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Civil Litigation - Applications (2). Pereira v. TYLT Technologies Inc. (TYLTGO)
In Pereira v. TYLT Technologies Inc. (TYLTGO) (Ont CA, 2023) the Court of Appeal held that where a proceeding commenced as an application requires credibility findings, a trial is required:[43] The matter was originally brought as an application. It does not appear that the parties requested that the matter be converted to a trial. However, it is evident that in order to properly adjudicate the issues between the parties, the court will have to make findings of fact, including findings of credibility regarding the circumstances under which Mr. Pereira’s role at TYLTGO was terminated and his shares were bought out. As a general rule, if the determination of the issues, including issues of credibility, cannot properly be made on the application record, then the application should be converted to a trial: see Gordon Glaves Holdings Ltd. v. Care Corp. of Canada Ltd. (2000), 2000 CanLII 3913 (ON CA), 48 O.R. (3d) 737 at para. 30 (C.A.). . Bernier v. Kinzinger
In Bernier v. Kinzinger (Div Court, 2023) the Divisional Court allowed an appeal where the theory relied upon by the respondent was practically 'unpled', although here in an application which does not require a statement of defence:25. The appellant states that mutual rescission was not an issue raised by or argued by the parties before the application judge. It was a “novel legal theory” applied by the application judge, which “escaped the rigours of the adversarial process”. This, the appellant argues, raises issues of procedural fairness and substantive propriety of the application judge’s finding that the agreement had been rescinded.
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30. An application judge’s interpretation of a contract is entitled to considerable deference in this court. However, when an application judge decides a matter on a basis that was not anchored in the pleadings, evidence, positions and submissions of the parties, principles of procedural fairness overtake principles of contractual interpretation: Union Building Corporation of Canada v. Markham Woodmills Development Inc., 2018 ONCA 401, para. 13. The following passage from the Court of Appeal’s decision in Rodaro v. Royal Bank (2002) 2002 CanLII 41834 (ON CA), 59 OR (3d) 74, para. 62 – was stated in respect to unargued theories of liability, but applies equally to unargued defences:In addition to fairness concerns which standing alone would warrant appellate intervention, the introduction of a new theory of liability in the reasons for judgment also raises concerns about the reliability of that theory. We rely on the adversarial process to get at the truth. That process assumes that the truth best emerges after a full and vigorous competition amongst the various opposing parties. A theory of liability that emerges for the first time in the reasons for judgment is never tested in the crucible of the adversarial process. We simply do not know how Spence J.'s lost opportunity theory would have held up had it been subject to the rigours of the adversarial process. We do know, however, that all arguments that were in fact advanced by Mr. Rodaro and were therefore subject to the adversarial process were found wanting by Spence J. 31. I appreciate that there is no formal statement of defence in an application. However, the parties filed extensive materials, including factums, and nowhere was the issue of mutual rescission mentioned. None of the cases relied upon by the application judge on this point were put to him by the parties. The application judge did not have the benefit of full argument from the parties on the impact of the sale of Northbud on the share acquisition agreement. In all of these circumstances, the application judge’s findings on the issue of mutual rescission are not entitled to deference in this court, and we are required to take a fresh look at the issue: Rodaro v. Royal Bank (2002) 2002 CanLII 41834 (ON CA), 59 OR (3d) 74.
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39. The passage from Chitty highlights the procedural unfairness of deciding this case on the basis on an unargued ground. There was no express contract to rescind the agreement. The question of whether subsequent events rescinded, varied, or left the agreement essentially intact, is, at best, of “considerable difficulty” in this case. The parties did address this “considerable difficulty” before us, and we are persuaded the original agreement can be implemented, as originally agreed, with only minor adjustments. . A.H. v Toronto District School Board
In A.H. v Toronto District School Board (Div Court, 2023) the Divisional Court ordered the applicant to provide necessary case particulars in their Notice of Application:[2]... The litigation guardians were also advised that the notice of application for judicial review lacked particulars regarding the decisions under review and the grounds for review. ...
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[6] In addition, the litigation guardians were advised in March 2023 that the notice of application for judicial review is deficient for the same reasons as in Ye v. TDSB. The notice of application itself is bare and contains no particulars as to the decision under review or the grounds for review. It does not even identify the decision under review. The litigation guardians have attached a document entitled “Description of the Decisions” which makes arguments about the TDSB’s admission policies and attaches certain screen shots. The “Description of the Decisions” is not a proper pleading and is not part of the notice of application for judicial review. For greater clarity, the “Description of Decisions” cannot be relied upon as forming part of the Notice of Application.
