Court Of Appeal Summaries (February 22-26, 2016)

The Court of Appeal released a number of interesting decisions this week. In Meridian Credit Union Limited v. Baig, the Court confirmed that silence and half-truths can amount to misrepresentation, and found a purchaser had engaged in fraudulent misrepresentation by silence in the context of a court-approved sale of assets by a receiver. Other topics addressed by the Court include entitlement to commissions, and the high threshold that must be met to permit an action against a monitor and/or receiver.

Table of Contents

Civil Decisions

Meridian Credit Union Limited v. Baig, 2016 ONCA 150

Keywords: Real Property, Creditor and Debtor, Court Appointed Receiver, Sale of Land, Fraudulent Misrepresentation, Misrepresentation by Silence, Corporate Veil, Hryniak v Mauldin, Intervener, Fresh Evidence, audi alteram partem

Crate Marine Sales Limited (Re), 2016 ONCA 140

Keywords: Bankruptcy, Receivership, Occupancy, Leave to Appeal, Bankruptcy and Insolvency Act, s. 193(c) & (e)

Holmes v. Schonfeld Inc., 2016 ONCA 148

Keywords: Civil Procedure, Tax, Income Tax, Administration and Enforcement, Creditors and Debtors, Receivers, Court Appointed Receivers, Motion to Dismiss, Leave Nunc Pro Tunc

Kloos v. Tangas, 2016 ONCA 149

Keywords: Commercial Law, Mortgage, Fraudulent Conveyance, Fraudulent Preference, Litigation Guardian, Doctrine of Laches, Estoppel, Perry, Farley & Onyschuk v. Outerbridge Management Ltd.

Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde (United Townships) v. Mohammed, 2016 ONCA 153

Keywords: Vexatious Litigant, s. 140(1) Courts of Justice Act, Motion for Extension of Time to File Appeal, Res Judicata, Abuse of Process

First Contact Realty Ltd. (Royal LePage First Contact Realty) v. Prime Real Estate Holdings Corporation, 2016 ONCA 156

Keywords: Real Estate law, Motion for Summary Judgment, Hyrniak Principles, Finding of Fact, Real Estate Commission, Restraint Order, Marijuana Grow-op, Controlled Drugs and Substances Act

Gray v. Rizzi, 2016 ONCA 152

Keywords: Family Law, Retroactive Variation Order, Divorce Act s.17, Material Change in Circumstances, Elimination of Child and Spousal Support Arrears, Overpayment of Support, Repayment Financial Hardship, D.B.S. v. S.R.G., L.M.P. v. L.S.

2274659 Ontario Inc. v. Canada Chrome Corporation, 2016 ONCA 145

Keywords: Standard of Review, Correctness, Remedy, Palpable and Overriding Error, Mining Act, S. 50(2), S. 51(1), Statutory Interpretation

Spylo v. Spylo, 2016 ONCA 151

Keywords: Estate Law, Trusts, Secret Trust, Lack of Evidence, Judicial Impartiality, Apprehension of Bias

Children's Aid Society of Toronto v. L.T. (Publication Ban), 2016 ONCA 146

Keywords: Child Protection, Motion to Dismiss for Delay, Adjournment, Best Interest of the Child

Murphy v. Wheeler, 2016 ONCA 166

Keywords: Civil Litigation, Mortgage, Equitable Mortgage, Unregistered Amending Agreements, Proceeds of Sale, Interest, Costs

Warburg-Stuart Management Corporation v. DBG Holdings Inc., 2016 ONCA 157

Keywords: Contracts, Contract Interpretation, Advisory Services, Lending, Joint and Several Liability, Costs, Partial Indemnity, Summary Judgement

For a list of Civil Endorsements, click here.

For a list of Criminal Decisions, click here.

Civil Decisions

Meridian Credit Union Limited v. Baig, 2016 ONCA 150

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Milton A. Davis and John Adair, for the appellant

J. Anthony Caldwell, for the respondent

Clifford Lax, Q.C., James Renihan and Linda Galessiere, for the interveners Miller Thomson LLP and Peter Kiborn

Keywords: Real Property, Creditor and Debtor, Court Appointed Receiver, Sale of Land, Fraudulent Misrepresentation, Misrepresentation by Silence, Corporate Veil, Hryniak v Mauldin, Intervener, Fresh Evidence, audi alteram partem

Facts:

Ahmed Baig, the appellant, agreed to purchase a building located at 984 Bay Street, Toronto (the "Property"), from the court appointed receiver and manager of the Property (the "Receiver") for $6.2 million (the "Agreement"). Unknown to the Receiver and prior to closing, the appellant agreed to re-sell the Property to Yellowstone Property Consultants Corp. ("Yellowstone") for $9 million. The appellant retained Miller Thomson LLP ("Miller Thomson") where Peter Kiborn acted for him in structuring the transaction.

