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Good evening.

Following are this week’s summaries of the civil decisions of the Court of Appeal for Ontario.

In Marvelous Mario’s Inc. v. St. Paul Fire and Marine Insurance Co., the Court of Appeal dealt with the issue of when a rolling limitation period exists in the breach of contract context (insurance policy). When there is only one breach, but ongoing damages, the limitation period does not get reset every time further damages arise from the initial breach. However, where there are ongoing contractual obligations, every time there is a breach of a contractual obligation, a cause of action for that breach is triggered, with its own new limitation period.

In Nemchin v. Green, the Court of Appeal had the opportunity to review the law on the admissibility of video surveillance and Facebook evidence at trial. The decision involved a discussion of the two purposes of video evidence, to impeach witness credibility or to be used as substantive evidence, and the requirements that must be met for evidence to be admissible. Where the evidence is only to be used for impeachment purposes, it need not be disclosed before trial. However, if the evidence is to be relied upon to prove a fact at trial, it must be disclosed in advance, just like any other document, during the discovery process.

Ridel v. Goldberg deals with the applicable limitation period to a claim brought by creditors of a bankrupt under an assignment to them of the claim of the bankrupt under section 38 of the Bankruptcy and Insolvency Act. The bankrupt was a judgment debtor, which had a claim over for contribution and indemnity against a principal of the company that it did not bring at the time of the underlying litigation. The creditors who had a partially unsatisfied judgment took an assignment of the claim over and brought the action against the principal years after their initial judgment. Among other arguments they made, the creditors argued that the limitation period did not start to run until they had the action assigned to them under section 38. The Court of Appeal rightly rejected this argument. If a claim belonging to a bankrupt is out of time before it is assigned to the creditors, it is also out of time after it is assigned to the creditors. The claim vests in the trustee in bankruptcy, who steps into the shoes of the bankrupt. The trustee and, by extension, the creditors who take on the claim, cannot be in a better position than the bankrupt. They inherit the claim with all its warts.

Other topics covered this week included leave to intervene on the motion for leave to appeal the decision of the Divisional Court in the Ontario sex-ed curriculum case, and whether a lawyer in private practice who received a lot of work from the Office of the Children’s Lawyer was a dependent contractor for the purpose of notice of termination of the relationship by her client.

Wishing everyone a nice long weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

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Table of Contents

Civil Decisions

Marvelous Mario’s Inc. v. St. Paul Fire and Marine Insurance Co., 2019 ONCA 635

Keywords:  Contracts, Insurance, Interpretation, Business Interruption, Contractual Limitation Periods, Rolling Limitation Periods, Causation, Stare Decisis, Ford Motor Company of Canada Ltd. v. Prudential Assurance Co. Ltd. (1958), 14 DLR (2d) 7, affirmed [1959] S.C.R. 539, Treeland Motor Inn Ltd. v. Western Assurance Co., 1985 CarswellSask 165 (Sask C.A.), Richards v. Sun Life Assurance Company of Canada, 2016 ONSC 5492

McFarlane v. Ontario (Education), 2019 ONCA 641

Keywords:  Civil Procedure, Motion for Leave to Appeal, Endorsement, Leave to Intervene, Distinct Contribution, ING Canada Inc. v. Aegon Canada Inc., [2004] S.C.C.A. No. 50, Sault Dock Co Ltd v. City of Sault Ste Marie, [1973] 2 O.R. 479 (C.A.), 2016596 Ontario Inc. v. Ontario (Minister of Natural Resources), [2003] O.J. No. 2905 (C.A.), Bedford v. Canada (Attorney General), 2009 ONCA 669, 98 O.R. (3d) 792

Nemchin v. Green, 2019 ONCA 634

Keywords: Civil Procedure, Trials, Evidence, Admissibility, Surveillance Evidence, Facebook Evidence, Voir Dire Proceedings, Witnesses, Credibility, Impeachment, The Rule in Browne v. Dunn (1893), 6 R. 67 (H.L. (Eng.), Documentary Evidence, Disclosure, Procedural Fairness, Iannarella v. Corbett, 2015 ONCA 110, Brochu v. Pond (2002), 62 OR (3d) 722 (CA), Vokes Estate v. Palmer, 2012 ONCA 510

Ridel v. Goldberg, 2019 ONCA 636

Keywords: Torts, Professional Negligence, Investment Advisers, Corporations, Breach of Fiduciary Duty, Bankruptcy and Insolvency, Property of the Bankrupt, Choses in Action, Assignment, Civil Procedure, Third Party Claims, Contribution and Indemnity, Limitation Periods, Discoverability, “Appropriate Means”, Ontario Business Corporations Act, R.S.O. 1990, c. B.16, s. 134, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 38, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 12, s. 4, s. 5(1)(a)(iv), s. 5(2), Morrison v. Barzo, 2018 ONCA 979, Indcondo Building Corporation v. Sloan, 2010 ONCA 890

Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640

Keywords: Contracts, Employment, Dependent Contractors, Termination, Notice, Civil Procedure, Appeals, Orders, Final or Interlocutory, Summary Judgment, McKee v. Reid’s Heritage Home Ltd., 2009 ONCA 916, Keenan v. Canac Kitchens Ltd., 2016 ONCA 79

