Legal Blog

The Civil Rules Review Releases Phase 2 Consultation Paper

The Civil Rules Review was launched by Attorney General Doug Downey and Superior Court Chief Justice Geoffrey B. Morawetz with a mandate to identify issues and develop proposals for reforming the Rules of Civil Procedure to make civil court proceedings more efficient, affordable, and accessible. As the Chief Justice made clear in his remarks at the Opening of the Courts Ceremony, the objective is not just to tinker with the Rules, it is wholesale reform.

On April 1, 2025, the CRR released its Phase 2 Consultation Paper, which provides a comprehensive overview of the reforms the CRR is proposing. The Phase 2 Consultation Report can be found here: https://www.ontariocourts.ca/scj/files/pubs/Civil-Rules-Review-2025-phase-two-EN.pdf

The co-chairs of the CRR, Justice Cary Boswell and SNF partner, Allison Speigel, will be discussing the proposed reforms at two up-coming virtual events put on by the Advocates’ Society and Toronto Lawyers’ Association:

• https://advocates.ca/TAS/Events/Showcase_Pages/Overhauling_Ontarios_Civil_Rules_Proposed_Changes.aspx?EventKey=ONRULES25&utm_source=TAS&utm_campaign=a4d4baf156-ed-rules-april-2-25&utm_medium=email&utm_term=0_-a4d4baf156-443965443
• https://www.tlaonline.ca/?pg=events&evAction=showDetail&eid=300877

Direct Payments (2)

In our October 2024 newsletter, discussing the motion judge’s 2024 decision in Demikon Construction Ltd. v. Oakleigh Holdings Inc. (Ontario Superior Court of Justice), we said, “In some cases, however, we just cannot fathom the position that the lawyers for one of the parties take.” In doing so, we implied that the lawyers for the lien claimant were taking an unreasonable position that was bound to fail. The lien claimant appealed the decision we were discussing and, now, after reviewing the reasons of the Divisional Court, we can “fathom” the position that the lien claimant’s lawyers were taking.

Recap

The construction manager of a condominium project registered a $5 million claim for lien. The developer posted security for $5,050,000 to vacate the lien from title to the condo lands. The developer later moved under s. 44(5) of the Construction Act for an order reducing its posted security by the additional $3.5 million it had paid to the construction manager’s subs. Section 44(5) gives the court authority to reduce lien security “where it is appropriate to do so.”

Sever (2)

In our June 2012 newsletter, we discussed how a joint tenancy could be severed. The usual way is for one party to deal with that party’s share (e.g. selling or encumbering it). However, even if the joint tenancy is severed, sometimes the actual result of the severance is not apparent.

A joint tenancy can be created by way of a transfer from an owner to the owner and another as joint tenants. Often, an owner decides to do this to avoid probate tax – with the understanding that the owner has full control over, and all monetary benefits of, the transferred property until the owner’s death. This is a dangerous game. Execution creditors of the new joint tenant can be waiting in the wings and pounce. The owner can have a change of mind. The new joint tenant can start to assert ownership rights. The exact nature of a joint tenancy and a severance under these circumstances was discussed in Nigel v. Rosenberg, a 2024 Ontario Court of Appeal decision.

Severance (2)

In our August 2011 newsletter, we discussed the severance of a joint tenancy and stated:

“Two or more people may own property together in one of two ways: as joint tenants or as tenants in common. On death, the interest of one joint tenant passes to the other joint tenant whereas the interest of a tenant in common passes to that person’s heirs in the normal course. Joint tenants acting together may, if they wish, choose to convert (or sever) a joint tenancy to a tenancy in common. Indeed, one joint tenant can unilaterally sever a joint tenancy. Is there ever a circumstance in which a third party can sever a joint tenancy?”

The answer to the last question was yes. If a creditor moves to have a joint tenant’s interest sold under a writ of seizure and sale and the sheriff advertises the property for sale, that is sufficient to sever the joint tenancy.

What happens when a joint tenant applies for an order taking back a full interest in the property, but, in the meantime, a creditor has filed a writ of seizure and sale against the other joint tenant. This situation arose in Brunton v. Lanzarotta, a 2024 decision of the Ontario Superior Court of Justice.

