COURT OF APPEAL FOR ONTARIO

CITATION: Atos IT Solutions v. Sapient Canada Inc., 2018 ONCA
    374

DATE: 20180418

DOCKET: C63181

Simmons, Brown and Fairburn JJ.A.

BETWEEN

Atos IT Solutions and Services GMBH and Atos Inc.

Plaintiffs (Respondents)

and

Sapient Canada Inc.

Defendant (Appellant)

Mark Gelowitz, Alexander Cobb and Evan Thomas, for the appellant

Peter H. Griffin, Paul-Erik Veel and Laurel D. Hogg, for
    the respondents

Heard: November 27, 2017

On appeal from the judgment of
    Justice Laurence A. Pattillo of the Superior Court of Justice, dated December
    7, 2016, with reasons reported at 2016 ONSC 6852, 63 B.L.R. (5th) 1, and from the
    costs judgment, dated May 1, 2017.

Brown J.A.:

I.

OVERVIEW

[1]

Sapient Canada Inc. (Sapient) appeals three aspects of the damages
    awarded to the respondent, Atos Inc. (Atos), following a lengthy breach of
    contract trial. Sapient seeks to reduce the damages awarded to Atos from
    $6,291,680.00 to $1,510,738.89.

[2]

Sapient contends the trial judge made three errors when calculating
    damages: (i) he failed to apply the minimum performance principle set out in
Hamilton
    v. Open Window Bakery Ltd.
, 2004 SCC 9, [2004] 1 S.C.R. 303, in respect of
    the data conversion services portion of the parties contract; (ii) he did not
    properly interpret a formula in the data conversion services portion of the
    contract; and (iii) he misinterpreted a limitation of damages clause as it
    applied to application management support services.

[3]

Sapient also seeks leave to appeal the trial judges award of costs to
    Atos. It asks this court to reduce the $3.1 million costs award to zero or,
    alternatively, to remit the issue of costs to the trial judge for determination
    in accordance with the outcome of this appeal.

[4]

For the reasons set out below, I would not interfere with the trial
    judges interpretation of the two contractual provisions determining available
    damages. However, I conclude, with respect, that the trial judge erred in law
    in failing to apply the
Open Window Bakery
minimum performance
    principle.

[5]

As a result, I would vary para. 1 of his Judgment and reduce the award
    of damages to Atos to $4,947,405. Since that alters the basis upon which the
    parties had agreed to the amount of the costs below, but only in part, I would
    grant Sapient leave to appeal costs but, as agreed by the parties, would remit
    the issue of costs to the trial judge for determination in accordance with the
    results of this appeal.

II.

SUMMARY OF THE DISPUTE, THE TRIAL JUDGES FINDINGS, AND THE ISSUES

The dispute

[6]

Only a brief review of the facts is required to place the damages issues
    in context.

[7]

In early 2006, Enbridge Gas Distribution Inc. (Enbridge) embarked on a
    major project to replace its many legacy customer information software systems
    with a single new system using enterprise resource planning software on a
    single IT platform (the Project).

[8]

Sapient was the successful bidder and became the Projects prime
    contractor. Sapient entered into a fixed price subcontract with Siemens Canada
    Limited (Siemens) dated June 4, 2007, which was amended as of September 30,
    2007 (collectively, the Subcontract). The Subcontract required Siemens to
    provide two services for the Project: (i) data conversion (DC) services,
    which would convert data from the legacy systems into the new systems format;
    and (ii) application management support (AMS) services to Enbridge personnel
    for a period of time after the new system went into operation.

[9]

The respondent, Atos, is the corporate successor to Siemens. Since the
    trial judges reasons refer to Siemens, for ease of reference I will refer to
    Atos as Siemens.

[10]

The
    Project involved extensive planning and implementation. Installation of the
    software began in June 2007 but was not completed until September 2009, five
    months behind schedule.

[11]

On
    June 29, 2009 Sapient terminated the Subcontract with Siemens for cause.

[12]

Siemens
    sued, claiming damages for wrongful termination of the Subcontract. In turn,
    Sapient counterclaimed for damages arising from the delay in completing the
    Project.

The trial judges findings

[13]

The
    trial judge concluded that Sapient wrongfully terminated the Subcontract.
    However, he also held that Siemens breached parts of the Subcontract at various
    times during the Project, entitling Sapient to damages as well. Neither party
    appeals those findings.

[14]

The
    trial judge awarded damages to Siemens for both the DC and AMS services
    portions of the Subcontract. I will deal in some detail with the trial judges
    damages calculations later in these reasons. At this point, I shall simply
    summarize the awards he made to Siemens.

[15]

The
    trial judge awarded Siemens damages of $2.404 million for the balance owing for
    DC services. He rejected Sapients argument that the minimum performance principle
    in
Open Window Bakery
should limit Siemens damages to a lesser amount
    calculated in accordance with the Subcontracts termination for convenience
    clause. However, the trial judge quite properly performed an alternative
    damages calculation for DC services using the termination for convenience
    formula, resulting in alternative damages for the termination of DC services of
    $1,059,725.

[16]

The
    trial judge awarded Siemens damages of $3,575,990 for the wrongful termination
    of AMS services, representing Siemens estimated gross profits.

The issues

[17]

This
    appeal raises four issues, which I will deal with in the following order:

(i)        In
    calculating damages for the DC services portion of the Subcontract, did the
    trial judge err by failing to apply the
Open Window Bakery
minimum
    performance principle?

(ii)       If
    he did, and DC services damages should have been calculated in accordance with
    the formula contained in the Subcontracts termination for convenience clause,
    did the trial judge err in interpreting that clause?

(iii)
          In calculating damages for the AMS services portion of the Subcontract,
    did the trial judge err in his interpretation of the Subcontracts limitation
    of liability clause?

(iv)      Finally,
    if the trial judge erred in any part of his calculation of damages, should his
    award of costs be set aside and the issue of the costs below be remitted to him
    for further determination?

III.

FIRST ISSUE: DOES THE
OPEN WINDOW BAKERY
PRINCIPLE APPLY TO THE
    CALCULATION OF DAMAGES FOR DATA CONVERSION SERVICES?

A.

The issue
    stated

The Subcontracts termination provisions

[18]

Article
    17 of the Subcontract afforded Sapient two rights to terminate. First, s. 17.2
    entitled Sapient to terminate the entire Subcontract for cause by providing
    notice to Siemens in certain circumstances, one of which (contained in s.
    17.2.2) was where Siemens commits a material breach of its obligations under
    this Agreement and such breach is not capable of being cured.

[19]

A
    more limited termination right was available in s. 17.4 of the Subcontract: it
    entitled Sapient to terminate the DC services part of the Subcontract for
    convenience.

[20]

Sapient
    relied on the s. 17.2 termination for cause provision in its June 29, 2009
    termination letter by which it terminated the entire Subcontract effective
    immediately.

[21]

When
    Sapient terminated the Subcontract, the DC services were almost, if not
    entirely, complete: Trial Reasons (Reasons), at para. 325. There was little
    work left for Sapient to finish.

[22]

At
    the time of termination Siemens was putting in place the organization to
    provide AMS services, but those services would not commence until the go-live
    date in September 2009. The trial judge found Sapient had no intention of
    terminating just the Data Conversion portion of the Subcontract: Reasons,
    para. 331. Sapient wanted to provide the AMS services itself. And, in the
    result, the day after it terminated Siemens, Sapient executed a new agreement
    with Enbridge to provide AMS services.

The calculation of damages for data conversion services

[23]

The
    Subcontract set a fixed fee for DC services. Siemens damages claim for the wrongful
    termination of that portion of the Subcontract included a claim for the amount
    of the balance owing: $2,404,000.

[24]

Sapient
    contended such an award would dramatically over-compensate Siemens. Instead,
    Siemens was entitled only to the difference between the Subcontract price and
    its costs to complete the DC services. According to Sapient, Siemens had not
    established the amount of that difference.

[25]

The
    trial judge accepted Siemens submission that the proper measure of damages for
    the termination of the DC services portion of the Subcontract was the balance
    owing.

[26]

Sapient
    advanced an alternative argument: Siemens was only entitled to damages for DC
    services calculated in accordance with the formula contained in the Subcontracts
    termination for convenience clause. Although Sapient had invoked the
    termination for cause provision (s. 17.2) to end the Subcontract, not the
    termination for convenience clause (s. 17.4), it argued that using the termination
    for convenience formula would result in it paying a smaller amount of damages. Sapient
    pointed to the
Open Window Bakery
minimum performance principle to
    argue it was entitled to the benefit of the less burdensome mode of performance
    of the Subcontract offered by the termination for convenience clause.

[27]

At
    paras. 327 to 331 of the Reasons, the trial judge described Sapients argument
    and explained why he rejected it:

Sapient further submits that even if it did not have the right
    to terminate the Subcontract for cause, it had the right to terminate the Data
    Conversion portion of the Subcontract for convenience pursuant to Section 17.4
    of the Subcontract. Accordingly, it submits that Siemens damages in respect of
    Data Conversion should be limited to the amount provided for in Section 17.4 in
    accordance with the rule confirmed by the Supreme Court of Canada in
Hamilton
    v. Open Window Bakery Ltd.
, 2004 SCC 9, [2004] 1 S.C.R. 303. According to
    that rule, where there are several ways in which a contract may be performed,
    damages are awarded based on the mode of performance that is least profitable
    to the plaintiff and least burdensome to the defendant.

Section 17.4 of the Subcontract (Section 2.5 of the Data
    Conversion Amendment) provides:

Sapient may terminate the Data Conversion Services for
    convenience by providing notice to the Subcontractor of such termination,
    effective as of the date set forth in the notice of termination. Subcontractor
    shall receive payment for the last milestone preceding the termination plus the
    lesser of (a) a time and materials rate of $1450 per person (not to exceed 12
    people) per day for each day of Data Conversion Services provided following the
    last completed milestone until the effective date of termination, plus a one time
    charge of $50,000 and (b) the amount due at the next milestone, had the Data
    Conversion Services not been terminated.

Sapient submits that, given the termination date of June 29,
    2009, the amount that would be owing to Siemens in accordance with the formula
    set out in Section 17.4 is $622,725.

