COURT OF APPEAL FOR ONTARIO

CITATION: Klassen v. Beausoleil, 2019 ONCA 407

DATE: 20190517

DOCKET: C65963

van Rensburg, Benotto and Harvison Young JJ.A.

BETWEEN

Henry Klassen

Plaintiff
(Appellant)

and

Robert Beausoleil and 1117726 Ontario Inc. o/a
    Roberts Boxed Meats

Defendants
(Respondents)

Rohit Kumar, for the appellant

J. Sebastian Winny, for the respondents

Heard: March 14, 2019

On appeal from the order of
    Justice David A. Broad of the Superior Court of Justice, dated September 6,
    2018, with reasons reported at 2018 ONSC 5237.

Harvison Young J.A.:

[1]

This is an appeal from an order denying the appellant leave to amend his
    Statement of Claim pursuant to r. 26.01 of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. The central issue is whether the appellants proposed
    amendments to his Statement of Claim constitute a new cause of action that is
    statute-barred or whether the amendments seek alternate relief based on material
    facts that already form part of the claim. For the reasons that follow, I
    conclude that the proposed amendments do not constitute a new cause of action,
    and that the appeal should be allowed.

The background facts

[2]

The appellant Henry Klassen was a 33% shareholder (holding 100 shares)
    of the respondent corporation. In 1996, he agreed to sell his shares pursuant
    to a Share Purchase Agreement (the 1996 SPA) in exchange for: a) the
    repayment of certain back wages owing in the amount of approximately $25,000;
    and b) amounts owed pursuant to a promissory note in the amount of
    approximately $20,000.

[3]

The 1996 SPA provided that the appellants shares would be held in
    escrow pursuant to an Escrow Agreement (the 1996 Escrow Agreement) pending
    repayment of the back wages and the amounts owing under the promissory note. Upon
    satisfaction of these escrow release conditions, the purchasers would be
    entitled to seek the release of the shares and would gain legal title to the
    shares.

[4]

The respondent Robert Beausoleil is the ultimate purchaser of the shares
    sold by Mr. Klassen in 1996, having purchased all of the outstanding shares of
    the company in 1997. The Share Purchase Agreement entered into at that time
    (the 1997 SPA) provided that Mr. Beausoleil, in purchasing the shares, also
    assumed responsibility for payment of the back wages and amounts owing on the
    promissory note. The appellants 100 shares would continue to be held in escrow
    pending satisfaction of the escrow release conditions. To this end the
    appellant, Mr. Beausoleil and the two other shareholders executed an Amended
    Escrow Agreement (the 1997 Escrow Agreement), which, in effect, continued the
    terms of the 1996 Escrow Agreement.

[5]

What happened over the next 18 years is very much in issue between the
    parties. The heart of the appellants claim is that, shortly after Mr.
    Beausoleil purchased the shares in the corporation in 1997, they entered into
    an oral agreement under which he and Mr. Beausoleil would each become 50% co-equal
    shareholders in the corporation. The appellant also alleges that, for various
    reasons, Mr. Beausoleil and the corporation did not pay the back wages owing or
    the amounts owed under the promissory note.

[6]

The dispute allegedly came to a head in late 2014, when Mr. Beausoleil
    denied that the appellant was a shareholder of the corporation. For his part,
    Mr. Beausoleil maintains that he has been the sole shareholder, director and
    officer of the corporation since purchasing all outstanding shares in 1997.

[7]

In 2015, the appellant commenced this action against the corporation and
    Mr. Beausoleil, as the ultimate purchaser of his shares, for breach of
    contract, breach of trust, unjust enrichment and seeking relief under s. 248 of
    the
Business Corporations Act
, R.S.O., c. B.16 for the respondents
    allegedly oppressive conduct.

[8]

In August 2017, the respondents brought a motion for summary judgment,
    seeking the dismissal of the appellants action in its entirety or, in the
    alternative, dismissing the appellants claim to a 50% ownership interest,
    claim for amounts owing on the promissory note, and claim for back wages. One
    of the core arguments raised by the respondents was that the appellants
    various claims were time-barred. The appellant responded, seeking the dismissal
    of the respondents summary judgment motion or, in the alternative, judgment in
    his favor.

[9]

The motion judge, Sloan J., granted summary judgment to the respondents
    on the promissory note, based on the respondents payment of the amount owing.
[1]
He determined that the appellant did not have any further claim for interest
    owing on the promissory note. The motion judge also dismissed the appellants
    claims in relation to certain other debts.

[10]

However,
    the motion judge declined to grant summary judgment on the appellants claims
    relating to the back wages and oral agreement for a 50% ownership interest in
    the corporation. It is clear from the motion judges endorsement that he viewed
    the respondents limitation defence to both claims as a live issue for trial. In
    particular, he found that since both claims and limitations defences turned on
    issues of credibility (and the alleged existence of numerous oral agreements),
    it was necessary to direct the claims to proceed to trial.

[11]

In
    the course of the summary judgment motion, counsel for the appellant argued that
    the appellant remained a 33% shareholder by virtue of the respondents failure
    to satisfy the escrow conditions. Counsel for the respondents objected on the
    basis that this theory was not pled in the appellants Statement of Claim. The
    motion judge did not deal with this issue in his endorsement. Counsel for the
    appellant advised at the hearing of the appeal that this exchange between
    counsel at the summary judgment hearing was an important impetus for the
    subsequent r. 26.01 motion.

[12]

Significantly,
    for the purpose of this appeal, the appellants 100 shares remain in escrow. In
    October 2017, following the summary judgment motion, the appellants counsel
    wrote to the escrow agent requesting the return of the appellants shares, on
    the basis that the escrow release conditions under the 1996 Escrow Agreement
    and 1997 Escrow Agreement had not been satisfied. The respondents counsel
    objected. The escrow agent refused to release the shares in light of the ongoing
    litigation between the parties.

[13]

In
    January 2018, the appellant brought a motion (now the subject of this appeal)
    pursuant to r. 26.01 of the
Rules
for leave to amend his Statement of
    Claim. In particular, the appellant sought to amend his Statement of Claim to
    plead, in the alternative to his request for a declaration of a 50% ownership
    interest in the corporation, a request for a declaration that he had a 33%
    ownership interest in the corporation. This requested alternative relief is
    premised on the theory that the escrow release conditions in the 1996 Escrow
    Agreement and 1997 Escrow Agreement remain unsatisfied and the appellants
    shares remain in escrow. If the appellants shares remain in escrow, and he is
    entitled to seek their return, he remains a 33% shareholder in the corporation
    (assuming the corporation has not issued any additional shares). The appellant
    also sought to make certain other minor amendments to his Statement of Claim,
    which are not at issue in this appeal.

The motion judges decision

[14]

The
    motion judge granted leave to the appellant to make most of the amendments
    sought, but refused to grant leave for the appellant to assert the alternative
    claim for a 33% ownership interest in the corporation. In this vein, he
    rejected the appellants submission that the claim for a 33% legal ownership
    interest (based on the 1996 SPA, 1996 Escrow Agreement, 1997 SPA, and 1997
    Escrow Agreement) was merely a claim for alternative relief, or the assertion
    of a different legal conclusion, based on no new facts and not going beyond the
    factual matrix of the original claims. The motion judge stated that the
    appellant had conceded that, if the alternative claim to a 33% ownership
    interest was the assertion of a new cause of action, it was statute-barred by
    the expiration of the relevant limitation period. As a result, he refused to
    allow the amendments relating to that claim.

[15]

In
    the motion judges view, the appellants claim to a 50% ownership interest in
    the corporation rested squarely on the alleged oral agreement between the
    appellant and the respondents. The factual basis for this was a series of
    alleged representations made by the respondents: see paras. 16-19. Thus, as
    currently constituted, the appellants claim to an ownership interest in the
    corporation was
not
premised on the 1997 SPA or
    any other written document: at para. 19.

[16]

The
    motion judge was also of the view that the sole cause of action relating to the
    assertion of an ownership interest in the corporation was the claim for breach
    of the oral agreement: at para. 20. By contrast, the claim to a 33% ownership
    interest in the corporation was based upon an entirely different set of written
    agreements, such that the amendment did not consist of an alternative claim for
    relief, or a statement of a different legal conclusion based on no new facts,
    and went far beyond the factual matrix from which the original claim to
    ownership arose: at para. 21. While the 1996 SPA, 1996 Escrow Agreement and
    1997 SPA were referred to in the Statement of Claim in order to provide background
    facts preceding the oral agreement, those written agreements did not provide
    any necessary support for the claim to a 50% ownership interest: at para. 22.

[17]

As
    a result, the motion judge denied the appellant leave to amend his Statement of
    Claim to assert the alternative claim to a 33% ownership interest. However, the
    motion judge, with only limited analysis, allowed the appellant to make the
    balance of the amendments sought on the motion. This included an amendment to
    plead that the conditions precedent for the transfer of the Klassen Escrow
    Shares have not been satisfied [and as] a result, Beausoleil has not acquired,
    and the Plaintiff is entitled to a return of, the Klassen Escrow Shares.

The arguments on appeal

[18]

The
    appellant raises three core arguments on appeal. First, he argues that the
    trial judge erred in concluding that the alternative pleading of a 33%
    ownership interest was a new cause of action, rather than a claim for
    alternative relief or a different legal conclusion drawn from the same set of
    facts. He submits that the claim to a 33% ownership interest is a legal
    conclusion which flows from the respondents failure to satisfy the applicable
    release escrow conditions. He argues that the Statement of Claim clearly pled
    that the escrow release conditions (payment of the back wages and amounts owed
    on the promissory note) had not been satisfied.

[19]

Similarly,
    the appellant argues that the motion judge erred in requiring the alternative
    pleading of a 33% ownership interest to be grounded in the purported oral
    agreement, rather than in the broader factual matrix, in order to be a
    non-statute-barred amendment. Further, an amendment allowed by the motion judge
     namely, permitting the appellant to seek the return of his shares in escrow
    is inconsistent with his order denying leave to assert a claim to a 33%
    ownership interest.

[20]

Second,
    the appellant argues that the motion judge erred in attributing to the
    appellant an admission that the applicable limitation periods had expired, such
    that the amendment would only be permissible if it was a claim for alternative
    relief based on an existing cause of action. The appellant argues that the applicable
    limitation period did not begin to run until October 2017, when the appellants
    request that his shares be released from escrow was refused.

