COURT OF APPEAL FOR ONTARIO

CITATION: Graham v. Lemay, 2016 ONCA 55

DATE: 20160127

DOCKET: C59925

Gillese, Pepall and Lauwers JJ.A.

BETWEEN

Jodi
    Graham and Colin J. Graham, by their litigation guardian,

Cheryl
    Margaret Graham, Cheryl Margaret Graham,

Joseph
    Raymond Graham and Christopher R. Graham

Plaintiffs
    (Appellants/

Respondents by way of
    cross-appeal)

and

Karine Lianne
    Lemay, GMAC Leaseco Corporation, Mario Pietrantonio,

West End
    Tile Ltd.,
Daimler Chrysler Financial Services Canada Inc.
,

Chevrolet
    West Inc., Capital Dodge Chrysler Jeep Limited,

Luciano
    Pietrantonio, General Motors Corporation and the City of Ottawa

and
Chrysler
    Canada Inc.

Defendants (
Respondents/

Appellant by way of
    cross-appeal
)

and

CorePointe
    Insurance Company, formerly carrying on business as

Daimler
    Chrysler Insurance

Respondent (Respondent)

William J. Sammon, for the appellants/respondents by way
    of cross-appeal

David A. Zuber, for the respondents Daimler Chrysler
    Financial Services Canada Inc. and CorePointe Insurance Company

W.S. Chalmers, for the respondent/appellant by way of
    cross-appeal, Chrysler Canada Inc.

Heard: September 8, 2015

On appeal from the orders of Justice Hugh R. McLean of
    the Superior Court of Justice, dated January 6, 2015, with reasons reported at
    2015 ONSC 6821, and February 5, 2015.

Pepall J.A.:

Introduction

[1]

The appellant Jodi Graham was a passenger in a motor vehicle and suffered
    serious injuries as a result of a collision with a motor vehicle driven by
    Mario Pietrantonio. The Pietrantonio vehicle had been leased. In the lease, Daimler
    Financial Services Canada Inc. (Daimler Financial) was described as the
    lessor. At the time of the accident, Chrysler Canada Inc. (Chrysler) was the
    beneficial owner of the Pietrantonio vehicle.

[2]

The appellants commenced an action against various parties, including
    Daimler Financial and Chrysler, both of whom are respondents on this appeal.
    Both the respondents and the appellants moved for summary judgment as a result
    of which the motions judge determined that:

-

Chrysler
    was an owner of the Pietrantonio vehicle within the meaning of s. 192(2) of the
Highway Traffic Act
, R.S.O. 1990, c. H-8.

-

Both
    Chrysler and Daimler Financial were lessors of the Pietrantonio vehicle and
    therefore entitled to the cap on liability provided by s. 267.12(1) of the
Insurance
    Act
, R.S.O. 1990, c. I-8.

-

Mario
    was not an unnamed insured under Daimler Financials excess insurance policy.

-

There
    was no genuine issue requiring a trial in respect of the appellants claim
    alleging negligent entrustment of the Pietrantonio vehicle against Daimler
    Financial and therefore that claim was dismissed.

[3]

The appellants challenge the latter three determinations. Chrysler, on
    cross-appeal, challenges the first. For the reasons that follow, I would
    dismiss both the appeal and the cross-appeal.

Facts

(1)

The Accident and Insurance Coverage

[4]

On May 18, 2006, Jodi was in the front passenger seat of a vehicle driven
    by Karine Lemay.  Mario was driving a 2003 leased Dodge Durango. He T-boned the
    passenger side of Lemays vehicle. According to the appellants, Mario was
    speeding and on his cell phone at the time.  Jodi suffered a traumatic brain
    injury as a result of the accident and will be permanently disabled.  Lemay
    carried $1 million in third-party liability insurance.

[5]

The lessees of the Pietrantonio vehicle, West End Tile Limited and
    Luciano Pietrantonio (Marios father), carried $2 million in third-party
    liability insurance. West End Tile Limited and Luciano leased the Dodge Durango
    vehicle pursuant to a lease with Daimler Financial, who was the registered
    owner of the Pietrantonio vehicle. Daimler Financial carried a standard lessors
    contingent automobile policy of insurance and a standard excess insurance
    policy that provided $10 million of coverage. The policies were issued by the
    respondent CorePointe Insurance Company.
[1]
Both policies stated that coverage extended only to the named insured, Daimler
    Financial, and excluded coverage for any lessee or employee of a lessee. Furthermore,
    coverage was available only if the lessees insurance was not collectible.
    According to the appellants, Jodis damages will significantly exceed the
    limits of the third-party liability insurance carried on the two vehicles.

[6]

Although Daimler Financial was the legal owner of the Pietrantonio
    vehicle, at the time of the accident, Chrysler was the beneficial owner as a
    result of agreements entered into with Daimler Financial.

(2)

The Pietrantonio Vehicle

[7]

Luciano incorporated West End Tile Limited in 1969. His son, Mario, was
    born in 1963 and by the date of the accident in 2006, was a co-owner of the company.

[8]

Mario became a licensed driver in 1979 and always drove vehicles that
    were either owned by, or leased through, West End Tile Limited.

[9]

His Ministry of Transportation driving record revealed that in 1981 he
    had been found speeding on three occasions and had been involved in a collision.
    He was also charged with careless driving later that year and his license was
    suspended. In 1985, 1991, and 1995, he was again found to have been speeding
    and later in 1995 he was found to have failed to use, or to have improperly
    used, a seat belt. In 2001, 2003, and 2006, three additional collisions were
    identified, although his driving record contains a driving properly notation
    for each of those incidents. Lastly, also in 2006, he was convicted of having
    an inoperative or modified seat belt assembly.

[10]

In
    November 2002, West End Tile Limited and Mario as co-lessees executed an
    agreement to lease a 2003 Dodge Durango with the Chrysler dealership, Capital
    Dodge Chrysler Jeep Limited (Capital Dodge). On November 5, 2002, both
    Luciano and Mario signed an application for credit with Daimler Financial. The
    application authorized Daimler Financial to collect personal information on
    both applicants. Marios application was not approved but no reasons were given
    for the rejection. Capital Dodge then entered into a lease with West End Tile
    Limited and Luciano as co-lessees.

[11]

During
    his examination for discovery, Luciano was asked if he knew why Mario had not
    been approved. Luciano responded that all of his sons, including Mario, could
    not lease a vehicle on their own and they always needed Luciano to act as a
    lessee or co-lessee for financial reasons.

[12]

Daimler
    Financial provided financing and, as provided in the lease, Capital Dodge
    assigned the lease and the motor vehicle to Daimler Financial. Daimler
    Financial became the registered owner of the vehicle along with West End Tile
    Limited and Luciano.

(3)

Corporate Relationships

[13]

The
    Chrysler relationships relevant to this appeal are complex.

[14]

Daimler
    Financial transferred ownership of a number of vehicles to Chrysler pursuant to
    a contract dated July 1, 1996. By contract dated July 1996, Chrysler and
    Daimler Financial entered into a Gold Key Administration and Credit Risk
    Assumption Agreement (the 1996 Gold Key Agreement).
[2]
It is uncontested that this agreement was structured to allow Chrysler to claim
    certain tax benefits in its capacity as owner of the vehicles. The 1996 Gold
    Key Agreement provided that:

-

Daimler
    Financial agreed to purchase vehicles as agent for Chrysler and to hold the
    related leases on behalf of and for the benefit of Chrysler in accordance with
    the terms of the 1996 Gold Key Agreement.

-

Daimler
    Financial would retain legal title to the vehicles and would be the registered
    lessor of the related leases as bare trustee and nominee for and on behalf of
    Chrysler. All indebtedness and liability due to Daimler Financial under the
    leases and all other benefits related to the vehicles including insurance were
    for the benefit of Chrysler.

-

Daimler
    Financial agreed to administer, for the account of Chrysler, the leases
    beneficially owned by Chrysler in return for which Chrysler would pay Daimler
    Financial a fee.

-

Chryslers
    role as beneficial owner of the vehicles and leases would not be disclosed
    except as required by law or by the 1996 Gold Key Agreement.

-

The terms
    of the 1996 Gold Key Agreement were binding on and enured to the benefit of
    successors and assigns.

[15]

The
    parties to the 1996 Gold Key Agreement subsequently entered into a Purchase and
    Sale Agreement and a Bill of Sale, both dated December 31, 2002. The latter two
    agreements, consistent with the 1996 Gold Key Agreement, effected the sales of the
    vehicles and leases to Chrysler and the requisite conveyances. It is conceded
    that the Pietrantonio vehicle was governed by these arrangements.

[16]

As
    such, to repeat, at the time of the accident, Chrysler was the beneficial owner
    of the Pietrantonio vehicle and the lease and Daimler Financial was the legal
    owner of the vehicle and the administrator of and named party to the lease with
    West End Tile Limited and Luciano.

Statutory Regimes

[17]

There
    are two statutory provisions that give rise to this dispute. First, s. 192(2)
    of the
Highway Traffic Act
provides that the owner of a motor vehicle
    is liable for loss or damage sustained by any person by reason of negligence in
    the operation of the motor vehicle on a highway, unless the motor vehicle was
    without the owners consent in the possession of some person other than the
    owner or the owners chauffeur.

[18]

Second,
    s. 267.12(1) of the
Insurance Act
provides, in essence, that in
    an action for loss or damage from bodily injury or death arising from the use
    or operation of a motor vehicle that is leased, the maximum amount for which
    the lessor or lessors are liable in their capacity as lessors is capped. For
    the purpose of this appeal, the statutory cap is $1 million subject to certain
    reductions including damages recovered under third-party liability policies.

[19]

Both
    s. 192(2) of the
Highway Traffic Act
and s. 267.12 of the
Insurance
    Act
are reproduced in full in Schedule A attached hereto.

Litigation

[20]

The
    appellants commenced an action for damages against numerous parties. Chrysler,
    Daimler Financial, and Capital Dodge moved for summary judgment dismissing the
    action against them. The appellants brought a cross-motion seeking summary
    judgment and a declaration that Mario was an unnamed insured under Daimler
    Financials excess insurance policy and that Chrysler and Daimler Financial
    were not entitled to the cap on liability of lessors as set out in s. 267.12(1)
    of the
Insurance Act
.

