COURT OF APPEAL SUMMARIES (NOVEMBER 11 – 15)

Krieser v Seligman was a dispute regarding the construction of a $ 5 million home in Forest Hill that began in 2003 but did not get to trial until 20 years later. The owners were unsuccessful on their deficiency claims and the construction manager was successful on their modest claim on outstanding invoices.

Afghahi v Mekhael was a family law decision that dismissed the wife’s appeal from the trial judge’s findings on support and imputation of income but allowed the appeal on the issue of equalization of net family property.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
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Table of Contents

Civil Decisions

Krieser v. Seligman, 2024 ONCA 827

Keywords: Contracts, Construction, Breach of Fiduciary Duty, Courts of Justice Act, R.S.O. 1990, C. C.43, s. 134(6)

Afghahi v Mekhael, 2024 ONCA 835

Keywords: Family Law, Spousal Support, Child Support, Section 7 Expenses, Imputed Income, Property, Unequal Division, Equalization of Net Family Property, Unjust Enrichment, Family Law Act, R.S.O. 1990, c. F.3, s. 5

Short Civil Decisions

Thunder Bay (City) v. Great American Insurance Company, 2024 ONCA 837

Keywords: Contracts, Interpretation, Insurance, Commercial General Liability, Coverage, Exclusions, Torts, Negligence, Duty to Defend, Insurance Act, R.S.O. 1990, c. I.8, s.124, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33

Passmore v. Hamilton (City), 2024 ONCA 825

Keywords: Torts, Negligence, MVA, Civil Procedure, Partial Summary Judgment, Rules of Civil Procedure, r. 20, Malik v Attia, 2020 ONCA 787

CIVIL DECISIONS

Krieser v. Seligman, 2024 ONCA 827

[Lauwers, Brown and Coroza JJ.A.]

Counsel:

A. Winton and T. Morrison, for the appellants
M. Shell and G. Brandys, for the respondents, G.E.S., G.E.S. Construction Limited and Greenstone Gardens Inc.

Keywords: Contracts, Construction, Breach of Fiduciary Duty, Courts of Justice Act, R.S.O. 1990, C. C.43, s. 134(6)

facts:

In 2003, the appellants, Shari Krieser and George Krieser, wished to construct a new home in Forest Hill, Toronto. They hired the respondent, G.E.S. Construction Limited (“G.E.S.”) (which was owned by the respondent Gregory Seligman), to perform or arrange the work required to build the new house. That arrangement was memorialized by a 2004 Construction Management Contract (the “Contract”) entered into between Shari Krieser, as “Owner”, and G.E.S. Under the Contract, G.E.S. was appointed the “agent” of the “Owner” and G.E.S. was to have “complete control of the Work and shall effectively direct and supervise the Work.” They also hired the respondent, Greenstone Gardens Inc., to perform the landscaping work for the project.

Construction of the home proceeded over the next few years. By July 2006, construction had progressed to the extent that the Krieser family were able to move in. However, in early 2007 a dispute arose between the appellants and G.E.S., which led to the appellants’ withholding payment of some invoiced amounts. Ultimately G.E.S. withdrew its services from the project in February 2007. By that time, most of the construction of the home and associated landscaping had been finished and the appellants had paid more than $ 5 million to G.E.S. and its subtrades.

Three lawsuits were commenced by the parties in May 2007: G.E.S. sought to recover payment of outstanding invoices; the appellants sought damages for a number of matters, including unremedied construction deficiencies. Although litigation started in 2007, the dispute was not tried until 2022 and 2023. The trial judge dismissed the appellants’ actions. He granted judgment in favour of G.E.S. in the amount of $ 92,589.90 and in favour of Greenstone Gardens Inc. in the amount of $ 20,084.95.

issues:

