Please find our summaries of last week’s civil decisions of the Court of Appeal for Ontario.
The most interesting and notable decision this week was Justice Thorburn’s decision in Wright v. Horizons ETFS Management (Canada) Inc. Like Darmar Farms, which was featured in our Top Appeals of 2019 CLE (and is awaiting to hear if leave to the Supreme Court will be granted), it would appear that the Court has once again expanded the scope of negligence claims for pure economic loss that can be brought.
In this class action, the plaintiff sued the fund manager of an ETF that tracked the VIX volatility index. On a single day in February 2018, the ETF lost 90% of its value and investors were wiped out. The fund manager subsequently wound up the ETF as non-viable. The allegation made was that such an ETF, by its very design, was doomed to catastrophically fail, and that the fund manager was therefore negligent in designing such a fund and in the disclosure made to investors.
The certification judge, Perell J, dismissed the entire action as disclosing no reasonable cause of action. The Court set aside that decision. While it agreed with the certification judge that the claim did not fit within the shoddy goods exception to claims for pure economic loss (since the financial product in this case was not a physical danger to person or property), it held that the negligence claim in this case fell within the negligent performance of a service exception. In the alternative, the Court determined that if the claim was novel and did not fit within one of the five recognized exceptions to the bar against claims for pure economic loss, it should be allowed to proceed and be determined on a full evidentiary record.
Other topics covered this week included the apportionment of liability in a social host MVA case where the amount of insurance available was not enough to satisfy the judgment obtained, the test for being awarded advance costs under s. 124 of the CBCA to defend a D&O claim, relief from forfeiture from the failure to properly exercise an option to renew a commercial lease, solicitor and client (claim on account for services rendered), striking pleadings on the basis of no reasonable cause of action, a multiplicity of proceedings, abuse of process and issue estoppel, dismissal for delay and rights of first refusal.