Hello All,

Topics covered by the Court of Appeal this week in its civil decisions included franchise law (duty of disclosure), employment law (WSIB and wrongful dismissal of dependent contractors), insolvency (statutory privilege of documents), debtor-creditor (capacity to execute guarantees), MVA (liability of automobile lessors), family law (property claims of unmarried common law spouses), contracts (interpretation and specific performance), and motions to strike for no reasonable cause of action (a claim by a lawyer against the Law Society and a securities class action).

Enjoy your weekend.

John Polyzogopoulos

Blaney McMurtry LLP
JPolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos

Table of Contents

Civil Decisions

Fleming v. Massey, 2016 ONCA 70

Keywords: Employment Law, Insurance, Workers’ Compensation, Workplace Safety and Insurance Act, Definition of Employee, Waiver of Statutory Rights, Enforceability, Public Policy

U.S. Steel Canada Inc. (Re), 2016 ONCA 68

Keywords: Bankruptcy and Insolvency, Companies’ Creditors Arrangement Act, Investment Canada Act, s.36, s.36(4)(b), s.36(5), Statutory Privilege, Settlement Privilege

2256306 Ontario Inc. v. Dakin News Systems Inc., 2016 ONCA 74

Keywords: Contract Law, Franchise Agreements, Rescission, Arthur Wishart Act, Summary Judgment, Procedural Fairness, Right to be Heard

Conway v. The Law Society of Upper Canada, 2016 ONCA 72

Keywords:   Torts, Misfeasance in Public Office, Regulation of Professions, Lawyers, Civil Procedure, Motion to Strike, No Reasonable Cause of Action, Leave to Amend, Plain and Obvious Test

Keenan v. Canac Kitchens Ltd., 2016 ONCA 79

Keywords: Employment Law, Reasonable Notice of Termination, Dependent vs. Independent Contractors, Exclusivity of Work, Lowndes v. Summit Ford Sales

Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73

Keywords: Debtor-Creditor, Guarantees, Capacity, Non-Est Factum, Summary Judgement, Onus of Proof

Graham v. Lemay, 2016 ONCA 55

Keywords:   Torts, Negligence, Motor Vehicle Accidents, Negligent Entrustment, Duty of Care, Proximity, Highway Traffic Act, s.192(2),  Insurance Law, Ownership of Motor Vehicle, Lessor, Insurance Act, s. 267.12(1), Unnamed Insured, Summary Judgment

Junker v. Hughes, 2016 ONCA 81

Keywords: Family Law, Common Law Spouses, Property, Constructive Trusts, Joint Family Venture, Kerr v. Baranow, Evidence, Financial Disclosure, Retroactive Child Support, Res Judicata

Farkas v. Bedic, 2016 ONCA 82

Keywords: Family Law, Common Law Spouses, Property, Resulting Trusts, Pecore v Pecore, Constructive Trusts, Kerr v Baranow, Joint Family Venture

Flintoff v. Crown William Mining Corporation, 2016 ONCA 86

Keywords: Contract Law, Contract Interpretation, Standard of Review, Palpable and Overriding Error, Sattva

Locking v. McCowan, 2016 ONCA 88

Keywords: Securities Law, Class Actions, Investment Losses, Breach of Trust, Breach of Fiduciary Duty, Knowing Assistance, Civil Procedure, Class Proceedings Act s.5(1)(a), Motion to Strike, No Reasonable Cause of Action

For a list of Civil Law Endorsements, click here

For a list of Criminal and Capacity decisions, click here

Civil Decisions

Fleming v. Massey, 2016 ONCA 70

[Feldman, Juriansz and Brown JJ.A.]

Counsel:

Paul J. Pape and Joanna Nairn, for the appellant

Susan Guzzo and Katarina Germani, for the respondents

Facts:       

The respondents Lombardy Karting and the National Capital Kart Club held a go cart event.  The race required a race director, the appellant Derek Fleming filled the position.  Mr. Massey was driving a go kart and crashed into some hay, leaving Mr. Fleming injured. The respondents argued that Fleming had signed a waiver releasing the respondents from liability for all damages associated with participation in the event.

The appellant main submission is that the waiver was void because it violated public policy, as the appellant was an employee.  The motion judge ruled that the appellant was not an employee, more of a volunteer and that he should have had an idea of what he was signing when he signed the waiver.

Issue:

Did the motion judge err in finding that the appellant was not an employee? Did the motion judge err in finding that the appellant understood the effect of the waiver when he signed it?

Holding: Appeal Allowed.

Reasoning:

The court agreed with the appellant that the motion judge erred in finding that the appellant was not an employee.  On discovery, the representative from National Capital Kart Club admitted that the appellant was an employee on the day of the accident.

The court had to consider whether the waiver signed by the appellant was void by the public policy of the Workplace Safety and Insurance Act because he signed it as an employee.  The court relied on the decision in Ontario (Human Rights Commission) v. Etobicoke that said “an agreement between an employer and employee whereby the latter agrees to waive a statutory duty imposed on the former in the interests of safety is generally not binding on the employee”. The Act provides workers with certain statutory rights of action for damages that abrogate some of the common law doctrines that restricted a worker’s right to recover.  Section16 in the Act did address the subject of waivers.  Section16 states “An agreement between a worker and his or her employer to waive or to forego any benefit to which the worker or his or her survivors are or may become entitled under the insurance plan is void.” After reading the WSIA as a whole, it was apparent its objective is to ensure injured workers have access to compensation.

U.S. Steel Canada Inc. (Re), 2016 ONCA 68

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

Counsel:

Andrew Hatnay and Adrian Scotchmer, for the appellants Non-USW Active Salaried Employees and Non-USW Salaried Retirees

Kristian Borg-Olivier, for the appellants USW and USW Local 1005

Michael Kovacevic, for the appellant City of Hamilton

Michael E. Barrack and John Mather, for the respondent United States Steel Corporation

Sharon Kour, for the respondent U.S. Steel Canada Inc.

John L. Syme, Joseph Cheng and Jacqueline Dais-Visca, for the respondent Attorney General of Canada

Jonathan G. Bell, for the respondent Ernst & Young Inc. (the Monitor)

Peter D. Ruby, for the Superintendent of Financial Services (Ontario)

Facts:

This appeal concerned the scope of privilege in section 36 of the Investment Canada Act (“ICA”) with respect to information obtained by a Minister or an officer or employee of Her Majesty in the course of the administration and enforcement of the ICA.

U.S. Steel Canada Inc. (“USSC”) was subject to protection under the Companies’ Creditors Arrangement Act (the “CCAA”). Certain CCAA stakeholders brought a motion for disclosure of the contents of a settlement agreement arrived at during litigation to enforce the ICA (the “Settlement Agreement”). The Settlement Agreement was entered into by USSC, its American parent, United States Steel Corporation (“USS”), and the Attorney General of Canada (“AGC”).

The CCAA judge considered whether section 36 of the ICA barred this disclosure and concluded that the Settlement Agreement was privileged in its entirety under that section of the ICA. Thus, he did not consider whether the Settlement Agreement was protected by common law settlement privilege. He dismissed the motion of four key stakeholders seeking production of the Settlement Agreement, who now appeal the dismissal of their motion.

Issues:

(1) Does section 36 of the ICA prohibit USSC/USS from disclosing the Settlement Agreement?

(2) Does the common law protect the Settlement Agreement from disclosure on the grounds of privilege?

Holding:

(1) No – Appeal Allowed

(2) Issue remitted to the CCAA judge.

Reasoning:

(1) No.  Initially, the court considered whether the CCAA judge erred in concluding that “information” in section 36 of the ICA includes “undertakings” given in enforcement proceedings. The court rejected the appellants’ submission that the undertakings in the Settlement Agreement were not privileged under section 36 of the ICA. Instead, the court agreed with the CCAA judge’s conclusion that Parliament intended “information” to include undertakings set out in a document given to the Minister. Similarly, the CCAA judge correctly found that “written undertaking” in section 36(4)(b) defines the location of the privileged information and does not define the scope of “information” for the purposes of section 36. This section thus does not make it clear that undertakings are not information for the purposes of section 36.

Nonetheless, the exception to the privilege regime in section 36(4)(b) applied to USSC and USS such that they were not prohibited from disclosing the Settlement Agreement. “Written undertaking” in s. 36(4)(b) meant the Settlement Agreement. Notably, the court rejected USS’s arguments that case law supported its position that s. 36(5) also excepted the supplier of the information, and that restricting s. 36(5) to the persons specifically named therein rendered the section meaningless.

(2) Not decided.  The Court noted that promoting settlement contributes to the effective administration of justice and that, while settlement privilege creates a presumption of inadmissibility with respect to settlement negotiations, exceptions are found “when the justice of the case requires it”. The party seeking to override the settlement privilege must show that there is a competing public interest that outweighs the public interest in securing settlement.

The appellants argued that they demonstrated a competing public interest in favour of disclosure that outweighed the public interest in encouraging settlement, whereas the respondents submitted that the court should return the issue of whether production of the Settlement Agreement and its contents is barred by common law settlement privilege back to the CCAA judge for determination. The court reasoned that because neither it nor the CCAA judge was provided a copy of the Settlement Agreement, there was no review or evaluation as to whether there was a competing public interest in disclosure that outweighed the public interest in settlement. Thus, the issue of settlement privilege was remitted to the CCAA judge for determination.

2256306 Ontario Inc. v. Dakin News Systems Inc., 2016 ONCA 74

[Weiler, LaForme and Huscroft JJ.A.]

Counsel:

Harjaap Mann, for the appellants

Michael Fleischmann, for the respondents

Facts:

The respondents purchased a news kiosk, International News, from a franchisee of the appellants in February 2011. The appellants advised the parties that there would be a $10,000 transfer fee before consenting to the sale but the parties went ahead with the sale regardless and the respondents paid royalties to the appellants and took over the kiosk. The respondents operated without interruption but did not enter into a franchise agreement with the appellants until October, 2012.

In August, 2013, the respondents tried to rescind the franchise agreement because of the appellants’ alleged failure to provide disclosure as required under the Arthur Wishart Act. The appellants argued they were exempt from disclosure and both parties brought a motion for summary judgment. The motion judge found that the exemption provisions under the Act did not apply because the franchise agreement executed by the respondents was a new agreement between different parties, so the obligation to disclose arose at the time that the new agreement was executed.

Issue:

Were the appellants denied a fair hearing by the motion judge because they were not heard on the respondents’ cross-motion?

Holding: Appeal dismissed.

Reasoning:

No. The court acknowledged that the motion judge’s remarks did create an expectation that there would be further argument on the respondents’ cross-motion if the appellants were unsuccessful on their motion for summary judgment. However, the issues on the motion and cross-motion were intrinsically connected and all of the relevant material was before the court when the appellants’ motion was argued.

The motion judge’s findings of fact were supported by the record and there was no basis for the court to interfere with them. In the circumstances, summary judgment in favour of the respondents was inevitable. As a result, the motion judge’s decision to deal with both the motion and cross-motion without further argument did not result in any prejudice to the appellants.

Conway v. The Law Society of Upper Canada, 2016 ONCA 72

[Weiler, van Rensburg and Roberts JJ.A.]

Counsel:

David Robert Conway, in person

Brendan van Niejenhuis, for the respondent

Facts:

The appellant appealed from the dismissal of his action against the The Law Society of Upper Canada (“the LSUC”) following a motion to strike the appellant’s statement of claim as disclosing no reasonable cause of action and as being frivolous, vexatious and an abuse of process. The appellant’s dispute with the LSUC has a long history stretching back to his first administrative suspension in June 2000 for his failure to pay transaction levies, and involves a myriad of different civil, disciplinary and bankruptcy proceedings that form the basis for his claims against the LSUC. The appellant settled the civil and trustee proceedings with the LSUC and entered into releases and consent judgments. In the present action, the appellant complains that he has been the subject of relentless and inequitable targeting, abuse of process and denial of due process by the LSUC in numerous proceedings.

Issues:

(1) Did the motion judge err in striking out the appellant’s statement of claim in its entirety?

(2) Did the motion judge err in determining that the appellant should not be granted leave to amend his statement of claim?

