Jump To: Table of Contents | Civil Decisions | Short Civil Decisions
Good evening.
Following are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of May 22, 2023.
Continue Reading
The Court released two companion decisions in Markowich v. Lundin Mining Corporation and Peters v. SNC-Lavalin Group Inc. which addressed the meaning of “material change” in the “business, operations or capital” under the secondary market liability provisions of the Securities Act. In both cases, the appellants alleged that the respondents failed to disclose “forthwith” a material change in the respondent reporting issuer’s “business, operations or capital”. The Court upheld the motion judge’s interpretation of “change in business, operations or capital” in Peters and overturned the motion judge’s interpretation in Markowich.
In Interhealth Canada Limited v. O’Keefe, the Court applied the test of breach of fiduciary duty in the context of diverting corporate opportunities, as set out in seminal Supreme Court decision in Can. Aero Service v. O’Malley. The Court agreed with the trial judge that the former CEO did not divert corporate opportunities.
In Imperial Oil Limited v. Haseeb, the Court set aside the decision of the Divisional Court and restored the decision of the Ontario Human Rights Tribunal. The Tribunal had found that Imperial Oil had discriminated against the appellant on the basis of citizenship when it withdrew an offer of employment as an engineer after he revealed that he was not a citizen or permanent resident and could only work on a temporary work visa.
In Davies v. Clarington (Municipality), the Court declined to order costs against third-party lenders who had made a loan to help fund a claim by a train passenger injured during a train accident in 1999. The plaintiff had sued for $50 million, had rejected a $500,000 offer, and only recovered $50,000 in damages after a 106-day trial. The amount of the loan had exceeded $400,000 by that point, as interest had been compounding at rates of almost 30% per year. $3.4 million in costs were awarded against the plaintiff, but were unrecoverable against him. The third-party lenders had no control over the conduct of the litigation and were not entitled to any part of any judgment obtained. Accordingly, the plaintiff was not a “person of straw” and there was therefore no basis for a costs award against the lenders.
In Jakab v Clean Harbors Canada, the appellants’ contractual claim to insure a truck was dismissed at trial, as was their related negligent misrepresentation claim. While the appeal on the contractual claim was dismissed, the appeal from the dismissal of the negligent misrepresentation claim was allowed and remitted to a new trial. The amount at issue is under $65,000.
Other topics covered this week included the survival of a debt on a statutory construction trust claim following bankruptcy as a result of the debt arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity and intervenors.
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
Imperial Oil Limited v. Haseeb, 2023 ONCA 364
Keywords: Constitutional Law, Human Rights, Discrimination, Employment Law, Immigration Law, Citizenship, Canadian Charter of Rights and Freedoms, s. 15, Human Rights Code, R.S.O. 1990, c. H.19, s. 5, s. 11(1), s. 16, s. 16(1), s. 16(2), s. 16(3), s. 34, s. 34(1), s. 45(2), Brooks v. Canada Safeway Ltd., [1989] 1 S.C.R. 1219, R. v. Perka, [1984] 2 S.C.R. 232, Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131, The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Briggs v. Durham (Police Board), 2022 ONCA 823, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Moore v. British Columbia (Education), 2012 SCC 61, Peel Law Association v. Pieters, 2013 ONCA 396, Québec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Centre), 2015 SCC 39, Ontario v. Association of Midwives, 2020 ONSC 2839, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3, Entrop v. Imperial Oil Limited (2000), 50 O.R. (3d) 18 (C.A.), Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 S.C.R. 536, Fraser v. Canada (Attorney General), 2020 SCC 28, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Stewart v. Elk Valley Coal Corp., 2017 SCC 30, Canada (Minister of Finance) v. Finlay, [1986] 2 S.C.R. 607, Bedford v. Canada, 2010 ONSC 4264, Carroll v. Toronto-Dominion Bank, 2021 ONCA 38, Landau v. Ontario (Attorney General), 2013 ONSC 6152, Washington [v. Student Federation of the University of Ottawa, 2010 HRTO 1976], (Litigation Guardian of) v. Ontario (Minister of Health) (2001), 55 O.R. (3d) 43 (C.A.), Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Railway Co. v. Canada (Canadian Human Rights Commission), [1987] 1 S.C.R. 1114, Robichaud v. Canada (Treasury Board), [1987] 2 S.C.R. 84, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Fawcett v. Fawcett, 2018 ONCA 150, Maurice v. Priel, [1989] 1 S.C.R. 1023, Thomas A. Cromwell, Locus Standi: A Commentary on the Law of Standing in Canada (Toronto: Carswell, 1986), The Construction of Statutes, 7th ed. (Toronto: LexisNexis Canada, 2022)
Interhealth Canada Limited v. O’Keefe, 2023 ONCA 368
Keywords: Corporations, Directors, Breach of Fiduciary Duty, Misappropriation of Corporate Opportunities, Civil Procedure, Trials, Procedural Fairness, Evidence, Admissibility, Affidavits, Witnesses, Cross-examination, Time Limits, Recalling of Witnesses, Rules of Civil Procedure, r. 53.01(3), Can. Aero Service v. O’Malley, [1974] S.C.R. 592, R v. Samaniego, 2022 SCC 9, 412 C.C.C. (3d) 7, Griffi v. Lee, 2005 CanLII 48316 (ONSC), Southwind v. Canada, 2021 SCC 28
40 Days for Life v. Dietrich, 2023 ONCA 379
Keywords: Torts, Defamation, Anti-SLAPP, Online Harassment, Constitutional Law, Freedom of Expression, Civil Procedure, Intervenors, Friends of the Court, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Rules of Civil Procedure, r. 13.02, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), RWDSU Local 558 v. PepsiCola Canada Beverages (West) Ltd., 2002 SCC 8, Grant v. Torstar Corp., 2009 SCC 61, R. v. Doering, 2021 ONCA 924
Convoy Supply Ltd. v. Elite Construction (Windsor) Corp., 2023 ONCA 373
Keywords: Bankruptcy and Insolvency, Debts Surviving Bankruptcy, Fraud, Embezzlement, Misappropriation or Defalcation While Acting in a Fiduciary Capacity, Construction Law, Statutory Trust Claims, Civil Procedure, Orders, Default Judgments, Amending, Setting Aside, or Varying Orders, Deemed Admissions, Extrinsic Evidence, Admissibility, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 69.3, s. 69.4, s. 178(1)(d), Construction Lien Act, R.S.O. 1990, c. C.30, Construction Act, 1990, c. C.30, Rules of Civil Procedure, r. 59.06(2), Simone v. Daley (1999), 43 O.R. (3d) 511 (C.A.), Bibico Electric Inc v. Battlefield Electrical Services Inc., 2012 ONCA 676, aff’g, [2011] O.J. No. 6557 (S.C.), Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd., 2022 ONCA 556, Re: Ieluzzi (#2), 2012 ONSC 1474
Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360
Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Costs, Securities Act, R.S.O. 1990, c. S.5, Class Proceedings Act, 1992, S.O. 1992, Criminal Code, R.S.C. 1985, c. C-46, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Director of Public Prosecutions Act, S.C. 2006, c. 9, s. 121, s. 13, Markowich v. Lundin Mining Corporation, 2023 ONCA 359, NC-Lavalin Group Inc. v. Canada (Public Prosecution Service), 2019 FC 282, Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92, Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Das v. George Weston Limited, 2018 ONCA 1053, Markowich v. Lundin Mining Corporation, 2022 ONSC 81, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, Coffin v Atlantic Power Corp., 2015 ONSC 3686, Paniccia v. MDC Partners Inc., 2018 ONSC 3470
Markowich v. Lundin Mining Corporation, 2023 ONCA 359
Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Certification, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 1(1), s. 57, s. 75(1), s. 75(2), s. 138.1, s. 138.3(4), s. 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5, Housen v. Nikolaisen, 2002 SCC 33, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310 (Div. Ct.), Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, rev’d on other grounds, 2014 ONCA 90, aff’d 2015 SCC 60, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, aff’d 2010 ONSC 3926 (Div. Ct.), Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021, Miller v. FSD Pharma, Inc., 2020 ONSC 4054
Jakab v. Clean Harbors Canada, Inc., 2023 ONCA 377
Keywords: Contracts, Interpretation, Covenant to Insure, Ambiguity, Contra Proferentem, Torts, Negligence, Negligent Misrepresentation, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2249778 Ontario Inc. v. Smith (Fratburger), 2014 ONCA 788, Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12, Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, Queen v. Cognos Inc., [1993] 1 S.C.R. 87, Mahendran v. 9660143 Canada Inc., 2022 ONCA 676
Davies v. Clarington (Municipality), 2023 ONCA 376
Keywords: Torts, Maintenance, Champerty, Civil Procedure, Costs, Non-Parties, Abuse of Process, Appeals, Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 6(1)(b), 131(1), Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30, 33.1, Davies v. Clarington (Municipality) (2006), 266 D.L.R. (4th) 375 (Ont. S.C.), Davies v. Corporation of the Municipality of Clarington et al., 2010 ONSC 418, Davies v. The Corporation of the Municipality of Clarington, 2018 ONSC 4370, Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292, 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, Arkin v. Borchard Lines Ltd. & Ors, [2005] EWCA Civ 655, Chapelgate Credit Opportunity Master Fund Ltd. v. Money & Ors, [2020] EWCA Civ 246, Fresco v. Canadian Imperial Bank of Commerce, 2021 ONCA 46, Hunt v. Worrod, 2019 ONCA 540, The St. James’ Preservation Society v. Toronto (City), 2007 ONCA 601, Housen v. Nikolaisen, 2002 SCC 33, Behn v. Moulton Contracting Ltd., 2013 SCC 26, McIntyre Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257 (C.A.), Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267, Das v. George Weston Limited, 2018 ONCA 1053
Short Civil Decisions
Hayer v. Bertasiene, 2023 ONCA 375
Keywords: Civil Procedure, Costs, Fresh Evidence, Hayer v. Bertasiene, 2023 ONCA 302
CIVIL DECISIONS
Imperial Oil Limited v. Haseeb, 2023 ONCA 364
[van Rensburg, Sossin and Copeland JJ.A.]
