Ontario Court Of Appeal Summaries (February 26 – March 2)

Good evening.

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

Topics covered this week included rectification of contracts (life insurance policy), third party assessments of lawyers' accounts, wrongful dismissal (calculation of damages, including bonuses), aboriginal law (authority to amend lease of band lands), wills and estates (payment of interest on late distributions), condominium law (oppression and restrictions on use of common elements) and family law (constructive trust, Crown wardship).

On Monday, my partner, Lea Nebel and I co-chaired our OBA CLE entitled "Top Appeals of 2017 at the Court of Appeal". We had about 70 participants and lively discussions about three important and interesting decisions. Lea and I would like to thank Justice Epstein, all of the panelists and most of all, everyone who attended. We hope everyone enjoyed the evening and look forward to seeing you all again next year. In order to assist us with making next year's program even better, we would kindly ask everyone to please complete the evaluations that were emailed to attendees.

Wishing everyone a nice weekend.

John Polyzogopoulos

Blaney McMurtry LLP

jpolyzogopoulos@blaney.com

Tel: 416 593 2953

http://www.blaney.com/lawyers/john-polyzogopoulos

Civil Decisions:

Cardillo v. Aird & Berlis LLP, 2018 ONCA 186

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

Counsel:

F S Turton, for the appellants

P Miehls and D Muise, for the respondent

Keywords: Contracts, Solicitor and Client, Legal Fees, Assessments, Releases, Solicitors Act, R.S.O. 1990 c. S.15, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, Plazavest Financial Corporation v. National Bank of Canada (2000), 47 O.R. (3d) 641 (C.A.)

Facts:

Sun Life Assurance Company of Canada ("Sun Life") entered into a loan agreement with Medcap Real Estate Holdings Inc. ("Medcap"), one of the appellants. The loan was secured by: (i) a mortgage over real property, (ii) a general security agreement; and (iii) a personal guarantee signed by John Cardillo, the other appellant. Ten years later, Sun Life retained the respondent law firm to take the necessary steps to enforce the security and to collect the amounts due. Ultimately, Sun Life and the appellants entered into a Forbearance Agreement in connection with Medcap's debt, which was then in excess of $1.5 million. The appellants, among other things, agreed that Medcap would reimburse Sun Life for all reasonable expenses, including legal fees, and that they were estopped from disputing the amount owing. Further, the appellants released Sun Life and its "attorneys, advisors and other representatives" from claims in connection with the Forbearance Agreement or the original loan agreement.

A Forbearance Extension Agreement which extended the time for payment contained an identical release. Contemporaneous with the payment of the amounts due, the parties entered into an Assignment Agreement, assigning the debt, loan agreement and underlying security to 2503866 Ontario Ltd. This agreement set out a summary of Medcap's indebtedness to Sun Life, which included specific amounts for legal fees and disbursements The Assignment Agreement also contained a comprehensive release in essentially the same terms as the first two releases. Sun Life paid each of the four accounts that were rendered by the respondent.

Subsequently, the appellants obtained a registrar's order for the delivery and assessment of the respondent's accounts. Eventually, the respondent moved for an order declaring that the three releases precluded the assessment of the various legal accounts rendered to Sun Life. The motion judge granted the motion and declared "that the Releases forever preclude the assessment of, or any other mater pertaining to, the [four accounts of Aird & Berlis LLP]". This order is the subject of this appeal.

Issues:

(1) Did the motions judge err in ruling that the releases precluded the assessment of the respondent's accounts?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The motion judge noted that in Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, 96 O.R. (3d) 171, the Court of Appeal held that parties cannot contract out of the Solicitors Act, R.S.O. 1990 c. S.15 for public policy reasons. However, he held that the rationale in Jean Estate did not apply to the case at bar where the parties were sophisticated commercial parties acting with the benefit of legal advice. He concluded that the parties were not seeking to contract out of the Solicitors Act, but that they had agreed that the appellants would be precluded from challenging its payment to Sun Life, which included the legal fees. The Court of Appeal agreed with the motion judge's conclusion, but not with his reasons.

