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Civil Practice and Procedure


Costs of appeals

Costs reserved to application judge after matter sent back for redetermination

Husband applied to terminate spousal support and life insurance obligations on basis that he was planning to retire and sought to reduce obligations leading up to retirement date. Application judge found that husband’s retirement and consequent reduction in income was material change in circumstances, that parties’ assets and income would be about equal after husband’s retirement and terminated husband’s spousal support and insurance obligations effective on anticipated retirement date. Wife appealed and order was made directing amount of spousal support and insurance benefits to be sent back for redetermination. Issue arose as to costs. Wife was awarded costs in amount of $13,000 for appeal. Wife largely prevailed on main issue, namely whether spousal support and insurance benefits should be terminated or reduced. That appropriate reduction to support and insurance obligations remained open for determination by another application judge constituted unusual circumstance supporting departure from general principle that successful party on appeal be granted costs. As result, costs of application were reserved to application judge.
Schulstad v. Schulstad (2017), 2017 CarswellOnt 4797, 2017 ONCA 246, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.); additional reasons (2017), 2017 CarswellOnt 1170, 2017 ONCA 95, K.M. Weiler J.A., Paul Rouleau J.A., and L.B. Roberts J.A. (Ont. C.A.).

Civil Practice and Procedure


Offers to settle or payment into court

Bankrupt’s consultants ordered to pay costs after rejecting settlement offer

Bankrupt re-sold telephone equipment. In May 2012, bankrupt began paying consultant, C, and C’s company $10,000 per month. In November 2013, bankrupt began receiving loans from new lender it reported as revenue. In March 2015, bankrupt’s old lender brought application for bankrupt’s receivership. In April 2015, receiver and manager were appointed. In July 2015, bankrupt was assigned into bankruptcy. At October 2015 examination under s. 163 of Bankruptcy and Insolvency Act (BIA), C testified he had no contact with and could not name any of bankrupt’s customers or suppliers. Trustee in bankruptcy brought successful motion for order requiring C and C’s company to repay $159,330 transferred during year prior to March 2014 (relevant period) to estate of bankrupt under s. 96 of BIA. Hearing was held to determine costs. C and C’s company were jointly and severally liable to pay trustee its costs fixed in amount of $15,356.99 inclusive of disbursements and taxes. Trustee’s offer to settle proceeding for $100,000 met procedural requirements of Rule 49 of Rules of Civil Procedure. There was no basis to depart from usual approach of ordering costs payable to winner or from enhancement of costs provided under Rule 49. Trustee beat amount of its offer and was entitled to costs to day of offer on partial indemnity basis and thereafter on substantial indemnity basis. Trustee’s lawyer’s rates and hours were well within reasonable range. Small increase as penalty for time spent responding to late filed material and for cross-examination without leave was properly included in bill of costs.
National Telecommunications Inc., Re (2017), 2017 CarswellOnt 5573, 2017 ONSC 2376, F.L. Myers J. (Ont. S.C.J. [Commercial List]); additional reasons (2017), 2017 CarswellOnt 3184, 2017 ONSC 1475, F.L. Myers J. (Ont. S.C.J. [Commercial List]).

Bankruptcy and Insolvency

Property of bankrupt

Family law issues

Bankrupt not liable to former spouse as evidence not establishing fraudulent misrepresentation

