BLANEY’S APPEALS: ONTARIO COURT OF APPEAL SUMMARIES (JUNE 17 – 21, 2019)

By John Polyzogopoulos on June 21, 2019

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Good evening.

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

First off, we would like to congratulate our firm’s very own, David Greenwood, for the excellent result obtained in Mikelsteins v. Morrison Hershfield Limited. The Court dealt with the question of whether an employee who had been terminated was entitled to an increase in the value of shares that he held in the corporation, along with a share bonus, through the reasonable period of notice. The Court held that the terms of the Shareholders’ Agreement alone govern the employee’s rights regarding his shares, not the common law principle of reasonable notice. The employee received what he was contractually entitled to receive under the Shareholders’ Agreement and the Employment Standards Act, 2000 had no application.

Another cases of interest this week is Third Eye Capital Corporation v. Ressources Dianor Inc./ Dianor Ressources Inc., where Court dealt with the question of whether a third party interest in land in the nature of a Gross Overriding Royalty could be extinguished by a vesting order granted in a receivership proceeding.

Lastly, for those who practice in the area of family law, you may wish to read the Court’s summary of the procedural history in Beaver v. Hill, which was described at one point in time as a “procedural morass” and how the Court dealt with a recusal application.

Have a nice weekend everyone.

Lea Nebel

Blaney McMurtry LLP

416.593.2953 Email

Civil Decisions

Hengeveld v. The Personal Insurance Company, 2019 ONCA 497

Keywords: Agency Law, Motor Vehicle Accident, Preservation Of Evidence, Spoliation, Third Party Claim, Reasonable Cause Of Action, Contribution and Indemnity, Contributory Negligence, Rules of Civil Procedure, Rule 21.01(1)(b), Negligence Act, R.S.O. 1990, c. N.1, Adams v. Thompson, Berwick, Pratt & Partners, (1987), 15 B.C.L.R. (2d) 51 (C.A.)

Kagan v. Brown, 2019 ONCA 495

Keywords: Family Law, Parenting Schedule, Standard of Review, Expert Reports, Maximum Contact Principle, Palmer Criteria, Divorce Act, R.S.C. 1985, c. 3, s. 16(1), D’Angelo v. Barrett, 2016 ONCA 605, Goldman v. Kudelya, 2017 ONCA 300, Children’s Aid Society of Owen Sound v. R.D. (2003), 2003 CanLII 21746 (ON CA)

Genstar Development Partnership v. The Roman Catholic Episcopal Corporation of the Diocese of Hamilton in Ontario, 2019 ONCA 506

Keywords: Specific Performance, Agreement of Purchase and Sale, Transfer Agreement, Discretion, Repurchase Option, Property Law, Successor, Transferee, Insufficient Evidence, Excluded Assets, Contracts, Real Estate, Converting an Application to an Action

Third Eye Capital Corporation v. Resources Dianor Inc./ Dianor Resources Inc., 2019 ONCA 508

Keywords: Real Property, Contracts, Vesting Order, Statutory Interpretation, Receivership, , Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 65.13(7), 243, Conveyancing and Law of Property Act, R.S.O. 1990, c. C. 34, s.21, Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, Chippewas of Sarnia Band v. Canada (Attorney General) (2000), 51 O.R. (3d) 641 (C.A.), Re Canadian Red Cross Society/Société canadienne de la Croix-Rouge (1998), 5 C.B.R. (4th) 299 (Ont. Ct. (Gen. Div.)), Business Development Bank of Canada v. Astoria Organic Matters Ltd., 2019 ONCA 269

Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512

Keywords: Employment, Wrongful Dismissal, Bonus Entitlement, Termination Provisions, Severance Pay, Appropriate Notice Period, Employment Standards Act, 2000, S.O. 2000, c. 41, Ending Mandatory Retirement Statute Law Amendment Act, 2005, S.O. 2005, c. 29, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Wronko v. Western Inventory Service Ltd., 2008 ONCA 327Lowndes v. Summit Ford Sales Ltd., (2006), 206 O.A.C. 55 (C.A.), Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, Paquette v. TeraGo Networks Inc., 2016 ONCA 618, Taggart v. The Canada Life Assurance Company, (2006), 39 C.C.E.L. (3d) 48 (ONCA), Poole v. Whirlpool Corporation, 2011 ONSC 4100, aff’d 2011 ONCA 808

Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515

Keywords: Employment Law, Shareholders’ Agreement, Termination Without Cause, Reasonable Notice, Wrongful Dismissal, Standard Of Review, Standard Form Contract, Correctness, Employment Standards Act, 2000, S.O. 2000, c. 41, Section 60(1)(a), Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37

Beaver v. Hill, 2019 ONCA 520

Keywords: Family Law Act, R.S.O. 1990, c. F.3, rr. 2(1) and 14(1)2, Children’s Law Reform Act, R.S.O. 1990, c. C.12, Settlement Conference, Case Management, Rules of Civil Procedure, rule 14.05(3)(h), Answer and Claim, Custody

Shuttleworth v. Ontario (Safety, Licensing Appeals and Standards Tribunals), 2019 ONCA 518

Keywords: Judicial Review of Administrative Decisions, Personal Injury, Motor Vehicle Accident, Catastrophic Impairment, Reasonable Apprehension of Bias, Lack of Adjudicative Independence, Insurance Act, RSO 1990, c I.8, s 280, Statutory Accident Benefits Schedule, O Reg 34/10, Adjudicative Tribunals Accountability, Governance and Appointments Act, 2009, SO 2009, c 33, Sched 5, ss 7, 8, 15 and 16, IWA v Consolidated-Bathurst Packaging Ltd, [1990] 1 SCR 282, Tremblay v Quebec(Commission des affaires sociales), [1992] 1 SCR 952, Ellis-Don Ltd v Ontario (Labour Relations Board), 2001 SCC 4, [2001] 1 SCR 221, Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, Yukon Francophone School Board, Education Area #23 v Yukon (Attorney General), 2015 SCC 25, Khan v College of Physicians & Surgeons of Ontario (1992), 9 OR (3d) 641 (ON CA), Valente v The Queen, [1985] 2 SCR 673, Bovbel v Canada (Minister of Employment and Immigration), [1994] 2 FC 563 (CA), Chipman Wood Products (1973) Ltd v Thompson (1996), 181 NBR (2d) 386 (CA); Fundy Linen Service Inc v New Brunswick (Workplace Health, Safety & Compensation Commission), 2009 NBCA 13

Short Civil Decisions

Paderewski Society Home (Niagara) v. Skorski, 2019 ONCA 510

Keywords: Appeal Book Endorsement

Pezzack Financial Services Inc. v. Raso, 2019 ONCA 517

Keywords: Trusts, Proceeds of Settlement, Escrow, Garnishment, Standard of Review

Rogers & Company Professional Corporation v. Beer, 2019 ONCA 514

Keywords: Appeal Book Endorsement, Adjournment

Criminal Decisions

R. v. Allen, 2019 ONCA 507

Keywords: Assault with a Weapon, Dangerous Operation of a Vehicle, Possession of Cocaine, Possession of Dangerous Weapons, Identification, Evidence Law, Eyewitness Evidence, Reliability, Credibility

R. v. Ballantine, 2019 ONCA 498

Keywords: Impaired Operation of a Vessel Causing Bodily Harm, Criminal Code, s. 255(2), s. 254(3), Breath Sample, Expert Witness

R. v. Fougere, 2019 ONCA 505

Keywords: Criminal Law, Aggravated Assault, Jury Trial, Jury Instructions, Self-Defence, Criminal Code, s.34, R. v. Bengy, 2015 ONCA 397, R. v. Phillips, 2017 ONCA 752, R. v. Jackson (1991), 51 O.A.C. 92 (C.A.)

