COURT OF APPEAL FOR ONTARIO

CITATION: FoodInvest Limited v. Royal Bank
    of Canada, 2019 ONCA 728

DATE: 20190919

DOCKET: M50320 (C66522)

Hoy A.C.J.O., Lauwers and Jamal
    JJ.A.

BETWEEN

FoodInvest
    Limited

Plaintiff (Appellant/Moving Party)

and

Royal Bank of Canada

Defendant (Respondent/Responding Party)

Glenroy Bastien, for the moving party

Catherine Francis, for the responding
    party

Heard: September 9, 2019

REASONS FOR DECISION

[1]

The corporate appellant brings two motions,
    identified as M50320 and M50386. The courts records and the appellants
    materials are difficult to follow, but we conclude that, in substance, the
    appellant asks this court to: (1)  review the March 28, 2019 order of Tulloch
    J.A. which, among other things, granted the respondent Bank security for costs;
    (2) review the May 9, 2019 order of Benotto J.A. dismissing the appellants
    motion for a further extension of time in which to perfect its appeal; and (3)
    set aside the Registrars order of May 23, 2019 dismissing this appeal for
    delay.

[2]

For the following reasons, we would set aside
    the order for security for costs and related order as to costs of Tulloch J.A.,
    the order of Benotto J.A., and the Registrars dismissal of the appeal, and
    grant the appellant a final extension of time to perfect the appeal.

[3]

We provide some brief background before turning
    to the orders at issue. In the underlying action, the appellant alleged, among
    other things, that the Bank was negligent because it failed to notify the
    appellant that it had been advised by the Polish bank to which it had wired
    funds, at the appellants request, that the Polish bank suspected fraud in
    relation to the wire transfers.

[4]

On December 27, 2018, Morgan J. granted summary
    judgment dismissing the appellants action against the Bank. He concluded that
    the Bank did not owe the appellant a duty of care to advise of the Polish
    banks suspicions about illegality being carried out by the counterparties.
    Further, he found that if the Bank owed the appellant a duty of care in respect
    of the information it received from the Polish bank, in the absence of expert
    evidence from the appellant as to the standard of care, the appellant could not
    prove negligence.

Order of Tulloch J.A.

[5]

In bringing its motion for security for costs,
    the Bank relied primarily on r. 61.06(1)(a) of the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194. That provision permits a judge of this court to, on
    motion, make such order for security for costs of the proceeding and of the
    appeal as is just where it appears that (1) there is good reason to believe
    that the appeal is frivolous and vexatious;
and
(2)
    that the appellant has insufficient assets in Ontario to pay the costs of the
    appeal.

[6]

In his endorsement, Tulloch J.A. indicated that
    he was ordering security for costs because he was satisfied that the appellant
    did not have sufficient funds in Ontario to pursue the appeal. But he did not
    find that there was good reason to believe that the appeal was frivolous and
    vexatious.

[7]

The appellant, which was not represented by
    counsel, did not spell out its grounds of appeal in its Notice of Appeal. The
    appellant retained Mr. Bastien to attend on this motion, which was of great
    assistance to the court. Mr. Bastien explains that the appellant argues that
    there is a genuine issue requiring a trial. The appellant says that Morgan J.
    erred in finding that a bank is not required to notify its customer when it is
    told by another bank that it suspects that the party with which the customer is
    doing business is engaging in a fraud and that expert evidence is not required
    in such circumstances. We reject the Banks argument that this is a frivolous
    and vexatious appeal. In our view, r. 61.06(1)(a) is not a basis for this court
    to award security for costs.

[8]

To the extent that the respondent Bank relies on
    rr. 61.06(1)(b) and (c) and r. 56.01(1)(d), the appellant is a corporation,
    and, based on the materials that the Bank filed before Tulloch J.A., we agree
    with him that there is good reason to believe that the appellant has
    insufficient assets in Ontario to pay the costs of the respondent. However, Tulloch
    J.A. did not consider the justness of the order sought in all the circumstances
    of the case, with the interests of justice at the forefront. Even where the
    other provisions of rr. 56 or 61 have been met, the failure to consider the
    justness of the order holistically, examining all the circumstances of the case
    and guided by the overarching interests of justice to determine whether it is
    just to make an order for security for costs constitutes an error in principle:
    see
Yaiguaje v. Chevron Corporation
, 2017 ONCA 827, 138 O.R. (3d) 1,
    at paras. 22, 25;
Pickard v. London Police Services Board
, 2010 ONCA
    643, 268 O.A.C. 153, at para. 17;
Ravenda Homes Ltd. v. 1372708
, 2017
    ONCA 556, at para. 4. Accordingly, it falls on this panel to consider the justness
    of the order for security for costs sought.

[9]

In all the circumstances, we consider that the
    justice of the case required the court to permit the appellant to perfect its
    appeal before considering if security for costs were warranted.

[10]

Tulloch J.A. ordered security for costs in the
    amount of $75,067.89, which was the sum of the costs order in the amount of
    $50,067.89 below plus estimated costs of the appeal of $25,000. While he made a
    very significant award for security for costs, he also granted the appellant an
    extension of time to perfect its appeal. Orders for security for costs are
    designed to be protective in nature:
Yaiguaje
, at para. 23. The
    respondent was not required to incur any expenses to respond to the appeal
    until after the appellant perfected its appeal. In other words, it is unclear
    that the respondent required protection at the time it brought its motion. The
    self-represented appellant had not filed any materials in response to the
    Banks motion for security for costs and, as indicated above, its Notice of
    Appeal did not specify its grounds of appeal. Having granted the self-represented
    appellant an extension, the interests of justice required that the respondents
    motion not be considered until the motion judge was able to consider such
    materials as the appellant might file and assess the merits of the appeal with
    the assistance of those materials.  This is particularly so given the
    significant amount of security for costs sought by the Bank and the seeming
    likelihood that such an order would effectively prevent the appellant from
    exercising its right of appeal.

