The headline decision this week was S.E.C. v M.P. It involved two appeals that concerned the scope and limits of the open court principle in the context of the court approval of settlements and contingency fees involving minor parties or parties under disability as required by r. 7.08 of the Rules of Civil Procedure. The Court applied the Sherman test and determined that in neither case were there grounds for a sealing order.

In Hevey v. Hevey, the court set aside a finding of contempt for alleged breach of two preservation orders. The husband refinanced a property to pay legitimate business debts, and this was found not to have contravened the terms of the orders.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

S.E.C. v. M.P., 2023 ONCA 821

Keywords: Civil Procedure, Settlements, Approval, Solicitor and Client, Contingency Fee Agreements, Approval, Parties Under Disability, Sealing Orders, Open Court Principle, Fresh Evidence, Parens Patriae Jurisdiction, Courts of Justice Act, RSO 1990, c C 43, s 137(2), 135(2), Solicitors Act, RSO 1990, c, s 15, Contingency Fee Agreements Regulation, O. Reg. 563/20, s 6(b), Criminal Code, RSC 1985, c C-46, s 486, Youth Criminal Justice Act, SC 2002, c 1, s 110, Rules of Civil Procedure, r 7.08, 37.11(1)(a), Sherman Estate v Donovan, 2021 SCC 25, Carroll et al. v Natsis, 2020 ONSC 3263, Palmer v The Queen, [1980] 1 SCR 759, Housen v Nikolaisen, 2002 SCC 33, Ruetz v Morscher & Morscher (1996), 28 OR (3d) 545, Mattei v Vautro (1898) 78 LT 682, Rhodes v Swithenbank (1889) 22 QBD 577, Poulin et al. v Nadon et al., [1950] OR 219, Wu, Re, 2006 CanLII 16344, Krukowski v Aviva Insurance Company of Canada, 2020 ONCA 631, Tsaoussis (Litigation guardian of) v Baetz, 1998 CanLII 5454, Ryan v Hebert, 2022 ONCA 750, Mother Doe v Havergal College, 2020 ONSC 2227, Dagenais v. Canadian Broadcasting Corp. [1994] 3 SCR 835, R. v Mentuck, 2001 SCC 76, Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41, Sierra Club v Canada (Minister of Finance), 2002 SCC 41, A.B. v Bragg Communications Inc., 2012 SCC 46, P1 v XYZ School, 2022 ONCA 571, A.P. v L.K., 2019 ONSC 4010, Law Society of Ontario v Gupta, 2022 ONLSTH 14, Alberta (Information and Privacy Commissioner) v University of Calgary, 2016 SCC 53, Henricks-Hunter v 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Raphael Partners v Lam (2002), 61 OR (3d) 417, Descôteaux v Mierzwinski, [1982] 1 SCR 860, Burns Estate v Falloon, 2007 CanLII 38558, Boone v Kyeremanteng, 2020 ONSC 198, Rivera v Leblond, (2007), 44 CPC (6th) 180, MacDonald v OSPCA, 2023 ONSC 2445, Dickson v Kellett, 2018 ONSC 4920, Kaiser (Re), 2012 ONCA 838, 113 OR (3d) 308

Hevey v. Hevey, 2023 ONCA 829

Keywords: Family Law, Civil Procedure, Orders, Enforcement, Contempt, Carey v Laiken, 2015 SCC 17

Short Civil Decisions

T.O. Estate v. D.O., 2023 ONCA 824

Keywords: Civil Procedure, Amending Pleadings, Costs

New Haven Mortgage Corporation v. Codina, 2023 ONCA 827

Keywords: Contracts, Real Property, Mortgages, Enforcement, Peaceable Possession, Mortgages Act, s. 42(1), Lee v. Guettler (1976), 10 O.R. (2d) 257 (C.A.), Hume v. 11534599 Canada Corp., 2022 ONCA 575

