Court of Appeal Summaries (July 1 – July 5)

In the leading decision of the week, Binscarth Holdings LP v. Grant Anthony, the Court made new law in Ontario. It held that limited partners in a limited partnership are entitled to seek leave to commence a derivative action on behalf of the limited partnership against third parties where the general partner refuses to bring that action, in this case because of a conflict of interest. Even though there is no provision in the Limited Partnerships Act to bring a derivative action, the Court recognized that there is a gap in the legislation and applied equity and the common law to fill that gap. The Court applied the tests for leave to commence derivative actions under the OBCA and CBCA by analogy, with necessary modifications. However, where limited partners already have a remedy, such the right to sue the general partner directly for breach of the limited partnership agreement and Limited Partnerships Act, leave to bring a derivative action on behalf of the partnership against the general partner will not be granted.

In Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc. the plaintiff obtained default judgment on a counterclaim that had added a party as defendant to the counterclaim without being issued by the court. The irregularity was discovered and the plaintiff successfully moved for a nunc pro tunc order deeming that the counterclaim had been issued when the defence and counterclaim had been filed with the court. The motion to cure the irregularity was brought before the limitation period expired, but the order itself was not made until after the limitation period expired. Applying the Supreme Court decision in Canadian Imperial Bank of Commerce v. Green that deals with nunc pro tunc orders, the Court dismissed the appeal and upheld the nunc pro tunc order.

1000029174 Ontario Inc. v. Miculinic Investment Corp. involved an appeal arising from a dispute about the interpretation of the amount of HST payable under an agreement of purchase and sale of a commercial property.

J.F.R. v. K.L.L. is a family law dispute relating to a shared parenting schedule for their adult child with Down’s Syndrome. The parenting order was overturned because the adult child was not afforded the right to participate in the proceeding.

Citti v. Klein deals with sanctions for contempt of court for violating a Mareva injunction. The Court dismissed the appeal, holding that there was no basis to interfere with the discretionary order imposing costs and fines made by the motion judge.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

1000029174 Ontario Inc. v. Miculinic Investment Corp., 2024 ONCA 526

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Evidence, Admissibility, Experts, Excise Tax Act, R.S.C. 1985, c. E-15, Rules of Civil Procedure, r. 39.01(7), r. 53.03(2.1), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

Citti v. Klein, 2024 ONCA 529

Keywords: Civil Procedure, Orders, Enforcement, Contempt, Sentencing, Costs

Binscarth Holdings LP v. Grant Anthony, 2024 ONCA 522

Keywords: Business Associations, Partnerships, Limited Partnerships, Corporations, Contracts, Partnership Agreements, Civil Procedure, Equitable Remedies, Derivative Actions, Leave to Commence, An Act to authorize Limited Partnerships in Upper-Canada, S. Prov. C. 1849, 12 Vict. c. 75, Limited Partnerships Act, R.S.O. 1990, c. L. 16, ss. 8, 9, 10, 11, 12(1), 12(2), 13(1), 13(2), 15(2) and 24, Asher Place Senior Residency Limited Partnership v. Balcom, 2021 BCCA 162, Foss v. Harbottle (1843), 67 E.R. 189 (Ch.), Kucor Construction & Developments & Associates v. Canada Life Assurance Co. (1998), 41 O.R. (3d) 577 (C.A.), Covia Canada Partnership Corp. v. PWA Corp. (1993), 105 D.L.R. (4th) 60 (Ont. Gen. Div.), Lehndorff General Partner Ltd., Re (1993), 17 C.B.R. (3d) 24 (Ont. Gen. Div.), Kingsberry Properties Ltd. Partnership, Re (1997), 3 C.B.R. (4th) 124, Canadian Home Publishers Inc. v. Parker, 2019 ONCA 314, Molchan v. Omega Oil & Gas Ltd., [1988] 1 S.C.R. 348, Extreme Venture Partners Fund I LP v. Varna, 2021 ONCA 853, Gemini Group Automated Distribution Systems Inc. v. PWA Corp. (1993), 16 O.R. (3d) 239 (C.A.), McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39, Hudson’s Bay Company v. OMERS Realty Corporation, 2016 ONCA 113, Belzberg Technologies Inc. v. ITG Canada Corp., 2005 CanLII 35788, Tran v. Bloorston Farms Ltd., 2020 ONCA 440, Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165, Rea v. Wildeboer, 2015 ONCA 373, Edwards v. Halliwell, [1950] 2 All E.R. 1064 (C.A.), Budd v. Bertram, 2018 NSCA 95, Link v. Link, 2022 NSCA 14, Crescent (1952) Ltd. v. Jones, 2011 ONSC 756, Vessair et al. v. Vessair et al., 2022 ONSC 500, Hevey v. Wonderland Commercial Centre Inc., 2021 ONSC 540, Chandler v. Sun Life Financial (2006), 14 B.L.R. (4th) 171 (Ont. S.C.), Zeifmans LLP v. Mitec Technologies Inc., 2019 ONSC 3643, 0738827 B.C. Ltd. v. CPI Crown Properties International Corporation, 2013 ABQB 499, Starratt v. Mamdani, 2015 ABQB 280, Esselmont et al. v. Centreville Limited Partnership, 2000 MBCA 27, Thompson Centres Inc. v. Hyde Park Limited Partnership, 2010 ONSC 718, Merklinger v. Jantree No. 3 Ltd. Partnership, 2004 CarswellOnt 6659 (S.C.), Barnes v. Blackfriar’s Development Inc., 1999 CarswellOnt 4450 (S.C.), Hartley v. Craig (1998), 60 O.T.C. 151 (Gen. Div.), Spencer et al. v. Targa Capital Inc. et al. (1994), 99 Man. R. (2d) 15 (Q.B.), Limited Partners in Henderson PFI Secondary Fund II LLP v. Henderson PFI Secondary Fund II LP & Ors, [2012] EWHC 3259 (Comm.), Allianz Global Investors GmbH & Ors v. Barclays Bank Plc & Ors, [2022] EWCA Civ. 353 (Comm.), Edwards v. Halliwell, [1950] 2 All E.R. 1064 (C.A.), at p. 1067, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Mady Development Corp. v. Rossetto, 2012 ONCA 31, McBride Metal Fabricating Corp. v. H & W Sales Company Inc. (2002), 59 O.R. (3d) 97 (C.A.), Prudential Assurance Co. Ltd. v. Newman Industries Ltd. (No. 2), [1982] 1 All E.R. 354 (Eng. C.A.), Gold v. Rosenberg (1995), 129 D.L.R. (4th) 152 (Ont. C.A.), Waxman v. Waxman, 186 O.A.C. 201 (C.A.), Harris v. Leikin Group Inc., 2011 ONCA 790, Roberts v. Gill, [2010] UKSC 22, Riviera Congress Associates v. Yassky (1966), 18 N.Y.2d 540 (C.A.)

