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Good afternoon.

Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of November 28 to December 2, 2022.

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This was a fairly light week. Topics covered included the applicable appeal routes to class proceedings in light of the 2020 amendments to the Class Proceedings Act, 1992, judicial review of a Human Rights Tribunal decision regarding whether Minutes of Settlement intended to settle both or only of the two outstanding human rights proceedings, stay pending appeal in a family law relocation case, vexatious litigants in a family law custody case and security for costs of an appeal where the appellant had few assets and a history of non-payment of costs orders and mortgage payments.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Table of Contents

Civil Decisions

Briggs v. Durham (Police Services Board), 2022 ONCA 823

Keywords: Human Rights, Administrative Law, Judicial Review, Standard of Review, , Contracts, Interpretation, Settlements, Human Rights Code, R.S.O. 1990, c. H.19, s. 45.8, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Biancaniello v. DMCT LLP, 2017 ONCA 386, 2274659 Ontario Inc. v. Canada Chrome Corporation, 2016 ONCA 145

Flores v. Glegg, 2022 ONCA 825

Keywords: Family Law, Emancipation of a Minor, Child Support, Civil Procedure, Vexatious Litigants, Abuse of Process, Res Judicata, Issue Estoppel, Collateral Attack, Costs, Courts of Justice Act, R.S.O. 1990 c. C.43, ss. 106, 140, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, R.G. v. K.G., 2017 ONCA 108, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Winter v Sherman Estate, 2018 ONCA 703, Peoples Trust Company v. Atas, 2018 ONSC 58

David v. Loblaw Companies Limited, 2022 ONCA 833

Keywords: Class Action Proceedings, Certification Order, Appeal, Jurisdiction of Appeal, Transitionary Rules, Statutory Interpretation, Class Proceedings Act, 1992, S.O. 1992, c. 6, s.5, s.30(1)(a)(b), s.30(2), Courts of Justice Act, R.S.O. 1990, c. C.43, s.6(1)(b), Legislation Act, 2006, S.O. 2006, c. 21, s. 52, Cavanaugh v. Grenville Christian College, 2013 ONCA 139

Ncube v. Hassen, 2022 ONCA 840

Keywords: Family Law, Co-Parenting, Relocation, Best Interest of Child, Civil Procedure, Stay Pending Appeal, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), s. 19(1)(b) and s. 39.2, BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Fontaine v. Canada (Attorney General), 2021 ONCA 313, Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, Johnson v. Ontario, 2021 ONCA 650, Hopkins v. Kay, 2014 ONCA 514, D.C. v. T.B., 2021 ONCA 562

Gauthier Estate v. White, 2022 ONCA 846

Keywords: Wills and Estates, Estate Trustees, Contracts, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Appeals, Security for Costs, Rules of Civil Procedure, r. 56 and 61.06, Yaiguaje v. Chevron Corporation , 2017 ONCA 827, Henderson v. Wright, 2016 ONCA 89

Short Civil Decisions

Godoy v. Godoy, 2022 ONCA 828

Keywords: Civil Procedure, Vexatious Litigants, Abuse of Process, Rules of Civil Procedure, r. 2.1.01, Visic v. Elia Associates Professional Corporation, 2020 ONCA 690

Liu v. Qiu, 2022 ONCA 835

Keywords: Civil Procedure, Costs

Singh v. Seth, 2022 ONCA 837

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Civil Procedure, Orders, Enforcement, Striking Pleadings, Financial Disclosure, Procedural Fairness, Mullin v. Sherlock, 2018 ONCA 1063

ALYU Inc. v. Deca-Yorkville Building Group Inc., 2022 ONCA 834

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29

Visic v. Elia Associates Professional Corporation, 2022 ONCA 841

Keywords: Torts, Defamation, , Regulated Professions, Lawyers, Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 5(1)(a)

Children’s Aid Society Region of Peel v. L.M., 2022 ONCA 838

Keywords: Family Law, Child Protection, Civil Procedure, Costs


CIVIL DECISIONS

Briggs v. Durham (Police Services Board), 2022 ONCA 823

[Simmons, Benotto and Favreau JJ.A.]

Counsel:

D. Cowling and A. Boissonneau-Lehner, for the appellants

T. Young and M. Noble, for the respondent J.B.

J. Tam and K. Snukal, for the respondent Human Rights Tribunal of Ontario

Keywords: Human Rights, Administrative Law, Judicial Review, Standard of Review, , Contracts, Interpretation, Settlements, Human Rights Code, R.S.O. 1990, c. H.19, s. 45.8, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, Biancaniello v. DMCT LLP, 2017 ONCA 386, 2274659 Ontario Inc. v. Canada Chrome Corporation, 2016 ONCA 145

facts:

The respondent, J.B., brought two separate applications to the Human Rights Tribunal of Ontario (the “Tribunal”) against the Durham Regional Police Services Board (the “Board”) and individual police officers. The first application arose from an incident on May 4, 2011, when two officers followed J.B., who is a black man, out of a restaurant parking lot. J.B. was then pulled over, questioned, handcuffed and detained. He alleged that he was discriminated against on the basis of race, colour, and ethnic origin. The second application arose from an incident on October 8, 2012, when J.B. was arrested and detained in Oshawa. An independent investigative report found that the police used excessive force against J.B. and denied him medical assistance. This application alleged that the arrest and maltreatment were a reprisal for his first application.

Before the Vice-Chair released her decision in the first application, the parties participated in a mediation in the context of the second application. The parties reached an agreement at mediation, and the Minutes of Settlement (the “Minutes”) referred to the style of cause of the second application. In addition, the Minutes stated that the parties “wish to resolve this matter without further hearing by the Tribunal” and that “the parties agree to the full and final settlement of the Application as follows” (emphasis added by the Court). The parties signed a Form 25 to confirm that the parties had resolved the application.

In June 2015, J.B. inquired about the decision on the first application. The Tribunal advised that it would be released in December 2015, however, the Board advised that its position was that the Minutes settled both applications. Despite these communications, the Vice-Chair released her decision on the first application on December 18, 2015 (the “Merits Decision”). The Vice-Chair became aware of the dispute as to the scope of the Minutes and convened a hearing to address the issue.

On November 3, 2017, the Vice-Chair released her decision (the “Interim Decision”), wherein she found that the Minutes were meant to cover both applications. She held that, despite the fact that the Minutes did not reference the first application, the parties intended to resolve both application because Paragraph 7 stated that J.B. released “[the Board and] all Personal Respondents, from any and all applications, claims, demands, complaints, or actions of any kind…” The Vice-Chair also held that the Form 25 was not part of the factual matrix in deciding the parties’ intentions. On March 27, 2017, the Vice-Chair released her Reconsideration Decision, in which she found that it was an abuse of process for the Tribunal to have issued the Merits Decision and she cancelled the decision.

J.B. sought judicial review of the Tribunal’s Interim Decision and Reconsideration Decision. The Divisional Court held that the decision of the Tribunal was unreasonable because it was an error for the Vice-Chair not to consider the Form 25. The Divisional Court exercised its discretion to decide the matter on the record before it because of the significant delay in resolving the first application and the fact that the issue of whether or not the Minutes covered both applications was binary. The Divisional Court ultimately found that the conduct of the parties demonstrated that they had not intended to settle the first application, and therefore it set aside the Interim Decision and the Reconsideration Decision. The Tribunal appealed.

issues:

(1) Was the Tribunal’s Interim Decision reasonable?

(2) Did the Divisional Court err in not remitting the matter to the Tribunal?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court noted that, in applying the reasonableness standard, the focus is supposed to be on the decision actually made, including both the decision maker’s reasoning and the outcome. The Court held that the court is to look for reasoning that is “rational and logical”, having regard to the relevant factual and legal constraints. The court is not to hold the reasons up to a standard of perfection or conduct a “line-by-line treasure hunt for error”: Canada (Minister of Citizenship and Immigration) v. Vavilov.

The Court held that the Vice-Chair’s decisions were unreasonable because she failed to consider the full factual matrix as required in a contractual interpretation exercise. A contract must be read as a whole, having regard to the ordinary and grammatical meaning of the words used, consistent with the surrounding circumstances or factual matrix. If there is ambiguity, the court can look to external or parol evidence, which may include the subsequent conduct of the parties. Specific to a release, the Court noted that one can look at the circumstances surrounding the giving of the release.

The Court determined that the Vice-Chair erred in holding that the Form 25 was post-settlement evidence and did not form part of the agreement. Given that the Minutes contemplated that the parties would sign a Form 25 and that the Board signed the Minutes and Form 25 on the same date, it was clear from the record that the Form 25 was part of the settlement. As a result, the Vice-Chair’s focus was too narrow. She only considered Paragraph 7 of the Minutes and not other factors that suggested that the settlement was not meant to cover the first application.

The Board argued that the Divisional Court erred in holding that the parties were clearly aware that they were required to sign a Form 25 for the matter to be resolved at the Tribunal. The Board cited Rule 15.6 of the Tribunal’s Rules of Procedure, which stated that the Tribunal can dispose of a matter by filing the Form 25 or by issuing a consent order. The Court held that, though Form 25 is not a strict requirement in all cases, the Tribunal still needed some form of notification of the settlement. In this case, the Minutes only required that a Form 25 be signed for the second application. Therefore, part of the factual matrix was the fact that the Tribunal was only notified of settlement for the second application, despite the fact that the parties were aware that the Merits Decision was pending. This suggested that the parties did not intend to settle the first application.

(2) No.

The Court held that the Divisional Court did not make an error of law or a palpable and overriding error of fact or mixed fact and law. This was an appropriate case for substituting its decision for the Tribunal’s decision. The Divisional Court correctly noted that, in the normal course, matters should be remitted to the Tribunal. However, it exercised its discretion not to do so because: 1) the first application has been extensively delayed, 2) the Tribunal does not have special expertise in interpreting settlement agreements, 3) the matter could be resolved on the record before it, and 4) the issue could only be answered one of two ways.

The Board argued that the decision not to remit to the Tribunal deprived it of calling evidence relevant to the issue of the parties’ intention to settle the first application. The Court disagreed, stating that the Board had this opportunity and failed to do so at the hearing before the Vice-Chair that led to the Interim Decision.


Flores v. Glegg, 2022 ONCA 825

[Pepall, Trotter and Thorburn JJ.A]

Counsel:

J. Zibarras, for the appellant R.G.

A.J. Wygodny, for the respondent’s H.F. and A.F.

L. Plumpton, A. Shelley and T. Weyman, for the respondents Justice for Children and Youth, J.M., M.B. and E.C.

Keywords: Family Law, Emancipation of a Minor, Child Support, Civil Procedure, Vexatious Litigants, Abuse of Process, Res Judicata, Issue Estoppel, Collateral Attack, Costs, Courts of Justice Act, R.S.O. 1990 c. C.43, ss. 106, 140, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, R.G. v. K.G., 2017 ONCA 108, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Winter v Sherman Estate, 2018 ONCA 703, Peoples Trust Company v. Atas, 2018 ONSC 58

facts:

On April 26, 2016, the appellant’s daughter, OG, obtained a declaration to withdraw from the appellant’s parental control and seek child support from him. OG was represented at the hearing by Justice for Children and Youth (“JFCY”), who, along with three of its staff lawyers, are respondents on this appeal. HF and AF, the remaining respondents, are family friends of OG who provided her safe haven when she withdrew from parental control.

After unsuccessfully opposing OG’s withdrawal from his parental control, the appellant commenced numerous proceedings including: an unsuccessful appeal of the withdrawal declaration, a private prosecution against the mother that was stayed, unsuccessful complaints alleging professional misconduct and seeking disbarment against two of the JFCY lawyers, the seeking of criminal charges against the mother in Florida that the Florida police refused to pursue, an unsuccessful application for enforcement of subpoenas and letters rogatory in Ontario and an unsuccessful ensuing appeal, commencement and dismissal of a Florida action seeking $9.6 million in damages against the mother for intentional interference with custodial rights and intentional infliction of emotional distress.

In addition, the appellant commenced: (1) a tort claim against the respondents JFCY and certain of their named employees seeking damages for alleged false representations, and (2) a tort claim against the respondents, HF and AF, seeking damages for allegedly helping OG’s mother circumvent the appellant’s sole custody order.

The respondents successfully brought two parallel applications against the appellant pursuant to s. 140 of the Courts of Justice Act: the first, to have the appellant declared a vexatious litigant, and the second, to stay his proceedings against them. The application judge declared the appellant to be a vexatious litigant, stayed the existing proceedings, barred him from commencing further proceedings absent leave of the court, and ordered full indemnity costs against the appellant.

issues:

(1) Did the application judge err by treating the applications as consolidated?

(2) Did the application judge err in finding the appellant’s proceedings to be an abuse of process and a collateral attack on previous court orders?

(3) Did the application judge err by prohibiting the appellant from litigating “in any court”?

(4) Did the application judge err by permanently staying the appellant’s actions against the respondents?

(5) Did the application judge err in awarding full indemnity costs against the appellant?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court held that the application judge did not err, as he did not consolidate the applications. Rather, he treated the two applications not as one, but as two parallel proceedings wherein some evidence from one was relied on in the other.

(2) No.

The Court held that application judge correctly held that the appellant’s actions against the respondents could not succeed without seeking to attack conclusions of the Court and other courts. One objective of abuse of process is to protect the integrity of the court’s process by preventing a party from relitigating matters that have already been finally determined. The doctrine of abuse of process applies to prevent re-litigation of previously decided facts and is available even where one or more parties to the action were not parties to the prior action. As the premise for these actions, that OG was brainwashed by her mother to seek emancipation, has been finally determined, the Court held that the appellant’s actions based on this premise amounted to an abuse of process. Accordingly, the Court found no basis to interfere with the application judge’s finding that the appellant’s actions against the respondents were predicated on allegations which several Ontario courts have rejected. Moreover, the Court held that the application judge correctly held that the appellant is a vexatious litigant.

(3) No.

The Court did not give effect to this ground of appeal as the application judge’s order, including the prohibition on the appellant from commencing and continuing certain proceedings “in any court” absent leave, is specifically provided for in s. 140(1) of the Courts of Justice Act.

(4) No.

The Court held that the application judge’s order to stay the underlying actions permanently was empowered by the court’s inherent jurisdiction and s. 106 of the Courts of Justice Act. The Court noted that Ontario courts have accepted that s. 140 is not a “complete code” that precludes the court from making purposive ancillary orders.

(5) No.

The Court held that a costs award should only be set aside on appeal if the application judge has made an error in principle or if the costs award is plainly wrong. The Court found that full indemnity costs were fully justified on the record before the application judge, and there was no basis to interfere.


David v. Loblaw Companies Limited, 2022 ONCA 833

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

R. Hofley and N. Cammarasana, for the respondent (C70893) / moving party (M53684) Canada Bread Company, Limited

S. Forbes, for the respondent (C70893) / moving party (M53678) Wal-Mart Canada Corp.

C. Cseh, for the respondent (C70893) / moving party (M53678) Giant Tiger Stores Limited

S. R. Hennig, for the respondent (C70893) / moving party (M53678) Sobeys Inc.

A. McCoomb and T. Brook, for the respondent (C70893) / moving party (M53678) Metro Inc.

M. Kremer and J. Abaki, for the respondents (C70893) / moving parties (M53664) Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc. and Weston Bakeries Limited

J. C. Orr, K. R. Taylor and J. H.W. Careen, for the appellants (C70893) / responding parties (M53684, M53678 & M53664)

Keywords: Class Action Proceedings, Certification Order, Appeal, Jurisdiction of Appeal, Transitionary Rules, Statutory Interpretation, Class Proceedings Act, 1992, S.O. 1992, c. 6, s.5, s.30(1)(a)(b), s.30(2), Courts of Justice Act, R.S.O. 1990, c. C.43, s.6(1)(b), Legislation Act, 2006, S.O. 2006, c. 21, s. 52, Cavanaugh v. Grenville Christian College, 2013 ONCA 139

facts:

The plaintiffs moved under s. 2(1) of the Class Proceedings Act (“CPA”) for an order under s. 5 of the CPA certifying a class proceeding against various producers and retailers of manufactured packaged bread. The plaintiffs alleged a widespread price fixing conspiracy, involving the manufacturers and retailers of packaged bread. The motion judge certified the proceedings against most of the named defendants (various producers and retailers of manufactured packaged bread). In certifying the proceeding, the motion judge defined the class as “All persons residing in Canada … other than Excluded Persons, who during the Class Period purchased Packaged Bread, either directly or indirectly, that was sold by a Defendant retailer.”

The plaintiffs appealed the definition of the class used by the motion judge to the Court on the basis that it effectively excluded the plaintiffs from the class.
The defendants brought motions to quash the responding parties’ appeal of the underlying certification order, on the basis that this court has no jurisdiction to hear the appeal.
The motion judge’s definition of the class for the purposes of the class proceeding was the exclusive focus of the proposed appeal brought by the plaintiffs. The moving parties brought motions to quash the responding parties’ appeal of the underlying certification order on the basis that the court had no jurisdiction to hear the appeal.

issues:

(1) Do the appeal provisions in the CPA govern this appeal?

(2) If the appeal provisions in the CPA govern this appeal, does the former appeal provision in the CPA apply, as opposed to the current provision?

holding:

Motion granted. Appeal quashed.

reasoning:

(1) Yes.

The Court determined that the proper characterization of the order under appeal was central to the determination of the proper appellate forum. In making that characterization, the Court determined that it ought to be concerned with the substance of the order and its effect on the proceedings, as applied by the court in Cavanaugh v. Grenville Christian College.

The Court reasoned that the certification order defines the class for the purpose of the certification proceeding. The Court noted that there was nothing in the order, expressly or by implication, decided on the merits of any claim in respect of any of the plaintiffs. Further, there was nothing in the motion judge’s language that suggested that any part of any claim by any potential plaintiff was dismissed by the motion judge.

The Court further noted that the order was not a final order bringing a plaintiff’s claim to an end. It was a procedural order, describing the constitution of the class for the purposes of the class proceeding certified by the motion judge. As such, the Court held that the appeal provisions of the CPA apply.

(2) Yes.

The plaintiffs referred to s. 52 of the Legislation Act, 2006, in support of the submission that s. 39(1) of the CPA (the transitionary provision) had no application to appeals. The Court held that the language in s. 39(1) of the CPA could not be clearer and so there was no need to look to other statutes to interpret s. 39(1).

The Court noted that the Legislature drew a bright line between class action proceedings commenced before the 2020 amendments came into effect, and class action proceedings commenced after that date. That bright line was: “except as otherwise provided by this section”. In applying this provision, the Court held that nothing in the language of s. 39(1) suggested that the section did not apply to the provisions in the CPA governing rights of appeal. The appeal provisions as they existed before the 2020 amendments to the CPA applied to this appeal, therefore, the former s. 30(2) of the CPA applied. The Court concluded that the appeal from the certification order was to the Divisional Court with leave from a Superior Court judge.


Ncube v. Hassen, 2022 ONCA 840

[Favreau JJ.A. (Motion Judge)]

Counsel:

S.P. Kirby, for the moving party

F.M. Wood, for the responding party

Keywords: Family Law, Co-Parenting, Relocation, Best Interest of Child, Civil Procedure, Stay Pending Appeal, Jurisdiction, Final or Interlocutory, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), s. 19(1)(b) and s. 39.2, BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, Fontaine v. Canada (Attorney General), 2021 ONCA 313, Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, Johnson v. Ontario, 2021 ONCA 650, Hopkins v. Kay, 2014 ONCA 514, D.C. v. T.B., 2021 ONCA 562

facts:

The moving party (the “mother”) and the responding party (the “father”), have a daughter. The parties moved to Sarnia in 2017 so the father could attend a college program. The parties separated in June 2021. At the time, the father had a job in Pickering and the mother lived and worked in Sarnia.

Months after the separation, the parties agreed to live together in Milton to facilitate their parenting arrangements. The mother stated that the arrangement was supposed to be temporary, while the father stated that there was no agreement that it would be a temporary arrangement. In early February 2022, the parties moved in together in Milton. They lived in the same dwelling, but they lived apart and co-parented their daughter.

The living arrangement did not work out, and in March 2022, the mother moved into her own apartment in Milton. In September 2022, the child started junior kindergarten at a school in Milton.

In October 2022, the mother moved the child back to Sarnia and enrolled her in a school in that city. Soon after the move, the father started an application in the Superior Court in Milton for various forms of relief, including the return of the child to Milton. The mother then brought an urgent application in the Superior Court in Sarnia. On the motion, the mother took the position that she and the child were habitually resident in Sarnia, and that the family law proceedings should take place in the court in Sarnia.

On November 1, 2022, the motion judge directed that the proper venue for the proceedings was Milton and ordered that the child be returned to Milton within 14 days. The mother moved to stay the order pending appeal.

issues:

(1) Does the appeal raise a serious issue?

(2) Would there be irreparable harm if the stay was not granted?

(3) Does the balance of convenience favour granting the stay?

holding:

Motion dismissed.

reasoning:

(1) No.

The Court described the threshold for the “serious issue” branch of the test for a stay pending appeal to be low. The moving party must only show that the appeal is neither frivolous nor vexatious. The Court found that the appeal was frivolous because it did not appear that the Court had jurisdiction over the issues raised. The Court explained that the motion judge’s order appeared to be interlocutory and therefore, the appeal lied to the Divisional Court, with leave.

(2) No.

The Court outlined that irreparable harm focuses on the child’s best interests. The mother argued that the child would suffer irreparable harm because her life in Sarnia would be disrupted and because she would not be with her mother, who had been her primary caregiver. The Court rejected both of these arguments. The Court noted that the evidence was that the child had lived and was enrolled in school in Milton. The Court found that the disruption occurred when the mother decided to unilaterally move the child to Sarnia and there was no evidence that the mother notified the father of her intention to move back to Sarnia, contrary to s. 39.3 of the Children’s Law Reform Act. In addition, the Court held that the motion judge’s order did not interfere with the mother’s regular parenting time.

(3) No.

The Court held that the balance of convenience did not favour granting a stay in light of the Court’s finding that there was no irreparable harm.


Gauthier Estate v. White , 2022 ONCA 846

[Favreau JJ.A. (Motion Judge)]

Counsel:

J. R.D. Lester, for the moving party

M. Cupello, for the responding party

Keywords: Wills and Estates, Estate Trustees, Contracts, Real Property, Agreements of Purchase and Sale of Land, Civil Procedure, Appeals, Security for Costs, Rules of Civil Procedure, r. 56 and 61.06, Yaiguaje v. Chevron Corporation , 2017 ONCA 827, Henderson v. Wright, 2016 ONCA 89

facts:

The moving party (the respondent on the appeal) brought a motion for security for costs of a pending appeal pursuant to r. 61.06 of the Rules of Civil Procedure. The appeal arose from a dispute over the enforcement of an agreement of purchase and sale of a property in Longlac, Ontario (“APS”). The plaintiff in the action (the late Y.G.) brought a claim to enforce the APS. Y.G. claimed the appellant, J.H.W. agreed to sell him the property for $40,000.

Y.G. made cash payments totalling $40,000 to J.H.W. and started some repair work on the property before the parties entered into the formal APS. In May 2018, the APS was prepared by a law firm acting for Y.G. and J.H.W. The APS provided for a purchase price of $40,000 and a deposit of $40,000 to the vendor. The APS did not reflect that Y.G. had already paid $40,000 to J.H.W.