MacDonald-Lamarche v. Ferguson, 2023 ONCA 828

Keywords: Wills and Estates, Civil Procedure, Applications

K.K. v. M.M., 2023 ONCA 823

Keywords: Family Law, Spousal Support, Spousal Support Advisory Guidelines, Hickey v. Hickey, [1999] 2 S.C.R. 518

Royal Bank of Canada v. Francoeur, 2023 ONCA 837

Keywords: Civil Procedure, Summary Judgment, EvidenceAct, R.S.O. 1990, c. E.23, s. 25, Meads v. Meads, 2012 ABQB 571

CIVIL DECISIONS

S.E.C. v. M.P., 2023 ONCA 821

[Trotter, Sossin and Monahan JJ.A.]

Counsel:

B. Legate, D. A. Wolfe, and L. Kilroy, for the appellants S.E.C., A.S.C.M., N.R.C-M., S.A.C.M., M.B.C., T.T., and S.T.

I. Fischer and G, Sheppard, for the intervenor Canadian Media Lawyers Association Sean Moreman, for the intervenor Canadian Broadcasting Corporation

J. Dart and J. Hull, for the intervenor Ontario Trial Lawyers Association

Keywords: Civil Procedure, Settlements, Approval, Solicitor and Client, Contingency Fee Agreements, Approval, Parties Under Disability, Sealing Orders, Open Court Principle, Fresh Evidence, Parens Patriae Jurisdiction, Courts of Justice Act, RSO 1990, c C 43, s 137(2), 135(2), Solicitors Act, RSO 1990, c, s 15, Contingency Fee Agreements Regulation, O. Reg. 563/20, s 6(b), Criminal Code, RSC 1985, c C-46, s 486, Youth Criminal Justice Act, SC 2002, c 1, s 110, Rules of Civil Procedure, r 7.08, 37.11(1)(a), Sherman Estate v Donovan, 2021 SCC 25, Carroll et al. v Natsis, 2020 ONSC 3263, Palmer v The Queen, [1980] 1 SCR 759, Housen v Nikolaisen, 2002 SCC 33, Ruetz v Morscher & Morscher (1996), 28 OR (3d) 545, Mattei v Vautro (1898) 78 LT 682, Rhodes v Swithenbank (1889) 22 QBD 577, Poulin et al. v Nadon et al., [1950] OR 219, Wu, Re, 2006 CanLII 16344, Krukowski v Aviva Insurance Company of Canada, 2020 ONCA 631, Tsaoussis (Litigation guardian of) v Baetz, 1998 CanLII 5454, Ryan v Hebert, 2022 ONCA 750, Mother Doe v Havergal College, 2020 ONSC 2227, Dagenais v. Canadian Broadcasting Corp. [1994] 3 SCR 835, R. v Mentuck, 2001 SCC 76, Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41, Sierra Club v Canada (Minister of Finance), 2002 SCC 41, A.B. v Bragg Communications Inc., 2012 SCC 46, P1 v XYZ School, 2022 ONCA 571, A.P. v L.K., 2019 ONSC 4010, Law Society of Ontario v Gupta, 2022 ONLSTH 14, Alberta (Information and Privacy Commissioner) v University of Calgary, 2016 SCC 53, Henricks-Hunter v 814888 Ontario Inc. (Phoenix Concert Theatre), 2012 ONCA 496, Raphael Partners v Lam (2002), 61 OR (3d) 417, Descôteaux v Mierzwinski, [1982] 1 SCR 860, Burns Estate v Falloon, 2007 CanLII 38558, Boone v Kyeremanteng, 2020 ONSC 198, Rivera v Leblond, (2007), 44 CPC (6th) 180, MacDonald v OSPCA, 2023 ONSC 2445, Dickson v Kellett, 2018 ONSC 4920, Kaiser (Re), 2012 ONCA 838, 113 OR (3d) 308

facts:

These appeals concerned the scope and limits of the open court principle in the context of the court approval of settlements involving minor parties or parties under disability as required by r. 7.08 of the Rules of Civil Procedure. Rule 7.08(1) requires that no settlement of a claim made by or against a person under disability, whether or not a proceeding has been commenced in respect of the claim, is binding on the person without the approval of a judge.