Short Civil Decisions

Pita Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc., 2019 ONCA 639

Keywords: Costs Endorsement

Mozas v. Francis, 2019 ONCA 643

Keywords: Civil Procedure, Settlements, Enforcement

Criminal Decisions

R. v. Josipovic, 2019 ONCA 633

Keywords: Criminal Law, First Degree Murder, Second Degree Murder, Mens Rea, Defences, Self-Defence, Provocation, Criminal Code, s. 21(1)(a), (b), (c), s. 229(a), R. v. Pickton, 2010 SCC 32, R. v. Dooley, 2009 ONCA 910, R. v. Zoldi, 2018 ONCA 384, R. v. Briscoe, 2010 SCC 13, R. v. Portillo, (2003) 176 CCC (3d) 467 (Ont. CA), R. v. Suzack, (2000) 141 CCC (3d) 449 (Ont. CA), R. v. W.(D.), [1991] 1 SCR 742, R. v. Sadiqi, 2013 ONCA 250, R. v. Reynolds, 2013 ONCA 433, R. v. Reid, (2003) 65 OR (3d) 723, R. v. Baron and Wertman, (1976) 14 OR (2d) 173 (CA), R. v. Huard, 2013 ONCA 650, R. v. Jackson, [1993] 4 SCR 573, R. v. Chambers, 2016 ONCA 684

R. v. Province, 2019 ONCA 638

Keywords: Criminal Law, Constructive First Degree Murder, Criminal Harassment, Procedural Fairness, Standard of Review, Jury Selection, Jury Instructions, Criminal Code, ss. 231(2), 231(6), 264(2)(d), 640, 640(2.1), 640(2.2), 640(4), 643(3), 670-672, 686(1)(b)(iii)-(iv), R. v. W.V., 2007 ONCA 546, leave to appeal refused, [2007] SCCA No. 615, R. v. Moore-McFarlane (2001), 160 C.C.C. (3d) 493 (Ont. C.A.), R. v. Noureddine, 2015 ONCA 770, 332 C.C.C. (3d) 114, R. v. Grant, 2016 ONCA 639, 342 C.C.C. (3d) 514, R. v. Murray, 2017 ONCA 393, 347 C.C.C. (3d) 529, R. v. Husbands, 2017 ONCA 607, 353 C.C.C. (3d) 317, leave to appeal refused, [2017] SCCA No. 364; R. v. Riley, 2017 ONCA 650, 351 C.C.C. (3d) 223, leave to appeal refused, [2018] SCCA No. 216, R. v. Gayle (2001), 154 C.C.C. (3d) 221 (Ont. C.A.), leave to appeal to S.C.C. refused (2002), 159 C.C.C. (3d) vi (note), R. v. Brown (2002), 166 C.C.C. (3d) 570 (Ont. C.A.), R. v. Swite, 2011 BCCA 54, 268 C.C.C. (3d) 184, R. v. Khan, 2001 SCC 86, [2001] 3 S.C.R. 823, R. v. Katoch, 2009 ONCA 621, 246 C.C.C. (3d) 423, R. v. Betker (1997), 115 C.C.C. (3d) 421 (Ont. C.A.), leave to appeal S.C.C. refused (1998), 121 C.C.C. (3d) vi (note), R. v. Brown (2005), 194 C.C.C. (3d) 76 (Ont. C.A.), R. v. Kosikar (1999), 138 C.C.C. (3d) 217 (Ont. C.A.), leave to appeal to S.C.C. refused (2000), 142 C.C.C. (3d) vi, R. v. Lamontagne (1998), 129 C.C.C. (3d) 181 (Que. C.A.), R. v. Burns, 2008 ONCA 6, R. v. Sim, 2017 ONCA 856, 41 C.R. (7th) 416, R. v. Farrant, [1983] 1 SCR 124, R. v. Harbottle, [1993] 3 SCR 306, R. v. Magoon, 2018 SCC 14, R. v. Pritchard, 2008 SCC 59, R. v. Kimberley (2001), 157 C.C.C. (3d) 129, leave to appeal refused, [2002] SCCA No. 29; R. v. Smith, 2015 ONCA 831, 344 O.A.C. 22, R. v. Parris, 2013 ONCA 515, 300 C.C.C. (3d) 41, R. v. McLellan, 2018 ONCA 510, 362 C.C.C. (3d) 183, R. v. Brown, 2018 ONCA 481, 361 C.C.C. (3d) 510, R. v. W.D.S., [1994] 3 S.C.R. 521, R. v. W. (D.), [1991] 1 S.C.R. 748, R. v. Rodgerson, 2015 SCC 38, [2015] 2 S.C.R. 760

R. v. Mehedi, 2019 ONCA 642

Keywords: Appeal Book Endorsement, Criminal Law, Certiorari Application, Vexatious Litigants

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CIVIL DECISIONS

Marvelous Mario’s Inc. v. St. Paul Fire and Marine Insurance Co., 2019 ONCA 635

[Hourigan, Paciocco and Fairburn JJ.A.]

Counsel:

R.D. Rollo and D. Melamed, for the appellants

D.A. Tompkins and T.J. Buckley, for the respondent

FACTS:

The appellants had an insurance policy with the respondents that would cover “direct loss from any Peril.” In October 1999, one of the appellant’s affiliated companies was impacted by a moth infestation that interrupted their business and caused them to be unable to pay rent to the appellant, which formed the basis of the first action. The appellant also loaned $950,000 to the affiliated company, which was never repaid.

In October of 2000, the affiliated company went into receivership and by December, a sale of the company was accepted by the court and the transaction closed. In November 2002, the appellant commenced an action claiming that the Receiver committed theft of insured equipment and assets by wrongfully retaining the assets or wrongfully transferring them to the purchaser, causing business interruption losses to the appellant. These allegations formed the basis of the second action.

