Court Of Appeal Summaries (April 5 ' April 9, 2021)

• Published date: 13 April 2021
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Charges, Mortgages, Indemnities, Financial Services, Trials & Appeals & Compensation, Professional Negligence
• Law Firm: Blaney McMurtry LLP
• Author: Mr John Polyzogopoulos

Good evening.

Please find below our summaries of the civil decisions of the Court of Appeal for the week of April 5, 2021.

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Table of Contents

Civil Decisions

Madison Joe Holdings Inc. v. Mill Street & Co. Inc., 2021 ONCA 205

Keywords: Contracts, Debtor-Creditor, Promissory Notes, Guarantees, Fair Protection Rule, Civil Procedure, Summary Judgment, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Kevin McGuinness, The Law of Guarantee, 3rd ed. (Toronto: Lexis Nexis Canada, 2013)

Goldentuler v. Simmons Dasilva LLP , 2021 ONCA 219

Keywords: Torts, Professional Negligence, Lawyers, Wills and Estates, Civil Procedure, Striking Pleadings, Capacity, Rules of Civil Procedure, Rule 21.01(3)(b), Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34

Farrell v. Kavanagh, 2021 ONCA 213

Keywords: Contracts, Real Property, Mortgages, Torts, Fraud, Civil Procedure, Appeals, Stay Pending Appeal, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, 2257573 Ontario Inc. v. Furney, 2020 ONCA 742, Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), Starkman v. Home Trust Company, 2015 ONCA 436

Catholic Children's Aid Society of Toronto v. V.R. (Publication Ban), 2021 ONCA 209

Keywords: Family Law, Child Protection, Crown Wardship, Access, Best Interests of the Child, Child, Youth and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, ss. 74(3), 105(5)-(6).

Sub-Prime Mortgage Corporation v. Kaweesa, 2021 ONCA 215

Keywords: Contracts, Real Property, Mortgages, Civil Procedure, Settlements, Enforcement, Writs of Possession, Appeals, Security for Costs, Rules of Civil Procedure, Rule 61.06(1)(a), Rule 63.01(1), Rule 63.02(1), Courts of Justice Act, s. 7(2), s. 134(2), Heidari v. Naghshbandi, 2020 ONCA 757, Hakim Optical Laboratory Ltd. v. 1570710 Ontario Ltd., 2010 ONCA 627, Waxman v. Waxman (2003), 168 O.A.C. 217 (C.A.), Abuzour v. Heydary, 2015 ONCA 249, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311

Atlas (Brampton) Limited Partnership v. Canada Grace Park Ltd.a, 2021 ONCA 221

Keywords: Contracts, Debtor-Creditor, Security Agreements, Control Agreements, Share Pledges, Enforcement, Foreclosure, Notice of Intention to Enforce Security, Right of Redemption, Statutory Interpretation, Principle of Implied Exclusion, Personal Property Security Act, R.S.O. 1990, c. P.10, ss. 17.1 and 63(4), Securities Transfer Act, 2006, S.O. 2006, c. 8, s. 24, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, University Health Network v. Ontario (Minister of Finance) (2001), 208 D.L.R. (4^th) 459, Casse v. Credifinance Securities Ltd. (1999), 14 P.P.S.A.C. (2d) 352

Short Civil Decisions

Ritchie v. Castlepoint Greybrook Sterling Inc., 2021 ONCA 214

Keywords: Contracts, Real Property, Agreements of Purchase and Sale of Land, Exclusion of Liability Clauses, Allocation of Risk

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CIVIL DECISIONS

Madison Joe Holdings Inc. v. Mill Street & Co. Inc., 2021 ONCA 205

[MacPherson, Gillese and Nordheimer JJ.A.]