J.F.R. v. K.L.L., 2024 ONCA 520

Keywords: Family Law, Parenting, “Child of the Marriage”, Civil Procedure, Standing, Capacity, Procedural and Natural Justice, Right to be Heard (Audi Alteram Partem), Canadian Charter of Rights and Freedoms, 1982, s. 15, Divorce Act, R.S.C. 1985, c. 3, ss. 2(1), 16.1, Substitute Decisions Act, 1992, S.O. 1992, c.30, ss. 3, 55(1), Rules of Civil Procedure, r. 7, Family Law Rules, O. Reg. 114/99, rr. 4, 7(5), Family Relations Act, R.S.B.C. 1996, c. 128, A.C. v. Manitoba (Director of Child and Family Services), 2009 SCC 30, R. v. Reid, 2016 ONCA 524, Canada (Attorney General) v. Downtown Eastside Sex Workers United Against Violence Society, 2012 SCC 45, A. (L.L.) v. B. (A.), [1995] 4 S.C.R. 536, Fontaine v. Canada (Attorney General), 2018 ONCA 1023, Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73, Ohenhen (Re), 2018 ONCA 65, Starson v. Swayze, [2003] 1 S.C.R. 722, Calvert (Litigation Guardian of) v. Calvert (1997), 32 O.R. (3d), Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447, Nova Scotia (Minister of Health) v. J.J., 2005 SCC 12, Crawford v. Crawford (1999), 45 N.B.R. (2d) 196, Whitton v. Whitton (1989), 21 R.F.L. (3d) 261 (Ont. C.A.), Ethier v. Skrudland, 2011 SKCA 17, Ross v. Ross, 2004 BCCA 131, Krangle (Guardian ad litem of) v. Brisco, 2002 SCC 9, Harrington v. Harrington (1981), 33 O.R. (2d) 150 (C.A.), Briard v. Briard, 2010 BCCA 431, Giorno v. Giorno (1992), 110 N.S.R. (2d) 87 (C.A.), Hartshorne v. Hartshorne, 2010 BCCA 327, Duncan v. Duncan, [1989] 74 Sask. R. 100 (Q.B.), Lougheed v. Lougheed, 2007 BCCA 396, H.M.R. v. D.G.R., 2010 BCSC 647, Fatima v. Agha, 2024 ONSC 1441, Perino v. Perino, 2012 ONSC 328, Law Commission of Ontario, Legal Capacity, Decision-Making and Guardianship: Final Report (Toronto: March 2017)

Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc., 2024 ONCA 518

Keywords: Civil Procedure, Limitations Periods, Procedural and Natural Justice, Leasing, Improper Seizure, Default Judgment, Nunc Pro Tunc Orders, Securities Act, R.S.O. 1990, c. s.5, s. 138.3, Limitations Act, 2002, S.O. 2002, c. 24, sched. B, s. 4, Rules of Civil Procedure, rr. 2.0114.01, 27.03, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Thistle v. Schumilas, 2020 ONCA 88, Douglas v. Stan Fergusson Fuels Ltd., 2018 ONCA 192, Patkaciunas v. Economical Mutual Insurance Company, 2021 ONSC 5945, Sax v. Rick Aurora, 2019 ONSC 3573, Carillion Canada Holdings Inc. et al. (Re), 2022 ONSC 66

Short Civil Decisions

Craft Kingsmen Rail Corp. v. Municipal Property Assessment Corporation, 2024 ONCA 539

Keywords: Costs

Martins v. Martins, 2024 ONCA 532

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Prejudgment Interest, Family Law Act, R.S.O. 1990, c. F.3, s. 10.1(4)

CIVIL DECISIONS

1000029174 Ontario Inc. v. Miculinic Investment Corp., 2024 ONCA 526

[Roberts, Miller and Gomery JJ.A.]

