COURT OF APPEAL FOR ONTARIO

CITATION: Roulston v. McKenny, 2017 ONCA 9

DATE: 20170105

DOCKET: C62102

Doherty, Brown and Huscroft JJ.A.

In the Matter of the
    Estate of Paul Penner (also known as Paul Ewald Penner, Paul Edwald Penner and Paul
    Edward Penner), deceased

BETWEEN

Rita Roulston

Applicant (Appellant)

and

Pauline McKenny, Kristine Nicole Holden,
    Stephanie Victoria Holden, Jesse Joseph Holden, Saxxon Elisabeth Holden and Elisabeth
    Penner

Respondents (Respondents)

Robert Trent Morris, for the appellant

Sean Dewart and Adrienne Lei, for respondent Pauline
    McKenny

Heard: December 23, 2016

On appeal from the order of Justice E. J. Koke of the Superior
    Court of Justice, dated April 7, 2016, with reasons reported at 2016 ONSC 2377.

ENDORSEMENT

Overview

[1]

This appeal concerns the estate of the late Paul
    Penner, who died in March, 2013. He is survived by his sister, the appellant
    Rita Roulston, who is his estate trustee, as well as a beneficiary under his
    will. Mr. Penner is also survived by his former wife, the respondent Pauline
    McKenny.

[2]

Mr. Penner and Ms. McKenny signed a separation
    agreement in 2002. It was a term of that agreement that Mr. Penner would
    maintain $150,000 in life insurance designating Ms. McKenny as the beneficiary.
    The parties also agreed that in the event Mr. Penner failed to maintain the
    insurance, Ms. McKenny would have a first charge against his estate in the
    amount of $150,000. At the time of their 2007 divorce, a court ordered an
    amendment to the separation agreement so that Mr. Penner was not required to
    maintain the life insurance policy beyond age 50. However, he died before he
    reached 50 years of age.

[3]

As matters transpired, Mr. Penner failed to pay
    the premiums on the life insurance policy, which lapsed before his death.

[4]

Mr. Penners estate is worth slightly more than
    $100,000. Under his will, the residue is divided 50:50 between his sister, Ms.
    Roulston, on the one hand, and several nieces and nephews, on the other.

[5]

In September 2015, Ms. McKenny commenced an
    action against the estate seeking payment of $150,000. In the context of an
    application for directions brought by Ms. Roulston as estate trustee, the
    parties asked the court to determine Ms. McKennys claim against the estate.
    The estate trustee took the position Ms. McKennys claim was statute-barred.

[6]

The application judge held Ms. McKennys claim
    for a first charge against the estate was not statute-barred. Ms. Roulston
    appeals, in her personal capacity as a beneficiary under her brothers will.

ANALYSIS

[7]

The appellant takes no issue with the
    application judges finding that the limitation period in s. 38(3) of the
Trustee
    Act
, R.S.O. 1990, c. T.23, applies to Ms. McKennys claim against the
    estate. Section 38(3) provides that an action brought against an estate trustee
    under s. 38 shall not be brought after the expiration of two years from the
    death of the deceased.

[8]

Mr. Penner died on March 20, 2013. Ms. McKenny
    commenced her action more than two years later, on September 18, 2015.

[9]

However, the application judge held that Ms.
    McKennys action was not statute-barred because the application of the doctrine
    of fraudulent concealment to the conduct of the estate trustee tolled the
    two-year limitation period until at least September 25, 2013. As a result, Ms.
    McKenny commenced her action within the limitation period.

[10]

Applying the principles regarding fraudulent
    concealment enunciated by this court in
Giroux Estate v. Trillium Health
    Centre
(2005), 74 O.R. (3d) 341 (C.A.), the application judge found: (i)
    the estate trustee, Ms. Roulston, was in a special relationship with Ms.
    McKenny because she had exclusive possession of knowledge and information
    whether an insurance policy existed and thus whether Ms. McKenny had a debt
    claim against the estate; (ii) the estate trustee acted in an unconscionable
    manner by withholding from Ms. McKenny material facts about the status of the
    insurance policy; and, (iii) as a result of withholding that information, Ms.
    McKenny had a reasonable belief, at least until September 25, 2013, that Mr.
    Penners insurance policy had been in good standing at the time of his death.

[11]

Ms. Roulston submits the application judge made
    two main errors in applying the doctrine of fraudulent concealment. First, the
    trial judge erred in finding a special relationship existed between the estate
    trustee and Ms. McKenny. Second, he erred in finding that the conduct of the
    estate trustee was such as to attract the operation of the doctrine of fraudulent
    concealment.

[12]

We are not persuaded by either submission.

[13]

First, we see no error in the application
    judges finding that a special relationship existed between Ms. Roulston, as
    estate trustee, and Ms. McKenny. In the present case, the special relationship
    arose from a combination of the duties owed at law by an estate trustee to
    estate creditors and Ms. Roulstons control over information about any
    insurance policies owned by the deceased.

[14]

The law imposes on estate trustees duties to
    the deceaseds creditors. Property of a deceased that vests in his estate
    trustee is subject to the payment of his debts:
Estates
    Administration Act
, R.S.O. 1990, c. E.22, s. 2(1). As a
    result, one of the fundamental duties of an estate trustee is to ascertain the
    debts and liabilities owing by the estate and to pay them: Carmen S.
Thériault
, ed.,
Widdifield on Executors and Trustees
,
loose-leaf (2011-Rel. 1),

6th ed., (Toronto: Thomson Reuters,
    2016), at p. 3-1.

[15]

In addition, in the present case information
    about any insurance policies in place at the time of the deceaseds death lay
    within the control of the estate trustee. Following Mr. Penners death, counsel
    for Ms. McKenny wrote to counsel for the estate asking for particulars of any
    policy of insurance under the separation agreement. Estate counsel responded on
    June 4, 2013 that the estate trustee was currently making investigations with
    respect to the insurance policy. Ms. McKennys counsel then contacted the
    insurer, Sun Life Financial, seeking information about any policy. Sun Life
    advised it could only release information to the estate trustee and therefore
    was unable to confirm the status of any policy [Mr. Penner] may have been
    insured under.

[16]

Ms. McKenny was unable to obtain information
    about a policy directly from the insurer. Therefore we see no error in the
    application judges findings that (i) the estate trustee had exclusive
    possession of knowledge and information of whether Ms. McKennys debt actually
    existed and (ii) since the estate trustee was in a unique and privileged
    position to obtain information, it was reasonable for Ms. McKenny to rely on
    what she was being told.

[17]

Second, we see no reversible error in the
    application judges finding that the estate trustees conduct was
    unconscionable.

[18]

On April 29, 2013 estate counsel wrote to Sun
    Life inquiring whether Mr. Penners life insurance policy was in good standing.
    On May 9, Sun Life advised the deceased had no active policies  his two policies
    had lapsed because of non-payment of the premiums.

[19]

Notwithstanding this clear information from the
    insurer, on June 4 estate counsel informed Ms. McKennys counsel that
    investigations were underway because Mr. Penner had expressed to Ms. Roulston
    and the deceaseds mother that there was insurance in place. Upon receipt of
    such information, we will provide correspondence to you. In a subsequent
    September 25, 2013 letter to Ms. McKennys lawyer, estate counsel was only
    prepared to go as far as to say that the insurer had advised that the policy
may
have
    lapsed. Neither representation by estate counsel was accurate; the estate
    trustee knew back on May 9 that Mr. Penner had let his insurance policy lapse.

[20]

Ms. Roulston submits the evidence was more nuanced
     it showed counsel for the estate trustee was investigating whether some other
    insurer might have issued a policy to Mr. Penner. We see no merit in this
    submission. The record contains no evidence of inquiries by the estate trustee
    or her counsel to any insurer other than Sun Life.

[21]

She also submits the application judges finding
    of unconscionable conduct cannot stand because he ignored a May 15, 2013 letter
    to her from counsel for Ms. McKenny. In that letter, counsel inquired whether
    Ms. Roulston was in charge of Mr. Penners estate. He continued: I wish to put
    the estate on notice that the insurance was not in place as required by the
    terms of the Separation Agreement. She submits that statement demonstrated Ms.
    McKenny knew she had a claim against the estate as early as May 15 and,
    therefore, the application judge erred in characterizing as unconscionable the
    subsequent conduct of the estate trustee and her counsel.

[22]

We are not persuaded by this submission. The
    mere absence of any reference to a piece of evidence in reasons for judgment
    does not establish the hearing judge failed to consider that evidence; a party
    must point to something in the trial record that justifies the conclusion the
    trial judge failed to consider certain evidence:
Waxman v. Waxman
(2004)
, 186 O.A.C. 201, [2004] O.J. No.
    1765 (C.A.), at para. 343. Correspondence after May 15, 2013 from Ms. McKennys
    lawyer revealed uncertainty on his part about whether an insurance policy was
    in place when Mr. Penner died, with the uncertainty mainly caused by the less
    than forthright correspondence from the estates counsel.

[23]

In light of the entirety of that correspondence,
    it was open to the application judge to find, at para. 52 of his reasons, that:

By withholding material facts, the estate
    trustee concealed from Ms. McKenny that she had a legitimate debt against the
    estate as a creditor.  In my view, given the special relationship between
    the estate trustee and Ms. McKenny, it was unconscionable for the estate
    trustee to initially suggest that insurance was in place, then delay matters by
    promising to bring an application for directions, and then later take the
    position (a position which provided a direct material benefit to her as a
    beneficiary of the estate), that the time for claiming against the estate had
    expired.