Around the time the sale was supposed to close, J.H.W. discovered that there was a mortgage for $25,000. He had thought the mortgage was for approximately $5,000. On the date of closing J.H.W. refused to close, claiming that the parties had agreed to a purchase price of $80,000. Y.G. brought an action against J.H.W. for specific performance or for a vesting order. J.H.W. counterclaimed, seeking, in part, a declaration that the purchase price was to be $80,000. The trial judge granted the vesting order and dismissed the counterclaim. The trial judge accepted Y.G.’s evidence and did not accept J.H.W.’s evidence on the purchase price. J.H.W. appealed the trial decision, submitting that the trial judge erred in his interpretation of the APS.

issues:

(1) Should the court make an order for security for costs?

holding:

Motion granted.

reasoning:

(1) Yes.

Rule 61.06 of the Rules of Civil Procedure provides that the court may order security for costs in specified circumstances where it appears that,

a. there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal;
b. an order for security for costs could be made against the appellant under rule 56.01; or
c. for other good reason, security for costs should be ordered,
a judge of the appellate court, on motion by the respondent, may make such order for security for costs of the proceeding and of the appeal as is just.

The Court found the appeal was not frivolous and vexatious. The Court noted that the appeal raised legitimate issues regarding the interpretation of the APS. The trial judge’s reasons did not set out the principles of contract interpretation applied, nor did he explain why he focused on the parties’ credibility rather than the terms of the APS. While this did not mean the appeal would succeed or that the appellant had strong arguments on appeals, the Court was not persuaded that the appeal was frivolous and vexatious.

The Court found that the unpaid costs order did not justify an order for security for costs. The Court noted that at the time the motion was brought, J.H.W. had not yet paid an outstanding costs order for $500 on a refusals motion. However, J.H.W. paid the outstanding costs before the motion before the Court was heard. The moving party still sought to rely on the outstanding costs order as a basis for the Court to order security. The Court held that the outstanding costs order alone did not justify an order for security for costs. The amount was relatively small. There was no evidence that the moving party made a demand for payment prior to bringing the motion. J.H.W. had since paid the outstanding costs.

Finally, the Court found that the there was ‘other good reason’ to make an order for security for costs. The Court exercised its residual discretion to make an order for security for costs on the basis that the appeal had a low prospect of success, and the appellant could pay costs but it would be “nearly impossible” for the respondent to collect those costs: Henderson v. Wright. The Court noted that the prospects of success were low, as at most, it appears there may be an ambiguity in the APS. The Court also found there was compelling evidence that it would be nearly impossible to collect costs from J.H.W based on the following: (1) J.H.W.’s affidavit only referred to two assets, being a small pension and scrap vehicles; (2) J.H.W. did not pay the $500 costs order from the refusals motion until the motion was brought; and (3) J.H.W. failed to make outstanding mortgage payments totalling approximately $10,000 since the trial. The Court found this evidence established that J.H.W. would not voluntarily pay any costs orders made against him.

The Court further found that the justness of the case required J.H.W. to post security for costs. Given that the chances of success on appeal were low, that there were no immediate assets to satisfy a costs order and that J.H.W. had a history of non-payment of his mortgage and costs, the Court was satisfied that the moving party should be protected from incurring further costs without some assurance that the costs could be recovered if the appeal was dismissed.


SHORT CIVIL DECISIONS

Godoy v. Godoy, 2022 ONCA 828

[Gillese, Benotto and Harvison Young JJ.A.]

Counsel:

J. Godoy, acting in person

B. Hutchison, for the respondents D.S. and K.P.

A. Crangle, for the respondents C.G., B.R., K.S. and S.B

R. Szymanski, for the respondents V.F. and P.M.

Keywords: Civil Procedure, Vexatious Litigants, Abuse of Process, Rules of Civil Procedure, r. 2.1.01, Visic v. Elia Associates Professional Corporation, 2020 ONCA 690

Liu v. Qiu, 2022 ONCA 835

[Feldman, Tuloch and Miller JJ.A.]

Counsel:

S. J. Erskine and A. Zaya, for the appellant

R. He and C. Tran, for the respondent

Keywords: Civil Procedure, Costs

Singh v. Seth, 2022 ONCA 837

[Tulloch, Thorburn and George JJ.A.]

Counsel:

C. D. Rawn, for the appellant

A. R. Toor, for the respondent

Keywords: Family Law, Spousal Support, Equalization of Net Family Property, Civil Procedure, Orders, Enforcement, Striking Pleadings, Financial Disclosure, Procedural Fairness, Mullin v. Sherlock, 2018 ONCA 1063

ALYU Inc. v. Deca-Yorkville Building Group Inc., 2022 ONCA 834

[Benotto, Roberts and Harvison Young JJ.A.]

Counsel:

E.S. Lederman and Z. Rosen, for the appellant

S. Zucker and N.J. Tourgis, for the respondents

Keywords: Contracts, Interpretation, Real Property, Agreements of Purchase and Sale of Land, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Corner Brook (City) v. Bailey, 2021 SCC 29

Visic v. Elia Associates Professional Corporation, 2022 ONCA 841

[MacPherson, Miller and Copeland JJ.A.]

Counsel:

A. Visic, acting in person

A. Casalinuovo, for the respondents

Keywords: Torts, Defamation, , Regulated Professions, Lawyers, Civil Procedure, Summary Judgment, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 5(1)(a)

Children’s Aid Society of the Region of Peel v. L.M., 2022 ONCA 848

[Feldman, Pepall and Tulloch JJ.A.]

Counsel:

A. Burgess and J. Gagne, for the appellant

L. Shaw, for the respondent

Keywords: Family Law, Child Protection, Civil Procedure, Costs


The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of November 21, 2022.

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The Court heard three appeals in class proceedings which all related to whether the tort of intrusion upon seclusion is a viable claim against custodians of personal information whose databases and security protocols are breached by unknown third party hackers. The Court ultimately held that while such custodians of personal data can be sued in negligence, contract or breach of statutory obligations to protect personal information, they cannot be sued for the tort of inclusions upon seclusion.

In National Organized Workers Union v. Sinai Health System, the union sought injunctive relief to prohibit the respondent from enforcing a mandatory vaccination policy pending a related grievance arbitration. The Court held that the application judge did not err in refusing to exercise her discretion to use the residual jurisdiction of the Superior Court to grant the injunctive relief. She correctly found that there was no remedial gap in the remedies available to a labour arbitrator, who could award reinstatement and compensation for lost wages to workers who were suspended or terminated for failing to abide by an unlawful vaccination policy.

The Court in Hybrid Financial Ltd. v. Flow Capital Corp. considered whether a buyout provision in a financing agreement, resulting in the appellant having to pay several times the initial loan amount received, constituted a violation of the usury laws set out in s. 347 of the Criminal Code. The Court found that the application judge had erred in finding that the Agreement’s buyout provision was not captured by s. 347, which makes it illegal to charge interest at rate of 60% or more per year. The Court must look to the substance of the transaction, rather than the form or characterization of payments.

In Beaudin v. Travelers Insurance Company of Canada, the Court upheld the Divisional Court’s decision holding that the respondent, who was catastrophically injured in a dirt bike accident in a closed course competition, was eligible for statutory accident benefits under the Statutory Accident Benefits Schedule of the Insurance Act. The Court held that the Divisional Court’s decision was consistent with the case law and the modern approach to statutory interpretation in deciding that the respondent’s injury occurred as a result of an “accident” through the use of an “automobile” as defined in the Insurance Act.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

 

Ines Ferriera
Blaney McMurtry LLP
416.597.4895 Email

Table of Contents

Civil Decisions

Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 807

Keywords: Civil Procedure, Orders, Enforcement, Contempt, Sentencing, Fines, Fresh Evidence, R. v. Palmer, [1980] 1 S.C.R. 759, The Corporation of the Township of King v. 11547372 Canada Inc. et al, 2022 ONSC 2261, College of Optometrists of Ontario v. SHS Optical Ltd., 2008 ONCA 685

Studley v. Studley, 2022 ONCA 810

Keywords:Family Law, Real Property, Marriage Property, Remedies, Constructive Trust, Resulting Trust, Civil Procedure, Amending Pleadings, Limitation Period, Jurisdiction, Family Law Act, R.S.O. 1990, c. F.3, s. 7(3)(a),  Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., s. 4,  Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 4, s. 23, Family Law Rules, O. Reg. 114/99, s. 5(1), r. 2(5)(a), r. 11(3), Pecore v. Pecore, 2017 SCC 17, Moghimi v. Dashti, 2016 ONSC 216, Greenglass v. Greenglass, 2010 ONCA 675, McConnell v. Huxtable, 2014 ONCA 86, Bakhsh v. Merdad, 2022 ONCA 130, 1250140 Ontario Inc. v. Bader, 2022 ONCA 197

National Organized Workers Union v. Sinai Health System, 2022 ONCA 802

Keywords: Labour Law, Labour Relations, Labour Arbitration, Grievances, Jurisdiction, Discretion, Injunctions, Vaccination Policies, Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A, ss. 48, 49, St. Anne Nackawic Pulp & Paper v. CPU, [1986] 1 S.C.R. 704, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, Northern Regional Health Authority v. Horrocks, 2021 SCC 42, Ontario Nurses Assn. v. Toronto Hospital, [1996] O.J. No. 3861 (Gen. Div.), Rattai v. Hydro One Inc., 2005 CanLII 13786, Housen v. Nikolaisen, 2002 SCC 33, H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173, Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, Wojdan v. Canada (AG), 2021 FC 1341, Lachance c. Procureur général du Québec, 2021 QCCS 4721, Kotsopoulos v. North Bay General Hospital, [2002] O.J. No. 715 (S.C.), Lavergne-Poitras v. Canada (AG), 2021 FC 1232, Amalgamated Transit Union, Local 113 v. Toronto Transit Commission, 2017 ONSC 2078, Vaughan v. Canada, 2005 SCC 11, RJR-MacDonald Inc. v. Canada (AG), [1994] 1 S.C.R. 311, Toronto Catholic District School Board v. Ontario English Catholic Teachers’ Association, 2021 CanLII 44852 (Ont. L.A.), Lakehead University v. Lakehead University Faculty Association, 2018 CanLII 112407 (Ont. L.A.), Milka Cavic v. Canadian Union of Public Employees Union Local 905, 2022 CanLII 5015 (Ont. L.R.B.), James T. Casey and Ayla Akgungor, ed., Remedies in Labour, Employment and Human Rights Law, loose-leaf (Toronto: Carswell, 2022).

Rosehaven Homes Limited v. Aluko, 2022 ONCA 817

Keywords:Civil Procedure, Summary Judgment, Evidence, Admissibility, Expert Evidence, Damages, Rules of Civil Procedure, r. 53.03, Form 53 Acknowledgment of Expert’s Duty, Karami v. Kovari, 2019 ONSC 637

Obodo v. Trans Union of Canada, Inc., 2022 ONCA 814

Keywords: Torts, Negligence, Intrusion Upon Seclusion, Breach of Privacy, Vicarious Liability, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Appeals, Jurisdiction, Final or Interlocutory, Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30 and 39(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Civil Code of Quebec, CQLR c CCQ-1991, art. 25 and 37, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Winder v. Marriott International, Inc., 2022 ONSC 390, Jones v. Tsige, 2012 ONCA 32, Owsianik: Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, R. v. Meltzer, [1989] 1 S.C.R. 1764, Cavanaugh v. Grenville Christian College, 2013 ONCA 139, Bazley v. Curry, [1999] 2 S.C.R. 534, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59

Winder v. Marriott International, Inc., 2022 ONCA 815

Keywords: Torts, Intrusion Upon Seclusion, Privacy, Civil Procedure, Class Proceedings, Certification, Reasonable Cause of Action, Rules of Civil Procedure, r. 21.01(1)(a), Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Das v. George Weston Ltd., 2018 ONCA, Jones v. Tsige, 2012 ONCA 32 1053

Hybrid Financial Ltd. v. Flow Capital Corp., 2022 ONCA 820

Keywords: Contracts, Interpretation, Debtor-Creditor, Criminal Law, Interest, Usury, Criminal Rate of Interest, Criminal Code, R.S.C., 1985, c. C-46, s. 347, Garland v. Consumers’ Gas Co., [1998] 3 S.C.R. 112, Degelder Construction Co. v. Dancorp Developments Ltd., [1998] 3 S.C.R. 90, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mira Design Co. v. Seascape Holdings Ltd. (1981), 34 B.C.L.R. 55 (S.C.), Cirius Messaging Inc. v. Epstein Enterprises Inc., 2018 BCSC 1859, Nelson v. C.T.C. Mortgage Corp. (1984), 59 B.C.L.R. 221 (C.A.), 16 D.L.R. (4th) 139, aff’d [1986] 1 S.C.R. 749

Beaudin v. Travelers Insurance Company of Canada , 2022 ONCA 806

Keywords: Contracts, Insurance, Coverage, Statutory Interpretation, Automobile Insurance, Statutory Accident Benefits, Definition of “Accident”, Definition of “Automobile”, Catastrophic Injury,  Insurance Act, R.S.O. 1990, c. I.8, s. 2, Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, s. 11(6), Licence Appeal Tribunal Act, s. 1, Highway Traffic Act, R.S.O. 1990, c. H.8, Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, s. 2(1)5, General Regulation, R.R.O. 1990, Reg. 863 of Off-Road Vehicles Act, R.S.O. 1990, c. O.4, s.224(1),Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Adams v. Pineland Amusements Ltd., 2007 ONCA 844, Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Matheson v. Lewis, 2014 ONCA 542, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, Bristol-Myers Squibb Co. v. Canada (Attorney General), 2005 SCC 26, Haliburton (County) v. Gillespie, 2013 ONCA 40

Owsianik v. Equifax Canada Co., 2022 ONCA 813

Keywords: Torts, Intrusion Upon Seclusion, Breach of Privacy, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 21.01(1)(a), Jones v. Tsige, 2012 ONCA 32, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Winder v. Marriott International, Inc., 2022 ONSC 390, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Bowman v. Ontario, 2022 ONCA 477, Agnew-Americano v. Equifax Canada Co., 2019 ONSC 7110, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Bennett v. Lenovo (Canada) Inc., 2017 ONSC 1082, Kaplan v. Casino Rama, 2019 ONSC 2025, Tucci v. Peoples Trust Company, 2020 BCCA 246, Nelles v. Ontario, [1989] 2 S.C.R. 170, Ontario (Attorney General) v. Clark, 2021 SCC 18, Arora v. Whirlpool Canada LP, 2013 ONCA 657, Del Giudice v. Thompson, 2021 ONSC 5379, Piresferreira v. Ayotte, 2010 ONCA 384, Demme v. Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503, Merrifield v. Canada (Attorney General), 2019 ONCA 205, Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, P. Perl (Exporters) Ltd. v. Camden London Borough Council, [1983] EWCA Civ 9, [1984] Q.B. 342, Allgood v. Paperlesspay Corp., 2022 WL 846070 (M.D. Fla.); Burton v. MAPCO Exp., Inc., 47 F. Supp. (3d) 1279 (N.D. Ala. 2014), Stephens v. Availity, 2019 WL 13041330 (M.D. Fla.), Purvis v. Aveanna Healthcare, LLC, 563 F. Supp. (3d) 1360 (N.D. Ga. 2021), Damner v. Facebook Inc., 2020 WL 7862706 (N.D. Cal.), Savidge v. Pharm-Save, Inc., 2021 WL 3076786 (W.D. Ky.), McKenzie v. Allconnect, Inc., 369 F. Supp. (3d) 810 (E.D. Ky. 2019), Carter v. Innisfree Hotel, Inc., 661 So. (2d) 1174 (Ala. 1995), re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F. (3d) 625 (3rd Cir. 2017), Moore v. New York Elevated Railroad Co., 130 N.Y. 523 (1892), Remijas v. Neiman Marcus Group, LLC, 794 F. (3d) 688 (7th Cir. 2015), Thetford v. City of Clanton, 605 So. (2d) 835 (Ala. 1992), Stephen G.A. Pitel & Matthew B. Lerner, “Resolving Questions of Law: A Modern Approach to Rule 21” (2014) 43:3 Adv. Q. 344, Philip H. Osborne, The Law of Torts, 6th ed. (Toronto: Irwin Law, 2020), at p. 268, Lewis N. Klar & Cameron Jefferies, Tort Law, 6th ed. (Toronto: Carswell, 2017)

Short Civil Decisions

Amerato v. TST-CF Solutions LP , 2022 ONCA 808

Keywords: Employment Law, Wrongful Dismissal, Damages, Vacation Pay, Canada Labour Code, R.S.C. 1985, c. L-2, s. 188

Benson v. Cichorczyk, 2022 ONCA 800

Keywords: Torts, Negligence, Damages, Punitive Damages

Cardinal Investments Inc. v. Ultra Depot (Ontario) Inc., 2022 ONCA 827

Keywords: Civil Procedure, Striking Pleadings, Rules of Civil Procedure, rr. 21, 26.01, and 25.06(8)


CIVIL DECISIONS

Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 807

[Paciocco, George and Favreau JJ.A.]

Counsel:

K. D. Sherkin and K. Sonshine, for the appellants

M. Winch and R. Sniderman, for the respondent The Corporation of the Town of Caledon

A. Hershtal, for the respondent B. R.

Keywords: Civil Procedure, Orders, Enforcement, Contempt, Sentencing, Fines, Fresh Evidence, R. v. Palmer, [1980] 1 S.C.R. 759, The Corporation of the Township of King v. 11547372 Canada Inc. et al, 2022 ONSC 2261, College of Optometrists of Ontario v. SHS Optical Ltd., 2008 ONCA 685

facts:

The appellants, Darzi Holdings Ltd. (“Darzi”) and Rafat General Contractor Inc. (“Rafat”) were closely held corporations controlled by the appellant, L.R.S. Rafat, a construction company, carried on business on properties owned by Darzi in the Town of Caledon (the “Town”).

In 2017, under L.R.S.’ direction, Rafat was parking hundreds of vehicles outdoors on Darzi’s properties in violation of a city by-law, even after having been fined for doing so. Rafat also trespassed on adjacent Town property and illegally constructed a fence on the Town’s land.

On September 12, 2019, the appellants were enjoined to: (1) stop trespassing on the Town’s land; (2) remove the fence by January 11, 2020; and, (3) refrain from using Darzi’s properties for outdoor vehicle storage (the “Order”).

On February 8, 2021, after continued non-compliance with terms (2) and (3) of the Order, the appellants were found in civil contempt. That finding was not appealed. The fence was removed soon after, on March 25, 2021, while sentencing on the finding of civil contempt was pending.

On December 9, 2021, the sentence for civil contempt of a $1,000,000 fine was imposed.

issues:

(1) Should the Court grant the appellant’s application for leave to admit fresh evidence on appeal?

(2) Did the sentencing judge err in their consideration of mitigating circumstances?

(3) Did the sentencing judge err in determining the appropriate fine?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court noted that the appellants sought to impugn the conduct of their trial counsel who had ceased representing the appellants months before the sentencing hearing where they were represented by other counsel who presented evidence during the sentencing hearing. Because this was a sentencing appeal, with due diligence, any fresh evidence the appellants sought to admit on appeal could have been presented at the sentencing hearing by their new counsel, who was not the subject of an ineffective assistance of counsel appeal. The Court stated that the due diligence requirement of the “Palmer test” (R. v. Palmer) for the admission of fresh evidence was not overcome by alleging the ineffective assistance of trial counsel, B.R., for having failed to present this evidence.

The Court further noted that some of the evidence offered as fresh evidence was before the sentencing judge or was offered to prove facts that the sentencing judge accepted. The Court ultimately held that none of the proposed evidence was reasonably capable of affecting the result of the sentencing. For example, the fact that trial counsel did not bring an application to vary the injunction could not reasonably have affected the outcome, given that the grounds available to support a variation application did not forestall the sentencing judge’s conclusion at the time of sentencing that the breaches were flagrant, protracted, deliberate and profitable.

Lastly, the Court noted that the appellants submitted that L.R.S’ trial counsel provided ineffective assistance by crafting inadvisable statements in his affidavit. The Court held that the proposed evidence could not alter the outcome. Although trial counsel may have drafted L.R.S’ affidavit, L.R.S. swore its contents to be true and offered no evidence that he did not understand what he was swearing to. Moreover, L.R.S. reaffirmed his affidavit evidence during oral cross-examination. Accordingly, the Court dismissed the application for leave to admit fresh evidence.

(2) No.

The Court held that the sentencing judge committed no palpable and overriding error in finding that the appellants had exaggerated their compliance efforts, and there was no basis for concluding that he failed to consider the efforts that the appellants claim to have undertaken. The Court noted that the sentencing judge was entitled to accept evidence and conclude that the profit that was earned by the appellants was earned in defiance of the court order.

(3) No.

The Court rejected the submission that the sentencing judge erred by equating the fine he selected with the profit earned. The Court held that the sentencing judge used the profit earned as a “benchmark”, as he was entitled to do. The Court agreed with the observation made by Akbarali J. in The Corporation of the Township of King v. 11547372 Canada Inc. et al, that “when determining a fit fine, the court should consider the economic circumstances of the contemnor, and the amount of fine that will have enough of an impact on the contemnor to induce future compliance with the court’s orders”. The Court concluded that this included consideration of whether the needs of sentencing can be met without requiring disgorgement through a fine of all or a significant part of the profit attributable to the breach.

The Court held that the sentencing judge reasonably found the appellants’ disobedience of the Court order to be flagrant, protracted, deliberate and profitable. The Court stated that the sentencing judge clearly reasoned that the appellants would not be deterred from future breaches if permitted to profit from their conduct, given the history of this matter. The Court was unpersuaded that the fine was unfit.


Studley v. Studley, 2022 ONCA 810

[Lauwers, Roberts and Trotter JJ.A]

Counsel:

E. Birnboim, M. Crampton and H. Corrigan, for the appellant

D. Winnitoy, for the respondent

Keywords:Family Law, Real Property, Marriage Property, Remedies, Constructive Trust, Resulting Trust, Civil Procedure, Amending Pleadings, Limitation Period, Jurisdiction, Family Law Act, R.S.O. 1990, c. F.3, s. 7(3)(a),  Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., s. 4,  Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 4, s. 23, Family Law Rules, O. Reg. 114/99, s. 5(1), r. 2(5)(a), r. 11(3), Pecore v. Pecore, 2017 SCC 17, Moghimi v. Dashti, 2016 ONSC 216, Greenglass v. Greenglass, 2010 ONCA 675, McConnell v. Huxtable, 2014 ONCA 86, Bakhsh v. Merdad, 2022 ONCA 130, 1250140 Ontario Inc. v. Bader, 2022 ONCA 197

facts:

The appellant and the respondent were married in May 1995 and separated in August or September 2015. The appellant commenced family law proceedings in October 2015, and the matter remained dormant until 2019. Three properties were acquired during the marriage; (1) the matrimonial home, (2) a cottage, and (3) a property in Florida. Although the three properties were in the appellant’s name, the funds to purchase each of them came from the respondent. The respondent was aware of the sale of each property at the time it was sold.

The appellant appealed an order granting the respondent leave to amend his Answer seven years after filing and allowing him to advance constructive and resulting trust claims in the three properties which were purchased during the marriage.

issues:

(1) Did the motion judge err by granting leave because the appellant was prejudiced by the timing of the amendment?

(2) Did the motion judge err by granting leave because the respondent’s claims were statute-barred?

(3) Did the motion judge err by granting leave because with respect to the Florida property, the Ontario courts have no jurisdiction to make an in rem order in relation to land in a foreign jurisdiction?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court found no error in the motion judge’s decision to permit the respondent to amend his answer. The appellant attempted to argue, on three grounds, that permission to amend would disadvantage her in a way that could not be compensated with costs, and accordingly, would go against r.11(3) of the Family Law Rules.

First, the appellant submitted that there was prejudice arising from her claimed inability to access documents that were essential to meet the respondent’s constructive and resulting trust claims. The Court disagreed, stating that there was no dispute that the properties in question were purchased with funds earned from the respondent’s company. The Court found that the appellant was unable to point to any evidence related to the proposed amendments that the appellant would be unable to locate or recall due to the passage of time.

