COURT OF APPEAL
    FOR ONTARIO

CITATION: Royal
    Bank of Canada v. Samson Management & Solutions Ltd., 2013
    ONCA 313

DATE: 20130513

DOCKET: C55749

MacPherson, Cronk and Lauwers JJ.A.

BETWEEN

Royal Bank of Canada

Appellant

and

Samson Management & Solutions Ltd., Jason
    Brasseur and
Cheryl Cusack

Respondent

Catherine Francis, for the appellant

H. Richard Bennett, for the respondent

Heard: January 9, 2013

On appeal from the judgment of Justice Bruce A. Glass of
    the Superior Court of Justice, dated June 20, 2012, with reasons reported at 2012
    ONSC 3612, [2012] O.J. No. 3149.

Lauwers
    J.A.:

[1]

This appeal concerns the enforceability of a standard form bank
    guarantee. The motion judge granted summary judgment to the Royal Bank of
    Canada (RBC or the Bank) against the debtor Samson Management and Solutions
    Ltd. (Samson), and against its principal, Jason Brasseur, on his personal
    guarantee. He refused to grant RBC summary judgment against the respondent
    Cheryl Cusack on her personal guarantee; instead he granted her summary
    judgment on her cross-motion to dismiss RBCs action against her.

[2]

RBC appeals. For the reasons set out below, I would allow the appeal and
    grant RBC summary judgment against Ms. Cusack for $250,000 plus interest as
    determined under the guarantee, and costs.

The Facts

[3]

Ms. Cusack is Mr. Brasseurs spouse. In 2005, she signed a continuing
    guarantee for the indebtedness of Mr. Brasseurs business, Samson, to RBC for
    $150,000. At the time, the loan agreement between RBC and Samson was for a
    credit facility in the amount of $150,000, secured by a general security
    agreement granting the Bank a first-ranking security interest in Samsons
    assets, and Mr. Brasseurs personal continuing guarantee in the amount of
    $150,000. By their terms, the personal guarantees covered present and future
    liabilities of Samson, and were not tied to any specific loan between RBC and
    Samson. Ms. Cusack received independent legal advice before signing the
    guarantee.

[4]

In 2006, RBC agreed to increase Samsons operating line of credit to
    $250,000.  Ms. Cusack and Mr. Brasseur each gave fresh personal guarantees, for
    $250,000, to RBC that covered Samsons present and future liabilities. These were
    also continuing guarantees and were not tied to any specific loan between RBC
    and Samson.

[5]

Ms. Cusack acknowledged that she received independent legal advice before
    signing the fresh guarantee. The letter of independent legal advice signed by her
    lawyer provided:

I have been consulted by
CHERYL CUSACK
(the
    Obligant) as to the liability which the Obligant would incur by taking the
    following action, vis., signing or endorsing the following.
FORM 812, GUARANTEE AND
    POSTPONEMENT OF CLAIM IN THE AMOUNT OF $250,000.00 SIGNED BY CHERYL CUSACK
.

for the purpose of securing the liabilities, whether past,
    present or future, of
SAMSON
    MANAGEMENT SOLUTIONS LTD.
(the Customer) to the Bank.

I have advised the Obligant fully as to the effect of
    that action and the liability which the Obligant would incur by taking it, and
    the manner in which that liability could be enforced. The Obligant understands
    the nature and effect of and the liability which would arise from the taking by
    the Obligant of that action.  I have given this advice to the Obligant as
    Solicitor for and in the Obligants interest only, and without regard to or
    consideration for the interests of the Customer or of the Bank.  I have not
    given any legal advice either to the Customer or to the Bank in connection with
    this matter. [Emphasis in original.]

[6]

Ms. Cusack signed the following acknowledgement on the letter of
    independent legal advice: I hereby acknowledge that all the statements made in
    the foregoing letter are true and correct.  In her cross-examination, Ms.
    Cusacks counsel confirmed on her behalf that this acknowledgment was true.
    She also testified that she was guaranteeing a loan limit, not a specific
    loan.

[7]

In 2008, the amount covered by the loan agreement between RBC and Samson
    was increased to $500,000. RBC did not request a new guarantee from Ms. Cusack
    but did obtain a new personal guarantee from Mr. Brasseur in the amount of
    $500,000. The 2008 loan document stated that the new loan agreement supersedes
    and cancels the 2006 agreement, and also stated that Security for the
    Borrowings and all other obligations of the Borrower to the Bank included Mr.
    Brasseurs 2008 guarantee for $500,000 and Ms. Cusacks 2006 guarantee in the
    amount of $250,000.  The 2008 loan agreement changed some loan terms: it set a
    term that funds advanced could be up to 75% of Samsons accounts receivable and
    also imposed compulsory reporting conditions on Samson.

[8]

In 2009, the loan amount between RBC and Samson was again increased to
    $750,000.  Mr. Brasseur signed a new personal guarantee for $750,000. As in
    2008, RBC did not request a new guarantee from Ms. Cusack but left in place her
    2006 guarantee for $250,000.

[9]

RBC did not have any contact with Ms. Cusack at any time. She never saw
    any of the loan agreements between RBC and Samson. RBC provided the guarantee
    forms to Mr. Brasseur who gave them to Ms. Cusack along with the form for
    independent legal advice. As I have said, she consulted a lawyer for
    independent legal advice before signing each of the guarantees and the
    acknowledgement that she received the advice.

[10]

The
    business failed in or about 2011. RBC made demands on Mr. Brasseur and Ms.
    Cusack under their guarantees  his 2009 guarantee and her 2006 guarantee  before
    bringing this action. At issue on this appeal is the enforceability of Ms.
    Cusacks 2006 guarantee.

[11]

I
    accept the motion judges finding that there is no genuine issue requiring a
    trial and there are no material facts in dispute.

The Decision under Appeal

[12]

The
    motion judge found on the evidence that Ms. Cusack provided the guarantees to
    RBC in 2005 and 2006 as an accommodation surety to assist her husband in
    obtaining the loan for his business.
Ms. Cusack
    stated in her affidavit that: While I did receive money from Samson from
    approximately 2004 to 2011, these payments were not wages and were solely for
    the purpose of income splitting and reducing Jasons taxable income.

[13]

The
    motion judge dismissed RBCs motion for summary judgment against Ms. Cusack and
    granted her summary judgment dismissing RBCs action against her on the
    following basis, at paras. 35 and 40:

I conclude that Ms. Cusack did not waive her rights in equity
    or in common law as a principal debtor or as a guarantor . . . .

. . .

The guarantee of Ms. Cusack is unenforceable. There were
    material changes without her being given notice or consenting to them. There
    was an obligation on Royal to apprise Ms. Cusack of changes to the loan
    liability so that she would be aware of a change to her risk or prejudice . . .
    .

[14]

The
    motion judge relied on the decision of the Supreme Court of Canada in
Manulife Bank of Canada v. Conlin
,

[1996]
    3 S.C.R. 415. The core of his reasoning is found in two propositions. First, he
    held that the material alteration rule in
Conlin
applied to Ms. Cusacks guarantee, largely because of the principal debtor
    clause (at paras. 31-35). Second, he held that there were material alterations
    in the underlying loan arrangements that Ms. Cusack did not know about or
    accept (at paras. 26-27, 36-37). The motion judge did not analyze the language
    of the RBC guarantee in his reasons.

The Issues

[15]

There
    is a single issue in this case, although it raises the ancillary issues
    discussed below: Did Ms. Cusack contract out of the protection provided to a guarantor
    by the common law and equity?

Analysis

[16]

The
    parties agree that the basic governing law is set out in
Conlin
, although they disagree on the implications
    for the result in this case. Cory J. expressed the material alteration rule at
    para 2 of
Conlin
:

It has long been clear that a guarantor will be released from
    liability on the guarantee in circumstances where the creditor and the
    principal debtor agree to a material alteration of the terms of the contract of
    debt without the consent of the guarantor. The principle was enunciated by
    Cotton L.J. in
Holme v. Brunskill
(1878), 3 Q.B.D. 495 (C.A.), at pp.
    505-6, in this way:

The true rule in my opinion is, that if there is any
    agreement between the principals with reference to the contract guaranteed, the
    surety ought to be consulted, and that if he has not consented to the
    alteration, although in cases where it is without inquiry evident that the
    alteration is unsubstantial, or that it cannot be otherwise than beneficial to
    the surety, the surety may not be discharged; yet, that if it is not
    self-evident that the alteration is unsubstantial, or one which cannot be
    prejudicial to the surety, the Court . . . will hold that in such a case the
    surety himself must be the sole judge whether or not he will consent to remain
    liable notwithstanding the alteration, and that if he has not so consented he
    will be discharged.