[24]

Given those circumstances, we see no basis to
    interfere with the application judges conclusion that the doctrine of
    fraudulent concealment applied to the conduct of Ms. Roulston, as estate
    trustee, with the result that the two-year limitation period for Ms. McKennys
    claim was tolled from the date of Mr. Penners death until at least September
    25, 2013, when estate counsel advised the policy may have lapsed. Consequently,
    Ms. McKennys action claiming a first charge of $150,000 on the estates assets
    is not statute-barred.

DISPOSITION

[25]

The appeal is dismissed.

[26]

The respondent is entitled to her costs of the
    appeal fixed in the amount of $7,500, inclusive of disbursements and HST.

"Doherty J.A."

"David Brown
    J.A."

"Grant Huscroft
    J.A."


COURT OF APPEAL FOR ONTARIO

CITATION: Routh Chovaz Insurance Brokers Inc. v. Aviva
    Insurance Company of Canada, 2017 ONCA 55

DATE: 20170124

DOCKET: C62283

Simmons, Brown and Roberts JJ.A.

BETWEEN

Routh Chovaz Insurance Brokers Inc.

Plaintiff (Appellant)

and

Aviva Insurance Company of Canada

Defendant (Respondent)

Marina Stoeva, for the appellant

Christopher Reain and Michelle Fan, for the respondents

Heard: January 17, 2017

On appeal from the judgment of Justice Grant R. Dow of
    the Superior Court of Justice, dated May 25, 2016, with reasons reported at 2016
    ONSC 2567.

ENDORSEMENT

Overview

[1]

The appellant,
Routh Chovaz
    Insurance Brokers Inc., sues the respondent, Aviva Insurance Company of Canada,
    to recover $23,658.31 it paid to a client, Mr. Waqar Zaidi, as compensation for
    damages a rear-end collision caused to his 2010 Mercedes-Benz. The lawsuit
    resulted from the following series of events.

[2]

Mr.
    Zaidi owned a 2008 Mercedes Benz, which he had insured through Routh Chovaz with
    the Jevco insurance company. In 2013, he replaced the 2008 model with a 2010
    Mercedes. He asked Routh Chovaz to arrange insurance for his new vehicle with Jevco.
    Routh Chovaz issued a new motor vehicle liability insurance card, a pink
    slip, to Mr. Zaidi, but it failed to process the vehicle model change with
    Jevco.

[3]

When
    the policy came up for renewal a year later in March 2014, Routh Chovaz
    arranged for insurance with Aviva. Through its further error, Routh Chovaz
    arranged the insurance for Mr. Zaidis former car  the 2008 Mercedes  not the
    2010 Mercedes.  Aviva issued a policy of insurance for the vehicle specified by
    Routh Chovaz  the 2008 Mercedes. However, Routh Chovaz orally informed Mr.
    Zaidi that insurance had been arranged with Aviva for his 2010 Mercedes.

[4]

On
    October 2, 2014, Mr. Zaidis car was involved in a rear-end collision (the
    Accident). He claimed under the Aviva policy for the damage to the car. Aviva
    denied coverage on the basis the policy it issued only covered the 2008 car.
    Aviva refunded Mr. Zaidi the premiums he had paid.

[5]

It
    was not disputed that had Routh Chovaz informed Aviva of the proper year and
    model sought to be insured, Aviva would have insured the 2010 Mercedes and the
    additional premium would have been $71.

[6]

Mr.
    Zaidi looked to Routh Chovaz for compensation. Its errors and omissions insurer
    paid Mr. Zaidis claim of $23,658.31. It then commenced this subrogated claim
    against Aviva seeking recovery of the $23,658.31 and a declaration that Aviva
    was responsible to defend and indemnify for any personal injury claims
    resulting from the Accident. As of the time of the appeal hearing, no such
    action had been served.

[7]

The
    motion judge granted summary judgment to Aviva, dismissing Routh Chovazs
    action. Routh Chovaz appeals.

Positions of the parties

[8]

Routh
    Chovazs main ground of appeal can be summarized as follows. Aviva had
    authorized Routh Chovaz to bind it to insure motor vehicle risks. When Routh
    Chovaz orally informed Mr. Zaidi it had insured his 2010 Mercedes with Aviva,
    Aviva was bound to insure that vehicle notwithstanding Routh Chovaz
    misdescribed it as a 2008 Mercedes in the materials sent to Aviva. Given that
    obligation to insure, Routh Chovaz submits Aviva was required to indemnify it for
    the $23,658.31 it paid Mr. Zaidi, less the $71 increased premium.

[9]

Routh
    Chovaz supports this position by submitting the motion judge erred by departing
    from established legal principles in concluding Aviva was not required to
    indemnify it. It points to cases affirming the insurers right to recover for
    losses resulting from its agents negligence, but limiting damages to the
    amount of the extra premium the agent should have collected where there is no
    doubt the insurer would have accepted the risk and there was no
    misrepresentation about it.

[10]

On
    its part, Aviva submits the motion judges conclusion it was not required to
    indemnify Routh Chovaz was based on his interpretation of the Brokerage
    Agreement governing the relationship between the two parties. As a question of
    mixed fact and law, his interpretation of that contract is entitled to
    deference.

Analysis

[11]

The
    motion judge found the relationship between Routh Chovaz and Aviva was governed
    by a Brokerage Agreement dated June 15, 2011 between Aviva and Prolink Broker
    Network Inc. (Prolink). On appeal, Routh Chovaz does not take issue with that
    finding.

[12]

That finding
necessitated a
    determination by the motion judge of whether Routh Chovaz had established
    entitlement to payment of the $23,658.31 under the terms of the Brokerage
    Agreement, in particular s. 10.1 which states:

10.1 [Aviva] shall indemnify and hold the Brokerage harmless
    from and against all costs, expenses, claims, suits, demands or actions (the
    Actions) including reasonable legal fees and expenses of investigation and
    defence incidental thereto, arising as a direct result of its negligent acts or
    omissions
,
to the extent that the
    Brokerage has not caused, contributed or compounded to such liability by its
    own acts or omissions.

[13]

Although the motion judge held the terms of
    the Brokerage Agreement provided Aviva with a complete defence to Routh
    Chovazs claim, apart from quoting several sections of the Brokerage Agreement,
    including s. 10.1 and s. 10.3 (which specify the insurers and brokers
    obligations to indemnify), he did not explain how he reached that conclusion.

[14]

To
    determine whether Routh Chovaz was entitled to indemnification under the
    Brokerage Agreement would require the motion judge to consider two issues under
    s. 10.1. First, is the amount claimed by Routh Chovaz one
arising as a direct result of [Avivas] negligent acts or
    omissions? Second, if it is, then did Routh Chovaz cause, contribute to or
    compound such liability by its own acts or omissions and, if so, to what extent?
    The motion judge did not deal with either issue in his reasons.

[15]

In fairness to the motion judge, in
    its statement of claim Routh Chovaz did not frame its claim as one under s.
    10.1 of the Brokerage Agreement. As well, on the motion below the parties did not
    squarely address those issues under s. 10.1.

[16]

Nevertheless, the motion judges
    reasons do not determine the key issue  whether Routh Chovaz established
    entitlement to be indemnified or held harmless by Aviva under s. 10.1 of the
    Brokerage Agreement. As a result, the reasons are not sufficient to permit
    appellate review. Consequently, the summary judgment dismissing Routh Chovazs
    action must be set aside.

[17]

This court is not in a position
    to resolve the dispute. Although the motion judge made certain findings of
    fact, he did not make all of the findings required to determine Routh Chovazs
    entitlement under s. 10.1. As well, the record before us does not contain all
    the evidence needed to determine that issue. For example, neither party placed
    in evidence the Underwriting Requirements referenced in s. 2.1 of the Brokerage
    Agreement. In those circumstances, it would not be appropriate for this court
    to exercise its fact-finding powers under s. 134(4) of the
Courts of Justice Act
, R.S.O. 1990, c. C. 43. Accordingly, we direct the action to
    proceed to trial.

Disposition

[18]

For the reasons set out above, we allow the
    appeal, set aside the judgment dismissing the action, and direct the action
    proceed to trial.

[19]

We fix the costs of this appeal at $12,000,
    inclusive of HST and disbursements, as agreed by the parties. However, we order
    the costs to be paid in the cause of the action.

"Janet
    Simmons J.A."

"David
    Brown J.A."

"L.B.
    Roberts J.A."


COURT OF APPEAL FOR ONTARIO

CITATION: Schwilgin v. Szivy, 2017 ONCA 78

DATE: 20170127

DOCKET: M45679 and M46003

Cronk, van Rensburg and Pardu JJ.A.

BETWEEN

Laszlo Schwilgin

Moving Party

(Appellant in Appeal)

and

Lori Anne Szivy

Respondent

(Respondent in Appeal)

Laszlo Schwilgin, acting in person

Lori Anne Szivy, acting in person

Heard: January 20, 2017

On motion to review the order of Justice D. Brown of the
    Court of Appeal, In Chambers, dated November 24, 2015, with reasons reported at
    2015 ONCA 816.