Second, the appellant contended that prejudice could be presumed due to the unexplained delay. The Court rejected this submission, finding that it was the appellant who had failed to promptly move the litigation forward since October 2015, placing much of the delay on the appellant. As the respondent was not seeking to amend his Answer on the eve of trial, like in Moghimi v. Dashti, the Court found that the appellant could not be considered to have been taken by surprise at the last minute. The next scheduled event was instead a settlement/trial management conference.

Finally, the appellant submitted she would be prejudiced by the fact that, if the respondent was allowed to assert his trust claims after the general two-year limitation period, she will be unable to make corresponding claims on his business interests. The Court found that this submission had no merit as, had there been a basis for such claims, they would have been made at the outset of the litigation. The Court found that differing limitation periods could not alone create prejudice.

(2) No.

The appellant contended that as the trust claims were, in essence, equalization claims, the applicable limitation period was two years. The Court rejected this argument and held that the applicable limitation period was 10 years, as it involved a trust interest in land, pursuant to s. 4 of the Real Property Limitations Act (RPLA”).

The Court further rejected the appellant’s submission that this was not an action to “recover any land”, as the land had been sold. The Court found that, although the trust claim was not an alternate claim, the claim fell within the scope of a claim for damages sheltered under a trust claim. The Court noted that a contrary interpretation might incentivize strategic, covert sales designed to reduce the limitation period from 10 years to two, extinguishing an otherwise viable claim.

The appellant also contended that the motion judge should not have determined the limitations issue on a final basis because it prematurely extinguished her substantive defence to the respondent’s new claims. The Court disagreed, as the appellant failed to identify any “facts in dispute” that prevented the motion judge from determining the limitations issue. Further, the Court held it was desirable for the motion judge to resolve the issue sooner, rather than later, given the slow pace of the litigation.

(3) No.

Lastly, the appellant submitted that the motion judge made a further error in relation to the Florida property because the Ontario courts have no in rem jurisdiction over the Florida property. The Court held that it was not necessary for the motion judge to address this issue as it was not relevant to the respondent’s request for leave to amend his Answer.


National Organized Workers Union v. Sinai Health System, 2022 ONCA 802

[van Rensburg, Huscroft and Copeland JJ.A.]

Counsel:

I.J. Perry and M. Joseph, for the appellant

B.R. Jones, E.C. Jamieson-Davies, and R.M. Counsell, for the respondent

F. Cesario, E.A. Vaughan, and D.L. Winkel, for the intervener

Keywords: Labour Law, Labour Relations, Labour Arbitration, Grievances, Jurisdiction, Discretion, Injunctions, Vaccination Policies, Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A, ss. 48, 49, St. Anne Nackawic Pulp & Paper v. CPU, [1986] 1 S.C.R. 704, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, Northern Regional Health Authority v. Horrocks, 2021 SCC 42, Ontario Nurses Assn. v. Toronto Hospital, [1996] O.J. No. 3861 (Gen. Div.), Rattai v. Hydro One Inc., 2005 CanLII 13786, Housen v. Nikolaisen, 2002 SCC 33, H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173, Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, Wojdan v. Canada (AG), 2021 FC 1341, Lachance c. Procureur général du Québec, 2021 QCCS 4721, Kotsopoulos v. North Bay General Hospital, [2002] O.J. No. 715 (S.C.), Lavergne-Poitras v. Canada (AG), 2021 FC 1232, Amalgamated Transit Union, Local 113 v. Toronto Transit Commission, 2017 ONSC 2078, Vaughan v. Canada, 2005 SCC 11, RJR-MacDonald Inc. v. Canada (AG), [1994] 1 S.C.R. 311, Toronto Catholic District School Board v. Ontario English Catholic Teachers’ Association, 2021 CanLII 44852 (Ont. L.A.), Lakehead University v. Lakehead University Faculty Association, 2018 CanLII 112407 (Ont. L.A.), Milka Cavic v. Canadian Union of Public Employees Union Local 905, 2022 CanLII 5015 (Ont. L.R.B.), James T. Casey and Ayla Akgungor, ed., Remedies in Labour, Employment and Human Rights Law, loose-leaf (Toronto: Carswell, 2022).

facts:

On August, 17, 2021, Ontario’s Chief Medical Officer of Health mandated every healthcare sector employer to develop and implement a policy that required hospital employees to provide their vaccination status to their employer and, if not fully vaccinated, to submit to regular testing and reporting. The respondent complied and implemented a “vaccinate or test” policy. However, on October 26, 2021, the respondent then implemented a workplace mandatory vaccination policy (the “Policy”). The Policy required employees to be fully vaccinated against COVID-19 by December 9, 2021, or their employment would be terminated, subject to medical or non-medical exemptions.

On November 3 and 4, 2021, the appellant filed a number of grievances against the Policy. The grievances alleged that the Policy was unreasonable, and that it violated various articles of the collective agreement as well as various pieces of legislation. On November 5, 2021, the appellant brought an application seeking an injunction to enjoin the respondent from enforcing the Policy pending arbitration.

The application judge dismissed the application for an interlocutory injunction. She was not satisfied that it was appropriate for the Superior Court to exercise its residual jurisdiction in labour relations matters on the record before her. She concluded that there was no remedial gap in the labour relations regime that would support the exercise of the Superior Court’s residual jurisdiction. The appellant union appealed.

Against this backdrop, the Court noted that the labour relations arbitral regime has the exclusive jurisdiction over matters arising out of a collective agreement. Labour arbitrators have broad remedial authority, which allows them to flexibly craft labour relations remedies to workplace issues. Therefore, the Superior Court has residual discretion to grant injunctive relief only if the arbitral process cannot provide an adequate alternative remedy.

issues:

(1) Did the application judge err in finding that if an injunction were not granted, the harm at issue was employees being placed on unpaid leave or terminated from employment?

(2) Did the application judge err by failing to engage in an analysis of all three branches of the RJR-MacDonald test in considering whether to exercise the court’s residual jurisdiction to grant an interlocutory injunction?

(3) Did the application judge err in finding that assessing the harm element in the jurisdictional analysis based on the subjective reaction of individual employees would be legally unworkable?

holding:

Appeal dismissed.

reasoning:

(1) No.

The appellant argued that the harm that arose for workers who did not comply with the Policy was compelled vaccination without their informed consent. The appellant further submitted that since vaccination cannot be undone, if injunctive relief were not granted, the harm would be irreparable, would render the arbitration moot, and could not be remedied by a grievance arbitrator. The application judge determined that the harm at issue was that some members of the appellant may be placed on unpaid leave or terminated from employment. She held that this loss could be remedied by an arbitrator through reinstatement and compensation for lost wages. Thus, there was no remedial gap warranting the discretionary exercise of the Superior Court’s residual jurisdiction.

The Court held that the application judge correctly stated the legal principles and did not make an overriding and palpable error in characterizing the harm that would result if injunctive relief was not granted. In addition, the Court noted that if the Superior Court were to intervene to grant injunctive relief pending a grievance arbitration every time a member of a bargaining unit felt pressure to comply with an employer policy because of the risk of employment discipline, it would fundamentally undermine the principle that the Superior Court’s jurisdiction in labour relations matters is residual.

(2) No.

The appellant argued that the application judge considered the irreparable harm branch of the RJR-MacDonald test, and erred in failing to consider the other branches of the test for an interlocutory injunction. The Court found that this argument failed for two reasons: 1) the application did not actually apply any branch of the RJR-MacDonald test because, on the preliminary issue, the potential harm that union members may face if the injunctive relief was not granted was only characterized for the purpose of determining the remedies available to a grievance arbitrator, and 2) the application judge was not required to make a determination on injunctive relief on the merits because the application was dismissed on the threshold jurisdictional issue.

(3) The Court held that it was not necessary to determine if the application judge erred on this issue because the finding did not impact her decision not to exercise the court’s residual jurisdiction.


Rosehaven Homes Limited v. Aluko, 2022 ONCA 817

[Simmons, van Rensburg and Favreau JJ.A.]

Counsel:

D. Milosevic and A. Moslehi, for the appellants

W. Jiang and S. S. Gill, for the respondent

Keywords: Civil Procedure, Summary Judgment, Evidence, Admissibility, Expert Evidence, Damages, Rules of Civil Procedure, r. 53.03, Form 53 Acknowledgment of Expert’s Duty, Karami v. Kovari, 2019 ONSC 637

facts:

On April 13, 2017, the appellants entered into an agreement of purchase and sale (“APS”) with Rosehaven Homes Limited (“Rosehaven”) to purchase a new home (the “Property”) to be constructed. Rosehaven was unwilling to accept any conditions in the APS concerning financing. Accordingly, no financing condition was included.

The purchase price for the Property was $1,523,162.00, including requested upgrades of $6,723.40. The appellants paid an initial deposit of $20,000.00 plus the cost of the upgrades. Later, they paid further deposits, totaling $70,000.00, in accordance with a schedule set out in the APS.

The original closing date was November 6, 2018. The appellants were unable to close on that date. They sought, and were granted, two extensions of the closing date. In each case, the appellants paid an additional $20,000.00 deposit to obtain the extension.

The appellants failed to close the transaction on the latest closing date because they were unable to obtain sufficient financing. Rosehaven declined the appellants’ request that it accept a vendor-take-back mortgage for a portion of the purchase price. Rosehaven eventually resold the Property on July 10, 2019 for the sum of $1,060,000.00.

The motion judge granted summary judgment to Rosehaven for the difference between the original sale price and the resale price, including carrying costs and less a credit for the deposits and the cost of the upgrades. In assessing damages, the motion judge relied on an affidavit appending an expert report that had been marked draft, which affidavit was sworn by one of the report’s co-authors.

issues:

(1) Did the motion judge err in admitting and relying on Rosehaven’s r. 53.03 litigation expert report (“Rosehaven’s expert report”) concerning the value of the Property?

(2) Did the motion judge err in law and make palpable and overriding errors regarding Rosehaven’s mitigation efforts and the quantification of damages?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court rejected the appellants’ submission that the motion judge erred in admitting Rosehaven’s expert report as evidence on the summary judgment motion. Rosehaven’s expert had adopted the contents of the Reports as drafted. Rosehaven’s expert report may not have been in perfect compliance with rule 53.03(2), however, any failure to fully comply was not material.

Further, the Court noted that the fact that r. 53.03 sets out rules for the exchange of expert reports for the purposes of a trial does not undermine the ability of a party to introduce expert evidence on a motion, provided that the rules relating to the admissibility of evidence, in general, and expert evidence, in particular, are respected.

The appellants submitted that Form 53 (Acknowledgment of Expert Duty Form ) was not signed notwithstanding that Rosehaven’s expert swore that Form 53 had been executed. The Court held the appellants had the opportunity to clarify the discrepancy or object to the admissibility of Rosehaven’s expert report if they were concerned about this issue, but they failed to do so.

Lastly, the appellants submitted that Rosehaven’s expert report failed to include a separate section entitled, “Instructions”. The Court held that a review of the report and accompanying covering letter revealed some of the instructions given. The appellants could have raised any issues concerning non-compliance with specific aspects of r. 53.03(2.1) on cross-examination. The appellants did not file a transcript of the cross-examination on the summary judgment motion. Most importantly, the appellants did not object to the admissibility of Rosehaven’s expert report on the summary judgment motion. Thus, the Court concluded that the motion judge had not erred in admitting it.

The appellants further argued that there were various deficiencies in the report, which should have precluded reliance on it or diminished the weight afforded to it. The Court noted again that the appellants did not object to the expert report or its contents before the motion judge. Nor did they file a transcript of their cross-examination of one of the co-authors. They could have raised the alleged deficiencies on cross-examination and the motion judge would then have had the opportunity to evaluate the deponent’s response. Equally importantly, the appellants did not file admissible competing expert evidence which could have challenged or undermined the methodology and conclusions in Rosehaven’s expert report. Accordingly, the Court was not persuaded that the motion judge made any error in his treatment of Rosehaven’s expert report.

(2) No.

The appellants argued that the motion judge erred in law and made palpable and overriding errors regarding Rosehaven’s mitigation efforts and the quantification of damages. For example, the appellants argued that Rosehaven failed to provide any adequate explanation for its delay in reselling the Property or for its failure to list the Property on MLS, as opposed to marketing it in-house.

The motion judge recognized there had been delay in reselling the Property and found that there was no evidence before him to show that the Property “would have received more and better offers to purchase if Rosehaven had conducted the sale in a certain way.” The Court held that there was nothing unreasonable about the valuation dates relied on in Rosehaven’s expert report. They reflected the dates on which Rosehaven became legally bound to sell the Property, first to the appellants, and, later, to the subsequent purchasers. There was no basis to interfere with the motion judge’s conclusions.


Obodo v. Trans Union of Canada, Inc., 2022 ONCA 814

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

C. DU Vernet and C. McGoogan, for the appellant

C. T. Lockwood, L. Harper and J. Habib, for the respondent

Keywords: Torts, Negligence, Intrusion Upon Seclusion, Breach of Privacy, Vicarious Liability, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Appeals, Jurisdiction, Final or Interlocutory, Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30 and 39(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Civil Code of Quebec, CQLR c CCQ-1991, art. 25 and 37, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Winder v. Marriott International, Inc., 2022 ONSC 390, Jones v. Tsige, 2012 ONCA 32, Owsianik: Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, R. v. Meltzer, [1989] 1 S.C.R. 1764, Cavanaugh v. Grenville Christian College, 2013 ONCA 139, Bazley v. Curry, [1999] 2 S.C.R. 534, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59

facts:

Trans Union of Canada, Inc. (“Trans Union”) is in the same business as Equifax Canada Co. and Equifax Inc. (collectively, “Equifax”). Like Equifax, Trans Union accumulates and stores in its database the personal information of millions of people for reasons associated with the credit-related services provided by Trans Union to its customers. The database was breached by unknown third-party hackers.

In the Amended Statement of Claim, the appellant (“Mr. O”) alleged that Trans Union, in furtherance of its business activities, gathered and aggregated a significant volume of personal and private information belonging to Mr. O and other class members. Trans Union used that information in providing services to its clients. The information included names, birthdates, addresses, information on debts owing, payment histories, and social insurance numbers.

Over a two-week period in June and July 2019, hackers, using credentials stolen from a Trans Union customer, accessed the database through a customer portal. In early October 2019, Trans Union notified the affected parties that their information had been improperly accessed by hackers. Trans Union offered certain compensation to affected parties.

Mr. O claimed that Trans Union represented that it took reasonable steps to secure the information in the database and that its protective measures were consistent with industry standards. He alleged, however, that the steps taken by Trans Union to secure the information were woefully inadequate and below industry standards. Mr. O further alleged that Trans Union did not have procedures in place to identify the intrusion in a timely fashion and minimize the harm caused by the hackers.

The Amended Statement of Claim alleged that the hackers’ intrusion upon the seclusion of Mr. O and the other class members was “enabled and facilitated” by Trans Union by: (1) gathering the information; (2) aggregating the information into a central location; (3) setting up a portal which allowed access to the database by customers of Trans Union; (4) failing to implement effective security measures; (5) failing to effectively monitor access through the portal; (6) failing to implement other security measures; and (7) failing to have in place measures that would minimize the negative impact of any unauthorized intrusion into the database.

Mr. O moved to certify various claims in a class proceeding. The motion judge certified claims based in negligence, and some of the claims based on various provisions in provincial privacy legislation. He declined to certify the intrusion upon seclusion claim, holding that he was bound by Owsianik.

issues:

(1) Do the amendments governing appeals under the Class Proceedings Act, 1992, that came into effect after this proceeding was commenced, apply?

(2) Is the distinction between Trans Union’s liability for the actions of an employee and its liability for the actions of a third-party hacker untenable?

(3) Is there a connection between the terms of articles 35 and 37 of the Civil Code of Quebec in the context of determining whether a claim based expressly on those provisions should be certified?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court agreed with Trans Union that the appeal routes applicable to class proceedings in effect at the time this proceeding was commenced were applicable, and an appeal from certification would normally lie to the Divisional Court.

However, the motion judge’s order did more than identify the claims that can and cannot go forward as part of the class action. The Court found that by holding that the intrusion upon seclusion claim did not disclose a cause of action against Trans Union, the motion judge effectively determined that the claim could not go forward. That order was a final order. Mr. O could not pursue the intrusion upon seclusion claim against Trans Union in any forum, absent a successful appeal.

After discussing the Court’s decision in Cavanaugh v. Grenville Christian College, the Court concluded that it had jurisdiction to hear the appeal under s. 6(1)(b) of the Courts of Justice Act.

(2) Yes.

The Court found that Mr. O described Trans Union as “an enabler”, but did not allege that Trans Union and the unknown hacker were co-conspirators, acted in concert, or in pursuit of a common unlawful goal. The Court clarified that absent a properly pleaded allegation of conspiracy or common enterprise, Trans Union could only be liable for the intrusion upon seclusion perpetrated by the third-party hacker if Trans Union was somehow vicariously liable for the actions of the hacker.

The appellant’s submission was that the nature of the loss suffered by Mr. O and other members of the class dictates that Trans Union is liable for the actions of the independent third-party hacker. This submission ignored the rationale for the doctrine of vicarious liability and the limits on that doctrine. An employer may be liable for the torts of its employees. Liability rests primarily on policy considerations which are, in turn, predicated on the existence of an employer-employee relationship and a connection in some sense between that relationship and the employee’s tortious misconduct. The appellant’s submission came down to an attempt to impose the equivalent of vicarious liability on Trans Union in the absence of any employer-employee relationship between the actual intruder and Trans Union. That relationship is a precondition to the imposition of vicarious liability on Trans Union. Trans Union remained liable for any damages flowing from its negligence, or from breaches of any contractual, or statutory duties potentially owing to Mr. O and the other class members.

(3) No.

The Court held that the terms of articles 35 and 37 of the Civil Code of Quebec did not assist the question of whether the intentional common law tort of intrusion upon seclusion should be extended to Trans Union based on its failure to adequately protect against third-party hackers accessing information. The Court noted that the obligations found in the articles are akin to the obligations already placed on database holders by the common law of negligence, contract law, and, in some cases, statutory provisions.


Winder v. Marriott International, Inc., 2022 ONCA 815

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

M. Robb and A. Manduric, for the appellant

R. Agarwal, R. Promislow, M. Eizenga, N. Butz and M. Kawatra, for the respondents

Keywords: Torts, Intrusion Upon Seclusion, Privacy, Civil Procedure, Class Proceedings, Certification, Reasonable Cause of Action, Rules of Civil Procedure, r. 21.01(1)(a), Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Das v. George Weston Ltd., 2018 ONCA, Jones v. Tsige, 2012 ONCA 32 1053

facts:

In 2018, Marriott International, Inc. and various subsidiaries and affiliates (“Marriott”) disclosed that unauthorized persons had accessed the reservation database of Marriott’s Starwood hotels. The database contained the personal information provided by customers for purposes associated with reserving and using the hotel facilities. The information included customers’ names, phone numbers, passport numbers, account information and, in some instances, credit card information. The unauthorized access had apparently been going on since 2014.

The appellant, Mr. W, sued Marriott on his own behalf and on behalf of the proposed class members. Mr. W claimed negligence, breach of contract, and breach of various statutory provisions. He alleged that Marriott was liable for the intentional tort of intrusion upon seclusion claiming that Marriott invaded the privacy of its customers when it collected and stored their personal information inconsistent with the representations Marriott had made to its customers and that did not meet Marriott’s legal obligations in respect of maintaining the security of the information. These legal obligations, the Mr. W alleges, included contractual and statutory obligations, as well as obligations imposed by industry standards and practices. On this approach, Marriott is said to have invaded the privacy of its customers by collecting and storing the information in contravention of its representations and obligations, regardless of whether any third party ever actually gained access to the customers’ information stored in the database.

Mr. W brought a motion to certify the proceeding as a class proceeding. Before the certification motion proceeded, the parties agreed to state a question of law for determination under r. 21.01(1)(a): “Does the Fresh as Amended Statement of Claim dated July 2, 2021 in the within proceeding disclose a cause of action against the Defendants under the tort of intrusion upon seclusion?” The motion judge held that the Fresh as Amended Statement of Claim (the “Claim”) did not.

issues:

Is Mr. W’s invasion of privacy claim viable?

holding:

Appeal dismissed.

reasoning:

No.

The Court reviewed the viability of Mr. W’s invasion of privacy claim in light of his pleading. In Mr. W’s factum and oral argument, Mr. W submitted that Marriott gained access to the customers’ personal information under “false pretences” when it represented that it would comply with its obligations to maintain the confidentiality of the information. The Court described the submissions as suggesting allegations of deceit or civil fraud, and dishonesty or fraudulent misrepresentations. However, none of these were pleaded.

The Court turned to paragraph 6 of the Claim, which alleged that Marriott disclosed personal information to unauthorized parties, or caused personal information to be disclosed to unauthorized parties. The Court clarified that those allegations could in law support an intrusion upon seclusion claim. However, the Court found that there were no material facts pleaded capable of supporting the allegation that Marriott either disclosed personal information to unauthorized parties, or caused it to be disclosed.

The Court found that the material facts pleaded in Mr. W’s Claim that are said to constitute an intrusion or invasion of his privacy by Marriott are the same facts said to support the claim that Marriott was negligent, breached its contractual obligations to Mr. W, and failed to comply with its statutory obligations. The Court found that there was no allegation that Marriott accumulated, stored or used the personal information provided by its customers for any purpose other than the purposes reasonably contemplated by the customers. However, what was alleged was that the manner in which Marriott stored the information did not comply with its representations or its obligations, and that this allowed third-party hackers to gain access to the information for their purposes. The Court concluded that, on the facts as pleaded, Marriott’s misconduct lied, not in any breach of the customers’ privacy rights, but in the failure to safeguard those privacy rights from intrusion by others.

The Court concluded that, based on the allegations in the pleading, the only interference with the customers’ ability to control access to, and use of their personal information occurred when unknown third-party hackers breached Marriott’s database. Until the hackers acted, there was no breach of the customers’ privacy rights and no intrusion.


Hybrid Financial Ltd. v. Flow Capital Corp., 2022 ONCA 820

[van Rensburg, Pardu and Copeland JJ.A]

Counsel:

K. Sherkin, for the appellant

J. Renihan, for the respondent

Keywords: Contracts, Interpretation, Debtor-Creditor, Criminal Law, Interest, Usury, Criminal Rate of Interest, Criminal Code, R.S.C., 1985, c. C-46, s. 347, Garland v. Consumers’ Gas Co., [1998] 3 S.C.R. 112, Degelder Construction Co. v. Dancorp Developments Ltd., [1998] 3 S.C.R. 90, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mira Design Co. v. Seascape Holdings Ltd. (1981), 34 B.C.L.R. 55 (S.C.), Cirius Messaging Inc. v. Epstein Enterprises Inc., 2018 BCSC 1859, Nelson v. C.T.C. Mortgage Corp. (1984), 59 B.C.L.R. 221 (C.A.), 16 D.L.R. (4th) 139, aff’d [1986] 1 S.C.R. 749

facts:

The appellant, Hybrid Financial Ltd. (“Hybrid”), carried on business as a sales and distribution company involved in the provision of capital market services. The respondent, Flow Capital Corp. (“Flow”) provided growth capital for companies in North America and the United Kingdom. In 2017, Hybrid was indebted to the Bank of Montreal, and the Hybrid’s CEO secured the debt with a personal guarantee. In a search for alternative financing to pay off the bank loan, Hybrid approached Flow. The parties agreed to a transaction with terms reflected in a document entitled the “Amended and Restated Royalty Purchase Agreement” dated August 10, 2017 (the “Agreement”).