[21]

The
    motions judge heard the motions over two days and granted two orders. The order
    dated January 6, 2015, provided that Chrysler was an owner of the vehicle
    driven by Mario within the meaning of s.192(2) of the
Highway Traffic Act
,
and that Chrysler and Daimler Financial
    were lessors within the meaning of s. 267.12(1) of the
Insurance Act
and as such were entitled to the cap on liability. The appellants claims of
    negligent entrustment against Daimler Financial and Capital Dodge were
    dismissed.

[22]

The
    order dated February 5, 2015, was on consent. It provided that the appellants
    motion for summary judgment and a declaration that Mario was an unnamed insured
    entitled to coverage under Daimler Financials standard excess policy was
    dismissed. However, the appellants consent was without prejudice to the
    appellants right to appeal the consent dismissal on the basis that the
    decision in
Xu v. Mitsui Sumitomo Insurance Company Limited
, 2014 ONSC 167, 119 O.R. (3d) 587, affd 2014 ONCA
    805, 42 C.C.L.I. (5th) 17,
was wrongly decided or, in the
    alternative, did not apply to Daimler Financial if it was found not to be a
    lessor within the meaning of s. 267.12(1) of the
Insurance Act
.

Motions Judges Reasons

[23]

The
    motions judge commenced his analysis by observing that Chrysler admitted that
    it owned the Pietrantonio vehicle for the purpose of claiming capital cost
    deductions for income tax purposes. He found that as owner, Chrysler was able
    to achieve $200 million in tax savings. The motions judge observed that there
    was no indication that Chrysler was an owner only to the extent necessary to
    claim the capital cost deductions. In any event, such a restriction on
    ownership would not be effective.

[24]

The
    motions judge noted that West End Tile Limited, Luciano, and Daimler Financial
    were all vicariously liable for the negligence, if any, of Mario. He concluded
    that Chrysler was too. Chrysler fell within the purview of s. 192(2) of the
Highway
    Traffic Act
which rendered an owner vicariously liable for loss or damage
    sustained by any person by reason of negligence. He rejected Chryslers
    argument that it did not fall within that provision because it had no control
    or dominion over the vehicle.

[25]

The
    motions judge then turned to the availability of the cap on liability and who
    was to be considered a lessor for the purposes of s. 267.12(1) of the
Insurance
    Act
. He stated that it was obvious that Daimler Financial was a lessor as
    it was listed on title as such. As for Chrysler, it had an interest in the
    remainder of the lease, that is, when the lease ended they would re-achieve
    complete ownership in the vehicle. However, during the time the lease was
    effective, the only right [Chrysler] had was as a lessor of the vehicle. He
    observed that in most situations, an owner would be a lessor if a prior lease
    was fixed on the property itself.  He noted that there was no indication in s.
    267.12(1) of any bifurcation for the purposes of the limitation of liability
    between ownership and lessorship. Therefore, Chrysler was also a lessor.

[26]

The
    motions judge then addressed the claim of negligent entrustment. He relied on
    the case of
Cella (Litigation Guardian of) v. McLean
(1997)
, 34 O.R. (3d) 327 (C.A.), to
    conclude that such a tort existed in Ontario and that liability would be
    imposed where there is sufficient relationship between the injured party and
    another person which makes it reasonable to conclude that the other person owed
    a duty towards the injured party and should have foreseen that he would be
    injured. He cited
Schulz v. Leeside Developments Ltd.
(1978)
, 90 D.L.R. (3d) 98 (B.C. C.A.),
    at p. 105, in support of the torts requisite elements. He described these as proof
    that: (i) the entrustee was incompetent, inexperienced, or reckless; (ii) the
    entrustor knew or had reason to know of the entrustees condition or
    proclivities; (iii) there was an entrustment of the chattel; (iv)  the
    entrustment created an appreciable risk of harm to the plaintiff and a
    relational duty on the part of the defendant; and (v) the harm to the plaintiff
    was proximately or legally caused by the negligence of the defendant.

[27]

The
    motions judge was not prepared to draw a negative inference from the failure of
    Capital Dodge and Daimler Financial to produce the full lease file which
    potentially contained reasons for the initial rejection of Mario as a
    co-lessee. He said there was evidence that the rejection had to do with Marios
    financial status.

[28]

The
    motions judge also observed that there was no suggestion that there was a
    concern about Marios driving record. He summarized Marios record as
    consisting of three speeding tickets and a charge of careless driving when he
    was 18, and three speeding tickets in the next 25 years, the last being 11
    years prior to the accident. While the reasonable inference to be drawn was
    that the respondents did nothing to inquire about Marios record, there was
    nothing in the record that would trigger knowledge that the lease should not
    have been entered into or that would have alerted Capital Dodge or Daimler
    Financial to any outstanding problems with Mario. There was no evidence that
    would trigger a finding that the respondents knew or ought to have known that Mario
    was an incompetent, inexperienced, or reckless driver.

[29]

Furthermore,
    the motions judge concluded that any duty to inquire would be too remote. West
    End Tile Limited and Luciano were the lessees, not Mario, who was a driver who
    worked for West End Tile Limited. It was reasonable for the respondents to rely
    on insurance obtained by the lessees to satisfy concerns about the competence
    of the eventual driver. The motions judge accordingly dismissed the claim of
    negligent entrustment asserted against Daimler Financial and Capital Dodge.

[30]

In
    his endorsement of February 5, 2015, the motions judge dealt with the
    appellants motion for summary judgment and a declaration that Mario was an unnamed
    insured under the standard excess policy issued to Daimler Financial. He noted
    that the issue was substantially similar to that decided by McEwen J. in
Xu
,

which had just been upheld by this
    court. Given that decision and the motions judges conclusion that Chrysler and
    Daimler Financial were lessors, the parties consented to an order dismissing
    the motion without prejudice to the appellants right to appeal on the basis
    that
Xu
was wrongly decided or was inapplicable if this court were to conclude
    that Daimler Financial is not a lessor.

Issues

[31]

There
    are four issues to address:

(i)  Was Chrysler correctly found to be an owner and
    vicariously liable for Marios alleged negligence pursuant to s. 192(2) of the
Highway
    Traffic Act
?

(ii)   Are Chrysler and Daimler Financial lessors within the
    meaning of s. 267.12(1) of the
Insurance Act
and entitled to the
    benefit of the cap on liability?

(iii) Is Mario an unnamed insured under Daimler Financials standard
    excess policy?

(iv)  Was the claim of negligent entrustment against Daimler
    Financial properly dismissed?

Analysis

(i)

Chryslers Vicarious Liability

(a)     Parties Positions

[32]

Chrysler
    argues that the motions judge erred in finding that Chrysler, as a
    non-registered owner of the Pietrantonio vehicle, was vicariously liable for
    the alleged negligence of Mario pursuant to s. 192(2) of the
Highway
    Traffic Act
. It submits that a non-registered owner will be vicariously
    liable for the negligence of the person operating the vehicle only if the
    non-registered owner exercises dominion and control over the vehicle. In this
    regard, it relies on this courts decision in
Wynne v. Dalby
(1913)
, 16 D.L.R. 710.  Chrysler also
    argues that the motions judge erred in not considering Chryslers affidavit
    evidence on the absence of dominion and control.

[33]

The
    appellants respond by stating that the inquiry into whether an entity is an
    owner of a motor vehicle within the meaning of s. 192(2) of the
Highway
    Traffic Act
is a factual one that does not merely turn on the dominion and
    control test. Chrysler admitted it was an owner. Moreover, even if such a test
    is applicable, in these circumstances it was met. It is also possible to have
    two owners. Lastly, a finding that Chrysler is not an owner would be
    inconsistent with its claim for capital cost allowance deductions and contrary
    to public policy.

(b)     Chrysler is an Owner and Vicariously Liable

[34]

In
    support of its position, Chrysler relies on
Wynne
. When discussing the
    predecessor to s. 192(2) in force at that time, at p. 716, this court stated that:

I do not think that it can have been intended to fix the very
    serious responsibility which the section imposes upon one who, like the
    respondent, at the time the accident happened, had neither the possession of
    nor the dominion over the vehicle, although he may have been technically the
    owner of it in the sense in which the owner of the legal estate in land is the
    owner of the land.

[35]

Chrysler
    accepts that subsequent decisions rendered by the Supreme Court have modified
    the requirements for finding a registered owner vicariously liable.

[36]

In
Hayduk v. Pidoborozny
, [1972] S.C.R. 879, the respondent father was
    the registered owner of the motor vehicle. In the purchase agreement, he was
    identified as the purchaser for the purpose of guaranteeing the purchase price.
    However, his son had paid for the vehicle, had exclusive possession and control
    of the vehicle, and was driving it at the time of the accident.

[37]

Ritchie
    J., delivering the majority judgment, concluded that the father should be
    considered an owner and was therefore vicariously liable. In part, that
    conclusion rested on the fact that he was the registered owner of the vehicle. However,
    at pp. 885-886, Ritchie J. stated that:

In the present case, however, the contention that the father
    was the owner within the meaning of s. 130 does  not rest upon registration
    alone. Here the father was the purchaser of the motor vehicle in conformity
    with the terms of a conditional sales contract which he had signed and the son
    had not. It is true that the son made all payments under this contract from his
    own resources, but the contract was obtained on the credit of the father and
    the payments thereunder were not fully discharged until after the accident had
    occurred. With all respect to the members of the Appellate Division, I agree
    with the learned trial judge that a valid sale of this motor vehicle had been
    made to the [respondent-father] and that he was the owner at common law
    notwithstanding the fact that his son had made the payments under the
    conditional sales contract and had had exclusive possession of the vehicle from
    the date of its purchase.

[38]

The
    Supreme Court next addressed the issue in
Honan v. Gerhold
, [1975] 2
    S.C.R. 866. In
Honan
, a third party had transferred ownership of a
    vehicle to the respondent who became the registered owner. However, that third
    party had exclusive possession of the vehicle and was found to have it under
    his dominion and control. He continued operating the motor vehicle and injured
    the appellant in an accident. The issue to be decided was the respondents
    liability. The respondent was found to be an owner because his actions were
    consistent with an assertion of ownership in the vehicle. He had applied for
    the vehicle registration, the vehicle was under his insurance policy, and he benefitted
    from the proceeds of disposition of the wrecked vehicle. Spence J. wrote at p.
    874:

I have therefore come to the conclusion that the appeal should
    succeed on the basis that whether the word owner in [s. 192] of
The
    Highway Traffic Act
should be interpreted to cover registered owner, [the
    respondent] was the owner in a common law sense of the vehicle which was
    involved in this accident and therefore [the respondent] is liable under the provisions
    of [s. 192] of
The Highway Traffic Act
.