The Dr. C Appeal

The first appeal dealt with the case of Dr. C., a 63-year-old pedestrian who was struck by a full-size SUV. Dr. C. suffered extensive brain injuries. He was found to be incompetent, and Guardians of the Person and Property were appointed. Dr. C.’s litigation guardian settled a tort and accident benefit claim for $8,500,000. The appellants moved in writing for the judicial approval of the action’s settlement under r. 7.08 and the Contingency Fee Agreement (“CFA”) under s. 24 of the Solicitors Act. The appellants sought to have two motions sealed: (1) approval of the settlement under r. 7.08, and (2) approval of the contingency fees under the Solicitors Act and CFA Regulation.

The motion judge approved the settlement, contingency fee arrangement and fees but dismissed the request for a sealing order.

The S.T.I.T.T. Appeal

The underlying case involved a medical negligence action that emerged when then 7-month-old S.T. was suffering a focal seizure, did not receive antiviral medication, and sustained catastrophic and irreparable brain damage. T.T.’s claim derived from the condition of S.T.

The settlement and contingency fees in that matter were also approved by the motion judge, but the request for an order sealing the terms of settlement and continency fee agreement was dismissed.

The appellants in both appeals appealed the dismissal of the sealing orders and also sought to introduce fresh evidence on appeal.

issues:

1. Should fresh evidence be allowed to be introduced?
2. Is the motion record subject to the open court presumption?
3. Is the court’s parens patriae jurisdiction part of the r. 7.08 analysis?
4. Did the appellants meet the Sherman test for a sealing order?

holding:

Motions to introduce fresh evidence dismissed. Appeals from sealing orders dismissed.

reasoning:

1. No.

The appellants sought to introduce fresh evidence to demonstrate how private and confidential information about infant plaintiffs has been obtained and disseminated by news organizations using materials filed as part of settlement approval motions.

The fresh evidence was comprised of an affidavit with an exhibit. The test for the admission of fresh evidence, set out in Palmer v. The Queen, is well-settled:

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial
(2) The evidence must be relevant to a decisive or potentially decisive issue in the trial.
(3) The evidence must be credible in the sense that it is reasonably capable of belief, and
(4) It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

The Court did not accept that the proposed fresh evidence was relevant to decisive or potentially decisive issues in these appeals. The motion judges did not conclude that the settlement approval motion records could not be accessed or shared through technology. Even if the evidence were relevant to a decisive issue, the Court did not accept that the evidence could have affected the result.

2. Yes.

The appellants argued that the motion judges erred in law when they failed to consider and apply r 37.11(1)(a) to the request to seal the motion records. The appellants highlighted that s. 135(2) of the CJA provides: “[s]ubject to section (2) and the rules of the court, all court hearings shall be open to the public…”. However, r. 37.11(1)(a) states that: “A motion may be heard in the absence of the public where … the motion is to be heard and determined without oral argument”. It was argued, that since r 7.08 orders are heard in writing, and in the absence of the public, they were not subject to the open court principle.

The Court rejected this submission. There was no basis for holding that the open court principle does not apply to written proceedings generally, or r. 7.08 motions in particular. Courts have not treated r. 37.11(1)(a) in this fashion and there was no indication that the legislature intended such a sweeping abrogation of the open court principle, rather than a procedural effort at improving court efficiency in certain motions.

3. Yes, but this does not grant a freestanding reason to grant a sealing order.

The appellants argued that it was an error in law for the motion judges to fail to consider the court’s parens patriae jurisdiction and its goal of preventing harm to persons under a disability when determining whether to grant a sealing order.

The Court found that that the open court principle did not conflict with, but rather protected parties under disability by ensuring that court oversight of minor parties and parties under disability was properly maintained. Where harm may result from applying the open court principle, judicial discretion ensures that the best interests of parties under disability remain protected.

