Palkowski et al. v. Ivancic [Indexed as: Palkowski v. Ivancic]

100 O.R. (3d) 89

2009 ONCA 705

Court of Appeal for Ontario,

Juriansz, MacFarland and Watt JJ.A.

October 8, 2009

Civil procedure -- Pleadings -- Amendment -- Plaintiffs bringing action alleging that defendant held residential property in trust for them pursuant to implied, constructive or expressed oral trust agreement -- Motion judge striking claim based on agreement but finding that statement of claim could be read as intending to advance claim based on unjust enrichment arising out of alleged upgrades to property -- Motion judge striking that claim due to lack of particulars with leave to amend -- Plaintiff's amended statement of claim containing claim under s. 37(1) of Conveyancing and Law of Property Act based on fact that they made improvements to property under belief that they owned it -- Motion judge erring in striking that claim -- Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 37(1).

Courts -- Open court principle -- Motion judge hearing pleadings motion in anteroom of courtroom -- Motion judge not offending requirement in s. 35(1) of Courts of Justice Act that court hearings shall be open to public -- Parties not objecting to manner in which motion was heard -- Record not indicating that anyone was excluded from anteroom -- Courts of Justice Act, R.S.O. 1990, c. C.43, s. 35(1).

The plaintiffs brought an action against the defendant alleging that the defendant held a residential property in trust for them pursuant to an implied, constructive or expressed oral trust agreement. On a motion by the defendant to strike the statement of claim, the motion judge struck out the Agreement Claim but found that the statement of claim could be read as intending to advance a claim based on unjust enrichment arising out of alleged upgrades to the property made by the plaintiffs. Since that claim was lacking in particulars, she struck it with leave to amend. She gave precise direction as to what amendments would be permitted. The plaintiffs served an amended statement of claim in which they claimed, for the first time, a right to retain the property or, alternatively, compensation, pursuant to s. 37(1) of the Conveyancing and Law of Property Act. The defendant brought a motion before the motion judge to determine whether, or to what extent, the amended statement of claim complied with her order. The motion judge was sitting as a judge of the Commercial List at the time, but agreed to hear the motion in an anteroom adjacent to the courtroom. She had prepared an endorsement which included a copy of the proposed amended statement of claim with extensive revisions that would have to be done in order to comply with her previous order. She struck the claim based on the CLPA and the material facts in support of that claim. The plaintiffs appealed.

Held, the appeal should be allowed.

Per MacFarland J.A. (Watt J.A. concurring): By hearing the motion in an anteroom, the motion judge did not offend the requirement in s. 135(1) of the Courts of Justice Act that, subject to s. 135(2) and the rules of court, all court hearings shall be open to the public. Neither counsel objected at the time to the manner in which the motion was heard. There was nothing in the record which suggested that anyone was excluded from the judge's chambers. Simply because a matter is dealt with in a judge's chambers does not mean that the hearing was not open to the public.

The motion judge erred in striking the claim under the CLPA. That claim was based on many of the same supporting facts as their earlier constructive trust claim, but the nature of the claim was different.

The plaintiffs failed to establish a reasonable apprehension of bias on the part of the motion judge. Where, as here, the issue of a reasonable apprehension of bias is raised for the first time on appeal, the court must exercise great caution. The facts that the motion judge did not find in favour of the plaintiffs and struck a pleading in error did not give rise to bias or any appearance of bias.

Per Juriansz J.A. (concurring in the result): The motion was not held in public as required by s. 135(1) of the Courts of Justice Act. Neither s. 135(2) of the CJA nor rule 37.11(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 authorized the motion judge to hear the motion in the absence of the public. The narrow interpretation of "open to the public" adopted by the majority would fall short of achieving s. 135's statutory purposes of cultivating public confidence in the courts and fostering public oversight of the work of judges. The motion judge also failed to give the plaintiffs an opportunity to be heard before announcing her decision and improperly redrafted a major portion of the amended statement of claim. Finally, the motion judge erred in striking the claim under the CLPA.

APPEAL from the order of Hoy J. of the Superior Court of Justice dated October 14, 2008 on a pleadings motion.

