder Agreement gave Invar a veto over the
    transfer of shares to M-Plan, a veto that it never relinquished. The term in
    the 2010 Trust Agreement providing that on M-Plans direction Danbury Sales was
    to transfer the shares to M-Plan, a term on which the motion judge relied, was
    ineffective. Because of Invars veto, the 2010 Trust Agreement could not convey
    a legal ownership interest in the shares to M-Plan.

(c)

The
    conduct and understanding of the parties after the 2010 Trust Agreement was
    signed

[60]

After
    the 2010 Trust Agreement was signed, both Shankman and Ordon conducted
    themselves on the basis M-Plans loan was still outstanding. After Danbury
    Financial had failed, Shankman began pressing Ordon for repayment of the loan,
    and Ordon tried to find a way to forestall a lawsuit. He knew that neither
    Danbury Sales nor Danbury Financial had the money to repay M-Plans loan. So he
    offered a guarantee and other security for the loan in another company he was
    associated with, 116. 116 could give security because it had a 17 percent ownership
    interest in five properties on Queen Street East in Toronto. Shankman accepted
    this security. In June 2012, the parties began negotiating a series of
    agreements, and eventually signed three security documents and a promissory
    note the following year.

[61]

Each
    of the three security documents signed in 2013  the Guarantee, the Share Pledge
    and Assignment Agreement, and the General Security Agreement  together with
    the Revised and Restated Promissory Note, recited that M-Plans $500,000 loan was
    still outstanding. Each document was negotiated and drafted with legal advice.
    Three of the documents were the subject of a year-long negotiation. Shankman
    and Ordon were not neophytes. They were sophisticated individuals,
    knowledgeable in commercial matters. To suggest that when these four documents
    were negotiated and signed Shankman and Ordon were oblivious to their legal
    rights is implausible. Both knew  and rightly so  that M-Plans loan still
    had not been satisfied.

[62]

The
    motion judges conclusion that the 2010 Trust Agreement discharged M-Plans
    loan was unreasonable. Subject to 116s cross-appeal, both the Guarantee and
    the General Security Agreement are valid and enforceable.

(2)

Are the Guarantee and General Security Agreement unenforceable because
    M-Plan knew that neither shareholder of 116 consented to either document?

[63]

As
    I said, Ordon and Lockyer were the directors of 116; their wives were the two
    shareholders. Although David Ordon agreed that 116 would secure M-Plans
    $500,000 loan, neither Martine Ordon nor Sonia Lockyer consented to giving security;
    both were unwilling to do so.

[64]

Before the motion judge, 116 submitted that if M-Plans loan was still
    outstanding, both the Guarantee and the General Security Agreement were
    unenforceable because Shankman and M-Plan knew the shareholders of 116 had not
    authorized giving this security. Although the motion judge agreed with 116s
    principal submission that the 2010 Trust Agreement discharged M-Plans loan to
    Danbury Sales, he addressed 116s alternative submission. And he concluded that
    if the loan were still outstanding, both security documents would be
    enforceable because of s. 184 of
Ontarios
Business
    Corporations Act
.

[65]

Subsection 184(1) stipulates that a director of a corporation can give a
    Guarantee and a General Security Agreement on behalf of a corporation without
    shareholder authorization unless the articles, by-laws, or a unanimous
    shareholder agreement of the corporation provides otherwise:

184 (1) Unless the articles or by-laws of or a unanimous
    shareholder agreement otherwise provide, the articles of a corporation shall be
    deemed to state that the directors of a corporation may, without authorization
    of the shareholders,

(c) give a guarantee on behalf of the corporation to secure
    performance of an obligation of any person; and

(d) mortgage, hypothecate, pledge or otherwise
    create a security interest in all or any property of the corporation, owned or
    subsequently acquired, to secure any obligation of the corporation.

[66]

116 did not have a shareholder agreement, and nothing in its articles or
    by-laws prevented a director from giving security without shareholder approval.
    To the contrary, the corporations general By-Law No. 2 allowed the directors
    to guarantee the repayment of debts, and so supplemented s. 184 of the statute.
    The motion judge held that the Guarantee was enforceable under s. 184(1)(c) and
    the General Security Agreement was enforceable under s. 184(1)(d).

[67]

In
    this court, 116 submits that the motion judge committed a palpable and
    overriding error in relying on s. 184 because M-Plan knew that Martine Ordon
    and Sonia Lockyer did not consent to giving security and therefore knew that
    Ordon did not have authority to bind 116. In support of its submission, 116
    makes three points. First, although Shankman received a certificate signed by
    Barry Lockyer certifying that a special resolution of the shareholders had been
    passed authorizing the security, the certificate omitted signature lines for
    Martine Ordon and Sonia Lockyer. Second, 116 points to a special resolution of
    the shareholders consenting to the security, which though signed by David Ordon
    and Barry Lockyer, left the signature lines for Martine Ordon and Sonia Lockyer
    blank. Finally, 116 relies on s. 19 of the
Business Corporations Act
,
    which, in substance, legislates the indoor management rule
[6]
.

[68]

I
    do not agree with 116s submission. The motion judge did not err in determining
    that the Guarantee and General Security Agreement were enforceable under s. 184
    of the
Business Corporations Act
.