Counsel:

J. Squire and S. Jones, for the appellant/respondent by way of cross-appeal

G. Tighe and L. Rakowski, for the respondents/appellants by way of cross-appeal

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Evidence, Admissibility, Experts, Excise Tax Act, R.S.C. 1985, c. E-15, Rules of Civil Procedure, r. 39.01(7), r. 53.03(2.1), Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53

facts:

This appeal arose from a dispute about the interpretation of an agreement of purchase and sale containing an ambiguity as to the calculation of the purchase price inclusive of Harmonized Sales Tax (HST). In August 2021, the appellant, Miculinic Investment Corporation, sold a mixed residential and commercial use property to the respondents, 2303515 Ontario Inc. and 1000029174 Ontario Inc. The agreement of purchase and sale stipulated that the $ 11,500,000 purchase price included an unspecified amount of HST payable on only the commercial portion of the property. However, the agreement did not specify what portion of the property was for commercial use, nor did it provide a mechanism for determining the amount of HST owed. Shortly before closing, the parties realized that they disagreed about the purchase price inclusive of HST. The respondents disputed the use designation in the appellant’s Statement of Adjustments, arguing that a greater area was commercial and attracted HST, to which they desired to apply tax credits to reduce the overall amount owed. The parties decided to partially close the sale without prejudice to the adjudication of the issue. The respondent paid an additional $ 9,179,067.29 to the appellant on top of the $ 1,000,000 deposit, with $ 549,957.52 kept in escrow by the respondent’s counsel pending resolution of the dispute.

In her reasons, the application judge relied heavily upon a property appraisal by D. Bottero & Associates Limited (“the Bottero appraisal evidence”) attached to the respondent’s affidavit, and the respondent’s CRA-approved HST return, which delineated part of the property as commercial and attracting over $ 1 million dollars in HST. Based on these documents, and without further interpreting the agreement, the application judge held that the respondents owed the appellant $ 276,106.19 to satisfy the purchase price. The application judge subsequently dismissed the appellant’s motion to reopen the proceedings and admit fresh evidence of the appellant’s CRA HST assessment, which assessed the HST for the property at a lower amount. In an amended endorsement, the application judge awarded $ 87,503.09 in costs to the appellant.

On appeal, the appellant sought payment of the remaining amount in escrow, while the respondents cross-appealed seeking dismissal of the main appeal and leave to appeal the costs order.

issues:

1. Did the application judge err in her interpretation of the agreement of purchase and sale?
2. Did the application judge err in her treatment of the Bottero appraisal evidence?

holding:

Appeal allowed.

reasoning:

1. Yes. The Court set aside the judgment, including her costs order, and remitted the matter for a new hearing. Consequently, it was unnecessary to address the cross-appeal.

The application judge failed to engage in the required analysis of the agreement of purchase and sale. She did not follow the interpretive method from Sattva, which instructs that the agreement must be interpreted in its entirety, and that the court should consider the factual matrix at the time the agreement was made to determine the objective intentions of the parties. The Court also deemed the application judge’s analysis insufficient, in that she never addressed discrepancies between the various CRA assessments and never explained why she rejected the appellant’s evidence regarding the property’s use and value.

2. Yes. The Court held that the application judge failed to grapple with the numerous deficiencies in the Bottero appraisal evidence. This evidence was flawed due to its retrospective nature (the appraisal was prepared three months after the property sale), and it was arguably inadmissible hearsay and not in compliance with the requirements for expert opinion evidence. As gatekeeper, the application judge ought to have at least addressed these issues.

Citti v. Klein, 2024 ONCA 529

[Rouleau, Benotto and Thorburn JJ.A.]

Counsel:

B. Brooksbank and D. Chu, for the appellants

E. Klein and E. Klein, for the respondents

Keywords: Civil Procedure, Orders, Enforcement, Contempt, Sentencing, Costs

facts:

The respondents were found in contempt of court for having violated the terms of a Mareva injunction. Contrary to the terms of the injunction, the respondents placed a mortgage in the amount of $ 25,000 on a property that they were enjoined from dissipating, assigning, encumbering, or dealing with. In addition, they failed to place several months’ worth of rental income from that property in trust as required by the Mareva order. The respondents then defaulted on the mortgage, surrendered the property to the mortgagee for a $ 5,000 fee, and the mortgagee subsequently sold the property.

At the contempt proceeding, the appellants sought a term of imprisonment of 120 days for the respondents and an order striking their amended statement of defence and counterclaim. They also sought costs of the motion on a substantial indemnity basis.