[17]

That
    said, Cory J. noted at para. 4 of
Conlin
that a guarantor can contract out of the protection provided by the common law:

Generally, it is open to parties to make their own
    arrangements. It follows that a surety can contract out of the protection
    provided to a guarantor by the common law or equity. See for example
Bauer
    v. Bank of Montreal
, [1980] 2 S.C.R. 102, at p. 107. The Ontario Court of
    Appeal, correctly in my view, added that any contracting out of the equitable
    principle must be clear. See
First City Capital Ltd. v. Hall
(1993), 11
    O.R. (3d) 792 (C.A.), at p. 796.

See also
Bank of
    Montreal v. Negin
(1996), 31 O.R. (3d) 321 (C.A.).

[18]

Cory
    J. added, at para. 6, of
Conlin
:
    The issue as to whether a surety remains liable will be determined by
    interpreting the contract between the parties and determining the intention of
    the parties as demonstrated by the words of the contract and the events and
    circumstances surrounding the transaction as a whole.

[19]

I
    agree with the motion judge that the alterations in the loan arrangements made
    between RBC and Samson over time increased the risk to which Ms. Cusack was
    exposed by her guarantee, even though her financial exposure was capped at
    $250,000. At common law these alterations in the loan arrangements would have
    resulted in her discharge from liability under the guarantee in the absence either
    of her consent, or of clear language in the guarantee permitting RBC and Samson
    to make the alterations without her consent.

[20]

Because
    Ms. Cusack was never approached by RBC for her consent to the alterations, the
    case falls to be determined by the language of the guarantee in the context of
    the transaction as a whole.

[21]

Did
    Ms. Cusack contract out of the protection provided to a guarantor by the common
    law and equity?

[22]

In
    my view, the application of the language in the guarantee in the context leads
    to the conclusion that Ms. Cusack contracted out of the protection provided by
    the common law, and is therefore liable under her guarantee.

The Language of the Guarantee and its Context

[23]

The
    language of the guarantee is very broad and is plainly designed to ensure that the
    guarantor does contract out of the ordinary protections of the common law as
Conlin
acknowledged was permissible.

[24]

The
    first paragraph on the first page of the guarantee is critical. It provides
    that Ms. Cusack will pay on demand to RBC: all debts and liabilities, present
    or future, direct or indirect, absolute or contingent, mature or not, at any
    time owing by Samson to RBC, or remaining unpaid by the customer to the
    Bank, heretofore or hereafter incurred or arising andincurred by or arising
    from agreement or dealings between the Bank and the customer This clause
    makes it clear that RBC could increase the amount of its loan to Samson and Ms.
    Cusack would remain liable under the guarantee. The letter of independent legal
    advice, acknowledged by Ms. Cusack, reinforced this fact by stating that the
    guarantee was: for the purpose of securing the liabilities, whether past,
    present or future, of
SAMSON.

The continuing
    obligation was also clearly expressed in clause (2), which provides:

(2)     This guarantee shall be a continuing
    guarantee and shall cover all the liabilities, and it shall apply to and secure
    any ultimate balance due or remaining unpaid to the Bank.

[25]

Various
    numbered clauses in the guarantee expressly permit RBC to take actions that
    might or would otherwise be material alterations affecting the enforceability
    of the guarantee at common law and equity, such as giving more time for
    payment, renewing the loan arrangements, increasing the interest rate, changing
    the maturity date of any loan, and introducing new terms and conditions in
    respect of the borrowing. Clause (1) provides:

(1)     The Bank may grant time, renewals,
    extensions, indulgences, releases and discharges to, take securities (which
    word as used herein includes securities taken by the Bank from the Customer and
    others, monies which the customer has on deposit with the Bank, other assets of
    the Customer held by the Bank in safekeeping or otherwise, and other
    guarantees) from and give the same and any or all existing securities up to,
    abstain from taking securities from, or perfecting securities of, cease or
    refrain from giving credit or making loans or advances to, or change any term
    or condition applicable to the liabilities, including without limitation, the
    rate of interest or maturity date, if any, or introduce new terms and
    conditions with regard to the liabilities, or accept compositions from and
    otherwise deal with, the customer and others and with all securities as the
    Bank may see fit, and may apply all moneys at any time received from the
    customer or others or from securities upon such part of the liabilities as the
    Bank deems best and change any such application in whole or in part from time
    to time as the Bank may see fit, the whole without in any way limiting or
    lessening the liability of the undersigned under this guarantee, and no loss of
    or in respect of any securities received by the Bank from the customer or
    others, whether occasioned by the fault of the Bank or otherwise, shall in any
    way limit or lessen the liability of the undersigned under this guarantee.

[26]

The range of Samsons liabilities to which the guarantee applies is
    very broad. As noted, the first paragraph of the guarantee defines liabilities
    to include

all debts and liabilities, present
    or future, direct or indirect, absolute or contingent, mature or not, at any
    time owing by Samson to RBC, or remaining unpaid by the customer to the Bank,
    heretofore or hereafter incurred or arising andincurred by or arising from
    agreement or dealings between the Bank and the customer

[27]

This
    comprehensive understanding
of the term, liabilities, is
    reinforced by clause (8):

(8)     All monies, advances, renewals,
    credits and credit facilities in fact borrowed or obtained from the Bank shall
    be deemed to form part of the liabilities, notwithstanding any lack or
    limitation of status or of power, incapacity or disability of the customer or
    of the directors, partners or agents of the customer, or that the customer may
    not be a legal or suable entity, or any irregularity, defect or informality in
    the borrowing or obtaining of such monies, advances, renewals, credits or
    credit facilities, or any other reason, similar or not, the whole whether known
    to the Bank or not.

[28]

The
    guarantee is what is known as a continuing all accounts guarantee. This is an
    important contextual consideration.
The difference between a
    specific guarantee and a continuing or all accounts guarantee is suggested
    by the terms themselves, and was explained by Swinton J. in
Granata Family Trust v. Royal Bank
,
[2000] O.J. No. 4239, at para. 9 and following.
At para. 12 she distinguished
Conlin
in the context of such a guarantee
:

Turning to the documents in issue in this case, one finds a
    very different fact situation from
Conlin
. The language of the guarantee
    indicates that it was to be an all accounts guarantee. It was meant to be a
    continuing one for debts of Robertson Foods already incurred, or those which
    would be incurred subsequently. Specifically, the guarantor agrees to guarantee
    "all debts and liabilities, present or future ... at any time owing"
    by Robertson Foods Inc. "heretofore or hereafter incurred or
    arising". Moreover, the guarantee "shall be a continuing guarantee
    and shall cover all the liabilities" due to the bank. As well, the
    guarantee provides that all monies borrowed from the bank shall be deemed to
    form part of the liabilities, notwithstanding certain circumstances, including
    any irregularity, defect or informality in the borrowing. Nevertheless, the
    liability of the guarantor is limited to $1.5 million, which was less than the
    amount available to the borrower under the original Credit Agreement.

[29]

The guarantee language in this case is virtually
    identical.

[30]

In
Royal Bank of Canada v. Adecon Transport
    Inc.
, [2004] O.J. No. 6249 (S.C.), Echlin J. considered the RBC
    form of guarantee. He found, at para. 12, that the defendants had provided personal
    continuing all accounts guarantees.  Echlin J.
found, at para. 14, that RBC
had no duty to
    inform the guarantor about future credit facilities, and that the onus was on
    the guarantor to inquire about the state of accounts. He found, at para. 15, that
    the subsequent loan obligations were not material alterations to the principal
    contract but were contemplated by the parties.

[31]

In this case, the
    motion judge sought to distinguish
Adecon
,
at para. 30:
With respect to Ms. Cusack, one
    might distinguish the facts from those in the
Adecon Transport
case (
supra
)
    because the 2008 loan agreement cancelled and superseded the 2006 loan
    agreement.
Adecon
, the motion judge noted at para. 29, was dealing
    with a development contemplated by the parties in the guarantee, being additional
    loan facilities which could be considered to be future liabilities as set out
    in the guarantee.

[32]

In my view, with respect, there is
    no difference in substance between the facts in
Adecon
and the facts in
    this case. The purpose of a continuing all accounts guarantee is to allow the
    customer and the lender to alter their business arrangements without having to
    involve the guarantor.

[33]

I turn now to consider
    more closely the motion judges reasoning.