R. v. M.C., 2019 ONCA 502

Keywords: Criminal Law, Sexual Abuse, Evidence, Sentencing, Credibility, Reasonable Doubt, Admissibility, Cogency, Due Diligence, Criminal Record, Cross-Examination, Criminal Code, ss.683(1), 718.2(e), Canada Evidence Act, R.S.C. 1985, c. C-5, s.12, R. v. Gladue, [1999] 1 S.C.R. 688, R. v. Corbett, [1988] 1 S.C.R. 670, R. v. Brown (1978), 38 C.C.C. (2d) 339 (Ont. C.A.), R. v. Stratton (1978), 42 C.C.C. (2d) 449 (Ont. C.A.), R. v. Gayle (2001), 154 C.C.C. (3d) 221 (Ont. C.A.), R. v. Reeve, 2008 ONCA 340, R. v. Manasseri, 2016 ONCA 703, R. v. Ipeelee, 2012 SCC 13

R. v. Stuckless, 2019 ONCA 504

Keywords: Criminal Law, Sexual Abuse, Indecent Assault, Gross Indecency, Sexual Assault, Buggery, Sentencing, Aggravating Factors, Proportionality, Criminal Code, ss.718.1, 718.2, 752.1, R. v. Jewell (1995), 100 C.C.C. (3d) 270 (Ont. C.A.), R. v. Lacasse, 2015 SCC 64, R. v. D.(D.) (2002), 58 O.R. (3d) 788 (C.A.), R. v. Woodward, 2011 ONCA 610, R. v. D.M., 2012 ONCA 520

R v. Altiman, 2019 ONCA 511

Keywords: Operating a Motor Vehicle while Impaired and Causing Death, Operating a Motor Vehicle while Impaired and Causing Bodily Harm, Criminal Code, s.718.1, s. 718.2(e), s.255(3), s.255(2), s.220, s.221, Criminal Negligence Causing Death, Criminal Negligence Causing Bodily Harm, R v. Gladue, [1999] 1 S.C.R. 688, R v. Ipeelee, 2012 SCC 13, Parity, Proportionality, Restraint, Demonstrably Unfit Sentence, R v. Boudreault, 2018 SCC 58, Mitigating Factors, Extreme Remorse, Good Character, Aggravating Factors, Speed, Blood Alcohol, Reasonable Sanctions, Moral Blameworthiness, Aboriginal Offenders, Sentencing, Deterrence, Denunciation, R v. F.H.L., 2018 ONCA 83, Context, Circumstances, Case-Specific, Out of Character, No Prior Criminal Record, No Prior Driving Offences

R v. Majdalani, 2019 ONCA 513

Keywords: Human Trafficking, Procurement into Prostitution

R v. Morris, 2019 ONCA 509

Keywords: Leave to Intervene, Systemic Racism, Racialized Offenders, Non-Indigenous Offenders, Systemic and Background Factors

R v. Opoku, 2019 ONCA 500

Keywords: Appeal Book Endorsement, Probation Term, Victim Surcharge, Sentence Appeal, R v. Woolcock, [2002] O.J. No. 4927

R. v. Cole, 2019 ONCA 516

Keywords: Criminal Law, Possession of Cocaine for the Purpose of Trafficking, Warrant, Telewarrant, Disclosure, Canada Charter of Rights and Freedoms, ss. 8, 24(2), R. v. Grant, 2009 SCC 32, [2009] 2 S.C.R. 353

R. v. La Force, 2019 ONCA 522

Keywords: Criminal Law, Aggravated Assault, Assault with a Weapon, Unlawful Entry into a Dwelling House with Intent to Commit an Indictable Offence, Self-Defence, Reasonableness, Criminal Code, ss. 34, 35

R. v. Gale, 2019 ONCA 519

Keywords: Criminal Law, Second Degree Murder, Parole, Sentencing, Evidence, Admissibility, Expert Witness, Polygraph, Canadian Charter of Rights and Freedoms, s.7, R. v. Beland, [1987] 2 S.C.R. 398, R. v. Charrette, [1994] O.J. No. 2509 (Ont. Gen. Div.), R. v. McKnight (1999), 135 C.C.C. (3d) 41 (Ont. C.A.)

R. v. Hustler, 2019 ONCA 528

Keywords: Criminal Law, Vetrovec Warning, Credibility, Evidence

R. v. King, 2019 ONCA 530

Keywords: Criminal Law, Second Degree Murder, Similar Fact Evidence, Jury Instruction, Parole, Sentencing

R. v. Meloche, 2019 ONCA 521

Keywords: Criminal Law, Aggravated Assault, Intoxication, Evidence, Self-Representative, R. v. Richards, 2017 ONCA 424

R. v. Preston, 2019 ONCA 529

Keywords: Criminal Law, Sexual Assault, Absence of Evidence, Reasonable Doubt

R v. Scantlebury, 2019 ONCA 526

Keywords: Appeal Book Endorsement, Fair Hearing

Ontario Review Board

Hassan (Re), 2019 ONCA 503

Keywords: Appeal Book Endorsement, Hybrid Disposition, Liberty, Detention, Criminal Code, Part XX.1, Pinet v. St. Thomas Psychiatric Hospital, 2004 SCC 21

CIVIL DECISIONS

Hengeveld v. The Personal Insurance Company, 2019 ONCA 497

[Hoy A.C.J.O., Lauwers and Zarnett JJ.A.]

Counsel:

S.G. Zilli and S. Kumar, for the appellant

D.B. Williams and J.P. Butkus, for the respondents

fACTS:

Individuals involved in a motor vehicle accident had been in pursuit of a claim when they learned that the damaged vehicle, which they felt could be used as evidence to assist them in their claim, had been destroyed. The individuals then started a second lawsuit against the appellant insurance company that they allege should have preserved the evidence.

The appellant argued that any failure to preserve the damaged vehicle was the result of faulty arrangements made by the individuals’ lawyers. In response, the appellant brought third party proceedings for contribution and indemnity against the individuals’ lawyers, who are the respondents in this case.

The respondents moved successfully under Rule 21.01(1)(b) of the Rules of Civil Procedure to strike out the third party claim on the basis that it disclosed no reasonable cause of action. The motion judge held that because the allegations in the third party claim related to conduct falling within the scope of the lawyers’ retainer, it was conduct that was attributable in law to the individuals. Therefore, the third party claim was unnecessary, because the lawyers’ alleged negligence could be raised by the appellant in its defence.

issues:

(1) Was the negligence alleged against the lawyers in the third party claim attributable to the individuals as plaintiffs?

HOLDING:

Appeal dismissed.

reasoning:

(1) Yes. A third party claim, like any action, must assert a cause of action. Here, the third party claim relied on the contribution and indemnity provisions of the Negligence Act. However, the appellant also relied on the contributory negligence provision of the Negligence Act to assert that the individuals involved in the accident themselves were responsible for all or part of their own claimed damages.

Before progressing to the agency portion of the analysis, the Court commented on the interaction of the contribution and indemnity provisions and the contributory negligence provisions. The Court ultimately held that a defendant may not “double dip” by asserting both. Where the fault or neglect that a defendant argues caused or contributed to the plaintiff’s injury is fault or neglect that will reduce the plaintiff’s claim, there is no risk that a defendant will have to pay 100% of the plaintiff’s loss, notwithstanding that fault or neglect.

Accordingly, whether a claim by a defendant seeking contribution and indemnity from a third party for alleged negligence, which caused or contributed to the plaintiff’s damages, discloses a reasonable cause of action depends on whether that negligence is attributable to the plaintiff. If it is, the defendant has no cause of action against the third party.

The starting point for dealing with a third party claim under the Negligence Act where the third parties are the plaintiff’s lawyers is Adams v. Thompson, Berwick, Pratt & Partners (1987), 15 B.C.L.R. (2d) 51 (C.A.). In that case, McLachlin J.A. (as she then was) described two situations in which a lawyer’s negligence will be attributed in law to the plaintiff. The first is where the alleged negligence is committed by the lawyer as agent for the plaintiff, within the scope of the agency. The second is where the lawyer’s alleged negligence relates to advice about the plaintiff’s duty to mitigate a loss that has already occurred.

Here, the appellant’s own pleadings make clear that the retainer of the respondents included taking steps, on behalf of the individuals, to preserve evidence. Further, it also disclosed that the lawyers’ dealings with the appellant were dealings undertaken on the individuals’ behalf. On a fair reading of the motion judge’s decision, he found that this was a situation of agency. Where there is an agency situation, it bars the third party claim on its own.

The Court also briefly acknowledges the appellant’s attempt to argue that the foundation of the action against it is spoliation, a cause of action which has not been fully settled in the jurisprudence. The Court dismissed this argument, stating that regardless of how well-founded or novel the cause of action against it may be, the appellant’s ability to bring a third party claim is foreclosed under fully established legal principles.

Kagan v. Brown, 2019 ONCA 495

[Tulloch, Roberts and Miller JJ.A.]

Counsel:

R. Karrass, for the appellant

E. Vine, for the respondent

facts:

After an 11-day trial, the trial judge ordered that the respondent have greater contact with the parties’ now four-year-old daughter, K. This included extended overnight visits during weekends and holidays.