At trial, the judge dismissed the first action in its entirety because the loss suffered was not a direct loss. The insured event was the moth infestation. The fact that the affiliated company later became unable to pay its financial obligations, despite receiving insurance money for the infestation, was an indirect result and was not covered by the insurance policy.

Regarding the second action, the question was one of a contractual limitation period. The insurance policy had a one-year limitation period. Since the sale of the affiliated company happened in December 2000, the commencement of the second action in 2002 was outside of that contractual limitation period. However, the trial judge found that the business interruption losses constituted on-going issues and so a rolling limitation period should apply. Only claims that pre-dated one year before the commencement of the second action were statute-barred.

The appellant appeals the dismissal of the first action in its entirety and the partial dismissal of the second action. The respondents cross-appeal on the issue of whether a rolling limitation period should apply.

ISSUES:

(1) Did the trial judge err in finding the losses suffered were not direct losses covered by the insurance policy?

(2) Did the trial judge err in applying damages principles to issue (1)?

(3) Did the trial judge err in holding that a rolling limitation period should apply in respect of the second action?

HOLDING:

Appeal dismissed. Cross-appeal allowed.

REASONING:

(1) Did the trial judge err in finding the losses suffered were not direct losses covered by the insurance policy?

No. The appellants submitted that the trial judge erred in holding that there could only be one proximate cause for a given loss. The Court of Appeal rejected this submission, as the trial judge specifically referred to Supreme Court of Canada cases that reference the idea that there can be multiple proximate causes. Particularly, in Ford, the SCC held “the cause of the loss or damage covered by the contracts must be a ‘proximate cause’” (emphasis added). The appellant submits that the infestation caused the bankruptcy of the affiliated company, which in turned caused the appellants to suffer a loss. The trial judge and the Court of Appeal rejected this submission. There was evidence that the affiliated company’s sales actually increased after the infestation, and it was instead its failure to manage its finances that led to the appellants’ loss.

(2) Did the trial judge err in applying damages principles to issue (1)?

No. The trial judge found that because the affiliated company already received insurance monies from the respondent for the infestation, permitting the appellants to do the same would amount to double recovery. The appellants seized upon this statement and argued that the trial judge erred in law by considering a damages principle in a coverage-only trial.

The Court of Appeal rejected this submission, as it mischaracterized the trial judge’s reasons. The trial judge’s decision referred to double recovery not as a principle of damages, but as a part of an analysis of interpreting the insurance policy. The trial judge was attempting to interpret the policy so as not to “give rise to results that are unrealistic or that the parties would not have contemplated in the commercial atmosphere in which the insurance policy was contracted”, as was espoused in Ledcor. The Court of Appeal upheld the trial judge’s reasoning, in that “it would be an unrealistic and commercially unreasonable result if one insured party was paid for its business interruption losses and then did not pay its obligations to a related insured party, who could then make another claim on the same policy…”

(3) Did the trial judge err in holding that a rolling limitation period should apply in respect of the second action?

Yes. The trial judge essentially split the second action into two issues. The first was for property losses for the alleged theft or wrongful handling of property by the Receiver. The second was for business interruption losses flowing from that deprivation. On the first issue, the trial judge found that the claim was barred by the contractual limitation period. On the second, he found that it was subject to a rolling limitation period, and therefore could proceed. The respondent submitted this was an error, and both issues should be barred by the contractual limitation period.

The trial judge found that the appellant knew that it had a cause of action as at the date of the sale, but relying on Treeland, found that business interruption claims are subject to a rolling limitation period because the loss accrues each day.

The Court of Appeal found this to be an error for several reasons. First, Treeland is a Saskatchewan case that has never been followed or adopted in Ontario. While it has been mentioned in passing in one decision, it is not good law in Ontario. While the respondent relied on large volumes of factually similar cases, the Court found that none of these cases were good law in Ontario, and were largely devoid of legal analysis on the issues in dispute in the present case.

The Court of Appeal endeavoured to discuss the principles of rolling limitations periods. Jurisprudence suggested that rolling limitation periods are available in breach of contract cases where the defendant has a recurring contractual obligation. The question is not whether the plaintiff is continuing to suffer a loss or damage, but whether the defendant has engaged in another breach of contract beyond the original breach by failing to comply with an ongoing obligation. Richards discussed the distinction between cases where a defendant is failing to make periodic payments owed to the plaintiff and cases where there is dispute as to whether there is an entitlement to periodic payments. The former set of cases are subject to a rolling period, while the latter are not.

The Court of Appeal found that the trial judge erred in focusing on whether the appellants were suffered continuing damages, rather than on whether the respondent was in breach of a recurring contractual obligation. Under the policy, the respondent was required to pay business operation losses in lump-sum immediately upon proof of the loss. While the exact quantum of damage was initially unknown, the appellant knew there had been a loss as at the date of the sale and so this is when the contractual limitation period began.

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McFarlane v. Ontario (Education), 2019 ONCA 641

[Nordheimer J.A. (Motion Judge)]

Counsel:

R. Khawja, I. Essajee and L. Bush, for the moving party, Ontario Human Rights Commission

B. Brammall, for the applicants

A. Bolieiro, for the respondent

FACTS:

The underlying proceeding involves a challenge to the provincial government’s directive dated August 22, 2018 (the “Directive”), requiring teachers in Ontario’s publicly funded elementary schools to teach the sex education curriculum in place from 2010 to 2015. The applicants contend that the Directive, and the events surrounding it, infringe the Charter rights of teachers, students, and/or parents. The Divisional Court dismissed that challenge and the applicants have sought leave to appeal. The Ontario Human Rights Commission (“OHRC”) seeks leave to intervene on the pending motion for leave to appeal. The OHRC also seeks an order granting it intervener status on the appeal, if leave to appeal is granted.

