Ontario Court Of Appeal Summaries (June 12 – 16, 2017)

Good afternoon,

Following are the summaries for this week's civil decisions of the Court of Appeal for Ontario.

In Hodge v. Neinstein, the Court upheld the Divisional Court's certification of a class proceeding against Neinstein & Associates LLP, in which the plaintiffs claim that the firm's accounts contravened the Solicitors Act.

In Bruff-Murphy v. Gunawardena, the Court of Appeal reviewed the law relating to the admissibility of expert opinion evidence and ordered a new trial after determining that certain expert evidence should not have been admitted. Other topics covered included municipal law, construction contracts and arbitration agreements.

Have a great weekend.

Civil Decisions:

Allto Construction Services Ltd v. Toronto and Region Conservation Authority, 2017 ONCA 488

[Weiler, van Rensburg and Huscroft JJ.A.]

Counsel:

D. LaFramboise, for the appellant

L. Wang, for the respondent

Keywords: Contracts, Liquidated Claims, Construction Law, Evidence, Burden of Proof, Oral Testimony

Facts:

The appellant Allto Construction Service Ltd. ("Allto") sued the respondent Aplus General Contractor Inc. (Aplus) for $163,202.98, the amount alleged to be owing under a subcontract to install a sewage system during the construction of a pool for the Heart Lake Conservation Area for the Toronto and Region Conservation Authority (the "Owner"). The respondent denied owing the amount claimed, pleaded that during its work Allto damaged an on-site irrigation system for which Aplus incurred repair expenses of $33,611.85, and asserted that Allto had overbilled Aplus $5,135.85 for additional risers which were included within its original scope of work. Aplus asserted a set-off and counterclaim in the amount of $38,747. The trial judge dismissed both the claim and the counterclaim. He stated there was no evidence at trial of invoices for the work performed by Allto and thus Allto had failed to meet its burden to satisfy the court it was owed the amount claimed.

Issues:

Did the trial judge err in dismissing the claim?

Holding: Appeal allowed.

Reasoning:

Yes. The court found the trial judge had erred in principle when he concluded that the appellant had not proved it was owed the amount it claimed. The appellant's witness had identified the purchase order issued by Aplus and had testified the work had been performed. The respondent's witness did not contradict that evidence and confirmed the work had been performed without deficiencies. While Aplus denied the amount owing, it admitted the contract and Allto's performance of the work. A witness had provided oral evidence that the amount claimed had not been paid. The court held this was sufficient to establish Allto's outstanding claim. There was no requirement for any further proof through invoices.

The only material point of dispute was with respect to whether a sprinkler head in the irrigation system had been damaged, and the cost of its repair. The court held the respondent's claim for set-off was not made out on the trial record, because Aplus's documentation was suspect and the amount for the repair of a sprinkler head unreasonable. Moreover, the trial judge was entitled to interpret the admissions as he did - as admitting an entitlement to a back-charge but not a right to the amount the respondent claimed. The court held there was no basis for a set-off to the amount claimed by the appellant.

1220510 Ontario Inc. v. Radium-O Developments. Ltd., 2017 ONCA 490

[MacPherson, Blair and Roberts JJ.A.]

Counsel:

G. Gryguc, for the appellant

L. Mongillo and S. Chahal, for the respondent

Keywords: Contracts, Settlements, Enforceability, Interest Act, R.S.C. 1985, c I-15 s 8

Facts:

The respondent 1220510 Ontario Inc. lent $6,000,000 to the appellant Radium-O Developments Ltd. by way of a vendor take-back mortgage. The mortgage matured with the appellant not having paid the principal owing and was in default as of that date. The respondent started an application for the appointment of a receiver.

After some negotiations, the respondent made a settlement offer for a total amount of $6,162,950.45. This amount included principal, interest, three months' interest compensation, receivership and legal fees, other fees and taxes. The payment had to be made in full by July 8, 2016. The offer contained a condition that the payment would be rejected and returned if there were any reservations, conditions, qualifications, or protests attached.

The appellant paid the full amount and asked for a discharge. The respondent discharged the mortgage. Later, the appellant disputed the amount charged, specifically the legal fees and discharge costs, before delivering a costs assessment notice and commenced a counter-application seeking to be relieved from paying the three months' interest compensation and receivership costs.

The respondent moved to enforce the settlement and had its motion granted. The motion judge stated that the appellant could not keep the benefit of the discharge and protest after the fact how much was paid.