Cases referred to

Canadian Broadcasting Corp. v. New Brunswick (Attorney General), 1996 184 (SCC), [1996] 3 S.C.R. 480, [1996] S.C.J. No. 38, 139 D.L.R. (4th) 385, 203 N.R. 169, 182 N.B.R. (2d) 81, 110 C.C.C. (3d) 193, 2 C.R. (5th) 1, 39 C.R.R. (2d) 189, 66 A.C.W.S. (3d) 444, 32 W.C.B. (2d) 273; Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, [1976] S.C.J. No. 118, 68 D.L.R. (3d) 716, 9 N.R. 115; Dagenais v. Canadian Broadcasting Corp., 1994 39 (SCC), [1994] 3 S.C.R. 835, [1994] S.C.J. No. 104, 120 D.L.R. (4th) 12, 175 N.R. 1, J.E. 95-30, 76 O.A.C. 81, 94 C.C.C. (3d) 289, 34 C.R. (4th) 269, 25 C.R.R. (2d) 1, 51 A.C.W.S. (3d) 1045, 25 W.C.B. (2d) 304; Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326, [1989] S.C.J. No. 124, 64 D.L.R. (4th) 577, 102 N.R. 321, [1990] 1 W.W.R. 577, J.E. 90-47, 71 Alta. L.R. (2d) 273, 103 A.R. 321, 41 C.P.C. (2d) 109, 45 C.R.R. 1, 18 A.C.W.S. (3d) 894; Leader Media Productions Ltd. v. Sentinel Hill Alliance Atlantis Equicap Ltd. Partnership (2008), 90 O.R. (3d) 561, [2008] O.J. No. 2284, 2008 ONCA 463, 237 O.A.C. 81, 167 A.C.W.S. (3d) 896; Named Person v. Vancouver Sun, [2007] 3 S.C.R. 253, [2007] S.C.J. No. 43, 2007 SCC 43, 285 D.L.R. (4th) 193, 368 N.R. 112, [2008] 1 W.W.R. 223, J.E. 2007-1909, 247 B.C.A.C. 1, 73 B.C.L.R. (4th) 34, 224 C.C.C. (3d) 1, 51 C.R. (6th) 262, 2007 CarswellBC 2418, 75 W.C.B. (2d) 103, 162 C.R.R. (2d) 104, EYB 2007-124673; R. v. Fell, [2009] O.J. No. 2828, 2009 ONCA 551, 254 O.A.C. 62; R. v. Mentuck, [2001] 3 S.C.R. 442, [2001] S.C.J. No. 73, 2001 SCC 76, 205 D.L.R. (4th) 512, 277 N.R. 160, [2002] 2 W.W.R. 409, J.E. 2001-2142, 163 Man. R. (2d) 1, 158 C.C.C. (3d) 449, 47 C.R. (5th) 63, 51 W.C.B. (2d) 349; Ruby v. Canada (Solicitor General), [2002] 4 S.C.R. 3, [2002] S.C.J. No. 73, 2002 SCC 75, 219 D.L.R. (4th) 385, 295 N.R. 353, J.E. 2002-2096, 49 Admin. L.R. (3d) 1, 22 C.P.R. (4th) 289, 7 C.R. (6th) 88, 99 C.R.R. (2d) 324, 118 A.C.W.S. (3d) 2; Stelco Inc. (Re) (2005), 2005 8671 (ON CA), 75 O.R. (3d) 5, [2005] O.J. No. 1171, 253 D.L.R. (4th) 109, 196 O.A.C. 142, 2 B.L.R. (4th) 238, 9 C.B.R. (5th) 135, 138 A.C.W.S. (3d) 222 (C.A.); Vancouver Sun (Re), [2004] 2 S.C.R. 332, [2004] S.C.J. No. 41, 2004 SCC 43, 240 D.L.R. (4th) 147, 322 N.R. 161, [2005] 2 W.W.R. 671, 199 B.C.A.C. 1, 33 B.C.L.R. (4th) 261, 184 C.C.C. (3d) 515, 21 C.R. (6th) 142, 120 C.R.R. (2d) 203, 61 W.C.B. (2d) 216

Statutes referred to

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 1.08 [as am.], 20.01(3), 21, 21.01(1)(b), 37.11, (1) [as am.], (2), 61.03.1, 77.12(2.1)

Authorities referred to

Burton, J.H., ed., Benthamiana: Or, Select Extracts from the Works of Jeremy Bentham (1843)

Marek Z. Tufman, for appellants. William O'Hara, for respondent.

JURIANSZ J.A. (concurring in the result):

I. Overview

[1] This appeal is about the attempt of a motion judge to deal with a routine pleading motion in an efficient and cost-effective manner. The motion judge carefully prepared for the motion ahead of time and called the parties' counsel out of the courtroom into her anteroom to receive her disposition without affording them an adequate opportunity to make submissions. I would allow the appeal because the motion judge erred by failing to provide counsel with a proper opportunity to make submissions before deciding the matter and because she erred in her disposition of the motion. I also find that the motion judge erred by failing to hear the motion in open court, but given the other grounds for allowing the appeal, I find it unnecessary to consider whether this failure would vitiate the decision she made.

II. Facts

[2] The appeal arises out of the appellants' claim for beneficial title to a residential property they had conveyed to the respondent in 1996. In November 2005, the appellants filed a claim seeking a declaration that the respondent held title to the property in trust for them "pursuant to an implied, constructive, or expressed [oral] trust agreement" (the "Agreement Claim"). In the Agreement Claim, the appellants alleged that they had transferred title to the respondent to hold in trust for them "temporarily for personal and business purposes". The appellants claimed that the respondent agreed to hold the property in trust and to return it to them when they so directed. They also claimed that they continued to live in the house, made substantial improvements to it, paid the mortgage taxes, insurance premiums, and other property expenses and were at all times the true owners of the property.

[3] In his Statement of Defence and Counterclaim dated July 18, 2006, the respondent denied the existence of both the alleged agreement and the trust. The respondent moved to strike out the appellants' Statement of Claim. By endorsement dated August 16, 2006 [[2006] O.J. No. 3322, 150 A.C.W.S. (3d) 735 (S.C.J.)], the motion judge struck out the appellants' Agreement Claim, without leave to amend, under rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the "Rules"), on the ground that it disclosed no reasonable cause of action. In the alternative, the motion judge dismissed the claim pursuant to rule 20.01(3) of the Rules on the ground that there was no genuine issue for trial. The motion judge quite properly reasoned that a "verbal" trust agreement to reconvey land or a trust in respect of land is enforceable at law and pursuant to ss. 1 and 9 of the Statute of Frauds, R.S.O. 1990, c. S.19. Moreover, she properly found that the facts alleged did not bring the appellants' claim within the doctrine of part performance so as to permit enforcement of the alleged oral contract in equity.

[4] The parties were unable to settle the order following the motion judge's disposition; the appellants maintained that the motion judge had not dealt with their claim of constructive trust. The parties attended again before the motion judge in November 2006. The motion judge gave them an opportunity to provide supplemental written submissions based on the motion record originally before her as to whether a claim for unjust enrichment or constructive trust should survive in light of the capital improvements the appellants claimed to have made to the property. The appellants filed extensive written submissions that went far beyond what the motion judge had directed. They went so far as to include additional evidence that was not before the court on the original motion, in direct contravention of the motion judge's directions.