[11]

Accordingly, we set aside the order of Tulloch
    J.A. for security for costs and his related costs award, without prejudice to
    the Bank renewing its motion for security for costs after the appellant has
    perfected its appeal. If the time permitted for the appellant to do so has
    expired and the appellant has not perfected its appeal, there will presumably
    be no need for the Bank to renew its motion.

The orders of Benotto J.A. and the Registrar

[12]

In denying the appellant a further extension of
    time to perfect its appeal beyond that ordered by Tulloch J.A., Benotto J.A.
    relied in part on the fact that the appellant had not complied with the order
    of Tulloch J.A. to pay security for costs. In our view, the appellants
    non-compliance with an order that we conclude must be set aside affected the
    outcome of the motion before Benotto J.A. and requires us to consider
de
    novo
the issue of whether a further extension of time should be granted.

[13]

The appellant served its Notice of Appeal on January
    28, 2019 and filed it on February 6, 2019, within the time frames required by rr.
    61.04(1)-(4). Rule 61.09(1) required it to perfect its appeal within at most 60
    days after filing its Notice of Appeal, depending on whether transcripts were
    required. Here, summary judgment was granted based on a written record, so
    transcripts are presumably not required. Accordingly, the delay in perfecting
    its appeal prior to Benotto J.A. denying the appellant a further extension of
    time was two months. Although the appellant offered little explanation for its
    delay in its materials, from the review of the record, we infer that the lack
    of counsel has been a significant cause of the delay. Mr. Bastien advised the
    court that he has a limited retainer in respect of these motions, but believes
    he will be retained on the appeal if these motions are granted.

[14]

We are not persuaded that any prejudice to the
    Bank has arisen from the appellants delay in perfecting its appeal. Further,
    having reviewed the reasons of Morgan J., and with the assistance of Mr.
    Bastien, we conclude that this is not a case where the appeal has so little
    merit that the court could reasonably deny the important right of appeal.

[15]

We conclude that the justice of the case
    requires a further, and final, extension of time to October 21, 2019 to perfect
    the appeal. Accordingly, we also set aside the order of Benotto J.A., including
    her order as to costs. Having set aside her order and granted a final
    extension, the Registrars order of May 23, 2019 is also set aside.

Costs

[16]

The appellant has filed deficient materials and
    sought indulgences from the court. In the circumstances, no costs are ordered
    on these motions.

Alexandra
    Hoy A.C.J.O.

P.
    Lauwers J.A.

M.
    Jamal J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Foote (Re), 2019 ONCA 731

DATE: 20190919

DOCKET: C66159

Watt, Miller and Fairburn JJ.A.

IN THE MATTER OF:  Ian R. Foote

AN APPEAL
    UNDER PART XX.1 OF THE
CODE

Anita Szigeti, for Ian Foote

Erica Whitford, for the Crown

Kathryn Hunt, for the Center for
    Addiction and Mental Health

Heard: September 13, 2019

On appeal against the disposition of the
    Ontario Review Board dated November 7, 2018.

REASONS FOR DECISION

[1]

This is an appeal from an Ontario Review Board
    detention order with privileges up to the possibility of community
    accommodation approved by the hospital. The appeal is based on three grounds:

(a)

the reasons were insufficient because the Board failed to properly
    address the appellants evidence and resolve the content of that evidence
    against the totality of the record;

(b)

there was a procedural error in light of the fact that the Board
    made a determination without having access to important information; and

(c)

the Board failed to adequately address why a conditional discharge
    was not the least onerous and restrictive disposition available.

[2]

We do not agree that the Board erred in any of these
    respects.

[3]

The Board was under no obligation to review the
    appellants evidence in fine detail. The reasons reflect that the Board
    adequately summarized the appellants evidence and grappled with its core
    content. Among other things, the appellant testified that he does not have a
    mental illness and denies delusional thinking. This central aspect of the
    appellants evidence was rejected by the Board. That rejection is clear based
    upon the Boards considered and reasoned acceptance of contrasting evidence in
    the case, including that of the treating psychiatrists who addressed the
    appellants ongoing psychiatric condition and his delusional thought processes:
R. v. J.J.R.D.

(2006), 215 C.C.C. (3d) 252 (Ont. C.A.), leave
    to appeal refd [2007] S.C.C.A. No. 69, at para. 53. The Board clearly accepted
    that evidence, the corollary of which was that they rejected the appellants
    denials.

[4]

Nor do we see any procedural error in this case.
    The Board very helpfully set out what it saw as gaps in the record, suggesting
    the types of documents that should be gathered before the next annual hearing.
    Despite those observations, the Board specifically noted that it was satisfied
    that the issues to be resolved could be properly addressed on the existing
    record. We see no error in that conclusion and agree that proceeding without an
    adjournment was wise given that the Boards disposition resulted in the
    appellant moving to a less restrictive setting than the one he was detained in
    at the time of the hearing.

[5]

Finally, we disagree that the Board erred in
    concluding that a detention order was required. Specifically, the appellant
    says that the Board failed to explain why a conditional discharge was not the
    least restrictive disposition available. We disagree.

[6]

The reasons are clear as to why a detention
    order was made and that finding fell within a range of reasonable outcomes. The
    Board concluded that left without hospital oversight, the appellant would
    experience a recurrence of his psychotic symptoms, including delusional
    beliefs about the victim he had stalked, would not take his medication, and
    would engage in seriously harmful criminal conduct, similar to that of the
    index offences. The evidentiary record supports those findings, including that
    the appellant:

·

suffers from a major mental illness;

·

has continued to engage in delusional thinking
    while in the hospital;

·

has a substance abuse disorder, including having
    consumed crystal methamphetamine;

·

has refused to take antipsychotic medication
    that is considered by the medical professionals as the principal risk
    management tool;

·

has a lack of insight into his symptoms and poses
    a significant risk to the public; and

·

has an established record of not complying with
    court orders.

[7]

We see no error in the Boards conclusion that
    the appellant continues to pose a significant threat to the safety of the public.
    The Board gave appropriate consideration to a conditional discharge, finding
    upon the evidence it accepted that the appellant is not currently in a
    position to be discharged into the community. We would defer to that finding.

