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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.).

Civil Practice and Procedure


Jury trial

New trial was not justified

Appellant S was driving on two-lane road, when respondent N’s car in opposite lane was struck and pushed into S’s lane. S struck N’s vehicle. N brought action against S for negligence. At trial, N had settled claim against other driver and damages were agreed upon with S. Jury found S to be liable for accident. S claimed that jury’s verdict was unreasonable, as they held S to standard of perfection. S claimed that specifically inappropriate instruction was given, as to S’s speed while driving. S finally claimed that N’s counsel made inappropriate remarks, given that damages were not in issue. S appealed from finding of liability. Appeal dismissed. N’s trial counsel’s comments as to effects of accident on N and family were clearly improper. Trial judge charged jury, and explained that sympathy for N and family were not to play role in verdict. New trial was not justified based on any or all of grounds of appeal. 

Norman (Litigation guardian of) v. van Meppelen Scheppink (2017), 2017 CarswellOnt 3209, 2017 ONCA 192, R.G. Juriansz J.A., David Brown J.A., and B.W. Miller J.A. (Ont. C.A.).

Bankruptcy and Insolvency

Avoidance of transactions prior to bankruptcy

Recovery of proceeds or property

Bankrupt was engaged in effort to defraud

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 BIA, C testified he had no contact with and could not name any of bankrupt’s customers or suppliers. Trustee in bankruptcy brought 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 Bankruptcy and Insolvency Act (BIA). Motion granted; C and C’s company ordered to pay estate $159,330. Payments to numbered company during relevant period fell within s. 96(1)(b)(i) of BIA. Although applications were generally to be brought as motions, judge had discretion to order trial or use summary process if it would yield fair result. No trial was necessary as issue was narrow, parties’ complete evidence was before court, protagonists had been cross-examined, and there was relatively small amount of money in issue. Section 96 did not require trustee to prove bankrupt was engaged in scheme to defeat its creditors generally or as group. C’s affidavit evidence from his knowledge of bankrupt’s customers to how he brought bankrupt millions of dollars in sales was contradictory. Value of consideration C and C’s company gave to bankrupt were presumptively what trustee opined, which was zero. There was no legal or persuasive burden on C or C’s company but, in absence of credible evidence to contrary, trustee proved on balance of probabilities that C and C’s company provided no services of any value to bankrupt during relevant period and that all payments bankrupt made to C or C’s company from that date were “payments at undervalue.” It was clear and undisputed that during relevant period, bankrupt was engaged in effort to defraud and delay bank from learning it was insolvent and borrowing from different lender. Three badges of fraud were found and gave rise to presumption that bankrupt intended to defraud, defeat, or delay old lender. There was no evidence of bona fide value flowing from C or C’s company to bankrupt even before relevant period. While solvent company was entitled to make payments for non-commercial or uneconomic motivations, insolvent company making such payments for no consideration while actively defrauding its principal lender could not be said to be acting in ordinary course of business.
National Telecommunications Inc., Re (2017), 2017 CarswellOnt 3184, 2017 ONSC 1475, F.L. Myers J. (Ont. S.C.J. [Commercial List]).

Civil Practice and Procedure

Limitation of actions
Real property

Plaintiff failed to show that their predecessor in title established adverse possession

Defendant owned vacant lot adjacent to plaintiffs’ lot. Both lots were converted to land titles in 2001. Defendant listed its lot for sale. Plaintiffs brought action for declaration that they owned portion of defendant’s lot (“disputed lands”) through adverse possession. Action was dismissed. Plaintiffs failed to show that their predecessors in title (H) established adverse possession over disputed lands prior to conversion to land titles, or that H’s acts of possession had intention of and effectively excluded true owner from possession. Trial judge found that use of defendant’s lot by H was seasonal and intermittent at best, which did not meet requirement of being constant and continuous, so there was no actual possession of disputed lands. Plaintiffs appealed. Appeal dismissed. It was clearly arguable that H’s use of disputed lands was sufficient to establish actual possession. However, plaintiffs’ claim failed on second branch of test for adverse possession, as they failed to show that H intended to use disputed lands in manner inconsistent with right of true owner to possession. H testified that he completed fence that enclosed disputed lands in belief that they were part of his property, and that he built concrete steps and two sheds on disputed lands. Mutual mistake could not be established on record; nor could argument of unilateral mistake by H be supported. It was open to trial judge to consider agreement of purchase and sale and statutory declaration when plaintiffs purchased their lot in rejecting H’s evidence that he believed he owned disputed lands. Trial judge’s conclusion that H knew he had no claim to defendant’s lot was not palpable and overriding error.
Sipsas v. 1299781 Ontario Inc. (2017), 2017 CarswellOnt 4409, 2017 ONCA 265, Alexandra Hoy A.C.J.O., M.L. Benotto J.A., and Grant Huscroft J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 1572, 2016 ONSC 212, Hood J. (Ont. S.C.J.).