1. Did the trial judge err in finding that the Contract was breached on behalf of the Owner by her spouse, by failing to make timely payments of invoices rendered by G.E.S.?
2. Did the trial judge err in finding that the breach of the Contract disentitled the appellants from any relief for warranty claims or construction deficiencies?
3. Did the trial judge fail to address all deficiency claims for which the appellants sought damages?
4. Did the trial judge err in dismissing their claim for damages for breach of fiduciary duty?
5. Should the appellants be granted leave to appeal the trial judge’s costs award?

holding:

Appeal dismissed.

reasoning:

1. No.

The Court found no error in the trial judge’s finding that the appellants’ failure to make timely payments breached the Contract. The Court held that the Contract required the Owner to make progress payments for work performed within seven days of the Owner’s receipt of an invoice. The Court noted that, despite the withholding of payment being a negotiation strategy by the appellants, it clearly breached the Owner’s payment obligations under the Contract.

2. No.

The Court found it unnecessary to decide this issue because the trial judge noted that even if he had found the appellants had not breached the Contract, he would not have been satisfied by the evidence about the appellants’ complaints.

3. No.

The Court disagreed with the appellants’ submission that the trial judge’s failure to address and determine each of the 63 deficiency claims required a new trial on the deficiencies he failed to consider. The Court held that while a more extensive treatment of the deficiency claim by the trial judge was merited, the lack of such analysis did not give rise to “some substantial wrong or miscarriage of justice” that would permit the Court to order a new trial.

The Court found that the trial judge in his reasons examined and did not accept the “big ticket” deficiency claims by the appellants. The Court noted that those were part of a list of 63 deficiencies attached to a 2016 expert report. The Court was not persuaded that the appellants placed before the trial judge sufficient evidence needed to determine the deficiency claims. The absence of evidence to establish whether a given deficiency appeared prior to or during the one-year contractual warranty period and therefore was covered by the warranty meant that the trial judge’s failure to deal with all 63 alleged deficiencies did not result in a substantial wrong or miscarriage of justice.

4. No.

The Court was not persuaded that the trial judge erred in dismissing the appellants’ claim for breach of fiduciary duty.

While the Statement of Claim pleaded breach of fiduciary duty, none of the appellants’ “Issues for Trial” delivered at the strat of trial identified a claim for breach of fiduciary duty. However, that by the time of the appellants’ closing submissions at trial, they advanced claims for both breach of good faith and honest performance, as well as breach of fiduciary duty.

The appellants argued that the trial judge failed to address their claim for breach of fiduciary duty as he dismissed their claim with one brief sentence in a section of his reasons. The appellants contended that the trial judge did not meaningfully analyze the alleged breaches of fiduciary duty after finding that no such duty existed. The Court disagreed, finding that, when the trial judge’s reasons were read as a whole, together with the provisions of the Contract, it was apparent that at various points in his reasons he dealt with the key aspects of the appellants’ breach of fiduciary duty claim.

5. No.

The Court was not persuaded that the appellants had demonstrated any error in principle or unreasonableness in the trial judge’s cost award. The trial judge gave detailed reasons and this discretionary decision was entitled to deference.

Afghahi v Mekhael, 2024 ONCA 835

[Brown, Coroza and Gomery JJ.A.]

Counsel:

J. Rechtshaffen and K. Davis, for the appellant
J. M., acting in person

Keywords:Family Law, Spousal Support, Child Support, Section 7 Expenses, Imputed Income, Property, Unequal Division, Equalization of Net Family Property, Unjust Enrichment, Family Law Act, R.S.O. 1990, c. F.3, s. 5

facts:

The parties married in 1996 and separated in 2019. They have one child who was 19 years old at the time of separation and 24 years old at the trial’s start. The respondent father is estranged from the child. The main issues at trial were: spousal support; child support; the apportionment of section 7 expenses; equalization and the unequal division of net family properties; and unjust enrichment. The trial judge made a comprehensive order dealing with all claims. The appellant mother appealed.

issues:

1. Did the trial judge err in his determination of imputed income used to calculate spousal and child support?
2. Did the trial judge err in his calculation of the equalization payment?
3. Did the trial judge err in dismissing the appellant’s unjust enrichment claim?

holding:

Appeal allowed in part.

reasoning:

1. No.

The trial judge imputed annual income to the appellant of $ 30,000 and to the respondent of $ 100,000. In the appellant’s view, the trial judge should not have imputed any income to her and should have imputed an annual income of $ 200,000 to her husband. The Court could not identify any reversible errors in the trial judge’s determinations on these issues.