Under the Agreement, Flow agreed to provide $750,000 to Hybrid, paid in two installments. In exchange, Flow acquired rights to receive payments, subject to a buyout option exercisable by Hybrid. There was no obligation on Hybrid to repay the initial $750,000 provided by Flow by any fixed date, but there was an acceleration clause requiring, at Flow’s option, payment of the amount advanced and any outstanding royalty payments, upon the occurrence of an “Event of Default” or “Bankruptcy Occurrence” as defined by the Agreement.

The buyout option gave Hybrid the right to end the obligation to make monthly payments once Hybrid had made payments totaling at least $750,000. The option required Hybrid to pay the greater of $1,500,000 or 5 per cent of Hybrid’s net equity value. Unless it exercised the buyout option, Hybrid was required to make the stipulated monthly payments in perpetuity.

In June 2020, Hybrid gave notice of its intention to exercise the buyout option. At the time, Hybrid had paid $828,205.34 in monthly payments. Flow rejected Hybrid’s offer to buy out the royalties for $1,500,000 over three years, insisting the payment be paid as a lump sum. Flow suggested the parties engage an independent valuator to determine Hybrid’s net equity value pursuant to the terms of the Agreement. On July 30, 2020, the parties jointly retained KPMG to conduct a valuation of Hybrid’s net equity.

KPMG delivered a draft valuation report on November 16, 2020 estimating Hybrid’s net equity value to be approximately $75,500,000. Using the 5 per cent net equity valuation stipulated in the Agreement, the cost of exercising the option to terminate the monthly payments would be $3,775,000. Hybrid disputed the valuation and claimed the net value of the company was under $30,000,000. On November 26, 2020, Hybrid asserted its claim that the Agreement was in violation of s. 347 of the Criminal Code (“CC”). Hybrid then  brought an application seeking an order that the financial formula stipulated in the Agreement exceeds the criminal interest rate under s. 347 of the CC. Flow brought an application for an order declaring Hybrid in default under the Agreement and requiring Hybrid to pay the buyout amount.

The application judge dismissed the Hybrid’s application and granted relief to Flow.

The application judge found that the agreement was a “hybrid agreement”, and that the Agreement lacked most of the benchmarks of a loan, and accordingly the $750,000 was not credit advanced for the purposes of s.347(2) of the CC. The application judge also found that the payments under the agreement were not “interest” because they were not sufficiently fixed or readily calculable. Finally, the application judge determined that even if the Agreement were captured by the CC, Hybrid had voluntarily triggered the alleged criminal rate when it sought to exercise its right to end the payments to Flow, resulting in the payment being outside the reach of s.347.

issues:

(1) Did the trial judge err by finding that the Aggregate Installment Amount did not constitute “Credit Advanced” for the purposes of s. 347 of the CC?

(2) Did the trial judge err by finding that the mode of calculating the amounts to be paid by the appellant removed the Agreement from the application of s. 347 of the CC?

(3) Did the trial judge err by finding that the exercise of the buyout was a voluntary act by the appellant making s. 347 of the CC inapplicable to the payment?

holding:

Appeal allowed.

reasoning:

(1) Yes.

First, the Court dealt with the proper standard of review to be applied. The Court held that on either standard of review, correctness or the more deferential standard applicable to questions of mixed fact and law, the application judge had made errors of law. The application judge failed to consider the substance of the Agreement as opposed to its form, and failed to give effect to the specific contractual provision dealing with the possibility that the amounts to be paid by the appellant might exceed the rate prohibited by s. 347 of the CC.

The Court noted that the interpretation of “interest” mandated by s. 347 of the CC may not follow intuitively from the concepts of “credit” and “interest” as those terms are employed at common law and in everyday life. What was crucial was the substance of the transaction and the plain terms of s. 347 of the CC must govern its application.

The Court found that the substance of the transaction was that Flow had advanced money to Hybrid, and Hybrid was required to pay money in return. The money Hybrid had to pay in return was an expense incurred for the advance of credit and was subject to the strictures of s. 347. The Court adopted the Supreme Court’s finding in Garland v. Consumers’ Gas Co. that “[t]he thrust of the definitions of “credit advanced” and “interest” is to cover all possible aspects of any transaction to ensure that the cost of using someone else’s money never exceeds the criminal rate. […] Clearly the intention of the legislature was to concentrate on the substance of the transaction, not on its mechanics or form.” Accordingly, the Court found that the application judge erred when she emphasized the form of the transaction over its substance. Further, the Court found that the fact that the payments Hybrid had to make were styled as “royalties” did nothing to alter the substance of the Agreement.

The Court also found that the application judge had erred by failing to consider s.6.13 of the Agreement, the Maximum Permitted Rate provision, which stipulated that under no circumstances could Flow receive a payment “rate that is prohibited under Laws”. The application judge had rejected the relevance of this section because it did not specifically reference s. 347 of the CC. The Court found that, as there was no other law that would apply to the present transaction and would prohibit a rate, other than s. 347, the application judge had erred by not giving s.6.13 legal significance. The Court found that this section of the agreement meant that the parties had contemplated s. 347, and that they had contracted for an adjusted rate in the event s. 347 was triggered.

(2) Yes.

The Court found that the application judge had erred when she concluded that repayment mechanisms in the Agreement lacked the features of “interest” as defined in the CC, and applied in the jurisprudence. Flow argued that the buyout payment was not “interest”, because only payments of a fixed amount can qualify as interest, whether the agreement was a debt instrument or equity investment.

The Court disagreed and found that the parties had chosen a contractual mechanism to resolve the issue of how much had to be paid (i.e., KPMG valuator). The amount to be paid could be determined with precision by following the method required by the Agreement. The Court found that the fact that different valuators might come to different conclusions about value was not a factor.

Further, the Court found that s. 347(2) of the CC defined “interest” very broadly, and in the present context, the buyout payment was an expense payable for the advancing of credit under the Agreement, and therefore constituted interest for the purposes of s. 347 of the CC.

(3) Yes.

Flow relied on the fact that the Agreement did not, on its face, require the payment of an illegal interest rate, and that a rate over 60% was only triggered when Hybrid chose to exercise the buyout option, thus preventing s. 347 from applying. The Court disagreed and found that it was unnecessary to consider the scope and application of the voluntary act exception outlined in caselaw due to the inclusion of the Maximum Permitted Rate provision in the Agreement. The Court found that when Hybrid elected to pay out its obligations, to the extent that the buyout amount would otherwise have exceeded the prohibited rate of interest, the parties had provided for a reduced rate. The Court stated that there was no question of Hybrid’s unilateral act rendering an otherwise legal rate of interest illegal. Rather, by including s.6.13, the parties provided in the Agreement for a lawful rate of interest if the buyout option were exercised.

The Court found that both parties were sophisticated and must have recognized that there was a risk that payment under the Agreement could run afoul of s. 347 of the CC, so they included contractual terms to deal with the possibility. The Court stated that there was no reason why they should not be held to the agreement.


Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806

[Gillese, Miller and Coroza JJ.A.]

Counsel:

D. Strigberger, C. Morrison, and D. Marr, for the appellant

N.G. Wilson and S. Romeih, for the respondent

Keywords: Contracts, Insurance, Coverage, Statutory Interpretation, Automobile Insurance, Statutory Accident Benefits, Definition of “Accident”, Definition of “Automobile”, Catastrophic Injury,  Insurance Act, R.S.O. 1990, c. I.8, s. 2, Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, s. 11(6), Licence Appeal Tribunal Act, s. 1, Highway Traffic Act, R.S.O. 1990, c. H.8, Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, s. 2(1)5, General Regulation, R.R.O. 1990, Reg. 863 of Off-Road Vehicles Act, R.S.O. 1990, c. O.4, s.224(1),Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Adams v. Pineland Amusements Ltd., 2007 ONCA 844, Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Matheson v. Lewis, 2014 ONCA 542, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, Bristol-Myers Squibb Co. v. Canada (Attorney General), 2005 SCC 26, Haliburton (County) v. Gillespie, 2013 ONCA 40

facts:

On July 9, 2017, the respondent suffered catastrophic injuries as a result of a dirt bike accident at a closed course motorcycle competition. The respondent’s automobile insurance policy was with the appellant insurer, but his dirt bike was not listed as an insured vehicle. The respondent applied to the appellant for statutory accident benefits and was denied coverage on the basis that the incident was not an “accident” as defined in the Statutory Accident Benefits Schedule (the “SABS”) because the respondent’s dirt bike was not an “automobile” within the meaning of s. 224(1) of the Insurance Act, and s. 3(1) of the SABS which states that an “accident” must involve an “automobile”.

The respondent unsuccessfully applied to an adjudicator of the Licence Appeal Tribunal (“LAT”) for a declaration that he was entitled to accident benefits. The LAT decision turned on whether the respondent was involved in an “accident” as defined in s. 3(1) of the SABS. The LAT found that a dirt bike driven in any closed course competition was exempt from the Off-Road Vehicles Act (“ORVA”) and was therefore not an “automobile” under the Insurance Act. Accordingly, the LAT decided in favour of the appellant.

On a reconsideration hearing, the LAT’s decision was set aside by the Associate Chair of the LAT, and the respondent was found eligible for SABS benefits (the “Reconsideration Decision”) as the exemption under the ORVA only applied to closed course competitions that were sponsored by a motorcycle association. The Associate Chair found that the first adjudicator erred in holding that the purpose of the ORVA was to protect the public when off road vehicles are driven in public areas. A narrow interpretation of the exemption was consistent with the legislative intent behind Ontario’s automobile insurance scheme requiring universal insurance coverage, subject to limited exceptions. Therefore, a “clear and rational reading of the provision” led the Associate Chair to conclude that to be exempt from the requirement of being insured, a closed course competition would need to be sponsored by a motorcycle association.

The appellant insurer appealed the Reconsideration Decision to the Divisional Court. The Divisional Court held that the Associate Chair was correct to follow the modern contextual interpretive approach in interpreting s. 2(1)5 of Regulation 863 and dismissed the appeal.

issues:

(1) Did the Divisional Court err by concluding that the Court in Benson v. Belair Insurance Company Inc. (“Benson”) had already ruled that only sponsored closed course competitions are exempt from the ORVA?

(2) Did the Divisional Court err in its application of Matheson v. Lewis (Matheson) and subsequently in accepting the Associate Chair’s conclusion that the purpose of the ORVA is to promote universal insurance coverage for all drivers of off-road vehicles?

(3) Did the Divisional Court err in failing to properly interpret the ORVA within the entire legislative scheme of auto insurance?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court held that the Divisional Court erred by concluding that the Court had previously ruled that only sponsored closed course competitions are exempt from the ORVA. However, the Court held that this error was inconsequential, as the Divisional Court’s interpretation of the obiter in Benson was entirely consistent with the purposes of the overall scheme of automobile insurance.

(2) No.

The Court held that the Divisional Court did not err in its application of Matheson or in accepting the Associate Chair’s conclusion that the purpose of the ORVA is to promote universal insurance coverage for all drivers of off-road vehicles. The Court noted that the Divisional Court recognized that one aspect of the ORVA is that it forms one part of a comprehensive legislative scheme for automobile insurance in Ontario. The Court stated that any interpretation of the ORVA must keep in mind that it is just one piece of a comprehensive scheme of automobile insurance that must be read harmoniously with other legislation that makes up that scheme. The goal of the statutory automobile insurance scheme is to protect victims of automobile accidents by promoting universal coverage. The Court concluded that one of the ORVA’s purposes is to promote the safe operation of off-road vehicles, while another is to protect innocent victims of automobile accidents through the imposition of mandatory insurance.

The Court held that although Matheson was decided in the context of driving on a highway, the factual context underlying Matheson does not detract from the fact that if drivers without insurance are in an accident, they are faced with a serious risk of not being able to obtain damages and benefits. The conclusion that sponsorship is required for closed course competitions to be exempt from the ORVA aligns with the view set out by the Court in Matheson and the principle of statutory interpretation that harmony should be achieved between the various statutes enacted by the same government, especially when the statutes relate to the same subject-matter.

(3) No.

The Court held that the Divisional Court properly interpreted the ORVA within the entire legislative scheme of auto insurance by finding the respondent eligible for statutory accident benefits under SABS. The Court held that the Divisional Court’s conclusion that only sponsored closed course competitions and rallies are exempt from the provisions of the ORVA is correct in light of context and purpose of the entire legislative scheme. Further, an interpretation of s. 2(1)5 that exempts participants in all closed course competitions regardless of sponsorship is inconsistent with the remedial purposes of the ORVA. The Court stated that this interpretation is supported by s. 1 of Regulation 863 which defines a “motorcycle association” as a motorcycle club or association that has (or is affiliated with a motorcycle club or association that has): first, a published constitution and, second, a membership roster of more than twenty-four persons. The organizations must have a public constitution, are organized, and contain several members. The Court found that permitting an exemption only for sponsored events aligns with the public safety focus of the ORVA. Finally, the Court held that the Divisional Court’s interpretation makes sense when one considers the protections that these types of sponsored events provide to participants and the general public.


Owsianik v. Equifax Canada Co., 2022 ONCA 813

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

J.-M. Leclerc, T. Poynter and A. Abdulla, for the appellant

L. F. Cooper, A. D. Cameron, S. J. Armstrong, V. Toppings and P. Sergeyev, for the respondent

Keywords:

Torts, Intrusion Upon Seclusion, Breach of Privacy, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 21.01(1)(a), Jones v. Tsige, 2012 ONCA 32, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Winder v. Marriott International, Inc., 2022 ONSC 390, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Bowman v. Ontario, 2022 ONCA 477, Agnew-Americano v. Equifax Canada Co., 2019 ONSC 7110, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Bennett v. Lenovo (Canada) Inc., 2017 ONSC 1082, Kaplan v. Casino Rama, 2019 ONSC 2025, Tucci v. Peoples Trust Company, 2020 BCCA 246, Nelles v. Ontario, [1989] 2 S.C.R. 170, Ontario (Attorney General) v. Clark, 2021 SCC 18, Arora v. Whirlpool Canada LP, 2013 ONCA 657, Del Giudice v. Thompson, 2021 ONSC 5379, Piresferreira v. Ayotte, 2010 ONCA 384, Demme v. Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503, Merrifield v. Canada (Attorney General), 2019 ONCA 205, Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, P. Perl (Exporters) Ltd. v. Camden London Borough Council, [1983] EWCA Civ 9, [1984] Q.B. 342, Allgood v. Paperlesspay Corp., 2022 WL 846070 (M.D. Fla.); Burton v. MAPCO Exp., Inc., 47 F. Supp. (3d) 1279 (N.D. Ala. 2014), Stephens v. Availity, 2019 WL 13041330 (M.D. Fla.), Purvis v. Aveanna Healthcare, LLC, 563 F. Supp. (3d) 1360 (N.D. Ga. 2021), Damner v. Facebook Inc., 2020 WL 7862706 (N.D. Cal.), Savidge v. Pharm-Save, Inc., 2021 WL 3076786 (W.D. Ky.), McKenzie v. Allconnect, Inc., 369 F. Supp. (3d) 810 (E.D. Ky. 2019), Carter v. Innisfree Hotel, Inc., 661 So. (2d) 1174 (Ala. 1995), re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F. (3d) 625 (3rd Cir. 2017), Moore v. New York Elevated Railroad Co., 130 N.Y. 523 (1892), Remijas v. Neiman Marcus Group, LLC, 794 F. (3d) 688 (7th Cir. 2015), Thetford v. City of Clanton, 605 So. (2d) 835 (Ala. 1992), Stephen G.A. Pitel & Matthew B. Lerner, “Resolving Questions of Law: A Modern Approach to Rule 21” (2014) 43:3 Adv. Q. 344, Philip H. Osborne, The Law of Torts, 6th ed. (Toronto: Irwin Law, 2020), at p. 268, Lewis N. Klar & Cameron Jefferies, Tort Law, 6th ed. (Toronto: Carswell, 2017).

facts:

Equifax and related companies (referred to collectively as “Equifax”) operated around the world providing credit reporting services and credit protection services to customers. For the purposes of providing credit ratings to its customers, Equifax collected and aggregated financial and other information relating to millions of individuals and various corporate entities (“consumers”).

Between mid-May and late July 2017, hackers gained unauthorized access to the personal information stored by Equifax. The information accessed included individuals’ social insurance numbers, names, dates of birth, addresses, driver’s licence numbers, credit card numbers, email addresses, and passwords. The data breach affected persons around the world. Equifax estimated that about 20,000 Canadians were affected by the breach.

The appellant, in its Statement of Claim, alleged that Equifax knew that it was a prime target for cybercriminals. The Statement of Claim further alleged deficiencies in the security systems put in place by Equifax to protect access to the database. It also alleged that Equifax was fully aware of the inadequacies of its system. Specific shortcomings were brought to Equifax’s attention after security audits in 2014 and 2016. The appellant further alleged that when Equifax became aware that its database has been improperly accessed, it failed to respond to the intrusion in a timely or effective manner.

The appellant pleaded that Equifax’s failure to take appropriate steps to guard against unauthorized access to sensitive financial information in the database constituted an intentional or reckless intrusion upon her privacy.

The Divisional Court granted Equifax leave to appeal on a single question of law: “Did the motion judge err in finding that the tort of intrusion upon seclusion is available against collectors and custodians of private information, such as the defendants in this case, where the private information is improperly [accessed] by a third party, including in circumstances where the defendants are alleged to have acted recklessly?”

The motion judge concluded, assuming the truth of the alleged facts, that it was not “plain and obvious” the intrusion upon seclusion claim could not succeed against Equifax. He stressed that a certification motion, and in particular a determination of whether the plaintiff had pleaded a cause of action, was not the forum in which to determine “what the law should be in novel circumstances or how unsettled existing law should be reconciled.” If the law was not “fully settled”, the case “must be permitted to proceed”.

In the Divisional Court, the majority, relying on Atlantic Lottery Corp. Inc. v. Babstock held that novel legal claims which are doomed to fail even if the alleged facts are true, should be disposed of at the certification stage: Owsianik. The majority concluded the intrusion upon seclusion claim advanced by the appellant fell within the “doomed to fail” category. The appellant had not alleged that Equifax perpetrated any act capable of amounting to an intrusion or invasion of her privacy, but had instead alleged that Equifax failed to take appropriate steps to protect the appellant from intrusions perpetrated by independent third-party hackers. In the majority’s view, the pleadings mischaracterized Equifax’s failure to protect the appellant from the invasion of her privacy by third-party hackers, as an intrusion into the appellants privacy by Equifax.

issues:

(1) Did the majority in the Divisional Court properly address the legal viability of the intrusion upon seclusion claim?

(2) Is Equifax liable for the tort of intrusion upon seclusion?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court held that the facts as pleaded did not constitute an act of intrusion or invasion into the privacy of the plaintiffs. The intrusions alleged were committed by unknown third-party hackers, acting independently from, and to the detriment of, the interests of Equifax. The Court held that there were no facts pleaded which could in law provide a basis upon which the actions of the hackers could be attributed to Equifax. There were no material facts pleaded which indicated that Equifax acted in consort with, or were vicariously liable for, the hackers’ conduct.

The Court commented that on the claims as pleaded, Equifax’s fault lied in their failure to take adequate steps to protect the plaintiffs from the intrusion upon their privacy by hackers acting independently of Equifax. The Court noted that Equifax may be liable for its failure to protect the plaintiffs’ privacy interests in the stored material in negligence, contract and under various statutes. The Court held that Equifax’s failure to meet their common law duty of care, or their contractual and statutory responsibilities to the plaintiffs to properly store the data, cannot, however, be transformed by the actions of independent third-party hackers into an invasion by Equifax of the plaintiffs’ privacy

The Court stated that a court cannot certify a class proceeding unless the prerequisites to certification set out in s. 5(1) of the Class Proceedings Act, 1992 are met. Section 5(1)(a) requires the pleadings to disclose a cause of action. Counsel for the appellant submitted that the requirement in s. 5(1)(a) that the claim “disclose a cause of action” sets a low bar and is not intended to pre-empt novel, or tenuous claims. On the motion, the court must read the pleadings generously, accept as true the facts as pleaded and determine whether, on those facts, it is “plain and obvious” that the plaintiff has no cause of action against the defendant.

The Court endorsed that the test to be applied in deciding whether a claim discloses a cause of action for the purposes of s. 5(1)(a) is the same as the test to be applied on a motion to strike a pleading as disclosing no reasonable cause of action under r. 21.01(1)(b): Babstock. The Court accepted that a claim should only be struck if it is “plain and obvious” that the claim cannot succeed. The Court also agreed that Babstock had not altered that test.

The Court stated that no decision has held that the tort of intrusion upon seclusion applies to companies like Equifax who hold and store private information (the Court used the term ‘Database Defendants’) based on negligent or reckless storage of private information. Such claims have been certified in class actions, but on the basis that it is not “plain and obvious” the claim cannot succeed. The legal viability of the intrusion upon seclusion claim was also amenable to determination based exclusively on the facts as pleaded. The Court held that there was no reason to think evidence adduced at the trial would have any effect on the determination of whether, as a matter of law, the tort could apply to Database Defendants whose failure to properly protect the data permits independent hackers to access the data.

The Court, in agreeing with Babstock, reiterated that when the validity of a claim turns exclusively on the resolution of a legal question, the court may on a pleadings motion, even if the answer to the legal question is complex, policy-laden and open to some debate, determine the law and apply the law as determined to the facts as pleaded to decide whether “the claim is plainly doomed to fail and should be struck”. The Court noted that Babstock was consistent with prior Supreme Court of Canada authorities.

The Court held that there were advantages to determining the viability in law of a claim on a pleadings motion when that viability turns exclusively on a question of law and the only material facts relevant to the question are those pleaded by the plaintiff. Deciding those questions early in the litigation serves judicial efficiency, enhances access to justice, and promotes certainty in the law.

The Court accepted there were legitimate arguments on both sides over the legal viability of the intrusion upon seclusion claim against Database Defendants. The parties did not refer to any appellate authority in Canada or elsewhere in the Commonwealth directly on point. However, the Court noted that uncertainty in the law did not require the motion judge to decline to resolve the legal question at the certification stage. Four factors offered strong justification for deciding the legal viability of this claim on the certification motion:

(1) the question fell to be answered on the facts as pleaded. There was no dispute as to the facts that were relevant and material to the legal viability of the cause of action pleaded. There was no chance any evidence could be led at trial that would impact on the answer to the legal question posed;

(2) there was no unfairness to either party in deciding the merits of the legal question on the pleadings motion;

(3) the issue was fully briefed and argued on the pleadings motion; and

(4) the institutional considerations articulated in Babstock favoured deciding the legal question on the merits

The Court found the majority in the Divisional Court properly determined whether the claim as pleaded could in law amount to an intrusion by Equifax into the privacy of the plaintiffs. The majority’s finding that the facts could not amount in law to the required intrusion meant that it was “plain and obvious” the claim could not succeed and should be struck.

(2) No.

The tort of intrusion upon seclusion is one of several intentional torts which, when taken together, provide “broad protection of the plaintiff’s personal integrity and autonomy. The elements of the tort of intrusion upon seclusion were laid down in Jones:

  1. the defendant must have invaded or intruded upon the plaintiff’s private affairs or concerns, without lawful excuse [the conduct requirement];
  2. the conduct which constitutes the intrusion or invasion must have been done intentionally or recklessly [the state of mind requirement]; and
  3. a reasonable person would regard the invasion of privacy as highly offensive, causing distress, humiliation or anguish [the consequence requirement].

The plaintiffs alleged that Equifax’s conduct constituted interference with their privacy. Equifax stored the data and accessed and used the data for commercial purposes. The plaintiffs alleged that the intrusion occurred when the defendants failed to take appropriate steps to guard against unauthorized access to sensitive financial information involving the class members’ private affairs or concerns.