ISSUES:

(1) Should the OHRC be granted leave to intervene on the pending motion for leave to appeal?

(2) Should the OHRC be granted intervener status on the appeal, if leave to appeal is granted?

HOLDING:

Motion for intervener status on the motion for leave to appeal dismissed. Motion for intervener status on the appeal if leave to appeal is granted adjourned.

REASONING:

(1) Should the OHRC be granted leave to intervene on the pending motion for leave to appeal?

No. The Court held that the OHRC had not established that this case was one where the extraordinary remedy of granting intervener status on a motion for leave to appeal was required. The OHRC said that it would make unique contributions to the motion for leave to appeal by submitting: (1) that the issues on the motion engage the public interest and (2) that the Divisional Court erred in its analysis of discrimination. In terms of the first point, the Court held that it was evident from the reasons of the Divisional Court that the issues raised by this litigation involved matters of public interest. That was not disputed. In terms of the second point, the Court held that the Canadian Civil liberties Association is capable of outlining any errors that it said the Divisional Court made in the course of its reasons. The Court accepted that the OHRC might be able to provide a separate perspective on the issues raised by the substance of the appeal – but that was a matter for the appeal itself, if leave is granted. It is not a requirement on the motion for leave to appeal, which simply requires that the applicant show that there is an arguable question of law or mixed fact and law.

(2) Should the OHRC be granted intervener status on the appeal, if leave to appeal is granted?

Adjourned. The Court held that the OHRC’s request that it be granted intervener status if leave to appeal is granted is premature. If leave to appeal is granted, there will be the opportunity for any number of interested parties to seek intervener status. Given that one of the considerations in granting intervener status is whether the proposed intervener will make a distinct contribution, it would be helpful in deciding those requests to know all of the persons who seek to intervene.

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Nemchin v. Green, 2019 ONCA 634

[Rouleau, Lauwers and van Rensburg JJ.A.]

Counsel:

S. Ross, B. Sunohara and M. Rodrigues, for the appellant

J. Obagi and E. Quigley, for the respondent

FACTS:

The appellant was driving a motor vehicle when she turned into oncoming traffic and hit the respondent. The respondent suffered several injuries, including a worsening of her existing PTSD condition. At trial, the appellant sought to produce video surveillance evidence and copies of some of the respondent’s Facebook posts, showing the respondent taking part in normal life activities so as to prove the limited impact PTSD actually had on her life. The trial judge found both sets of evidence inadmissible.

The respondent was ultimately awarded $700,000 at trial. The appellants believe the trial judge erred in not admitting the above evidence, and that if the trial judge had admitted the evidence, the damages award would have been substantially lower. They appeal the inadmissibility ruling of the evidence.

ISSUES:

(1) Did the trial judge err in not admitting the video surveillance evidence?

(2) Did the trial judge err in not admitting the Facebook evidence?

(3) If so, were the errors sufficiently grave as to warrant a new trial?

HOLDING:

Appeal dismissed.

REASONING:

(1) Did the trial judge err in not admitting the video surveillance evidence?

Yes. The Court first discussed the two possible purposes of video surveillance at trial. The first is to use it to impeach witness credibility on cross-examination. The second is to use the video surveillance as substantive evidence in the party’s case. In order to use the video evidence for the second purpose, it must be disclosed in a timely manner, in accordance with the Rules of Civil Procedure.

The test for admissibility of video evidence was laid out in Ianarella, and involves a voir dire hearing where the videographer can be examined to assess whether the video depicts the evidence fairly and accurately. The trial judge must also assess whether the video evidence would impact trial fairness. The trial judge’s task in a voir dire is to look at each piece of video evidence individually to determine if each piece is admissible.

On the question of fairness, the video evidence must be viewed on a continuum of significance in light of the Rule in Browne v. Dunn. The Rule in Browne v. Dunn requires counsel to give a witness an opportunity to address any possible contradictions on cross-examination for matters of substance. Where the video evidence shows a major contradiction, the witness must be given a chance to address the contradiction. Where it is only a minor contradiction, the video evidence can be led as substantive evidence without impacting trial fairness. These are the two ends of the continuum, and trial judges must assess where any given piece of video evidence falls.

At trial, the judge dismissed the video evidence as a whole, rather than look at each piece individually. The trial judge held that the evidence did not contradict the witness’ testimony, and so could not be admitted. This was an error. While the contradiction may have been minor, that was irrelevant. The video evidence still could have been led as substantive evidence. The trial judge also held that because the video evidence had not been shown to expert witnesses, it could not be properly contextualized, and its significance not properly understood by the jury. However, the respondent led similar evidence at trial without expert testimony. This contradiction could not be explained and amounted to an error.

Another issue with the video evidence was that some parts of it were not disclosed in a timely manner through inadvertence. However, since each piece of evidence must be assessed individually, this should not have impacted the admissibility of the evidence that was disclosed on time. Further, since the evidence that was disclosed late was substantially the same as evidence that was disclosed properly, there was no surprise or prejudice to the respondent. The trial judge’s failure to assess the evidence in this way was an error.

The final issue with the video evidence was the manner in which it was edited. The raw footage was not attempted to be admitted into court, but rather, an edited version that cut out parts of the footage where the respondent was not present, or to splice in multiple cameras or angles of certain events. The videographer did not know exactly how it was edited and so the trial judge found that it was not certifiable as true and accurate. The Court found this to be an error, as it is common practice to adduce edited evidence, as to show hours of unedited footage would waste the court and jury’s time. The question should have been whether the evidence was fair and accurate, and since the videographer was the one recording the events, they were in a sufficient position to authenticate it.