[7] As a result of the litigation guardians’ continued non-compliance with the Rules, I advised the parties at the case conference that I would direct the Registrar to issue a notice under Rule 2.1.01 of the Rules of Civil Procedure. Accordingly, a notice shall be issued pursuant to Rule 2.1.01 of the Rules of Civil Procedure that the court is considering dismissing the appeal pursuant to Rule 2.1.01(1) as frivolous, vexatious and an abuse of process because of the following:(a) The litigation guardians continue to be in non-compliance of Rule 7.05(3) requiring them to be represented by counsel; and
(b) The notice of application for judicial review fails to state a basis for judicial review and is devoid of merit. [8] Pursuant to the procedure provided for under Rule 2.1.01(3), the applicants have 15 days following the notice to respond with a written submission no more than 10 pages in length. The TDSB is not required to respond at this time. . Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc.
In Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc. (Ont CA, 2023) the Court of Appeal reviews the general nature of a R14.05 'application', and dismisses the appeal (in part) as an application was inappropriate in the circumstances:[60] Bryton’s application was issued under r. 14.05 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). As indicated by r. 14.02, the commencement of proceedings by way of an application is an exception to the general rule that proceedings are commenced as actions. Under r. 14.05(2) a proceeding may be commenced by application to the Superior Court if a statute so authorizes, and r. 14.05(3) authorizes a proceeding by application where authorized by the Rules or where the relief claimed falls within r. 14.05(3)(a)-(g.1). Under r. 14.05(3)(h), a proceeding may be brought by application in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial.
[61] Rule 14.05 is procedural in nature. It does not create jurisdiction, but assumes it, and provides a means by which to engage that jurisdiction: Grain Farmers of Ontario v. Ontario (Ministry of the Environment and Climate Change), 2016 ONCA 283, 130 O.R. (3d) 675, at paras. 17-18. A court must have jurisdiction independent of r. 14.05 before it can consider the appropriate vehicle for bringing the matter forward, whether by application or action: J.N. v. Durham Regional Police Service, 2012 ONCA 428, 294 O.A.C. 56, at para. 16.
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[67] I see no merit to this ground of appeal. Bryton’s attempt to obtain declaratory relief dismissing and barring the Creditor Claims and the ss. 95 and 96 BIA claims through the vehicle of an application was defective on two bases: (1) it was not a proper use of the application procedure, and (2) it went beyond the proper scope of declaratory relief. Further, and in any event, the application judge did not consider an irrelevant factor and his exercise of discretion in refusing declaratory relief is entitled to deference.
[68] First, Bryton erred in its reliance on r. 14.05(3)(e) to initiate its application for declaratory relief. The rule provides that a proceeding can be brought by application where the relief claimed is “the declaration of an interest in or charge on land, including the nature and extent of the interest or charge … or the settling of the priority of interests or charges”. In my view, the relief Bryton was seeking went beyond the scope of r. 14.05(3)(e). Bryton was not simply seeking a declaration of its rights; it was seeking a dismissal of the Creditor Claims and ss. 95 and 96 BIA claims, whether on their merits or on default of the respondents bringing forward evidence to support the claims. Bryton could not simply rely on the failure of the respondents to join issue on the substance of the challenges it pre-emptively brought before the court. There had to be a basis for seeking the relief by way of application, and, in this case, there was none. . Palichuk v. Palichuk
In Palichuk v. Palichuk (Ont CA, 2023) the Court of Appeal considered when, in relation to the death or incapacity of a testator or settlor, testamentary instruments or trusts could be subject to RCP 14.05(3)(a) "opinion, advice or direction of the court":[62] At the same time, I agree with the submissions of Nina’s counsel that, terminology aside, the application judge’s broader concern was about engaging in an academic or hypothetical exercise because Nina, having been found capable, could change all the impugned documents. Nina could make the changes to revoke any or all impugned instruments in the middle of that trial, resulting in a waste of judicial time and resources. It would also put the litigants to unnecessary expense. The application judge cited cases where this concern has been expressed: see Re Skinner, 1970 CanLII 360 (ON SC), [1970] 3 O.R. 35 (H.C.J.), at pp. 38-40, and Furfaro v. Furfaro (1986), 22 E.T.R. 241, at pp. 247-48.
