PQ Licensing S.A. v. LPQ Central Canada Inc., a franchise rescission case, was the most interesting decision of the week for several of reasons, none of which have to do with rescission.
First, the decision is the latest in a series of recent examples where the "appropriate means" branch of the discoverability test in section 5(1)(a)(iv) of the Limitations Act, 2002, was employed to delay the discoverability of a claim. In this case, the fact that the franchise agreement required mediation before the arbitration could proceed, resulted in a determination that the commencement of arbitration was not the "appropriate means" to seek a remedy until the completion of the mediation. This resulted in the suspension of the commencement of the limitation period for four years, while the mediation was outstanding.
Second, the Court determined that the standard of review from an arbitrator's decision on the applicability of the Limitations Act, 2002, was reasonableness, not correctness, even though it involved the application of a statute of general application (the Limitations Act, 2002).
Finally, the decision confirms an arbitrator's ability to use the "blue pencil" method of severing unenforceable portions of clauses, while keeping the remainder of the clause intact. In this case, the franchise agreement provided for mediation in Delaware. Rather than finding the whole mediation clause unenforceable, the arbitrator simply severed the requirement to mediate in Delaware and enforced the remainder of the clause.
Other topics covered this week included liability for wrongful patent enforcement, the duty to defend in the MVA context, family law (custody and access and breach of court orders), securities class actions, and mortgage enforcement.
Wishing everyone a nice weekend and a Happy Eastern Orthodox Easter to everyone celebrating.
[MacFarland, Huscroft and Nordheimer JJ.A.]
M S Balz, for the appellant
K Ballantyne, for the respondent
Keywords: Family Law, Divorce, Support Orders, Orders of the Court, Refusal to Obey, Arrears of Support, Introducing Affidavit Evidence after Expiry of Timelines
This contentious and lengthy family law litigation is the result of the appellant's (Mark Del Vecchio) refusal to obey orders of the court.
The appellant appeals the order of Paisley J. dated October 13, 2017, striking his pleadings and permitting the respondent to proceed to an uncontested trial. At issue was whether the judge failed to consider the affidavit of Karen Pritchard (the appellant's assistant), filed by the appellant in response to the motion made in writing.
(1) Was Paisley J.'s order made in error for failing to consider the evidence contained in the affidavit of Karen Pritchard?
Holding: Appeal dismissed.
(1) No. The continuing record, which was before Paisley J. for this motion in writing, records the fact that the affidavit was filed with the court and was therefore very likely before the judge when he made his order. While the preamble in the order does not refer to the affidavit, the draft order was prepared by the moving party's lawyer before she was aware that any responding materials would be filed. By the terms of the July 27, 2017 Horkins J. order, the appellant had no right to notice of this procedural motion, and was served merely as a courtesy. The moving party would have no reason to expect the appellant would be filing materials – particularly in view of his history of non-compliance.
The content of the Pritchard affidavit was highly contentious – much of the content on its face could not be considered support related. There was no opportunity given to cross-examine on its contents and perhaps most importantly, it was nothing more than an attempted collateral attack on previous support orders. It was also noted that the appellant unilaterally reduced his monthly support payments to $1400 per month, in breach of a previous order. In these circumstances, Paisley J. did not err by proceeding as he did. The appellant was given numerous chances to comply with and meet his obligations. He simply refused to do so. Not until the very last minute did he take any steps to attempt to show he was not in arrears in respect of the support orders. He still had not complied with the obligations requiring financial production, and unilaterally reduced his support payments. He remained in serious violation of a number of court orders.
[Doherty, van Rensburg and Nordheimer JJ.A.]
Robert C. Dunford & Sarah Wouters, for the appellants
R. Adam J. Pyne-Hilton, for the respondent
Keywords: Contracts, Real Property, Mortgages, Defences, Non Est Factum, Duress, Unconscionability, Gifts, Summary Judgment
The defendants appeal from summary judgment granted by the motion judge to the plaintiff of the sum of $247,247.93 together with interest and costs under a mortgage. The judgment also required the appellants to deliver possession of the property against which the mortgage was secured. The evidence established that the respondent advanced monies to the appellants to assist them in running a charitable organization. Four different advances were made. The first two were repaid but the latter two were not. Eventually, the appellants gave a mortgage to the respondent to secure the amount that was outstanding. They also signed a promissory note for the outstanding amount.
