Ontario Court Of Appeal Summaries (March 19 – March 23)

Good evening.

It has been a busy week at the Court of Appeal and a notable one at our office. I would first like to congratulate Varoujan Arman and Megan Hodges of our office, who successfully responded to an appeal on behalf of our client in V. Melfi Holdings Ltd. v. Dourada Investment Inc. In that case, Dourada purchased an industrial warehouse from Melfi, who was permitted to remain in a portion of the premises as Dourada's tenant for a limited period of time in order to remove a substantial amount of scrap metal, equipment, and debris that occupied the premises. Melfi eventually failed to pay rent and stopped attending the premises altogether, however it refused to dispose of the scrap material and debris that it had left behind despite repeated demands by Dourada. After a long period of negotiation, the locks were changed and Dourada sold what it could in order to mitigate its damages and recover arrears of rent.

Dourada was successful on its summary judgment motion in obtaining judgment for arrears of rent and damages for Melfi's breach of its covenant pursuant to the agreement of purchase and sale to leave the premises empty and in "broom-swept condition". Melfi appealed from the summary judgment decision, alleging that, among other things, the motion judge had erred in finding that Melfi's failure to remove its goods constituted abandonment. The Court of Appeal found that the motion judge made no errors and that his factual findings were available to him on the evidence. Accordingly, Melfi's appeal was dismissed.

In Reeves v. Brand, 2018 ONCA 263, our new family lawyer, Ryan Kniznik, represented a mother in a contested relocation and custody application. This was a decision involving important principles of general application to determinations of child relocation or mobility, an area, which Laskin J.A. noted was "among the most difficult cases in family law". Ryan notes that Laskin J.A., on behalf of the panel, discussed the concepts of maximum contact, disruption to the child, and the parent's reasons for moving, within the context of a parent's request to move a child some distance away from the other parent. The decision provides a nuanced analysis with respect to maximum contact, in that there has to be a reasonable application of this principle. Further, the decision, under the disruption factor, noted that children are adaptable to change, and the disruption to a younger child is likely less significant than an older child. The decision is important to review and consider when grappling with a mobility or relocation case.

In Brown v. Woodstock (Police Services Board), the Court applied its recent decision in Winmill v. Woodstock (Police Services Board), confirming that claims of battery against the police are discoverable after mirror image criminal charges against a plaintiff are dismissed or withdrawn. Until then, suing is not an "appropriate means" of seeking a remedy within the meaning of ss. 5(1)(a)(iv) of the Limitations Act, 2002.

Finally, in 2363523 Ontario Inc. v. Nowack, Justice Brown lamented an apparent increase in motions seeking panel reviews of decisions made by single judges of the Court of Appeal. In the past the Court has lamented the difficulty in sometimes determining appeal routes and whether an order is final or interlocutory. Hopefully, MAG will review the Courts of Justice Act and the Rules as they relate to appeals and introduce some much-needed fine-tuning.

Other topics covered this week included seeking intervener status in an environmental contamination case, automobile insurance, MVA jury trials, motions for summary judgment in the class action context, breach of confidence, family law, bankruptcy and insolvency and solicitors' liens and charging orders.

I wish everyone a happy and safe start to the Spring.

John Polyzogopoulos

Blaney McMurtry LLP

jpolyzogopoulos@blaney.com

Tel: 416 593 2953

V. Melfi Holding Ltd. v. Dourada Investment Inc., 2018 ONCA 290

Sharpe, Juriansz and Miller JJ.A.

D. Saverino, for the appellant

Varoujan Arman and Megan Hodges, for the respondent

Keywords: Real Property, Commercial Leases, Default in Payment of Rent, Abandonment of Property, Improvident Sale, Damages, Mitigation

Facts:

The appellant, V. Melfi Holding Ltd. ("Melfi"), was the owner of a large industrial warehouse which it sold to the respondent, Dourada Investment Inc. ("Dourada"), in 2011. Melfi was permitted to remain on the property as a tenant for a limited three-month period following the closing of the sale in order to remove its contents. Melfi then remained for a further period on a month-to-month basis as an over-holding tenant, and eventually defaulted on the payment of rent and utilities.

As part of the Agreement of Purchase and Sale for the sale of the property, Melfi was required to leave the premises in a "broom-swept" condition. Pursuant to the terms of the sale agreement, Dourada was also entitled to hold back $100,000 from the purchase price, to be released to Melfi upon all of Melfi's sale covenants being fulfilled.