[63] Similarly, in Brian A. Schnurr, Estate Litigation, loose-leaf, 2nd ed., vol. 2, (Toronto: Thomson Reuters Canada Limited, 2021), at c. 12.3, the author identified two types of questions that should not be entertained in this context:One type relates to matters of an academic or hypothetical nature. The court will refuse to answer questions in the abstract. The court will only answer questions that apply to the facts of a particular case.
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The other type of question that should not be put to the court is one that may or may not be a problem depending upon the happening of future events. In cases of this nature, the court will refuse to proceed with the action.[4] These principles apply to this case.
[64] This brings me back to the jurisdictional basis upon which this aspect of Linda’s application proceeded – r. 14.5(3)(a). This rule provides:14.5(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
(a) the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust. [Emphasis added.] This is the only rule to employ the language “opinion, advice or direction.”
[65] Linda sought the “opinion, advice or direction” on the validity of all the impugned instruments. However, the rule does not contemplate the court providing an “opinion, advice or direction” on the will of a living person, the granting of a power of attorney, or the settling of a trust.
[66] More generally, the courts do not entertain requests for its opinion, advice or direction. In 1472292 Ontario Inc. (Rosen Express) v. Northbridge General Insurance Company, 2019 ONCA 753, 96 C.C.L.I. (5th) 1, the court considered an appeal from a decision refusing to make a declaration about rights under an insurance policy. In dismissing the appeal, the court referred to s. 97 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, which empowers the court of appeal, superior court, and the small claims court to make binding declarations of rights. The application judge refused to do so. In upholding this decision, Feldman J.A. wrote, at para. 22:[A declaration of right] is not to be given as an opinion on a hypothetical set of facts, or as an academic exercise to settle what may happen in the future… At p. 26, Riddell J.A. quoted from Curtis v. Sheffield (1882), 21 Ch. D. 1, at pp. 3-4, where Jessel M.R. stated:Now it is true that it is not the practice of the Court, and was not the practice of the Court of Chancery, to decide as to future rights, but to wait until the event has happened, unless a present right depends on the decisions, or there are some other special circumstances to satisfy the Court that it is desirable at once to decide on the future rights. [67] Returning to this case and the application of r. 14.5(3)(a), I accept that determining the validity of a will depends upon a future contingency – the testator’s death. The Succession Law Reform Act, R.S.O., 1990, c. S. 26 clearly states at s. 22 that a will speaks from death:22 Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,
(a) the property of the testator; and
(b) the right, chose in action, equitable estate or interest, right to insurance proceeds or compensation, or mortgage, charge or other security interest of the testator under subsection 20 (2). [68] In the case of Duke of Marlborough v. Lord Godlophin (1750), Ves. Sen. 61, 28 E.R. 41 (H.C. of Ch.), Lord Hardwicke L.C. remarked that the testamentary document of a living person is nothing more than a piece of waste paper, at p. 50: “…[T]he law says, that a testamentary act is only inchoate during the life of the testator, from whose death only it receives perfection: being till then ambulatory and mutable, vesting nothing, like a piece of waste paper.” This decision has been cited in other cases for the proposition that a will only speaks from the moment of death: see Y.P. v. M.L.S., 2006 MBCA 32, 205 Man R (2d) 20, at para. 19; S.A. (Trustee of) v. M.S., 2005 ABQB 549, 18 E.T.R. (3d) 1 at para. 28.
[69] There are a couple of Superior Court of Justice decisions that involve a review of the validity of a trust or will during the grantor or testator’s lifetime. See, e.g. Brandon v. Brandon, [2001] O.J. No. 2986, which was upheld by this court in brief reasons, see Brandon v. Brandon, [2003] O.J. No. 4593, and Rubner v. Bistricer, 2018 ONSC 1934, 36 E.T.R. (4th) 79. Neither case involved a direct challenge to the trust or to the will. Instead, the question of the validity of these instruments was incidental to another dispute. The Brandon case was primarily an action to enforce a mortgage, with a counterclaim to discharge the mortgage and declare an inter vivos trust invalid due to undue influence. In Rubner, the validity of a will was directly relevant to the current management of property by joint attorneys for property for the incapable person.