[69]

As
    the motion judge found, Shankman never insisted that there had to be a
    shareholders resolution authorizing the security. The motion judge held at
    para. 111 that it was nice but not a legal necessity. Even so, in the certificate
    of the special resolution of shareholders that Shankman received, Barry Lockyer
    certified that a shareholders resolution had been passed in June 2013. In the
    absence of any other evidence  and there was none  M-Plan had no reason to
    think that the resolution was unreliable. The absence of signature lines for
    Martine Ordon and Sonia Lockyer did not undermine the certificates
    reliability. Nor did the absence of their signatures on the special resolution
    of shareholders itself. Indeed, it is unclear that Shankman ever received the
    special resolution.

[70]

Section
    19 of the
Business Corporations Act
entitled M-Plan to assume that
    Ordon was authorized to give the Guarantee and General Security Agreement on
    behalf of 116 unless M-Plan or Shankman knew otherwise:

19 A corporation or a guarantor of an obligation of a
    corporation may not assert against a person dealing with the corporation or
    with any person who has acquired rights from the corporation that,

(d) a person held out by a corporation as a director, an
    officer or an agent of the corporation has not been duly appointed or does not
    have authority to exercise the powers and perform the duties that are customary
    in the business of the corporation or usual for such director, officer or
    agent;

(e) a document issued by any director, officer or agent of a
    corporation with actual or usual authority to issue the document is not valid
    or genuine;

except where the person has or ought to have, by virtue of the
    persons position with or relationship to the corporation, knowledge to that
    effect.

[71]

But
    the motion judge found at para. 114 of his reasons that, in the light of its
    receipt of the certificate of the shareholders resolution, M-Plan did not know
    the shareholders had not authorized the security:

In the immediate case the short answer to the matter of the
    application of the Indoor Management Rule is that Mr. Shankman had been told
    that only Mrs. Lockyer was holding out opposition but subsequently [M-Plan]
    received a certificate of the shareholders resolution signed by Mr. Lockyer
    and by the time of the closing of the transaction [M-Plan] did not have
    knowledge that the transaction did not have the authorization of the
    shareholders.

[72]

That
    finding of fact was reasonably available to the motion judge. It is not tainted
    by any palpable and overriding error. I therefore agree with the motion judge
    that the Guarantee and General Security Agreement are enforceable.

(3)

Did the motion judge commit a palpable and overriding error in finding
    that Danbury Financial mistakenly paid M-Plan $130,000 to reduce Danbury Sales
    debt to M-Plan

[73]

Between
    October 2011 and March 2012, Danbury Financial made three payments to M-Plan
    two of $50,000 and one of $30,000, for a total of $130,000. M-Plans position
    was that the payments were made to reduce a $300,000 debt owed to M-Plan by a
    related company, Danbury Industrial, in a separate transaction  the
    Progressive Molded transaction. The payments had nothing to do with Danbury
    Sales $500,000 debt to M-Plan. The motion judge found otherwise. He found that
    Danbury Financial mistakenly made all three payments to reduce the debt of its
    majority shareholder, Danbury Sales, to M-Plan. In the motion judges view the
    payments were mistaken because they were made after the 2010 Trust Agreement
    had discharged M-Plans $500,000 loan.

[74]

M-Plan
    submits that the motion judges finding is palpably and overridingly wrong. As
    it did on the motion, M-Plan says that Danbury Financial made the three payments
    to reduce Danbury Industrials debt on the Progressive Molded transaction. 116
    submits that the motion judges finding is reasonable and we should not interfere
    with it.

[75]

I
    agree with M-Plans submission for two reasons. First, the timing and size of
    the payments correspond to payments Danbury Industrial admittedly made to
    reduce its debt to M-Plan on the Progressive Molded transaction. In his
    affidavit filed on the motion, Ordon admitted that in August 2011, Danbury
    Industrial made two $50,000 payments to M-Plan to reduce its indebtedness on
    the Progressive Molded transaction. Beginning two months later, after Danbury
    Industrial encountered its own financial difficulties, Danbury Financial made
    the three payments in issue  two further $50,000 payments and one $30,000 payment
    to M-Plan. The amount of the payments and their timing strongly suggest that
    they were also made in connection with the Progressive Molded transaction.

[76]

Second,
    the three payments of $130,000 were made well before the Guarantee and General
    Security Agreement were given. If the parties intended that the payments were
    made to reduce Danbury Sales debt to M-Plan, then these documents would have
    stated that only $370,000 was owing on M-Plans loan to Danbury Sales. But both
    documents reflect the full amount of the debt, $500,000. Similarly,
    correspondence between Ordon and his lawyer in November 2012 (long after the
    three payments of $130,000 were made to M-Plan) confirms that Ordon understood
    Danbury Sales still owed M-Plan the full $500,000. In cross-examination on his
    affidavit on the motion, Ordon admitted that he believed as much up until
    shortly before 116 filed its statement of claim in this proceeding.

[77]

I would therefore set aside the motion judges finding that the $130,000
    was paid to reduce Danbury Sales debt to M-Plan.