ISSUES:

(1) Did the trial judge err in failing to follow the recommendations of the expert assessor respecting the parenting schedule, specifically, the gradual increase of overnight and holiday access?

holding:

Appeal dismissed.

REASONING:

(1) No. It is well established that the trial judge’s determination of the appropriate parenting schedule is firmly within his discretion. The Court found the trial judge did not commit any palpable and overriding error or error in principle in coming to his determination.

The appellant’s main submission is that the trial judge erred in failing to follow the recommendations of the expert assessor respecting the parenting schedule, specifically, the gradual increase of overnight and holiday access. The appellant argued that their daughter is distressed by the present schedule because it provides for too much time away from her mother while she is very young. In support of this submission, the appellant sought to file new opinion evidence from a clinical psychologist.

The trial judge was required to give effect to the “maximum contact” principle under s. 16(10) of the Divorce Act, which states “a child of the marriage should have as much contact with each spouse as is consistent with the best interests of the child”. The Court did not accept the appellant’s argument that the trial judge’s order was punitive against the appellant because she moved a fair distance away from the respondent after the marriage breakdown.

The Court further found that the trial judge did not disregard the assessor’s recommendations. The toxic relationship between the parties made the 50/50 parenting model recommended by the assessor impossible, so decision-making authority was granted to the appellant and a parenting schedule was created such that the parties’ daughter spends most of her time in her mother’s care. However, it was clear that, despite their differences, both parties are excellent parents who are devoted to their daughter. Therefore, the trial judge determined that granting increased access to the respondent, including overnight and holiday access, would be in the best interests of their young child.

The appellant sought to introduce fresh evidence by way of a report from Dr. Weiser, a clinical psychologist who has seen the parties’ daughter several times. Dr. Weiser opined that the child would become distressed when away from her mother, but also notes that this distress can be alleviated by contact with her mother. Dr. Weiser further states that the child “will become tremendously distressed if she has to endure a prolonged separation from her mother, by which at her age would be no more than five consecutive days”.

The Court finds this report would not have changed the parenting schedule ordered by the trial judge. Dr. Weiser’s observations were made when the child was three years old and speaks to the effect of separation from her mother as at that age. She gives no opinion as to the effect of such a separation when the child is 6, when the first month holiday with her father is proposed to occur under the parenting schedule. Moreover, any concern about distress appears to be mitigated by the communication and other techniques that Dr. Weiser advocates for the child’s comfort.

Genstar Development Partnership v. The Roman Catholic Episcopal Corporation of the Diocese of Hamilton in Ontario, 2019 ONCA 506

[MacPherson, Tulloch and Harvison Young JJ.A.]

Counsel:

A. Merskey and G. Mens, for the appellant

J. Lancaster and S. Carter, for the respondent

FACTS:

In 1998, Imasco Enterprises Inc. (Genstar’s purported predecessor) sold a block of land within a subdivision development to the Diocese, pursuant to an Agreement of Purchase and Sale (the “Agreement”). The property was zoned as a “place of worship”, and could only be sold to a purchaser who planned to use it for its designated purpose. The purchase price was $576,000. There is no dispute that the purchase price was less than the market value of the property, given the limited pool of potential purchasers for property zoned exclusively for religious purposes.

The Agreement provided Imasco the right to repurchase the property from the Diocese if it was not developed as a church within 10 years or if the property was subsequently not required for a church (the “Repurchase Option”). The Repurchase Option was apparently included because municipal planning rules contemplated that a property initially zoned as a “place of worship” could be re-zoned residential if it was not developed into a place of worship after a certain period of time.

Following the sale of the property to the Diocese, Imasco transferred certain assets to other entities, including Genstar Development Company Limited (“GDCL”) through a 2000 Transfer Agreement. Shortly thereafter, GDCL transferred all of its assets to a newly formed partnership – the appellant Genstar. Imasco and GDCL are no longer active corporations.

The Diocese did not develop the property as a church. It also did not give notice after the expiration of the 10 year period referred to in the Repurchase Option. It appears that nothing of substance happened until 2016, when the Diocese decided to sell the property. The Diocese issued a request for proposals, seeking bids to purchase the property.

Genstar learned that the Diocese planned to sell the property in April 2016. It wrote the Diocese, taking the position that the Diocese had breached the terms of the Agreement and expressing its position that Genstar was entitled to exercise the Repurchase Option as a successor to Imasco. Genstar twice attempted to tender on the Diocese, but the Diocese refused to close citing deficiencies in the tenders and taking the position it was not obligated to sell the property to Genstar.

The appellant Genstar brought an application for specific performance to enforce its purported right to purchase a block of land from the Diocese, pursuant to the Agreement. The application judge dismissed Genstar’s application, finding that Genstar had not established whether it was a successor to Imasco or equitable assignee of the Agreement and/or Repurchase Option. The application judge also found that Genstar’s various tenders to the Diocese were deficient, as they had not used the Ontario Consumer Price Index (as contemplated in the Repurchase Option) to calculate the purchase price and thus had understated the correct purchase price by approximately $20,000. The application judge held that the Diocese was entitled to insist on strict compliance with the terms of the Repurchase Option.

ISSUE:

(1) Did the application judge make palpable and overriding errors of fact in not finding that Genstar was the successor to Imasco or, that Genstar was the equitable assignee of the Repurchase Option?

(2) Did the application judge err in not exercising her discretion to accept additional evidence or to convert the application to an action?

(3) Did the application judge err in finding that Genstar’s tenders were deficient and precluded enforcement of the repurchase option?

HOLDING:

Appeal dismissed.

REASONING:

(1) No. It was only possible to determine which assets flowed from Imasco to GDCL to Genstar on a consideration of the contractual documents evidencing the transfers. The absence of a schedule listing excluded assets to the Transfer Agreement left a critical gap in Genstar’s claim that it was a successor because it had “[assumed] the burdens and become [vested] with the rights” of Imasco and its alternative claim that it was an equitable assignee of the Repurchase Option because the intention was for Genstar to have the benefit of the Repurchase Option. The Court said the application judge could not determine if the Agreement had been transferred to Genstar on the record before her.

Since Genstar’s affidavit evidence was simply a description and attachment of the Transfer Agreements between Imasco, GDCL and Genstar, the Court said it was impossible to determine whether the specific Agreement at issue in this appeal was transferred in the absence of the schedule of excluded assets. While Genstar argued that the test for successorship does not require that the purported successor assume all of the predecessor’s rights and obligations, it provided no authority for the proposition that a successor can exercise a right not assumed.

(2) No. The Court held that the application judge had not erred in not exercising her discretion to receive additional evidence or to convert the application to an action. An application judge’s discretionary decisions are entitled to significant deference, and an appellate court will only interfere where the lower court misdirected itself, came to a decision that is so clearly wrong so as to amount to an injustice, or gave no or insufficient weight to a relevant consideration. Here, the application judge raised the issue of the missing schedule of “Excluded Assets” at the hearing of the application. The application judge was clearly concerned that to allow additional evidence would result in unfairness to the Diocese. In these circumstances, the Court was not satisfied that the application judge exercised her discretion in such a manner so as to warrant appellate intervention.

Moreover, the Court added that Genstar had urged the application judge not to convert the application to an action in its written supplementary submission, so for that reason, it does not lie for it to argue before the appellate court that the application judge ought to have converted the application to an action.

The Court also added that while it is true that the application judge raised the issue of whether it was necessary to convert the application to an action at the hearing of the application – due in large part to the fact that the schedule of excluded assets to the Transfer Agreement was not in evidence – the parties were provided an opportunity to make additional written submissions on this issue. Thus, the Court held that Genstar was not “blindsided” such that they needed to appeal.

(3) The Court did not resolve the question of whether the application judge erred in finding Genstar’s tenders were deficient.

Third Eye Capital Corporation v. Ressources Dianor Inc./ Dianor Ressources Inc., 2019 ONCA 508

[Pepall, Lauwers and Huscroft JJ.A.]

Counsel:

P. L. Roy and S. Grayson, for the appellant 2350614 Ontario Inc.

S. Roy and N. Nezhat, for the respondent Third Eye Capital Corporation

S. Brotman and D. Chochla, for the receiver of the respondent Ressources Dianor Inc./ Dianor Ressources Inc., Richter Advisory Group Inc.