The motion judge concluded that there was no genuine issue requiring a trial. Specifically, she rejected the appellants' contention that the monies advanced were a gift and not a loan and that they were interest-free. The motion judge also rejected arguments advanced by the appellants that they did not understand the mortgage that they signed (even though they received independent legal advice before signing it), that they signed under duress, and that the mortgage was an unconscionable transaction.
(1) Did the motion judge err in granting summary judgment?
(1) No. The appellants have failed to establish that the motion judge made any palpable and overriding error in the conclusions that she reached. Generally, the various defences advanced by the appellants were untenable and contrary to the evidentiary record. At the hearing of the appeal, the appellants limited their argument to the amount of the judgment, arguing that the motion judge ought not to have determined the amount on the basis of conflicting evidence about payments that they made and in particular ought not to have accepted the accounting in Schedule A that was attached to the respondent's factum on the motion. Schedule A referred to evidence that was properly before the motion judge as an answer to a question taken under advisement that specifically requested the respondent to summarize the payments made and the amount due. There was no error in the motion judge using this evidence for that purpose. Nor was it necessary for the motion judge to require oral evidence on the amount due. All of the evidence necessary for the purpose of making that determination was before her. In her reasons, the motion judge invited submissions on "the total amount". If counsel thought there was an issue in this respect, they had the opportunity to advise the motion judge, but no such submissions were made.
[Sharpe, LaForme and van Rensburg JJ.A.]
Geoffrey B. Shaw and Eric Mayzel, for the appellants
David M. Golden and Marco P. Falco, for the respondent
Keywords: Contracts, Franchise Agreements, Rescission, Arbitration Clauses, Interpretation, Standard of Review, Reasonableness, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, Dunsmuir v. New Brunswick, 2008 SCC 9, Enforceability, Illegality, Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3, s. 10, Severance, "Blue Pencil" Approach, Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, 2176693 Ontario Ltd. v. Cora Franchise Group Inc., 2015 ONCA 152, Limitations Periods, Discoverability, "Appropriate Means", Tolling Agreements, Limitations Act, 2002, S.O. 2002, c. 24, Schedule "B", s. 5(1)(a)(iv) and 22, 407 ETR Concession Co. v. Day, 2016 ONCA 709
The appellants (the "franchisor"), PQ Licensing S.A., and the respondents, LPQ Central Canada Inc. (the "franchisee"), were engaged in a dispute about a franchisee's purported rescission of their franchise agreement. The agreement provided for the mediation, then arbitration, of disputes. On the franchisor's preliminary motion, the arbitrator determined that the limitation period of two years under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B had not expired, and that the arbitration of the parties' dispute could therefore proceed. The franchisor's appeal to the Superior Court was dismissed. The further appeal to the Court of Appeal was by way of leave.
Did the arbitrator err in determining that the limitation period of two years under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B had not expired?
Holding: Appeal dismissed.
No. The court held that the arbitrator's decision that the arbitration was not time-barred was reasonable, which was the applicable standard of review of his decision. It was based on his reasonable conclusions that (i) the parties' agreement provided for mediation as a precondition to arbitration; (ii) the requirement to mediate "in Delaware", which ran afoul of section 10 of the Arthur Wishart (Franchise Disclosure) Act, could be severed from the parties' agreement using the "blue pencil" approach, which kept intact the requirement to mediate, just not in Delaware; and (iii) applying the "appropriate means" branch of the discoverability test in s. 5(1)(a)(iv) of the Limitations Act, 2002, the two year limitation period for arbitration commenced on the date that mediation was deemed completed.
[Hourigan, Pardu and Huscroft JJ.A.]