The Court assessed the background and purpose of r. 7.08 motions. Rule 7.08 has been part of the Rules of Civil Procedure since 1990. However, r. 7.08 did not introduce court settlement approval for minor parties or parties under disability. Rather, it codified the common law rules as to the requirement of court approval of settlements involving persons under disability. The common law rules meant that: “For centuries, judges of the Superior Court have exercised the parens patriae guardianship of the sovereign to ensure that the rights of infants and others legally disabled are protected”: Ruetz v. Morscher & Morscher. The jurisprudence made clear that r. 7.08 is designed to protect parties under disability by providing court oversight of settlements that the parties under disability cannot themselves shape and agree to.

To achieve its protective purpose and oversight, motions under r. 7.08 must be accompanied by evidence. This includes, for example, records of medical or expert evidence underlying the settlement, as well as affidavit evidence from the litigation guardian and counsel as to the basis and justification of the settlement, including the amount of the settlement and legal fees involved, among other disclosures.

There was no question that the information included in the record in a r. 7.08 motion could − and generally will − include sensitive and personal information about the party whose claim is being settled. However, r. 7.08 addresses these potential harms by affording judges discretion to protect the parties’ information.

The argument urged by the appellants would, in effect, render all motions under r. 7.08 presumptively confidential. This would screen an important role of the courts from public view in a sweeping fashion. This would be contrary to the parens patriae purpose of r. 7.08 and the rationale for the open court principle.

4. No.

The appellants, in the alternative, argued that the Sherman test was met in the cases at issue based on the need to avoid serious risks to the important public interest in protecting the privacy of the appellants in medical records, stigmatized medical conditions, and relationships, protecting parties under disability, and affirming solicitor-client privilege.

Under this test, the party seeking a sealing order or publication ban must show that:

(a) Court openness poses a serious risk to an important public interest;

(b) The order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and

(c) The benefits of the order outweighs its negative effects.

The appeals before the Court turned primarily on the first prong of the Sherman test. A serious risk could be established through direct evidence or through logical inferences, but these inferences must be “grounded in objective circumstantial facts that reasonably allow the finding to be made”.

The argument that this aspect of the Sherman test was met was rejected by the motion judge in the Dr. C Appeal. The motion judge found that the first branch of the Sherman test was not met because the impugned disclosure would not put an important public interest at risk.

The appellants argued that the motion judges erred in these conclusions. They raised three grounds on which they argued the open court principle imposes a serious risk to an important public interest in these cases: First, the law protects privacy in relation to medical records, stigmatized medical conditions (disability), relationships, and confidential business information; second, the court has a duty to protect those under a legal disability; and, third, there is a public interest in ensuring that solicitor-client privilege remains as close to absolute as possible.

The Court assessed each of these grounds in the context of the first ground of the Sherman test:

(a) Privacy is not, by itself, an important public interest and it was not at significant risk in these appeals

The Supreme Court in Sherman clarified that privacy, in and of itself, was too open-ended to meet the criterion of an important public interest jeopardized by the open court principle. The court emphasized that privacy will only be a sufficient public interest if the disclosure puts the person’s dignity at risk. The private information must go to the “biographical core” of the person seeking protection, such that its dissemination would result in an affront to the person’s dignity. Dignity will only be at serious risk in limited circumstances.

The choice to pursue a remedy through litigation involved giving up a measure of privacy. In the Court’s view, there was no question that there was a public interest in the protection of the identities of minor victims of crime and minor persons when made party to litigation. However, the motion judges found no serious risk of harm. Additionally, the situation is different when dealing with a settlement of a claim where a minor or party under disability, through their litigation guardian, brought litigation against other parties that turn on the disclosure of personal information. In such cases, in light of the pleadings – whether or not the motion records were sealed – the nature of the incident, injuries, and limitations underlying the claims were part of a public record through the statements of claim. Therefore, those aspects of the litigation can no longer truly be considered “private.”