Holding: Appeal allowed to grant the appellant leave to serve and file, within 60 days, a fresh as amended statement of claim to plead with proper particulars a tenable cause of action against the LSUC based on the tort of misfeasance in public office arising out of its alleged bad faith conduct in relation to the appellant. Otherwise, the appeal is dismissed.

Reasoning:

(1) No, the motion judge did not err as his reasoning and conclusions that the various individual acts by the LSUC were incapable of giving rise individually to any viable cause of action in the manner as pleaded by the appellant. The motion judge correctly struck out the factual claims as scandalous, frivolous and vexatious.  The claims against the LSUC in relation to the civil and trustee proceedings that the appellant was seeking to re-litigate in the present action were also correctly struck out as an abuse of process.

(2) Yes, the appellant should have been granted leave to properly plead the tort of misfeasance in public office. Taking all of the appellant’s factual allegations as true, and reading the essence of his pleading as a claim for misfeasance in public office, it was not plain and obvious that a proper pleading of a reasonable cause of action founded on the alleged bad faith conduct against the LSUC would fail. However, the appellant’s current pleading was woefully deficient. The appellant did not plead any of the requisite elements of any viable cause of action based on alleged bad faith conduct that may deprive the LSUC of its statutory immunity, nor with any precision the particulars that support these allegations, as required under the Rules of Civil Procedure. The LSUC is entitled to know with particularity the case that it has to meet.

Keenan v. Canac Kitchens Ltd., 2016 ONCA 79

[Gillese, MacFarland and van Rensburg JJ.A.]

Counsel:

Paul Boshyk, for the appellant

Bram A. Lecker and Matthew A. Fisher, for the respondents

Facts:

Lawrence Keenan began working for Canac Kitchens Ltd., a division of Kohler Canada Co., in 1976. Canac was a manufacturer and distributor of kitchen cabinets.  For the first six years of his employment he worked as an installer of kitchen cabinets, and in 1983, he became a foreman for the company.  His wife began to work for the company in 1983 as a foreman as well.

The Keenan’s relationship with Canac ended in 2009.  Canac was closing its operations and no longer needed their services.  Canac gave the Keenans no notice, no payment in lieu of notice and none of the statutory entitlements.

Canac claimed that the Keenans were independent contractors, thus they were not entitled to any of the statutory entitlements upon termination.  Each of them had worked for the company for a few years before being told in 1987 that they would carry on their work as contractors.

Shortly after 1987, Canac presented the Keenans with a draft agreement, which reflected the new arrangements whereby they became sub-contractors of Canac. Only Mrs. Keenan signed. Upon their termination, the Keenans brought an action against Canac.

At trial, the judge found that the Keenans were in fact economically dependent on Canac due to the fact that they worked exclusively for Canac.  Having found that they were dependent contractors, they were entitled to reasonable notice on termination.  Canac appealed the decision.

Issues:

Did the trial judge err in:

(1) finding that the Keenans were dependent – rather than independent –

contractors; and

(2) awarding the Keenans 26 months of notice.

Holding: Appeal Dismissed.

Reasoning:

(1) The court held that the trial judge’s decision was correct with regards to this submission. A determination of exclusivity must take into account a full history of the relationship. The court ruled that due to the fact that the Keenans worked exclusively with Canac, the trial judge’s finding that the Keenans were dependent was appropriate.

(2) The court made it clear that in reliance on the decision of Lowndes v. Summit Ford Sales, reasonable notice is case specific and only exceptional circumstances will support a notice period in excess of 24 months. The court held that given the Keenans’ age and length of service, and the character of the positions they held, it would not interfere with the award of 26 months.

Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73

[Gillese, MacFarland and van Rensburg JJ.A.]

 Counsel:

Joseph Kary, for the appellant, Janice Oliver Goldman

Rachel Moses, for the respondent RBC

 Facts:

The appellant, Ms. Goldman, appealed the motion judge’s decision to grant summary judgment in favour of the respondent, RBC, on the basis of certain guarantees signed by the Ms. Goldman. There was no issue that Ms. Goldman signed the guarantees nor was there any question that the loans which are the subject of the guarantees are in default.

The issue relates to Ms. Goldman’s capacity to enter into the guarantees, which was first raised in November, 2013 on a receivership motion by RBC in relation to the three companies and the debts that underlie the guarantees that are the subject of the appeal. The motion judge held that no material was filed on the issue of capacity. The issue was raised again in July, 2013 where it was noted in the motion judge’s decision that no steps had been taken to determine the issue of capacity. The motion for summary judgment was heard on May 15, 2015, at which time Ms. Goldman’s lawyer sought an adjournment on the basis his client lacked capacity. The adjournment was not granted and the motion judge proceeded to hear the motion.

Issues:

(1)  Did the motion judge err in proceeding with RBC’s motion for summary judgment in the face of “clear” evidence that Ms. Goldman lacked capacity?

(2) Did using the loan money for a purpose other than the purpose for which it was advanced constitute a material change that released Ms. Goldman from the guarantees?

 Holding: Appeal dismissed.

Reasoning:

(1) No. Ms. Goldman’s lawyer filed two affidavits having to do with his client’s capacity. An affidavit from Ms. Goldman’s son that offered hearsay evidence that his mother has been diagnosed with dementia and early stage Alzheimer’s. He also offered his own observations of his mother’s conduct and attached medical records and a letter from a physician. Nothing in the letter said anything about lack of capacity. The second affidavit was from a former co-worker of Ms. Goldman who spoke to her forgetfulness.  However, she was not qualified to make a diagnosis of lack of capacity.

The onus is on anyone alleging lack of capacity to prove it. There was no evidence before the motion judge to support a finding that Ms. Goldman lacked capacity.

(2) No. The court did not accept Ms. Goldman’s argument that because the corporation used the loan money advanced by RBC for a reason other than for which it was advanced, that this constituted a material change to the loan arrangement that would, absent Ms. Goldman’s consent, release her from the guarantees.

The evidence showed that RBC advanced the loan money as it was directed by the principal of the three companies, Ms. Godman’s son. This was a “continuing all accounts” guarantee for which the purpose is to allow the customer and the lender to change their business arrangements without having to involve the guarantor.

The motion judge correctly found that non est factum did not apply on the basis that Ms. Goldman was an intelligent woman who had previously guaranteed her son’s companies’ loan arrangements and was given the opportunity to solicit independent legal advice. There was no basis on the evidence that Ms. Goldman was unduly influenced. Finally, in response to the argument that because RBC did not fully advance the loan monies, Ms. Goldman was not obligated to RBC, there was no requirement that the monies be fully advanced before she became obligated to RBC. This was an all accounts continuing guarantee.

Graham v. Lemay, 2016 ONCA 55

[Gillese, Pepall and Lauwers JJ.A.]

Counsel:

William J. Sammon, for the appellants/respondents by way of cross-appeal

David A. Zuber, for the respondents Daimler Chrysler Financial Services Canada Inc. and CorePointe Insurance Company

W.S. Chalmers, for the respondent/appellant by way of cross-appeal, Chrysler Canada Inc.

Facts:

The appellant Jodi Graham (“Jodi”) was a passenger in a motor vehicle and suffered serious injuries as a result of a collision with a motor vehicle driven by Mario Pietrantonio (“Pietrantonio”). The Pietrantonio vehicle had been leased. In the lease, Daimler Financial Services Canada Inc. (“Daimler Financial”) was described as the lessor. At the time of the accident, Chrysler Canada Inc. (“Chrysler”) was the beneficial owner of the Pietrantonio vehicle.

Pietrantonio was a co-owner along with his father Luciano (“Luciano”) of West End Tile Limited (“West End”). The lessees of the Pietrantonio vehicle, West End and Luciano, carried $2 million in third-party liability insurance. West End and Luciano leased the Dodge Durango vehicle pursuant to a lease with Daimler Financial, who was the registered owner of the Pietrantonio vehicle. Daimler Financial carried a standard lessors’ contingent automobile policy of insurance and a standard excess insurance policy that provided $10 million of coverage. The policies were issued by the respondent CorePointe Insurance Company. Both policies stated that coverage extended only to the named insured, Daimler Financial, and excluded coverage for any lessee or employee of a lessee. Furthermore, coverage was available only if the lessee’s insurance was not collectible.  According to the appellants, Jodi’s damages will significantly exceed the limits of the third-party liability insurance carried on the two vehicles.

The appellants commenced an action against various parties, including Daimler Financial and Chrysler, both of whom were respondents on the appeal.  Both the respondents and the appellants moved for summary judgment. On the motion for summary judgment, the judge granted two orders. The first order  provided that Chrysler was an owner of the vehicle driven by Mario within the meaning of s.192(2) of the Highway Traffic Act, and that Chrysler and Daimler Financial were lessors within the meaning of s. 267.12(1) of the Insurance Act and as such were entitled to a cap on liability. The appellants’ claims of negligent entrustment against Daimler Financial and another defendant, Capital Dodge, were dismissed. The second order was on consent, and provided that the appellants’ motion for summary judgment and a declaration that Mario was an unnamed insured entitled to coverage under Daimler Financial’s standard excess policy was dismissed. However, the appellants’ consent was without prejudice to the appellants’ right to appeal the consent dismissal on the basis that the decision in Xu v. Mitsui Sumitomo Insurance Company Limited (“Xu”) was wrongly decided or, in the alternative, did not apply to Daimler Financial if it was found not to be a lessor within the meaning of s. 267.12(1) of the Insurance Act.

Issues:

(1) Was Chrysler correctly found to be an owner and vicariously liable for Mario’s alleged negligence pursuant to s. 192(2) of the Highway Traffic Act?

(2) Are Chrysler and Daimler Financial lessors within the meaning of s. 267.12(1) of the Insurance Act and entitled to the benefit of the cap on liability?

(3) Is Mario an unnamed insured under Daimler Financial’s standard excess policy?

(4) Was the claim of negligent entrustment against Daimler Financial properly dismissed?

Holding: Appeal and cross-appeal dismissed.

Reasoning:

(1) Yes. The motions judge did not err in concluding that Chrysler was an owner for the purposes of s. 192(2) of the Highway Traffic Act. Chrysler admitted that it was the non-registered owner of the Pietrantonio vehicle. Moreover, its conduct was consistent with that admission in that it had claimed significant tax deductions in its capacity as owner. The agreements between Daimler Financial and Chrysler explicitly stated that Chrysler was the beneficial owner.

(2) Yes. The language of s. 267.12(1) of the Insurance Act, its legislative purpose, and the agreements between Chrysler and Daimler Financial all supported the motion judge’s conclusion that Chrysler was a lessor within the meaning of that subsection and was therefore entitled to the cap on liability. Daimler Financial retained legal title to the Pietrantonio vehicle. Furthermore, by virtue of the assignment to Daimler Financial from Capital Dodge, the lease itself described Daimler Financial as lessor. The appellants failed to identify any error in the motion judge’s analysis on the application of s. 267.12(1) to Daimler Financial.

(3) No. Xu is dispositive of this issue. In Xu, the motion judge accurately considered the legislative history and purpose of s. 267.12(1). He correctly concluded that permitting a lessee to access a lessor’s insurance, as an unnamed insured, would undermine the animating purpose of that provision. That analysis was upheld by the Court of Appeal. The appellants in this case did not present any cogent reasons for revisiting that conclusion. The Court of Appeal will not overturn one of its prior decisions unless sitting as a five-judge panel. In this case, the appellants’ request for a five-judge panel on the basis that Xu was wrongly decided was refused. The three-judge panel on the current appeal could request that an appeal be assigned to a five-judge panel if convinced that an arguable case can be made for reviewing or overruling the prior decision at issue. However, all of the appellants’ arguments for reviewing Xu were rejected.

(4) Yes, the claim of negligent entrustment was properly dismissed. The vehicle was leased not to Mario but to West End and Luciano. The motions judge concluded that a duty on Daimler Financial to ascertain the competency of the driver of the vehicle was too remote. It was reasonable for the lessors to rely on the insurance that had been obtained by the lessees. On this basis, the motion judge correctly concluded that there was no genuine issue requiring a trial on the issue of negligent entrustment.  As noted by the motions judge, in the present case, Daimler Financial leased the Pietrantonio vehicle to Luciano and West End. Finding a duty of care in the present case would lead to the conclusion that the lessor had an obligation to inquire into who would be driving it. The relationship between the appellants and Daimler Financial does not disclose proximity sufficient to justify imposing a duty.