[8]

We see no basis upon which to intervene in the
    Boards decision. The appeal is dismissed.

David Watt J.A.

B.W. Miller J.A.

Fairburn J.A.


COURT
    OF APPEAL FOR ONTARIO

CITATION: Gauthier v. Gauthier, 2019 ONCA
    722

DATE: 20190917

DOCKET: C66750

Hoy A.C.J.O, Nordheimer and
    Jamal JJ.A.

BETWEEN

Jennifer
    Dawn Gauthier

Applicant (Respondent)

and

Michel
    Omer Gauthier

Respondent (Appellant)

Elliot Vine and Jordan Welsh, for the
    appellant

Jennifer Judge (Gauthier), acting in
    person

Heard: September 11, 2019

On appeal from the order of Justice Michael
    R. Gibson of the Superior Court of Justice, dated March 5, 2019.

REASONS FOR DECISION

[1]

In 2010, the appellant was ordered to pay child
    support to the respondent. On August 4, 2016, Barnes J. of the Superior Court
    of Justice dismissed the appellants motion to vary the child support order and
    ordered that the appellant not bring any further motions without leave of that court.
    On February 7, 2019, the appellant brought a motion for leave to proceed with a
    motion to change the 2010 order for child support and for leave to proceed with
    a motion to reduce a 2012 order for security for costs. His motion was
    dismissed in both respects. He appeals that dismissal. For the following
    reasons, we allow the appeal.

[2]

While the motion judge found that the appellant
    had not persuaded him that there had been a sufficient
prima facie
change in his income, the motion judge failed to explain why he was not so
    persuaded in light of the financial information provided by the appellant.
    Similarly, the motion judge said that he was not persuaded that the factors
    that led to the order for security for costs had diminished or that the order
    was not just. Again, the motion judge failed to explain why he was not so
    persuaded. In the context of the record before the motion judge, we are unable
    to determine how he arrived at these conclusions. Consequently, the motion
    judges reasons do not allow for meaningful appellate review and his
    conclusions are not entitled to deference.

[3]

The 2010 order for child support was based on
    the appellant having an annual income of $123,000. The record that was before
    the motion judge indicates that since that order was made, certain events have
    taken place, including:

1.

In 2016, in a separate proceeding, child support
    was ordered for the child of the appellants second family based on the
    appellant having an income in 2013 of $94,203.76 per annum;

2.

The appellant declared personal bankruptcy in
    2016;

3.

A notice of assessment and a notice of
    reassessment issued in respect of the 2015 and 2016 tax years indicate that the
    appellants income for those years was $101,553 and $55,077, respectively;

4.

Based on an unaudited financial statement and T4
    and T5 statements, the appellants income (salary plus dividends) appears as $58,904
    in 2017 and $56,588 in 2018.

[4]

The above events are sufficient to warrant judicial
    consideration of whether the child support payments, ordered in 2010, ought to
    be reduced. On the motion to change itself, however, the appellant would, at a
    minimum, have to produce notices of assessment and reassessment for 2017 and
    2018 (and not just unaudited financial statements) to have any chance of
    success.

[5]

The appellant also contends that certain
    expenses associated with the children when they were younger (e.g. daycare) have
    been eliminated. That said, we appreciate that other expenses may have
    increased so as to reduce or even eliminate any net change on the expense side
    of the ledger. Either way, it is clear that the circumstances are not exactly
    as they were when the original order was made and that the appellant should at
    least have the opportunity to make his case for a change.

[6]

In addition, the uncontradicted evidence of the
    appellant is that the existing security for costs order, that requires him to
    post $59,500 before he can proceed with a motion to change, is an
    insurmountable obstacle to his ability to have the child support order
    reviewed.

[7]

We appreciate, and the appellant himself admits,
    that his conduct since 2010 has been poor. It is undisputed that he has
    accumulated considerable arrears of child support. For a number of years, the
    appellant made no child support payments at all. However, the evidence also shows
    that since enforcement proceedings were taken by the Family Responsibility
    Office, including a period of incarceration ending in 2018, the appellant has
    been making regular child support payments. While these payments do not match
    his obligations, he has produced evidence consistent with his position that he
    is paying as much as his current financial situation will allow.

[8]

Orders for security for costs are a blunt
    instrument. They are not intended to act as a roadblock to genuine claims:
Izyuk
    v. Bilousov
, 2015 ONSC 3684, 62 R.F.L. (7th) 131, at para. 37. They should
    be used sparingly and carefully because they may well have the effect of barring
    a party from access to the court process for a proper review of existing orders
     something, for example, to which a party is entitled respecting child support
    orders if there has been a change in circumstances:
Family Law Act
,
    R.S.O. 1990, c. F.3, s. 37(2.1). Without commenting on whether the security for
    costs order was appropriate when it was made, there is now enough evidence to make
    a
prima facie
case of change in circumstances warranting a review of
    the child support order. The outstanding order for security for costs ought not
    to block that review.

[9]

On that latter point, the appellant,
    appropriately, does not seek a removal of the order for security for costs.
    Rather, he seeks a reduction in the amount of security to $10,000, an amount
    that he says he can manage to borrow, and that will still operate to provide
    some measure of protection to the respondent.

[10]

In all the circumstances, we allow the appeal.
    We grant leave to the appellant to proceed with his motion to reduce the order
    for security for costs and we reduce the security for costs order to $10,000. If
    the appellant posts that security, the appellant will then be entitled to bring
    a motion for a change to the child support order but only with respect to that
    order. No other issues are to be raised by the appellant.

[11]

The appellant did not seek costs of the appeal
    and no costs are ordered.

Alexandra Hoy A.C.J.O.

I.V.B. Nordheimer J.A.

M. Jamal
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Hasselsjo v. Arcand, 2019 ONCA
    735

DATE: 20190919

DOCKET: C66841

Hoy A.C.J.O., Nordheimer and
    Jamal JJ.A.

BETWEEN

Songja
    Hasselsjo

Appellant/Plaintiff

and

Dan Arcand and TD Canada Trust

Respondents/Defendants

Songja Hasselsjo, in person

James Riewald, for the respondents

Heard and released orally: September 13, 2019

On
    appeal from the order of Justice Andrew J. Goodman of the Superior Court of
    Justice, dated April 16, 2019.