[5] The motion judge released a supplementary endorsement on February 6, 2007 [[2007] O.J. No. 442, 154 A.C.W.S. (3d) 1237 (S.C.J.)], in which she confirmed that the appellants' Agreement Claim was struck, without leave to amend. However, the motion judge generously construed the Statement of Claim and found that it could be read as intending to advance a claim based on unjust enrichment arising out of the alleged upgrades. Such a claim, however, was lacking in particulars, and was also struck by the motion judge pursuant to Rule 21 of the Rules, with leave to amend.

[6] In para. 28 of her supplementary endorsement, the motion judge indicated that the appellants' "claim for compensation or a constructive trust on the basis that the defendant was unjustly enriched as a result of the upgrades to the property they allegedly made after selling the property to the defendant is also struck, with leave to file and serve an Amended Statement of Claim" (emphasis in original). She then went on to give precise direction as to what amendments would be permitted. Specifically, she directed that the Amended Statement of Claim [at para. 28]:

. . . shall be black-lined, deleting the Agreement Claim and the facts pleaded in the Statement of Claim relating thereto, and claiming compensation or a constructive trust based on the alleged unjust enrichment arising out of the alleged upgrades of the property. In the Amended Statement of Claim, the plaintiffs shall provide particulars of the alleged upgrades, when they were done, their cost, who paid for them and how, the amount by which they increased the value of the property and whether the defendant requested or approved the particular upgrade or the plaintiffs effected the alleged upgrade of their own volition without approval. (Emphasis in original)

[7] I emphasize that the motion judge directed the deletion of the Agreement Claim as well as the facts pleaded in relation to it.

[8] On June 24, 2008, the appellants served an Amended Statement of Claim in which they claimed, for the first time, the right to retain the property or, alternatively, compensation, pursuant to s. 37(1) of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34 (the "CLPA"). That section provides:

37(1) Where a person makes lasting improvements on land under the belief that it is the person's own, the person or the person's assigns are entitled to a lien upon it to the extent of the amount by which its value is enhanced by the improvements, or are entitled or may be required to retain the land if the Superior Court of Justice is of opinion or requires that this should be done, according as may under all circumstances of the case be most just, making compensation for the land, if retained, as the court directs.

[9] The respondent took the position that the Amended Statement of Claim did not comply with the motion judge's order of February 6, 2007. On the agreement of counsel, the respondent brought a motion before the motion judge on October 14, 2008 to determine whether, or to what extent, the appellants' Amended Statement of Claim complied with her order of February 6, 2007. At that time, the motion judge was sitting on the Commercial Court.

[10] This appeal arises out of what transpired when counsel attended before the motion judge on the motion scheduled for October 14, 2008. On appeal, the parties filed an Agreed Statement of Fact as to what occurred on that day. I set it out in full:

AGREED STATEMENT OF FACT

Introduction

The parties agree that the Court of Appeal has jurisdiction to hear this Appeal.

The parties agree that the following facts are accurate for the purpose of this Appeal.

Proposed amended statement of claim

Counsel for the plaintiff prepared an amended statement of claim and counsel for the defendant objected to the proposed amendments. Counsel agreed to attend before [the motion judge] on a contested motion to determine whether the proposed amended claim complied with her endorsements and orders. Counsel for the defendant prepared a motion to strike the plaintiffs' claim against the defendant without leave for failing to comply with the orders of [the motion judge] dated August 2, 2006 and February 6, 2007.

Attendance before [the motion judge]

Counsel attended before [the motion judge] on October 14, 2008 for the motion scheduled to be heard at 10:00 a.m. As [the motion judge] was sitting as a judge of the Commercial List at the time, she agreed to hear this motion on her list. At approximately 10:20 a.m. counsel were asked by court staff to join [the motion judge] in the anteroom adjacent to the courtroom. [The motion judge] was seated at a desk and counsel sat opposite her. The motion materials were open on the desk in front of her with handwriting on the back cover of the motion record.

[The motion judge] said initially to counsel for the plaintiffs that she was "appalled" at the proposed amended statement of claim which clearly did not accord with the terms set out in her endorsements. She briefly explained where it was deficient.

Before turning to the endorsement [the motion judge] added that she was "appalled" by the delays to date and the lack of progress in resolving this case. She said she would order a timetable for the litigation.

[The motion judge] then advised counsel that she had prepared an endorsement which included a copy of the proposed amended statement of claim with extensive revisions that would have to be done for the amended statement of claim to comply with her order of February 6, 2007. She then read her endorsement to counsel and began to review her revisions to the proposed amended claim.

Counsel for the plaintiffs objected to the wording of the endorsement and argued that the proposed changes precluded the plaintiffs from obtaining a vesting order for the property that would allow them to reacquire the property on the basis of the alleged improvements. Counsel for the defendant was asked for the defendant's position and had to concede that "in theory" it was possible that the plaintiffs to reacquire the property pursuant to a constructive trust, though not on the facts of the case as he understood them. [The motion judge] made revisions on page three of the proposed amended claim and in paragraphs 11 and 28 in response to the submissions of plaintiffs' counsel that specifically permitted such a claim. She observed that the facts would be determined by the trial judge.

[The motion judge] then turned to the timetable for the litigation and with input from both counsel she set out on a new sheet of paper the timetable that would apply.

[The motion judge] then reiterated to plaintiffs' counsel that any claim that the property was held in an express trust or that the defendant had a contractual obligation to re-convey the property had been struck and that the plaintiffs should not endeavour to revisit these areas. There was no argument from counsel on this point and [the motion judge] added a paragraph to her endorsement to reflect that provision. She then signed the endorsement and ended the attendance.

The counsel were instructed to return to the courtroom, where they and Mr. Palkowski awaited a copy of the endorsement.

This appeal followed.