[21]

Third,
    the appellant asserts that the respondents would not suffer any presumed or
    actual non-compensable prejudice  apart from the alleged expiry of a
    limitation period  as a consequence of the amendment. As a result, the amendment
    must be allowed pursuant to r. 26.01 of the
Rules
.

[22]

In
    response, the respondents argue that to allow the appellant leave to plead the
    alternative claim to a 33% ownership interest would fundamentally change the
    nature of the litigation, some 22 years after the relevant events in question.
    They argue, in substance, that the underlying claim to a 33% ownership interest
    and request for the return of the appellants shares currently held in escrow
    is incurably time-barred. In this vein, they argue that the appellant
    discovered his claim for breach of the 1996 SPA, 1996 Escrow Agreement and 1997
    SPA when the corporation defaulted on payment in 1997. Thus, any claim in
    relation to the breach of those agreements is statute-barred by the expiration
    of the six-year limitation period provided by s. 45(1)(g) of the
Limitations
    Act,
R.S.O. 1990, c. L. 15 or alternatively by the transitional provisions
    under the
Limitations Act, 2002,
S.O. 2002, c. 24, Sched. B.

[23]

The
    respondents also argue that there has been extraordinary delay in seeking the
    amendments, such that a presumption of non-compensable prejudice arises. They
    point to the some 22 years that have elapsed since default in payment under the
    1996 SPA, 1996 Escrow Agreement and 1997 SPA as evincing extraordinary delay.
    In any event, the respondents argue that they will suffer actual
    non-compensable prejudice as a consequence of the amendments because, among
    other things, they made a unilateral payment to the appellant on the promissory
    note in 2016 and because a material witness has died.

Analysis

(1)

The test to be applied

[24]

I
    begin with the text of r. 26.01 of the
Rules
. It provides:

On motion at any stage
    of an action the court
shall
grant leave to amend a pleading on such
    terms as are just,
unless
prejudice would result that could not be
    compensated for by costs or an adjournment. [Emphasis added.]

[25]

The
    rule is framed in mandatory terms: the court must allow the amendment, unless
    the responding party would suffer non-compensable prejudice, the proposed
    pleading is scandalous, frivolous or vexatious, or the proposed pleading fails
    to disclose a reasonable cause of action:
158844 Ontario Ltd v. State Farm
    Fire and Casualty Co.
, 2017 ONCA 42, 135 O.R. (3d) 681, at para. 25;
Iroquois
    Falls Power Corp. v. Jacobs Canada Inc
., 2009 ONCA 517, 264 O.A.C. 220, at
    paras. 15-16.

[26]

The
    expiry of a limitation period is one form of non-compensable prejudice. A party
    cannot circumvent the operation of a limitation period by amending their
    pleadings to add additional claims after the expiry of the relevant limitation
    period:
Frohlick v. Pinkerton Canada Ltd
, 2008 ONCA 3, 88 O.R. (3d)
    401, at para. 24;
1100997 Ontario Ltd. v. North Elgin Centre Inc.
, 2016 ONCA 848, 409 D.L.R. (4th) 382,
at
    paras. 21-23;
United Food and Commercial Workers Canada, Local 175 Region 6
    v. Quality Meat Packers Holdings Limited,
2018 ONCA 671,
    at paras. 64;
Davis v. East Side Marios Barrie
, 2018 ONCA 410, at paras. 31-32
. In this regard, the
    addition of
new
statute-barred claims by way of
    an amendment is conceptually no different than issuing a new and separate Statement
    of Claim that advances a statute-barred claim (emphasis added)
:
Quality Meat Packers,
at para.
    64; citing
Frohlick
, at para. 24.

[27]

An
    amendment will be statute-barred if it seeks to assert a new cause of action
    after the expiry of the applicable limitation period:
North Elgin
, at
    paras. 19-23, 33;
Quality Meat Packers
, at para. 65. In this regard, the
    case law discloses a factually oriented approach to the concept of a cause
    of action  namely, a factual situation the existence of which entitles one
    person to obtain from the court a remedy against another person:
North
    Elgin
, at para. 19;
Quality Meat Packers
, at para. 65.

[28]

An
    amendment does not assert a new cause of action  and therefore is not impermissibly
    statute-barred  if the original pleading  contains all the facts necessary
    to support the amendments  [such that] the amendments simply claim additional
    forms of relief, or clarify the relief sought, based on the same facts as
    originally pleaded:
Dee Ferraro,
at paras. 4, 13-14;
North Elgin
    Centre Inc
., at paras. 20-21;
East Side Marios Barrie
, at paras.
    31-32;
Quality Meat Packers
, at para. 65. Put somewhat differently, an
    amendment will be refused when it seeks to advance, after the expiry of a
    limitation period, a "fundamentally different claim" based on facts
    not originally pleaded:
North Elgin
, at para. 23.

[29]

The
    relevant principle is summarized in Paul M. Perell & John W. Morden,
The
    Law of Civil Procedure in Ontario
, 3rd ed. (Toronto: LexisNexis, 2017), at
    p. 186:

A new cause of action is not
    asserted if the amendment pleads an alternative claim for relief out of the
    same facts previously pleaded and no new facts are relied upon, or amount
    simply to different legal conclusions drawn from the same set of facts, or
    simply provide particulars of an allegation already pled or additional facts
    upon [which] the original right of action is based.
[2]

[30]

In
    the course of this exercise, it is important to bear in mind the general
    principle that, on this type of pleadings motion, it is necessary to read the
    original Statement of Claim generously and with some allowance for drafting
    deficiencies:
Farmers Oil and Gas Inc. v. Ontario (Ministry of Natural
    Resources)
, 2016 ONSC 6359, 134 O.R. (3d) 390 (Div. Ct.), at para. 23.

[31]

Finally,
    the court may refuse an amendment where it would cause non-compensable
    prejudice. The prejudice must flow from the amendment and not some other source:
Iroquois Falls,
at para. 20. At some point the delay in seeking an
    amendment will be so lengthy, and the justification so inadequate, that
    prejudice to the responding party is presumed. In this event, the onus to rebut
    the presumed prejudice lies with the moving party:
State Farm
, at para.
    25.

[32]

Alternatively,
    the responding party may resist the amendment by proving actual prejudice
    i.e. by leading evidence that the responding party has lost an opportunity in
    the litigation that cannot be compensated by an adjournment or an award of costs
    as a consequence of the amendment. It is incumbent on the responding party to
    provide specific details of the alleged prejudice:
State Farm
, at
    para. 25.

[33]

Irrespective
    of the form of prejudice alleged, there must be a causal connection between the
    non-compensable prejudice and the amendment. The prejudice must flow from the
    amendment and not from some other source:
State Farm
, at para. 25.

[34]

Bearing
    in mind these principles, the framework to determine the issues raised by this
    appeal is as follows:

·

Are the proposed amendments to assert a claim to a 33% ownership
    interest the assertion of a new cause of action? If the proposed amendments are
    the assertion of a new cause of action, are the amendments statute-barred?

·

Irrespective of the above, is this a case where non-compensable
    prejudice will arise as a consequence of the amendments?

(2)

The proposed amendments do not assert a new cause of action

[35]

The
    first issue is whether the proposed amendments to assert an alternative claim
    to a 33% ownership interest is the assertion of a new cause of action and statute-barred
    by the expiration of a limitation period. In my view, the proposed amendments
    do not assert a new cause of action.

[36]

With
    respect, the motion judge erred in principle in his approach to the motion for
    leave to amend under r. 26.01 of the
Rules
. In suggesting that the
    1996 SPA, 1996 Escrow Agreement and 1997 SPA were pled solely as background
    to the 50% ownership interest claim, the motion judge failed to appreciate that
    the appellant had explicitly asserted claims for breach of contract and breach
    of trust in relation to the those agreements. Reading the appellants Statement
    of Claim generously, the proposed amendments do not amount to the assertion of
    a new cause of action; rather, the alternative claim to a 33% ownership
    interest is an alternative claim for relief, or an alternative legal
    conclusion, flowing from the material facts as original pled.

[37]

I
    turn now to the content of the appellants Statement of Claim and the material
    facts pled therein. Reading the Statement of Claim generously and as a whole,
    the essential factual matrix giving rise to the appellants action is his
    decision to sell his shares in 1996, the respondents failure to pay him for
    his shares, and the oral agreements allegedly made between the parties,
    including the oral agreement that he would become a 50% shareholder. As pled,
    these issues are all interwoven.

[38]

While
    the allegation that the appellant is a 50% shareholder of the corporation has,
    for obvious reasons, been the predominant focus of the litigation to date, it
    is not the exclusive claim set out in the original Statement of Claim. The
    appellant has also expressly pled claims for breach of contract relating to the
    1996 SPA, the 1996 Escrow Agreement and 1997 SPA,
in addition
to the
    purported breach of the oral agreement. Thus, the various written agreements
    referred to in the Statement of Claim not only provide the necessary material
    facts and background relating to the alleged breach of the oral agreement, but
    also the material facts necessary to ground a claim for breach of the written
    agreements themselves.

[39]

In
    this vein, the appellants original Statement of Claim expressly pleads and
    relies on the 1996 SPA and 1996 Escrow Agreement, and sets out the material
    terms in respect of both agreements (see Statement of Claim, at paras. 9-11).
    The Statement of Claim similarly expressly pleads and relies on the terms of
    the 1997 SPA, under which Mr. Beausoleil is said to have assumed the rights and
    obligations relating to the 1996 SPA and 1996 Escrow Agreement (see Statement
    of Claim, at paras. 15-16).

[40]

The
    appellant then expressly pleads that the respondents have breached their
    obligations under the 1996 SPA, 1996 Escrow Agreement, 1997 SPA, and oral
    agreement, in that, among other things:

·

The respondents failed, neglected and/or refused to pay the back
    wages (Statement of Claim, at para. 29(b));

·

The respondents have failed, neglected and/or refused to pay back
    the promissory note (Statement of Claim, at para. 29(c));

·

The respondents have sold, assigned, hypothecated, alienated,
    released from escrow or dealt with the Klassen Escrow Shares (i.e. the
    appellants 100 shares) in a manner contrary to the 1996 Escrow Agreement (Statement
    of Claim, at para. 29(d));

·

The respondents have failed, neglected and/or refused to pay the
    appellant for the Klassen Escrow Shares when it was due and payable, or at
    all (Statement of Claim, at para. 29(g));

·

The respondents have failed, neglected and/or refused to make
    good faith efforts to satisfy their obligations under the 1996 SPA, 1996 Escrow
    Agreement, 1997 SPA and/or the alleged oral agreement (Statement of Claim, at
    para. 29(j)); and

·

In the alternative, the appellant pleads that the foregoing
    breaches amounted to the frustration of the 1996 SPA, 1996 Escrow Agreement,
    1997 SPA or alleged oral agreement (Statement of Claim, at para. 30).