In my view, the rule in
Open Window
does not apply to
    Sapients termination of the Subcontract having regard to its terms. Simply
    put, given Sapients intention to terminate the entire Subcontract pursuant to
    Section 17.2, Section 17.4 is not an alternative mode of performance permitting
    Sapient to terminate the entire Subcontract.

Section 17.2 of the Subcontract permitted Sapient to terminate
    the entire Subcontract, including AMS. As I have found, that is exactly what
    Sapient intended to do. It had no intention of terminating just the Data
    Conversion portion of the Subcontract. On the other hand, Section 17.4, the
    termination for convenience provision, applies only to the Data Conversion
    portion of the Subcontract. Accordingly, termination for convenience is not an
    alternate mode enabling Sapient to terminate the entire Subcontract. It follows
    that because Sapient intended to terminate the entire Subcontract, it cannot
    rely on the termination for convenience provision to limit Siemens Data
    Conversion damages.

The issue on appeal

[28]

Sapient
    submits the trial judge erred in law by failing to calculate damages for the DC
    services portion of the Subcontract in accordance with the minimum performance
    principle. That error attracts review on the correctness standard.

[29]

Siemens
    argues the trial judge was quite right in his conclusion that the minimum
    performance principle did not apply. Since Sapient could not terminate the
    entire Subcontract using the termination for convenience clause, the
    Subcontract did not contain an alternative means of performance upon which the
    minimum performance principle rests. Further, the reasons in
Open Window
    Bakery
must be read in light of the decision of the Supreme Court of
    Canada in
Bhasin v. Hrynew
, 2014 SCC 71, [2014] 3 S.C.R. 494, which
    recognized an over-arching duty of good faith and honest performance of
    contracts. In the present case, bad faith characterized Sapients termination
    of the Subcontract. As a result, Siemens argues, the minimum performance principle
    could not apply.

B.

Analysis

The minimum performance principle

[30]

Compensatory
    damages are the usual measure of damages for breach of contract. The expectancy
    principle governs the calculation of compensatory damages. It requires the
    breaching party to pay as damages an amount that will provide the non-breaching
    party with the financial equivalent of performance: John D. McCamus,
The
    Law of Contracts
, 2d ed. (Toronto: Irwin Law, 2012), at p. 871; and Angela
    Swan & Jakub Adamski,
Canadian Contract Law
, 3d ed. (Markham, ON:
    LexisNexis Canada, 2012), at pp. 381-383.

[31]

The
    common law places several limits on the expectancy principle: see McCamus, at
    pp. 877-882; and Swan & Adamski at p. 471. One limit is the minimum
    performance principle. The principle has been expressed in several different
    ways. In
Open Window Bakery
, at paras. 11 and 20, the Supreme Court of
    Canada expressed the principle this way: in cases where the defaulting party
    had alternative modes of performing the contract, damages are calculated on the
    basis of the mode of performance least burdensome to the defaulting party and
    least profitable to the non-breaching party.

[32]

The
    jurisprudence and legal literature contain other formulations of the minimum
    performance principle:

(i)

[D]amages for breach of a contract with alternative performances are
    assessed by reference to the promisors minimum or least extensive performance:
    Michael G. Pratt, Damages for Breach of Contracts with Alternative
    Performances in Jeff Berryman & Rick Bigwood, eds.,
The Law of
    Remedies: New Directions in the Common Law
(Toronto: Irwin Law, 2010), p. 105
    at p. 107;

(ii)

[W]here the option of fulfilling one of two alternative promises rests
    with the promisor who is in default, the measure of damages is the loss caused
    by reason of the promisor failing to perform the promise with the lesser value:
Stewart v. Cran-Vela Rental Co., Inc.
, 510 F.2d 982 (U.S. C.A. 5th
    Cir. 1975), at p. 986; and

(iii)

Damages are assessed on the basis that the defendant will perform the
    contract in the way most beneficial to himself and not in the way that is most
    beneficial to the plaintiff:
Withers v. General Theatre Corp.
, [1933]
    2 K.B. 536 (C.A.), at p. 549.

[33]

In
Withers
, at p. 549, the English Court of Appeal gave a simple example
    of the principle in operation. If a vendor agreed to sell a purchaser 800 to
    1200 tons of a certain commodity but failed to deliver any amount, the court
    would assess damages on the basis the vendor had failed to supply the lower
    amount  800 tons  not on the basis of a failure to supply the higher amount
    of 1200 tons.

[34]

In
    the
Open Window Bakery
case, the supplier, Open Window Bakery (OWB),
    was entitled under the terms of its contract with a distributor, Hamilton, to
    terminate in several ways, two of which were relevant on appeal: (i) for cause;
    or (ii) on three months notice, without cause, but only after the 19
th
month of the contractual term.

[35]

The
    trial judge, as summarized by the Supreme Court at para. 7, held that OWB
    wrongfully repudiated the contract and awarded damages reflecting the payments
    that would have been made under the full 36-month term of the contract, less an
    allowance of 25 percent. The discount reflected the possibility that OWB might
    at some later point have validly exercised its right to terminate the contract
    with notice (citations omitted).

[36]

This
    court and the Supreme Court, however, held that damages for OWBs wrongful
    termination of the contract for cause should be calculated on the basis of the
    three-months notice provision. The Supreme Court explained the rationale for applying
    the minimum performance principle, at paras. 17-18:

[U]nder the general principle applicable in breach of contracts
    with alternative performances enunciated above, it is not necessary that the
    non-breaching party be restored to the position they would likely, as a matter
    of fact, have been in but for the repudiation.  Rather, the non-breaching party
    is entitled to be restored to the position they would have been in had the
    contract been performed.

In this case, the relevant contractual duties have been
    expressly set out by the parties in the agreement.  Hamilton is entitled to
    OWBs performance of these voluntarily assumed duties.  Hamilton has no
    compensable interest in the advantages she might have expected under any
particular
performance of the contract, since the
    contract itself provided for alternative methods of performance at the election
    of the defendant.  If Hamilton wanted to secure herself the benefits associated
    with a given particular method of performance, she should have contracted for
only that
method of performance. [Emphasis in original.]

[37]

In
Open Window Bakery
, the Supreme Court acknowledged that [t]he method
    of performance that is most advantageous or least costly for the defendant may
    not always be clear at the outset from the contracts terms; as a result, [a]
    court may have to consider evidence to determine an estimated cost of the
    various means of performance: para. 21. The need for such a factual inquiry,
    however, does not undermine the general principle: para. 21.

Application to the present case

[38]

The
    trial judge held that the minimum performance principle did not apply to
    Sapients termination of the Subcontract because the termination for
    convenience clause was not an alternative mode open to Sapient to terminate the
    entire Subcontract. That clause only entitled Sapient to terminate the DC
    services part of the Subcontract, not the AMS services portion. Since Sapient intended
    to terminate the entire Subcontract, not just the DC services portion, it was
    not entitled to have the damages for its termination of DC services calculated
    using the less burdensome formula in the termination for convenience clause:
    Reasons, paras. 330-331.

[39]

With
    respect, I disagree. Instead, I accept Sapients submission that the damages
    for the wrongful termination of the DC services should have been calculated on
    the basis of the minimum performance Siemens was entitled to expect under the
    Subcontract with respect to those services alone.

[40]

Under
    the terms of the Subcontract, Sapient could terminate the DC services portion in
    one of two ways: (i) under s. 17.4, for convenience; or (ii) under 17.2, for
    cause. Although the Subcontract did not contain a formula for calculating
    damages where DC services were terminated for cause, s. 17.4 specified the formula
    the parties were to use where those services were terminated for convenience. In
    those circumstances, the minimum performance principle applied to the
    calculation of damages for the termination of the DC services because the alternative
    mode of performance contained in s. 17.4 shaped and constrained Siemens reasonable
    expectations concerning the damages it could recover in the event Sapient
    terminated the DC services.

[41]

That
    Sapient terminated the entire contract, and not just the DC services portion, does
    not alter how the expectancy principle operates in connection with its termination
    of the DC services. The terms of the Subcontract did not prevent Sapient
    terminating both the DC and AMS services portions at the same time. The
    termination for convenience clause did not stipulate it would apply only in the
    event Sapient terminated the DC services portion but continued the contract
    with Siemens for AMS services.

[42]

On
    the language of the Subcontract, it was open to Sapient to use the termination
    for convenience clause to terminate the DC services part, while relying on the
    termination for cause provision to terminate the rest of the contract. While
    Sapient did not purport to terminate the Subcontract in that fashion, it was a
    mode of termination open on the language of ss. 17.2 and 17.4. Even if Sapient ultimately
    could not justify its termination of AMS services for cause, that would not
    alter the limit placed by the Subcontracts language on Siemens reasonable
    expectation about the damages recoverable for the termination of the other part
    of the contract involving DC services. The termination for convenience clause
    effectively defined the upper limit of Sapients liability for damages in
    respect of DC services:
Open Window Bakery
(2002), 58 O.R. (3d) 767
    (C.A.), at para. 43, varied on other grounds, 2004 SCC 9, [2004] 1 S.C.R. 303,
    at paras. 9 and 23.

[43]

Siemens
    argues that even if the terms of the Subcontract provided Sapient with alternative
    modes of performance, the minimum performance principle should not apply
    because Sapient did not act in good faith when it terminated the Subcontract.
    Siemens contends the minimum performance principle should be read in light of
    the over-arching duty of good faith and honest performance recognized in
Bhasin
.
    Siemens argues that, in terminating the Subcontract, Sapient breached its
    common law duty of good faith, as well as its contractual duty of good faith
    set out in s. 20.1 of the Subcontract. Consequently, Sapient cannot take
    advantage of the less burdensome damages calculation formula contained in the Subcontracts
    termination for convenience clause.

[44]

I
    am unable to accept these submissions for two reasons.

[45]

First,
    although the trial judge found that Sapient did not act in good faith when invoking
    the termination for cause provision to end the entire Subcontract, he did not conclude
    that Sapients lack of good faith barred the application of the minimum
    performance principle. Instead, he concluded the principle did not apply
    because the termination for convenience clause was not an available alternative
    mode of performance given Sapients intention to terminate the entire
    Subcontract, not just the DC services portion.