REASONS FOR DECISION

[1]

The appellant has failed to show any error in
    the motion judges conclusion that TD Canada Trust was entitled to terminate
    its banking relationship with the appellant. The appellant has also failed to
    point to any evidence that would sustain her other claims including for
    defamation and unjust enrichment.

[2]

Summary judgment was properly granted dismissing
    the appellants claims.

[3]

The appellant also sought leave to appeal the
    motion judges award of costs. We do not see any basis upon which we would
    properly grant leave.

[4]

The motion for leave to appeal is dismissed as
    is the appeal itself. Costs are awarded to the respondent in the all-inclusive
    amount of $1,500.

Alexandra Hoy A.C.J.O.

I.V.B. Nordheimer
    J.A.

M. Jamal J.A.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Hearn v. McLeod Estate, 2019 ONCA 682

DATE: 20190903

DOCKET: C65584

Lauwers, Pardu and Nordheimer JJ.A.

BETWEEN

Kevin Hearn

Plaintiff (Appellant)

and

Estate of Joseph
    Bertram McLeod, Deceased

and
    Maslak-McLeod Gallery Inc.

Defendants (Respondents)

Matthew Fleming and Chloe Snider, for the appellant

No one appearing for the respondents

Michael Panacci for the proposed interveners

Heard: April 9, 2019

On appeal from the judgment of Justice Edward M. Morgan
    of the Superior Court of Justice, dated May 24, 2018, with reasons reported at 2018
    ONSC 2918.

Lauwers J.A.:

[1]

Kevin Hearn, the appellant, claimed that the respondents sold him a fake
    painting by the renowned Anishinaabe artist Norval Morrisseau, accompanied by a
    false provenance statement verifying the paintings authenticity. He claimed
    the return of the purchase price of $20,000, an additional $25,000 representing
    the loss of investment return on the painting, and the sum of $50,000 in
    punitive damages, together with pre-judgment and post-judgment interest and
    costs.

[2]

The trial judge dismissed the action.

[3]

I would allow the appeal for two reasons. First, in considering the
    paintings authenticity, the trial judge was not obliged to accept the expert
    evidence tendered by the appellant, but he erred in rejecting that evidence
    based on his own personal research, which was not in evidence.

[4]

Second, the trial judge misapprehended the evidence regarding the nature
    and purpose of the contract between the plaintiff and the defendants,
    particularly the contractual term that the respondents provide a valid
    provenance statement for the painting.

[5]

I explain each of these reasons in turn. Before doing so, I explain
    briefly why we refused the last-minute efforts of White Distribution Limited,
    2439381 Ontario Inc. and Nathaniel Big Canoe, who were intervenors in the trial
    court, to have the appeal adjourned so that they could bring a motion for leave
    to intervene in the appeal.

A.

the adjournment motion was
    dismissed

[6]

The trial was originally scheduled to go forward on an undefended basis
    because, although the respondents had filed a statement of defence, in May 2017,
    counsel advised the court that the defendants no longer intended to defend the
    action. Mr. McLeod died in August 2017. The action would have proceeded as
    undefended but for the trial judges decision to permit certain intervenors to
    participate, for the reasons he explained at 2017 ONSC 6711.

[7]

Counsel for the proposed intervenors,
Michael Panacci
showed up at the last minute and sought an
    adjournment, which the trial judge granted for reasons reported at 2017 ONSC
    7247. At the trial, the intervenors effectively took on the role of the
    defendants. The trial judge explained, at para. 21 of his trial reasons:

I therefore allowed James White, a
    well-known dealer in Norval Morrisseau works, along with his corporation [White
    Distribution Limited and 2439381 Ontario Inc.], to intervene. I also granted
    intervenor status to Nathaniel Big Canoe, a contemporary Anishinaabe painter
    who carries on in an artistic path similar to that of Morrisseau. These
    Intervenors were permitted to stand in the Defendants' shoes in presenting
    evidence and argument.

[8]

Judgment was rendered and Mr. Hearn appealed. The date for this appeal
    was confirmed by the court by letter dated December 18, 2018. Counsel for Mr.
    Hearn wrote to Mr. Panacci on January 29, 2019 asking whether his clients intended
    to participate in the appeal, but Mr. Panacci did not respond.

[9]

On March 21, 2019, Mr. Panacci wrote to counsel for Mr. Hearn asserting
    that this court had no jurisdiction to hear the appeal and that Mr. Hearn was
    out of time to appeal to the Divisional Court. On April 1, 2019, Mr. Panacci
    wrote to this court requesting an adjournment, and effectively asserted that
    intervenor status in the court below gave him the rights of a party in this
    matter. The panel refused the adjournment request. On April 8, 2019, Mr.
    Panacci requested leave to file a factum, which we refused on the basis that
    his clients were not parties.

[10]

Undaunted, Mr. Panacci appeared just after the appellant
    began argument, sought an adjournment for the purpose of bringing a motion for
    leave to intervene under r. 13 of the
Rules
    of Civil Procedure
,

and then argued that this court had
    no jurisdiction over the appeal.

[11]

The nub
    of Mr. Panaccis argument was that the decision of the trial judge properly
    fell within s. 19 (1.2) (d) of the
Courts of Justice Act
,

RSO 1990 c. C.43,

which gives the Divisional Court jurisdiction where the
    trial court has dismissed a claim for an amount not more than  $50,000
    exclusive of costs, and in respect of which the judge or jury indicates that
    if the claim had been allowed the amount awarded would have been not more than
    the amount of $50,000 exclusive of costs.

[12]

However,
    the trial judge did not assess damages, so s. 19 (1.2) does not apply and this
    court has jurisdiction:
Mars
    Canada Inc. v. Bemco Cash & Carry
2017 ONSC 3399,
146 C.P.R. (4th) 263
(Div. Ct.), at para. 14. The panel
    refused Mr. Panaccis request for an adjournment because it was far too late.
    The appeal proceeded as undefended.