[41]

The
    appellant further pleads that the respondents are liable for breach of trust
    because the respondents appropriated or converted all or part of the Klassen
    Escrow Shares to their own use or to a use inconsistent with the 1996 Escrow
    Agreement and 1997 SPA: Statement of Claim, at para. 31.

[42]

The
    claim for relief in the original Statement of Claim expressly requests damages
    in respect of the non-payment of the promissory note and back wages, as well as
    $2 million in general damages for breach of contract and/or breach of trust.
    This relief can only be claimed in respect of the alleged breaches of the 1996
    SPA, 1996 Escrow Agreement and 1997 SPA.

[43]

In
    light of these material facts expressly set out in the Statement of Claim, the
    appellants requested amendments do not assert a new cause of action, but
    rather request alternative relief flowing from the respondents alleged breach
    of the 1996 SPA, 1996 Escrow Agreement and 1997 SPA. In the appellants
    original Statement of Claim, he expressly alleges that the respondents breached
    their contractual obligations by failing to satisfy the escrow release
    conditions  i.e. by paying the back wages and amounts owing under the
    promissory note  and sought damages in that regard. The proposed amendments do
    not seek to introduce
any
new material facts.
    Rather, the amendments seek to introduce, wherever a pleading of a 50%
    ownership interest is particularized, language to the effect of or in the
    alternative a 33% ownership interest. In effect, the appellant seeks the
    return of his shares held in escrow and a declaration that he remains a 33%
    shareholder as a consequence of the respondents breach of the 1996 SPA, 1996
    Escrow Agreement and 1997 SPA, rather than an award of damages. This is a
    quintessential example of a request for additional forms of relief, or [a
    clarification of] the relief sought, based on the same facts as originally
    pleaded:
Dee Ferraro,
at para. 4.

[44]

I
    also agree with the appellants submission that it is inconsistent for the
    motion judge to have granted leave to allow the appellant to plead an
    entitlement to the return of the shares in escrow, while denying the amendment
    to plead that he remains a 33% shareholder. These pleadings are fundamentally
    interrelated.

[45]

During
    oral argument on the appeal, counsel for the respondent forcefully argued that
    the underlying claim to the return of the shares in escrow or claim to a 33%
    ownership interest, however framed, is incurably time-barred. In this vein, the
    respondents argue that the failure to make payment on the promissory note and
    back wages in 1997 triggered the start of the applicable limitation period,
    such that any claim for breach of the 1996 SPA, 1996 Escrow Agreement and 1997
    SPA, and corresponding request for the return of the shares, is now
    statute-barred.

[46]

Whatever
    the merits of the respondents limitations arguments, it is only necessary to
    determine whether a limitation period has expired in respect of the proposed
    amendments
if
the amendments assert a new cause of
    action. I have concluded that the proposed amendments do not do so. For this
    reason, it is unnecessary to address the parties various limitation arguments arising
    from the original pleadings at this stage. It is clear that whether any or all
    of the appellants claims are time-barred will be a central issue at the
    eventual trial of this matter.

(3)

The amendments would not cause prejudice to the respondents

[47]

The
    next issue is whether the appellants delay in seeking the amendment raises a
    presumption of non-compensable prejudice or whether the respondents have
    demonstrated actual, non-compensable prejudice. For the reasons that follow, I
    conclude that the delay in seeking leave to amend, in these circumstances, does
    not raise a presumption of prejudice and that the respondents have not
    established they would otherwise suffer actual, non-compensable prejudice as a
    result of the amendments.

(4)

Presumed prejudice

[48]

The
    respondents argue that the appellants delay in seeking the amendment raises a
    presumption of non-compensable prejudice. They focus on the fact that 22 years
    have elapsed between the events giving rise to the 33% ownership claim and the
    appellant seeking leave to amend his Statement of Claim.

[49]

I
    disagree. The focus is properly on the period of delay between commencing the
    proceedings and seeking leave to amend,
not
the
    period between the underlying events in question and seeking leave to amend:
State
    Farm
, at para. 44. Here, the delay of approximately 2 years and 7 months
    between commencing the action (April 2015) and formally seeking leave to amend was
    short. Moreover, the appellant moved fairly promptly to amend his Statement of
    Claim following the summary judgment motion, when the respondents counsel
    object to the appellants position that the 33% ownership claim was
    sufficiently pled in the original Statement of Claim.

[50]

Most
    significantly, as discussed earlier in these reasons, the amendment claims
    alternative relief based on the same material facts as were originally pleaded.
    It is integrally related to the existing claim. These circumstances cannot give
    rise to any presumed prejudice.

(5)

Actual Prejudice

[51]

The
    respondents also argue that they will suffer actual, non-compensable prejudice
    as a consequence of the amendments. They point to four sources of actual
    prejudice:

·

In January 2016, the corporation made what was described by the
    respondents as a unilateral payment of approximately $46,000 on the
    promissory note. The payment was also stated to be without prejudice to the
    appellants other claims, and the respondents defence of those other claims.
    The respondents argue that if the amendments are allowed, the appellant may
    take the position that this payment is an acknowledgment and has restarted the
    limitation period to reclaim his escrowed shares. A material witness  Robert
    Detzler  has passed away. Mr. Detzler was briefly employed by the corporation.
    He was also involved in some negotiations over the course 1997-1998, along with
    Mr. Beausoleil and the appellant, with a view to combining the corporation with
    another meat supplier. The appellant argues that Mr. Detzler is a witness to
    anything that the appellant said about his ownership interest in the
    corporation during the period of 1997-1998. Mr. Detzler was examined by both
    parties in May 2017 before the summary judgment motion.

·

Relevant evidence from the corporations business records and
    corporate files have been lost, as the corporations practice is only to retain
    records for seven years.

·

The respondents have already examined the appellant for discovery
    and, as a consequence, did not have the opportunity to examine the appellant on
    the alternative claim to a 33% ownership interest.

[52]

I
    do not agree that the respondents have established that the amendments will
    cause them actual, non-compensable prejudice.

[53]

First,
    the payment on the promissory note in January 2016 was tendered on an
    unconditional basis and without prejudice to the appellants other claims. On
    the strength of that payment, the respondents were able to obtain summary
    judgment on the appellants claim for payment on the promissory note. The
    respondents made a strategic choice to make a payment on the promissory note,
    and cannot now point to that payment as establishing actual prejudice.

[54]

Second,
    I do not agree that allowing the amendments will cause the respondents to
    suffer prejudice as a consequence of Mr. Detzlers death. Mr. Detzler was not a
    party to the 1996 SPA, 1996 Escrow Agreement or 1997 SPA, nor privy to the
    negotiations leading up to the execution of those agreements. It is upon these
    agreements that the appellants alternative claim to a 33% ownership interest
    is premised. While the respondents argue that Mr. Detzler might be able to give
    evidence about anything the appellant said regarding his ownership interest in
    the corporation during 1997-1998, presumably this would have been fully
    canvassed when the parties examined Mr. Detzler prior to respondents summary
    judgment motion because the appellants ownership in the corporation was
    squarely in issue at that time.

[55]

Third,
    the alleged prejudice resulting from the destruction or loss of the business
    records does not arise as a consequence of the amendments. The evidence is that
    certain corporate records were destroyed by the corporations solicitor in the
    ordinary course prior to the commencement of the action in 2015. Mr. Beausoleil
    similarly deposes that he suspended his practice of destroying business records
    after 7 years when the action was commenced. The respondents do not suggest
    that any further records have been lost or destroyed since the action was
    commenced. Thus, the alleged prejudice does not flow from the amendments; it
    flows from the historic nature of the allegations as originally particularized
    in the Statement of Claim.

[56]

Fourth,
    any prejudice resulting from the fact that the appellant has already been
    examined for discovery can be cured by allowing for additional examinations.

[57]

As
    a result, I conclude that the respondents have not discharged their onus of
    proving actual, non-compensable prejudice.

Disposition

[58]

For
    the forgoing reasons, the appeal is allowed. The appellant is granted leave to
    amend his Statement of Claim in accordance with the draft amended Statement of
    Claim filed on the motion below. The appellant is entitled to his costs of the
    appeal in the agreed upon amount of $10,000, inclusive of HST and
    disbursements, and the costs of the motion below in the agreed upon amount of
    $6,000, inclusive of HST and disbursements.

[59]

In
    these circumstances, the respondents shall be entitled to deliver an amended statement
    of defence to address the amendments made by the appellant. The parties shall
    be entitled to conduct further examinations for discovery on matters arising
    out of the amendments. The costs of any such further examinations shall be
    determined by the ultimate trier, in the ordinary course.

Released: May 17, 2019

MLB

A. Harvison Young J.A.

I agree K. van Rensburg J.A.

I agree M.L. Benotto J.A.

[1]
In January 2016, the corporation made what was described by the respondents as
    a unilateral payment of approximately $46,000 on the promissory note. The
    payment was also stated to be without prejudice to the appellants other
    claims, and the respondents defence of those other claims.

[2]
This statement of the law has been adopted by this court
in
East
    Side Marios
, at para. 32, and in
North Elgin
, at para. 20.


COURT OF APPEAL FOR ONTARIO

CITATION: Kormos v. Fast, 2019 ONCA 430

DATE: 20190523

DOCKET: C66117

Sharpe, Pepall and Roberts JJ.A.

BETWEEN

Jonathan Kormos and
    Elizabeth Kormos

Applicants
(Appellants)

and

Jonathan Crawford Fast and Katherine Anne
    Fast

Respondents
(Respondents)

James P.E. Hardy, for the appellants

Kenneth Page, for the respondents

Heard: May 17, 2019

Appeal from the order of Justice P. Cavanagh of the
    Superior Court of Justice, dated October 11, 2018, with reasons reported at
    2018 ONSC 6044.

REASONS FOR DECISION

[1]

The appellants appeal from the dismissal of their application under s.
    181(1) of the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3 (
BIA
),
    to annul the bankruptcy of the respondent, Katherine Anne Fast.