Bankrupt and former spouse (former spouse) bought home together in 2006. Same year, bankrupt’s interest in home was deemed impressed with trust for unremitted source deductions. Parties separated in late 2006. Between December 2008 and February 2009, bankrupt received 2008 Assessment indicating he owed CRA over $70,000 and gave it to lawyer, expecting it to be disclosed to former spouse in matrimonial proceedings. Proceedings were settled with February 2009 consent order requiring bankrupt to transfer interest in home to former spouse, which he did. Before transfer was registered, CRA certified bankrupt’s tax debt and registered $30,562.73 lien against his half interest in home. Bankrupt made assignment into bankruptcy and was discharged. In 2011, former spouse brought claim against bankrupt for $80,562 in general damages and $50,000 in punitive damages, alleging reliance on bankrupt’s non-disclosure of tax debt in December 2008 financial statement. Trial judge held that bankrupt committed civil fraud and materially misrepresented, concealed or failed to disclosure important facts he knew or ought to have known would likely affect how former spouse negotiated consent, or did so with willful disregard for consequences of doing so, and that former spouse would not have made consent had she known of tax debt. Bankrupt appealed. Appeal allowed; action dismissed; lower judgments set aside. It was not open to trial judge to find that bankrupt made representation that he had no liability to CRA and, so, no basis for finding he made false representation. As such, there was no evidence bankrupt knew former spouse intended to rely on any representation or that bankrupt intended that former spouse rely on absence of debts and liabilities in financial statements as representation he had no liability to CRA. There was no evidence either party knew CRA could register lien against bankrupt’s interest in home. There was no evidence bankrupt deliberately tried to mislead former spouse about true state of affairs, from which trial judge could infer fraudulent intent, or that former spouse relied on lack of reference to bankrupt’s debts and liabilities to CRA in financial statements when consenting in February 2009. Trial judge erred in law in failing to analyze evidence as it related to test for fraudulent misrepresentation, approaching case on basis of fraudulent non-disclosure. Application of correct test would have led to conclusion that former spouse failed to prove on balance of probabilities all four of elements of tort of fraudulent misrepresentation and that claim did not survive bankruptcy and had to be dismissed.
Moore v. Morris (2017), 2017 CarswellOnt 5551, 2017 ONSC 1980, Kiteley J., Swinton J., and M.L.J. Edwards J. (Ont. Div. Ct.).

Bankruptcy and Insolvency

Discharge of bankrupt

Conditional discharge

Student loan indebtedness discharged by assignment in bankruptcy

Applicant obtained student loans for her first course of study in connection with Bachelor of Science program. She obtained loan money between August 1996 and April 2001 and graduated in October 2004. In her second course of study, applicant attended college between 2006 and 2007, but did not obtain student loans. Applicant left program in April 2007. Applicant filed assignment in bankruptcy on December 3, 2011. By virtue of s. 178(1)(g)(ii) of Bankruptcy and Insolvency Act (“BIA”), some student loan debt survives bankruptcy in certain circumstances. Student loan debt is not discharged by bankruptcy if bankruptcy occurred within seven years after person ceased being student. Applicant brought application seeking declaration that she ceased to be student with respect to her student loans in October 2004, and declaration that those student loans were discharged by virtue of applicant’s assignment in bankruptcy. Application granted. Interpretation of s. 178(1)(g)(ii) must be guided by overall purpose of BIA, which was namely rehabilitating and reintegrating individuals to allow for future participation in Canadian economy. Permitting bankrupt to discharge her debts after seven years from date of program to which student loan was connected goes some distance in promoting intent and purpose of BIA, that is to promote rehabilitation of debtors, providing them with fresh start while discouraging any abuse of bankruptcy system. For purposes of applicant’s student loans, she ceased to be student in October 2004. Therefore, seven-year delay requirement had been met. Accordingly, applicant’s indebtedness for student loans obtained prior to October 1, 2004 was discharged by her assignment in bankruptcy.
St. Dennis v. Ontario (Ministry of Training, Colleges & Universities) (2017), 2017 CarswellOnt 6316, 2017 ONSC 2417, Patricia C. Hennessy J. (Ont. S.C.J.).

Bankruptcy and Insolvency

Companies’ Creditors Arrangement Act


Reopening sale and investment solicitation process would be unfair and foolhardy

Applicants, group of insolvent steel companies, sought Companies’ Creditors Arrangement Act (CCAA) protection. Sale and investment solicitation process (SISP) was authorized. E Global was deemed non-compliant bidder under SISP as it failed to prove it had adequate financial resources. In accordance with SISP, applicants accepted joint bid from approved joint bidders and brought motion for order approving asset purchase agreement (APA). Before motion was heard, one joint bidder decided not to proceed. Other joint bidder sought to close transaction in partnership with certain senior noteholders of applicant. Union filed cross-motion to advance purported transaction with O Steel, entity owned by E Global. E Ltd. brought motion to reopen SISP. Union brought motion for directions as to whether it could engage in discussions with O Steel regarding potential sale. Motions dismissed. Re-opening SISP in circumstances would be unfair and foolhardy. There was no evidence E Global had financial wherewithal to undertake asset purchase and no evidence of any interested, viable bidder. Fact that large percentage of senior noteholders replaced one of joint bidders made accepted bid more viable, not less reliable. There was no basis for order authorizing union to do anything with O Steel in current process. In Non-Disclosure Agreement signed by union, it was agreed that union needed applicants’ consent to talk to SISP bidder and that bidder needed to be qualified SISP bidder. O Steel was not SISP bidder.
Essar Steel Algoma Inc., Re (2017), 2017 CarswellOnt 4050, 2017 ONSC 1401, Newbould J. (Ont. S.C.J. [Commercial List]).