The Principal Debtor
    Clause and the Material Alteration Rule

[34]

The motion judge invoked the reasoning of
    the Supreme Court of Canada in
Conlin
.  In that case Manulife Bank of Canada
    entered into a mortgage with Dina Conlin for $275,000 for three years bearing
    interest at 11.5 percent.  The mortgage was guaranteed by John Conlin, the
    mortgagors husband, and his company Conlin Engineering and Planning Limited.
    The Conlins marriage ended, and just before the mortgage was to mature, Dina
    Conlin entered into a renewal agreement that renewed the mortgage for a
    further three-year term at a yearly interest rate of 13 percent.  The form
    provided a signature line for a guarantor but only Dina Conlin signed it and
    the guarantors did not receive notice of the renewal.  In March 1992 she
    defaulted and eventually the bank pursued the guarantors.

[35]

The motion judge relied particularly on para. 19 of
Conlin
, which provided
:

In
Canadian Imperial Bank of Commerce v. Patel
(1990),
    72 O.R. (2d) 109 (H.C.), at p. 119, it was held that a principal debtor clause
    converts a guarantor into a full-fledged principal debtor. I agree with this
    conclusion. If the guarantor is to be treated as a principal debtor and not as
    a guarantor, then the failure of the bank to notify the respondent of the
    renewal agreement and the new terms of the contract must release him from his
    obligations since he is not a party to the renewal. This conclusion does not
    require recourse to equitable rules regarding material variation of contracts
    of surety. It is simply apparent from the contract that a principal debtor must
    have notice of material changes and consent to them.
Of course, a guarantor
    who, by virtue of a principal debtor clause, has a right to notice of material
    changes, may, by the terms of the contract, waive these rights. However, in the
    absence of a clear waiver of these rights, such a guarantor must be given
    notice of the material changes and, if he is to be bound, consent to them
.
[Emphasis added.]

[36]

The majority in
Conlin
concluded that
    although the guarantee permitted the bank to provide an extension of time to
    the mortgagor, the provision was not broad enough to permit the bank to enter
    into a renewal agreement without involving the guarantor (at para. 23).

[37]

In
    this case, the motion judge noted, at paras. 33 and 34:

At paragraph 19 of [
Conlin
], the Supreme Court also took
    into account that a principal debtor clause will convert a guarantor into a
    full-fledged principal debtor. Should that development occur, then failing to
    notify the guarantor of new terms in a contract will release the person from
    the obligations because the individual will not be a party to the new terms.

With the 2006 guarantee signed by Ms. Cusack, paragraph 8 makes
    provision for her to become a principal debtor should Royal not be able to
    recover any sum of money on the guarantee. The natural inference with Ms.
    Cusack is that she could be a principal debtor and she had not been given any
    notice of material changes.

[38]

I would, with respect, distinguish
Conlin
on four
    bases.  First, the last two sentences of para. 19 of
Conlin
which
    the motion judge cited, set out above, lead the court back to the central issue
    in this case, which is whether Ms. Cusack contracted out of the common law
    protections for a guarantor. Para. 19 of
Conlin
therefore adds little to the analysis,
    but in fact begs the question before this court.

[39]

Second, in
Conlin
the context of the loan was quite different; the guarantee
    in
Conlin
applied to a single mortgage transaction for a house purchase,
    rather than to a continuing all accounts guarantee. By contrast, Ms. Cusack
    acknowledged her understanding that the guarantee was meant to capture ongoing business
    financing in which money would be advanced by the Bank and paid back by the
    borrower from time to time.  This is the basis on which Swinton J.
    distinguished
Conlin
in
Granata
    Family Trust
and her logic applies
    equally to this case.

[40]

Third, the
Conlin
case turned on whether the
    terms of the guarantee allowed the bank and the mortgagor to enter into a
    renewal agreement.  The majority concluded that it did not, so the guarantee
    was unenforceable because the renewal agreement was a material alteration.  The
    language at issue in the guarantee in this case permitted RBC to advance more
    money to Samson.

[41]

Fourth, the language of the principal debtor clause in
Conlin
is quite different from the language in clause (8) of
    the guarantee in this case.  In
Conlin
the guarantors were identified as principal debtors from
    the outset.  In this case, the clause provided for the conversion of the
    guarantor into a principal debtor only for enforcement purposes if the borrower
    defaulted and the guarantee for some other reason became unenforceable against
    the guarantor as a guarantee.

Royal Bank v. Bruce Industrial Sales Ltd.

[42]

Ms. Cusack seeks to reinforce the motion judges reasoning about
    the proper application of the material alteration rule in
Conlin
by
    invoking
the decision of this court in
Royal Bank v. Bruce Industrial Sales Ltd.
(1998), 40 O.R. (3d) 307.  In that case, the appellants were former
    employees and shareholders of Bruce. They gave guarantees in the principal
    amount of $128,000 with interest at Royal Banks prime rate plus 1.5 percent.
    The guarantees applied to a revolving operating loan for $125,000 and a fixed
    term loan for $100,000.

[43]

Bruce terminated the guarantors employment with
    the company on March 6, 1991, and on March 26, 1991 they notified the bank in
    writing that they were determining their liability as guarantors under
    paragraph 4 of the guarantee (para. 7). Moldaver J.A. noted, at para. 18, that
    the ordinary effect of giving a notice of determination is that:

the appellants would not be responsible for
    post-determination advances made to the company [A]fter receiving the notice
    of determination, it was entirely for the bank to decide whether it was willing
    to take the risk of advancing additional funds to the company, albeit without
    the protection afforded by the appellants guarantees.

[44]

But Moldaver J.A. noted at para. 9 of
Bruce
that upon receiving
    the notice of determination, the bank immediately converted the revolving loan
    into a fixed loan, with this catastrophic effect on the guarantors: By
    converting the revolving operating loan into a fixed loan, the bank effectively
    nullified that term of the principal loan agreement which required the bank to
    apply credit balances in the companys current account, rounded to the nearest
    $10,000, in repayment of the operating loan (para. 15). Had the bank continued
    to apply credit balances in the companys current account in repayment of the
    operating loan, the amount outstanding on that loan would have declined to
    $5,000 reducing the exposure on the guarantees by $90,000 (para 16).

[45]

Moldaver J.A. put the issue at para. 19:
The
    real question is whether it was open to the bank to convert the operating loan
    from revolving to fixed without losing its right to look to the appellants on
    their guarantees, at least in so far as they related to the $95,000.00 owing on
    that loan as of March 27, 1991.

[46]

In converting the revolving loan into a fixed
    loan in
Bruce
, the bank relied on language in clause (1) of the guarantee
    that is somewhat similar to the language of clause (1) of the guarantee at
    issue in this case quoted above:

(1) The Bank may grant time, renewals, extensions, indulgences,
    releases and discharges to, take securities (which word as used herein includes
    other guarantees) from and give the same and any or all existing securities up
    to, abstain from taking securities from or from perfecting securities of, cease
    or refrain from giving credit or making loans or advances to, accept
    compositions from and
otherwise deal with, the customer and others and with
    all securities as the Bank may see fit
,[Emphasis by Moldaver J.A.]

[47]

Moldaver J.A. found that the underlined wording,
    which he called the blanket provision, did not authorize the Bank to change
    the revolving loan into a fixed loan.  He gave three reasons for this holding at
    paras. 39-41:

First, the language used in the so-called "blanket"
    provision is vague, imprecise and general. It can scarcely be described as the
    "very clear wording" to which Professor McGuiness refers [in
The
    Law of Guarantee
, 2nd Edition (Scarborough, Ontario: Carswell, 1996) at
    546-47] . Surely, if clause (1) of the guarantee agreement was meant to
    provide the bank with the unqualified right to make material changes to the
    principal loan agreement, it could have been drafted in simple and precise
    terms to reflect this. The fact that it was not weighs against the bank.

Secondly, in attempting to discern the purpose and effect of
    the "blanket" provision, the provision must be considered in the
    overall context of clause (1). Significantly, because the provision finds its
    place at the tail-end of a series of specified permissible alterations, it
    ought not to be construed as authorizing radical changes to the principal
    contract. In this respect, the following passage from McGuiness, at p. 546, is
    apposite:

As a working premise, the courts are reluctant to construe
    broad and general provisions of uncertain scope and obscure purpose as
    authorizing radical changes to the principal contract, especially where there
    are specific provisions authorizing particular types of changes that might
    fairly be said to be covered by the broader provision concerned. The basic
    principle of interpretation applied in such cases would seem to be one of
expressio
    unius est exclusio alterius
.

Thirdly, taking into account the facts and circumstances
    surrounding the loan transaction as a whole, there is nothing to suggest that
    in providing their guarantees, the appellants intended to confer upon the bank
    the unqualified right to materially alter the principal loan agreement.

