COURT OF APPEAL FOR ONTARIO

CITATION: Trotter Estate, 2014 ONCA 841

DATE: 20141126

DOCKET: C56823

van Rensburg, Hourigan and Benotto JJ.A.

In the matter
of the Estate of Audrie Jean Trotter, deceased

BETWEEN

William
John Trotter, Catherine Ruth Trotter

and Robert Trotter

Applicants (
Appellants
)

and

Johnstone
Dempsey Trotter personally, and Johnstone Dempsey Trotter and James Bell in
their capacity as estate trustees with a will in the estate of

Audrie Jean Trotter

Respondents (Respondents
in Appeal)

Application under Rule 14

of the
Rules
of Civil Procedure

AND

In the matter
of the Estate of Audrie Jean Trotter, deceased

BETWEEN

William John Trotter, Catherine and Ruth Trotter

Applicants (Appellants)

and

Johnstone
Dempsey Trotter personally, and Johnstone Dempsey Trotter and James Bell in
their capacity as estate trustees with a will in the estate of

Audrie Jean Trotter

Respondents (Respondents
in Appeal)

Application under Rule 14

of the
Rules
of Civil Procedure

Martin Teplitsky, Q.C., for the appellants

Brian A. Schnurr and Jordan D. Oelbaum, for the
respondent estate trustees

Michael Adams, for the respondent Johnstone Dempsey
Trotter

Heard: September 23, 2014

On appeal from the judgment of Justice
Margaret
Eberhard of the Superior Court of Justice, dated February 22, 2013, with
reasons reported at 2013 ONSC 1182.

Benotto J.A.:

[1]

The parties to this appeal are family members embroiled in a bitter
dispute over their mothers estate. In two related actions, the appellants
challenged the validity of her wills and certain
inter vivos
transfers
of land. They alleged undue influence in both the will and transfer actions,
and also argued that the two impugned transfers were procured by fraud. Vastly
differing factual assertions are put forward by those who attack and those who
defend the dispositions.

[2]

The appellants actions were dismissed with costs of $400,000 after the
respondents brought a successful motion for summary judgment. This appeal
concerns the process by which the motion judge determined that there was no
genuine issue requiring a trial.

[3]

The appellants assert that the action was not capable of being resolved
on the basis of the written record, as evidenced by the motion judges failure
to make the credibility findings necessary to support her conclusion on undue
influence. The appellants also allege that the motion judge erred in dismissing
the transfer action on the basis that it was subsumed within the wills action. Finally,
the appellants submit that the motion judges reasons raise a reasonable
apprehension of bias and that the costs order was excessive.

[4]

The respondents argue that there was evidence from which the motion
judge could, in her discretion, conclude that there was no issue requiring a
trial. Further, the
inter vivos
transfer action did become moot once
the wills action was dismissed. Even if the transfers were set aside, the
respondent Johnstone Dempsey Trotter would still inherit the properties by way
of the 2005 will.

[5]

I have concluded that the motion judge erred in her approach to the
summary judgment determination. She undertook the analysis in a conclusory
fashion and failed to make the findings of credibility necessary to support her
ultimate decision. This conclusion is dispositive of the appeal and it is not
necessary to address the dismissal of the transfer action or the award of
costs. I will nonetheless briefly address the allegation of reasonable
apprehension of bias.

I.

Background

(1)

The Parties

[6]

Audrie and Ty Trotter had five children: William (Bill), Catherine (Kate),
Robert, Phillip and Johnstone (John). Ty died in 1996, and Audrie died in
2008. The challenged wills and
inter vivos
transfers were executed by
Audrie.

[7]

Kate and Bill, the appellants in this appeal, brought the initial
application to challenge Audries wills. Robert was added as a plaintiff and was
represented by separate counsel. He takes no part in this appeal. The
respondents are John in his personal capacity as well as John and James Bell in
their capacity as estate trustees. Phillip was not a party to the proceedings
but gave evidence as a witness for John.

(2)

The Assets

[8]

Audrie and Ty Trotter lived in Gilford, Ontario. They operated a gas
station and garage at Fennells Corner at the junction of Highway 11 and
Highway 89. The garage business was held in the name of Trotters Garage Inc.
The garage was on a lot owned by Trotters Holdings Inc. Ty owned the shares of
both corporations. John worked with his father in the garage business. At some
point, Johns friend George Pohle also began working at the garage. George was
a beneficiary under several of Audries wills.

[9]

Ty and Audrie owned approximately 100 acres of farm land adjacent to the
garage. The farm contained an old barn and a rental house. Their home of many
years was on a separate property across the road from the farm. Next to this residential
property was another lot that contained a residence (the "white house")
and a small barn. This lot was typically used as a rental property.

(3)

The Wills and Transfers

[10]

In
1995, Ty and Audrie signed mirror wills prepared by their local family lawyer,
Roy Gordon. The wills left each of their children an equal share of their
assets, excluding all the shares in Trotters Garage Inc. and 50% of the shares
in Trotters Holdings Inc., which were left to John.

[11]

Ty
died in 1996. The Trotters Garage Inc. shares vested in John, who continued to
operate the garage. The rest of Tys estate, including 50% of the shares in
Trotters Holdings Inc., went to Audrie. Johns entitlement to the shares relating
to the garage business has never been at issue.

[12]

In
October 1999, Audrie made a new will, also prepared by Mr. Gordon. This will left
John the farm and surrounding properties on the condition he pay $50,000 to
both Kate and Phillip and $5,000 to George Pohle. Audrie named John and
Audrie's brother, Douglas Dempsey, as co-executors. The residue of the estate
was divided equally among the five children.

[13]

The
following year, Audrie changed lawyers. She was concerned that Mr. Gordon was
not keeping her matters confidential. She arranged to travel to Toronto to meet
with a lawyer, Earl Heiber. Audrie gave Mr. Heiber instructions for a new will.
It was signed in May 2000. This time, the will entitled both Kate and Phillip to
one-acre parcels of the farm and to 25% of the residue of the estate. John
received the remaining shares in Trotters Holdings Inc., the residence
property, the rental property containing the white house and the remaining 50%
of the residue of the estate. The remainder of the farm and a time share
property in Florida were to be sold, with the proceeds accruing to the residue
of the estate. George Pohle was to receive $5,000. John was no longer an
executor.

[14]

Audrie
told Mr. Heiber that John was trying to manipulate her and was being selfish,
but was taking good care of her. Audrie did not tell John about her visit to
Mr. Heiber. She made efforts to ensure that John would not find out about the
new will by having Mr. Heiber send all the documents to her brother's residence
and by asking her brother to pay the legal bill.

[15]

In
November 2000, Audrie returned to Mr. Gordon and asked him to transfer her
residence to herself and John as joint tenants. She signed the transfer in
January 2001.

[16]

In
December 2002, Audrie executed a new will, again prepared by Mr. Heiber in
Toronto. This will was similar to the previous will, but increased the
entitlements of Kate and Phillip. Kate and Phillip were each left ten-acre
parcels of the farm. John was to receive an eight-acre parcel of the farm
containing the rental house and the barn. If severance of these parcels was
impossible, John was to pay Kate and Phillip each 12% of the appraised value of
the farm should he desire to keep the property. In the event John did not pay
this amount, the farm was to be sold with the proceeds accruing to the residue
of the estate. The residue was to be divided as follows: 40% to Kate, 40% to
Phillip and 20% to John.

[17]

In
July 2003, Audrie asked Mr. Gordon to prepare a transfer of the farm to herself
and John as joint tenants. She signed the transfer in August 2003.

[18]

In
July 2005, Audrie executed a final will. This time it was Mr. Gordon, not Mr.
Heiber, who prepared the will. In this will Audrie left no real or personal
property to Kate or Phillip. Earlier wills had divided the majority of Audries
personal property between Kate, Phillip and John. In contrast to the previous
will, the 2005 will left the entire residue to John. The will confirmed that
ownership of the residence and the farm vested in John through survivorship. John
was directed to pay Kate and Phillip $50,000 each in consideration for these
transfers. Audrie left the rental property containing the white house to George
Pohle.

[19]

Audrie
died on March 6, 2008.

(4)

The Barn Invoices

[20]

The
old barn on Audrie's farm was apparently in bad shape, having been damaged in a
storm. Johns evidence was that the barn needed to be demolished and this would
have been very expensive. He claimed that he and his mother agreed that he
would try to rebuild the barn. In order to protect his interests in the event of
a future dispute over his entitlement to the farm property, he asserted that he
and his mother arrived at an arrangement. John would record his time and
expenses and produce invoices for Audrie to sign.

[21]

John
started the barn renovation project in the summer of 2001 and worked until the
end of 2002. He prepared two invoices: the first on November 13, 2001, signed
by Audrie on April 29, 2002, and the second on December 23, 2002, signed by
Audrie on December 28, 2002. The invoices totalled approximately $740,000, and
included GST and PST. John stated he did not know the actual cost of the work
on the barn, what he paid out of pocket or why he included GST and PST.

[22]

John
explicitly stated in his affidavit that the transfer of the residence and the
farm to him and his mother jointly was in lieu of payment for the invoices.
John estimated that the total value of the farm property was $500,000 to $600,000.
John agreed that the barn was used almost exclusively for storage.

[23]

The
appellants allege that John fraudulently issued the invoices to obtain title to
the house and farm. The appellants argue that the amount cannot be
substantiated and that it would have been illogical to spend more on the barn
than the property was worth. Kate testified that it would have bothered her
mother a great deal to have a debt outstanding, let alone one of this
magnitude.

II.