Civil Practice and Procedure


Particular orders as to costs

Court proceeding, reopened on basis of fraudulent document, attracting significant costs award

Respondent Chief Building Officer revoked building permit issued for construction on appellant’s property (“revocation order”). Appellant appealed revocation order to Superior Court. Appeal was dismissed. Parties made submissions as to costs. Respondents submitted that appellant had provided fraudulent document (“Exhibit H”) in support of his motion to reopen appeal and had caused respondents considerable time and expense in effort to determine whether Exhibit H was authentic document; and accused respondents of conspiring to hide true zoning for appellant’s property. Respondents awarded full indemnity costs of in amount of $50,976.96. Respondents were most successful party. It could not have been outside reasonable expectation of appellant that court proceeding, reopened on basis of fraudulent document, would attract significant cost award. Hours charged and rates set out by respondents, relative to circumstances of this case and counsel’s year of call, were fair and reasonable. In this case, there had been fraud and unproven allegations of conspiracy: impact of authentic Exhibit H were used to buttress argument for reopening appeal and was important factor in court’s decision to reopen appeal. Reasonable conclusion was that failure to consider new document that could resolve dispute would constitute miscarriage of justice. After applying factors in R. 57.01(1) of Rules of Civil Procedure to this case and noting egregious nature of appellant’s conduct, elevated cost awarded was fair and reasonable in all circumstances of this case. This was not case where cost award would adversely impact on access to justice issues. On contrary, elevated cost award was necessary to deter appellant from using court system to adjudicate frivolous claims.
Elbasiouni v. Brampton (City) (2017), 2017 CarswellOnt 4876, 2017 ONSC 2088, Barnes J. (Ont. S.C.J.); additional reasons (2015), 2015 CarswellOnt 15057, 2015 ONSC 6149, Barnes J. (Ont. S.C.J.).

Alternative Dispute Resolution

Judicial review of arbitration awards

Grounds for review

Arbitrator’s breach of obligation to treat party fairly constituting breach of natural justice

Parties signed minutes of settlement resolving issue of child support for two children. Parties agreed to submit subsequent dispute about retroactive and prospective child support to arbitration. Eight days before arbitration hearing was scheduled, father dismissed lawyer. Arbitrator refused father’s request for adjournment, and father attended arbitration hearing without lawyer. Father applied for judicial review, seeking to have arbitration award set aside. Application granted. Arbitrator considered father’s request for adjournment but she did so in relation to whether he intended to appear at hearing and what consequences of not appearing could be, and there was nothing that showed that arbitrator considered father’s actual reason for requesting adjournment, that he wanted opportunity to obtain new counsel. Arbitrator appeared not to have put her mind to whether father was honestly seeking to exercise his right to counsel or whether he was manipulating system to orchestrate delay. This was not case where father had gone though number of lawyers, and there was no logical benefit to him in delaying matter. Father’s request for adjournment was extremely timely. Based on evidence, it seemed clear father was honestly seeking his right to legal counsel and he was denied opportunity. Consequences of hearing were serious and father was prejudiced by refusal to grant adjournment, while there was no evidence that mother would have been prejudiced by adjournment. In circumstances father was not treated equally and fairly by arbitrator, and he was not given opportunity to present his case or respond to mother’s case. Arbitrator did not balance interests of mother to get on with hearing with interests of father to exercise his right to counsel or with interests of administration of justice to ensure matter was decided on its substantive merits and that justice was not only done but was seen to be one. Breach of obligation to treat father fairly and equally pursuant to s. 19 of Arbitration Act constituted breach of natural justice, arbitration award must be set aside, and parties were to submit dispute to different arbitrator.
Lockman v. Rancourt (2017), 2017 CarswellOnt 5118, 2017 ONSC 2274, Tracy Engelking J. (Ont. S.C.J.).
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