[48]

As a result, the court in
Bruce
concluded
    that the guarantee did not permit the bank to convert the loan from a revolving
    loan to a fixed loan (para. 43).

[49]

Ms. Cusack argues that the effect of this courts
    decision in
Bruce
is that the doctrine of material alteration addressed by the
    Supreme Court of Canada in
Conlin
applies to a continuing all accounts guarantee.  I would agree, but
    that is not the end of the analysis, it is the beginning. The court must, as
    the Supreme Court noted in
Conlin
, consider the words of the guarantee
    in context.

[50]

In assessing the applicability of
Bruce
, the
    context is critical. Implicit in Moldaver J.A.s analysis is the recognition
    that the banks approach would have permitted the bank to completely defeat the
    purpose of limiting the guarantors liability that was the function of the
    determination clause. Or, putting it differently, the general language of the
    blanket provision should not be permitted to overcome the guarantor-protective
    express language of the determination clause. No such issue is found in the
    words of the guarantee in this case, or in the context. The notice of
    determination was the critical contextual factor in
Bruce
. Ms. Cusack
    did not invoke the determination clause in this case, and RBC is not relying on
    the blanket provision in the current version of the guarantee.

The Alleged Material Alterations

[51]

There is a lurking
    terminological conundrum in the cases on material alteration.  Sometimes the
    court says that the challenged alteration is a material alteration that
    therefore triggers the
Conlin
rule and makes the guarantee unenforceable.  Sometimes, as
    in
Adecon,
the court determines
    that, because the challenged alteration was authorized by the words of the
    guarantee, it is not a material alteration and the material alteration rule
    does not apply.

[52]

Analytically, it seems to
    me that there are two distinct steps in the logical sequence that should be
    taken to preserve clarity.  The first step is to consider whether the challenged
    alteration to the underlying loan arrangement is a material alteration as a
    matter of law quite apart from any possible authorizing language in the guarantee.
    The second step is to consider whether the language of the guarantee permits
    the material alteration.

[53]

Bruce
is
instructive on how the court should approach the task set
    by
Conlin
of interpreting a guarantee.
I observe that
    if RBC had renewed the principal loan agreement in
Bruce
(which was not
    possible on the language of the guarantee in
Conlin
), the guarantors would have had no
    valid objection. This follows from the statement of Moldaver J.A. in
Bruce
,
    at para. 59:
Clause (1) of the guarantee agreement entitled the bank to
    renew the principal loan agreement. It did not permit the bank to do so at an
    increased rate of interest.
In
Bruce
, the court found
    that an increase in the interest rate from Royal Bank prime plus 2.25 percent
    to Royal Bank prime plus 2.5 percent was a material change to the principal
contract
    that entitled the appellants to be discharged from liability for the term loan
    because it was not expressly authorized.  (I note that a change in the interest
    rate is now expressly provided for in the RBC guarantee,
perhaps
    as a result of
Bruce
).

[54]

In this case, the motion judge found that the
    increases in the amount of the debt guaranteed (para. 27, 39), and in the more
    stringent report against performance ratio requirements (para. 27) were
    material alterations that triggered the rule in
Conlin
.

[55]

The
    motion judge was troubled by the increase in Samsons indebtedness, pointing
    out at para. 39 that: the Samson debt was three times what it was when Ms. Cusack
    provided the $250,000 guarantee. As noted, I agree with the motion judge that for
    Ms. Cusack the result was a greater potential for her to have to pay (para.
    27).

[56]

In support of his finding that the increase in Samsons borrowing
    was a material alteration, the motion judge noted that RBCs witness, Paul
    Keppen, acknowledged in cross-examination that when the loan agreement between
    Samson and RBC for $500,000 was created in 2008, the 2006 loan agreement for $250,000
    was terminated; the 2008 loan agreement expressly superseded and cancelled the
    preceding one although the 2009 agreement did not expressly supersede and
    cancel the 2008 agreement.

The motion
    judge was troubled that RBC did not seek a new guarantee each time the loan
    increased, noting, at para. 16, that the usual practice of Royal was to obtain
    a new guarantee when terminating one loan agreement and creating a new one.

[57]

With respect, there is no support in the evidence for this
    finding.

RBCs witness, Mr. Keppen did
    not testify as to a usual Bank practice. Mr. Keppen acknowledged that while it
    might have been prudent for RBC to have had new guarantees from Ms. Cusack when
    the loan agreements for $500,000 and $750,000 were created, he asserted that
    doing so was not necessary. I would agree; it was open to the Bank to leave the
    2006 guarantee, which capped Ms. Cusacks exposure at $250,000, in place.

[58]

There is a parallel here to
Adecon
, where the defendants urged Echlin J. to take into account internal
    bank documentation that suggested a preferable manner of dealing with such
    guarantee matters as a bank practice.  Echlin J. decided, however, that the
    internal documentation was not determinative of the interpretation of the
    language of the guarantee, which he found, at paras. 16, 17 and 21, to be clear
    and without ambiguity. I would apply the same logic here.

[59]

As noted, I agree with the motion judge that the
    increases in the amount of the debt guaranteed and in the more stringent
    performance requirements were material alterations, but that is the first step
    of the analysis.

[60]

The
    second step is to consider the language of the guarantee. It expressly
    permitted an increase in the amount loaned to Samson, and the prospect of an
    increase in future liabilities was expressly acknowledged by Ms. Cusack in her
    endorsement on the letter of independent legal advice. She knew and accepted
    that Samsons indebtedness to RBC could increase in the future even though her
    guarantee was limited.
This is the advice that her
    lawyer confirmed that he gave Ms. Cusack in the letter of independent legal
    advice and that she acknowledged receiving.

[61]

Parties are entitled to make their own arrangements, and a
    guarantors decision to contract out of the protection provided by the common
    law or equity will usually be respected by the courts so long as the
    contracting-out language is clear and unambiguous:
Conlin
, at para. 4.

[62]

In
Toronto-Dominion Bank v. Schrage
(2009), 64 B.L.R. (4th) 277, at para.
    15, Strathy J. cautioned that guarantees are invariably drawn by the lender
    ... typically on standard forms and afford no opportunity for negotiations by
    the guarantor.  They usually result in broad surrender of the guarantors legal
    and equitable rights.  Courts will look for clear and unambiguous language,
    and may, when traditional defences to the enforcement of a guarantee, including
    those based on equitable principles such as unconscionability require, refuse
    to enforce such a provision.  See also
British Columbia (Attorney General)
    v. Malik
, 2009 BCCA 202, 91 B.C.L.R. (4
th
) 87, at para. 49.
    There is, however, no basis for invoking such equitable principles in this
    case.

[63]

In
    my view, while the subsequent advances by RBC to Samson were material
    alterations to the principal loan contract, they were contemplated by the
    parties, permitted by the clear language of the guarantee, and inherent in
a continuing all accounts guarantee that contemplates increases in the
    size of the underlying indebtedness

. Further,
clause (1) of the guarantee expressly permitted RBC to change the
    terms of the borrowing, which would include changes in performance standards.

[64]

Thus, despite the material alterations in
    the underlying loan arrangements, Ms. Cusacks personal guarantee remains
    enforceable given the clear and unambiguous language of the guarantee and the
    factual context.

[65]

At issue in this case was the enforceability of a
    plain-vanilla standard form bank guarantee in the context of a small business
    loan, of which there are undoubtedly many. The motion judge found, and I agree,
    that Ms. Cusack was an accommodation surety, that is, someone who undertakes
    to be a surety for no consideration, whose obligations are to be strictly
    construed: see
Conlin
at para. 12. Despite the finding that Ms. Cusack was
    an accommodation surety, in my view there was nothing in the language of the
    guarantee or in the factual context to justify the motion judges decision not
    to enforce the RBC guarantee according to its terms but instead to dismiss
    RBCs action against Ms. Cusack. This is not a case where the context included,
    for example, an impermissible renewal in the circumstances of a matrimonial
    breakdown as in
Conlin
, a lender overreaching as in
Bruce
, or a
    lenders employee providing misleading advice, as was alleged but not proven in
C.I.B.C. v. Trapp
, [1987]
    B.C.J. No. 280, 12 B.C.L.R. (3d) 35 (C.A.), where the loan amount ballooned
    from $45,000 at its inception to $1 million
. Nor
    is this a case like
Bruce
where the alteration in the loan arrangements was
    both material and was not contemplated by the guarantee.