The Summary Judgment Motion

[24]

In
December 2009, the two related actions challenging the validity of Audries
wills and the
inter vivos
transfers were ordered to be tried together.
Robert was added as a plaintiff. In April 2012, Johns counsel brought a motion
for summary judgment in the wills action. The evidence filed on the motion included
affidavits, cross-examination transcripts and documentary exhibits. The motion
was heard over six days commencing in October 2012 and ending in January 2013. The
motion judge did not hear any oral evidence. Costs submissions followed.

(1)

Johns Position

[25]

John's
position on the motion was that a trial was not required. The unequal treatment
of Audries children was not surprising since Bill and Robert were estranged
from Audrie and Kate did not provide care or attend upon Audrie with any
regularity. Most importantly, it was John who cared for and looked after Audrie,
supporting her financially and investing time, resources and energy into
improving her properties.

[26]

John
left university in order to help run the garage and look after his parents. The
other siblings moved away. As a result of Johns work at the garage, his
parents standard of living improved. They were able to travel and purchase the
time share in Florida.

[27]

The
transfers were reasonable in light of the 18 months John spent working on the
barn. Although he presented invoices to his mother for $740,000, he did not
make a demand for payment.

(2)

The Appellants Response

[28]

The
appellants evidence portrayed a pattern of isolation, domination and influence
that John exerted over Audrie. There were detailed descriptions of Johns explosive
anger and temper. There was evidence of Audries fear of displeasing John.

[29]

In
May 1999, a few years after Ty died, Kate took Audrie to lunch. Audrie informed
Kate she could not stay too long because John would become angry and
suspicious. When Kate brought Audrie home, John rushed into the house, slammed
the door and asked where Audrie had been. He searched Audries purse. A few
months later, Audrie executed her 1999 will which named John as a co-executor
and gave him the farm. When John learned that he was not the sole executor, he became
angry with Audrie.

[30]

The
following year, Audrie went to Mr. Heiber. Her comments to Mr. Heiber about
Johns attempts to manipulate her, as well as her steps to keep Mr. Heiber's
involvement secret, demonstrate her fear of John.

[31]

John
had a violent streak. In 2001, he attacked his 15 year old cousin during a
family trip to Florida. While she was joking with him, John grabbed her neck without
warning until her face turned red. She was finally released when she was able
to kick him in the groin.

[32]

On
December 31, 2002, Audrie returned to Mr. Heiber, again without John's
knowledge. She signed the second will prepared by Mr. Heiber which substantially
increased the entitlements of Kate and Phillip, and gave them each significant
parcels of the farm. However, seven months later, she removed the farm from her
estate when she instructed Mr. Gordon to transfer it into a joint tenancy with
John. John stated in his affidavit that the transfer was in lieu of payments
for invoices totalling over $740,000, which he charged her for the barn
renovation. The appellants allege that he provided insufficient basis for the reasonableness
of the repair costs.

[33]

In
2004, Audries niece and Kate planned a birthday party for Audrie's brother,
Douglas Dempsey, in Toronto. Audrie originally planned to attend, but changed
her mind out of concern that she would have trouble with John if she went.

[34]

When
Audrie changed her will again in 2005 with the assistance of Mr. Gordon, she
was frail and in a wheelchair. Just a week before the signing, she had been in
the hospital.

[35]

Roy
Gordon was Johns lawyer on other matters, and the two were friends. Mr. Gordon
acted for both Audrie and John in the property transfers.

[36]

In
2007, Kate went to Florida to visit Audrie. Kate's uncle Doug told her that
Audrie did not want John to know that Kate had visited. Later the same year, Kate
arranged a doctor's appointment in Toronto to deal with cancerous sores on
Audrie's feet and legs. At the last minute, Audrie left the following voicemail
for Kate:

Don't bother making the appointment with [the doctor] please
because I have upset John so much. I ran it by him and he's not very happy with
the whole deal and I can't stand fighting anymore about it. He gets so upset

[37]

Johns
actions rendered Audrie physically dependent and vulnerable. As her health
deteriorated, John looked after her personal care even though female caregivers
were available. Audrie was a dignified and private person who would have found
this embarrassing.

[38]

Audrie
told Kate that she did not want the improvements done to the barn. She thought
it was a waste of money. She told her niece it was easier just to let John do
what he wanted.

[39]

In
March 2008, Audrie was admitted to the hospital and John instructed the
hospital staff not to contact any family members. She died a few days later.

(3)

Reasons of the Motion Judge

[40]

The
motion judge allowed the respondent's motion, thereby dismissing the claim of
undue influence. She reviewed nine points regarding undue influence raised by
the appellants: (1) relationship of dependency and control between Audrie and
John, (2) drastic change to the wills, (3) evidence of testamentary intention,
(4) Audrie's character, (5) John's character, (6) John's anxiety to get the
benefits under the will, (7) the absence of independent legal advice received
by Audrie, (8) evidence of John's dishonesty and his inconsistencies and (9)
the moral claims of the other potential beneficiaries. She summarized the
evidence with respect to each heading.

[41]

The
motion judge determined that the claim of undue influence was based on bald
allegations. She found that Audrie was an independent person who made her own
plans for her will. She organized her life to her liking. There was no evidence
that John had pressured Audrie or that Audrie had been affected by any
influence from John. Audrie openly expressed her opinion on Johns changes to
the barn and often won arguments with him. She changed executors because she
lost respect for one of her trustees. Her one failing was that her children did
not get along, and had been distant with each other for some time. Audrie
managed these relationships by not telling her children about her contact with
the others, but was tired of the fighting.

[42]

The
motion judge then turned to the allegedly fraudulent invoices. She found that
the invoices were for John's work as well as money he spent. Audrie was present
to observe the changes made to the barn, and signed off on the invoices. There
was no evidence of any demand for payment being made, and nothing supported the
appellants contention that John compelled the transfers of property. Audrie
expressly stated her reason for the farm transfer in a letter to her lawyer: John
paid off the mortgage and put work and money into the barn and the house on
that property.

[43]

The
motion judge determined that the challenge to the
inter

vivos
transfers was subsumed within the challenge to the will and therefore failed
along with the wills action.

III.

Analysis

[44]

The
issues in this appeal raise one main question: did the motion judge use the
proper approach to summary judgment in the face of
highly
contested facts?
I will explain my conclusion on the summary judgment
motion and then make brief comments regarding the allegation of a reasonable apprehension
of bias.

(1)

Summary Judgment

[45]

This
motion was heard and decided before the Supreme Court of Canada released its
decision in
Hryniak v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, which
expanded the availability of summary judgment. This might, at first view, lead
to the conclusion that judgment granted under a stricter regime would attract
significant deference on appeal. However, the motion judges approach to her
conclusion was fundamentally flawed. She made palpable and overriding errors in
relation to her analysis of the evidence, erred in her conclusion regarding the
legal requirements for undue influence and made conclusory determinations on
important factual and legal issues in dispute without conducting a credibility
analysis.

[46]

I
begin by reviewing the evolution of motion judges powers in the context of summary
judgment. Next, I review the motion judges approach in the present case.
Finally, I address her analysis with the benefit of the
Hryniak
framework. As will be explained, even pursuant to the more expansive approach
to summary judgment, the decision cannot stand.

i.

Expanded Powers Pursuant to the Rules

[47]

The
2010 amendments to the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194,
expanded the availability of summary judgment by altering the wording of the
test and vesting motion judges with enhanced powers to assess conflicting
evidence. The test under rule 20.04(2)(a) is no longer whether there is a
genuine issue for trial but rather whether there is a genuine issue
requiring
trial. The additional powers granted to motion judges under rules
20.04(2.1) and (2.2) are as follows:

Powers

(2.1) In determining under clause 2(a) whether there is a
genuine issue requiring a trial, the court shall consider the evidence
submitted by the parties and, if the determination is being made by a judge,
the judge may exercise any of the following powers for the purpose, unless it
is in the interest of justice for such powers to be exercised only at a trial:

1.

Weighing the evidence.

2.

Evaluating the credibility of a deponent.

3.

Drawing any reasonable inference from the evidence.

Oral Evidence (Mini-Trial)

(2.2) A judge may, for the purposes of exercising any of the
powers set out in subrule (2.1), order that oral evidence be presented by one
or more parties, with or without time limits on its presentation.

[48]

These
changes were designed and implemented to improve access to justice by providing
a mechanism to resolve issues more expeditiously than through a traditional
trial. In appropriate cases, the motion for summary judgment provides an
alternative model of adjudication that has the benefit of streamlining the process
for litigants and making the civil justice system more accessible and
affordable.

[49]

However,
the fact that the new process of adjudication is well-intentioned and can be beneficial
cannot impose an imperative on the court to use it in every case. There is a
risk that, in an effort to dispose of the case, the evidence will not be
properly analysed. The Supreme Court affirmed in
Hryniak
, at para. 28,
that [t]he principal goal remains the same: a fair process that results in a
just adjudication of disputes.

ii.

The Motion Judges Analysis

[50]

The
motion judge erred in fact and law. She incorrectly labelled the appellants
evidence bald allegations, failed to make credibility findings, erred in her
analysis of undue influence and failed to properly consider the barn invoices.

(a)

The bald allegations

[51]

There
are repeated references in the motion judges reasons to the appellants bald
allegations, implying that the evidence before her on its face was sufficient
for her to conclude that there was no genuine issue requiring a trial. A review
of the record, however, reveals that the allegations were not bald. There was
evidence concerning Johns anger, his temper, his efforts to keep Audrie
isolated from Kate, Audrie's fear of him, her dependency upon him, his attempts
to manipulate her and her fear of being sent to a nursing home. There was
evidence that Audrie transferred the farm property to John because she felt
indebted to him for money he put into the barn. He sent her invoices for an
amount that was approximately $200,000 more than the value of the property
itself. The invoices alone support the appellants claims of undue influence
and fraud.