N. Kluge, for the monitor of Essar Steel Algoma Inc., Ernst & Young Inc.

S. J. Weisz, for the intervenor Insolvency Institute of CanadA

facts:

On August 20, 2015, the court appointed Richter Advisory Group Inc. (the “Receiver”) as receiver of the assets, undertakings and properties of Dianor Resources Inc. (“Dianor”), an insolvent exploration company focused on the acquisition and exploitation of mining properties in Canada. The appointment was made pursuant to s. 243 of the Bankruptcy and Insolvency Act (“BIA”) and s. 101 of the Courts of Justice Act (“CJA”), on the application of Dianor’s secured lender, the respondent Third Eye Capital Corporation (“Third Eye”) who was owed approximately $5.5 million.

Dianor originally entered into agreements with 3814793 Ontario Inc. (“381”) to acquire certain mining claims. The agreements provided for the payment of Gross Overriding Royalty’s (“GORs”) for diamonds and other metals and minerals in favour of the appellant 2350614 Ontario Inc. (“235”), another company controlled by the same individuals as 381. The mining claims were also subject to royalty rights for all minerals in favour of Essar Steel Algoma Inc. (“Algoma”).

On October 7, 2015, a motion judge made an order approving a sales process for the sale of Dianor’s mining claims. The process generated two bids, both of which contained a condition that the GORs be terminated or impaired. One of the bidders was Third Eye. On December 11, 2015, the Receiver accepted Third Eye’s bid conditional on obtaining court approval.

On August 9, 2016, the Receiver applied to the court for approval of the sale to Third Eye and, at the same time, sought a vesting order that purported to extinguish the GORs and Algoma’s royalty rights as required by the agreement of purchase and sale. 235 did not oppose the sale but asked that the property that was to be vested in Third Eye be subject to its GORs.

On October 5, 2016, the motion judge held that the GORs did not amount to interests in land and that he had jurisdiction under the BIA and the CJA to order the property sold and on what terms. He granted the sale approval and order vesting the property in Third Eye and ordering that on payment of $250,000 and $150,000 to 235 and Algoma respectively, their interests were extinguished. Upon receipt of the motion judge’s decision 235 did nothing.

The Receiver circulated a draft sale approval and vesting order for approval as to form and content to interested parties. On October 26, 2016, 235 approved the order as to form and content, having made no changes. The sale approval and vesting order was issued and entered on that same day and then circulated.

On October 26, 2016, for the first time, advised counsel for the Receiver that “an appeal is under consideration” and asked the Receiver for a deferral of the cancellation of the registered interests. Receiver responded that the transaction was scheduled to close and the approval order was not stayed during the appeal period. Counsel for 235 did not respond and took no further steps. The Receiver later closed the transaction in accordance with the terms of the agreement of purchase and sale. The Receiver was placed in funds by Third Eye, the sale approval and vesting order was registered on title and the GORs and the royalty interests were expunged from title. That same day, the Receiver advised 235 and Algoma that the transaction had closed and requested directions regarding the $250,000 and $150,000 payments.

On November 3, 2016, 235 served and filed a notice of appeal of the sale approval and vesting order. It did not seek any extension of time to appeal. 235 filed its notice of appeal 29 days after the motion judge’s October 5, 2016 decision and 8 days after the order was signed, issued and entered.

ISSUES:

(1) Can a third party interest in land in the nature of a Gross Overriding Royalty be extinguished by a vesting order granted in a receivership proceeding?

(2) Does the appeal period in the Bankruptcy and Insolvency Act or the Courts of Justice Act govern the appeal from the order of the motion judge in this case?

HOLDING:

Appeal dismissed.

REASONING:

(1) Yes. The Court held that, a third party interest in land in the nature of a GOR can be extinguished by a vesting order granted in a receivership proceeding; however, the motion judge erred in concluding that it was appropriate to extinguish them from title given the nature of the GORs in this case.

In considering whether an interest in land should be extinguished, a court should consider: (1) the nature of the interest in land; and (2) whether the interest holder has consented to the vesting out of their interest either in the insolvency process itself or in agreements reached prior to the insolvency.

The Court held that a GOR is an interest in the gross product extracted from the land, not a fixed monetary sum. While the GOR, like a fee simple interest, may be capable of being valued at a point in time, this does not transform the substance of the interest into one that is concerned with a fixed monetary sum rather than an element of the property itself. The interest represented by the GOR is an ownership in the product of the mining claim, either payable by a share of the physical product or a share of revenues. In other words, the GOR carves out an overriding entitlement to an amount of the property interest held by the owner of the mining claims.

Given the nature of 235’s interest and the absence of any agreement that allows for any competing priority, there is no need to resort to any further considerations. The motion judge erred in granting an order extinguishing 235’s GORs, although the court had the jurisdiction to do so. The court then considered whether the appellant failed to preserve its rights such that it is precluded from persuading the court that the order granted by the motion judge ought to be set aside.

(2) The Court held that the appeal period in the BIA governed the appeal. Under r. 31 of the BIA Rules, a notice of appeal must be filed “within 10 days after the day of the order or decision appealed from, or within such further time as a judge of the court of appeal stipulates.”

235 had known for a considerable time, there could be no sale to Third Eye in the absence of extinguishment of the GORs and Algoma’s royalty rights; this was a condition of the sale that was approved by the motion judge. The appellant was stated to be unopposed to the sale but in essence opposed the sale condition requiring the extinguishment. The Court held that the jurisdiction to grant the approval of the sale emanated from the BIA and so did the vesting component. It would make little sense to split the two elements of the order in the circumstances. The essence of the order was anchored in the BIA. Accordingly, the Court concluded that the appeal period was 10 days as prescribed by r. 31 of the BIA Rules and ran from the date of the motion judge’s decision of October 5, 2016. 235’s appeal was out of time.

Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512

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

Counsel:

M.A. Hines and A.J. Hunter, for the appellant

A.F. Camman, S.A. Toth and S. Bauer, for the respondent

facts:

MD was employed by Equitable Life for his entire career of 37 years. He was the Senior Vice President at the time he was terminated without cause. MD’s compensation package was comprised of a base salary and a cash bonus along with various other benefits. All changes to the compensation plan were imposed unilaterally by Equitable Life.

In 2006, Equitable Life introduced two new bonus plans which had new provisions that substantially limited employees’ bonus entitlements in circumstances of resignation and termination without cause. In cases of termination without cause, the plans provide for a “Terminal Award” pro-rated to the last day of active employment, and require that the employee sign a “Full and Final Release” in order to receive the Terminal Award. However, there was nothing in the documentation accompanying these plans that highlighted the introduction of the termination provision that is in dispute. There was also no confirmation that the termination provision was ever discussed. MD received bonus payments under both plans since 2006, except for 2011 and 2012.

MD’s employment was terminated in 2015. He rejected an offer of 24 months’ notice and the Terminal Awards under the new bonus plans. The termination letter included a requirement to sign a release of claims. MD refused to sign the release and payment of the Terminal Awards was withheld. Despite his refusal to sign the release, MD was paid eight weeks of termination pay in lieu of notice, as well as 26 weeks of severance pay in accordance with the provisions of the Employment Standards Act.

MD sued for wrongful dismissal. Both parties moved for partial summary judgment on two issues relating to the calculation of damages: (1) the proper notice period; and (2) MD’s entitlement under Equitable Life’s bonus plans. The motion judge held that 30 months was the appropriate notice period and that MD was entitled to bonus payments over this period.

issues:

(1) Did the motion judge improperly deal with contested facts that were irrelevant to the issues before him?

(2) Did the motion judge err in finding that the appropriate notice period was 30 months?

(3) Did the motion judge err in finding that MD was entitled to his full bonus plan payments during the notice period instead of the Terminal Awards?

holding:

Appeal allowed in part.

reasoning:

(1) Yes. Regardless, ground of appeal dismissed. While the motion judge’s comments were not necessary to the issues he was tasked with deciding, they had no influence on the motion judge’s findings on the substantive issues before him.

(2) Yes. The motion judge’s approach to reasonable notice was in error – the notice period should be reduced to 24 months. The proper approach for reasonable notice which has been consistently applied comes from Lowndes v Summit Ford Sales, (2006), 206 O.A.C. 55 (C.A.). That decision held the determination of what constitutes reasonable notice is “case-specific” and, while there is “no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months.”

The motion judge took a different approach. His conclusion that a notice period of 30 months was appropriate did not rest on the presence of exceptional circumstances; instead, it was based on his perception of broader social factors that led him to conclude that the “presumptive standards” discussed in Lowndes were inapplicable.