Disposition

[66]

I would allow the appeal, set aside the motion judges
    order dismissing RBCs motion for summary judgment against Ms. Cusack and dismissing
    RBCs action against her, and substitute an order for judgment in RBCs favour
    against Ms. Cusack for $250,000, plus interest as determined under the
    guarantee.

[67]

The parties were able to agree on costs. I would
    therefore fix the costs of this appeal at $20,000 all-inclusive, payable by Ms.
    Cusack to RBC. Ms. Cusack would also be responsible for the costs before the
    motion judge in the amount of $16,950, all-inclusive.

Released: May 13, 2013 (J.C.M.)

P. Lauwers J.A.

I agree. J.C. MacPherson J.A.

I agree. E.A. Cronk J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sally Creek Environs Corporation (Re), 2013
    ONCA 329

DATE: 20130521

DOCKET: C55472

Simmons, Hoy and Strathy JJ.A.

In the Matter of the Bankruptcy of Sally Creek
    Environs Corporation of the City of Brantford in the County of Brant in the
    Province of Ontario

Bobby H. Sachdeva and Wojtek Jaskiewicz for A. Robert
    Murphy, A. Robert Murphy Architect Incorporated and Gray Wave Resources Inc.

Liz Tinker for The Superintendent of Bankruptcy

Heard: May 13, 2013

On appeal from the order of Justice Peter A. Cumming of
    the Superior Court of Justice, dated April 30, 2012.

ENDORSEMENT

[1]

The appellants, A. Robert Murphy, A. Robert Murphy Architect
    Incorporated and Gray Wave Resources Inc., creditors of the bankrupt Sally
    Creek Environs Corporation (Sally Creek), appeal an order dismissing their
    motion for leave pursuant to s. 215 of the
Bankruptcy and Insolvency Act
(the BIA) to commence an action against the Office of the Superintendent of
    Bankruptcy (the OSB) and two of its employees (collectively, the OSB
    Defendants).

[2]

The background, briefly, is as follows.

[3]

Sally Creek was assigned into bankruptcy on January 10, 2003. In 2004
    and 2005, the appellants filed complaints with the OSB regarding perceived
    misconduct of the Trustee in bankruptcy of the Estate of Sally Creek. The OSB
    investigated and responded to the complaints.

[4]

The appellants also challenged the Trustees Statement of Receipts and
    Disbursements over the course of a fourteen day taxation hearing before the
    Registrar in Bankruptcy, held between June of 2007 and March of 2008. In his
    decision of June 23, 2008, the Registrar made findings of serious misconduct on
    the part of the Trustee and reduced the Trustees fees to the nominal sum of
    one dollar and disallowed a significant amount of the Trustees disbursements
    for legal fees. The effect of this was to require the Trustee to repay a
    significant amount to the Estate. The Registrars decision was appealed first
    to Mesbur J. of the Superior Court of Justice, and then to this court.
    Ultimately, the Trustees fees and disbursements were reduced from the amount
    sought, but not as drastically as had been done by the Registrar.

[5]

Subsequently, the appellants sought to commence a negligence action
    against the OSB Defendants, on their own behalf and on behalf of the Estate. They
    assert that creditors would have received a larger dividend, but for the
    Trustees mismanagement of the Estate, and that the OSB Defendants are
    responsible for not correcting the Trustees mismanagement. They also assert
    that the OSB breached a duty it owed to them when, after the Registrars
    decision, it failed to require the Trustee to increase the amount of its bond.

[6]

Section 215 of the BIA provides that no action lies against the
    Superintendent of Bankruptcy except by leave of the court. The appellants
    accordingly brought a motion for leave in April of 2012. The motion judge
    concluded that the negligence claims that the appellants sought to assert
    against the OSB Defendants were not sustainable at law because they were barred
    by the operation of the
Limitations Act, 2002
, S.O. 2002, c. 24,
    Sched. B. He accordingly dismissed their motion.

[7]

Before the motion judge, counsel for the appellants conceded that the
    limitation period in respect of their proposed actions against the OSB
    Defendants would have begun to run by no later than June 23, 2008  the date
    that the Registrar made his finding of serious misconduct on the part of the
    Trustee and required the Trustee to pay a significant amount to the Estate
    but for the appeal of the Registrars decision to Mesbur J., and the subsequent
    appeal of her decision to this court. The only issue before the motion judge
    was the effect of those appeals on the limitation period. The motion judge
    concluded that all material facts with respect to the asserted causes of action
    against the OSB Defendants were known by June 23, 2008, and neither appellate
    decision affected the calculation of the limitation period.

[8]

On this appeal, the appellants argue that the motion judge made two
    errors.

[9]

The first is that the motion judge did not consider what the appellants
    allege was the effect of Mesbur J.s decision, namely that the Trustee did not
    have to pay the Estate any money. They argue that the effect of her decision
    was that damage, such as required for a cause of action based on the OSBs
    failure to require the Trustee to increase the amount of its bond to accrue,
    had not occurred.

[10]

Their
    reasoning is as follows. After the Registrar rendered his decision requiring
    the Trustee to pay significant amounts to the Estate, the appellants were
    concerned that the Trustee would be unable to pay the amounts ordered and
    cautioned the OSB Defendants that the OSB should increase the amount of the
    bond the Trustee was required to post. The OSB did not. The appellants argue
    that if the Trustee did not have to pay any amount to the Estate, there would
    have been no need to have recourse to any security, and they would therefore
    not have suffered damages as a result of the OSB Defendants failure to require
    the Trustee to post additional security.

[11]

This
    first argument has no merit. Whether the effect of Mesbur J.s order was that
    the Trustee was not required to pay monies to the Estate is in our view of no
    moment. As the motion judge concluded, all of the material facts with respect
    to the asserted causes of action set out in s. 5(1)(a) of the
Limitations
    Act, 2002
 including that damage had occurred  were known by no later
    than June 23, 2008. The appellants provided no authority for their argument
    that Mesbur J.s decision, in effect, tolled the limitation period that they
    concede had already begun to run.

[12]

The
    appellants second argument arises out of a comment made by Mesbur J. in the
    course of her reasons of February 19, 2009.  In her view, certain findings made
    by the Registrar were improper because they had been the subject of the OSBs
    investigations, in response to the appellants complaints.  She wrote that the
    appellants presumably could have applied for judicial review of the findings
    of the regulatory bodies. It did not. The appellants acknowledge that Mesbur
    J.s conclusion that the findings were not open to the Registrar was overturned
    on appeal to this court. However, they argue that commencing an action
    following the decision of Mesbur J. and prior to the decision of this court would
    have been an impermissible collateral attack on her decision.

[13]

This
    second argument similarly has no merit.  It does not address the core finding
    of the motion judge, with which we agree, namely that all material facts with
    respect to the asserted causes of action were known by no later than June 23,
    2008.  The subsequent comment of Mesbur J. does not affect this.

[14]

The
    appeal is accordingly dismissed.

[15]

The
    OSB is entitled to costs of this appeal and motion for leave to bring this
    appeal, fixed in the agreed amount of $9,500, inclusive of disbursements and
    applicable taxes.

Janet Simmons
    J.A.

Alexandra Hoy
    J.A.

G.R. Strathy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sentineal v. Sentineal, 2013 ONCA
    299

DATE: 20130507

DOCKET: C54927

Rosenberg, Rouleau and Pepall JJ.A.

BETWEEN

Jeffrey Sentineal

Applicant (Respondent)

and

Jack Sentineal

Respondent (Appellant)

Howard J. Wolch for the appellant

Brian Banfield for the respondent

Heard: May 6, 2013

On appeal from the order/judgment of Justice Peter B.
    Hambly of the Superior Court of Justice, dated December 22, 2011.

APPEAL BOOK ENDORSEMENT

[1]

Despite the hostility between the parties, on the hearing of the appeal,
    it turned out that there was very little in real dispute. The judgement will be
    varied to provide that all the remaining funds will be held back until the
    final passing of accounts.

[2]

We see no reason to interfere with Hambly J.s decision re legal fees,
    given the history of this matter. We interpret Hambly J.s reasons that the
    question of executors fees including disbursements for appropriate legal fees
    will be dealt with at the passing of accounts.

[3]

As to the cross-appeal, the cross-appellant has not shown that Hambly J.
    did not properly exercise his discretion. The fresh evidence does not show that
    the decision was clearly wrong. To the contrary, all the fresh evidence shows the
    impracticality of inserting a new estate trustee at this point, on the eve of
    the passing of accounts by the current trustee.

[4]

Accordingly the cross-appeal is dismissed. The appeal is dismissed
    except as noted above.