[52]

There
was evidence of control and domination on the one hand and fear and
vulnerability on the other. These are key components of an allegation of undue
influence, as will be discussed below.

[53]

The
motion judges conclusion that the evidence raised by the appellants  standing
on its own  consisted only of bald allegations and did not give rise to the
requirement for a trial reflects a misapprehension of the evidence.

(b)

Conclusory Findings

[54]

Since
the evidence adduced by the appellants was capable of supporting an allegation
of undue influence, it was incumbent upon the motion judge to explain why she
rejected it. This, of necessity, requires a credibility analysis pursuant to the
expanded judicial powers under rule 20.04(2.1) to weigh the evidence, evaluate
the credibility of the appellants deponents and draw reasonable inferences.

[55]

It
is not always a simple task to assess credibility on a written record. If it
cannot be done, that should be a sign that oral evidence or a trial is
required. The motion judge did not engage in a credibility analysis or attempt
to provide conclusions on credibility. Where important issues turn on
credibility, failure to make credibility findings amounts to reversible error: see
Sagl v. Cosburn, Griffiths and

Brandham

Insurance Brokers
Ltd
., 2009 ONCA 388, [2009] O.J. No. 1879, at paras. 98-100.

[56]

The
motion judge did not make proper use of the expanded powers under rule 20.04.
She reviewed the appellants evidence in support of the undue influence allegations,
but did not subject it to evaluation or make credibility findings. She did not
address the evidence of John's anger or its effect on Audrie. The motion judge
twice states that she is not going to place reliance on John's disputed
assertions, but accepts his uncorroborated evidence as to the legitimacy of the
barn invoices. She did not fully analyse the reasonableness of these invoices,
which I will discuss below.

[57]

There
was circumstantial evidence from which the court could infer that Audrie did
not want to prefer John over her other children. This was not addressed. Either
the motion judge failed to assess the evidence, which was improper in light of
the substantial evidence capable of supporting a claim of undue influence, or
her assessment of the evidence was wholly inadequate and unsubstantiated by her
reasons.

(c)

Undue Influence

[58]

Undue
influence involves the domination of the will of one person by another. Undue
influence exists when a testator is coerced into doing that which she does not
desire to do:
Wingrove

v. Wingrove
(1885), 11 P.D. 81 (Eng.
Prob. Ct.), at p. 82. As stated by Cullity J. in
Scott v. Cousins
, [2001]
O.J. No. 19, 37 E.T.R. (2d) 113 (S.C.), at para. 113, quoting E.V. Williams et
al.,
Williams, Mortimer and Sunnucks on Executors, Administrators and
Probate
, 17th ed. (London: Stevens & Sons, 1993), at p. 184:

There is no undue influence unless the testator if [she] could
speak [her] wishes would say this is not my wish but I must do it.

[59]

The
high burden of establishing undue influence rests with the party asserting it. However,
circumstantial evidence can be used by those challenging a will to discharge
their burden  otherwise, undue influence would cease to have much practical significance
in the law of wills:
Scott v.

Cousins
, at para 48.

[60]

The
motion judges conclusion that there was no undue influence is summed up in the
following statements, at paras. 145 and 180 of her judgment:

The inescapable finding that does not require a trial to fully
appreciate is that Audrie was nobody's fool.

I find that the record before me gives a full appreciation of
what Audrie wanted for herself and how she went about making it happen.

[61]

These
conclusions do not address the circumstances that were potentially indicative
of undue influence: Audries vulnerability and dependency, the allegations that
Audrie felt she had to please John despite her own wishes, the allegations of
domination and control, questions about the confidentiality and independence of
her legal advice and instructions, and Audries statements to an independent
lawyer that John was trying to manipulate her:
Scott v. Cousins
, at para.
114;
Gironda v. Gironda
, 2013 ONSC 4133, 89 E.T.R. (3d) 224, at para.
77.

[62]

Nor
do the motion judges conclusions accurately capture the law of undue
influence. Audrie could be nobodys fool and want certain things for herself,
yet still be subject to undue influence. Audrie could falsely believe that she
was heavily indebted to John as a result of his inflated invoices and thereby feel
obliged, contrary to her wishes, to do what he wanted. A person may appreciate
what she is doing but be doing it as a result of coercion or fraud: see
Vout
v. Hay
,

[1995] 2 S.C.R. 876, per Sopinka J., at para 29.

[63]

In
Boyse v. Rossborough
(1857), 10 E.R. 1192 (U.K. H.L.), Lord Cranworth
said, at p. 1211:

I am prepared to say that influence, in order to be undue
within the meaning of any rule of law which would make it sufficient to vitiate
a will, must be an influence exercised either by coercion or by fraud...

It is, however, extremely difficult to state in the abstract
what acts will constitute undue influence in questions of this nature. It is
sufficient to say, that allowing a fair latitude of construction, they must
range themselves under one or other of these heads  coercion or fraud.

Recent cases echo the notion that undue influence can
be exercised by coercion
or
fraud: see
Vout v. Hay
, at para.
21;
Scott v. Cousins
, at para. 39;
Zerbinati v. Doherty
, 2014
ONSC 4565, at para. 15.

[64]

The
motion judge addressed the effect of the barn invoices in the context of fraud,
but there was insufficient discussion of the interplay between fraud and
coercion in the undue influence context. In any event, as I discuss below, her
analysis of the barn invoices was flawed.

(d)

The Barn Invoices

[65]

The
motion judge did not adequately address the reasonableness of the invoices, nor
their possible effects on Audries intentions. They were a significant feature
of the allegations of both fraud and undue influence.

[66]

The
motion judge found that the only way for the appellants to succeed at trial was
to show that John was overestimating the value of the work on the barn to
obtain a transfer of the farm. She apparently held that the invoices were
legitimate, or at least did not affect Audrie. In my view, this was a palpable
and overriding error.

[67]

The
motion judge found that Audrie did not mention any amount owing to John when
explaining to Roy Gordon her reasons for the transfers of the house and farm.
However, at para. 176, she referred to Audries letter to Mr. Gordon requesting
the farm transfer, in which Audrie specifically states that John had put a lot
of money into the barn. John explicitly noted in his affidavit that the
transfers were in lieu of payment for the invoices. This directly supports the
appellants position that Audrie was influenced by the amount owing to John
when she made the transfers.

[68]

There
was little, if any, evidence supporting the reasonableness of the invoices John
presented to Audrie for the renovations. He was unable to substantiate the
amounts. This was particularly problematic given the fact that the total cost
drastically exceeded his own estimation of the value of the entire farm property.
There was no evidence adduced to explain why Audrie would have voluntarily
spent more on the renovation of a barn  used primarily for storage  than the
underlying property was worth.

[69]

Johns
evidence on cross-examination was insufficient to conclusively refute the
appellants allegations that he inflated the cost of the renovations. For
example, he did not know why he added GST and PST and he was only pretty sure
the bill included labour. He had no idea what he paid out of pocket and could
not support his assertion that the price he charged per square foot was
reasonable.

[70]

In
sum, the motion judges finding that the barn invoices were not fraudulent and
did not unduly influence Audrie was conclusory in light of the evidence of the
appellants and the lack of evidence from John supporting the validity of the
invoices. She made palpable and overriding errors in her assessment of Audries
motivations for transferring the farm property.

[71]

I now turn to consider the trial judges analysis through
the lens of the
Hryniak
framework.

iii.

The
Hryniak
framework

[72]

In
Hryniak
, the Supreme Court established a two-step process that motion
judges must follow on a summary judgment motion. First, a motion judge is to
determine  based only on the evidence before her  whether there is a genuine
requiring a trial. If not, then summary judgment should be granted. There will
be no genuine issue requiring a trial when the written record (1) allows the
judge to make the necessary findings of fact, (2) allows the judge to apply the
law to the facts and (3) is a proportionate, more expeditious and less
expensive means to achieve a just result:
Hryniak
,

at para.
49.

[73]

The
motion judges reference to bald allegations implies that the written record
on its face was sufficient to conclude that there was no genuine issue
requiring a trial. This would be the equivalent to dismissing the action at
step one of
Hryniak.

[74]

However,
as set out above, the allegations were not bald. The evidence conflicted. The appellants
evidence demonstrated a genuine issue requiring a trial.

[75]

At
this point, a motion judge may, at her discretion, move to step two of
Hryniak
,
where she must consider whether a trial can be avoided by using the powers
granted under rules 20.04(2.1) and (2.2) to weigh the evidence, evaluate
credibility, draw reasonable inferences and call oral evidence. These
discretionary powers are presumptively available unless it is in the interest
of justice to exercise them only at a trial.

[76]

In
the present case, the motion judge recited the evidence but did not weigh it,
evaluate it or make findings of credibility. Thus, even on the lower threshold
of
Hryniak
, the approach was flawed.

iv.

Conclusion on summary judgment

[77]

A
motion judge exercising the expanded powers under rule 20.04(2.1) is entitled
to deference on appeal. However, when a motion judge misdirects herself, errs
in principle or comes to a decision that is so clearly wrong that it results in
an injustice, the decision cannot stand:
Hryniak
, at paras. 83-84. In
my view, the motion judge took a conclusory approach to the summary judgment
motion. She ignored evidence relevant to the claim of undue influence and
failed to make the credibility findings necessary to support her conclusion. Her
analysis of the barn invoices was entirely unsatisfactory.

