Hello Everyone.

This week was a busy one at the Court of Appeal.   In two important decisions Deslauriers Custom Cabinets and Howard v Benson Group, the Court further chipped away at Sattva and the Supreme Court’s pronouncement in that case that contractual interpretation is now an issue of mixed fact and law and therefore subject to a more deferential standard of review.  In Deslauriers, which involved the interpretation of a commercial lease to determine whether it was the landlord or the tenant that bore the risk of fire loss, the Court applied a correctness standard rather than the deferential Sattva standard. In doing so, Justice Cronk relied on Sattva itself, which leaves room for the application of the correctness standard when there are “extricable” questions of law involved. “Extricable questions of law” include legal errors involving “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 Court found that the motion judge in Deslauriers had failed to properly consider and apply prior case law that held that when a commercial lease provides for a party to the lease (whether a landlord or a tenant) to insure the premises against loss, it normally precludes that party and its insurer from subsequently claiming over against the other party for the very losses to be insured against. The Court therefore applied the correctness standard and set aside the motion judge’s decision, siding with the landlord in this case.

In Howard v Benson Group, the Court again applied the correctness standard when interpreting an employment contract rather than the deferential Sattva standard.  The Court held that where there is a fixed term employment contract with no early termination provision (the provision in this case was found ambiguous and therefore unenforceable), the wrongfully terminated employee is entitled to be paid damages for the entire balance of the term of the employment contract and has no duty to mitigate.  The Court held that these were extricable questions of law that arose in this case, and therefore the correctness standard of review was more appropriate than the deferential Sattva standard.

Another significant decision this week was the decision in Good v Toronto (Police Services Board), the class action brought against the Toronto Police as a result of Charter breaches perpetrated during the mass arbitrary arrests and detentions that took place during the G20 Summit in Toronto in the summer of 2010.  The Court upheld the Divisional Court’s certification of two class actions and increased the costs award made in favour of the plaintiffs.

In Fontaine v Canada, the Residential Schools class action, the Court largely upheld the supervising judge’s decision to leave it up to the victims as to whether the evidence they gave during the ADR and claims processes during the class proceeding ought to be preserved with the National Centre for Truth and Reconciliation and/or the Truth and Reconciliation Commission.

Finally, there were several other decisions covering topics such as MVA limitation periods, debtor-creditor, consumer protection class action (prepaid phone cards), insolvency and architects’ E&O insurance.

Have a nice 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

Royal Bank of Canada v. Uni-Can Linen & Uniform Supply Company Inc., 2016 ONCA 245

Keywords: Debtor-Creditor, Civil Procedure, Summary Judgment, Adjournments

Sankar v. Bell Mobility Inc., 2016 ONCA 242

Keywords: Contracts, Consumer Protection, Class Actions, Consumer Protection Act, Gift Card Regulation

Enroute Imports Inc. (Re) 2016 ONCA 247

Keywords: Bankruptcy and Insolvency, Proposals, Leave to Appeal, Bankruptcy and Insolvency Act, sections 193(c), 193(e)

Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246

Keywords: Real Property, Commercial Leases, Insurance Covenants, Allocation of Risk of Loss or Damage to Property, Contractual Interpretation, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp.

Basandra v. Sforza, 2016 ONCA 251

Keywords: Torts, Negligence, MVA, Insurance Law, Collateral Benefits, Deductions, Insurance Act, s.267.8, Jury Award, Ambiguity

Good v. Toronto (Police Services Board), 2016 ONCA 250

Keywords: Torts, Police Liability, Arbitrary Arrest and Detention, Civil Procedure, Class Actions, Class Proceedings Act, 1992, section 5, Certification, Costs

Fontaine v. Canada (Attorney General), 2016 ONCA 241

Keywords:   Torts, Assault, Aboriginal Law, Residential Schools, Civil Procedure, Class Actions, Confidential Settlement Documents, Deemed Undertaking, Privacy, Access to Information, , Document Retention and Destruction

Pro-Demnity Insurance Company v. Ontario (Financial Services Commission), 2016 ONCA 260

Keywords: Regulation of Professions, Architects, Architects Act, ss. 2(5), Insurance Law, Professional Liability Insurance, , Insurance Act, ss. 27(2), Determination of Rights Arising out of Interpretation of Statute, Rules of Civil Procedure, Rule 14.05(3)(d)

Machaj v. RBC General Insurance Company, 2016 ONCA 257

Keywords: Torts, MVA, Statutory Accident Benefits, Catastrophic Injury Determination, Limitation Periods, Do v Guarantee Insurance Co.

Fennell v. Deol, 2016 ONCA 249

Keywords: Torts, Negligence, MVA, Limitation Periods, Limitations Act, 2002, Discoverability, Reasonable Diligence

Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256

Keywords: Contracts, Employment Law, Wrongful Dismissal, Fixed Term Contract, Early Termination, Damages, Reasonable Notice of Termination, Payment in Lieu of Notice, Duty to Mitigate

For a list of Civil Endorsements, click here.

For a list of Criminal Decisions, click here.

 

 

Civil Decisions

Royal Bank of Canada v. Uni-Can Linen & Uniform Supply Company Inc., 2016 ONCA 245

[Weiler, Hourigan and Huscroft JJ.A.]

Counsel:

Sukhjinder Bhangu, for the appellants

Clark Peddle, for the respondent

Keywords: Debtor-Creditor, Civil Procedure, Summary Judgment, Adjournments

Facts:

The respondent was granted summary judgment but agreed to seek having the judgment set aside as the appellants, who did not appear on the summary motion, believed they were consenting to an adjournment. The respondent then brought a motion to set aside the summary judgment, as well as an additional motion for summary judgment.

The appellants were served with notice of the motions but did not file any materials. The motion judge then denied their request for a further adjournment to afford them an opportunity to file responding material. The motions judge set aside the initial summary judgment and then granted summary judgment to the respondent.

On appeal, the appellants argued that the motion judge erred in granting summary judgment to the respondent while the first summary judgment was in place. The appellants also submitted that the motion judge acted unfairly in denying the adjournment and erred in calculating the amounts owing in the matter.

Issues: Did the motions judge err in refusing the adjournment, granting the second summary judgment and in calculating the amounts owing?

Holding: No to all – Appeal dismissed.

Reasoning:

The motion to set aside the first summary judgment was dealt with prior to the second motion being heard and decided. The appellants had ample notice of the second motion date and simply chose not to file materials. While the second motion was not in the court file, it was still properly before the court and it was open to the motion judge to refuse the adjournment.

The appellants did not raise any specific issues with respect to the amounts owing and alleged that they had never received a proper statement as to what they owed. However, the parties had agreed that prior payments made by the appellant would be credited following the judgment. The appellant sought to adduce one annual statement with respect to one of the loan facilities, but the court find that this was an incomplete statement of the entire account. Ultimately, the court was satisfied there was no dispute as to the amount owing.

Sankar v. Bell Mobility Inc., 2016 ONCA 242

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Louis Sokolov, Jean-Marc Leclerc and Christine Davies, for the appellant

Steve Tenai and Guy White, for the respondent

Keywords: Contracts, Consumer Protection, Class Actions, Consumer Protection Act, Gift Card Regulation

Facts: 

The Defendant (“Bell”) sold pre-paid wireless services under three different brand names: Bell Mobility, Solo Mobile and Virgin Mobile. The service agreements had different active periods and pricing, and provided that pre-paid credits would expire after a specified time period. If customer topped-up the prepaid account balance before the service period expired, any unused balance was carried over or added to the topped-up amount and made subject to the new service period. If not, the unused balance was forfeited.

The Plaintiff customer commenced a class action alleging Bell had wrongfully seized unused balances remaining in a customer’s top-up account on the stated expiry date as opposed to the day after the expiry date as required by the contracts. The Plaintiff also alleged that top-up payments were gift card agreements which, pursuant to the Gift Card Regulation under the Consumer Protection Act (“CPA”), were prohibited from expiring. The action was certified as a class proceeding on behalf of all pre-paid customers who had balances remaining in their accounts at the end of the service period expiring after May 4, 2010.

The parties brought cross-motions for summary judgment. The motion judge ruled that Bell did not breach its contract and that the Gift Card Regulations of the CPA do not apply to prepaid phone cards. He granted summary judgment answering the common issues in Bell’s favour and dismissed the class action.

Issues: 

(1) Did the motion judge fail to consider the prepaid wireless contract as a whole, having regard to the expiry dates assigned by Bell and communicated to subscribers?

(2) Did the motion judge err in finding that the Gift Card Regulation is inapplicable to Bell’s phone cards?

Holding: Appeal dismissed.

Reasoning: 

(1) No. The breach of contract claim boiled down to whether the prepaid card expired at the end of the last day of the active period, or the day after. If the card did not expire until the day after the end of the active period, then Bell had breached its contract by treating the purchaser as having forfeited the unused balance on that day.

The court accepted Bell’s submissions that the contract terms were contained not only in the agreements made when customers initially signed up for wireless service, but also in pricing and other contractual information, including expiry dates, set out in the prepaid cards and PIN receipts, which customers obtained when they bought top-ups. The court found the motion judge was entitled to rely on these documents that formed part of the contractual relationship between the parties in deciding the issue. The court found that the motion judge correctly held that the card expired at the end of the last day of the active period, not on the day after. Bell was therefore entitled to collect the unused balances after the last day of the active period.

The court also noted that the appellant’s real complaint, and the real complaint in the class action, was that Bell’s subsequent communications to its customers – made after they had purchased their top-ups and as the top-up was about to expire – were misleading. That is because they may have created the impression that subscribers had an additional day after the end of the active period to “top up” before their funds expired. However, it agreed with the motion judge that this was essentially a claim for misrepresentation or promissory estoppel, neither of which was before the motion judge, because neither was held to be amenable to resolution as a common issue in the class proceeding.

(2) No, the motion judge was correct to grant summary judgment in favour of the respondent on the common issue relating to the Gift Card Regulation. The court did not find it necessary to address the issue of whether the Gift Card Regulation applies only to gift cards purchased as gifts. It rested its conclusion on the interpretation of the regulation. The regulation prohibits an expiry date on the “future performance of the agreement”. It provides that a future performance agreement with an expiry date is to be effective “as if it had no expiry date”. Its purpose is to prevent the expiry of the agreement before the seller of the card has delivered the goods or performed the services promised under the agreement. It does not prohibit an agreement being time-limited.

The court found the plain meaning of the contracts was that customers were buying a defined period of wireless service. Bell was required to perform the agreement once the consumer decided to activate the service, and the agreement was fully performed by Bell when it gave the customer access to its wireless services for the agreed-upon period. The court reasoned that the fact that the service purchased was for a defined period, calculated on the dollar value of credits the consumer added to the account, was not a breach of the regulation. To hold otherwise would mean that Bell was required to keep the wireless service and number available to the customer indefinitely, a patently unreasonable outcome.

Enroute Imports Inc. (Re) 2016 ONCA 247

[Weiler, Hourigan and Huscroft JJ.A.]

Counsel:

Dannial E.S. Baker, for the appellants, unsecured creditors, Frank Santaguida and Victor Santaguida

Craig A. Mills, for the respondent Enroute Imports Inc.

Graham Phoenix, for the Proposal Trustee

Keywords: Bankruptcy and Insolvency, Proposals, Leave to Appeal, Bankruptcy and Insolvency Act, sections 193(c), 193(e)

Facts:

The appellants are unsecured creditors who recovered 52.3% of their claim against the respondent, Enroute Imports (“Enroute”), prior to Enroute filing a notice of intention to make a proposal under the Bankruptcy and Insolvency Act (the “BIA”).  The proposal was filed, amended, and accepted by 92% of the creditors which represented 87% of the value of the outstanding debt – more than the required majority of creditors (the “Amended Proposal”).

The appellants objected to the Amended Proposal and conducted an out-of-court examination of Enroute’s president.  The motion judge approved the Amended Proposal and declined the appellants’ request to adjourn the approval motion so that they could compel answers to undertakings and continue the examination of Enroute’s president.

Issues:

(1) Is leave to appeal the motion judge’s order required under s. 193 of the BIA?

(2) Should leave to appeal under s. 193(e) of the BIA be granted?

Holding: Motion for leave to appeal is dismissed.

Reasoning:

(1) Yes.  The appellants require leave to appeal except where the property involved in the appeal exceeds ten thousand dollars in value, as set out in s. 193(c) of the BIA.  The right of appeal without leave under s. 193(c) must be narrowly construed and the right to conduct an examination is procedural and does not directly involve property.  The appellants’ argument that the motion judge erred in finding that the proposal was reasonable and made in good faith is not a situation where property is directly in issue.

(2) No.  In determining whether to grant leave to appeal under s. 193(e) of the BIA, a court will consider whether the proposed appeal: (i) raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or the administration of justice as a whole; (ii) is prima facie meritorious; and (iii) would unduly hinder the progress of the bankruptcy/insolvency proceedings.

This appeal is focused on fact-specific issues and is not of significance beyond the interested parties.  The discretionary considerations of the motion judge do not rise to the level of general significance to bankruptcy/insolvency matters or to the administration of justice as a whole.  The court held that there was no merit to the appeal because the decision not to grant an adjournment is highly discretionary and that there were a number of grounds for the motion judge to refuse the adjournment.

The motion judge carefully reviewed the Amended Proposal and concluded that it had strong support from the creditors and was to the benefit of the general body of creditors.  The proposal trustee had conducted a reasonable review and found that there was no realistic possibility that the unsecured creditors would receive any money in a bankruptcy.  The motion judge considered the appellants’ concerns regarding the Amended Proposal and made no error in dismissing them on the basis that they were mostly speculative and ignored the reality of Enroute’s difficulties and finding that the Amended Proposal was made in good faith.

The court held that whether the appeal would unduly hinder the progress of the bankruptcy/insolvency proceedings was an “artificial analysis” in the circumstances because the appellants did not first move to obtain leave to appeal before a single judge of the court and so granting leave would not unduly delay the proceedings.

The parties filed fresh evidence on consent that Enroute failed to disclose a partially subrogated lawsuit prior to the approval of the Amended Proposal.  The existence of this lawsuit, which is still at the pleadings stage, did not change the analysis of the court.

Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246

[Cronk, Pepall and Miller JJ.A.]

Counsel:

D.H. Rogers, Q.C. and Rebecca Moore, for the appellant

Matthew J. Halpin, for the respondent

Keywords: Real Property, Commercial Leases, Insurance Covenants, Allocation of Risk of Loss or Damage to Property, Contractual Interpretation, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp.

Facts: In 2007, the respondent, Deslaurier Custom Cabinets Inc. (the “Tenant”) entered into a written lease with the appellant, 1728106 Ontario Inc. (the “Landlord”), for the rental of several units in the Landlord’s commercial building (the “Lease”). The Lease obliges the parties to obtain insurance coverage for specified risks. Other provisions of the Lease impose insurance obligations on the Tenant. The Lease also contains cross-indemnity covenants. In 2009, John Faught Steel Inc. (“Faught Steel”), a welding contractor engaged by the Landlord, carried out repairs at the Premises, and a fire broke out. The fire resulted in significant damage to the Landlord’s building, which was eventually demolished, and to the Tenant’s property and business at the Premises. The Tenant claimed indemnification under its insurance policy for its losses and was paid approximately $10.861 million by its insurer. Unfortunately, the limits of the policy were insufficient to cover the Tenant’s full losses. As a result, in 2010, the Tenant sued the Landlord and Faught Steel in negligence for damages in respect of its full property and business losses caused by the fire. The Tenant sought recovery for subrogated losses ($10.861 million) and uninsured losses (approximately $4.138 million). The Landlord defended the action, denying any negligence and any liability to the Tenant for its claimed losses. The Landlord pleaded that the Tenant and its insurer bore all responsibility for the Tenant’s damages. The Landlord also took the position that the Tenant had failed to add the Landlord as an additional insured on its property damage insurance policy, thereby precluding the Tenant or its insurer from suing the Landlord under the Lease. In 2014, the motions judge dismissed the Landlord’s motion and granted a declaration that the Landlord was liable to indemnify the Tenant for its claimed losses, subject to quantification. She subsequently awarded $100,000 in costs and disbursements to the Tenant. The Landlord appealed.

Issues:

(1)     What standard of review applies to the motions judge’s decision?

(2)     Did the motions judge err in her interpretation of the Lease:

(a)        by failing to hold that the Tenant had contractually assumed the risk of any damage to its property and business arising from fire?

(b)        by relying on extrinsic evidence concerning the Landlord’s leases with other tenants in the building to aid in her interpretation of the Lease?

(c)        by failing to hold that the Tenant’s claim is barred as a result of its failure to add the Landlord as an additional insured on its property damage insurance policy?

Holding: Appeal Allowed.

Reasoning:

(1) The recent decision of the Supreme Court in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 makes clear that the interpretation of a negotiated contract is generally subject to a deferential standard of review. However, this general rule is not absolute. Sattva recognizes that the correctness standard may apply to questions of contractual interpretation where it is possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law. Extricable questions of law in this context include legal errors involving 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 motions judge erred in law by failing to apply binding appellate authority regarding contractual allocation of risk.  She also erred in law by failing to assign meaning to all the contested terms of the Lease and by adopting a construction of the Lease that fails to accord with the governing principles of contractual interpretation. As these errors involve extricable questions of law within the meaning of Sattva, the correctness standard of review applies.

(2)(a) Yes. The motions judge erred by holding that the Landlord’s Indemnity Covenant overtakes the Tenant’s Insurance Covenants and the Immunity Provision, such that the Landlord, rather than the Tenant, is responsible for loss or damage to the Tenant’s property and business caused by fire. Here, the parties specifically agreed that the Tenant would insure against the risk of loss or damage to its property by fire. That is the very risk that materialized. No coverage exclusion applied under the insurance policy and the Tenant’s claim was paid to the extent of the policy limits. The fact that, as it happens, the Tenant was underinsured for this risk does not mean that its failure to obtain full protective coverage can be laid at the Landlord’s door.

(2)(b) Yes. The motions judge erred in admitting extrinsic evidence regarding the terms of the Landlord’s leases with other tenants at the building, and relying on it to interpret the Lease. Sattva confirms that evidence of the circumstances surrounding the formation of a contract is admissible as an aid to ascertaining the parties’ contractual intentions. However, Sattva also warns that such evidence should consist only of objective evidence of the background facts at the time of the execution of the contract; that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. The record before the Court does not establish that the admissibility pre-requisite set out in Sattva was satisfied in this case. In addition, Sattva holds that, while surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement. In this case, even assuming that the evidence of the Landlord’s other leases was admissible before the motions judge, the contents of those leases do not control the proper interpretation of the Lease. They neither establish nor alter the contractually agreed allocation of risk in this Lease. For these reasons, there is no need to go beyond the words of the Lease to determine the legal effect of the Tenant’s Insurance Covenants and the scope of the Landlord’s Indemnity Covenant and the Immunity Provision. The Tenant’s Insurance Covenants assign the risk of loss or damage to the Tenant’s property due to fire to the Tenant by requiring that it obtain insurance coverage against that risk.

(2)(c) Yes. Under section 8(5) of the Lease, the Landlord was to be added as an additional insured on the Tenant’s liability and property damage insurance policies. This provision, had it been honoured, would operate as a subrogation bar to claims by the Tenant’s insurer for the Tenant’s fire losses. Had the Tenant complied with its obligations under the Lease, neither it nor its insurer would have any viable subrogated claim against the Landlord for loss or damage to the Tenant’s property arising from the fire. The Tenant cannot benefit from its admitted breach of section 8(5) of the Lease to found a subrogated claim in respect of such loss or damage against the Landlord. Having assumed the risk of fire loss or damage to its own property, the Tenant bears the risk of underinsuring for such loss or damage.

Basandra v. Sforza, 2016 ONCA 251

[Strathy C.J.O., Lauwers and Benotto JJ.A.]

Counsel:

Gary Mazin and Supriya Sharma, for the appellant

Bruce Chambers, for the respondent

Keywords: Torts, Negligence, MVA, Insurance Law, Collateral Benefits, Deductions, Insurance Act, s.267.8, Jury Award, Ambiguity

Facts:

The appellant was injured in a motor vehicle accident. The jury found the respondent liable and, consistent with the jury questions, awarded damages. Unfortunately, the jury questions had grouped together damages for medical/rehabilitation, attendant care, and housekeeping. As a result, the trial judge could not deconstruct the award to make the necessary statutory reductions on a benefit-by-benefit basis pursuant to s. 267.8 of the Insurance Act.

Following the rendering of the verdict, counsel informed the trial judge that they were unable to agree on the impact of collateral benefits on the damages award. They moved for an order determining whether and how the grouped jury awards, specifically the $55,000 for “past loss of care, medical/rehabilitation and housekeeping” and $50,000 for “future care, medical/rehabilitation and housekeeping”, should be reduced under the provisions of the Insurance Act to account for the statutory accident benefits received by the appellant for healthcare and housekeeping.

The trial judge accepted the appellant’s evidence regarding the medical rehabilitation benefits, attendant care benefits, and housekeeping benefits. She also acknowledged that, in light of Bannon v. McNeely, “there is no question that it is the defendant that bears the onus of establishing beyond dispute that the deduction should occur.” She then noted that the sheer quantum of the collateral benefits already received under the three heads was “significantly higher than the jury award.” The trial judge then concluded that the jury’s awards for past and future attendant care, medical/rehabilitation, and housekeeping costs should be reduced from $105,000 to zero.

On appeal, the appellant argued that the defence had the onus to prove how the jury award should be reduced and that the trial judge erred by reducing the jury’s total award to zero. The respondent argued that the lack of clarity in the jury questions is the fault of the appellant, who should not now be permitted to separate the various heads of expenses so as to frustrate the application of the Insurance Act.

Issues: Did the trial judge err by reducing the jury’s awards for past and future attendant care, medical/rehabilitation and housekeeping costs from $105,000 to zero in the absence of clear evidence about the quantum of each collateral benefit?

Holding: Appeal Dismissed.

Reasoning:

No. After reviewing various legal principles associated with Ontario’s no-fault automobile insurance regime, the Court held that the trial judge was faced with a mandatory statutory direction to deduct collateral benefits under s. 267.8 of the Insurance Act. Moreover, the judge was reasonably assured, by comparing the quantum of benefits awarded to the appellant by the jury with the benefits that he had already received, that the appellant had been fully compensated for the applicable heads of damage, despite the fact that they were lumped together.

The Court held that it was reasonable for the trial judge to consider that the defendant had met the onus of proof for the reduction of the jury award for pecuniary losses pursuant to s. 267.8 of the Insurance Act and under Bannon v. McNeely. The trial judge correctly commented that it would have been preferable for the jury questions to have reflected the statutory scheme, and the Court reasoned that, in the context of this case, she committed no error.  Instead, she reasonably gave effect to the policy objective of full compensation while respecting the policy objective of not overcompensating. Finally, the Court found that the trial judge reasonably apprehended that if she did not make the reductions sought by the defence, the appellant would have been overcompensated.

Good v. Toronto (Police Services Board), 2016 ONCA 250

[Hoy A.C.J.O., Pardu and Roberts JJ.A.]

Counsel:

Kevin McGivney, Cheryl M. Woodin and Damian Hornich, for the appellant

Eric K. Gillespie, Kent Elson, Kiel Ardal and Priya Vittal, for the respondent

David Morritt and Alexis Beale, for the intervener, Canadian Civil Liberties Association

Keywords: Torts, Police Liability, Arbitrary Arrest and Detention, Civil Procedure, Class Actions, Class Proceedings Act, 1992, section 5, Certification, Costs

Facts:

The plaintiff/respondent was among the individuals detained at specially constructed Detention Centres during the G20 summit held in Toronto in June, 2010. She commenced a proposed class action against the Toronto Police Services Board (“TPS”) and three other defendants, asserting multiple claims, including a breach of her Charter rights and that of other detainees who would be included in the class.

The motion judge dismissed the plaintiff’s motion for certification, and the plaintiff narrowed her proposed class proceeding before appealing to the Divisional Court. The Divisional Court allowed the appeal and certified the narrowed claim as two separate class proceedings. It also awarded the plaintiff costs of the original certification in the amount of $125,728.03, which was reduced from the costs sought to reflect the time that was spent on the unsuccessful aspects of the claim as originally advanced.

TPS appealed the order of the Divisional Court certifying the two proceedings, and the plaintiff sought leave to cross-appeal the costs awarded by the Divisional Court.

Issues:

TPS argued that in certifying the action the Divisional Court made the following errors:

(1)   It improperly conducted a de novo review of the issue of whether the requirements of s. 5(1) of the Class Proceedings Act, 1992 had been met, rather than applying an appellate standard of review to the motion judge’s determination that they had not met those requirements.

(2)   It erred in concluding that the plaintiff had met the s. 5(1)(b) identifiable class criterion.

(3)   It erred in identifying the following as common issues, when they are not:

  1. Did each mass detention and/or arrest (or the prolonged duration thereof) constitute (a) false imprisonment of the respective subclass members at common law and/or (b) arbitrary detention or imprisonment contrary to s. 9 of the Charter, including a determination of whether the mass detentions and/or arrests are justified under s. 1?
  2. If TPS breached the class members’ common law or Charterrights, can the court make an aggregate assessment of damages as part of the common issues trial?

iii.       Was TPS guilty of conduct that justifies an award of punitive damages?

(4)   It erred in concluding that a class proceeding would be the preferable procedure for the resolution of the common issues.

(5)   It certified two class proceedings in the absence of discrete Statements of Claim for each.

The Plaintiff seeks leave to cross-appeal the Divisional Court’s cost award.

Holding: Appeal dismissed. Cross-appeal allowed.

Reasoning:

TPS’ Appeal of Certification

(1) The court found that the Divisional Court’s intervention was valid because the proposed class action on appeal was significantly narrower than the proposed class action considered by the motion judge. Where the Divisional Court reversed determinations made by the motion judge, it was justified in doing so because of the narrowed scope of the proposed class proceeding. In addition, the court found the motion judge made errors in principle that had no significance on the certification motion, but became significant in the context of the proposed class action on appeal.

(2) The court did not give effect to any of TPS’ arguments. It found that the Divisional Court correctly found “the commonality of an alleged command order being made ordering the detention of the class members without regard for the individual characteristics or conduct of each class member.” In addition, the court agreed that the combination of classes in a single proceeding is not prohibited. It also rejected TPS’ argument that the motion judge correctly concluded that the location-based subclass definitions should exclude individuals who engaged in unlawful conduct during the protests. Instead, it agreed with the Divisional Court that it is of no consequence whether any member of the class did commit a criminal offence or a breach of the peace, because the police cannot justify detaining a person based on information they either did not have, or did not rely on, in ordering a person’s detention.

(3) No. With regard to false imprisonment, it agreed with the Divisional Court’s analysis that the motion judge’s conclusion that the issue was not a common issue was rooted in her focus on the extent of varying individual conduct by the detained or arrested individuals, which was an error in principle in the context of the class as cast on appeal. With regard to the aggregate assessment of damages, the court agreed that this should be open to the common issues judge to consider whether it would be an appropriate remedy.

As for punitive damages, the court did not find the Divisional Court erred in its conclusion that, in this case, it is a proper common issue. Here, the common issues dealing with alleged breaches of the class members’ rights contemplate that liability will be determined at the common issues trial. The common issue proposed, and certified, is only whether TPS’ conduct justifies an award of punitive damages. The court held if liability were found, and at least part of the compensatory damages were assessed on an aggregate basis, it would be open to the trial judge to consider whether she had a sufficient measure of the compensatory damages to determine entitlement to and the quantum of punitive damages, consistent with the principles in Whiten, or whether this could be determined only after any individual assessment phase.

(4) The court agreed with the Divisional Court that a class proceeding is the preferable procedure for the resolution of the common issues and with its reasons for so concluding. Since the Divisional Court correctly concluded both that the plaintiff had satisfied the identifiable class criterion in s. 5(1)(b) of the Act and that the core allegation in the action was indeed a common issue, these conclusions radically altered the landscape in which the preferability analysis was conducted.