[5]

As to costs, the appeal partially succeeded and the cross-appeal was
    dismissed. That said, we are of the view that the costs sought by the appellant
    are excessive and wholly out of proportion to the issues.

[6]

The appellant shall have costs of $10,000 inclusive of disbursements and
    H.S.T.


COURT OF APPEAL FOR ONTARIO

CITATION: Stein v. Windsor Police Services
    Board, 2013 ONCA 323

DATE: 20130514

DOCKET: C56376

Rosenberg, Rouleau and Pepall JJ.A.

BETWEEN

Deborah
    Stein, Rodger Stein and Jessica Angel Stein, a minor,
    by her Litigation Guardian, Rodger Stein

Plaintiffs/Respondent in Appeal

and

Windsor
    Police Services Board, the Corporation of the City of Windsor,
    Bruce Douglas Murray, Tony Garro, Jane
    Doe(s) 1 and John Doe(s) 1, RVJJ
    Enterprises Inc. (formerly known as Pierascenzi Construction Limited)
    and John Doe(s) 2

Defendants

and

The Special Investigation Unit

Non-Party Appellant

Sara Blake and Nadia Laeeque, for the appellant

Dina Mejalli, for the respondent

Heard and released orally: May 8, 2013

On appeal from the decision of Justice Terrence L. J. Patterson
    of the Superior Court of Justice, dated November 5, 2012.

ENDORSEMENT

[1]

The parties agreed that the standard of review for the issue of
    relevance on this appeal was correctness.

[2]

An order against a non-party for production for inspection of a document
    under rule 30.10(1) of the
Rules of Civil Procedure
may be made if:

(1) the document is not privileged;

(2) the document is relevant
    to a material issue in the action; and

(3) it would be unfair to
    require the moving party to proceed to trial without having
    discovery of the document.

[3]

The motion judge ordered production of an unedited copy of the Special
    Investigation Units (SIU) investigation file, including the SIUs Directors
    Report to the Attorney General.

[4]

The only issue before us is whether the SIU Directors Report should be
    produced by the SIU, a non-party to the action.

[5]

The Directors Report, a statutory requirement, is a summary of evidence
    and the legal analysis of that evidence with a view to whether a criminal
    prosecution should be commenced.

[6]

Having reviewed the Directors Report, we are satisfied that the motion
    judge erred in determining that it was relevant. The information in the Report
    is derivative of other sources of information in the investigation file with
    the exception of the Directors legal analysis and the lead investigators
    assessment of the case, neither of which is relevant to any material issue in
    the action.

[7]

Given our conclusion, it is unnecessary to address the additional
    requirements relating to the absence of privilege and unfairness.

[8]

The appeal is allowed and the order of November 5, 2012 is set aside.  There
    will be no order as to costs.

M.
    Rosenberg J.A.

Paul
    Rouleau J.A.

S.E.
    Pepall J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: United States v. Churuk, 2013 ONCA
    330

DATE: 20130523

DOCKET: C54053, C54054, C56061 & C56062

Laskin, Feldman and Watt JJ.A.

IN THE MATTER OF an appeal of a
    committal order pursuant to s. 49 of the
Extradition Act
, S.C. 1999,
    c. 18

AND IN THE MATTER OF an
    application for judicial review pursuant to s. 57 of the
Extradition Act
,
    S.C. 1999, c. 18

BETWEEN

The Attorney General of Canada on Behalf of the
    United States of America

Respondent

and

Yaroslav Churuk (a.k.a. Yaroslav Botsvynyuk a.k.a.
    Slavko)  and Mykhaylo Botsynyuk (a.k.a.
    Mykhaylo Churuk a.k.a. Misha)

Appellants/Applicants

Paul Slansky, for the appellants/applicants

Richard A. Kramer, for the respondent

Heard and released orally: May 2, 2013

On appeal from the committal order of Justice Jane E.
    Kelly of the Superior Court of Justice, dated July 22, 2011, and on application
    for judicial review of the surrender order of the Minister of Justice, dated August
    28, 2012.

ENDORSEMENT

[1]

The appellants/applicants are sought for prosecution in Pennsylvania for
    their role in a human trafficking scheme that saw their victims smuggled from
    the Ukraine into the United States, where they were allegedly held under
    conditions of servitude.

[2]

The appellants are alleged to have conspired in the scheme with their
    three brothers, two of whom have been found guilty following their trial by
    jury in Pennsylvania.

[3]

Kelly J. ordered the appellants committed for extradition.  The Minister
    of Justice then ordered their surrender.  The appellants appeal the committal
    order and apply for judicial review of the surrender order.  They raise
    numerous interrelated grounds of appeal and arguments.  We will deal briefly
    with each one.

(1)

Ulterior Motives

[4]

The appellants contend that the Ukraine has ulterior motives to
    prosecute them and that the United States is wilfully blind to these motives.
    The appellants argue that to extradite them in these circumstances would be an
    abuse of process.  Both the extradition judge and the Minister rejected this
    argument.  We see no error in their doing so.

[5]

Contrary to the appellants submission, we are satisfied that the
    extradition judge understood the argument on ulterior motives but did not
    accept it.  After making several findings at para. 21 of her reasons, she
    concluded at para.  22:

Further, there is no requirement for the authorities in the U.S.A.
    to examine the Ukrainian investigation and court proceedings or make that part of
    the Record of the Case.  Police misconduct in Ukraine cannot make it an abuse
    of process for the American to prosecute persons for offences allegedly
    committed in their jurisdiction.

[6]

We agree with her conclusion.

(2)

Disclosure

[7]

The appellants argue that they cannot challenge the reliability of the
    evidence of the witnesses without disclosure of their names.  Pardu J. rejected
    this argument.  She held that this was a matter that went to ultimate
    reliability, not threshold reliability.  On the record in this case we agree
    with her holding.  Moreover, as Kelly J. noted, the appellants received, in
    considerable detail, the substance of the evidence against them.

[8]

Finally, ordering disclosure of the names of the witnesses would give
    the appellants a degree of disclosure that would exceed their entitlement under
    the procedural laws of Pennsylvania: see
USA v. Michaelov
, at para.
    61.  The sensible purpose of this disclosure policy is to protect the safety of
    the victims in human trafficking cases.

(3)

Certification

[9]

The appellants contend that without the names of the witnesses the
    record is not properly certified.  There is no merit to this contention.

(4)

The Conduct was
    Statute Barred

[10]

The
    United States has said that the offences continued until 2007.  The indictment
    was issued March 17, 2010 and, thus, filed within the five year limitation
    period.  Moreover, this argument was raised by one of the brothers at his trial
    in the United States and was rejected.  In our opinion, the Minister was
    entitled to rely on the United States position and the finding of the trial
    court.

(5)

Indirect Refoulement

[11]

The
    appellants also argue that, as they are convention refugees in Canada, they are
    entitled to our countrys protection and that their surrender would amount,
    indirectly at least, to refoulement.  The Minister concluded there were serious
    reasons for considering that the appellants had committed a serious
    non-political crime in the United States before they were declared refugees in
    Canada.  Therefore, they were not entitled to protection under the principle of
    non-refoulement.

[12]

We
    agree with the Minister.

[13]

In
    addition, the Minister asked CIC to conduct a risk assessment and that
    assessment showed the appellants would not face a risk of persecution or
    torture in the Ukraine.

(6)

Double Jeopardy

[14]

Churuk
    was not even prosecuted in the Ukraine so that he was not in jeopardy.
    Therefore, he cannot raise this argument.

[15]

The
    Minister recognized that he had discretion under s. 47(a) of the Act to refuse
    the surrender of Botsvynyuk on the ground of double jeopardy.  The Minister
    declined to exercise this discretion because, in his view, the victims were
    different and a considerable part of the criminal conduct could not be
    prosecuted in the Ukraine.

[16]

These
    were reasonable grounds for the Ministers exercise of discretion not to refuse
    surrender on the basis of double jeopardy.

(7)

Persecution

[17]

The
    appellants submit that before surrendering them, the Minister was required to
    seek assurances that they would be returned to Canada, not the Ukraine, after
    the United States proceedings are completed.  The Minister did not accept this
    submission.  He held that the appellants surrender would not shock the
    conscience and, therefore, assurances were neither required nor appropriate.

[18]

We
    agree.

(8)

Conclusion

[19]

The
    appeal and the application for judicial review are dismissed.

John Laskin J.A.

Kathryn Feldman J.A.

David Watt J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Vetro v. Vetro, 2013 ONCA 303

DATE: 20130507

DOCKET: C56023 and C56580

Weiler, Gillese and Hoy JJ.A.