Although the motion judge was correct that MD’s circumstances – including his senior position, career long years of service at the same company, age at the time of termination, and his difficulty in finding new employment – warranted a substantial notice period, there was no basis to award MD more than 24 months’ notice. MD’s circumstances are similar to those of the employee in Lowndes. The Court in Lowndes recognized ML’s status as a long-term employee who had exhibited loyalty and dedication to the employer’s business over most of his working career. However, she noted that the base notice period of 24 months recognizes and rewards these factors, and constitutes the “high end of the appropriate range of reasonable notice for long-term employees in ML’s position”.

(3) No. Although the motion judge incorrectly applied the second part of the two-part test for determining whether a wrongfully dismissed employee is entitled to damages for the loss of bonus entitlement, deference must be given to the motion judge’s factual conclusion that the termination provision was not properly communicated to MD.

In Paquette v TeraGo Networks Inc., 2016 ONCA 618, the Court held that damages for wrongful dismissal generally include all compensation and benefits that the employee would have earned during the notice period. In Paquette, this Court articulated a two-part test for determining whether a wrongfully dismissed employee is entitled to damages for the loss of bonus entitlement: (1) was the bonus an integral part of the employee’s compensation package, triggering a common law entitlement to damages in lieu of bonus?; and (2) if so, is there any language in the bonus plan that would specifically remove the employee’s common law entitlement?

The motion judge correctly applied the first part of the Paquette test in finding that Equitable Life’s bonus plans were an integral part of Mr. Dawe’s compensation package. The motion judge identified the relevant factors involved in making this determination, including evidence concerning the competitive objectives of the compensation scheme as a whole, and the integral nature of the bonus plans to the compensation scheme. The motion judge was aware of Mr. Dawe’s history of having received a bonus every year he was employed (except once in 2011 or 2012). Moreover, as the motion judge observed, the purpose of the bonus plan was described in the plan document as “…an integral component of Equitable’s executive cash compensation strategy consisting of a base salary program, short term (annual) incentives and long term incentives”.

The motion judge incorrectly applied the second part of the Paquette test in finding that the terms of the bonus plans were unclear and confusing. Similar to this case, the issue in Paquette was whether the employee was entitled to claim wrongful dismissal damages for bonus payments he would have earned during the notice period following his termination without cause. In Paquette, the motion judge found that a term of the bonus plan that required that a person must be an “active employee” was clear and unambiguous and, therefore, disentitled the employee to any bonus entitlement upon being terminated without cause. The “active employee” term in the bonus plan at issue in Paquette is similar to the definition of “Eligible Participant” in this case. In this case, the bonus plans went well beyond stipulating “active employment” as a precondition for bonus entitlement. The terms addressed, with great precision, what would happen to an eligible participant’s bonus entitlement upon termination without cause.

Deference must be given to the motion judge’s ultimate conclusion that Equitable Life failed to bring the limiting terms of the bonus plans to MD’s attention, which is largely factual in nature. The issue of proper notice was squarely addressed in Poole v Whirlpool Corporation, 2011 ONSC 4100, aff’d 2011 ONCA 808, which involved an “actively employed” condition that the employer relied upon to limit entitlement to bonus payments. This Court affirmed that the failure to establish the limiting condition and draw the employee’s attention at any time, either orally or in writing, precluded any “reliance by the employer on the precondition to defeat the employee’s bonus claim”. The motion judge’s conclusions were consistent with this Court’s decision in Wronko v Western Inventory Service Ltd., 2008 ONCA 327, where it was held that in situations where changes were imposed unilaterally by the employer, the essence of the problem is whether the employee accepted the newly imposed terms of employment.

Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515

[Lauwers, Fairburn and Nordheimer JJ.A.]

Counsel:

David Greenwood, for the appellant

J. Heeney and J. Burke, for the respondent

facts:

The appellant, Morrison Hershfield Limited (“MHL”) appealed from the partial summary judgment awarding the respondent, a former employee of MHL, an increase in the value of shares that he held in the parent corporation of MHL, along with a share bonus, through the period of reasonable notice. MHL is an employee-owned engineering firm.

The respondent was employed by MHL for 31 years before being notified that his employment was being terminated without cause, effective immediately. The respondent commenced an action for wrongful dismissal. In granting partial summary judgment, the motion judge awarded to the respondent damages for wrongful dismissal based on a notice period of 26 months.

Under the terms of the Shareholders’ Agreement, shareholders are eligible to receive annual “Share Bonuses”. The motion judge determined that the respondent was entitled to: (i) hold his shares until the end of the reasonable notice period; and (ii) receive damages for the loss of the share bonus that would have been payable during such 26 month period.

Article 3.2 of the Shareholders’ Agreement applies in cases of termination and states: A Shareholder whose association with the Corporation and its Affiliates ceases by reason of termination by the Corporation of his/her employment with the Corporation and its Affiliates shall, immediately after such termination, be deemed to have given a Transfer Notice covering all of the Shares held by him/her on a date which is 30 days from the date he/she is notified of such termination by the Corporation. The Shareholders’ Agreement proceeds to specify that a shareholder that is deemed to have given a Transfer Notice is entitled to the “Fair Value” of his/her shares.

issues:

(1) What is the appropriate standard of review?

(2) Is the respondent entitled to receive payment for his shares with the value calculated at the end of the reasonable notice period?

(3) Does the Shareholders’ Agreement violate the Employment Standards Act, 2000?

holding:

Appeal allowed.

reasoning:

(1) What is the appropriate standard of review?

The Court held that the appropriate standard of review in this case is correctness, for two reasons. First, the Shareholders’ Agreement is a standard form contract, sometimes referred to as a contract of adhesion. An employee who is invited to become a party to the Shareholders’ Agreement has no ability to negotiate the terms of that agreement. Consequently, the factual matrix plays less of a role in the interpretive exercise.

Second, the interpretation of the Shareholders’ Agreement will have implications for all other shareholders, both existing and future. As such, it is important that the Shareholders’ Agreement be interpreted in a consistent manner.

The Court applied the principle in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co, 2016 SCC 37, to support the view that the interpretation of a standard form contract should be subject to a correctness review.

(2) Is the respondent entitled to receive payment for his shares with the value calculated at the end of the reasonable notice period?

No. The motion judge erred in this respect. The error was due to the fact that the motion judge improperly conflated the respondent’s entitlement to compensation arising from the breach of his contract of employment with his contractual entitlements respecting his shares. The shares were received pursuant to the Shareholders’ Agreement, not his employment contract. Therefore, it is the terms of the Shareholders’ Agreement that determines the respondent’s rights with respect to those shares.

(3) Does the Shareholders’ Agreement violate the Employment Standards Act, 2000?

No. Section 60(1)(a) of the Employment Standards Act, 2000 reads:

During a notice period under section 57 or 58, the employer,

(a) shall not reduce the employee’s wage rate or alter any other term or condition of employment;

The Shareholders’ Agreement does not alter any term or condition of employment, as it relates only to the rights of an employee with respect to any shares he or she may hold. The argument that the Shareholders’ Agreement violates the above provision of the Employment Standards Act, 2000 makes the same error as the argument that the respondent is entitled to receive payment for his shares with the value calculated at the end of the reasonable notice period. Namely, treating the employment contract and the Shareholders’ Agreement as if they are one and the same. The Court held that they are not.

Beaver v. Hill, 2019 ONCA 520

[Brown, Roberts and Miller JJ.A]

Counsel:

M.S. Rankin and A.K. Lokan, for KH, the appellant in Appeal C65513

M.L. Solmon, M. Wilson and G. Manoharan, for KH, the appellant in Appeal C66285, and the responding party in Motion M50431

H. Niman, M. McCarthy and S. Byers, for BB, the respondent in Appeals C65513 & C66285, and the moving party in Motion M50431

facts:

In late 2015, BB commenced an application against KH, pursuant to the Family Law Rules, seeking relief under the Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), and Children’s Law Reform Act, R.S.O. 1990, c. C.12 (“CLRA”) (the “FLA Proceeding”). BB and KH are the parents of one child, B., who is 9 years old. This case concerns three matters before the Court: two appeals from orders made in or in respect of the FLA Proceeding and a motion to quash one of those appeals.

