Ontario Court Of Appeal Summaries (October 22 – 26, 2018)

Good evening.

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

In Beaver v Hill, the Court of Appeal reiterated that although under the Family Law Rules, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedures, there is no provision in the Family Law Rules that provides that costs awards should approach "full recovery costs". In awarding costs, family law judges must apply the principles of proportionality and reasonableness set out in Rule 24(12) of the Family Law Rules.

Other topics covered this week included the acceptance of a Rule 49 offer before it could be withdrawn in writing, whether parents paying off the mortgage of their child and spouse was a gift or loan, adverse possession and prescriptive easements, contractual interpretation, lack of jurisdiction to hear judicial review applications and appeals in the OLRB context, setting aside default judgments and dismissals for delay, and vexatious litigants.

Have a great weekend.

CIVIL DECISIONS

Beaver v. Hill, 2018 ONCA 840

[Lauwers, van Rensburg and Nordheimer JJ.A.]

Counsel:

C.G. Paliare, B.R.G. Smith, and A.K. Lokan, for the appellant

8. Niman, M. McCarthy, S. Strathopolous, J. Radbord, and S. Byers, for the respondent

13. Fancy and E.L. Garfin, for the Attorney General of Ontario, intervenor

    Keywords: Family Law, Civil Procedure, Costs, Proportionality, Reasonableness, Offers to Settle, Biant v. Sagoo, [2001] O.J. No. 3693 (SCJ), Berta v. Berta, 2015 ONCA 918, Frick v. Frick, 2016 ONCA 799, Family Law Rules, O. Reg. 114/99, Rule 18(14) and 24, Rules of Civil Procedure, Rule 57

    Facts:

    This matter began as a motion, by the appellant, to stay the family law proceedings until the constitutional issue was heard and determined. In response, the respondent brought a motion seeking 14 different orders or declarations. It was not clear why the respondent launched such a broad and sweeping response, but, having done so, she bore a significant share of the responsibility for the unwarranted eight days of court time it took to address the issues, even with the serious constitutional issue that was raised.

    The motion judge's task was, in essence, to determine whether the appellant's answer adequately pleaded the constitutional issue and, if so, whether that issue should have proceeded before, after, or concurrently with the family law claims. Unfortunately, the motions traversed into other issues, the answers to which were either obvious or unnecessary to the narrow issues that were before the motion judge.

    In terms of her costs award, the motion judge correctly concluded that a risk premium could not be awarded. She also correctly concluded that this was not a case for a full recovery award of costs. Yet, that is not how the costs in this case were determined. Rather, the resulting award approached a full recovery amount. In defence of that result, the respondent relied on what is contended to be the principle from Biant v. Sagoo, [2001] O.J. No. 3693 (SCJ), that costs in family proceedings should "generally approach full recovery".

    Issues:

    (1) Did the motion judge err in adopting a "close to full recovery" approach in fixing costs of the motions?

    Holding:

    Appeal allowed.

    Reasoning:

    (1) Yes. The Court began with the basic premise that costs awards are discretionary and entitled to deference. However, the motion judge erred in her costs decision as a result of her failure to apply two important principles. One is proportionality and the other is the "reasonableness" evaluation of the ultimate award. That error led to a costs award that was excessive.

    First, while the judge in Biant does refer to costs generally approaching full recovery, it is based on two decisions of other Superior Court judges, a close reading of which do not support the thrust of costs generally approaching full recovery. What those other cases do establish is that under the Family Law Rules, judges are not constrained to the normal scales of costs found in the Rules of Civil Procedure, since no scales of costs are mentioned in the Family Law Rules. Second, the respondent's assertion that Berta v. Berta, 2015 ONCA 918 supports the "full recovery" approach to costs in family matters also reflected a failure to read the decision closely. What the court endorsed in that case was the principle that "a successful party in a family law case is presumptively entitled to costs" (at para. 94) subject, though, to the factors set out in Rule 24.

    There is no provision in the Family Law Rules that provides for a general approach of "close to full recovery" costs. Rather, r. 24(12) sets out the appropriate considerations in fixing the quantum of costs. As the wording of the rule makes clear, proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.