Counsel:
T. G. Young and M. E. Maxwell, for the appellant
R. Nixon and D. Burns-Shillington, for the respondent Imperial Oil Limited
B. A. Blumenthal, for the respondent Human Rights Tribunal of Ontario
S. Choudhry and A. Nayerahmadi, for the interveners the South Asian Legal Clinic of Ontario and the Colour of Poverty/Colour of Change Network
Keywords: Constitutional Law, Human Rights, Discrimination, Employment Law, Immigration Law, Citizenship, Canadian Charter of Rights and Freedoms, s. 15, Human Rights Code, R.S.O. 1990, c. H.19, s. 5, s. 11(1), s. 16, s. 16(1), s. 16(2), s. 16(3), s. 34, s. 34(1), s. 45(2), Brooks v. Canada Safeway Ltd., [1989] 1 S.C.R. 1219, R. v. Perka, [1984] 2 S.C.R. 232, Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131, The Guarantee Company of North America v. Royal Bank of Canada, 2019 ONCA 9, Ontario (Health) v. Association of Ontario Midwives, 2022 ONCA 458, Turkiewicz (Tomasz Turkiewicz Custom Masonry Homes) v. Bricklayers, Masons Independent Union of Canada, Local 1, 2022 ONCA 780, Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, Canadian Federation of Students v. Ontario (Colleges and Universities), 2021 ONCA 553, Briggs v. Durham (Police Board), 2022 ONCA 823, Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, Shaw v. Phipps, 2012 ONCA 155, Moore v. British Columbia (Education), 2012 SCC 61, Peel Law Association v. Pieters, 2013 ONCA 396, Québec (Commission des droits de la personne et des droits de la jeunesse) v. Bombardier Inc. (Bombardier Aerospace Training Centre), 2015 SCC 39, Ontario v. Association of Midwives, 2020 ONSC 2839, British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 S.C.R. 3, Entrop v. Imperial Oil Limited (2000), 50 O.R. (3d) 18 (C.A.), Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 S.C.R. 536, Fraser v. Canada (Attorney General), 2020 SCC 28, British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868, Stewart v. Elk Valley Coal Corp., 2017 SCC 30, Canada (Minister of Finance) v. Finlay, [1986] 2 S.C.R. 607, Bedford v. Canada, 2010 ONSC 4264, Carroll v. Toronto-Dominion Bank, 2021 ONCA 38, Landau v. Ontario (Attorney General), 2013 ONSC 6152, Washington [v. Student Federation of the University of Ottawa, 2010 HRTO 1976], (Litigation Guardian of) v. Ontario (Minister of Health) (2001), 55 O.R. (3d) 43 (C.A.), Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Railway Co. v. Canada (Canadian Human Rights Commission), [1987] 1 S.C.R. 1114, Robichaud v. Canada (Treasury Board), [1987] 2 S.C.R. 84, Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, Fawcett v. Fawcett, 2018 ONCA 150, Maurice v. Priel, [1989] 1 S.C.R. 1023, Thomas A. Cromwell, Locus Standi: A Commentary on the Law of Standing in Canada (Toronto: Carswell, 1986), The Construction of Statutes, 7th ed. (Toronto: LexisNexis Canada, 2022)
facts:
The appellant was an international student in Canada about to graduate with a mechanical engineering degree, and not yet a Canadian citizen or permanent resident. Upon graduation, he was to be entitled to a Post-Graduate Work Permit (“PGWP”), which would have allowed him to work full-time, anywhere in Canada, for any employer, for up to three years.
The appellant applied for an entry-level engineering job with Imperial Oil as he neared university graduation. Imperial had a policy that required, as a condition of employment, permanent eligibility to work in Canada, as established by proof of either Canadian citizenship or permanent resident status. The appellant was the top candidate for the job. Imperial offered him the job, conditional on permanent eligibility to work in Canada. After initially answering in the affirmative of being eligible, when the appellant subsequently disclosed that he was neither a Canadian citizen nor a permanent resident, and would have to initially work on the three-year PGWP, Imperial withdrew its job offer.
In the time period relevant to this appeal, the appellant was not a Canadian citizen nor a permanent resident (he has since become a Canadian citizen). In February 2015, the appellant filed an application with the tribunal, as the Ontario’s Human Rights Code (the “Code”) prohibits discrimination in employment on the basis of citizenship. The appellant claimed that Imperial had discriminated against him on the basis of citizenship in requiring that he be a Canadian citizen or permanent resident to be hired, despite the fact that by the time the position was anticipated to commence, he would have his PGWP and an unrestricted right to work in Canada for up to three years.
The Human Rights tribunal found there had been discrimination by Imperial on the basis of citizenship and awarded the appellant $120,360.70 in damages for lost income, injury to dignity, feelings and self-respect, and pre-judgment interest. Imperial applied for judicial review of the tribunal’s decision to the Divisional Court. A majority of the Divisional Court allowed the application for judicial review, quashed the tribunal’s decision, and declined to remit the matter to the tribunal for a new hearing. The appellant appealed the Divisional Court’s decision.
issues:
- Was the tribunal’s decision that the appellant had standing to file an application claiming discrimination in employment on the basis of citizenship reasonable?
- Was the tribunal’s finding of a prima facie claim of employment discrimination on the basis of citizenship reasonable?
- Was the tribunal’s finding that Imperial withdrew the job offer because the appellant was not a Canadian citizen or permanent resident, rather than solely because of his dishonesty in the job competition, reasonable?
- Was the tribunal’s decision that the defence under s. 16(1) of the Code was not available to Imperial reasonable?
holding:
Appeal allowed.
reasoning:
- Yes.
The Court agreed with the appellant that the tribunal’s analysis and conclusion regarding his standing were reasonable. The principles relied on by the tribunal to assess the appellant’s standing were consistent with the broad language of s. 34(1) of the Code, with prior jurisprudence of the tribunal on standing, and with the approach to direct interest standing (private standing) in the courts. Ultimately, the factual conclusions reached by the tribunal were well-grounded in the evidentiary record and were reasonable.
First, the Court reasoned that as the tribunal noted, s. 34(1) of the Code provided for a broad grant of standing. Any person who “believes that any of his or her rights under Part I have been infringed” has standing to apply to the tribunal for a remedy. One could imagine scenarios where there was no factual basis for a person’s belief that their rights have been infringed, and on that basis the assertion of standing would be speculative. But the Court held that that was not the case here.
Citing Carasco v. University of Windsor (“Carasco”), the Court explained that the test applied by the courts for private interest standing required that the applicant or plaintiff have a personal and direct interest in the issue raised in the proceeding. The interest must not be too indirect, remote, or speculative. Various formulations of this requirement were used in the jurisprudence, including that the person is “specifically affected by the issue”, has a “personal legal interest”, or has a “personal and direct interest” in the outcome of the proceeding. This type of standing was often referred to as “direct interest” or “private” standing to distinguish it from public interest standing (the latter having different requirements). A claim in which there is no direct interest is in the nature of public interest standing, and under s. 35(1) of the Code, only the Ontario Human Rights Commission may bring such claims.
In this case, the evidence before the tribunal supported its findings that the appellant was a genuine job seeker; that upon graduation he would be entitled to a PGWP which would entitle him to work full-time, anywhere in Canada, for any employer, for up to three years; that he was anticipated to graduate in January 2015 (and in the event did); and that the expectation of both the appellant and Imperial was that he would commence work after he graduated (i.e., once he was permitted to work without restriction under the PGWP program). These findings supported the conclusion that the appellant had a direct interest in the hiring policy of Imperial limiting prospective employees to Canadian citizens and permanent residents. The tribunal’s conclusion that the appellant had satisfied the requirements for standing under s. 34(1) of the Code and to bring a claim of discrimination was reasonable.
- Yes.
In the Court’s view, the tribunal’s analysis of the scope of discrimination on the basis of citizenship in s. 5 of the Code was reasonable. However, the Court recognized that it was not the role of the Court to conduct a de novo interpretation of s. 5, but rather to engage with the tribunal’s reasoning and determine whether the tribunal’s interpretation was “defensible in light of the interpretive constraints imposed by law.”
First, the Court established that two principles must be borne in mind when considering the meaning of discrimination on the basis of citizenship in s. 5 of the Code: (1) in the administrative law context, a decision-maker must interpret legislative provisions “consistent with the text, context and purpose, applying its particular insight into the statutory scheme at issue”; and, (2) human rights legislation is to be given a broad, liberal, and purposive interpretation, consistent with its remedial objectives.
Second, the Court reasoned that the text of both ss. 5 and 16 of the Code is the starting point for the interpretation of the meaning of “equal treatment with respect to employment without discrimination because of … citizenship.” Section 16 creates statutory defences to claims of discrimination on the basis of citizenship in some circumstances where Canadian citizenship is a requirement, qualification, or consideration.
Third, the Court noted that “citizenship” is not defined in the Code. Accordingly, on a plain reading, s. 5 appears to prohibit (subject to applicable defences) discrimination based on whether someone is or is not a Canadian citizen and also discrimination based on whether someone is or is not a citizen of another country. However, citing Rizzo & Rizzo Shoes Ltd. (Re) (“Rizzo”), the ordinary meaning of the legislative provision is not the end of the analysis.
Fourth, the Court found that reading s. 5 in the context of s. 16 of the Code, as the tribunal did, supported the tribunal’s analysis of the broader scope of s. 5. Based upon the principles of statutory interpretation, the Court held that it was reasonable for the tribunal to consider the scope of the defences available in s. 16 of the Code as providing interpretive guidance on the scope of “citizenship” as a prohibited ground of discrimination in s. 5. Both ss. 16(1) and 16(3) create defences to allegations of discrimination on the basis of citizenship that are applicable to the employment context. Consistent with the tribunal’s reasoning, the fact that the legislature created this defence and the terms in which it is expressed, show that the legislature understood that the concept of discrimination on the basis of citizenship in s. 5 of the Code applied to a requirement of Canadian citizenship.