A A Evangelista and J Kent, for the appellant
G A Marsden, for the respondents
Keywords: Insurance Law, Coverage, Duty to Defend, Pleadings Rule, Monenco Ltd. v. Commonwealth Insurance Co 2001 SCC 49, Off-Road Vehicles Act, R.S.O. 1990, c. O.4
The appellant insurer appeals from the order of the application judge requiring it to defend the appellants in an action arising from an accident involving an ATV. The plaintiff in the action was a passenger on an ATV driven by the respondent Andrew Ernst. The Ernst's automobile insurance policy extends coverage to an ATV if it is owned by the respondents and the respondents were not occupiers of the property on which the accident occurred. The ATV was to be purchased by Ernst along with the land, but the closing date for the sale was subsequent to the accident. The appellant insurer denied coverage on the basis that, at the time of the loss, the ATV was not required to be insured because it was being operated on private property, and so did not fall under the definition of "automobile" in the OAP 1, and was considered an off-road vehicle pursuant to the Off-Road Vehicles Act, R.S.O. 1990, c. O.4.
The application judge found against the insurer. The appellant argued that although the application judge properly articulated the pleadings rule, he erred in applying it. In particular, he explored possible outcomes rather than simply evaluating the pleadings, and wrongly assumed that the respondents could not be occupiers of the property because the vendors were also occupiers of the property.
Did the application judge err in his application of the pleadings rule?
The pleadings rule was articulated in Monenco Ltd. v. Commonwealth Insurance Co 2001 SCC 49. It provides as follows: If the pleadings allege facts which, if true, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence. The application judge was required to give the pleadings the widest latitude, and did so. He acknowledged that the statement of claim did not specifically allege that the owner of the ATV and occupier of the property were different people at the time of the accident. It included allegations both that the respondents were owners of the ATV and occupiers of the property, and that the vendors were the owners of the ATV and occupiers of the property at the relevant time. Although it is possible for more than one party to be the occupier of property at a time, the pleadings alleged facts that would permit a finding that the vendors, and not the respondents, were the occupiers at the relevant time, and that was sufficient to trigger the appellant's duty to defend. There is no requirement that the allegations against the respondents be expressly pleaded in the alternative for the duty to defend to arise.
[Strathy C.J.O., Juriansz and Huscroft JJ.A]
S G Mason and D A Tait for the appellant Abbott Laboratories Ltd.
C C Van Barr and K Murphy for the appellant Takeda parties
A R Brodkin and M S Wilson, for the respondent , Apotex Inc.
Keywords: Intellectual Property, Patents, Pharmaceuticals, Abbreviated New Drug Submissions, Unjust Enrichment, Damages, Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, s. 6, s. 8
This is the second appeal arising out of an action brought by Apotex against Abbott and Takeda, concerning the patented medicine Prevacid® and Apotex's generic drug Apo-lansoprazole. Apotex's action alleged losses caused by Abbott and Takeda arising out of steps they took to deny Apo-lansoprazole access to the market. Abbott and Takeda were granted partial summary judgment dismissing Apotex's unjust enrichment claim, and that decision was upheld on appeal by the court: Apotex Inc. v. Abbott Laboratories, Limited, 2013 ONCA 555.
Apotex's claim for damages continued. Apotex's claimed damages for sales of Apo-lansoprazole that were lost during the period in which the drug could not be sold because of proceedings taken by Abbott and Takeda under s. 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (NOC Regulations). Those proceedings resulted in a stay of Apotex's application for approval to sell the drug, and so precluded its sale.
Abbott and Takeda brought a motion for summary judgment seeking to have Apotex's damages claim dismissed. That motion was dismissed. The motion judge concluded that, but for the proceedings taken by Abbott and Takeda, Apotex would have received approval from the Minister of Health to sell Apo-lansoprazole on April 17, 2007, and was therefore entitled to damages. The quantum of damages was left for determination at trial. Abbott and Takeda appeal from the motion judge's order dismissing their motion for summary judgment.
(1) Did the motion judge err in dismissing the appellant's motion for summary judgment?
Holding: Appeal dismissed.
(1) No. Abbott and Takeda's core argument on the motion was that Dr. Sharma erred in issuing the Patent Hold letter. They submitted that absent this mistake, no NOC could have, would have, or should have been issued until final approval in June, 2009, following expiry of the two-year statutory stay period under s. 6. Thus, s. 8 damages could not have accrued to Apotex. In a comprehensive 52-page judgment, the motion judge – who case-managed the litigation since 2011 – found that, but for Abbott and Takeda's s. 6 proceeding, Apotex could and would have received a NOC on April 17, 2007. Dr. Sharma's correspondence showed that Health Canada had completed its review of Apotex's Abbreviated New Drug Submission ("ANDS") and found it to be satisfactory and approvable, and would have issued a NOC for Apo-lansoprazole absent the s. 6 proceedings.