[78]

When
conflicting evidence is presented on factual matters, a motion judge is
required to articulate the specific findings that support a conclusion that a
trial is not required. The dangers of not doing so were highlighted by this
court in
Baywood Homes

Partnership v. Haditaghi
, 2014 ONCA
450, 120 O.R. (3d) 438, where Lauwers J.A. stated, at para 44:

Evidence by affidavit, prepared by a partys legal counsel,
which may include voluminous exhibits, can obscure the affiants authentic
voice. This makes the motion judges task of assessing credibility and
reliability especially difficult in a summary judgment and mini-trial context.
Great care must be taken by the motion judge to ensure that decontextualized
affidavit and transcript evidence does not become the means by which
substantive unfairness enters, in a way that would not likely occur in a full
trial where the trial judge sees and hears it all.

[79]

The
evidence in this case was extensive and conflicting. The allegations were not
bald and the motion could not be resolved on the basis that there was no
genuine issue requiring trial on the face of the evidence alone. Rather, credibility
assessments, a weighing of the evidence and possibly oral evidence were required.
The motion judges conclusory findings do not provide the analysis or reasoning
necessary to support her ultimate conclusion that there was no undue influence.

[80]

In
my view, the conflicts in this case could not be resolved on the basis of the
written record before the motion judge. While summary judgment may have been
appropriate had the motion judge exercised her powers under rule 20.04(2.2) to
hear oral evidence, she did not seek to do so. Her order must be quashed.

IV.

Apprehension of Bias

[81]

The
reasons of the motion judge contain disparaging remarks which appear to be
directed at the appellants. There were also direct attacks on the appellants
trial counsel. In light of my conclusion on the summary judgment issue, it is
not necessary to determine whether the comments rise to the high level that
would warrant overturning the decision. However, one comment in the reasons
must be addressed.

[82]

The
reasons refer to a homophobic undertone in the submissions as being especially
troubling. The implication is that the appellants counsel made inappropriate
remarks. The references to homosexuality arise from an affidavit filed by the
respondent wherein Bill is alleged to have referred to John and his homosexual
friends, and from questions on cross-examination regarding Johns relationship
with George Pohle. Somehow these comments seem to have been characterized as
homophobic submissions by the appellants counsel. Counsel for the respondent
agreed that the appellants counsel made no such submission. It is not
homophobic to inquire about the mere existence of a same-sex relationship.
Moreover, the allegation first appeared in the motion judges reasons, thereby
affording counsel no opportunity to respond. It was a serious and admittedly
baseless comment. It should not have been made.

V.

Disposition

[83]

I
would allow the appeal, set aside the summary judgment and costs order and
direct that the matter proceed to trial before a different judge.  I would
award costs of the appeal to the appellants fixed at $25,000 inclusive of
disbursements and applicable taxes.

Released: (KMvR) NOV 26, 2014                           M.L.
Benotto J.A.

I
agree K. van Rensburg J.A.

I
agree C.W. Hourigan J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Vogler v. Allstate Insurance Company of Canada,
    2014 ONCA 825

DATE: 20141120

DOCKET: C58646

Cronk, Gillese and Rouleau JJ.A.

BETWEEN

Edward Randall Vogler

Plaintiff (Appellant)

and

Allstate
    Insurance Company of Canada

Tom
    Lemieux

Defendant

and

Allstate
    Insurance Company of Canada

Statutory
    Third Party added by order pursuant to s. 258(14)

of the
Insurance
    Act
, R.S.O. 1990 c. I.8, as amended

Statutory third party (respondent)

Alan L. Rachlin, for the appellant

R. Shawn Stringer, for the respondent

Heard and released orally: November 13, 2014

On appeal from the order of Justice Ian F. Leach of the
    Superior Court of Justice, dated July 8, 2013, sitting on appeal as a single
    judge of the Divisional Court from the order of Master Lou Ann M. Pope of the
    Superior Court of Justice, dated March 15, 2012.

ENDORSEMENT

[1]

The proceeding below was an appeal to a single judge of the Divisional Court
    from a Masters decision denying the appellants motion under rules 1.04,
    5.04(2) and 26.01 of the
Rules of Civil Procedure
for an order adding
    the respondent insurer as a named party defendant in the main action.

[2]

The appeal judge upheld the Masters ruling, albeit for different
    reasons.  In so doing, the appeal judge, without prior notice to the parties,
    determined a key contractual interpretation issue under various factual
    scenarios that he posited.  If accepted, the appeal judges interpretation was
    conclusive of the coverage dispute between the parties.

[3]

With respect, the appeal judge erred by proceeding in this fashion.  The
    proper focus of the inquiry before him was whether the requested amendment
    should be allowed based on the governing principles for a pleadings amendment
    of this kind.  Although it was open to him to determine whether the appellants
    proposed coverage claim against the respondent was tenable at law, it was not
    open to him to finally adjudicate on a novel question of law under a paradigm
    not disclosed to the parties and where the underlying relevant facts had yet to
    be determined.  See for example,
Royal Laser Corp. v. Rivas
, 2011 ONCA
    655.  As a result, the appeal judges decision cannot stand.

[4]

Similarly, the Masters ruling on the amendment motion cannot stand.
    The Master ruled that the appellants proposed claim against the respondent is
    untenable at law.  As we have said, the appeal judge agreed, although for
    different reasons.  In the unusual circumstances of this case, the claim sought
    to be advanced appears to be novel.  Neither party could point to any
    authorities directly on point during this appeal hearing.  At this early stage
    of the proceedings, when material facts remain contested, in our view it cannot
    be said that the proposed claim is unsound or that it is clearly impossible
    that the claim could succeed at trial.

[5]

The parties accept that if the decisions below are set aside, this court
    should determine the question of the requested pleadings amendment.

[6]

There is no suggestion that the respondent insurer will suffer any
    prejudice as a result of the proposed amendment that cannot be compensated for
    in costs.  Nor does the respondent any longer claim that the applicable
    limitation period has expired.  In light of these considerations and the
    unusual nature of the claim raised in this case, the requested pleadings
    amendment should be allowed.

[7]

Accordingly, the appeal is allowed, the appeal judges and the Masters
    orders are set aside, and the appellant is granted leave to amend his statement
    of claim to restore the respondent insurer as a named party defendant.  Of
    course, this relief is without prejudice to any defences that the respondent
    insurer may wish to raise and any other motions available to it under the
Rules
    of Civil Procedure
.  The appellant is entitled to his costs of the appeal
    and both proceedings below, fixed in the aggregate amount of $22,000, inclusive
    of disbursements and all applicable taxes.

E.A. Cronk J.A.

E.E. Gillese J.A.

Paul Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Wilson v. Cranley, 2014 ONCA 844

DATE: 20141127

DOCKET: C58281

Laskin, Gillese and Pardu JJ.A.

BETWEEN

Dean Wilson

Plaintiff (Respondent)

and

Stephen Cranley

Defendant (Appellant)

Chris G. Paliare and Andrew Lokan, for the appellant

James L. Vigmond and Brian Cameron, for the respondent

Heard: October 15, 2014

On appeal from the judgment of Justice Barry G.
    MacDougall of the Superior Court of Justice, dated Sept. 6, 2013.

Gillese
    J.A.:

[1]

When determining whether an offer to settle attracts the costs
    consequences of rule 49.10 of the
Rules of Civil Procedure
, R.R.O.
    1990, Reg. 194, should the court add notional pre-judgment interest to the
    jurys general damages award?  This appeal depends on the answer to that
    question.

BACKGROUND

[2]

Dean Wilson (the plaintiff or the respondent) and Stephen Cranley
    (the defendant or the appellant) were involved in a motor vehicle accident
    on October 4, 2008.  The plaintiff claimed damages of more than $800,000, plus
    interest and costs.

[3]

Before trial, the plaintiff put forward two offers to settle.  On April
    19, 2013, he offered to settle for $145,000, inclusive of interest but
    excluding costs.  And on May 3, 2013, he offered to settle for $95,000,
    excluding interest and costs.

[4]

The defendant also made an offer to settle.  His offer of May 2, 2013,
    was for $50,000 in damages, plus interest under the
Courts of Justice Act
,
R.S.O. 1990, c. C.43 (the
CJA
), costs, disbursements and taxes
    (the Offer).  The Offer of $50,000 plus interest amounted to $61,609.56.

[5]

Prior to trial, the plaintiff asked the defendant to participate in mediation,
    as required by legislation. The defendant did not respond.  He did, however, admit
    liability for the accident after the plaintiff brought a motion to compel the
    defendant to attend for examination under oath.

[6]

Following a six-day trial, the jury awarded the plaintiff $15,000 for general
    damages and $45,000 for loss of future income, for a total award of $60,000.
    After applying the $30,000 statutory deductible mandated by s. 267.5(7) of the
Insurance
    Act
, R.S.O. 1990, c. I.8, as amended by S.O. 1996, c. 21, s. 29 (the
Act
),
    the award for general damages was reduced to zero.

[7]

The defendant sought partial indemnity costs from the date of his Offer.
    He argued that the plaintiff had obtained a judgment only as favourable as, or
    less favourable than, the Offer and therefore the costs consequences of rule
    49.10 should apply.  In making this argument, he compared the Offer of $61,609.56
    (plus costs, disbursements and taxes) to the total jury award of $60,000
    ($15,000 for general damages and $45,000 for loss of future income).

[8]

The trial judge rejected the defendants argument because he found that
    the plaintiff beat the Offer.  In so finding, the trial judge added notional
    pre-judgment interest of $2,299.31 to the $15,000 award for general damages.
    By notional, the trial judge meant the amount of prejudgment interest that
    would have accrued on the general damages award but for the application of the
    statutory deductible.  The general damages award plus notional pre-judgment
    interest amounted to $17,299.31.  When the trial judge added that sum to the
    award of $45,000 for loss of future income, the total amount was $62,299.31.
    The Offer was for $61,609.56. Thus, the trial judge reasoned, for the purposes
    of rule 49.10, the judgment was more favourable than the Offer by $689.75 and
    the plaintiff was presumptively entitled to costs.