Fifth, the Court clarified how in the statutory context of ss. 5 and 16 of the Code, and in particular s. 16(1), the provincial statute clearly invokes considerations of federal immigration law. With extensive federal legislation and regulation, the Court explained that the provincial legislature must have been aware that federal law is the most likely source of a requirement, qualification or consideration relating to Canadian citizenship “imposed or authorized by law.” In this particular context, the Court found that the harmony between the tribunal’s interpretation of the scope of discrimination on the basis of citizenship and federal immigration law and policy supports the reasonableness of its interpretation. The Court further held that tribunals and courts should strive to adopt interpretations of provincial laws that achieve harmony with, rather than frustrate, federal legislation.
The Court found that the tribunal’s conclusion that that Imperial’s policy discriminated against the appellant on the basis of citizenship reasonable. The Court reasoned that the tribunal reasonably found that the appellant: (1) was a member of a group defined by a protected ground under the Code, citizenship, because he was a non-Canadian citizen; (2) experienced adverse treatment because the job offer was withdrawn; and, (3) non-citizenship was a factor in the adverse treatment. The appellant was a non-Canadian citizen, who had a right to work fulltime, for any employer, anywhere in Canada, for up to three years. The Court found that the fact that the policy did not exclude all non-Canadian citizens did not “cure” its discriminatory effect. Rather, it resulted in partial discrimination (against a subset of non-Canadian citizens eligible to work in Canada), rather than full discrimination (against all non-Canadian citizens eligible to work in Canada).
The Court further held that the Divisional Court majority did not correctly apply the standard of review. First, the Court found that the majority reasons did not take as a starting point respectful attention to the reasons of the tribunal. Rather, the majority started by assessing the question of whether Imperial discriminated against the appellant by re-doing its own analysis from scratch. Second, the Court found that the majority mischaracterized the reasons of the tribunal. The Court clarified that respectful attention to a tribunal’s reasons, which is the starting point of reasonableness review, cannot be accorded if the reviewing court mischaracterizes the tribunal’s reasons. Third, the majority of the Divisional Court failed to follow well-established analytical principles for human rights claims.
- Yes.
The Court found that the tribunal’s finding that Imperial withdrew the job offer because the appellant was not a Canadian citizen or a permanent resident reasonable. This was evidenced by the letter that Imperial sent to the appellant withdrawing the job offer and which expressly stated that the job offer was being withdrawn because he was unable to meet the employment condition of permanent eligibility to work in Canada established by proof of either Canadian citizenship or permanent residence. The letter also invited the appellant to re-apply for work with Imperial if he became eligible to work permanently in Canada, and said that if he did so, Imperial “would be pleased to consider [his] application at that time.” The letter made no reference whatsoever to the appellant’s dishonesty about his status, and the Court found that the invitation to reapply belied Imperial’s reliance on the appellant’s lies as the reason for withdrawing the job offer.
The Court further found that the tribunal’s legal analysis about the impact of the appellant’s dishonesty about his eligibility to work permanently in Canada during the job competition was reasonable and consistent with human rights jurisprudence. The tribunal discussed the burden of proof at the outset of its discrimination analysis, and correctly stated that in human rights cases, the applicant has the onus of proving, on a balance of probabilities, that a violation of the Code has occurred. The tribunal correctly recognized that while the evidential burden may shift to the respondent during the analysis, the ultimate onus of proving discrimination remains on the appellant.
- Yes.
Subsection 16(1) of the Code provides that “a right under Part I to non-discrimination because of citizenship is not infringed where Canadian citizenship is a requirement, qualification or consideration imposed or authorized by law.” The Court held that the tribunal’s decision that the defence under s. 16(1) of the Code was not available to Imperial was reasonable. The Court found that Imperial failed to raise the s. 16(1) defence before the tribunal and should not be permitted to raise it for the first time on review, particularly given that the tribunal had specifically asked Imperial whether the section 16(1) defence was being raised and Imperial did not assert that defence in its submissions.
There is a particular concern that arises from new issues being argued in the judicial review context because of the reviewing court’s role vis-à-vis the tribunal. The legislature made the decision to entrust adjudication of human rights claims to the tribunal, subject to review by the Courts. Where an issue is not raised before the tribunal, there is no decision on an issue to review. Furthermore, the premise of judicial review starts with “respectful attention” to an administrative decisionmaker’s reasons, which cannot be applied where an issue was not raised below, and the tribunal was not given the opportunity to consider the issue and provide reasons. Accordingly, it was beyond the scope of this appeal to pronounce on the scope of that statutory defence.
Interhealth Canada Limited v. O’Keefe, 2023 ONCA 368
[Hoy, Thorburn and Favreau JJ.A.]
Counsel:
R. B. Cohen, D. Kelman and S. Mills, for the appellant
E. Evangelista, for the respondent, MO
P. L. Vay, S. Bass and K. A. Johnson, for the respondent, Canadian Hospitals Network International Inc.
Keywords: Corporations, Directors, Breach of Fiduciary Duty, Misappropriation of Corporate Opportunities, Civil Procedure, Trials, Procedural Fairness, Evidence, Admissibility, Affidavits, Witnesses, Cross-examination, Time Limits, Recalling of Witnesses, Rules of Civil Procedure, r. 53.01(3), Can. Aero Service v. O’Malley, [1974] S.C.R. 592, R v. Samaniego, 2022 SCC 9, 412 C.C.C. (3d) 7, Griffi v. Lee, 2005 CanLII 48316 (ONSC), Southwind v. Canada, 2021 SCC 28
facts:
The appellant, Interhealth Canada Limited, sued MO, a former CEO and director, for breach of fiduciary duty. Relying on Can. Aero Service v. O’Malley, [1974] S.C.R. 592 (“Canaero”), the appellant alleged that, after resigning, MO diverted two maturing corporate opportunities that belonged to it to Canadian Hospital Network International Inc. (“CHNI”), a corporation in which MO held a 15% interest for a time after his resignation. The trial focused on these two opportunities: the “HIH Opportunity” and the “Cromwell Opportunity”.
On or around April 12, 2006, CHNI entered into an agreement with HIH to provide services in relation to a project. At the time, MO held a 15% beneficial interest in CHNI. On April 9, 2006, four months after the appellant had submitted its proposal to HIH, and more than two months after HIH had rejected the appellant’s proposal, CHNI submitted a proposal to HIH to act as “Employee Prime.” That proposal was accepted, resulting in the April 12, 2006 agreement which constitutes the “HIH Opportunity.”
In December 2006, a corporation which CHNI had a minority interest in acquired the corporation which held a 20-year operating licence for Cromwell Hospital. MO served as the Hospital’s Interim CEO from December 2006 until February 2007. MO or CHNI’s indirect interest in the purchase of the operating licence for the Cromwell Hospital is the “Cromwell Opportunity” – the second alleged maturing opportunity of the appellant that MO diverted to CHNI. The appellant also sued CHNI. Its claim against CHNI depended on a finding that MO breached his fiduciary duty to the appellant.
After an 18-day trial, the trial judge found that the two “opportunities” the appellant alleged MO had diverted to CHNI did not fairly belong to the appellant in the circumstances. Therefore, MO had not breached his fiduciary duty to the appellant and, because he had not, there could be no finding against CHNI. She dismissed the appellant’s claims against MO and CHNI.
issues:
- Did the trial judge err in conducting a “trial by stopwatch” and deprived it of due process by unreasonably cutting its trial counsel off before he could complete his cross-examination of two key witnesses?
- Did the trial judge err in dismissing its motion to recall MO for cross-examination pursuant to r. 53.01(3) of the Rules of Civil Procedure, and in refusing to admit two affidavits?
- Did the trial judge make substantive errors in her interpretation and application of applicable law?
holding:
Appeal dismissed.
reasoning:
- No.
The Court held that where counsel seeks an extension of the time agreed or fixed for cross-examination, and their cross-examination has not been unduly repetitive, rambling, argumentative, misleading or irrelevant, it is prudent for a trial judge to inquire as to what additional questions counsel wishes to ask, and how long doing so might take before cutting counsel off. This brief exchange may need to take place in the absence of the witness. Such an inquiry should not create delay. Armed with the responses to these questions, the trial judge will be able to quickly assess the relevance and materiality of counsel’s proposed line of further inquiry and determine whether a brief extension is reasonable and warranted in all the circumstances. Whether the pace of counsel’s cross-examination had been slowed by unreasonable interjections of opposing counsel may be a relevant factor in deciding whether a brief extension is appropriate.
Here, the Court held that the trial judge did not ask counsel for the appellant what additional questions he wished to ask MO or SS, and how long doing so might take. She may have concluded that trial counsel had failed to focus and get to the point, as she had cautioned him to do, but she made no comment to that effect.
In any event, counsel did not put on the record what additional lines of inquiry he sought to pursue, and why. While counsel said it was clear that nothing he said would have changed the trial judge’s mind, he nonetheless should have done so. Nor did the appellant outline in its factum on appeal what those additional lines of inquiry were, and why he was prejudiced by his inability to ask further questions.
- No.
The appellant argued that the trial judge’s exercise of discretion in dismissing its motion was unreasonable in the circumstances. The Court held that the trial judge considered the jurisprudence which the parties agreed applied. She balanced the interests of both parties. She considered relevant factors and concluded that MO should not be recalled. She rejected the appellant’s argument that recall was warranted solely on the basis of relevance. The question was not whether the evidence sought to be gained from recalling MO was relevant (which the respondents continued to dispute at trial). Rather, it was whether there would be a “failure of justice” if he were not recalled. The trial judge did not err in applying a multi-factorial approach. The Court concluded that except perhaps in exceptional circumstances, relevance alone sets the bar too low on a recall motion.
