Canada: Top 5 Civil Appeals from the Court of Appeal (March 2012)

Last Updated: March 26 2012
Article by Carolyn Brandow
  1. Bolohan v. Hull, 2012 ONCA 121 (Sharpe J.A., Armstrong J.A. and Watt J.A.), February 22, 2012

  2. Sharma v. Timminco Limited, 2012 ONCA 107 (Goudge J.A., Armstrong J.A. and Lang J.A.), February 16, 2012

    Coulson v. Citigroup Global Markets Canada Inc.
    2012 ONCA 108 (Goudge J.A., Armstrong J.A. and Lang J.A.), February 16, 2012

  3. Curactive Organic Skin Care Ltd. v. Ontario 2012 ONCA 81 (Doherty J.A., LaForme J.A. and Hoy J.A.), February 7, 2012

  4. Hansen Estate v. Hansen, 2012 ONCA 112 (Winkler C.J.O., Doherty J.A. and Goudge J.A.), February 22, 2012

  5. Ashfield-Colborne-Wawanosh (Township) v. Central Huron (Municipality), 2012 ONCA 111 (Weiler J.A., Sharpe J.A. and Blair J.A.), February 21, 2012
1.  Bolohan v. Hull, 2012 ONCA 121 (Sharpe J.A., Armstrong J.A. and Watt J.A.), February 22, 2012

In this wrongful dismissal case, the Court of Appeal provided some useful guidance about status hearings.

In advance of a status hearing, the defendant's lawyer advised the plaintiff's lawyer that he would be asking the Master at the status hearing to dismiss the action for delay.  On the basis of oral representations by counsel at the status hearing, the Master denied the request for a dismissal. Pursuant to Rule 48.14(13), the Master exercised her discretion and provided a detailed timetable and discovery plan for the completion of the action.  While the plaintiff had no explanation for a delay of some 22 months, the defendant had sat idly and had not complied with the Rules in all respects. 

On appeal to the Superior Court, the judge held that the plaintiff had failed to file affidavit evidence necessary to satisfy her onus under Rule 48.14, and allowed the defendant's appeal.  The Court of Appeal for Ontario disagreed, holding that it was an error to require affidavit evidence and commenting that "the usual practice is for the initial status hearing to proceed on the basis of oral submissions".  If the judicial officer conducting a status hearing forms the view, on the basis of oral submissions, that the action is vulnerable to dismissal for delay, then, ordinarily, a full hearing will be ordered on affidavit evidence. 

In this case, the defendant's lawyer made no objection to the plaintiff's lawyer outlining facts by way of oral submissions rather than by affidavit evidence.  The Court of Appeal held that the plaintiff's lawyer was entitled to proceed before the Master at the initial status hearing without affidavit evidence and it was an error for the appeal judge to find that the plaintiff had failed to meet her onus to explain the delay. 

While the Court of Appeal overturned the appeal judge's order on this basis, the Court then turned to a consideration of the proper legal test to be applied at a Rule 48.14 status hearing.  The Master had stated in her endorsement that the test to be applied was the same as on a motion to dismiss for delay under Rule 24.  The Court of Appeal held that Rule 24 has no application to a Rule 48.14 status hearing.  The proper test on a status hearing is whether there is an acceptable explanation for litigation delay and whether, if the action is allowed to proceed, the defendant will suffer non-compensable prejudice.  The plaintiff has the burden to meet the test. 

Rather than remitting the case back for another status hearing, the Court of Appeal used the relevant undisputed facts in the record to make its determination.  It found that there was not an "unexplained delay of 22 months" although there was a troubling failure to move the action forward in a timely manner.  Here, the plaintiff attempted to schedule a mediation four months after the defence was filed, but was met with the defendant's insistence on a non-rostered mediator. The plaintiff's lawyer assumed the court would automatically assign a rostered mediator, but it did not occur.  The status notice was months later and a request for a status hearing was made.  The plaintiff proposed a timetable prior to the status hearing. 

The Court of Appeal commented that, while the focus of the analysis on a Rule 48.14 hearing is the plaintiff's conduct, the conduct of the defendant in the litigation can still have bearing on the assessment of the reason for the delay.  In this case, while the defendant may have been "strictly entitled" to insist on non-rostered mediator, it was not a tactic consistent with a willingness to see a relatively straightforward case proceed expeditiously.  The delay was, therefore, not exclusively attributable to the plaintiff as some steps were taken to move the action forward but met resistance by the defendant.

