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Fairness - Unargued Grounds. LIUNA v. Dennis
In LIUNA v. Dennis (Ont Div Ct, 2026) the Ontario Divisional Court allowed an appeal, this brought to quash "the decision of the motion judge, which allowed the respondent an extension of time to file an amended statement of claim".
Here the court considers 'unargued grounds' as a fairness issue:[1] The appellants seek to quash the decision of the motion judge, which allowed the respondent an extension of time to file an amended statement of claim. They submit the order was granted in a procedurally unfair manner because the motion judge relied on a rule not cited by the respondent, Mr. Dennis, in his materials. Specifically, while Mr. Dennis brought a motion to vary a previous order under r. 59.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the motion judge instead granted an extension of time to amend the statement of claim under r. 3.02. The appellants submit that, because they were not given notice that r. 3.02 would be relied upon, they did not file evidence of the prejudice they had suffered by the passage of time.
[2] The only issue on the appeal is whether granting the order for an extension of time breached the appellants’ right to procedural fairness. For the following reasons, I find it did.
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[8] .... In his motion materials, Mr. Dennis relied only on r. 59.06.
[9] In his order, Trimble J. allowed the motion under r. 3.02(1), which permits the court to extend the time prescribed by an order. He gave Mr. Dennis 30 days to file an amended statement of claim. He reasoned that the court prefers to allow matters to be dealt with on their merits. He also stated: “The key consideration is prejudice to the respondent…Where the respondent cannot demonstrate prejudice in its ability to defend the claim, the indulgence should be granted.”
Was there a breach of procedural fairness?
[10] Deciding a motion on a basis not pleaded by the parties may amount to a breach of procedural fairness. Civil proceedings generally should be decided within the boundaries pleaded by the parties so that the parties know the case they have to meet: Colautti Construction Ltd. v. Ashcroft Development Inc., 2011 ONCA 359, at para. 42; Rodaro v. Royal Bank of Canada, 2002 CanLII 41834 (ON CA), at paras. 60-63; A-C-H International Inc. v. Royal Bank of Canada, 2005 CanLII 17769 (ON CA), at paras. 13-21; 2183164 Ontario Inc. v. Gillani, 2013 ONSC 1456, at paras. 24-25. It is well established that deciding a case on a basis never pleaded or raised amounts to a denial of procedural fairness: Nicholls v. Zsiga, 2021 ONSC 6890, at para. 7.
[11] Pursuant to r. 37.06, a party’s notice of motion is required to state the precise relief sought and state the grounds to be argued, including any rule to be relied upon.
[12] This does not mean a motion judge can never decide a motion on a basis other than set out in the pleadings. A decision can be made that does not perfectly accord with the pleadings as long as no party was surprised or prejudiced: Nicholls, at para. 9, citing Tervita Corporation v. Commissioner of Competition, 2013 FCA 28.
[13] Indeed, parties (particularly self-represented parties) frequently cite the wrong rule of civil procedure, and, as long as there is no surprise or prejudice, the court will endeavour to apply the correct rule “to secure the just, most expeditious and least expensive determination” of the proceeding (Rule 1.04(1)).
[14] In this case, there was a breach of procedural fairness because Mr. Dennis brought his motion only on the basis of r. 59.06, and the appellants were denied the opportunity to provide the evidence of prejudice that the motions judge considered key to the analysis.
[15] As indicated above, Mr. Dennis’ main focus was for “an Order setting aside or varying the Order of the Honourable Justice Jamie Trimble dated June 17, 2021.” He sought an order for a timetable for the action, and requested orders for specific steps in the action, such as discoveries, a pre-trial, and setting the matter down for trial.
[16] In their responding materials, the appellants filed two affidavits providing the history of communications between the parties. The argument in their factum was focused entirely on the test under r. 59.06. At the argument of the motion, counsel for Mr. Dennis relied only on r. 59.06. The appellants submitted the test under r. 59.06 was not met because there were no fraud or new facts discovered after the initial motion decision.
[17] It was only the motion judge who raised the possibility of an order under r. 3.02. In oral argument, counsel for the appellants responded that he had not addressed that rule because it was not pleaded. When the motion judge asked counsel what evidence his clients had of prejudice caused by the delay, counsel responded that he did not file any evidence of prejudice because that was not an issue under r. 59.06. Moreover, counsel for the appellant noted that Mr. Dennis had not included a draft amended statement of claim in his motion record, and the defendants could not provide evidence of prejudice without knowing what would be in the draft amended statement of claim.