(5) The court rejected the TPS’ argument that the Divisional Court’s certification of the plaintiff’s claim as two separate proceedings in the absence of discrete statements of claim was procedurally unfair because it deprived TPS of the ability to make submissions on the certification test with reference to a pleading. It found there was no procedural unfairness and TPS’ ability to make submissions on the certification test was unaffected by the absence of separate pleadings.

Plaintiff’s Cross-Appeal of Costs Award

The court granted leave to the plaintiff to cross-appeal the Divisional Court’s cost award, allowed the cross-appeal and awarded the plaintiff costs of the certification motion in the all-inclusive amount of $315,000. It agreed that a reduction in the costs sought by the plaintiff was warranted to reflect the change in the scope of the plaintiff’s claim. However, the Divisional Court erred in principle in two respects in arriving at its costs disposition. First, in determining the quantum of the award, the Divisional Court relied on inapplicable benchmarks. Second, it failed to consider the impact of its costs award on access to justice.

On the first issue, it noted that the Divisional Court focused on the fact that TPS sought costs on the certification motion in the amount of $393,233.37, and was only awarded $223,233.37 in costs. It was an error in principle to use those amounts as a benchmark. Public interest is a factor to be considered in fixing costs of class proceedings. The motion judge tempered the costs she awarded to TPS to reflect access to justice concerns. However, such a reduction was similarly not appropriate when awarding costs of a certification motion to a successful plaintiff. On the second issue, it accepted the plaintiff’s submission that, left untouched, the Divisional Court’s costs award would have a chilling effect on public interest class actions and would substantially hinder access to justice.

Fontaine v. Canada (Attorney General), 2016 ONCA 241

[Strathy C.J.O., Sharpe and MacFarland JJ.A.]

Counsel:

Charles Gibson and Ian Houle, for the Sisters of St. Joseph of Sault Ste. Marie

Janine Harding, for Twenty-Two Catholic Entities

Pierre Baribeau and Paul Lepsoe, for Nine Catholic Entities

Peter Grant, Diane Soroka and Sandra Staats, for Independent Counsel

Gary Penner and Diane Fernandes, for the Attorney General of Canada

Julian N. Falconer and Julian Roy, for the Truth and Reconciliation Commission of Canada

Joanna Birenbaum, for the National Centre for Truth and Reconciliation

Kate Wilson and Regan Morris, for the Privacy Commissioner of Canada

Stuart Wuttke, for the Assembly of First Nations

Joseph Arvay, Q.C., Catherine Boies Parker and Susan Ross, for the Chief Adjudicator of the Indian Residential Schools Adjudication Secretariat

Keywords:   Torts, Assault, Aboriginal Law, Residential Schools, Civil Procedure, Class Actions, Confidential Settlement Documents, Deemed Undertaking, Privacy, Access to Information, , Document Retention and Destruction

Facts:

The Indian Residential Schools Settlement Agreement (“IRSSA”) is a comprehensive settlement of class actions and other litigation by former residential school students. The parties agreed to establish the Independent Assessment Process (“IAP”) as an aspect of the settlement in order to compensate survivors who suffered sexual abuse, physical abuse, or serious psychological harm when they were students at Indian Residential Schools.  Under the IAP, a survivor can apply for additional compensation above a minimum amount given to all class members.

The appeal and cross-appeal concern the disposition of the highly confidential documents created within the IAP. These include the survivors’ application forms, the written and audio records of their own evidence about their abuse and suffering and the compensation decisions written about their claims by the adjudicators (collectively, the “IAP Documents”).

The Supervising Judge held that other individuals and institutions affected, including the alleged perpetrators and the churches, do not hold a veto over the survivors’ right to share their own IAP Documents. He held that IAP Documents could be archived with the claimants’ consent alone. He ordered a notice program to inform claimants of their right to do so. He also held that the court, not the government, controls the IAP Documents and that federal legislation does not require their archiving at the government’s discretion. The court was required to give effect to the survivors’ wishes about their own stories. The Supervising Judge ordered that there be a 15-year retention period, during which survivors could decide whether they wanted to transfer their documents to the National Centre for Truth and Reconciliation (“NCTR”). The Truth and Reconciliation Commission (“TRC”) or the NCTR would notify survivors of their option to transfer their documents to the NCTR.  At the end of the 15-year period, all IAP Documents in the possession of others, including the government, would be destroyed.

On the appeal, the Sisters of St. Joseph of Sault Ste. Marie, the Twenty-Two Catholic Entities, and the Nine Catholic Entities (the “Catholic Entities”) appealed the Supervising Judge’s order that the IAP Documents may be archived at the NCTR at the request of an IAP claimant alone. They claimed that the IRSSA expressly provides that archiving may only take place with their consent. On the cross-appeal, Canada, supported by the TRC and the NCTR, claimed that it controls the IAP Documents and that they are subject to federal privacy, access to information and archiving legislation. The Chief Adjudicator and the Assembly of First Nations (“AFN”) disagreed and generally supported the Supervising Judge’s decision. They stated that the records in the possession of everyone but class members should ultimately be destroyed. Class members will have the right to archive their statements and to transfer their IAP Documents to the NCTR, but the choice is theirs. Independent Counsel also assert that the notice program should not be run by the TRC or NCTR, that the retention period for IAP Documents should be lowered to two years, and that the order should include documents from the alternative dispute resolution (ADR) process.

Issues:  

In regards to the Appeals:

(1) Who must consent to archiving the IAP Documents?

(2) Is the notice program a material amendment to the IRSSA?

In regards to the Cross-Appeals:

(3) Are the IAP Documents government records?

(4) Is the order to destroy IAP Documents reasonable?

(5) Is the 15-year retention period reasonable?

(6) Was it reasonable to order the TRC and NCTR to conduct the notice program?

(7) Should the orders on IAP Documents apply to the ADR documents?

Majority Holding: Appeal and cross-appeals dismissed. Order varied to include the ADR documents and to require the Chief Adjudicator to conduct the notice plan.  Sharpe J, dissenting, would have allowed the cross-appeals.

Reasoning: 

(1) IAP Documents may be archived with the consent of the claimant alone. A claimant’s archiving of documents with the NCTR does nothing more than preserve the documents for what they are: the stories of claimants who say they suffered mistreatment and abuse in residential schools. By allowing claimants to archive their IAP transcripts, the IRSSA merely provides claimants with an alternative and expeditious means of preserving their stories as part of the TRC process. There was nothing to stop an IAP claimant from entering the TRC process and telling his or her story there so that it would be preserved for all to see. The IAP claimant would not have required anyone’s permission or consent to take that step. Thus, the majority of the Court of Appeal failed to see any reason why a claimant should require permission or consent to accomplish the same result simply by depositing the IAP transcript with the NCTR.

(2) No, the notice plan was not a material amendment to the IRSSA. It does not alter the terms of the IRSSA, create new rights or ignore other rights. It serves only to ensure that the rights accorded by the IRSSA are understood and respected.

(3) No. The IAP Documents are not government records. The IAP Documents were documents obtained and created through a litigation process within the settlement of civil litigation. When the government is in possession of records only as a result of litigation, and is constrained in its use of those records by the court process or a specific court order, those records are not “under the control of a government institution.” The Settlement Agreement Operations Branch (“SAO”) obtained the IAP Documents through a court-controlled process, so it could only use those documents for the purpose of that process, and when the process had run its course, the documents had to be returned or destroyed. Its possession of the documents was always constrained by the court’s inherent jurisdiction and the principle underlying the implied/deemed  undertaking.

(4) Yes, the order was reasonable. Ordering the eventual destruction of the IAP Documents was within the Supervising Judge’s supervisory jurisdiction as a class action judge. It was a reasonable response to a gap in the IRSSA, based on his thorough and thoughtful interpretation of that agreement and the surrounding factual matrix.  The Supervising Judge’s exercise of his broad, discretionary jurisdiction to remedy administrative gaps in the IRSSA, as well as his factual findings and interpretation of the IRSSA, are owed deference on review. The disposal or destruction of the documents is not prohibited by law as the IAP Documents are not government records subject to the Library and Archives Act.

(5) Yes. The 15-year retention period was reasonable. The 15-year period was based on the ultimate limitation period in the Limitations Act, 2002. It recognizes that the IAP Documents may unexpectedly become relevant years after the claim process appears to have been completed.

(6) No.  It was unreasonable to order the TRC and NCTR to conduct the notice program. The notice does not fall within the mandate of either entity and, most importantly, it would be a breach of confidence to provide them with the information necessary for a notice program.  The notice program should be carried out by the Chief Adjudicator, on such terms as may be approved by the Supervising Judge. As the Supervising Judge indicated, this should be determined after an evidence-based inquiry.

(7) Yes. The order should have included the ADR documents. Since the intent of the IRSSA was to roll all existing litigation into the IAP, the records of the predecessor process are subject to the court’s supervisory jurisdiction. Consistency and fairness require that they be treated in the same manner as the IAP Documents.

Justice Sharpe, in dissent, would have allowed the cross-appeals, dismissed the appeals, and set aside the Supervising Judge’s order to the extent that it required destruction of the IAP documents possessed and controlled by Canada through the SAO.

Pro-Demnity Insurance Company v. Ontario (Financial Services Commission), 2016 ONCA 260

[Sharpe, Juriansz and Roberts JJ.A.]

Counsel:

John J. Chapman and Jennifer Bush, for the appellant

Robert H. Ratcliffe and Edmund Huang, for the respondent

Keywords: Regulation of Professions, Architects, Architects Act, ss. 2(5), Insurance Law, Professional Liability Insurance, , Insurance Act, ss. 27(2), Determination of Rights Arising out of Interpretation of Statute, Rules of Civil Procedure, Rule 14.05(3)(d)

Facts: The Pro-Demnity Insurance Company provides professional liability insurance to Ontario architects. The Ontario Architects’ Association, the body that regulates architects in Ontario pursuant to the Architects Act, is authorized by s. 2(5) of that Act to own shares in Pro-Demnity. Pro-Demnity is licenced under the Insurance Act to sell liability insurance to architects. Pro-Demnity brought an application under r. 14.05(3)(d) of the Rules of Civil Procedure, seeking a determination that s. 2(5) of the Architects Act does not prevent it from expanding the scope of its insurance business beyond liability insurance for architects. The application judge held that he had jurisdiction to hear the application, but declined to exercise it.

Issues:

(1) Did the application judge err in declining his jurisdiction?

Holding: Appeal dismissed.

Reasoning:

(1). No. The motion judge’s decision was discretionary and reasonable. Pro-Demnity commenced its application after it had submitted an application to the Superintendent to amend its licence to sell insurance. Section 27(2) of the Insurance Act gives the Superintendent exclusive jurisdiction to determine all questions of fact and law that arise in dealing with that application. In response to Pro-Demnity’s application, the Superintendent expressed a concern in relation to ss. 2(5) of the Architects Act. While the motion judge determined he had jurisdiction to rule on the application, he explained that he regarded it as more appropriate for the Superintendent to determine the question in the context of the licence amendment application, and then allow any challenge to the Superintendent’s decision to come before the court on judicial review.

Machaj v. RBC General Insurance Company, 2016 ONCA 257

[Sharpe, Juriansz and Roberts JJ.A.]

Counsel:

Sandi J. Smith, for the appellant

Harry P. Brown, for the respondent

Keywords:

Torts, MVA, Statutory Accident Benefits, Catastrophic Injury Determination, Limitation Periods, Do v Guarantee Insurance Co.

Facts:

The appellant completed an OFC-19 form seeking a “catastrophic determination,” but no claim was made for specific benefits. The respondent denied the request, stating the assessors determined the appellant did not sustain catastrophic impairment. At the end of the denial, the respondent wrote “and therefore you do not qualify for the increased benefits.”

The appellant commenced an action for catastrophic injury, as per the Statutory Accident Benefits. The motion judge dismissed the action by deciding it was barred by ss. 281(1) of the Insurance Act, . The appellant’s claim was barred because a mediation proceeding had not been commenced “within two years after the insurer’s refusal to pay the benefits claimed.”

Issue:

Did the motion judge err by dismissing the claim as statute-barred?

Holding:

Appeal allowed.

Reasoning:

Yes. The motion judge erred and the claim is not statute-barred.

The motion judge decided that the decision in Do v Guarantee Insurance Co, 2015 ONSC 1891 did not apply to this case. Do upheld a consistent line of decisions holding that an insurer’s denial of a catastrophic impairment does not amount to a denial of a benefit, and that it is only where a specific benefit is denied that the limitation period begins to run against the claimant.

There is no difference in substance between the denial in this case and the denial in Do. Do stands for the proposition that the two-year limitation period only applies to claims for specific benefits and not to a claim for the determination of catastrophic injury status. Adding the words at the end of the denial, the respondent was merely telling the appellant that she lacked status to claim increased benefits. The wording did not convert denial of a catastrophic determination into a denial of specific benefits that would have triggered the two-year limitation period.

Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256

[Cronk, Pepall and Miller JJ.A.]

 Counsel:

Kevin Sherkin and Ryan Wozniak, for the appellant

Albert Campea and Rachel Goldenberg, for the respondent

 Keywords: Contracts, Employment Law, Wrongful Dismissal, Fixed Term Contract, Early Termination, Damages, Reasonable Notice of Termination, Payment in Lieu of Notice, Duty to Mitigate

 Facts:

John Howard, the appellant, was employed by the respondent, Benson Group Inc. (“Benson”) as the Truck Shop Manager and then as Sales Development Manager of an automotive service

centre. Howard signed a written employment contract with a five-year term (the “Employment Contract”) which Benson terminated, without alleging cause, 23 months later.

Howard brought an action for breach of contract, seeking payment of his compensation for the remaining period of the contract which was more than three years’ salary. On summary judgment, Howard was not awarded payment of salary to the end of the term of the contract as he sought. Instead, he was awarded common law damages for wrongful dismissal, subject to mitigation, to be assessed at a mini trial.