The motion judge determined that the appropriate sanction was an order that the respondents pay a fine to the court of $ 35,000 and pay the appellants’ outstanding costs of $ 15,474.32 within 60 days, failing which their amended statement of defence and counterclaim would be struck. The motion judge awarded substantial indemnity costs for the portion of the proceedings dealing with the finding of contempt, and determined the appellants should receive only partial indemnity costs for the sanctions portion of the contempt proceedings.

issues:

1. Did the motion judge fail to consider or give appropriate weight to the principles of deterrence and denunciation and the aggravating factors in his contempt decision?
2. Did the motion judge err in imposing a fine as a sanction?
3. Did the judge err in awarding partial indemnity costs rather than full or substantial indemnity costs?

holding:

Appeal dismissed.

reasoning:

1. No. The motion judge correctly set out the factors relevant to the determination of an appropriate sanction for civil contempt, including the importance of deterrence and denunciation. He found that incarceration for civil contempt was rare and should only be undertaken where the breach of the Court Order was knowing and deliberate, continued over several days and the only response from the Defendants was defiant without remorse The Court found the contempt had been committed at a time when the respondents were undergoing financial strain. These were their only acts of contempt and they exhibited remorse, having provided an apology.

2. No. The Court determined that a fine was an appropriate sanction. It would have been unfair to the appellants to have to pursue an action and defend a counterclaim if the respondents did not pay the fine and costs. The motion judge’s decision that the respondents’ pleadings should only be struck if the respondents did not pay the fine within 60 days was a reasonable one and the Court saw no basis to interfere.

3. No. The Court found that the motion judge had provided an explanation as to why he considered partial indemnity costs to be appropriate for the sanctions phase. There was no basis to interfere with his discretion in making this decision.

Binscarth Holdings LP v. Grant Anthony, 2024 ONCA 522

Pepall, van Rensburg and Monahan JJ.A.

Counsel:

M. Wainberg, for the appellants (C70888) G.A., G.A., G.A., A.A., J.A., and G.A., and for the respondents (COA-22-CV-0468) Binscarth Holdings LP, G.A., G.A., G.A., A.A., J.A. and G.A.

S.C. Hutchinson, E. Brousseau, D. Postel, and G. Vance, for the respondents (C70888) G.A., Binscarth Holdings GP Inc., 1862438 Ontario Inc., 975393 Ontario Inc. and L.C., and for the appellants (COA-22-CV-0468) G. A. and Binscarth Holdings GP Inc.

Keywords: Business Associations, Partnerships, Limited Partnerships, Corporations, Contracts, Partnership Agreements, Civil Procedure, Equitable Remedies, Derivative Actions, Leave to Commence, An Act to authorize Limited Partnerships in Upper-Canada, S. Prov. C. 1849, 12 Vict. c. 75, Limited Partnerships Act, R.S.O. 1990, c. L. 16, ss. 8, 9, 10, 11, 12(1), 12(2), 13(1), 13(2), 15(2) and 24, Asher Place Senior Residency Limited Partnership v. Balcom, 2021 BCCA 162, Foss v. Harbottle (1843), 67 E.R. 189 (Ch.), Kucor Construction & Developments & Associates v. Canada Life Assurance Co. (1998), 41 O.R. (3d) 577 (C.A.), Covia Canada Partnership Corp. v. PWA Corp. (1993), 105 D.L.R. (4th) 60 (Ont. Gen. Div.), Lehndorff General Partner Ltd., Re (1993), 17 C.B.R. (3d) 24 (Ont. Gen. Div.), Kingsberry Properties Ltd. Partnership, Re (1997), 3 C.B.R. (4th) 124, Canadian Home Publishers Inc. v. Parker, 2019 ONCA 314, Molchan v. Omega Oil & Gas Ltd., [1988] 1 S.C.R. 348, Extreme Venture Partners Fund I LP v. Varna, 2021 ONCA 853, Gemini Group Automated Distribution Systems Inc. v. PWA Corp. (1993), 16 O.R. (3d) 239 (C.A.), McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39, Hudson’s Bay Company v. OMERS Realty Corporation, 2016 ONCA 113, Belzberg Technologies Inc. v. ITG Canada Corp., 2005 CanLII 35788, Tran v. Bloorston Farms Ltd., 2020 ONCA 440, Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165, Rea v. Wildeboer, 2015 ONCA 373, Edwards v. Halliwell, [1950] 2 All E.R. 1064 (C.A.), Budd v. Bertram, 2018 NSCA 95, Link v. Link, 2022 NSCA 14, Crescent (1952) Ltd. v. Jones, 2011 ONSC 756, Vessair et al. v. Vessair et al., 2022 ONSC 500, Hevey v. Wonderland Commercial Centre Inc., 2021 ONSC 540, Chandler v. Sun Life Financial (2006), 14 B.L.R. (4th) 171 (Ont. S.C.), Zeifmans LLP v. Mitec Technologies Inc., 2019 ONSC 3643, 0738827 B.C. Ltd. v. CPI Crown Properties International Corporation, 2013 ABQB 499, Starratt v. Mamdani, 2015 ABQB 280, Esselmont et al. v. Centreville Limited Partnership, 2000 MBCA 27, Thompson Centres Inc. v. Hyde Park Limited Partnership, 2010 ONSC 718, Merklinger v. Jantree No. 3 Ltd. Partnership, 2004 CarswellOnt 6659 (S.C.), Barnes v. Blackfriar’s Development Inc., 1999 CarswellOnt 4450 (S.C.), Hartley v. Craig (1998), 60 O.T.C. 151 (Gen. Div.), Spencer et al. v. Targa Capital Inc. et al. (1994), 99 Man. R. (2d) 15 (Q.B.), Limited Partners in Henderson PFI Secondary Fund II LLP v. Henderson PFI Secondary Fund II LP & Ors, [2012] EWHC 3259 (Comm.), Allianz Global Investors GmbH & Ors v. Barclays Bank Plc & Ors, [2022] EWCA Civ. 353 (Comm.), Edwards v. Halliwell, [1950] 2 All E.R. 1064 (C.A.), at p. 1067, Hodgkinson v. Simms, [1994] 3 S.C.R. 377, Mady Development Corp. v. Rossetto, 2012 ONCA 31, McBride Metal Fabricating Corp. v. H & W Sales Company Inc. (2002), 59 O.R. (3d) 97 (C.A.), Prudential Assurance Co. Ltd. v. Newman Industries Ltd. (No. 2), [1982] 1 All E.R. 354 (Eng. C.A.), Gold v. Rosenberg (1995), 129 D.L.R. (4th) 152 (Ont. C.A.), Waxman v. Waxman, 186 O.A.C. 201 (C.A.), Harris v. Leikin Group Inc., 2011 ONCA 790, Roberts v. Gill, [2010] UKSC 22, Riviera Congress Associates v. Yassky (1966), 18 N.Y.2d 540 (C.A.)