Further, the Court held that the trial judge did not err by refusing to admit the affidavits. She had permitted the appellant to use the affidavit of one of the witnesses to attempt to impeach that witness. There was therefore no basis or need to admit the affidavit itself as evidence. As to the other affidavit, the affiant was not a witness at trial. The trial judge properly ruled that it was inadmissible hearsay. None of the exhibits to the affidavits were identified or authenticated in such a way that they could have been admitted into evidence in their own right.
- No.
First, the Court held that it was open to the trial judge to accept the evidence of MO that he believed that the possibility of being involved with HIH or the Cromwell Opportunity would not have been available to the appellant, as she clearly did, and to conclude that the appellant would not have believed that the Cromwell Opportunity was open to it.
Further, it was open to the trial judge to draw reasonable and logical inferences based on the admissible evidence. A finding that a defendant has usurped a corporate opportunity does not depend upon proof by a plaintiff that, but for the acts of the fiduciary, the plaintiff would have obtained the opportunity. Ultimately, the Court concluded that the trial judge’s finding that the HIH Opportunity and the Cromwell Opportunity were not available to the appellant was amply supported by the record.
Second, the Court was not persuaded that the trial judge’s conclusions were tainted by palpable and overriding error. While the trial judge could have done a far better job of explaining why she came to these conclusions, each of the impugned findings was supported by the record. The Court reasoned that the trial judge’s finding that the HIH Opportunity was “an entirely different opportunity” from that pursued by the appellant is supported by the evidence of MO as well as by the documentation. Further, the trial judge’s credibility assessments were entitled to deference. There was no basis for the Court to interfere with the trial judge’s acceptance of MO’s evidence as to why he resigned, and why he accelerated the date of his resignation. Reading her reasons in context, the evidence of SS and the resignation of several other directors at nearly the same time as MO clearly bolstered his evidence as to why he accelerated his resignation and underpinned her credibility finding.
Third, the Court held that the trial judge did not err in her application of Canaero by considering whether the Cromwell Opportunity and the HIH Opportunity were different from the opportunities which the appellant had sought to pursue. The “substantial resemblances” language in Canaero was merely a factor that may have assisted in determining whether the opportunity pursued by a fiduciary post-departure was different from one that the company pursued. In the case of the Cromwell Opportunity, the “project” changed from inquiring about the possibility of a contract to manage a hospital, to acquiring a licence to operate a hospital. In the case of the HIH Opportunity, the “project” changed from being hired by HIH as consultant – a Strategic Healthcare Planner – to acting as HIH’s representative, supervising that consultant and others. The opportunities were not simply “varied in some details”. They were fundamentally different.
Further, the Court held that the trial judge did not err in law by not considering that the Cromwell Opportunity could possibly be described as being in a related business as an indicator that it belonged to the appellant. The Court reasoned that the question of whether a corporate opportunity has been appropriated is a highly contextual one, which must be tested in each case by many factors. Whether, or the extent to which, the opportunity was in a related business might be a relevant factor, it was only one factor. The other factors that the trial judge relied on amply supported her conclusion that MO did not appropriate a corporate opportunity and the record supported her conclusion. There was no “opportunity” for MO to usurp, as it was nothing more than an exploratory expression of interest.
Fourth, the Court accepted the trial judge’s finding that MO did not resign to pursue a relationship with HIH. Based on her finding of fact that the HIH Opportunity would not have been available to the appellant, MO’s pre-resignation conduct posed no threat to the appellant’s market base. Taking preliminary steps in the period between submitting notice of resignation and the effective date of resignation that might assist in obtaining work post-resignation that was not, and would not be, available to one’s employer was not competing. The Court added that MO’s pre-resignation involvement with HIH did not breach his fiduciary duty. Even if it did, the appellant had not satisfied the requisite causal link between the breach and the gain which the appellant sought disgorgement of.
40 Days for Life v. Dietrich, 2023 ONCA 379
[Fairburn A.C.J.O. (Motion Judge)]
Counsel:
A. Bernstein, S. Whitmore, J. Lowenstein, and A. Matas, for the appellant BD
P.H. Horgan and R.T.R. Fernandes, for the respondent 40 Days for Life
Z.R. Levy and R. Laurion, for the proposed intervener Canadian Civil Liberties Association
Keywords: Torts, Defamation, Anti-SLAPP, Online Harassment, Constitutional Law, Freedom of Expression, Civil Procedure, Intervenors, Friends of the Court, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 137.1, Rules of Civil Procedure, r. 13.02, Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Peel (Regional Municipality) v. Great Atlantic & Pacific Co. of Canada Ltd. (1990), 74 O.R. (2d) 164 (C.A.), RWDSU Local 558 v. PepsiCola Canada Beverages (West) Ltd., 2002 SCC 8, Grant v. Torstar Corp., 2009 SCC 61, R. v. Doering, 2021 ONCA 924
facts:
The respondent, 40 Days for Life (“40 Days”), conducted vigils outside of abortion clinics. The appellant often engaged online with social justice issues, including pro-choice rights and reproductive freedom. The appellant posted a series of videos online relating to 40 Days and their protest activities. In some of the videos she made statements about 40 Days that it alleged were false and defamatory. 40 Days commenced an action for damages for libel, internet harassment, breach of contract, inducement of breach of contract, fraud, and/or conspiracy. In response, the appellant brought an anti-SLAPP motion under s. 137.1 of the Courts of Justice Act (the “CJA”). The motion was dismissed.
Prior to bringing her anti-SLAPP motion, 40 Days obtained two interim injunctions against the appellant and other unidentified defendants. The other defendants have appealed, with leave, those injunctions to the Divisional Court. The Canadian Civil Liberties Association (“CCLA”) was granted leave to intervene in the Divisional Court. In the meantime, the appellant appealed the decision to dismiss her anti-SLAPP motion and the CCLA sought leave to intervene on the appeal to the Court.
On appeal, the appellant argued that the motion judge erred in finding that 40 Days had established substantial merit for its claims of internet harassment and conspiracy without finding grounds to believe that 40 Days had suffered the requisite harms. She also argues that the motion judge failed to adequately consider the context of the counter-protests and their connection with the public debate over abortion access in Canada, and thus failed to appreciate that the appellant’s counter-protests were expressive activities worthy of protection. In addition, the appellant submitted that the motion judge erred in conducting the balancing exercise under s. 137.1(4)(b) of the CJA by determining that the public interest in permitting the claims to continue outweighed the public interest in protecting the appellant’s expression. Therefore, the case will necessarily engage with whether and to what extent online protests should be considered analogous to in-person protests and how online activity intersects with the freedom of expression. Thus, while this is a private dispute, the resolution of that dispute will, to some extent, engage with a public policy dimension.
The CCLA sought intervenor status and proposes to make submissions on two issues. First, on the issue of whether freedom of expression ought to be protected in the online world, the CCLA proposes to provide a roadmap for applying the existing traditional jurisprudence on the location of expressive activity to the virtual environment. Second, the CCLA proposes to make submissions about how the new tort of internet harassment should develop in light of freedom of expression.
issues:
Should the CCLA be granted intervenor status?
holding:
Motion granted.
reasoning:
Yes.
The Court noted that, in an appeal involving private actors, the proposed intervenor must meet a stringent standard, one that can bend somewhat where issues of public policy arise.
40 Days opposed the CCLA’s intervention on five grounds: (1) This was a private claim and the appellant is capable of advancing the relevant submissions, (2) the CCLA’s submissions will be duplicative of the appellant’s on the applicability of freedom of expression jurisprudence, (3) the intervention will prejudice 40 Days because the motion was not brought in a timely manner, (4) the CCLA was really supporting a “pro-choice cause”, and (5) the CCLA overstepped its appropriate role as an intervenor in the Divisional Court and it is likely it will do the same here.
The Court rejected 40 Days’ arguments. First, the Court noted that there are remedies available if the CCLA oversteps in the intervenor role. Further, 40 Days was, in effect, asking the Court to anticipate that, if the CCLA is granted intervenor status, that it will breach the order allowing for the intervention by exceeding the boundaries of that order. The Court disagreed, stating that it was proper to operate on the assumption that the CCLA knows well the appropriate role of an intervenor and that the CCLA will comply with any order made.
Next, the Court stated that intervenors do not need to be entirely disinterested in the outcome of a legal issue. To the contrary, intervenors are frequently aligned with a party in terms of the outcome of a legal issue. It is the outcome of the case that they must remain distanced from. Therefore, the motion really came down to whether the CCLA had something useful to contribute to the appeal beyond what the appellant had already set out in her materials, and whether prejudice will arise from an intervention at this stage. The Court stated that the CCLA did have something useful to contribute because there was little overlap in the arguments put forth in the materials. Furthermore, any risk of overlap can be mitigated by narrowing the terms of the intervention. Lastly, even though the motion was brought at a fairly late stage, there was enough time for the CCLA to file a factum and for the parties to file reply factums should they wish to do so. The Court concluded that the CCLA should be granted intervenor status as a friend of the court.
Convoy Supply Ltd. v. Elite Construction (Windsor) Corp., 2023 ONCA 373
[Trotter, Sossin and Copeland JJ.A.]