Issues:

Did the motions judge err in finding that:

(1) the respondent is liable for damages according to the common law of reasonable notice, rather than damages for termination of a fixed term contract?

(2) an award of damages for early termination of the Employment Contract is subject to a duty to mitigate?

Holding: Appeal allowed.

 Reasoning:

(1) Yes.  The motion judge found that the early termination clause in the Employment Contract was sufficiently ambiguous as to be unenforceable. Without an enforceable early termination clause, Benson’s obligations are governed by “an implied term under the common law requiring ‘reasonable notice’ for the termination of the employment of the [appellant]”.  Howard argued that even if the early termination clause was not enforceable, the other contractual provisions with respect to term and termination remained in effect, and the Employment Contract remained a fixed term contract.

Benson argued that the Employment Contract must be interpreted in accordance with the parties’ intentions. Clause 1.3 provided that the Employment Contract could be terminated “at any time”. Based on this clause, they argued that on early termination, Howard cannot be entitled to compensation that he would have earned to the end of the Employment Contract. Otherwise, Howard’s right to compensation would be the same regardless as to whether there was an early termination clause or not. The employer would receive no benefit from contracting for early termination if that were the case.

At common law, there is a presumption that every employment contract includes an implied term that an employer must provide reasonable notice to an employee prior to the termination of employment. Without an agreement to the contrary, an employee is entitled to common law damages as a result of the breach of that implied term and this presumption can only be rebutted if the contract clearly specifies some other period of notice.

The motion judge erred in holding that the Employment Contract, without the early termination clause, did not rebut that presumption by clearly specifying some other period of notice, expressly or impliedly. An employment agreement with a fixed term automatically terminates at the end of the term with no obligation on the employer to provide notice or payment in lieu of notice. This will oust the implied term that reasonable notice must be given for termination without cause. Parties to a fixed term employment contract can specifically provide for early termination.  However, if they do not specify a pre-determined notice period, an employee is entitled on early termination to the wages the employee would have received to the end of the term.

The Employment Contract, without the early termination clause, remains a fixed term contract. Benson argued that this interpretation produces a windfall to Howard and is unfair to the employer. The court disagreed on the basis that it was the employer, Benson, that drafted the Employment Contract and it was a sophisticated party. Benson attempted to use a fixed term contract to either eliminate its obligation entirely or to limit it to two weeks’ notice on an early termination. While Benson were free to do this, courts have consistently held that an employer must communicate clearly in the contract that this is what they are intending to do because of the significant consequences to an employee in such a situation.

(2) Yes. There is no basis to depart from the rule in Bowes v. Goss Power Products Ltd., 2012 ONCA 425 that there is no duty to mitigate where the contract specifies the penalty for early termination. It does not matter if, as in this case, the penalty is the default wages and benefits for the remaining term of the contract or whether the penalty is specified expressly, as in Bowes.

The court held that neither of the cases relied on to argue mitigation helped Benson. Benson relied on the decision Loyst v. Chatten’s Better Hearing Service, 2013 ONCA 781, but the trial decision in Loyst predates Bowes. On appeal in Loyst, the issues of duty to mitigate or Bowes were not raised.  In Graham v. Marleau, Lemire Securities Inc. (2d) 289 (Ont. S.C.), the judge held the duty to mitigate applied to both fixed term contracts and contracts of indefinite duration. However, Graham has been overtaken by Bowes on this point.

If there is no enforceable contractual provision for a fixed term of notice, or any other provision to the contrary, a fixed term employment contract requires an employer to pay an employee to the end of the term and will not be subject to mitigation.

Fennell v. Deol, 2016 ONCA 249

[MacPherson, van Rensburg and Miller JJ.A.]

Counsel:

William G. Scott, for the appellant

Agatha Dix, for the respondent and appellant by way of cross-appeal

Cary N. Schneider and Philip Pollack, for the respondent by way of cross-appeal

Keywords: Torts, Negligence, MVA, Limitation Periods, Limitations Act, 2002, Discoverability, Reasonable Diligence

Facts:

In August 2010, the appellant, Daniel Fennell (“Fennell”) was in a four vehicle accident. There was a problem in determining the identities of the other drivers in the accident. At the time of the accident, Fennell’s wife noted the respondent, Gurjinder Deol’s (“Deol”) license plate number. The police only gave Fennell one page of the motor vehicle accident report (“MVAR”) which named Boota Shergill (“Shergill”) and another driver (not Deol).

In August 2012, Fennell’s lawyer received the complete MVAR from the police. The next day, Fennell issued a statement of claim and Shergill was served in September. Deol was not named in the action. In January 2013, Shergill’s lawyer received the MVAR from the police and contacted Fennell’s lawyer in March with regards to Deol’s identity. Fennell amended the statement of claim to include Deol. In the interim, Fennell’s lawyer wrote to the police and obtained the police notes. In October 2014, Shergill crossclaimed against Deol.

Deol successfully moved for summary judgment dismissing the claim against him as being out of time, but failed on his motion to have the crossclaim against him brought by Shergill also dismissed on that basis.  Fennell and Deol appealed.

Issues:

(1) On Fennell’s appeal, did the motion judge err by granting summary judgment dismissing the claim against Deol?

(2) On Deol’s appeal, did the motion judge misapprehend the facts and applicable law?

Holding: Fennell’s appeal is allowed. Deol’s appeal is dismissed.

Reasoning:

(1) Yes. The motion judge was wrong to dismiss Fennell’s claim against Deol. The motion judge found that Fennell discovered the claim no later than when he issued the claim against Shergill. The finding was based on the motion judge’s conclusion that Fennell and his lawyer did not exercise due diligence. Although due diligence factors into the analysis for when a claim ought to have reasonably been discovered, it is not in itself a reason to dismiss the plaintiff’s claim.

Due diligence is not referred to in the Limitations Act, 2002, but it is a principle that underlies and informs limitations periods. Plaintiffs are required to act and not sit idle. Due diligence is part of the section 5(1)(b) evaluation in deciding when a person in the plaintiff’s circumstances and abilities ought to have reasonably discovered the claim. The motion judge erred by focusing on whether Fennell exercised due diligence and by concluding the onus was on Fennell to show due diligence to rebut the presumption in section 5(2). However, to overcome the presumption, Fennell only needed to prove that on the date of the accident, he did not know about his permanent and serious impairment, not whether or not he exercised due diligence.

Fennell claimed he discovered his claim in August 2014 when a doctor told him his injuries were permanent. The motion judge considered this but did not make a specific finding as to when Fennell had actual knowledge of his permanent and serious impairment. Fennell could not have known of his permanent and serious impairment at the time of the accident. Therefore, Fennell successfully rebutted the presumption in section 5(2) that he knew of all of the elements of his claim on the date of the occurrence.

The motion judge’s only finding of when the claim ought reasonably have been discovered was that had Fennell fulfilled his due diligence obligation, the permanent and serious impairment would have been discovered no later than around the time he commenced his action against Shergill. The action was commenced against Shergill in August, 2012. Deol was added as a defendant within two years of that date (in March, 2014). As such, the motion judge’s conclusion that Fennell’s claim against Deol was statute-barred was inconsistent with his own finding as to when the claim was reasonably discoverable.

(2) No. The motion judge did not misapprehend the facts or the applicable law in finding that Shergill ought to have discovered his claim for contribution and indemnity in the fall of 2012. The presumptive two-year limitation period for Shergill’s claim against Deol for contribution and indemnity began running in September, 2012 when Shergill was served the statement of claim.

The motion judge’s determination of when Shergill’s claim for contribution and indemnity against Deol ought reasonably have been discovered was founded on the evidence and is entitled to deference. The motion judge decided that Shergill acted reasonably after having the necessary information in waiting to commence a crossclaim rather than commencing a third party claim at an earlier date (before Deol had been added). The court repeated that due diligence is not a separate question in determining whether a limitation period has begun to run. The issue was when a person with Shergill’s abilities and in his circumstances ought to have discovered his claim for contribution and indemnity.

Civil Endorsements

Wilson v. 2246519 Ontario Inc., 2016 ONCA 244

[Doherty, Cronk and Pepall JJ.A.]

Counsel:

Shahzad Siddiqui, for the appellants

Paul Robson, for the respondent

Keywords: Civil Procedure, Certificate of Pending Litigation, Failure to Plead, Rules of Civil Procedure, Rule 42.01(2)

Delgado-Cruz (Re), 2016 ONCA 261

[MacPherson, MacFarland and LaForme JJ.A.]

Counsel:

Dean Embry, for the appellant

Eric Siebenmorgen, for the Crown

Keywords: Ontario Review Board, Conditional Discharge, Absolute Discharge, Liberty Interest, Appeal Dismissed

Criminal Decisions

R v. A.E., 2016 ONCA 243

[Feldman, MacPherson and Miller JJ.A.]

Counsel:

A.E., acting in person

Lisa Feinberg, amicus curiae

Joanne Stuart, for the respondent

Keywords: Criminal Law, Driving Without Insurance, Fines, Sentencing, Fresh Evidence, Appeal Allowed

R. v. M.O., 2016 ONCA 236

[Doherty, Simmons and van Rensburg JJ.A.]

Counsel:

Catriona Verner, for the appellant

Joanne Stuart, for the respondent

Keywords: Criminal Law, Break In and Enter, Vetrovec Instruction, Identification of Accused, Sentencing, Appeal Dismissed

R. v. Chica, 2016 ONCA 252

[Laskin, Cronk and Miller JJ.A. ]

Counsel:

Elmé G. Schmid and Lina Anani, for the appellant

Mabel Lai, for the respondent

Keywords: Criminal Law, Sexual Assault, Imprisonment, Fresh Evidence, The Rule in Browne v. Dunn, Charter of Rights and Freedoms, s. 14, Appeal Dismissed

R. v. Horgan, 2016 ONCA 255

[Feldman, Simmons and Pepall JJ.A. ]

Counsel:

Patrick Horgan, in person

Apple Newton-Smith, duty counsel

Brock Jones, for the respondent

Keywords: Criminal Law, Sentencing, Pre-Trial Custody, Theft, Driving Offences, Genuine Remorse, Appeal Allowed

R. v. Pham, 2016 ONCA 258

[Watt, Epstein and Tulloch JJ.A]

Counsel:

Venus Sayed, for the appellant

Stephen Dawson, for the respondent

Keywords: Criminal Law, Possession, Trafficking, Imprisonment, Unreasonable Search and Seizure, Charter of Rights and Freedoms, ss 24(2), Appeal Dismissed

R. v. Alvarez, 2016 ONCA 259

[MacPherson, MacFarland and LaForme JJ.A]

Counsel:

Jonathan Dawe, for the appellant

Karen Papadopoulos, for the respondent

Keywords: Criminal Law, Abduction, Assault with a Weapon, Forcible Confinement, Attempted Murder, Identification Issue, Appeal Dismissed

R. v. Harflett, 2016 ONCA 248

[Watt, Lauwers and Pardu JJ.A.]

Counsel:

Malcolm McRae and Erec Rolfe, for the appellant

Rick Visca, for the respondent

Keywords: Criminal Law, Highway Traffic Act, Suspended License, Possession of Marijuana, Trafficking, Charter of Rights and Freedoms, s. 8, R v. Grant, Appeal Allowed

R. v. Stephens, 2016 ONCA 262

[MacPherson, MacFarland and LaForme JJ.A]

Counsel:

Bernadette Saad, for the appellant

Sandy Thomas, for the respondent

Keywords:  Criminal Law, Trafficking, Sentencing, Appeal Dismissed

R. v. Versnick, 2016 ONCA 232

[Blair, Tulloch and Pardu JJ.A.]

Counsel:

Lisa Gunn, for the appellant

Katie Doherty, for the respondent

Keywords: Criminal Law, Sentencing, Driving Prohibition, Leave to Appeal Granted, Appeal Dismissed

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 everyone.

Except for a brief addendum to an order made in a criminal matter, the Court of Appeal only released civil law decisions this week, which is rare. Topics covered included whether or not leave to appeal a vesting order made on a receivership sale under the Bankruptcy and Insolvency Act is required (it is), an ironic case in which a lawyer initially resisted a professional negligence claim for missing a limitation period by arguing the limitation period had been missed (nice try), insurance law and adjournments.

Wishing everyone a nice long weekend and everyone celebrating a Happy Easter.

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

Table of Contents

DBDC Spadina Ltd. v. Walton, 2016 ONCA 220

Keywords: Bankruptcy and Insolvency, Receiverships, Sale, Real Property, Commercial Leases, Mortgages, Priority Dispute, Judgments, Vesting Orders, Doctrine of Merger

Clarke v. Faust, 2016 ONCA 223

Keywords: Torts, Negligence, Professional Liability, Lawyers, Limitation Periods, Discoverability, Limitations Act, 2002, Section 5, Prematurity, Estoppel

2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225

Keywords: Bankruptcy and Insolvency, Receiverships, Sale of Assets, Approval and Vesting Orders, Bankruptcy and Insolvency Act, Section 193, Appeal as of Right, Leave to Appeal, Motion to Quash

Arcelormittal Dofasco Inc. v. Industrial Alliance Insurance and Financial Services Inc., 2016 ONCA 224

Keywords: Insurance Law, Medical Benefits Coverage, Reimbursement, Limitation Periods, Summary Judgment

Turbo Logistics Canada Inc. v. HSBC Bank Canada, 2016 ONCA 222

Keywords: Civil Procedure, Trials, Adjournments, Factors in Granting or Refusing, Self-Represented Litigants, Rules of Civil Procedure, R. 2.01(1)(a)

Economical Mutual Insurance Company v. Caughy, 2016 ONCA 226

Keywords: Insurance Law, Automobile Insurance, Statutory Accident Benefits Coverage, Statutory Accident Benefits Schedule, Section 3(1), Definition of Accident, Amos v. Insurance Corp of British Columbia, Purpose Test

Civil Decisions


DBDC Spadina Ltd. v. Walton, 2016 ONCA 220

[Laskin, Simmons and Huscroft JJ.A.]

Counsel:

Christopher Sparling, for Junior Academy Inc. and Dibri Inc.

Danielle Glatt, for 368230 Ontario Ltd.