Construction Act (#5)

In 2018, we devoted four newsletters to the revamp of the Construction Lien Act, including its change of name to the Construction Act (the “Act“). Most of the changes to the Construction Lien Act took effect as of July 1, 2018; the prompt payment and adjudication provisions took effect as of October 1, 2019. On November 6, 2024, the Act had its first revamp. The bill making these changes has been enacted, but has not yet been proclaimed into force. Similarly, contemplated new regulations have not yet been promulgated.

Rather than a whole-scale change, the new legislation is more akin to a significant tweaking of some existing concepts in the Act. We will now review the more important of these tweaks. To meet space requirements, we will limit our comments to a prime contract scenario; however, the changes are applicable to subcontracts with only slight variations.

Krystyne Rusek’s Appointment by the Executive of the Trusts and Estates Section of the OBA

Krystyne Rusek has been appointed by the Executive of the Trusts and Estates Section of the OBA to act as the liaison for the OBA’s Civil Rules Review Taskforce.  The Taskforce will be making submissions to the Civil Rules Review Group, co-Chaired by Allison Speigel and the Honourable Justice Cary Boswell, and participating in consultations regarding a proposed overhaul of the Rules of Civil Procedure.

Corporate Attribution

The common law doctrine of corporate attribution provides guiding principles for when the actions, knowledge, state of mind, or intent of the directing mind of a corporation may be attributed or imputed to a corporation. Attribution is generally inappropriate if the directing mind acted to defraud the corporation or those actions were not designed to benefit the corporation.

The Supreme Court of Canada has ruled in both civil and criminal cases that it would give effect to the exceptions and would not apply the corporate attribution doctrine in the contexts of those cases.

The court has now discussed the corporate attribution doctrine in bankruptcy and insolvency contexts:  Aquino v. Bondfield Construction Co. 2024 SCC 31 and Scott v. Golden Oaks Enterprises Inc. 2024 SCC 32.

Direct Payments

In almost all legal cases, we can understand the positions of the parties. Some positions are better; some are worse. But at least they are reasonably arguable. In some cases, however, we just cannot fathom the position that the lawyers for one of the parties take. The case of Demikon Construction Ltd. v. Oakleigh Holdings Inc., a 2024 decision of the Ontario Superior Court of Justice, is one of those cases.

Motion

The construction manager of a condominium project registered a $5 million claim for lien. The developer posted security for $5,050,000 (i.e. the lien amount plus $50,000 for costs). The developer obviously needed to clear title so that mortgage money or unit sales would flow in the normal course.

The Opening of the Courts: Chief Justice Morawetz’s Speech

On September 23, 2024, Chief Justice Morawetz gave a speech at the annual Opening of the Courts, in which he provided an update on the work of the Civil Rules Review, which our own Allison Speigel is co-chairing along with Justice Cary Boswell.

His remarks concerning the work of the Civil Rules Review were as follows:

“One significant measure towards addressing our Court’s backlog and the culture of complacency in the area of Civil, is a commitment to a complete reform of the Civil Rules of Procedure.  Rules that have not been updated for 40 years.

Last Fall, Attorney General Doug Downey and I announced a Civil Rules Review. We assembled a team dedicated to this work.  It is co-chaired by Justice Cary Boswell and Allison Speigel, and includes members of the judiciary, members of the private and public bar and expert legal academics.

The group launched phase one of their work in January.

From the outset, I hoped for bold and inspired thinking.

No Claims Over – Release

A creditor commences an action against, seemingly, the only entity liable for the debt. It enters into minutes of settlement with that debtor and, as part of the minutes, it is to give a full and final release. The debtor wants a “no claims over” clause, but the creditor does not want to give up its rights to claim against someone else – just in case. The creditor and debtor disagree as to the form of the release. Will the release contain that clause and, if it does, what then? Those questions were answered in Haider v. Rizvi, a 2023 decision of the Ontario Court of Appeal.

Clause Meaning

A “no claims over” clause stipulates that not only will the releasor (creditor) release all its claims against the releasee (debtor), but it will also not commence any action against anyone else who might claim contribution and indemnity against the releasee relating to the same issues.