[46]

Second,
    in
Agribrands Purina Canada Inc. v. Kasamekas
, 2011 ONCA 460, 106 O.R.
    (3d) 427, at para. 47, this court stated that the application of the minimum
    performance principle did not depend upon good faith conduct by the breaching
    party.

[47]

Siemens
    submits that the decision in
Agribrands
has been overtaken by that in
Bhasin
.
    I am not persuaded by that submission.
Bhasin
focused on the issue of
    the performance of contracts: specifically, the existence of a general
    organizing principle of good faith contractual performance and a common law
    duty to perform contractual obligations honestly.
Bhasin
did not
    purport to alter the existing principles concerning the proper measure of
    expectation damages in the event of a breach of contract.

[48]

Indeed,
    there are suggestions in
Bhasin
 albeit not definitive  that the
    minimum performance principle operates in conjunction with the general
    organizing principle of good faith. Recall that in
Bhasin
the contract
    ran for an initial term of three years, with an automatic renewal for a further
    three years unless one party gave six months written notice to the contrary.
    At issue was whether the terminating party, Can-Am, had acted honestly in
    exercising the non-renewal clause. In the course of discussing the breadth of
    an organizing principle of good faith, the Supreme Court alluded to the minimum
    performance principle when it stated, at para. 90:

Even if there were a breach of a broader duty of good faith by
    forcing the merger, Can-Ams contractual liability would still have to be
    measured by reference to the least onerous means of performance, which in this
    case would have meant simply not renewing the contract. Since no damages flow
    from this breach, it is unnecessary to decide whether reliance on a
    discretionary power to achieve a purpose extraneous to the contract and which
    undermined one of its key objectives might call for further development under
    the organizing principle of good faith contractual performance.

[49]

Given
    that comment, I am not persuaded, as Siemens submits, that this courts
    decision in
Agribrands
has been overtaken by that in
Bhasin
.

[50]

Accordingly,
    I conclude the trial judge should have applied the minimum performance principle
    and calculated Siemens damages for the wrongful termination of the DC services
    portion of the Subcontract by using the formula in s. 17.4, the termination for
    convenience clause. His failure to do so amounted to an error of law, which is subject
    to review on the correctness standard:
Deslaurier Custom Cabinets Inc. v.
    1728106 Ontario Inc.
, 2017 ONCA 293, 135 O.R. (3d) 241, at paras. 58-61,
    leave to appeal refused, 37039 (Oct. 19, 2017). Accordingly, I would set aside
    his finding that Siemens was entitled to damages for the wrongful termination
    of the DC services portion of the Subcontract in the amount of $2,404,000: Reasons,
    at paras. 321, 345 and 410.

IV.

SECOND
    ISSUE: THE INTERPRETATION OF THE DAMAGES FORMULA IN THE TERMINATION FOR
    CONVENIENCE CLAUSE

A.

The issue
    stated

[51]

As
    noted, the trial judge performed an alternative calculation of damages in
    accordance with the formula set out in the Subcontracts termination for
    convenience clause. That section, s. 17.4, provided for a payment to Siemens
    calculated as follows:

[Siemens] shall receive
    payment for the last milestone preceding the termination
plus the lesser
    of (a) a time and materials rate of $1450 per person (not to exceed 12 people)
    per day for each day of Data Conversion Services provided following the last
    completed milestone until the effective date of the termination, plus a one
    time charge of $50,000 and (b) the amount due at the next milestone, had the
    Data Conversion Services not been terminated. [Emphasis added.]

[52]

Sapient
    had argued that under the termination for convenience clause Siemens was
    entitled to damages of $622,725. Siemens disagreed. It submitted that s. 17.4
    entitled it to an additional $437,000, representing the payment due for the
    last milestone preceding termination. As put by the trial judge, the dispute
    was what is meant by the words for the last milestone preceding termination
    in Section 17.4.

[53]

The
    trial judge accepted Siemens submission that it was entitled to an additional
    $437,000. He stated, at paras. 336 to 338:

The plain language of the words in that Section provides that
    Sapient must pay Siemens for the last milestone preceding the termination in
    the event of termination. Significantly, the words do not provide that payment
    in respect of the last milestone is only to be made if it has not yet been
    paid.

Further, it is reasonable to conclude that at the time the
    termination for convenience provision is invoked, Sapients obligation to pay
    the previous milestone would have already crystallized and been paid.
    Consequently, the provision in Section 17.4 to pay for the last milestone
    preceding termination is not to ensure that Siemens was paid for that previous
    milestone but rather to provide an additional level of compensation to Siemens
    given that termination was for convenience and not cause.

I conclude, therefore, that Section 17.4 requires Sapient to
    pay to Siemens the amount owing for the last milestone preceding termination
    regardless of whether that amount has already been paid, together with the
    lesser of the two amounts set out for services since the last completed
    milestone.

[54]

The
    trial judge concluded Siemens would be entitled under s. 17.4 to damages for
    breach of the DC services in the amount of $1,059,725  the undisputed
    $622,725, plus an additional $437,000.

B.

The
    positions of the parties

[55]

Sapient
    submits the trial judge interpreted the formula in s. 17.4 in a commercially
    absurd manner. Under his interpretation, Siemens would be entitled to a payment
    of $437,000 for the last milestone preceding the termination even though it
    already had received payment for that milestone. According to Sapient, where a
    contract provides that a party shall receive payment for something, it
    means only one payment, unless clear words to the contrary are present to
    sanction payment twice.

[56]

Siemens
    contends that the plain language of s. 17.4 supports the trial judges
    interpretation. The section does not provide that payment for the last
    milestone was to be made only if it had not already been paid. The trial
    judges interpretation was reasonable and entitled to deference.

C.

Analysis

[57]

The
    standard of review applicable to the contractual interpretation issues raised
    on this appeal is that set out by the Supreme Court of Canada in
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, and
    subsequent decisions. As summarized by this court in
Weyerhaeuser Company
    Limited v. Ontario (Attorney General)
, 2017 ONCA 1007, 13 C.E.L.R. (4th)
    28, at para. 55:

That standard holds the interpretation of non-standard form
    contracts involves issues of mixed fact and law that are subject to deferential
    review on appeal and in respect of which appellate courts may not intervene in
    the absence of a palpable and overriding error. Although it may be possible to
    identify an extricable question of law in a contractual interpretation dispute,
    courts should be cautious about identifying such questions because of the close
    relationship between the selection and application of principles of contractual
    interpretation. The construction ultimately given to the contract means that
    the circumstances in which a question of law can be extricated from the
    interpretation process will be rare:
Sattva
, paras. 50 to 55;
Ledcor
    Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC 37, at
    para. 24;
Uniprix inc. v. Gestion Gosselin et Bérubé inc.
, 2017
    SCC 43, at para. 41.

[58]

On
    first impression, how to interpret the phrase for the last milestone preceding
    the termination in s. 17.4 of the Subcontract would seem to raise a
    quintessential question of mixed fact and law, with the trial judges
    interpretation entitled to deference. However, Sapient contends the
    interpretation reached by the trial judge ran afoul of the legal principle of
    contractual interpretation that requires any interpretation to accord with good
    business sense and avoid a commercial absurdity. Sapient paints the trial
    judges interpretation as offending that principle, thereby raising an
    extricable question of law which attracts review on a correctness standard.

[59]

Sapients
    argument does not persuade me.

[60]

The
    interpretive principle of commercial efficacy  and its corollary, avoiding
    interpretations that result in a commercial absurdity  is merely one of
    several tools used by courts to give an accurate meaning to the parties
    intentions as stated in a contract: Geoff R. Hall,
Canadian Contractual
    Interpretation Law
, 3d ed.

(Toronto: LexisNexis Canada, 2016), at
    pp. 55-66. Commercial reasonableness is not judged solely from the perspective
    of one of the contracting parties but rather must be assessed objectively:
    Hall, at p. 57. [I]n assessing commercial reasonableness the court will
    consider both the language of the contract as a whole (such that individual
    provisions are not assessed in isolation for commercial reasonableness) and the
    factual matrix (as the surrounding circumstances are essential to understanding
    whether a particular interpretation makes good business sense): Hall, at p.
    58.

[61]

The
    trial judges reasons disclose that he was attentive to the plain language of
    s. 17.4, the provisions of the Subcontract as a whole, and the factual matrix
    from which the Subcontract emerged. Given those circumstances, little ground
    remains on which Sapient can erect an argument based on commercial absurdity.

[62]

Moreover,
    the trial judge offered a commercial rationale for interpreting s. 17.4 as
    requiring an additional payment of $437,000. He stated, at para. 337:

Further, it is reasonable to conclude that at the time the
    termination for convenience provision is invoked, Sapients obligation to pay
    the previous milestone would have already crystallized and been paid. Consequently,
    the provision in Section 17.4 to pay for the last milestone preceding
    termination is not to ensure that Siemens was paid for that previous milestone
    but rather to provide an additional level of compensation to Siemens given that
    termination was for convenience and not cause.

[63]

As
    the trial judge noted, a payment of $437,000 due for the last milestone preceding
    termination would amount to only 10% of the total Subcontract price. Although a
    material amount, in the circumstances of this case awarding damages of that
    magnitude would not come close to approaching a commercially unreasonable result.

[64]

Accordingly,
    I see no basis for appellate interference with the trial judges interpretation
    of s. 17.4. He applied the governing principles of contractual interpretation
    and clearly explained the basis for his interpretation. His interpretation was
    reasonable in the circumstances and was not the product of palpable and
    overriding error. I would not give effect to this ground of appeal.

V.

THIRD ISSUE: DAMAGES FOR AMS SERVICES

A.

The issue
    stated

[65]

The
    AMS portion of the Subcontract required Siemens to implement and operate a 24/7
    toll free call centre to respond to questions or concerns from Enbridge
    personnel after the new system went into operation. Although Siemens delivery
    of the AMS services would start after the new system went live, the Subcontract
    required Siemens to perform some preparatory work, including having AMS
    personnel on site before the go-live date.

