



COURT OF APPEAL FOR ONTARIO

CITATION: 1062484 Ontario Inc. v. McEnery,
    2021 ONCA 129

DATE: 20210302

DOCKET: C68190 and C68191

Roberts, Zarnett and Sossin
    JJ.A.

DOCKET: C68190

BETWEEN

1062484 Ontario Inc.

Plaintiff (Appellant)

and

Williams McEnery, Williams
    Litigation Lawyers and Paul McEnery, by his litigation guardian, the Public
    Guardian and Trustee

Defendants (Respondents)

DOCKET: C68191

AND BETWEEN

1770650 Ontario Inc.

Plaintiff (Appellant)

and

Williams McEnery, Williams
    Litigation Lawyers and Paul McEnery, by his litigation guardian, the Public
    Guardian and Trustee

Defendants (Respondents)

Christine
    G. Carter, for the appellants

Stephen Cavanagh and Robin S. Brown,
    for the respondents Williams McEnery and Williams Litigation Lawyers

No one appearing for the respondent
    Paul McEnery

Heard: January 26, 2021, by video conference

On appeal from the judgments of Justice Robyn
    M. Ryan Bell of the Superior Court of Justice, dated February 7, 2020, with
    reasons reported at 2020 ONSC 825, 1 B.L.R. (6th) 120, and from the costs
    order, dated June 22, 2020, with reasons reported at 2020 ONSC 3861.

REASONS FOR DECISION

OVERVIEW

[1]

This is a consolidated appeal from two summary
    judgments, both dated February 7, 2020, with additional reasons on costs, dated
    June 22, 2020.

[2]

The motion judge heard summary judgment motions
    in two actions against the respondents, one brought by the appellant 1062484
    Ontario Inc. (106 Ontario) and one by the appellant 1770650 Ontario Inc.
    (177 Ontario). Both appellants were represented by the same counsel on the
    motions and the motion judges reasons dealt with both actions.

[3]

The respondent Williams McEnery, now known as
    Williams Litigation Lawyers (the Firm), is a law firm located in Ottawa
    focusing on civil litigation.

[4]

The respondent Paul McEnery (by his litigation
    guardian, the Public Guardian and Trustee) was a lawyer who shared space with
    the Firm. Mr. McEnerys practice included corporate law, commercial law, real
    estate, and estates law.

[5]

In the first action, the appellant 106 Ontario
    claimed that a related company dealt with Mr. McEnery and as a result loaned
    $420,000 in March 2015, of which $400,000 was repaid, and $360,000 in September
    2015, none of which was repaid. 106 Ontario claims that the loans were made not
    just to Mr. McEnery but to the Firm because Mr. McEnery was dealing as, or was
    held out to be, a partner of the Firm. It sues for recovery as the assignee of
    the outstanding debt.

[6]

In the second action, the appellant 177 Ontario alleged
    that, as a result of dealings with Mr. McEnery, in September 2015 it provided
    $241,000 to be used to pay off and discharge a mortgage. The mortgage remains registered
    on title. 177 Ontario seeks to recover the amount advanced as well as
    additional costs incurred to maintain the mortgage in good standing from both
    Mr. McEnery and the Firm because it alleges that he was dealing as, or was held
    out to be, a partner of the Firm.

[7]

The motion judge granted summary judgment in
    favour of the appellants as against Mr. McEnery.

[8]

However, the motion judge dismissed the
    appellants motion for summary judgment as against the Firm.

[9]

The motion judge also granted summary judgment
    in favour of the Firm, dismissing the appellants actions as against the Firm.

[10]

Each appellant appeals the motion judges disposition
    of its respective summary judgment motion on substantially the same grounds.

[11]

For the reasons that follow, we dismiss the
    appeal.

THE MOTION JUDGES DECISION

[12]

The motion judge found there was no genuine
    issue requiring a trial with respect to Mr. McEnerys liability, granting
    summary judgment against him in favour of the appellants for the outstanding debts.