[2]

The appellants and the respondents are neighbours.  On November 2, 2016,
    the appellants obtained a Small Claims Court judgment against the respondents, in
    the amount of $25,565.64, for water damage to their property.

[3]

On April 25, 2017, Mrs. Fast made a voluntary assignment into bankruptcy,
    fifteen days after the appellants attempted to enforce their judgment by
    serving on her a notice of examination.  In her Statement of Affairs filed, she
    disclosed assets having a value of $722,461, including her RRSPs of $83,461 and
    real property that she estimated at $630,000. Her liabilities were listed as
    $653,313.19, including two mortgages in the total amount of $606,866.85, and
    the debt owed to the appellants.

[4]

The appellants brought an application to annul Mrs. Fasts assignment
    into bankruptcy, arguing that she was not an insolvent person and that her
    assignment was an abuse of process.

[5]

Unbeknownst to the appellants, on August 24, 2016, the respondent,
    Jonathan Crawford Fast, had filed a consumer proposal.  In their application,
    the appellants
also sought to annul Mr. Fasts consumer
    proposal.  They do not appeal from the dismissal of that part of the
    application judges order.

[6]

The application judge accepted the appellants opinion of value of the
    respondents jointly held property and found that its market value at the date
    of Mrs. Fasts bankruptcy was between $1,300,000 and $1,400,000, and not
    $630,000 as she alleged in her Statement of Affairs.  He also accepted that the
    mortgages appeared to be in good standing and that the mortgage debt had been
    reduced over time.  An apparent mortgage debt of $900,000 in 2012 was now
    stated to be $476,565.  Nevertheless, the application judge was not satisfied
    that the appellants had discharged their onus of showing that Mrs. Fast was not
    an insolvent person on the date of her bankruptcy.

[7]

The application judges decision turned on his acceptance that according
    to Mrs. Fasts Monthly Income and Expense Statement, monthly expenses of $4,910
    exceeded monthly income of $2,900 by $2,010.  As a result, the application
    judge concluded that the appellants had not shown that Mrs. Fast was able to
    meet Mrs. Fasts obligations generally as they became due or that she had not
    ceased paying her current obligations in the ordinary course of business as
    they generally became due.  He also rejected that her bankruptcy was an abuse
    of process.  He dismissed the application.

[8]

The appellants submit that the application judge erred by failing to
    find that Mrs. Fast was not an insolvent person or that her bankruptcy application
    was an abuse of process, and he thus legitimized an unjustified asset
    management strategy.

[9]

We agree that the application judge erred in failing to find that Mrs.
    Fast was not an insolvent person.  It is therefore unnecessary for us to
    determine whether her bankruptcy was an abuse of process.

[10]

At
    the date of her bankruptcy, Mrs. Fast was not an insolvent person as that
    term is defined under s. 2 of the
BIA
.  Her assets greatly exceeded and
    were available to satisfy all her liabilities.  Other than the unexplained
    monthly deficit, there was no evidence that she could not meet or had ceased
    paying her obligations as they generally came due.  Rather, the unchallenged
    evidence was that she could.  The only evidence of any obligation she had not
    paid was the debt owed to the appellants.

[11]

Under
    s. 181(1) of the
BIA
, a court may annul a bankruptcy order if it is of
    the opinion that it ought not to have been made.  The circumstances under which
    the courts jurisdiction pursuant to s. 181(1) of the
BIA
should be exercised
    were addressed in
Re Wale

(1996), 45 C.B.R. (3d) 15, at para.
    17:

An annulment will be granted only where it is shown either the
    debtor was not an insolvent person when he made the assignment or where it is
    shown that the debtor abused the process of the court or committed a fraud on
    his creditors.

[12]

Section
    2 of the
BIA
defines an insolvent person as follows:

Insolvent person means a person who is not bankrupt and who
    resides, carries on business or has property in Canada, whose liabilities to creditors
    provable as claims under this Act amount to one thousand dollars, and

(a) who is for any reason unable to meet his obligations as
    they generally become due,

(b) who has ceased paying his current obligations in the
    ordinary course of business as they generally become due, or

(c) the aggregate of whose property is not, at a fair valuation,
    sufficient, or, if disposed of at a fairly conducted sale under legal process,
    would not be sufficient to enable payment of all his obligations, due and
    accruing due.

[13]

Mrs.
    Fast clearly did not meet any criteria of the definition of insolvent person.
    Bankruptcy is reserved for clear cut situations where the liabilities on which
    the petition is founded and the act of bankruptcy are clearly established by
    sound and convincing evidence:
Sangha v. Crowe MacKay & Company Ltd
.
,
    2016 BCSC 260 (CanLII), at para. 20, citing Houlden & Morawetz,
Bankruptcy
    & Insolvency Law of Canada
, 3d ed. Looseleaf (Toronto: Carswell 2002),
    at p. 2-93.  That is not the case here.

[14]

The
    application judge erred by failing to consider Mrs. Fasts ability to meet her
    obligations, in the light of her access to substantial assets, with a view to
    determining whether she was unable or merely unwilling to satisfy her
    outstanding obligations.

[15]

At
    the date of her bankruptcy, the total value of Mrs. Fasts assets in excess of
    her liabilities, including her share in the appraised value of the property,
    was $417,581.24.  The only evidence of any default is the debt that Mrs. Fast owes
    to the appellants in the amount of $25,565.64 plus interest.  As the
    application judge noted, it is likely that Mrs. Fast was prompted to take this
    action by the steps that were taken on behalf of the [appellants] to enforce
    their judgment.  The fact that she reduced her mortgages and the absence of
    any mortgage default belie any claim that she cannot meet her expenses as they
    come due or has ceased to pay her current obligations.  That Mrs. Fast may have
    elected to structure her affairs to run a monthly deficit of $2,010 in order to
    build up her equity in the property, or for any other purpose, does not mean
    she is insolvent when she has available significant assets to satisfy this
    deficit and the debt to the appellants.  As this court concluded in
Thorne
    Riddell v.

Fleishman
, 1983 CarswellOnt 201, 47 C.B.R.
    (N.S.) 233, at para. 22, if, as here, a person has ample funds to meet
    obligations and chooses not to do so, that person is not insolvent.

[16]

For
    these reasons, we are satisfied that the appellants have met their onus of demonstrating
    that Mrs. Fast was not an insolvent person as at the date of her bankruptcy.
    Accordingly, we allow the appeal and order the annulment of Mrs. Fasts
    bankruptcy.

[17]

The
    appellants are entitled to their partial indemnity costs of the appeal in the amount
    of $2,000, inclusive of disbursements and applicable taxes.

Robert J. Sharpe J.A.

S.E. Pepall J.A.

L.B. Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Krawczynski v. Ralph Culp and Associates Inc., 2019
    ONCA 399

DATE: 20190514

DOCKET: M50180 & M50387

Benotto J.A. (In Chambers)

In the
    Matter of the Bankruptcy of Mark Jack Krawczynski,
of the City of Hamilton, in the Province of Ontario

BETWEEN

Mark Jack
    Krawczynski

Moving Party (Applicant)

and

Ralph
    Culp and Associates Inc.

Responding Party (Respondent)

R. Klotz, for the applicant Mark Jack Krawczynski

A. Fogul, for the respondent Ralph Culp and Associates
    Inc., trustee of the estate of Mark Jack Krawczynski

Heard: May 6, 2019

REASONS
    FOR DECISION

[1]

The applicant moves for an order extending the time to perfect his
    motion seeking leave to appeal the dismissal of an order for security for
    costs.

Background

(1)

Facts

[2]

The applicant filed an assignment for the general benefit of his
    creditors in November 2009. At the date of his bankruptcy, he was the owner of
    real property at 54 Oakland Drive, Hamilton. The property vested in the respondent
    Trustee pursuant to ss. 67(1)(c) and 71 of the
Bankruptcy and
    Insolvency Act,
R.S.C. 1985, c. B-3 (
BIA
)
. At the time the property was listed
    as fully encumbered. It has since gone up in value.

[3]

The Trustee was discharged on April 17, 2016. Following the discharge,
    this court released its decision in
Lepage (Re),
2016 ONCA 403, 36
    C.B.R. (6th) 207. That decision dealt with the increase in equity of property as
    an after-acquired asset that could be realized for the benefit of creditors.
    Consequently, the Trustee sought re-appointment and possession of the property
    so that he could proceed to realize on the current equity of the property for
    the benefit of creditors. There are no funds in the estate.

(2)

Motion for security for costs

[4]

The applicant moved for security for costs against the Trustee. He argued
    that the Trustee is akin to a plaintiff in a civil suit and, as a nominal
    plaintiff or applicant, there is good reason to believe that the Trustee has
    insufficient assets in Ontario to pay the costs of the defendant or respondent
    in accordance with r. 56.01(d) of the
Rules of Civil Procedure,
R.R.O.
    1990, Reg. 194.

[5]

The motion was heard by Chiappetta J. who concluded that r. 56.01(d) did
    not apply for two reasons. First, the Trustee is not a nominal plaintiff or a
    corporation acting in a personal capacity. Rather, the Trustee is seeking
    recovery of the appreciation of an asset for the benefit of others. Second, in
    any event, the justice of the case does not warrant the order.

[6]

Chiappetta J. concluded:

In my view, a full hearing on the
    merits including an assessment of the conduct [of the Trustee] with a full
    evidentiary record, in the context of the
Re Lepage
case, is required
    to determine if the Trustee shall be personally liable for any costs awarded
    that are not covered by the estate. This assessment is more appropriately
    conducted at the conclusion of the hearingTo [conduct it] effectively by this
    motion would not be just.

(3)

The appeal and request for extension

[7]

The order of Chiappetta J. dismissing the motion for security for costs was
    dated January 15, 2019. After counsel for the applicant indicated that he had
    received instructions to seek leave to appeal the order, the Trustee consented
    to an extension of time for the applicant to file his Notice of Motion for
    Leave to Appeal. The Notice of Motion was eventually filed on February 8, 2019.
    Pursuant to r. 61.03.1(6), the applicant was required to perfect his motion for
    leave to appeal by serving and filing his motion record and factum by March 10,
    2019. He did not meet this deadline.