Counsel:

M Simaan, for the appellants

J Berall, for the respondent

Keywords: Contracts, Debtor-Creditor, Promissory Notes, Guarantees, Fair Protection Rule, Civil Procedure, Summary Judgment, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Kevin McGuinness, The Law of Guarantee, 3rd ed. (Toronto: Lexis Nexis Canada, 2013)

facts:

Madison Joe Holdings Inc. ("MJH") was the 100% owner of All Source Security Container Mfg. Corp. ("All Source"). In 2014, Mill Street & Co. Inc. ("Mill Street") purchased a 50% interest in All Source from MJH. Part of the payment was by way of promissory notes. Mill Street acquired the remaining 50% interest in All Source from MJH in 2016. At the time of the second 50% purchase, Mill Street still owed payments to MJH under the existing promissory notes it had issued in connection with the first 50% purchase. To restructure that debt, the existing promissory notes were extinguished and All Source executed two new promissory notes to MJH in their place. The new promissory notes were guaranteed by Mill Street, Noah Murad ("Noah") and Roy Murad ("Roy") (collectively, the "Guarantors"). In connection with the second 50% purchase, Noah, on behalf of All Source, entered into a Loan Agreement with TD Bank. All Source, MJH and TD Bank then entered into an Inter-Creditor Agreement.

After the promissory notes were executed in 2016, All Source paid the required monthly interest payments, but failed to pay the principal and outstanding interest owing under the promissory notes on their maturity dates. MJH commenced an action against All Source and the Guarantors. MJH then moved for summary judgment on the unpaid promissory notes. The motion judge found that the Inter-Creditor Agreement restricted All Source from repaying the principal but not the monthly interest under the promissory notes, which was payable before and after their maturity dates. She found that the Inter-Creditor Agreement did not shield the Guarantors from their joint and several obligations to pay the principal and monthly interest amounts under the promissory notes. Accordingly, the plaintiff was granted judgment against All Source and each of the Guarantors.

issues:

1. Did the motion judge err in her interpretation of the guarantees in ignoring the "in accordance with its terms" language, which prevented enforcement of the guarantees on the same terms as enforcement could be made on the promissory notes?

holding:

Appeal dismissed.

reasoning:

No. The motion judge was required to interpret several commercial and contractual documents as part of her analysis. Contractual interpretation involves issues of mixed fact and law, meaning deference is owed to the court of first instance and the "palpable and overriding" standard applies on appellate review.

The guarantees stated that they were to be resorted to only if the debtor defaulted in making payments under a promissory note in accordance with its terms. The appellants argued that non-payment did not equal default in certain circumstances, and that without default there could be no enforcement on the guarantees. The appellants further submitted that their proposed interpretation was commercially reasonable and consistent with the Guarantors' agreement to only be liable if the default was caused by events other than the financial situation of the debtor, which was inextricably linked to a formula under the Inter-Creditor Agreement.

The motion judge rejected the appellants' argument. She stated that the alternative interpretation urged by the appellants would render the security of the guarantees illusory because it would mean that if All Source was not in a financial position to repay the promissory notes because of its other financial obligations, then the Guarantors would not have to pay either, whereas a guarantee would ordinarily be called upon in precisely that circumstance.

The Court agreed with the motion judge, and that she therefore had not committed any palpable and overriding error. The motion judge's interpretation was consistent with legal scholarship on guarantees and the "Fair Protection Rule". Guarantees are read so as to give effect to the apparent intent of the parties, so as to afford fair protection to a creditor in accordance with that apparent intent. The Court concluded that all the elements of the guarantee in this case had been satisfied. All Source defaulted in making payments due under the promissory notes. As a result, All Source owed money to MJH, and the guarantee was triggered as a result.

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Goldentuler v. Simmons Dasilva LLP, 2021 ONCA 219

[Juriansz, Nordheimer and Jamal JJ.A.]

Counsel:

S. Dewart and A. Lei, for the appellants

E. Goldentuler, in person

Keywords: Torts, Professional Negligence, Lawyers, Wills and Estates, Civil Procedure, Striking Pleadings, Capacity, Rules of Civil Procedure, Rule 21.01(3)(b), Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34

facts:

The respondent's late brother, a lawyer in private practice, had commenced an action before he passed away. The respondent, also a lawyer, obtained an order to continue the action in the name of his late brother's Estate. The Estate obtained judgment. In his capacity as Estate trustee, the respondent retained the appellants to pursue an appeal which was successful, resulting in the damages award in favour of the Estate being increased. A dispute arose concerning the appellant's fees, regarding which the respondent commenced this solicitor's negligence action in his own name and in his personal capacity. He sought damages, alleging that the appellants fell below the standard of care in conducting the appeal.

The appellants brought a motion to dismiss the action on the grounds that the respondent did not have legal capacity to sue them, as the appellants had acted for the Estate, not the respondent. The motion judge dismissed the motion to dismiss the action, finding that the appellants were...