[13]

I now
    turn to the substantive issues in the appeal.

B.

The nature and purpose of the
    contract

[14]

The
    evidence overwhelmingly supports the appellant's claim that he bargained for
    and was promised an authentic
Morrisseau
painting to be accompanied by a valid provenance
    statement attesting to the paintings authenticity.

[15]

However,
    the trial judge effectively severed the contractual term that the painting be
    an authentic
Morrisseau
from the contractual term that the painting be accompanied by a valid provenance
    statement.

C.

Was the Painting an Authentic Morrisseau?

[16]

In
    a nutshell, the trial judge characterized the sole issue at trial as whether
    the defendants had sold the appellant a forged Norval Morrisseau painting. The
    trial judge said, at para. 146: The issue is whether this contention has
    proven to be true. At para. 155, he concluded: While
Spirit Energy of Mother Earth
may indeed be a fraudulent Morrisseau,
    there is an equal chance that it is a real Morrisseau.
Accordingly,
    in the trial judges view, the appellant had failed to prove the central issue
    in the case. He explained, at paras. 157-58:

Spirit Energy of Mother Earth
is one more painting
    an interesting and beautiful one, if l may say so  that is possibly an
    authentic Norval Morrisseau and possibly not. As a matter of law, what is
    important is that a tie goes to the Defendants (or, here, to the Intervenors).
    Where a court is left in doubt because the relevant burden of proof has not
    been satisfied, the 'fact' sought to be proved is in law not true:
Re B,
[
Re B (A Child)
[2008] UKHL 35],
    at para 2 (per Lord Hoffmann).

Spirit Energy of Mother Earth
has not been proved to be a forged or fake Morrisseau. From the law's point of
    view, it is therefore a real Norval Morrisseau painting.

[17]

The
    appellant led the evidence of Professor Carmen Robertson as an expert in Mr.
Morrisseaus
art. She is
    a full professor of Indigenous Art History at the University of Regina. She has
    written several books on Mr. Morrisseau's art and has received substantial
    funding for her research from the Social Sciences and Humanities Research
    Council of Canada.

[18]

Determining
    the authenticity of art is an area in which expert evidence is admissible.
Professor Robertsons
evidence was relevant and
    it was necessary to assist the trier of fact. The trial judge qualified
    Professor Robertson in the following words:

Professor Robertson has an
    impressive cv. I am prepared to accept Professor Robertson as an expert in the
    areas which Mr. Sommer has asked her to be qualified in, that (being) art
    history, art and artistic methods, and authenticity of Norval Morrisseau and in
    contemporary Aboriginal art. And I will  and she is therefore entitled to give
    opinion evidence on those subjects. She certainly has knowledge going beyond that
    of the trier of fact, I must admit.

[19]

Although
    the trial judge had both Professor Robertsons curriculum vitae and her expert
    report, it appears that only Professor Robertsons curriculum vitae was made a
    lettered exhibit for identification. In para. 31 of the decision, he noted:

Indeed, Dr. Robertson, a noted
    scholar with substantially more training than [Ritchie] Sinclair [the person
    who first asserted that the painting was a fake], took 50 pages to come to the
    subtly stated conclusion that, "The disparate elements discussed throughout
    this report, when taken as a whole, result in an artistic dissonance with
    Morrisseau's artistic style, conventions, and art practice."

[20]

Professor
    Robertson testified that in her opinion the painting was a forgery and not an
    authentic Morrisseau. She testified:

[I]t is my opinion that this
    appears to be a pastiche, meaning a conglomeration of Morrisseau visual
    vocabulary, in effect, a studied, almost hyper-real, to call on Jean
    Baudrillard, that brings together elements that are found in Morrisseau paintings
    surely, in his original paintings, but the result here, in my opinion, is a
    pleasing simulation of Morrisseaus artistic vocabulary that does not fit
    within Morrisseaus art, especially in the 1973, '74, 75 period.

[21]

Professor
    Robertson also stated that the signature on the back of the work is not
    representative of the works that I have observed in art museums from Canada, in
    important private collections, but for the purpose of this report, in viewing
    works in the noted art museums from the period of 1973 through 1975, I did not
    observe any paintings with black dry brush and of a signature on the back of
    the works.

[22]

Professor
    Robertson added:

So, based on provenance, based on
    my reading of formulaic elements of this particular work, based on my knowledge
    of  of visually seeing work in art museums, private collections and at art
    exhibitions throughout Canada, I have to say that, in my opinion, this is not
    an original Morrisseau painting.

She was absolutely certain of that opinion.

[23]

In
    the course of her evidence, Professor Robertson described her approach to
    determining the authenticity of the painting as Morellian analysis. In the
voir
    dire
to qualify Professor Robertson, she said this about the currency of
    that approach:

Ive only used Morellian analysis
    for the purposes of this expert report. I will admit that art history no longer
    acknowledges Morellian analysis as a number one focus of research, but that
    said, it is one of the many tools available, and so I have taken advantage of
    using that. I have still done iconographic searches and research, however not
    Morellian analysis on other paintings before this.

[24]

In
voir dire
cross-examination Professor Robertson noted that Morellian
    analysis had been superseded by critical theory, and that while Morellian
    analysis was taught when she was in school, it is no longer taught. This
    reference to critical theory caught the trial judges attention, who remarked:
    Im only smiling because Im looking forward to a two-sentence explanation of [French
    philosopher Michel] Foucault, to which she replied: Im happy I didnt
    mention [French philosopher Jacques] Derrida.

[25]

When
    he qualified Professor Robertson as an expert witness, the trial judge made the
    following comment:

As for Morellian analysis, I will
    hear Professor Robertsons evidence on that methodology. Shes been
    straightforward and frank about the place of Morellian analysis and the
    weaknesses  and its weaknesses in the present scholarly view. Ill take her
    evidence on that with that perspective in mind. For those legal academics,
    former legal academics in the room, it sounds to me something sort of akin to
    someone who has studied traditional statutory interpretation, the canons of
    constructions, which were of course early 20
th
century attempts at
    so-called scientific legalism, and today in law schools critical theory has
    come to dominate legal scholarship and interpretation.