ENDORSEMENT

[1]

The moving party, Laszlo Schwilgin, a self-represented litigant, moves
    to review the decision of Brown J.A. of this court, dated November 24, 2015,
    dismissing Mr. Schwilgins motion for an extension of time to file a Notice of
    Appeal from the May 20, 2014 order of Backhouse J. of the Superior Court of
    Justice in this matrimonial case.  The respondent, Lori Anne Szivy, also a
    self-represented litigant, opposes the motion.

Adjournment Request

[2]

On December 26, 2016, Mr. Schwilgin contacted court staff and requested
    an adjournment of his review motion on the grounds that, while he allegedly has
    obtained legal aid for the purposes of his proposed appeal and argument of this
    motion, he has been unable to obtain counsel and he is unable to defend
    himself due to illness and lack of funds.

[3]

The Panel reviewed all the materials filed by Mr. Schwilgin in support
    of his adjournment request, as well as those in support of his request that
    Brown J.A.s order be set aside.

[4]

With respect to the adjournment request: i) Mr. Schwilgin provides no
    current medical or other evidence in proper form justifying his adjournment
    request; ii) the materials provided by him do not confirm that he has been
    granted legal aid for argument of this motion or his proposed appeal; and iii)
    no acceptable explanation for Mr. Schwilgins delay in moving for review of
    Brown J.A.s order, which was made 13 months ago, has been furnished.

[5]

In these circumstances, no reasonable basis for it having been
    demonstrated, the Panel denied Mr. Schwilgins adjournment request.

Review Motion

[6]

In the result, at the oral hearing, the Panel received submissions from
    both parties on the merits of the review motion.  At the conclusion of oral
    argument, we dismissed the motion for reasons to follow.

[7]

We see no basis for interference with Brown J.A.s impugned order.
    Justice Brown considered and properly applied the governing legal principles
    for an extension of time, reviewed the evidentiary record on the motion as a
    whole, and reached a conclusion on that record that was readily and reasonably
    available to him.

[8]

We note, in particular, that Brown J.A. did not accept as reasonable Mr.
    Schwilgins explanation for the delay in seeking to appeal to this court, was
    not persuaded that there was merit to the proposed appeal, and was satisfied
    that the justice of the case favoured dismissing the extension of time motion.
    Justice Brown provided clear and detailed reasons for his holdings on each of these
    issues.  We agree with his conclusions and his reasoning in support of them.

[9]

This review motion is therefore dismissed.

Costs

[10]

Ms. Svizy requests that she be awarded her reasonable costs of this
    motion, incurred by her on account of legal fees because Mr. Schwilgin served
    her former lawyer with his motion materials and his correspondence relating to
    his adjournment request.  Her former lawyer, although not currently counsel of
    record for Ms. Szivy in this court, responded to Mr. Schwilgins correspondence
    on her behalf.

[11]

In these circumstances, we are satisfied that Ms. Szivy is entitled to
    costs of this motion in the amount of $1,000, payable by Mr. Schwilgin
    forthwith, and we so order.

E.A. Cronk J.A.

K. van Rensburg J.A.

G. Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Shipman (Re), 2017 ONCA 36

DATE: 20170116

DOCKET: C62250

Feldman, Rouleau and van Rensburg JJ.A.

IN THE MATTER OF:  James Shipman

AN APPEAL UNDER PART XX.1 OF THE
CODE

Meaghan McMahon, for the appellant

Michelle OBonsawin, for Brockville Mental Health Centre

Rochelle Direnfeld, for the Attorney General of Ontario

Heard: January 12, 2017

On appeal against the disposition of the Ontario Review
    Board dated April 11, 2016.

APPEAL BOOK ENDORSEMENT

[1]

The appellants appeal raises an issue with respect to the supervisory
    powers of the Board between hearings.  As the Boards disposition has been
    implemented and the appellant seeks no remedy on the appeal, we agree with the
    respondents that the appeal is moot.  We therefore decline to address the issue
    raised.  The appeal is dismissed as moot.


COURT OF APPEAL FOR ONTARIO

CITATION: Staniszewski (Re), 2017 ONCA 37

DATE: 20170116

DOCKET: C62314

Feldman, Rouleau and van Rensburg JJ.A.

IN THE MATTER OF:  David Staniszewski

AN APPEAL UNDER PART XX.1 OF THE
CODE

Michael Davies, for the appellant

Michelle OBonsawin, for Brockville Mental Health Centre

Rochelle Direnfeld, for the Attorney General of Ontario

Heard: January 12, 2017

On appeal against the disposition of the Ontario Review
    Board dated May 13, 2016.

APPEAL BOOK ENDORSEMENT

[1]

The appellant raises three grounds of appeal:

1)

the
    Board did not apply the
Winko
test in concluding that the appellant
    remains a significant threat to the safety of the public and in failing to
    order an absolute discharge;

2)

the
    Board erred in failing to order a conditional discharge;

3)

because
    of the inability of North Bay to receive the appellant as contemplated, the
    conditions in #5 of the disposition should be amended to allow the hospital to
    allow the appellant, in its discretion, to live in approved accommodation in
    the community.

[2]

We would not give effect to the first two grounds.  The Board properly
    considered the
Winko
test and all of the evidence in concluding that
    the appellant continues to pose a significant threat to the safety of the
    public and that a discharge was not an appropriate disposition at this time.

[3]

The Hospital fairly agreed that in light of the unanticipated inability
    of North Bay to receive the appellant for the foreseeable future, the community
    living condition that was provided for North Bay should be available now to the
    appellant in Brockville.  We agree.

[4]

The appeal is allowed to that extent.


COURT OF APPEAL FOR ONTARIO

CITATION:  Szymanski v. Alaimo, 2017 ONCA 86

DATE: 20170131

DOCKET: C62162

Doherty, Brown and Miller JJ.A.

BETWEEN

Francine Szymanski

Applicant (Appellant)

and

Giuseppina Alaimo and Francesco Alaimo

Respondents (Respondents)

Corinne A. Muccilli, for the appellant

Gwendolyn L. Adrian, for the respondents

Heard and released orally:  January 27, 2017

On appeal from the judgment of Justice Douglas K. Gray of
    the Superior Court of Justice, dated April 14, 2016, with reasons reported at
    2016 ONSC 2527.

ENDORSEMENT

[1]

Counsel advance three arguments on the main appeal.  First, she argues
    that the application judge erred in holding that the right-of-way provided the
    appellant only with access to the garage along the existing laneway.  She
    argues that the right-of-way, properly interpreted, extended to access to the
    appellants property from any point along the established laneway.

[2]

In his reasons, the application judge properly instructed himself on the
    controlling legal principles.  He was required to examine both the terms of the
    document that created the right-of-way and the surrounding circumstances.  His
    determination as to the nature and scope of the right-of-way is a finding of
    fact.  In our view, the application judge made no legal error and did not
    misapprehend the evidence in coming to his conclusion as to the nature of the
    appellants right-of-way.  Absent any such error, we must defer to the application
    judges finding of fact and we do so.

[3]

Counsels second argument relates to the erection of certain posts as
    part of a fence which was constructed by the respondents along the pathway and
    led to this litigation.  The application judge found that the posts did intrude,
    to a small extent, on the right-of-way.  He made no finding that the posts in
    any way interfered with the use of the right-of-way as a means of getting into
    and out of the garage.

[4]

More to the point, however, this issue is moot.  The posts are gone and
    there is no reason to say anything more about the effects of those posts on the
    right-of-way.

[5]

The third point raised by counsel relates to the nature of the order made
    by the application judge.  The application judge accepted certain undertakings
    from the respondents.  The undertakings were, first, not to reinstall the gates
    that had been removed and, second, to move the fence posts.  These undertakings
    were referred to in the recitals to the order, but were not made part of the
    formal order and were not part of any declaration made by the application
    judge.

[6]

The form of the order is a matter for the discretion of the application
    judge.  Some judges might have included the substance of the undertakings as
    part of a formal declaration and others would not.  In our view, when it comes
    to enforcing the order, there is no significant difference between the two
    options.

[7]

The fresh evidence placed before us at the start of the oral argument
    does not suggest that the undertakings are not being complied with by the
    respondents.  In the circumstances, we see no reason to interfere with the
    manner in which the application judge chose to frame the order.  This ground of
    appeal fails.

[8]

In the result, the main appeal is dismissed.

[9]

As explained to counsel, we cannot determine the costs question raised
    by the appellant without seeing the written submissions that were made before
    the application judge.  Counsel have indicated that those submissions can be
    provided to the court within two weeks.  We will address the costs appeal when
    we have those written submissions.  If for any reason they are unavailable, we
    will address the costs submissions on the basis of the record we now have.
    Counsel should file the written submissions in a single compendium as soon as
    they are available.

Doherty J.A.

David Brown J.A.
 B.W. Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: W&W Fiberglass Tank Co. Profit Sharing Plan v.
    Bartholomew,

2017 ONCA 4

DATE: 20170105

DOCKET: C62259

Gillese, MacFarland and Pepall JJ.A.

BETWEEN

Wayne Wilson, Trustee of the W&W Fiberglass
    Tank Co. Profit Sharing Plan

Plaintiff (Appellant)

and

Gary
    Bartholomew and Trevor Michael

Defendants (Respondents)

Ronald G. Chapman, for the appellant

John M. Picone, for the respondents

Heard:  December 15, 2016

On appeal from the order of Justice Edward M. Morgan of
    the Superior Court of Justice, dated May 27, 2016.