The respondent was consequently held to be vicariously
    liable for the negligence of the third party who was driving the vehicle:
Honan
,
    p. 874. In
Kerri (Guardian ad litem of) v. Decker
, 2002 NFCA 11,
209 Nfld. & P.E.I.R.,
at para. 12, the Court of Appeal
    for Newfoundland summarized the
ratio
from
Honan
as follows:

Spence J. then concluded that, whether or not the word owner
    in [s. 192 of
The Highway Traffic Act
]
should be interpreted to cover registered owners, Gerhold was the owner in a
    common law sense and, therefore, liable jointly with the driver for the damages
    that she had caused.

[39]

While
    these cases involved registered owners, the Supreme Court also looked to other
    factors to reflect ownership.  I see no reason to adopt a different approach
    for non-registered owners.  The language of s. 192(2) of the
Highway
    Traffic Act
speaks of an owner and does not reflect any distinction between
    non-registered and registered owners.  Nor does it impose any dominion and
    control requirement.  Such an approach is also consistent with the public
    protection purpose of s. 192(2).  Dominion and control may result in a finding
    of ownership in the case of a non-registered owner but other factors may also
    lead to that conclusion.

[40]

In
    this case, Chrysler admitted that it was the non-registered owner of the
    Pietrantonio vehicle. Moreover, its conduct was consistent with that admission
    in that it had claimed significant tax deductions in its capacity as owner. The
    agreements between Daimler Financial and Chrysler explicitly state that
    Chrysler is the beneficial owner. In these circumstances, it was unnecessary
    for the motions judge to engage in any additional analysis on dominion and
    control. The motions judge did not err in concluding that Chrysler was an owner
    for the purposes of s. 192(2) of the
Highway Traffic Act
. Therefore, I
    would dismiss Chryslers cross-appeal.

(ii)

Lessors Liability

(a)

Parties Positions

[41]

The
    appellants submit that the motions judge erred in finding that Chrysler and
    Daimler Financial were both lessors and therefore entitled to the benefit of
    the cap on liability. Their primary submission is that the motions judge erred
    by concluding that Chrysler was a lessor. They assert that he failed to examine
    the intent of the statutory provision and the relevant agreements between
    Chrysler and Daimler Financial. Here Chrysler did not act in the capacity of
    lessor; rather, this role was delegated by agreement to Daimler Financial. Chrysler
    chose to bifurcate ownership and leasing so as to obtain substantial tax
    benefits and it now should accept the burden of unlimited liability.
    Furthermore, the appellants argue that the purpose of s. 267.12(1) is satisfied
    if only Daimler Financial is found to be a lessor.

[42]

Alternatively,
    the appellants argue that if Chrysler is a lessor, then Daimler Financial
    cannot also be a lessor. They assert that if Chrysler is a lessor, then Daimler
    Financial is not the lessor but is just an administrator of the lease. The
    subsection does not apply to an administrator of the lessor.

[43]

Chrysler
    submits that the motions judge properly interpreted and applied s. 267.12(1).
    While the appellants rely on the agreements between the respondents to support
    their position that Chrysler is an owner of the Pietrantonio vehicle, under
    those same agreements, Chrysler is also the owner of the lease and is entitled
    to the rights and benefits of a lessor.

[44]

CorePointe
    and Daimler Financial take the position that the motions judge correctly
    concluded that Daimler Financial was a lessor as it was listed as such on the
    title of the vehicle. Additionally, West End Tile Limited and Luciano agreed to
    the assignment of the lease by Capital Dodge to Daimler Financial. Moreover, s.
    267.12(1) expressly provides that there may be more than one lessor of a
    vehicle.

[45]

No
    party relied on any provisions of the
Personal Property Security Act
,
    R.S.O. 1990, c. P-10. The lease in issue on this appeal predated amendments made
    to the Act that expanded registration requirements for leases of personal
    property.

(b)

Chrysler and Daimler Financial are Lessors

[46]

In
    examining the cap on liability issue, I will first address the interpretation
    of s. 267.12(1) and then examine the relevant agreements. Next, I will consider
    the application of the statute and the agreements to the facts of the case.

Legislative Intent

[47]

As repeatedly said, the words of an Act are to be read in their entire
    context and in their grammatical and ordinary sense harmoniously with the
    scheme of the Act, the object of the Act, and the intention of Parliament:
Bell
    ExpressVu Limited Partnership v. Rex
, 2002 SCC 42, [2002] 2 S.C.R. 559, at
    para. 26 citing Elmer A. Driedger,
Construction of Statutes
, 2d ed.
    (Toronto: Butterworths, 1983), at p.87.

[48]

Section
    267.12(1) of the
Insurance Act
was enacted in March 2006. It was part
    of a legislative initiative that included other statutory amendments relevant
    to the automotive industry.

[49]

In
Xu
, McEwen J. considered whether s. 267.12 prevented a lessee
    from obtaining coverage under a lessors insurance policy beyond the liability
    cap. At para. 31, McEwen J. discussed the policy rationale for the statutory
    cap on liability for lessors:

The legislative intent behind Bill 18 is clear from Hansard. Lessors
    were, according to the Government of Ontario, experiencing unfairly high costs
    of doing business given the fact that awards for personal injury had become
    exorbitant. This was increasing lessors insurance rates and affecting their
    ability to obtain insurance at a reasonable price. The cost of this would be
    passed on to the consumer. The purpose of the legislation was to protect lessors
    by reducing their exposures in personal injury lawsuits, thus reducing their
    insurance rates.

[50]

At
    para. 29, McEwen J. quoted from Hansard:

This is about fairness. Leasing and rental companies do not
    have control over the actions of the drivers. Those vehicles are in the hands
    of the driver for an extended period of time, and theres no direct business
    relationship, save and except the rental, between the owners of the company and
    the actual drivers. Continuing to impose uncapped vicarious liability on the
    basis of ownership may unfairly drive up the cost of doing business for the
    leasing and rental companies. This would, in turn, drive up the cost of those
    leased or rented vehicles and thus the cost to the consumer who is choosing
    that form of auto usage.
[3]

[51]

Section
    267.12 was designed to reduce insurance costs and the cost of doing business
    for leasing and rental companies in the automotive arena  an industry of
    significant importance in Ontario  and hence those of the consumer. This was
    the legislative context. The legislative objective was clearly expressed in s.
    267.12 by the introduction of the cap on liability available to a lessor or
    lessors.

Agreements between Daimler
    Financial and Chrysler

[52]

Turning
    then to an examination of the agreements in issue, three are relevant. First, the
    lease agreement respecting the Pietrantonio vehicle was executed on November 7,
    2002, by West End Tile Limited and Luciano as co-lessees and Capital Dodge as
    lessor. This agreement clearly provided that [t]his Lease is accepted and assigned
    to [Daimler Financial] according to the terms of the agreements between Lessor
    and [Daimler Financial].  It was not disputed that this agreement effected a
    valid assignment of Capital Dodges interest to Daimler Financial.

[53]

Second,
    in the 1996 Gold Key Agreement, Daimler Financial agreed to assign to Chrysler
    beneficial ownership of certain vehicles and related leases but to retain legal
    title to the vehicles and to be the registered lessor. Daimler Financial agreed
    to act as agent in administering the leases and related rights in exchange for
    a fee. Each party also paid the other party one dollar in consideration of the
    mutual covenants contained in the 1996 Gold Key Agreement.

[54]

Third,
    the Agreement of Purchase and Sale and Bill of Sale effected these commitments.
    Section 2.1 of the Purchase and Sale Agreement stated that the leases were to
    be assigned to Chrysler and it would become entitled to all the benefits of,
    and subject to all the obligations under, the leases. The Agreement provided
    that Daimler Financial was to retain legal title to the vehicles and remain the
    registered lessor of the related leases as bare trustee and nominee for and on
    behalf of Chrysler. Chrysler would become the beneficial owner of the vehicle.
    Section 2.3 stated:

[Daimler Financial] acknowledges and declares that it will
    retain legal title to the Vehicles purchased as provided in Section 2.1 and
    shall be the registered Lessor of the Related Lease as bare trustee and nominee
    for and on behalf of [Chrysler],
[Chrysler] being the
    beneficial owner of (i) such Vehicles, (ii) the Related Leases, (iii) all
    indebtedness and liability due and to become due to [Daimler Financial] under
    or in respect of each Related Lease
and (iv) all other rights, claims
    and benefits of [Daimler Financial] thereunder or otherwise related thereto or
    to any such Vehicle, including any (a) collateral security, (b) guarantees, (c)
    insurance and proceeds of such insurance and (d) agreements and other contracts
    by or pursuant to which any of such rights, claims and benefits are created or
    arise, all of which shall be for the benefit of [Chrysler] save as otherwise
    expressly provided herein. [Emphasis added.]

[55]

The
    conveyance was effected by a Bill of Sale which stated that the vehicles and
    related leases sold were those held by Daimler Financial immediately prior to
    the end of its fiscal year on December 31, 2002. The Pietrantonio vehicle lease
    was dated November 7, 2002.

Application to Facts

[56]

The
    appellants argue that the agreements between Chrysler and Daimler Financial effectively
    divided ownership and leasing between Chrysler and Daimler Financial
    respectively. I disagree. The effect of the agreements was to divide legal
    title and beneficial ownership. Canadian law has long recognized a division
    between legal and equitable property rights: Bruce Ziff,
Principles of
    Property Law
, 5th ed. (Toronto: Carswell, 2010) at pp. 78 and 211.

[57]

A
    lease is a contract by which the lessee obtains a right to use the property
    leased in exchange for consideration. The proprietary interest in the property
    is not changed, but remains in the owner:
Canadian Acceptance Corp. v.
    Regent Park Butcher Shop Ltd.
(1969), 3 D.L.R. (3d) 304 (Man. C.A.). Put
    differently, an owner has the right to lease the vehicle owned.