The appellants highlighted what they characterize as an unfairness in r. 7.08: that it took away from parties under a disability the option to keep their settlement, and its underlying record, private. In other words, a settlement involving a 17-year-old is presumptively part of the public record via the r. 7.08 record, while a settlement involving the same settlement scenario, injuries, evidence, and record involving an 18-year-old would be confidential (since no court order is needed to approve the settlement). The Court did not find this argument persuasive. The parens patriae rationale for r. 7.08 arises from a bright line drawn in law between those who are and are not minors. In Mother Doe, which was heard and decided prior to the release of the Sherman decision, the court did not order a full publication ban on the record, but rather crafted an order anonymizing the record by removing the names of minors and identifying information. The Court viewed that a similar approach is appropriate in the cases under appeal.

Neither appeal disclosed an error on the part of the motion judges in their assessment of the information in the settlement motion records. In neither case was there a basis to conclude that the open court principle jeopardized information revealing core aspects of the private lives of the parties involved that would erode their dignity such that it would constitute an important public interest for the purposes of the test. The first prong of the Sherman test was not met on the basis of the privacy interests at stake constituting an important public interest put at serious risk by the open court principle.

(b) Protection of minor parties or parties under a disability is an important public interest, but it was not at serious risk in these appeals

There was no basis to conclude that, as a general statement, the open court principle jeopardized the important public interest in protecting minor parties or parties under disability in r. 7.08 motions. First, the open court principle was not in conflict with the court’s parens patriae jurisdiction, but rather a manifestation of it. Second, the open court principle was already tempered with judicial discretion to limit public access to information where specific circumstances warrant such limits in the interests of minors or parties under disability. And third, the Sherman test took into account the protection of the party applying for the sealing order, considering whether disclosure poses a serious risk to them is ingrained in its analysis.

Moreover, in the cases on appeal, there was no indication that the protection of minors or parties under disability was being put at serious risk in the absence of a sealing order.

(c) Solicitor-client privilege is an important public interest, but it was not at risk in these appeals

The appellants argued that solicitor-client privilege is a principle of fundamental justice and a substantive right that warrants public protection, even where it interferes with the open court principle.

There was no question that solicitor-client privilege represented a fundamental right that is in the public interest to protect. Because of this, it was clear that as a general principle, solicitor-client privilege constitutes an important public interest under the Sherman test. There was a question, however, as to whether the protection of that privilege was at serious risk because of the open court principle in the context of r. 7.08 motions. The Court concluded that it was not.

In a motion under r. 7.08, the court must be satisfied that the Contingency Fee Agreement is fair and reasonable. The fairness requirement “is concerned with the circumstances surrounding the making of the agreement and whether the client fully understands and appreciates the nature of the agreement that he or she executed”. Reasonableness was determined by assessing: the time expended by the solicitor; the legal complexity of the matter at issue; the results achieved; and the risk assumed by the solicitor.

The Ontario Trial Lawyer’s Association (“OTLA”) urged the Court to recognize that, while r. 7.08 may not technically require the infringement of solicitor-client privilege, as a matter of practice, counsel on a r. 7.08 motion will need to share their appraisal of the strengths and weaknesses of the case, and in so doing, disclose privileged communications with the client. OTLA also observed that at the time the r. 7.08 motion record is filed, and thereby made subject to public access, the litigation has not yet settled. As a result, the potential for prejudice against the plaintiff in disclosing such privileged assessments could be very real.

While this concern struck the Court as well-founded, it did not lead to the conclusion that motion records under r. 7.08 should be presumptively sealed. Rather, it speaks to the need for counsel to be guided by this concern in how they prepare affidavits for r. 7.08 motions, so as to minimize the disclosure of privileged information, and the basis on which they may seek specific redactions in the context of specific cases where such disclosure is viewed as necessary to obtain judicial approval.

Due to the three grounds above, the first prong of the Sherman test was not met and accordingly, the Court did not need to assess the second and third prongs.

