Ontario Court of Appeal Summaries (December 11 – December 15, 2017)

Below are this week's summaries of the civil decisions of the Court of Appeal.

There were two decisions of note this week. The first was Willowbrook Nurseries Inc. v. Royal Bank of Canada. In this decision the Court of Appeal ruled on the extent of the duty of good faith in contracts established by the Supreme Court in Bhasin v. Hrynewas applied to the commercial lending context. Due to the seasonal nature of the debtor's business, the lender would allow the debtor to exceed its line of credit each winter. However, in 2007, the debtor failed to pay back the excess debt and the lender refused to allow the debtor to advance even further funds the following winter. The Court of Appeal ruled that in these circumstances, the lender was not required to lend more money than it wanted to or had previously agreed to lend.

The second was 2105582 Ontario Ltd. (Performance Plus Golf Academy) v. 375445 Ontario Limited (Hydeaway Golf Club). This decision involved a review of when a landlord is entitled to distrain (for arrears of rent but not after terminating a lease), and what a landlard may distrain (chattels, but not trade fixtures, unless those trade fixtures are severed from the land before the lease is terminated).

Other topics covered this week included testamentary capacity, negligent misrepresentation, WSIB collateral benefits in MVA context, a boundary dispute and exemption from seizure of property under the Indian Act in a repair and storage lien context.

Happy Chanukah to all who are celebrating.

Civil Decisions

WesternTroy Capital Resources Inc. v. Genivar Inc., 2017 ONCA 971

[Sharpe, Epstein and van Rensburg JJ.A.]

Counsel

J Erskine and K. Surko, for the appellant H B Borlack and S. Barbier, for the respondent, Genivar Inc.

Keywords: Torts, Negligent Misrepresentation, Damages

Facts:

The appellant retained the respondent, an engineering consulting firm, to conduct a feasibility study to evaluate the amount of mineral resources and economic viability of developing a property at MacLeod Lake in Northern Quebec.

The trial judge found that but for the respondent's negligent misrepresentation to the appellant, the appellant would have terminated its project sooner and was thereby entitled to compensation for unnecessary expenses incurred.

The trial judge found that the resource estimate provided by the respondent should have been finalized at least one year and maybe as much as two years earlier than was actually done. The trial judge awarded $1.25 million to the appellant.

Issues:

(1) Did the trial judge err in his damages assessment?

Holding:

Appeal dismissed.

Reasoning:

(1) No. When the reasons of the trial judge are read as a whole, the trial judge provided an adequate explanation, firmly grounded in evidence, for why he rejected the approach advocated by the appellant and accepted the respondent's position that not all the expenses claimed by the appellant would have been avoided if a timely resources estimate had been provided. His assessment is therefore not vulnerable to review by the Court of Appeal on the applicable standard of review.

The trial judge noted that there were several matters bearing upon the damages assessment that were "speculative" when the evidence was considered as a whole. The first speculation was how much earlier the work could have been done. The second speculation was what expenses the appellant would have incurred regardless of the resource estimate having been completed in a timely manner. The third area of uncertainty was how the appellant would have acted upon receipt of a timely feasibility study.

The court accepted that based on the evidence there was a significant element of judgment required to assess damages in this case. The court rejected the appellant's submission that the calculation of damages could only have been accomplished on an invoice by invoice basis. The appellant failed to persuade the court that the trial judge ignored relevant evidence or that he made any palpable or overriding error of law that would justify intervention with his decision.

Wilken v. Sun Life Assurance Company, 2017 ONCA 975

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

Counsel:

Douglas M. Bryce, for the appellant

Stephen H. Shantz, for the respondent

Keywords: Torts, MVA, SABs, Collateral Benefits, WSIB

Facts:

The appellant is claiming payment of long-term disability ("LTD") benefits from the respondent. The appellant was injured in a motor vehicle accident while working and started collecting Workplace Safety and Insurance Board ("WSIB") benefits before retroactively re-electing to proceed with a tort action against the other driver involved in the accident. The appellant seeks to distinguish the court's decision in Richer v. Manulife Financial ("Richer").

Issues: Is the appellant's claim to payment of LTD benefits from the respondent distinguishable from Richer?

Holding: Appeal dismissed.

Reasoning:

No. The LTD policy in this case is different than that in Richer in that it provides that the insurer can subtract from the LTD payment any payment or benefit for which the insured is "eligible" under the Workers' Compensation Act or similar law. However, the motion judge on the respondent's summary judgment motion provided detailed reasons for finding "there are no meaningful or relevant distinctions between the Richer case and the situation before me". The Court of Appeal adopted the motion judge's reasons and conclusions.

Having concluded the insurer was entitled to an "offset", the motion judge dismissed the appellant's claim for benefits during the period November 26, 2012 to August 23, 2014, because the WSIB benefits for which the appellant was eligible exceeded the amount of the benefit that would have been payable under the LTD policy. The motion judge also dismissed the appellant's claim for the period August 23, 2014 to June 1, 2015. On the record, the motion judge was entitled to infer that the WSIB would have continued to pay the appellant benefits at the "for loss of earnings" level but for his noncompliance with the WT plan. The deduction of "full loss of earnings" benefits results in an LTD benefit of "nil" for this period as well.

Willowbrook Nurseries Inc. v. Royal Bank of Canada, 2017 ONCA 974

[Pardu, Trotter and Paciocco JJ.A.]

Counsel:

Paul J. Pape, for the appellant

Milton A. Davis and Rob Macdonald, for the respondent

Keywords: Contract Law, Breach of Contract, Banking Law, Commercial Lending, Duty of Good Faith, Thermo King Corp. v. Provincial Bank of Canada (1981), 34 O.R. (2d) 369 (C.A.), Bhasin v. Hrynew, 2014 SCC 71

Facts:

Willowbrook Nurseries Inc. ("Willowbrook") needed to borrow more money from its banker, Royal Bank of Canada ("RBC"). RBC began lending to Willowbrook through a line of credit, demand loan, various mortgages, and a corporate credit card in January 2005. To satisfy Willowbrook's seasonal financing needs, RBC would agree to a temporary accommodation request ("TAR") that allowed Willowbrook to temporarily exceed its $2.75 million line of credit each winter. However, through the spring and summer of 2008, Willowbrook did not fully repay the $1.25 million worth of TAR that RBC extended in the winter of 2007, despite three extensions of time to do so ("2007 TAR"). Nonetheless, Willowbrook submitted an additional $1.2 million TAR following the completion of its fiscal 2008 financial statements on October 14, 2008 ("2008 TAR") along with a debt restructuring and separate $500,000 term loan request. Approval of these requests would have meant that RBC would have been lending more than ever before to Willowbrook. Willowbrook was approaching the limits of its agreed upon credit, had no immediate prospect of significant revenue, and faced the expenses of planting for a new season.

On November 26, 2008, a RBC risk manager refused Willowbrook's 2008 TAR, restructuring request, and term loan request. Instead, the risk manager transferred Willowbrook's account into Special Loans and Advisory Services ("Special Loans") on December 5, 2008. RBC outlined its concerns and requirements by letter dated December 8, 2008. It expressed concern about Willowbrook's working capital, liquidity...