(2) Did the trial judge err in not admitting the Facebook evidence?

No. The respondent’s Facebook account had been deleted, and so the parties entered into an access agreement whereby the appellant would have access to the Facebook account so long as they provided the respondent with copies of the material they planned to use on cross-examination to impeach the witness’ credibility. The appellant failed to adduce it in a timely manner. The appellant sought to adduce six volumes of Facebook evidence. The trial judge held that the work and time required to allow the respondent time to review the evidence and prepare a response in the middle of sitting for cross-examination would be quite substantial and would amount to prejudice. The Court accepted this ruling and it was one the trial judge was able to make under her discretion according to the Rules of Civil Procedure.

(3) If so, were the errors sufficiently grave as to warrant a new trial?

No. A new trial “should not be ordered unless the interests of justice plainly require that to be done”, a proposition that was espoused in Brochu. The appellant must be able to show a substantial wrong or miscarriage of justice had occurred according to Vokes. In this case, the Court of Appeal found that the jury’s award was based largely on the respondent’s inability to work to her full capacity, and thus her income potential was reduced. While the jury considered the impact of her PTSD on her enjoyment of everyday life, this was not the main basis of their award.

The critical issue at trial was whether the car accident caused the PTSD or whether it was an existing condition. The video evidence the appellant sought to bring into evidence did not go to this point. The video evidence did not do much to contradict or add to evidence already admitted. Therefore, the Court of Appeal was not convinced that the damages award would have been much different, if at all different, had the jury seen the video evidence at issue on appeal. Thus, there was no major wrong or miscarriage of justice, and no new trial was necessary.

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Ridel v. Goldberg, 2019 ONCA 636

[Feldman, van Rensburg and Benotto JJ.A.]

Counsel:

R. Anisman, for the appellants

N. Holmberg and B. Needham, for the respondent

FACTS:

In December 2006, the appellants commenced an action (the “Prior Action”) against their investment broker, AC, and his employer, e3m, for negligence, breach of contract and breach of fiduciary duty in the management of their investment accounts. They alleged, among other things, that e3m, contrary to legal and regulatory requirements, had failed to supervise AC’s handling of their accounts.

On April 17, 2013, after a ten-day trial, Pepall J. (as she then was) granted judgment against e3m and AC (the “2013 Judgment”), concluding that e3m was vicariously liable for AC’s conduct and also directly liable to the appellants. The direct liability of e3m was based on its failure to supervise AC. On January 20, 2015, e3m made an assignment in bankruptcy. At the time, the appellants were owed the sum of $1,036,245.85 under the 2013 Judgment, including post-judgment interest.

On October 25, 2016, the appellants, as creditors of e3m, obtained an order under s. 38 of the Bankruptcy and Insolvency Act (the “BIA”) from the Registrar in Bankruptcy, authorizing the assignment to them by the trustee in bankruptcy of e3m’s right to sue G. The s. 38 order provided that the appellants were authorized to commence and prosecute an action against G to recover the damages for which e3m became liable pursuant to the 2013 Judgment in their own name and at their own expense and risk, based on G’s failure to fulfil his obligations as a director and officer of e3m by abdicating his responsibility to supervise the appellants’ accounts at e3m.

Pursuant to the order, the trustee assigned the appellants its right, title and interest to pursue e3m’s right of action against Goldberg. The appellants commenced their action the day they obtained the s. 38 order, October 25, 2016. The claim alleged that Goldberg was liable to compensate e3m for the amount of the 2013 Judgment. The claim asserted that the 2013 Judgment resulted from a breach of Goldberg’s fiduciary obligations and duty of care to e3m, and from a breach of his duties to e3m under s. 134 of the Ontario Business Corporations Act (the “OBCA”).

The appellants brought a motion for summary judgment claiming the sum of $262,165.10, the amount remaining unpaid after they had received payment under the 2013 Judgment from AC and as creditors in e3m’s bankruptcy. As evidence in support of their claim, the appellants relied on the findings of Pepall J. in the Prior Action with respect to G’s wrongdoing. They argued that G was estopped from denying the findings in Pepall J.’s reasons, and that his actions, on this evidence, constituted a breach of his duty of care and fiduciary duties to e3m, contrary to s. 134 of the OBCA.

In response, among other things, G argued that the decision in the Prior Action could not be used as a finding of personal liability against him because he was not a party to the Prior Action. G also claimed that the assigned action was an abuse of process because the action made claims against him that could have been asserted in the Prior Action. G brought a cross-motion for summary judgment dismissing the action against him on the basis that the appellants’ claims were statute-barred under the Limitations Act, 2002.

The motion judge dismissed the appellants’ motion, finding that there were issues requiring a trial. He concluded that, while the reasons of Pepall J. in respect of the 2013 Judgment were admissible, they were not determinative of G’s personal liability to e3m. The parties to the Prior Action were different, as were the causes of action. G had not been called upon in the Prior Action to defend himself regarding his personal liability under the OBCA. Nor was G a “privy” of e3m, such that he would be estopped from contesting Pepall J.’s findings. The motion judge rejected the respondent’s argument that the action was an abuse of process. While the appellants could have sued G in the Prior Action, in the normal course they would have expected to recover their entire claim against AC and e3m.