C.

conclusion

[78]

I
    would allow the appeal, set aside the judgment of the motion judge, and in its
    place grant judgment as follows:

a)

A Declaration that 116s
    Guarantee of the debt of Danbury Sales to M-Plan is a valid and binding guarantee;

b)

A Declaration that the
    General Security Agreement between M-Plan and 116 is a valid and binding security;

c)

Judgment on the Guarantee
    in the amount of $500,000 plus pre-judgment and post-judgment interest at the
    rate of 3% per annum from November 29, 2005 to the date of payment;

d)

An order that the
    judgment in favour of M-Plan be paid out from the funds held in court to the
    credit of the action under the consent order of Conway J. dated September 25,
    2015; and

e)

An order dismissing 116s
    summary judgment motion.

[79]

M-Plan
    is entitled to its costs of the appeal and the cross-appeal, which I would fix
    in the amount of $40,000 inclusive of disbursements and HST. If the parties
    cannot agree on the costs of the motion before the motion judge, they may make
    brief submissions in writing to the panel.

Released: J.L. November 7, 2017

John Laskin J.A.

I agree. P. Lauwers J.A.

I agree. David Brown J.A.

[1]
R.S.O. 1990, c. B.16.

[2]

The motion judge refers to the appellant numbered Ontario
    company as the Shankman Corporation. I have referred to it as M-Plan, the name
    used by the appellant in its factum. Also, the motion judge refers to 116 as
    the Wives Corporation.

[3]

Two previous trust agreements had been prepared but M-Plan did
    not sign either one of them.

[4]
R.S.O. 1990, c. P.10.

[5]
2007 ONCA 59, 85 O.R. 3(d) 616.

[6]

Under the indoor management rule if a corporation holds
    someone out as a director, officer, or agent to a third party, the corporation
    cannot deny that the person has the authority usual for the position. The third
    party is entitled to assume that the corporations internal procedures have
    been complied with unless the third party knew or ought to have known
    otherwise. See:
Midas Investment Corp. v. Bank of Montreal
, 2016 ONSC
    3003, at para. 4


COURT OF APPEAL FOR ONTARIO

CITATION: 6443923 Canada Inc. (Zesty Market) v. Kablou, 2017
    ONCA 916

DATE: 20171128

DOCKET: C63480

Sharpe, Epstein and van Rensburg JJ.A.

BETWEEN

6443923 Canada Inc.,
    c.o.b. as Zesty Market

Plaintiff (Appellant)

and

Yashar Kablou

Defendant/Plaintiff by counterclaim

(Respondent)

and

Ali Karimi and
    Nava Vosough

Defendants by
    counterclaim

Eric Lay, for the appellant

Ian B. McBride, for the respondents

Heard: November 23, 2017

On appeal from the order of Justice Calum MacLeod of the
    Superior Court of Justice, dated February 3, 2017

REASONS FOR DECISION

[1]

These civil proceedings follow a
    2011 criminal trial in which a jury found Mr. Karimi, a principal of the
    numbered company appellant in each action, guilty of extortion and criminal
    harassment.  The respondents and a third individual, Mr. Alireza Khodabandeh,
    were the victims of Mr. Karimis crimes. Mr. Karimi defended the criminal
    charges primarily on the basis that the respondents and Mr. Khodabandeh had
    committed theft against his company. In the sentencing judges view, the guilty
    verdict made clear that the jury found no theft had occurred. She imposed a
    sentence that included significant restitution orders in favour of the
    respondents. On April 28, 2014, this court dismissed Mr. Karimis appeal from
    conviction and sentence.

[2]

Following
    his criminal prosecution, Mr. Karimi commenced these actions against the
    respondents, and an action against Mr. Khodabandeh. In each action, Mr. Karimi
    claimed damages for theft.

[3]

On December 1, 2015, Beaudoin J. granted summary judgment dismissing the
    action against Mr. Khodabandeh. On July 11, 2016, this court dismissed Mr.
    Karimis appeal from that decision.  Mr. Karimi sought leave to appeal to the
    Supreme Court.

[4]

The respondents moved for a stay of these proceedings, primarily on the
    basis that the actions were an abuse of process.  In his decision dated
    February 3, 2017, the motion judge accepted the appellants submissions on
    abuse of process and ordered that both actions be temporarily stayed, reasoning
    that they amount to an impermissible collateral attack on the verdict in the
    criminal prosecution. The motion judge ordered that if the Supreme Court
    refused Mr. Karimi leave to appeal this courts July 11, 2016 decision (or
    granted leave and dismissed the appeal), the temporary stay would become
    permanent. The motion judge further provided that Mr. Karimi had to comply with
    the restitution orders from the criminal proceedings as a condition of bringing
    any motion to lift the stay.

[5]

Prior to this appeal being heard, the Supreme Court denied leave to
    appeal this courts July 11, 2016 decision. As a result, the stay ordered by
    the motion judge is now permanent.

[6]

The appellant appeals the motion judges imposition of the stay. His
    primary argument is that the motion judge erred in finding that the actions
    against the respondents amount to a collateral attack on the criminal
    prosecution.  He submits that the jury charge provided the jury a number of
    different routes to a guilty verdict, not all of which involved the conclusion
    that no theft had occurred.  Since it is impossible to know which route the
    jury followed, the appellant submits the motion judge erred in finding that
    these actions constitute a collateral attack on the jurys verdict.

[7]

We disagree with this argument.