To avoid land transfer tax, Kiborn recommended that title to the Property be transferred directly to Yellowstone. The Receiver erroneously believed Yellowstone was the appellant's corporation incorporated for the purposes of the Agreement. Neither Kiborn nor the appellant corrected this misunderstanding. Had it known, the Receiver claims it would not have recommended approval of the sale to the court in the receivership proceeding. However, it obtained court approval for the Agreement and the transaction closed.

Meridian Credit Union Limited ("Meridian"), the respondent, discovered the re-sale and informed the Receiver. As Meridian had not recovered the full amount owing to it in the receivership proceeding, the Receiver assigned its cause of action against the appellant to Meridian. Meridian then commenced the within action against the appellant.

In the decision under appeal, the motion judge dismissed the summary judgment motion brought by the appellant and instead found him liable for fraudulent misrepresentation.

Issues:

(1) Did the motion judge err by finding the appellant personally liable for fraudulent misrepresentations?

(2) Did the motion judge err by concluding that the interveners had made misrepresentations in their absence?

(3) The interveners also seek to introduce fresh evidence on appeal.

Holding: Appeal dismissed.

Reasoning:

(1) No. The court cited the test for civil fraud from Hryniak v Mauldin, 2014 SCC 7 and found there was sufficient evidence to prove all four elements and to find the appellant personally liable. Further, the motion judge's findings were reasonable and amply supported by the evidence before him. First, the record disclosed that the appellant engaged in actions that amounted to misrepresentations. Second, the appellant had some level of knowledge about the misrepresentations. Third, the representations caused the Receiver to seek court approval and to transfer title directly to Yellowstone. Lastly, as a result of the misrepresentations, the Receiver lost an opportunity to negotiate a higher price with the appellant or another party. The lost opportunity is a sufficient loss to ground a claim for civil fraud.

As it relates to the appellant's submission that he was protected by the corporate veil, the court found it inappropriate that the appellant tried to withdraw the concession made before the motion judge that he would be liable for any tortious misrepresentation made by his lawyers. In addition, the court stated it was consistent law in Canada that officers, directors and employees of corporations are responsible for their tortious conduct even if done in the best interests of the company.

(2) No. The interveners relied on the principle of audi alteram partem, composed of two elements: a right to be heard by a decision-maker, and a right to notice of a hearing sufficient in time and substance to enable a party to present their case. The court did not find the interveners had a right to be heard or to receive notice in this case.

The court stated audi alteram partem applies whenever a person's rights, interests, or privileges are affected by a decision. As non-parties to the action, the interveners were not directly impacted by the order. They were not bound by the motion judge's finding that they made fraudulent misrepresentations. The only tangible manner in which the court found they were impacted was indirect: now with the appellant liable for damages, the interveners were exposed to a greater risk that they may be found liable for a portion of the appellant's liability.

The court reiterated the principle that the common law does not provide non-parties with the right to notice, to adduce evidence, or to make submissions whenever an adverse credibility finding may be made in judicial proceedings that involve them. Non-parties are limited to whatever procedural rights they have under the rules.

(3) Lastly, the fresh evidence application failed because the evidence was irrelevant to the validity of the process followed by the motion judge and the criteria in R v Poulos does not apply. Further, the criteria in R v Palmer also does not apply for similar reasons, because the interveners' belief is irrelevant to the issues raised. Therefore, the fresh evidence could not have affected the results of the motion below.

Crate Marine Sales Limited (Re), 2016 ONCA 140

[Hourigan J.A. (In Chambers)]

Counsel:

Harvey G. Chaiton and Doug Bourassa, for Crawmet Corp., the moving party

James P. McReynolds, for the appellant 2124915 Ontario Inc.

R. Brendan Bissell, for the A Farber & Partners Inc., the Receiver

Keywords: Bankruptcy, Receivership, Occupancy, Leave to Appeal, Bankruptcy and Insolvency Act, s. 193(c) & (e)

Facts: The appellant, 2124915 Ontario Inc., brought a motion seeking a declaration that that the receiver occupied Lagoon City Marina for a specified period and an order that the receiver pay occupation rent. The motion judge held that the receiver did not occupy the marina and that if rent was owed; it should be reduced by whatever the receiver paid for utilities. The motion was dismissed.

At issue was whether the appellant requires leave to appeal.

Issues: Does the appellant require leave to appeal the order pursuant to s. 193(e) of the Bankruptcy and Insolvency Act or is there an automatic right of appeal pursuant to s. 193(c)? Under s. 193(c), if the property involved in the appeal "exceeds in value ten thousand dollars", then leave is not required.

Holding: Motion dismissed. No leave required.

Reasoning: The appellant argued that it has an automatic right of appeal pursuant to Section 193(c) of the Bankruptcy and...