The motion judge then considered G’s motion to dismiss on the basis of the alleged expiry of the two-year limitation period. Because the appellants obtained their right to advance e3m’s claim by assignment from the trustee in bankruptcy, s. 12 of the Limitations Act, 2002 was engaged. Thus, the date of the appellants’ knowledge of the matters referred to in s. 5(1)(a) of the Limitations Act, 2002 was the earlier of (1) the day the predecessor in right, title or interest first knew or ought to have known of such matters, and (2) the day the person claiming first knew or ought to have known of those matters. The motion judge concluded that, based on the findings of Pepall J., the appellants became aware of the facts forming the claim against G, namely his failure to supervise AC, in July 2006. This was the case even though the appellants could not have brought an action on behalf of e3m against Goldberg until the company’s bankruptcy.

The motion judge concluded in the alternative that the limitation period began to run against e3m in December 2006, when e3m was served with the statement of claim in the Prior Action, and therefore knew that G’s conduct was at issue, or at the very latest when the 2013 Judgment was released and when e3m and its investors received a legal opinion about the poor prospects of an appeal shortly thereafter. By that point, e3m had all the material facts required for a potential claim against G.

The motion judge accepted that, because the action was a claim for contribution and indemnity, the appellants had the onus of rebutting the presumption under s. 18(1) of the Limitations Act, 2002, that the claim was discovered when the statement of claim was served on e3m in the Prior Action. The motion judge rejected the argument, based on s. 5(1)(a)(iv) of the Limitations Act, 2002 that, because a successful appeal might have eliminated the damages it was required to pay the appellants, e3m would not have known that an action against G was “an appropriate means” to seek to remedy its losses until November 2014, when the appeal of the 2013 Judgment was dismissed.

The motions judge considered the argument that e3m would not have sued G because this would have been against its own interest and would have amounted to G suing himself. While he accepted that this was a reason to dismiss the argument that the proceedings were an abuse of process, he stated that he did not find that this was relevant to the limitation period issue. In the result, since the appellants’ claim against G was brought outside any two-year limitation period, the motion judge granted G’s motion and dismissed the claim against him.

ISSUES:

(1) Did the motion judge err when he concluded that the appellants personally had knowledge of the claim against G?

(2) Did the motion judge err when he concluded that e3m, as the predecessor of the appellants in respect of the claim, had knowledge of the claim more than two years before the action was commenced?

HOLDING:

Appeal dismissed.

REASONING:

(1) Did the motion judge err when he concluded that the appellants personally had knowledge of the claim against G?

Yes. The trial judge erred in concluding that the limitation period ran against the appellants because of their personal knowledge of the relevant facts, when they had no capacity to sue in e3m’s name until after the company was bankrupt.

The appellants are pursuing a claim that initially belonged to e3m and that vested in the trustee on e3m’s bankruptcy. The claim for breach of G’s fiduciary and other duties to e3m is not one that the appellants could have pursued before e3m’s bankruptcy. Indcondo did not address the question of when the limitation period under s. 12 would run in respect of a creditor who may well have known of the potential claim by the bankrupt, but had no way to enforce it until the bankruptcy. The Court agreed with the appellants that, because they lacked capacity to bring a claim in the name of e3m against G, any personal knowledge they might have had before e3m’s bankruptcy respecting a claim did not cause the limitation period to run against them pursuant to s. 12(1). The Court ruled, however, that this result did not flow from the application of s. 5(1)(a)(iv).

Until e3m was bankrupt, any claim against G for breach of his duties as a director could only be pursued by e3m. The appellants had no right, title or interest in the claim. They had no ability to bring the claim while the claim continued to belong to e3m. In this case, the appellants could not have asserted a claim against G for wrongs done to e3m until they obtained the s. 38 order. They had no standing to claim for e3m’s losses until obtaining this order. Section 5(1) applies to “the person with the claim”. When they were litigating against e3m in the Prior Action, the appellants may well have known of the various matters under s. 5(1)(a) in the general sense, but because they were not and could not have been “the persons with the claim” at that stage, as any such knowledge was immaterial. Therefore, the appellants’ knowledge of those matters did not become relevant until they had or ought reasonably to have had the authority to pursue the claim, which was, at the very earliest, upon the bankruptcy of e3m in January 2015.

Under this analysis, s. 5(1)(a)(iv) is not engaged. The question is not whether the appellants knew or ought to have known that a proceeding by the company would be an appropriate remedy for G’s alleged wrongs. Until they had control over the claim, or the means to obtain such control (by moving promptly in e3m’s bankruptcy), they were not “claimants” for the purpose of s. 5(1)(a), and therefore their knowledge was not the knowledge of claimants under the section.

(2) Did the motion judge err when he concluded that e3m, as the predecessor of the appellants in respect of the claim, had knowledge of the claim more than two years before the action was commenced?

No. The trial judge did not err in concluding that the limitation period ran against their predecessor, e3m, based on its knowledge in relation to a claim against G – including, in the particular circumstances of this case, the knowledge of its shareholders – of the relevant matters under s. 5(1)(a) of the Limitations Act, 2002.

The Court noted two preliminary points: First, in this case, the predecessor, for the purpose of the s. 12 analysis, is not the trustee in bankruptcy of e3m, but e3m itself. This is not a claim that arose on the bankruptcy, but a claim that vested in the trustee on e3m’s bankruptcy, and then was assigned to the appellants. It is a claim that, subject to discoverability under s. 5(1)(a), e3m could have made itself against its director, G, prior to the bankruptcy. Accordingly, the two-year limitation period began to run against e3m in respect of the claim against G on the earlier of when e3m first knew or ought reasonably to have known of the matters set out in s. 5(1)(a): that the injury, loss or damage to e3m had occurred, that the injury, loss or damage was caused by or contributed to by an act or omission of G, and that “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”.