[9]

The trial judge stated that in considering the rule 57.01 factors, he
    took into account, among other things, the fact that the jurys award was only slightly
    more favourable than the Offer and that the defendant did not respond to the
    plaintiffs request for mediation, as required by the
Act
.  He noted
    that a failure to participate in mediation shall be considered by the court in
    awarding costs.

[10]

By
    judgment dated September 6, 2013, the trial judge awarded the plaintiff costs
    of $45,200 plus disbursements of $41,040.86, both of which sums included HST.

ISSUES

[11]

The
    appellant submits that the trial judge erred by:

1.  adding
    notional pre-judgment interest to the general damages award for the purposes of
    rule 49.10; and,

2.  failing
    to properly consider the near miss Offer, even if notional pre-judgment
    interest was properly added to the general damages award.

Issue #1: Did the trial judge err by adding notional
    pre-judgment interest to the general damages award for the purposes of rule
    49.10?

[12]

The
    appellant begins his argument on this ground of appeal by pointing out that neither
    the
CJA
nor the
Rules
provide for interest to be applied to
    anything other than the judgment as issued and entered.  He then points to s.
    267.5(9) of the
Act
and says there is nothing in it that creates an
    entitlement to notional pre-judgment interest.  Section 267.5(9) reads as
    follows:

In an action for loss or damage from bodily injury or death
    arising directly or indirectly from the use or operation of an automobile, the
    determination of a partys entitlement to costs shall be made without regard to
    the effect of paragraph 3 of subsection (7)
on the amount of damages, if
    any, awarded for non-pecuniary loss.
[Emphasis added.]

[13]

Thus,
    the appellant submits, as there is no statutory authority for adding interest
    to any amount other than the judgment, the trial judge erred by adding notional
    pre-judgment interest to the general damages award for the purpose of
    determining whether the Offer attracted rule 49.10 consequences.

[14]

The
    appellant also maintains that adding notional pre-judgment interest is an unwarranted
    extension of the reasoning of this court in
Rider v. Dydyk
, 2007 ONCA
    687, 286 D.L.R. (4th) 517, leave to appeal to S.C.C. refused, [2007] S.C.C.A.
    No. 594, and inconsistent with the reasoning in
Pilon v. Janveaux
, [2006]
    O.J. No. 887 (C.A.).

[15]

I
    would not accept this submission.  I agree with the trial judge that when determining
    whether the plaintiff obtained a judgment more or less favourable than the
    Offer, in calculating the judgment, the court shall consider the amounts that
    the jury awarded, without regard to the statutory deductible, together with
    notional pre-judgment interest added to the award for non-pecuniary loss.

[16]

There
    can be no doubt that when determining a partys entitlement to costs, the trial
    judge was correct to ignore the statutory deductible.  In actions involving
    motor vehicle accidents, pursuant to s. 267.5(7), the award for non-pecuniary
    loss will be reduced by the statutory deductible, which is now $30,000.  However,
    pursuant to s. 267.5(9) of the
Act
, the statutory deductible is not to
    be taken into account when determining whether the plaintiff obtained a judgment
    as favourable as, or less favourable than, a rule 49 offer:
Rider
, at
    para. 23.

[17]

Further,
    when comparing the judgment in such a case with the rule 49 offer, the court is
    to consider not the judgment awarded by the jury but the amount finally awarded
    by the trial judge plus pre-judgment interest:
Pilon
, at para. 16;
Lawson
    v. Vierson
, 2012 ONCA 25, 346 D.L.R. (4th) 518, at para. 22.

[18]

But,
    the appellant argues, the amount finally awarded by the trial judge would be
    reduced by the amount of the statutory deductible, so the trial judge erred in
    adding notional pre-judgment interest to the full amount of the jurys general
    damages award.

[19]

I
    disagree.

[20]

As
    the trial judge noted, s. 128 of the
CJA
provides that a person who is
    entitled to an order for the payment of money is entitled to an award of
    pre-judgment interest on the amount ordered, from the date the cause of action
    arose to the date of the order.  Pre-judgment interest is ordinarily awarded,
    absent special circumstances, to reflect the value of the money wrongfully
    withheld from the plaintiff:
Andrew Kowalczewski Insurance Brokers Ltd. v.
    Hunt
,
[2001] O.J. No. 4429 (C.A.), at para. 13.

[21]

As
    pre-judgment interest would, in the ordinary course, be added to the general
    damages award (
Pilon
)
and the general damages award should be
    considered absent the statutory deductible (
Rider
)
, it follows
    that pre-judgment interest should be notionally added to the general damages
    award from the date of the notice of claim, for the purpose of determining
    whether the judgment was more favourable than the Offer.  Thus, contrary to the
    appellants submission, adding notional pre-judgment interest is not an
    unwarranted extension of
Rider

and
Pilon
.  Rather, it
    is the logical conclusion that flows from the reasoning in the two cases.

[22]

Accordingly,
    in my view, this ground of appeal must fail.

Issue #2: Did the trial
    judge err by failing to properly consider the near miss Offer?

[23]

The
    appellant conceded that in the recent decision of
Elbakhiet v. Palmer
,
    2014 ONCA 544, 121 O.R. (3d) 616, leave to appeal to S.C.C. requested, this court
    makes it clear that there is no near miss policy for the purposes of rule
    49.10.  However, the appellant points out, the court also emphasized in
Elbakhiet
that rule 49.13 requires that any written offer to settle must be taken into
    account when the court exercises its discretion with respect to costs.  The
    appellant says that just as in
Elbakhiet
, the trial judge in this case
    did not mention rule 49.13.  Furthermore, the appellant contends, the trial
    judge did not take into consideration the rule 57.01(1) factors, such as the amount
    that the plaintiff had claimed and the amount that he was awarded.  Therefore, the
    appellant submits, the costs order below cannot stand and this court should
    either reduce the costs order by 50% or order that no costs are payable after
    the date of the Offer.

[24]

I
    would not accept this submission.

[25]

As
    the appellant rightly concedes,
Elbakhiet
affirms that there is no
    near miss policy in respect of rule 49.10.  At para. 31 of
Elbakhiet
,
    Rosenberg J.A., writing for this court, states:

I agree with the respondents that there is no near miss
    policy.  A party that comes close to meeting the judgment is not thereby
    entitled to an award of costs as if they did provide a successful offer.

[26]

However, at para. 32 of
Elbakhiet
,
Rosenberg
    J.A. stresses that even where an offer does not attract rule 49.10
    consequences, pursuant to rule 49.13 the court should consider such offers when
    exercising its discretion with respect to costs.

[27]

And, at para. 33,
    Rosenberg J.A. explains the approach the court is to take pursuant to rule
    49.13:

As this court pointed out
    in
Lawson v. Viersen
, 2012 ONCA
    25, at para. 46, rule 49.13 is not concerned with technical compliance with the
    requirements of rule 49.10.  Rather, it calls on the judge to take a more
    holistic approach.  The appellants complied with the spirit of Rule 49 even if
    they failed for technical reasons to provide an offer that exceeded the judgment.
    As held in
Lawson
, at para. 49,
    this was the type of offer that ought to have been given considerable weight
    in arriving at a costs award.

[28]

Although the trial judge in the present case did
not
    expressly refer to rule 49.13, in my view, his endorsement complies with the
    approach mandated by
Elbakhiet
.

[29]

At
    para. 21 of his endorsement, the trial judge states, the award of the jury was
    only slightly more favourable than the [Offer].  This is an express reference
    to the Offer and the fact that the result at trial barely exceeded it.  Indeed,
    earlier in his reasons, the trial judge acknowledges that the difference
    between the Offer and judgment was a mere $689.75 and arose only because
    notional pre-judgment interest had been applied to the general damages award.
    In short, the trial judge was fully aware that the Offer was a near miss and
    he took that into consideration.

[30]

At
    the same time, however, it is important to recognize that the trial judge took the
    requisite holistic approach.  He considered the full circumstances surrounding
    the Offer, including the offers to settle that the plaintiff had made and,
    significantly, the appellants failure to participate in the statutorily
    mandated mediation, given the respondents request for the same.  Under ss. 258.6(1)
    and (2) of the
Act
, the insurer has an obligation to mediate, at the
    request of the insured, and a failure to do so shall be considered by the
    court in awarding costs.  Those sections read as follows:

258.6(1) 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.

(2) 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.

[31]

Further,
    unlike in
Elbakhiet
, the trial judge in this case made no error in
    principle in his approach to rule 57.01.

[32]

Accordingly,
    I would reject this ground of appeal.

DISPOSITION

[33]

For
    these reasons, I would dismiss the appeal with costs to the plaintiff
    (respondent) fixed at $9,500, all inclusive.

Released: November 27, 2014 (E.E.G.)

E.E. Gillese
    J.A.

I agree. John Laskin J.A.

I agree. G. Pardu J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:  Xu v. Mitsui Sumitomo Insurance Company Limited,

2014 ONCA 805

DATE: 20141117

DOCKET: C58764

Cronk, Gillese and Rouleau JJ.A.

BETWEEN

Jie
    (Jay) Xu, by his Litigation Guardian

Guoping
    (Annie) Huang,

Chao
    (Sarah) Xu, and Guoping (Annie) Huang, personally

Appellants

and

Mitsui
    Sumitomo Insurance Company Limited

and
    Chubb Insurance Company of Canada

Respondents

Alan A. Farrer and David F. MacDonald, for the
    appellants

Paul Tushinski and Eric J. Adams, for the respondents

Heard and released orally: November 12, 2014

On appeal from the order of Justice Thomas McEwen of the
    Superior Court of Justice, dated April 8, 2014.