Facts: 

The property at issue in this appeal was originally purchased by the appellant, Dibri Inc., in 2005 (the “Property”). A school was later built on the Property and operated by the appellant, Junior Academy Inc. The appellants, Dibri and Junior Academy share common principals. In 2011, Dibri sold the Property to The Rose and Thistle Group Ltd. (“Rose”), in trust, for a company to be incorporated. As part of the agreement, Junior Academy would continue as a tenant of the Property.

Junior Academy, Dibri and Rose entered into a side agreement for $100,000 to be held back from the purchase price for an anticipated retroactive realty tax reassessment. Subsequently, the parties agreed that instead of the $100,000 holdback, Junior Academy would pay $25,000 to Academy Lands Ltd., the company incorporated by Rose to complete the sale agreement. Junior Academy leased the Property from Academy Lands for 10 years and Dibri guaranteed Junior Academy’s obligations under the lease for five years. Under the lease, Junior Academy would pay $5,000 monthly to Academy Lands for the estimated property taxes and if the property taxes assessed were “less than the amount paid by the Tenant”, the Landlord was required to credit the Tenant “the difference on account of the taxes due for the following year”.

In 2014, the first mortgagee of the Property obtained an order to appoint Spergel Inc. as receiver of the assets of Academy Lands. In response, Junior Academy stopped paying amounts owing under its lease. In an order dated December 17, 2014, Junior Academy was ordered by a motions judge to pay $188,845 on account of rent and other arrears to Spergel.

By way of a January 2015 vesting order, Spergel transferred the Property to the purchaser, 368230 Ontario Ltd (the “Purchaser”). Before the receiver’s sale, Dibri held a second mortgage on the Property. The vesting order transferred the Property to Purchaser, vested Junior Academy’s lease in the Purchaser and extinguished Dibri’s second mortgage and most other encumbrances.

An April 21, 2015 order directed that $188,845 be held back from the initial distribution of the net proceeds of sale (the “disputed balance”) until it was determined whether amounts paid by Junior Academy to Academy Lands for property taxes under the lease were enforceable against the Purchaser and the entitlement of various parties to the disputed balance.

The motion judge held that the amounts paid by Junior Academy to Academy Lands for the property taxes under its lease are enforceable against the Purchaser but that the Purchaser should be paid the amount owing under the December 17, 2014 order regarding the rent arrears out of the disputed balance, less credit for the property tax overpayments. The motion judge declined to grant Junior Academy’s request to enforce against the Purchaser the $25,000 payment made to Academy Lands under the side agreement.

Issues: 

(1) Did the motion judge err in holding that the Purchaser is entitled to be paid the amount owing under the December 17, 2014 order?

(2) Did the motion judge err in failing to order that the entire disputed balance be paid to Dibri?

(3) Did the motion judge err in denying Junior Academy’s claim for a $25,000 credit against the purchaser?

Holding: Appeal dismissed.

Reasoning:

(1) No. The Court rejected the appellant’s argument that the arrears owed under the lease merged in the December 17, 2014 judgment and so remained the property of Academy Lands, through its receiver. The vesting order operates as an assignment of the lease to the Purchaser and thus vests all Academy Lands’ interest in the Purchaser. The sale documents made it clear that all benefits and obligations under the lease, including rent, vested with the Purchaser.

The appellants cited the Supreme Court of Canada 2007 decision Hislop v. Canada (Attorney General) and its 1934 decision Lew v. Lee as the basis for the argument that a cause of action merges in a judgment so that an appeal can be prosecuted in relation to a judgment even after the holder of a personal action has passed away. The Court held that these cases did not establish that the December 17, 2014 order somehow excluded the rent arrears from the operation of the vesting order.

(2) No. Dibri’s second mortgage does not give it priority over unsecured claims of the Purchaser against Junior Academy for rent arrears. The arrears effectively formed part of the sale and needed to be accounted for as part of the transaction. As well, Dibri and Junior Academy had common principals and Dibri guaranteed Junior Academy’s obligations under the lease.

(3) No. The appellants argued that the $25,000 payment decreased Junior Academy’s amount owing on account of assessed property taxes and increased the amount Junior Academy overpaid for property taxes under the lease. The Purchaser was not party to the side agreement and the vesting order did not transfer the benefits and obligations under the side agreement to the Purchaser. Junior Academy’s rights against the Purchaser arise out of the lease and there was no evidence that Academy Lands had used the $25,000 to reduce the property taxes owing.

Clarke v. Faust, 2016 ONCA 223

[Feldman, Juriansz and Brown JJ.A.]

Counsel:

Edward Goldentuler, for the appellants

Kerri P. Knudsen and Nicole A. Dowling, for the respondent

Facts:

The appellants were injured in a motor vehicle collision on April 7, 2006. They retained the respondent, Joseph Faust, to represent them on their claims for accident benefits and tort damages. The respondent issued a statement of claim on June 17, 2008, nine weeks after the second anniversary of the accident. Prior to the filing of the statement of claim, the appellants retained new counsel, who advised that the statement of claim had not been issued within two years of the accident. The new counsel advised that this was not necessarily fatal to the claim because of the doctrine of discoverability. The new counsel wrote to the respondent on July 2, 2008 putting him on notice of the missed limitation period, and the respondent replied with the response that no limitation period had been missed because of the doctrine of discoverability.

The appellants’ solicitor passed away and another solicitor at the firm advised he was not concerned about the missed limitation period and spoke with defence counsel about the discoverability issue. The defendants did not initially plead the missed limitation period as a defence.  However, they amended their statement of defence on March 18, 2009, to plead the limitation period. The appellants commenced a professional negligence action against the respondent on December 22, 2010. Ironically, the respondent pleaded that the appellants’ professional negligence action against him was statute-barred because it was commenced more than two years after they knew or ought to have known they had a cause of action against him.

The appellants’ action against the respondent was dismissed by way of summary judgment in favour of the respondent. The motion judge found there was no genuine issue requiring a trial on whether the action was statute-barred. The appellants appealed.

Issues:

(1) Did the motion judge err in finding that the limitation period to sue the lawyer began to run before March 18, 2009, when the appellants say they first knew they had suffered some damages from the respondent’s “act or omission”?

(2) Did the motion judge err in her finding that discoverability had not been pleaded in the appellants’ statement of claim for the professional negligence action?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The court held that the appellants’ claim against the respondent was not discovered before March 18, 2009, if at all. The motion judge was mistaken in her understanding of the Limitations Act, 2002. She failed to consider the requirement of ss. 5(1)(a)(iv) that a person with a claim know that a proceeding would be an appropriate means to seek to remedy the injury, loss or damage having regard to its nature. That provision requires a person to have good reason to believe he or she has a legal claim for damages before knowing that commencing a proceeding would be an appropriate means to seek to remedy the injury, loss or damage.

Since the motion judge proceeded on an incorrect understanding of the Act, the court proceeded to determine when the appellants first discovered they had a claim against the respondent lawyer. It held that based on the appellants’ subjective knowledge, they were advised by three lawyers that the doctrine of discoverability applied to their motor vehicle action and it was the amended statement of defence on March 18, 2009 that changed the situation. On those facts, the court was satisfied the appellants had no reason to know that commencing a legal proceeding was appropriate before the amendment of the statement of defence.

In addition, a reasonable person with the abilities and in the circumstances of the appellants would not have known it was appropriate to commence a legal proceeding before the March 18, 2009 amendment of the statement of defence in the motor vehicle action. This satisfied the objective test of ss. 5(1)(a).

Finally, the court made two further observations in obiter.  First, it remained to be determined whether the appellants’ motor vehicle accident was statute-barred.  If it was not statute-barred, the professional negligence action may be premature. Second, the appellants might have been able to establish that the respondent was estopped from pleading a limitation defence in the professional negligence action. The court found it likely that the appellants, in failing to commence the professional negligence action within two years of the second anniversary of the motor vehicle accident, relied on the respondent’s expressed initial position that he had not missed the limitation period in the motor vehicle action. However, the appellants did not raise this issue and it was unnecessary to deal with it.

(2) Yes. The statement of claim set out the material facts to support the application of the doctrine.

2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2016 ONCA 225

[Brown J.A. (In Chambers)]

Counsel:

Kenneth Kraft, for the moving party, A. Farber & Partners Inc.

Robert MacRae, for the responding party, Bending Lake Iron Group Limited

Facts:

The Debtor went into receivership in 2014 on the application of its secured creditor, 2403177 Ontario Inc. (the “Receivership Order”). The Debtor’s major asset is an undeveloped iron ore mine site located northwest of Thunder Bay, Ontario. By order, the court approved a Sales and Investor Solicitation Process for the Debtor’s property (the “SISP Order”). Significantly, the Debtor consented to the SISP Order. In 2015, the Receiver moved for court approval of an asset purchase agreement it had entered into with Legacy Hill for substantially all of the Debtor’s property (the “Sale Agreement”).  The Debtor opposed the motion and, in turn, brought its own motion seeking a variety of relief, including the postponement of the sale of its property. The motion judge approved the Sale Agreement and ordered the vesting of the Debtor’s property in Legacy Hill upon the filing of a receiver’s certificate (the “Approval and Vesting Order”). As well, the motion judge dismissed the Debtor’s motion to postpone the sale and for other relief. The Debtor filed a notice of appeal in 2016 seeking to set aside the Approval and Vesting Order. Legacy Hill is not prepared to close the Sale Agreement until the Debtor has exhausted its appeal rights in this court. The Receiver moves for a declaration that the Debtor requires leave to appeal.

Issue:

Does the Approval and Vesting Order fall into any of the categories identified in s. 193(a)-(c) of the Bankruptcy and Insolvency Act (“BIA”) in which an appeal lies as of right to this court, or does the Debtor have to obtain leave to appeal under s. 193(e)?

Holding: Receiver’s motion granted and Debtor ordered to obtain leave to appeal from the Approval and Vesting Order. The Debtor’s notice of appeal dated 2016 is quashed.

Reasoning:

The Approval and Vesting Order does not fall under any of the categories in BIA s.193(a)-(c), and therefore the Debtor has to obtain leave to appeal under s,193(e).

Under BIA s.193(a), the Approval and Vesting Order does not involve future rights. The Debtor’s argument that the Approval and Vesting Order involves the future rights of “affected Aboriginal communities” is vague and difficult to follow. First, for an order to involve future rights, it must involve the future rights of those with an economic interest in the Debtor company – i.e. its creditors or shareholders. On the sale approval motion, the Debtor did not adduce evidence that any “affected Aboriginal community” had such an economic interest in the Debtor. Second, at this stage of the process it does not lie in the Debtor’s mouth to contend that the Receiver failed to give proper notice to “affected Aboriginal communities”. The time to raise such an issue was when the Receiver sought approval of the SISP Order, yet the Debtor consented to that order. Third, to the extent that the Approval and Vesting Order affects the rights of those with an economic interest in the Debtor, it affects the present, existing rights of the Debtor’s creditors and shareholders, not their future rights. Finally, it is clear that the Debtor’s real complaint about the effect of the Approval and Vesting Order is one concerning the “commercial advantages or disadvantages that may accrue from the order challenged on appeal.” That has nothing to do with “future rights” within the meaning of s. 193(a).

Under BIA s.193(b), the Approval and Vesting Order does not affect other cases of a similar nature in this proceeding. First, the Debtor consented to the SISP Order which authorized the Receiver to proceed with the sales process.  The Debtor did not raise the issue of a duty to consult “affected Aboriginal communities” about a sale at that time.  It is difficult to conceive how it can do so now. Second, it is very doubtful that the Debtor has standing to advance on appeal an argument based on the duty to consult. Third, the jurisprudence has consistently interpreted this section as meaning that a right of appeal will lie where “the decision in question will likely affect another case raising the same or similar issues in the same bankruptcy proceedings.”  Here, the Approval and Vesting Order disposed of all the property of the Debtor. Consequently, there will not be any other case dealing with the disposition of the Debtor’s property in this receivership.

The Approval and Vesting Order is not a method of disposing of a debtor’s assets that falls under BIA s.193(c) (property involved in the appeal exceeds $10,000). The caselaw holds that s. 193(c) of the BIA does not apply to decisions or orders that are procedural in nature, including orders concerning the methods by which receivers or trustees realize an estate’s assets. In the present case, the overwhelming majority of the Debtor’s grounds of appeal are process-related, involving issues concerning the Debtor’s dealings with Legacy Hill following the Receivership Order, the Receiver’s disclosure of information about the Sale Agreement, the negotiation process it followed with Legacy Hill, its treatment of persons affected by the Sale Agreement, and the adequacy of notice it gave to “affected Aboriginal communities.” The second principle emerging from the caselaw is that s. 193(c) is not engaged where the decision or order does not call into play the value of the debtor’s property. In the present case, the Approval and Vesting Order marked the final step in the Receiver’s monetization of the Debtor’s assets. Finally, for s. 193(c) to apply, the order in question must contain some element of a final determination of the economic interests of a claimant in the debtor. The Approval and Vesting Order did not determine the entitlement of any party with an economic interest in the Debtor to the sale proceeds.  In that sense, no interested party gained or lost as a result of the order.

Arcelormittal Dofasco Inc. v. Industrial Alliance Insurance and Financial Services Inc., 2016 ONCA 224

[Laskin, MacFarland and Roberts JJ.A]

Facts:

D.C. has a rare medical condition; her hematologist prescribed the drug Soliris to manage her condition.  The drug is very expensive, costing roughly $25,000 per month.  D.C. applied to the respondent Industrial Alliance (IA), her employer’s group benefits insurer, for pre-approval for the expected cost of the drug.  The IA policy provided for reimbursement of 90% of certain drug payments.

IA denied D.C’s claim.  IA thought that Soliris was administered in a hospital setting, and therefore excluded it under the terms of its policy.  Her retired husband had a benefit plan through his former employment; this plan was underwritten by the appellant, Arcelormittal and managed by Great West Life (GWL).

After paying benefits for a year, GWL began to inquire why IA denied D.C’s claim. Evidence demonstrated that IA knew that its denial was inappropriate.  IA also ignored or refused requests from GWL and D.C. for the wording of the policy.  In the meantime, IA continued to refuse coverage.