Junker v. Hughes, 2016 ONCA 81

[Gillese, MacFarland and van Rensburg JJ.A.]

Counsel:

Michelle Kropp (agent for Tony Sferruzzi, lawyer on record) and Kenneth Peacocke, for the appellant

Joseph A. Irvine, for the respondent

Facts:

The appellant, Ms. Hughes and the respondent, Mr. Junker separated in 2007 after a seven year relationship. The parties were never married.  A trial was held in 2015 on two unresolved issues: Mr. Junker’s constructive trust claim against the proceeds of sale of Ms. Hughes’ house that they lived in together during the relationship, and her claim for retroactive child support.

Issues:

(1) Did the trial judge err in her finding Mr. Junker had overpaid his child support?

(2) Did the trial judge err in awarding Mr. Junker damages for a constructive trust claim against Ms. Hughes’ property?

Holding: Appeal dismissed.

Reasoning:

(1) No. Ms. Hughes position was that the trial judge had erred in ruling that Mr. Junker had overpaid his child support and dismissing her claim for retroactive child support.  She argued that entries on bank records produced by Mr. Junker corresponded to payments for his other children’s expenses and that the trial judge should have credited these to her and Mr. Junker’s child.

During oral argument, it emerged that Ms. Hughes’ real issue was that Mr. Junker may have attempted to recover the overpayment from her, or credited amounts against his future child support payments.  This claim was not made at trial and based on comments of the trial judge, the court held that the issue of overpayment and its possible effects are res judicata.

(2) No.  The house in question was purchased by Ms. Hughes in 2000 and the parties lived there until they separated in 2007.  She made the down payment, monthly mortgage payments and the title was taken in her name.  The house was sold in 2010 for substantially above the purchase price.

Mr. Junker is a contractor and argued that he made improvements to the house during the time he lived there.  He also stated that he made financial contributions to household bills and the mortgage payments.  He paid rent from 2005 onward after he had paid back a significant loan that Ms. Hughes had made to him.

The trial judge found that Mr. Junker had proven his claim for unjust enrichment.  Ms. Hughes was enriched by the increase in value of the property.  The corresponding deprivation was Mr. Junker’s compensation for his contributions made for the collective benefit of the family and that there was no juristic reason for this.  The trial judge found that the parties were involved in a joint family enterprise and awarded Mr. Junker an amount in damages.

Ms. Hughes’ argued that there was no evidence of deprivation or a joint family venture. These arguments all challenged the trial judge’s findings of fact.  While the record was not ideal, the trial judge was in the best position to determine if the trial should proceed without further financial disclosure.  The trial judge was entitled to assess the claim on the basis of the parties’ testimony and limited records.

Even though the trial judge did not consider the evidence under the various headings in Kerr v. Baranow used to determine the existence of a joint family venture, she did consider all of the appropriate factors.  As well, the trial judge did not err in awarding Mr. Junker the lesser of one half of the net proceeds from the sale of house after repayment to the Ms. Hughes of her down payment, and the amount of Mr. Junker’s claimed contributions.  While it would have preferable for the trial judge to have specifically addressed the proportionate contribution Mr. Junker made to the joint family venture, it was implicit in her decision that the parties had contributed equally to the increase in the value of the house.

Farkas v. Bedic, 2016 ONCA 82

[Laskin, Pardu and Brown JJ.A.]

Counsel:

Paul D. Amey, for the appellant

Julie K. Hannaford and D. Clarke, for the respondent

Facts:

The appellant, Bedic and the respondent, Farkas, began dating in 1994, began living together in 1997 and cohabited for 13 and a half years before separating in 2011. During the course of their relationship, they acquired and maintained several hotel and cottage properties. Each party contributed financially and by physical labour to the properties.

When the relationship ended, Farkas sought a 50 percent interest in the properties or in the proceeds from their sale. At trial, the judge found in her favour, holding that many of the key facts were not disputed, and finding in favour of Farkas where the evidence of each party differed. Bedic appealed, challenging the trial judge’s findings on two of the properties: the Queensway Motel and the Fairview Motel.

Issues:

(1) Did the trial judge err in finding that Farkas had a 50 percent beneficial interest in the Queensway Motel?

(2) Did the trial judge err in finding that Bedic holds title to the Fairview Motel in trust for himself and Farkas equally?

(3) Did the trial judge err in finding that Bedic had failed to account for money he withdrew from the parties’ joint account?

Holding: Appeal dismissed.

Reasoning:

(1) No. The court did not agree that Farkas’ 50 percent interest should revert to Bedic by a resulting trust. Although Bedic referred to an agreement for Farkas’ $125,000 contribution into the Queensway Motel, whereby he would repay the loan and Farkas would repay her half interest in the property to him, at trial this agreement was not relied on. The court agreed that the parties had not relied on this agreement nor did their actions demonstrate a reliance on the agreement when the property was sold in 2006. Bedic did not offer to pay Farkas $125,000 and Farkas did not ask for the money back.   Further, the court found the facts did not support the existence of a resulting trust because here, Farkas provided value in exchange for the equity interest in Queensway transferred to her. Lastly, Bedic’s conduct did not demonstrate an intention to create a resulting trust per Pecore v Pecore. The court found he treated the equity from the sale of the motel as belonging beneficially to both him and Farkas.

In addition, the court found the facts reasonably supported the trial judge’s finding that Bedic and Farkas contributed more or less equal amounts of capital to the Queensway Motel.

(2) No. The court agreed with the trial judge’s finding of a joint family venture in connection with the Fairview Motel. The court found that to remedy what would otherwise be Bedic’s unjust enrichment, the trial judge effectively found that Farkas had a beneficial 50 percent interest in the Fairview Motel by way of a constructive trust, which was reasonably supported by the evidence. As constructive trustee, Bedic was obligated to convey that 50 percent interest to Farkas or pay her one half the value of Fairview. The court reiterated the test from Kerr v Baranow, stating that even though the trial judge did not expressly review the evidence under the factors cited in Kerr v Baranow, the evidence and his findings show a joint family venture between Bedic and Farkas.

Per Kerr v Baranow, the court also found that the evidence supported a link between Farkas’ contribution to her partnership with Bedic and their accumulation of wealth. Further, the evidence supported the trial judge’s finding that each party’s proportionate share in the Fairview Motel should be equal and the court found no reason to interfere with the remedy ordered.

(3) No. The court rejected Bedic’s submissions that the parties’ banking records show the money he took was properly accounted for. The money in question represented part of the net proceeds of sale from the Queensway Motel. The court did not find it within their task to redo the trial judge’s forensic accounting as he had the evidence to support his finding and his order. The trial judge’s finding was not unreasonable and the court found no reason to interfere with his order.

Flintoff v. Crown William Mining Corporation, 2016 ONCA 86

[Pepall, Pardu and Roberts JJ.A.]

Counsel:

Douglas D. Langley, for the appellants

David Milosevic, for the respondents

Facts: The plaintiffs/respondents were victimized by a fraudster, against whom they obtained judgment. Crown William Mining Corporation, a corporation that is controlled by the appellants, purchased the respondents’ judgments in exchange for two promissory notes and 200,000 shares of Crown William.

The purchase agreement contained a “Put-Right option” which provided that after a two-year holding period the respondents could compel the appellants to repurchase the shares from them for $3 per share, exercisable only during a one-year period commencing January 22, 2013. The respondents exercised the option but the appellants did not purchase the shares. The respondents then commenced the present action and obtained summary judgment for specific performance.

The appellants argued that the motion judge erred in granting summary judgment in favour of the respondents because the Put-Right option was a unilateral contract, one of the respondents (Ms. Rinder) had signed a release that barred her claim, and because the motion judge erred in the remedy granted.

Issues:

(1) Was the Put-Right option a unilateral or bilateral contract?

(2)  Were the respondents in substantial compliance with the notice provisions of the purchase agreement?

(3) Did the failure to provide s. 116 certificates mean that the respondents could not compel the appellants to purchase the shares?

(4) Did the release bar Ms. Rinder’s claim?

(5) Did the motion judge err in the remedy granted?

Holding: Appeal dismissed.

Reasoning:

(1) No.  The court reasoned that whether the Put-Right option was part of a unilateral agreement was a question of mixed fact and law, and the appellants did not identify any extricable legal error. Thus, in the absence of a palpable and overriding error (Sattva), the motion judge’s conclusion was owed deference: the conclusion was reasonable and supported by the evidence.

(2) Yes.  The court agreed with the motion judge that the plaintiffs/respondents substantially complied with the notice requirement as contemplated by the purchase agreement, and there was no basis to interfere with that conclusion.

(3) No.  The motion judge correctly held that this was not a precondition for the respondents to exercise the option, and thus this conclusion was also reasonable.

(4) No.  The agreement released the appellants from all claims that Ms. Rinder may have had against them as of the date of the agreement, which was dated April 19, 2011. The motion judge concluded that her claim arose after April 19, 2011 and was thus not barred. The court found that this interpretation of the release agreement was reasonable.

(5) No.  Specifically, the appellants argued that the motion judge erred by granting specific performance, when the respondents’ notice of motion only asked for summary judgment and damages. The court rejected this submission on the basis that the appellants were not prejudiced by a judgment that was within the terms of the relief claimed in the statement of claim.

Locking v. McCowan, 2016 ONCA 88

[Gillese, MacFarland and van Rensburg JJ.A.]

Counsel:

John Archibald and Paul Bates, for the appellant

Thomas Curry and Julia G. Brown, for the respondents

Facts:

The appellant is the representative plaintiff in a proposed class action by unit holders of Partners REIT, an unincorporated real estate investment trust whose units trade on the Toronto Stock Exchange. The appellant claims that the class sustained losses when the REIT’s unit price dropped because an improper property transaction had to be set aside. McCowan was the REIT’s interim CEO at the relevant time and Weinberg was one of the trustees. On April 2, 2014, the respondent Philip and her company Holyrood Holdings Limited sold three properties to the REIT at McCowan’s behest. McCowan failed to disclose that he had a longstanding, close personal and business relationship with Philip. When McCowan’s conflict of interest was exposed, the transaction was set aside and all monies paid were returned to the REIT. However, it is alleged that the fall-out caused the REIT’s unit price to drop by more than 30%. By order dated August 19, 2015, the motions judge permitted the breach of trust claim against Weinberg and the knowing assistance claim against McCowan to proceed. However, he struck the knowing assistance claim against the respondents.

Issue:

Did the motions judge err in striking the knowing assistance claim against the respondents?

Holding: Appeal allowed.

Reasoning:

Yes. The motion judge’s first error was in failing to accurately and generously construe the claim made against the respondents. He read the Amended Statement of Claim as alleging that the respondents’ only assistance or participation in the breach of trust was their suppression of information which they had no duty to disclose. On the pleadings, however, it is alleged that the respondents were active participants – playing the roles of genuinely disinterested arm’s length parties who were the sole owners of the properties – who concealed the improprieties underlying the transaction and sold those properties to the REIT.

The motion judge’s second error relates to his approach to the third element of the test for a knowing assistance claim against the respondents. In order for a knowing assistance claim to succeed, the plaintiff must establish: (i) an act of fraud or dishonesty on the part of the trustee; (ii) that the defendant had knowledge of the trustee’s dishonest conduct; and (iii) that the defendant assisted the trustee in perpetrating the dishonest conduct. The motion judge viewed this third element as requiring that the defendant take a positive step to help or to take part in the trustee’s breach of trust. However, what amounts to “assistance” has not been fully explored by the jurisprudence, and it may be that silence, in certain circumstances, is sufficient to constitute assistance. Thus, it was not plain and obvious that the knowing assistance claim against the respondents could not possibly succeed, as required by s.5(1)(a) of the Class Proceedings Act.

Civil Endorsements

Packall Packaging Inc. v. Ciszewski, 2016 ONCA 78

[Doherty, Brown and Miller JJ.A.]

Counsel:

Peter W.G. Carey, for the appellants Geoffrey D.E. Adair, Q.C., for the respondents

Keywords: Endorsement, Costs, Partial Indemnity

Sabet v. Elhalwagy, 2016 ONCA 84

[Simmons, Pepall and Pardu JJ.A.]