facts:

F.A. died in 2014, and his wife, J.A., died in March 2018. They had several children, six of whom are the respondents and one of whom is the appellant, G.A. F.A. established Binscarth LP to hold most of their real estate. F.A. formed Binscarth GP to serve as the general partner of Binscarth LP, and the Anthony Control Trust to hold 100 percent of the shares of Binscarth GP. The beneficiaries of the Anthony Control Trust are G.A. and the six respondents, among others. G.A. is the sole director of Binscarth GP and the sole surviving trustee of the Anthony Control Trust. G.A. also owns or controls 27 percent of the partnership units in Binscarth LP. The respondents own or control 54.5 percent of the partnership units in Binscarth LP.

Directly or indirectly, F. A. and J. A. bequeathed their assets to Binscarth LP, which owns and manages commercial real estate worth over $ 200 million. Binscarth LP also owns the former matrimonial home which G. A. has resided in since 2018.

The motion judge denied the respondents leave to bring a derivative action against three parties. They are 1862438 Ontario Inc. (“186”), 975393 Ontario Inc. (“975”), and L. C. 186 is a private Ontario corporation, of which G. A. is the sole officer, director, and shareholder. L. C. is a real estate broker who was initially retained to list the Binscarth home for sale and was subsequently hired by G.A. as a project manager to oversee its renovations. The respondents brought a motion for leave to bring a derivative action on behalf of Binscarth LP and four of its portfolio companies as against Binscarth GP, G.A., L.C., 186, and 975. The motion judge granted the respondents’ motion but limited the defendants to Binscarth GP and G.A. She also denied the respondents’ motion for leave to bring a derivative action on behalf of the four portfolio companies.

The motion judge determined that there was no statutory right to commence a derivative action under the LPA. The motion judge concluded that the only exception that may apply in this case was the fraud exception. As the motion judge found that L.C., 186, and 975 had no legal or de facto control over Binscarth LP, a derivative action against them was not possible. Instead, the narrow fraud exception only permitted a derivative action to be brought on behalf of Binscarth LP against Binscarth GP and G.A. The motion judge then considered whether leave should be granted to bring a derivative action against Binscarth GP and G.A. She was satisfied that the respondents had a strong prima facie case and sought to bring the action in good faith. She granted leave to bring a derivative action against Binscarth GP and G.A. and refused leave as against L.C., 186, and 975.

The appellants sought and were granted leave to appeal the order as against Binscarth GP and G.A. to the Divisional Court. The question ordered to be answered on the appeal before the Divisional Court was whether it was legally possible for some limited partners to bring a common law derivative action on behalf of a limited partnership against a general partner. The respondents did not appeal the denial of leave to bring a derivative action on behalf of the four portfolio companies but did appeal directly to the Court of Appeal the motion judge’s order dismissal of their proceeding relating to L.C., 186, and 975. The appellants obtained an order on consent that the Divisional Court appeal be transferred to the Court of Appeal and be combined with the respondents’ appeal.

issues:

1. Did the motion judge err in deciding that at common law, it was permissible for the respondents, as limited partners, to bring a derivative action in the name of and on behalf of Binscarth LP against Binscarth GP and G.A?
2. Did the motion judge err in refusing the respondents leave to bring a derivative action in the name of and on behalf of Binscarth LP against L.C., 186, and 975?

holding:

Appeal allowed.

reasoning:

1. Yes. The motion judge erred in deciding that at common law, it was permissible for the respondents, as limited partners, to bring a derivative action in the name of and on behalf of Binscarth LP against Binscarth GP and G.A.

The appellants submitted that a limited partnership, unlike a corporation, is not a legal person and, as such, the rule in Foss v. Harbottle and its exceptions were inapplicable. They argued that the rationale for a derivative action does not apply to limited partnerships. At common law, an aggrieved shareholder had no legal redress absent a derivative action. However, an aggrieved limited partner does have legal redress. The appellants submitted that limited partners have both statutory and contractual rights and can sue the general partner directly. Accordingly, there is no equitable gap to be filled by granting leave to a limited partner to sue in the name of the limited partnership. The appellants argued that there are pragmatic reasons to abstain from recognizing a derivative action in limited partnerships. However, the legislature has not chosen to include derivative actions in the Limited Partnerships Act (“LPA“). Furthermore, in forming Binscarth LP, the limited partners agreed to the rights of the limited partners as described in the LPA and the Limited Partnership Agreement, neither of which provides for derivative actions.