[66]

The
    trial judge did not accept Sapients position that it had cause to terminate
    the AMS portion of the Subcontract because of a lack of urgency by Siemens in
    performing the preparatory work. He found that as of June 29, 2009 Siemens was
    not in breach of its contractual obligations concerning AMS services.

[67]

Siemens
    claimed damages for loss of profits arising from Sapients wrongful termination
    of the AMS portion of the Subcontract in the amount of $3,575,990. That amount
    represented Siemens estimate of the total gross profits it would have earned
    from the AMS portion of the Subcontract had it remained in force for the full
    three year period following the go live date. The trial judge accepted the
    accuracy of Siemens estimate.

[68]

Sapient contended that s. 18.6 of the Subcontract, entitled Limitation
    of Liability, precluded Siemens from recovering damages for lost profits
    resulting from the termination of the AMS services. The relevant portions of s.
    18.6 provided:

18.6.1 SUBJECT TO SECTION 18.6.2, NOTWITHSTANDING
    ANYTHING TO THE CONTRARY HEREIN, EACH OF SUBCONTRACTOR AND SAPIENT WILL BE
    LIABLE TO THE OTHER WITH RESECT TO THIS AGREEMENT AND ANY OTHER OBLIGATIONS
    RELATED THERETO
ONLY FOR DIRECT DAMAGES
AND FOR AN AMOUNT THAT WILL
    NOT EXCEED, IN THE AGGREGATE

.

FOR GREATER CERTAINTY, SUBJECT TO SECTION 18.6.2,
    NEITHER SUBCONTRACTOR NOR SAPIENT WILL BE LIABLE TO THE OTHER FOR INDIRECT,
    SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR FOR LOSS OF PROFITS
    (COLLECTIVELY,
EXCLUDED DAMAGES
), EVEN IF THE PARTY HAS BEEN ADVISED
    OF THE POSSIBILITY OF SUCH DAMAGES.

18.6.3 THIS SECTION 18.6 WILL APPLY IRRESPECTIVE OF
    THE NATURE OF THE CAUSE OF ACTION, DEMAND OR CLAIM, INCLUDING BUT NOT LIMITED
    TO, BREACH OF CONTRACT (INCLUDING FUNDAMENTAL BREACH), NEGLIGENCE, TORT OR ANY
    OTHER LEGAL THEORY, AND WILL SURVIVE A FUNDAMENTAL BREACH OR BREACHES AND/OR
    FAILURE OF ESSENTIAL PURPOSE OF THIS AGREEMENT OR OF ANY REMEDY CONTAINED
    HEREIN. [Bold in original and italics added.]

[69]

Sapient
    argued s. 18.6.1 clearly excluded any liability on its part for loss of
    profits, with the result that Siemens damages for the AMS portion of the
    Subcontract should be limited to its alternative claim of incremental staffing
    costs in the amount of $543,548.89.

[70]

The
    trial judge did not accept Sapients position. He started his analysis by considering
    the first step in the test set out in
Tercon Contractors Ltd. v. British
    Columbia (Ministry of Transportation and Highways
), 2010 SCC 4, [2010] 1
    S.C.R. 69, at para. 122. Under the first step, a court must ask whether the
    exclusion clause would even apply in the circumstances of the case.

[71]

The
    trial judge applied the principles of contractual interpretation discussed in
Sattva
and concluded, at para. 354, that when the words in Section 18.6.1 are read
    both on their own and in the context of the Subcontract as a whole, the
    limitation of liability set out in Section 18.6.1 does not apply to Siemens
    damage claim for loss of profits in respect of AMS.

[72]

The
    trial judge explained how he reached this conclusion, at paras. 356 to 361 of
    his reasons:

Turning first to the wording of Section 18.6, the wording in
    Section 18.6.1, which limits damages to direct damages only, includes loss of
    profits under the Subcontract. As previously discussed, expectation damages,
    which are direct damages, include loss of profits.

Section 18.6.1 goes on, however, for greater certainty to
    provide that neither Siemens nor Sapient will be liable to the other for
    indirect, special, consequential or punitive damages or for loss of profits
    (collectively, Excluded Damages), even if the party has been advised of the
    possibility of such damages.

Given the above grouping and inclusion of loss of profits as
    Excluded Damages along with indirect, special and consequential damages, in
    my view the reference to loss of profits in Section 18.6.1 refers to
    consequential or indirect lost profits, i.e., a breach that causes either
    Siemens or Sapient to lose profit from other work forgone as a result of the
    breach. Consequential lost profits do not include profits under the Subcontract
    but rather are indirect losses which are only recoverable when they are
    foreseeable or communicated to the defendant:
Hadley v. Baxendale
(1854), 9
    Exch. 341, 156 E.R. 145 (Eng. Ex. Div.) at para. 3. My conclusion
    that the provision of loss of profits in Excluded Damages relates to
    consequential or indirect profits is further confirmed by the concluding words
    of the paragraph which provide: even if the party has been advised of the
    possibility of such damages. That language is in accordance with the
Hadley
recovery
    principle for consequential damages.

In my view, the above interpretation of loss of profits in s.
    16.1 is also confirmed when considering the context of the Subcontract. The AMS
    portion of the Subcontract is a fixed price commercial contract for services.
    It is reasonable to assume that parties who enter into such a contract would
    rely on the fact that they would receive the loss of profit component of the
    price in the event of a breach. As stated by Professor Waddams in the
Law
    of Contracts
, (6
th
ed.), at pp. 523-524, the main purpose
    of contracts in a commercial context is to allow and protect reliance. The
    learned author goes on to state:

Thus reliance can only be fully protected, at least in a
    commercial context, by a rule that measures damages by the value of
    performance, enabling the plaintiff to recover what has been called the
    expectation interest or damages for the loss of bargain.

Further, there is no evidence surrounding the formation of the
    contract that would support a finding that it was the intention of the parties
    at the outset of the Subcontract that the limitation of liability clause would
    apply to prevent the recovery of loss of profits in the event of a breach of
    the Subcontract.

For the above reasons, therefore, I conclude as a matter of
    interpretation that the limitation of liability clause in Section 18.6 of the
    Subcontract does not apply to Siemens claim for loss of profits arising from
    Sapients breach of the AMS portion of the Subcontract. The claim for lost
    profits is a direct damage claim and does not come within the exclusion in
    Section 18.6.1 of the Subcontract. As a result of my conclusion, as noted above
    by Justice Binnie in
Tercon
, there is no need to proceed further
    with the
Tercon
analysis.

[73]

The
    trial judge awarded Siemens damages of $3,575,990 for Sapients breach of the
    AMS portion of the Subcontract.

B.

Positions
    of the parties

[74]

Sapient
    advances two main arguments in support of its position that the trial judge
    erred in concluding s. 18.6.1 did not exclude a claim for loss of profits: (i)
    the proper interpretation of this exclusion clause involves an extricable
    question of law to which the correctness standard applies; or (ii)
    alternatively, the trial judge made a palpable and overriding error in light of
    the unambiguous and unqualified language chosen by the parties in s. 18.6 to
    exclude liability for loss of profits.

[75]

Siemens
    contends the trial judges interpretation of the limitation of liability
    provision is a question of mixed fact and law, reviewable on a deferential
    standard. His interpretation was a reasonable one.

C.

Analysis

The standard of review

[76]

In
    support of its argument that the correctness standard applies, Sapient points
    to this courts decision in
Biancaniello v. DMCT LLP
, 2017 ONCA 386, 138
    O.R. (3d) 210. Sapient contends
Biancaniello
stands for the
    proposition that the interpretation of a contractual term that uses language
    common to other contracts  such as consequential or indirect damages  involves
    an extricable question of law to which the correctness standard applies.

[77]

I
    am not persuaded by this submission.

[78]

Sapient
    seeks to stretch the decision in
Biancaniello
beyond its specific
    circumstances. At issue in that case was whether the words releasing any claim
    existing to the present time covered claims unknown at the time the parties
    signed a release. The issue of the standard of review was intertwined with the
    litigation history of the case: leave to appeal had been granted by the
    Divisional Court from the initial dismissal of the summary judgment motion; the
    Divisional Court dismissed the appeal; and then this court granted further
    leave to appeal. This court stated, at paras. 20-22, that this litigation
    history affected the applicable standard of review because leave to appeal would
    only have been granted if the issue raised was one of general public
    importance.

[79]

Consequently,
    I do not read this courts explanation in
Biancaniello
for its choice
    of the correctness standard of review in that particular case as establishing some
    broader proposition that a correctness standard applies to contractual
    interpretation when a non-standard form contract uses words found in other
    agreements. The choice of the standard of review in
Biancaniello
was
    firmly rooted in that cases procedural history.

[80]

Further,
    Sapients submission that a correctness standard should apply where a
    non-standard form contract uses words found in other contracts runs against the
    grain of two basic directions given by this court about contractual
    interpretation.

[81]

First,
    following
Sattva
this court has cautioned that reviewing courts should
    be slow to identify extricable questions of law in interpretation disputes
    given that the goal of ascertaining the objective intentions of the parties is inherently
    fact specific:
Trillium Motor World Ltd. v. Cassels Brock & Blackwell
    LLP
, 2017 ONCA 544, 72 B.L.R. (5th) 177, at para. 25, leave to appeal refused,
    [2017] S.C.C.A. No. 366, citing
Sattva
, at paras. 54-55. As
Sattva
emphasized, at para. 55, [t]he close relationship between the selection and
    application of principles of contractual interpretation and the construction
    ultimately given to the instrument means that the circumstances in which a
    question of law can be extricated from the interpretation process will be rare.
    To adopt the correctness standard whenever a contract uses a word found in
    another would turn the rare into the common.

[82]

Second,
    the meaning of a contractual term is derived not just from the words used, but
    from the context or circumstances in which the words are used. Sometimes it may
    prove difficult to understand contractual language without some knowledge of
    its context and the purpose of the contract:
Dumbrell v. The Regional Group
    of Companies Inc.
, 2007 ONCA 59, 85 O.R. (3d) 616, at para. 52. This too
    militates against adopting the correctness standard of review simply because a
    contract uses a word found in other agreements.