Arcel commenced an action seeking reimbursement from IA for Soliris payments from 2009 to 2011.  They sought reibursment from IA for Soliris payments from October 2009 to November 2011 in the sum of $1,280,163.95, representing 90 percent of its payout of $1,422,404.40.

By way of summary judgment, the court ordered that IA reimburse the appellant for 90 percent of all amounts paid from April 2010, onwards, which amounted to a total of $548,995.97.  The rest of the claim was found to be statute-barred.  Arcel appealed.

Issues:

1) Did the motion judge err in finding that Arcel’s agent, GWL, was aware of IA’s obligation to pay as of October 2009 constitute a palpable and overriding error?

2) Did Arcel clearly establish that its agent, GWL, acting reasonably could not have discovered its claim until on or after April 4, 2010?

Holding: Appeal Allowed

Reasoning:

Yes to both questions.  The court held the appellant acted properly in the face of the respondent’s denial of coverage.   The appellant asked for the contract wording which supported the Soliris decline.  Despite follow up emails from the appellant, IA did not respond until December 2010, but did not provide the policy wording. The court held that contrary to the motion judge’s finding, the appellant did not know and could not reasonably have known it had a claim until after September 2011, the action was therefore commenced within the two years of its “discovery” and, accordingly, none of the claims for which it sought reimbursement from the respondent were statue-barred.

Turbo Logistics Canada Inc. v. HSBC Bank Canada, 2016 ONCA 222

[Strathy, C.J.O., Lauwers and Benotto JJ.A.]

Counsel:

Jasdeep Singh Bal and Daniel Perlin, for the appellants

Matt Saunders and J. Brian Casey, for the respondent

Facts:

A trial was scheduled to commence in September 2013, a date that was set to accommodate the schedule of the appellants’ counsel. Three weeks before trial, the appellants served notices of intention to act in person. It appeared that they were hoping to settle the case, and when their offer of settlement was rejected, their lawyer discussed the costs of proceeding to trial. The appellants were unwilling to pay him for same, and he subsequently insisted on getting off the record. Shortly before trial, the appellants stated that they would not be pursuing their claim and that the trial was to proceed on the respondent’s counterclaim.

A few days before trial, the appellants advised that they would be seeking an adjournment. The trial judge refused the adjournment. At trial, the appellants were found liable for over $10 million in damages for fraudulent misrepresentation, negligent misrepresentation, conversion and conspiracy in connection with loans made by the respondent bank. The trial judge found that the appellants fraudulently submitted false information to the respondent to obtain the loans.

On appeal, the parties agreed that the sole ground of appeal was whether the trial judge erred in refusing an adjournment to enable the appellants to retain new counsel. The appellants acknowledged that the decision to grant an adjournment is discretionary and is thus afforded deference from an appellate court. Nonetheless, they argued that the trial judge failed to consider all of the relevant circumstances and thus the decision was contrary to the interests of justice.

Issue:

Did the trial judge fail to consider all of the relevant circumstances in this matter in deciding not to grant an adjournment?

Holding: Appeal Dismissed.

Reasoning:

No.  The appellants submitted that the trial judge failed to exercise her discretion judicially, whereas the respondent argued that the trial judge properly measured the case and concluded that it would not be unfair to refuse the adjournment.

The court in Khimji v. Dhanani reasoned that, in refusing an adjournment, a trial judge should have taken into account the goal expressed in Rule 2.01(1)(a), namely “to secure the just determination of the real matters in dispute” and the resolution of cases on their merits. Factors to be considered in this determination include the reason for the adjournment request, the history of the matter, the prejudice to the party resisting the adjournment and the consequences to the requesting party of refusing the request. The fact that a party is self-represented is a relevant factor, as the court has an obligation to ensure that all litigants have a fair opportunity to advance their positions.

The appellants had given notice of their intention to act in person and had ample time within which to retain new counsel. They did not demonstrate any attempt to retain new counsel and did not offer terms. Instead, the court concluded that they “had simply rolled the dice, hoped to settle and when that strategy did not work, decided to try another one – delay.” While the appellants were self-represented, this was simply the result of their own decision to put off trial preparation in the hope of settlement.

Moreover, the trial judge considered the nature of the case, the matters in dispute, the appellants’ familiarity with the issues and their relative sophistication. The appellants were experienced and sophisticated businessmen, while the issues were not complex. The Court further commented that it would “have been perfectly obvious to the trial judge that the appellants had nothing to lose and everything to gain by delaying the trial as long as possible.” Conversely, the respondent would obviously be prejudiced by further delay.

Finally, the Court reasoned that there is a public interest in the efficient use of scarce judicial resources and in the efficient and fair resolution of trials. These were factors the trial judge was entitled to take into account. There was no merit to the assertion that the conduct of the trial was unfair: the trial judge managed the trial firmly but fairly.

Economical Mutual Insurance Company v. Caughy, 2016 ONCA 226

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

Counsel:

Daniel Strigberger and Alexandra Wilkins, for the appellant

Nigel Gilby, Jasmine Akbarali, and Christopher Dawson, for the respondent

Facts:

The respondent was playing tag with his daughter and her friend around midnight when he suffered an injury from running into a parked motorcycle on the pedestrian walkway. The motorcycles were not blocking the walkway initially, however, after nightfall, and without the respondent’s knowledge, the motorcycles were moved and parked on the walkway. The respondent suffered serious spinal cord injuries as a consequence of the fall. He was also intoxicated at the time of the incident. The respondent sought accident benefits from his insurer, the appellant, which were denied on the basis that the incident did not meet the definition of accident as found in the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (the “SABS”).

The application judge found that that the temporary parking of the motorcycle that evening on the walkway constituted an ordinary or well-known use of the vehicle. In addition, he found that the temporary parking of the motorcycle that evening was the dominant feature in the incident, and not ancillary to it. The application judge concluded that the incident satisfied the test for an accident under the SABS as articulated by the Supreme Court of Canada in Amos v. Insurance Corp. of British Columbia [Amos].

Issue:

Whether the application judge erred in concluding that the purpose test from Amos was met in finding that the respondent was involved in an “accident”, as that term is defined in s. 3(1) of the SABS.

Holding: Appeal dismissed.

Reasoning:

No.  The application judge was correct in finding that the respondent was involved in an accident, as that term is defined in the SABS. The court found that parking a vehicle does not constitute the type of aberrant use contemplated by the Supreme Court in Citadel General Assurance Co v Vytlingam, which considered the Amos test. The court noted that a vehicle is designed to be parked and most vehicles are parked most of the time. It concluded that parking a vehicle is an ordinary and well-known activity to which vehicles are put.

With regard to the alleged errors in the application judge’s analysis of the purpose test, the court addressed the appellant’s arguments but noted they would not change the result.

First, the argument that the application judge erred in failing to conclude that there must be an active use of the vehicle to meet the purpose test was misconceived. There is no active use component of the purpose test.

Second, the application judge did not err in finding that the motorcycle was parked temporarily on the walkway when the appellant tripped as suggested by the appellant. He correctly found that there was no evidence that the motorcycle was inoperable or that it was being stored at the campsite for an extended period of time.

Third, the court did accept the appellant’s submission that the application judge erred when he concluded that the respondent had satisfied the purpose test that the use or operation of an automobile was involved in this incident. The court stated the purpose test was not designed to determine whether a vehicle is involved in an incident. However, when the application judge’s statement was read in context, the court was satisfied that the application judge understood the elements of the purpose test and that the misstatement did not affect his analysis.

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.

Good afternoon.

Cases this week included a couple of commercial leasing decisions involving issues such as insurance and allocation of risk for damage between landlord and tenant and the commencement of the limitation period for suing for ongoing breaches of covenants.  Other topics included the enforceability of a choice of law and forum clause in a financial adviser case, MVA, copyright, and a debtor-creditor case where the debtor got the better of the creditor and succeeded in a claim against the creditor for intentional interference with economic relations.

Perhaps the most interesting decisions released this week were the MEDIchair and the Accuworx decisions.  In MEDIchair, the Court of Appeal struck down a non-competition covenant that purported to restrict the business of a former franchisee in a particular geographical area where the franchisor had no intention to carry on business in that area.  In Accuworx, a successful claim for unjust enrichment was brought against a landlord corporation for environmental clean-up work on its property even though the contract to clean up was not with that corporation but with a related tenant corporation that had gone bankrupt.  The court found that the landlord corporation received the benefit of avoiding a potential clean-up order issued by the Ministry of the Environment and therefore should be liable for the clean-up costs even though it was the related tenant corporation that had contracted for the work to be performed.  This was a clever way to get around the annoying issues of privity of contract and the corporate veil.  No doubt the fact that the landlord and tenant corporations were related (they were closely held corporations with the same controlling mind) played a critical role in the outcome.  It would have been interesting to see if the same result would have followed if the corporations had been at arm’s length.

Have a nice 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

MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168

Keywords: Contracts, Franchise Agreements, Restrictive Covenants, Enforceability, Reasonableness in Scope, Legitimate or Proprietary Interest, Elsley v. J.G. Collins Ins. AgenciesPayette v. Guay, Arthur Wishart Act (Franchise Disclosure), s. 5, Disclosure Statement, Fresh Evidence

Accuworx Inc. v. Enroute Imports Inc., 2016 ONCA 161

Keywords: Environmental Law, Environmental Protection Act, Remedial Orders, Unjust Enrichment, Quantum Meruit, Summary Judgment

Yasmin v. Alexander, 2016 ONCA 165

Keywords: Civil Procedure, Tax, Income Tax, Administration and Enforcement, Creditors and Debtors, Receivers, Court Appointed Receivers, Motion to Dismiss, Leave Nunc Pro Tunc

Orion Interiors Inc. v. State Farm Fire and Casualty Company, 2016 ONCA 164 

Keywords: Real Property, Commercial Tenancies, Leases, Over-Holding Tenancy, All Risks Insurance

Manjos v. Fridgant, 2016 ONCA 176

Keywords: Contracts, Torts, Negligence, Investment Advisers, Jurisdiction, Forum Selection Clause, Choice of Law Clause, Enforceability, Expedition Helicopters Inc. v. Honeywell Inc.

Miguna v. Walmart Canada Corp., 2016 ONCA 174

Keywords: Intellectual Property, Copyright Infringement, Misapprehension of Evidence, Summary Judgment

Grand Financial Management Inc. v. Solemio Transportation Inc., 2016 ONCA 175

Keywords: Debtor-Creditor, Factoring, Torts, Intentional Interference with Economic Relations, Damages At Large, Punitive Damages, Equitable Set-Off, Matters not Pleaded

Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179

Keywords: Contracts, Real Property, Commercial Tenancies, Leases, Repudiation, Remedies, Limitation Period, Limitations Act, 2002 s. 4 & s.5(1)-(2), Discoverability, Continuing Breaches

For a list of Civil Endorsements, click here.

For a list of Criminal Decisions, click here.

Civil Decisions

MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168 

[Feldman, MacPherson and Miller JJ.A.]

Counsel:

David S. Altshuller and Jennifer Pocock, for the appellants

R.S.M. Woods and Peter Smiley, for the respondent

Keywords: Contracts, Franchise Agreements, Restrictive Covenants, Enforceability, Reasonableness in Scope, Legitimate or Proprietary Interest, Elsley v. J.G. Collins Ins. AgenciesPayette v. Guay, Arthur Wishart Act (Franchise Disclosure), s. 5, Disclosure Statement, Fresh Evidence

Facts: MEDIchair LP is a franchisor that operates a network of franchise stores that sell and lease home medical equipment. One of its franchise locations was in Peterborough, Ontario. It was owned and operated by DME Medequip Inc. (“DME”). DME’s latest franchise agreement was dated 2005 (the “2005 Franchise Agreement”). In 2008, the appellants, Ms. Rolph and Mr. Seiderer, incorporated the appellant 2169252 Ontario Inc. to purchase the Peterborough franchise from the owners of DME, and agreed to be bound by the 2005 Franchise Agreement, including the restrictive covenant. That covenant, which was to apply on the termination of the agreement, prevented them from operating a similar store for 18 months within a 30-mile radius of their store or the nearest franchise store. In 2011, the MEDIchair franchise system was sold to Centric Health Corporation (“Centric”). In 2012, Centric also purchased Motion Specialties (“Motion”), a group of corporate stores similar to the MEDIchair stores. One of those stores was in Peterborough, competing directly with the appellants’ MEDIchair store. The appellants allege that, following these acquisitions, Centric focused its support on the Motion stores, rather than the MEDIchair stores. The number of MEDIchair stores began to decline. Having become very disenchanted with MEDIchair, the appellants did not renew their franchise agreement when it expired in 2015. Instead, they removed the MEDIchair signage and continued to operate their business at the same premises with the same merchandise and the same employees, and changed their name to Living Well Home Medical Equipment. The respondent franchisor, MEDIchair LP, was successful on its application to enforce the restrictive covenant against the appellants, DME Medequip Inc. (its former franchisee) and related parties.

Issues:

(1) Should the court admit and consider fresh evidence?

(2) Did the application judge err by holding that MEDIchair was not required under the Arthur Wishart Act (Franchise Disclosure) to provide the appellants with a franchise disclosure document when they originally purchased the franchise?

(3) Did the application judge err by holding that the term “similar to” in the restrictive covenant was not ambiguous?

(4) Did the application judge err by finding that the restrictive covenant was reasonable in scope, having regard to the legitimate or proprietary interest that MEDIchair was entitled to protect?

Holding: Appeal allowed.

Reasoning:

(1) No. The appellants sought to introduce fresh evidence regarding the modification of their business in order to try to make it sufficiently dissimilar to the MEDIchair business to comply with the covenant, and the declining state of the MEDIchair franchise system. The court did not call on the respondent to address the issue of the admissibility of this evidence on the appeal. With the limited exception of the current state of the MEDIchair franchise system, all of the other proposed fresh evidence could have been obtained by cross-examination of the respondent’s deponents and put before the application judge.