Counsel:
C.J. Bondy, for the appellants
E. Durst, for the respondent
Keywords: Bankruptcy and Insolvency, Debts Surviving Bankruptcy, Fraud, Embezzlement, Misappropriation or Defalcation While Acting in a Fiduciary Capacity, Construction Law, Statutory Trust Claims, Civil Procedure, Orders, Default Judgments, Amending, Setting Aside, or Varying Orders, Deemed Admissions, Extrinsic Evidence, Admissibility, Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, s. 69.3, s. 69.4, s. 178(1)(d), Construction Lien Act, R.S.O. 1990, c. C.30, Construction Act, 1990, c. C.30, Rules of Civil Procedure, r. 59.06(2), Simone v. Daley (1999), 43 O.R. (3d) 511 (C.A.), Bibico Electric Inc v. Battlefield Electrical Services Inc., 2012 ONCA 676, aff’g, [2011] O.J. No. 6557 (S.C.), Yanic Dufresne Excavation Inc. v. Saint Joseph Developments Ltd., 2022 ONCA 556, Re: Ieluzzi (#2), 2012 ONSC 1474
facts:
In July 2020, the respondent commenced a claim against the appellants seeking, inter alia, approximately $92,000 in damages for breach of trust, or in the alternative, general damages in the amount of $92,000. The claim included a request for an order, if required, for leave to continue the action pursuant to s. 69.4 of the Bankruptcy and Insolvency Act (the “BIA”) as against any defendant that has made or makes an assignment in bankruptcy, as well as an order, pursuant to s. 178(1)(d) of the BIA, that a damages award made in the action would not be discharged in the event that any defendant has made or makes an assignment in bankruptcy. The Statement of Claim pleaded and relied upon the Construction Lien Act, R.S.O. 1990, c. C.30 (the “CLA”) and the Construction Act, 1990, c. C.30 (the “CA”), alleging that the appellants were liable pursuant to the statutory trust provisions and that the individual appellant was an officer, director, guarantor, and directing mind of the corporate appellant.
The appellants were noted in default. Default judgment was granted by Gordon J. on March 3, 2021. The order included an award of approximately $92,000 in damages for breach of trust, and an award of $7,500 in punitive damages. The respondent took various steps to attempt to enforce the default judgment. The appellants were not compliant with the enforcement procedures in that they failed to produce information and documents that they were repeatedly ordered to provide. At the time the motion under appeal was heard, the appellants remained in breach of various court orders to produce documents and attend for examination in aid of execution. Following the initiation of contempt proceedings against the appellants by the respondent in relation to orders made in the course of the respondent’s attempts to enforce the default judgment, the individual appellant made an assignment into bankruptcy on December 14, 2021.
issues:
- Did the motion judge err in refusing to admit evidence on the motion tendered by the individual appellant about mental health issues he experienced?
- Did the motion judge err in considering the procedural history of subsequent steps by the respondent to enforce the default judgment and the appellants’ actions in the context of those enforcement steps?
- Did the motion judge err in finding that the judgment debt arose from misappropriation or defalcation in relation to the trust funds by failing to apply the law correctly to the facts before him?
holding:
Appeal dismissed.
reasoning:
- No.
The Court held that the motion judge correctly recognized that he had a discretion to consider extrinsic evidence regarding the alleged misappropriation of trust funds on a rule 59.05(2) motion. The motion judge considered the nature of the evidence that the appellants proposed to tender and found that the evidence sought to contradict the deemed admissions that were inherent in the default judgment. The Court further held that the motion judge concluded it was not appropriate to allow the appellants to seek to contradict the deemed admissions by extrinsic evidence, as doing so would have been tantamount to setting aside the default judgment. The motion judge also noted that the appellants had failed to comply with court-ordered productions in the subsequent enforcement proceedings. The Court underlined that this evidentiary ruling was made in the context of the appellants having sought, and failed, to set aside the default judgment. As a result, the Court was not persuaded that the motion judge committed any palpable and overriding error in his exercise of that discretion.
2. No.
The Court saw no merit to this ground of appeal and held that the motion judge was entitled to rely on the procedural history as a factor in exercising his discretion regarding the admissibility of evidence. Further, the Court did not accept the appellants’ argument that the motion judge relied on the procedural history of the subsequent attempts to enforce the default judgment in concluding that the individual appellant failed to account for the trust funds under the CA. Instead, the Court held that the reasons of the motion judge demonstrated that he drew this conclusion from the deemed admissions that were available from reading the Statement of Claim as a whole.
3. No.
The Court held that the motion judge correctly stated the law in relation to the nature of the factual findings required to engage s. 178(1)(d) of the BIA. The motion judge recognized that, in order for a judgment debt to trigger s. 178(1)(d) as arising from “fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity”, the debt must arise from conduct that displays at least some element of wrongdoing or improper conduct that would be unacceptable to society because of its “moral turpitude or dishonesty” and that he was required to make a factual assessment of whether the breach of trust, in the context of the deemed admissions in the pleading, engaged s. 178(1)(d) of the BIA.
The Court did not agree with the appellants’ characterization of the motion judge’s decision and instead found that the motion judge made a case-specific finding and did not rely on a categorical rule in considering whether the deemed admissions were of conduct which could have been done negligently or incompetently (which would not have triggered s. 178(1)(d) of the BIA), or were of conduct done intentionally and with an element of misconduct. The Court saw no basis for appellate intervention in the motion judge’s findings that the record was sufficient to establish that the judgment debt arose from misappropriation or defalcation.
Peters v. SNC-Lavalin Group Inc., 2023 ONCA 360
[Paciocco, George and Favreau JJ.A.]
Counsel:
J. Strosberg and S. Robinson, for the appellant/respondent by way of cross-appeal
K. L. Kay, D S. Murdoch, S. R. Hennig and H. Wafaei, for the respondents/appellants by way of cross-appeal
T. Q. Yang and M. Waddell, for the Law Foundation of Ontario, respondent by way of cross-appeal
Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Costs, Securities Act, R.S.O. 1990, c. S.5, Class Proceedings Act, 1992, S.O. 1992, Criminal Code, R.S.C. 1985, c. C-46, Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, Director of Public Prosecutions Act, S.C. 2006, c. 9, s. 121, s. 13, Markowich v. Lundin Mining Corporation, 2023 ONCA 359, NC-Lavalin Group Inc. v. Canada (Public Prosecution Service), 2019 FC 282, Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310, Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92, Hughes v. Liquor Control Board of Ontario, 2019 ONCA 305, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Das v. George Weston Limited, 2018 ONCA 1053, Markowich v. Lundin Mining Corporation, 2022 ONSC 81, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, Coffin v Atlantic Power Corp., 2015 ONSC 3686, Paniccia v. MDC Partners Inc., 2018 ONSC 3470
facts:
SNC-Lavalin Group Inc. (“SNC”) is a Canadian company that provided engineering and project management services throughout the world. The appellant was a professional engineer living in Ontario. He held shares in SNC at the relevant time, which was between September 4, 2018 and October 10, 2018. The proposed action arose from a prosecution against SNC and two of its subsidiaries in relation to the companies’ activities in Libya.
On February 19, 2015, the RCMP charged SNC and two of its related companies, SNC International and SNC Construction, with one count of fraud under s. 380 of the Criminal Code and one count of corruption under s. 3(1)(b) of the Corruption of Foreign Public Officials Act. The charges alleged that, between 2001 and 2011, SNC paid public officials in Libya over $47 million to influence government decisions and defraud Lybian organizations of approximately $130 million.
The appellant sought leave under s. 138.8, Part XXIII.1, of the Securities Act to bring a statutory cause of action against SNC and some of its former executives. The appellant alleged that SNC and the other defendants failed to disclose “forthwith” a material change in SNC’s “business, operations or capital” as required under ss. 75(1), 138.1 and 138.3(4) of the Securities Act.
The appellant also sought certification of a class action, under s. 5 of the Class Proceedings Act, 1992, advancing claims on behalf of certain shareholders of SNC based on: i) the statutory cause of action under the Securities Act; and ii) negligent misrepresentation at common law.
The motion judge dismissed the appellant’s motions. The “change” the appellant alleged SNC had an obligation to disclose was the content of a telephone call on September 4, 2018, when the Department of Public Prosecutions Services of Canada (the “PPSC”) advised SNC that it would not be invited to negotiate a remediation agreement under Part XXII.1 of the Criminal Code, which would have resolved a pending prosecution against SNC for fraud and corruption.
The motion judge concluded that leave should not be granted to bring a statutory cause of action because there was no reasonable possibility, based on a plausible interpretation of the Securities Act and credible evidence, that the September 4, 2018 call represented a change in SNC’s business, operations or capital. Specifically, SNC faced the prospect of prosecution before the call and SNC continued to face the prospect of prosecution after the call. SNC had publicly disclosed the risk of prosecution on many occasions. In addition, even after the call, the PPSC agreed to receive further submissions from SNC on the request for a remediation agreement. It was only on October 9, 2018, that the PPSC said that it did not accept SNC’s submissions, and the following day, on October 10, 2018, SNC made a public disclosure about the PPSC’s position on a remediation agreement. The motion judge held that, in all the circumstances, there was no reasonable possibility that a Court would find at trial that the September 4, 2018 call constituted a change in SNC’s business, operations or capital.
As the motion judge did not grant leave, he declined to certify the statutory cause of action as a class proceeding. The motion judge also concluded that the common law claim in negligent misrepresentation was not suitable for certification because the issue of reliance could not be decided on a class basis. Unlike for the statutory cause of action, there is no deemed reliance at common law.
The appeal was restricted to the motion judge’s refusal to grant leave to bring the statutory cause of action under the Securities Act and to certify that claim as a class proceeding. The appellant argued that the motion judge erred in his interpretation of “change” and erred in finding that the September 4, 2018 call was not a material change. The appellant argued that, at the very least, the motion judge improperly applied the test for leave. At this stage of the proceedings, the appellant claimed that he offered a plausible interpretation of “change” and, based on additional evidence that may become available at trial from the Government of Canada, there was a reasonable possibility of success. SNC cross-appealed on the issue of costs.
issues:
- Did the motion judge err in finding that the September 4, 2018 call was not a “change” within the meaning of “material change” because he adopted an overly narrow interpretation of “change” and did not consider that a “change” could include the risk of a change in SNC’s business, operations or capital?
- Did the motion judge err in failing to find that the September 4, 2018 call was “material” within the meaning of “material change”?
- Did the motion judge misapply the test for leave by making findings of fact that should be left for trial?
- Did the motion judge err in the amount of costs awarded to SNC?
holding:
Appeal and cross-appeal dismissed.
reasoning:
- No.