The respondents took the position that the limited partnership is the proper plaintiff. They relied on Kucor Construction & Developments & Associates v. Canada Life Assurance Co., for the proposition that r. 8.01(1) of the Rules of Civil Procedure recognizes “a partnership as a legal entity for the procedural purpose of suing or being sued in the firm name.” Moreover, the respondents stated that the rule in Foss v. Harbottle applies to limited partnerships. They relied on Covia Canada Partnership Corp. v. PWA Corp. The respondents also argued that other alternative forms of redress available to the limited partners were not an issue before the Court, and the alternatives of dissolution or damages for breach of contract were unavailable or inadequate.

The Court failed to see why resorting to a derivative action against Binscarth GP and G.A. was required. The Court decided the respondents could pursue a direct claim in their own names against both. Accordingly, they allowed the appeal with respect to the first issue.

2. Yes. The motion judge erred in refusing the respondents leave to bring a derivative action in the name of and on behalf of Binscarth LP against L.C., 186, and 975. The motion judge determined that the narrow fraud exception to the rule in Foss v. Harbottle would not permit the respondents to commence a derivative action against L.C, 186, and 975. As neither L.C. nor 975 had any affiliation with Binscarth LP, the control requirement was not met, and she held that 186 similarly had no control over Binscarth LP. Accordingly, she dismissed the request for leave to bring a derivative action against those three parties.

Unlike with the first issue, where limited partners have a direct cause of action against their general partners for breach of contract or the LPA, there is no similar privity of contract or statutory relationship between limited partners and third parties. Subject to the factual circumstances, there may be an equitable gap where third parties have harmed the limited partnership but, illegitimately, the general partner has refused to seek redress. With there are proposed claims against the third parties, it may be necessary for equity to intervene to allow for a common law derivative action to permit limited partners to bring those claims of the limited partnership against the third parties when the general partner refuses to bring them. Borrowing from the requirements for leave contained in the OBCA and the CBCA, but with some adjustments, the Court stated that before granting leave to pursue a derivative action on behalf of and in the name of a limited partnership, the court should be satisfied that: (a) the general partner has refused to pursue a claim against a third party; (b) the limited partner is acting in good faith; and (c) it appears to be in the best interests of the limited partnership that the action be brought.

The Court found that in this case, the evidence on some of these issues was somewhat ill-defined. The respondents filed a notice of motion and amended notice of motion seeking leave to bring their derivative action but did not include a draft statement of claim. While Ramsay J. ruled that a draft statement of claim was not mandatory, it is preferable that a limited partner seeking leave to pursue a derivative action on behalf of a limited partnership file a draft statement of claim. Notwithstanding this limitation, based on the record before the Court, the Court was satisfied that the respondents met the test for obtaining leave to pursue a derivative action on behalf of and in the name of Binscarth LP against L.C., 186, and 975.

The Court state that Binscarth GP has certainly implicitly, if not explicitly, declined to take action against the third parties. Binscarth GP and G.A. were in an apparent conflict of interest with respect to the three third parties. The conflict factor weighed heavily in favour of granting leave. The claims proposed to be asserted suggested a strong prima facie case against L.C., 186, and 975. Mindful of the extensive powers vested in Binscarth GP as detailed in the Limited Partnership Agreement and the LPA, in all of these circumstances, the Court was persuaded that it appeared to be in the best interests of Binscarth LP that the action be brought. The Court was satisfied that in principle, a derivative action would be available to the respondents if they choose to proceed with that course of action. The Court accordingly granted leave to the respondents to proceed with a derivative action against L.C., 186, and 975.

J.F.R. v. K.L.L., 2024 ONCA 520

[Hourigan, Roberts and Coroza JJ.A.]

Counsel:

M. Battaglia and S. Timerman, for the appellant

O. Bonham-Carter and M. Swindley, for the respondent

V. Naik, for M.L-R.

G. Reznick and I. Stefan, for the intervener, People First of Canada

W. Poziomka and A. Wilson, for the interveners, Canadian Down Syndrome Society and Inclusion Action in Ontario

M. Pearlman and B. Pooran, for the intervener, Community Living Ontario

Keywords: Family Law, Parenting, “Child of the Marriage”, Civil Procedure, Standing, Capacity, Procedural and Natural Justice, Right to be Heard (Audi Alteram Partem), Canadian Charter of Rights and Freedoms, 1982, s. 15, Divorce Act, R.S.C. 1985, c. 3, ss. 2(1), 16.1, Substitute Decisions Act, 1992, S.O. 1992, c.30, ss. 3, 55(1), Rules of Civil Procedure, r. 7, Family Law Rules, O. Reg. 114/99, rr. 4, 7(5), Family Relations Act, R.S.B.C. 1996, c. 128, A.C. v. Manitoba (Director of Child and Family Services), 2009 SCC 30, R. v. Reid, 2016 ONCA 524, Canada (Attorney General) v. Downtown Eastside Sex Workers United Against Violence Society, 2012 SCC 45, A. (L.L.) v. B. (A.), [1995] 4 S.C.R. 536, Fontaine v. Canada (Attorney General), 2018 ONCA 1023, Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73, Ohenhen (Re), 2018 ONCA 65, Starson v. Swayze, [2003] 1 S.C.R. 722, Calvert (Litigation Guardian of) v. Calvert (1997), 32 O.R. (3d), Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447, Nova Scotia (Minister of Health) v. J.J., 2005 SCC 12, Crawford v. Crawford (1999), 45 N.B.R. (2d) 196, Whitton v. Whitton (1989), 21 R.F.L. (3d) 261 (Ont. C.A.), Ethier v. Skrudland, 2011 SKCA 17, Ross v. Ross, 2004 BCCA 131, Krangle (Guardian ad litem of) v. Brisco, 2002 SCC 9, Harrington v. Harrington (1981), 33 O.R. (2d) 150 (C.A.), Briard v. Briard, 2010 BCCA 431, Giorno v. Giorno (1992), 110 N.S.R. (2d) 87 (C.A.), Hartshorne v. Hartshorne, 2010 BCCA 327, Duncan v. Duncan, [1989] 74 Sask. R. 100 (Q.B.), Lougheed v. Lougheed, 2007 BCCA 396, H.M.R. v. D.G.R., 2010 BCSC 647, Fatima v. Agha, 2024 ONSC 1441, Perino v. Perino, 2012 ONSC 328, Law Commission of Ontario, Legal Capacity, Decision-Making and Guardianship: Final Report (Toronto: March 2017)

facts:

The parties to the proceedings were M’s parents. They separated in 2012 and subsequently entered into a separation agreement concerning support and parenting issues. As part of their separation agreement, the parties agreed to share parenting of their children at their respective homes (the “shared parenting schedule”).

M was a 26-year-old adult living with Down Syndrome. He could not live independently and continued to live with his mother and his father at their respective homes past the age of majority in accordance with the shared parenting schedule. When the COVID-19 pandemic struck, the parties agreed that M would temporarily live with his mother. Since October 2020, his father sought to return to the shared parenting schedule without success.

As a result, M’s father sought and obtained the interim parenting order under appeal which restored a 50/50 parenting schedule as per the separation agreement, on a week-on, week-off basis. The motion judge further ordered that the parties retain a social worker or psychologist to interview M and attempt to elicit his views and preferences. The psychologist’s report was filed on consent as fresh evidence on the appeal. M was not named as a party or formally served with notice of these proceedings, and he did not have the opportunity to make submissions to the court before the parenting order was made. M’s mother appealed.

issues:

1. Does the definition of “child of the marriage” under s.2(1)(b) of the Divorce Act infringe on M’s rights under s.15 of the Charter of Rights and Freedoms?
2. Was there a breach of the principles of natural justice because M did not have an opportunity to be heard on a decision that affected his interests?
3. Should M be bound by the interim parenting order?

holding:

Appeal allowed.

reasoning:

1. No. The Court concluded that the appellants’ constitutional challenge could not succeed. The Court did not have an appropriate record from which to carry out the requisite analysis. Second, the appellant lacked standing to raise the Charter issue. M was independently represented by counsel at the time of the appeal, pursuant to an order of the court. Counsel for M did not assert any breach of M’s constitutional rights on the appeal.

2. Yes. The Court found that M had the right to be heard which included the right to speak to his ability to withdraw from parental control in the specific sphere of his residential schedule, and he was denied the opportunity to exercise that right. The audi alteram partem principle required that M be given the opportunity to participate fully, including in the adjudication of any capacity issues. The failure to do so resulted in a breach of natural justice. Dependence on others or incapacity in some or all areas of decision making did not eliminate the right to be heard. Capacity was a spectrum. A person might have been capable of making decisions regarding some aspects of property and personal care, for example, one’s residence, but not other aspects.

3. No. The Court determined the parenting order regarding M’s residence could not stand. While it was established that M could not live independently and required financial and other support, it was not established that he was unable to withdraw from parental charge in relation to decisions about residence. The Court found that M’s lack of objection to his current living arrangements or his present willingness to live with either of his parents did not mean he agreed to be bound by an order compelling him to live with each of them at particular times. In the absence of any determination to the contrary, he was presumed capable of making those decisions.

As an adult who was presumed capable of choosing his residence until proven otherwise, M had the right to representation and to make submissions on the threshold question of where, when, and with whom he lived, and whether he remained “a child of the marriage,” as that term was defined under s. 2(1)(b) of the Act.

Norman Towing (7344508 Canada Inc.) v. Riordan Leasing Inc, 2024 ONCA 518

Pepall, van Rensburg and Monahan JJ.A.