Counsel:

Ioulia Vinogradova, for the appellant

John O’Sullivan, for the respondent

Keywords: Costs Endorsement, Substantial Indemnity Costs, Failure to Pay Costs

Criminal Decisions

Ontario (Attorney General) v. $104,877 in U.S. Currency (In rem), 2016 ONCA 71

[Doherty, Pardu and Benotto JJ.A.]

Counsel:

Glenroy Bastien, for the appellant

Miriam Young and Anastasia Mandziuk, for the respondent

Keywords: Criminal Law, Civil Forfeiture, Civil Remedies Act, s. 3, s. 8, Proceeds from Unlawful Activity

R v. C.K.-D, 2016 ONCA 66

[Sharpe, Hourigan and Benotto JJ.A.]

Counsel:

C. K.-D., in person

Lou Strezos, duty counsel

Michael Bernstein, for the respondent

Keywords: Criminal Law, Sexual Assault, Evidence, Child Witness, Credibility, Sentencing

R v. Johnson, 2016 ONCA 69

[Feldman, Cronk and Roberts JJ.A.]

Counsel:

Anthony Fitzroy Johnson, appearing by video conference

Yoni Rahamim, appearing as duty counsel

Roger A. Pinnock, for the respondent

Keywords: Criminal Law, Aggravated Assault, Sentencing, Credit for Pre-Sentence Custody

R v. Mahomood, 2016 ONCA 75

[MacPherson, MacFarland and Roberts JJ.A.]

Counsel:

Najam Mahmood, acting in person

Erin Carley, for Her Majesty the Queen

Keywords: Criminal Law, Tax Evasion, Income Tax Act, Excise Tax Act, Sentencing

R v. S.C., 2016 ONCA 83

[Laskin, Hourigan and Pardu JJ.A.]

Counsel:

Mark Halfyard, for the appellant

Kevin Rawluk, for the respondent

Keywords: Criminal Law, Sexual Offences, Evidence, Credibility

R v. Hemsworth, 2016 ONCA 85

[Cronk, Epstein and Brown JJ.A.]

Counsel:

Zachary Kerbel, for the appellant

Mary Ellen Hurman, for the respondent

Keywords: Criminal Law, Sexual Assault, Sexual Interference, Kienapple v R, Evidence, Credibility, Witnesses

 

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.

Hello again to everyone. Below are summaries of this week’s Ontario Court of Appeal civil decisions (non-criminal). Topics include nuisance, occupier’s liability, estates, procedure to be taken where it is unclear whether an arbitrator has jurisdiction, an unsuccessful attempt to invalidate the actions of a Union at a national convention, summary dismissal of  a subrogated action and unconscionability of an exclusion clause under an insurance policy.

Please feel free to share this blog with anyone whom you think would be interested. As always, we welcome your comments and feedback.

Have a great long weekend.

John Polyzogopoulos
Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos
1317424 Ontario Inc., v. Chrysler Canada Inc., 2015 ONCA 104
[Feldman, Simmons and Pardu JJ.A.]
Counsel:
R. F. Leach and M. A. Polvere, for the appellants
B. Bresner, for the respondent, Chrysler Canada Inc.

Keywords: Torts, Environmental Law, Nuisance, Requirement of Emanating from Other Land Contamination, Remediation

Facts:
The land in issue was operated as a foundry and asbestos insulation producer for several decades, resulting in significant contamination. It was acquired by Chrysler in 1987 and decommissioned to then-current standards. In 1989, Chrysler sold the land to The D’Andrea Group Inc., with a certificate from the Ministry of the Environment confirming that the land had been decommissioned in accordance with existing regulatory requirements. The D’Andrea Group in turn sold the land to the appellants in 1999. The appellants’ suit against Chrysler is for negligence in decommissioning the property and failing to remediate it, negligent misstatement that Chrysler had properly remediated the land, and the creation of a stigma to the land.

The appellants later sought to amend to add a claim against Chrysler for nuisance by failing to remediate, causing an unreasonable interference with the use and enjoyment of the land. That amendment was denied by the motion judge. He concluded that, to form a tenable nuisance claim, the interference with the use and enjoyment of the claimant’s land must originate outside the plaintiff’s land. The appellants appealed, arguing that the scope of nuisance was not finally settled, and that the claim should therefore be allowed to proceed.

Issue: Can a claim in nuisance be made when the nuisance emanates from the plaintiff’s own land and not from outside that land?

Decision: Appeal dismissed.

Reasoning:
The issue of whether a nuisance must emanate from another’s land was recently specifically addressed by the Nova Scotia Court of Appeal in W. Eric Whebby Ltd. v. Doug Boehner Trucking & Excavation Ltd., 2007 NSCA 92, 258 N.S.R. (2d) 41. In Whebby, at para. 128, Cromwell J.A. (as he then was) stated that regardless of who causes the nuisance, the interference with the plaintiff’s land must be indirect and not direct, meaning it must originate elsewhere than on the plaintiff’s land. Therefore, the alleged nuisance must originate somewhere other than on the plaintiff’s land.

Home Trust Company v Fierro Estate, 2015 ONCA 106
[MacFarland, Hourigan and Benotto JJ.A]
Counsel:
G. Gryguc, for the appellant Fierro
R. Migicovsky, for Rose and Rose
A. Jackson, for the responding party Home Trust

Keywords: Family Law, Estates, Matrimonial Home, Setting Aside Mortgage, Family Law Act, ss. 21, 23, Summary Judgment

Facts:
Victoria Fierro mortgaged a residential property in Vaughan on July 8, 2009, to the respondent as mortgagee. Ms. Fierro died in July 2011. The mortgage went into default in October 2011 and subsequently matured. In March 2012, the respondent commenced an action for payment and possession under the mortgage against Mr. Fierro in his capacity as the estate trustee. In June 2013, a counterclaim was filed arguing the mortgage should be set aside pursuant to ss.21 and 23(3) of the Family Law Act. A third party claim was also commenced against the law firm acting for the parties on the mortgage, alleging they were negligent for not making inquiries into Ms. Fierro’s marital status. Mr. Fierro ceased being the estate trustee in 2013.

In March 2014 on a respondent motion for summary judgement, the motion judge found that Mr. Fierro had no claim to the mortgaged property under the FLA. She further found that sections 21 and 23(3) should not be applied to set aside the mortgage as the evidentiary onus had not been met to establish the respondent had actual or constructive notice that Ms. Fierro was a spouse and the mortgaged property was a matrimonial home.  Mr. Fierro appeals the order of the motion judge granting summary judgment on the mortgage action against the estate of Victoria Fierro.

Issue:  Did the motion judge err in not finding that ss. 21 and 23(3) of the Family Law Act should be applied to set aside the mortgage?

Holding:  Appeal dismissed.

Reasoning:
No. Given that Mr. Fierro is no longer an estate trustee and was not sued in his personal capacity, he has no capacity to bring the appeal. In any event, the court found the motions judge correctly found that Mr. Fierro had not met his onus of establishing that the respondent had actual or constructive notice that Ms. Fierro was a spouse and the mortgaged property was a matrimonial home.

D’Alimonte v. Weber, 2015 ONCA 79
[MacFarland, Hourigan and Benotto JJ.A.]
Counsel:
C. Weber, acting in person
A. R. Leardi, for the respondent

Keywords:  Power of Attorney, Standard of Review, Palpable and Overriding Error

Facts:
The appellant appealed the order removing her as the power of attorney for property and care on behalf of her elderly mother.

Holding:  Appeal dismissed.

Reasoning:
The application judge’s findings were factual in nature. There was sufficient evidence before her to support the order. Absent any palpable and overriding error, the Court of Appeal would not interfere.

MacQuarrie v. National Bank Life Insurance Company, 2015 ONCA 100
[Doherty, Gillese and Lauwers JJ.A.]
Counsel:
R. Andal, for the appellant
C. Carter, for the respondents

Keywords:   Insurance Law, Contract Interpretation, Critical Illness Insurance, Exclusion Clause, Unconscionability

Facts:
The trial judge dismissed the appellant’s claim for payment under a critical illness insurance policy on the basis that the appellant’s claim fell within the 90-day exclusion clause in the policy. The trial judge found that the clause referred to any sign of cancer that appeared before the 91st day after the certificate of insurance came into effect, whether that was before or after the date on which the certificate of insurance came into effect.

Issues:
(1) Is the claim excluded by the 90-day exclusion clause in the agreement?
(2) Did the trial judge err in enforcing the 90-day exclusion clause in the circumstances of this case?

Holding: Appeal dismissed.

Reasoning:
(1) There is no suggestion that the trial judge misapprehended any relevant evidence in her interpretation of the 90-day exclusion clause. That interpretation was reasonable and the Court would not interfere with it.

(2) Like the trial judge, the Court found that it would not be unconscionable to enforce the 90-day exclusion clause in these circumstances.

Zuk v. Atkinson, 2015 ONCA 96
[MacFarland, Hourigan and Benotto JJ.A.]
Counsel:
J.V. Allen, for the appellant
T. Hartley, for the respondents

Keywords:  Civil Procedure, Undertakings, Sanction for Failure to Comply, Striking Claim, Motion to Set Aside

Facts:
Justice O’Connor made an order setting a deadline of April 2, 2012 for the appellant to comply with outstanding undertakings. The appellant did not comply with the order of O’Connor J. Wein J. then made an order extending the time to answer undertakings to June 29, 2012. Justice Wein also ordered that if the appellant did not comply with her order, the respondents could move without notice to dismiss the action. The appellant did not comply with the order of Wein J. and the respondents brought a successful ex parte motion before Murray J. to dismiss the action.

The appellant then brought a motion before Lemon J. to set aside the order of Murray J. That motion was dismissed. Justice Lemon found that there was no adequate explanation for the delay in bringing the motion before him. He held that there was nothing in the explanation offered by the appellant for his non-compliance with the previous court orders that would have made any difference in the motion before Murray J. Further, the motion judge was satisfied that there was some prejudice to the respondents because certain outstanding undertakings were required to allow them to properly respond to the claim. He went on to observe that tactical decisions by counsel to avoid their obligation to answer undertakings should be discouraged by the court.

Issues: Did the motion judge err in:

(1) finding that the appellant’s counsel deliberately did not comply with the orders of O’Connor and Wein JJ.?

(2) finding that the delay resulted in prejudice to the respondents? or

(3) basing his decision on a perceived litigation context beyond the facts of this case?

Held: Appeal dismissed.

Reasoning:
(1) No. The court found that there was no reasonable explanation for the non-compliance with the orders.

(2) No. The lack of explanation made the issue of prejudice suffered by the respondents less of a factor on the motion before Lemon J. However, the motion judge did find prejudice to the respondents and the court saw no error in this conclusion.

(3) No. The court was not satisfied that the motion judge based his decision to dismiss the motion on his observations regarding the practice of some counsel to avoid their obligation to answer undertakings.

Kelly (Re), 2015 ONCA 95
[Watt, Pepall and Huscroft JJ.A]
Counsel:
H. Kelly, acting in person
A. Szigeti, for the appellant
P.G. Cowle, for the Attorney General of Ontario
B. Walker-Renshaw, for Ontario Shores Centre for Mental Health Sciences

Keywords:  Administrative Law, Not Criminally Responsible, Ontario Review Board, Significant Threat Standard

Facts:
Mr. Kelly was found not criminally responsible on account of mental disorder on charges of uttering threats of death or bodily harm and a failure to comply with a probation order on July 9, 2008. He has been under the supervision of the Ontario Review Board since that time. Kelly appeals from the disposition made by the Ontario Review Board on April 7, 2014, with reasons released on May 5, 2014. Counsel argues that the Board erred in giving effect to the position of counsel without discharging its inquisitorial function and making an independent determination of the significant threat threshold. It is argued there is no evidence that Mr. Kelly constituted a real risk of physical or psychological harm to members of the public from conduct that is criminal in nature.

Issue:  Should the decision by the Ontario Review Board be changed?

Holding:  Appeal dismissed.

Reasoning:
The Board was entitled to rely and act on counsel’s acknowledgment that the significant threat standard had been met. It was an acknowledgment by counsel that coincided with a robust history of such findings during Mr. Kelly’s tenure under the supervision of the Review Board. It turned its mind to the issue of significant threat and gave brief reasons to explain why it considered the standard to have been met. The court was satisfied that the Board gave the issue adequate consideration in the circumstances. The finding was not unreasonable.