III. Issues

[11] The appellants raise the following issues on appeal: (1) Did the motion judge err in failing to hold an oral hearing in public? (2) Did the motion judge err in attempting to redraft the appellants' pleading? (3) Did the motion judge err in striking out the appellants' claim under the CLPA? (4) Did the motion judge err in striking out facts necessary for the appellants to rely on in pursuit of their claim for declaration of constructive trust, and for relief under the CLPA? (5) Did the motion judge err in compelling the appellants to plead that they paid rent, although they claim that they did not, despite the prior finding by the motion judge that the appellants paid the mortgage and insurance instead? (6) Did the conduct of the motion judge result in a reasonable apprehension of bias on her part?

IV. Analysis

[12] The issues as stated by the appellants overlap significantly. I have grouped their issues into fewer issues, stated differently, and will deal with each in turn. I begin with the "open court" issue not only because the parties argued it first but because of its broad importance beyond this case.

1. The motion judge erred in failing to hear and determine the motion in public

[13] The respondent recognized that the open court principle is one of the cornerstones of our judicial system. However, he submitted that the motion judge had the discretion to deal with the motion in chambers. He submitted the motion judge's discretion derived from one or more of the Courts of Justice Act, R.S.O. 1990, c. C.43, the Rules, the Superior Court's Practice Direction Concerning the Commercial List and the inherent jurisdiction of the court.

[14] Section 135(1) of the Courts of Justice Act states the general principle that "all court hearings shall be open to the public". The general principle, however, is subject to s. 135(2) and the Rules. Section 135(2) gives the court discretion to exclude the public from a hearing "where the possibility of serious harm or injustice to any person justifies a departure from the general principle that court hearings should be open to the public". Section 135(2) has no application to this case.

[15] Rule 37.11(1) of the Rules sets out the following list of circumstances in which a motion may be heard in the absence of the public:

37.11(1) . . . (a) the motion is to be heard and determined without oral argument; (b) because of urgency, it is impractical to have the motion heard in public; (c) the motion is to be heard by conference telephone; (d) the motion is made in the course of a pre-trial conference; or (e) the motion is before a single judge of an appellate court.

[16] As can be seen, the rule permits the situations in which, as a matter of existing practice, motions are typically not heard in public. Motions made in writing, such as motions for leave to appeal to the Court of Appeal, are permitted by para. (a). Tele-conference motions are permitted by para. (c). Paragraph (b) provides a judge with discretion to hear any motion in camera where is it impractical to hear the motion in public because of urgency.

[17] None of these circumstances existed in this case. It is clear that the list of exceptions set out in rule 37.11(2) is exhaustive because the rule provides that "[t]he hearing of all other motions shall be open to the public, except as provided in section 135 of the Courts of Justice Act". The mandatory feature of this provision is telling -- "all other motions shall be open to the public". This mandatory feature is accentuated by the edict that where there is a departure from the open court principle, "the presiding judge or officer shall endorse on the notice of motion leave for a hearing in the absence of the public".

[18] Thus, neither s. 135(2) of the Courts of Justice Act nor rule 37.11(1) of the Rules authorized the motion judge to hear this motion in the absence of the public. Rather, both s. 135(1) and rule 37.11(2) affirmatively required the hearing of this motion to be open to the public.

[19] I see no merit in the respondent's reliance on the Superior Court's Practice Direction Concerning the Commercial List and the court's inherent jurisdiction. I leave aside the question whether the Practice Direction even applies to this motion that seems to have proceeded before a judge of the Commercial Court only as a matter of convenience. Specifically, the respondent cited the following provision from that Practice Direction: "The special procedures adopted for the hearing of matters on the Commercial List expedite the hearing and determination of these matters and they have met with considerable approval." This quotation is drawn from the preamble to the 2002 revision of the Practice Direction. The respondent did not identify any substantive provision of the Practice Direction that could be construed to authorize the motion judge to proceed in the absence of the public.

[20] Nor did the respondent cite any authority pertaining to the court's inherent jurisdiction. In any event, neither the Practice Direction nor the court's inherent jurisdiction could permit discretion to be exercised in contravention of the affirmative requirements of a statute and the Rules. As Blair J.A. observed in Stelco Inc. (Re) (2005), 2005 8671 (ON CA), 75 O.R. (3d) 5, [2005] O.J. No. 1171 (C.A.), at para. 35, despite the expansive nature of inherent jurisdiction, it does not operate where Parliament or the legislature has acted.

[21] I would conclude that s. 135 of the Courts of Justice Act and rule 37.11 of the Rules govern when motions are permitted to be heard in the absence of the public; both required the motion judge to deal with this motion in public.

[22] I have had the opportunity to read the reasons of MacFarland J.A., who would find that the requirements of s. 135(1) of the Courts of Justice Act were met because there was nothing in the record to suggest that "anyone was excluded from the judge's chambers. No one requested that the appellants personally be permitted to attend on the motion judge with their counsel." "Absent some evidence of exclusion", she would not give effect to this ground of appeal. With respect, I cannot acquiesce in an interpretation of s. 135 that results in the conclusion that this motion was "open to the public". The words "open to the public" should be given the ordinary grammatical sense that best accords with the statutory purpose of s. 135.