The Court commented that on the allegation made, Equifax failed to take steps to prevent independent hackers from conduct that clearly invaded the plaintiffs’ privacy interests in the documents stored by Equifax. Equifax did not, however, itself interfere with those privacy interests. The wrong done by Equifax arose out of Equifax’s failure to meet its obligations to the plaintiffs to protect their privacy interests. The Court concluded the claim failed at this fundamental level as the claim did not include conduct capable of amounting to an intrusion into, or an invasion of, the plaintiff’s privacy alleged against Equifax.

The appellant submitted that her claim alleged an intrusion upon seclusion because she pleaded that the defendant acted recklessly. Jones recognized that recklessness would suffice to establish liability. The Court found the appellant’s submission misunderstood the relationship between the two elements of the tort. The first element, the conduct requirement, required an act by the defendant which amounted to a deliberate intrusion upon, or invasion into, the plaintiffs’ privacy. The prohibited state of mind, whether intention or recklessness, must exist when the defendant engaged in the prohibited conduct. The state of mind must relate to the doing of the prohibited conduct. The defendant must either intend that the conduct which constitutes the intrusion will intrude upon the plaintiffs’ privacy, or the defendant must be reckless that the conduct will have that effect. The Court clarified that if the defendant does not engage in conduct that amounts to an invasion of privacy, the defendant’s recklessness with respect to the consequences of some other conduct, for example the storage of the information, cannot fix the defendant with liability for invading the plaintiffs’ privacy.

Thus, the Court held that the claim failed at the conduct component of the tort of intrusion upon seclusion. Equifax’s negligent storage of the information could not in law amount to an invasion of, or an intrusion upon, the plaintiffs’ privacy interests in the information. Equifax’s recklessness as to the consequences of its negligent storage could not make Equifax liable for the intentional invasion of the plaintiffs’ privacy committed by the independent third-party hacker. Equifax’s liability, if any, lies in its breach of a duty owed to the plaintiffs, or its breach of contractual or statutory obligations.

The Court rejected extending liability for the commission of the intentional tort of invasion of privacy by a stranger to Equifax would amount to an incremental change in the law. The Court noted that on the alleged facts, Equifax did not unlawfully access any information; no one acting on Equifax’s behalf, or in consort with Equifax, did so; and no one for whom Equifax could be held vicariously liable accessed any private information. A third-party stranger to Equifax accessed the information.

The Court was not prepared to impose liability on Equifax for the tortious conduct of unknown hackers, finding that it would create a new and potentially very broad basis for a finding of liability for intentional torts. The Court cautioned that this would lead to a scenario where a defendant could be liable for any intentional tort committed by anyone, if the defendant owed a duty, under contract, tort, or perhaps under statute, to the plaintiff to protect the plaintiff from the conduct amounting to the intentional tort.

The Court found the appellant did not make out the case for extending the tort of intrusion upon seclusion to Database Defendants whose negligent storage of information permitted independent hackers to access that information. The Court signaled that it is possible that existing common law remedies do not adequately encourage Database Defendants to take all reasonable steps to protect private information under their control. However, it is open to Parliament and legislatures to expand these protections to provide for what Parliament and the legislatures might regard as more effective remedies against Database Defendants who do not take proper steps to secure the information under their control.


SHORT CIVIL DECISIONS

Amerato v. TST-CF Solutions LP , 2022 ONCA 808

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

L. Hone, for the appellant

R. Flom, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Damages, Vacation Pay, Canada Labour Code, R.S.C. 1985, c. L-2, s. 188

Benson v. Cichorczyk,, 2022 ONCA 800

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

R. A. Levin, for the appellant

D. O. Smith and J. Thoburn, for the respondents D.D. and the City of Toronto

Keywords: Torts, Negligence, Damages, Punitive Damages

Cardinal Investments Inc. v. Ultra Depot (Ontario) Inc. , 2022 ONCA 827

[van Rensburg, Sossin and Copeland JJ.A.]

Counsel:

J.R. Smith, for the appellant

A.S. Cofman, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Rules of Civil Procedure, rr. 21, 26.01, and 25.06(8)



The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

Jump To: Table of Contents | Civil Decisions | Short Civil Decisions

Good evening.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of November 14, 2022.

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Notably, in the companion decisions of Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975 and Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, the Court considered two appeals from Divisional Court decisions that overturned Ontario Labour Relations Board (“OLRB”) rulings that had found the respondents in each case to be related employers. The Court held that each of the Divisional Court decisions had failed to comply with the Supreme Court of Canada’s directives from its landmark decision in Vavilov. The Court concluded that the OLRB’s decisions each bore the hallmarks of a reasonable decision – justification, transparency, and intelligibility. The Divisional Court had erred when it applied its “own yardstick and measured the Board Decision against it”, instead of considering the decision within the Vavilov framework.

In Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), the Court clarified s. 24 of the Solicitors Act as it applies to a lawyer seeking to invalidate a retainer agreement. The Court determined that the motion judge did not err in his application of the two-part test from Raphael Partners v. Lam, but clarified that the lawyer bears the burden to rebut the presumption of fairness of the retainer agreement. As such, the Court allowed the appeal in part and varied the motion judge’s order.

McDonald v. Toronto-Dominion Bank dealt with the second largest Ponzi scheme in history. Stanford International Bank Ltd. (“SIB”) was used as a vehicle to defraud bank customers of over seven billion dollars. Upon its collapse, it was liquidated and the Joint Liquidators commenced an action on behalf of SIB against TD Bank, claiming: (1) it was liable to SIB for knowing assistance in breach of fiduciary duty; and (2) it was negligent in the provision of services. The trial judge dismissed the action finding that TD Bank had no actual knowledge of the fraud and was not reckless or wilfully blind. As for the negligence claim, the trial judge concluded that there was insufficient proximity to give rise to what would have been a novel duty of care. The Joint Liquidators appealed from the dismissal of the negligence claim. The Court held the trial judge did not err in both the duty of care and standard of care analysis, and that she did not make a flawed procedural finding resulting in an unfair trial process.

Other topics include whether a claim of assault was statute barred, whether mortgage financing was void ab initio for violating the Fraudulent Conveyances Act, the duty of good faith and honest performance in the context of a right of first refusal over assets, and the discoverability principle in the context of a negligent misrepresentation claim.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

 

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Stevens v. Hutchens , 2022 ONCA 771

Keywords: Fraudulent Conveyance, Void Ab Initio, Mortgages, Constructive Trust, Lien, Legal Fees, Receivership, Rights of Creditors, Priority, Unjust Preference, Intent to Defeat, Abuse of Process, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Ontario Securities Commission v. Money Gate Mortgage Investment Corporation, 2020 ONCA 812, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Indcondo Building Corp. v. Sloan, 2014 ONSC 4018, Mohammed v. Makhlouta, 2020 ONSC 7494

Deluca v. Bucciarelli , 2022 ONCA 774

Keywords: Summary Judgment, Torts, Assault, Limitation Periods, Intentional Infliction of Emotional Distress, Limitations Act, 2002, S.O. 2002, c. 24, s. 4, s. 5(1)(a)(iv) and s. 16(1)(h.2)(i), Bruce v. Dyer, [1966] 2 O.R. 705 (H.S.) aff’d [1970] 1 O.R. 482 (C.A.), Warman v. Grosvenor (2008), 92 O.R. (3d) 663 (S.C.), Dunne v. Gauthier, 2000 BCSC 1603, Barker v. Barker, 2022 ONCA 567

Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), 2022 ONCA 781

Keywords: Contracts, Interpretation, Solicitor-Client Retainer Agreement, Solicitors Act, R.S.O. 1990, c. S.15., s. 16, s. 23, s. 24, English Attorneys’ and Solicitors’ Act 1870 (U.K.), 33 & 34 Vict., c. 28, ss. 8-9, The Conveyancing and Law of Property Act, 1886, S.O. 1886, c. 20, s. 23(4), Solicitors Remuneration Act 1881 (U.K.), 44 & 45 Vict., c. 44, s. 8(4), The Law Reform Act, 1909, S.O. 1909, c. 28, ss. 31-32, Moore v. John A. Annen Barrister Professional Corporation, 2017 ONSC 7720, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (C.A.)., Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, Re Stuart, Ex p. Cathcart, [1893] 2 Q.B. 201 (C.A.), Re Mendelson, Beatty & Wood and Iwan, [1969] 2 O.R. 393 (H.C.), Re Solicitor, [1972] 1 O.R. 694 (H.C.), Andrew Feldstein & Associates Professional Corporation v. Keramidopulos, 2007 CanLII 40202 (Ont. S.C.)

Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779

Keywords: Labour and Employment, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Subcontractors, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness,  Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Delios v. Canada (Attorney General), 2015 FCA 117, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

Keywords: Labour and Employment Law, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness, s. 1(4), s. 69, s. 133, Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, 133, Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, Wasaga Trim Supply (2006) Inc., [2010] O.L.R.D. No. 1854, Re Blouin Drywall Contractors Ltd. and United Brotherhood of Carpenters and Joiners of America, Local 2486 (1975), 8 O.R. (2d) 103 (C.A.), leave to appeal to S.C.C. refused, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, D’Errico v. Canada (Attorney General), 2014 FCA 95, Canada (Attorney General) v. Zalys, 2020 FCA 81, Canadian Broadcasting Corporation v. Ferrier, 2019 ONCA 1025, leave to appeal to S.C.C. refused [2020] S.C.C.A. No. 59

McDonald v. Toronto-Dominion Bank , 2022 ONCA 788

Keywords: Torts, Duty of Care, Standard of Care, Negligence, Novel Duty of Care, Proximity, Foreseeability, Established Categories, Rules of Civil Procedure, rr. 1.04(1), 53.07, Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L); Cooper v. Hobart, 2001 SCC 79, Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, Toronto Dominion Bank v. 1633092 Ontario Ltd., 2019 ONSC 1473, Dr. Robert Grossman v. The Toronto-Dominion Bank, 2014 ONSC 3578, Toronto Dominion Bank v. Whitford, 2020 ABQB 802, Lee v. Canadian Imperial Bank of Commerce, 2001 CarswellOnt 3019 (S.C.), Good Mechanical v. Canadian Imperial Bank of Commerce (2005), 49 C.L.R. (3d) 183 (Ont. S.C.), Don Bodkin Ltd. v. Toronto Dominion Bank (1993), 14 O.R. (3d) 571 (Gen Div.), aff’d (1998) 40 O.R. (3d) 262 (C.A.), Oak Incentives Group Inc. v. Toronto Dominion Bank, 2011 ONSC 3245, aff’d 2012 ONCA 726, Groves-Raffin Construction Ltd. v. Canadian Imperial Bank of Commerce (1975), 64 D.L.R. (3d) 78 (B.C.C.A.), Rausch v. Pickering City, 2013 ONCA 740, R. v. Sheppard, 2002 SCC 26, R. v. M. (R.E.), 2008 SCC 51, Granitile Inc. v. Canada (1998), 41 C.L.R. (2d) 115 (Ont. Gen. Div.), Peter Sankoff, Law of Witnesses and Evidence in Canada

Amelin Engineering Ltd. v. Blower Engineering Inc , 2022 ONCA 785

Keywords: Limitations, Statute Barred, Discoverability, Ameliorating Loss, Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s.5(1), Limitations Act, R.S.O. 1990, c. L.15, s.45(1)(g), St. Jean (Litigation Guardian of) v. Cheung, 2008 ONCA 815, Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, Brown v. Baum, 2016 ONCA 325, Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, Ferrara v. Lorenzetti Wolfe Barristers and Solicitors, 2012 ONCA 851, Crombie Property Holdings Ltd. v. McColl-Frontenac Inc. (Texaco Canada Ltd.), 2017 ONCA 16

Greta Energy Inc. v. Pembina Pipeline Corporation , 2022 ONCA 783

Keywords: Contract Law, Securities Law, Purchase and Sale, Right of First Refusal, Good Faith, Duty of Honest Performance, Torts, Inducement of Breach of Contract, Conspiracy, GATX Corp. v. Hawker Siddeley Canada Inc. (1996), 27 B.L.R. (2d) 251 (Ont. C.J.), C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Correia v. Canac Kitchen, 2008 ONCA 506

Short Civil Decisions

Pervez v. Mohammed , 2022 ONCA 778

Keywords: Family Law, Separation Agreement, Child and Spousal Support, Settlement, Financial Disclosure, Consent Order, Motions, Family Law Rules, O. Reg. 114/99, rr. 13, 14, Federal Child Support Guidelines, SOR/97-175, s. 25(1), Dowdall v. Dowdall, 2021 ONCA 260

Van Delst v. Hronowsky , 2022 ONCA 782

Keywords: Appeal, Stay of Order, Standard of Review

Klim v. Klim , 2022 ONCA 784

Keywords: Evidence, Credibility, Wills and Estates, Power of Attorney, Capacity, Frivolous Allegations, Costs, Full-Indemnity

Lamothe v. Ellis, 2022 ONCA 789

Keywords: Appeals, Uncontested Trial, Motion to Quash an Appeal, Non-compliance of Court Orders, Prejudice, Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 134, 140(5), Peerenboom v. Peerenboom, 2020 ONCA 240, Abu-Saud v. Abu-Saud, 2020 ONCA 824

Hart v. Balice, 2022 ONCA 787

Keywords: Civil Procedure, Frivolous and Vexatious Conduct, Abuse of Process, Re-litigating Issues, Finality, Rules of Civil Procedure, rr. 2.1, 59.06, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720


CIVIL DECISIONS

Stevens v. Hutchens , 2022 ONCA 771

[Feldman, Hoy and Favreau JJ.A.]

Counsel: 

B. Moldaver, for the appellant, Adroit Advocacy LLC (Non-Party)

J. Necpal, for the respondents, G. S., L. S., and 1174365 Alberta Ltd.

J. Gibson, for the respondent, A. Farber & Partners Inc. (Receiver)

B. F. VanBunderen, for the respondents, CGC Holding Company, LLC, Harlem Algonquin LLC, and J. T. M.

Keywords: Fraudulent Conveyance, Void Ab Initio, Mortgages, Constructive Trust, Lien, Legal Fees, Receivership, Rights of Creditors, Priority, Unjust Preference, Intent to Defeat, Abuse of Process, Fraudulent Conveyances Act, R.S.O. 1990, c. F.29, Assignments and Preferences Act, R.S.O. 1990, c. A.33, Ontario Securities Commission v. Money Gate Mortgage Investment Corporation, 2020 ONCA 812, Royal Bank of Canada v. North American Life Assurance Co., [1996] 1 S.C.R. 325, Indcondo Building Corp. v. Sloan, 2014 ONSC 4018, Mohammed v. Makhlouta, 2020 ONSC 7494

facts:

The respondents are judgment creditors of TH and SH (the “Hutchens”). The Hutchens live in Ontario and their known assets are in Ontario. The respondents brought their motion in the context of the receivership proceeding. The receiver deferred to the appellants to bring the motion and took no position on the motion for cost reasons. The judgment, dated July 5, 2019, recognized two 2018 judgments of the United States District Court for the Eastern District of Pennsylvania, each for more than $26 million USD. The Pennsylvania judgments arose from a mortgage financing fraud perpetrated by the Hutchens. There were other judgement creditors of the Hutchens’ as a Colorado class action resulted in an award of damages to the plaintiffs of more than $24 million USD. The presiding judge in Colorado also imposed a constructive trust over several properties, including five of the six mortgaged properties at issue, finding that they were probably purchased using funds advanced by the Colorado plaintiffs in the fraudulent scheme.

The appellant, Adroit Advocacy LLC (a U.S. law firm), acted for various defendants in the Colorado class action, including the Hutchens and, until they were released from the action, the corporations (the “mortgagor corporations”) which were the registered owners of the mortgaged properties. On October 4, 2017, 8 days after the Colorado judgment, the appellant law firm registered a $2 million CAD mortgage against six properties in Ontario to secure its payment of legal fees, five of which were subject to the constructive trust imposed by the Colorado class action. TH gave the mortgages in her capacity as the sole shareholder of the mortgagor corporations.

At the time, the appellant’s outstanding invoices for legal fees were in the range of $180,000 USD. In an email to SH, a lawyer at the appellant law firm complained about the delay in the granting of the mortgages: “[I]t is nearly incomprehensible to me that there is a delay in allowing us to receive a lien to ensure our payment that will put us ahead of the plaintiff….”

The Hutchens live in Ontario and have known assets in Ontario. In February 2019, over the objections of the Hutchens, an interim receiver was appointed in Ontario over their property, including the mortgagor corporations. The mortgages represent over half of the value of the just over $3 million CDN available to creditors.

The respondents brought their motion in the receivership proceeding. The Colorado plaintiffs supported their motion. The receiver deferred to the appellants to bring the motion and took no position on the motion for cost reasons.The motion judge found that the mortgages were void under two statutes: they constituted fraudulent conveyances under s. 2 of the Fraudulent Conveyances Act (the “FCA”) and were made with the intent to defeat creditors and were an unjust preference under ss. 4(1) and 4(2) of the Assignments and Preferences Act (the “APA”).

issues:

(1) Did the motion judge err in concluding that the respondents had standing to bring their motion?

(2) Did the motion judge err in concluding that the respondents, who were creditors of TH and not creditors of the mortgagor corporations, were “creditors or others” with intent to defeat “creditors or others” within the meaning of those terms in s. 2 of the FCA?

(3) Did the motion judge err in concluding that the mortgages were not made “in good faith” and “upon good consideration”, and, therefore, that the exceptions to s. 2 of the FCAset out in ss. 3 and 7(2) did not apply?

(4) Did the motion judge fail to conclude that that motion was barred by res judicataor was an abuse of process?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court disagreed with the appellant’s assertion that in the context of a receivership, only the receiver, and not a creditor in the receivership, can bring a motion affecting the rights of another creditor in the receivership.

The Court held that a receivership proceeding has a time sensitive and multi-stakeholder nature: Ontario Securities Commission v. Money Gate Mortgage Investment Corporation. The mortgagor corporations were included in the scope of the receivership order, and the appellant and the respondents were creditors in the receivership. The respondents’ motion involved a priority dispute between two creditors asserting claims against the assets of the receivership. The Court agreed with the motion judge who found, and the appellants do not dispute, that the receiver deferred to the respondents to bring the motion for cost efficiency reasons. Moreover, the appellants did not point to any prejudice to them resulting from the respondents proceeding in the manner that they did.

(2) No.

The appellant argued that s. 2 of the FCA required the mortgagor corporations to have made the mortgages with the intent to defeat creditors or prospective creditors of the mortgagor corporations and that there was no evidence that the mortgagor corporations had creditors or prospective creditors other than the appellant. Hence, the mortgages were not made to defeat “creditors or others” within the meaning of s. 2 of the FCA.

The Court rejected this argument and noted that the appellant had construed s. 2 of the FCA too narrowly and ignored the substance of what occurred. The Court reasoned that the FCA is remedial in nature and should be given a fair, large, and liberal interpretation that best achieves its purpose, namely to strike down all conveyances of property made with the intention of delaying, hindering, or defrauding creditors and others except for conveyances made for good consideration and bona fide to persons not having notice of such fraud: Royal Bank of Canada v. North American Life Assurance Co.

The Court stated that TH was the sole shareholder or “principal” of the mortgagor corporations. She granted the mortgages in her capacity as sole shareholder of the mortgagor corporations, thus causing the mortgages to be granted as security for, among other liabilities, her liabilities to the appellant. She treated the properties registered in the name of the mortgagor corporations as her own.

Section 2 of the FCA focuses on whether the conveyance was made with the intent of defeating creditors or others. The Court held that even if s. 2 was interpreted in the manner urged by the appellant (that is, by requiring that the mortgagor corporations have made the mortgages with the intent of defeating their “creditors or others”), the argument fails. For instance, the appellant argued that the meaning of “others” is restricted to prospective creditors of the mortgagor corporations. The Court found that although the appellant was correct that “others” has been interpreted as including prospective creditors of the debtor, “others” could also include creditors of the mortgagor corporation’s sole principal, in circumstances where all or some of the money used to purchase the mortgaged properties came from the defrauded creditors of the principal, and where the principal caused the mortgages to be granted and did so with the intention of defeating her creditors. The Court noted that these were the circumstances present in this case.

(3) No.

To fall within the exceptions to s. 2 of the FCA set out in ss. 3 and 7(2), the conveyance must be made both “in good faith” and “upon good consideration”. The motion judge found that the grant of the mortgages did not satisfy either requirement.

The Court found it was unnecessary to address the appellant’s argument that there was good consideration for the mortgages as the findings of the motion judge were based on findings of fact and entitled to deference.  The Court noted that the finding was rooted in, among other evidence, the appellant’s own email evidencing its intent to “get ahead” of other creditors, the appellant’s knowledge of the Hutchens’ fraudulent activities, and the appellant’s registration of the mortgages in the face of court-imposed constructive trusts. The Court held that the appellant had failed to identify any palpable and overriding error and that the motion judge’s finding was amply supported by the record.

(4) No.

The appellant asserted that the Colorado plaintiffs’ support of the respondents’ motion was an abuse of process because they did not have a judgment in Ontario and were using the receivership to take steps that they should have taken in Colorado. The motion judge had found that the Colorado plaintiffs’ course of action in supporting the respondents’ motion made sense procedurally and cost efficient. The motion judge had found it was not an abuse of process.

The Court held that there was no merit to the appellant’s argument that the motion should have been barred by the doctrine of res judicata or as an abuse of process. The Court concluded there was nothing inappropriate in the Colorado plaintiffs supporting the motion.


Deluca v. Bucciarelli , 2022 ONCA 774

[Simmons, Benotto and Favreau JJ.A.]

Counsel:

J. B. R. Palmer, for the appellant

J. Vrancic, for the respondent

Keywords: Summary Judgment, Torts, Assault, Limitation Periods, Intentional Infliction of Emotional Distress, Limitations Act, 2002, S.O. 2002, c. 24, s. 4, s. 5(1)(a)(iv) and s. 16(1)(h.2)(i), Bruce v. Dyer, [1966] 2 O.R. 705 (H.S.) aff’d [1970] 1 O.R. 482 (C.A.), Warman v. Grosvenor (2008), 92 O.R. (3d) 663 (S.C.), Dunne v. Gauthier, 2000 BCSC 1603, Barker v. Barker, 2022 ONCA 567

facts:

The appellant and respondent were involved in a romantic relationship between 2003 and 2010. The appellant ended the relationship in early November 2010. In January 2019, the appellant issued a statement of claim against the respondent claiming damages of $1.4 million for multiple causes of action, including assault arising from the respondent’s conduct toward her between December 2010 and sometime in 2012 after she had ended the relationship. The appellant asserted that after she terminated the parties’ relationship, beginning in December 2010 until sometime in 2012, the respondent engaged in a campaign of harassing and threatening behaviour toward her that caused her to fear for her safety.

The appellant did not dispute that she was aware that the conduct she alleged in her statement of claim occurred more than two years before she issued her statement of claim. However, she relied on ss. 5(1)(a)(iv) and 16(1)(h.2)(i) of the Limitations Act, 2002, (the “Act”) to assert that there was a genuine issue for trial concerning whether she was prevented from discovering her claim within the two-year period because of her fear of the respondent (s. 5(1)(a)(iv)) or whether her claim fell within the exception to the two-year period because her proceeding was based, at least in part, on an assault that occurred in an intimate relationship (s.16(1)(h.2)(i)).