[83]

Accordingly,
    the trial judges interpretation of s. 18.6 of the Subcontract attracts the
    deferential
Sattva
standard of review.

The trial judges interpretation of s. 18.6 of the Subcontract

[84]

Sapient
    contends the trial judge made numerous errors in interpreting s. 18.6: (i) he
    failed to determine the parties intentions in accordance with the language
    they used; (ii) he read one part of s. 18.6  direct damages  in isolation,
    without construing the contract as a whole; (iii) he ignored the ordinary and
    grammatical meaning of the clause, including the disjunctive language used; (iv)
    his interpretation deprived the phrase loss of profits of any meaning; (v) he
    failed to consider the clause in relation to a similar (but not identical)
    clause in the Prime Contract between Sapient and Enbridge; and (vi) he did not
    have regard to the overall commercial context of the Subcontract.

[85]

I
    would not accept these submissions. Sapients long list of purported errors
    simply reflects its disagreement with the trial judges detailed analysis, at
    paras. 356 to 361 of the Reasons, reproduced above. Sapient would have
    interpreted s. 18.6 in a different fashion. So be it. Reasonable people can
    disagree about the meaning of some contractual provisions.

[86]

But
Sattva
and its successors are premised on the inevitability of
    reasonable disagreements about the interpretation of provisions in a
    non-standard form contract. Where, as in this case, the trial judge gives a
    considered, detailed, and context-sensitive explanation about how he arrived at
    the specific interpretation, and his analysis is not marked by a rare
    extricable error of law or palpable and overriding errors of fact, then an
    appellate court should defer to his interpretation. That another interpretation
    might reasonably be available does not provide a basis for appellate
    intervention.

[87]

Accordingly,
    I would not give effect to this ground of appeal.

VI.

SUMMARY ON THE APPEAL FROM DAMAGES

[88]

I
    conclude the trial judge erred in his assessment of the damages for the
    termination of DC services. Instead of awarding damages based upon the balance
    owing for DC services ($2,404,000), he should have applied the formula
    contained in s. 17.4 of the Subcontract. However, I see no basis for appellate
    intervention in the alternative damages calculation he performed under s. 17.4
    ($1,059,725) or in his award of damages for termination of the AMS services
    part of the Subcontract.

[89]

Consequently,
    I would reduce the damages awarded to Siemens by $1,344,275 (i.e., $2,404,000 less
    $1,059,725). That would result in an award of damages to Siemens of $4,947,405
    (i.e., $6,291,680 less $1,344,275).

VII.

FOURTH
    ISSUE: COSTS

[90]

Siemens
    and Sapient resolved the costs below, fixed at an award of $3,100,000 to
    Siemens, subject to the outcome of any appeal made by Sapient.

[91]

In
    the event this court reduced the damages awarded to Siemens, the parties agreed
    that the costs of the proceedings below should be remitted to the trial judge
    for his further consideration.

VIII.

DISPOSITION

[92]

For
    the reasons set out above, I would reduce the damages awarded to Siemens by
    $1,344,275. Accordingly, I would set aside para. 1 of the judgment and
    substitute an award of damages in favour of Siemens in the amount of
    $4,947,405. I would also set aside the award of costs to Siemens and remit the
    issue of the costs below back to the trial judge.

[93]

The
    parties agreed that the successful party on the appeal would be entitled to
    costs fixed at $50,000. In the result, success on the appeal has been mixed. In
    the event the parties are unable to resolve the issue of the costs of the
    appeal, they may file brief, written cost submissions to the panel no later
    than April 30, 2018.

Released: DB Apr 18 2018

David Brown J.A.
I agree. Janet Simmons J.A.
I agree. Fairburn J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Auciello v. CIBC Mortgages Inc., 2018 ONCA 377

DATE: 20180419

DOCKET: C63861

Pepall, Roberts and Miller JJ.A.

BETWEEN

Vito Auciello

Plaintiff

(Appellant)

and

CIBC
    Mortgages Inc., Home Trust Company
and

Sun Life Assurance Company
    of Canada

Defendants

(
Respondents
)

Vito Auciello, acting in person

Onofrio Ferlisi, for the respondent CIBC Mortgages Inc.
    previously carrying on business as 3877337 Canada Inc.

Amanda Jackson, for the respondent Home Trust Company

Heard: April 12, 2018

On appeal from the judgment of Justice Carole J. Brown of
    the Superior Court of Justice, dated April 25, 2017, with reasons reported at
    2017 ONSC 2360.

REASONS FOR DECISION

[1]

The appellant appeals
from the order of C. Brown
    J., granting summary judgment to the respondents and dismissing the appellants
    action against them.

[2]

The respondent, CIBC Mortgages Inc. previously
    carrying on business as 3877337 Canada Inc. (387), is a mortgage broker that
    arranges mortgages for clients with financial institutions.  The appellant
    contacted 387.  He advised 387s representative that he wished to refinance
    adjoining commercial properties, which he believed to be worth $1.2 million,
    with a new first mortgage of $600,000.  387s representative suggested Home
    Trust Company (Home Trust) as a potentially suitable lender but indicated
    that a property appraisal would be required.  Subsequently, the appellant
    advised 387s representative that the properties were owned by Network Cash
    Mart Ltd. (Network).

[3]

Ultimately, the appellant executed a Home Trust
    mortgage commitment letter in Networks name as mortgagor and his name as
    guarantor.  The commitment was subject to certain conditions, including an
    appraisal reflecting a minimum property value of $1.2 million.

[4]

The first appraiser advised that a $1.2 million
    was unrealistic but did not compile an appraisal report.  The motion judge
    found that this was a courtesy to the prospective mortgagor so that it would
    not be charged for an appraisal report that did not meet the commitment
    requirement.  A second appraiser also declined to complete an appraisal because
    the valuation was unrealistic.

[5]

To assist the appellant, Home Trust asked the
    first appraiser to complete an appraisal report.  The appraisal confirmed an as-is
    value of $600,000 and a value if complete of $665,000.  Based on this
    appraisal, Home Trust provided a new commitment for mortgage financing of
    $390,000, subject to certain conditions.  The appellant did not accept the new
    commitment.  The first commitments $1.2 million appraisal condition remained
    unfulfilled, and the financing did not proceed.

[6]

The appellant then commenced proceedings against
    387 and Home Trust for breach of contract and various other causes of action.
    Among other things, he alleged that they mishandled the appraisal process,
    caused undue delay, and failed to act in good faith.

[7]

The respondents successfully moved for summary
    judgment, and the appellants claim was dismissed.  The motion judge concluded
    that the appellant had no cause of action as the property was owned by a
    corporation and not by the appellant, and in any event, no damages were caused
    by the respondents.

[8]

On appeal, the appellant submits that as a
    self-represented party, the motion judge ought to have assisted him and granted
    an adjournment due to his and his mothers health, a procedural issue, and so
    that he could bring the action in the name of the corporation.  He also asserts
    that the motion judge made certain factual errors and erred in her finding
    relating to the value of the property and his failure to prove any damages.

[9]

We do not agree with the appellants
    submissions.

[10]

An adjournment would have made no difference to
    the outcome, and in any event, none was requested of the motion judge.
    Furthermore, the appellant could not succeed in the action regardless of
    whether it was in his name or that of the corporation.  There was no reliable
    evidence that the property had a value of $1.2 million or that the appraised
    value of $600,000 was wrong.  In this regard, it was open to the motion judge
    to discount the MLS posting prepared and posted by the appellant as being
    self-serving.  Fundamentally, the property did not have an appraised value of
    $1.2 million, and as such, no mortgage financing was available.

[11]

As the motion judge concluded, there was no
    obligation on the part of either respondent to secure the amount of the loan
    sought by the appellant.  The evidence reveals no act or omission by the
    respondents that caused any loss or damages.  The motion judge properly
    concluded that there was no genuine issue requiring a trial.

[12]

The appellant also seeks to admit fresh evidence
    consisting of an affidavit sworn by him.  The contents of the affidavit meet
    none of the requirements for the admission of fresh evidence described in
Palmer
    v. The Queen
, [1980] 1 S.C.R. 759;
and
Sengmueller
    v. Sengmueller
(1994), 17 O.R. (3d) 208.

[13]

For these reasons, the motion to admit fresh
    evidence and the appeal are dismissed.  The appellant shall pay $5,000 in costs
    on a partial indemnity scale, inclusive of disbursements and applicable tax, to
    each of the respondents.

S.E. Pepall J.A.

L.B. Roberts J.A.

B.W. Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: B2B Bank v. Hails, 2018 ONCA 366

DATE: 20180412

DOCKET: M48951 (C64489)

Watt J.A. (In Chambers)

BETWEEN

B2B Bank

Respondent

and

Darrell George Hails

Appellant (Moving Party)

Darrell Hails, in person

James M. Butson, for the respondent

Heard: March 29, 2018

ENDORSEMENT

[1]

Darrell George Hails entered into a mortgage agreement with B2B Bank (the
    Bank). The mortgage was registered on October 29, 2012 in connection with
    residential property located in Grimsby, Ontario. The mortgage secured the sum
    of $280,526 at an interest rate of 3.14 percent for a term of five years
    commencing on December 1, 2012 and maturing on November 1, 2017.

[2]

The Standard Charge Terms provided the Bank with remedies on default of
    payment, including entry upon and sale of the land.

The Default

[3]

Mr. Hails defaulted on payment of installments of principal and interest
    on January 1, 2017. He continued in default until the mortgage matured on
    November 1, 2017. The mortgage was not renewed or extended.

The Proceedings to Enforce the Mortgage Security

[4]

On May 17, 2017 the Bank issued a statement of claim in the Superior
    Court of Justice. About a week later, the Bank issued a Notice of Sale under
    Mortgage and a Notice of Intention to Enforce Security. Mr. Hails delivered his
    statement of defence on June 20, 2017.

The Summary Judgment Motion

[5]

After a review of the statement of defence, the Bank considered that the
    pleadings revealed no genuine issue requiring a trial. As a result, the Bank
    brought a motion for summary judgment.