Matthews v. Andrushko, 2015 ONCA 92
[Rouleau, van Rensburg and Pardu JJ.A.]
Counsel:
M. Merchant, for the appellant
No one appearing for the respondents

Keywords:  Endorsement, Settlement Agreement

Holding: Matter dismissed. The parties reached a settlement agreement before the appeal was heard, which included the matter that costs were payable to the respondents.

Winters v Haldimand (County), 2015 ONCA 98
[MacFarland, Hourigan and Benotto JJ.A.]
Counsel:
N.R. Jones and J.P. Cavanagh, for the appellants
S. Handler and B. McCall, for the respondents

Keywords: Torts, Personal Injury, Occupier’s Liability, Trees, Standard of Care, Duty to Warn, Costs, Family Law Act Claimants

Facts:
The plaintiff/appellant fell from a tree and was rendered paraplegic. The tree was located in a park in Cayuga, Ontario.

The appellant submitted that the trial judge erred in three ways: (1) failing to make a finding as to whether the premises were reasonably safe; (2) finding that the monitoring the town had in place was reasonable; and (3) not finding it was obvious that the tree in question was not reasonably safe and that it was inherently unsafe in the absence of appropriate monitoring.

The appellant also sought leave to appeal the trial judge’s costs award and, in particular, the costs award made against the Family Law Act claimants. The trial judge awarded costs against each of the six FLA claimants in the amount of $5,000 for a total of $30,000.

Holding: Appeal dismissed. Leave to appeal the costs award was granted, but the cost appeal was dismissed. Costs of the appeal were agreed in the sum of $15,000 apportioned $500 against each of the five remaining FLA claimants and $12,500 against the appellant, Eric Winters.

Reasoning:
The trial judge did not err. He was alive to the three issues as they had been put to him in oral and written argument. The evidence did not disclose any prior complaint or injury with respect to the tree. The evidence was that the tree was healthy and typical of its type. Further, the trial judge concluded that the Town’s monitoring of the park and visits by maintenance personnel were reasonable in all the circumstances. Any danger posed by the tree was an obvious one. There is no duty to warn of such an obvious and self-evident danger nor any duty to monitor beyond what the Township was doing at the time of the accident.

On costs, leave to appeal was granted but the appeal was dismissed. While in some cases there have been no costs awarded against FLA claimants, there is no general rule that that should be so. The awarding of costs is a matter for the discretion of the trial judge. While the awards here seemed somewhat high, to interfere the Court must be satisfied that the trial judge committed an error in principle or was clearly wrong. This case did not rise to that standard.

Ciano Trading & Services C.T. v. Skylink Aviation Inc., 2015 ONCA 89
[MacFarland, Hourigan and Benotto JJ.A.]
Counsel:
M.L. Solmon and R. Sparano, for the appellant
F. Kussner and B. Halfin, for the respondent

Keywords:   Civil Procedure, Stay Pending Arbitration, Jurisdiction of Arbitrator, Competence-Competence Principle

Facts:
The appellant commenced an action against the respondent because the respondent terminated a Service Agreement between the parties. The appellant brought an application for a declaration that the arbitration clause in the Service Agreement did not apply. The respondent brought a motion to stay the proceedings pending arbitration.

The motion judge granted the respondent’s motion and dismissed the appellant’s application. He found that it was unclear whether the arbitration clause survived the termination of the Services Agreement. The arbitration clause was not listed in the Service Agreement’s survival clause. Pursuant to the competence-competence principle, the motion judge referred the matter to an arbitrator to determine whether the arbitrator had jurisdiction.

Holding: Appeal dismissed. Matter referred to arbitration.

Reasoning:
The motion judge did not err in his interpretation of the Service Agreement, nor his finding that the survival of the termination clause was arguable.

Under the International Commercial Arbritration Act, R.S.O. 1990, c.I.9 and the UNCITRAL  Model Law on International Commercial Arbitration, the motion judge was obliged to defer the issue of applicability of the arbitration clause to the arbitrator unless the agreement was null and void, inoperative or incapable of being performed. Further, the case law recognizes that where it is unclear if the arbitrator has jurisdiction, then it is preferable to leave the issue to the arbitrator pursuant to the competence-competence principle. In these circumstances, the motion judge was under no obligation to make a determinative finding regarding the operability of the arbitration clause.

Branch 1 of the Polish National Union of Canada v. Polish National Union of Canada Inc., 2015 ONCA 91
[MacFarland, Hourigan and Benotto JJ.A.]
Counsel:
J.F. Diamond, for the appellants
R.S. Segal and Maria Constantine, for the respondents

Keywords: Labour Law, Property, Injunctions, Union Governance, Elections, Natural Justice

Facts:
This litigation arises as the result of a disagreement between the Branch and the Union over the ownership and the use of certain property. There were two central issues. The first was the ownership of the properties where Branch 1 had been meeting for many years and the second was described as “governance issues”.  The application judge decided the property issue and no appeal was taken from that decision. On the governance issues, the court determined that the appellants had not been afforded natural justice at a special meeting called by the president of the HEB on February 15, 2013. As a result, the appellants asked the court to invalidate many actions taken by the Union at that meeting.

Before the application was heard, the appellants sought an injunction to prevent the Union from holding its national convention on December 14, 2013. The motion proceeded before Brown J. who refused the injunction and the convention took place.

After hearing the application, the court quashed only a few of the actions of the Union at the meeting in question. On appeal, the appellants argued that their victory was a hollow one because the decision did not take the further step and invalidate all of the actions taken at the national convention in December 2013. They say that because of the actions taken by the HEB in February of 2013 where their membership was effectively terminated, they were precluded from participating att the convention held in December.

The appellants appealed the judgment of the application judge and argued essentially that he failed to deal with all of the issues that were before him. The appellants maintained invalidation of the elections held at the national convention were not collateral and this issue was put before the motion judge.

Issue: Did the application judge err by failing to deal with all the issues before him?

Holding: Appeal dismissed.

Reasoning: No.
First, the application judge in his reasons specifically stated that other than the matters he did deal with, the other matters raised in the draft forms of judgment were collateral, and because they were not specifically addressed he would not make orders in relation to them. If, as the appellants now argue, these matters were specifically addressed, then the court stated that the obligation was to return to the application judge and seek adjudication on those issues, not to raise them by way of appeal.

Second, the order of Brown J. specifically permitted the Union to carry on with the national convention and the elections as specifically set out in the agenda. That order was not appealed and the elections proceeded as authorized by it. The damage had been done and the “irreparable harm” foreseen by the motion judge had occurred, yet the injunction did not issue and the application judge stated the matter to be collateral and not specifically addressed.

Sanofi Pasteur Limited v. UPS SCS, Inc., 2015 ONCA 88
[Hoy A.C.J.O., Simmons and Tulloch JJ.A.]
Counsel:
S.K. Faguy and V. Doré, for the appellant
K. Podrebarac and A. Melamud, for UPS SCS Inc.
D. Hillel, for Automation Components Inc.
L. Matthews and D. Milligan, for Industrial Technical Services (ITS) Inc.
D.S. Young and K.R. Bridel, for Airon HVAC Service Ltd. and Airon HVAC and Control Ltd.
M. Shortreed and E. Lawrence, for Honeywell Limited and Honeywell International Inc.
B. Benning, for Maple Reinders Constructors Ltd. and Maple Reinders Construction Ltd.
P. Duffy, for Heraeus Sensor Technology, USA

Keywords: Insurance Law, Contract of Insurance, All-Risks Policy, Summary Judgment, Negligence, Privity of Contract, Third Party Beneficiary of Contract, Fraser River Pile v Can-Drive Services, Costs

Facts:
The respondent, UPS SCS, Inc. (UPS), stored the vaccines of the appellant, Sanofi Pasteur Limited, in a dedicated, temperature-controlled warehouse. As required by the storage contract between them, the appellant insured its vaccines under an all-risks policy. The warehouse cooling system malfunctioned. After a weekend at below the contractually-stipulated temperatures, the vaccines were unsaleable. The appellant was fully indemnified by its insurer. The appellant’s insurer subrogated itself to the appellant and commenced an action against UPS and a number of other defendants (the Other Defendants). On summary judgment motions brought by most of the defendants, the motion judge dismissed the action in its entirety and awarded costs to UPS and the Other Defendants. He also ordered the appellant to pay one-half of the costs sought by the third parties to the action. The appellant appealed.

Issues:
(1) Did the motion judge err in concluding that the effect of the covenant (the Insurance Covenant) in the storage contract between the appellant and UPS, that required the appellant to maintain all-risk insurance, could be determined on a summary judgment motion?

(2) Did the motion judge err in concluding that the Insurance Covenant signified that the appellant had assumed all risk of damage to the vaccines and in barring the appellant’s claim against UPS?

(3) Did the motion judge err in concluding that the Other Defendants were third-party beneficiaries of the Insurance Covenant and insulated from a law suit?

(4) Did the motion judge err in his costs awards?

Holding: Appeal dismissed in part.

Reasoning:
(1) No. The effect of the Insurance Covenant could be determined on summary judgement. The appellant argued that because the parties advanced competing interpretations of the Agreement, the motion judge needed to engage in an exercise of contractual interpretation and a complete factual matrix relating to the incident and its cause was necessary before this task could be undertaken. The appellant argued that the complete factual matrix could only be determined after it has had an opportunity to examine an individual who allegedly suppressed a temperature alarm in the warehouse. Therefore, it submitted, a trial of the action was required. The court disagreed. It held that a trial was not required to determine whether – or to what extent – the appellant contractually assumed the risk of damage to its vaccines and, to the extent the appellant had assumed the risk, whether the parties intended to extend the benefit of the Insurance Covenant to all of the defendants.

(2)  Yes. The motion judge failed to consider a material provision of the agreement. Section 1 of the Master Services Agreement (MSA), mandated that in the event of any conflict between a provision in the MSA (such as the Insurance Covenant) and a provision in Service Schedule 1, the terms of Service Schedule 1 would prevail. As a result, the appellant assumed all risk of damage to its vaccines except for damages of up to $100,000 solely due to the negligence of the defendants. The motion judge erred to the extent that he concluded otherwise.

(3) No. The Other Defendants are third-party beneficiaries and benefit from this limitation of liability. The Supreme Court of Canada (SCC) adopted a principled approach to determine when the doctrine of privity of contract should be relaxed. In Fraser River Pile & Dredge Ltd. v. Can-Drive Services Ltd, [1999] 3 S.C.R 108, the SCC articulated the following two-part test to be applied in determining if a third-party should be permitted to enforce the benefit of a contractual provision to defend against an action by one of the contracting parties: (1) did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provision; and (2) are the activities performed by the third party seeking to rely on the contractual provision the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, again as determined by reference to the intentions of the parties? The court found that the Other Defendants met the threshold set out in Fraser River Pile.

(4) No. The court held that “a court should set aside a costs award on appeal only if the [motion] judge has made an error in principle or if the costs award is plainly wrong”: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303. The court was not persuaded that the motion judge made an error in principle or that his costs awards were plainly wrong. Provided UPS paid to the appellant $100,000 plus pre-judgment interest within 10 days, the court would uphold the motion judge’s costs awards and dismiss the appeal.

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.

Hello again to everyone. Below are summaries of this week’s Ontario Court of Appeal civil decisions (non-criminal). The court’s long-awaited decision on expert reports in Moore v Getahun was released yesterday. Most will recall that the issue under consideration were discussions between counsel and expert witnesses and the extent to which consultations between them should be documented and disclosed to the other side. The court has provided counsel with some much needed guidance on dealing with experts and the extent of disclosure obligations in respect of those dealings. The court held that counsel may communicate with an expert on a draft report and assist in the preparation of that report and that not all drafts or notes must be disclosed. However the litigation privilege that attaches is qualified with some exceptions and disclosure obligations may arise in circumstances such as for the production of foundational information.  The court may also order disclosure of such discussions where it can be shown on reasonable grounds that counsel improperly influenced the expert. For a more detailed discussion of Moore v Getahun please see Visnja Jovanovic’s article on the case, which can be found here:
http://www.blaney.com/sites/default/files/InsuranceBulletin_January2015.pdf

Other topics covered this week included family law (material change in circumstance as it relates to varying residency schedules), class actions (refusal of the court to approve the settlement in the claim by lawyers against Carswell for reproducing their facta on their research service, Litigator), summary judgment and more.