Issues:

(1) Did the motion judge err in enforcing the settlement?

(2) Did the motion judge err in approving the costs and fees relating to the respondent's steps in pursuit of the appointment of a receiver because they were in the nature of a penalty and therefore violated s 8 of the Interest Act?

Holding: Appeal dismissed.

Reasoning:

(1) No. The settlement was a contract with an offer and explicit acceptance. The appellant received the consideration it bargained for - a discharge of the mortgage.

(2) No. The steps taken to appoint a receiver were entirely reasonable in light of the appellant's default. Further, the three months' interest compensation did not violate s 8 of the Interest Act, (see Mastercraft Properties Ltd. v. EL EF Investments Inc. (1993), 14 OR (3d) 519 (CA) and Irwin Mintz, In Trust v. Mademont Yonge Inc. and Paul Montgomery, 2010 ONSC 116).

232169 Ontario Inc. (Farouz Sheesha Café) v. Toronto (City), 2017 ONCA 484

[Weiler, van Rensburg and Huscroft JJ.A.]

Counsel:

R.P. Zigler, for the appellants

K. Franz and L. Mendelson, for the respondents

Keywords: Municipal Law. Bylaws, Jurisdiction, Judicial Review, City of Toronto Act, 2006, SO 2006 c 11, Occupational Health and Safety Act, RSO 1990, c O1

Facts:

The appellants operate hookah lounges in Toronto. Hookah lounges offer beverages and food for sale, but are known primarily as places to socialize or relax, and smoke hookahs, a form of water pipe. In 2015, the City of Toronto passed By-Law 1331-2015, which prohibits the use of hookah devices in connection with premises, vehicles, or things required to be licensed by the City for various purposes. The appellants brought an application challenging the validity of the bylaw. The application judge held that the City had the authority to pass the bylaw and that the by-law was valid.

Issues:

(1) Did the application judge err in determining that the purpose of the by-law was the protection of health?

(2) Does the by-law infringe on the appellants' property and civil rights to an extent not permitted by the City of Toronto Act or the common law?

(3) Did the application judge err in concluding that the by-law does not conflict with or frustrate the purpose of the Occupational Health and Safety Act?

Holding: Appeal dismissed.

Reasoning:

(1) No. The court rejected the appellants' contention that the primary effect of the law will be the closing of hookah lounges, which overwhelms the City's health and safety motive when characterizing the purpose of the by-law. The court found the appellants are licensed by the City to sell food and may continue to do so. They also can continue to sell shisha. What they cannot do is to permit the smoking of hookah pipes on their premises. Although many hookah lounges will suffer economic harm as a result of the by-law, this effect is incidental. The court held there was ample support in the record of the application judge's conclusion that the purpose of the by-law was the protection of public health and safety, which is specifically authorized by s 8(2) of the City of Toronto Act.

(2) No. The court rejected the appellants' description of the legislation as "targeting and destroying their business property without compensation". The court found the City of Toronto Act establishes broad by-law making authority which is not to be given the narrow construction advocated by the appellants. The by-law regulates business establishments licensed by the city and falls within the city's by-law making authority.

(3) No. The court found there was no merit to the appellants' submission that the by-law conflicts with or frustrates the purpose of the Occupational Health and Safety Act. The by-law was enacted to protect the health and safety of patrons as well as employees of businesses.

Finally, the court held it is not the court's role to second-guess policy decisions made by elected municipal officials. The City of Toronto Act immunizes by-laws against judicial review for reasonableness and the application judge was limited to determining the legal validity of the city's by-law. He made no errors in upholding the bylaw.

6524443 Canada Inc. v. Toronto (City), 2017 ONCA 486 [LaForme, van Rensburg and Huscroft JJ.A.]

Counsel:

R.G. Slaught and S. Rollwagen, for the appellant

C.B. Kuehl and C.T. Shorey, for the respondent

Keywords: Contracts, Real Property, Leases, Arbitration Agreements, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

Facts: 6524443 Canada Inc. ("Brookfield") and the City of Toronto ("Toronto") are parties to a 99-year ground lease. The lease provided for the annual rent for the first period of 40 years. The rent for the second period was to be agreed between the parties, failing which either party could submit the issue to arbitration. Toronto provided notice of arbitration to Brookfield in 2011. The parties entered into an Arbitration Agreement in 2013. The arbitration Award was rendered in...