When this case was previously at the Court in October 12, 2018, the Court described the case as having developed into a procedural morass. Last August, Justice Pazaratz was designated as the case management judge for the FLA Proceeding. In his November 27, 2018 Settlement Conference endorsement, he made two comments, neither of which disclosed the content of the settlement discussions, but both of which described the conduct of the parties in this litigation. He wrote:

I am led to conclude that cumulatively there is little indication of good faith efforts being made by anyone. … I have no control over what happens with respect to appeals, but I would ask that any judges hearing any pending appeals be mindful of the absolute frustration being experienced at this level. These parties just want to litigate, and as a judicial system we need to be delivering a consistent message that we’re not going to tolerate or facilitate such a wasteful and destructive approach to important and sensitive family law issues.

Justice Pazaratz concluded on January 16, 2019 that he was of the view that “there is no demonstrated desire or intention to resolve any issues or even narrow the issues.”

Appeal C66285

On July 27, 2018, KH issued a notice of application against BB pursuant to rule 14.05(3)(h) of the Rules of Civil Procedure, which authorize commencing a proceeding by bringing an application “in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial” (the “Rule 14 Application”). In that civil application, KH sought the following relief: “Judgment that the Honourable Mr. Justice Sloan recuse himself from presiding over any further matters in relation to” the FLA Proceeding (emphasis added).

At a November 27, 2018 case/settlement conference, Justice Pazaratz granted judgment as follows: “THIS COURT ORDERS THAT the Application is dismissed, without prejudice to it being returnable in the event that the Honourable Mr. Justice Sloan is assigned to a future event on this file.”

KH appeals that judgment. BB moves to quash his appeal, taking the position that the judgment is an interlocutory order, an appeal from which requires leave of the Divisional Court.

Appeal C65513

KH sought leave to amend to request an order that B. “reside” with KH “as follows: a) primarily with [KH]; or in the alternative, b) equally with [BB and KH]; or in the alternative, c) with [BB] and [KH] shall have access with [B.] as may be agreed upon by the parties.” Justice Sloan dismissed this part of KH’s application.

Next, by order dated June 11, 2018 made on a 14B motion, Justice Sloan granted sole custody of B. to BB. KH has not appealed that order. However, on June 18, 2018, he did file a rule 14B motion to set the order aside.

On August 9, 2018, KH moved before this court for leave to amend his Answer and Claim. The draft amended Answer and Claim filed with this court included a claim for access to B. but no claim for custody. Nordheimer J.A. heard the motion and dismissed it. He endorsed the record: “If the appellant is successful in getting the right to seek to amend his Answer and Claim the formal motion to amend will properly [be] dealt with in the SCJ.” On August 29, 2018, Pazaratz J. was appointed case management judge. By order dated October 12, 2018, this court allowed the appeal, in part, set aside para. 4 of the order of Chappel J., “which dismissed the constitutional claim,” and substituted the following: “The Respondent’s Amended Answer and Claim dated June 8, 2016 is struck, with leave to amend.”

During the hearing of the appeal on September 11, 2018, KH’s counsel handed up to the court a draft of his client’s proposed Amended Answer and Claim. In the Answer part of the document, KH did not agree with BB’s claim for sole custody. However, in the Claim portion, KH indicated that he was not making any claim for custody of B. but was making a claim for access to B.

Counsel provided the panel with a copy of the Amended Answer and Claim sent by KHs’ counsel to BB’s in compliance with that direction. Whereas in the August and September proposed Amended Answer and Claims submitted by KH to this court he did not assert a claim for custody, in the November 13, 2018 draft he claims joint custody of B. with BB.

ISSUES:

Appeal C66285

Did Justice Pazaratz, the case management judge, err in dismissing KH’s r.14.05(3) application to have Justice Sloan recused?

Appeal C65513

Did Justice Sloan err in dismissing part of the motion brought by KH seeking leave to amend his Answer and Claim to seek custody of their child B?

holding:

Appeal C66285

Appeal dismissed

Appeal C65513

Appeal dismissed

REASONING:

Appeal C66285

No. Generally speaking, a judgment dismissing a Rule 14.05(3) application is a “final order” for the purpose of determining the route of appeal. However, the FLA Proceeding between BB and KH in which Sloan J. made his endorsements and orders is a proceeding under the FLA and CLRA. The Family Law Rules apply in this case. Once a proceeding is commenced under the Family Law Rules, any request for pre-trial relief, including the recusal of a judge from hearing a step in the proceeding, must be brought before the court by way of a motion in accordance with the Family Law Rules (rr. 2(1) and 14(1)2).

In the present case, KH chose the wrong procedure to bring his recusal request before the court: he commenced a Rule 14 civil application when he should have brought a motion within the FLA Proceeding using the Family Law Rules. An incorrect procedural choice does not render his application a nullity. That said, the characterization of an order under appeal that is the product of an incorrect procedural choice must be determined by looking at the substantive effect of the order. In the present case, the judgment of Justice Pazaratz dismissing KH’s recusal request on a without prejudice basis clearly is interlocutory in nature. It does not result in the final determination of any legal or litigation right of KH.

The appeal of an interlocutory order of a judge of the Superior Court of Justice lies to the Divisional Court, with leave. Given the procedural morass permeating this case and the need to move it along to a final adjudication on the merits, this panel secured designation as a panel of the Divisional Court to hear KH’s request for appellate review and granted leave to appeal. However, the Court dismissed the appeal. Justice Pazaratz was correct in the order he made. KH’s appeal is without merit. Justice Pazaratz accurately described KH’s application as one “seeking a court order that [Sloan J.] not do something he isn’t going to do anyway”.

The disposition accorded with and promoted the objectives of the Family Law Rules as stated in rr. 2(2) and 2(3). It also furthered the direction of this court in its October 12, 2018 reasons that “[t]he case going forward requires active and determined case management.” The Court saw no error by Justice Pazaratz.

The Court said that with the expansive case management powers possessed by judges under r. 2 of the Family Law Rules including the duty to promote active management of cases by “considering whether the likely benefits of taking a step justify the cost”, Justice Pazaratz’s dismissal was appropriate.

Appeal C65513

No. The chronology of events in this appeal discloses three things. First, KH repeatedly has represented to the Court that he is not seeking custody of B. However, in drafts of Amended Answers and Claims filed or served in the court below, KH has taken the contrary position. KH has changed his position on custody with some frequency, in some cases within the span of a few weeks.

Second, as the record in this proceeding now stands, the issue of the custody of B. was determined by the final order of Sloan J. dated June 11, 2018. The record also discloses that: (i) KH has not appealed that order; (ii) One year ago – on June 18, 2018 – KH filed a 14B motion with the Superior Court of Justice to set aside that final order; and (iii) KH has not sought to move that motion along, notwithstanding the appointment of a designated case management judge.

Third, given the existence of the final order granting BB custody of B., the earlier May 24, 2018 order of Sloan J. dismissing KH’s motion for leave to amend his pleading to claim custody was superseded by the June 11, 2018 final order. Yet, instead of appealing that final order, KH has appealed the superseded May 24, 2018 order. He is challenging the wrong order.

Shuttleworth v. Ontario (Safety, Licensing Appeals and Standards Tribunals), 2019 ONCA 518

[Tulloch, Hourigan and Fairburn JJ.A.]

Counsel:

S. Mathai and D. Polla, for Safety, Licensing Appeals and Standards Tribunals Ontario and Licence Appeal Tribunal

C. Verconich, for Peel Mutual Insurance Company

G. Mazin and V. Bibolli, for M. Shuttleworth

Keywords: Judicial Review of Administrative Decisions, Personal Injury, Motor Vehicle Accident, Catastrophic Impairment, Reasonable Apprehension of Bias, Lack of Adjudicative Independence, Insurance Act, RSO 1990, c I.8, s 280, Statutory Accident Benefits Schedule, O Reg 34/10, Adjudicative Tribunals Accountability, Governance and Appointments Act, 2009, SO 2009, c 33, Sched 5, ss 7, 8, 15 and 16, IWA v Consolidated-Bathurst Packaging Ltd, [1990] 1 SCR 282, Tremblay v Quebec (Commission des affaires sociales), [1992] 1 SCR 952, Ellis-Don Ltd v Ontario (Labour Relations Board), 2001 SCC 4, [2001] 1 SCR 221, Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, Yukon Francophone School Board, Education Area #23 v Yukon (Attorney General), 2015 SCC 25, Khan v College of Physicians & Surgeons of Ontario (1992), 9 OR (3d) 641 (ON CA), Valente v The Queen, [1985] 2 SCR 673, Bovbel v Canada (Minister of Employment and Immigration), [1994] 2 FC 563 (CA), Chipman Wood Products (1973) Ltd v Thompson (1996), 181 NBR (2d) 386 (CA); Fundy Linen Service Inc v New Brunswick (Workplace Health, Safety & Compensation Commission), 2009 NBCA 13.