Second, the claim against G is in respect of the amount owed to them as judgment creditors of e3m following the Prior Action. The statement of claim expressly claimed indemnification of e3m for the amount of the 2013 Judgment. Accordingly, the two-year limitation period presumptively ran from the date the statement of claim was served in the Prior Action (in December 2006), subject to the appellants proving that e3m did not know or that a reasonable person in e3m’s circumstances would not have known of the matters referred to in s. 5(1)(a) in relation to e3m’s claim for indemnity at the time the Prior Action was commenced. Section 18(1) of the Limitations Act, 2002 placed the onus on the appellants to rebut this presumption.

In the particular circumstances of this case, it was reasonable to conclude that e3m knew or ought to have known of a potential claim against G, at the latest, by the time of the 2013 Judgment, including that a proceeding against G would be appropriate. The Court found that it was apparent from the evidence that, even accepting that G did not disclose the extent of his wrongdoing to the shareholders and assuming that in 2006 they could not have appreciated that a wrong had been done to e3m, when the trial decision was released, they independently acquired knowledge of G’s alleged breaches of duty to e3m. At that time, for the purposes of the discoverability analysis under s. 5(1)(a) of the Limitations Act, 2002, e3m knew that: an injury had occurred; its loss was caused by an act or omission; the act or omission was allegedly that of G; and a proceeding was an appropriate means to remedy it. Irrespective of G’s control of the defence to the litigation, the shareholders could have assumed control of e3m’s board of directors and caused e3m to make a claim against G, or they could have commenced a derivative action on e3m’s behalf. That the shareholders opted instead to pursue the appeal was an informed choice that, for the reasons explained below, did not halt the limitations clock.

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Thurston v. Ontario (Children’s Lawyer), 2019 ONCA 640

[Huscroft, Trotter and Zarnett JJ.A.]

Counsel:

V. Glasser, for the appellant

T.K. Lee, for the respondent

FACTS:

The respondent is a lawyer in sole practice who provided legal services to the Office of the Children’s Lawyer (the “OCL”) pursuant to a series of agreements spanning the course of 13 years. The OCL did not renew her retainer following the expiry of the last agreement.

During this 13-year period, the respondent maintained an independent legal practice, and that practice formed a majority of her billings. Her OCL work accounted for anywhere from a low of 14.8% to a high of 62.6% of her annual billings. Over the 13-year period, her OCL billings accounted for an average of 39.9% of her annual billings.

The respondent brought a claim alleging that she was a dependent contractor and was therefore entitled to 20 months’ notice of termination. The OCL brought a motion for summary judgment dismissing her claim. That motion was dismissed, and the OCL appealed.

ISSUES:

(1) Does the Court of Appeal have jurisdiction to hear this appeal?

(2) Did the motion judge err in finding that the respondent was a “dependent contractor”?

HOLDING:

Appeal allowed.

REASONING:

(1) Does the Court of Appeal have jurisdiction to hear this appeal?

Yes. This particular issued centred on whether the motion judge had made a final order concerning the respondent’s status as a dependent contractor. In email from the motion judge’s assistant, the parties were informed that “on the issues put before the Court, findings of fact were made and intended to be binding on the parties…” The Court of Appeal was satisfied that this clarification confirmed that conclusive findings were made on the dependent contractor issue.

Therefore, the Court found that there was no doubt that the motion judge intended her determination to be binding on the parties, and that this appeal was therefore from a final order of a judge of the Superior Court of Justice, and properly before the court.

(2) Did the motion judge err in finding that the respondent was a “dependent contractor”?

Yes. As the Court of Appeal set out in McKee v. Reid’s Heritage Home Ltd., 2009 ONCA 916, dependent contractor status is a non-employment relationship in which there is “a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity”. In distinguishing dependent from independent contractors, McKee made clear that exclusivity of service provision, and therefore of income, is key. In Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, the Court of Appeal further emphasized that exclusivity was “integrally tied to the question of economic dependency”, and that the determination of exclusivity required consideration of the full history of the relationship in question.

The Court found that in this case, there was no question that the respondent did not work exclusively for the OCL. On the contrary, the retainer agreement expressly contemplated the respondent maintaining a private legal practice throughout the entire time she was retained, and she in fact did so.

Furthermore, on no account can 39.9% of billings be said to constitute “near-complete exclusivity”, such that economic dependence is established. The Court conceded that near-complete exclusivity cannot be reduced to a specific number, and that additional factors may be relevant in determining economic dependency. However, the Court emphasized that “near-exclusivity” necessarily requires substantially more than 50% of billings.

In short, the Court found that the OCL was a very important client of the respondent, but still only one of her clients. The Court also found that the longevity of the relationship did not transform it into a relationship of “enduring dependency”. On the contrary, the terms of the retainer made it clear that the respondent had no entitlement to any minimum level of work.

The motion judge’s failure to give effect to these considerations rendered her conclusion that the respondent was a dependent contractor unreasonable, and therefore open to appellate intervention. Any findings of dependent contractor status purporting to bind the parties moving forward were therefore set aside.

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SHORT CIVIL DECISIONS

Pita Royale Inc. (Aroma Taste of the Middle East) v. Buckingham Properties Inc., 2019 ONCA 639

[Hourigan, Benotto and Huscroft JJ.A.]

Counsel:

D.A. Weisman, for the appellants

H.S. Consky and R. Nosratpanah Gashti, for the respondent

Keywords:  Costs Endorsement

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Mozas v. Francis, 2019 ONCA 643

[Juriansz, van Rensburg and Paciocco JJ.A.]