A "close call", but the Court of Appeal held that the timetable set by the master, with adjusted dates, should be in place and the action permitted to proceed. 

2.   Sharma v. Timminco Limited, 2012 ONCA 107 (Goudge J.A., Armstrong J.A. and Lang J.A.), February 16, 2012

       Coulson v. Citigroup Global Markets Canada Inc. 2012 ONCA 108 (Goudge J.A., Armstrong J.A. and Lang J.A.), February 16, 2012

Two appeal decisions this month arose from decisions of Justice Perell on the application of the limitation suspension provision (s.28) of the Class Proceedings Act, 1992,  S.O., 1992, c. 6.

In Coulson, the plaintiff commenced a proposed class action asserting a statutory cause of action under s.130 of the Ontario Securities Act, R.S.O. 1990, c. S.5.  Justice Perell granted a motion brought by the defendants, holding that the plaintiff's claim was barred by the limitation period in s.138 of the Ontario Securities Act and was not saved by the suspension of limitation periods provided in s.28 of the Class Proceedings Act. 

In 1998, Mr. Menegon commenced a proposed class action in Ontario against Philip Services Corp. and the defendants in the Coulson action pursuant to s.130 of the Ontario Securities Act and a common law claim for negligent misrepresentation.  Mr. Menegon purchased his shares in the secondary market, not from the primary distribution of shares.  Mr. Menegon's action was dismissed on March 6, 2001, on the basis that the purchase was in the secondary market and he did not have a claim for negligent misrepresentation.  Mr. Menegon's appeal was dismissed by the Court of Appeal for Ontario on January 9, 2003, and on July 17, 2003, the Supreme Court of Canada dismissed his application for leave to appeal.  On July 8, 2003, the plaintiffs commenced the Coulson action. 

Section 130 of the Ontario Securities Act creates a statutory cause of action for purchasers of a primary distribution for securities where there has been a misrepresentation in a prospectus.  A s. 130 cause of action is subject to a strict limitation period set out in s.138 of the Ontario Securities Act of 180 days or 3 years.  Subsection 28(1) of the Class Proceedings Act provides some relief from limitation periods for class members where the class proceeding does not proceed at all or for those who opt out.  The suspension of the limitation period starts at the commencement of the proposed class proceeding.  The Coulson action was commenced on July 8, 2003, and would be barred by the limitation period in s.138 of the Ontario Securities Act unless s. 28(1) applied to suspend the limitation period because of the commencement of the Menegon action and the appeals from its dismissal.

Justice Perell's succinct description of the purpose of s.28 was approved by the Court of Appeal:  "[t]he purpose of s.28 of the Class Proceedings Act, 1992 is to protect class members from the operation of limitation periods until it has been determined whether class members may obtain access to justice through membership in a class proceeding as an alternative to obtaining access to justice by pursuing individual actions.  In the absence of s.28, class members would have to commence a multitude of individual actions ..."

The limitation period for the s.130 claim was found to begin to run with the plaintiff's knowledge of the misrepresentations which arose, at the latest, at the commencement of the Menegon action on May 5, 1998.  The suspension of the limitation period under s.28(1) started on the same day as the Menegon action commenced and ran until 30 days after the action was dismissed on March 6, 2001, unless the limitation period was continued by the appeal.  On appeal, significant deference was also given to Justice Perell's finding that the appeal in the Menegon action was not in regards to the s.130 claim, but rather in respect of the negligent misrepresentation claim.  There was no suggestion in the appeal materials including the facta and the decision of the Court of Appeal in Menegon that the dismissal of the s.130 statutory claim was being appealed.  As the Menegon appeal did not seek a reversal of the dismissal of the s.130 statutory misrepresentation claim, s.28(2) did not continue the suspension of the limitation period for the s.130 claim in Coulson

Justice Perell also provided guidance as to why, when the suspension of the limitation period pursuant to s.28 ends, the limitation period arguably resumes but retroactive to the time when the suspension started.  The Court of Appeal noted that it had grave doubts about this argument given the plain and ordinary meaning of s.28 and its policy rationale.  It was not necessary, however, for the determination of this case and a decision on the issue was best left for a future case requiring its resolution. 