[58]

Daimler
    Financial assigned to Chrysler beneficial ownership in the Pietrantonio
    vehicle, the related lease, and all indebtedness and liability due and to
    become due to Daimler Financial under or in respect of the related lease. It is
    clear from the agreements that Daimler Financial and Chrysler intended that
    Chrysler have the benefit of the debt assigned, Daimler Financial would act as
    agent to administer the leases, and the transfer was made for good
    consideration. The lease with West End Tile Limited and Luciano permitted a
    sale or assignment of both the motor vehicle and the lease to a third party
    in this case, Chrysler. As such, at all material times, Chrysler was a lessor.

[59]

I
    would also note that the presence of the bare trustee language found in the 1996
    Gold Key Agreement and Purchase and Sale Agreement does not detract from the
    vesting of the beneficial ownership of the vehicle and the lease in Chrysler. The
    agreements reflected intertwined but separate promises: Chrysler would purchase
    the beneficial ownership in the vehicles and the related leases and Daimler
    Financial would retain legal title and remain registered lessor as bare trustee
    for Chrysler.  Both the assignment and the trust served to vest in Chrysler the
    beneficial ownership of the Pietrantonio vehicle and the related lease.

[60]

In
    conclusion, the language of s. 267.12(1), its legislative purpose, and the
    agreements between Chrysler and Daimler Financial all supported the motions
    judges conclusion that Chrysler was a lessor within the meaning of that
    subsection and was therefore entitled to the cap on liability. There is nothing
    that would cause one to conclude that a beneficial owner of the motor vehicle
    and the lease is not, or should not be considered, a lessor.

[61]

It
    remains to be considered whether Daimler Financial was also a lessor. The
    appellants submit that s. 267.12(1) does not speak of an administrator of a
    lease and as such, Daimler Financial was not entitled to benefit from the cap
    on liability.

[62]

I
    do not agree. Daimler Financial retained legal title to the Pietrantonio
    vehicle. Section 267.12 (1) speaks of the maximum amount for which the lessor
    or lessors of the motor vehicle are liable in respect of the same incident in
    their capacity as lessors of the motor vehicle. Clearly the statute
    contemplates multiple lessors.

[63]

Furthermore,
    by virtue of the assignment to Daimler Financial from Capital Dodge, the lease
    itself described Daimler Financial as lessor.

[64]

The
    appellants have failed to identify any error in the motions judges analysis on
    the application of s. 267.12(1) to Daimler Financial. Therefore, I would not
    give effect to the appellants first ground of appeal.

(iii)

Mario is not an Unnamed Insured under Daimler Financials Standard
    Excess Policy

(a)    Parties Positions

[65]

The
    appellants take the position that if this court accepts that Daimler Financial
    is a lessor for the purposes of the
Insurance Act
(as I have), then
    the decision of
Xu
should be reconsidered and Mario treated as an unnamed
    insured under Daimler Financials standard excess policy.

[66]

The
    respondents submit that an unnamed insureds access to a lessors insurance
    coverage was the very issue that was rejected by McEwen J. in
Xu
. The
    appeal to this court was dismissed. They state that the appellants are
    attempting to reargue
Xu
and, in any event, it was correctly decided.

(b)
Xu
was
    not Wrongly Decided

[67]

The
    applicant in
Xu
had been injured in a motor vehicle accident. The
    defendant had leased the vehicle he had been driving at the time of the
    accident. The issue before McEwen J. was whether the applicant could access the
    lessors insurance policy on the basis that the defendant lessee was an unnamed
    insured.

[68]

Under
    s. 277(1.1) of the
Insurance Act
, a lessees policy is required
    to respond first and if that policy provides coverage of $1 million or more,
    access to the lessors policy is precluded if s. 267.12 of the
Insurance
    Act
is applicable. McEwen J. determined that s. 267.12 did apply and did
    not permit an unnamed insured access to the lessors excess coverage. Section
    267.12(1) commenced with the phrase [Despite] any other provision in this
    Part. This language reflected both the primacy of the section and legislative
    intent.

[69]

In
    addition, as mentioned, the purpose of the provision was to protect lessors by
    reducing their exposures in personal injury lawsuits, thus reducing their
    insurance rates and keeping rental and leasing costs affordable. At para. 31,
    McEwen J. wrote that if the application were allowed, and lessors insurers were
    exposed to judgments over $1 million via lessees as unnamed insureds, the
    effect of the legislation would be nullified.

[70]

Xu
was appealed to this court. The appellants before us in this case sought
    leave to intervene but their request was denied. This court dismissed the
    appeal in
Xu
and upheld the decision of McEwen J.

[71]

Xu
is dispositive of the issue before us.

[72]

This
    court will not overturn one of its prior decisions unless sitting as a
    five-judge panel:
R. v. Labrecque
, 2011 ONCA 360, at para. 5. In this
    case, the appellants request for a five-judge panel on the basis that
Xu
was wrongly decided was refused.

[73]

In
    spite of the refusal, it is still open to a three-judge panel to request that
    an appeal be assigned to a five-judge panel if convinced that an arguable case
    can be made for reviewing or overruling the prior decision at issue:
Ontario
    (Attorney General) v. Collins
, 2012 ONCA 76, at para. 9.

[74]

In
    requesting a review of
Xu
, the appellants argue that McEwen J. ignored
    relevant considerations, such as the policy considerations underlying unlimited
    vicarious liability in the
Highway Traffic Act
, or conflated different
    issues, such as the limitation of liability in s. 267.12(1) with provisions
    governing the priority in which various insurance policies will be required to
    pay.

[75]

I
    would reject all of the appellants arguments. McEwen J. accurately considered
    the legislative history and purpose of s. 267.12(1). He correctly concluded
    that permitting a lessee to access a lessors insurance, as an unnamed insured,
    would undermine the animating purpose of that provision. That analysis was
    upheld by this court, and the appellants have not presented any cogent reasons
    for revisiting that conclusion. I would not give effect to this ground of
    appeal.

(iv)

Negligent Entrustment

(a)     Parties Positions

[76]

The
    appellants submit that the motions judge erred in dismissing their claim of negligent
    entrustment against Daimler Financial. No appeal is taken from the dismissal of
    the claim against Capital Dodge.

[77]

The
    appellants submit that the motions judge erred in his treatment of the
    evidentiary burden of proof applicable to a motion for summary judgment. In
    addition, his finding that Marios lease application was rejected due to his
    financial status was purely speculative as there was no direct evidence on this
    issue from Daimler Financial. He also erred by not drawing an adverse inference
    against Daimler Financial due to its failure to produce the leasing file for
    Mario, Luciano and West End Tile Limited.

[78]

The
    respondent answers by submitting that the motions judge properly described the
    law of negligent entrustment and found that the appellants had not made out
    their claim that Daimler Financial knew or should have known that Mario was an
    incompetent, inexperienced, or reckless driver. There was nothing in Marios
    driving record that would trigger any suggestion that the lease should not have
    been entered into with West End Tile Limited and Luciano. It was reasonable for
    Capital Dodge and Daimler Financial to rely on the insurance particulars for
    the lessees to satisfy any concerns about the liability and competence of the
    eventual driver. Lastly, there was evidence that supported the finding that
    Marios application was rejected due to his financial status.

(b)      The Claim was Properly
    Dismissed

[79]

The
    parties and the motions judge proceeded on the basis that the tort of negligent
    entrustment exists in Ontario and in that regard relied on
Cella
. While
    the tort exists in the United States and arguably in British Columbia (
Schulz
, at p. 105) and
has been advanced in
    Ontario (
Vynckier v. Brown and State Farm
, 2015 ONSC 376;
Persaud
    v. Bratanov and Unifund Assurance Co.
, 2012 ONSC 5232, 96 C.C.L.T. (3d)
    147;
Ladouceur v. Zimmerman
, [2009] O.J. No. 4777; and
Ahmetspasic
    v. Love
, 2002 CarswellOnt 4475), no definitive statement on the existence
    of the tort has been enunciated by either the Supreme Court of Canada or by this
    court. As the appeal was not argued on the basis that the tort does not exist,
    I propose to address this ground of appeal assuming, without deciding, that
    such a tort does exist.

[80]

In
    my view, the appellants argument must be rejected.  It was open to the motions
    judge to find on the record before him that the rejection of Mario as a
    co-lessee had to do with his financial status. This conclusion was based on
    Lucianos testimony. More significantly, the appellants argument fails due to the
    absence of any duty of care between the appellants and Daimler Financial.

[81]

The
    test for a duty of care is well-established in Canadian law. As noted in
R.
    v. Imperial Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45, at para.
    41, a duty of care requires both foreseeability and a relationship of
    sufficient closeness, or proximity, to make it just and reasonable to impose an
    obligation on one party to take reasonable care not to injure the other. In
    particular, when the claim at issue alleges a failure to act, foreseeability
    alone cannot be enough and the facts must disclose a justification for imposing
    on a defendant a positive duty to act:
Childs v. Desormeaux
, 2006 SCC
    18, [2006] 1 S.C.R. 643, at para. 31. In
Childs
, at para. 31, the
    court noted that [generally], the mere fact that a person faces danger, or has
    become a danger to others, does not itself impose any kind of duty on those in
    a position to become involved.

[82]

In
Cella
, a decision the appellants rely upon, this court stated, at p.
    331, that [liability] for a negligent act or omission will be imposed in
    situations where there is a sufficient relationship between the injured party
    and another person, which makes it reasonable to conclude that the other person
    owed a duty towards the injured party.

[83]

In
    the case under appeal, the vehicle was leased not to Mario but to West End Tile
    Limited and Luciano. The motions judge concluded that a duty on Daimler
    Financial to ascertain the competency of the driver of the vehicle was too
    remote. It was reasonable for the lessors to rely on the insurance that had
    been obtained by the lessees. On this basis, the motions judge correctly
    concluded that there was no genuine issue requiring a trial on the issue of
    negligent entrustment. He wrote:

Moreover the vehicle was not leased directly to the driver; it
    was leased to the company [West End Tile Limited] for whom the driver worked.
    It would seem, therefore, that a duty to inquire about the eventual driver
    would be one that would be far too remote. Indeed, the lessors would have no
    ability to ascertain who the driver was at a particular time even if the
    driving record of the eventual driver was suspect. It would be entirely
    reasonable for them to be satisfied with regard to the fact that insurance had
    been granted.