Wishing everyone a nice weekend.

John Polyzogopoulos

Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos


Brown v. Lloyd
, 2015 ONCA 46

[Feldman, Cronk and Hourigan JJ.A.]

Counsel:
K.C. Bales and R. Diamond, for the appellant
J. N. Moldaver, for the respondent

Keywords: Family Law, Access, Residency Schedule, Material Change in Circumstances

Facts:
The appellant, David Lloyd, and the respondent, Moya Dianne Brown, resided together from August 2004 to May 2007.  They never married.  They are the parents of one child, David Daxton Brown Lloyd (“Dax”), who was born on November 14, 2004.  Dax is now 10 years of age. Mr. Lloyd appeals from the order of Stevenson J. of the Superior Court of Justice dated January 14, 2014, dismissing his motion to vary the existing residency schedule for Dax based on alleged material changes in circumstances.  He seeks to increase his access rights so as to implement essentially an equal residency schedule for Dax, affording each parent equal time with him.

The motion judge dismissed Mr. Lloyd’s motion to vary.  She found that there had been no material change in Dax’s circumstances within the meaning of the governing authorities or the Children’s Law Reform Act (the “CLRA”).  The threshold requirement of a material change in circumstances not having been met, the motion judge declined to inquire further into the merits of Mr. Lloyd’s variation proposal.

Issues:
1) Did the motion judge err by misapprehending the test for the demonstration of a material change in circumstances?

2) Did the motion judge err by failing to find a material change in circumstances? and

3) Did the motion judge err by failing to consider the “maximum contact principle” and Dax’s best interests?

Holding:
Appeal dismissed.

Reasoning:
1) No.  The motions judge referred expressly to the test for variation enunciated by the Supreme Court in the leading case of Gordon v. Goertz, [1996] 2 S.C.R. 27, and noted, correctly, that on the authority of Gordon, the merits of an application to vary a custody and access order may be considered only where the reviewing court is first satisfied that a material change in circumstances has occurred since the date of the order sought to be varied.

2) No. The motion judge considered each of the events or developments advanced by Mr. Lloyd as a material change of circumstances.  These included: Dax’s age and advancing maturity; Ms. Brown’s remarriage; the birth of her two daughters and her relocation to a new home; and Dax’s diagnosis of a learning disability, which occasioned the need for specialized tutoring. For lengthy and detailed reasons, the motion judge concluded that while most of these developments constituted changes in the circumstances that prevailed at the time of the original order, none of them, alone or in combination, met the Gordon test for a material change in circumstances on the facts of this case. 

3) No. The finding of a material change in circumstances is a prerequisite to an examination of the merits of an application to vary an existing custody or access order.  Absent such a finding, the variation inquiry can go no further.

Crawford v. Carey, 2015 ONCA 40

[Doherty, Rouleau & Watt JJ.A.]

Counsel:
F. Crawford, for the plaintiffs (appellants)
S.A. Crocco, for the defendant (respondent) Allan Socken

Keywords: Civil Procedure, Pleadings, Leave to Amend

Facts:
On appeal from the order of Justice Chiappetta of the Superior Court of Justice dated August 27, 2014.

Issue:
Did the motion judge err in refusing to grant the plaintiffs (appellants) leave to amend their statement of claim?

Holding:
Appeal dismissed.

Reasoning:
The statement of claim does not plead facts as against the defendant capable of supporting any of the causes of action as pled. Like the motion judge, the court saw no basis upon which to grant the appellants leave to amend.

Holdstock v. Holdstock, 2015 ONCA 42

[Feldman, Simmons and Pardu JJ.A.]

Counsel:
Raymond G. Colautti and Anita E. Landry, for the appellant
Robert J.M. Ballance, for the respondent

Keywords: Family Law, Property, Trust Agreement, Authenticity of Signature, Commercial Property

Facts:
The parties were involved in matrimonial litigation following a long-standing marriage of 35 years. The current appeal related to a commercial property on which the husband runs his landscaping business. The husband’s financial statements show the property as owned by the wife. After the wife entered into an agreement of purchase and sale to sell the property for approximately $80,000 in excess of the valuation-day value, the husband claimed to have found a trust agreement which provides that the wife holds the property in trust for the husband and agrees not to sell it. The wife tendered an unsworn expert report that questioned the authenticity of her signature on the trust agreement. The motion judge granted the wife’s motion for a writ of possession on the basis that her alleged signature was refuted by a handwriting analyst. The formal order did not include a declaration that the wife was the owner of the property. Rather, it simply provided that a writ of possession shall issue in favor of the wife. The husband appealed the motion judge’s ruling and renewed his request for a trial on the issue of the authenticity of the wife’s signature.

Issue:
Did the motion judge err in issuing the writ of possession?

Decision:
Appeal dismissed

Reasoning:
No. Although the motion judge erred by relying on the unsworn report of a handwriting expert, he came to the correct conclusion that a writ of possession should issue. Given the wife’s status as the registered owner, the husband’s position in his financial statements that the wife is the owner of the property, and her reliance on that position in selling the property, together with the unclear effect of the declaration of trust, in all the circumstances, the mere existence of the trust document, even if signed, did not justify jeopardizing the favourable sale of the property at this stage of the proceedings. The parties were not precluded from asserting their respective claims to the proceeds of sale as advised.

Agostino v Gary Bean Securities Ltd., 2014 ONCA 49

[Doherty, Juriansz and Huscroft JJ.A.]

Counsel:
M. Agostino, acting in person
L.M. Smits, for the respondents

Keywords: Employment Law, Termination For Cause, Progressive Discipline, Pre-Trial Disclosure of Witnesses, Failure to Disclose not Precluding Calling Witnesses

Facts:
This was an appeal from the decision of Grace J. dismissing the appellant’s action for wrongful dismissal and granting judgment on the respondents’ counterclaim for $63,179.66, money found owing as a result of the appellant’s expense account.

Holding:
Appeal dismissed.

Reasoning:
The trial judge properly exercised his discretion to allow the respondents to call two witnesses to testify at the trial, despite the fact that they were not included on the pre-trial conference report.

It was open to the trial judge to conclude that the appellant’s employment was terminated for just cause given his findings that the appellant made unauthorized trades, lied to a client, and misled the respondent.

Further, there is no legal principle requiring progressive discipline in every case.  The trial judge considered whether progressive discipline was appropriate and determined that it was not.

There was no basis to suggest that the respondents acted with malice or bad faith toward the appellant.

Lastly, there was no need to consider the appellant’s notice period argument, and the trial judge’s calculation of expenses was supported by the facts.

Pinsky v. Smiley, 2015 ONCA 52

[Weiler, Watt and Epstein JJ.A.]

Counsel:
M. Cheng, for the moving parties, responding parties by way of cross-motion
A. Pinsky, acting in person

Keywords: Civil Litigation, Quashing Appeal, Interlocutory vs. Final

Facts:
This was a motion to quash the the appellant, Mr. Prinsky’s appeal as being interlocutory rather than final. The appellant conceded that the decision on a motion to remove counsel is interlocutory. He argued that the motion judge’s refusal to grant him an adjournment to examine a third party was a final one and that the Court of Appeal has jurisdiction to deal with the matter. The appellant sought an adjournment to examine witnesses for whom solicitor client privilege was claimed. The request for the adjournment was intertwined with the refusal to remove Faskens as solicitors of record, and that was not a final order as it flowed from the refusal to move Faskens and was an attempt to circumvent it.

Holding:
Appeal was quashed and the cross-motion dismissed. This decision was without prejudice to the appellant’s right to apply for an extension of time in which to seek leave to appeal to the Divisional Court.

Waldman v Thomson Reuters Canada Limited, 2015 ONCA 53

[Simmons, MacFarland and Benotto JJ.A.]

Counsel:
P.J. Pape and S. Chaudhury, for the appellant
A.E. Bernstein and S. Whitmore, for the respondent

KeywordsClass Actions, Class Proceedings Act1992, Civil Procedure, Courts of Justice Act; s. 6(1)(a)-(b); s. 6(2); s. 19(1)(a)-(b), Appellate Jurisdiction, Approval of Settlement Agreement, Approval of Fee Retainer Agreement, Approval of Class Counsel Fees, Sutts, Strosberg LLP v Atlas Cold Storage Holdings Inc.

Facts:
The action was commenced because Thomson, through its legal publishing branch known as Carswell, made available court documents authored by the lawyers who constituted the proposed class members. Carswell copies documents from public court files, replicates them on an electronic database and search and retrieval service known as “Litigator”, and makes the copies available to subscribers. Documents authored by Mr. Waldman, who is a lawyer, were included in Litigator without his permission.

On October 3, 2013, the appellant and respondent reach an agreement to settle the copyright infringement class action. By order dated March 4, 2014, Perell J. refused to approve the settlement, as well as the retainer agreement and class counsel fees sought as part of that agreement. Perell J. concluded that the proposed settlement was “not fair, reasonable and in the best interests of the Class Members”. Both parties appealed that refusal.

Holding:
Appeal dismissed.

Reasoning:
There was a preliminary issue regarding the Court of Appeal’s jurisdiction to hear the appeal, pursuant to ss. 6(1)(b) of the Courts of Justice Act [“CJA”]. The issue was whether the order of Perell J. was final, giving the Court of Appeal jurisdiction over the matter, or whether the order was interlocutory, leaving the Court with no jurisdiction and the appeal laying to the Divisional Court with leave, pursuant to ss. 19(1)(b) of the CJA.

Regarding the Court of Appeal’s jurisdiction, three separate matters from Perell J.’s order were being appealed: (1) refusal to approve of the settlement agreement; (2) refusal to approve of the fee retainer agreement; and (3) refusal to approve of the class counsel fees sought.

First, the Court disagreed with the appellant’s submission that Sutts, Strosberg LLP v Atlas Cold Storage Holdings Inc., 2009 ONCA 690 stands for the proposition that all appeals from orders related to fee retainer agreements and fees lay to the Court of Appeal. That case was different because the motion judge in that case had approved the settlement agreement, but in doing so, had reduced the quantum of class counsel fees. By contrast, in this case, the settlement was not approved and thus there was no finality to the litigation.

Even if the Court of Appeal had jurisdiction to hear the appeal with respect to fees, the Court rejected the appellant’s argument that ss. 6(2) of the CJA would give the Court jurisdiction in respect of the entire order. Subsection 6(2) provides: “The Court of Appeal has jurisdiction to hear and determine an appeal that lies to the Divisional Court or the Superior Court of Justice if an appeal in the same proceeding lies to and is taken to the Court of Appeal.”

An appeal from an interlocutory order only “lies to the Divisional Court” within the meaning of ss. 6(2) once leave to appeal that order has been granted. If the motion judge’s order refusing to approve the settlement agreement was interlocutory, then this court still would not have jurisdiction to hear the appeal from that order under ss. 6(2) unless and until the appellant obtained leave to appeal to the Divisional Court.

Lastly, the Court rejected the appellant’s submission, supported by the respondent, that an appeal lay to the Court of Appeal under ss. 6(1)(b) because the order refusing to approve the settlement was a final order of a judge of the Superior Court. The appellant argued that it amounted to a final order because the settlement agreement had been finally dismissed, and therefore the parties’ contractual rights and obligations were put to an end. However, as noted by the Court, the cases cited in support of this proposition were not helpful, and more importantly, the argument presumed that to be a final order, an order need only dispose finally of whatever issue was before the motion judge irrespective of whether the order terminates the action or resolves a substantive claim or defence of the parties. To accept this would eliminate the distinction between interlocutory and final orders.

In sum, although the settlement agreement was not approved, the litigation continued, and the parties cannot be said to have lost a substantive right relating to the merits of the litigation. The appeal lies to the Divisional Court with leave.

First Elgin Mills Developments Inc. v. Romandale Farms Limited, 2015 ONCA 54

[Epstein, Lauwers and Pardu JJ.A.]