In the Sharma case, the plaintiffs' claim was based in negligence and negligent misrepresentations, alleging misrepresentations by the respondents that had adversely affected the value of shares of Timminco.  The plaintiffs also advised in their Statement of Claim dated May 14, 2009, that they would be seeking an order granting leave to assert the statutory cause of action for misrepresentation provided by s.138.3 of Part XXIII.1 of the Ontario Securities Act.  By the end of February, 2011, however, the plaintiffs had not sought leave to assert the statutory cause of action. 

Part XXIII.1 imposes a limitation period of 3 years from the misrepresentation for the commencement of an action under that Part.  The misrepresentations were alleged to have commenced on March 17, 2008, and continued until November 11, 2008.   The key question on appeal was whether mentioning an intention to seek leave in the Statement of Claim was enough to activate s.28 of the Class Proceedings Act to suspend the limitation period. 

Subsection 28(1) provides that a limitation period applicable to a cause of action style="text-decoration: underline;">asserted in a class proceeding is suspended at the time of the commencement of the class proceeding.  The  definition of "assert" in dictionaries included terms such as enforcing or invoking a claim or legal right.  The Court of Appeal held that "assert" was a significantly more forceful concept than the term "mentioned", which was defined as to refer to or remark on incidentally.

Absent leave, a s.138.3 cause of action could not be advanced and it could not be invoked as a legal right.  Giving s.28(1) its ordinary meaning, the s.138.3 cause of action could not be said to be "asserted" since no leave had been granted.  The Court of Appeal rejected the plaintiff's argument that s.28(1) did not require that a cause of action be "commenced" (only that it be asserted) on the basis that the word "commencement" and its concept would be inapplicable to a cause of action.  The term "commenced" only applies to the litigation in which a cause of action is asserted.  The mere mention of a cause of action in a litigation should not suspend the limitation period. 

Section 138.14 was clearly designed to ensure that secondary market claims be proceeded with dispatch.  To be effective, the necessary leave motion must be required to be brought expeditiously.  To suspend a limitation period with no guarantee that the s.138.3 cause of action, including the prerequisite leave motion, would be proceeded with expeditiously would be inconsistent with the purpose of s.138.14. 

The Court of Appeal held that, for a s.138.3 cause of action to be asserted in a class proceeding so as to trigger the suspension provision in s.28, leave to bring the cause of action must be granted.  As no leave application had been brought, the plaintiffs' motion for an order declaring that the limitation period in s.138.14 suspended was dismissed.

3.   Curactive Organic Skin Care Ltd. v. Ontario 2012 ONCA 81 (Doherty J.A., LaForme J.A. and Hoy J.A.), February 7, 2012

In this decision, the Court of Appeal agreed with the motions judge that this claim was, in substance, a claim for injurious affection and that such claims fall within the exclusive jurisdiction of the Ontario Municipal Board. 

Injurious affection is defined in s.1 of the Expropriations Act, R.S.O. 1990, c. E.26 to mean, essentially, reduction in the market value of the land and personal and business damages resulting from the construction of the works by the statutory authority.  In this action, the plaintiff's hair salon in the St. Clair West neighbourhood in Toronto brought a claim under the Class Proceedings Act, 1992, S.O. 1992, c.6 for damages allegedly arising from the St. Clair West public transit project.

The allegations in the lawsuit focussed on whether the construction of the St. Clair West project took too long and unreasonably impacted on the businesses of potential class members.  The claims were not characterized as injurious affection; however, the substance was a claim based on injurious affection, except for a claim of that the City had unlawfully adopted an internal policy of blockbusting to intentionally cause harm to affected businesses. 

The Court of Appeal held that the court's jurisdiction can be ousted in favour of an administrative tribunal through clear, explicit and unambiguous language in the statute.  The combination of the Expropriations Act and the Ontario Municipal Board Act clearly conferred jurisdiction over injurious affection claims on the Ontario Municipal Board.  Commencing the action under the Class Proceedings Act did not alter the jurisdictional issue, as the Class Proceedings Act is only a procedural statute and does not confer substantive law jurisdiction on the courts.  Accordingly, that claim could not be advanced.

While an allegation to intentionally harm others is not a claim of injurious affection, the allegations as pleaded did not identify any individual who engaged in any improper conduct; did not identify with any specificity the alleged improper conduct; and provided no particulars in support of the allegation of an intention of harming the affected businesses.  The intentional blockbusting claim, as pleaded, disclosed no reasonable cause of action for intentional misconduct on the part of the City.  The Court of Appeal held that it was not appropriate at "this late juncture" to allow the plaintiff an opportunity to amend its pleadings.  It had been made aware of the City's position with respect to the inadequacy of the pleadings a long time ago and numerous attempts by the City to secure particulars were all but ignored.  There was nothing in the record to suggest that the plaintiff was in a position to amend its pleadings in a manner that would give any reasonable substance to its claim of abuse of public authority. 