ENDORSEMENT

[1]

This insurance-related appeal concerns two questions:

1)

whether a
    leasing companys insurer enjoys the protection of s. 267.12 of the
Insurance
    Act,
R.S.O. 1990, c. I.8, such that its liability for loss or damage from
    bodily injury or death arising directly or indirectly from the use or operation
    of a leased motor vehicle is limited to $1 million, less any amounts available
    under the lessees policy of insurance; and

2)

whether,
    in this case, the leasing company and owner of a car involved in a motor
    vehicle accident, together with the driver of the car, are insureds within
    the meaning of a standard SPF 7 excess insurance policy such that the excess
    policy responds to a claim against the driver as an unnamed insured.

[2]

With respect to the first question, the application judge concluded that
    s. 267.12 of the
Insurance Act
precludes a lessee from coverage under
    a lessors insurance policy beyond the qualified $1 million cap on liability
    set out in that section.  In other words, the liability of a lessor and its
    insurer is limited to a maximum of $1 million by reason of s. 267.12.

[3]

For the reasons expressed by the application judge, we agree.  This
    conclusion is dispositive of the appeal.  Accordingly, we do not reach the
    additional interpretive question raised by the appellants, described above.

[4]

The appeal is therefore dismissed.  The costs of the appeal are fixed in
    the agreed amount of $15,000, inclusive of disbursements and all applicable
    taxes.

E.A. Cronk J.A.

E.E. Gillese J.A.

Paul Rouleau J.A.


COURT OF APPEAL
    FOR ONTARIO

CITATION: Bank of Nova Scotia v. Diemer, 2014 ONCA 851

DATE: 20141201

DOCKET: C58381

Hoy A.C.J.O., Cronk and Pepall JJ.A.

BETWEEN

The Bank of Nova Scotia

Plaintiff (Respondent)

and

Daniel A. Diemer o/a Cornacre Cattle Co.

Defendant (Respondent)

Peter H. Griffin, for the appellant PricewaterhouseCoopers
    Inc.

James H. Cooke, for the respondent Daniel A. Diemer

No one appearing for the respondent The Bank of Nova
    Scotia

Heard: June 10, 2014

On appeal from the order of Justice Andrew J. Goodman of
    the Superior Court of Justice, dated January 22, 2014, with reasons reported at
    2014 ONSC 365.

Pepall J.A.:

[1]

The public nature of an insolvency which juxtaposes a debtors financial
    hardship with a claim for significant legal compensation focuses attention on
    the cost of legal services.

[2]

This appeal involves a motion judges refusal to approve legal fees of
    $255,955 that were requested by a court appointed receiver on behalf of its
    counsel in a cattle farm receivership that spanned approximately two months.

[3]

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

Facts

(a)

Appointment of Receiver

[4]

The respondent, Daniel A. Diemer o/a Cornacre Cattle Co. (the debtor),
    is a cattle farmer.  The Bank of Nova Scotia (BNS) held security over his farm
    operations which were located near London, Ontario.  BNS and Maxium Financial
    Services Inc. were owed approximately $4.9 million (approximately $2 million
    and $2.85 million respectively).  BNS applied for the appointment of a receiver
    pursuant to s. 243(1) of the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3 (
BIA
)
and s. 101 of the
Courts of
    Justice Act
, R.S.O. 1990, c. 43
.
    The debtor was represented by counsel and consented to the appointment.

[5]

On August 20, 2013, Carey J. granted the request and appointed PricewaterhouseCoopers
    Inc. (PWC or the Receiver) as receiver of the debtor.  The initial
    appointment order addressed various aspects of the receivership.  This included
    the duty of the debtor to cooperate with the Receiver and the approval of a
    sales process for the farm operations described in materials filed in court by BNS.
    The order also contained a come-back provision allowing any interested party to
    apply to vary the order on seven days notice.

[6]

Paragraphs 17 and 18 of the appointment order, which dealt with the accounts
    of the Receiver and its counsel, stated:

17.     THIS COURT ORDERS that the Receiver and counsel to the
    Receiver shall be paid their reasonable fees and disbursements, in each case at
    their standard rates and charges, and that the Receiver and counsel to the
    Receiver shall be entitled to and are hereby granted a charge (the Receivers
    Charge) on the Property, as security for such fees and disbursements, both
    before and after the making of this Order in respect of these proceedings, and
    that the Receivers Charge shall form a first charge on the Property in
    priority to all security interests, trusts, liens, charges and encumbrances,
    statutory or otherwise, in favour of any Person, but subject to sections
    14.06(7), 81.4(4), and 81.6(2) of the BIA.

18.     THIS COURT ORDERS that the Receiver and its legal
    counsel shall pass its accounts from time to time, and for this purpose the
    accounts of the Receiver and its legal counsel are hereby referred to a judge
    of the Ontario Superior Court of Justice.

There is no suggestion that the materials filed in
    support of the request for the appointment of the Receiver provided specifics
    on the standard rates and charges referred to in para. 17 of the initial
    appointment order.

[7]

Counsel to the Receiver was Borden Ladner Gervais LLP (BLG) and the
    lead lawyer was Roger Jaipargas.  Mr. Jaipargas was called to the Ontario bar
    in 2000, practises out of BLGs Toronto office, and is an experienced and
    capable insolvency practitioner.  Among other things, at the time of the
    receivership, he was the Chair of the Insolvency Section of the Ontario Bar
    Association.

(b)

Receivers Activities

[8]

The activities of the Receiver and, to a certain extent, those of its
    counsel, were described in reports dated September 11 and October 15, 2013 filed
    in court by the Receiver.  Both reports were subsequently approved by the
    court.

[9]

The reports revealed that:

-

Following
    the granting of the initial appointment order, the Receiver entered into an
    agreement with the debtor pursuant to which the latter was to manage the
    day-to-day operations of the farm and the Receiver would provide oversight.

-

After
    the Receiver was appointed, the debtor advised the Receiver of an August 13,
    2013 offer he had received.  It had resulted from a robust sales process
    conducted by the debtor.  On learning of this offer, the Receiver negotiated an
    agreement of purchase and sale with the offeror for the purchase of the farm
    for the sum of $8.3 million.  The purchase price included 170 milking cows.

-

On
    September 17, 2013, the Receiver obtained, without objection from the debtor, a
    court order setting aside the sales process approved in the initial appointment
    order, approving the agreement of purchase and sale it had negotiated, and
    approving the Receivers September 11, 2013 report outlining its activities to
    date.

-

The
    agreement of purchase and sale required that over 150 cows be removed from the
    farm (not including the 170 milking cows that were the subject of the agreement
    of purchase and sale).  Complications relating to these cows and an additional
    60 cows which the debtor wanted to rent to increase his milking quota arose to
    which the Receiver and its counsel were required to attend.

-

The
    Receiver and BLG also negotiated an access agreement to permit certain property
    to remain on the farm after the closing date of the agreement of purchase and
    sale at no cost to the debtor.  Unbeknownst to the Receiver, the debtor then
    removed some of that property.

-

The
    Receiver and its counsel also had to consider numerous claims to the proceeds
    of the receivership by other interested creditors and an abandoned request by
    the debtor to change the venue of the receivership from London to Windsor.

[10]

After
    approximately two months, the debtor asked that the Receiver be replaced.
    Accordingly, PWC brought a motion to substitute BDO Canada Ltd. as receiver and
    to approve its second report dated October 15, 2013.

(c)

Application to Approve Fees

[11]

The
    Receiver also asked the court to approve its fees and disbursements and those
    of its counsel including both of their estimates of fees to complete.

[12]

The
    Receivers fees amounted to $138,297 plus $9,702.52 in disbursements.  The fees
    reflected 408.7 hours spent by the Receivers representatives at an average
    hourly rate of $338.38.  The highest hourly rate charged by the Receiver was
    $525 per hour.  Fees estimated to complete were $20,000.

[13]

The
    Receivers counsel, BLG, performed a similar amount of work but charged
    significantly higher rates.  BLGs fees from August 6 to October 14, 2013 amounted
    to $255,955, plus $4,434.92 in disbursements and $33,821.69 in taxes for a
    total account of $294,211.61.  The fees reflected 397.60 hours spent with an
    average hourly rate of $643.75.  Mr. Jaipargass hours amounted to 195.30 hours
    at an hourly rate of $750.00.  The rates of the other 10 people on the account
    ranged from $950 per hour for a senior lawyer to $195 for a student and $330
    for a law clerk.

[14]

Fees
    estimated to complete were $20,000.

[15]

In
    support of the request for approval of both sets of accounts, the Receiver
    filed an affidavit of its own representative and one from its counsel, Mr. Jaipargas.

[16]

As
    is customary in receiver fee approval requests, the Receivers representative stated
    that, to the best of his knowledge, the rates charged by its counsel were
    comparable to the rates charged by other law firms for the provision of similar
    services and that the fees and disbursements were fair and reasonable in the
    circumstances.

[17]

In
    his affidavit, Mr. Jaipargas attached copies of BLGs accounts and a summary of
    the hourly rates and time spent by the eleven BLG timekeepers who worked on the
    receivership. The attached accounts included detailed block descriptions of the
    activities undertaken by the BLG timekeepers with total daily aggregate hours
    recorded.  Usually the entries included multiple tasks such as e-mails and
    telephone calls.  Time was recorded in six minute increments.  Of the over 160 docket
    entries, a total of 11 entries reflected time of .1 (6 minutes) and .2 (12
    minutes).

[18]

On
    October 23, 2013, the motion judge granted a preliminary order.  He ordered
    that:

·

BDO Canada Ltd. be substituted as receiver;

·

PWCs fees and disbursements be approved;

·

the Receivers October 15, 2013 report and the activities of the Receiver
    set out therein be approved;

·

$100,000 of BLGs fees be approved; and

·

the determination of the approval of the balance of BLGs fees
    and disbursements be adjourned to January 3, 2014.