[8]

On April 16, 2019, the Registrar of the Court of Appeal for Ontario
    issued a Notice of Intention to Dismiss for Delay. This Notice indicated that
    if the applicant did not perfect his motion for leave to appeal by April 26,
    2019, it would be dismissed. The applicant again failed to perfect by this deadline.
    Instead, on April 26, 2019, the applicant filed a motion for an extension of time
    to perfect his motion for leave to appeal. In support of this motion for an
    extension of time, the applicant filed an affidavit of a law clerk explaining
    the delay as follows:

·

The applicant had difficulty funding the matter;

·

The law clerk was ill on April 25;

·

The feeder mechanism on the office copier was malfunctioning;

·

Additional research on the law is required and research that has
    already been done has gone missing.

Discussion

(1)

Test on a motion for an extension of time

[9]

Pursuant to r. 3.02(1), this court may extend any time limit prescribed
    by the
Rules of Civil Procedure
on such terms as are just. In
Issai
    v. Rosenzweig
, 2011 ONCA 112, 277 O.A.C. 391, at para. 4, Weiler J.A. identified
    the following five factors as relevant in determining whether to grant an
    extension of time to perfect an appeal:

(1) whether the appellant formed an intention to appeal within
    the relevant period;

(2) the length of the delay and explanation for the delay;

(3) any prejudice to the respondent;

(4) the merits of the appeal; and

(5) whether the justice of the case requires it.

[10]

A
    motion to extend the time for leave to appeal in the bankruptcy context was
    discussed by Strathy J.A (as he then was) in
Ontario
    Wealth Management Corporation v. Sica Masonry and General Contracting Ltd
.,
    2014 ONCA 500, 17 C.B.R. (6th) 91, at paras. 2 and 26:

Rule 31(1) of the
Bankruptcy
    and Insolvency General Rules
, C.R.C., c. 368, provides that a notice of
    appeal must be filed within ten days after the day of the order appealed from
    or within such further time as a judge of this court stipulates.

[]

The overarching principle is
    whether the justice of the case requires that an extension be granted. The
    relevant factors may include:

(a) whether the applicant had a
    bona fide intention to appeal before the expiration of the appeal period;

(b) the length of and explanation
    for the delay in filing;

(c) any prejudice to the responding
    parties caused by the delay; and

(d) the merits of the proposed
    appeal.

See
Howard v. Martin
,
    2014 ONCA 309 (CanLII);
Enbridge Gas Distribution Inc. v. Froese
, 2013
    ONCA 131 (CanLII), 114 O.R. (3d) 636. See also
Braich (Re)
, 2007 BCCA
    641 (CanLII).

[11]

This
    approach was adopted by this court in
National Telecommunications Inc
.
v. Stalt Telcom Consulting Inc.
(2018), 64 C.B.R. (6th) 169. At para.
    17 Simmons J. A. stated:

the overriding consideration is
    whether the justice of the case requires an extension and that the enumerated
    factors are both non-exclusive and may vary in importance depending on the
    circumstances.

(2)

Application of the test

Intention to appeal and explanation for the delay

[12]

Since
    this is a motion for an extension of time to perfect a motion for leave to
    appeal, instead of asking whether the appellant formed an intention to appeal,
    I would ask whether the applicant maintained an intention to seek leave to appeal
    within the relevant period. I must also consider whether the applicant has
    provided a reasonable excuse for the delay in perfecting the appeal.

[13]

In
    my view, it is not clear that the applicant maintained an intention to seek
    leave to appeal within the relevant period. The delay from March 10 (when the
    motion for leave was due to be perfected) to April 25 (when the law clerk fell
    ill) is unexplained. In addition, it appears that the applicant took no steps
    to perfect the appeal until the Registrar issued the Notice of Intention to
    Dismiss for Delay on April 16, 2019.

Prejudice to the respondent

[14]

The
    results of the motion for security for costs have no bearing on the merits of
    the Trustees application, and only add costs to the estate which will be borne
    by the creditors. I find there is prejudice to the respondent if the extension
    of time is granted.

Merits of the motion for leave to appeal

[15]

The
    applicant submits that this is not the time to consider the merits and, to the
    extent to which the merits of the leave motion are considered, a flexible approach
    has been adopted by this court and should be followed.

[16]

Indeed,
    there have been two approaches to the test for leave to appeal under s. 193(e)
    of the
BIA
. Both were discussed in
Business Development Bank of
    Canada v. Pine Tree Resorts Inc.
,

2013 ONCA 282, 115 O.R. (3d)
    617, by Blair J.A. In one, the
Power Consolidated
[1]

test, the court considers whether:

1.

the issue is of significance to the practice as a whole;

2.

it is of significance to the action itself;

3.

the appeal prima facie meritorious; and

4.

the appeal unduly hinder the progress of the action?

[17]

A
    second formulation was adopted by this court in
R.J. Nicol
[2]

which seeks to determine whether the decision from which leave to appeal
    is sought:

1.

Appears to be contrary to law;

2.

Amounts to an abuse of judicial power; or

3.

Involves an obvious error, causing prejudice for which there is no
    remedy.

[18]

Blair
    J.A. resolves the two approaches at para. 29 and states that:

The court will look to whether the proposed appeal,

a) raises an issue that is of
    general importance to the practice in bankruptcy/insolvency matters or to the
    administration of justice as a whole, and is one that this Court should
    therefore consider and address;

b) is
prima facie
meritorious,
    and

c) would unduly hinder the
    progress of the bankruptcy/insolvency proceedings.

[19]

The
    applicant submits that he has met this test.

[20]

I
    disagree.

[21]

The
    issue of whether an order for security for costs should have been granted in
    this case is not of general importance to the practice of bankruptcy law. It
    involves a discretionary interlocutory order which does not prejudice the
    applicant whose claim for costs is preserved. The proposed motion for leave to
    appeal would also divert the proceedings away from the real issue  the
    re-appointment of the Trustee  and thus unduly hinder their progress.

[22]

Finally, there is no
prima facie
merit to the appeal. The decision
    of Chiappetta J. was discretionary in nature and thus entitled to deference on
    appeal. In oral submissions, the applicant argued that the decision is clearly
    wrong because Chiappetta J. considered only r. 56.01, and not the
BIA
.
    I reject this submission. The
BIA
does not outline a specific
    procedure to apply on motions for security for costs in bankruptcy proceedings.
    However, s. 3 of the
Bankruptcy and Insolvency General Rules,
C.R.C.,
    c. 368 states that [i]n cases not provided for in the [
BIA
] or these
    Rules, the courts shall apply, within their respective jurisdictions, their
    ordinary procedure to the extent that that procedure is not inconsistent with
    the [
BIA
] or these Rules. Chiappetta J.s reliance on r. 56.01 of the
Rules of Civil Procedure
was therefore entirely appropriate. I note
    that the same conclusion was reached by Monnin J.A. of the Court of Appeal for
    Manitoba in
Moss (Re)
, 2005 MBCA 59, 15 C.B.R. (5th) 123, at para. 12.

The
    justice of the case

[23]

In
    light of the above, I conclude that the justice of the case does not require
    granting the applicant an extension of time to perfect his motion for leave to
    appeal.

Conclusion

[24]

The
    motion for an extension of time is dismissed.

M.L. Benotto J.A.

[1]

Power Consolidated (China) Pulp Inc. v. British Columbia Resources
    Investment Corp
. (1988), 19 C.P.C. (3d) 210.

[2]

R.J. Nicol Construction Ltd. (Trustee of) v. Nicol
(1995), 77 O.A.C. 395 (C.A.).


COURT OF APPEAL FOR ONTARIO

CITATION: Lehmann v. Lehmann, 2019 ONCA 357

DATE: 20190501

DOCKET: C65703

Doherty, Rouleau and Brown JJ.A.

BETWEEN

Anna Lehmann

Applicant (Appellant)

and

The Estate of William Lehmann

Respondent (Respondent in Appeal)

Ken H. Nathens, for the appellant

Michael van Bodegom and Daniel Veinot, for the
    respondent

Heard and released orally: April 29, 2019

On appeal from the judgment of Justice Taylor of the Superior
    Court of Justice, dated June 28, 2018.

REASONS FOR DECISION

[1]

The appellant argues that under the terms of the marriage contract, the
    waiver of support clause was contingent upon the matrimonial home being held in
    joint tenancy. She argues that when the matrimonial home ceased to be so held,
    the waiver ceased to operate and she was entitled to support under the
    generally-recognized principles applicable to support under the
Succession
    Law Reform Act
, R.S.O. 1990, c. S.26
.

[2]

We disagree. The submission fails to take into
    account the two significant amendments to the marriage contract negotiated by
    the parties. Both referred specifically to the title to the matrimonial home
    and, read together, make it absolutely clear that the home would be held in
    tenancy in common with certain rights to the appellant upon the respondents
    death. Neither amendment detracts from the waiver provision found in the
    original contract.

[3]

The trial judge considered the terms of the
    contract and the amending agreements. He also considered and rejected the very
    same argument that counsel has forcefully advanced here: see reasons at paras.
    76-80. As the trial judge was engaged in a contractual interpretation exercise,
    we must defer to the trial judge and his conclusion, absent a clearly
    identifiable error in law or a palpable and overriding factual error. We find
    neither.

[4]

The appellant does not advance any other
    argument that she has a claim for support if, as the trial judge found and as
    we have affirmed, the waiver in the marriage contract is valid.

[5]

The appeal is dismissed.

[6]

Costs are awarded to the respondent in the
    amount of $15,000, inclusive of disbursements and relevant taxes.

Doherty J.A.

Paul Rouleau J.A.

D.M. Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: LePage (Re), 2019 ONCA 363

DATE: 20190506

DOCKET: C65796

Brown, Roberts and Zarnett JJ.A.

IN THE MATTER OF: DENIS LUCIEN LEPAGE

AN APPEAL UNDER PART XX.1 OF THE
CODE

Michael Davies, for the appellant

Christine Tier, for the respondent Attorney General of
    Ontario

Janice E. Blackburn, for the respondent Person in Charge
    of the Waypoint Centre for Mental Health Care

Heard: April 24, 2019

On appeal against the disposition of the Ontario Review
    Board dated July 10, 2018.

REASONS FOR DECISION

[1]

The appellant, Denis Lucien LePage, has been under the jurisdiction of
    the Ontario Review Board (the Board) since 1978, following a finding of not
    guilty by reason of insanity to the charge of possession of a weapon for a
    purpose dangerous to the public peace. For the vast majority of that time he
    has been at the Waypoint Centre for Mental Health Care or its predecessor
    (Waypoint). Mr. LePage has been diagnosed as suffering from Query Aspergers
    Disorder and Mixed Personality Disorder with Obsessive-Compulsive, Schizoid and
    Antisocial features.