On a summary judgment motion, the motion judge dismissed the appellant’s action against the respondent because the motion judge found that the action was barred by the basic two-year limitation period set out in the Act. In particular, the motion judge found that the appellant had not brought herself within the ambit of s. 16(1)(h.2)(i) of the Act because she had not demonstrated she had reasonable grounds to believe that she was in danger of imminent harmful, offensive conduct or violence from the appellant. The motion judge was not satisfied the appellant had adduced evidence of conduct by the appellant that could meet the definition of “an assault” as it appears in s. 16(1)(h.2)(i) of the Act. In addition, the motion judge said, “[t]he affidavit evidence proffered in support of the [appellant’s] alleged fear for her personal safety and the safety of her family [lacked] particulars and [was not] persuasive.”

issues:

(1) Did the motion judge reverse the burden of proof on a summary judgment motion?

(2) Did the motion judge err in appreciating the scope of s. 16(1)(h.2(i) of the Act or in articulating or applying the elements of the tort of assault?

(3) Did the motion judge fail to address the appellant’s argument under s. 5(1)(a)(iv) of the Act that the appellant was prevented from discovering her claim because of her fears for the safety of herself and her family?

(4) Were the motion judge’s reasons infected by assumptions based on myths and stereotypes or palpable and overriding error?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court noted that the appellant did not dispute the fact that the conduct alleged in her statement of claim occurred more than two years before it was issued. In these circumstances it was up to the appellant to put her best foot forward and adduce sufficient evidence to demonstrate a genuine issue requiring a trial concerning whether she could rely on either of ss. 5(1)(a) (iv) or 16(1)(h.2)(i) of the Act. The motion judge was not satisfied she had done so and the Court did not see any error in this conclusion.

(2) No.

The Court noted that the motion judge relied on Bruce v. Dyer for a description of the elements of the tort of assault. The motion judge said, “[t]he [appellant] must prove on a balance of probabilities that she had reasonable grounds to believe that she was in danger of violence from [the respondent], that she feared imminent harmful or offensive contact (emphasis in the original)” The motion judge was not satisfied the appellant had adduced evidence that could meet this standard.

The appellant submitted that the motion judge took too narrow a view of “imminence” and of the scope of “an assault” as that term appears in s. 16(1)(h.2)(i) of the Act. The appellant pointed to Warman v. Grosvenor (“Warman”) and Dunne v. Gauthier (“Dunne”) as examples of cases that illustrate that ‘imminence’ can mean different things in different contexts. The appellant also argued that the motion judge erred in failing to recognize that the term “assault”, as it appears in s. 16(1)(h.2)(i), can and should be interpreted broadly, so as to encompass threatening and harassing behaviour giving rise to fear of harm at some future unspecified point in time.

The Court noted that s. 16(1)(h.2)(i) of the Act provides that there is no limitation period in respect of “a proceeding based on an assault” where at the time of the assault the parties “had an intimate relationship.” The Court found the appellant’s arguments were foreclosed by the Court’s recent decision in Barker v. Barker, in which the Court considered the scope of the tort of assault. In Barker, this Court explained that a tortious assault “involves intentionally causing another to fear imminent contact of a harmful or offensive nature.” Barker also confirmed that “imminence is a critical component of the tort of assault.”

In light of Barker, the Court saw no error in the motion judge’s appreciation of the scope of s. 16(1)(h.2)(i) of the Act or in her articulation or application of the elements of the tort of assault. The Court held that the motion judge’s articulation of the elements of assault is consistent with Barker. The motion judge had concluded that the appellant had not adduced evidence capable of demonstrating a genuine issue for trial concerning whether the respondent’s alleged conduct met the threshold of “an assault”. The Court noted that this conclusion was based on an assessment of the appellant’s evidence as lacking in particulars and being unpersuasive.  The appellant had relied on a police occurrence which the motion judge noted contained a comment that the appellant did not fear for her safety. The Court held that the facts of both Warman and Dunne are distinguishable. The Warman trial judge was satisfied based on the specific facts of that case that the plaintiff was “reasonably apprehensive of imminent physical contact”. The physical battering that preceded the conditional threat in Dunne and the victim’s knowledge of the appellant’s capabilities were specific circumstances creating support for the finding of an assault. The Court concluded that the appellant’s allegations and evidence did not rise to a similar level and thus, saw no basis to interfere with the motion judge’s findings and conclusions.

(3) No.

The Court noted that while the motion judge may not have referred to that section specifically in her reasons, her finding that the evidence proffered in support of that assertion “[lacked] particulars and [was not] persuasive” was fatal to the assertion that the appellant was prevented from discovering her claim because of her fears for the safety of herself and her family.

(4) No.

The Court rejected the appellant’s submission that the motion judge erred in failing to rely on her assertion on cross-examination that the respondent had threatened to harm her. Her statement was no more than a bald assertion. She provided no particulars of date, time or context. She also acknowledged that the record did not include additional particulars of any such threats.


Bimman v. Igor Ellyn Professional Corporation (Ellyn Law), 2022 ONCA 781

[Gillese, Huscroft and Sossin JJ.A.]

Counsel:

I. Ellyn, for the appellant

J. Levitt, for the respondent

Keywords: Contracts, Interpretation, Solicitor-Client Retainer Agreement, Solicitors Act, R.S.O. 1990, c. S.15., s. 16, s. 23, s. 24, English Attorneys’ and Solicitors’ Act 1870 (U.K.), 33 & 34 Vict., c. 28, ss. 8-9, The Conveyancing and Law of Property Act, 1886, S.O. 1886, c. 20, s. 23(4), Solicitors Remuneration Act 1881 (U.K.), 44 & 45 Vict., c. 44, s. 8(4), The Law Reform Act, 1909, S.O. 1909, c. 28, ss. 31-32, Moore v. John A. Annen Barrister Professional Corporation, 2017 ONSC 7720, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Raphael Partners v. Lam (2002), 61 O.R. (3d) 417 (C.A.)., Henricks-Hunter v. 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Jean Estate v. Wires Jolley LLP, 2009 ONCA 339, Re Stuart, Ex p. Cathcart, [1893] 2 Q.B. 201 (C.A.), Re Mendelson, Beatty & Wood and Iwan, [1969] 2 O.R. 393 (H.C.), Re Solicitor, [1972] 1 O.R. 694 (H.C.), Andrew Feldstein & Associates Professional Corporation v. Keramidopulos, 2007 CanLII 40202 (Ont. S.C.)

facts:

The appellant, Mr. E, and his former law firm, Ellyn Law LLP, were retained by the respondents to act on a complex shareholder dispute that ran between December 2012 and May 2017 (through the “Agreement”). Mr. B and several other Toronto investors were involved in a real estate project. The other investors diluted the respondents’ minority share and accused Mr. B of fraud. In response, the respondents commenced an action for oppression and damages.

When Mr. B approached Ellyn Law, the action had been ongoing for two years and the respondents had gone through two other lawyers. In addition to acting on the main litigation, the respondents retained Ellyn Law to assess the accounts of their most recent counsel, which was the subject of a separate retainer agreement.

Ellyn Law drafted the Agreement for the main litigation, which the parties signed on January 30, 2013. Paragraph 3 listed the matters covered by the Agreement. Paragraph 3(3) did not include any qualifications or exceptions. Mr. E’s evidence was that his overall goal for the Agreement was to assure the respondents that he would see the matter through to trial. In addition to a retainer fee, the Agreement set out a hybrid compensation structure. Paragraph 15 provided that, “[i]n no circumstance will the fees and disbursements be less than the costs recovered.” However, paragraph 16 imposed an overriding cap on fees at 30% of total recovery. Paragraph 17 of the Agreement dealt specifically with disbursements in the case of an appeal. There was no other reference to an appeal in the Agreement.

Following trial in 2014, the trial judge found that the respondents had been oppressed. Both parties filed appeals, which were dismissed. There was no separate retainer agreement prepared or agreed to for the appeal. The respondents’ recovery after the appeals included partial indemnity costs and post-judgment interest. Additional costs were awarded for legal fees, disbursements, and HST, while the balance was for the fees of expert witnesses. In January 2014, the respondents signed an irrevocable direction, providing that the proceeds of any settlement or judgment in the action would be paid to Ellyn Law in trust out of the funds held in court.

In May 2017, following these appeals, Mr. B informed Mr. E that he was withdrawing the irrevocable direction and asked that the funds in court be paid directly to him. Mr. E rejected these instructions as contrary to the previous direction and order of the trial judge, and, in reply, the respondents terminated the Agreement.

Mr. E realized he had both a duty to deal with the funds in accordance with the trial judgment and a potential conflict given his personal interest in how those funds were distributed. He retained Chitiz Pathak LLP to represent Ellyn Law. The dispute was resolved through a motion for directions before the trial judge, who directed that the funds under the judgment be paid to the appellant in trust.

The appellant rendered regular accounts to the respondents between January 2013 and January 2015. No further accounts were rendered until June 2017, after the respondents terminated the Agreement. In the June 2017 account, the appellant sought payment for fees all-in, which were greater than the 30% recovery cap, though still less than the actual docketed time on the file. Specifically, the appellant sought costs for the following: the argument needed to finalize the trial judgment; for negotiation of advance costs; for a motion in the appeal; for the cross-appeal; for arguing costs on the appeal; and for the services of Chitiz Pathak LLP (“the Chitiz disbursement”).

The respondents disagreed with these additional charges. They brought a motion under the Solicitors Act (the “Act”) to determine the effect of the Agreement on the fees claimed. The respondents asked the motion judge to find that the Agreement capped fees at 30%, that the five other accounts claimed by the appellant were subsumed by the Agreement, and that the Chitiz disbursement was not payable. They also sought an assessment of the fees charged by the appellant for assessing prior counsel’s account. The appellant argued that the 30% cap was unfair and unreasonable in the context of a difficult client, an excellent result in the litigation, and the many unforeseen activities that were required on the file.

The motion judge found that the Agreement was valid and enforceable, capping the appellant’s fees at 30%. He disallowed any further fees or disbursements except for the appellant’s assessment of prior counsel’s account, which was remitted to the assessment officer. He declined to order costs of the motion in the circumstances.

The motion judge noted that the regular rules of contract interpretation apply to a retainer agreement, subject to the requirement under s. 24 of the Act and the common law that the agreement be fair and reasonable. The motion judge reviewed the Agreement and affidavit evidence and found the appellant agreed to accept a retainer that was less than the amount reasonably needed to secure the firm’s fees. In exchange, the appellant negotiated a possible premium payment based on the quantum of damages recovered.

The motion judge found that paragraph 3(e) of the Agreement was drafted broadly and was not limited to litigation through the end of trial, given the Agreement’s reference to disbursements for an appeal. The parties must have understood that an appeal was likely and made provision for it. It was reasonably foreseeable at the time of the retainer that the respondents might appeal an eventual trial decision.

The motion judge also observed that the history of the litigation at the time the Agreement was signed, as well as the respondents’ request to assess prior counsel’s fees, would have reasonably raised the appellant’s concerns about the future collectability of his own account. The motion judge noted that he must look at fairness and reasonableness both at the time the Agreement was entered into and “at the end of the day.” He accepted that he had jurisdiction to refuse to enforce an agreement that worked an unfairness against a lawyer.

The motion judge observed that, as a general principle of interpreting fee agreements, a court will usually order an agreement enforced against the lawyer, but not always. He found the Agreement in this case was both fair and reasonable.

The motion judge found that all steps in the litigation were or ought to have been reasonably anticipated. The appellant, as drafter, could have included exceptions in the Agreement or required a separate retainer for an appeal. The fact that he did not do so was consistent with a finding that the parties knowingly and voluntarily remained under this arrangement throughout the litigation.

The motion judge noted that although the fees sought were likely reasonable on a purely quantum meruit basis, it was not unfair or unreasonable to hold a solicitor to a fee agreement in respect of specific matters that fell within its scope, that were reasonably foreseeable, and from which they could have protected themselves by drafting differently. A 30% recovery is common in contingency fee agreements, and if the hybrid nature of this arrangement made a difference to the economics, this should have been dealt with in the Agreement. Having concluded the Agreement was valid, the motion judge went on to find that all of the additional fees sought were expressly contemplated by, or reasonably part of, the broad language of paragraph 3(e). The only exception was the fees billed for assessing prior counsel’s bill, which were subject to a separate retainer agreement.

Finally, the motion judge reasoned that the Chitiz disbursement did not fall under the Agreement because it was related to a dispute between lawyer and client rather than to resolving the action. He concluded that the time to seek costs in that matter was during the motion before the trial judge. As no costs were awarded at that time, the appellant could not seek reimbursement after the fact.

issues:

(1) Did the motion judge err in finding that the retainer agreement was valid and enforceable under s. 24 of the Act?

(2) Did the motion judge err in finding that the additional fees claimed were covered by the retainer agreement or that the disbursement should not be allowed?

holding:

Appeal allowed in part. Order varied.

reasoning:

(1) No.

The parties agreed that s. 24 of the Act was to be interpreted according to the Court’s decision in Raphael Partners v. Lam (“Raphael”). Based on Raphael, the appellant argued that resolving a motion under s. 24 involved two discrete steps: (1) a decision-maker must consider whether the retainer agreement was fair, and (2) the decision-maker must determine whether the retainer agreement was reasonable in light of the outcome of the matter.

The Court distinguished Raphael from the current case. Raphael dealt with a client seeking to invalidate a contingency fee arrangement with his lawyer, whereas the current case is where a lawyer is seeking to invalidate a retainer agreement.

The Court clarified that nothing in the Act precludes a lawyer from bringing a motion for relief on the basis that a retainer agreement was unfair and/or unreasonable. Further, the Court clarified that s. 23 explicitly allowed for an application by a “party to the agreement”, including a lawyer. In its review of the policy context of s. 24 of the Act, the Court found that s. 24 must be interpreted and applied in light of its purpose of protecting clients from unfair and unreasonable retainer agreements.

S. 21 of the Act makes it clear that lawyers are not entitled to seek fees beyond what is expressly agreed to in an agreement with a client. When a fee agreement is challenged under s. 24 by the client, the lawyer bears the onus of satisfying the Court that the way in which the agreement was obtained was fair and that the terms of the agreement are reasonable. The Court explained that the fairness requirement of s. 24 is concerned with the circumstances surrounding the making of the agreement and whether the client fully understood and appreciated the nature of the agreement executed. The Court saw no reason as to why the onus would shift in a case where a lawyer seeks to invalidate a retainer agreement.

With respect to reasonableness of the Agreement, the Court clarified and contemplated the factors: (1) the time expended by the lawyer; (2) the legal complexity of the matter; (3) the results achieved; and (4) the risk assumed by the lawyer.

Although the motion judge did not expressly refer to the two-part framework from Raphael, the Court found the motion judge’s findings addressed the substantive inquiries required by that test. The motion judge also appropriately focused on the reasonable foreseeability of the steps that occurred in the litigation and the fact that the appellant could have revisited the Agreement when it became clear it was not favourable to him.

However, in the Court’s view, the Raphael framework should be modified in the rare case of a lawyer challenging their own retainer agreement under s. 24. In these circumstances, the Court found it should be presumed that retainer agreements are made fairly and that its terms are reasonable. The Court found that a lawyer seeking to challenge the validity of a retainer agreement will bear the burden of demonstrating some exceptional circumstance to rebut this assumption.

The Court found that there were no exceptional circumstances which would rebut the presumption of validity.

(2) Yes.

The Court found no basis to interfere with the motion judge’s findings in relation to whether the additional fees were covered by the Agreement. The Court, however, disagreed that the Chitiz disbursement fell outside of the Agreement and is not payable by the respondents.

The Court found that the motion judge erred in his interpretation and application of the Agreement by concluding that the Chitiz disbursement did not fall within paragraph 3(e) of the Agreement. The Court found that the appellant was both legally and professional obligated to ensure that the funds from the action were not paid out contrary to the trial judgement. The disbursement was reasonably necessary to fulfill this obligation.


Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779

[Gillese, Trotter and Harvison Young JJ.A.]

Counsel:

M.A. Church and S. Virdi, for the appellant UNIFOR Local 975

J. Craig and C. Fynney, for the respondents Ganeh Energy Services Ltd. and Beaver Energy Services Ltd.

R.J. Charney and S. Cass, for the respondent Enercare Home & Commercial Services Limited Partnership

A. Hart and A. Bowker, for the respondent Ontario Labour Relations Board

Keywords: Labour and Employment, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Subcontractors, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness,  Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Delios v. Canada (Attorney General), 2015 FCA 117, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

facts:

The respondent, Enercare Home & Commercial Services Limited Partnership (“Enercare”), and the appellant, UNIFOR Local 975 (“Unifor”), were in a collective bargaining relationship. Unifor asked the Ontario Labour Relations Board (the “Board”) to declare that Enercare, Ganeh Energy Services Ltd. (“Ganeh”), Beaver Energy Services Ltd. (“Beaver”), and Perras Mechanical Services Ltd. (“Perras”) (collectively “the respondents”) were related employers within the meaning of s. 1(4) of the Labour Relations Act (the “LRA”).

Enercare and Unifor entered into settlements and letters of understanding related to contracting out. In May 2006, a settlement clarified the scope of the bargaining rights of several unions, including Unifor’s predecessor. At that time, Unifor’s predecessor did not attempt to expand its bargaining rights to include Enercare’s independent contractors. In April 2010, Enercare and Unifor entered into Letter of Understanding (“LOU”) #3, which provided that Enercare “shall not sub-contract work that is presently being performed by employees covered by this agreement that would by so doing result in lay off of regular Bargaining Unit Employees”. LOU #2, which was also part of the collective agreement, provides that Enercare “is committed to successfully growing its competitive sales and services business with our own employees in our franchise area.”

Ganeh and Beaver are economically dependent on Enercare. Enercare contracts form 100% of Ganeh’s business and 95-98% of Beaver’s business. Between December 2011 and March 2012, Unifor brought applications to the Board for declarations that Enercare and its contractors Ganeh, Beaver, and Perras were “related employers” within the meaning of s. 1(4) of the LRA and, alternatively, that there had been a transfer of business within the meaning of s. 69. The Board declared, pursuant to s. 1(4), that respondents were related employers, but Perras was not (the “Board Decision”).

The Board stated the “well established” purpose of s. 1(4) is to prevent the erosion of a trade union’s bargaining rights. If that occurs, or if there is a reasonably foreseeable erosion of bargaining rights, the relief available pursuant to s. 1(4) is a related employer declaration. However, the purpose of s. 1(4) is not to extend a trade union’s bargaining rights. The Board then stated that four criteria must be met for a related employer declaration to be made: (1) there must be more than one entity involved; (2) the business activities of the entities must be associated or related; (3) the entities must be under common control or direction; and, (4) there must be a labour relations reason for granting the declaration.

The Board found that each criterion was met, and that Enercare had not divested fundamental control and direction over the work performed for it by Ganeh, Beaver and Perras. The evidence established that Enercare and those entities share common control and direction over the activities which they carry on as part of Enercare’s core business activities.

Having found that the s. 1(4) preconditions were met, the Board then considered whether there was a labour relations reason for issuing a related employer declaration. The Board found that Unifor’s bargaining rights were eroded or undermined by the diversion of what would normally be work performed by Unifor’s members to one of the respondents. Accordingly, Ganeh and Beaver were deemed to be related employers, however, Perras was not as the majority of its business was not with Enercare.

The Divisional Court concluded that the Board’s analysis leading to it declaring the respondents to be related employers was unreasonable because it failed to consider the parties’ bargaining history, the collective agreement, and the relevant LOUs addressing Enercare’s longstanding contracting out practices. It said that this unreasonable analysis led the Board to analyze other issues without regard for the proper context in which those issues arose.

The Divisional Court questioned the validity of the Board’s distinction between Ganeh/Beaver and Perras. It said the distinction was drawn on the basis that virtually all of Ganeh/Beaver’s business was with Enercare while only roughly 30% of Perras’ business was. It said that this distinction did not affect the bargaining relationship between Enercare and Unifor. It added that nothing prevented Ganeh/Beaver from performing other work and it was solely a management decision on their part to work almost exclusively for Enercare. After quashing the Board’s Decision, the Divisional Court remitted the matter to the Board for a fresh determination.

issues:

(1) Was the Board’s decision reasonable in light of the considerations from Vavilov?

(2) Did the Divisional Court err in finding that the Board was unreasonable because the Board did not consider the parties’ bargaining history, collective agreement and LOUs?

(3) Did the Divisional Court err in finding that the Board was unreasonable because the Board conflated Enercare’s contracting out generally with its contracting out specifically to Ganeh and Beaver?

(4) Did the Divisional Court err in finding that the Board was unreasonable because the Board treated Ganeh and Beaver’s economic dependence as a relevant factor?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The Court began its analysis with a review of the principles in Canada (Minister of Citizenship and Immigration) v. Vavilov (“Vavilov”) and their application to the decision of the Board.  As a preliminary issue, the Court held that the Divisional Court had correctly identified reasonableness as the proper standard of review.

The Court stated that two types of fundamental flaws can render an administrative decision unreasonable: 1) a failure of rationality internal to the reasoning process, and 2) where a decision is untenable, in some respect, in light of the relevant factual and legal constraints that bear on it.

The Court found that the Board’s reasoning was internally coherent, rational, and logical. The Court stated that, having found that the preconditions to the exercise of discretion under s. 1(4) were met, the Board chose to exercise its discretion and make the related employer declaration in respect of Enercare, Ganeh, and Beaver because Unifor’s bargaining rights were being eroded by the diversion of work that would normally be performed by Unifor’s members.  The Court agreed with the Board’s refusal to make a related employer declaration in respect of Perras because the evidence did not show that the relationship between Enercare and Perras had eroded Unifor’s bargaining unit. Accordingly, the Court considered the Board’s decision to have bore the hallmarks of reasonableness – justification, transparency, and intelligibility.

The Court also found the Board’s decision tenable in light of the relevant factual and legal constraints. The Court stated that, according to Vavilov, three factual constraints are pertinent on a reasonableness review: 1) the evidence before the decision maker and facts of which the decision maker may take notice; 2) the parties’ submissions; and 3) the potential impact on the individual to whom the decision applies. The Court stated that the Board had identified the evidence before it and the facts upon which it relied in making the related employer declarations. Further, it clearly set out the parties’ submissions, and explained that the impact of a s. 1(4) finding on the respondents was not an issue because those provisions are concerned with protecting bargaining rights and not their effect on the corporate entities involved. Accordingly, the Court held that the Board’s decision was factually tenable.

The Court stated that the relevant legal constraints include the governing statutory scheme, other relevant statutory and common law, the principles of statutory construction, and the past practices and decisions of the administrative body. The Court held that the issues with which the Board had to grapple, including the scope of bargaining rights, were squarely within the Board’s core jurisdiction and the confines of its enabling statute. Consequently, the Court saw nothing unreasonable about the Board’s Decision.

(2) Yes.

The Court found that the Divisional Court decision did not align with two core Vavilov directives. The Court found that the Divisional Court failed to determine if the Board’s decision bore the requisite level of intelligibility, transparency, and justification.  Instead, it considered the legislative history of s. 1(4) and the Board’s jurisprudence on it and came to its own determination of what was required for the Board to make a related employer declaration. The Court found that the Divisional Court had erred in imposing’s its view that it was necessary for the parties’ bargaining history, collective agreement, and other agreements respecting contracting out to be considered when determining whether the s. 1(4) preconditions to a declaration had been met. The Court concluded that the Divisional Court had erred when it “made its own yardstick and measured the Board Decision against it”.

The Court held that the Divisional Court also erred because, before deciding that the Board had unreasonably excluded considerations of the collective agreement and LOUs, the Divisional Court had failed to look at the Board’s reasons for so doing, determine if the Board’s approach accorded with the purposes and practical realities of s. 1(4), and was reasonable given the consequences and operational impact of the decision. Further, the Divisional Court’s review failed to reflect an appropriate degree of restraint rooted in an appreciation of the Board’s demonstrated expertise and lengthy experience in deciding s. 1(4) applications, a matter within its exclusive jurisdiction.