FACTS:

Ms. Shuttleworth suffered physical and psychological injuries as a result of a motor vehicle accident on September 28, 2012. She applied to her insurer, Peel Mutual Insurance Company (“Peel”), for a determination that her accident injuries met the statutory threshold for a “catastrophic impairment” as defined in the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“SABS”). A finding that she was catastrophically impaired would have entitled her to enhanced benefits.

Conflicting reports were submitted by the parties, one saying Ms. Shuttleworth’s whole person impairment (“WPI”) rating fell below the 55% threshold for catastrophic impairment, and the other saying she did meet the threshold. Ms. Shuttleworth applied to the Licence Appeal Tribunal (the “LAT”) to resolve the issue. The LAT acquired jurisdiction over disputes in respect of the SABS on April 1, 2016. At the time, the LAT was a part of a cluster of tribunals known as the Safety, Licensing Appeals and Standards Tribunals Ontario (“SLASTO”). Ms. Shuttleworth’s case was the first catastrophic impairment decision that the LAT was to release.

On April 21, 2017, LAT Vice-Chair Susan Sapin released a decision determining that the threshold was not met. Approximately two months later, Ms. Shuttleworth’s counsel received an anonymous letter stating that, before the decision was released, it was reviewed and changed by Linda Lamoureux, the Executive Chair of SLASTO. The letter claimed that in Ms. Sapin’s initial decision, Ms. Shuttleworth’s injuries qualified as a catastrophic impairment, but when Ms. Lamoureux reviewed the decision, she altered it and determined that Ms. Shuttleworth did not meet the threshold.

Ms. Shuttleworth attempted to obtain information about the process followed in her case, including an access to information request. The LAT asserted a broad claim of adjudicative privilege and maintained its position that there was no interference in Ms. Sapin’s decision. Ms. Shuttleworth brought an application for judicial review and sought an order reversing the decision or referring the matter back to the LAT for a rehearing.

The Divisional Court granted Ms. Shuttleworth’s application and set aside the LAT’s decision, finding that the LAT’s decision-making process did not meet the minimum standards required to ensure both the existence and appearance of adjudicative independence. After considering the authority of Khan v. College of Physicians & Surgeons of Ontario (1992), 9 O.R. (3d) 641 (C.A.) and Ellis-Don Ltd. v. Ontario (Labour Relations Board), 2001 SCC 4, the Divisional Court accepted that an adjudicator’s discussion of a draft decision with colleagues does not in and of itself breach the rules of natural justice. However, the court emphasized that the institutional consultation procedure must be designed to safeguard a decision-maker’s ability to independently decide the facts and the law.

The Divisional Court concluded the LAT breached the rule of consultation from Ellis-Don and subjected the decision to a peer review process that lacked the required safeguards of adjudicative independence. The court emphasized the lack of a formal or written policy protecting the adjudicator’s right to decline to participate in a review by the executive chair or make changes proposed by the executive chair. This was “significant” because it was required by ss. 7-8 of the Adjudicative Tribunals Accountability, Governance and Appointments Act (“ATAGAA”) and the existence of such a policy would have safeguarded the appearance of propriety. The matter was referred back to the LAT for a new hearing.

issues:

Did the Divisional Court err by:

Incorrectly articulating and applying the test for reasonable apprehension of bias?
Wrongly applying the trilogy of Supreme Court of Canada cases involving the preparation of reasons by administrative tribunals?
Mistakenly finding that ss. 7 and 8 of the ATAGAA required SLATSO to have written consultation procedures?
Failing to conduct a holistic analysis as mandated by Khan v. College of Physicians & Surgeons of Ontario (1992), 9 OR (3d) 641 (ON CA)?
Concluding that there was a reasonable apprehension of a lack of independence on the facts of this case?

HOLDING:

Appeal dismissed.

REASONING:

The LAT, SLATSO and Peel (collectively, the “Appellants”)

(1) No. The test for a reasonable apprehension of bias or lack of independence in respect of an administrative tribunal is whether the apprehension is a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. The question is whether “an informed person, viewing the matter realistically and practically – and having thought the matter through” would think that it is more likely than not that the decision-maker would decide fairly. (IWA v Consolidated-Bathurst Packaging Ltd, [1990] 1 SCR 282 at 334). The Appellants seized on the Divisional Court’s passing reference to a “cautious observer” which, on its face, may appear to introduce an unknown element to the test. On a review of the court’s reasons as a whole, the test for a reasonable apprehension of a lack of independence was clearly articulated at para. 50 and the relevant authorities on the issue were cited. The court applied that test and found a reasonable apprehension of a lack of independence without making reference to a “cautious observer.”

(2) No. The Divisional Court did not err in its application of the trilogy of Supreme Court cases—Consolidated-Bathurst, Tremblay v Quebec, and Ellis-Don. The guiding principle from the trilogy is that the decision-maker must be free to decide cases in accordance with his own conscience and opinions. Consolidated-Bathurst establishes that discussions with colleagues are permissible even though they raise the possibility of “moral suasion,” and that adjudicators are entitled to consider the opinion of their colleagues in the interest of adjudicative coherence.

The Supreme Court outlined specific rules that govern the practice of full-board consultation. In Consolidated-Bathurst, the court found it “obvious” that “no outside interference may be used to compel or pressure a decision maker to participate in discussions on policy issues raised by a case on which he must render a decision”. Likewise, in Tremblay, the court found that the tribunal president’s ability to refer a matter for plenary discussion without the permission of the adjudicator was a sufficient basis to find an appearance of a lack of independence. Ellis-Don held that it was a basic principle that only the adjudicators could request consultation and that their superiors in the administrative hierarchy could not impose it on them.

The Court rejected the Appellants’ attempt to distinguish the LAT’s review process from the full-board meetings discussed in the Supreme Court trilogy. First, the Appellants submitted that the review process was purely focused on the quality of the written decision, unlike the full-board meetings that involved reviewing policy choices and the ultimate result, but the Court stated it is inaccurate to characterize the review process as a purely qualitative or editorial exercise. Second, the fact that fewer people were involved in the review than in the full-board consultations the trilogy considered does not assist the Appellants. The Executive Chair holds the most authority within the LAT and SLATSO as well as power over reappointment of individual adjudicators under s. 14(4) of ATAGAA. As Tremblay and Consolidated-Bathurst recognize, adjudicators are more likely to feel free to decide according to their own conscience and opinions if the consultation occurs at their own request. It is also important to note that courts have found the principles from the trilogy on full-board consultation relevant to cases dealing with other review processes for draft decisions. Khan relied on Tremblay for the principle that compulsion to consult with others may cause the appearance of independence to be lost.

(3) No. Subsections. 7-8 of ATAGAA do not require SLATSO to publish a written peer review policy. Section 7(2) only requires a tribunal to describe the functions of the members, the skills and qualifications required to be appointed a member, and a member code of conduct, and SLATSO did in fact publish a code of conduct as well as descriptions of the vice-chair and member positions. Despite the foregoing, the Divisional Court was still entitled to find the absence of such a policy significant when it considered the adequacy of LAT’s procedural safeguards.

The SLASTO code of conduct and the position descriptions for the member and vice-chair positions undermine the Appellants’ position. The Appellants point to the guarantee of adjudicative independence in these documents. However, the code of conduct simply states that “[m]embers should be independent in decision-making” and makes no mention of a member’s right to refuse a review by the executive chair. Moreover, the member position description confirms the Divisional Court’s finding that members were expected to submit their decisions for peer review and were not advised of their right to refuse.

(4) No. The Appellants’ submission that the Divisional Court failed to apply the holistic approach from Khan is unfounded. In Khan, the proposition that the result of compulsory consultation is that “the appearance of independence may be lost” was arrived at after consideration of all of the factual circumstances. In this case, the Divisional Court recognized this, and stated it was necessary to assess the “specific circumstances” and review the five factors from Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, to determine the level of procedural fairness required.

In Khan, Doherty J.A. stressed that counsel’s involvement “could not have had any coercive effect” because counsel was the “servant of the Committee” and his involvement “was not mandatory, and was entirely under the control of the Committee”. In contrast, the executive chair in this case was the superior of the adjudicator with power over her reappointment, not the adjudicator’s servant.