The Court noted that the standard of review on a question of law is correctness. In Kerr v. Danier Leather the Supreme Court (the “SCC”) emphasized that the Securities Act is “remedial legislation” that is to be given a broad interpretation. The Court held that the Securities Act protects investors by imposing disclosure obligations. At the same time, it limits the burden placed on reporting issuers of securities by requiring forthwith disclosure of material changes but not of material facts. The Court noted that in Kerr, the SCC stated that the distinction between a material change and a material fact is “deliberate and policy-based.”
The Court held that the issue of whether there has been a material change requires a two-step analysis. First, the court must determine whether there has been a change in the business, operations or capital of the issuer. Second, the court must determine whether the change was material, in the sense that it would be expected to have a significant impact on the value of the issuer’s shares.
The Court held that section 138.3(4) of the Securities Act creates a statutory right of action against an issuer who fails to make a timely disclosure. While s. 138.3(4) of the Securities Act creates a statutory cause of action that eliminates the need to prove reliance, to guard against strike suits, s. 138.8(1) of the Securities Act requires that a party obtain leave of the court before proceeding with a claim. The statutory test for leave provides that the Court is only to grant leave if it is satisfied that: (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved in favour of the plaintiff at trial.
The Court found the motion judge did not err in his interpretation of the word “change” used in the context of “material change”. The motion judge adopted a very expansive definition of “change” and he explicitly accepted that a “change in business, operations or capital” could include a change in risk to an issuer’s business, operations or capital.
While the appellant had framed his disagreement with the motion judge’s consideration of whether the September 4, 2018 call was a change in SNC’s business, operations or capital as an error of law, the Court said the real focus of the appellant’s argument was on the motion judge’s application of his interpretation of those terms to the circumstances of this case.
The Court found that, consistent with Kerr, the motion judge had properly emphasized the distinction between a material change and a material fact. He recognized that this distinction was “a deliberate and policy-based legislative decision to relieve reporting issuers of the obligation to continually interpret external political, economic, and social developments as they affect the affairs of the issuer, unless the external change will result in a change in the business, operations or capital of the issuer, in which case, timely disclosure of the change must be made.” He also emphasized that the meaning of “change” was fact-specific and that there was no “bright-line test”.
Ultimately, the Court held that the only limit the motion judge placed on what could constitute a “change” in the definition of “material change”, were the qualifying words in the definition itself to the effect that the change must be “in the business, operations or capital”. In other words, external circumstances that may affect share prices but that did not effect a change in an issuer’s business, operations or capital did not qualify as change within the meaning of material changes. The Court held that, here, the motion judge made no such error. His interpretation of the term “change” was expansive, consistent with existing case law and properly focused on whether the September 4, 2018 call constituted a change in SNC’s business, operations or capital.
As part of his argument that the motion judge interpreted “change” too narrowly, the appellant said that the motion judge failed to consider that a change could include a change in risk. However, the Court found that it was evident from the motion judge’s reasons that he did consider that the obligation to disclose a material change under the Securities Act included an obligation to disclose a material change in risk in an organization’s business, operations or capital. He simply did not accept, based on the largely uncontested evidence before him, that the September 4, 2018 call could reasonably be found at trial to constitute a change in the risk SNC’s business faced. The Court saw no reversible errors in his reasoning.
The risk that SNC would be prosecuted and debarred from participating in Canadian projects for up to ten years was known to investors at the time of the call. At most, the communications between the PPSC and SNC’s counsel represented an effort by SNC to be invited to negotiate a remediation agreement. There was never any assurance an invitation would be forthcoming. In addition, discussions continued after the September 4, 2018 call. As in Theratechnologies, there was no change in SNC’s business, operations or capital, or to the risks faced by SNC’s business, operations or capital on September 4, 2018. The Court found the motion judge made no palpable and overriding errors in characterizing the September 4, 2018 call and in finding that there was no reasonable possibility that the appellant could succeed at trial in showing that the call was a change in SNC’s business, operations or capital, including a change in risk.
- No.
The appellant argued that the motion judge failed to consider that the September 2, 2018 call was material. Given the motion judge found there was no change in SNC’s business, operations or capital, it was not necessary for him to consider whether the September 4, 2018 call was material.
- No.
The appellant argued that the motion judge went too far in making findings of fact for the purpose of a motion for leave. Specifically, he argued that there may be more evidence available after discoveries about the PPSC’s and the Federal government’s intentions at the time of the September 4, 2018 call with respect to the issue of whether SNC would be invited to negotiate a remediation agreement. The appellant relied on the Court’s decision in Rahimi to argue that, on a motion for leave under the Securities Act, a motion judge should consider the evidence that is available and the evidence that is not available.
The Court found the motion judge made no error in his application of the test for leave in the circumstances of this case. First, the motion judge noted that this was an unusual case because there was extensive evidence available about the circumstances surrounding SNC’s efforts to be invited to negotiate a remediation agreement and there was little conflict in the evidence. In effect, the appellant obtained relevant documents through a freedom of information request, and therefore there was significant evidence available regarding internal communications within the Government of Canada at the relevant time.
In any event, the Court noted it was hard to see how additional information on the issue of internal government communications could be relevant to the appellant’s claim. The appellant alleged that SNC failed to disclose the September 4, 2018 call. The Court noted that each case is to be decided on its facts. As held by the SCC, on a motion for leave under the Securities Act, it is appropriate for the motion judge to weigh the evidence, without going so far as embarking on a mini-trial, for the purpose of determining whether there is a reasonable possibility that the plaintiff will succeed at trial. The Court found the appellant failed to identify any areas of missing evidence that may be available on discovery that could affect the outcome at trial.
- No.
The Court found the motion judge made no obvious error in exercising his discretion to reduce the costs sought by SNC. Leave to appeal a costs decision is only granted sparingly and only in “obvious cases where the party seeking leave convinces the Court there are ‘strong grounds upon which the appellate court could find that the judge erred in exercising his discretion'”: Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused, [2007] S.C.C.A. No. 92. Even where leave is granted, an appellate Court will only overturn a costs award if the Court below made a legal error or the award is clearly wrong.
In this case, the Court held that the motion judge referred to the correct legal principles in his costs decision. Consistent with Das, he noted that legal novelty is on a “continuum”. He also noted that “to be a matter of public interest, the action must have some specific, special significance for, or interest to, the community at large beyond the interests of the parties to the litigation”. While the motion judge did not explicitly explain why he concluded that the case raised novel legal issues or matters of public importance, he said that his reasons for decision on the merits of the motions were incorporated into his costs decision. The Court was satisfied that his conclusion that the case raised novel legal issues and matters of public importance was supported by his lengthy reasons on the merits of the motions.
Markowich v. Lundin Mining Corporation, 2023 ONCA 359
[Simmons, Benotto and Favreau JJ.A.]
Counsel:
J. Groia, B. Pascutto and S. Robinson, for the appellant
L. Jackson and J.M. Picone, for the respondents
Keywords: Securities, Secondary Market Liability, Material Changes, Failure to Disclose, Negligence Misrepresentation, Civil Procedure, Class Proceedings, Leave to Commence Proceeding, Certification, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, s. 1(1), s. 57, s. 75(1), s. 75(2), s. 138.1, s. 138.3(4), s. 138.8, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5, Housen v. Nikolaisen, 2002 SCC 33, Mask v. Silvercorp Metals Inc., 2016 ONCA 641, Kerr v. Danier Leather, 2007 SCC 44, Theratechnologies Inc. v. 121851 Canada Inc., 2015 SCC 18, Cornish v. OSC, 2013 ONSC 1310 (Div. Ct.), Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719, Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, rev’d on other grounds, 2014 ONCA 90, aff’d 2015 SCC 60, Rex Diamond Mining Corporation et al., 2008 ONSEC 18, aff’d 2010 ONSC 3926 (Div. Ct.), Peters v. SNC-Lavalin Group Inc., 2021 ONSC 5021, Miller v. FSD Pharma, Inc., 2020 ONSC 4054
facts:
The appellant was a shareholder of the respondent, LMC. The appellant sought leave under s. 138.8 of the Securities Act to bring a statutory cause of action against LMC for their failure to disclose “forthwith” a “material change” in LMC’s “business, operations or capital” as required under ss. 75(1), 138.1, and 138.3(4) of the Securities Act. The appellant also sought certification of a class action under s. 5 of the Class Proceedings Act, 1992, advancing claims on behalf of certain shareholders of LMC based on the statutory cause of action under the Securities Act and negligent misrepresentation at common law.
The appellant’s motions were dismissed as the motion judge found that the “changes” LMC was alleged to have had an obligation to disclose were a pit wall instability detected on October 25, 2017, in part of LMC’s open pit mine at its Candelaria copper mine in Chile, and a subsequent rockslide at the mine during which an estimated 600,000 to 700,000 tonnes of waste material fell down a slope from Phase 10 of the mining operation, restricting access to Phase 9. LMC did not disclose the pit wall instability at the time it occurred, but rather first publicly disclosed these events on November 29, 2017, in its November News Release, in which it stated that the instability of the pit wall occurred on October 31, 2017. On November 30, 2017, the price of LMC’s securities fell on the TSX from $8.96 on November 29, 2017 to $7.52 at closing time on November 30, 2017, representing a decline of $1.44 or 16%. This one-day drop amounted to over $1 billion of market capitalization.
The motion judge held that “[m]ining is an inherently risky and unpredictable industry” and “rock slides are routine”. In the context of open pit mines, one of the most common risks is slope instability. The motion judge concluded that leave should not be granted to bring a statutory cause of action because there was no reasonable possibility based on a plausible interpretation of the Securities Act and credible evidence that there had been a “change” to Lundin’s business, operations or capital. He did however conclude that if the matters relied upon by the appellant constituted a “change” they were “material”. Because the motion judge did not grant leave, he did not certify the statutory cause of action. The motion judge further concluded that the common law claim in negligent misrepresentation was not suitable for certification because a multitude of mini-trials would be required to address the issue of reliance. This was because unlike for the statutory cause of action, there is no deemed reliance for common law misrepresentation.