[6]

The summary judgment motion came on for hearing on September 22, 2017.
    As a result of Mr. Hails agreement not to oppose the motion and the imminence
    of the maturity of the mortgage, the motion judge granted summary judgment to
    the Bank, but ordered that it could not take possession of the mortgaged
    property until November 1, 2017, the maturity date of the mortgage. This
    allowed Mr. Hails a further opportunity to redeem the mortgage or make other
    necessary financial arrangements.

The Appellate Proceedings

[7]

Mr. Hails appealed the order granting summary judgment. He also filed a
    motion for leave to introduce fresh evidence on the hearing of the appeal.

[8]

On two separate occasions, Mr. Hails sought an order staying execution
    of that portion of the order made on the motion for summary judgment requiring
    him to deliver vacant possession of the mortgaged property on or before the maturity
    date. Both motions were dismissed by judges of this court.

The Sale of the Property

[9]

On January 29, 2018 the sale of the mortgage property closed. The sale
    price of $489,900 yielded a net surplus available for distribution of
    $125,700.45.

[10]

On
    March 21, 2018, the Banks solicitor contacted the second mortgagee seeking a
    discharge statement identifying the amount outstanding under the second
    mortgage.

These Motions

[11]

Mr.
    Hails, who is self-represented, has filed three further motions in connection
    with his appeal to this court. He seeks an order:

i.

appointing Michael Joseph Albert, Gaboury as a McKenzie friend;

ii.

adjourning the hearing of the appeal to permit the McKenzie friend time
    to prepare; and

iii.

directing the payment of the surplus available from the sale of the
    property and an accounting in connection with the sale.

[12]

In
    oral submissions, Mr. Hails abandoned his request for an adjournment.

The McKenzie Friend Motion

[13]

In
    support of his motion to have Michael Joseph Albert, Gaboury appointed as a McKenzie
    friend, Mr. Hails relies upon his own affidavit and an affidavit from the
    proposed McKenzie friend.

[14]

For
    all practical purposes, the supportive affidavits are in identical terms. Each
    asserts the complexity of the proceedings and the difficulty Mr. Hails has in
    keeping up and organizing his documents as the basis for his request for the
    appointment of a McKenzie friend. The balance of both affidavits is occupied by
    descriptions of the qualifications of Michael Joseph Albert, Gaboury for his
    proposed role as McKenzie friend and his prior experience of serving in that
    capacity.

[15]

The
    proposed McKenzie friend, Michael Joseph Albert, Gaboury is a party to what
    is described as a pure trust agreement with Mr. Hails, as grantor, with
    respect to the mortgaged property. According to the pure trust, the mortgage
    property was conveyed unto the trust pursuant to a vote of the board of directors
    of the Hails Life Maintenance Foundation. The transfer and trust is dated
    August 24, 2017 well after default first occurred under the mortgage and the
    Bank had begun to take steps to enforce its rights.

[16]

A
    further connection between the proposed McKenzie friend and Mr. Hails appears
    on examination of the address for service Mr. Hails has provided in his
    materials. The address is the registered address for G.E. Holdings Canada
    Limited, a company of which Lord Michael Joseph Albert Gaboury is the director.

[17]

As
    I will briefly explain, I am not persuaded that this is a case in which a
    McKenzie friend should be appointed.

[18]

Appointment
    of a McKenzie friend appears to have originated in a practice developed in
    England primarily for family law proceedings. In accordance with this practice,
    self-represented litigants are permitted to have with them in the court room a
    friend who can take notes, make suggestions and give advice. In this way, the
    self-represented litigant is better able to present their case to the court.

[19]

The
    role of the McKenzie friend does
not
extend to the functions usually
    discharged by counsel. Cross-examining witnesses. Advancing argument. The
    appointment of a McKenzie friend is left to the sound discretion of the court
    to which the application is made, with each case falling to be decided on its
    own facts. Even where such an appointment is made, the nature and extent of the
    assistance authorized must be closely circumscribed, lest the mandate provided
    to the friend amount to the functional equivalent of that performed by counsel.
    See,
Law Society (Manitoba) v. Pollock,
2007 MBQB 51, at paras.
    121-122.

[20]

In
    this case, the record is barren of any credible evidence that Mr. Hails is in
    need of a McKenzie friend.

[21]

These
    proceedings originate in Mr. Hails default under a mortgage. The terms of the
    mortgage required Mr. Hails to make monthly payments of principal and interest.
    Default began on January 1, 2017 and continued throughout the remaining term of
    the mortgage. The Bank exercised its rights under the mortgage. It sought and
    obtained summary judgment without opposition from Mr. Hails. It obtained an
    order for possession of the property effective on the maturity date of the
    mortgage. It sold the property, paid out the first mortgagee and is in the
    process of doing the same in connection with the second mortgagee.

[22]

It
    is difficult to tease out of this factual matrix any support for the claim of
    complexity Mr. Hails advances as the lynchpin of his claim for appointment of a
    McKenzie friend. Any complexity is of Mr. Hails own making.

[23]

The
    few authorities to which I have been referred do not assist Mr. Hails. For the
    most part, appointment of a McKenzie friend occurs in family law proceedings,
    not in enforcement proceedings for default under a mortgage. And the range of
    assistance provided, according to those authorities, such as helping the
    litigant find the courtroom; organize and locate court documents; take notes; talk
    to the litigant during submissions; offer suggestions during court recesses;
    and quietly indicate to the litigant whether all points have been covered
    during submissions seem not to be what Mr. Hails has in mind for Michael
    Joseph Albert, Gaboury who may be one and the same as Lord Michael Joseph
    Albert Gaboury, a director of G.E. Holdings Canada Limited and a party to a
    pure trust agreement in connection with the property.

[24]

The
    motion to appoint a McKenzie friend fails and is dismissed.

The Motion Relating to the Proceeds of Sale

[25]

Mr.
    Hails also seeks directions on disbursement of the excess funds available after
    sale of the mortgaged property and an accounting of the sale proceeds. Mr.
    Hails wants the surplus paid into court then disbursed to him for the purpose
    of paying the second mortgagee.

[26]

Section
    27 of the
Mortgages Act,
R.S.O. 1990, c. M. 40 directs the manner in
    which the person receiving the money from the sale of a mortgaged property is
    to apply that money.

[27]

In
    this case, the person receiving the money from the sale is the Bank. Thus far,
    the Bank, in complying with its obligations under the section, has:

i.

paid all the expenses incident to the sale;

ii.

applied the money in discharge of all interest and costs it has
    incurred;

iii.

paid the principal balance outstanding under its first mortgage;

iv.

contacted the second mortgagee in order to determine, then pay the
    amount due to it under its mortgage; and

v.

agreed to remit the remaining surplus to Mr. Hails.

[28]

The
    obligation to pay the second mortgagee from the sale proceeds settles upon the
    bank under s. 27 of the
Mortgages Act.
It follows that the direction
    sought by Mr. Hails  that
he
receive the current surplus to pay the
    second mortgagee  would have the effect of circumventing the obligations
    imposed on the bank by s. 27 of the
Mortgages Act
. It is not an order
    that I am prepared to make.

[29]

Mr.
    Hails also complains about the Banks costs associated with the sale and
    payments out under its mortgage. He alleges an improvident sale of the
    mortgaged property. Complaints about costs, governed by s. 43(2) of the
Mortgages
    Act
, are to be made to and settled by an assessment officer upon proper
    notice. And the materials filed by the Bank in response to the motion for
    directions disclose full particulars of the sale and subsequent disbursements.

Conclusion

[30]

In
    the result, the motion fails in its entirety and is dismissed. The Bank is
    entitled to its costs which shall be in the cause and determined by the panel
    hearing the appeal. If the appeal does not proceed, the Bank may make written
    costs submissions in connection with this motion in accordance with a schedule
    I will set upon notice that the appeal has been abandoned.

David Watt J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: B2B Bank v. Hails, 2018 ONCA 380

DATE: 20180418

DOCKET: C64489

Benotto, Brown and Miller JJ.A.

BETWEEN

B2B Bank

Plaintiff (Respondent)

and

Darrell George Hails

Defendant (Appellant)

Darrell George Hails, acting in person

Cristina Internicola, for the respondent

Heard and released orally: April 17, 2018

On appeal from the order of Justice Andrew J. Goodman of
    the Superior Court of Justice, dated September 22, 2017.

REASONS FOR DECISION

[1]

The appellant defaulted on a residential mortgage granted in favour of
    the respondent. The respondent brought a motion for summary judgment, including
    an order for possession, which was granted unopposed. As the mortgage was to
    mature five weeks subsequent, the motion judge provided for the order to be
    held in abeyance for five weeks, to November 1, 2017, to allow the appellant an
    opportunity to make financial arrangements and redeem the mortgage.

[2]

The appellant subsequently appealed to this court. He brought an
    unsuccessful motion to stay the order for possession pending appeal. He has
    since been evicted and the house has been sold.

[3]

The appellant now seeks leave to admit fresh evidence, made up of a
    disparate collection of materials that were available at the time of the
    hearing of the summary judgment motion, and in any event have no relevance to
    the action. The motion to admit fresh evidence is dismissed.

[4]

The appellant argues that the motion judge erred by denying him an
    opportunity to amend his statement of defence and file a counterclaim. Leave
    was not granted to amend the statement of defence or file a counterclaim.

[5]

The appellant has not been able to articulate an arguable defence or
    counterclaim.

[6]

The appeal is dismissed. Costs are awarded to the respondent in the
    amount of $8,500, inclusive of disbursements and taxes.

M.L. Benotto J.A.

David Brown J.A.

B.W. Miller J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cana International Distributing Inc. v. Standard
    Innovation Corporation, 2018 ONCA 387

DATE: 20180419

DOCKET: C63087

Laskin, Sharpe and Fairburn JJ.A.

BETWEEN

Cana International Distributing Inc. c.o.b. Sexy
    Living

Plaintiff

(Appellant)

and

Standard Innovation Corporation

Defendant

(Respondent)

AND BETWEEN

Standard Innovation
    Corporation

Plaintiff by
    Counterclaim

(Respondent)

and

Cana International Distributing Inc. c.o.b. as Sexy Living
    and

Micheline Ciolli

Defendants by
    Counterclaim

(Appellants)

Shaun Laubman and Laura M. Wagner, for the appellants

Peter Mantas and Tala Khoury, for the respondent

Heard: January 23, 2018

On appeal from the judgment of Justice P. Smith of the Superior
    Court of Justice, dated November 18, 2016, with reasons reported at 2016 ONSC
    7197.