ENDORSEMENT

[1]

It is undisputed on this record that the money paid by the appellant,
    earmarked for a specific fund, and no other, was in fact otherwise invested by
    the individual respondents and, to date, has not been repaid. The funds were
    diverted to third-party companies connected to the respondents. When the
    appellants money was not returned following his lawyers demand letter dated
    October 8, 2015, the Statement of Claim was issued October 30, 2015, and a
    summary judgment motion was promptly set down. That motion was adjourned at the
    respondents request, pending settlement discussions. The respondents do not
    dispute the facts  there is no Statement of Defence, no affidavit evidence
    filed by either respondent, or on their behalf, and they did not seek to
    cross-examine the appellants affiants.

[2]

The respondents entered into Minutes of Settlement with the appellant. That
    said, they argue that because the Minutes provided that the settlement was not
    agreed or effective, unless certain stipulated payments were made, they may
    not be relied upon. On this appeal, there is no need to decide whether the
    Minutes of Settlement are enforceable or otherwise admissible into evidence. We
    do not rely upon them. The case turns on whether the respondents breached their
    fiduciary duties, misappropriated funds belonging to the appellant, and are
    obliged to account.

[3]

The sole ground of defence raised in opposition to the appellants
    summary judgment motion was that, although both respondents were served and
    live in Ontario, the action had to be stayed  and the motion for summary
    judgment dismissed  because of the choice of forum clause contained in the
    Subscription Agreement (the Agreement).

[4]

The motion judge accepted this argument and, by order dated May 27, 2016
    (the Order), dismissed the appellants motion for summary judgment and stayed
    the action.

[5]

In our view, the appeal must be allowed. The motion judge erred in
    misconstruing the nature of the appellants claim.

[6]

The choice of forum clause found in the Agreement reads:

(xx) The Subscriber and the Fund agree that any action or
    proceeding arising, directly, indirectly, or otherwise, in connection with, out
    of, related to, or from, this Application Form for Subscription or the purchase
    of the Participating Shares, or any transaction covered hereby, shall be
    resolved, whether by arbitration or otherwise, exclusively within the Cayman
    Islands. Accordingly, the parties consent and submit to the exclusive
    jurisdiction of the courts located within the Cayman Islands. The parties
    further agree that any such action or proceeding brought by either such party
    to enforce any right, assert any claim, or obtain any relief whatsoever in
    connection with this Agreement shall be commenced by such party exclusively in
    the Cayman Islands.

[7]

In our view, the appellants action as pleaded does not arise directly,
    indirectly, or otherwise, in connection with, out of, related to, or from, this
    Application Form for Subscription or the purchase of the Participating Shares

[8]

While the Statement of Claim is perhaps not a model pleading and does
    reference breach of contract, it is clear when read generously that the claim
    advanced is, in its essence, one for misappropriation of funds by the
    respondents. It is not a claim against Global Innovation SPV 1, Ltd. (Global
    SPV), the other party to the Agreement. The action is framed as one for breach
    of fiduciary duty and for an accounting from the respondents  who are, on the
    evidence, responsible for, and who facilitated, the movement of the appellants
    money, from Global SPV elsewhere, without authority. The Statement of Claim
    alleges that the respondents breached their fiduciary duty to the appellant, by
    causing the appellants monies to be advanced to third parties connected to the
    respondents.

[9]

In July 2014, the respondent Gary Bartholomew wrote to the appellant
    that, as the only authorized investment had not been made, the appellants investment
    in Global SVP had been liquidated. The monies were to have been returned to the
    appellant at that point, but were not. The Statement of Claim pleads, at para.
    10, that the respondents  allegedly the fiduciaries of the appellant, in
    breach of their duties  were the directors and principals of Global SVP and
    responsible for the repayment of those monies to the appellant.

[10]

On October 16, 2015, Mr. Bartholomew, in response to the appellants
    demand through counsel, for payment, e-mailed the appellants counsel,
    attaching three documents from March 2014. Assuming, without deciding, that this
    covering e-mail is settlement privileged, the three attachments are not. The
    documents, dated one and a half years before the appellants formal demand for
    payment, are not communications written for the purpose of attempting to effect
    a settlement:
Sable Offshore Energy Inc. v. Ameron International Corp.
,
    2013 SCC 37, [2013] 2 S.C.R. 623, at para. 14; S.N. Lederman, A.W. Bryant &
    M.K. Fuerst,
The Law of Evidence in Canada
, 4th ed. (Markham:
    LexisNexis Canada, 2014), at p. 1041. Rather, they are the underlying contracts
    through which, in March 2014, the respondents misappropriated the appellants
    funds by diverting them to third-party companies connected to the respondents.

[11]

The respondents purportedly authorized the transfer of the monies
    first as a loan from Global SPV to Global Innovation Fund, Ltd., and then, as
    consideration for convertible promissory notes, to XRM Global Inc., an Ontario
    company, and Pinpoint Integrity Inc., a Cayman Islands company. Mr. Bartholomew
    signed as Director to Global SPV for the loan agreement. The respondent Trevor
    Michael signed as Managing Partner of Global Innovation Fund, Ltd., for the
    loan agreement, and Director of both Pinpoint Integrity Inc. and XRM Global
    Inc., for the convertible promissory notes. Although there is no evidence in
    the record that Mr. Bartholomew was also an operating mind of the borrowers,
    the respondents did not contest the appellants assertion that the respondents
    worked in concert to misappropriate the monies. The self-dealing aspects of the
    transactions are readily apparent.

[12]

The claim as indicated earlier, is for breach of fiduciary duty and an
    accounting and, in its essence, is one for the return of misappropriated funds.

[13]

Factually, this case has some similarities to the unreported decision of
    Spence J. in
Leggat v. Direct Leverage Limited et al
(21 January 2015),
    Toronto, CV-12-455116 (Ont. S.C.).  Unlike
Leggat
, fraud was not
    specifically pleaded. However, as mentioned, the claim turns on the
    respondents misappropriation of the funds. Moreover, they have filed no
    materials challenging the appellants claim.

DISPOSITION

[14]

For these reasons, the appeal is allowed, the Order set aside, and
    summary judgment granted. The respondents shall pay the appellant the sum of
    US$ 1,052,706.31, together with appropriate interest to date. Costs of the
    appeal to the appellant are fixed in the sum of $5,000, in addition to costs of
    the summary judgment motion in the sum of $12,500, as agreed by counsel. Both
    figures are inclusive of disbursements and HST.

E.E.
    Gillese J.A.

J. MacFarland
    J.A.

S.E.
    Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Waite (Re), 2017 ONCA 56

DATE: 20170123

DOCKET: C62524

Doherty, Blair and Lauwers JJ.A.

IN THE MATTER OF: Andrew B. Waite

AN APPEAL UNDER PART XX.1 OF THE
CODE

Erin Dann, for the appellant

Kevin Rawluk, for the Attorney General

Janice Blackburn, for the North Bay Regional Health
    Center

Heard: January 19, 2017

On appeal form the order of the Ontario Review Board
    dated, April 28, 2016.

ENDORSEMENT

[1]

The appellant challenges the disposition of the Ontario Review Board by
    which his previous disposition was continued. Under that disposition he
    continues to be discharged from the North Bay Regional Health Center  North
    Bay site, subject to a number of conditions.

[2]

The appellant makes two arguments in this appeal. First, he argues that
    the Board failed to focus on whether he poses a significant risk of serious
    harm to the public, as it is required to do under s. 672.54 of the
Criminal
    Code
. Instead it wrongly focussed on the evidence of Dr. Rachel Henry who
    testified that if the appellant were no longer under the jurisdiction of the
    Review Board, he would discontinue his medication.

[3]

We do not accept this argument. The appellant suffers from a
    schizoaffective disorder  bipolar type that is control by medication. The evidence
    is clear that the appellant would discontinue his medication if he could. If he
    did so, Dr. Henry testified that he would discontinue his medication,
    decompensate and revert to his previous aggressive behaviour in the community.
    This raises the risk that he would revert to his previous criminal behaviour.
    In this case the index offences were one charge each of assault and criminal
    harassment, and two charges of breach of probation, on July 7, 2005. His
    criminal record involving violence is more extensive. Moreover, we observe that
    the Assertive Community Treatment team sees Mr. Waite 12 times per week and
    that an earlier effort to reduce the frequency of visits was unsuccessful.

[4]

It was entirely within the Boards expertise to conclude that if the appellant
    were given an absolute discharge, he would discontinue medication and would inevitably
    progress to the behaviour that led to the index offences. The decision was
    entirely reasonable.

[5]

The appellants second ground of appeal is that the Board erred in
    failing to consider whether a community treatment order under the
Mental
    Health Act
could serve to mitigate any residual risk to the public that
    would be posed by the appellant if he were absolutely discharged.

[6]

We reject this argument, because it was not advanced before the Board
    and there is no supporting evidence for it: see
Re Petroniuk
, 2016 ONCA
    186. We add that the Board itself has no authority to make a community
    treatment order. That is the task of a medical doctor under s. 33.1 of the
Mental
    Health Act
. Nor is there evidence that the conditions precedent to such an
    order as set out in s. 33.1(4) of the
Mental Health Act
have been met.