[13]

The motion judge also found no genuine issue
    requiring a trial with respect to the Firms liability and granted summary
    judgment in favour of the Firm.

[14]

Specifically, the motion judge found that Mr. McEnery
    was not a partner of the Firm and that the respondents conducted two distinct
    businesses. As a result, the Firm was not liable for actions of Mr. McEnery
    under ss. 11 or 12 of the
Partnerships Act
, R.S.O. 1990, c. P.5.

[15]

The motion judge based this finding on a close
    reading of the record, including: the Firms partnership agreement, which
    expressly stated that Mr. McEnery was not a partner of the Firm; law society
    filings; bank account and accountants records; and other documentary evidence.
    She stated, at para. 67:

There is
    compelling evidence that the [respondents] were not carrying on a business in
    common. Mr. McEnery and the [Firm] shared office space for many years in an
    office building owned by Mr. McEnery and Mr. Williams personally. Mr. McEnery
    paid his share of the common overhead expenses. However, Mr. McEnery and the [Firm]
    had separate offices, separate trust accounts, separate employees, and separate
    filing and computer systems. Mr. McEnery had his own chartered accountant. He
    had his own financial statements, separate from those of the [Firm]. The [Firm]
    and Mr. McEnery maintained their respective trust accounts at different
    financial institutions.

[16]

Further, the motion judge found that, since no
    credit was given to Mr. McEnery in reliance of his being allegedly held out as
    a partner of the Firm, liability under s.15 of the
Partnerships
    Act
could not be established.

ANALYSIS

[17]

We begin with the standard of review. Absent an
    extricable error of law, which would be reviewable on a correctness standard,
    deference is owed to findings on a summary judgment motion. Decisions as to
    whether there are genuine issues for trial are questions of mixed fact and law
    which will not be disturbed absent a palpable and overriding error:
Housen
    v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8;
Hryniak
    v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 81-84.

[18]

We see no such errors.

The liability issue

[19]

The motion judge considered two different
    pathways under the
Partnerships Act

for holding the Firm liable for the appellants
    losses.

[20]

First, she considered whether Mr. McEnery was a
    partner of the Firm. Under s. 11 of the
Partnerships Act
, a firm may
    be held liable for the wrongful act or omission of a partner. Under s. 12, a
    firm may be liable for a partners misapplication of money or property received
    for or in custody of the firm.

[21]

After a thorough assessment of the parties
    objective intentions, the motion judge found that Mr. McEnery was not a partner
    of the Firm, and that the Firm was not liable for the actions of Mr. McEnery.

[22]

The appellants principal argument regarding
    this pathway is that the motion judge misconstrued the test for a business in
    common when she stated, at para. 74:

The fact
    that parties hold themselves out as partners may be evidence of their intention
    to carry on business in common under a partnership, but this alone would not
    have the effect of validating the existence of a partnership (
Continental Bank
, at para. 36). A court may find the existence of a
    partnership, notwithstanding express statements between the partners to the
    contrary, on the basis of the partnerships dealings with third parties, but
    only if other partnership
indicia
are present (
Elbow River
, at para. 86, citing Alison R. Manzer,
A
Practical Guide to Canadian Partnership Law
, loose-leaf (Aurora, Ont.:
    Canada Law Book, 1994- (October 2011 release consulted) at para. 2.340).

[23]

The appellants submit that the motion judge
    erred in this statement of the principle. They argue that if individuals
    present to the world a common business enterprise with a view to profit, then
    this may be sufficient to constitute a partnership.

[24]

We do not find any error in the motion judges
    statement of the law from
Continental Bank Leasing
    Corp. v. Canada
, [1998] 2 S.C.R. 298
.

[25]

The appellants also contend that the requisite
    indicia set out in
Continental Bank

were in fact present. They focus on the
    definition of a partnership in s. 2 of the
Partnerships Act
, which has
    three elements: (a) a business; (b) carried on in common; (c) with a view to
    profit.