Counsel:

A. J. Kania, for the appellant

K. D. Reason, for the respondent

Keywords: Civil Procedure, Limitations Periods, Procedural and Natural Justice, Leasing, Improper Seizure, Default Judgment, Nunc Pro Tunc Orders, Securities Act, R.S.O. 1990, c. s.5, s. 138.3, Limitations Act, 2002, S.O. 2002, c. 24, sched. B, s. 4, Rules of Civil Procedure, rr. 2.0114.01, 27.03, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Thistle v. Schumilas, 2020 ONCA 88, Douglas v. Stan Fergusson Fuels Ltd., 2018 ONCA 192, Patkaciunas v. Economical Mutual Insurance Company, 2021 ONSC 5945, Sax v. Rick Aurora, 2019 ONSC 3573, Carillion Canada Holdings Inc. et al. (Re), 2022 ONSC 66

facts:

The appellant, NA, appealed the motion judge’s grant of a nunc pro tunc order declaring the statement of defence and counterclaim by the respondent Riordan Leasing Inc. (“Riordan”) issued as of June 18, 2021. After NA and his company Norman Towing (“Norman”) defaulted on five vehicle leases from Riordan, Riordan seized and sold the vehicles. Riordan informed NA that a deficiency remained owing on the leases even after the sale. Norman subsequently sued Riordan for $ 200,000 in damages arising from the allegedly improper vehicle seizure and sale. The statement of claim was issued and then served via email due to the COVID-19 pandemic. On June 18, 2021, Riordan’s counsel filed the statement of defence and counterclaim with the court through the online portal. The pleading claimed the amount still owing on the lease and added NA as a new party. Though the pleading was filed and served on NA, the counterclaim was never issued. As the counterclaim added NA as a party, it ought to have been issued as well as filed.

After receiving no response to multiple emails sending the pleading to opposing counsel and requesting acceptance of service, the respondent noted the appellant in default and moved for default judgment. The motion judge granted default judgment pursuant to the counterclaim in the amount of $ 63,513.12 plus interest and $ 2,500 in costs in favour of the respondent. Five months later, counsel acting for both NA and Norman wrote to Riordan’s counsel complaining of the lack of notice and advising that he would seek to set aside the default judgment. The limitation period for the deficiency claim that was the subject matter of the counterclaim expired on September 14, 2022, two months before the set aside motion was scheduled. At the set aside motion, Norman and NA’s counsel advised Riordan that its statement of defence and counterclaim had never been issued, leading Riordan to move for a nunc pro tunc order to have the defendant’s pleading deemed issued on the date it was filed.

The motion judge set aside the default judgment and granted the nunc pro tunc order on the terms requested. He held that Riordan’s counterclaim for a deficiency indisputably crystallized on September 14, 2020, and that if he did not grant the order the claim would be time barred. Although Riordan’s counsel erred by neglecting to ask that the pleading be issued as well as filed, issuance was an administrative step that would have been granted as a matter of course. NA and Norman had notice of the counterclaim within the limitation period, and all case law cited against granting the order was distinguishable.

On appeal, NA sought to overturn the nunc pro tunc order, arguing that since the limitation period for the counterclaim had expired, it was not open to the motion judge to grant the order. Riordan contended that the motion judge correctly used the order to cure a procedural irregularity, and that granting the order did not undermine any legislative purpose underlying limitations periods.

issue:

Did the motion judge err in granting a nunc pro tunc order in circumstances where a statement of defence and counterclaim was filed and served on an added party but not issued before the limitation period expired?

holding:

Appeal dismissed.

reasoning:

No. The Court held that it was open to the motion judge to make the nunc pro tunc order. The facts of this case were distinguishable from the 2015 Supreme Court decision on nunc pro tunc orders, Canadian Imperial Bank of Commerce v. Green, and other cases cited by NA, all of which required leave to commence the action. Such cases did not involve an administrative misstep as Riordan made here.

The Court cited Green for the principle that leave need not be granted but just sought prior to the expiration of a limitation period. Thus, the Court held it followed that a nunc pro tunc order could be granted in the face of the expiry of a limitation period if leave was sought before the limitation period expired. Rule 2.01 provides that a failure to comply with the Rules is an irregularity and does not render a proceeding a nullity. The Court characterized Riordan’s failure to seek issuance as an irregularity, and agreed with the motion judge’s holding that the appellant was unquestionably aware of the counterclaim well before the associated limitation period ran out. The counterclaim was both physically served to NA’s home and Riordan’s counsel repeatedly emailed the pleading to opposing counsel.

Given these circumstances, the Court ultimately concluded that pursuant to r. 2.01, the motion judge was permitted to grant relief to secure the just determination of the real matters in dispute via an order treating the date of filing as the date of issuance. The certainty, evidentiary, and diligence purposes of limitations periods set out in Green, which animate the limitation period prescribed by the Limitations Act, were not undermined through the motion judge’s nunc pro tunc order.

SHORT CIVIL DECISIONS

Craft Kingsmen Rail Corp. v. Municipal Property Assessment Corporation, 2024 ONCA 539

[Roberts, Zarnett and Favreau JJ.A.]]

Counsel:

S. Longo and J. Walker, for the appellant

M. VanBerkum, for the respondent, Municipal Property Assessment Corporation

C. Henderson and M. Faught, for the respondent, City of Toronto

Keywords: Costs

Martins v. Martins, 2024 ONCA 532

[Roberts, Miller and Gomery JJ.A.]

Counsel:

J. Rechtshaffen and K. Davis, for the appellants

G. Carpenter and M. MacArthur, for the respondent

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Prejudgment Interest, Family Law Act, R.S.O. 1990, c. F.3, s. 10.1(4)

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