[70] Another Superior Court of Justice decision, Dempster v. Dempster, 2008 CanLII 2747 (Ont. S.C), cites Brandon in suggesting at para. 9. that the law in Ontario “may well be moving towards” permitting claims of undue influence where a testator remains alive. Given the incidental nature of the validity issue in Brandon, I disagree with this portent. I also disagree with the suggestion that Cullity J.’s comment at para. 28 of Stern v. Stern, (2003) 49 E.T.R. (2d) 129 (Ont. S.C), is intended to open the door to will challenges during the testator’s life:The court should not, I think, close its eyes to the fact that litigation among expectant heirs is no longer deferred as a matter of course until the death of an incapable person. While, in law, the beneficiaries under a will, or an intestacy, of an elderly incapable person obtain no interest in that person's property until his, or her, death, the reality is that very often their expectant interests can only be defeated by the disappearance, or dissipation, of such property before the death. I read this quote consistently with the two cases discussed above: litigation among expectant heirs may occur before death when a present dispute comes before the court. Practically, there will be some cases in which the validity of a will, trust or transfer incidentally comes into play. This does not mean that it is either necessary or desirable for the law to permit direct challenges to these instruments during the grantor or testator’s life.
[71] To the contrary, there are strong public policy reasons not to permit a challenge to a will prior to the death of a testator. A testator may change their will as often as they like. It is entirely unknown how much, if any, money or property there will be left to dispute until the testator dies. It cannot be known if any of the beneficiaries will have predeceased the testator. Thus, the common law insists upon the death of the testator before litigation. Otherwise, the courts would be inundated with litigation that is hypothetical during the lifetime of the testator, with the potential for re-litigation after their death.
[72] The application judge was aware of the problems associated with considering the validity of the will and the property transfer in the circumstances. As he said at para. 126 of his reasons:It is less obvious that I need to assess Nina’s testamentary capacity or her capacity to transfer the Acton property to Susan, when Nina is alive and these instruments are executory. However, if Nina did not have the requisite capacity, and if she was not expected to regain capacity, it might be open to Linda to challenge the validity of the Will at this time. In that case, the issue of the validity of the Will and property transfer might not be premature or hypothetical. Nonetheless, although the application judge refused to consider undue influence in relation to these instruments, he did determine Nina’s capacity.
[73] The application judge should not have provided his “opinion, advice or direction” on either basis because there is every possibility that Nina may decide to reorganize her affairs. As Dr. Shulman reported in his assessment report, Nina said that her will was not “written in stone”. Nina said she might change it if Linda treats her better.
[74] As for the transfer of the Acton property, Susan has no beneficial interest in the property. She simply holds it in trust for Nina. Even absent the trust agreement, since the transfer was gratuitous, the law presumes that Susan holds the property in trust for Nina. In Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721, Juriansz J.A. said, at para. 26: “Equity presumes bargains, not gifts. Thus, when a parent gratuitously transfers property to an adult child, the law presumes that the child holds the property in a resulting trust for the parent: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 36”.
[75] For all these reasons, the application judge should not have provided his “opinion, advice, and direction” on the validity of the transfer and settlement of the trust as part of Nina’s estate planning. As the application judge said, at para. 161: “…the transfer of the Acton property might properly be treated as testamentary. Because Susan is a bare trustee, she will derive no benefit from the transaction until Nina dies.”
[76] As for the powers of attorney, again the question of undue influence is premature.[5] Counsel did not point us to any existing cases in which the question of undue influence was determined while the grantor was both alive and capable. The two cases referred to in Linda’s factum to suggest that the court may consider undue influence to undermine the validity of a document or transfer in the face of capacity: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353 and O’Meara v. Miller, 2021 ONSC 5919, both involved estate disputes after the grantor’s death. There is nothing on the facts of this case that would suggest expanding the law.
[77] I would also add that, if Susan begins to act under the authority of either power of attorney document, she will be held to exacting standards. A person acting under a power of attorney for property is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit: SDA, ss. 32(1) and 38(1). There was no evidence that Susan was acting under the authority of the continuing power of attorney at the time of the application.
[78] Similarly, the powers and duties of an attorney for personal care must be exercised diligently and in good faith according to the incapable person’s best interests: SDA, ss. 66(1), (4) and 67. Susan is not authorized to act on this power of attorney while Nina remains capable of making her own personal care decisions: SDA, s. 49.