[19]

Prior
    to the January return date, the debtor filed an affidavit of a representative
    from his law firm.  The affiant described the billing rates of legal
    professionals located in the cities of London and Windsor, Ontario.  These
    rates tended to be significantly lower than those of BLG.  For example, the
    highest billing rate was $500 for the services of a partner called to the bar
    in 1988.  Mr. Jaipargas replied with an affidavit that addressed Toronto rates
    in insolvency proceedings in Toronto with which BLGs rates compared favourably.
    He also revised BLGs estimate to complete to $30,000.

Motion Judges Decision

[20]

On
    January 3, 2014, the motion judge heard the motion relating to approval of the
    balance of BLGs fees and disbursements.  He refused to grant the requested fee
    approval and provided detailed reasons for his decision dated January 22, 2014.

[21]

In
    his reasons, the motion judge considered and applied the principles set out in
Re
    Bakemates International Inc.
(2002),
    164 O.A.C. 84 (C.A.), leave to appeal refused, [2002] S.C.C.A. No. 460
(also referred to as
Confectionately Yours Inc., Re
);
BT-PR Realty
    Holdings Inc. v. Coopers & Lybrand
(1997), 29 O.T.C. 354 (S.C.); and
Federal
    Business Development Bank v. Belyea
(1983), 44 N.B.R. (2d) 248 (C.A.).  The
    motion judge considered the nature, extent and value of the assets handled, the
    complications and difficulties encountered, the degree of assistance provided
    by the debtor, and the cost of comparable services.

[22]

The
    motion judge took into account the challenges identified by the Receiver in
    dealing with the debtor.  However, he found that the debtor had co-operated and
    that there was little involvement by the Receiver and counsel that required
    either day-to-day management or identification of a potential purchaser.

[23]

He
    noted, at para. 17 of his reasons, that although counsel for the debtor took
    specific issue with BLG counsels rates: I glean from submissions that the
    thrust of his argument evolved from a complaint about the rates being charged
    to an overall dispute of the unreasonableness of the entirety of the fees (and
    by extension  the hours) submitted for reimbursement.

[24]

The
    motion judge considered the hourly rates, time spent and work done.  He noted
    that the asset was a family farm worth approximately $8.3 million and that the
    scope of the receivership was modest.  In his view, the size of the
    receivership estate should have some bearing on the hourly rates.  He determined
    that the amount of counsels efforts and the work involved was disproportionate
    to the size of the receivership.  After the size of the estate became known,
    the usual or standard rates were too high.  He expressly referred to paras. 17
    and 18 of the initial appointment order.

[25]

The
    motion judge also took issue with the need for, and excessive work done by,
    senior counsel on routine matters.  He rejected the Receivers opinion
    endorsing its counsels fees, found that the number of hours reflected a significant
    degree of inefficiency, and that some of the work could have been performed at
    a lower hourly rate.  He concluded: I have concerns about the fees claimed
    that involve the scope of work over the course of just over two months in what
    appears to be a relatively straightforward receivership.  Frankly, the rates
    greatly exceed what I view as fair and reasonable.

[26]

He
    acknowledged that there were several methods to achieve what he believed to be
    a just and reasonable amount including simply cutting the overall number of
    hours billed.  Instead, so as to reduce the amount claimed, he adopted the
    average London rate of $475 for lawyers of similar experience and expertise as shown
    in the affidavit filed by the debtor.  He also expressly limited his case to
    the facts at hand, noting that his reasons should not be construed as saying
    that Toronto rates have no application in matters in the Southwest Region.

[27]

The
    motion judge concluded that BLGs fees were nothing short of excessive.  He
    assessed them at $157,500 from which the $100,000 allowed in his October 23,
    2013 order was to be deducted.  He also allowed disbursements of $4,434.92 and
    applicable HST.

Grounds of Appeal

[28]

The
    appellant advances three grounds of appeal.  It submits that the motion judge
    erred: (1) by failing to apply the clear provisions of the appointment  order
    which entitled BLG to charge fees at its standard rates; (2) by reducing BLGs
    fees in the absence of evidence that the fees were not fair and reasonable; and
    (3) by making unfair and unsupported criticisms of counsel.

Burden of Proof

[29]

The
    receiver bears the burden of proving that its fees are fair and reasonable:
HSBC
    Bank Canada v. Lechier-Kimel
, 2014 ONCA
    721, at para. 16 and
Bakemates
,
    at para. 31
.

Analysis

(a)     Appointment of a Receiver

[30]

Under
    s. 243(1) of the
BIA
,
the court may appoint a receiver and
    under s. 243(6), may make any order respecting the fees and disbursements of
    the receiver that the court considers proper.  Similarly, s.101 of the
Courts
    of Justice Act
provides for the appointment of a receiver and that the appointment
    order may include such terms as are considered just.  As in the case under
    appeal, the initial appointment order may provide for a judicial passing of
    accounts.  Section 248(2) of the
BIA
also permits the Superintendent
    of Bankruptcy, the debtor, the trustee in bankruptcy or a creditor to apply to
    court to have the receivers accounts reviewed.  The court also relies on its
    supervisory role and inherent jurisdiction to review a receivers requests for
    payment:
Bakemates
, at para. 36 and Kevin P. McElcheran,
Commercial
    Insolvency in Canada
, 2d ed. (Markham: LexisNexis, 2011), at pp. 185-186.

[31]

The
    receiver is an officer of the court:
Bakemates
, at para. 34.  As
    stated by McElcheran, at p.186:

The receiver, once appointed, is said to be a fiduciary for
    all creditors of the debtor.  The term fiduciary to describe the receivers
    duties to creditors reflects the representative nature of its role in the
    performance of its duties.  The receiver does not have a financial stake in the
    outcome.  It is not an advocate of any affected party and it has no client.  As
    a court officer and appointee, the receiver has a duty of even-handedness that
    mirrors the courts own duty of fairness in the administration of justice.
    [Footnotes omitted.]

(b)     Passing of a Receivers
    Accounts

[32]

In
Bakemates
, this court described the purpose of the passing of a
    receivers accounts and also discussed the applicable procedure.  Borins J.A. stated,
    at para. 31, that there is an onus on the receiver to prove that the compensation
    for which it seeks approval is fair and reasonable.  This includes the
    compensation claimed on behalf of its counsel.  At para. 37, he observed that
    the accounts must disclose the total charges for each of the categories of
    services rendered.  In addition:

The accounts should be in a form that can be easily understood
    by those affected by the receivership (or by the judicial officer required to
    assess the accounts) so that such person can determine the amount of time spent
    by the receivers employees (and others that the receiver may have hired) in
    respect to the various discrete aspects of the receivership.

[33]

The
    court endorsed the factors applicable to receivers compensation described by
    the New Brunswick Court of Appeal in
Belyea
:
Bakemates
, at
    para. 51
.  In
Belyea
, at para. 9, Stratton J.A. listed the
    following factors:

·

the nature, extent and value of the assets;

·

the complications and difficulties encountered;

·

the degree of assistance provided by the debtor;

·

the time spent;

·

the receivers knowledge, experience and skill;

·

the diligence and thoroughness displayed;

·

the responsibilities assumed;

·

the results of the receivers efforts; and

·

the cost of comparable services when performed in a prudent and
    economical manner.

These factors constitute a useful guideline but are not
    exhaustive:
Bakemates
, at para. 51.

[34]

In
    Canada, very little has been written on professional fees in insolvency
    proceedings: see Stephanie Ben-Ishai and Virginia Torrie, A Cost Benefit
    Analysis: Examining Professional Fees in
CCAA
Proceedings in Janis P.
    Sarra, ed.,
Annual Review of Insolvency Law
(Toronto: Carswell, 2010)
    141, at p.151.

[35]

Having
    said that, it is evident that the fairness and reasonableness of the fees of a
    receiver and its counsel are the stated lynchpins in the
Bakemates
analysis.
     However, in actual practice, time spent, that is, hours spent times hourly
    rate, has tended to be the predominant factor in determining the quantum of
    legal fees.

[36]

There
    is a certain irony associated with this dichotomy.  A person requiring legal
    advice does not set out to buy time.  Rather, the object of the exercise is to
    buy services. Moreover, there is something inherently troubling about a billing
    system that pits a lawyers financial interest against that of its client and
    that has built-in incentives for inefficiency.  The billable hour model has
    both of these undesirable features.

(c)     The Rise and Dominance of
    the Billable Hour

[37]

For
    many decades now, the cornerstone of legal accounts and law firms has been the
    billable hour.  It ostensibly provides an objective measure for both clients
    and law firms.  For the most part, it determines the quantum of fees.  From an
    internal law firm perspective, the billable hour also measures productivity and
    is an important tool in assessing the performance of associates and partners
    alike.

[38]

The
    billable hour traces its roots to the mid-20th century.  In 1958, the American Bar
    Association (ABA)s Special Commission on the Economics of Law Practice
    published a study entitled The 1958 Lawyer and his 1938 Dollar.  The study noted
    that lawyers incomes had not kept pace with those of other professionals and
    recommended improved recording of time spent and a target of 1,300 billable hours
    per year to boost lawyers profits: see Stuart L. Pardau,
Bill, Baby,
    Bill: How the Billable Hour Emerged as the Primary Method of Attorney Fee Generation
    and Why Early Reports of its Demise May be Greatly Exaggerated
 (2013) 50
    Idaho L. Rev. 1, at pp. 4-5.  By 2002, in its Commission on Billable Hours, the
    ABA revised its proposed expectation to 2,300 hours docketed annually of which
    1,900 would represent billable work: see Pardau, at p. 2.  And that was in
    2002.