COSTS ENDORSEMENT

[1]

We have now received written costs submissions
    regarding costs in this matter.

[2]

As the appellant achieved substantial success on
    the appeal, we award the appellant $15,000 costs of the appeal including taxes
    and disbursements.

[3]

With respect to the trial costs, as the appeal
    has been allowed and the matter remitted to the trial judge to determine the damages
    on the claim relating to the mainstream agreement, a fresh assessment of the
    trial costs will be required. Accordingly, the trial judges costs order is set
    aside and issue of the trial costs (for both the original trial and the damage
    assessment) is remitted to the trial judge to be determined after the damages
    on the mainstream agreement have been assessed.

John
    Laskin J.A.

Robert
    J. Sharpe J.A.

Fairburn
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Carangay (Re), 2018 ONCA 395

DATE: 20180424

DOCKET: C63669

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

IN THE MATTER OF:  Richard Carangay

AN APPEAL UNDER PART XX.1 OF THE
CODE

Russell Browne, for the appellant

Carmen Elmasry, for the Crown

Heard: April 13, 2018

On appeal against the disposition of the Ontario Review
    Board dated April 18, 2017.

REASONS FOR DECISION

[1]

Richard Carangay appeals from the April 18, 2017 disposition of the
    Ontario Review Board. In their reasons dated May 10, 2017, the Board concluded
    that the appellant constitutes a significant threat to the safety of the
    public and ordered his continued detention at the General Forensic Unit of the
    St. Josephs Healthcare Hamilton, West 5
th
Campus (the Hospital).

[2]

The appellant argues that he is not a significant threat to the safety
    of the public and seeks an absolute discharge. The Crown opposes the
    appellants release and seeks to uphold the Boards disposition.

[3]

At the conclusion of the hearing, we dismissed the appeal with reasons
    to follow.  We now provide our reasons.

Background

[4]

On March 23, 2016, the appellant was found not criminally responsible
    ("NCR") on account of mental disorder on charges of possession of a
    weapon for a purpose dangerous to the public peace, assault with a weapon and
    uttering death threats. As a result of these verdicts, the appellant came under
    the jurisdiction of the Ontario Review Board ("ORB).

[5]

The background to the index offences can be stated briefly. The appellant
    became angry with his next door neighbour, for reasons that are unclear.  The
    appellant went to his neighbours house armed with a baseball bat.  Upon being
    confronted by his female neighbour, the appellant made a threat of bodily harm
    directed towards her.  He was swinging the baseball bat around.  The
    appellants male neighbour appeared and the appellant made two attempts to hit
    the male neighbour in the head with the baseball bat, both of which were,
    fortunately, unsuccessful.  The appellant then returned to his own home.  The
    police arrived.  The appellant appeared on the porch of his home armed with a
    large butcher knife.  He was swinging the knife in the direction of the police.
    The appellant then returned inside his home.  Sometime later, the appellant
    again came out of his home.  This time he was unarmed.  The appellant charged
    at the police.  He was taken down and arrested.

[6]

The Board heard from Dr. Kolawole, the treating psychiatrist.  It was
    Dr. Kolawoles opinion that the appellant continues to pose a significant risk
    to the safety of the public.  We note that counsel for the appellant did not
    cross-examine the doctor at the hearing.

[7]

The appellant suffers from Bipolar Affective Disorder and Cannabis Use
    Disorder.  He suffers from psychotic symptoms when in a manic episode and he
    has auditory and persecutory delusions.  The appellant has a long history of
    noncompliance with medication combined with a history of drug use, namely,
    cocaine and marijuana.

[8]

Further, the appellant has a criminal record that consists of prior
    convictions for violent offences involving the use of weapons.

[9]

Perhaps most troubling is the fact that, on two occasions, a search of
    the appellants room uncovered to do lists.  These lists contained weapons
    and other items that the appellant apparently intended to gather.  Given that
    this happened twice, the appellants explanation that these lists were mere
    fantasies that he had no intention of acting on, is one that is difficult to
    accept.

[10]

In
    addition to these events, the appellant has also breached other rules of the
    Hospital, including using drugs and making inappropriate comments to members of
    the Hospitals staff.

[11]

Given
    the nature of the appellants illness, his history and his actions while
    detained at the Hospital, it was reasonable for the Board to conclude that the
    appellant posed a significant risk to the safety of the public, especially
    given his conduct that underlies the index offences.  In particular, the Board
    concluded (at para. 15):

There can be no doubt that when in the manic phase of his
    Bipolar illness, his behaviour is violent and aggressive.

[12]

The
    appellant also submits that the Board erred in not considering a conditional
    discharge.  We note that the appellant did not ask the Board to consider that
    alternative disposition at the hearing.  That said, we accept that the Board
    had an obligation to consider this option under its duty to impose the least
    onerous and least restrictive disposition.

[13]

Given
    the evidence that was before the Board, we do not see that a conditional
    discharge was appropriate in this case, at least in part because the appellant
    has only begun a substance abuse program.  Drug use is linked to the
    appellants mental health issues and to the conduct that results.  Further, we
    note that, in its disposition, the Board provided a number of conditions that
    will permit the appellant to be in the community on occasions approved by the
    Hospital.  The recent addition of the appellants brother as an approved person
    will undoubtedly assist in those efforts.

[14]

In
    the end result, the Boards determination that a period of further detention
    was necessary was a reasonable one.  There is no proper basis for this court to
    interfere with that conclusion.  In reaching our decision, we would add that we
    have not considered the so-called fresh evidence that consisted of the Crown
    reading out an email that she had received from counsel for the Hospital about
    a subsequent occurrence involving the appellant.

Conclusion

[15]

It
    is for these reasons that the appeal was dismissed.

Alexandra Hoy A.C.J.O.

Robert J. Sharpe J.A.

I.V.B. Nordheimer J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Carleton Condominium Corporation No. 396 v. Burdet,
    2018 ONCA 342

DATE: 20180409

DOCKET: C64330

Hourigan, Pardu and Huscroft JJ.A.

BETWEEN

Carleton Condominium Corporation No. 396

Plaintiff/Respondent in Appeal

and

Claude
    Alain Burdet in Trust, Claude-Alain Burdet,

1457563
    Ontario Corporation, 1457563 Ontario Corporation in Trust,

Janet
    Sue Burdet and Nelson Street Law Offices

Defendants/Appellants

and

LAcademie Christiane Sauve Inc.

International Beauty Depot

Defendants

Claude-Alain Burdet, for the appellants

Gary Boyd, for the respondent

Heard: April 5, 2018

On appeal from the order of Justice S. Gomery of the Superior
    Court of Justice, dated August 18, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appellants were found liable
    following a trial for condominium arrears owing to the respondent. Their appeal
    of that judgment to this court was unsuccessful, as was their motion for leave
    to appeal with the Supreme Court of Canada.

[2]

The appellants brought a motion in the
    Superior Court pursuant to r. 59.06(2) to set aside the judgment and for an
    order for judgment in their favour. The motion judge dismissed that motion
    pursuant to r. 2.1.02(1), with costs fixed at $500 payable to the respondent.

[3]

We see no basis to interfere with the
    order of the motion judge.

[4]

We do not accept the submission that this
    court should interfere on the basis of a denial of procedural fairness. We
    agree that the motion judge should have either invited submissions or ordered
    explicitly that written submissions were not required. However, as we read her
    reasons she implicitly ordered that written submissions were not required. That
    decision was free from error.

[5]

It is clear on the face of the r.
    59.06(2) motion record that it is frivolous, vexatious and an abuse of process.
    The relief sought went well beyond what would have been permissible on such a
    motion. There were no new facts, as the very set-off issue argument made by the
    appellant now was made below before the trial judge. In any event, s. 84(3) of
    the
Condominium Act
provides
    that an owner is not exempt from the obligation to contribute to common
    expenses even if the owner is making a claim against the corporation. We also
    note that the appellants were well aware of the request by the respondent to
    have the case dismissed pursuant to r. 2.1.

[6]

The appeal is dismissed with costs of the
    appeal payable by the appellants to the respondent in the all-inclusive sum of
    $16,000.


COURT OF APPEAL FOR ONTARIO

CITATION: Connelly v. Toronto (Police Services Board), 2018
    ONCA 368

DATE: 20180416

DOCKET: C63991

MacFarland, LaForme and Epstein JJ.A.

BETWEEN

John Connelly and Gloria Connelly

Plaintiffs (Appellants)

and

Toronto Police Services Board

Defendant (Respondent)

Cameron Fiske and David Cassin, for the appellants

Fred Fischer and Alison Mintoff, for the respondent

Heard: April 10, 2018

On appeal from the judgment of Justice Kenneth G. Hood of
    the Superior Court of Justice, dated June 6, 2016.

REASONS FOR DECISION

[1]

Pursuant to Rule 21 the motion judge struck out the appellants claim,
    without leave to amend, on the basis that it did not disclose a reasonable
    cause of action. The motion judge found it was plain and obvious that the
    Toronto Police Services Board (TPSB) owed no duty of care to the appellants.
    Indeed, except for the issue we briefly discuss below, the motion judge
    addressed each of the submissions the appellants repeat on this appeal.

[2]

At the outset, counsel for the appellants accepted that our panel of
    three judges is precluded from reconsidering this courts decision in
Wellington
    v. Ontario
, 2011 ONCA 274. Instead, they argue that
Wellington
should be distinguished because the facts in the appellants case are uniquely
    different. Counsel, however, concedes that if
Wellington
cannot be
    distinguished, the appeal should be dismissed.

[3]

Counsel for the appellants argue that
Wellington
is
    distinguishable from this case for two reasons: (i) the appellants do not have
    the rights to certain remedies for victims of crimes identified at para. 53 of
Wellington
;
    and (ii) they were actively assisting the police in association with them in the
    conduct of the investigation. We disagree; these factual differences do not
    convert the public duty of the police to investigate crime into a private duty
    owed to the appellants.