Following the termination of the lease, Melfi refused to remove its large amount of equipment and debris in the leased premises. On April 14, 2014, Dourada locked Melfi out of the premises for its failure to pay rent and utilities. Eventually, after multiple requests by Dourada for Melfi to remove its contents, for which Dourada provided numerous opportunities, Dourada sold what it could in order to mitigate its damages for arrears of rent and lost prospective rent. Before doing so, Dourada obtained two appraisals regarding the value of the property.

Dourada brought a summary judgment motion against Melfi seeking arrears of rent, utilities and other damages. The motion was granted, with the motion judge finding that Melfi had in effect abandoned its goods. Melfi was held liable for rent/damages calculated at 25.5 months in the amount of $286,875 plus HST and utilities, less credits and the amounts Dourada recovered through its sale efforts. The motion judge further held that, contrary to Melfi's allegation, there was no improvident sale, as Dourada had acted in a commercially reasonable manner in obtaining two appraisals and selling the abandoned contents to mitigate its damages after having provided ample advance warning to Melfi that this would be done.

Melfi appealed.

Issues:

1) Did the motion judge make a palpable and overriding error in finding that Melfi's actions in failing to remove its contents from the premises constituted abandonment, entitling Dourada to sell the items to recoup arrears of rent?

2) Did the motion judge err in his calculation of the rent and damages payable by Melfi?

3) Did the motion judge err in ordering that the $100,000 holdback funds be released to Dourada?

4) Should Dourada have followed the procedure set out in the Commercial Tenancies Act regarding distress for non-payment of rent, even though Melfi conceded that this was not a situation of distress?

Holding:

Appeal dismissed.

Reasoning:

1) No. Dourada repeatedly requested that Melfi remove its goods from the warehouse, and gave Melfi multiple opportunities to do so. Melfi failed to avail itself of those opportunities, insisting that it would only remove the contents on its own terms. There was sufficient evidence on the motion for the motion judge to make the finding that Melfi had abandoned its goods.

2) No. Melfi was locked out of the premises on April 14, 2014, therefore rent was payable up to that date. Melfi's failure to remove the contents from the premises made it impossible for Dourada to use or rent the premises. Therefore, the motion judge properly calculated damages for breach of the contractual obligation on the basis of rent that would otherwise be payable.

3) No. Melfi breached the terms of the Agreement of Purchase and Sale requiring it to remove its goods. As a result, the motion judge was entitled to find that that breach entitled Dourada to the $100,000 holdback funds as partial payment of the damages award.

4) No. Dourada sold Melfi's goods after giving Melfi the opportunity to remove them and behaved in a commercially reasonable manner when it obtained appraisals and sold a portion of the items at a public auction. The motion judge found that there was no merit to the allegation of an improvident sale.

Reeves v. Brand, 2018 ONCA 263

[Laskin, Huscroft and Paciocco JJ.A.]

Counsel:

Ryan Kniznik, for the appellant

Stephen Codas and Sarah Strathopolous, for the respondent

Keywords: Family Law, Child Custody, Relocation, Best Interests of the Child, Costs

Facts:

Ms. Brand and Ms. Reeves are the parents of a six year old boy. After Ms. Brand and Ms. Reeves separated, they litigated over custody of their son and where he should live. Ms. Brand sought joint custody and asked that Ray remain in Toronto. Ms. Reeves sought sole custody and permission to relocate with Ray to New Ross, Nova Scotia, where her parents live and where Ray has spent considerable time.

After a seven-day trial, the trial judge granted the relief Ms. Reeves asked for. He then set out a detailed access schedule, intended to give Ms. Brand "reasonable, frequent contact" with Ray and awarded her costs of the action.

Ms. Brand brought a motion to stay the trial judge's order pending appeal. Justice Miller dismissed the motion. Ms. Brand appeals all aspects of the trial judge's judgment.

Issues:

(1) Did the trial judge err by failing to award joint custody because he made legal and factual errors concerning the level and quality of communication between the parties?

(2) Did the trial judge err by permitting Ray and Ms. Reeves to relocate to New Ross, Nova Scotia?

(3) Was the trial judge's access schedule unreasonable because it turns Ms. Brand into a "holiday parent" and the four-hour limitation undermines frequent contact?

(4) Did the trial judge err in principle in his costs award?

Holding: Appeal allowed, in part.

Reasoning:

(1) No. Trial judges' decisions on custody...