[18] The motion judge then decided the motion based exclusively on r. 3.02(1). He briefly addressed the elements of the test for an extension of time and relied on the principle that, where a respondent cannot demonstrate prejudice, an extension of time should be granted. He stated: “The delay is the main problem for the Plaintiff although not a large one given the lack of prejudice for the Respondent.”
[19] The breach of procedural fairness arose because the appellants were not on notice that prejudice was in issue. It is not sufficient that Mr. Dennis requested an extension of time to file an amended statement of claim as the final alternative relief in his notice of motion. Mr. Dennis did not offer a draft amended statement of claim, did not cite r 3.02 in his motion materials, and did not address the test for an extension of time. Although the motion judge raised r. 3.02 at the hearing, it was too late by then for the appellants to file evidence of prejudice, particularly in the absence of a draft amended statement of claim. Overall, the appellants did not have advance notice that they would be required to demonstrate specific evidence of prejudice caused by the passage of time. In my view, it was therefore unfair to decide the motion on that basis. . Jamrik v. 2688126 Ont. Inc.
In Jamrik v. 2688126 Ont. Inc. (Div Court, 2024) the Divisional Court allowed a JR against a Construction Act adjudicator's 'prompt payment' decision that "the contract was not “completed” within the meaning of the Construction Act".
Here the court discusses deciding a case on unargued grounds:Deciding A Case on the Basis of an Unargued Point
[5] It is, of course, open to an adjudicator to decide a point on a basis not raised before him by the parties. However, if this arises, both as a matter of procedural fairness, and to ensure that the adjudicator has the benefit of the parties’ submissions on material points, the adjudicator should give the parties notice of their concerns and give the parties an opportunity to address them. See, for example, Caledon (Town of) v. 2220742 Ont. Ltd. o/a Bronte Construction, 2024 ONSC 3739, where this court sought supplementary written submissions in respect to a point that had not been addressed by the parties.
[6] Had additional submissions been sought in this case, the parties might well have persuaded the Adjudicator that his proposed analysis was in error: it is clearly contrary to established principle, and counsel for the parties would have been obliged to provide the Adjudicator with the correct law for his consideration. . Zaidi v. Syed Estate
In Zaidi v. Syed Estate (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal of a denial of an estates application to enforce a settlement.
Here the court considered an argument that it was unfair to decide an issue on unpled grounds:(1) Alleged Denial of Procedural Fairness
[14] Mr. Zaidi’s first argument is that the application judge relied on legal principles that were not advanced by Ms. Naqvi, and that as a result he was deprived of procedural fairness. He contends that Ms. Naqvi’s main challenge to the enforcement of the settlement agreement was that the application did not comply with the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for proceedings against an estate. He relies on this court’s decision in Singh v. Trump, 2016 ONCA 747, 408 D.L.R. (4th) 235, at paras. 148-49, as authority that there is a denial of procedural fairness where a motion judge grants or dismisses a claim on a motion for summary judgment that is not within the scope of the motion before the court, and that a fair hearing requires that a party have notice of the matters that will be at issue at the hearing.
[15] In Singh, this court noted that the summary judgment motion in the court below had been limited to two categories of claims that were asserted in the notice of motion and included in the parties’ factums. Because the motion judge had gone beyond the contentious issues when he dismissed causes of action that fell outside the scope of the motion for summary judgment, the dismissal of these causes of action was set aside on appeal.
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[21] The specific legal label attached by a party to their claim or defence is not determinative of whether an action has been decided outside the scope of the pleadings: see e.g., Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 861, 476 D.L.R. (4th) 500, at para. 94. The forms of action must be interpreted with a measure of common sense: Leslie v. Mississauga (City) (2006), 2006 CanLII 63743 (ON SCDC), 81 O.R. (3d) 415, at para. 15. And, as Perell J. noted in Cashbloom Canada, ULC v. Ridgeway Design Centre Inc., 2017 ONSC 2994, at para. 6, the court will not take an overly technical approach to determining whether a claim or defence has been adequately pleaded. . Drewlo Holdings Inc. v. Municipal Property Assessment Corporation
In Drewlo Holdings Inc. v. Municipal Property Assessment Corporation (Div Court, 2023) the Divisional Court considered an 'unargued grounds' [audi alteram partem] procedural fairness argument:A point of procedural fairness
[37] Drewlo also complains that it was denied procedural fairness because the Board focused in its decision on whether new lands were created, and made reference to the Condominium Act, “which neither party had raised, and regarding which the parties were not invited to make further submissions.” Drewlo asserts that this was a violation of the audi alteram partem rule.