Counsel:

R. Moldaver, Q.C., for the appellant, R.F.

S. Hennig, for the appellant, S.F.

F. Schumann, for the appellant, Medcan Health Management Inc.

G. Capern and M. Fenrick, for the respondents

Keywords:  Civil Procedure, Settlements, Enforcement

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CRIMINAL DECISIONS

R. v. Josipovic, 2019 ONCA 633

[Doherty, Hourigan and Harvison Young JJ.A.]

Counsel:

D. Doucette and D. Santoro, for the appellant, J.J.

J.M. Rosen and L. Trevelyan, for the appellant, M.J.

M. Bernstein, for the respondent

Keywords:  Criminal Law, First Degree Murder, Second Degree Murder, Mens Rea, Defences, Self-Defence, Provocation, Criminal Code, s. 21(1)(a), (b), (c), s. 229(a), R. v. Pickton, 2010 SCC 32, R. v. Dooley, 2009 ONCA 910, R. v. Zoldi, 2018 ONCA 384, R. v. Briscoe, 2010 SCC 13, R. v. Portillo, (2003) 176 CCC (3d) 467 (Ont. CA), R. v. Suzack, (2000) 141 CCC (3d) 449 (Ont. CA), R. v. W.(D.), [1991] 1 SCR 742, R. v. Sadiqi, 2013 ONCA 250, R. v. Reynolds, 2013 ONCA 433, R. v. Reid, (2003) 65 OR (3d) 723, R. v. Baron and Wertman, (1976) 14 OR (2d) 173 (CA), R. v. Huard, 2013 ONCA 650, R. v. Jackson, [1993] 4 SCR 573, R. v. Chambers, 2016 ONCA 684

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R. v. Province, 2019 ONCA 638

[Watt, Huscroft and Roberts JJ.A.]

Counsel:

A. Kapoor and D. Achtemichuk, for the appellant

J. Klukach and D. Bell, for the respondent

Keywords:  Criminal Law, Constructive First Degree Murder, Criminal Harassment, Procedural Fairness, Standard of Review, Jury Selection, Jury Instructions, Criminal Code, ss. 231(2), 231(6), 264(2)(d), 640, 640(2.1), 640(2.2), 640(4), 643(3), 670-672, 686(1)(b)(iii)-(iv), R. v. W.V., 2007 ONCA 546, leave to appeal refused, [2007] SCCA No. 615, R. v. Moore-McFarlane (2001), 160 C.C.C. (3d) 493 (Ont. C.A.), R. v. Noureddine, 2015 ONCA 770, 332 C.C.C. (3d) 114, R. v. Grant, 2016 ONCA 639, 342 C.C.C. (3d) 514, R. v. Murray, 2017 ONCA 393, 347 C.C.C. (3d) 529, R. v. Husbands, 2017 ONCA 607, 353 C.C.C. (3d) 317, leave to appeal refused, [2017] SCCA No. 364; R. v. Riley, 2017 ONCA 650, 351 C.C.C. (3d) 223, leave to appeal refused, [2018] SCCA No. 216, R. v. Gayle (2001), 154 C.C.C. (3d) 221 (Ont. C.A.), leave to appeal to S.C.C. refused (2002), 159 C.C.C. (3d) vi (note), R. v. Brown (2002), 166 C.C.C. (3d) 570 (Ont. C.A.), R. v. Swite, 2011 BCCA 54, 268 C.C.C. (3d) 184, R. v. Khan, 2001 SCC 86, [2001] 3 S.C.R. 823, R. v. Katoch, 2009 ONCA 621, 246 C.C.C. (3d) 423, R. v. Betker (1997), 115 C.C.C. (3d) 421 (Ont. C.A.), leave to appeal S.C.C. refused (1998), 121 C.C.C. (3d) vi (note), R. v. Brown (2005), 194 C.C.C. (3d) 76 (Ont. C.A.), R. v. Kosikar (1999), 138 C.C.C. (3d) 217 (Ont. C.A.), leave to appeal to S.C.C. refused (2000), 142 C.C.C. (3d) vi, R. v. Lamontagne (1998), 129 C.C.C. (3d) 181 (Que. C.A.), R. v. Burns, 2008 ONCA 6, R. v. Sim, 2017 ONCA 856, 41 C.R. (7th) 416, R. v. Farrant, [1983] 1 SCR 124, R. v. Harbottle, [1993] 3 SCR 306, R. v. Magoon, 2018 SCC 14, R. v. Pritchard, 2008 SCC 59, R. v. Kimberley (2001), 157 C.C.C. (3d) 129, leave to appeal refused, [2002] SCCA No. 29; R. v. Smith, 2015 ONCA 831, 344 O.A.C. 22, R. v. Parris, 2013 ONCA 515, 300 C.C.C. (3d) 41, R. v. McLellan, 2018 ONCA 510, 362 C.C.C. (3d) 183, R. v. Brown, 2018 ONCA 481, 361 C.C.C. (3d) 510, R. v. W.D.S., [1994] 3 S.C.R. 521, R. v. W. (D.), [1991] 1 S.C.R. 748, R. v. Rodgerson, 2015 SCC 38, [2015] 2 S.C.R. 760

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R. v. Mehedi, 2019 ONCA 642

[Rouleau, Tulloch and Fairburn JJ.A.]

Counsel:

G.M., in person

M. Fawcett, for the respondent

Keywords: Appeal Book Endorsement, Criminal Law, Certiorari Application, Vexatious Litigants

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