[2]

On June 21, 2018 the Board convened a review hearing. The evidence
    before the Board indicated, and the parties jointly submitted, that Mr. LePage
    remained a significant threat to public safety and that his continued detention
    at Waypoint was justified. The evidence also revealed a treatment impasse in
    that Mr. LePage does not engage constructively with the clinical team at Waypoint,
    and refuses Waypoint's attempts at therapy, but that he does, however, have
    faith in the psychiatrists and staff at Royal Ottawa Mental Health Centre (ROH).

[3]

This led the parties to jointly submit to the Board that the appellant should
    continue to be detained at Waypoint with no change to the then current terms
    and conditions of his disposition. They also requested that there should be an
    in-patient assessment of the appellant at ROH. They disagreed on whether the
    terms of the in-patient assessment should include there being additional
    security present if a female patient was admitted to the Secure Assessment Unit
    at ROH where the appellant was expected to be during his assessment. The appellant
    objected to such a term as unnecessary. After the hearing before the Board, but
    before it made its disposition, ROH advised that it could not accommodate the
    appellant as an in-patient for an assessment. It indicated that an assessment
    could be done via Telemedicine Video Technology (OTN), an approach rejected by
    the appellant.

[4]

The Board accepted the parties joint submission and found that the
    appellant remained a significant threat to public safety and that he should
    continue to be detained at Waypoint on the terms previously in place and so
    provided in the disposition. The Board also accepted their joint request for an
    independent assessment but stated that it could not dictate to ROH how to
    manage the appellant during an assessment or whether the assessment should be
    done on an in-patient basis or OTN. It therefore included in its disposition the
    following term:

[3] AND IT IS FURTHER ORDERED that the person in charge of Waypoint
    Centre for Mental Health Care;

(b) arrange for an independent assessment of the appellant.

In its reasons for disposition, it stated that the
    details of the assessment would have to be worked out between the hospitals and
    the parties.

[5]

The appellant appeals from para. 3(b) of the disposition. He asks that
    that paragraph be quashed and substituted with an appropriate disposition for
    his transfer to ROH for an independent psychiatric assessment.

[6]

All parties before us agree that para. 3(b) of the Board's disposition
    reflects an error by the Board justifying appellate intervention. We agree. It
    was the Board's responsibility to determine whether an assessment should take
    place, where, and under what conditions in order to address the treatment
    impasse at Waypoint.  It ought not to have transferred that responsibility to
    the parties to work out: see
Gonzales (Re)
, 2017 ONCA 102. To be sure,
    the Board could take into account the extent to which the parties were agreed
    on terms for an assessment and if satisfied with the terms, order them or
    determine any points that were not agreed. But that is not what occurred, leaving
    the parties effectively without an order for an independent assessment that
    could be implemented.

[7]

ROH has now advised that it could accommodate Mr. LePage for an
    in-patient assessment. Instead of simply setting aside para. 3(b) and sending
    the matter back to the Board, we set aside para. 3(b) of the Boards
    disposition and pursuant to ss. 672.78(3)(a) and (c) of the
Code
, replace
    it with the terms for an in-patient assessment at ROH attached to these reasons
    as Schedule A. Those terms are substantially the product of agreement that has
    been arrived at by the parties. We were informed during the hearing that the
    terms have been provided to ROH and are acceptable to it. We are satisfied the
    terms are reasonable.

[8]

We were asked by the respondents to consider whether an additional term
    ought to be included mandating additional security at ROH if a female patient
    is admitted to the Secure Assessment Unit. We are satisfied that the
    combination of the balance of the terms, and the general responsibility of ROH
    to observe the appellant, keep all concerned safe and to take such steps as it
    deems appropriate to achieve that, makes a specific provision in this regard
    unnecessary.

[9]

Waypoint asked that we admit fresh evidence on the topic of the amount
    and responsibility to pay the cost of the assessment, and that we direct that
    the cost of the independent assessment at ROH be borne by the Board. No party
    objected to the fresh evidence and we agree it should be admitted. We also
    agree that the cost of the assessment should be borne by the Board:
Ontario
    (Attorney General) v. Taylor
, 2010 ONCA 35, at paras. 3, 14, 15 and 21.
    That provision is included in the terms in Schedule A. We were advised that
    counsel for the Board was present in court while that issue was discussed. The
    Board made no objection to the inclusion of this provision in the terms we
    ordered.

[10]

Accordingly
    the appeal is allowed to the extent that para. 3(b) of the Boards disposition
    is set aside and replaced with the terms set out in Schedule A to these
    reasons. The balance of the Boards disposition shall continue in force.

David Brown J.A.

L.B. Roberts J.A.

B. Zarnett J.A.

Schedule A

The disposition of the Board dated July 10, 2018 is
    amended by deleting para. 3(b) thereof and replacing it with the following
    terms:

[1]      The person in charge of Waypoint Centre for
    Mental Health Care shall:

(i)

safely and securely transport the accused to the Secure Assessment Unit
    of the Ottawa Site of Royal Ottawa Mental Health Centre for a comprehensive
    inpatient assessment for a period not exceeding 60 days as soon as practicable;

(ii)

ensure the transfer of the accused from Waypoint Centre for Mental
    Health Care to Royal Ottawa Mental Health Centre for the independent assessment
    shall only be with the cooperation of the accused. Physical force is not
    authorized to implement the Order. The security details of the transfer shall
    be as directed by the person in charge or his or her designate; and

(iii)

detain the accused on readmission from Royal Ottawa Mental Health Centre
    in accordance with paras. 1 and 2 of the Boards disposition dated July 10,
    2018.

[2]      The person in charge of Royal Ottawa Mental
    Health Centre shall detain the accused in custody on the Secure Assessment Unit
    in which the person in charge shall conduct an inpatient assessment, with all
    security or supervisory measures that the person in charge deems appropriate,
    including that the person in charge:

(i)

shall secure the accused in his room between 11:00 p.m. and 7:00 a.m.;

(ii)

may permit the accused to have access to a secure yard or gymnasium in
    the hospital, escorted by staff;

(iii)

may permit the accused to attend outside the hospital for necessary
    medical, dental, legal or compassionate purposes, escorted by a minimum of two
    staff;

(iv)

shall safely and securely transport the accused to Waypoint Centre for
    Mental Health Care Provincial Forensic Programs at the earliest of the
    completion of the assessment or the expiry of 60 days from admission;

(v)

notwithstanding clause (iv) above, may safely and securely transport the
    accused to Waypoint Centre for Mental Health Care Provincial Forensic Programs
    at any time should his behaviour warrant it in the opinion of the person in
    charge of Royal Ottawa Mental Health Centre;

(vi)

shall report in writing to the Ontario Review Board and the person in
    charge of Waypoint Centre for Mental Health Care as to the outcome of the
    assessment as soon as practicable after the accuseds readmission to Waypoint
    Centre for Mental Health Care Provincial Forensic Programs; and

(vii)

shall notify the local police at such times as he or she exercises his
    or her discretion to permit the accused to enter the community and to advise
    the local police of the terms and conditions under which he or she permitted
    the accused to do so pursuant to this clause.

[3]      The cost of the assessment shall be borne by
    the Ontario Review Board.


COURT OF APPEAL FOR ONTARIO

CITATION: Mann (Re), 2019 ONCA 360

DATE: 20190503

DOCKET: C65880

Watt, Pardu and Nordheimer JJ.A.

IN THE MATTER OF:  Richard Mann

AN APPEAL UNDER PART XX.1 OF THE
CODE

Anita Szigeti, for the appellant

Manasvin Goswami, for the respondent, Her Majesty the
    Queen

Janice Blackburn, for the respondent, St. Josephs
    Healthcare Hamilton

Heard:  April 29, 2019

On appeal against the disposition of the Ontario Review
    Board dated, July 25, 2018 with reasons dated August 13, 2018.

REASONS FOR DECISION

[1]

Mr. Mann appeals from the decision of the Ontario Review Board that continued
    his detention order. He asserts that the Board applied the wrong legal test in
    arriving at its decision. He further asserts that the Board failed to address,
    in a meaningful fashion, whether a conditional discharge would adequately protect
    the public and, in any event, the Boards decision to deny a conditional
    discharge is unreasonable on the facts. At the conclusion of the hearing, we
    dismissed the appeal with reasons to follow.  We now provide those reasons.

[2]

We see little merit in this appeal. On the first issue, the Board said,
    in the final paragraph of its reasons:

In coming to its decision the Board has considered the safety
    of the public which is the primary consideration, the mental condition of Mr.
    Mann, the clinical view of his psychiatrist, and the Hospital Report contents
    and Mr. Manns needs.

[3]

The appellant complains that the Board did not expressly refer to the
    reintegration of the accused into society which is a requirement for the
    Boards disposition under s. 672.54 of the
Criminal Code
. We reject
    that submission for two reasons. One is that the clinical view of Mr. Manns
    psychiatrist, and the contents of the Hospital Report, addressed the reintegration
    of Mr. Mann into society.  It is thus clear that the Board considered that issue.
    The other is that, while it might have been preferable if the Board had
    enunciated the specific wording of the section, the Board is an experienced tribunal
    that would have been alive to the correct standard:
R. v. C. (M.L.),
104 O.R. (3d) 450, 2010 ONCA 843 at para. 46.

[4]

We also reject the submission that the Board failed to meaningfully
    consider a conditional discharge and that its decision not to grant a
    conditional discharge was unreasonable. To the contrary, the Board gave
    thorough and complete reasons for its conclusion that it was not appropriate,
    at this stage of Mr. Manns progression, to grant a conditional discharge. The
    Board permitted Mr. Mann to move out into the community but only when properly supervised
    accommodation could be found for him. There is nothing unreasonable in the
    Boards decision to continue the detention order, appropriately amended in
    order to address the risk that Mr. Mann continues to pose to the public,
    particularly when he resorts to the consumption of alcohol. Further, the
    Boards decision on the appropriate disposition is entitled to deference.

[5]

For the foregoing reasons, the appeal was dismissed.

David
    Watt J.A.
G. Pardu J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: McRae Cold Storage Inc. v. Nova Cold Logistics ULC, 2019 ONCA 452

DATE: 20190531

DOCKET: C66367

Sharpe, Trotter and Harvison Young JJ.A.

BETWEEN

McRae Cold Storage Inc.