Counsel:
R. Leigh Youd and Adam J. Wygodny, for the moving parties
John J. Longo and Martin J. Henderson, for the responding party

Keywords: Civil Procedure, Motion for Re-hearing, Sattva Capital Corp. v. Creston Moly Corp., Standard of Review

Facts:
This was a motion for a re-hearing of an appeal on the basis that the court applied the wrong standard of review and that the interests of justice required a re-hearing. The moving parties alleged that the Supreme Court of Canada’s decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, released several days before the appeal decision in question was released, altered the applicable standard of review. The appeal in question did not make reference to Sattva. The Court of Appeal applied a standard of correctness. In Sattva the SCC held that contractual interpretation involves issues of mixed fact and law. Rothstein J. left open the possibility of identifying “an extricable question of law from within what was initially characterized as a question of mixed fact and law”, including the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor. The moving parties asserted that Sattva required a greater degree of appellate deference to the decision of the application judge than the Court of Appeal showed in its reasons for judgment.

Issue:
Did the Court of Appeal make an error requiring a re-hearing of the appeal?

Decision:
Appeal Dismissed.

Reasoning:
No. The Court of Appeal will re-open an appeal prior to the entering of the order only in the type of rare circumstance where it is in the interests of justice to withdraw the reasons of the court and re-hear the case on the merits. Something in the nature of overlooked or misapprehended evidence, or failing that, a clear and compelling case in law on the point and the prospect of a very serious injustice absent reconsideration would be required to justify withdrawing the court’s reasons and holding a re-hearing. This case did not rise to that threshold. The result in the appeal was not driven by the standard of review and would not have been different under the application of the Sattva test.

Koohestani v. Mahmood, 2015 ONCA 56

[Epstein, van Rensburg and Benotto JJ.A.]

Counsel:
J.S. G. Macdonald, for the appellants
R.D. Elliott and R. Hosseini, for the respondent

Keywords: Shareholder Litigation, Partial Summary Judgment, Sattva Capital Corp. v. Creston Moly Corp., Striking Statement of Defence, Refusal to Grant Leave to Amend to Add Counterclaim, Failure to Pay Costs

Facts:
The appellants appealed the decisions of two judges in the courts below. The appellants appealed the decision of Roberts J., who allowed the respondent’s motion for partial summary judgment and found that the appellants breached a previous interim agreement. The appellants also appealed the decision of Spence J., who struck their statement of defence and dismissed their motion to add a counterclaim.

The case involves a shareholder dispute between the appellants and the respondent, who are the only three shareholders of the respondent limousine business. The appellants and respondent earn income from the business as employees, and the respondent was previously the sole officer and director of the business before the appellants held a shareholder meeting in his absence and removed him from his position. The respondent’s underlying action includes claims for damages, breach of fiduciary duty, and misappropriation of profits.

Prior to the litigation that forms the subject of these appeals, the appellants and respondents attended a case conference and reached an interim agreement related to the business. In sum, the interim agreement provided that an audit of the company would occur, the respondent would have fair access to client calls and vehicles of the business, the appellants would not divert business away from the subject corporation, and all parties would act in good faith and in a commercially reasonable manner in executing the terms of the agreement.

The respondent subsequently brought a partial summary judgment motion before Roberts J., who held that the appellants breached the interim agreement and ordered them to pay damages accordingly. In response, the appellants moved to vary the order of Roberts J. and also sought to amend their statement of defence to add a counterclaim. The respondent then moved to strike their statement of defence. Spence J. struck the statement of defence and dismissed the appellants’ motion.

Issues:
(1) Did Roberts J. err in hearing the appellant’s motion for partial summary judgment when no proper notice of motion was served?
(2) Roberts J. err in finding breaches of the interim agreement?
(3) Did Spence J. err in striking the statement of defence?
(4) Did Spence J. err in dismissing the appellants’ motion to add a counterclaim?

Holding:
The appeal from the order of Roberts J. was dismissed on both grounds. The appeal was allowed in part in relation to the order of Spence J. striking out the statement of defence. The appeal was dismissed in part with respect to Spence J.’s order dismissing the appellants’ request to amend their defence to add a counterclaim, but without prejudice to their being able to move under the appropriate rules for leave to add a counterclaim. The costs award in the matter before Spence J. was reduced to $2,500 in favour of the respondent, given the divided success with the appellants. As the overall outcome favours the respondent, he was awarded costs of the appeal in the amount of $10,000.

Reasoning:
(1) No. Roberts J. did not err in hearing the partial motion for summary judgment, even though the respondent failed to plead breach of the interim agreement and failed to serve a notice of motion under rule 37.01 of the Rules of Civil Procedure. Despite the fact that the respondent did not comply with these rules and offered to bring a proper motion at a later date, the appellant was prepared and even insisted on responding to this motion on the same day. Therefore, the appellants arguments that the motion should not have been heard due to a lack of procedural fairness cannot succeed.

(2) No. Roberts J.’s interpretation of the interim agreement was a reasonable one, and her finding that the appellants had breached it on several occasions was supported by the evidence. Specifically, it was reasonable to conclude that an implied term of the agreement was that the business would continue to operate as it had before the litigation commenced. The appellants had breached this implied term by deducting expenses and commissions from the respondent’s pay, thereby changing longstanding business practices. Roberts J.’s interpretation of the agreement attracts deference, and her findings should not be interfered with: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53.

(3) Yes. It was open to Spence J. to consider striking the appellants’ defence based on their failure to pay the amounts ordered by Roberts J. pursuant to subrules 57.03(2) and 60.12(b) of the Rules of Civil Procedure. However, Spence J. failed to consider any of the relevant principles from the case of Bell ExpressVu Limited Partnership v. Corkery, 2009 ONCA 85 before determining if the statement of defence should have been struck. These principles include the fact that: this remedy is not a remedy of first resort, the defaulting party should be provided with an opportunity to cure the default before its pleadings are struck, the pleading and any evidence relevant to the defence may demonstrate a strong defence such that the interests of justice warrant finding another way to sanction the misconduct. Additional principles that Spence J. failed to consider include the context of the misconduct relied upon, responses proportional to the severity of misconduct, and counsel for the defaulting parties rather than the parties themselves may bear primary responsibility for the misconduct in issue.

The failure of Spence J. to take these factors into account disentitles his decision to the deference it would normally attract, and therefore the order striking the appellant’s statement of defence is set aside. Instead, it was ordered that the amounts owing under the order of Roberts J., including costs and post-judgment interest, be paid within 30 days of the release of the Court of Appeal’s reasons, failing which the respondent would be entitled to move again to strike out the statement of defence.

(4) No. Since the appellants’ statement of defence was reinstated, they now have the right to seek leave in a future proceeding to amend their defence by adding a counterclaim. If the appellants wish to do so, they must have the consent of the other parties to add a counterclaim or obtain leave of the court, as pleadings have closed – subrules 27.07(1) and 26.02 of the Rules of Civil Procedure.

Moore v. Getahun, 2015 ONCA 55

[Laskin, Sharpe and Simmons JJ.A.]

Counsel:
J.T. Curry and J.E. Lilles, for the appellant
P.J. Pape and J. Nairn, for the respondent
M. Gourlay and S. Walker, for the intervener Criminal Lawyers’ Association
R. Halpern and B. Cameron, for the intervener Ontario Trial Lawyers Association
W.D. Black, J.R. Morse and J.J. Morris, for the intervener The Holland Group
J.A. Olah and S. Libin, for the intervener Canadian Defence Lawyers Association
C. Raphael, for the intervener Canadian Institute of Chartered Business Valuators
L.R. Rothstein and J.C. Killey, for the intervener The Advocates’ Society

Keywords: Medical Malpractice; Expert Witnesses; Expert Reports; Rules of Civil Procedure; Rule 53.03; Rule 31.06(3); Evidence Act; s. 52; Hearsay; Res Gestae; Courts of Justice Act; s. 134(6)

Facts:
This appeal raises significant issues in relation to the preparation and use of expert reports.

Following a motorcycle accident, the respondent (plaintiff) was treated by the appellant (defendant), a recently qualified orthopedic surgeon, for a fracture to his right wrist. The appellant applied a full circumferential cast to the respondent’s wrist and forearm. The respondent suffered permanent damage to the muscles in his arm due to compartment syndrome that he alleged was caused by the appellant’s negligence in the application of a full cast.

The central issues at trial were whether the appellant had fallen below the standard of care required of him by applying a full circumferential cast on the respondent’s wrist and whether the full cast caused the compartment syndrome. Much of the eight-day trial concerned expert evidence.

The respondent obtained an expert report from Dr. Orsini, the orthopedic surgeon who performed the surgery to relieve the compartment syndrome. Dr. Orsini died before the trial. The trial judge ruled that his first report outlining his observations and the facts as to the treatment he provided were admissible pursuant to s. 52 of the Evidence Act, R.S.O. 1990, c. E.23, which permits the admission of a medical practitioner’s report with leave of the court. This ruling was not contested at trial or on appeal. The trial judge refused to admit Dr. Orsini’s opinions on standard of care and causation, contained in his second report, for the truth of their contents. She did so on the grounds that Dr. Orsini was not available for cross-examination, and the requirement of necessity had not been met since the respondent had another expert who could testify to these issues. However, as other expert witnesses had commented on Dr. Orsini’s opinion, the trial judge concluded, at paragraph 21, “that Dr. Orsini’s opinions on negligence and causation expressed in his reports are admissible as part of the res gestae and background, but not admitted for their truth.”

The respondent also sought to adduce opinion evidence from Dr. Tanzer, the emergency room physician who first saw the respondent and detected the compartment syndrome. Following the Divisional Court’s judgment in Westerhof v. Gee Estate, 2013 ONSC 2093, the appeal from which was heard at the same time as this appeal, the trial judge refused to admit Dr. Tanzer’s opinion evidence as to the standard of care and causation because he had not prepared a report in compliance with rule 53.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

The appellant called two expert witnesses. Dr. Ronald Taylor was a retired orthopedic surgeon who had practiced in a community hospital setting for his entire career. During cross-examination, Dr. Taylor indicated that he had sent a draft of one of his reports to the appellant’s counsel for review. Dr. Taylor testified that he had produced his final report following an hour and a half conference call with counsel. Although the respondent’s counsel did not pursue this issue, the trial judge expressed her concern over the consultation between Dr. Taylor and the appellant’s counsel.

The trial judge preferred the evidence of the respondent’s expert witness over that of the appellant’s expert witnesses and found that the application of the full circumferential cast was a breach of the standard of care and had caused the compartment syndrome to develop. In doing so, the trial judge held that it was improper for the appellant’s counsel to assist an expert witness in the preparation of the expert’s report.

The second significant legal issue involved the use of the appellant’s expert witness reports. The reports were not entered into evidence and the parties proceeded to call viva voce evidence from all expert witnesses. The expert reports were, however, made available to the judge as an aide memoire. In assessing the credibility of the expert witnesses called by the appellant, the trial judge took into account what she perceived to be contradictions between the experts’ viva voce evidence and the written reports. The appellant submitted that she erred in doing so.

Issue(s):
1) Did the trial judge err in her treatment of the appellant’s expert opinion evidence by:

a) Criticizing the appellant’s counsel for discussing with an expert witness the content of his draft report?

b) Rejecting aspects of the appellant’s expert opinion evidence on account of alleged contradictions between the experts’ testimony and the experts’ written reports?

2) Did the trial judge err in her application of the doctrine of res gestae?

3) Did the trial judge err in her analysis of causation?

4) Did the trial judge’s errors render the trial unfair and cause a substantial wrong or miscarriage of justice?

Decision:
Appeal dismissed.

Reasoning:
1. (a) Yes. The Court of Appeal noted that it is widely accepted that consultation between counsel and expert witnesses in the preparation of Rule 53.03 reports, within certain limits, is necessary to ensure the efficient and orderly presentation of expert evidence and the timely, affordable and just resolution of claims.

First, the Court noted that nowhere in the trial judge’s reasons did she explain which changes, made to Dr. Taylor’s report following discussion with counsel, were significant. There was no evidence of any significant change to the substance of the report.

The 2010 amendments to Rule 53.03 regarding expert evidence were only intended to clarify, emphasize and codify the duties of expert witnesses that already existed at common law. No additional duties were created by the 2010 amendments.