[26]

The indicia which the appellants say show that Mr.
    McEnery and the Firm carried on business in common with a view to profit
    largely involve how the Firm held out Mr. McEnery to third parties. Those
    alleged indicia include the following:

·

the Firm name was Williams McEnery;

·

the Firms Facebook page and website referred to
    Mr. McEnery as a founding partner;

·

the Firm had a single reception area with a
    single receptionist;

·

the Firms letterhead contained no indication
    that Mr. Williams and Mr. McEnery were not partners; and

·

the appellant 177 Ontario was directed to make
    cheques payable to Williams McEnery.

[27]

We would not give effect to this argument. We
    are satisfied that the motion judge committed no palpable and overriding error
    in her identification and application of the test as to whether Mr. McEnery was
    a partner of the Firm. Her finding that Mr. McEnery and the Firm were not
    carrying on a business in common is one of mixed fact and law and thus entitled
    to deference.

[28]

The second pathway to liability considered by
    the motion judge concerned the Firms alleged holding out of Mr. McEnery as a
    partner within the meaning of s. 15(1) of the
Partnerships
    Act
.

[29]

Section 15(1) of the
Partnerships
    Act
provides:

Every person, who by words spoken or written
    or by conduct represents himself or herself or who knowingly suffers himself or
    herself to be represented as a partner in a particular firm, is liable as a partner
    to any person who has on the faith of any such representation given credit to
    the firm, whether the representation has or has not been made or communicated
    to the persons so giving credit by or with the knowledge of the apparent
    partner making the representation or suffering it to be made.

[30]

In applying s. 15(1) to this case, the motion
    judge followed the approach taken by Corthorn J. in
Dawson v. Halpenny
    Insurance Brokers Ltd.
,
2017 ONSC 4487
. Under that approach, the appellants
    would first be required to establish that Mr. McEnery and the Firm held
    themselves out to the public as partners. Second, the onus would shift to the Firm
    to show that the Firm and Mr. McEnery clearly conveyed to the public that they
    were not partners. Third, even if the first two steps favoured the appellants, they
    would still need to show that they gave credit to Mr. McEnery based on his
    being held out as a partner of the Firm to the public.

[31]

The motion judge focused her analysis on the
    third step in this framework, namely whether the appellants had subjectively
    relied on their belief that Mr. McEnery was a partner with the Firm in their
    respective dealings with him. Following the approach in
Dawson
, the
    motion judge reasoned that the first two steps in the framework would only be
    relevant if the appellants could meet the subjective portion of the test for
    holding out.

[32]

As the motion judge acknowledged, there was
    evidence in the record that the decision-makers for the businesses involved in the
    impugned transactions relied on their belief that Mr. McEnery was a partner of
    the Firm. One of those decision-makers gave evidence that he and his wife took
    comfort in the fact Mr. McEnery was part of the Firm, while the other stated
    that he would not have given their business to Mr. McEnery had he realized Mr.
    McEnery was a sole practitioner.

[33]

However, the motion judge did not accept this
    evidence. She referred to the former statement, at para. 104, as little more
    than a bare allegation and to the latter, at para. 107, as bootstrapping
    evidence.

[34]

We see no basis on which to interfere with the
    motion judges findings of fact on this issue.

[35]

For this reason, the appellants appeal of the
    motion judges finding that the Firm was not liable fails.

The boomerang order issue

[36]

The appellants argue the motion judge erred by
    granting summary judgment in favour of the Firm when the Firm had not brought a
    cross-motion seeking such relief. This situation is commonly referred to as a
    boomerang order; the party that brought a motion for summary judgment ends up
    with a summary judgment order against itself.

[37]

The motion judge relied on several cases in
    which this court has held that a motion judge has authority to grant summary
    judgment in a partys favour where no cross-motion has been filed, including:
Meridian
    Credit Union Limited v. Baig
,
2016 ONCA 150
, 394
    D.L.R. (4th) 601, at para.
17
, leave to appeal to S.C.C. refused, (2017)
    46 C.B.R. (6th) 3,
King Lofts Toronto I Ltd. v. Emmons
,
2014
    ONCA 215
, 40 R.P.R. (5th) 26, at paras.
14-15
; and
Kassburg
    v. Sun Life Assurance Company of Canada
, 2014 ONCA 922,
124 O.R.
    (3d) 171
, at paras.
50-52
.