[8]

In our view, it was open to the motion judge to conclude that the jury
    in the criminal prosecution found that the alleged thefts did not occur.  The
    sentencing judge in those proceedings, Ratushny J., held that the jury
    implicitly made such a finding.  At para. 125, of her reasons for sentence, she
    reasoned:

It can be said that the Crown proved the absence of any theft.
    The jury by reason of its guilty verdicts has to be taken to have accepted the
    victims evidence that they were not thieves and that Karimis accusations that
    they were thieves was not a reasonable justification, excuse or lawful
    authority for his crimes of extortion and harassment.

[9]

Ratushny J. went on to observe that the jury heard ample evidence to
    lead them to the conclusion that there had been no theft committed by any of
    the victims or by anyone else.

[10]

The appellant takes issue with relying on Ratushny J.s reasons.  Citing
R. v. Punko
, 2012 SCC 39, [2012] 2 S.C.R. 396, at para. 11, he argues
    that the sentencing judges finding set out above does not constitute a
    judicial determination that the respondents did not steal from him.

[11]

The problem with this submission is that
Punko
addressed the
    application of issue estoppel to criminal proceedings.  Here, the motion judge
    stayed the proceedings on the basis of the abuse of process doctrine, which is
    unencumbered by the specific requirements of concepts such as issue estoppel
Toronto
    (City) v. C.U.P.E., Local 79
, 2003 SCC 63, [2003] 3 S.C.R. 77, at para.
    37.  The doctrine of abuse of process engages the courts inherent jurisdiction
    to prevent the misuse of its procedure in a way that would be manifestly unfair
    to a party before it or would otherwise bring the administration of justice
    into disrepute:
C.U.P.E.
, at para. 37.

[12]

The motion judge explained why these actions amount to an abuse of
    process as follows at para. 8 of his decision:

It would bring the administration of justice into disrepute if
    a man convicted of criminal offences on the basis that he made false
    allegations of theft against these plaintiffs is then permitted to proceed with
    a civil action based on identical allegations. In effect he would be allowed to
    continue the persecution and harassment for which he has just been convicted.

[13]

We agree with that statement.

[14]

We further note that in its July 11, 2016 decision, this court noted
    that Beaudoin J. was entitled to rely on Ratushny J.s reasons for sentence in
    forming his own judgment about the evidence before him on the summary judgment
    motion brought by Mr. Khodabandeh. For similar reasons, it was open to the
    motion judge in this case to take both Beaudoin J.s and Ratushny J.s reasons
    into account.  We note that the motion judge did not suggest that the findings
    in either decision were binding on him.

[15]

The appellant also submits that the motion judge lacked the authority to
    order Mr. Karimi to satisfy the restitution orders from the criminal
    proceedings before seeking to lift the temporary stay. As the Supreme Courts
    denial of leave renders the stay permanent, we need not address this submission

[16]

Accordingly, the appeal is dismissed.

[17]

Costs to the respondents fixed at $13,500 inclusive of disbursements and
    HST.

Robert
    J. Sharpe J.A.

Gloria
    Epstein J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Aubrey Dan Family Trust v. Ontario (Finance), 2017
    ONCA 875

DATE: 20171116

DOCKET: C62438

Simmons, Rouleau and Brown JJ.A.

BETWEEN

Aubrey Dan Family Trust

Appellant

and

Minister of Finance

Respondent

Mark Tonkovich and Jacques Bernier, for the appellant

Andrea Jackett, for the respondent

Heard: October 16, 2017

On appeal from the order of Justice Sidney N. Lederman of
    the Superior Court of Justice, dated June 10, 2016, with reasons reported at
    2016 ONSC 3801.

REASONS FOR DECISION

[1]

The appellant appeals from an order dismissing its summary judgment
    motion.

[2]

The appellant moved for summary judgment allowing its appeal from a
    reassessment of provincial income tax issued under t
he Ontario
Income Tax Act
, R.S.O. 1990, c. I.2 (the
    Ontario Act), for the 2007 taxation year.
[1]

[3]

On its motion, the appellant asserted that the
    reassessment occurred after the limitation period for reassessing Ontario
    income tax had passed. The appellant argued that limitation waiver form T2029,
    which it had submitted for the 2007 taxation year, is a prescribed form under
    the federal
Income Tax Act
, R.S.C. 1985,  c. 1
    (5th Supp.) (the Federal Act), but the form did not operate to waive the
    limitation period for reassessing income tax under the Ontario Act. That is
    because waiver form T2029 had never been prescribed for the purposes of the
    Ontario Act by means of an order of the Provincial Minister: s. 1(1) of the
    Ontario Act
[2]
.
    In any event, advice from government agencies that no order or other document
    exists that prescribed waiver form T2029 for the purposes of the Ontario Act called
    in question whether it had been prescribed for purposes of the Ontario Act: s. 48(15)
    of the Ontario Act.

[4]

The motion judge found that the relevant
    limitation period had expired but rejected the appellant's
argument that
    no valid waiver was submitted
. Among other things, the motion
    judge concluded that waiver form T2029 was deemed, by s. 48(15) of the
    Ontario Act, to be a form prescribed by order of the Provincial Minister
    under the Ontario Act. He also concluded that the waiver form had not been
    called into question by the Provincial Minister or anyone acting on his behalf
    within the meaning of s. 48(15). The motion judge therefore held that the
    waiver form signed by the appellant was valid for the purposes of waiving the limitation
    period for reassessment of Ontario income tax.