[7]

The appeal is dismissed.

Doherty J.A.

R.A. Blair J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Wharry v. Wharry, 2017 ONCA 72

DATE: 20170125

DOCKET: C61297

Strathy C.J.O., Pardu and Brown JJ.A.

BETWEEN

John Wilson Wharry

Applicant (Respondent in Appeal)

and

Karen Wharry

Respondent (Appellant)

Elli Cohen, for the appellant

Ross C. McLean and John W.E. Gilbert, for the respondent

Heard: November 10, 2016

On appeal from the judgment of Justice Michael G. Emery
    of the Superior Court of Justice, dated October 16, 2015.

COSTS ENDORSEMENT

[1]

We have now received submissions as to costs
    from the parties. The appellant, Karen Wharry, achieved some success on the
    appeal, increasing spousal and child support and eliminating a termination date
    fixed by the trial judge for spousal support. She was unsuccessful in
    overturning the trial judge's conclusions as to the equalization of net family
    property, an issue of substantial financial significance. Having regard to the
    outcome of the appeal, we would vary the trial judges costs award of $10,000
    in favour of John Wilson Wharry by reducing it to $7,000. Neither party
    provided this court with any assistance in relation to the child or spousal
    support guidelines. Each party will bear his or her own costs of the appeal.

G.R. Strathy C.J.O.

G. Pardu J.A.

David Brown J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Whirlpool Canada Co. v. Chavila Holdings Limited,
    2017 ONCA 81

DATE: 20170131

DOCKET: C61703

Strathy C.J.O., LaForme and Benotto JJ.A.

BETWEEN

Whirlpool Canada Co.

Applicant (Appellant)

and

Chavila Holdings Limited, Outrigger Investments
    Limited, and 863880 Ontario Limited

Respondents

(Respondents in
    Appeal)

Jennifer Dahany and Gary D. Graham, for the appellant

Allan Sternberg and Joseph Figliomeni, and the
    respondents

Heard: October 11, 2016

On appeal from the order of Justice G. Dow of the Superior
    Court of Justice, dated January 12, 2016, with reasons reported at 2016 ONSC 58.

Benotto J.A.:

Overview

[1]

This appeal concerns an alleged conflict of interest between parties to
    an action arising out of the sale of contaminated land.

[2]

In the early 1990s, an area of land on the western edge of downtown
    Toronto was being assembled for development. It is now known as Liberty
    Village. The land consisted of four adjacent properties, which I refer to (by
    the names of their original owners) as the CP Lands, the Oxford Lands, the CN
    Lands and the Inglis Lands.
[1]

[3]

In 1990, 863800 Ontario Limited (863) purchased the CP and Oxford
    Lands. In 1991, 863 sought to purchase Whirlpools parcel (the Inglis Lands)
    through its related corporations Chavila and Outrigger.
[2]
It was discovered that the
    soil and groundwater on all four properties were contaminated. Negotiations
    ended but resumed years later when Whirlpool lowered its asking price in
    exchange for Chavila and Outrigger agreeing to indemnify it for all liability
    arising from the condition of the property, and to defend any actions brought
    against it. The terms of the sale and indemnity are central to the issues in
    this appeal.

[4]

In 2004, 863 commenced an action against CP and Oxford for contamination
    of the CP and Oxford Lands. In 2012, CP and Oxford brought claims seeking
    contribution and indemnity from Whirlpool. These claims triggered Chavila and
    Outriggers agreement to defend the action and to indemnify Whirlpool. Chavila
    and Outrigger said they would honour the agreement and appointed counsel to
    represent Whirlpool.

[5]

Whirlpool challenged Chavila and Outriggers choice of counsel, alleging
    a conflict of interest. It says that counsel cannot represent Whirlpools
    interests while taking instructions from Chavila and Outrigger. Whirlpool
    brought an application in the Superior Court for an interpretation of the
    indemnity agreement that would preclude this conflict.

[6]

The application judge concluded that there was no conflict and dismissed
    the application. Whirlpool appeals. For the following reasons, I would dismiss
    the appeal.

Background

[7]

Between 1990 and 1997, 863 purchased and assembled former industrial
    lands for redevelopment. In 1990, it purchased the CP and Oxford Lands. Inglis
    had historically leased the CN and Oxford Lands for commercial activities,
    including manufacturing appliances.

[8]

863 had affiliate corporations: 921424 Ontario Limited (921), which
    became Outrigger, and 941600 Ontario Limited (941), which became Chavila.

[9]

Outrigger had initially sought to purchase the Inglis Lands from
    Whirlpool in 1990. The purchase price was $25.6 million. David Moscovitz was
    counsel representing Outrigger/921. 921 carried out due diligence examinations
    of Whirlpools land and the lands that its predecessor Inglis had been leasing
    from CN, 863 and Oxford. All four parcels of land were found to be
    contaminated. The soil and groundwater contained elevated levels of the
    carcinogen trichloroethylene. On behalf of 921, Mr. Moscovitz terminated the
    purchase.

[10]

Years later, negotiations resumed and Mr. Moscovitz again acted as
    counsel for Outrigger. Gowlings acted as counsel for Whirlpool. A sale was
    negotiated in 1997. The purchase price was now $4 million and the property was
    being sold as is. In 1998 the parties signed an Agreement of Purchase and
    Sale and an Indemnity Agreement.

[11]

The Agreement of Purchase and Sale provided that Whirlpool would receive
    a full and final release from the purchasers for any liability relating to the
    condition of the CN Lands. The Indemnity Agreement provided that Chavila and
    Outrigger would indemnify Whirlpool for any claims against Whirlpool in
    relation to the lands it had owned or leased, and that Chavila and Outrigger
    would defend any actions brought against Whirlpool. Section 15 of the Agreement
    of Purchase and Sale provides:

The Vendor leases certain lands from [863] which lands were
    formerly owned by [CP]  The Purchaser acknowledges the possibility of a claim
    for the remediation of contamination of the CP Lands. The Purchaser and
    [Chavila] assume as of Closing any and all responsibility and liability
    whatsoever relating to the condition of the CP Lands  This Agreement is
    conditional  upon ... [an indemnity by the Purchaser and [Chavila] to save the
    Vendor harmless from and against any and all Claims whatsoever relating in any
    manner to the contamination to, in or under or the remediation of the CP
    Lands.

[12]

Section 7 of the recitals to the Indemnity Agreement has a similar
    provision. Section 5 of the Indemnity Agreement provides:

[Outrigger and Chavila], at their own expense, shall be
    obligated to assume the carriage of and the diligent prosecution or defence of
    any legal or administrative proceeding, mediation or arbitration in connection
    with any and all Claims against one or both of Inglis and Whirlpool, to pay all
    costs and expenses of Inglis and Whirlpool of any nature whatsoever in relation
    to each such proceeding

[13]

All the land purchased by Outrigger and Chavila was reconveyed to 863
    and developed into Liberty Village  a mixed residential, commercial and office
    development.

[14]

In 2004, 863 commenced an action (amended in 2010) against CP and Oxford
    seeking private law remedies for the costs of remediation of the contaminated
    Liberty Village lands. I will refer to this action as the Main Action. In
    2012, CP and Oxford each commenced an action against Whirlpool, seeking
    contribution and indemnity in respect of the environmental contamination claims
    made by 863.

[15]

The CP and Oxford actions against Whirlpool triggered the Indemnity
    Agreement. Outrigger and Chavila agreed to honour the indemnity and to appoint
    counsel to conduct Whirlpools defence against CP and Oxford. Outrigger and
    Chavila further committed not to seek payment of any judgment against CP or
    Oxford to the extent that Whirlpool is found liable.

[16]

Mr. Moscovitz, the real estate lawyer who represented 863, Outrigger and
    Chavila throughout the period from 1990 to 1997, is also the sole officer and
    director of 863, Outrigger and Chavila. On behalf of 863, he instructs Ricketts
    Harris, counsel of record to 863 in the Main Action against CP and Oxford. He
    has appointed Simon Schneiderman to act for Whirlpool in its defence of the CP
    and Oxford actions. Mr. Schneiderman has not acted for 863, Outrigger or
    Chavila before. He has no affiliation with Ricketts Harris.

[17]

Gowlings is counsel of record for Whirlpool in the CP and Oxford
    actions.  Gowlings has sought reimbursement from Outrigger and Chavila for
    costs of approximately $80,000 for defending the CP and Oxford actions,
    although no Statement of Defence has yet been delivered.

[18]

Whirlpool challenged Outrigger and Chavilas appointment of counsel to
    defend it in the CP and Oxford actions. Whirlpool took the position that Mr.
    Schneiderman was in a prohibited conflict of interest by representing Whirlpool
    while taking instructions from Outrigger and Chavila, which are associated with
    863, the plaintiff in the Main Action.

[19]

Whirlpool, still represented by Gowlings, launched an application in the
    Superior Court for an interpretation of the Indemnity Agreement that would
    preclude Mr. Schneiderman from acting. Before the application was heard, CP and
    Oxford brought a motion before the Master for intervenor status within the
    application. Master Short dismissed the motion and commented:

Why does [Whirlpools representation] matter to [CP]?  They
    will have to defend and assert their arguments regardless of who is instructing
    counsel.