Because the accounts have already been paid by Sun Life and the appellant Medcap, who became liable for their payment and is not the client but a third party to the solicitor-client relationship, an order for assessment had to be obtained under s. 9(1) of the Solicitors Act, which required the appellant to demonstrate special circumstances justifying the assessment following payment pursuant to s. 11. Section 11 refers to "special circumstances", which "in the opinion of the court appear, to require the assessment." And, it contemplates that in doing so, the court has a broad discretion to be exercised on a case-by-case basis and with an eye to all of the relevant circumstances. Special circumstances will tend to either undermine the presumption that the account was accepted as proper or show that the account was excessive or unwarranted. This is the analytical approach the motion judge should have followed in this case. However, the Court of Appeal found that there were not special circumstances that would warrant an order directing the assessment of the accounts.

First, the appellants were at all material times represented by legal counsel. They were indebted to Sun Life, and they negotiated and concluded a commercial agreement to satisfy their debt. The appellants confirmed their obligation to pay the total indebtedness to Sun Life, including the respondent's fees and disbursements, which were disclosed at Schedule A to the Assignment Agreement, to which they were parties. Second, as per Plazavest Financial Corporation v. National Bank of Canada (2000), 47 O.R. (3d) 641 (C.A.), the terms of an agreement can figure prominently in the determination of whether special circumstances exist. Here, the appellants expressly acknowledged in the Assignment Agreement that they had had an adequate opportunity to read and consider it and to obtain independent legal advice before executing it. They knew that Sun Life was entitled to its "reasonable" expenses, including legal fees. They were fully informed of the legal fees and disbursements that were included in the amount paid to Sun Life. And, they signed three documents containing a comprehensive release that by its terms extended to Sun Life's legal counsel and their accounts. Therefore the appeal was dismissed.

Peters v. Swayze, 2018 ONCA 189

[Sharpe, Rouleau and Benotto JJ.A.]

Counsel:

L DeLong and E Abraham, for the appellant

G Smits, for the respondent

Keywords: Family Law, Cohabitation, Unjust Enrichment, Constructive Trust

Facts:

Peters and Swayze cohabited for 15 years from 2000 to 2015. When they began living together, Swayze took title to a home that he had owned with his former spouse. There was no equity in the home. Peters and Swayze lived for two years in Peters' apartment and then, in 2002, they moved to the home that Swayze had acquired from his former spouse.

By May 2005, the parties had acquired significant debt. They consolidated their combined debt with a loan with CitiFinancial for $57,290. Swayze was the borrower and Peters co-signed the loan. Swayze testified that the carrying costs of the loan became too much and he refinanced the debt with a mortgage on his home in the amount of $187,568. CitiFinancial was paid $57,000 and, after other legal expenses, Swayze was paid $19,000 from the proceeds of that mortgage. Peters was not liable for the mortgage.

At no time did the parties have joint bank accounts or joint savings. Peters was on Swayze's benefits from work and she and her daughter were on Swayze's car insurance as secondary drivers.

Peters submits that the trial judge erred in dismissing her claim to a constructive trust interest in the home. She claims that she is entitled to half the equity in the home on the basis of her contributions during cohabitation.

Issue: Did the trial judge err in dismissing the appellant's claim to a constructive trust interest in the home?

Holding: Appeal dismissed.

Reasoning:

No. The trial judge made no error in fact or law. The Supreme Court of Canada set out the law of unjust enrichment arising from a common law relationship in Kerr v. Baranow. Pursaunt to that decision, the court first determines if there has been an unjust enrichment by determining whether the defendant has been enriched and the claimant has suffered a corresponding deprivation. If so, then the court then determines if there a reason in law or the justice of the case for the defendant to keep the benefits conferred by the claimant.

If unjust enrichment has been established, the concept of joint family venture comes into play when considering remedy. The Kerr v. Baranow factors to be considered in determining whether a joint family venture exists are:

Mutual effort - did the parties pool their efforts and work towards a common goal? Economic integration - how extensively were the parties' finances integrated? Actual intent - did the parties intend to have their lives economically intertwined? Priority of the family - to what extent did the parties give priority to the family in their decision making? The determination of whether there has been unjust enrichment and a joint family venture are questions of fact, which Peters bears the onus of establishing.

The trial judge found that unjust...