Law Times

Page 4 May 8, 2017 • Law TiMes www.lawtimesnews.com OCA sets aside some findings of retired judge BY ALEX ROBINSON Law Times T he Court of Appeal has set aside some of the findings of a now-retired Ontario Superior Court judge in a long-running case after lawyers representing the appel- lants questioned the judge's deci- sion in the proceedings. The lawyers had argued that Justice John McIsaac had made legal and factual errors in his decision in Todd Family Hold- ings Inc. v. Gardiner. While the Court of Appeal set aside some of McIsaac's findings, it also confirmed his judgment against one of the defendants. The case concerned whether Roy Gardiner, an inventor, and his wife were guilty of the tort of deceit for allegedly misrepresent- ing his company, Barefoot Hold- ings, to an investor, Lance Todd. The investor claimed that Gardiner had said the company owned the intellectual property, patents and trademarks of its re- habilitative shoe products when, in fact, Gardiner individually owned them. Todd launched the lawsuit in 2009 after Barefoot Holdings defaulted on its loan obligations. Todd took control of the busi- ness after Gardiner failed to re- pay a loan advance. In 2015, McIsaac ruled against Gardiner and ordered him and his wife to pay $2.2 mil- lion in damages to Todd. The lawyers representing Gardiner challenged McIsaac's finding of deceit, arguing there was no material misrepresen- tation made by the inventor that persuaded Todd to invest. Gardiner's counsel maintained that the alleged misrepresenta- tion would have only become relevant when security was dis- cussed for funds that Todd ad- vanced, meaning there was no causal connection between the alleged misrepresentation and the investments. The court, however, found that Gardiner had made repre- sentations from the outset that Barefoot Holdings owned the IP and that they were relevant to Todd's investment. It also upheld a finding that Gardiner had forged a docu- ment to try to take control of the intellectual property, despite what he told Todd. While the Court of Appeal upheld McIsaac's finding of de- ceit against Gardiner, it slashed the damages that were awarded against the inventor down to $1.25 million. This could be reduced further as the court set aside a finding by McIsaac that Barefoot Holdings had not made any money since Todd and remitted the damages to the Ontario Superior Court for an accounting. The court found that Todd's claim that the business had not turned a profit since gaining control of it was entirely based on his oral testimony, as he had failed to produce the required documentation. While Gardiner provided an expert that suggested significant profits had been made, McIsaac rejected this evidence "on the basis that it was inconsistent with his perception of Todd's circumstances at the time of trial," said the decision on behalf of a three-judge panel of justices David Doherty, Jean MacFar- land and Paul Rouleau. The court added that the finding was even more untenable because of independent evidence establishing substantial sales during the time between when Todd first gained control of the business and the trial. "The trial judge's conclusion that there was 'absolutely no re- covery' in the years that Todd operated the business ref lects a failure to engage with the rel- evant evidence, and reliance on irrelevant considerations," the Court of Appeal decision said. "The finding must be set aside." Depending on what the ac- counting issue yields, the $1.25 million could be further re- duced by any potential profits the business has gained. The court also overturned McIsaac's finding of deceit against Gardiner's wife, saying his reasons provided no basis to find her liable. "Roy Gardiner is grateful to the Ontario Court of Ap- peal for its careful attention to this matter, and pleased that so much of the trial judgment was overturned on appeal," Matthew Milne-Smith, one of the lawyers representing Gardiner, said in an emailed statement. "As the matter of an account- ing continues to be before the courts, we will have no further comment at this time." It was not the first time one of McIsaac's decisions had faced scrutiny. In 2003, the Court of Appeal reduced an hourly rate McIsaac had approved for a lawyer to prosecute a contempt proceed- ing he initiated against the prov- ince's public safety minister. Then, in 2012, the appellate court said McIsaac, who later retired in 2015, should have re- cused himself from a real estate dispute because of a reason- able apprehension of bias, as he owned a cottage in the area and his wife was a real estate agent. David MacKenzie, the lawyer representing the respondents, declined to comment on the decision. David Taub, a lawyer who represented Todd at trial, did not respond to a request for comment. LT NEWS NEWS NEWS The Court of Appeal has set aside some of the findings of a now-retired Ontario Superior Court judge, but it also confirmed a judgment against one of the defendants. © 2017 Thomson Reuters Canada Limited 00238SJ-A87622-CE GET ALL YOUR CPD AT THE TORONTO LAWYERS ASSOCIATION MAY 16, 2017 Environmental Considerations in Real Estate and Business Transactions JUNE 1, 2017 True or False: Corporate Lawyers Need to be Securities Lawyers JUNE 7, 2017 What it Takes to Become a Judge tlaonline.ca | info@tlaonline.ca

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