[84]

As
    noted by the motions judge, in the present case, Daimler Financial leased the
    Pietrantonio vehicle to Luciano and West End Tile Limited. Finding a duty of
    care in the present case would lead to the conclusion that the lessor had an obligation
    to inquire into who would be driving it. The relationship between the
    appellants and Daimler Financial does not disclose proximity sufficient to
    justify imposing a duty.  The motions judge properly concluded that Daimler
    Financial had met its evidentiary burden and that there was no genuine issue
    requiring a trial on the claim of negligent entrustment.

Disposition

[85]

For
    these reasons, I would dismiss the appeal and the cross-appeal with costs in
    the amount of $5,000 payable by the appellants to each of Chrysler and Daimler
    Financial for a total of $10,000 inclusive of disbursements and HST.

Released:

JAN 27 2016                                    S.E.
    Pepall J.A.

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

I
    agree P. Lauwers J.A.

Schedule A

(a)
Highway Traffic Act
 s. 192(2)

The owner of a motor vehicle or street car is liable for
    loss or damage sustained by any person by reason of negligence in the operation
    of the motor vehicle or street car on a highway, unless the motor vehicle or
    street car was without the owners consent in the possession of some person
    other than the owner or the owners chauffeur.

(b)
Insurance Act
 s. 267.12

Liability of lessors

(1)  Despite any other provision in this Part, except
    subsections (4) and (5), in an action in Ontario for loss or damage from bodily
    injury or death arising directly or indirectly from the use or operation of a
    motor vehicle that is leased, the maximum amount for which the lessor or
    lessors of the motor vehicle are liable in respect of the same incident in
    their capacity as lessors of the motor vehicle is the amount determined under
    subsection (3) less any amounts,

(a)   that are recovered for loss or
    damage from bodily injury or death under the third party liability provisions
    of contracts evidenced by motor vehicle liability policies issued to persons
    other than a lessor;

(b)   that are in respect of the use or
    operation of the motor vehicle; and

(c)   that are in respect of the same
    incident.

Same

(2)  For the purposes of subsection (1), the amounts
    referred to in clauses (1) (a), (b) and (c) include only amounts recovered
    under the coverages referred to in subsections 239 (1) and (3) and section 241
    and exclude,

(a)

any sum
    referred to in subsection 265 (1);

(b)

any amount
    payable as damages by the Motor Vehicle Accident Claims Fund under the
Motor
    Vehicle Accident Claims Act
; and

(c)

any other
    amounts determined in the manner prescribed by the regulations.

Maximum amount

(3) The maximum amount for the purposes of subsection (1) is
    the greatest of,

(a)   $1,000,000;

(b)   the amount of third party liability insurance required by
    law to be carried in respect of the motor vehicle; and

(c)   the amount determined in the manner prescribed by the
    regulations, if regulations are made prescribing the manner for determining an
    amount for the purposes of this clause.

Exceptions

(4) Subsection (1) does not apply,

(a)

in such
    circumstances as may be prescribed by the regulations or to such persons,
    classes of persons, motor vehicles or classes of motor vehicles as may be
    prescribed in the regulations, subject to such terms, conditions, provisions,
    exclusions and limits as may be prescribed by the regulations;

(b)

in respect
    of amounts payable by a lessor other than by reason of the vicarious liability imposed
    under section 192 of the
Highway Traffic Act
; or

(c)

in respect
    of a motor vehicle used as a taxicab, livery vehicle or limousine for hire.

Application of subs. (1)

(5) Subsection (1) applies
    only to proceedings for loss or damage from bodily injury or death arising from
    the use or operation of a motor vehicle on or after the day this section comes
    into force.

Definitions

(6)  In this section,

lessor means, in respect of a motor vehicle, a person who is
    leasing or renting the motor vehicle to another person for any period of time,
    and leased has a corresponding meaning; (bailleur)

motor vehicle has the same meaning as in subsection 1 (1) of
    the Highway Traffic Act (véhicule automobile).

[1]
Formerly carrying on business as Daimler Chrysler Insurance Company.

[2]
The parties to the agreement were Chryslers predecessor in title, Chrysler
    Canada Ltd., and Daimler Financials predecessor in title, Chrysler Credit
    Canada Ltd. I refer to these parties as Chrysler and Daimler Financial, respectively.

[3]
Wayne Arthurs, the Parliamentary Assistant to the Minister of Finance.


COURT OF APPEAL FOR ONTARIO

CITATION: Hawthorne v. Markham Stouffville Hospital, 2016
    ONCA 10

DATE: 20160106

DOCKET: C60444

Cronk, Tulloch and van Rensburg JJ.A.

BETWEEN

Sherriene Hawthorne and Povell Tyrell

Plaintiffs/Appellants

and

Markham Stouffville Hospital, York Central
    Hospital,
Dr. Ademilola Oyenubi, Dr. Joanne Lewtas,
    Dr. Partha Datta, Dr. Andrew Arcand,
Dr. Arthur Bookman,
Dr. Caroline
    Geenen, Dr. Solow, Dr. A. Ing,
Dr. Lola,
Dr. Bansal,
Dr. Gernin,
Dr. David Weizman, Dr. Larry Grossman, Dr. M. Sugai, Dr. Andre F. Charest,
    Dr. Aviv S. Gladman, Dr. Allan Kagal, Dr. Seyed Ali Ghafouri, Dr. Prince
    S. Aujla

Defendants/
Respondents

Prakash Pooran, for the appellants

Meredith E. Jones, for the respondents

Heard: January 4, 2016

On appeal from the judgment of Justice
Suhail
    A.Q. Akhtar
of the Superior Court of Justice, dated April 13, 2015.

ENDORSEMENT

[1]

The appellants appeal from an order dismissing their action as against
    the respondents on a summary judgment motion.

[2]

The appellants claimed damages for medical malpractice, as a result of
    the appellant Sherriene Hawthornes treatment between October 2009 and March
    2010, initially for a urinary tract infection. Ms. Hawthorne asserted that high
    doses of steroids were administered to her without her consent, which made her
    slip into a coma and suffer loss of memory and vision, and paralysis. Her son
    claimed damages under the
Family Law Act
, R.S.O. 1990, c. F.3
.
The action against the defendant hospitals was
    dismissed on consent.

[3]

Ms. Hawthorne had commenced three actions in respect of the alleged
    medical malpractice. The first was initiated in November 2011 by notice of
    action. There is no evidence as to what happened to this action. The second,
    commenced in March 2012, also by notice of action, was dismissed as abandoned
    by the registrar in November 2012. The third action, which was the subject of
    the summary dismissal, was commenced on October 26, 2012. The appellants were
    self-represented when they filed their claims, and represented by counsel in
    responding to the motion for summary judgment.

[4]

In the statement of claim in the third action, the appellants pleaded
    that Ms. Hawthorne became aware of the malpractice when she retrieved her
    medical records from two of the defendant hospitals in October and November
    2011. The respondents brought a motion, among other things, to dismiss the
    action, relying on the
Limitations Act, 2002
, S.O. 2002, c. 24, Sch.
    B.

[5]

The motion judge granted the motion on the basis that the statutory
    presumption in s. 5(2) of the
Limitations Act, 2002
applied: that is,
    that the claim was presumed to have been discovered on the day the act or
    omission on which the claim is based took place, unless the contrary is proved.

[6]

The evidence was that Ms. Hawthorne had been discharged from the
    hospital in March 2010. The appellants offered no evidence, however, relating
    to discoverability in response to the motion. There were inconsistencies
    between the second notice of action and the statement of claim in the third
    action with respect to the date Ms. Hawthorne claimed to have discovered her
    claim against these respondents. In the second action, the notice of action pleaded
    that the claim was discovered when Ms. Hawthorne retrieved her medical records
    around September 2010 (the pleading stated 2009, but it is agreed that was a
    typographical error). In contrast, in their pleading in the third action, the
    appellants alleged that the records were retrieved in October and November
    2011. According to the motion judge, this unexplained inconsistency made the
    discovery date pleaded in the current action unworthy of belief.

[7]

On appeal, the appellants assert that the motion judge erred by failing
    to give effect to evidence that was available in the motion record, but not
    referred to in argument. The evidence consists of receipts for payment for
    medical records by Ms. Hawthorne, dated October 28 and November 1, 2011, which
    would suggest that that was the time Ms. Hawthorne discovered the act or
    omission on which the claim was based.

[8]

We do not give effect to this argument. The failure of the appellants to
    respond to the summary judgment motion with evidence to rebut the presumption
    in s. 5(2) of the
Limitations Act, 2002
is fatal. Pleadings are not
    evidence. The appellants could not rest on the pleading of a timely discovery
    date in their third action, when confronted by a motion for summary dismissal
    based on the limitations argument.

[9]

The two receipts that were in the record (as part of the respondents
    materials), even if drawn to the attention of the motion judge, without any
    further evidence or explanation, could not have affected the result. Even if it
    might be reasonable to conclude that the appellants received medical records on
    the dates shown in the receipts for payment, this was not sufficient to
    overcome the statutory presumption. The receipts alone do not advance the
    appellants discoverability argument, in the absence of any explanation by Ms.
    Hawthorne linking what was in the records to the discovery of her claim.

[10]

For
    these reasons, the appeal is dismissed. The respondents are entitled to their
    costs of the appeal, if requested, fixed in the amount of $7,000, inclusive of
    applicable taxes and disbursements.

E.A. Cronk J.A.

M. Tulloch J.A.

K. van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hodder v. Lindhorst, 2016 ONCA 42

DATE: 20160115

DOCKET: C60068

Juriansz, Hourigan and Roberts JJ.A.

BETWEEN

J. Gardner Hodder and J. Gardner Hodder, A
    Professional Corporation

Applicants (Respondents)

and

Alvin Lindhorst

Respondent (Appellant)

Robert Maki, for the appellant

Brian A. Pickard, for the respondents

Heard and released orally: January 8, 2016

On appeal from the order of Justice Brian W. Abrams of
    the Superior Court of Justice, dated January 20, 2015.