(5) No. First, the Divisional Court correctly found that the executive chair’s imposition of the review on the adjudicator breached the rules set out in the trilogy. The adjudicator was expected to send the decision for peer review, and the adjudicator was only informed of the review after it had taken place. The Court also rejected the Appellants’ argument that consultation was not imposed because the LAT lacked the legal power to force an adjudicator to participate in the peer review process. The adjudicator’s freedom to decline the review does not assist her because she was never given the opportunity to decline and was instead presented with the executive chair’s review as a fait accompli. As such, the LAT violated the rule from the trilogy because a superior level of authority imposed consultation on the adjudicator.

Second, the Divisional Court found that the breach was significant because of the power of the SLATSO executive chair. Consolidated-Bathurst recognized the possibility that a tribunal chair could exert moral suasion over tribunal members. Similarly, Tremblay stressed the control the tribunal president exercised over the consultation process in finding a reasonable apprehension of bias. The executive chair’s power over reappointment of individual adjudicators is significant, as was noted by the Divisional Court. Legal commentators have also recognized the power of the executive chair and the potential danger the chair’s control over reappointments poses to the independence of individual adjudicators.

Third, the Divisional Court correctly concluded that the review process lacked the appropriate procedural safeguards. Peer review processes must be accompanied by “robust protections to safeguard adjudicative independence”, which aligns with the trilogy. The executive chair imposed the review and the adjudicator was only informed of it after it took place. The Divisional Court considered this evidence cumulatively with the lack of a formal written policy to protect the adjudicator’s right to decline to participate and the lack of evidence as to the nature of the changes stemming from the review.

SHORT CIVIL DECISIONS

Paderewski Society Home (Niagara) v. Skorski, 2019 ONCA 510

[MacPherson, Tulloch and Harvison Young JJ.A.]

Counsel:

A. Davidoff, in person, appellant

Z. Saskin, for the respondent

Keywords: Appeal Book Endorsement

Pezzack Financial Services Inc. v. Raso, 2019 ONCA 517

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

Counsel:

R. Moldaver, Q.C., for the appellants

E. Tingley, for the respondent

Keywords:Trusts, Proceeds of Settlement, Escrow, Garnishment, Standard of Review

Rogers & Company Professional Corporation v. Beer, 2019 ONCA 514

[Sharpe, Brown and Roberts JJ.A.]

Counsel:

No one appearing for the appellants

E. Rogers and K. Fisher, for the respondent

Keywords: Appeal Book Endorsement, Adjournment

CRIMINAL DECISIONS

R. v. Allen, 2019 ONCA 507

[Doherty, Watt and Pardu JJ.A.]

Counsel:

P. Michaud-Simard, for the appellants

E. Whitford, for the respondent

R. v. Ballantine, 2019 ONCA 498

[Hoy A.C.J.O., Hourigan and Paciocco JJ.A.]

Counsel:

J.A. Greenspan and B. Greenshields, for the appellant

S. Horgan, for the respondent

Keywords: Impaired Operation of a Vessel Causing Bodily Harm, Criminal Code, s. 255(2), s. 254(3), Breath Sample, Expert Witness

R. v. Fougere, 2019 ONCA 505

[Juriansz, Pepall and Lauwers JJ.A.]

Counsel:

B. Saad and J. Prince, for the appellant

G. Choi, for the respondent

R. v. M.C., 2019 ONCA 502

[Watt, Benotto and Roberts JJ.A.]

Counsel:

L. P. Strezos, P. H Skinner and K. Davidson, for the appellant

C. Suter, for the respondent

J. Rudin and M. Atkinson, for the intervener Aboriginal Legal Services of Toronto

R. v. Stuckless, 2019 ONCA 504

[Rouleau, Pepall and Huscroft JJ.A.]

Counsel:

G. Tweney and P. Cowle, for the appellant

L. Riva, for the respondent

R v. Altiman, 2019 ONCA 511

[Sharpe, Benotto and Brown JJ.A.]

Counsel:

W. Thompson and S. Secter, for the appellant

S.L. Reid, for the respondent

R v. Majdalani, 2019 ONCA 513

[Sharpe, Brown and Roberts JJ.A.]

Counsel:

M.C. Halfyard and C. Rudnicki, for the appellant, D.M.

R. Sheppard, for the appellant, H.S-F.

K. Doherty, for the respondent

Keywords: Human Trafficking, Procurement into Prostitution

R v. Morris, 2019 ONCA 509

[Strathy C.J.O. (Motions Judge)]

Counsel:

S. Porter and R. Shallow, for the appellant

F. Mirza and G.D. Smith, for the respondent

N.R. Hasan and G. Philipupillai, for the proposed intervener The David Asper Centre for Constitutional Rights

E. Lam and M. Salih, for the proposed intervener the Criminal Lawyers’ Association

C.E. Kasper and D. Varrette, for the proposed intervener Aboriginal Legal Services

S. Wickramasinghe and Z. Kerbel, for the proposed interveners the South Asian Legal Clinic of Ontario, Chinese and Southeast Asian Legal Clinic, and Colour of Poverty/Colour of Change Network

J. Shime and N. Yanful, for the proposed interveners the Black Legal Action Centre and the Canadian Association of Black Lawyers

D. Achtemichuk, for the proposed intervener the Canadian Civil Liberties Association

T. Hashmani, for the proposed intervener Canadian Muslim Lawyers Association

A. Enenajor, for the proposed intervener the Urban Alliance on Race Relations

Keywords: Leave to Intervene, Systemic Racism, Racialized Offenders, Non-Indigenous Offenders, Systemic and Background Factors

R v. Opoku, 2019 ONCA 500

[Doherty, Watt and Pardu JJ.A.]

Counsel:

A. Stastny, for the appellant

M. Hourigan, for the respondent

Keywords: Appeal Book Endorsement, Probation Term, Victim Surcharge, Sentence Appeal, R v. Woolcock, [2002] O.J. No. 4927

R. v. Cole, 2019 ONCA 516

[Juriansz, Watt and Hourigan JJ.A]

Counsel:

M. Salih, for the appellant

A. Hauk, for the respondent

R. v. La Force, 2019 ONCA 522

[Sharpe, Brown and Roberts JJ.A.]

Counsel:

R. Boggs, for the appellant

M. Goswami, for the respondent

R. v. Gale, 2019 ONCA 519

[Hoy A.C.J.O., Hourigan and Paciocco JJ.A.]

Counsel:

B. H. Greenspan and P. R. Hamm, for the appellant

A. Alvaro, for the respondent

R. v. Hustler, 2019 ONCA 528

[Benotto, Miller and Trotter JJ.A.]

Counsel:

J. Zita and M. Huberman, for the appellant

C. Suter, for the respondent

Keywords: Criminal Law, Vetrovec Warning, Credibility, Evidence

R. v. King, 2019 ONCA 530

[Sharpe, Brown and Roberts JJ.A.]

Counsel:

J. Zita, for the appellant

M. Lai, for the respondent

Keywords: Criminal Law, Second Degree Murder, Similar Fact Evidence, Jury Instruction, Parole, Sentencing

R. v. Meloche, 2019 ONCA 521

[Benotto, Miller and Trotter JJ.A.]

Counsel:

E. Taché-Green, for the appellant

M. Goswami, for the respondent

Keywords: Criminal Law, Aggravated Assault, Intoxication, Evidence, Self-Representative, R. v. Richards, 2017 ONCA 424

R. v. Preston, 2019 ONCA 529

[Benotto, Paciocco and Fairburn JJ.A.]

Counsel:

C. Sewrattan, for the appellant

C. Weiler, for the respondent

Keywords: Criminal Law, Sexual Assault, Absence of Evidence, Reasonable Doubt

R v. Scantlebury, 2019 ONCA 526

[Benotto, Miller and Trotter JJ.A.]

Counsel:

L. Jorgensen, for the appellant

J. Tatum, for the respondent

Keywords: Appeal Book Endorsement, Fair Hearing

ONTARIO REVIEW BOARD

Hassan (Re), 2019 ONCA 503

[Doherty, Watt and Pardu JJ.A.]

Counsel:

A. Szigeti, for the appellant

L. Bolton, for the Crown

G.S. MacKenzie, for the Person in Charge of the Centre for Addiction and Mental Health

Keywords: Appeal Book Endorsement, Hybrid Disposition, Liberty, Detention, Criminal Code, Part XX.1, Pinet v. St. Thomas Psychiatric Hospital, 2004 SCC 21

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