BETWEEN

Dominic Vito Vetro

Applicant (Appellant)

and

Gabrielle Vetro

Respondent (Respondent)

J. Kelvin Ford, for the appellant

Gabrielle Vetro, acting in person

Heard: May 6, 2013

On appeal from the order of Justice Douglas K. Gray of
    the Superior Court of Justice, dated August 23, 2012 and the order of Justice
    Meredith Donohue of the Superior Court of Justice, dated November 19, 2012.

By the
    Court:

[1]

The appellant is in substantial compliance with the conditions of the
    order of MacPherson J.A.  Consequently, the court heard these two appeals, one
    following the other. At the conclusion of the appellants oral argument we
    dismissed the appeal with reasons to follow.  These are those reasons.

The appeal from the order of Gray J. striking the appellants
    pleadings

[2]

The appellant submits that the motion judge erred in not creating any
    roadmap by which the appellant could reinstate his pleadings after striking
    them.  The appellant further submits that in striking his pleadings the motion
    judge was obliged to give him an opportunity to correct or explain his default
    and that he did not do so.

[3]

We disagree. The motion judge began by correctly stating the governing
    legal principle, namely that striking a pleading is a serious matter, and
    should only be done in unusual cases:
Marcoccia v. Marcoccia
(2009),
    60 R.F.L. (6th) (Ont. C.A.), at para.3

[4]

The appellant had been given prior opportunities to correct and explain
    his default and the motion judge made findings of fact to the effect that he
    had not done so.  Gray J. found that the orders for interim support were made
    on the appellants own evidence, that he went into default almost immediately
    and that any compliance since then had been minimal and only on the eve of
    scheduled trials or motions. We note, as well, that the motion judge was not
    satisfied the appellant had yet made full disclosure despite the existence of a
    long standing disclosure order and attempts at enforcing it. The motion judge
    found that the appellants assertion of his financial situation and level of income
    varied according to what suited his interest at any particular point in time.

[5]

In addition, the appellant took money from the childrens R.E.S.P. for
    his own purposes and although he agreed to repay the money he had only repaid
    $2,000 of the $5,500 he took. Irrespective of the issues of disclosure, the
    motion judge struck the pleadings on the basis of the appellants
    non-compliance with prior court orders and, having regard to the history and
    circumstances of the case, he was entitled to do so without giving the
    appellant any further opportunity to correct or explain his defaults.

[6]

In these circumstances we see no error in the motion judges exercise of
    discretion to strike the pleadings.  He correctly articulated the law and made
    findings of fact to support his application of it.

[7]

We wish to add that the reasons of Donohue J. indicate that, prior to
    trial, the appellant brought an unsuccessful motion before Murray J. to
    reinstate his pleadings.  This fact was not set out in the appellants factum, nor
    were any of the relevant documents, including a copy of the order dismissing
    the motion, in the appellants appeal book. In the absence of a record of the
    proceedings before Murray J. and his order, it is not clear that we had the
    jurisdiction to deal with the appeal from the order of Gray J.  Nonetheless, on
    the assumption that it was within our jurisdiction, we considered the appeal of
    Gray J.s order and, as indicated, dismiss it.

The appeal from the order of Donohue J.

[8]

The essential aspects of the appellants appeal from the order of
    Donohue J. involve: 1) the amount of income imputed to the appellant and
    respondent for support purposes; and 2) the vesting of title to the matrimonial
    home in the respondent.

Income imputed for support purposes

[9]

The trial judge made findings of fact for which there was ample evidence
    in the trial record.  We are not satisfied that she made any error in the
    amount of income that she imputed to the appellant. She imputed to him the
    amount of income he had been able to earn during a substantial period of the
    marriage. Although the appellant complains that the trial judge did not take
    into consideration his financial position, it is clear that she considered such
    financial disclosure as the appellant saw fit to make, including his bank
    statements, his tax returns and his deposition under questioning in November
    11, 2010. Notwithstanding counsels submissions respecting the variations in
    the appellants income, the figure the trial judge imputed was a figure that
    was in keeping with a long history of the appellants income and his capacity
    to earn income.

[10]

The
    issues of support are tied to the imputed income and we need say nothing more
    about those.

Vesting of title to the matrimonial home

[11]

The
    appellant contests the valuation put on the matrimonial home by the trial judge
    and submits she should have used a valuation of $3 million. The appellant
    further submits that the respondent did not seek a vesting order and that there
    was no basis for the trial judge to make the order and no jurisdiction to do
    so.

[12]

We
    disagree. The appellants own evidence showed valuations of the matrimonial
    home ranging from $1.5 million, to $1.85 million, to $3 million all as of
    November 7, 2008, the date of separation. In addition, there was evidence that
    the house needed work to be done to it.

[13]

In
    making her calculation vesting the husbands one-half interest in the
    matrimonial home in partial satisfaction of the appellants arrears and lump
    sum support obligations, the trial judge used the current appraisal of the home
    obtained by the wife in the amount of $1.65 million. This figure is supportable
    on the evidence and we would not interfere with it.

[14]

As
    to the vesting order, the respondent asked the trial judge to make such an
    order given the appellants history of non-payment and the trial judge was
    entitled to do so. Finally, the decision of this court in
Lynch v. Segal
(2006),
    82 O.R. (3d) 641, supports her jurisdiction to do so.

[15]

Accordingly,
    this appeal is also dismissed.

Costs

[16]

The
    respondent, who is self-represented, seeks costs of the appeals.  Having regard
    to the disbursements she incurred, and the submissions made, we hereby fix
    costs of the appeals in the amount of $2,500 inclusive of all applicable taxes,
    payable forthwith.

Released: May 7, 2013                                                    K.M.
    Weiler J.A.

KMW                                                                          E.E.
    Gillese J.A.

Alexandra
    Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Williston v. Hamilton (Police
    Service), 2013 ONCA 296

DATE: 20130507

DOCKET: C55390

Gillese, Blair and Rouleau JJ.A.

BETWEEN

Dale Williston

Plaintiff (Appellant)

and

City of Hamilton operating as Police Services and
    Preston Gabriele

Defendants (Respondents)

Sumitra Lagoo and Efstathios Balopoulos, for the
    appellant

Kieran C. Dickson, for the respondents

Heard: March 21, 2013

On appeal from the judgment of Justice James A. Ramsay of
    the Superior Court of Justice, dated September 16, 2011, with reasons reported
    at 2011 ONSC 5400.

Rouleau
    J.A.:

A.

Overview

[1]

The appellant appeals the trial judges cost award. Leave to appeal was
    granted by a panel of this court on April 19, 2012.

[2]

The costs decision arises from motor vehicle litigation wherein the
    trial judge concluded that the respondents were responsible for 100% of the
    damages to the appellant, in the agreed-upon amount of $100,000. The trial
    judge awarded the appellant partial indemnity costs fixed at $60,000. The
    appellant had also sought an augmented award of costs on the basis that the
    respondents had refused repeated requests to engage in mediation pursuant to s.
    258.6 of the
Insurance Act,
R.S.O.
1990, c. I.8. The trial judge denied this request and it is this refusal to grant
    an augmented cost award that is the subject of the appeal.

B.

Facts

[3]

Section 258.6(1) provides that a person making a claim for damages for
    injury arising from the use or operation of an automobile, and an insurer that
    is defending an action on behalf of an insured or that receives a notice under s.
    258.3(1)(b) in respect of a claim, shall participate in mediation if the other
    party so requests. Pursuant to s. 258.6(2), a failure to comply with a request
    to mediate shall be considered by the court in awarding costs.

[4]

This court considered this provision in
Keam v. Caddey
, 2010
    ONCA 565, 103 O.R. (3d) 626, and, at para. 29, determined that where an
    insurer breaches s. 258.6(1), s. 258.6(2) requires the trial judge to
    ascertain the appropriate remedial costs penalty in the circumstances.

[5]

In the present case, the trial judge declined to make an augmented cost
    award because he concluded that the provision only applied to insurers. He
    determined that the respondents were not insurers either as named defendants to
    the action or by way of subrogation. This finding was likely based on the fact
    that the action had been defended throughout by the legal services division of
    the City of Hamilton, rather than outside counsel.

C.

Positions of the parties

[6]

The appellant submits that the trial judge erred in ruling that s. 258.6
    did not apply because the respondents were not insurers either as named
    defendants or by way of subrogation. The ruling was made without either party
    having raised the issue. Further, had the issue been raised, the appellant
    would have provided ample evidence that s. 258.6(2) had been engaged in the
    circumstances of this case. In support of that submission, the appellant has
    tendered fresh evidence showing that the respondents were insured; that the
    respondents had confirmed to the appellant that there was coverage and advised
    of its limits; and that the appellant had made requests for mediation engaging
    the obligations outlined in s. 258.6(1).