(2) No. Subsections 5(1) and (4) of the Arthur Wishart Act require a franchisor to provide a prospective franchisee with a “disclosure document” that contains prescribed information about the franchise at least 14 days before a franchise agreement is signed or payment is made. However, in a number of cases described in ss. 5(7) of the Act, a franchisor is exempted from that obligation. One is where the grant of the franchise by a franchisee “is not effected by or through the franchisor”: ss. 5(7)(a)(iv). The application judge found that the respondent had very little involvement in the sale of the franchise and was therefore exempt from the disclosure requirement. The respondent merely gave its required approval for the transfer, took a transfer fee, and obtained personal covenants from Ms. Rolph and Mr. Seiderer to be bound by the 2005 Franchise Agreement, as well as a guarantee from the appellant numbered company for DME’s obligations under the 2005 Franchise Agreement.

(3) No. The application judge found that the respondent has “a method of operation, goodwill, products, and services that it has a legitimate interest in protecting from similar operations specializing in the sale or rental of home medical equipment.” In other words, the similarity is found by comparing not only the product line, but also the method of operation, including whether the appellant was trading on the goodwill of the MEDIchair operation from which it had benefitted over the years.

(4) Yes. The basic principles governing the courts’ approach to the enforceability of covenants in restraint of trade have been set out in two cases from the Supreme Court of Canada, Elsley v. J.G. Collins Ins. Agencies, [1978] 2 SCR 916, and Payette v. Guay, 2013 SCC 45. In Elsley, Dickson J. (as he was then) stated that a covenant in restraint of trade is enforceable only if it is reasonable between the parties and with reference to the public interests. In Payette, Wagner J. concluded that in the commercial context – i.e. the sale of a business – the courts will treat a restrictive covenant as lawful unless it is shown on a balance of probabilities to be unreasonable. In this case, the application judge erred in finding the scope of the restrictive covenant reasonable. It was clear from the evidence that by deciding not to operate in Peterborough, MEDIchair effectively acknowledged that it had no legitimate or proprietary interest to protect within the defined territorial scope of the covenant. Nor had the respondent attempted to suggest that it would be entitled to enforce the MEDIchair restrictive covenant in order to protect its interest in another business, Motion, owned within the same corporate group. The restrictive covenant was unreasonable as between the two parties in the circumstances of the particular Peterborough franchise because MEDIchair did not have a legitimate or proprietary interest to protect within the territorial scope of the covenant.

Accuworx Inc. v. Enroute Imports Inc. 2016 ONCA 161 

[Gillese, Hourigan and Brown JJ.A.]

Counsel:
Tamara Farber and Alexandra L. White, for the appellant
William A. Chalmers, for the respondent

Keywords: Environmental Law, Environmental Protection Act, Remedial Orders, Unjust Enrichment, Quantum Meruit, Summary Judgment

Facts:
The respondent, Accuworx Inc. (“Accuworx”), provided clean-up services for a spill of canola oil. The canola oil was owned by Sunora Foods Ltd. (“Sunora”) and the spill occurred at the premises of Enroute Imports Inc. (“Enroute”). The appellant, Pydel Properties Inc. (“Pydel”), owns the property where Enroute carried on their business. Accuworx was not paid for its work and sued.  Enroute made a proposal under the Bankruptcy and Insolvency Act and the action was stayed against it.

On summary judgement, the motion judge found that Pydel had been unjustly enriched by the clean-up services on the basis that Pydel’s statutory and common law liability for the spill had been eliminated. Accuworx was found to be entitled to $328,067.96 quantum meruit for their services provided regarding the spill even though there was no direct contract between Accuworx and Pydel.

Issue:
Did the motion judge err in finding that Accuworx met the test for showing unjust enrichment?

Holding: Appeal dismissed.

Reasoning:
No. Pydel submitted that it received no direct benefit from the work Accuworx performed in cleaning up neighbouring properties. Pydel also argued that it did not receive a negative benefit from the work done on neighbouring properties because they may not have been subject to a clean-up order under the Environmental Protection Act (“EPA”) or a claim from an affected party either at common law or under the EPA. The court held that Pydel could be subject to a remediation order from the Ministry and Environment and Climate Change (“MOE”). The evidence established that Mr. Pileggi, an officer and director of both Pydel and Enroute took steps to clean up the spill to reduce the risk that the MOE would make a remedial order.

Accuworx may have potential claims against other parties but this does not detract from the issue that they have not been paid for their services and thus deprived. There is no juristic reason why Pydel should maintain the negative benefit it received. There is no requirement under quantum meruit for an explicit agreement for services provided so long as they were provided at the request or acquiescence of the opposing party.  In this case, the request for services was made by Mr. Pileggi who was a director and officer for both Pydel and Enroute. The argument that Mr. Pileggi acted as an agent for Sunora when he requested Accuworx’s services does not change the fact that benefit was conferred on Pydel with the encouragement and acquiescence of its officer and director.

Yasmin v. Alexander, 2016 ONCA 165 

[MacPherson, van Rensburg and Miller JJ.A.]

Counsel:

William G. Scott, for the appellant

Michael Chadwick, for the respondent

Keywords:  Torts, Motor Vehicle Accidents, Limitation Periods, Discoverability, Reasonable Diligence, Limitations Act, ss. 5(1)(b), Insurance Act, S. 267.5(5), Serious and Permanent Injury

Facts:

The appellant claims that in August 2008 she was struck by a car owned and operated by the respondent Lenard Alexander. As a result she sustained serious, lasting and permanent personal injuries. The appellant retained a lawyer, K, who pursued her claim for statutory accident benefits. K did not, however, commence a tort action. In 2011, the appellant sued K, alleging negligence in his failure to commence the tort action within the prescribed limitation period. At the request of K’s lawyers, the appellant’s new counsel issued a statement of claim on February 17, 2012 against the respondent. The respondent moved for summary judgment claiming that the action was statute-barred. The motion judge granted the respondent’s motion and dismissed the action. The motion judge noted that the appellant’s claim may not meet the threshold under s. 267.5(5) of the Insurance Act, in which case she would have no right to sue. If the claim met the threshold, then the question is when a person exercising reasonable diligence would have known this was the case. The motion judge concluded that, according to the available medical reports, from the date of the accident to February 10, 2010 (two years before the statement of claim was issued) little, if anything, had changed. Even if admissible, the appellant’s statement in her discovery that she believed she would get better did not address the objective test for discoverability set out in ss. 5(1)(b) of the Limitations Act, 2002. Thus, the appellant, or her former lawyer, did not exercise reasonable diligence to determine the possibility that her injuries were serious and permanent.

Issues:

Did the motion judge err in:

(1) finding that the appellant had no right to sue at all if her claim did not meet the threshold under ss. 267.5(5) of the Insurance Act?

(2) finding that the appellant did not exercise reasonable diligence to determine the possibility that her injuries were serious and permanent?

(3) failing to consider the fact that the defendant obtained an orthopaedic report dated September 6, 2013, that states that the appellant had not sustained a serious impairment of an important bodily function?

Holding: Appeal dismissed.

Reasoning:

(1) No. The motion judge was not making a pre-trial determination that the appellant’s injuries failed to meet the threshold, and this was not, on any reasonable interpretation of his reasons, the basis for his dismissal of the claim.

(2) No.  The evidence suggests no real change in the appellant’s condition since 2008. Indeed, the appellant’s new counsel based his opinion that she met the threshold on her description of her injuries together with an x-ray report from 2009. Thus, there was no error in the motion judge’s finding that the appellant failed to act with diligence to determine whether her injuries were serious and permanent, and that her claim ought reasonably to have been discovered before February 17, 2010.

(3) No. The orthopaedic report is simply an opinion obtained in the course of the litigation that no serious impairment had occurred, and expresses the opinion that the appellant’s condition had almost entirely resolved. It is not evidence that the appellant had “not yet” met the threshold, nor is it determinative of whether the appellant, who had commenced an action seeking damages for her injuries, ought reasonably to have discovered that her impairment was serious and permanent.

Orion Interiors Inc. v. State Farm Fire and Casualty Company, 2016 ONCA 164 

[Simmons, Pepall and van Rensburg JJ.A.]

Counsel:

Stephen Panzer, for the appellant
Christopher R. Dunn and Joanna F. Reznick, for the respondent
Michael Unea, for the third party Metal Craft Mechanical Inc.

Keywords: Real Property, Commercial Tenancies, Leases, Over-Holding Tenancy, All Risks Insurance

Facts:

Orion Interiors Inc. (the “Appellant”) is the tenant of commercial premises (the “Leased Premises”) owned by the landlord, Rhyl Realty Inc. (the “Respondent”). The parties signed a lease in August 2005 with a term that ended in October 2010. The Appellant continued to occupy the Leased Premises and paid rent. Although there were negotiations, the parties never signed a lease extension or renewal.

The Appellant was to obtain various types of insurance, including “all risks” insurance. The all risks insurance was to be “in an amount equal to the full replacement costs of all improvements, equipment and chattels in or serving the Leased Premises…” The Appellant purchased all risks property insurance from State Farm Fire and Casualty Company (“State Farm”) and named the Respondent as an insured.

The lease also had a provision that the Respondent would not be liable for damage to the Appellant’s property resulting from the Respondent’s negligence, or failure to supply services or utilities beyond the Respondent’s reasonable control.

In 2012, the Appellant’s Leased Premises and contents were damaged from a flood. A rubber drain plug in a drain line from the roof dislodged. The plug was installed by Metal Craft Mechanical Inc. (“Metal Craft”). The Respondents had contracted with Metal Craft. The Respondent commenced a third party claim against Metal Craft.

On summary judgment, the Appellant’s action was dismissed. The motion judge found that the terms of the lease governed the parties at the time of the flood even though the lease term had expired.

Holding: Appeal dismissed.

Issue: Did the motion judge err by granting summary judgment?

Reasoning:

No.  The Appellant argued that summary judgment should not have been granted because facts were in dispute. The court found no merit to this argument because the issue was the interpretation of the lease. Also, there was no risk of inconsistent verdicts. Whether or not the flood occurred, the risk of damage to its property was assumed by the Appellant.

The Appellant argued that the terms of the lease do not govern where the lease expired and was never renewed. The court disagreed. The Appellant was an over-holding tenant that remained in the Leased Premises subject to the terms, covenants and conditions in the lease.

The Appellant tried to rely on the landlord’s obligation to maintain and repair the roof drain system. However, the terms of the lease regarding insurance shifted the risk of damage to the property to the Appellant, and flooding was an insured peril. This stands regardless of whether the landlord’s conduct with regards to the flooding was a breach of the lease.

Manjos v. Fridgant, 2016 ONCA 176 

[Cronk, Tulloch and van Rensburg JJ.A.]

Counsel:
Hari Nesathurai and Glen Perinot, for the appellants

Crawford Smith and Lara Guest, for the respondent

Keywords: Contracts, Torts, Negligence, Investment Advisers, Jurisdiction, Forum Selection Clause, Choice of Law Clause, Enforceability, Expedition Helicopters Inc. v. Honeywell Inc.

Facts:

The defendant, Fridgant, was the appellants’ investment advisor. In December 2011, he informed the appellants that he was moving to a new firm, PI Financial Corp. (the respondent). Fridgant met with the appellants and asked them to sign documentation to transfer their accounts to PI Financial. The individual appellants signed the documentation, which contained a choice of law and forum clause, which stated that the agreement was governed by the law of British Columbia.

In April 2014, the appellants commenced an action against Fridgant claiming he had mismanaged their accounts and that the respondent was vicariously liable for Fridgant’s actions. The respondent successfully moved for a stay on the basis that the choice of forum clause required the appellants to sue them in British Columbia. The appellants appealed that stay.

Issues: Did the motion judge err in exercising his discretion to enforce the forum selection clause?

Holding: Appeal Dismissed.

Reasoning:

No.  The appellants argued that the motion judge erred in finding that they failed to show cause to depart from the principle established in Expedition Helicopters Inc. v. Honeywell Inc. that a forum selection clause in a commercial contract should be given effect. The appellants also argued that Expedition Helicopters should be modified to recognize that their agreements were more consumer than commercial in nature.

The court held that the motion judge did not err in exercising his discretion. The individual appellants were educated and sophisticated and the appellants had the opportunity to review the agreements before signing them but chose not to do so. While Fridgant did not draw the impugned clause to the appellants’ attention at signing, this conduct did not amount to an improper inducement. Moreover, the appellants were not obliged to transfer their accounts.

The appellants’ argument that British Columbia courts would be unable to deal with aspects of the Ontario Securities Act and the Rules and Policies of the Investment Industry Regulatory Organization were also rejected, as Ontario law could be proved without difficulty before the courts of British Columbia. The appellants’ argument that the language of the clause was not broad enough to cover all the allegations asserted by them was also rejected and the court instead found the wording to be very broad.

Miguna v. Walmart Canada Corp., 2016 ONCA 174 

[van Rensburg, Pardu, and Miller JJ.A.]

Counsel:
Miguna Miguna, in person
Antonio Turco and Sarah O’Grady for the respondent Walmart Stores, Inc.
Dominique Hussey and Ilan Ishai for the respondent Consortium Book Sales and Distribution LLC

Keywords: Intellectual Property, Copyright Infringement, Misapprehension of Evidence, Summary Judgment

Facts:
The respondent, Miguna Miguna, is the author of the book titled Peeling Back The Mask: A Quest for Justice in Kenya (the “Book”) published by Gilgamesh Africa Ltd. (“Gilgamesh”).  Mr. Miguna alleges that Gilgamesh and other entities have published and sold unauthorized editions of the Book, including thousands of copies in North America without compensating Miguna.

Mr. Miguna alleges that the respondent, Consortium Book Sales and Distribution (“Consortium”) illegally reproduced and sold copies of the Book, sourced by Baker & Taylor Fulfilment, for sale through the website Walmart.com in the U.S.  In 2014, Mr. Miguna discovered the Book was for sale on Walmart.com and that Consortium was listed as its publisher.  His position is that Consortium had published a version of the Book without his consent and that the respondent Walmart Stores Inc. was selling it in violation of his copyright.