[4]

At para. 53 in
Wellington
, the court merely made closing
obiter
    dicta
comments to illustrate that concerned family members of victims of
    crime often have rights to certain remedies. As that court concluded in that
    paragraph, Refusing to recognize the existence of a private law duty of care
    in relation to police investigations does not leave the families of victims or
    these respondents without appropriate and viable legal recourse.

[5]

Regarding the appellants claim in connection with their assisting the
    police; this consists of their providing reasons to the police for their desired
    outcome of the investigation. It does not create any special relationship with
    the police that converts the duty of care the police owe to the public into a
    private duty of care to the appellants.

[6]

Turning to the substance of the appeal, further to the concession by
    counsel for the appellants, we concur entirely with the motion judges reasons
    for his decision. That is,
Wellington
provides a full answer to the
    appellants appeal. As the motion judge held at para. 10 of his reasons:

[W]hile the police owe a duty of care to suspects and to a
    narrow and distinct group of potential victims of a specific threat, the police
    do not owe victims of crime and their families a private law duty of care in
    relation to the investigation of alleged crimes:
Wellington
, at para.
    20. Nor does a parents desire for a thorough police investigation give rise to
    a relationship of proximity sufficient to ground an action for damages in tort:
Wellington
, at para. 33. It is clear that the duty being put forward
    in this case is not novel. It has already been excluded.

[7]

Despite the appellants attempts to characterize their claim as novel,
    their claim of negligence against the police is not. The law is clear; the
    police do not owe them a duty of care as the family members of a victim of a
    potential crime. As the motion judge correctly concluded, it is a category that
    has already been considered and rejected: see
Hill v. Hamilton-Wentworth
    (Regional Municipality) Police Services Board,
2007 SCC 41 at paras. 27
    and 45.

[8]

The appeal is dismissed. Costs of the
    appeal are awarded to the respondent in the agreed upon amount $5,000 inclusive
    of disbursements and HST.

J. MacFarland J.A.

H.S. LaForme J.A.

Gloria Epstein J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Cunningham v. Hutchings, 2018 ONCA 365

DATE: 20180412

DOCKET: C64451 and C64670

Hoy A.C.J.O., MacFarland and Roberts JJ.A.

BETWEEN

Mildred Cunningham

Plaintiff (Appellant)

and

Paul Anthony Hutchings, Deanna E. Walsh, Lisa C.
    Betts and Maxime Daoust

Defendants (Respondents)

Bryan Fromstein and A. Fabio Longo, for the appellant

Nawaz Tahir and Evan Bawks, for the respondent Deanna E.
    Walsh

Heard: April 9, 2018

On appeal from the order of Justice Flynn of the Superior
    Court of Justice, dated March 8, 2017, and from the order of Justice Gordon of
    the Superior Court of Justice dated September 14, 2017.

REASONS FOR DECISION

[1]

The appellant appeals the orders of Gordon J. dated March 8, 2017 and
    Flynn J. dated September 14, 2017.

[2]

The order of Gordon J. dismissed her action for failure to file either a
    notice of appointment of counsel or of an intention to act in person within 30
    days of the Order of Reilly J. dated November 16, 2016 removing her former
    lawyer as her counsel of record.

[3]

The order of Reilly J. was deficient in that it did not include the text
    of rules 15.04(8) and (9) of the
Rules of Civil Procedure
, as required
    by r. 15.04(4). The importance of those provisions in an order removing a
    solicitor cannot be overstated. The obvious purpose is to bring home to the now
    unrepresented litigant the fact that she is required to give notice to the
    court and other parties to the litigation that she has either appointed
    alternate counsel or will be acting in person and that failure to do so can
    result in the court dismissing her proceeding or striking out her defence.

[4]

Further, the appellant, who did not appear before Gordon J., had not
    been served with the respondents motion in accordance with the Rules.

[5]

Gordon J. gave no reasons for his order and we cannot ascertain why he
    ordered the most draconian remedy available in the circumstances of this case.
    Accordingly, his order cannot stand.  We set aside his order and order that the
    appellants action shall be dismissed if she fails to file a notice of
    appointment of counsel within 14 days.

[6]

When the appellant learned of Gordon J.s order she promptly moved
    before Flynn J. under r. 37.14 to set it aside, on the basis that she failed to
    appear through insufficient notice. Flynn J. concluded that her recourse was to
    appeal Gordon J.s order to this court and dismissed her motion.

[7]

It is unclear from Flynn J.s reasons that he grappled with the
    threshold issue of insufficient notice within the meaning of r. 37.14. In our
    view, it was open to him to have granted the relief sought by the appellant. Accordingly,
    Flynn J.s order is set aside.

[8]

In view of this result, the costs order of Gordon J. is set aside and the
    costs order of Flynn J. is reversed so that the respondent Walsh is required to
    pay the appellant $5000. The costs of the appeal are to the appellant, fixed in
    the sum of $8500 agreed to by counsel. Both costs dispositions are inclusive of
    disbursements and HST.

Alexandra
    Hoy A.C.J.O.

J.
    MacFarland J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Danilova v. Nikityuk, 2018 ONCA 403

DATE: 20180426

DOCKET: C64103

Doherty and Pepall JJ.A. and Gray J. (
ad hoc
)

BETWEEN

Svetlana Danilova and Pavel Danilov

Plaintiffs (Appellants)

and

Alla Nikityuk, Valentin Nikityuk, Yana Skybin,
    Young Mens Christian Association operating as YMCA Simcoe/Muskoka

Defendants (Respondents)

Amanda M. Chapman and Jessica Mor, for the appellants

Aman Dhillon and Lisa Loader, for the respondents, Alla
    Nikityuk and Valentin Nikityuk

Andrew M. Mae and W. Thomson for the respondents, Yana
    Skybin and YMCA Simcoe/Muskoka

Heard and released orally:  April 23, 2018

On appeal from the order of Justice G. Mulligan of the Superior
    Court of Justice, dated June 28, 2017.

REASONS FOR DECISION

[1]

The appellants raise three grounds of appeal. Two concern the trial
    judges credibility assessments and the third alleges prejudice resulting from
    a five-month adjournment in the course of the trial proceedings.

[2]

Counsel for the appellants acknowledged at the outset of oral argument
    that the appeal is limited to the three issues raised. She takes the position
    that if any of their grounds succeed, there must be a new trial. If none
    succeed, counsel does not argue that the judgment should be varied.

[3]

We confine our reasons to the three issues raised.

I

the trial judges assessment of credibility

[4]

The trial judge clearly preferred the evidence of the respondents over
    that given by the appellants. The appellants claim that he did so in a
    peremptory manner that failed to demonstrate the basis upon which the trial
    judges credibility determinations were made. Counsel relied on a single
    passage in para. 59 of the reasons for judgment.

[5]

It is true that para. 59 is conclusory, however, that paragraph must be
    read in the context of the entire judgment. Throughout the judgment, the trial
    judge made findings of fact that amply justified the trial judges ultimate
    credibility findings and fully explained to the reader the reasons for that
    finding: for example, see paras. 174-75, 179. Read as a whole, the reasons
    adequately explain the trial judges findings. Those findings were warranted on
    the evidence and set out the trial judges pathway to his credibility findings.

II

the collusion argument

[6]

The appellants argue that there was evidence that Ms. Skybin, one of the
    respondents, colluded with three witnesses called by the YMCA in respect of
    their evidence. They gave evidence in the second part of the trial, after the
    five month adjournment referred to above.

[7]

The record shows that Ms. Skybin, who speaks Russian, was involved in
    the preparation of the will-say statements by these three witnesses who are
    Russian speaking. The extent of her involvement in the will-say statements was
    a matter of dispute at the trial.

[8]

When the three witnesses testified, each gave evidence that was
    inconsistent with the contents of the will-say statements in one or two
    respects. None of the witnesses were asked about any influence Ms. Skybin had
    on either their will-say or, more importantly, their actual evidence at
    trial. Nor were any questions directed to these witnesses about the collusion
    between Ms. Skybin and the witnesses.

[9]

In our judgment, the record does not offer any evidentiary support for a
    collusion finding. It is difficult to find collusion in a situation in which the
    will-says said to be prepared by Ms. Skybin, one of the alleged colluders,
    are inconsistent in material respects with the evidence given by witnesses who
    are said to have colluded with Ms. Skybin. We observe that, in some cases, the
    version of events in the will-says were more favourable to the respondents
    but in at least one case, the will-says were more favourable to the
    appellants.

[10]

The
    record may have supported an argument that Ms. Skybin was improperly involved
    in the preparation of the will-says and that her involvement should adversely
    affect her credibility and the credibility of the witnesses to whom the will-says
    refer. However, that avenue was not pursued at trial. Counsel did not seek to
    have Ms. Skybin recalled and no questions were ever put to her about her
    involvement in the preparation of the will-says. In these circumstances, we
    see no error in the trial judges failure to address collusion as a separate
    consideration in his credibility assessment.

III

the five-month adjournment of the trial

[11]

The
    trial ran beyond the allotted time. It was adjourned without objection to the fall
    sittings, some five months later. At the time of the adjournment, the YMCA witnesses
    had not testified.

[12]

Counsel
    submits that the adjournment caused serious prejudice to the appellants and
    effectively denied them meaningful access to justice. No one pretends that a
    five-month adjournment in the middle of a trial is a good thing. It clearly is
    not. However, this court cannot, in the absence of any request at trial for an
    earlier date, or any comment by anyone at trial that an earlier date should be
    sought, declare that a five-month adjournment is so presumptively prejudicial
    as to require the setting aside of a judgment. No actual prejudice has been
    demonstrated by the appellants and in this case none can be assumed merely from
    the length of the adjournment.

[13]

The
    appeal is dismissed.

[14]

In
    our view, this is a case for costs on a partial indemnity basis. Costs to
    Nikityuk respondents in the amount of $11,000, inclusive of disbursements and
    relevant taxes, and costs to the YMCA/Skybin respondents in the amount of
    $20,000, inclusive of disbursements and relevant taxes.

Doherty J.A.

S.E. Pepall J.A.

D.K. Gray J. (
ad
    hoc
)