Applicant (Appellant)

and

Nova Cold Logistics ULC

Respondent (Respondent)

Ronald Birken, for the appellant

Emily Sherkey and Winston Gee, for the respondent

Heard: May 28, 2019

On appeal from the judgment of Justice Sandra Nishikawa of
    the Superior Court of Justice, dated December 13, 2018, with reasons reported
    at 2018 ONSC 7494.

REASONS FOR DECISION

(1)

Factual Background

[1]

This appeal arises out of a commercial lease
    between the parties. The appellant McRae Cold Storage Inc. leased space in a
    cold storage facility owned by the respondent Nova Cold Storage Logistics ULC
    pursuant to a lease agreement dated March 2013 (the Lease). While otherwise a
    gross lease, a clause in the Lease allowed Nova Cold to pass along certain
    increases in energy costs to McRae. Although the Lease was for a 5-year term,
    it provided McRae with an option to renew, if the Lease was in force and McRae
    was not in default under any terms of the Lease on the date it exercised the
    option to renew.

[2]

Beginning in the summer of 2016, a dispute arose
    between the parties as to the proper interpretation of the clause which allowed
    Nova Cold to pass along increased energy costs to McRae. Nova Cold claimed it
    was entitled to additional payment under the clause. McRae continued to pay its
    monthly rent, but did not pay any of the increased energy costs claimed by Nova
    Cold.

[3]

In March 2017, Nova Cold advised McRae that it
    considered McRaes failure to pay the increased energy costs claimed to be a
    default under the Lease. Nova Cold reiterated this position in April and again
    in July 2017, and also informed McRae that if it failed to pay it would not be
    permitted to exercise its option to renew the Lease. By this time, both parties
    had retained counsel and McRae had indicated that it might need to commence an
    application for the interpretation of the energy provisions if they could not
    agree.

[4]

At the end of September 2017, McRae wrote to
    Nova Cold advising that it was exercising the renewal option. Nova Cold
    responded a few days later and rejected the purported renewal, stating again that
    since McRae was in default it could not renew the Lease.

[5]

McRae took no further steps for a number of
    months.

[6]

In early March 2018, McRae brought an
    application seeking an interpretation of the energy clause. Among other relief,
    it sought: (i) a declaration that it was not in default of its obligations
    under the Lease (i.e. the energy clause) and that it had properly exercised its
    option to renew; and (ii) in the event that McRae was in default, a declaration
    that it was entitled to relief from forfeiture. On March 15, 2018, McRae
    deposited the amount claimed by Nova Cold ($136,000) as the increased energy
    costs with its solicitors. This money was to be released to Nova Cold if it was
    determined to be owing, and if McRae was granted renewal of the lease. The
    Lease expired on March 31, 2018.

(2)

The Decision Below

[7]

The application judge, following a comprehensive
    analysis of the law and the evidence before her, found that McRae was in breach
    of its obligation to pay for increased energy costs as contemplated by the
    Lease. As a result, McRae was in default and not entitled to renew.

[8]

The application judge
    also declined to provide McRae relief from forfeiture. Citing this courts
    decision in
120 Adelaide Leaseholds Inc. v. Oxford Properties Canada
    Ltd
., [1993] O.J. No 2801 (C.A.), the application
    judge found that the courts equitable jurisdiction to grant relief from forfeiture
    was more limited in cases of a failure to perform conditions precedent to a
    right. She found that McRae had failed to act with due diligence, and thus that
    it was not an appropriate case to provide relief from forfeiture.

(3)

Issues and Analysis

[9]

On appeal, McRae does not take issue with the
    application judges interpretation of the energy clause and conclusion that it
    was in default under the Lease. Rather, it appeals only on the basis that the application
    judge erred in declining to grant relief from forfeiture. To this end, it
    argues that the application judge applied the wrong legal test, as she failed
    to apply the test identified in
Saskatchewan River Bungalows Ltd v.
    Maritime Life Assurance Company
, [1994] 2 S.C.R. 490, as structuring a
    courts discretion to provide relief from forfeiture.

[10]

We see no merit in this position. Given the
    application judges interpretation of the Lease, which McRae does not
    challenge, there can be no question that McRae was in default under the Lease.
    As a result, it had not satisfied one of the conditions precedent to the
    renewal of the Lease. The application judge correctly noted that where
    preconditions to the renewal of a lease are in issue, the jurisdiction to grant
    relief from forfeiture is narrower than the three-pronged test applied in cases
    such as
Saskatchewan River Bungalows
.
With respect to the renewal of a lease, a precondition
    for the exercise of any such equitable discretion is that the tenant has made
    diligent efforts to comply with the terms of the lease which are unavailing
    through no default of his or her own:

120 Adelaide Leaseholds Inc.,
at para. 9;
Ross v. T. Eaton Co
. (1992), 11 O.R. 115 (C.A.), at pp. 124-125;
1383421
    Ontario Inc. v. Ole Miss Place
(2003), 67
    O.R. (3d) 161 (C.A), at para. 80;
Mapleview-Veterans Drive
    Investments Inc.

v. Papa
    Kerrollous IV Inc.
, 2016 ONCA 93, 344
    O.A.C. 363, at paras. 55-56. The application judge did not apply the wrong
    legal test.

[11]

Nor is there any basis to interfere with the
    application judges conclusion that McRae failed to exercise due diligence in
    seeking to comply with the terms of the Lease. In light of the correspondence
    between the parties, there was an ample evidentiary basis upon which to
    conclude that McRae had not acted with diligence to cure its default under the
    Lease or to obtain a judicial interpretation of the impugned energy clause. We
    would not interfere with the application judges conclusion in this regard.

[12]

Accordingly, the appeal is dismissed. As agreed by the parties,
    costs are payable by the appellant to the respondent in the amount of $24,000
    inclusive.

Robert J. Sharpe J.A.

G.T.
    Trotter J.A.

A. Harvison Young
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Meridian Credit Union Ltd. v. Chijindu, 2019 ONCA
    425

DATE: 20190522

DOCKET: C66067

Sharpe, Pepall and Roberts JJ.A.

BETWEEN

Meridian Credit Union Ltd.

Plaintiff
    (Respondent)

and

Christian Chukwuedozie
    Chijindu and Nkiruka Chijindu

Defendants (Appellants)

Christian C. Chijindu, in person and for the appellant,
    Nkiruka Chijindu

Duncan M. MacFarlane, for the respondent

Heard and released orally: May 17, 2019

On appeal from the
    judgment of Justice S.J. Woodley of the Superior Court of Justice, dated September
    27, 2018.

REASONS FOR DECISION

[1]

The appellants admit that, by transferring and further encumbering the
    property without the respondent mortgagees consent, they committed acts of
    default.  They argue, however, that the motion judge erred by granting summary
    judgment to enforce the mortgage on the basis of those defaults, and submit that
    by taking three months payments by way of prearranged withdrawal from the appellants
    bank account after giving notice of default, the respondent waived the default.

[2]

We do not accept that submission.

[3]

Accepting monthly payments did not amount to waiver under
    the terms of the mortgage, which provides that the mortgagee may waive default
    in writing, nor did accepting payments meet the legal test for waiver, laid
    down in
Saskatchewan

River Bungalows Ltd. v. Maritime Life Assurance
    Co.
,
[1994] 2 S.C.R. 490,
    which requires
inter alia
the
    communication of an unequivocal and conscious intention to abandon the right to
    rely on the deficiency or default. The motion judge found that acceptance of
    three payments did not satisfy that test and her conclusion is amply supported
    by the record.

[4]

The respondent concedes
    that para. 2 of the judgment should be amended to reflect the interest payments
    made by the appellants on the line of credit up to the date of judgment.
    Accordingly, para. 2 shall be amended as follows:

THIS
    COURT FURTHER ORDERS that the Defendants shall pay to the Plaintiff the sum of
    $74,971.31, due under the line of credit dated May 24, 2016, and post-judgment
    interest at the rate of 3% per annum.

[5]

The appeal is allowed,
    but only to the extent of the concession relating to pre-judgment interest.
    Otherwise, the appeal is dismissed. Costs to the respondent, fixed at $5,000,
    inclusive of disbursements and taxes.

Robert
    J. Sharpe J.A.

S.E.
    Pepall J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Ontario (Transportation) v. 2523654 Ontario Inc.,
    2019 ONCA 370
DATE: 20190506

DOCKET: C66302

Watt, Pardu and Nordheimer JJ.A.

BETWEEN

Her Majesty the Queen in
    right of Ontario as represented by the Minister of Transportation

Applicant (Respondent)

and

2523654 Ontario Inc.,
    Aamir Khan, Abdul Qayyum Mian and Sam Guido

Respondents (Appellants)

Eric Gionet and Andrew Wood, for the appellants

Sarah Valair, for the respondent

Heard and released orally:  May 3, 2019

On appeal from the order of Justice Guy DiTomaso of the Superior
    Court of Justice, dated November 26, 2018 with reasons reported at 2018 ONSC 7060

REASONS FOR DECISION

[1]

The appellants appeal from the order of the application judge who granted
    the respondents application and dismissed the appellants cross-application.

[2]

The proceedings arise out of the placement of trailers with signs on
    them on property that borders Highway 400 such that the signs can be seen by
    motorists using the highway.

[3]

The respondent gave notice to the appellants that the trailers and the
    signs violated the
Public Transportation and Highway Improvement Act
,
    R.S.O. 1990, c. P.50 (
PTHIA
). The respondent required that the
    appellants remove the signs.  The appellants refused. The respondent brought an
    application, pursuant to s. 112 of the
PTHIA
, for a warrant directing
    the Sheriff to take such steps as may be necessary to enable the Minister of
    Transportation to have the signs removed. The appellants brought a
    cross-application for a declaration that the signs were permitted. The
    application judge granted the respondents application and dismissed the
    appellants cross-application.

[4]

There is no dispute that the signs are within 400 metres of Highway 400
    and are, consequently, presumptively in violation of the provisions of the
PTHIA
.
    The appellants point to the fact that the respondent relied on incorrect
    subsections of the
PTHIA
when it directed the appellants to remove the
    signs.

[5]

While there was at least one reference to an incorrect subsection of the
PTHIA
, we agree with the application judge that that error is a mere
    irregularity that does not vitiate the legal authority of the direction given. There
    is no doubt that the appellants were well aware of the issue that the
    respondent was taking with their signs. The appellants were, therefore, on full
    notice of the issue being raised and were not, in any way, misled because of
    the erroneous reference.