[26]

This
    comment morphed into a significant aspect of the judgment, which was largely a
    deconstruction of the Morellian method using critical theory. In paras. 117-134
    the trial judge drew on numerous critical theorists and their works.
    Unfortunately, none of these were in the evidence nor had Professor Robertson been
    given any opportunity to respond to them. The trial judge said, at para. 117:
    While I genuinely respect the scholarly effort that Professor Robertson has
    put into this analysis, I frankly am skeptical of its usefulness. He then
    began the deconstruction process with the comment, at para 118: This tendency
    to read undiscernible qualities into physical detail represents the central
    effort, and central fallacy, of Morellian analysis.

[27]

Given
    Professor Robertsons earlier comment about Derrida, it is perhaps ironic that
    the trial judge concluded, at para 134:

The Morellian analysis simply does
    not produce the kind of scientific, objective conclusions that its promoters
    claim for it. It stresses the artist's conventions, but, as leading critical
    theorists caution, "conventions are by essence violable and precarious,
    in themselves and by the fictionality that constitutes them, even before there
    has been any overt transgression": Jacques Derrida,
Limited Inc.
(Northwestern University Press, 1988), p. 105.

[28]

I
    see three errors here. The first is a breach of the rules of natural justice.
    In
Pfizer Co. v. Deputy Minister of National Revenue (Customs & Excise)
,
    [1977] 1 S.C.R. 456, the Tariff Board relied on two scientific publications that
    were not put into evidence or referred to at the hearing. The Supreme Court
    found this to be a breach of the rules of natural justice. Pigeon J. noted, at
    para. 18:
It is clearly contrary to those rules to
    rely on information obtained after the hearing was completed without disclosing
    it to the parties and giving them an opportunity to meet it. He added at para.
    19 that this was a grave error. In my view this principle applies to this
    case. See also
Cronk v. Canadian General Insurance Co.
(1995) 25 O.R. (3d) 505, at paras. 24-26, per Lacourciere
    J.A.

[29]

The
    second and corollary error is with respect to the sufficiency of reasons. There
    is no obligation on a trial judge to accept all or any of an expert witnesss
    evidence. But, if the evidence is to be rejected, reasons must be given for
    doing so, and those reasons must themselves be rooted in the evidence before
    the trial judge.  Otherwise the trial reasons are not reasonably intelligible
    to the parties and cannot provide the basis for meaningful appellate review:
R.
    v. Sheppard
,
2002 SCC 26, [2002]
    1 S.C.R. 869, at paras. 1, 24, 28, and 55, per Binnie J.;
C.(R.) v.
    McDougall
, 2008 SCC 53, [2008] 3 S.C.R. 41, at para 98; and
Vancouver
    International Airport Authority v. Public Service Alliance of Canada
, 2010
    FCA 158,  [2011] 4 F.C.R. 425, at para. 16, per Stratas J.A.

[30]

The
    third error relates to the treatment of expert evidence. The trial judge
    rejected Professor Robertson's expert evidence on a contrary theory that was
    not put to her and on which she was not cross-examined. He drew on resources
    that were not in evidence but were obtained by him outside of the courtroom
    through research done by him or at his direction. In doing so, the trial judge
    stepped out of the impartiality of his position as trial judge and descended
    into the arena, effectively becoming the art expert posed against Professor
    Robertson. In the words of Doherty J.A. in
R. v. Hamilton
, 72 O.R.
    (3d) 1, at para. 71, the trial judge assumed the multi-faceted role of
    advocate, witness, and judge. This was not appropriate:
Phillips v. Ford
    Motor Co. of Canada
, [1971] 2 O.R. 637,

at para. 64,
    per Evans J.A.;
R. v. Bornyk
, 2015 BCCA 28, 366 B.C.A.C. 194, at
    paras. 10, 11, and 16.

[31]

I note in passing that neither Professor Robertsons
    curriculum vitae nor her expert report were provided to this court by the
    appellants counsel in the Exhibit Book or the Compendium. This oversight
    defeats the purpose for which a trial record is designed:
1162740 Ontario Limited v. Pingue
, 2017 ONCA 52, 135 O.R. (3d) 792,
    at para. 14.

[32]

At
    trial, the intervenors led the evidence of Kenneth Davies, on graphoanalysis
    and forensic analysis of handwriting and signatures. The trial judge permitted
    him to give evidence despite the appellants objections. Mr. Davies' report was
    provided only two days before he testified. The appellant was not given any
    time to prepare or to call a responding expert on such short notice. There were
    several other difficulties with Mr. Davies evidence, including the fact that
    he had only examined the painting by video link, which is also the means by
    which he testified. All of this was substantially unfair to the appellant.

[33]

The
    trial judge set out Mr. Davies evidence from paras. 136-145. He noted, at para.
    143, that Mr. Davies laid out his conclusion that the black dry brush
    signature on the painting at issue was done by the same hand as did the others
    he has studied, but then noted, at para. 144, that Mr. Davies, in
    cross-examination, agreed that there is nothing in his study that establishes
    that any black dry brush signatures, including his specific comparators, are
    authentic in the first place. The trial judge recorded Mr. Davies evidence but
    it is not clear to what degree, if at all, the trial judge relied on it in
    reaching his conclusion about the authenticity of the painting.

[34]

On
    the totality of the evidence, including his own ill-advised foray into the generation
    of evidence, the trial judge found that it remains an open question whether the
    painting is a genuine Morrisseau. But, contrary to his view, this finding should
    not have led to the dismissal of the appellants action.

D.