The appellant abandoned his claim for negligent misrepresentation at common law and restricted this appeal to the motion judge’s refusal to grant leave to the statutory cause of action under the Securities Act.
issues:
- Did the motion judge err in adopting an overly narrow interpretation of “change in the business, operations or capital”, especially in the context of a motion for leave?
- Did the motion judge’s narrow interpretation of these terms lead him to resolve conflicts and gaps in the evidence that should have been left for trial?
holding:
Appeal allowed.
reasoning:
- Yes.
The Court found that the motion judge erred in his interpretation of “change in the business, operations or capital” and that, as a consequence of this error, he erred in finding that the evidence available on the motion did not support granting leave. The Court held that taking a more generous approach to the terms “change in the business, operations or capital” was warranted. Based on this more generous interpretation and the evidence available at this stage of the proceedings, the appellant should have been granted leave to proceed with the action.
The disclosure requirements in the Securities Act for material facts and material changes are different. The Act imposes various disclosure obligations on reporting issuers with respect to material facts, but, unlike material changes, does not require that issuers disclose material facts “forthwith”. The issue of whether there has been a material change requires a two-step analysis. First, the court must determine whether there has been a change in the business, operations or capital of the issuer. Second, the court must determine whether the change was material, in the sense that it would be expected to have a significant impact on the value of the issuer’s shares. The Court found that this case focused on the first step of the analysis, specifically the meaning of “a change in the business, operations or capital” and the relevant case law.
The statutory test for leave under s. 138.8 of the Securities Act provides that the court is only to grant leave if it is satisfied that: (a) the action is being brought in good faith, and (b) there is a reasonable possibility that the action will be resolved in favour of the plaintiff at trial. The Court, citing Rahimi v. SouthGobi Resources Ltd., noted that on a motion for leave under s. 138.8 of the Securities Act, a motion judge is to engage in some weighing of the evidence, but this is also to include consideration of the evidence not available at this early stage of the proceeding.
The Court held that the motion judge erred in his interpretation of “change in the business, operations or capital” by concluding that, in order to find that a material change has occurred, the court must be satisfied the event at issue results in a “different position, course, or direction to a company’s business, operations, or capital”. The Court noted that the motion judge’s reference to a “different position, course, or direction” derived from a definition of “change” in the online version of the Merriam-Webster Dictionary. The motion judge provided no support for using this definition from any case law interpreting the definition of “material change” in the Securities Act, nor did he provide any rationale for adopting this definition of “change” in the context of the Securities Act.
After defining “change” as a “different position, course, or direction”, the motion judge went on to address the definitions of the terms “business”, “operations” and “capital”. Earlier in his decision, he had observed that these terms are not defined in the Securities Act. In this section of his decision, he gleaned definitions of these terms from a brief review of case law. With respect to the term “business”, the motion judge stated that it had been “broadly described by the OSC as the lines of activity in which the issuer engages to generate revenue”. He then concluded that “business” refers to “what the company does”. The motion judge then concluded that “operations” refers to “where” or “how” a company conducts its business and determined that “capital” refers to the “share structure and rights of shareholders”. The Court therefore held that the motion judge erred in adopting a definitive interpretation of the terms “change in the business, operations or capital” that was inconsistent with the interpretation of those terms to the extent they have been considered in other cases. The Court found that a review of the case law made it evident that, contrary to the motion judge’s approach, the distinction between material change and material fact does not focus on the magnitude of the change but, rather, on whether the change was external to the company as opposed to whether the change was in the business, operations or capital of the company.
The Court further held that in adopting a restrictive definition of “change”, the motion judge erred in law by relying on a statement made by Strathy J. (as he then was) in Green, to the effect that “[t]he requirement to make timely disclosure of a material change is not an obligation to provide running commentary on the company’s progress during the quarter or to comment on internal or external events that may impact its performance.” However, the Court noted that this comment in Green was made about the obligation to disclose a “material change”, and not about the meaning of the words “change in the business, operations or capital” in the definition of “material change” as a whole.
Finally, the Court held that case law has established that the definition of “change” was not meant to include its magnitude, but rather its qualitative nature, and that the magnitude of the change in business, operations or capital is reserved for the second part of the “material change” definition where materiality is considered. As a result, the motion judge erred in adopting an overly restrictive definition of “change”, in the context of the words “change in the business, operations or capital”.
- Yes.
The Court held that the motion judge erred in law because his assessment of the evidence was based on his interpretation of “change in the business, operations or capital” which was an erroneous application of the legal test to the evidence in the case. The Court held that had he applied the proper legal test, the available evidence should have led the motion judge to conclude that there was a reasonable possibility that the appellant could demonstrate that the pit wall instability and rockslide constituted a change in LMC’s operations.
The Court further held that had the motion judge adopted a less rigid interpretation of “change in the business, operations or capital” in the context of the motion for leave, he should have found that there was a reasonable possibility that the appellant and the proposed class could succeed at trial with the statutory cause of action under the Securities Act.
Jakab v. Clean Harbors Canada, Inc., 2023 ONCA 377
[van Rensburg, Paciocco and Thorburn JJ.A.]
Counsel:
N.G. Aresta, for the appellants
K. Kernick, for the respondent
Keywords: Contracts, Interpretation, Covenant to Insure, Ambiguity, Contra Proferentem, Torts, Negligence, Negligent Misrepresentation, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, 2249778 Ontario Inc. v. Smith (Fratburger), 2014 ONCA 788, Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12, Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, Queen v. Cognos Inc., [1993] 1 S.C.R. 87, Mahendran v. 9660143 Canada Inc., 2022 ONCA 676
facts:
The individual appellant leased a transport truck through his solely owned corporation, the second appellant, Ontario Heavy Xpress Ltd. (“Xpress”). On July 5, 2018, after Xpress had purchased the truck outright, it caught fire and was destroyed. The truck could not be repaired.
At all relevant times the appellant was operating the truck exclusively for a large waste disposal company, the respondent. Pursuant to the terms of the “National Transportation Lease Agreement (Cdn.)” (the “contract”), Xpress agreed to provide freight haulage and furnish the trucking equipment to the respondent. During the currency of the contract, the truck was operated under licence plates registered in the respondent’s name. The appellants had not purchased any insurance for the vehicle, and the respondent had not insured it for first-party damage by fire. After the fire, the respondent looked into it and an amount between $18,000 – $20,000 (USD) was floated. The appellant therefore initially believed the respondent was going to pay for the Truck, but ultimately the respondent refused to do so.
The appellants sued the respondents for damages, which the trial judge assessed to be $63,775.22. The appellants claimed that the respondent had breached its contractual obligation to provide first-party insurance coverage for damage by fire (the “breach of contract claim”). It also advanced the alternative claim that, after the contract had been concluded, an employee of the respondent had negligently misrepresented to the appellant that the truck was “fully covered” (the “negligent misrepresentation claim”). The trial judge dismissed both claims.
issues:
- Did the trial judge err in dismissing the claim for breach of contract?
- Did the trial judge err in dismissing the claim for negligent misrepresentation?
holding:
Appeal allowed, in part.
reasoning:
- No.
The Court first reviewed the relevant legal principles, stating that contractual interpretation is an exercise in discovering the “objective intentions of the parties as expressed in the words of the contract”. The Court noted that the exercise of interpretation should also reflect the factual matrix underlying the contract and accord with sound commercial principles and good business sense, while avoiding commercially absurd interpretations. The Court also considered whether the correct standard of review for a standard form contract of adhesion was correctness or reasonableness. In the result, the Court declined to decide as it found that under either standard, it would uphold the trial judge’s decision.
The Court agreed with the trial judge’s interpretation that the parties had agreed that the respondent would be obligated to make available to the appellants only that coverage found in the policies of insurance that the respondent obtained and maintained. The Court reached this conclusion, in part, on its interpretation of the phrase, “make … available”. The Court held that the phrase more naturally described an obligation to provide access to something that is already held, than an obligation to obtain and maintain something new. Moreover, the Court held that if the phrase “make available” was meant to describe an obligation on the part of respondent to secure insurance for the appellants, the subsequent phrase in clause 1 of Schedule 2, “obtained and maintained” would be redundant.
The Court further found that when the provision was viewed in the context of the contract as a whole, all ambiguity was removed. If the appellant’s interpretation were correct, it would render meaningless several other terms in the contract. First, the Court found that clause 13 imposed sole responsibility on the appellants “for loss or damage to the Equipment however caused”, and it explicitly contemplated the appellants themselves maintain insurance in respect of damage to the truck. The Court rejected the appellants attempt to apply contra proferentem to this clause as the rule seeks to give effect to contract clauses, not nullify them.
The Court also noted that the contract stipulated that the respondent made no representation or warranty with respect to the adequacy of the insurance coverage and that this was irreconcilable with an obligation on its part to take responsibility for full insurance coverage. Further, the Court found that the contract imposed an obligation on the appellants to satisfy themselves as to the adequacy of insurance coverage, and that this obligation would be nonsensical if the respondents were then obliged to maintain coverage for the appellants.
In sum, the Court held that when the contract was read as a whole and interpreted in a manner that gave meaning to all of its terms it was clear that the parties agreed that the respondent was obligated to provide only that coverage found in the policies of insurance that it maintained. The Court also held that it was not commercially absurd to expect a subcontractor to insure their own interest in a truck that they leased.
- Yes.
The Court found that the trial judge had erred in dismissing the appellant’s claim for negligent misrepresentation. The Court first laid out the five elements necessary to establish negligent misrepresentation: There is a “special relationship” between the person making the statement and the person hearing it, it is reasonable for the person hearing the statement to rely on it, the statement is untrue, the person was careless in making the statement, and the person who reasonably relied on the statement suffered damages.
The trial judge dismissed the claim on the basis that the first three elements of the test had not been met. The Court found that the trial judge failed to resolve the factual question of whether the “fully covered” statement had been made by a representative of the respondent. The Court found that when the trial judge’s reasons were read as a whole, it became evident that she chose not to make a factual finding on whether the “fully covered” conversation occurred, but found that even if it had, it was not actionable.