[6]

Another issue raised by the appellants is that the authorization that
    the Minister issued to a third party to have the signs removed did not specify
    which specific signs were subject to the authorization. Indeed, the
    authorization referred only to a sign and not to signs. The application
    judge recognized that this was a problem with the authorization and ordered
    that the respondent shall immediately deliver a supplementary Authorization
    to specifically identify the seven portable signs that were in issue.

[7]

We agree with the appellants that the application judge ought not to
    have made an order of this type that the respondent had not sought. However,
    all that the application judges order did was direct the respondent to do
    something that it could have done on its own. Once the error was recognized, there
    was nothing that prevented the respondent from issuing a fresh authorization
    with the seven signs identified. Thus, the order made by the application judge
    is of no consequence in the ultimate result.

[8]

Finally, we agree with the application judge that the appellants
    cross-application had to be dismissed. The declaration that the appellants
    sought fundamentally confuses the provisions of the respondents sign policy
    with the general prohibition against signs within 400 metres of a highway under
    the
PTHIA
. On that latter point, in our view highway 400 is both a
    controlled access highway and a Kings Highway under the PTHIA.

Conclusion

[9]

The appeal is dismissed with costs to the respondent payable by the
    appellants jointly and severally and fixed in the agreed amount of $8,500 inclusive
    of disbursements and HST.

David
    Watt J.A.
G. Pardu J.A.

I.V.B. Nordheimer J.A


COURT OF APPEAL FOR ONTARIO

CITATION: Ozimkowski v. Raymond, 2019 ONCA 435

DATE: 20190524

DOCKET: C66053

Tulloch, Benotto and Huscroft JJ.A.

BETWEEN

Margaret
    Ozimkowski

Plaintiff (Respondent)

and

Luc Raymond

Defendants (Appellant)

and

The
    Corporation of the County of Lanark

Third Party

Michael White and Jeff Pasternak, for the appellant

Shawn OConnor and Kelly Santini, for the respondent

Heard and released orally: May 22, 2019

On appeal from the
    judgment of Justice Robyn M. Ryan Bell of the Superior Court of Justice, dated
    September 28, 2018.

REASONS FOR DECISION

[1]

The appellant submits that the motion judge applied the wrong test in
    granting partial summary judgment in the context of a rear end motor vehicle
    collision on an icy road during freezing rain. He submits that the motion judge
    erred by failing to address the alleged contributory negligence of the
    respondent whose vehicle was hit from behind by the appellant. He submits the
    respondent should not have stopped on the highway.

[2]

We disagree. Paragraph 39 of the motion judges reasons deals with this.

[The appellant] has failed to
    persuade us that [the respondent] was wholly or partially responsible for the
    accident. I find that [the respondent] did not act negligently in bringing her
    jeep to a stop given the road conditions that evening, the fact that she
    observed emergency vehicles at the bottom of the hill and the fact that she was
    unable to see in front of her. On [the appellants] own evidence, this was the
    kind of road where a driver had to be ready to stop because it is not easy to
    see what is ahead. Given the admission and the poor driving conditions that
    evening. [The appellants] evidence that [the respondent] had no reason to stop
    is not credible. His position that he could be forgiven for not seeing the
    flashing lights does not discharge his burden of disproving his own
    negligence.

[3]

We are not satisfied that the motion judge committed any palpable or
    overriding error, nor are we satisfied that she applied the wrong test on
    summary judgment.

[4]

Therefore, the appeal is dismissed with costs to the respondent in the
    amount of $15,000 all inclusive.

M. Tulloch J.A.

M.L. Benotto J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Abreha, 2019 ONCA 392

DATE: 20190510

DOCKET: C62569

Lauwers, van Rensburg
    and Trotter JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Daniel Abreha

Appellant

Geoff Haskell, for the appellant

Susan Reid, for the respondent

Heard: April 26, 2019

On appeal from the conviction entered by Justice Robert
    A. Clark of the Superior Court of Justice, sitting with a jury, on February 14,
    2014, and from the sentence imposed on October 3, 2014.

REASONS FOR DECISION

[1]

The appellant was convicted of numerous firearms offences arising out of
    an incident in downtown Toronto when he attempted to discard a loaded handgun.
    He was subsequently sentenced to five and a half years in jail, less credit for
    pre-sentence custody. He appeals his conviction and sentence.

(1)

The conviction appeal

[2]

The appellant challenges his conviction on the basis that the trial
    judge erred in failing to grant a stay of proceedings based on the failure of
    the police to preserve relevant evidence, contrary to s. 7 of the
Charter
.
    In the proceedings before the trial judge, the focus was on the failure of the
    police to secure video footage from its own CCTV cameras and video footage from
    private businesses, as well as the failure of the police to ascertain the
    identity of, and obtain statements from, witnesses. On appeal, we are only
    concerned with the police CCTV footage.

[3]

In the early morning hours of October 22, 2012, the police were
    patrolling an area of downtown Toronto known as the Entertainment District. A
    concerned citizen approached a police officer, described a man across the
    street, and said that the man had a firearm in his waistband. The officer soon
    identified the person referred to  it was the appellant. He was talking on a
    cellphone while pacing back and forth on the sidewalk. After making eye contact
    with the officer, the appellant started to walk away.

[4]

Two officers pursued the appellant. One of them drew his service pistol,
    pointed it at the appellant, and yelled at him to show his hands. The appellant
    did not comply. The other officer saw the appellant fiddling with the front of
    his pants as the appellant stood beside a taxi. The officer saw the appellant remove
    a handgun from his waistband, lower his hand to his side, and drop the handgun on
    the pavement. The officers tackled the appellant. Once they had him under
    control, the officers asked the taxi driver to move his vehicle forward. A
    handgun was found on the ground underneath where the taxi had been stopped.

[5]

In the aftermath of this incident, the taxi left the scene. The driver
    was not identified. The concerned citizen who initially approached the police
    refused to reveal his identity. He too left the scene.

[6]

On the
voir dire

pertaining to the application for a
    stay, it was common ground that there are police CCTV cameras in the
    Entertainment District. They scan certain areas and record activities. There
    was a CCTV camera located close to where the appellant was arrested. The trial
    judge found that the CCTV camera continuously turns in a clockwise direction,
    rotates through a number of sectors, pausing in each for a matter of a few
    seconds, and zooms in and out.

[7]

The CCTV system has limited memory capacity. The video footage captured
    by the system is overwritten every 72 to 96 hours. None of the officers
    involved in this case attempted to secure video footage from this CCTV camera.

[8]

On the
voir dire
, the appellant testified that he dropped a
    cellphone, not a gun. He stated that he was aware of the nearby CCTV camera and
    told the arresting officers to check the camera footage to confirm his assertion.
    Both officers denied this claim, noting that the appellant remained silent during
    and after his arrest. The trial judge rejected the appellants evidence on this
    point, and gave reasons for doing so.

[9]

The first time that access to the CCTV footage was raised was at the
    preliminary inquiry, held in April of 2013. A formal request for disclosure was
    made in June of 2013. By that time, the footage was long gone.

[10]

On
    the
voir dire
, the Crown produced a sample video from the same
    camera system located near the scene of the arrest. The sample video was
    created in late 2013. Based in part on the sample video, the trial judge found
    that it was unlikely that the cameras would have assisted in clarifying what
    the appellant dropped just before he was apprehended by the police.

[11]

In
    dismissing the application to stay proceedings, the trial judge identified the
    framework for lost evidence applications articulated in
R. v. Bero
(2000), 151 C.C.C. (3d) 545 (Ont. C.A.);
R. v. La
, [1997] 2 S.C.R. 680;
    and
R. v. Dixon
, [1998] 1 S.C.R. 244. This framework was restated in
R.
    v. Hersi
, 2019 ONCA 94, in which Doherty J.A. said, at para. 26, that the
    loss or destruction of evidence in the possession or control of the police will
    result in a breach of s. 7 when: (1) the material was disclosable under the
    standard set out in
R. v. Stinchcombe
, [1991] 3 S.C.R. 326; and (2) the
    prosecution fails to show that the loss or destruction was not the consequence
    of unacceptable negligence by the police: see also

La
, at
    para. 22; and
Bero
, at para. 30.

[12]

The
    appellant argues that the trial judge erred in the application of these
    principles by reversing the burden of proof. Although the trial judges reasons
    may not have adhered strictly to the framework set out above, we are satisfied
    that he reached the correct result in finding that there was no breach of s. 7,
    let alone one that warranted a stay of proceedings. As Doherty J.A. said in
Hersi
,
    at para. 25, a stay of criminal proceedings is the appropriate remedy only in
    extraordinary circumstances.  In oral argument, counsel for the appellant
    acknowledged that, if there were a breach, standing alone this was not one of
    the clearest of cases warranting a stay of proceedings.
[1]
We agree with this assessment.

[13]

Ultimately,
    the appellant received a remedy. In his charge to the jury, the trial judge
    provided an instruction on the failure of the police to preserve relevant
    evidence. After reviewing the relevant evidence, he said: The effect that the
    unavailability of any such evidence may have on the Crowns obligation to prove
    the case against the accused will be for you [the jury] to say.

[14]

This
    type of instruction is recognized as a remedy for failure to preserve evidence
    that results in a breach of s. 7 of the
Charter
: see
Bero
, at
    para. 67. The trial judges instruction closely aligns with the model
    instruction in David Watt,
Watts Manual of Criminal Jury Instructions
,
    2nd ed. (Toronto: Carswell, 2015), at p. 432 (Final 43  Lost, Destroyed or
    Unpreserved Evidence). To the extent that the appellant suffered any prejudice
    from the failure to preserve the CCTV footage, it was cured by this
    instruction.

[15]

The
    appeal from conviction is dismissed.

(2)

The sentence appeal

[16]

At
    the hearing of the appeal, we were advised that the appellant has served his
    sentence. Nevertheless, he wished to proceed with his sentence appeal in the
    hope that the court might clarify an issue concerning the calculation of pre-sentence
    custody. Given that the appeal from sentence is effectively moot, we leave this
    issue for another day.

[17]

Leave
    to appeal sentence is refused.

P. Lauwers J.A.

K. van Rensburg J.A.

Gary Trotter J.A.

[1]

The appellant argued that this case, when considered alongside
    the case of
R. v. Miniaci
, 2011 ONCJ 491, discloses a pattern of conduct
    relating to a failure by police to secure CCTV footage from the Entertainment
    District. Given our finding in this appeal, it is unnecessary to consider this
    submission.