[38] In fact, however, the Condominium Act, and its use as authority to create new individually taxable parcels of land, had been specifically referenced in paras. 19 and 20 (and their attendant footnotes) of MPAC’s submissions to the Board. In its own factum to the Board, at para. 4, Drewlo acknowledged its awareness that the condo plan would affect the “legal status” of an MPAC assessment. Drewlo was on notice that the effect of the Condominium Act was a live issue before the Board and had the opportunity to address it.
[39] The audi alteram partem rule must take into account a particular tribunal’s “expertise and the body of jurisprudence that has developed around its area of expertise”: Knoll North America Corp. v. Adams, 2010 ONSC 3005 (Div. Ct.), 104 O.R. (3d) 297, at paras. 28-31; Girouard v. Canada (Attorney General), 2020 FCA 129, 449 D.L.R. (4th) 679, at paras. 97-98; IWA v. Consolidated Bathurst Packaging Ltd., 1990 CanLII 132 (SCC), [1990] 1 S.C.R. 282, 68 D.L.R. (4th) 524, at para. 93. With respect to the use of s. 33(1) by MPAC as an accepted tool when properties are converted to condominium units, see, for example, National Car Rental (Canada) Inc. v. Municipal Property Assessment Corporation, Region 15, 2022 CanLII 53352 (ON ARB), at paras. 109-110. The operation of the Condominium Act in the context of the Act must have been in the contemplation of these parties in the circumstances of this case.
[40] This ground of appeal, along with its procedural fairness component, must fail. . Ledore Investments v. Dixin Construction
In Ledore Investments v. Dixin Construction (Div Court, 2023) the Divisional Court considered whether a decision made on unargued grounds was a breach of procedural fairness (it was):Was there a breach procedural fairness?
[26] Dixin submits, however, that there was no breach of procedural fairness in this case. In its submission, the context of interim adjudication is important. It is a fast and informal process intended to secure an interim result pending the parties pursuing their dispute more comprehensively in court or before an arbitrator. Dixin submits that in this context, the parties are entitled to limited procedural protections.
[27] We agree that Ross Steel was not entitled to the full range of procedural protections that would apply, for example, in a final arbitration or court hearing. In determining the level of procedural fairness owed, Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, requires the court to consider, among other factors, the statutory scheme. The provisions of the Act establish a prompt and abbreviated adjudicative process. The process is targeted (see s. 13.5(4)), proceeds according to short timelines (see ss. 13.11, 13.13(1)) and, in this case, with strict page limits as described above.
[28] But the right to be heard on the determinative issue is a central component of even more limited procedural protections. It is a legal truism in our system of justice that it is fundamentally unfair, and quite possibly unreliable, for a judicial officer or adjudicator to reach a conclusion in his or her reasons for judgment in a proceeding based on an issue that has not been pleaded or relied upon by a party to the proceeding.
[29] It is fundamentally unfair because the losing party has had no opportunity to know the case it has to meet, or to address the issue that has been determined to be decisive. It is potentially unreliable because, in a system in which the adversarial process is relied upon to reach the best and most thoroughly considered determination, a decision that has not been tested in that framework cannot be trusted to have had its flaws exposed and addressed: Labatt Brewing Company Ltd. v. NHL Enterprises Canada, L.P., 2011 ONCA 511, 106 O.R. (3d) 677, at paras. 4-5; Rodaro v. Royal Bank of Canada (2002), 2002 CanLII 41834 (ON CA), 59 O.R. (3d) 74 (C.A.), at paras. 61-63; A-C-H International Inc. v. Royal Bank of Canada (2005), 2005 CanLII 17769 (ON CA), 139 ACWS (3d) 525 (Ont. C.A.), at paras. 15-18; Garfin v. Mirkopoulos, 2009 ONCA 421, 250 OAC 168, at paras. 19-20.
[30] In this case, the subject of the adjudication was whether the funds paid to Dixin by the College should flow down to Ross Steel since Dixin had delivered no notices of non-payment on the three invoices in question. From Dixin’s perspective, the adjudicator needed to determine whether it was entitled to withhold funds and set them off against deficiencies and damages caused by Ross Steel even in the absence of notices of non-payment. The parties agreed that the College had paid the funds on the invoices that Dixin had given it.
[31] The parties did not raise the form of Dixin’s invoice as an issue, and Dixin had not even filed in its adjudication materials the invoices that it had submitted to the College for the adjudicator’s consideration. Had submissions been invited from the parties, Ross Steel may have chosen to make comment on the adjudicator’s ability to base conclusions on invoices that were not before him.
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