ENDORSEMENT

[1]

This is an appeal from an order finding the appellant to be a vexatious
    litigant. On appeal, the appellant argues he was not accorded the right to be
    heard, in that the application judge denied him standing and ejected him from
    the courtroom, and that the application judge failed to make allowances for his
    debilitating medical illness. In his factum, he also argued that the
    application was brought in an inconvenient location that prevented him from
    having the benefit of representation. Finally, he points out that he has
    enjoyed some success in litigation.

[2]

We would not give effect to any of the appellants arguments. The
    application judge was entitled to refuse the appellants standing at the
    hearing because he had failed to comply with the earlier peremptory order of Tausendfreund
    J., that unless he filed an appearance and responding material by specified
    dates, he would not have standing at the hearing. The appellant also repeatedly
    disrupted the hearing and made abusive comments to the judge and the judge was
    entitled to have him escorted from the courtroom. We see no error in denying
    him standing and having him ejected from the courtroom. If anything, his
    behaviour at the hearing demonstrated his vexatious manner of conducting
    proceedings.

[3]

The appellants illness is not a relevant factor. His illness has not
    prevented him from being able to initiate and participate in a myriad of
    proceedings. There is no evidence it disabled him from responding to this
    application. Certainly, his illness does not entitle him to institute vexatious
    proceedings and obligate the court to tolerate his abusive behaviour towards
    other parties. In any event, the record shows he received a number of
    indulgences from the court, including by Tausendfreund J., whose eventual order
    he failed to comply with.

[4]

We do not accept that Belleville, where the application was returnable,
    was an inconvenient location to the appellant. He lives in Bancroft in the
    Belleville judicial district and he has repeatedly used the court in Belleville
    to bring meritless actions. The argument that the appellant was unrepresented
    because the hearing was in Belleville is unsupported by the evidence.

[5]

The minor and occasional success the appellant has enjoyed does not
    detract from his long history of instituting multiple and meritless proceedings
    and his vexatious manner of conducting them.

[6]

The appeal is dismissed. The respondents costs are fixed in the amount
    of $6,000 all inclusive. The appellant will have 120 days to pay the costs.

R.G.
    Juriansz J.A.

C.W.
    Hourigan J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Kamali (Re) 2016 ONCA 52

DATE: 20160118

DOCKET: C61073

Feldman, Cronk and Roberts JJ.A.

IN THE MATTER OF: Sinem Kamali

AN APPEAL UNDER PART XX.1 OF THE
CODE

Ian S. McCuaig, for the appellant

Kathryn Hunt, for the Centre for Addiction and Mental
    Health

Jessica Smith Joy, for the Attorney General of Ontario

Heard: January 15, 2016

On appeal against the disposition of the Ontario Review
    Board dated January 13, 2015.

By the Court:

[1]

The appellant appeals from the order of the Ontario Review Board (the
    Board) dated January 13, 2015 that she be detained on the General Forensic
    Unit at the Centre for Addiction and Mental Health (CAMH) in Toronto, subject
    to a number of conditions, including the privilege of living in the community
    in accommodation approved by the person in charge of CAMH.

Background

[2]

On June 14, 2012, the appellant was found not criminally responsible (NCR)
    on account of mental disorder on a charge of arson relating to an offence on
    October 23, 2010.  She has been subject to a treatment order since October 2010
    and a detention order under the Boards supervision since 2012.

[3]

The appellant is 35 years old.  Between July 2008 and October 2010, she
    was apprehended under the
Mental Health Act
, R.S.O. 1990, c. M.7 eight
    times.  She was admitted to hospital on numerous occasions commencing in 2009,
    for periods ranging from several days to several weeks.  Her medical records
    indicate that she exhibited psychosis, paranoia, delusions, self-harming
    behaviour and physical aggression during her admissions.

[4]

The appellant also has a history of substance abuse, with documented
    incidents of the use of marijuana, powdered cocaine, methadone, percocets and
    gasoline mixed with juice.

[5]

The appellants current diagnosis is schizophrenia.  She has no criminal
    record but was arrested and charged prior to October 2010 for assault and
    attempted murder.  All charges were ultimately withdrawn.

[6]

The appellant has resided at CAMH since December 10, 2010 except for the
    time period between February 25, 2014 and June 2014.  In February 2014, she was
    approved to live in the community, in supervised housing at St. George House,
    under the oversight of her CAMH out-patient team.  She was readmitted to CAMH
    on April 9, 2014 when she breached her disposition order by drinking alcohol.

[7]

Shortly thereafter, the appellant was again discharged to reside at St.
    George House.  However, concerns soon emerged regarding her failure to comply
    with her medication regime.  She also missed two appointments with her treating
    psychiatrist and, on June 9, 2014, absconded from St. George House for a period
    of approximately two weeks, during which she resided with strangers, failed to
    take her medication and consumed alcohol.

[8]

On June 18, 2014, the appellant was arrested and readmitted to the
    General Forensic Unit at CAMH.  She was later transferred to the Secure
    Forensic Unit.  The readmission and transfer were the subject of restriction of
    liberty hearings held before the Board on July 16 and October 7, 2014 at which
    the Board held that the restrictions were warranted.  In October 2014, following
    her restriction of liberty hearings, the appellant set a fire in her bedroom at
    CAMH.

[9]

At the time of her January 13, 2015 hearing, the appellant was subject
    to the terms and conditions of a Board disposition dated February 18, 2014,
    under which she was detained on the General Forensic Unit of CAMH, subject to
    conditions that afforded the privilege of living in approved community
    accommodation.  At her January 13, 2015 hearing, the appellant sought an
    absolute discharge.

Board Decision

[10]

The
    Board concluded, on all the evidence before it, that the appellant continued to
    pose a significant threat to the safety of the public.  It also accepted CAMHs
    submission that it was necessary and appropriate in the circumstances, taking
    into account the safety of the public, the appellants mental condition, her
    re-integration into society, and her other needs, that her detention on the
    General Forensic Unit at CAMH should continue, on essentially the same terms as
    set out in the Boards 2014 disposition.

[11]

The
    appellant appeals from both of these rulings.

Issues

[12]

The
    appellant submits that the Board erred in finding, in the absence of any
    positive evidence, that she continues to pose a significant risk to the public.
    Further, the appellant says, the Board erred by ignoring or discounting the
    evidence before it of significant improvements in her mental status during the
    latter part of 2014.  As a result of these errors, the appellant submits, the
    Board failed to impose a disposition that was the least onerous and least
    restrictive in the circumstances and to properly consider her liberty
    interests.

Discussion

[13]

We do not accept these submissions.  In our view, the Board did not err
    in its assessment of the threat posed by the appellant to public safety or in
    its determination of the necessary and appropriate disposition in all the
    circumstances.  In both respects, the Boards disposition was reasonable and
    fully supported by the evidence.

[14]

The
    central issue at the Board hearing was whether the appellant continued to pose
    a significant threat to the safety of the public.  The evidence before the
    Board on this issue consisted of the testimony of the appellants treating
    psychiatrist, Dr. Wilkie, and CAMHs hospital report, dated December 15, 2014.

[15]

Dr.
    Wilkie testified that, notwithstanding acknowledged improvements in the
    appellants mental status in late 2014: i) she continues to suffer from
    persecutory and somatic delusions due to her psychotic disorder, together with
    disorganized thinking and behaviour.  Her psychotic symptoms are sometimes
    accompanied by physical or verbal threats; ii) the appellant continues to
    exhibit paranoid delusions, although her more grandiose delusions have abated
    as her medication has been optimized; and iii) the appellant continues to have limited
    insight into the relationship between her mental illness, substance abuse and
    the risk of her engaging in violent behaviour and the need for medication.

[16]

Further,
    and importantly, it was Dr. Wilkies opinion that, absent supervision, the
    appellant would likely decrease or discontinue her medications, leading to her
    rapid decompensation, the overt manifestation of symptoms of psychosis and a
    significant risk to the public.  As a result, the appellants continued
    detention was necessary to permit CAMHs rapid and early intervention in the
    event of the appellants non-compliance with medication and resulting
    decompensation.

[17]

There
    was also evidence before the Board establishing that, during the 2014 review
    year:

1)

from
    July to October 2014, the appellant was involved in a number of episodes of
    agitation, altercation and verbal threats;

2)

when
    the appellant was absent without leave from St. George House in June 2014, she
    stole money, drank alcohol and lived with strangers;

3)

on
    readmission to CAMH in late June 2014, the appellant presented as
    significantly disorganized, whispering and incoherent;

4)

following
    her readmission, the appellant: refused clozapine medication; engaged in
    altercations with staff and co-patients; stole and drank hand sanitizer; set
    paper on fire in her bedroom; and, while on the Secure Forensic Unit at CAMH,
    continued to present as highly disorganized and confused, exhibiting both paranoid
    and grandiose delusions; and

5)

notwithstanding
    that the appellants symptoms had attenuated somewhat due to her medication
    compliance, to which the Board referred, she continued to lack insight into her
    illness and her need for medication.  In particular, on transfer back to the
    General Forensic Unit on December 9, 2014, the appellant continued to deny her
    mental illness and exhibited limited insight.

[18]

This
    evidence, together with Dr. Wilkies testimony, provided ample support for the
    Boards finding that the appellant continues to pose a significant threat to
    the safety of the public.  This finding is dispositive of the appellants
    contention on appeal that she should have been granted an absolute discharge at
    her January 2015 hearing.  On the evidence before the Board, outlined above, an
    absolute discharge would have been unreasonable.  It would also have failed to
    accord with s. 672.54(a) of the
Criminal Code
, R.S.C. 1985, c. C-46,
    which contemplates an absolute discharge for an NCR-accused where, in the
    opinion of the court or the Board, the accused is not a significant threat to
    the safety of the public.

[19]

Nor,
    in our view, can the Board otherwise be faulted for ordering the continued
    detention of the appellant.  In contrast to a conditional discharge (which, we
    note, the appellant did not request at the hearing), under a detention order,
    an NCR-accused can be returned to hospital, if necessary, by means of a
    Board-issued warrant of committal, without detention in jail or a court order:
    s. 672.57 of the
Criminal Code
.  This court has recognized the
    practical advantages and public safety dimensions of providing for the
    involuntary return of an NCR-accused to hospital by means of this approach: see
R. v. Breitwieser
, 2009 ONCA 784.