The appeal from the dismissal of the action was dismissed.

4.   Hansen Estate v. Hansen, 2012 ONCA 112 (Winkler C.J.O., Doherty J.A. and Goudge J.A.), February 22, 2012

What constitutes a "course of dealing" sufficient to establish that a joint tenancy should be declared severed? 

The respondent was separating from her husband when he died.  They held title to their matrimonial home as joint tenants.  The trustees for the estate took the position that the joint tenancy was severed due to the course of conduct in the separation such that a one-half interest in the home devolved to the estate.  The respondent claimed the right of survivorship, relying upon the critical distinction between the two forms of land holding – joint tenancy and tenants in common.

The application judge dismissed the application brought by the estate, holding that the joint tenancy should not be declared severed.  The Court of Appeal disagreed concluding that the application judge had stated the correct principles and test, but erred in their application.

The three modes or rules of severance of a joint tenancy are:

Rule 1:  unilaterally acting on one's own share, such as selling or encumbering it;

Rule 2:  a mutual agreement between the co-owners to sever the joint tenancy; and,

Rule 3:  any "course of dealing" sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.

The appeal proceeded with a consideration of Rule 3.  The "course of dealing" rule operates to prevent a party from asserting a right of survivorship when doing so would not do justice between the parties.  Unlike Rule 2, Rule 3 applies where there is no agreement.  For Rule 3 to apply, the co-owners must know of the other's position and must all treat their respective interests in the property as no longer being held jointly, but rather in common. 

In the context of negotiations between spouses who are in the midst of a marriage breakdown, even failed negotiations can lead to severance because the negotiations can represent an attitude that the notional unity of ownership under a joint tenancy has been abandoned.  Joint tenancy is not a situation that involves a co-owner speaking of his or her "share" or separate interest. 

The application judge in this case fell into reversible error in applying Rule 3.  The application judge considered only evidence that was similar to conduct in previously decided cases, rather than looking at the totality of the evidence.  This category-based approach led the application judge to fail to appreciate the significance of evidence that the respondent moved out of the home during negotiations; the respondent took steps to value her half-interest in the home; the respondent and the deceased opened separate bank accounts; and the deceased re-wrote his will in a way that was inconsistent with a right of survivorship. 

The correspondence between the lawyers for the separating couple was further evidence of conduct capable to sever the joint tenancy as the discussions proposed an equal division of the assets, much of which was the value of the home.  The appeal was allowed and a declaration granted that the appellants were entitled to an undivided, one-half interest in the property located in London, Ontario.

5.   Ashfield-Colborne-Wawanosh (Township) v. Central Huron (Municipality), 2012 ONCA 111 (Weiler J.A., Sharpe J.A. and Blair J.A.), February 21, 2012

The appellants tried to overturn a decision in which a by-law was interpreted in a manner that led to a reduction of representatives for certain townships on County Council.

By-Law 28 of 1999 was enacted by the County of Huron to determine the representation of lower tier municipalities (nine townships) on the County Council.  The formula in the by-law provided that the head of the township had one vote on County Council but that each township could receive an additional representative (with an additional vote) for every 4,000 voters above the first 4,000.  Following the 2000 election, the number of County Council members was determined to be 18.  At the 2006 election, two additional townships were found to have more than 8,000 voters and each gained a further representative to increase the number of Council members to 20. At the 2010 elections, four townships had fallen below the threshold for an additional representative.  Council noted that the by-law did not discuss reducing the number of representatives, and a striking by-law was passed appointing 20 members of Council to boards and committees. 

Eight months into the term of office, an application was brought by the County and five of the townships to confirm that the by-law was valid, the striking by-law was not valid and that the number of Council members should be reduced to 16.  The application judge agreed.

On appeal, the Court of Appeal held that the by-law prescribed a formula, despite not explicitly stating this, to be applied afresh after each election which allowed for both the addition and the reduction of representation.  The fact that the representatives had been sworn in and assumed office could not 'make right' the 'wrong' of allowing the numbers of representatives to sit contrary to the prescribed formula.  It was not unfair to remove someone from office who had no legal right to hold the office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Carolyn Brandow
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