Abbott submits that the motion judge made two palpable and overriding errors. First, the motion judge erred in concluding that the high-fat study played no part in the final review process. Second, the motion judge erred in concluding that because the ANDS was ultimately approved in the same form, the June 2, 2009 approval confirmed the April 17, 2007 approval.
Takeda argues that the motion judge erred in three ways. First, the motion judge erred in finding that Apotex's April 2007 submission was sufficient and that Apo-lansoprazole could be approved without a high-fat study. Second, the motion judge erred in conflating Apotex's product and submission. The safety and effectiveness of Apo-lansoprazole in 2007 was irrelevant because Apotex's submission was not sufficient to allow the Minister to determine whether it was. Third, the motion judge erred by substituting his determination as to the sufficiency of Apotex's submission for that of the Minister. All of these arguments are variations on a theme: the motion judge erred concerning the significance of the high-fat study to the Minister's decision.
The motion judge made no error, much less a palpable and overriding error, in concluding that Apotex would have received a NOC for Apo-lansoprazole on April 17, 2007, if the s. 6 proceedings had not been commenced by the appellants. On the contrary, there was ample evidence to support the motion judge's decision.
[Hourigan, Pardu and Huscroft JJ.A.]
Glenda McLeod, for the appellant
Judy Byrne and Kaitlin Jagersky, for the respondent
Keywords: Family Law, Custody and Access, Appointment of Counsel for the Children, United Nations Convention on the Rights of the Child, Articles 3 and 10, Family Law Rules, O. Reg.114/99, Rule 4(7), Fiorito v. Wiggins, 2014 ONCA 603
Larry Mader appeals from the decision of the Superior Court of Justice upholding the Ontario Court of Justice decision dismissing his motion to appoint private counsel for two children, L.M., soon to be 16 years old, and N.M., now 13 years old.
In or about 2013, the appellant initiated a motion to vary access. In this proceeding, the Office of the Children's Lawyer ("OCL") was appointed for the children. The OCL Office conducted an investigation and concluded that the children did not want to vary the existing access schedule. The appellant withdrew his motion for an increase in access in October 2014. He maintained a motion to decrease child support, based on an argument that there was a shared custody agreement. That motion was dismissed in January 2015. One year later, the appellant elected to retire. In December 2015, he moved again to increase his time with the children and to decrease child support. In May 2016, the appellant moved for an order appointing the OCL. That motion was dismissed and no appeal was pursued.
In August 2016, the appellant moved again for an order appointing a private lawyer for the children, who proposed to conduct an investigation in the same way as would the OCL. The motion judge noted that the custody issues did not involve mobility issues and that this was not a fresh custody application. She dismissed the motion for appointment of private counsel for the children, and her decision was upheld on appeal to the Superior Court of Justice.
The appellant argues that the motion judge was obliged to appoint counsel for the children and failed to pay heed to the United Nations Convention on the Rights of the Child, Can. T.S. 1992 No. 3, and that the appeal judge erred in upholding the decision in the court below.
Did the motion judge err in not appointing counsel for the children and did the appeal judge err in upholding that decision?
Holding: Appeal dismissed.
No. The court was not persuaded that the motion judge erred in balancing the children's best interests or that the appeal judge erred in his consideration of the appeal. The decision whether or not to appoint a lawyer for children is a discretionary decision which should focus on the best interests of the children. Deference is owed to a motion judge's assessment of the advantages and disadvantages of such an appointment: Fiorito v. Wiggins, 2014 ONCA 603.
Rule 4(7) of the Family Law Rules, O. Reg.114/99 provides that "[i]n a case that involves a child who is not a party, the court may authorize a lawyer to represent the child, and then the child has the rights of a party, unless the court orders otherwise." The wording of the provision is permissive, not mandatory.
Article 3 of the United Nations Convention on the Rights of the Child, ratified by Canada in 1991, provides in part that "[i[n all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration."
Article 12 of the same provides as follows:
- States Parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child.