[5]

The appellant does not dispute that waiver form
    T2029 is a prescribed form for the purposes of the Federal Act. However, it
    submits that s. 48(15) is a procedural and evidentiary provision that only operates
    to dispense with formal proof; it does not operate to deem that waiver form
    T2029 has been prescribed by order of the Provincial Minister for the purposes
    of the Ontario Act when that has never occurred: s. 1(1) of the Ontario Act; and
Murphy v. Minister of National Revenue
, 2009
    FC 1226, [2010] 3 C.T.C. 1. In any event, the advice that no such order exists
    called in question the form and prevented the operation of s. 48(15).

[6]

We do not accept the appellants submissions.

[7]

The combined operation of s. 10 of the Ontario
    Act, which adopts certain provisions of the Federal Act, and s. 152(4) of the
    Federal Act permit reassessment of Ontario tax after a taxpayers normal
    reassessment period in respect of a taxation year where the taxpayer has filed
    with the Minister a waiver in prescribed form within the normal reassessment
    period for the taxpayer in respect of the year: s. 152(4)(a)(ii) of the
    Federal Act.

[8]

Section 48(15) of the Ontario Act states that [e]very
    form purporting to be a form prescribed  by the Provincial Minister shall be deemed
    to be a form prescribed by order of the Provincial Minister under  [the
    Ontario] Act unless called in question by the Provincial Minister or by some
    person acting for the Provincial Minister or Her Majesty.

[9]

As noted by the motion judge, given the
    existence of a long-standing collection agreement between the Ontario
    government and the Federal government, by operation of s. 1(1) of the Ontario
    Act, Provincial Minister in s. 48(15) of the Ontario Act means the Minister
    of National Revenue for Canada.

[10]

Further, waiver form T2029 bears the insignia
    of the  [Canada Revenue Agency (CRA)] and the Government of Canada and  is
    regularly used by the CRA. In the motion judges words, [i]n this way, it
    implies or purports to be a prescribed form. Moreover, [e]xplicit wording on
    the form that it purports to be a form prescribed under the Ontario Act is not
    required for subsection 48(15) to apply.

[11]

We agree with the motion judge that
Murphy
does not assist the appellant. In that case, it was held that a deeming
    provision in the Federal Act (s. 244(13)) could not assist where a document was
    signed and issued by a CRA official who lacked the statutory authority to do
    so. Here, no delegated statutory authority is required to authorize any
    signatures on waiver form T2029.

[12]

As the motion judge observed, this case is more
    akin to the decisions of the British Columbia Court of Appeal in
R.
    v. Point
, 119 C.C.C. 117;
R. v. Watson
, 2006 BCCA 233, [2006] 4 C.T.C. 61; and
R. v. Smith
, 2007 BCCA 499, [2007] 1 C.T.C. 147, in which that court relied on
    deeming provisions in the Federal Act (s. 244(16) or a predecessor
    thereof), which is akin to s. 48(15) of the Ontario Act, to find that forms
    were prescribed forms under the Federal Act.

[13]

The scope of s. 48(15) is to be determined based
    on a proper interpretation of the Ontario Act. While all statutes  must be
    interpreted in a textual, contextual and purposive way, the context of an
    income tax statute may lead to an emphasis on textual interpretation:
Canada
    Trustco Mortgage Co. v. R
.
,
    2005 SCC 54, [2005] 2 S.C.R. 601, at para. 11. Section 48(15) deems waiver form
    T2029 to be a prescribed form.

[14]

We agree with the motion judge that s. 48(15)
    avoids the necessity of formal proof of an order of the Minister of National
    Revenue and that [t]he prescription imposed by the Minister
[of
    National Revenue]
is sufficiently evidenced by the aforesaid
    indicia on the form. Further, as we have said, the appellant does not dispute
    that waiver form T2029 is a prescribed form for the purposes of the Federal
    Act.

[15]

Accordingly, under the first part of s. 48(15)
    of the Ontario Act, waiver form T2029 clearly purports to be a form prescribed
    or authorized by the [Minister of National Revenue]. Further, on a proper
    reading of the second part of s. 48(15), waiver form T2029 shall be deemed to
    be a form prescribed by order of the [Minister of National Revenue] under this
    Act. The meaning is clear. This form purporting to be prescribed or
    authorized by the [Minister of National Revenue] shall be deemed to be
    prescribed by order of the [Minister of National Revenue] under the Ontario
    Act.

[16]

Finally, we agree with the motion judge that
    advice to appellants counsel from government agencies under freedom of
    information type legislation and a statement in the respondents motion factum
    did not amount to calling into question form T2029 as a prescribed form.  The
    statements upon which the appellant relies were to the effect that no order or
    other document exists prescribing waiver form T2029 for the purposes of waiving
    the normal reassessment period under the Ontario Act.

[17]

However, as stated by the motion judge,
    [w]aiver form T2029 is a form utilized for federal purposes and purports to be
    the form prescribed or authorized by the Minister of National Revenue  a fact
    the appellant does not dispute.

[18]

Moreover, there is no evidence that it has been
    called in question by the Provincial Minister or by some person acting for the
    Provincial Minister or Her Majesty.