The independence and objectivity of expert witnesses is fostered under existing law and practice in a number of ways. First, the ethical and professional standards of the legal profession forbid counsel from engaging in practices likely to interfere with the independence and objectivity of expert witnesses. Second, the ethical standards of other professional bodies place an obligation upon their members to be independent and impartial when giving expert evidence. Third, the adversarial process, particularly through cross-examination, provides an effective tool to deal with cases where there is an air of reality to the suggestion that counsel improperly influenced an expert witness. Judges have not shied away from rejecting or limiting the weight to be given to the evidence of an expert witness where there is evidence of a lack of independence or impartiality.

Furthermore, it would be bad policy to disturb the well-established practice of counsel meeting with expert witnesses to review draft reports. Just as lawyers and judges need the input of experts, so too do expert witnesses need the assistance of lawyers in framing their reports in a way that is comprehensible and responsive to the pertinent legal issues in a case.

Consultation is also important to ensure that experts understand their duties to the court under the Rules of Civil Procedure, to avoid increased delay and costs, and to avoid the use of expert witnesses who make a career of testifying in court because they are perceived to be hired guns and are likely to offer partisan opinions and require less guidance and preparation.

The Court then considered the extent to which consultations between counsel and expert witnesses need to be documented and disclosed to an opposing party. Such consultations attract the protection of litigation privilege. Pursuant to Rule 31.06(3), the draft reports of experts the party does not intend to call are privileged and need not be disclosed. However, the Court held that the litigation privilege attaching to expert reports is qualified, and that disclosure may be required in certain situations.

First, if a party intends to call the expert as a witness at trial, the opposite party is entitled on oral discovery to “obtain disclosure of the findings, opinions and conclusions of an expert engaged by or on behalf of the party being examined”. Further, the party who intends to call the expert witness is required to disclose the expert’s report and other information mandated by Rule 53.03(2.1).

Second, litigation privilege yields where required to meet the ends of justice. The ends of justice do not permit litigation privilege to be used to shield improper conduct. For example, where the party seeking production of draft reports or notes of discussions between counsel and an expert can show reasonable grounds to suspect that counsel communicated with an expert witness in a manner likely to interfere with the expert witness’s duties of independence and objectivity, the court can order disclosure of such discussions. However, this requires a factual foundation to support a reasonable suspicion that counsel improperly influenced the expert. Evidence of an hour and a half conference does not meet the threshold of constituting a factual foundation for an allegation of improper influence.

1. (b) Yes. The trial judge’s use of the expert reports of Drs. Taylor and Athwal to contract their viva voce evidence was an error of law.

If an expert’s report has not been entered into evidence as an exhibit, it has no evidentiary value, even if provided to the trial judge as an aide memoire. Inconsistencies between the viva voce evidence of an expert witness and his or her written report are the proper subject of cross-examination. However, if the expert witness was not cross-examined as to an inconsistency between his or her viva voce evidence and the contents of their report, it is not open to a trial judge to place any weight in assessing the expert’s credibility on this perceived inconsistency. This is not a mere technicality but rather a matter of trial fairness.

The expert witness is entitled to be openly confronted with what may appear to be contradictions so that he or she has the opportunity to explain or clarify the apparent inconsistencies.

2. No. The res gestae doctrine operates as an exception to the hearsay rule and allows a court to admit certain utterances for their truth. The res gestae doctrine has no application to the admission of evidence as part of the narrative.

Although the trial judge misused the label “res gestae” in determining the admissibility of Dr. Orsini’s opinion on standard of care and causation and Dr. Orsini’s statements to the respondent’s father commenting adversely on the appellant’s treatment of the respondent, the trial judge did not make inappropriate use of hearsay evidence and any error she made did not have an impact on the outcome of the trial. It was a harmless error of nomenclature rather than substance.

3. No. The trial judge reviewed the evidence at considerable length and her reasons demonstrate that she was alive to the issues raised at trial and on appeal. It was not unreasonable for the trial judge to find that the compartment syndrome developed before the cast was removed. Further, there was no error in the trial judge’s conclusion that the “crumbling skull” doctrine had no application to the facts of this case.

4. No. Although the trial judge erred, the Court of Appeal determined that these errors did not affect the outcome. Pursuant to s. 134(6) of the Courts of Justice Act, as no substantial wrong or miscarriage of justice flowed from her errors, a new trial would not be justified. Even without her errors, she would necessarily have reached the same result.

Murphy v. Murphy, 2015 ONCA 69

[Justice, Justice and Justice JJ.A.]

Counsel:
Edwin A. Flak and Amit S. Dror, for the appellant
Gary S. Joseph and Ryan M. Kniznik, for the respondent

Keywords: Family Law, Mediation-Arbitration, Retroactive Child Support, Sufficiency of Arbitrator’s Reasons, D.B. S v. S.R.G.

Facts:
The parties to this appeal had been involved in expensive, acrimonious and protracted family law litigation. They referred all matters to mediation-arbitration. Consequently, there was an appeal and a cross-appeal to the Superior Court of Justice. The appeal judge dealt with all the issues. Both parties then sought leave to appeal to the Court of Appeal. Leave was granted to the appellant on one issue only: the arbitrator’s award of retroactive child support which had been overturned by the appeal judge.

Issue:
Did the appeal judge err in overturning the arbitrator’s award of retroactive child support?

Decision:
Appeal Allowed

Reasoning:
The appeal judge erred in law in two ways. First, he applied the wrong test to the sufficiency of the arbitrator’s reasons. He cited criminal cases without regard to the goals of efficiency and expediency in the arbitration context. Furthermore, Hickey v. Hickey [1999] 2 S.C.R. 518 provides that significant deference must be given in relation to the determination of support orders. This principle recognizes that the discretion in making the order is best exercised by the person who heard the parties directly. This is of particular significance when the parties select an arbitrator well known and respected for his expertise in family law. In any event, arbitrator’s reasons, although brief, explained how he calculated the award and why he made it.

The second error of the appeal judge was to determine as a matter of law that D.B. S v. S.R.G. [2006] S.C.C. 37 applied to the circumstances here, and having made that determination, to disallow the award without performing the analysis himself or referring the matter back to the arbitrator for the analysis.  On this basis the Court referred the issue of retroactive child support back to the arbitrator for reconsideration.

It is of note that at the hearing of the appeal, the Court did not permit the respondent to make submissions based on his wilful and deliberate misconduct, which included failure to disclose income tax returns.

Philip Services Corp. v. Deloitte & Touche, 2015 ONCA 60 

[Hoy A.C.J.O., Simmons and Tulloch JJ.A.]

Counsel:
T. Dunne and J. Callaghan, for the appellants
R. C. Heintzman, M. Schafler and M. Evans, for the respondents
P. F. Farley and B. Bellmore, for the Institute of Chartered Accountants of Ontario

Keywords: Civil litigation, Rule 30.10(1) and (3) of the Rules of Civil Procedure, Wigmore Test, Privilege

Facts:
The appellants are the representative plaintiffs in a billion-dollar class action involving allegations that the respondent, Deloitte and Touche (“Deloitte”), was negligent in preparing 1995 and 1996 annual statements of Philip Services Corp (“Philip”), a public company. In 1998, roughly 2 years before the appellants commenced their action, the Institute of Chartered Accountants of Ontario (the “Institute”) began an investigation into Deloitte’s audits of Philip for 1995 and 1996. In 2007, the Institute brought charges against Noel Woodsford, a senior partner at Deloitte responsible for audits. In 2008, Mr. Woodsford was found guilty of professional misconduct.

In 2014, the appellants sought an order under rule 30.10 (1) of the Rules of Professional Conduct requiring the Institute (a non-party to the litigation) to produce documentation concerning the Institute’s investigation and discipline of Mr. Woodsford. The motion judge concluded that it would not be unfair for the appellants to proceed to trial without having discovery of the material sought and that, in any event, the materials did not have to be produced because they were subject to a Wigmore case-by-case privilege.

Issues:
(1) Did the motion judge err in concluding that it would not be unfair for the appellants to proceed to trial without the discovery of documents?

(2) Did the earlier decision of the Court in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2014 ONCA 89 (the “Prior Decision”) finally determine that material relating to the discipline proceedings against Mr. Woodsford was admissible – and not privileged?

(3) If the issue of privilege was not resolved by the Prior Decision, did the motion judge err in finding that the documents were privileged by case-by-case privilege? and

(4) Did the motion judge err in making his findings without inspecting the documents at issue?

Holding:
Appeal dismissed.

Reasoning:
As per the requirements of rule 30.10, the appellants were required to establish that the material at issue was not privileged and that it would be unfair to require them to proceed to trial without having discovery of the material.  While the Court agreed with the appellant that the motion judge erred in finding the subject documents privileged on a case-by-case basis, there was no basis to interfere with the decision since it would not be unfair to proceed to trial without discovery of those documents.

(1) No.  Rule 30.10(1) is discretionary. The determination of the motion judge (who is also the case management judge for the class proceeding) was fact specific, and was therefore entitled to deference.  Rule 30.10 assumes that it is not per se unfair to require a party to go to trial without the forced production of relevant documents in the possession of third parties. Therefore, there was no basis to interfere with the motion judge’s conclusion that the appellants had failed to overcome this perception.

(2) No. The Court was not persuaded by the appellant’s argument that the Prior Decision foreclosed an argument that the material was privileged based on a case-by-case privilege.

(3) Yes.  The motion judge correctly articulated the appropriate test for determining a case-by-case privilege; however, his conclusion based on the application of the test could not stand. The Court set out the four elements in the Wigmore criteria. The Court held that the motion judge’s conclusion that the Wigmore criteria were established in this case resulted from a reversible error.

The Court found that the communications between Mr. Woodsford and the Institute could not have originated in confidence that they would not be disclosed after charges were laid, and after Mr. Woodsford would, in the normal course, be in possession of the materials and could himself be compelled to disclose them. The Court found that the first element of the Wigmore test was not made out, and that motion judge’s palpable and overriding error in relation to the first element tainted the balance of the Wigmore analysis.

For the second element of the Wigmore test, the motion judge rejected the appellants’ argument that where (as here) a member was compelled to cooperate with a regulator, and the governing statute did not provide assurances as to confidentiality, confidentiality was not “essential to the full and satisfactory maintenance of the relation between parties”. However, not providing disclosure to the member charged and entering into a “unique” agreement were contrary to the Institute’s normal practices and not consistent with its policy. After the charges were laid, but for a tactical ploy, Mr. Woodsford would have had possession of the materials, and could have been compelled to disclose them. Further, those materials would have been made public through the discipline process. Therefore, after the charges were laid, confidentiality was not essential to the full and satisfactory maintenance of the relationship between the Institute and Mr. Woodsford. The Institute’s claim for case-by-case privilege therefore failed.

(4) No.  Rule 30.10(3) is discretionary. The motion judge did not have to inspect the documents. In this case, the motion judge is also the case management judge for the class proceeding. He clearly understood the nature and significance of the documents at issue; therefore, his decision not to inspect the documents was entitled to deference.

Bank of Montreal v. Reckless, 2015 ONCA 62 

[Hoy A.C.J.O., van Rensburg and Brown JJ.A.]

Counsel:
B. Reckless, acting in person
M. T. Collis, for the respondent

Keywords:   Action to Recover Debt, Summary Judgment, Self-Represented Litigants

Facts:
The appellant appeals from an order granting summary judgment in favour of the respondent the Bank of Montreal (“BMO”) in the amount of $44,178.26, and which dismissed the appellant’s counterclaim against BMO, in which he had sought damages of $261,472.

In his brief oral reasons, the motion judge found that BMO was entitled to repayment of the credit card debt owed to it by the appellant.

The motion judge also found that the appellant had not raised any issue requiring a trial in respect of the issues of estoppel or accord and satisfaction asserted by the appellant against BMO by way of defence and by way of counterclaim.

Holding:
Appeal dismissed.

Reasoning:
Ample evidence supported those findings made by the motion judge. BMO filed evidence that established the existence and amount of the appellant’s credit card debt.

The motion judge was correct in concluding that the appellant could not attempt to dictate unilaterally the terms and conditions upon which he would repay his credit card debt. The documents entitled “Accord and Satisfaction” sent by the appellant to BMO, and BMO’s subsequent acceptance of payment made by the appellant did not have the legal effect of altering the debt owing.

With respect to procedure, the Court concluded that the appellant, who was self-represented, was not entitled to cross-examine the deponent of BMO at the motion in the absence of a notice of examination.

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