Problems with the Provenance
    Statement

[35]

The
    appellant wanted a valid provenance statement because Mr.
Morrisseaus paintings
had
    inspired a clandestine industry along with a substantial market in fake Morrisseau
    paintings. The trial judge covered this evidence at length in paras. 39-92, and
    came to the following conclusion, at para. 93:

I do not doubt the existence of a
    Thunder Bay-area fraud ring and the circulation of fraudulent paintings
    produced there. However, I cannot impugn the authenticity of
Spirit

Energy of Mother Earth
simply because it was produced in a 'high
    crime area', as it were. The information conveyed by the witnesses who relate
    the existence of a fraud ring is only truly probative of the issues in this
    action to the extent that it relates to paintings possibly acquired and re-sold
    by McLeod and the Gallery. And the little evidence that exists in that respect
    is, as described above, highly suspect. Indeed, since no one can identify
Spirit
    Energy of Mother Earth
at all, let alone as having been produced by the
    fraudsters, the relevance of this evidence turns out to be tangential at best.

[36]

I
    do not agree. The evidence was highly relevant. In the context of the known
    existence of fake Morrisseau paintings, the appellants purpose in requiring the
    provenance statement was to give him assurance that the painting he was buying
    from the respondents was authentic, and not the product of the active industry
    and market in fake
Morrisseau
paintings.

[37]

The
    supporting evidence is clear. Mr. Hearn testified that Mr. McLeod made several
    representations to him in May 2005 before he bought the painting. In response
    to Mr. Hearn's concern about fake Morrisseau paintings, Mr. Hearn testified
    that Mr. McLeod told him: "you've come to the right place. This is the
    safest and best place to buy a Norval Morrisseau painting." Mr. Hearn
    further testified that Mr. McLeod went over the painting, and showed Mr. Hearn the
    thunderbird design, explaining: "Whenever Norval thought that a painting
    was special, or that he was particularly proud of, he would draw this thunderbird
    on the back." He added that the painting "was from a period when
    Norval Morrisseau was influenced by a religion he had recently discovered
    called Eckankar." As to the provenance, Mr. Hearn testified that Mr. McLeod
    "said he would have to go through his files and find out the information,"
    and would provide the provenance information if Mr. Hearn wanted to buy the painting.

[38]

When
    Mr. Hearn bought the painting, he got a document, labelled as: Appraisal Form,
    which specified the purchase price of $20,000. It stated that the painting was
    by Mr. Morrisseau. The provenance statement listed in ownership sequence Norval
    Morrisseau, Rolf Schneiders, Allan Swanson, the Maslak-McLeod Gallery and finally,
    Mr. Hearn.

[39]

In
    April 2010 the painting was on display at the Art Gallery of Ontario, but
    shortly after the exhibit opened an official told Mr. Hearn that the painting
    was most likely a fake and took the exhibit down.

[40]

Mr.
    Hearn met with Mr. McLeod, who denied that the painting was a fake. Mr. McLeod then
    provided Mr. Hearn with a second and different provenance statement, dated July
    10, 2010, listing in ownership sequence Norval Morrisseau, Rolf Schneiders,
    Robert Voss, and Irving Jacobs. (The statement of defence did not invoke either
    provenance statement, but simply said: "The Painting was on consignment to
    the Defendant and had been purchased from Khan Auctions.")

[41]

The
    trial judge noted, at paras. 27 and 28:

Hearn, however, was not inclined to believe McLeod at this
    point -- a skepticism that was reinforced when the ownership as set out on the
    provenance statement proved impossible to verify. I cannot blame Hearn for
    being frustrated. One does not expect a long time, respected art dealer such as
    McLeod and a high-end outlet such as the Gallery to provide its customers with
    an unreliable provenance statement. If McLeod himself had some doubts about the
    painting's provenance, one would think he would have advised Hearn of those
    doubts in a forthright way.

It also turned out that McLeod's
    reference to Eckankar was incorrect, as Morrisseau was not introduced to that
    movement until 1976, two years after the date of
Spirit Energy
.

[42]

The
    trial judge noted Professor Robertsons evidence about the provenance
    statements, at para. 101:

Before starting her Morellian
    analysis, Dr. Robertson testified about the provenance letter for
Spirit
    Energy
supplied by the Gallery at the time of its purchase by Hearn. She
    indicated that in her view, the written provenance is suspect, as the several
    previous owners listed there could not be found or would not confirm that they
    had owned the painting. None of these previous owners were called to testify at
    trial and so, of course, their statements are hearsay. Since Dr. Robertson is a
    credible source of the hearsay I have admitted them, but the limitations on this
    evidence are self-evident.

[43]

The
    trial judge then referred to the evidence regarding several of the people listed
    on the provenance statements. His culminating statement is at para. 106:

The fact that a Morrisseau
    painting is sold with an inaccurate provenance letter, or with a provenance
    letter that lists untraceable prior owners or prior owners who do not wish to
    involve themselves in a current legal controversy, should surprise no one.

[44]

This
    view of the evidence misapprehends the contract between the appellant and the Maslak-McLeod
    Gallery. The trial judge erred in failing to find that the Gallerys provision
    of a valid provenance statement was a term of the purchase and a warranty, not
    mere puffery.

[45]

Thus,
    shortly stated, the fact that both provenance statements were false means that
    the appellant did not get what he bargained for and is entitled to a remedy, as
    requested, under the
Sale of Goods Act
,

R.S.O. 1990, c. S.1
. Mr. Hearn seeks the
    expectation measure of damages, which is the amount that would put him in the
    position he would have been in had the description of the painting been
    accurate, under s. 14 of the
Sale of Goods
    Act
, which provides:

Where there is a contract for the sale
    of goods by description, there is an implied condition that the goods will correspond
    with the description The remedy for the breach is specified by s. 51 of the
    Act, which provides:

51(1) Where there is a breach of warranty by the seller, or
    where the buyer elects, or is compelled, to treat a breach of a condition on
    the part of the seller as a breach of warranty, the buyer is not by reason only
    of such breach of warranty entitled to reject the goods, but may,

(a)  set up against the seller the
    breach of warranty in diminution or extinction of the price; or

(b)  maintain an action against the
    seller for damages for the breach of warranty.

(2) The measure of damages for
    breach of warranty is the estimated loss directly and naturally resulting in
    the ordinary course of events from the breach of warranty.