[19]

The appeal is therefore dismissed with
    costs to the respondent on a partial indemnity scale fixed in the amount of
    $10,000 inclusive of disbursements and applicable taxes.

Janet
    Simmons J.A.

Paul
    Rouleau J.A.

David
    Brown J.A.

Appendix A
[3]

Income Tax Act
, R.S.O.
    1990, c. I.2.

Interpretation

1. (1) In this Act,

Federal
    Act means the
Income Tax Act
(Canada);

Minister
    means the Minister of National Revenue for Canada, but in any provision of the
    Federal Act that is incorporated by reference in this Act, unless a collection
    agreement has been entered into, a reference to the Minister shall be read and
    construed for the purposes of this Act as a reference to the Provincial
    Minister;

prescribed,
    in the case of a form or the information to be given on a form, means
    prescribed by order of the Provincial Minister, and, in any other case, means prescribed
    by regulation;

Provincial Minister means the
    Minister of Finance or, where a collection agreement is entered into, means,

(a) the Receiver General for
    Canada, in relation to the remittance of an amount as or on account of tax
    payable under this Act, and

(b) the Minister, in relation to
    the administration and enforcement of this Act other than,

(i) sections 8.5 and 8.6,
    subsections 10 (3) and (4) and sections 22.1, 28, 45, 49 and 53,

(i.1) section 8.4.1,

(i.2) Divisions C.1 and C.2 of
    Part II and provisions of this Act and the Federal Act that apply in respect of
    provisions in those Divisions,

(ii) in relation to the assessment
    of a penalty under subsection 19 (3.1),

(iii) in relation to an objection
    to an assessment of a penalty under subsection 19 (3.1) or an appeal from such
    an assessment, and

(iv)
    Part III as it applies in relation to the Ontario child care supplement for
    working families;

Assessments and withholdings

10.
    (1) The following provisions of the Federal Act apply for the purposes of this
    Act and, in their application, any reference in them to section 150 or
    subsection 150 (1) of the Federal Act shall be read to include a reference to
    subsection 9 (1) of this Act:

1. Section
    151.

2.
    Subsections 152 (1), (1.11), (1.12), (2), (3), (3.1), (4), (4.01), (4.1),
    (4.2), (4.3), (4.4), (5), (6), (7), (8) and (9).

3.
    Subsections 153 (1), (1.1), (1.2) and (3) and 156.1 (4).

4. Subsections 227 (5), (5.1), (8.3) and (8.4).  1997, c.
    10, s. 4 (3); 1999, c. 9, s. 123 (1-3);

Forms prescribed or authorized

48. (15) Every form purporting
    to be a form prescribed or authorized by the Provincial Minister shall be
    deemed to be a form prescribed by order of the Provincial Minister under this
    Act unless called in question by the Provincial Minister or by some person
    acting for the Provincial Minister or Her Majesty.

Income Tax Act
, R.S.C.
    1985, c. 1 (5th Supp.).

Assessment and reassessment

152 (4)
    The Minister may at any time make an assessment, reassessment or additional
    assessment of tax for a taxation year, interest or penalties, if any, payable
    under this Part by a taxpayer or notify in writing any person by whom a return
    of income for a taxation year has been filed that no tax is payable for the
    year, except that an assessment, reassessment or additional assessment may be
    made after the taxpayers normal reassessment period in respect of the year
    only if

(a) the taxpayer or person filing
    the return

(i) has made any
    misrepresentation that is attributable to neglect, carelessness or wilful
    default or has committed any fraud in filing the return or in supplying any
    information under this Act, or

(ii)
    has filed with the Minister a waiver in prescribed form within the normal
    reassessment period for the taxpayer in respect of the year;

Proof of documents

244 (13) Every document
    purporting to have been executed under, or in the course of the administration
    or enforcement of, this Act over the name in writing of the Minister, the
    Deputy Minister of National Revenue, the Commissioner of Customs and Revenue,
    the Commissioner of Revenue or an officer authorized to exercise a power or
    perform a duty of the Minister under this Act is deemed to have been signed,
    made and issued by the Minister, the Deputy Minister, the Commissioner of
    Customs and Revenue, the Commissioner of Revenue or the officer unless it has
    been called in question by the Minister or by a person acting for the Minister
    or Her Majesty.

Forms prescribed or authorized

244 (16) Every form purporting
    to be a form prescribed or authorized by the Minister shall be deemed to be a
    form authorized under this Act by the Minister unless called in question by the
    Minister or by a person acting for the Minister or Her Majesty.

Definitions

248 (1) In this Act,

Minister
means the Minister of National Revenue;

prescribed
means

(a) in the case of a form, the
    information to be given on a form or the manner of filing a form, authorized by
    the Minister,

(a.1) in the case of the manner
    of making or filing an election, authorized by the Minister, and

(b) in any other case, prescribed
    by regulation or determined in accordance with rules prescribed by regulation;

[1]

The statutes cited in these reasons have undergone amendments
    that are not reflected herein. Quotations of statutory provisions reflect the
    versions in force at the relevant time.

[2]

The full text of all relevant provisions of the Ontario Act
    and the Federal Act is included in Appendix A to these reasons.