The Court found that the trial judge erred in her analysis by requiring proof of who made the alleged representation. The Court held that, so long as the appellants established that an employee had made the representation, the first element of the test would be met. The Court also found that the trial judge erred in finding that there was no “special relationship”. The appellants were dependant on the respondents, pursuant to the contract, on receiving accurate information of what the respondent’s insurance covered. Accordingly, the Court found a special relationship existed.
The Court went on to find that the trial judge erred in applying the second stage of the test by requiring the appellants to show that the representation, if made, could be considered true. The court held that this overstated the onus on the appellants, and that the appellants were only required to show that it was more probable that the statement was inaccurate or misleading. The Court also found that the trial judge erred in the application of the third part of the test by requiring the appellants to prove the intention of the statement. The Court found that it was sufficient that the appellants show the statement negligently caused them to believe that they were fully covered for fire damage.
Accordingly, the Court ordered a new trial on the claim of negligent misrepresentation.
Davies v. Clarington (Municipality, 2023 ONCA 376
[Zarnett, Coroza and Favreau JJ.A.]
Counsel:
J.M. Regan, for the appellants/respondents by cross-appeal Apache Specialized Equipment Inc., Apache Transportation Services Inc., and T.G.
A. Barda and S. Ross, for the appellant/respondent by cross-appeal The BLM Group Inc.
L.P. Brasil and R. Egit, for the respondent/appellant by cross-appeal BridgePoint Financial Services Inc.
J. Strype, for the respondent/appellant by cross-appeal Yorkfund Investment Inc.
R. Aisenberg, for the respondent/appellant by cross-appeal Seahold Investments Inc.
N. Mizobuchi, for the respondent/appellant by cross-appeal Lexfund Inc.
S. Barclay, for Via Rail Canada Inc. and Canadian National Railway Company
S. MacDonald, for Hydro One Networks Inc.
Keywords: Torts, Maintenance, Champerty, Civil Procedure, Costs, Non-Parties, Abuse of Process, Appeals, Jurisdiction, Courts of Justice Act, R.S.O. 1990, c. C. 43, ss. 6(1)(b), 131(1), Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30, 33.1, Davies v. Clarington (Municipality) (2006), 266 D.L.R. (4th) 375 (Ont. S.C.), Davies v. Corporation of the Municipality of Clarington et al., 2010 ONSC 418, Davies v. The Corporation of the Municipality of Clarington, 2018 ONSC 4370, Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292, 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, Arkin v. Borchard Lines Ltd. & Ors, [2005] EWCA Civ 655, Chapelgate Credit Opportunity Master Fund Ltd. v. Money & Ors, [2020] EWCA Civ 246, Fresco v. Canadian Imperial Bank of Commerce, 2021 ONCA 46, Hunt v. Worrod, 2019 ONCA 540, The St. James’ Preservation Society v. Toronto (City), 2007 ONCA 601, Housen v. Nikolaisen, 2002 SCC 33, Behn v. Moulton Contracting Ltd., 2013 SCC 26, McIntyre Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257 (C.A.), Houle v. St. Jude Medical Inc., 2017 ONSC 5129, Fehr v. Sun Life Assurance Company of Canada, 2012 ONSC 2715, Brad-Jay Investments Limited v. Village Developments Limited (2006), 218 O.A.C. 315 (C.A.), Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267, Das v. George Weston Limited, 2018 ONCA 1053
facts:
This appeal arose out of a collision in 1999 between a Via Rail train and a tractor trailer that was stopped on the railway track. In 2000, a class action was certified on behalf of all passengers who were on the train. In 2006, a settlement among the defendants and the class was reached, which the court approved. The approval order provided that the settlement did not compromise the claim of CZ. The respondents (the “Lenders”) made separate loans to CZ to fund his litigation. The total principal, added together, was over $400,000. The loans bore interest, some at compound rates of up to almost 30% per year.
CZ sought $50 million for his claim. Prior to trial, he turned down an offer of $500,000, at a time when the loans, with interest, significantly exceeded that amount. CZ also made offers to settle. In November 2009, he offered to accept $35 million. In 2014, he offered to accept $26.2 million for damages and interest, plus costs, which were to include interest on the litigation loans. He then recovered only $50,000 after about seven years of pre-trial proceedings and a 106-day trial. The defendants to the claim were awarded costs against CZ of more that $3.4 million, which he cannot or will not pay. At the time of the costs award in March 2021, CZ’s aggregate debt to the Lenders was in excess of $6 million, considering principal and accrued interest.
The defendants sought an order that the lenders, as non-parties, pay the costs awarded against CZ. The trial judge made the following observations about the loans: (i) their interest provisions were onerous; (ii) none provided that the Lenders would indemnify CZ for any costs award against him; (iii) none gave the Lenders a share of any potential monetary award or settlement; and (iv) none gave the Lenders direct control over the litigation. Further, citing the Court’s decision in 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd. (“Laval”), the trial judge noted that there were two circumstances where the court can award costs against a non-party: (a) where the non-party meets the “person of straw” test, and (b) where the non-party initiates or conducts the litigation in such a manner that amounted to an abuse of process. The trial judge held that neither circumstance was present and declined to order costs against the Lender.
issues:
- Does the Court have jurisdiction to determine this appeal?
- Did the trial judge err in in law in failing to find that the conduct of the Lenders amounted to an abuse of process within the meaning of Laval?
- Did the trial judge err in in law in failing to conduct an analysis of whether the loans advanced by the Lenders constituted champerty and maintenance?
- Should the Lenders be granted leave to cross-appeal the trial judge’s discretionary decision not to award them costs?
holding:
Appeal dismissed. Leave to cross-appeal denied.
reasoning:
- Yes.
The Court noted that the Class Proceedings Act, 1992 (“CPA”) directs appeals from the determination of individual claims of class members to the Divisional Court. However, this was not an appeal by a class member or representative plaintiff, and therefore, the CPA was inapplicable on the route of appeal. The Court stated that, given the amount in issue on the costs award and the fact that the order under appeal is final, the appeal was properly to the Court pursuant to s. 6(1)(b) of the Courts of Justice Act.
- No.
The appellants did not challenge the trial judge’s finding that the person of straw test did not apply on these facts. The appellants argued that the trial judge erred by confining the abuse of process doctrine to situations where the non-party directly controls the litigation. They submitted that the Lenders’ decision to advance loans with uncapped compound interest exerted such an influence on CZ and his counsel that their involvement should be seen as ‘conducting’ the litigation within the meaning of Laval. They took this position for three reasons: (a) the loan was used to fund a lengthy proceeding for a wildly exaggerated claim, (b) the high rates of compounding interest on the loans pushed the indebtedness of CZ to levels that made it impossible to accept the defendants’ offers to settle, and (c) the trial judge made a finding that the loans needed, but did not qualify for, court approval.
The Court disagreed with the appellants’ submissions. First, the mere fact that a loan’s principal is used to fund unsuccessful litigation should not render the Lenders liable for the costs of that litigation absent evidence that the Lenders exercised control over the conduct of the litigation and did so in a way that constituted an abuse of process. In this case, although the proceeds of the loans were used to fund some aspects of the litigation, the trial judge made no finding, and the appellants pointed to no evidence, that the Lenders controlled CZ’s litigation choices.
Second, it was true that the trial judge identified the excess of the aggregate debt with interest over the defendants’ offers as creating a “massive impediment” to settlement. However, he also noted that CZ’s unrealistic expectations were an obstacle to settlement. Therefore, the Court noted that it could not be said that the Lenders were the cause of CZ’s refusal to accept the offers or of his choice to litigate his claim in the protracted way that he did. In fact, the Court stated that there was no evidence from CZ that, absent the debt, he would have accepted any of the defendants’ offers.
Lastly, the Court disagreed with the argument that the trial judge’s finding that the loans required, but did not receive, court approval buttressed their point that the trial judge should have found the Lenders “unreasonably controlled” CZ’s litigation. Even though the loans preceded the enactment of s. 33.1 of the CPA which now governs court approval of third-party funding agreements for class proceedings, at common law, a number of factors were considered before a funding agreement for a class proceeding was approved. One factor was that the agreement could not interfere with the right of the representative plaintiff to control the litigation. The Court noted that the trial judge never made a finding to the contrary.
- No.
The appellants argued that the trial judge failed to consider whether the Lenders were engaged in maintenance. The Court disagreed, stating that the trial judge carefully considered the terms of the loans, including that they did not give the Lenders any share of the proceeds. The Court held that the trial judge’s conclusion not to exercise his discretion to award costs against the Lenders in these circumstances cannot be said to have arisen from a failure to consider either the Laval test or the relationship of the concepts of champerty and maintenance to it. The Court held that the trial judge did not err in opting not to order costs against the non-party Lenders.
- No.
The Lenders sought leave to cross-appeal the trial judge’s discretionary decision not to award them costs of the appellants’ unsuccessful request that the Lenders pay the costs of the action awarded against CZ. The Court noted that leave to appeal a costs order will only be granted where there were strong grounds upon which the court could find that the judge erred in exercising their discretion. The trial judge refused to award costs on the basis that the issue was novel, which was an accepted principle on which a judge may make a no costs disposition. The Court stated that it was open to the trial judge in his discretion to consider that the case fell at a point on the novelty spectrum sufficient to decline to award costs. Therefore, the Court held that the trial judge made no error and leave to cross-appeal the costs award was denied.
SHORT CIVIL DECISIONS
Hayer v. Bertasiene, 2023 ONCA 375
[Doherty, Zarnett and Sossin JJ.A.]
Counsel:
T. Corsianos, for the appellants
H. Dhaliwal, for the respondents J.H. and B.H.
E.P. Youssoufian, for the respondents O.I. and V.I.
A. Schorr, for the respondents V.K. and S.K
Keywords: Civil Procedure, Costs, Fresh Evidence, Hayer v. Bertasiene, 2023 ONCA 302
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.