- For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body, in a manner consistent with the procedural rules of national law.
[Hourigan, Pardu and Huscroft JJ.A.]
Bonnie Roberts Jones and Andrew Morganti, for the appellant
Laura K. Fric, Kevin O'Brien and Karin Sachar, for the respondent
Keywords: Securities, Misrepresentation, Securities Act, R.S.O. 1990, c. S.5, Part XXIII.1, ss. 138.3(6) and 138.14, Civil Procedure, Class Actions, Limitation Periods, Pleadings, Determination of Question of Law, Rules of Civil Procedure, Rule 21.01(1)(a)
The Appellant is a plaintiff in a class proceeding against the respondent suing on fourteen alleged misrepresentations. Eleven of the misrepresentations were made more than three years before the action was commenced. The appellant argued that the claims based on the misrepresentations should not be ruled statute-barred on a r. 21.01.(1)(a) motion because it is within the discretion of the judge hearing the leave application to treat them as a single misrepresentation.
The motion judge rejected this argument and ruled that the claims based on the eleven misrepresentations were statute-barred pursuant to s. 138.14 of the Securities Act (the "Act"). He found that the statutory discretion to treat multiple misrepresentations as a single misrepresentation did not impact the limitation period analysis. The appellant appeals this ruling.
(1) Did the motion judge err in finding that the appellant's claim is statute-barred pursuant to s. 138.14 of the Act?
(1) No. The limitation period in s. 138.14 of the Act is an event-triggered limitation period which commences on the making of the oral statement or release of impugned document. It runs without regard to the plaintiff's knowledge of the facts giving rise to the cause of action. The eleven misrepresentations were made more than three years before the issuance of the appellant's statement of claim.
The appellant's argument that s.138.3(6) of the Act operates to extend the limitation period in the case of multiple misrepresentations was rejected. There is nothing in the language of this section to suggest an intention to modify the clear event-triggered limitation period provided in s. 138.14. Also, Part XXIII.1 of the Act strikes a delicate balance between various market participants. Part of the balance is struck by the three-year event-driven limitation period to protect subsequent shareholders from claims based on alleged misrepresentations made to previous shareholders.
Section 138.6 was designed to protect issuers from multiple rights of action or multiple liability for essentially the same misrepresentation repeated on a number of occasions and not to extend the limitation period.
Even if s. 138.3(6) was intended to modify the limitation period analysis, there is a basis to believe that the limitation period would begin to run from the date the misrepresentation was first made. The result would then be that the limitation period for all fourteen misrepresentations has expired.
[Pepall, Brown and Trotter JJ.A.]
Angela Assuras, for the appellants
Ron Aisenberg, for the respondents
Keywords: Endorsement, Contracts, Commercial Lending, Guarantees, Summary Judgment, Appeal Dismissed
[Pepall, Brown and Trotter JJ.A.]
John Nicholl and Kyle Magee, for the appellant
Geoff Adair and Gord McGuire, for the respondent
Keywords: Endorsement, Contracts, Insurance Law
[Strathy C.J.O., Roberts and Paciocco JJ.A.]
Eric Sherkin, for the appellant
Tanya Walker and James Coristine, for the respondent
Keywords: Contracts, Real Property, Agreements of Purchase and Sale, Completion Date, Waiver, Assignments, Consent, Appeal Dismissed
[Watt J.A. (In Chambers)]
Randall Barrs, for the appellant
Katie Doherty, for the respondent
Keywords: Criminal Law, Firearms Offences, Sentencing, Release Pending Leave to Appeal, Supreme Court Act, ss. 40, Criminal Code, ss. 679(3), Appeal Dismissed
[Watt, Hourigan and Miller JJ.A.]
David M. Humphrey and Ian B. Kasper, for the appellant
Lisa Joyal, for the respondent
Keywords: Criminal Law, Sexual Assault, Severance of Charges, Collateral Facts, Jury Charge, Appeal Dismissed
[Watt J.A. (In Chambers)]
Shaun Rootenberg, in person
Tracy Kozlowski, for the respondent
Keywords: Criminal Law, Detention Order, Fraud, Judicial Review, Jurisdiction, R. v. Durrani, 2008 ONCA 856, Application Dismissed
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