[39]

Typically,
    a lawyers record of billable hours is accompanied by dockets that record and
    detail the time spent on a matter.  In theory, this allows for considerable
    transparency.  However, docketing may become more of an art than a science, and
    the objective of transparency is sometimes elusive.

[40]

This
    case illustrates the problem.  Here, the lawyers provided dockets in blocks of
    time that provide little, if any, insight into the value provided by the time
    recorded.  Moreover, each hour is divided into 10 six-minute segments, with six
    minutes being the minimum docket.  So, for example, reading a one line e-mail
    could engender a 6 minute docket and associated fee.  This segmenting of the
    hour to be docketed does not necessarily encourage accuracy or docketing
    parsimony.

(d)

Fees in Context of Court Appointed Receiver

[41]

The
    cost of legal services is highlighted in the context of a court-supervised
    insolvency due to its public nature.  In contrast, the cost of putting together
    many of the transactions that then become unravelled in court insolvency
    proceedings rarely attract the public scrutiny that professional fees in
    insolvencies do.  While many of the principles described in these reasons may
    also be applicable to other areas of legal practice, the focus of this appeal
    is on legal fees in an insolvency.

[42]

Bilateral
    relationships are not the norm in an insolvency.  In a traditional solicitor/client
    relationship, there are built-in checks and balances, incentives, and, frequently,
    prior agreements on fees.  These sorts of arrangements are less common in an
    insolvency.  For example, a receiver may not have the ability or incentive to
    reap the benefit of any pre-agreed client percentage fee discount of the sort
    that is incorporated from time to time into fee arrangements in bilateral
    relationships.

[43]

In
    a court-supervised insolvency, stakeholders with little or no influence on the
    fees may ultimately bear the burden of the largesse of legal expenditures.  In
    the case under appeal, the recoveries were sufficient to discharge the debt
    owed to BNS.  As such, it did not bear the cost of the receivership.  In
    contrast, had the receivership costs far exceeded BNSs debt recovery such that
    in essence it was funding the professional fees, BNS would hold the economic
    interest and other stakeholders would be unaffected.

[44]

In
    a receivership, the duty to monitor legal fees and services in the first
    instance is on the receiver.  Choice of counsel is also entirely within the
    purview of the receiver.  In selecting its counsel, the receiver must consider
    expertise, complexity, location, and anticipated costs. The responsibility is
    on the receiver to choose counsel who best suits the circumstances of the
    receivership.  However, subsequently, the court must pass on the fairness and
    reasonableness of the fees of the receiver and its counsel.

[45]

In
    my view, it is not for the court to tell lawyers and law firms how to bill. That
    said, in proceedings supervised by the court and particularly where the court
    is asked to give its
imprimatur
to the legal fees requested for
    counsel by its court officer, the court must ensure that the compensation
    sought is indeed fair and reasonable.  In making this assessment,
all
the
Belyea
factors, including time spent, should be considered.  However,
    value provided should pre-dominate over the mathematical calculation reflected
    in the hours times hourly rate equation.  Ideally, the two should be synonymous,
    but that should not be the starting assumption. Thus, the factors identified in
Belyea
require a consideration of the overall value contributed by the
    receivers counsel.  The focus of the fair and reasonable assessment should be
    on what was accomplished, not on how much time it took.  Of course, the
    measurement of accomplishment may include consideration of complications and
    difficulties encountered in the receivership.

[46]

It
    is not my intention to introduce additional complexity and cost to the
    assessment of legal fees in insolvency proceedings. All participants must be
    mindful of costs and seek to minimize court appearances recognizing that the
    risk of failing to do so may be borne on their own shoulders.

(e)

Application to This Case

[47]

Applying
    these principles to the grounds raised, I am not persuaded that the motion
    judge erred in disallowing counsels fees.

[48]

The
    initial appointment order stating that the compensation of counsel was to be
    paid at standard rates and the subsequent approval of the Receivers reports do
    not oust the need for the court to consider whether the fees claimed are fair and
    reasonable.

[49]

As
    stated in
Bakemates
, at para. 53, there may be cases in which the fees
    generated by the hourly rates charged by a receiver will be reduced if the
    application of one or more of the
Belyea
factors so requires.
    Furthermore, although they would not have been determinative in any event,
    there is no evidence before this court that the standard rates were ever
    disclosed prior to the appointment of the receiver.  In addition, as stated,
    while the receiver and its counsel may be entitled to charge their standard
    rates, the ultimate assessment of what is fair and reasonable should dominate
    the analysis.  I would therefore reject the appellants argument that the
    motion judge erred in disallowing BLGs fees at its standard rates.

[50]

I
    also reject the appellants argument that the motion judge erred in fact in
    concluding that counsels fees were not fair and reasonable.

[51]

In
    this regard, the appellant makes numerous complaints.

[52]

The
    appellant submits that the motion judge made a palpable and overriding error of
    fact in finding that the debtor was cooperative.  The appellant relies on the
    contents of the Receivers two reports in support of this contention.  The first
    report states that on the date of the initial appointment order, August 20,
    2013, the Receiver became aware of an offer to purchase the farm dated August 13,
    2013 and reviewed the offer with the debtors counsel.  The report goes on to
    state that the debtor was not opposed to the Receiver completing that transaction
    and seeking the courts approval of it.  The second report does detail some
    issues with the debtor such as the movement of certain property and cows to two
    farms for storage, even though the Receiver had arranged for storage with the
    purchaser at no cost to the Receiver or the debtor, and the leasing by the
    debtor of 60 additional cows to increase milk production.

[53]

While
    there are certain aspects of the second report indicating that some negotiation
    with the debtor was required, based on the facts before him, it was open to the
    motion judge to conclude, overall, that the debtor cooperated.  The Receiver and
    its counsel never said otherwise.  Furthermore, this finding was made in the
    context of the debtor having agreed to continue to operate the farm pursuant to
    an August 30, 2013 agreement and in the face of little involvement of the
    Receiver and its counsel in the day-to-day management of the farm.  Indeed, in
    the first report, the Receiver notes the debtors willingness to carry on the farming
    operations on a day-to-day basis.

[54]

In
    my view, it was also appropriate for the motion judge to question why a senior
    Toronto partner had to attend court in London to address unopposed motions and,
    further, to find that the scope of the receivership was modest.  Indeed, in his
    reasons at para. 40, the motion judge wrote that, in the proceedings before
    him, counsel for the Receiver acknowledged that the receivership was not
    complex.  Based on the record, it was open to him to conclude that the
    receivership involved the divestment of the farm and assets with some modest
    ancillary work.

[55]

As
    the motion judge noted at para. 20, the fixing of costs is not an unusual task
    for the court.  Moreover, he was fully familiar with the receivership and was
    well-placed to assess the value generated by the legal services rendered.  He properly
    considered the
Belyea

factors.  While a different judge might
    have viewed the facts, including the debtors conduct, differently, the motion
    judge made findings of fact based on the record and is owed deference.  In my
    view, the appellant failed to establish any palpable and overriding error.

[56]

Nor
    did the motion judge focus his decision on what remained to the debtor after
    the creditors, the Receiver and Receivers counsel had been paid, as alleged by
    the appellant.  In para. 34 of his reasons, which is the focus of the
    appellants complaint on this point, the motion judge correctly considered the
    size of the estate.  He stated that he was persuaded that the amount of counsels
    efforts and work involved may be disproportionate to the size of the
    receivership.  After the size of the estate became known, he concluded that
    the standard rates of counsel were too high relative to the size.  As
    observed in
Belyea
, at para. 9, the nature, extent and value of an
    estate is a factor  to be considered in assessing whether fees are fair and
    reasonable.  As such, along with counsels knowledge, experience and skill and
    the other
Belyea
factors, it is a relevant consideration.

[57]

In
    addition, the motion judge was not bound to accept the affidavit evidence filed
    by BLG or the two Receiver reports as determinative of the fairness and
    reasonableness of the fees requested.  It is incumbent on the court to look to
    the record to assess the accounts of its court officer, but it is open to a
    motion judge to draw inferences from that record.  This is just what the motion
    judge did.

[58]

Having
    said that, I do agree with the appellant that there were some unfair criticisms
    made of counsel.  There was no basis to state that counsel had attempted to
    exaggerate or had conducted himself in a disingenuous manner.  I also agree
    with the appellant that the Receiver and its counsel cannot be faulted for
    failing to bring the accounts forward for approval at an earlier stage.  Costly
    court appearances should be discouraged not encouraged.

[59]

I
    also agree with the appellant that it was inappropriate for the motion judge to
    adopt a mathematical approach and simply apply the rates of London counsel.  However,
    this was not fatal: the motion judges decision was informed by the factors in
Belyea
.
    As he noted, he would have arrived at the same result in any event. He was
    informed by the correct principles, which led him to conclude that the fees
    lacked proportionality and reasonableness.  This is buttressed by the motion
    judges concluding comments, in para. 47 of his reasons, where he made it clear
    that the driving concern in his analysis was the overall reasonableness of the
    fees and that his decision should not be read as saying that Toronto rates
    have no application in matters in London or its surrounding areas.

[60]

While
    certain of the motion judges comments were unjustified, I am not persuaded
    that a different result should ensue.

Disposition

[61]

For
    the foregoing reasons, I would dismiss the appeal.  As agreed, the appellant
    shall pay the respondents costs of the appeal, fixed in the amount of $5,500,
    together with disbursements and all applicable taxes.

Released:

DEC -1 2014                                    Sarah E.
    Pepall J.A.

EAC                                                 I
    agree Alexandra Hoy A.C.J.O.

I
    agree E.A. Cronk J.A.