[3]

As previously noted, these provisions reflect the relevant
    sections in force at the relevant times.


COURT OF APPEAL FOR ONTARIO

CITATION: Bassett & Walker International Inc. v. Soleau
    International BVBA, 2017 ONCA 886

DATE: 20171120

DOCKET: C63170

Cronk, Pardu and Huscroft JJ.A.

BETWEEN

Bassett & Walker International Inc.

Appellant

and

Solea International BVBA

Respondent

Geoff R. Hall and Atrisha Lewis, for the appellant

Timothy J. Law and Assunta Mazzotta, for the respondent

Heard: November 16, 2017

On appeal from the judgment of Justice Andra Pollak of
    the Superior Court of Justice, dated December 7, 2016.

REASONS FOR DECISION

[1]

This appeal involves a dispute regarding the appellants purchase of
    frozen shrimp from the respondent.  The respondent, a trader of seafood
    products, purchased the shrimp from an Ecuadorian supplier for shipment to the
    appellant, a Toronto-based company, via an Ecuadorian shipping line for
    delivery to a port in Mexico where the goods were to clear Mexican customs.
    Some of the documents pertaining to the sale stipulate that Belgian law applies
    to disputes arising out of the contract.  Others contain no governing law
    provisions.

[2]

The appellant appeals from a summary judgment holding it liable to the
    respondent for the full unpaid purchase price for the shrimp ($228,604.50 US),
    plus prejudgment interest in accordance with the
Courts of Justice Act
,
    R.S.O.1990, c. C. 43.

[3]

The parties appear to have assumed that the contract was governed by
    domestic Ontario law. No issue as to the law governing the contract was raised
    before the motion judge. No doubt for that reason, the motion judge proceeded
    to determine the appellants liability as if it was governed by the common law
    of Ontario.

[4]

It is unclear as to how the issue of the appellants alleged liability
    for the outstanding purchase price for the shrimp could be determined without
    first ascertaining the proper law of the contract  in particular, whether the
International
    Sale of Goods Act
, R.S.O. 1990, c. I.10 and the United Nations Convention
    on Contracts for the International Sales of Goods, set out in the Schedule to
    the Act, apply in the circumstances of this case and, if so, to what effect.

[5]

We note that Ontario, Belgium, Mexico and Ecuador have all ratified and
    acceded to the Convention.  The Convention applies to contracts of the sale of
    goods  with certain exemptions  where, as here, the parties have places of
    business in different contracting states.

[6]

Before this court, the parties now acknowledge that the Convention
    applies to the contract at issue.

[7]

The question of the proper law of the contract is thus a threshold issue.
    The matter not having been raised before or considered by the motion judge, we
    cannot be certain that her analysis of the issues in contention and her
    conclusions on those issues might not have been different had the proper law of
    the contract and its application here been fully argued before her.

[8]

In these circumstances, the summary judgment cannot stand.

[9]

The appeal is allowed, the summary judgment is set aside and the matter
    is remitted to the motion judge for a new hearing on the parties competing
    summary judgment motions.  At that new hearing, the parties may supplement the
    record, if so advised, to address the question of the proper law of the
    contract and its application to the facts of this case, in accordance with any
    directions as may be provided by the motion judge.

[10]

As
    the parties accept, this is not an appropriate case for an award of the costs
    of the appeal and cross-appeal.

E.A. Cronk J.A.

G. Pardu J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Beaudry v. Beaudry, 2017 ONCA 936

DATE: 20171130

DOCKET: C63391

Rouleau, Benotto and Roberts JJ.A.

BETWEEN

Deborah Beaudry

Applicant (Appellant)

and

Royal Beaudry

Respondent (Respondent in Appeal)

Guy A. Wainwright, for the appellant

Paul Mongenais, for the respondent

Heard and released orally: November 27, 2017

On appeal from the order of Justice Robin Y. Tremblay of
    the Superior Court of Justice, dated January 31, 2017.

REASONS FOR DECISION

[1]

The appellant brought an application for retroactive spousal support for
    a four and a half year period from June 30, 2010 to December 31, 2014. The
    trial judge dismissed her claim.

[2]

The appellant submits that the trial judge erred in the following ways:

(i)

When considering her delay in making the retroactive claim for
    support,  he did not take into account that much time was spent in mediation;

(ii)

He did not address the issue of compensatory support; and

(iii)  He did not provide reasons for
    departing from the Spousal Support Advisory Guidelines (SSAGs).

[3]

We disagree.

[4]

With respect to delay, the trial judge referred to the date the
    proceedings were instituted. The appellant submits that she was prejudiced as a
    result of going to mediation. Because the mediation was confidential, she was
    not able to show that she claimed support before initiating proceedings. She
    submits that the trial judge should have considered the time spent in mediation
    to offset the delay in making the claim for retroactive support.   First, the
    trial judges finding as to the effective date of notice was open to him on
    this record. Second, the trial judge was aware of the mediation.  Third he did
    not place great significance on the delay in making the claim.

[5]

The trial judge did consider compensatory support.  He referred to
Thompson
    v. Thompson
, 2013 ONSC 5500 and the factors therein articulated. His
    findings relevant to that issue include the fact that the respondents earnings
    after the separation were not connected to the appellants assumption of
    household and family responsibilities; and that there was no evidence the
    appellant had sacrificed personal, educational or career plans for the benefit
    of the husbands career.