    The motion judge did not evaluate the hourly rates charged with the proportionality and reasonableness principles in mind. The motion judge also gave undue weight to the respondent's offer to settle, along with the appellant's failure to make an offer to settle. The Court of Appeal found that the case was not a situation where the issues could have been settled in any practical way. Either the appellant was going to be able to proceed with his constitutional claim or he was not. The motion judge determined that it was appropriate to award the respondent 85% of her full recovery costs but did not explain where she drew that percentage from or why it was appropriate to apply it. Also concerning was the fact that she appeared to have increased the amount of costs as a consequence of the appellant's ability to pay. There is no principle relating to costs that requires wealthier individuals to pay higher costs for the same step in a proceeding.

    What was most important, however, is that the motion judge did not consider the principle of proportionality. She never considered whether a costs award of over $300,000 was proportionate to the issues raised by the motions that were before her. In the end, the Court of Appeal adopted the appellant's suggested upper limit for a costs award at $200,000 and fixed the costs of the original motions at $200,000.

    Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839

    [Pepall, Lauwers and Paciocco JJ.A.]

    Counsel:

10. Dent, for the appellants

13. Johnston, for the respondent

    Keywords: Civil Procedure, Offers to Settle, Enforcement, Summary Judgment, Rules of Civil Procedure, Rules 49.02 & 49.04(1), Hryniak v Mauldin, 2014 SCC 7, R. v Palmer, [1980] 1 S.C.R. 759, Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., (2007) 87 O.R. (3d) 464 (Div Ct), Dawson v. Rexcraft Storage & Warehouse Inc., (1998), 111 O.A.C. 201 (CA), Chao v Chao, 2017 ONCA 701, Sengmueller v Sengmueller (1994), 17 O.R. (3d) 208, R. v. Truscott, 2007 ONCA 575

    Facts:

    The respondent sued the appellants for damages for breach of contract, oppression, and various other causes of action. In 2015, the appellants served the respondent with a written Rule 49 offer to settle the action (the "2015 Offer") and the offer provided it would remain open until the trial of the action. On September 20, 2016, counsel for both parties attended a pretrial of the action. What happened next was disputed. The appellants took the position that their offer had been rescinded orally at pretrial, and that on September 19, 2016 they served by process server a second written Rule 49 offer to settle the action for much less (the "2016 Offer"). This offer expressly revoked the 2015 Offer. The respondent took the position that the 2015 Offer had been accepted before receipt of the 2016 Offer. The respondent brought a motion for judgment in accordance with the terms of the accepted offer, which the motion judge granted. The motion judge found that the parties agreed that the 2015 Offer was made in accordance with Rule 49.02(1) and accordingly found that it had to be withdrawn in writing per Rule 49.04(1). The motion judge then found that the 2016 Offer was served on the respondent's counsel after the respondent had accepted the 2015 Offer and granted judgment in favour of the respondent.

    Issues:

    (1) Did the motion judge err in giving judgment in terms of the 2015 Offer the appellants had made?

    (2) Should fresh evidence be admitted?

    Holding:

    Appeal dismissed.

    Reasoning:

    (1) No. The motion judge did not err in giving judgment in accordance with the terms of the 2015 Offer. Firstly, the motion judge correctly concluded that any revocation of the 2015 Offer had to comply with Rule 49.04(1). Secondly, the motion judge did not err in applying the two-step analysis from Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc., (2007) 87 O.R. (3d) 464 (Div Ct). Although Capital Gains was decided before the Supreme Court of Canada's decision in Hryniak v. Mauldin, 2014 SCC 7, which altered the framework for granting summary judgment, the two-step approach applying to the enforcement of a Rule 49 offer remains unaltered. The motion judge did not expressly advert to the two-step test, but she nonetheless applied it.

    The first step of the test was satisfied because it was uncontested that the Rule 49 offer had to be revoked in writing and there was no evidence that the 2015 Offer had been revoked at the pretrial. The motion judge found that the appellants had known for over a year that the respondent was taking the position that their counsel was not served with the second offer until 5:23pm on September 20, 2016, without providing an affidavit of service from the process server. This finding, in particular, was fatal to the appellants' case. The appellants had provided affidavits of service for other documents served on the respondents by that process server, and accordingly the absence of an affidavit of service weighed heavily in the respondent's favour, given the case turned on the timing of service of the second offer...