[38]

The motion judge properly also considered
Drummond
    v. Cadillac Fairview Corporation Limited
, 2019 ONCA 447, where a boomerang
    order was found inappropriate. She found that the factors which made a
    boomerang order inappropriate in
Drummond
were not present in this
    case.

[39]

Based on the record in this case, the motion
    judge held, at para. 31:

There is no unfairness to the plaintiffs in
    the other actions against Mr. McEnery and the [Firm]. None of those plaintiffs
    has moved for summary judgment. Some of their counsel have participated in case
    conferences dealing with the scheduling of these motions. Like the plaintiffs
    before me, the plaintiffs in the other actions were, effectively, on notice
    that the plaintiffs motions might be unsuccessful, and summary judgment could
    be ordered in the [Firms] favour. As the [Firm] put it in its written
    supplementary submissions on this issue, [a]ny risk of contrary findings
    regarding the plaintiffs primary allegation of actual partnership is present
    regardless of the [Firms] request for a boomerang order. There is no risk of
    contrary findings regarding the issue of whether the [Firm] is liable pursuant
    to s. 15(1) of the
Partnerships Act
, R.S.O. 1990, c. P.5 for holding
    Mr. McEnery out as a partner because that issue is factually specific to each
    plaintiff who has alleged detrimental reliance.

[40]

We find no error in the motion judges
    application of the case law on summary judgment. The motion judge found that summary
    judgment was a timely, affordable, and proportionate procedure in this case.
    We see no basis on which to disturb that finding.

The costs issue

[41]

The motion judge awarded the Firm its partial
    indemnity costs against the appellants in the respective amounts of $35,751.58
    and $20,646.64. She granted the appellants each their partial indemnity costs
    against Mr. McEnery in the amount of $1,250. However, she declined to make a 
Sanderson costs award, which
    would have required Mr. McEnery to pay the Firms costs, concluding in her costs
    endorsement that such an award would not be just or fair in the circumstances
    of this case.

[42]

The appellants seek leave to appeal the amount
    of the costs award against Mr. McEnery and submit the motion judge erred in
    failing to issue a Sanderson order. They say the motion judge erred in
    depriving them of their costs of the motion and the action against Mr. McEnery
    and argue it was fair and reasonable to hold Mr. McEnery responsible for the
    Firms costs because those costs were incurred as a result of Mr. McEnerys
    misconduct and refusal to consent to judgment.

[43]

While we would grant leave, we would not give
    effect to these submissions.

[44]

There is no basis on which to interfere with the
    quantum of the motion judges costs order against Mr. McEnery. While low, we
    see no error in the motion judges exercise of her discretion in the
    circumstances of this case as detailed in her costs reasons.

[45]

With respect to the appellants second argument,
    this court set out the circumstances which warrant a Sanderson or Bullock
    costs order in
Moore v. Wienecke
, 2008 ONCA 162, 90 O.R. (3d) 463. Unless plainly wrong, costs
    awards are not to be set aside:
Moore
, at para. 40. In
Moore
, MacPherson J.A. reiterated, at
    para. 45, that a courts determination of whether to grant a Sanderson order is
    discretionary.

[46]

The motion judge identified and applied the test
    for a Sanderson costs order as set out in
Moore
. The appellants submissions
    on appeal largely mirror those the motion judge considered and rejected in her
    costs endorsement.

[47]

Accordingly, we find no basis on which to
    interfere with the motion judges exercise of discretion on the costs issue.

CONCLUSION

[48]

For the reasons set out above, the appeal is dismissed

[49]

The respondent Firm is entitled to its costs. By
    agreement of the parties, costs are fixed at $11,500.00, all inclusive.

L.B. Roberts J.A.

B. Zarnett J.A.

Sossin J.A.