[46]

I
    am satisfied that this was a sale by description within the meaning of the
Sale
    of Goods Act
:
Bailey v. Croft
, [1932] 1 D.L.R. 777 (Man. C.A.);
Lederman
    v. Goldfarb
,
2010
    CarswellOnt 11315
.
See also
Hall v. Gascard
, 2018 DNH
    152, 96 U.C.C. Rep. Serv. 2d 473;
Balog v. Centre Art Gallery-Hawaii Inc.
,
    745 F. Supp. 1556 (D Haw. 1990).

[47]

The
    appellant argues that he is entitled to expectation damages in the amount that
    the market establishes would be the value of a similar genuine Morrisseau
    painting on the basis of the
Sale of Goods Act
or ordinary contractual
    principles:
Langille v. Keneric

Tractor Sales Limited
,
    [1987] 2 S.C.R. 440, at para. 29. The evidence sets that range between $40,000-$60,000.
    If the painting is not a genuine Morisseau, then it is valueless. I would set
    the value at $50,000.

[48]

A
    secondary issue arises and that is whether there was either civil fraud or
    misconduct on the part of Mr. McLeod and the Maslak-McLeod Gallery that would
    justify a punitive damages award?

[49]

Mr.
    McLeod and the Maslak-McLeod Gallery did not provide any documentary support
    for the first provenance statement, or the second, or the bald statement in the
    statement of defence about the consignment arrangement with another gallery. Mr.
    Hearn met with Mr. McLeod after he got the Art Gallery of Ontario officials
    assertion that the painting was a fake. He requested his money back, but Mr.
    McLeod refused because "that would set off a chain of events that would
    result in the closing of my gallery. When Mr. Hearn suggested that they work
    together to investigate the allegation that the painting was fake, Mr. McLeod
    refused. Mr. McLeods assertion that the painting was genuine was only matched
    by his elusiveness in demonstrating that fact, which can only be explained as
    deliberate. In my view the elements of civil fraud, as prescribed by the
    Supreme Court in
Bruno Appliance and Furniture Inc. v. Hryniak
, 2014
    SCC 8, [2014] 1 S.C.R. 126, at para. 21 have been fully made out. With respect
    to the provenance statement, Mr. McLeod made a false representation, either knowing
    that it was false and without an honest belief in its truth, or he made the
    statement recklessly without caring whether it was true or false, with the
    intent that Mr. Hearn would rely upon it, which he did, to his personal loss.

[50]

A
    modest punitive damages award is warranted in these circumstances in light of
    the egregious conduct of the respondents.

E.

Disposition

[51]

For
    the reasons set out above, I would allow the appeal and give judgment in the
    appellants favour for breach of contract and breach of the
Sale of Goods
    Act

against the respondents in the amount of $50,000, plus
    pre-judgement interest. I would fix punitive damages in the amount of $10,000.
    If the appellant recovers damages, he must return the painting to the
    respondent, the Maslak-McLeod Gallery.

[52]

I conclude with an observation.  It is
    often said that the most important person in a courtroom, and the primary
    audience for reasons is the losing party, who is entitled to be treated with
    respect.  In his reasons, apparently as an ill-advised attempt at humour,
    the trial judge used lyrics from songs that had been made popular by a
    well-known musical group, of which Mr. Hearn is a member, to describe Mr.
    Hearns actions in buying and displaying the painting. The trial judges
    comments were inappropriate and unnecessary.

Released: September 3, 2019

P. Lauwers J.A.

I agree. G. Pardu J.A.

I agree. I.V.B. Nordheimer J.A.


COURT
    OF APPEAL FOR ONTARIO

CITATION: Hosseinkhani v. QK Fitness Inc.,
    2019 ONCA 718

DATE: 20190912

DOCKET: C66502

Hoy A.C.J.O., Nordheimer and
    Jamal JJ.A.

BETWEEN

Fatemeh
    Hosseinkhani, Manuchehr Rasouli, Mohamed Reza Rasouli and Behnoush Rasouli

Plaintiffs (Appellants)

and

QK
    Fitness Inc., 2083053 Ontario Ltd. and Helen Doe

Defendants (Respondents)

George Pappas and Matthew Wasserman,
    for the appellants

C. Michael J. Kealy, for the respondents

Heard and released orally:  September
    10, 2019

On appeal from the order of Justice Robert
    Charney of the Superior Court of Justice, dated January 3, 2019 with reasons
    reported at 2019 ONSC 70

REASONS FOR DECISION

[1]

The appellants appeal from the summary judgment
    granted by the motion judge that dismissed their claims.

[2]

It is not, in our view, necessary to go into all
    of the details regarding the background to this matter in order to resolve this
    appeal. The action arises out of a claim for personal injuries suffered by Ms. Hosseinkhani
    while she was participating in a fitness class at the premises of QK Fitness.

[3]

During the course of the fitness class, Ms.
    Hosseinkhani stepped on a round dumbbell that was part of the equipment used in
    the class. She fell and was injured.  Ms. Hosseinkhani then sued the
    respondents for negligence.

[4]

The motion judge reviewed the matter in detailed
    reasons.  He concluded that the respondents could not rely on an exclusion of
    liability clause that was contained in the membership agreement.  However, the
    motion judge did find, on the factual record before him, that the appellants
    could not establish that the respondents were negligent in any way. In
    particular, the motion judge found that there was no evidence that the round
    dumbbell posed an unusual hazard and that neither the dumbbells nor the exercises
    themselves were inherently hazardous. The motion judge also found that the fact
    that a round dumbbell might roll was an obvious risk. Indeed, Ms. Hosseinkhani
    admitted that no one had to explain to her that round dumbbells placed on their
    side might roll.  Consequently, the motion judge granted summary judgment
    dismissing the appellants claims. Contrary to the appellants submissions, the
    motion judge considered whether a duty to warn was required in the particular
    factual context and found that it was not.

[5]

We are not persuaded that there is any basis to
    interfere with the motion judges findings of fact and mixed fact and law.

[6]

The appeal is dismissed.  The respondents are
    entitled to their costs of the appeal fixed in the amount of $
5,000
inclusive of disbursements and HST.

Alexandra Hoy A.C.J.O.
I.V.B. Nordheimer J.A.

M. Jamal J.A.