[23] Section 135 is the embodiment of the open court principle, a fundamental canon of our legal system. The Supreme Court of Canada has discussed its purpose on many occasions. Recently, in Named Person v. Vancouver Sun, [2007] 3 S.C.R. 253, [2007] S.C.J. No. 43, 2007 CarswellBC 2418, 2007 SCC 43, Bastarache J. (McLachlin C.J.C., Binnie, Deschamps, Fish, Abella, Charron and Rothstein JJ. concurring), drawing on earlier decisions of the court, [See Note 1 below] explained the open court principle's value and function in some detail at paras. 31-34. He reiterated that the open court principle is a "hallmark of a democratic society", long recognized as a "cornerstone of the common law". Bastarache J. then recalled Bentham's powerful assertion that "Publicity is the very soul of justice. It is the keenest spur to exertion, and the surest of all guards against improbity" (J.H. Burton, ed., Benthamiana: Or, Select Extracts from the Works of Jeremy Bentham (1843), p. 115). Bastarache J. further underscored the fact that a critical purpose of the open court principle is to encourage the courts to function in a manner that the public approves: "An open court is more likely to be an independent and impartial court. Justice seen to be done is in that way justice more likely to be done." He explained that public access to the courts "allows anyone who cares to know the opportunity to see 'that justice is administered in a non-arbitrary manner, according to the rule of law'". He characterized the "openness of our courts [as] a "principal component" of their legitimacy". He went on to recognize the principle's "longstanding role as a common law rule required by the rule of law", which is "clearly a broad principle of general application to all judicial proceedings".

[24] Lebel J., in his reasons dissenting in part, stated simply, at para. 81: "The hearing rooms where the parties present their arguments to the court must be open to the public, which must have access to pleadings, evidence and court decisions." He too emphasized the purpose of the open court principle in fostering public scrutiny of the way the courts function by noting, at para. 83, "Thus, it has been argued that all participants in judicial proceedings will be further induced to conduct themselves properly if they know that they are under the watchful eye of the public." Further, at para. 85, he echoed Bastarache J.'s position that it is "essential that what the courts do be open to public scrutiny in order both to improve the operation of the courts and to maintain public confidence in them".

[25] Both Bastarache J. and Lebel J. stressed the relationship between the open court principle and s. 2(b) of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Sch. B to the Canada Act 1982 (U.K.), 1982, c. 11 (the "Charter"). Lebel J. more fulsomely explained, at para. 88, that

The open court principle, which was accepted long before the adoption of the Charter, is now enshrined in it. This is due to the fact that the principle is associated with the right to freedom of expression guaranteed by s. 2(b) of the Charter. It is clear that members of the public must have access to the courts in order to freely express their views on the operation of the courts and on the matters argued before them.

[26] With respect, in my view the phrase "open to the public" when interpreted to foster its enormously important purposes must be taken to mean a forum where the public understands it is free to enter without specifically requesting admission. Here, while the Agreed Statement of Fact provides limited detail, it does state that "counsel were asked by court staff to join [the motion judge] in the anteroom adjacent to the courtroom" and that at the end of the proceedings, "counsel were instructed to return to the courtroom, where they and Mr. Palkowski awaited a copy of the endorsement". The Agreed Statement of Fact does not indicate who else, if anyone, was in the courtroom when counsel were asked to enter the anteroom. While the time when Mr. Palkowski arrived in the courtroom and whether he inquired about admission to the anteroom is not set out, it is clear he went to the courthouse for the motion and that upon his arrival he did not enter the anteroom to watch his case being adjudicated. As a general matter, a judge's chambers and anterooms are spaces which individuals other than court staff do not enter on their own, but are ushered on those occasions when they are admitted. The fact that counsel were ushered into the anteroom rather than entering on their own establishes to my satisfaction the anteroom was not open to the public. Mr. Palkowski, no matter when he arrived, was not ushered into the anteroom. It seems that the right of any member of the public or press to wander in and observe the day's proceedings was not contemplated. The respondent did not argue that the hearing in this case was open to the public.

[27] The narrow interpretation of "open to the public" adopted by the majority will fall short of achieving s. 135 [of the Courts of Justice Act]'s statutory purposes of cultivating public confidence in the courts and fostering public oversight of the work of judges. This case is an apt example. Here, the motion judge proceeded in a most unconventional way. The public should be able to easily scrutinize the novel procedures courts adopt in an effort to make the system more efficient. If these novel procedures are implemented in rooms where the public does not have free access, the public's ability to exercise oversight of the work of judges will be frustrated.

[28] I do not agree that the procedure can be saved because counsel did not object when summoned into the anteroom by the motion judge. First, I would distinguish Leader Media Productions Ltd. v. Sentinel Hill Alliance Atlantis Equicap Ltd. Partnership (2008), 2008 ONCA 463, 90 O.R. (3d) 561, [2008] O.J. No. 2284, 237 O.A.C. 81 (C.A.) as it did not involve a statutory requirement. More importantly, the open court principle exists for the benefit of the public as well as the litigants. As explained above, it is associated with the rights guaranteed by s. 2(b) of the Charter, including the freedom of the press. Counsel's action or inaction could not affect those rights.

[29] Finally, I am concerned that a narrow interpretation of the phrase "open to the public" will have a far-reaching effect beyond the court system itself. It will affect the proceedings of a great many administrative tribunals, municipal and other public institutions, whose governing statutes require that proceedings be "open to the public". Section 9 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 provides that, subject to specific and narrow exceptions, "an oral hearing shall be open to the public". Section 55(3) of the Municipal Act, R.S.O. 1990, c. M.45 provides that "except as provided in [s. 55], all meetings shall be open to the public". The governing statutes of a great many administrative tribunals, municipal and other public institutions with decision-making bodies have similar provisions. [See Note 2 below] A narrow interpretation of this phrase risks allowing a great many public institutions to withdraw behind closed doors which, while not locked, are opened only upon the making of an express request for admission.

[30] For these reasons, I would conclude that s. 135 of the Courts of Justice Act and rule 37.11 of the Rules both required the motion judge to deal with this motion in public. However, given that I would allow the appeal on other grounds, I do not express any view as to the effect of her failure to do so on the force of the order as between the litigants.

2. The motion judge's failure to give the appellants an opportunity to be heard is a denial of due process and a failure of natural justice

[31] The appellants claim that the procedure adopted by the motion judge created a reasonable apprehension of bias. That is not the way I would characterize the issue. As I see it, the appellants' concern may more appropriately be described as one of due process -- that the motion judge adopted a procedure that did not accord with the basic requirements of fairness.