Hevey v. Hevey, 2023 ONCA 829

[Rouleau, Benotto and Copeland JJ.A.]

Counsel:

R. Haas, for the appellant

A. Drury, for the respondent

Keywords: Family Law, Civil Procedure, Orders, Enforcement, Contempt, Carey v Laiken, 2015 SCC 17

facts:

The appellant appeals the finding of contempt made against him in a family law proceeding. The motion judge found that he violated the terms of two preservation orders by refinancing a property that was subject to the order. He appealed on the basis that he did not violate the preservation orders. He submitted that he did not benefit in any way from the impugned transactions and that the value of his assets were not diminished. He also argued that, in any event, the orders lacked clarity. The appellant also sought to set aside sanctions flowing from the contempt finding contained in the November 29, 2022 order and the January 23, 2023 order.

issue:

Did the motion judge err in finding that the appellant violated the terms of two preservation orders?

holding:

Appeal allowed.

reasoning:

Yes. The Court stated that the purpose of a preservation order is to maintain assets pending a final determination. There was no evidence that the impugned transactions diminished the value of the assets, nor was there evidence that the appellant benefitted personally from the transactions. The respondent alleged that the appellant put a mortgage on a business property in Michigan, which violated the May 10, 2022 order. The appellant testified that the mortgage funds were used to discharge a mortgage and to pay contractors, he received no funds personally, and in any event, it was permitted under para. 7 of the order because it was in the ordinary course of business as a land developer.

The onus on the party seeking a contempt order is to establish the allegations beyond a reasonable doubt. The Court was not satisfied that, in light of the activities permitted by para. 7 and the ambiguity as to the application of para. 8, the order clearly prohibited the mortgage. In challenging the sanctions, the appellant raised the issue that para. 12 of the November 29, 2022 order was a sanction and, if the appeal was allowed, both it and the January 25, 2023 sanction should be set aside. The Court allowed the appeal and set aside the contempt findings and sanctions imposed.

SHORT CIVIL DECISIONS

T.O. Estate v. D.O., 2023 ONCA 824

[Fairburn A.C.J.O., van Rensburg and Zarnett JJ.A.]

Counsel:

T. Gleason, T. A. Pagliaroli and V. Mishra, for the appellant

R. N. Kostyniuk, for the respondent

Keywords: Civil Procedure, Amending Pleadings, Costs

New Haven Mortgage Corporation v. Codina, 2023 ONCA 827

[Fairburn A.C.J.O., van Rensburg and Zarnett JJ.A.]

Counsel:

A. C., acting in person

J. Croswell, for the respondents

Keywords: Contracts, Real Property, Mortgages, Enforcement, Peaceable Possession, Mortgages Act, s. 42(1), Lee v. Guettler (1976), 10 O.R. (2d) 257 (C.A.), Hume v. 11534599 Canada Corp., 2022 ONCA 575

MacDonald-Lamarche v. Ferguson, 2023 ONCA 828

[Roberts, Paciocco and Monahan JJ.A.]

Counsel:

A. Rouben, for the appellant

K. McDormand, for the respondent

Keywords: Wills and Estates, Civil Procedure, Applications

K.K. v. M.M., 2023 ONCA 823

[Fairburn A.C.J.O., van Rensburg and Zarnett JJ.A.]

Counsel:

G. Pop-Lazic, for the appellant

A. Pasha, for the respondent

Keywords: Family Law, Spousal Support, Spousal Support Advisory Guidelines, Hickey v. Hickey, [1999] 2 S.C.R. 518

Royal Bank of Canada v. Francoeur, 2023 ONCA 837

[Hourigan, Miller and Nordheimer JJ.A.]

Counsel:

A. P. J. F., acting in person

J. Kukla, for the respondent

Keywords: Civil Procedure, Summary Judgment, Evidence Act, R.S.O. 1990, c. E.23, s. 25, Meads v. Meads, 2012 ABQB 571

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.