(3) Yes.

The Court held that the Divisional Court had erred in its conclusion that the Board erroneously conflated Enercare’s general practice of contracting out with contracting out work specifically to Ganeh and Beaver. The Court held that it was incorrect to say that the Board distinguished Perras from Ganeh/Beaver solely on the amount of Enercare work each performed. The Board made numerous critical factual findings that distinguished Ganeh/Beaver from Perras and had erred in ignoring these findings. The Court held that as the reviewing court, the Divisional Court was not to interfere with the Board’s factual findings and had to refrain from reweighing and reassessing the evidence considered by the Board, absent exceptional circumstances.

The Court also found that the Divisional Court’s conclusion overlooked the Board’s analysis on whether a s. 1(4) labour relations purpose would be served by making a related employer declaration in respect of Ganeh/Beaver and Perras. In this regard, the Court found that the Board again made critical factual findings that distinguished Ganeh/Beaver from Perras, which were subsequently disregarded by the Divisional Court.

(4) Yes.

The Court held that the Divisional Court did not find the Board Decision unreasonable because of its treatment of Ganeh and Beaver’s economic dependence on Enercare. Rather, the Divisional Court accepted that economic dependence could be a factor for consideration on a s. 1(4) application but viewed the Board’s use of that factor to be flawed because it failed to consider it within the context of the parties’ bargaining history, their collective agreement, and the relevant LOUs.

The Court found that Vavilov was clear in that the Divisional Court was not to interfere with the Board’s factual findings that underlaid its determination of common control or direction nor was the Divisional Court to reweigh or reassess the evidence the Board relied on for that determination “absent exceptional circumstances”. The Court held that instead of reviewing the reasonableness of the Board’s determination of common control or direction, the Divisional Court measured the Board’s determination against its view of the legislation and its analysis of the Board’s jurisprudence. In doing so, the Divisional Court effectively decided the issue of common control or direction de novo, something which the Court held Vavilov expressly prohibited.

The Court held that because the Divisional Court was conducting a reasonableness review of the Board Decision, it was to consider the Decision and the reasons for it, with respectful attention to the Board’s demonstrated expertise. The Divisional Court was to see if the Board Decision accorded with the purposes and practical realities of s. 1(4) and represented a reasonable approach given the consequences and operational impact of the decision. The Court stated that that approach was not limited to an assessment of the Board Decision as a whole. It was also the approach to be taken when considering individual components of the Board Decision, including its determination that the statutory condition of common direction or control had been met. Accordingly, on the Vavilov approach, the Court found that the Board reasonably determined that the third criterion of common direction or control had been satisfied.


Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780

[Gillese, Trotter and Harvison Young JJ.A.]

Counsel:

P. Cavalluzzo, S. Moreau, and A. Hanif, for the appellants Bricklayers, Masons Independent Union of Canada, Local 1, Labourers’ International Union of North America, Local 183 and Masonry Council of Unions Toronto and Vicinity

M.Z. Tufman and G.A.P. Tufman, for the respondent T.T.

A. Hart and A. Bowker, for the respondent Ontario Labour Relations Board

Keywords: Labour and Employment Law, Labour Relations, Unions, Collective Agreements, Collective Bargaining, Bargaining Rights, Related Employers, Administrative Law, Labour Relations Board, Standard of Review, Reasonableness, s. 1(4), s. 69, s. 133, Labour Relations Act, 1995,S.O. 1995, c. 1, Sched. A, ss. 1(4), 69, 133, Enercare Home & Commercial Services Limited Partnership v. UNIFOR Local 975, 2022 ONCA 779, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, Wasaga Trim Supply (2006) Inc., [2010] O.L.R.D. No. 1854, Re Blouin Drywall Contractors Ltd. and United Brotherhood of Carpenters and Joiners of America, Local 2486 (1975), 8 O.R. (2d) 103 (C.A.), leave to appeal to S.C.C. refused, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, D’Errico v. Canada (Attorney General), 2014 FCA 95, Canada (Attorney General) v. Zalys, 2020 FCA 81, Canadian Broadcasting Corporation v. Ferrier, 2019 ONCA 1025, leave to appeal to S.C.C. refused [2020] S.C.C.A. No. 59

facts:

TT, one of the respondents, is currently a sole proprietor operating as Tomasz Turkiewicz Custom Masonry Homes (“TTCMH”). TT was a principal and director of Brickpol Masonry Corporation (“Brickpol”). The appellants, Bricklayers, Masons Independent Union of Canada, Local 1 (“Local 1”), and the Labourers’ International Union of North America, Local 183 (“Local 183”), (together, the “Unions”) are construction trade unions within the meaning of ss. 1 and 129 of the Labour Relations Act (“LRA”). The Unions have a collective agreement with an employers’ group, the Masonry Contractors’ Association of Toronto Inc. (“MCAT”) known as the MCUTV Collective Agreement, which recognizes MCUTV as the exclusive bargaining agent for its employees engaged in construction work in the residential sector of the construction industry in certain geographical areas.  Local 1 and MCAT are also parties to another collective agreement, known as the “Local 1 Collective Agreement”. The terms and conditions of the Local 1 Collective Agreement are the same as those in the MCUTV Collective Agreement except for the sector of the construction industry and geographic areas to which the Local 1 Collective Agreement applies. Together, the MCUTV Collective Agreement and the Local 1 Collective Agreement are known as the Masonry Collective Agreements (“MCA”).

Brickpol was incorporated by TT in 2001 and signed voluntary recognition agreements (“VRAs”) with the Unions, binding Brickpol to the MCA. In 2004 and 2007, TT signed renewal agreements on behalf of Brickpol. In 2007, TT was injured in a car accident and, as a result, declared personal bankruptcy. In 2008, Brickpol notified the Unions that it was no longer performing work covered under the MCA and later voluntarily dissolved in 2010. In December 2011, TT was discharged from his personal bankruptcy. In May 2017, TT registered TTMCH as a sole proprietorship and began performing bricklaying/masonry work in North York. TT was no longer a union member and did not hire union members to perform the work.

The Unions filed two applications against both TTCMH and Brickpol with the Ontario Labour Relations Board (“OLRB”) relating to bricklaying work being done by TT pursuant to ss. 1, 69, and 126 of the LRA. The Unions alleged that TTCMH violated the MCA by failing to apply its terms to the work TTMHC was performing. The OLRB proceedings took place in three stages: (1) the s. 1(4) application (the “First Decision”); (2) the first part of the grievance, which dealt with whether TTCMH was bound to the then-current version of the MCA (the “Second Decision”); and (3) the second part of the grievance, which dealt with whether TTCMH had violated the MCA and, if so, the quantum of damages TTCMH was to pay to the Unions (the “Third Decision”).

In the First Decision, the OLRB declared that Brickpol and TTMHC are a single employer within the meaning of s.1(4) of the LRA as they were both carried out under the common control and direction of TT, served the same markets, and perform work for the same type of clients. The OLRB also concluded that the Unions collective bargaining rights under the MCA were being eroded by TT’s decision to recommence bricklaying and masonry work in the same market and for the same type of clients as Brickpol but on a non-union basis through TTCMH. Accordingly, the OLRB held that TTCMH was deemed to be a signatory to the VRAs entered into between Brickpol and the Unions.

In the Second Decision, the OLRB relied on the findings in the First Decision and concluded that TTCMH was bound by the MCA. Vice-Chair K viewed TT’s personal bankruptcy and the fact that TTCMH had no employees to be irrelevant to this conclusion.

In the Third Decision, the OLRB heard the grievance with respect to TTCMH’s bricklaying and masonry work in North York. TTCMH argued that collective agreements did not apply where a sole proprietor searches out work on his own behalf and performs it on his own. The OLRB disagreed, observing that the pre-cast work was “clearly bargaining unit work,” and allowed the grievance, concluding that TTCMH had violated the MCA. The OLRB awarded damages of $32,466 to the Unions.

TT then brought three judicial review applications to the Division Court for each of the OLRB Decisions. The Divisional Court granted the applications and quashed the OLRB Decisions. The Divisional Court held that although the OLRB’s finding in the First Decision, that Brickpol and TTCMH are a single employer was available and reasonable, the OLRB failed to find a valid labour relations purpose before making a related employer declaration. The Divisional Court observed that this was not a case of an employer repositioning its business to avoid labour relations obligations, but rather, the case was about a man whose life and business were largely destroyed due to injury who, many years later, tried to start again. The Divisional Court also noted that while it was “clear” that TT would meet the test of a “key individual”, the OLRB did not put its mind to the nature and reason for the hiatus, nor did it seem to place weight on the length of the hiatus, which, in practical terms, was a decade. Because the First Decision was unreasonable, it was quashed. Because the Second and Third Decisions were based on the First Decision, they too were quashed. The Divisional Court declined to remit the First Decision to the OLRB because the result that the declaration does not serve the purpose of s.1(4) of the LRA would be inevitable. The Divisional Court also stated that had it not quashed the Third Decision due to the First Decision being quashed, it would have quashed and remitted the Third Decision for reconsideration as the quantum of damages was harsh and unreasonable.

issues:

(1) Did the Divisional Court err in its application of Vavilov and the standard of review of reasonableness to the OLRB Decisions?

(2) Did the Divisional Court err in finding that the OLRB failed to consider whether a related employer declaration made pursuant to s. 1(4) of the LRAwould serve a labour relations purpose?

(3) Did the Divisional Court err in finding that the OLRB failed to properly address s. 126(3) of the LRAand consider the reasons for the hiatus?

(4) Did the Divisional Court err in making findings of fact not made by the OLRB?

(5) Did the Divisional Court err in finding that the damages award was punitive and unreasonable?

(6) Did the Divisional Court err in declining to remit the OLRB Decisions to the Board for a new hearing?

holding:

Appeal allowed.

reasoning:

(1) Yes.

The Court held that the Divisional Court erred by failing to follow the of Canada (Minister of Citizenship and Immigration) v. Vavilov (“Vavilov”) directives in its the application of the reasonableness standard to the OLRB Decisions. The Divisional Court did not show the requisite restraint and respect for the specialized expertise of the OLRB, nor did it afford the OLRB Decisions appropriate deference. It committed errors that Vavilov specifically cautioned against with respect to the proper application of the reasonableness standard.

As set out in Vavilov, a court conducting a reasonableness review must focus on the decision actually made by the decision maker and, where reasons have been given, examine the reasons with respectful attention, seeking to understand the reasoning process the decision maker used to arrive at its conclusion. Two types of fundamental flaws can render a decision unreasonable: (1) a failure of rationality internal to the reasoning process; and (2) the decision is untenable in light of the relevant factual and legal constraints that bear on it. The Court reviewed the OLRB Decisions according to the Vavilov directives and found, under the first directive, that the OLRB Decisions were rational and logical as each decision was based on reasoning that was rational and logical. Under the second directive, the Court found that the OLRB Decisions were tenable in light of the relevant factual and legal constraints. A consideration of the relevant factual constraints reinforced the reasonableness of the OLRB Decisions and a consideration of the relevant legal constraints showed nothing untenable about the OLRB Decisions and offered no basis for judicial intervention.

(2) Yes.

The Court held that the Divisional Court erred in its application of the reasonableness standard of review in concluding that the OLRB had “failed to analyze whether a related employer declaration would serve a labour relations purpose as it was required to do.” In the First Decision, the OLRB found that the Unions’ bargaining rights were being eroded because TTCMH was performing bargaining unit work on a non-union basis. Although the OLRB did not use the phrase “labour relations purpose”, it is clear that it chose to exercise its discretion to grant the related employer declaration for that labour relations purpose. The labour relations purpose, as found by the Board, falls squarely within the Divisional Court’s statement that a labour relations purpose includes the preservation or protection from artificial erosion of a union’s bargaining rights.

The Court further stated that it was not open to the Divisional Court to substitute its own view of what constitutes a labour relations purpose. Section 1(4) gives the OLRB the discretion to make a related employer declaration when the statutory preconditions are met. The Divisional Court should have shown appropriate deference to the OLRB’s specialized expertise and jurisprudence on the issues before it. In finding the First Decision to be unreasonable, the Court held that the Divisional Court failed to adhere to the foundational principle underlying a reasonableness review: intervene in administrative matters only if it is truly necessary to safeguard the legality, rationality, and fairness of the administrative process.

(3) Yes.

The Court found that the Divisional Court erred by criticizing the OLRB’s treatment of s. 126(3) of the LRA by failing to consider whether the nature, length, and reasoning behind TT’s hiatus would not lead to a related employer declaration. The Court held that these criticisms reflect an erroneous application of the reasonableness standard of review. Further, the Court found that the OLRB was not required to consider the reasons for the hiatus and that the only factor that s. 126(3) requires the OLRB to consider is the length of the hiatus, which it did. OLRB jurisprudence affirms that there is no requirement for anti-union motivations to exist for a s. 1(4) declaration to be issued. The Court concluded that the Divisional Court erred by imposing an additional factor on the OLRB that is not grounded in the LRA or the jurisprudence.

(4) Yes.

The Court held that the Divisional Court improperly made factual findings that the OLRB did not make in the First Decision concerning TT’s injury, ability to work, and the impact of his circumstances. Vavilov affirmed that reviewing courts must not interfere with a tribunal’s factual findings absent exceptional circumstances, and should refrain from reweighing and reassessing the evidence considered by the decision maker. The Court concluded that there were no exceptional circumstances justifying the Divisional Court’s departure from the general prohibition against reassessing evidence. Accordingly, the Court held that the Divisional Court erred in making those findings and relying on them to conclude that the OLRB Decisions were unreasonable.

(5) Yes.

The Court found that the Divisional Court erred in its assessment of the reasonableness of the OLRB’s damages award by failing to refer to Blouin Drywall or explain why it concluded that the damages award was harsh and unreasonable. The Court noted that there was no basis for the Divisional Court’s determination that the damages award was unreasonable.

(6) Yes.

The Court held that Vavilov instructs reviewing courts that where a decision is unreasonable it is most often appropriate to remit the matter to the decision maker. In refusing the remit the matter, the Divisional Court erred because the high threshold for refusing to remit was not met. The Court determined that a reviewing court may only render a decision in exceptional circumstances and further concluded that there no exceptional circumstances to justify the Divisional Court from departing from this general principle.


McDonald v. Toronto-Dominion Bank , 2022 ONCA 788

[Fairburn A.C.J.O., Sossin and Favreau JJ.A.]

Counsel:

L. Caylor, M. M. Ward, N. J. Shaheen, A. C. Payne, S. P. Tolani and T. Feore, for the appellants

G. R. Hall, J. Sirivar, C. Wadsworth, A. Bond, E. Chesney and J. Klugsberg, for the respondent

Keywords: Torts, Duty of Care, Standard of Care, Negligence, Novel Duty of Care, Proximity, Foreseeability, Established Categories, Rules of Civil Procedure, rr. 1.04(1), 53.07, Anns v. London Borough of Merton, [1977] 2 All E.R. 492 (H.L); Cooper v. Hobart, 2001 SCC 79, Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, 1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35, Toronto Dominion Bank v. 1633092 Ontario Ltd., 2019 ONSC 1473, Dr. Robert Grossman v. The Toronto-Dominion Bank, 2014 ONSC 3578, Toronto Dominion Bank v. Whitford, 2020 ABQB 802, Lee v. Canadian Imperial Bank of Commerce, 2001 CarswellOnt 3019 (S.C.), Good Mechanical v. Canadian Imperial Bank of Commerce (2005), 49 C.L.R. (3d) 183 (Ont. S.C.), Don Bodkin Ltd. v. Toronto Dominion Bank (1993), 14 O.R. (3d) 571 (Gen Div.), aff’d (1998) 40 O.R. (3d) 262 (C.A.), Oak Incentives Group Inc. v. Toronto Dominion Bank, 2011 ONSC 3245, aff’d 2012 ONCA 726, Groves-Raffin Construction Ltd. v. Canadian Imperial Bank of Commerce (1975), 64 D.L.R. (3d) 78 (B.C.C.A.), Rausch v. Pickering City, 2013 ONCA 740, R. v. Sheppard, 2002 SCC 26, R. v. M. (R.E.), 2008 SCC 51, Granitile Inc. v. Canada (1998), 41 C.L.R. (2d) 115 (Ont. Gen. Div.), Peter Sankoff, Law of Witnesses and Evidence in Canada

facts:

RS is serving a 110-year sentence for perpetrating the second largest Ponzi scheme in history. He and three others used Stanford International Bank Ltd. (“SIB”) as a vehicle to defraud the bank’s customers of over 7 billiondollars. SIB was an offshore bank solely owned by RS. In the early 1990’s, the bank was migrated to Antigua and Barbuda (“Antigua”) and was renamed SIB.

The Toronto Dominion Bank (“TD”) acted as SIB’s primary U.S. dollar correspondent bank from 1991 until SIB’s collapse in 2009. As a correspondent bank, TD was responsible for receiving funds from and disbursing funds to purchasers of SIB’s certificates of deposit.

RS and JD (SIB’s Vice-President/Controller) led customers to believe that SIB earned consistently high investment returns, which allowed it to pay guaranteed high returns and fund all redemption requests. To do this, they reported misleading investment types and invented fictitious investment balances

Using a classic Ponzi setup, RS and JD misappropriated money from SIB’s assets, leaving redemption requests from old customers to be paid by the incoming funds from new customers. In large measure, the scheme went undetected because of the structure of SIB’s investment portfolio, which RS divided into three tiers. While the first two tiers were legitimate and known by everyone, there was a secret third tier that consisted of illiquid and risky investments. Only RS, JD and two others (officers of other Stanford Group companies) knew about the third tier. Ultimately, the third tier contained at least 2 billion USD of personal loans to RS.

While there was a risk that SIB’s auditor or the Financial Services Regulatory Commission in Antigua would uncover the scheme, RS took care of that risk by bribing the SIB auditor and the chair of the regulator. These bribes resulted in the auditor providing yearly, unqualified opinions about SIB’s financial health and the regulator turning a blind eye instead of undertaking its normal review and audit function.

The Ponzi scheme continued undetected until the financial crisis in 2008. At the time of its collapse, only approximately $678 million USD in identifiable or traceable assets remained in SIB, a small fraction of the $7.4 billion USD owed to its customers. The Securities Exchange Commission (“SEC”) filed charges against RS, JD and the other two perpetrators alleging a massive fraud. All four received prison sentences. SIB was placed into liquidation. Ultimately, the Joint Liquidators were appointed to replace the original receiver-managers.

The Joint Liquidators commenced an action on behalf of SIB against TD, claiming: (1) it was liable to SIB for knowing assistance in breach of fiduciary duty; and (2) it was negligent in the provision of services. The Joint Liquidators’ action was dismissed. As for the knowing assistance claim, the trial judge found that TD had no actual knowledge of the fraud and was not reckless or wilfully blind. The trial judge found that the negligence claim could not succeed because the Joint Liquidators had failed to establish the “required proximity to give rise to the novel duty of care proposed in this case.” In the alternative, the trial judge concluded that even if there was a duty of care, the Joint Liquidators had failed to prove a breach of the standard of care.

The Joint Liquidators appealed only from the dismissal of the negligence claim. They submitted that the trial judge erred in both the duty of care and standard of care analysis. They also contended that the trial judge erred in permitting an unfair trial process by making a flawed procedural ruling.

issues:

(1) Did the trial judge err in her duty of care analysis?

a. Did the trial judge err in finding that the relationship between TD and SIB did not fall within an established or analogous category of proximity and so a full proximity analysis was required?

b. Did the trial judge err in conducting her full proximity analysis?

(2) Did the trial judge make legal or factual errors in concluding that, if there were a duty of care, there would have been no breach of the standard of care?

a. Did the trial judge err by suggesting that TD had to have subjective knowledge of the fraudulent scheme to fall below the standard of care?

b. Did the trial judge err in her treatment of evidence with respect to the 1999 FinCEN Advisory and the 2002 Philadelphia Inquirer article?

c. Did the trial judge err in uniformly accepting TD’s expert opinion evidence?

d. Were the trial judge’s reasons inadequate?

(3) Did the trial judge err in interpreting and applying r. 53.07 of the Rules of Civil Procedure, resulting in trial unfairness?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Joint Liquidators submitted the trial judge erred by failing to find that the relationship between TD and SIB fell within an established or analogous category of proximity. And, alternatively, if a full proximity analysis was required, she erred in concluding that the required proximity between the parties had not been established. According to the Joint Liquidators, the trial judge went off course in her proximity analysis by finding that sufficient proximity could only exist if TD had subjective knowledge of the fraudulent scheme and by incorrectly defining the duty of care. The Court found no error in the trial judge’s application of the test.

a. No.

The Court reviewed the governing case law and stated that under the Anns/Cooper framework, establishing a duty of care requires a two-step analysis. At the first stage, the Court asks whether the defendant owes the plaintiff a prima facie duty of care by considering proximity and foreseeability: Cooper v. Hobart; Deloitte & Touche v. Livent Inc. (Receiver of); 1688782 Ontario Inc. v. Maple Leaf Foods Inc. If a prima facie duty is established, the analysis moves to the second stage where the question is whether there are residual policy considerations that may negate the imposition of a duty of care: Livent.

According to Livent, where it is alleged that there was negligent performance of a service, it is more useful to consider proximity before foreseeability, because whether an injury is reasonably foreseeable will depend upon the scope of the relationship of proximity. At the proximity stage of the analysis, the overarching question is whether the parties are in “‘such a close and direct’ relationship that it would be ‘just and fair having regard to that relationship to impose a duty of care in law’”: Livent, Cooper; and Maple Leaf. In cases of pure economic loss arising from negligent performance of services, two factors are determinative in the proximity analysis: the defendant’s undertaking and the plaintiff’s reliance: Livent; Maple Leaf.

The Court found the trial judge correctly concluded that the relationship between TD and SIB did not fall within an established or analogous category of proximity. The Court found the trial judge correctly recognized that the mere fact that proximity has been recognized as existing in a bank-customer relationship for one purpose is insufficient to conclude that proximity exists between the same parties for all purposes. She detailed prior cases in which banks had been found to owe duties to customers with respect to the opening and ongoing operation of bank accounts and explained why they were distinguishable. She found that the Joint Liquidators were seeking to impose a novel duty of care and so a full proximity analysis was required.

The Joint Liquidators took issue with the trial judge’s conclusion that the proximate relationship in this case was novel, and her discussion of proximity in of a duty “to protect the bank’s customer terms from insider abuse”, which they said amounts to conflating duty and standard of care. In their submission, the relationship between TD and SIB is at the very least analogous to prior cases recognizing a proximate relationship between a bank and its customer: Toronto Dominion Bank v. 1633092 Ontario Ltd.; Dr. Robert Grossman v. The Toronto-Dominion Bank; Toronto Dominion Bank v. Whitford.

The Court disagreed that the fact that banks have been found to owe duties to their customers was an all-encompassing category of proximity between banks and their customers in relation to “banking services”. This broad characterization was at odds with the Supreme Court’s admonition in Livent and Maple Leaf to look beyond the mere identity of the parties. To accept such a broad category would be to ignore that banks undertake an extremely broad range of activities for very different purposes: cashing cheques, transferring funds, offering bank accounts, issuing credit cards, underwriting mortgages and a host of other “banking services”. Therefore, to define the relationship of proximity as simply that of a “bank-customer” relationship is to ignore the reality that banks and their customers are not engaged in a one-size-fits-all relationship.