[32] As the Agreed Statement of Fact indicates, the motion judge prepared her endorsement before asking counsel to join her in the anteroom adjacent to the courtroom to receive her disposition. Her endorsement was already on the back cover of the motion record when counsel were ushered into the anteroom. She advised counsel "she had prepared an endorsement" and "then read her endorsement to counsel" without calling upon them to make submissions. The motion judge did entertain the objections that appellants' counsel made on his own initiative about the "wording of the endorsement". In response to these submissions, the motion judge then made revisions to her notes on the proposed amended claim.

[33] The efforts of hard-working judges to achieve greater efficiencies in the system should be supported. However, basic standards must be observed. Here, the motion judge did not merely indicate her preliminary views to counsel so that they could best focus their submissions. She announced her decision before giving counsel a chance to speak. I do not regard the submissions counsel made after the motion judge read her decision as a full and adequate opportunity to address the merits of the motion. It is not unusual for counsel to make submissions about the wording of the decision after it is rendered, and as I read the Statement of Agreed Facts, that is all that occurred in this case.

[34] Moreover, justice must not only be done, it must also be seen to be done. If the public or press had been ushered into the anteroom along with counsel, my view is that they would not have regarded the process as a fair one.

[35] I would conclude that the appellants were denied due process. They were not afforded a fair opportunity to attempt to persuade the motion judge that their reliance on the CLPA fell within the scope of the alleged upgrade they had been permitted to include in their amended claim. They did make such submissions on appeal, which are discussed below.

3. The appellants should have been permitted to include a statutory claim under the CLPA in the Amended Statement of Claim

[36] The heart of the appellants' action, as originally framed, was the Agreement Claim, which alleged that the respondent had verbally agreed to hold the property in trust for them and to transfer it back to them upon request. The motion judge struck the Agreement Claim and ruled also that the facts pleaded in relation to it should be deleted in the Amended Statement of Claim. She allowed the appellants to include in their Amended Statement of Claim a particularized claim "for compensation or a constructive trust on the basis that the respondent was unjustly enriched as a result of the upgrades" the appellants claimed to have made to the property.

[37] Section 37(1) of the CLPA provides for a claim where "a person makes lasting improvements on land under the belief that it is the person's own". I see no meaningful distinction between "lasting improvements" and "upgrades". The appellants' claim under s. 37(1) is based on the appellants' alleged upgrades to the property and thus falls within the scope of the "upgrades claim" that the motion judge permitted.

[38] Section 37(1) requires that the appellants made the lasting improvements believing the land was their own. To advance the s. 37(1) claim, they had to plead facts setting out the basis for their belief that the property belonged to them. They assert that they believed the property was theirs because of the alleged oral agreement with the respondent to reconvey the property to them upon request. From the appellants' point of view, while the oral agreement could not create legal rights, it is the basis of their subjective mistaken belief that the land was theirs. Asserting the statutory claim under s. 37(1) of the CLPA requires the appellants to plead many of the same facts they originally set out in support of their Agreement Claim, albeit from a somewhat different perspective.

[39] The motion judge's ruling of February 6, 2007 could not and, as I read it, does not prevent the appellants from pleading the facts that are relevant to the permitted claim just because those facts had been relevant to the Agreement Claim and had already been pleaded to support it. Facts pleaded because they were relevant to the alleged upgrades claim would not be facts that "related" to the Agreement Claim, even if they were the same facts. The appellants therefore submit that their claim under s. 37(1) of the CLPA and the facts pleaded to support it should not have been struck.

[40] The respondent argues that it is critical to remember that the motion judge dismissed the appellants' claim summarily and the only claim she allowed to proceed was an unjust enrichment claim based on the alleged upgrades. In my view, little is to be gained from debating whether a claim for compensation for lasting improvements made to land, which invokes a statute, falls with the permitted claim for "compensation or a constructive trust on the basis that the defendant was unjustly enriched as a result of the upgrades to the property". Even if further leave to amend were required, the respondent did not allege that any prejudice would result from permitting the inclusion of the statutory claim that could not be compensated for by costs.

[41] The motion judge therefore erred in striking the appellants' claim under s. 37(1) of the CLPA from the Amended Statement of Claim.

4. The motion judge improperly "redrafted" the appellants' Statement of Claim

[42] The Amended Statement of Claim that was before the motion judge on October 14, 2008 did not consist of a concise statement of the material facts to support either a claim under s. 37(1) of the CLPA or a claim for unjust enrichment. The Amended Statement of Claim contained what was largely a re-articulation of the appellants' allegation that the transfer of title to the property was understood by both parties to be temporary. The motion judge properly struck the pleading of such facts as failing to comply with her supplementary endorsement of February 6, 2007.

[43] As both her endorsement of October 14, 2008 and the Agreed Statement of Fact indicate, the motion judge was frustrated with both the delay in the proceedings and the failure of the appellants' Amended Statement of Claim to accord with the directions given in her previous order. Moreover, as I have already noted, the appellants had earlier flagrantly disregarded the motion judge's directions.

[44] It is understandable, then, that the motion judge wished to avoid further delay and took it upon herself to provide the appellants with the detailed wording that would be acceptable. She attached to her endorsement the Amended Statement of Claim marked by her "to indicate what would need to be done for the amended statement of claim to comply". The appellants do not exaggerate in submitting that the motion judge, in effect, redrafted a major portion of their Statement of Claim.

[45] There is no doubt that, in controlling the process before the court, a judge may give such directions as considered necessary for the matter to proceed in an orderly manner without undue delay. That said, a judge should exercise caution before adopting a role inimical to the judicial function in the adversarial process. Here, there is merit to the appellants' submission that the motion judge interfered with their ability to fashion the pleading of their claim as they saw fit.