Civil Practice and Procedure


Costs of appeals

Quantum of costs had to reflect divided success

Applicant owners purchased lakefront property, across which ran above-ground pipe drawing water from lake for respondent neighbours’ property pursuant to “water pipe easement” document executed by predecessors in title. Neighbours entered into owners’ property without permission on basis that pipe was leaking and had to be repaired. Owners’ application for declaration that easement was invalid was dismissed and neighbours’ counter-application for declaration of subsisting easement was granted on terms allowing them to bury new water line within boundaries of easement. Owners’ appeal was allowed in part, to vary declaration to limit easement to leaving existing pipeline in present position and allowing neighbours to make only those repairs to which owners agreed in advance. Costs submissions received. Owners awarded costs in amount of $8,000. There were no unusual circumstances justifying departure from usual approach of setting aside order for costs below. As appeal was allowed only in part, it did not automatically follow that owners were entitled to full costs of proceedings below. Quantum of costs had to reflect that there was divided success. Owners enjoyed greater success as they succeeded on issues that drove proceedings below, namely whether neighbours could enter onto their lands without their prior permission to repair pipeline and whether neighbours had right to replace existing pipeline. Owners’ suggestion about neighbours’ conduct, namely that there was no leak in pipeline, was based on correspondence that arose after conclusion of proceedings and which had not been tested in crucible of litigation. Meaning to be taken from correspondence was disputed and record would not support credibility findings necessary to resolve dispute so as to find reprehensible behaviour warranting sanction of costs.
Mihaylov v. 1165996 Ontario Inc. (2017), 2017 CarswellOnt 3741, 2017 ONCA 218, Eileen E. Gillese J.A., M.L. Benotto J.A., and L.B. Roberts J.A. (Ont. C.A.); additional reasons (2017), 2017 CarswellOnt 1653, 2017 ONCA 116, E.E. Gillese J.A., M.L. Benotto J.A., and L.B. Roberts J.A. (Ont. C.A.).

Aboriginal Law

Reserves and real property


Plaintiff and Band entered into private leasing contract regarding hunting grounds

Plaintiff was member of defendant Band and he agreed to lease hunting grounds from Band for purposes of operating hunt club business pursuant to series of lease or land use agreements between plaintiff and Band. Plaintiff sought approval from Band to make capital improvements to buildings and lands of hunt club, and he sought credit for cost of capital improvements against rent he was required to pay. Plaintiff claimed that credit of $532,500 was agreed upon, and plaintiff did not pay rent for five years on the basis that he was drawing down capital improvement credit. There was change in Band council and plaintiff was evicted after 15 years of leasing land, right at start of hunting season, and plaintiff lost money, he was humiliated and his reputation suffered greatly. When council voted to evict plaintiff, they refused to count vote of one council member because they did not want there to be tie. Plaintiff brought action seeking damages, claiming that eviction constituted breach of agreement he had with Band; Band counterclaimed for unpaid rent due and owing. Action allowed; counterclaim allowed. Parties agreed that plaintiff would lease land from Band for $84,000 per year. Plaintiff and Band had agreement that plaintiff could proceed with construction and renovations, Band agreed to reimburse plaintiff for improvements by way of capital improvement credit to his rent, and plaintiff was entitled to capital improvement credit of $532,500. Band allowed and encouraged work to be completed knowing that plaintiff expected to be reimbursed. Band took no steps to collect rent for five years that plaintiff did not pay. Band knew that plaintiff did not keep receipts for cost of improvements, as much of work was done by plaintiff and his men on cash basis and receipts were not available. Procedure followed by Band council at meeting where they voted to evict plaintiff was completely improper. Parties entered into private contract and it could not be said that Band owed duty of fairness to plaintiff, but giving effect to intention of parties, justice required plaintiff to be given capital improvement credit of $532,500 against rent. Taking into account capital improvement credit, rent owing, and deposit plaintiff had paid, plaintiff was entitled to judgment of $142,500.
Sands v. Walpole Island First Nations Band Council (2016), 2016 CarswellOnt 21492, 2016 ONSC 7983, Pamela L. Hebner J. (Ont. S.C.J.).
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An estate trustee who took an ‘egregious' position in litigation has been ordered to personally pay more than $140,000 in costs. Will this ruling serve as an appropriate caution to executors on how they conduct themselves in litigation?
Yes, this will remind trustees of the potential exposure of significant awards being made against them personally.
No, it’s unlikely this ruling will dissuade executors from engaging in unreasonable conduct during litigation.