The parties married in 1996. At that time, the respondent worked for Turco Persian Rug Company (“Turco Persian”) while the appellant was operating her own business, Kimiya Trading Co. (“Kimiya”), which sold rugs. The appellant turned the running of Kimiya over to her husband in 2003. He continued to work for Turco Persian. In 2013, the respondent started to display Kimiya’s remaining inventory in the Turco Persian showroom.

In 2015, the respondent and his brother incorporated IRG. In 2016, the respondent left Turco Persian to set up IRG alongside his brother. There was no dispute that by the time IRG commenced business in 2017, Kimiya had transferred any remaining inventory to it IRG.

Imputing the respondent’s income

The Court held that, when the trial judge’s reasons were read as a whole, it was clear that he relied on expert and non-expert evidence to reach his conclusion. The non‑expert evidence included the respondent’s liquidation of all his RRSPs to meet expenses in the first few years of IRG’s operation before and at the time of the parties’ separation, as well as the decline in the worldwide market for Persian rugs described by an expert.

The Court held that the appellant failed to demonstrate that the trial judge’s acceptance of the expert evidence of the respondent that the vast majority of rugs in the stock at IRG at the material time were on consignment amounted to a misapprehension of the evidence or palpable and overriding error of fact. Based on the Court’s review of the record, the Court concluded that the trial judge’s determinations were anchored in evidence, including the opinions of the respondent’s expert and that expert’s description of the underlying documentation upon which his opinion was based, which incorporated a review of IRG’s general ledgers for years ending 2019-2022.

The Court also held that the trial judge identified a number of reasons why he did not find credible the appellant’s evidence about the provenance of the rugs at IRG. While one of those reasons was irrelevant to the credibility assessment, other reasons explained his credibility finding. Further, the trial judge’s reasons disclosed that other evidence he accepted played a decisive role in his analysis of the respondent’s income.

Imputing the appellant’s income

The trial judge found that the appellant was able to work and imputed to her annual income of $ 30,000, based on the prevailing minimum wage, for the purpose of determining spousal support. The thrust of the appellant’s submission was that the trial judge erred in so doing because his analysis failed to take into account her age, physical and emotional ailments, level of education, employment experience, and lack of success in her recent business as a real estate agent. The Court saw no such error, holding that the trial judge took all those circumstances into account, together with assessments of her functional abilities, her earning capacity, and a video of her physical mobility and flexibility. The Court explained that the trial judge concluded that that the appellant’s reported income of zero per annum did not fairly reflect her ability to earn income. She did not demonstrate that this finding was tainted by palpable and overriding error.

2. Yes, in part.

The value of the respondent’s interest in IRG at date of separation

The respondent owned a 50% interest in IRG at the date of separation. Both parties filed expert reports regarding the valuation of that interest. The appellant’s expert valued the respondent’s interest in IRG on the date of separation at $ 301,592, while the respondent’s expert placed the value of IRG at nil. The trial judge accepted the respondent’s valuation.

The trial judge observed that the most significant differences between the two expert reports concerned unreported and reported inventory. As to the reported inventory, the trial judge accepted the respondent’s expert’s evidence that when consignment rugs were returned to their owners, the inventory level would decrease while no sales would be recorded.