[46] First, the motion judge failed to include in her redraft of the Statement of Claim a properly pleaded claim under s. 37(1) of the CLPA.

[47] Second, the motion judge's handwritten amendments require the appellants to plead that they paid "rent" to the respondent. The appellants' position, however, is that as a matter of fact, they did not pay "rent", but rather paid the mortgage payments, utilities and all other related property expenses. A pleading stating that they paid "rent" may be reasonably viewed as undermining their pleading that they had a subjective belief that the land was theirs. The pleading that they paid the "mortgage" simply alleges they paid money to the mortgage company and not to the respondent. I do not view the appellants' pleading that they made payments to a mortgage company rather than to the respondent as an attempt to revive the properly struck Agreement Claim. Whether payments were made, to whom they were made and whether they support either a claim under s. 37(1) of the CLPA or a claim for unjust enrichment are questions for trial.

[48] The motion judge's endorsement and order make clear that the appellants could not regard her handwritten edits as merely suggestions of wording that they could consider. To the contrary, the appellants were required to file an Amended Statement of Claim in the form of the edited version the motion judge attached as an appendix to her endorsement. In my view, the motion judge improperly entered the litigation arena in this case.

V. Conclusion

[49] I would find that the motion judge erred by failing to hear the motion in public as required by s. 135(1) of the Courts of Justice Act and rule 37.11(2). I would allow the appeal because the motion judge erred by depriving the appellants of due process by not affording them an adequate opportunity to make submissions, and erred by striking their claim under s. 37(1) of the CLPA as it was properly pleaded. I would set aside the order of the motion judge dated October 14, 2008.

[50] The appellants filed with this court a redraft of their Amended Statement of Claim and asked for an order allowing them to file it. I would decline to make such an order. I would remit the motion to the Superior Court to be heard and determined by a different judge. At that motion, the appellants can seek the court's leave to file the revised Amended Statement of Claim.

[51] As agreed by counsel, I would fix the appellants' costs in the amount of $7,500, inclusive of disbursements and GST.

[52] MACFARLAND J.A. (WATT J.A. concurring): -- I have had the benefit of reading the reasons of my colleague Juriansz J.A., and I must respectfully disagree with his disposition of some of the issues raised on this appeal and, in particular, four of the six grounds of appeal raised.

[53] It is the reality that much of the court's business is conducted by judges in their personal chambers, as well as in retiring rooms and anterooms.

[54] Were it not for the willingness of judges to do their work in places other than formal courtroom settings, there could be even greater delays in cases working their way through the system than there are presently.

[55] In this case, the motion judge was, at the time, assigned to the Commercial List at Toronto. This case is not a Commercial List case. Nonetheless, the motion judge agreed to accommodate counsel and hear their case, in addition to her regular list of cases. She heard counsel in the anteroom adjacent to her courtroom and, in my view, absent any objection by counsel, it was perfectly appropriate for her to do so.

[56] Given the history of the proceeding, one can readily understand why the motion judge was "appalled" at the delay in the case and the apparent failure by the appellants to follow her direction.

[57] Nowhere in the Agreed Statement of Fact filed in this court does the appellant say that they objected to the motion proceeding in chambers, as opposed to the courtroom. Indeed, it is agreed that they did not.

[58] While the motion judge appeared to have already drafted an endorsement in part, and had ready suggested revisions to the Statement of Claim, it is clear from the Agreed Statement of Fact that she listened to counsel's objections to her proposals and made changes accordingly.

[59] We must not forget that this was not the first time this judge had been called upon to consider this pleading. In a lengthy endorsement released August 16, 2006 [[2006] O.J. No. 3322, 150 A.C.W.S. (3d) 735 (S.C.J.)], this motion judge struck certain parts of the Statement of Claim for disclosing no cause of action. Following a further attendance before her on November 23, 2006, she issued a further supplemental endorsement granting the plaintiffs leave to amend to provide particulars of their claim for unjust enrichment arising out of alleged upgrades they made to the property.

[60] The appellants appealed that order to this court. Their appeal was dismissed May 22, 2008 [[2008] O.J. No. 2057, 2008 ONCA 419].

[61] At para. 28 of the supplemental endorsement released February 6, 2007 [[2007] O.J. No. 442, 154 A.C.W.S. (3d) 1237 (S.C.J.)], the motion judge provided the necessary detail in relation to the appellants' claim that had survived the motion to strike. Following this court's dismissal of their appeal in May 2008, the appellants further amended the Statement of Claim, as the February ruling had permitted them to do. The respondents were of the view that the pleading did not comply with the motion judge's ruling.

[62] Counsel agreed to appear before the motion judge to determine whether the proposed amended claim complied with her August 2006, and February 2007, orders.

[63] That attendance proceeded on October 14, 2008, and it is from that attendance that this appeal arises.

[64] In my view, there is nothing in this record that in any way offends s. 135(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides: "[s]ubject to subsection (2) and rules of court, all court hearings shall be open to the public".

[65] There is also nothing in the record which suggests anyone was excluded from the judge's chambers. No one requested that the appellants personally be permitted to attend on the motion judge with their counsel. In short, as the Agreed Statement of Fact provides: "[n]either counsel objected at the time to dealing with the motion in this way".

[66] In my view, counsel had an obligation to object when before the motion judge. It is inappropriate to raise this procedural objection now for the first time on appeal. If they wanted their motion heard in the courtroom, as opposed to chambers, they had the obligation to tell the judge so at the time: see Leader Media Productions Ltd. v. Sentinel Hill Alliance Atlantis Equicap Ltd. Partnership (2008), 2008 ONCA 463, 90 O.R. (3d) 561, [2008] O.J. No. 2284, 237 O.A.C. 81 (C.A.), at paras. 50 and 56.