[7]

The respondents acknowledge that the issue was not raised in submissions
    before the trial judge and candidly stated that the trial judges basis for
    rejecting the claim for augmented costs came as a surprise to both parties.
    However, they maintain that the trial judge was correct and that the appellant did
    not establish that s. 258.6(2) applied in the circumstances of this case.

D.

Analysis

[8]

For the reasons that follow, I would allow the appeal.

(1)

Fresh Evidence

[9]

The appellants claim arose from a motor vehicle accident in Ontario
    where insurance is mandatory pursuant to the
Compulsory Automobile
    Insurance Act
, R.S.O. 1990, c. C.25, s. 2(1). After the collision, the
    appellant sought and obtained confirmation from the respondents that there was insurance
    coverage.

[10]

When
    the appellant sought augmented costs pursuant to s. 258.6(2) of the
Insurance
    Act
, he had no reason to expect that there would be an issue as to whether
    the section applied in the circumstances. He quite reasonably expected that the
    insurer had been involved in the defence of the claim, was aware of the appellants
    several requests for mediation and had refused to accede to these repeated
    requests.

[11]

Although
    the respondents opposed the appellants request for augmented costs at first
    instance, they did so on the basis that such costs were not warranted. The
    respondents did not suggest to the trial judge that he could not make the award
    because no insurer was involved in the defence of the action or in the refusal
    to mediate. The appellant was, therefore, taken by surprise by the trial
    judges ruling and cannot be faulted for not having filed any material to
    confirm the applicability of s. 258.6(2) of the
Insurance Act
.

[12]

Before
    ruling as he did, the trial judge ought to have raised his concern with the
    parties and given them an opportunity to address the issue of whether the
    insurers obligation to mediate had been engaged. Had the trial judge done so,
    the appellant would no doubt have sought permission to file relevant material. Because
    the trial judge did not provide this opportunity, it is appropriate, in my
    view, for the appellant to file on appeal the fresh evidence touching on this
    issue.

(2)

The Applicability of
    s. 258.6 of the
Insurance Act
to this Case

[13]

Section
    258.6 of the
Insurance Act
reads as follows:

258.6(1)
    Mediation

A person making a claim for loss or damage from bodily injury
    or death arising directly or indirectly from the use or operation of an
    automobile and an insurer that is defending an action in respect of the claim
    on behalf of an insured or that receives a notice under clause 258.3(1)(b) in
    respect of the claim shall, on the request of either of them, participate in a
    mediation of the claim in accordance with the procedures prescribed by the
    regulations.

258.6(2)
    Failure to comply

In an action in respect of the claim, a persons failure to
    comply with this section shall be considered by the court in awarding costs.

[14]

Pursuant
    to s. 258.6(1), an insurer that is defending an action in respect of the claim
    on behalf of an insured or that receives a notice under clause 258.3(1)(b) in
    respect of the claim must participate in mediation if requested by the
    plaintiff. The respondents argue that there was no basis for concluding that an
    insurer defended the action. The only evidence was that the action was defended
    throughout by the legal services division of the City of Hamilton. As a result,
    the appellant has not established that the section applies to them. Further,
    the respondents argue that the appellant has not established that the insurer
    ever received the s. 258.3(1)(b) notice referred to in s. 258.6(1). Finally,
    the respondents argue that the appellant has not established that the insurer
    was asked to mediate.

[15]

The
    s. 258.3(1)(b) notice is a written notice that a plaintiff must serve on the
    defendant, advising the defendant that the plaintiff intends to commence an
    action. It is to be served within 120 days of the incident, or such longer
    period as may be allowed by the court. The fresh evidence shows that the appellant
    sent the s. 258.3(1)(b) notice to the City on November 17, 2006.

[16]

Once
    the City received the notice, it was required by s. 258.3(2) to give a copy of
    the notice to the insurer within seven days of receiving the notice. In light
    of the statutory requirement, it is reasonable to presume that the respondents
    did in fact transmit the notice to the insurer.

[17]

Section
    258.4 of the
Insurance Act
then provides that an insurer who receives
    a s. 258.3(1)(b) notice is to promptly inform the plaintiff whether there is a
    motor vehicle liability policy issued by the insurer to the defendant and, if
    so, what the liability limits under the policy are and whether the insurer will
    respond under the policy to the claim.

[18]

The
    fresh evidence contains a November 21, 2007 letter to the appellant advising
    that the policy limits under Guarantee Company of North America Policy
    #A197970 for 2005 are $10,000,000.00. There are no coverage issues. This
    letter was authored by the City of Hamiltons legal services division and
    states that it is in response to correspondence received from the appellants
    solicitor dated November 16, 2007. The appellants November 16, 2007 letter
    does not appear to be in the record before us. It is, however, reasonable to
    conclude that it inquired about the Citys insurance coverage, and the Citys
    response to the appellant containing the insurance details was sent in
    compliance with the insurers obligation under s. 258.4 of the
Insurance
    Act
.

[19]

From
    this chain of correspondence, and taking into account the statutory
    requirements, the only reasonable conclusion is that the insurer was fully
    apprised of the claim and had received the s. 258.3(1)(b) notice. It is, in my
    view, highly unlikely that a solicitor for a sophisticated insured such as the
    City of Hamilton would send a letter to a plaintiff representing that there are
    no coverage issues without having first obtained confirmation to this effect
    from the insurer.

[20]

I
    turn now to whether the request to mediate pursuant to s. 258.6(1) was sent to
    the insurer. The appellant wrote to the legal services division of the City of
    Hamilton on February 3, 2011, and formally requested private mediation pursuant
    to s. 258.6(1) of the
Insurance Act
. When made by the plaintiff, the
    s. 258.6(1) mediation request is directed to the defendants insurer. No response
    was received from the legal services division of the City. There was no
    suggestion that the legal services division of the City was not in a position
    to accept such a request on behalf of the insurer.

[21]

On
    July 7, 2011, the appellant sent the Citys legal services division a further
    request for mediation pursuant to s. 258.6(1) of the
Insurance Act.
This
    time, the Citys legal services division responded and questioned the utility
    of mediation. It stated that it would pass the request for mediation onto its
    principals, but would not recommend mediating until further discovery,
    production, and a medical exam had been done. The letter did not identify who
    the principals were and, as with the previous request, did not suggest that
    the legal services division of the City was not in a position to accept the
    request for mediation on behalf of the insurer.

[22]

A
    third letter requesting mediation was sent by the appellant on July 19, 2011. Although
    no specific reference to s. 258.6 is made in the letter, the tenor of the
    letter makes it clear that the appellant was renewing his request for
    mediation.

[23]

This
    record allows for no other reasonable conclusion but that the legal services
    division of the City of Hamilton was, at a minimum, holding itself out to the
    appellant as being authorized by the insurer to provide the response required
    of an insurer upon receipt of a s. 258.3(1)(b) notice and to respond on the
    insurers behalf to mediation requests made pursuant to s. 258.6(1). The
    respondents filed nothing suggesting otherwise, nor did they indicate what
    arrangement existed between the legal services division of the City of Hamilton
    and the insurer.

[24]

As
    a result, the appellant was justified in dealing with the legal services
    division of the City of Hamilton as representing both the City and the insurer.
    I conclude therefore that s. 258.6(2) applies in the circumstances of this case
    because the insurer failed to respond to a request to mediate, as required by
    s. 258.6(1).

Remedy

[25]

In
    my view, an augmented cost award was warranted in the circumstances of this
    case. The appellant repeatedly requested mediation and the insurer never agreed
    to participate, despite its obligation to do so pursuant to s. 258.6(1).

[26]

As
    set out in
Keam
, at para. 32, the award should reflect the censure of
    the court and provide appropriately significant recovery. In
Keam
, the
    court determined that increasing the quantum of the fee portion of the costs
    awarded to the appellants was warranted and it increased the fee award from
    $110,000 to $150,000 plus applicable taxes.

[27]

In
    the present case, the fee portion of the trial costs, on a partial indemnity
    basis, was $41,183.60. In my view, a $20,000 increase is appropriate, thus raising
    the total cost award from $60,000 to $80,000. I would also award the appellant
    costs of the appeal, including the leave to appeal motion, fixed in the global amount
    of $15,000 inclusive of disbursements and applicable taxes.

Paul Rouleau J.A.

I agree E.E. Gillese
    J.A.

I agree R.A. Blair
    J.A.

Released: May 7, 2013