[20]

In
    this case, Dr. Wilkies testimony and the evidence of the appellants clinical
    course and behaviours during the 2014 review year supported the conclusion that
    a detention order, as a preventative and public safety measure, was both
    necessary and appropriate.  The Board accepted this evidence, as it was
    entitled to do, and found that it is essential that [CAMH] have the ability to
    respond quickly and intervene early in the event of [the appellants]
    non-compliance with medication and decompensation.  This conclusion was both
    reasonable and supported by the evidentiary record.

[21]

Accordingly,
    for the reasons given, the appeal is dismissed.  We note that the appellants
    next review hearing is scheduled for January 19, 2016, four days from the date
    of this appeal.  The appellants progress during the 2015 review year, and her
    suitability for discharge from CAMH, no doubt will be fully canvassed at that
    hearing.

K. Feldman J.A.

E.A. Cronk J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Keenan v. Canac Kitchens Ltd., 2016 ONCA 79

DATE: 20160127

DOCKET: C60019

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

Marilyn Keenan and Lawrence Keenan c.o.b. as
    Keenan Cabinetry

Plaintiffs (Respondents)

and

Canac Kitchens Ltd., a division of Kohler Ltd.,
    and Kohler Canada Co.

Defendant (Appellant)

Paul Boshyk, for the appellant

Bram A. Lecker and Matthew A. Fisher, for the
    respondents

Heard: January 18, 2016

On appeal from the judgment of Justice Graeme Mew of the Superior
    Court of Justice, dated January 21, 2015.

Gillese
    J.A
.:

[1]

This appeal depends upon the answer to two questions.  The first
    question relates to exclusivity.  Exclusivity is a significant factor in
    determining whether a person is a dependent or independent contractor.  Is
    exclusivity to be determined at, or about, the time of termination of the business/employment
    relationship?  The second question relates to reasonable notice.  Were there
    exceptional circumstances in the present case which support an award for a
    period in excess of 24 months?

BACKGROUND IN BRIEF

[2]

Lawrence Keenan began working for Canac Kitchens Ltd., a division of
    Kohler Canada Co., in 1976.  Canac was a manufacturer, distributor, and
    retailer of kitchen cabinets and related accessories.  For the first six or
    seven years, Mr. Keenan worked as an installer of kitchen cabinets.  In 1983,
    he became a foreman, supervising the work crews which installed Canac kitchens
    in new homes.

[3]

Marilyn Keenan is Lawrence Keenans wife.  She formally began work for
    Canac in 1983, as a foreman.  Before that, she had helped out her husband on an
    informal basis.

[4]

The Keenans relationship with Canac came to an end on March 15, 2009,
    when they were called to a meeting and told that Canac was closing its
    operations and their services were no longer needed.  At that time, Mr. Keenan
    was 63 years of age and Mrs. Keenan was 61.

[5]

Canac gave the Keenans nothing on termination - no notice, no pay in
    lieu of notice, and none of the usual statutory entitlements.  None has ever
    been provided or paid.  Why?  Because in Canacs view, the Keenans were
    independent contractors.  To understand this, one needs to appreciate how the employment
    relationship between Canac and the Keenans unfolded.

[6]

As already indicated, Mr. Keenan and Mrs. Keenan worked fulltime for
    Canac beginning in 1976 and 1983 respectively.  They continued as fulltime
    Canac employees until October 1987 when they were called into a meeting and
    told that they would carry on their work as contractors.

[7]

Canac told the Keenans that their job title had changed from foreman to
    Delivery and Installation Leader and that, going forward, installations would
    be done in the following way.  The installers would provide their own trucks
    and pick up the kitchens from Canac.  They would then deliver the kitchens to
    job sites where they would be installed.  Canac would set the rates to be paid
    to the installers and give the Keenans the amounts owing to the installers.
    The Keenans were then to pay the installers.  The Keenans were also made
    responsible for any damage to cabinets that occurred while in transit and told
    that they were expected to obtain insurance to cover those costs.

[8]

The Keenans themselves were to be paid, as before, on a piece work basis
    for each box or unit installed but the amount would be increased to reflect the
    fact that they were paid in gross, without deductions for income taxes,
    employment insurance and CPP.

[9]

Shortly after the 1987 meeting, Canac presented the Keenans with a draft
    agreement, which reflected the new arrangements and which had already been
    signed by Canac.  Only Mrs. Keenan signed the agreement.  The Keenans did not
    obtain independent legal advice before she signed.  The agreements required the
    Keenans, as sub-contractors of Canac, to devote full-time and attention to
    Canac.

[10]

The
    Keenans also received records of employment, which showed that the reason for
    issuance was that they had quit their jobs with Canac.  Neither paid any
    attention to those records because their working relationship with Canac was continuing.
    The Keenans never incorporated; they carried on business as Keenan Cabinetry, a
    sole proprietorship.

[11]

For
    all intents and purposes, after the 1987 meeting, the Keenans working
    relationship with Canac and their duties remained unaltered.  The Keenans
    continued to supervise the delivery, installation and service of Canac
    kitchens.  And, the Keenans considered themselves loyal Canac employees.  They
    continued to enjoy employee discounts, wore shirts with the Canac logo, and
    used Canac business cards.  Mr. Keenan received a signet ring for 20 years of
    loyal service.  In the words of the trial judge:

To the outside world, and in particular, to Canacs customers,
    the [Keenans] were Canacs representatives.

[12]

With
    the exception of some weekend jobs and work for friends and family, the Keenans
    continued to work exclusively for Canac until the end of 2006.

[13]

Beginning
    in 2007, the Keenans started to do some work for Cartier Kitchens, a competitor
    of Canac.  They did so because the work from Canac had slowed down.  Canac
    turned a blind eye to the work that the Keenans performed for Cartier.

[14]

At
    p. 5 of his reasons, the trial judge found that, despite taking on work for
    Cartier, a substantial majority of the Keenans work continued to be done for
    Canac.  In 2007, the Keenans revenues attributable to Canac and Cartier were
    80% and 20% respectively.  In 2008, it was 66.4% and 33.6%.  And, in 2009, to
    the point of termination, the split was 72.6% and 27.4%.

[15]

After
    Canac ended the relationship in March 2009, the Keenans brought the within
    action.

[16]

At
    trial, a short statement of agreed facts was entered and both the Keenans
    testified.  Canac did not call any evidence.    Although initially there was a
    suggestion that the Keenans remained employees throughout, as the trial
    developed it became clear that the real issue was whether the Keenans were
    dependent or independent contractors in March of 2009.

[17]

The
    trial judge considered the five principles set out in
Belton v. Liberty
    Insurance Co. of Canada

(2004), 70 O.R. (3d) 81, 2004 CanLII 6668
    (C.A.) for distinguishing employees from independent contractors.  Based on
McKee
    v. Reids Heritage Homes Ltd.
, 2009 ONCA 916, at para. 32, the trial judge noted
    that those principles also apply to distinguishing employees from dependent
    contractors.  The trial judge found that all five of those now well-known
    principles favoured a finding that the Keenans were dependent contractors from
    1987 until termination.

[18]

In
    particular, the trial judge found that the Keenans were economically dependent
    on Canac due to the fact that they worked exclusively for Canac or at a high
    level of exclusivity.

[19]

Having
    found that the Keenans were dependent contractors, they were entitled to
    reasonable notice on termination.  The trial judge awarded them damages of approximately
    $125,000 in lieu of 26 months notice.

[20]

Canac
    appeals.

THE ISSUES

[21]

Canac
    contends that the trial judge erred in:

1.

finding that the
    Keenans were dependent  rather than independent  contractors; and

2.

awarding the
    Keenans 26 months of notice.

ANALYSIS

Issue #1  Dependent or Independent Contractors

[22]

Canac
    takes issue with only one aspect of the trial judges determination that the
    Keenans were dependent contractors: his finding of exclusivity.  Canac acknowledges
    that the Keenans worked exclusively for it until the end of 2006.  However,
    from then until termination, on the findings of the trial judge, the Keenans
    also worked for one of its competitors.  Canac contends that exclusivity is a
    matter to be determined at, or about, the time of termination of the
    relationship.  Thus, it argues, as the Keenans did not work exclusively for
    Canac in the approximately two-year period immediately preceding termination,
    the trial judge erred in finding that the Keenans were dependent
    contractors.

[23]

I
    reject this submission.  I see no basis for interfering with the trial judges finding
    of exclusivity or near exclusivity.

[24]

The
    trial judge observed that, in the jurisprudence leading to a recognition of the
    intermediate category of dependent contractors, a finding that the worker was
    economically dependent on the company due to complete exclusivity or a high
    level of exclusivity weighed heavily in favour of the conclusion that the
    worker was a dependent contractor.

[25]

In
    my view, this observation is not only correct, it is vital to understanding how
    the question of exclusivity is to be approached.  Exclusivity cannot be
    determined on a snapshot approach because it is integrally tied to the
    question of economic dependency.  Therefore, a determination of exclusivity
    must involve, as was done in the present case, a consideration of the full history
    of the relationship.  It is for the trial judge to determine whether, after
    examining that history, the worker was economically dependent on the company,
    due to exclusivity or a high level of exclusivity.

[26]

The
    trial judge was fully aware that the Keenans did some work for one of Canacs
    competitors in the last two years of the relationship  but he considered that
    information in context. Lawrence Keenan worked exclusively for Canac from 1976
    to 2007.  Marilyn Keenan worked exclusively for Canac from 1983 to 2007.  Their
    agreement with Canac demanded nothing less.  The services that the Keenans
    provided to Cartier were for a relatively short period, and done in response to
    a slowdown in work from Canac.  Canac turned a blind eye to that work.
    Furthermore, on the findings of the trial judge, during the period that the
    Keenans provided services to Cartier, the substantial majority of their work
    continued to be done for Canac.

[27]

Counsel
    for Canac conceded that between 1987 and the beginning of 2007 approximately
    97.5% of the Keenans income was from Canac.  And, I note, this figure does not
    include the Keenans prior periods of employment with Canac, as employees, when
    they worked exclusively for Canac.

[28]

Of
    the approximately 32 and 25 years of service that Lawrence Keenan and Marilyn
    Keenan respectively gave to Canac, in all but two of those years they
    exclusively served Canac.  With this history of the work relationship between
    the parties in mind, I see no fault in the trial judges finding of the
    requisite high degree of exclusivity.