It is also argued that the proposed arrangement by 863 for
    legal representation of Whirlpool gives rise to a conflict of interest and
    impacts the public perception of the administration of justice in that [863]
    will be instructing on the conduct of the third party defence.

The potential for this result turns on the meaning of the
    parties agreements. If this potential result was a real concern, it could have
    been addressed when the agreements were entered more than 15 years ago.

[20]

The Master compared the situation to that of an insurer added as a third
    party with potential conflicts in the main action.

The Application

[21]

The application requested an interpretation of the Indemnity Agreement
    that would prohibit Mr. Schneiderman from representing Whirlpool in the CP and
    Oxford actions. Whirlpool argued that allowing Mr. Schneiderman to represent it
    on the instructions of Outrigger and Chavila would put Mr. Schneiderman in a
    prohibited conflict of interest. Whirlpool wanted to be able to instruct
    counsel itself.

[22]

The application judge dismissed the application. He found that there was
    no conflict of interest because the immediate interests of Whirlpool were not
    adverse to those of Outrigger and Chavila.

[23]

Moreover, the Indemnity Agreement itself contemplated the actions by CP
    and Oxford; the possibility of such actions was known to the parties when they
    signed the Agreement. The application judge also noted that the intent and
    effect of the Indemnity Agreement was for 863 to forebear collection of any
    award it received against CP and Oxford to the extent that Whirlpool is required
    to indemnify CP and Oxford. If such an award were made and 863 collected it, it
    would have to be paid by Outrigger and Chavila, affiliates of 863, pursuant to
    the agreement.

[24]

The application judge analogized the relation between Chavila and
    Outrigger and Whirlpool to that between an insurer and an insured. He noted
    that Mr. Schneiderman, as an officer of the court, had acknowledged that he
    would act in the best interests of Whirlpool in fulfilling the Indemnity
    Agreement. There were no instructions that could be given to him that would
    harm Whirlpool to the benefit of 863. Whirlpool, Chavila and Outrigger had the
    same interest: to minimize Whirlpools liability.

[25]

The application judge held that it was not necessary to read into the
    Indemnity Agreement an implied term prohibiting Schneiderman from acting for
    Whirlpool. The Indemnity Agreement had the exact effect in the circumstances at
    hand that the parties intended it to have. In exchange for expunging its
    potential liability for contamination, Whirlpool had given up the right to
    direct its defence against CP and Oxford.

The Appeal

[26]

The issue on appeal is simply this: did the application judge err in
    finding that Mr. Schneidermans representation of Whirlpool does not place him
    in a prohibited conflict of interest?

Positions of the Parties

[27]

Whirlpool submits that Mr. Schneiderman is in a conflict of interest if
    he represents Whirlpool in the action with CP and Oxford because Mr.
    Schneiderman will be instructed by Outrigger and Chavila  companies affiliated
    to 863. 863 is the plaintiff in the Main Action against CP and Oxford.
    Whirlpool argues that it has a limitation defence to the claims of CP and
    Oxford, and that Outrigger and Chavila will refuse to instruct Mr. Schneiderman
    to raise this defence because, if successful, it would also bar 863s claim
    against CP and Oxford in the Main Action.

[28]

Outrigger and Chavila submit that there is no conflict of interest
    because Whirlpool has no legitimate interest in the outcome of the main action.
    Indeed, Whirlpool has no interest in the CP and Oxford actions because it is
    fully indemnified. The Indemnity Agreement constitutes express or implied consent
    to have Outrigger and Chavila choose and instruct Whirlpools counsel. With
    respect to the limitation defence, this submission is academic because the
    limitation defence has already been raised by CP and Oxford. Lastly, they
    submit that deference is owed to the application judges interpretation of the
    Indemnity Agreement.

Analysis

Standard of Review

[29]

Whirlpools application was framed in contractual interpretation.
    Whirlpool asked for a determination of rights arising out of the Agreement of
    Purchase and Sale and Indemnity Agreement. The contracts were anything but
    standard form: they arose in a unique set of circumstances after a series of
    negotiations. All parties were sophisticated entities represented throughout by
    experienced counsel. The application judges interpretation should be reviewed
    on the deferential standard described in
Sattva Capital Corp. v. Creston
    Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633.

[30]

As I will explain, I have concluded that the application judge did not
    err in law.

A Lawyers Duty to a Client

[31]

A lawyer has a duty to avoid conflicts of interest when representing a
    client. This is established both by the Law Society of Upper Canada in its
    Rules of Professional Conduct and by the courts. As McLachlin C.J. wrote in
Canadian National Railway Co. v. McKercher LLP
,

2013 SCC 39,
    [2013] 2 S.C.R. 649, at para. 16:

Both the courts and law societies are involved in resolving
    issues relating to conflicts of interest  the courts from the perspective of
    the proper administration of justice, the law societies from the perspective of
    good governance of the profession. [Citation omitted.]

[32]

A lawyer may not represent a client in one matter while representing
    that clients adversary in another matter. This is a bright line rule, as
    articulated in
R. v. Neil
, 2002 SCC 70, [2002] 3 S.C.R. 631, at para.
    29:

The bright line is provided by the general rule that a lawyer
    may not represent one client whose interests are directly adverse to the
    immediate interests of another current client
even if the two mandates
    are unrelated
 unless both clients consent after receiving full
    disclosure (and preferably independent legal advice), and the lawyer reasonably
    believes that he or she is able to represent each client without adversely
    affecting the other. [Emphasis in original.]

[33]

However, as the court writes in
McKercher
, at para. 41, the
    rule in
Neil
is limited in scope:

It applies only where the
immediate
interests of
    clients are
directly adverse
in the matters on which the lawyer is
    acting. It applies only to legal  as opposed to commercial or strategic
    interests. It cannot be raised tactically. And it does not apply in
    circumstances where it is unreasonable for a client to expect that a law firm
    will not act against it in unrelated matters. If a situation falls outside the
    scope of the rule, the applicable test is whether there is a substantial

risk
    that the lawyers representation of the client would be materially and
    adversely affected. [Emphasis in original.]

[34]

The application judge found, and I agree, that the immediate interests
    of Whirlpool are not directly adverse to those of Outrigger and Chavila.
    Whirlpool states that Mr. Schneiderman is not pursuing a limitation defence in
    the Main Action. First, Whirlpool is not yet a party to the Main Action. Second,
    Oxford and CP have already raised a limitation defence. Third, there is no
    evidence that Mr. Schneiderman, as an officer of the court, would not pursue a
    diligent defence for Whirlpool. Indeed, the application judge accepted the
    evidence that Mr. Schneiderman would act in Whirlpools best interests. Any
    suggestion to the contrary is speculative at best and does not meet the test in
McKercher
. This case therefore falls outside the scope of the bright
    line rule.

[35]

I turn to consider whether there is a substantial risk that Mr.
    Schneidermans representation of Whirlpool would be materially and adversely
    affected by the fact that he would be taking instructions from Chavila and
    Outrigger, which share their sole officer and director with 863.

[36]

In my view the situation does not generate such a risk. I say this for
    three reasons: (i) 863 and Whirlpool are not adverse in interest; (ii) the
    terms of the Indemnity Agreement anticipated this very scenario; and (iii) by
    analogy to insurance law principles, there is no conflict.

Not adverse in interest

[37]

Whirlpool has no direct interest in the outcome of either the 863 action
    or the CP and Oxford actions because its interests are fully protected pursuant
    to the terms of the Indemnity Agreement and the confirmation by 863 that it
    will not seek any damages from Whirlpool. If 863 recovers damages from CP or
    Oxford, and CP or Oxford are awarded indemnity from Whirlpool, 863 will forbear
    collection of the amount otherwise payable by Whirlpool. The interests of 863
    and Whirlpool are fully aligned. This alignment makes it unlikely that Mr.
    Schneidermans representation of Whirlpool will be adversely affected by his
    taking instructions from companies associated with 863.

The Indemnity Agreement

[38]

The Indemnity Agreement was negotiated in a specific context. Whirlpool
    agreed to sell its property at a significant discount in return for an
    indemnity with respect to all claims arising out of contamination. The parties
    to the agreement anticipated the very situation that has arisen. They knew
    there was contamination on all four lots. They anticipated the Main Action and
    the potential parties to that action. Whirlpool knew that 863, Outrigger and
    Chavila were affiliated; nonetheless, with the benefit of counsel, it agreed to
    the indemnity which by its very nature gave Outrigger and Chavila the right to
    instruct counsel in Whirlpools defence. In sum, Whirlpool anticipated that 863
    would be involved in litigation with CP and Oxford and that Outrigger and
    Chavila would be conducting Whirlpools defence of any claims for contribution
    and indemnity.  The agreement by Outrigger and Chavila to provide a diligent
    defence is read in this context.

[39]

Paragraphs 6 and 7 of the Recitals provide:

[Outrigger] acknowledges the possibility of a claim against
    Inglis by one or all of [CN]  and [Chavila] relating to contamination or
    remediation of the CN Lands. [Outrigger] and [Chavila] have agreed to assume as
    of Closing all responsibility and liability whatsoever relating to the
    condition of the CN Lands.

[Outrigger] acknowledges the possibility of a claim against
    Inglis by one or all of [CP], [Oxford], [863] and [Chavila] relating to
    contamination or remediation of the CP Lands. [Outrigger] and [Chavila] have
    agreed to assume as of Closing any and all responsibility and liability
    whatsoever relating to the condition of the CP Lands.