[67] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194 now provide for the hearing of motions via telephone and video conference. [See Note 3 below] As well, the Rules provide that some motions may be heard by attendance, in writing, or by fax. [See Note 4 below] Indeed a motion for leave to appeal to this court is in the normal course made entirely in writing. [See Note 5 below]

[68] Many of these methods for hearing would not involve the attendance of the parties or their counsel, and the motions would, in all likelihood, be dealt with by judges somewhere other than in a formal courtroom setting. Simply because a matter is dealt with in a judge's chambers does not mean the hearing was not open to the public. Moreover, in my view, courtrooms, and by courtrooms I mean anywhere where judicial business is conducted, are presumed to be open to the public. It is for this reason that whenever a party wishes to have specific persons, or indeed the public, excluded from a courtroom, an application must be made to the presiding judge or an order to that effect. Absent some evidence of exclusion, I would not give effect to this ground of appeal.

[69] The second, third, fourth and fifth grounds of appeal are interrelated and, as such, I will deal with all four together. The motion judge's redrafting of the pleading, annexed as Schedule A to her order of October 14, 2008, does not refer to the appellants' claim made pursuant to s. 37(1) of the Conveyancing and Law of Property Act, R.S.O. 1990 c. C.34 ("CLPA").

[70] Perhaps as a result of this claim not being raised by the appellants in the earlier drafts of their Statement of Claim, the motion judge appears to have misapprehended the submission the appellants sought to advance. While their claims for a constructive trust by virtue of an oral agreement were struck earlier, and that ruling upheld by this court, the statutory claim they sought to advance is a different claim altogether. Many of the facts they asserted to support the earlier constructive trust claim that was struck are relevant and will be relied upon to support their statutory claim. In my view, the motion judge erred in striking the appellants' statutory claim, and the material facts advanced in support of it, which included their characterization of the nature of the payments made by them over the years.

[71] The last ground of appeal alleges that the motion judge exhibited a reasonable apprehension of bias. The test for reasonable apprehension of bias on the part of a trial judge is a high one.

[72] The test is: "what would an informed person, viewing the matter realistically and practically -- having thought the matter through -- conclude": Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, [1976] S.C.J. No. 118, at p. 394 S.C.R.

[73] An allegation of reasonable apprehension of bias calls into question not simply the personal integrity of the judge, but the integrity of the entire administration of justice. Judges start with a presumption of impartiality. Where the ground is raised for the first time on appeal in circumstances where there is no record below, this court must exercise great caution: see, e.g., R. v. Fell, [2009] O.J. No. 2828, 2009 ONCA 551, at para. 9.

[74] Where counsel in the court below is of the view that the trial judge, or, in this case, the motion judge, is exhibiting bias, they have the obligation to raise it with the judge below at the time. At that point, a record will become available and the judge will make a ruling -- both of which will then be available for this court to review. That was not done here and the motion judge was not alerted to this issue, now raised for the first time on appeal.

[75] Simply because the motion judge did not find in favour of the appellants and struck a pleading which this court finds was in error does not give rise to bias or any appearance thereof.

[76] This ground of appeal arises because of the appellants' argument that (1) there was no oral hearing in public; and (2) the appellants were deprived of their right to make submissions.

[77] I have already disposed of these grounds earlier in my reasons, concluding that the hearing was held in public, no one objected to the hearing being conducted in chambers and no one who expressed desire to be present was excluded from the anteroom. No objection was made to the proceeding being conducted as it was.

[78] It is clear from the Agreed Statement of Fact that counsel made submissions. Further, the entered order, which would have required the approval of the appellants, provides in its preamble: ". . . and on hearing oral submission of counsel".

[79] Neither of these arguments in the nature of natural justice are made out. I would not give effect to this ground of appeal.

[80] In conclusion, I would allow the appeal on the sole ground that the motion judge erred in striking the appellants' claim based on the CLPA and the material facts which support those claims.

[81] Costs to the appellants in the agreed sum of $7,500, inclusive of disbursements and GST.

Appeal allowed.

Notes

Note 1: See, e.g., Vancouver Sun (Re), 2004 SCC 43, [2004] 2 S.C.R. 332, [2004] S.C.J. No. 41; Canadian Broadcasting Corp. v. New Brunswick (Attorney General), 1996 184 (SCC), [1996] 3 S.C.R. 480, [1996] S.C.J. No. 38; Edmonton Journal v. Alberta (Attorney General), 1989 20 (SCC), [1989] 2 S.C.R. 1326, [1989] S.C.J. No. 124; Ruby v. Canada (Solicitor General), 2002 SCC 75, [2002] 4 S.C.R. 3, [2002] S.C.J. No. 73; Dagenais v. Canadian Broadcasting Corp., 1994 39 (SCC), [1994] 3 S.C.R. 835, [1994] S.C.J. No. 104; R. v. Mentuck, 2001 SCC 76, [2001] 3 S.C.R. 442, [2001] S.C.J. No. 73.

Note 3: See rule 1.08.

Note 4: See rule 77.12(2.1).

Note 5: See rule 61.03.1.

Palkowski v. Ivancic, 2009 ONCA 705

Case Summary

Palkowski et al. v. Ivancic [Indexed as: Palkowski v. Ivancic]

Cases referred to

Statutes referred to

Rules and regulations referred to

Authorities referred to

I. Overview

II. Facts

III. Issues

IV. Analysis

1. The motion judge erred in failing to hear and determine the motion in public

2. The motion judge's failure to give the appellants an opportunity to be heard is a denial of due process and a failure of natural justice

3. The appellants should have been permitted to include a statutory claim under the CLPA in the Amended Statement of Claim

4. The motion judge improperly "redrafted" the appellants' Statement of Claim

V. Conclusion

Notes

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 48