[6]

The trial judge recognized that the spousals support payments were in
    fact below the SSAGs. He nonetheless found that the appellant had benefitted
    from the voluntary payments made by the respondent. Most notably, during the
    period after the separation, the appellant was able to nearly double her
    savings by increasing them by about $100,000.

[7]

In our view, the trial judge correctly approached the only issue before
    him:  that of retroactive support. There is no presumptive right to retroactive
    support and we see no error in the exercise of the trial judges discretion.

[8]

The appeal is dismissed with costs payable to the respondent fixed in
    the amount of $10,000 inclusive of disbursements and applicable taxes.

Paul Rouleau J.A.

M.L. Benotto J.A.

L.B. Roberts. J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Collins Barrow Toronto LLP v.
    Augusta Industries Inc., 2017 ONCA 883

DATE: 201711
20

DOCKET: C63720

Cronk, Huscroft and Nordheimer
    JJ.A.

BETWEEN

Collins Barrow Toronto LLP

Applicant (Respondent)

and

Augusta Industries Inc.

Respondent (Appellant)

Leo Klug, for the appellant

Elliot S. Birnboim and Bettina Xue
    Griffin, for the respondent

Heard and released orally: November
    17, 2017

On appeal from the judgment of Justice
    Jasmine Akbarali of the Superior Court of Justice, dated March 30, 2017.

REASONS FOR DECISION

[1]

[1]

Augusta Industries Inc. appeals from the
    judgment awarded in favour of Collins Barrow Toronto LLP on invoices delivered
    for services rendered as the auditors for Augusta Industries Inc.  The
    appellant submits that the application judge ought to have converted the
    application into an action because the appellant alleged that the respondent
    had been negligent in the provision of its services.  There is also a secondary
    argument that certain of the outstanding invoices are barred through expiration
    of the applicable two-year limitation period:
Limitations Act, 2002
, S.O. 2002, c. 24,
    Sched. B.

[2]

The application judge concluded that it was open
    to her to determine the respondents claim under r. 14.05(3)(d) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194 on the basis that the claim arose from the determination
    of rights that depend on the interpretation of a contract.  While we note that
    the formal Notice of Application refers to r. 14.05(3)(h), that did not
    preclude the application judge from relying on the sub-rule that she did to
    determine the matter.  In both subject years, the respondent had been engaged
    by the appellant pursuant to terms of written engagement letters.  We see no
    error in the application judges conclusion in that regard.

[3]

The application judge also concluded that the
    reasons advanced by the appellant to convert the application into an action
    were insufficient.  In particular, she noted that the appellant had not adduced
    any expert evidence supporting its allegation of negligence; much of the
    appellants evidence was hearsay (or double hearsay); and that there was no
    reliable evidence that the appellant had suffered any damages.  In light of
    these deficiencies, the application judge concluded that there was no reason to
    postpone the determination whether the appellant was liable to the respondent
    on the unpaid invoices.  Again, we see no error in the application judges
    ruling on this issue.

[4]

Finally, in terms of the limitation period, the
    application was launched on April 14, 2016.  The application judge concluded
    that the first two invoices in dispute were the subject of an express agreement
    in the January 2014 engagement letter that they would be settled by April 15,
    2014.  As a consequence, claims on those two invoices were not barred by the
    two-year limitation period.  This interpretation was both available and
    reasonable on the language of the engagement letter.  The application judges
    interpretation of the engagement letter is owed deference by this court.

[5]

The other two invoices in dispute are dated
    April 9, 2014 and April 11, 2014.  The application judge pointed out that the
    engagement letters expressly provided that invoices only became delinquent once
    45 days had expired from their delivery.  The application judge concluded that
    the limitation period for these two invoices did not commence until 45 days
    after they were delivered.  We agree with her conclusion in that regard.  It is
    consistent with the express wording of the engagement letters and also with
    existing case law that provides that the limitation period on an invoice does
    not begin to run until a reasonable period of time has expired for payment of
    the invoice:  see, for example,
G.J.
    White Construction Ltd. v. Palermo
, [1999] O.J. No. 5563 (S.C.J.).

[6]

In our view, this conclusion is not inconsistent
    with the recent decision in
Pellerin
    Savitz LLP v. Serge Guindon
, 2017 SCC 29, in which Gascon J. makes
    it very clear that the conclusion on the commencement of a limitations period
    is highly fact-specific and that a judges conclusion in that regard is
    entitled to great deference (para. 11).  In addition, we note that
Pellerin
was concerned
    with the interpretation of the
Civil
    Code of Quebec
.

[7]

We also agree with the application judge that
    determining the issue of the appellants liability for the unpaid invoices did
    not prevent the appellant from commencing a claim in negligence.  Indeed, the
    appellant advises that it has now done precisely that.  In the interests of
    expediency, there was no reason to delay the determination of liability on the
    unpaid invoices pending any determination of the negligence claim.

[8]

Accordingly, the appeal is dismissed.  The
    respondent is entitled to its costs of the appeal fixed in the amount of $   5,000,
    inclusive of disbursements and HST.

E.A. Cronk J.A.

Grant Huscroft J.A.

I.V.B. Nordheimer J.A.