The Court agreed with the trial judge that this case was unlike prior cases where banks have been held to owe duties to their customers in carrying out a range of different activities for different purposes, for example, securing loans (1633092 Ontario Ltd.), executing bank drafts (Good Mechanical), responding to customer inquiries (Oak Incentives), following customer instructions (Don Bodkin) and cashing cheques (Dr. Robert Grossman). The Court found that none of these cases established that a bank has a proximate relationship with a client that extended to monitoring the client for the purpose of detecting internal fraud. The Court determined that this case was different than prior authorities that suggested that a bank may be liable to a customer where the bank failed to question suspicious banking transactions since there were no allegations of suspicious banking transactions in this case.

b. No.

The Court found the trial judge did not err in concluding that the Joint Liquidators failed to establish the required proximity. Given the nature of the bank’s undertaking, the trial judge concluded that there was no “basis for SIB to reasonably rely on TD Bank to protect it from insider abuse”. Given the mismatch between the undertaking and reliance, the trial judge concluded that the Joint Liquidators had not established “the required proximity to give rise to the novel duty of care proposed in this case”. To hold otherwise would expand TD’s responsibilities well beyond what it undertook as a correspondent bank. It agreed to provide correspondent banking services; it did not, in the words of the trial judge, “assume the role of a regulator, auditor or insurer.”

The Court found the trial judge’s analysis was consistent with Livent and Maple Leaf, which recognized that a plaintiff’s entitlement to rely on the defendant “operates only so far as the [defendant’s] undertaking goes”: Maple Leaf; Livent. In other words, reliance by the plaintiff that “falls outside of the scope of the defendant’s undertaking of responsibility – that is, of the purpose for which the representation was made or the service was undertaken – necessarily falls outside the scope of the proximate relationship and, therefore, of the defendant’s duty of care”: Livent, at para. 31; Maple Leaf, at para. 35. It was simply not believable that SIB detrimentally relied on TD to effectively protect SIB from itself.  Monitoring SIB’s internal operations so as to protect SIB from internal abuse fell well outside the scope of the proximate relationship and therefore outside TD’s duty of care.

The Joint Liquidators contended that the trial judge’s proximity analysis was flawed for two main reasons. First, they contended that the trial judge erred in finding that sufficient proximity to give rise to a duty of care could only exist if TD had subjective knowledge of the fraudulent scheme. In support of this submission, the Joint Liquidators pointed to the trial judge’s comment about the need for “clear indicia to put the bank on notice”. According to the Joint Liquidators, the only plausible interpretation that can be given to the impugned comments about “clear indicia” to put the bank on notice is that the trial judge erroneously required TD to be subjectively aware, or at least reckless or wilfully blind, to the fraudulent scheme before proximity could be made out.

In the Court’s view, the impugned passages need to be read in context. The trial judge found as a matter of fact that there were no clear indicia to put the bank on notice. She concluded that this was an “elaborate, highly sophisticated, and tightly concealed fraud”, there was no indication that internal abuse was occurring at SIB, and there were “no transactional or operational matters that raised” suspicion. The court understood the trial judge to be saying that a different factual scenario could lead to a different analysis and, therefore, a different conclusion. There was no basis to suggest that the trial judge erred by making this observation.

Second, the Joint Liquidators submitted that the trial judge conflated duty and standard of care by basing her full proximity analysis on the content of the duty of care (i.e., the standard of care). The Court rejected this argument for the same reasons they rejected the subjective knowledge argument.

(2) No.

The Joint Liquidators contended that the trial judge made at least four legal and factual errors in how she approached the standard of care, including that she erred in: (1) injecting a subjective element into her standard of care analysis; (2) disregarding the evidence of Mr. Cullen and Mr. Doyle; (3) uniformly accepting Ms. Joyce’s evidence; and (4) providing inadequate reasons.

a. No.

According to the Joint Liquidators, the trial judge’s view that the duty of care rested on TD’s subjective knowledge of the fraud led her to erroneously believe that the standard of a reasonable banker also depended upon subjective knowledge of the fraudulent scheme. The Court rejected the assertion that the trial judge injected a subjective element into the standard of care analysis for two reasons.

The Court held that, first, the Joint Liquidators’ point of departure on this alleged error has already been rejected: the trial judge did not erroneously inject a subjective knowledge standard into the duty of care analysis. Second, the Joint Liquidators’ argument was predicated on an assumption that is not borne out by the reasons. Their argument proceeded on the assumption that the trial judge must have asked herself whether TD had reason to suspect that RS was perpetrating a fraud. However, nowhere in her reasons did the trial judge say this. To the contrary, she assessed the evidence, including the expert evidence as to what a reasonable bank ought to have done, made findings of fact, and ultimately concluded that TD, in its capacity as a correspondent bank, acted reasonably in the circumstances.

b. No.

The Joint Liquidators took issue with the trial judge’s treatment of evidence related to a 1999 advisory directed at U.S. banks and a 2002 newspaper article mentioning RS. The advisory was issued by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in April of 1999 and was withdrawn just over two years later in August 2001. The Advisory advised U.S. banks to give enhanced scrutiny to all financial transactions routed into or out of Antigua.

The newspaper article was published in the Philadelphia Inquirer on August 28, 2002. It was titled “Offshore banker is Torricelli key donor” and focussed on Mr. Torricelli, a U.S. politician, and referred to contributions that RS had made to a defence fund for legal proceedings in which Mr. Torricelli was involved. The article stated that three years before, RS had become embroiled in a bitter dispute with U.S. authorities who said he was using his financial and political clout to subvert banking laws in Antigua. The article noted that RS’s name was never mentioned in the Advisory, but that U.S. officials confirmed that there were referring to RS.

The Joint Liquidators submitted that the trial judge erred in disregarding Mr. C’s evidence related to the FinCEN Advisory and Mr. D’s evidence related to the Philadelphia Inquirer article on the basis that they testified with “hindsight knowledge” that RS was a fraudster. They also submitted that the trial judge made palpable and overriding errors in failing to find that a reasonable bank would have obtained and investigated the FinCEN Advisory. The Joint Liquidators submitted that there was no basis for the trial judge to reject Mr. C’s evidence about the FinCEN Advisory. They suggested that the trial judge effectively singled out Mr. C (and Mr. D) by taking issue with their hindsight knowledge and ignoring that every expert witness testifies at trial with hindsight knowledge.

The Court rejected these submissions holding that it was entirely open to the trial judge to reject Mr. C’s evidence and she did so in a clear and reasoned manner. Not only was it open to the trial judge to reject Mr. C’s hindsight view as to what he might have done had he received the FinCEN Advisory based upon the multiple “contingencies” built into his answers, but it was also open to the trial judge to resolve the expert evidence on the FinCEN point and the Court found that is exactly what she did.

The trial judge accepted Ms. J’s evidence over other experts. She concluded that the Joint Liquidators had not proven on a balance of probabilities that TD fell below the standard of care with respect to the FinCEN Advisor. The Court found it was open to her to make these findings. She gave reasons for doing so and the Court saw no error of law or fact as it related to that reasoned conclusion.

The trial judge rejected Mr. D’s evidence as to what he would have done had he known about the Philadelphia Inquirer article in 2003. The trial judge accepted Ms. J’s evidence over other experts. In her view, the article contained “rumours”, “gossip” and four-year-old information, and it related to the FinCEN Advisory that had long been withdrawn. Ms. J’s point, was that in light of the content of the article, sending it to AML Group was nothing more than an option. The trial judge accepted this evidence and concluded that there was no breach of the standard of care. The Court found it was open to the trial judge to come to the factual conclusions she did, all of which informed her ultimate conclusions relating to the standard of care.

c. No.

The Joint Liquidators argued that the trial judge made two related errors in uniformly accepting TD’s expert opinion evidence given by Ms. J. The Court found there was no merit to these claims. The Court noted that there were no objections to Ms. J’s evidence at trial, which is evidence that Ms. J stayed within the appropriate bounds of her expert opinion. The Court also found that trial judge did not cross the line. She did what she was called upon to do: determine the facts.

d. No.

The Court found there was no basis to suggest that the reasons on any of the issues in the case, including the standard of care, were inadequate. Trial judges have an obligation to provide reasons. Reasons provide a level of accountability for all judicial decisions. They serve to justify the result, explain how the result was achieved, tell the party that lost why they lost, allow for informed consideration as to whether an appeal should be taken, and allow for effective appellate review: R. v. Sheppard; R. v. M. (R.E.).

The Court found the reasons achieved all of these purposes. The trial judge meaningfully grappled with the extensive evidentiary record and positions of the parties, and she thoroughly explained how she reached her findings that informed her conclusion. While the Joint Liquidators took objection to the reasoning, there was no basis to find that the reasons lacked or did not permit meaningful appellate review.

(3) No.

The Joint Liquidators said that the trial judge’s second ruling contradicted her earlier ruling under r. 53.07 (i.e., calling an adverse party as witness) (the “First Ruling”) and that her second ruling was based on an incorrect interpretation of r. 53.07 (the “Second Ruling”). The Joint Liquidators submitted that this resulted in an unfair trial process. The Court did not accept that the trial judge’s second ruling was incorrect or that it resulted in trial unfairness.

In the First Ruling, TD was opposed to the Joint Liquidators cross-examining any former employees. It argued that r. 53.07 only applies to current employees and so if the Joint Liquidators wished to examine former employees as witnesses at trial, they were required to summon and examine those witnesses in chief. The trial judge rejected TD’s position. She found that the rule applied to former employees. She concluded that it was in the interests of justice to permit the Joint Liquidators to cross-examine the witnesses pursuant to r. 53.07 and to allow TD to re-examine them.

Once the Joint Liquidators closed their case, TD sought to recall three of the witnesses (the “Recall Witnesses”) who had already testified pursuant to the first procedural ruling. The Joint Liquidators opposed this and maintained that the trial judge’s first procedural ruling precluded this approach and that permitting the Recall Witnesses to testify again would “eviscerate the effect of Rule 53.07” and “result in irreparable prejudice” to the Joint Liquidators.

The trial judge concluded there was “nothing” in r. 53.07 that “states that an adverse party who does not give an undertaking to call a witness forfeits the right to call that witness” after that witness’ initial testimony. The trial judge decided that she would not resolve “all theoretical abuses of the rule” and tailored her ruling to provide a just outcome. That outcome was to allow the recall of the witnesses while at the same time directing TD not to duplicate evidence that the Recall Witnesses had previously given. This arrangement, she concluded, would mitigate any prejudice arising from the recall and allow the court to have a complete evidentiary record.

The Joint Liquidators submitted that the trial judge’s Second Ruling “eviscerated both her first procedural ruling… on which the Joint Liquidators’ trial strategy was based, and rule 53.07. The Court rejected this ground of appeal for 5 reasons.

1) The Court held there was nothing in the wording of r. 53.07 that precluded a party from recalling a witness after refusing to undertake to call that witness in the first place. And, notably, r. 53.01(3) provides that “[t]he trial judge may at any time direct that a witness be recalled for further examination.”

2) The Court noted that pursuant to r. 1.04(1), r. 53.07 is to be construed liberally in order to secure “the just, most expeditious and least expensive determination” of every proceeding based on its merits.

3) The Court found that the Second Ruling did not render r. 53.07 “effectively meaningless”. The Joint Liquidators submission ignored the purpose of the rule: it permitted a plaintiff to call as a witness a person opposed in interest but whose evidence is critical to the plaintiff’s case without being limited to direct examination, which is unlikely to be an effective way to prove a party’s case in the circumstances: Peter Sankoff, Law of Witnesses and Evidence in Canada; Granitile Inc. v. Canada. The rule fulfilled its clear purpose: it allowed the Joint Liquidators to elicit evidence through cross-examination from adverse witnesses in building their case.

4) The Court concluded that the trial judge’s interpretation prevented strategic behaviour that could deprive the finder of fact of relevant evidence.

5) The Court held that the trial judge’s two procedural rulings were reconcilable. The trial judge tailored her ruling to limit the examination of the Recall Witnesses to areas not previously covered in their testimony. She also provided the Joint Liquidators with the right to exercise full cross-examination and to call reply evidence should they choose to do so. They exercised the first right and chose not to exercise the second.

The Court concluded there was nothing unfair or prejudicial about this procedure.


Amelin Engineering Ltd. v. Blower Engineering Inc., 2022 ONCA 785

[Fairburn A.C.J.O., Huscroft and George JJ.A.]

Counsel:

M. Diskin, T. Dumigan, and D. Gibbs, for the appellants

J. F. Lancaster and R. Laurion, for the respondents

Keywords: Limitations, Statute Barred, Discoverability, Ameliorating Loss, Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, s.5(1), Limitations Act, R.S.O. 1990, c. L.15, s.45(1)(g), St. Jean (Litigation Guardian of) v. Cheung, 2008 ONCA 815, Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005, Brown v. Baum, 2016 ONCA 325, Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44, Ferrara v. Lorenzetti Wolfe Barristers and Solicitors, 2012 ONCA 851, Crombie Property Holdings Ltd. v. McColl-Frontenac Inc. (Texaco Canada Ltd.), 2017 ONCA 16

facts:

The appellants purchased steam generators from the respondents over a period of several years, commencing in 1995. The appellant, the founder and president of Amelin Engineering Ltd., entered into an agency relationship with the respondents in 1995 pursuant to which the appellant would sell generators designed and manufactured by the respondents for a five-year period. This agreement was subsequently extended for an additional five years. Different generators were purchased on various dates.

Repairs to the generators were made over several years, sometimes by the appellants and other times by the respondents. The trial judge noted that the appellants pleaded that they immediately encountered a number of difficulties and technical deficiencies with the generators, including critical components of the generators disintegrating within just a few days of operation and generators producing unacceptably high levels of CO and NO/NOx, and not operating at their rated maximum output.

In April 2003, the appellants retained an independent firm, Bell Combustion, to carry out tests on a generator manufactured by the respondents at one of the respondents’ facilities. Bell Combustion delivered its report on April 16, 2003 (the “Bell Report”), following which the appellants sent a letter to the respondents outlining their difficulties with the generators. The respondents demanded outstanding payments on November 26, 2003 and terminated the agreements with the appellants by letter dated January 12, 2004.

The appellants’ statement of claim for negligent misrepresentation was not issued until April 3, 2009, just under six years after receipt of the Bell Report. The respondents issued a counterclaim on July 29, 2009, seeking a set-off for unpaid invoices.

The trial judge dismissed the action and the counterclaim following a 13-day trial. She found that the appellants’ claim was statute barred and, in any event, could not succeed. The counterclaim was dismissed on the basis that there was no evidence as to when the debts were due.

issue:

Did the motion judge err in concluding that the claim is statute barred?

holding:

Appeal dismissed.

reasoning:

No.

The Court cited its decision in Sosnowski v. MacEwen Petroleum Inc. to reason that it may be appropriate to delay the start of a limitation period if a plaintiff is relying on a defendant’s superior knowledge and expertise, especially where the defendant was taking steps to ameliorate a loss. That was the case, for example, in Brown v. Baum, in which the court concluded that delay in suing a doctor who was taking steps to ameliorate problems arising out of a patient’s surgery was reasonable.

The Court further held that the rationale for delaying the discovery of a claim is that ameliorative efforts may reduce or eliminate a plaintiff’s damages and render litigation unnecessary. However, the Court held that discovery cannot be delayed indefinitely. To do so would undermine the rationale for limitation periods. S. 5(1)(b) of the Limitations Act, 2002 establishes a “modified objective” test that requires consideration of what a reasonable person with the abilities and in the circumstances of the claimant ought to have known.

In applying this test, the Court held that this case was concerned with the purchase of multiple generators over a period of several years. According to the appellants, the report made April 16, 2003, was the earliest possible date their claim became discoverable, and they had six years from that date to bring their claim. The appellants claimed that the respondents assured the appellants that the generators could operate as represented. The respondents undertook various ameliorative efforts from 1998-2003. When the problems were not resolved, the appellants commissioned an independent third party to conduct an emissions test which established the generators were inherently flawed.

The trial judge found that the appellants knew or ought to have known of their potential claim as early as 1998 and, in any event, by November 2002 or January 2003. She found that the appellants knew that the generators purchased in 1997 could not operate at their rated maximum output and were aware of this throughout their dealings with the respondent. Further, the appellants were aware of high CO, NO/NOx emissions by late 2002. The Court agreed with the trial judge’s finding that the appellants did not require an independent report to know that they had suffered damage or injury.

The Court noted that this was a case involving two professional engineers. The appellant had acknowledged his extensive experience in the thermal generation industry. The respondent’s president presumably had greater knowledge, having invented the machines in question, but the appellant was capable of making his own judgment and in all the circumstances should have done so well before the Bell Report was received. Ameliorative efforts had been ongoing for several years prior to the decision to commission the Bell Report. The Court held that it was not necessary to commission an expert report to confirm what the appellants ought reasonably to have known.

The Court concluded that the appellants’ decision to not bring their claim until April 3, 2009 was not reasonable in all the circumstances and held that the trial judge did not err in concluding that the claim was statute barred.


Greta Energy Inc. v. Pembina Pipeline Corporation , 2022 ONCA 783

[Gillese, Huscroft and Sossin JJ.A.]

Counsel:

B. van Niejenhuis and S. Luk, for the appellants Greta Energy Inc. and Great Grand Valley 2 Limited Partnership

M.A. Gelowitz and S. Hay, for the respondent Pembina Pipeline Corporation

R.S.M. Woods and R. Torrance, for the respondent BluEarth Renewables Inc.

J.H. Nasseri and A. Bourassa, for the intervener Ontario Petroleum Institute

Keywords: Contract Law, Securities Law, Purchase and Sale, Right of First Refusal, Good Faith, Duty of Honest Performance, Torts, Inducement of Breach of Contract, Conspiracy, GATX Corp. v. Hawker Siddeley Canada Inc. (1996), 27 B.L.R. (2d) 251 (Ont. C.J.), C.M. Callow Inc. v. Zollinger, 2020 SCC 45, Correia v. Canac Kitchen, 2008 ONCA 506

facts:

The respondent, Pembina Pipeline Corp. (formerly and at all material times, “Veresen”), owned three wind farms: 1) Grand Valley 1 (“GV1”), 2) Grand Valley 2 (“GV2”), and 3) St. Columban. The other respondent, BluEarth Renewables Inc. (“BluEarth”), was interested in purchasing the three wind farms. However, the appellants, Greta Energy Inc. (“Greta”) and Great Grand Valley 2 Limited Partnership (“GGVLP”), held a right of first refusal (“ROFR”) on GV1 and GV2.

In August 2016, Veresen announced its intention to sell the wind farms. Veresen preferred an en bloc sale of its interest in the three wind farms. BluEarth submitted a bid on January 13, 2017. The bid was successful, which resulted in a signed Purchase and Sale Agreement on February 18, 2017. ROFR notices were sent to the appellants on February 23, 2017. Greta ultimately informed Veresen on March 14, 2017 that it would only be exercising its ROFR on GV2.

The appellants alleged that Veresen and BluEarth conspired to manipulate the price of the wind farms being sold by Veresen in a bad faith attempt to prevent them from exercising their ROFRs. The appellants sought damages for breaching the duty of honest performance, inducing breach of contract, and conspiracy. The motion judge granted the respondents’ motions for summary judgment. Specifically, the motion judge held that Veresen had set up a legitimate process to sell the wind farms and BluEarth engaged in that process. Further, it was not commercially unreasonable for BluEarth to pay a price for any or all of the wind farms that would pressure the appellants not to exercise its ROFR.

issues:

(1) Did the motion judge err in her application of the duty of honest performance?

(2) Did the motion judge err in failing to consider BluEarth’s liability for inducing breach of contract?

(3) Did the motion judge err in her application of the tort of conspiracy?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court held that the motion judge did not err in concluding that the respondents did not breach the duty of honest performance. Veresen set up a package bidding process on the advice of its bank in an attempt to obtain a better price. The purchase price was allocated among the three wind farms only because it was required by the ROFR notice. There was no evidence that Veresen consciously permitted and encouraged BluEarth to artificially inflate the price of GV2. On the contrary, the motion judge found that BluEarth allocated the price in the manner that it did for legitimate reasons. This was a competitive bidding process that entailed upward pressure on prices. Fair market value was not determinative of whether Veresen acted in good faith.

The Court further confirmed that C.M. Callow Inc. v. Zollinger does not impose a duty of disclosure so long as a party does not knowingly mislead the other party. Veresen disclosed documents each time that the appellants made a request, and this disclosure was sufficient to allow the appellants to make an informed decision on whether or not to waive the ROFR. The Court held that the motion judge’s conclusion that the appellants were not misled was supported by the record and was entitled to deference.

(2) No.

The motion judge found there was no evidence that BluEarth intended to cause a breach of contract, or that it had in fact caused a breach of contract. The appellants argued that the motion judge erred in determining that BluEarth could not be liable so long as it was willing to complete the transaction. They characterized the motion judge as holding that BluEarth had “no duties whatsoever” to the ROFR holder. The Court rejected the Appellants’ arguments. The motion judge noted that, at most, BluEarth may have intended to discourage the appellants’ exercise of the ROFRs. However, the dynamic between the ROFR holder and the third party is a competitive one: the respondents were entitled to attempt to discourage the exercise of the ROFR and did not “eviscerate” the appellants’ rights. The Court held that the appellants did not establish a palpable and overriding error and as such there was no reason for the Court to intervene.

(3) No.

The Court held that the motion judge did not err in her application of the tort of conspiracy. The motion judge found that BluEarth priced the wind farms in a manner intended to discourage the exercise of the ROFR on GV2 and that it was entitled to do so. She found no evidence that the price was deliberately manipulated to prevent the exercise of the ROFRs or harm the appellants. The Court held that the appellants did not establish any palpable and overriding error in the motion judge’s findings and there was no basis for the Court to intervene.


SHORT CIVIL DECISIONS

Pervez v. Mohammed , 2022 ONCA 778

[Pepall, Trotter and Thorburn JJ.A.]

Counsel:

A.C. Gerstl, for the appellant

J.K. Grossman and R.D. Richards, for the respondent

Keywords: Family Law, Separation Agreement, Child and Spousal Support, Settlement, Financial Disclosure, Consent Order, Motions, Family Law Rules, O. Reg. 114/99, rr. 13, 14, Federal Child Support Guidelines, SOR/97-175, s. 25(1), Dowdall v. Dowdall, 2021 ONCA 260

Van Delst v. Hronowsky , 2022 ONCA 782

[Paciocco, George and Favreau JJ.A.]

Counsel:

T.J.H., acting in person

K. Shadbolt, for the responding party

Keywords: Appeal, Stay of Order, Standard of Review

Klim v. Klim , 2022 ONCA 784

[Paciocco, George and Favreau JJ.A.]

Counsel:

R.N. Brady, for the appellants

R.C. Corbett, for the respondents

Keywords: Evidence, Credibility, Wills and Estates, Power of Attorney, Capacity, Frivolous Allegations, Costs, Full-Indemnity

Lamothe v. Ellis , 2022 ONCA 789

[Paciocco, George and Favreau JJ.A.]

Counsel:

V. Ambrosino, A. Voss and A. Boggild, for the respondent / moving party

P.G.E., acting in person

Keywords: Appeals, Uncontested Trial, Motion to Quash an Appeal, Non-compliance of Court Orders, Prejudice, Courts of Justice Act, R.S.O. 1990, c. C.43., ss. 134, 140(5), Peerenboom v. Peerenboom, 2020 ONCA 240, Abu-Saud v. Abu-Saud, 2020 ONCA 824


Hart v. Balice , 2022 ONCA 787

[Paciocco, George and Favreau JJ.A.]

Counsel:

M.H., acting in person

Ferguson and N. Groot, for the respondent

Keywords: Civil Procedure, Frivolous and Vexatious Conduct, Abuse of Process, Re-litigating Issues, Finality, Rules of Civil Procedure, rr. 2.1, 59.06, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Scaduto v. The Law Society of Upper Canada, 2015 ONCA 733, Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720


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