[40]

The agreement provided that Outrigger and Chavila would assume the
    carriage of and the diligent defence of all legal proceedings. It further
    provided that Whirlpool would not negotiate, settle, compromise or pay any
    claims except with the consent of Outrigger and Chavila. Inherent in these
    provisions is the right of Outrigger and Chavila to retain and instruct
    counsel.

[41]

Knowing all this, Whirlpool agreed to accept the terms of the Indemnity
    Agreement in return for the sale of its land. It now submits that the party
    that it agreed would take over its defence may not act in its best interests.
    It raises the spectre of reputational damage, damage to its credit rating, and
    the risk of enforcement proceedings. These were all known to Whirlpool as potential
    outcomes of litigation. They are not new. If it believed these risks were
    substantial, Whirlpool would not have entered into the agreements. In my view,
    these matters cannot now be relied upon to ground a claim of conflict of
    interest such that the terms of the indemnity do not apply.

Insurance law principles

[42]

The parties and the application judge looked to insurance law principles
    for guidance in the present case. My conclusion that there is no conflict does
    not depend upon, but is strengthened by, the analogy to principles of insurance
    law.

[43]

In respect of Whirlpools liability to CP and Oxford, the relation
    between Whirlpool and Chavila and Outrigger is analogous to that between an insured
    and an insurer. As this court recently stated, "[t]here is no doubt that a
    liability insurer owes a duty of good faith to its insured in the defence of a
    claim:
Ernst & Young Inc. v. Chartis Insurance Co. of Canada
,
    2014 ONCA 78, 118 O.R. (3d) 740, at para. 70. The insurers contractual
    obligation to defend an action carries with it an obligation to exercise
    reasonable care and skill in so doing:
Kingscourt Auto Enterprises Inc. v.
    General Accident Assurance Co. of Canada
(1992), 8 C.C.L.I. (2d) 21 (Ont.
    C.J.), at p. 34, citing
Fredrikson v. Insurance Corp. of British Columbia
(1990), 44 B.C.L.R. (3d) 303 (S.C.), at p. 329. In
Shea v. Manitoba Public
    Insurance Corp.
(1991),55 B.C.L.R. (2d) 15 (S.C.), at para. 154, the court
    stated that [t]he duty to defend includes a duty to attempt to minimize the
    amount of any damages to be assessed against the insured.

[44]

These insurance law principles demonstrate that Outrigger and Chavila
    and the counsel they appoint for Whirlpool  must exercise reasonable care and
    skill in defending the CP and Oxford actions and must pursue Whirlpools best
    interests by minimizing its liability.

[45]

In any event, it is unlikely that Outrigger and Chavila, in their
    capacity as third party liability insurer, will infringe the duty of utmost
    good faith in defending Whirlpool from the CP and Oxford claims. Their duty to
    minimize Whirlpools liability overlaps precisely with 863s interest in
    maximizing the liability of CP and Oxford. Moreover, Whirlpool will experience
    no setback to its economic interests because it is insulated from having to pay
    damages both by the Indemnity Agreement, which Outrigger and Chavila have
    pledged to honour, and by 863s undertaking not to collect any portion of any
    damages against CP and Oxford for which Whirlpool is found liable.

[46]

In recognizing the undertaking by 863 to forbear on collection of
    damages, the application judge did not  as Whirlpool suggests  import a new
    term into the agreement, relating to actions by a stranger to the contract. On
    the contrary, the undertaking was simply an acknowledgment by 863 that it would
    respect the Indemnity Agreement of its affiliated companies, Outrigger and
    Chavila.

Subsidiary issues

[47]

Whirlpool submits that the application judge erred in determining that
    Mr. Moscovitz was not the controlling mind of 863, Outrigger and Chavila. I
    disagree.  The application judge accepted the evidence that Mr. Moscovitz is
    the sole officer and director of the three corporations. There is no evidence
    that he is their beneficial owner.

[48]

Whirlpool seeks to recover the costs outlined in the account rendered by
    Gowlings. The application judge considered and rejected the amount claimed. He
    found, at para. 23, that the account  includes vast amounts of time and
    expense not related to the simple effort required to locate the source
    documents including the Indemnity Agreement and forward the statement of claim
    to Chavila and Outrigger requesting confirmation they respond in accordance
    with the Indemnity Agreement.  The application judge reduced the amount sought
    to $2,395.74. I see no reason to interfere with this discretionary finding.

DISPOSITION

[49]

I would dismiss the appeal with costs payable to the respondents fixed
    at $25,000, inclusive of disbursements and HST.

M.L. Benotto
    J.A.

I agree H.S.
    LaForme J.A.

Strathy C.J.O. (Dissenting)

[50]

I would allow the appeal for two reasons.

[51]

First, the application judge erred in law by failing to identify a patent
    conflict between the appellants interests and the interests of the respondent,
    863.
[3]
That conflict was not resolved either by the Indemnity Agreement given by 863s
    affiliates, the respondents Chavila and Outrigger, or by the hold harmless
    agreement offered by 863.

[52]

Second, the application judge made an extricable error of law in his
    interpretation of the Indemnity Agreement by failing to give any effect to the
    appellants contractual right to be provided with a diligent defence by
    Chavila and Outrigger. The appellant was entitled to be represented by a lawyer
    who was free of conflicts and who would raise every viable defence. The lawyer
    appointed to defend the appellant was not entitled to put the interests of 863,
    the party who appointed him, ahead of the appellants interests.

Background

[53]

My colleague has set out the factual background. I will summarize what I
    see as the essential facts.

[54]

In 1998, the appellant sold the Inglis Lands to Chavila and Outrigger. As
    part of the Agreement of Purchase and Sale, Chavila and Outrigger executed an
    Indemnity Agreement in favour of the appellant.

[55]

That agreement contained two separate, but interrelated obligations. The
    first was an agreement to
indemnify
the appellant against all claims
    associated with the environmental condition of the Inglis Lands.

[56]

The second was an agreement to
defend
the appellant against any
    such claims. That agreement is quoted in my colleagues reasons, but for the
    sake of reference it provides:

[Chavila] and [Outrigger], at their own expense,
shall be obligated to assume the carriage of and the diligent
    prosecution or defence
of any legal or administrative proceeding,
    mediation or arbitration in connection with any and all Claims against one or
    both of Inglis and Whirlpool, to pay all costs and expenses of Inglis and
    Whirlpool of any nature whatsoever in relation to each such proceeding. [Emphasis
    added.]

[57]

In 2004, 863 sued CP and Oxford, owners of adjacent lands, claiming that
    they caused pollution of the Inglis Lands. Instead of commencing third-party
    proceedings, CP and Oxford commenced a separate action against the appellant,
    claiming contribution and indemnity for 863s claims. It is not disputed that the
    separate action will likely be consolidated with 863s Main Action, making the
    appellant a third party in the Main Action. It is in the appellants interest for
    the consolidation to occur because it would have an opportunity to defend 863s
    claim in the Main Action.

[58]

A significant issue in the Main Action will be whether 863s claim is
    time-barred. The appellant wishes to plead, and claims that it can adduce
    evidence, that 863 discovered pollution on the CP and Oxford lands in 1991 and
    that the limitation period expired long before the action was commenced in
    2004. CP and Oxford have also raised the limitation period as a defence.

[59]

863 retained a lawyer, Simon Schneiderman, to defend the appellant,
    purportedly pursuant to the Indemnity Agreement given by Outrigger and Chavila.
    When the appellant raised the issue of conflict of interest, Mr. Schneiderman
    stated that the indemnitors had the right to control the defence and that this
    would [militate] against Whirlpool assisting the defendants in the main action
    beyond its obligation to comply with the rules or with the principles of
    evidence. This statement was a reference to the appellants desire, as a third
    party, to defend 863s claim against CP and Oxford based on the expiry of the
    limitation period. Mr. Schneiderman went on to say that if the appellant did
    not accept his clients position, the indemnitors will thereafter consider
    their obligation to [the appellant] to be terminated.

[60]

Mr. Schneiderman confirmed that 863 would not seek payment from the
    appellant of any amounts for which the appellant was found to be liable as a
    result of the claims of CP and Oxford. The terms of the proposed hold harmless
    agreement to be given by 863 were as follows:

In the event 863 is awarded a judgment in the main action
    against CPR or Oxford, to the extent that Whirlpool is found to be liable, 863
    will not seek payment from either CPR or Oxford of that amount in respect of
    which Whirlpool is found to be liable. 863 is prepared, if necessary, to
    document this in further detailed language to be reviewed and agreed upon by
    Whirlpools counsel.

[61]

When the matter was not resolved, Whirlpool brought an application for a
    determination of its rights under the Indemnity Agreement.

Discussion

[62]

As stated at the outset, I would allow the appeal for two reasons. I
    discuss each in turn.

Mr. Schneiderman has a conflict of interest

[63]

In my view, 863s appointment of Mr. Schneiderman to defend the
    appellant, and the instructions it has given to him, have put the interests of
    the appellant in direct and immediate conflict with the interests of 863,
    contrary to the bright line rule against conflicts enunciated in
Canadian
    National Railway Co. v. McKercher LLP
, 2013 SCC 39, [2013] 2 S.C.R. 649,
    at para. 33. The application judge erred in failing to identify this conflict and
    in failing to exercise the courts inherent supervisory power to protect the appellant
    from prejudice and to preserve the repute of the administration of justice:
McKercher
,
    at para. 13.