[29]

Accordingly,
    I would dismiss this ground of appeal.

Issue #2  The Notice Period

[30]

If
    it fails on the first ground of appeal, Canac asks this court to set aside the
    trial judges award of damages of 26 months of notice.  Canac founds its
    position on this courts decision in
Lowndes v. Summit Ford Sales Ltd.
,
    [2006] O.J. No 13 (C.A.).  At para. 11 of
Lowndes
, this court stated
    that while the reasonable notice period is a case-specific determination and
    there is no absolute upper limit on what constitutes reasonable notice,
    generally only exceptional circumstances will support a notice period in excess
    of 24 months.  Canac says that the trial judge erred in principle by failing to
    make a finding of exceptional circumstances before awarding damages for
    reasonable notice in excess of 24 months.  Consequently, it submits, this court
    can set aside the award.  It urges this court to make an award of between 16 to
    18 months but, in any event, not greater than 24 months.

[31]

I
    agree that the trial judge failed to expressly make a finding of exceptional
    circumstances.  I note that as part of the agreed statement of facts, the
    parties presented an agreed damages calculation that included figures for up to
    26 months of notice.  This may explain why there is no explicit finding of
    exceptional circumstances as it clearly indicates that an award beyond 24
    months was in the contemplation of all parties.  In any event, however, given
    the Keenans ages and lengths of service, and the character of the positions
    that they held, I would not interfere with the award.

[32]

Lawrence
    Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively.
    Together, their average length of service was 28.5 years.  They were 63 and 61 years
    of age at the time of termination.  They held supervisory, responsible
    positions in which they oversaw the installation of Canacs products and met
    with Canacs customers as its representatives.  For over a generation, they
    were Canacs public face to the outside world.  Over a period of approximately thirty
    years  the entirety of their working lives  the Keenans income had come from
    Canac and they relied on that income to support themselves and their family.
    Even during the approximately two years that they provided some services to
    Cartier, a substantial majority of the Keenans work continued to be done for
    Canac.  These circumstances justify an award in excess of 24 months and I see
    nothing wrong in the trial judges finding that 26 months notice was
    reasonable.

[33]

I
    also reject Canacs submission that the trial judge erred in his assessment of
    reasonable notice by basing his decision on
Cardenas v. Canac Kitchens
,
    2009 CanLII, 17976 (ON SC).  In
Cardenas
, a 43-year old shift supervisor
    who had worked for Canac for 27.5 years was awarded damages of 26 months
    notice.

[34]

I
    do not accept that the trial judge based his award on that given in
Cardenas
.
    He considered the
Cardenas
case, along with the other cases put forward
    by the parties, when determining the period of reasonable notice.  It is not an
    error to consider awards made in other cases involving the same company.  While
    each case must be adjudicated on its own facts, previously decided cases
    particularly those with analogous circumstances  offer useful guidance. The
    trial judge did precisely as he was required to do  he adjudicated this case,
    on its own facts, having due regard to the relevant case law.

DISPOSITION

[35]

Accordingly,
    I would dismiss the appeal with costs fixed at $24,000, all inclusive.

Released: January 27, 2016 (E.E.G.)

E.E. Gillese
    J.A.

I agree. J. MacFarland J.A.

I agree. K. van Rensburg
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Klein v. Dick, 2016 ONCA 8

DATE: 20160106

DOCKET: C60622

Doherty, MacPherson and van Rensburg JJ.A.

BETWEEN

Ester Klein and Willy (Vilmos) Klein

Plaintiffs (Appellants/

Respondents to the cross-appeal)

and

Charles Dick
,
Esther Dick
, Joel Dick, 8800383 Canada Inc.,
ABC Variety Services
,
ABC Variety
and
Jamarmy Financial Services

Defendants (Respondents/

Appellants by way of cross-appeal
)

M. Michael Title and Patricia Virc, for the appellants/respondents
    by way of cross-appeal

Fred Tayar and Colby Linthwaite, for the respondents
    Joel Dick and 8800383 Canada Inc.

James Clark, for the respondents/appellants by way of
    cross-appeal Charles Dick, Esther Dick, ABC Variety Services, ABC Variety and
    Jamarmy Financial Services

Heard: December 18, 2015

On appeal from the order of Justice Paul M. Perell of the
    Superior Court of Justice, dated May 19, 2015.

ENDORSEMENT

[1]

The appellants, Ester and Willy Klein, lent Charles and Esther Dick
    money for their ATM business through a series of promissory notes. After the
    Dicks business partners brought an action for misappropriation of funds, the
    appellants brought an action to enforce the promissory notes. They also brought
    an action for a declaration that certain mortgages received by the respondents
    Joel Dick and 8800383 Canada Inc. were fraudulent conveyances under the
Fraudulent
    Conveyances Act
(
FCA
).

[2]

The motion judge dismissed the appellants fraudulent conveyance claim
    against the respondents for the same reasons as those given in the companion
    case,
2057552 Ontario Inc. v. Dick
. The motion judge also granted
    summary judgment to the appellants on the promissory notes claims for the full
    value of the notes, $710,000.

[3]

The appellants appeal and the respondents cross-appeal the motion
    judges decision.

The appeal

[4]

The appellants contend that the motion judge failed to properly assess
    the advisability of the summary judgment process in dismissing the appellants
    fraudulent conveyance claim when those defendants had not moved for summary
    judgment.

[5]

We disagree. The appellants brought a summary judgment motion, asserting
    that there was no genuine issue requiring a trial, among other things, in respect
    of their fraudulent conveyance claim. The case law is clear that summary
    judgment may be granted against the moving party in the absence of a motion
    from the responding party: see, for example,
Hunter-Rutland Inc. v.
    Huntsville (Town)
, 2015 ONCA 353, at para. 5. Once the motion judge made
    the essential findings of fact with respect to the fraudulent conveyance claim
    (that there was no fraud and no intent to defeat creditors), his dismissal of
    that claim was inevitable.

[6]

Second, the appellants contend that the motion judges reasons and
    disposition on the fraudulent conveyance issue were flawed.

[7]

For the reasons in
2057552 Ontario Inc. v. Dick
, we reject this
    submission.

The cross-appeal

[8]

The respondents contend that the motion judge erred by fixing the
    quantum of damages and by not staying the remainder of the action to allow for
    arbitration.

[9]

We disagree. There was no reason for the motion judge not to fix the
    quantum of damages relating to the promissory notes. However, we accept the respondents
    fair concession that the proper amount is $650,000, not $710,000. We also do
    not see any reason, at this juncture, to send the parties down a different path
    in this litigation.

Disposition

[10]

The
    appeal is dismissed. The cross-appeal is allowed, but only to the extent of
    changing the damages to $650,000 from $710,000. The respondents are entitled to
    their costs of the appeal fixed at $18,000, inclusive of HST and disbursements.
    The appellants are entitled to their costs of the cross-appeal fixed at $4,000,
    inclusive of disbursements and HST.

Doherty
    J.A.

J.C.
    MacPherson J.A.

K. van
    Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Khosa v. Homelife/United Realty Inc., 2016 ONCA 3

DATE: 20160106

DOCKET: C60735

Pepall, Pardu and Roberts JJ.A.

BETWEEN

Jaswinder Khosa

Plaintiff

Appellant

and

Homelife/United Realty Inc., Parvinder
    Singh, Gurjinder Singh and K & K Brothers
    Inc.

Defendants

Respondents

Douglas G. Edward, for the appellant

Pathik Baxi, for the respondents

Heard and released orally: January 5, 2016

On appeal from the judgment of Justice Casimir Herold of
    the Superior Court of Justice, dated June 3, 2015.

ENDORSEMENT

[1]

The appellant appeals from the June 3, 2015 summary judgment in which
    Herold J. dismissed the appellants action against the respondents.  He
    dismissed the action, which was commenced on October 17, 2013, based on a
    finding that the limitation period expired at the very latest on September 13,
    2013.

[2]

The appellant submits that the motion judge erred  in granting summary
    judgment in the absence of any cross-examinations or examinations for
    discovery.  He argues that the motion judge ignored the appellants sworn
    statement that he received from the respondents a cash payment of $5,000 on
    December 2, 2011, which served to extend the limitation period.  This evidence
    was contradicted by the respondent Singh and as such, there was a genuine issue
    requiring a trial.

[3]

The appellant requested an adjournment of the summary judgment motion to
    conduct cross-examinations on the affidavits filed by the respondents.  He also
    had not filed a factum. The motion judge exercised his discretion to refuse the
    request.  The motion had been served nine months earlier, had been adjourned
    twice before, and on two prior occasions, timetables for cross-examinations and
    other steps in the proceedings had been ordered and not maintained. Moreover,
    the date of the motion had been scheduled for three hours and had been made
    peremptory on all parties.  The respondents were prepared to proceed.  The
    motion judge was satisfied that he could reach a fair and just determination on
    the merits in the absence of cross-examinations.

[4]

The appellant was afforded ample opportunity to conduct
    cross-examinations but opted not to do so.  Scheduling timetables are not
    ordered to be ignored.   It was open to the motion judge to refuse an
    adjournment in the circumstances.

[5]

That said, the motion judge still had to be satisfied that there was no
    genuine issue requiring a trial and that a fair and just determination on the
    merits could be reached.  See
Hryniak v. Maudlin
, 2014 SCC 7.

[6]

The appellant argues that the respondents paid $5,000 to the appellant
    on December 2, 2011, and that the payment served to extend the limitation
    period.  The respondents deny any indebtedness to the appellant and deny making
    any such $5,000 payment.

[7]

The respondents acknowledge that the extension of the limitation period
    issue was raised before the motion judge.  Further, the motion judge alluded to
    it in his reasons refusing the adjournment request.  However, the motion judge
    failed to make any findings on this issue and failed to resolve the material
    contradictions in the evidence, including whether the $5,000 payment was made.

[8]

In these circumstances, we are of the view that the appeal must be
    allowed and the summary judgment dismissing the action set aside.

[9]

The costs order below is set aside and in substitution, as agreed by the
    parties, the appellant is to pay the respondents $2,500 inclusive of
    disbursements and HST.

[10]

There
    will be no order of costs for the appeal.

S.E. Pepall J.A.

G. Pardu J.A.

L.B. Roberts
    J.A.