[79] In conclusion, the application judge did not err by failing to consider the issue of undue influence as it related to the impugned instruments. Where the grantor was found capable at the time of the application, it would have involved delving into a hypothetical or abstract inquiry, resulting in the waste of judicial resources, and at great expense to the parties. For these same reasons, the application judge’s inquiry into whether Nina was capable at the time that she executed the impugned instruments was also unnecessary. . Benbella v. The National Dental Examining Board of Canada
In Benbella v. The National Dental Examining Board of Canada (Ont CA, 2023) the Court of Appeal considered an appeal a R21 dismissal of a R14.05 [likely R14.05(3)(d) 'determination of rights that depend on the interpretation of a deed, will, contract or other instrument'], where a dental student failed national examinations. The basis of denying the appeal was that the Examining Board's by-laws provided for no substantive (as opposed to procedural) rights for further administrative appeal:[18] We agree with the submissions of the respondent and the interpretation of the motion judge that the appellant’s motion is dependent on whether there exists a substantive right to a “Special Appeal” pursuant to the by-laws. The provisions of the by-laws must be read as a whole. As noted above, the various appeal mechanisms are clearly stated in rr. 20 to 23 of the by-laws. Nowhere within these provisions is there any stated substantive grounds of appeal from the failure of a written examination. . Pushie v Guidarelli
In Pushie v Guidarelli (Div Court, 2022) the Divisional Court considered the law of converting an application to an action under R38.10, where live issues of credibility existed:[22] The application judge expressed a view that he did not have the authority to convert the application to an action under Rule 38.10 of the Rules of Civil Procedure in the absence of a request for that relief in Mr. Pushie’s motion record. There is no requirement for a party to ask for that relief in their materials under Rule 38.10, or under the authorities for a judge to make that order.
[23] In Yoo v. Kang, [2002] O.J. No. 4041, Paisley J. held he had the discretion to make an order for the trial of an issue. He stated that “it is not open to a judge on an application, where affidavits and examinations in transcript form are the only evidence before the court to decide the credibility of the witnesses other than in the clearest of cases”: at para. 24. In Newcastle Recycling Ltd. v. Clarington (Municipality), 2005 CanLII 46384 (ON CA), [2005] O.J. No. 5344, the Court of Appeal for Ontario held that in such circumstances it is beyond the role of an application judge to determine credibility to resolve material facts, and that a trial of an issue should be directed: at paras. 11-12. See also Keewatin v. Minister of Natural Resources, 2003 CanLII 43991 (ON SCDC), [2003] O.J. No. 2937 (Div. Crt.).
[24] This view can be reconciled with the cases that Ms. Guidarelli relies upon.
[25] In Fort William Indian Band v. Canada (Attorney General), (2005), 2005 CanLII 28533 (ON SC), 76 O.R. (3d) 228, Smith J. stated that a factual dispute in and of itself is not sufficient reason for the court to convert an application to an action. An order for that conversion should only be made where there are facts in dispute that are material to the case: at para. 31.
[26] In a similar fashion, the Court of Appeal for Ontario in Champion v. Guibord, 2007 ONCA 161, upheld the decision of an application judge to reject the evidence of a party without directing a trial because the case was not one where “the determination of material facts require the choice between conflicting versions testified to by different witnesses”: at para. 6.
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[30] It is evident that the application judge made findings against Mr. Pushie in his oral reasons that Mr. Pushie could not be believed. He wholly adopted the examples of contradictory evidence set out in paras. 20 to 34 of Ms. Guidarelli’s factum, along with her conclusion in para. 35.
[31] In contrast, the application judge accepted Ms. Guidarelli’s evidence about the nature of the advance as credible without hearing testimony on how the funds should be considered a loan without any reference to its terms or repayment. Nor was there evidence given to refute any claim that Mr. Pushie was entitled to a constructive trust by unjust enrichment, or to a claim in resulting trust. The courts have held that in certain circumstances where a trust claim is made, the actual intention of the transferor is the governing consideration: Kerr v. Baranow, 2011 SCC 10 and Korman v. Korman, 2015 ONCA 578.
[32] It is significant to read further in the Fort William case where Smith J. wrote that where there are credibility issues involved or when viva voce evidence is required, a matter should proceed as an action [emphasis provided].
[33] An application is suitable for use where authorized by statute or where the issues in the case fall under one or more of the subparagraphs in Rule 14.05(3). Those circumstances include subparagraph (h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
[34] That was not the case before the application judge. He assessed the credibility of the parties on facts material to the issues in dispute by relying on a paper record. The evidence of the witnesses about material facts were diametrically opposed. The findings of the application judge involving the assessment of credibility between witnesses were made despite the conflicting evidence of the parties as to those facts, and even though the objective evidence did not clearly support one party’s version of the facts over that of another party.
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