Mr. Miguna brought an action claiming primary and secondary infringement against Consortium, and secondary infringement against Walmart. The respondents brought a motion for summary judgment and were successful in dismissing the action.

Issue:
Did the motion judge make a palpable and overriding error in concluding that neither of the respondents ever physically received or sold a copy of the Book?

Holding: Appeal dismissed.

Reasoning:
No.  Mr. Miguna argued that the motion judge misapprehended evidence that established that the respondents held physical copies of the Book.  Specifically, he claimed that business records of Consortium documented sales of the Book. The court disagreed, finding that the business records were only sales of unfilled backorders.  There was no basis for Mr. Miguna’s interpretation of a letter from General Counsel for Walmart that identified Baker & Taylor as the “supplier of the book” which he claimed implied Walmart held a supply.  Finally, Mr. Miguna argued that an affidavit from Baker & Taylor in another proceedings established that they had supplied two American universities with copies of the Book they had received from the Consortium.  The motion judge reasonably preferred other evidence before him to the uncontested affidavit.

The court rejected Mr. Miguna’s argument that the motion judge relied on a letter from Baker & Taylor’s lawyer that addressed the affidavit that was referenced in Walmart’s factum. The Consortium advised the motion judge that they would be introducing the letter through a forthcoming affidavit.  The motion judge shared Mr. Miguna’s concern with the letter but dismissed his motion to strike the paragraph from the factum.  Mr. Miguna could not point to any place in the motion judge’s reasons that suggested he had relied on the material in the factum at issue.

Grand Financial Management Inc. v. Solemio Transportation Inc., 2016 ONCA 175

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

Counsel:

Tim Gleason and Matthew Tubie, for the appellants/respondents by cross-appeal

Terry Corsianos and George Corsianos, for the respondent/appellant by cross-appeal

Keywords: Debtor-Creditor, Factoring, Torts, Intentional Interference with Economic Relations, Damages At Large, Punitive Damages, Equitable Set-Off, Matters not Pleaded

Facts:

Grand Financial Management Inc. provides factoring services, amongst other financial services, to companies in the transportation industry. This appeal arises in the context of two such agreements that are legally distinct, but that were to operate in an overlapping factual and commercial context. The first was between Grand Financial and Solemio Transportation Inc. (“the Solemio Agreement”). The second was between Grand Financial and Wild Lions Inc. (“the Wild Lions Agreement”). The Solemio Agreement was guaranteed by Solemio’s principal, Sami Ullah.

Arnold Bros. Transport Ltd., a large trucking operation, was the source of the commercial link between the two factoring agreements.  It subcontracted some of its freight delivery obligations to Solemio, thus creating accounts receivable in favour of Solemio for those services.

Those accounts receivable were, for a short period of time, assigned to Grand Financial pursuant to the Solemio Agreement. In turn, Solemio subcontracted the Arnold Bros. work to Wild Lions, thus creating accounts receivable owing by Solemio to Wild Lions (“the Wild Lions Receivables”). Those accounts receivable were also assigned to Grand Financial, but from Wild Lions and pursuant to the Wild Lions Agreement.

Ultimately, Solemio defaulted on its payments, and Grand Financial sued Solemio and Arnold Bros. The action against Aronold Bros was discontinued before trial, but Solemio and Mr. Ullah defended and counterclaimed for damages for the tort of intentional interference with economic relations.

At trial, the judge granted judgment against Solemio in the amount of $200,000. This amount was arrived at by relying on what the trial judge took to be an admission by Mr. Ullah that Solemio was liable to Grand Financial for about that amount under the Wild Lions Agreement.

At the same time, he awarded Solemio, but not Mr. Ullah, damages “at large” in the amount of $175,000 on the counterclaim. He declined to award punitive damages against Grand Financial. He also declined to award costs because, in his view, success was divided. Both parties appeal from these results, and Solemio and Mr. Ullah appeal against the trial judge’s decision not to award any costs.

Issues:

For the purposes of the appeal and cross-appeal, the issues to be addressed are whether the trial judge erred by:

(a) awarding Grand Financial the amount of $200,000 based on Mr. Ullah’s admission that about that amount was owing to it under the Wild Lions Agreement, even though that Agreement had not been pleaded as the basis for recovery by Grand Financial;

(b) finding Grand Financial liable for the tort of intentional interference with economic relations;

(c) awarding damages “at large” in the amount of $175,000;

(d) refusing to award Solemio punitive damages on the counterclaim; and

(e) failing to award costs in favour of Solemio.

Holding: Appeal Dismissed.  Cross-Appeal Allowed.

Reasons:

(a)        The court accepted Solemio’s submission on this ground of appeal.  The court said that the trial judge was not entitled on these pleadings and this record to grant judgment in favour of Grand Financial for breach of the Wild Lions Agreement- a claim that was neither pleaded nor asserted at trial and which- if treated as having arisen at trial would be considered statute barred.  The court set aside the award of $200,000 against Solemio.

(b)        Grand Financial argued on the cross-appeal that the trial judge erred in law in holding that it was liable for the tort of intentional interference with economic relations (or, as it is sometimes called, the tort of causing loss by unlawful means). The court ruled that Solemio succeeded in establishing the necessary elements of that tort on the evidence.  The court held that Grand Financial intended both to harm Solemio in its business interests and enrich itself. The court found that Grand financial was liable for the tort of intentional interference with economic relations.

(c)        The court held that the trial judge’s findings that the intentional interference counterclaim was not supported by any reliable documentary, accounting, or expert evidence were well-founded on the record, and there is no basis for interfering with them.  Damages at large may be awarded in cases of intentional torts, and to corporations in such circumstances where there has been injury to the corporation’s reputation and associated economic loss. As a result of Grand Financial’s unlawful conduct, Solemio lost its major client, Arnold Bros.  Further, its bank account was emptied and frozen, and the company was unable to make payments for trucks, insurance and salaries. The court agreed with the trial judge’s award for damages.

(d)       Even though he found that Solemio had made out the tort of intentional interference with economic relations, the trial judge declined to grant Solemio’s request for punitive damages in the amount of $250,000. The court saw no error in this determination. The court held that the trial judge’s application of the law on punitive damages to the circumstances of this case was a matter of fact and mixed fact and law, and is therefore entitled to deference.

(e)        In light of Solemio’s success on its cross-appeal, it was not necessary to deal with its arguments regarding costs.

Pickering Square Inc. v. Trillium College Inc., 2016 ONCA 179

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Courtney Raphael, for the appellant Trillium College Inc.

Alan B. Dryer and Orly Kahane-Rapport, for the respondent Pickering Square Inc.

Keywords: Contracts, Real Property, Commercial Tenancies, Leases, Repudiation, Remedies, Limitation Period, Limitations Act, 2002 s. 4 & s.5(1)-(2), Discoverability, Continuing Breaches

Facts:

Trillium College Inc. (Trillium) and Pickering Square Inc. (Pickering) were parties to a long-term lease of space. Trillium covenanted not only to pay rent but also to occupy the premises and to operate its business continuously, and to restore the premises at the expiry of the lease. Trillium paid rent but did not operate its business continuously and failed to restore the premises when the lease ended. Pickering brought a claim for damages for Trillium’s breaches of its covenants following the expiry of the lease. Trillium brought a motion for summary judgment, arguing that Pickering’s claim was brought outside the two-year limitation period under s. 4 of the Limitations Act, 2002. The motion judge held that Trillium’s breach of the covenant to occupy the premises and operate its business continuously was of a continuing nature, such that each day of the breach gave rise to a fresh cause of action. As a result, only a portion of Pickering’s claim against Trillium for breach of its covenant – the portion concerning the breach that occurred more than two years prior to commencement of the action – was barred. The motion judge also held that Pickering’s claim for damages for breach of the covenant to restore the premises was not time-barred. Pickering appealed against the judgment but did not pursue its appeal. As a result, this case is concerned solely with Trillium’s cross-appeal of the partial summary judgment.

Issues:

(1) Did the motion judge err by finding a continuing breach of the lease giving rise to a new cause of action and a new limitation period each day that Trillium failed to carry on business at the leased premises?

(2) Did the motion judge err by finding that the repair claim was not statute- barred because it concerned repairs at the end of the lease rather than during its term?

Holding: Cross-appeal dismissed.

Reasoning:

(1) No. For the purposes of s. 5(1) of the Limitations Act, 2002, a claim is discovered once a plaintiff knew or ought to have known of sufficient facts on which to base the claim. Under s. 5(2), a claimant is presumed to discover his or her claim on the day the act or omission giving rise to the claim occurs, unless the contrary is proven. In order to determine the discovery date for the claim, the nature of the breach must be determined. In this case, the breach was a continuing obligation under a contract. Trillium breached its covenant to operate its business continuously – “at all times” – for the duration of the lease. Trillium’s argument that breach of its covenant to operate its business continuously established a complete cause of action as of October 1, 2008, overlooks the consequences of its breach. In the face of Trillium’s action – a serious breach or repudiation of the lease – Pickering had an option. It could either cancel the lease or affirm it and require performance. Pickering elected not to cancel the lease following Trillium’s October 1, 2008 breach. It affirmed the lease and, as a result, the parties were required to perform their obligations under it as they fell due.

The motion judge properly concluded that a fresh cause of action accrued every day that breach continued – every day that Trillium failed to carry on its business in accordance with the covenant. The accrual of fresh causes of action has consequences for the innocent party as well as the party in breach of the contract. It sets the clock running for a new two-year limitation period. Pickering’s election to affirm rather than cancel the lease does not have the effect of postponing the date for discovery of the breach until expiry of the lease. The limitation period in this case applied on a “rolling” basis. The two-year limitation period commenced each day a fresh cause of action accrued and ran two years from that date. Thus, Pickering was entitled to claim damages for breach of the covenant for the period going back two years from the commencement of its action on February 16, 2012 – the period that ran from February 16, 2010 until the lease expired on May 31, 2011.

(2) No. Trillium submits that Pickering’s restoration claim was related to obligations during the lease rather than upon its expiry. This claim was therefore discoverable as of October 1, 2008 and, as a result, is barred by the two-year limitation period under s. 4 of the Limitations Act, 2002. However, the motion judge was entitled to find that the respondent was claiming only for the breach of the covenant to repair and restore at the end of the lease. From this finding it followed that the limitation period for the claim began to run on May 31, 2011, and as a result the action was commenced within two years of discovery of the claim. Whether notice was provided was irrelevant to the nature of the claim and the Limitations Act, 2002 issue.

Civil Endorsements

Monk v. Farmers’ Mutual Insurance Company (Lindsay), 2016 ONCA 181

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

David A. Morin, for the appellant

Martin P. Forget, for the respondent Farmers’ Mutual Insurance Company (Lindsay)

Demetrios Yiokaris, for the respondent Muskoka Insurance Brokers Ltd.

Keywords: Insurance Law, Motion for Costs, Partial Indemnity Costs Awarded

Criminal Decisions

R. v. D.R., 2016 ONCA 162

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

R. John McCulligh, for the appellant

Eric Siebenmorgen, for the respondent

Keywords: Criminal Law, Sexual Assault, Minors, Misapprehension of Evidence, Credibility, Reliability, Conviction Quashed, New Trial, Appeal Allowed

R. v. Nero, 2016 ONCA 160

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

Alan D. Gold and Melanie J. Webb, for the appellant Nicola Nero

Vincenzo Rondinelli, for the appellant Martino Caputo

Nick Devlin, Amber Pashuk and Jeremy Streeter, for the respondent

Keywords: Criminal Law, Possession for the Purposes of Trafficking Cocaine, Reasonable Apprehension of Bias, Evidence, Spousal Communication Privilege, Parole, Parole Restrictions, Appeal Dismissed

R. v. Phung, 2016 ONCA 170

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

Setu Purohit, for the appellant

Lisa Henderson, for the respondent

Keywords: Criminal Law, Possession of Controlled Drugs, Child Pornography, Evidence, Misapprehension of Evidence, Appeal Dismissed

R. v. Arsabekov, 2016 ONCA 169

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

Margaret Bojanowska, for the appellant

Alexander Hrybinsky, for the respondent

Keywords: Criminal Law, Possession of Controlled Drugs, Child Pornography, Evidence, Misapprehension of Evidence, Appeal Dismissed

R. v. Dhanaswar, 2016 ONCA 172

[Tulloch, Benotto and Roberts JJ.A.]

Counsel:

Devika Dhanaswar, in person

Gerald Chan, duty counsel

Greg Skerkowski, for the respondent

Keywords: Criminal Law, Fraud over Five Thousand, Real Estate Fraud, Sentencing, Appeal Dismissed

R. v. Mullings, 2016 ONCA 171

[Sharpe, Benotto and Huscroft JJ.A.]

Counsel:

Richard Fedorowicz, for the appellant

Brock Jones, for the respondent

Keywords: Criminal Law, Possession of Marijuana for the Purposes of Trafficking, Possession of Firearms, Evidence, Misapprehension of Evidence, Unreasonable Verdict, Appeal Allowed in Part

R. v. St. Pierre, 2016 ONCA 173

[MacPherson, Tulloch and Benotto JJ.A.]

Counsel:

Dani Raymond St. Pierre, in person

Erika Chozik, duty counsel

Michael Fawcett, for the respondent

Keywords: Criminal Law, Promise to Appear, Failure to Appear, Motion for Directed Verdict, Evidence, Circumstantial Evidence, Appeal Dismissed

R v. Piekarski, 2016, ONCA 183

[Watt, Lauwers and Pardu JJ.A.]

Counsel:

Tina Kaye, for the appellant

Alexander Hrybinsky, for the respondent

Keywords: Criminal Law, Appeal Book Endorsement, Appeal Dismissed

R. v. Laing, 2016 ONCA 184

[Watt, Hourigan and Huscroft JJ.A.]

Counsel:

Tina Kaye, for the appellant

Alexander Hrybinsky, for the respondent

Keywords: Criminal Law, Possession of a Loaded Firearm, Corbett Application, Negligence, Abuse of Process, Evidence, Failure to Preserve, Canadian Charter of Rights and Freedoms, s. 7, Appeal Dismissed

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.