[64]

In the defence of the appellant in the Main Action, Mr. Schneiderman takes
    his instructions from 863, the plaintiff in the Main Action. It is in the
    appellants interest to raise a limitation defence to 863s claim. If that
    defence is successful and 863s claim against Oxford and CP is dismissed, the
    appellant will have no liability to those parties, and it will not have to call
    on Outrigger and Chavila for indemnification. Nor will it have to run the risk
    that Outrigger and Chavila will be unwilling or unable to honour the Indemnity
    Agreement. It is equally obviously
not
in 863s interest for the
    appellant to raise a limitations defence. If successful, that would defeat
    863s claim.

[65]

I therefore respectfully disagree with my colleagues conclusion that Mr.
    Schneidermans duty to minimize [the appellants] liability overlaps precisely
    with 863s interest in maximizing the liability of CP and Oxford. The
    appellants interest goes further than minimizing its own liability by
    maximizing that of CP and Oxford. Its interest is in having CP and Oxford exposed
    to
no liability
(by virtue of the limitations defence). In that case,
    there will be
no
claim for contribution against the appellant, and it will
    never have to call on either the indemnity of Chavila and Outrigger or the hold
    harmless agreement proposed by 863.

[66]

The facts belie the assumption made by the application judge that Mr.
    Schneiderman would act in the appellants best interests and that the conflict
    of interest is speculative. Mr. Schneiderman took the position that the
    appellant was not permitted to assist the defendants in the main action by
    raising the limitations defence. This position was immediately and directly
    adverse to the appellants interest.

[67]

It is not speculative to conclude that Mr. Schneiderman will fail to
    advance the limitation defence. The only reason 863 offered to not to seek
    payment from CN and Oxford of that amount in respect of which Whirlpool is
    found to be liable was because it took the position, through Mr. Schneiderman,
    that it was entitled to decide what defences would be raised on behalf of the
    appellant. Because Mr. Schneiderman was being instructed to abandon the
    limitations defence, which was not in 863s interests, 863 offered to cure the
    problem by giving the appellant an agreement to hold it harmless.

[68]

863s offer was an attempt to avoid the consequences of the conflict
    between its own interests and the interests of the appellant. It confirms that
    a conflict exists, because it was an offer by 863 to attempt to mitigate the
    consequences of the conflict.

[69]

The appellant was not obliged to accept 863s offer. Why would it surrender
    a viable defence in return for a promise from a party with whom it had not
    contracted (863) and run the risk of a judgment going against it and having to
    enforce an indemnity? The appellant could have waived the conflict, but it was
    not obliged to do so.

[70]

I disagree with the application judges conclusion that the failure to
    raise the limitation defence is of no consequence because of the Indemnity
    Agreement. As I have explained, there is an immediate and direct conflict of
    interest. The abandonment of the limitations defence exposes the appellant to
    the possibility of a judgment going against it. The appellant has no obligation
    to accept a promise from a party with which it did
not
contract (863) in
    place of a promise of a diligent defence from parties with which it
did
contract (Chavila and Outrigger).

[71]

The application judge also dismissed the appellants concerns about
    reputational damage, damage to its credit rating and the risk of enforcement
    proceedings. Respectfully, the appellants point was that these concerns may
    arise if the limitation defence is not advanced on its behalf. A judgment in
    the third party proceedings may go against it (causing reputational damage and
    damage to its credit rating) and it will have to enforce the hold harmless
    agreement against 863 and the Indemnity Agreement against Chavila and
    Outrigger, possibly resulting in further litigation. As I have noted, it should
    be entitled to raise every viable defence to the Main Action to avoid ever
    having to call on the indemnity.

Chavila and Outrigger have breached their duty to defend

[72]

In my view, the application judge failed to recognize and to give any
    effect to the express contractual promise of Chavila and Outrigger to assume
    the carriage and the
diligent

defence
of any legal
    proceeding (emphasis added). In so doing, he failed to construe the contract
    as a whole and fell into extricable legal error: see
1298417 Ontario Ltd.
    v. Lakeshore (Town)
, 2014 ONCA 802, 102 O.R. (3d) 401, at paras. 8-9,
    leave to appeal to S.C.C. refused, [2015] S.C.C.A. No. 43; and
Richcraft
    Homes Ltd. v. Urbandale Corp.
, 2016 ONCA 622, at para. 59.

[73]

Properly interpreted, the promise made by Chavila and Outrigger to
    provide the appellant with a diligent defence meant that they had to conduct
    the defence in good faith and exercise reasonable care and skill in doing so:
    see
Ernst & Young Inc. v. Chartis Insurance Co. of Canada
, 2014
    ONCA 78, 118 O.R. (3d) 740, at para. 70; and
Kingscourt Auto Enterprises
    Inc. v. General Accident Assurance Co. of Canada
(1992), 8 C.C.L.I. (2d)
    21 (Ont. C.J.), at p. 34. As was said in
Shea v. Manitoba Public Insurance
    Corp.
(1991), 55 B.C.L.R. (2d) 15, at para. 154, the duty to defend
    includes a duty to attempt to minimize the amount of any damages to be assessed
    against the insured.

[74]

Chavila and Outrigger have not conducted the appellants defence in good
    faith, because they have refused to instruct Mr. Schneiderman to raise the
    limitation defence against 863s claim.

[75]

The fact that the limitations defence is being advanced by Oxford and CP
    is irrelevant. The appellant was entitled to adduce evidence that 863 knew or
    ought to have known of facts that triggered the commencement of the limitation
    period more than six years before the action was commenced. To give up that defence
    just because another party is raising it is not to provide a diligent defence
    in good faith.

[76]

The duty of Chavila and Outrigger to defend also carries with it a duty
    to be free from conflicts  a duty not to steer the defence in favour of the
    indemnifying party or to soft-peddle defences that are available to the
    indemnified party: see
Appin Realty Corp. v. Economical Mutual Insurance Co
.,
    2008 ONCA 95, 89, O.R. (3d) 654, at para. 14, leave to appeal to S.C.C.
    refused, [2008] S.C.C.A. No. 145; and
Amato v. Welsh
, 2013 ONCA 258,
    205 O.A.C. 155, at para. 60. As discussed, the appellants viable limitation defence
    could not be abandoned for the benefit of 863. And the failure to provide a diligent
    defence could not be remedied by the Indemnity Agreement or by the hold
    harmless agreement offered by 863.

[77]

Finally, there is nothing in the Indemnity Agreement or its underlying
    factual matrix to suggest that the parties contemplated that the appellant would
    lose the right to a diligent defence against time-barred claims. In my view,
    there is no reasonable interpretation of that agreement that would support the
    conclusion that Chavila and Outrigger were not required to advance a viable a
    limitation period defence if one were available to the appellant. There is
    nothing in the factual matrix that would warrant overriding the express
    contractual duty to provide the appellant with a diligent defence.

[78]

While this is not an insurance case, the provisions of the Indemnity
    Agreement are akin to the promise given by a liability insurer to defend the
    insured against claims falling within the policy and to indemnify it against
    proven claims. In such circumstances, the right of the insurer (the
    indemnifying party) to control the defence and the right of the insured (the
    indemnified party) to a full and fair defence may come in conflict
: Hoang
    (Litigation Guardian of) v. Vicentini
, 2016 ONCA 723, at paras. 73-76. The
    courts responsibility is to balance these rights. As this court said in
Brockton
    (Municipality) v. Frank Cowan Co.
(2002),

57 O.R. (3d) 447 (C.A.),
    at para. 43:

The issue is the degree of divergence of interest that must
    exist before the insurer can be required to surrender control of the defence
    and pay for counsel retained by the insured. The balance is between the insureds
    right to a full and fair defence of the civil action against it and the insurers
    right to control that defence because of its potential ultimate obligation to
    indemnify. In my view, that balance is appropriately struck by requiring that
    there be, in the circumstances of the particular case, a reasonable
    apprehension of conflict of interest on the part of counsel appointed by the
    insurer before the insured is entitled to independent counsel at the insurers
    expense. The question is whether counsels mandate from the insurer can
    reasonably be said to conflict with his mandate to defend the insured in the
    civil action. Until that point is reached, the insureds right to a defence and
    the insurers right to control that defence can satisfactorily co-exist.

[79]

In my view, for the reasons given, this case has reached the point at
    which the appellants and the indemnitors rights can no longer co-exist.

[80]

I would therefore allow the appeal and order that the appellant is
    entitled to retain separate counsel at the respondents expense. I would award
    costs to the appellant fixed at $25,000, inclusive of disbursements and all
    applicable taxes.

Released: January 31, 2017

G.R. Strathy C.J.O.

[1]
The appellant Whirlpool is the corporate successor to Inglis. For ease of
    reference they will be referred to when the context permits, as Whirlpool.

[2]
Negotiations began with 921424 Ontario Limited (921) and 941600 Ontario
    Limited (941), whose corporate successors are Outrigger and Chavila
    respectively. For ease of reference they are referred to by the latter names
    where possible.

[3]
For simplicitys sake,
I adopt the abbreviations of the
    parties names and other relevant terms established by my colleague.