The Court explained that the more significant difference concerned unreported inventory. As in the case of the income stream valuation, the trial judge preferred the expert evidence of the respondent on the point. On this issue, the appellant essentially repeated the arguments she made to challenge the trial judge’s acceptance of the expert evidence of the respondent about the his income stream. Just as the Court was not persuaded that the appellant demonstrated a palpable and overriding error in the trial judge’s conclusion on that point, the Court similarly concluded she has not done so on the issue of IRG’s valuation.

The appellant’s claim for marriage-date deduction in respect of money owed to her by Kimiya

At trial, the appellant submitted that at the date of the parties’ marriage Kimiya owed her $ 248,567. She recorded this amount on her net family property statement as a debt owed to her on the date of marriage, which she treated as a deduction in the calculation of her net family property on the date of separation. The trial judge did not accept this sum as a marriage-date deduction.

The appellant submitted that the trial judge erred in disallowing the appellant’s Kimiya shareholder loan on the basis that she had not adduced a valuation of Kimiya at the date of marriage. The Court accepted her submission, explaining that the evidence before the trial judge was sufficient to establish that at the date of marriage Kimiya owed the appellant a shareholder loan in the amount of $ 248,567.

Consequently, the Court held that the trial judge committed a palpable and overriding error in disallowing Item 24 on the appellants Net Family Property Statement: namely, the Value of Property Owned on the Date of Marriage in the amount of $ 248,567. The Court held that the trial judge’s calculation of the equalization payment in that regard should be varied to include the recognition of the marriage date deduction claimed by the appellant.

Order Regarding the Appraisal of Tapestries

The Court explained that, as part of his equalization analysis, the trial judge was required to make findings regarding the value of certain tapestries. The appellant submitted that the trial judge erred in accepting the evidence of the respondent’s expert as to the value of the tapestries, as the respondent did not permit the appellant’s appraiser to value the tapestries, as required by a pre-trial order.

The Court saw no error, holding that, first, the cross-examination of the respondent revealed that there was a disagreement about the events which resulted in the appellant’s appraiser not viewing the tapestries. Second, the appellant did not object to the admission of the respondent’s expert evidence at trial and conducted a cross-examination of that witness. In those circumstances, the Court held that the trial judge was entitled to accept the expert’s valuation opinion.

3. No.

The appellant asserted a claim for unjust enrichment based on her husband’s use of joint lines of credit. As described in her factum, when IRG started up in 2016, the respondent withdrew funds from the National Bank joint line of credit secured by the matrimonial home to fund the company. This continued until the date of separation. While the respondent made payments to reduce the balance on the line of credit, according to the appellant the principal balance increased from 2016 until the 2019 date of separation. The appellant thus sought an order that the respondent pay her damages of $ 72,484 for her unjust enrichment claim.

The trial judge dismissed the appellant’s unjust enrichment claim. The Court held that the appellant failed to demonstrate that the dismissal of this claim was tainted by palpable and overriding error.

SHORT CIVIL DECISIONS

Thunder Bay (City) v. Great American Insurance Company, 2024 ONCA 837

[Pepall, Nordheimer and Zarnett JJ.A.]

Counsel:

M. Barrett, for the appellant
G. McGuire and S. Blakeley, for the respondent, The Corporation of the City of Thunder Bay
J. Tam and T. J. Donnelly, for the respondent, Lloyd’s Underwriters

Keywords: Contracts, Interpretation, Insurance, Commercial General Liability, Coverage, Exclusions, Torts, Negligence, Duty to Defend, Insurance Act, R.S.O. 1990, c. I.8, s.124, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33

Passmore v. Hamilton (City), 2024 ONCA 825

[Huscroft, Harvison Young and Copeland JJ.A.]

Counsel:

J. Katz and E. D’Alessio, for the appellant
C. P. Gronke and C. Albuquerque, for the respondent

Keywords: Torts, Negligence, MVA, Civil Procedure, Partial Summary Judgment, Rules of Civil Procedure, r. 20, Malik v Attia, 2020 ONCA 787

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.