Canada: Top 5 Civil Appeals (July 2012)

 

1.  Baglow v. Smith, 2012 ONCA 407 (Goudge, Sharpe and Blair JJ.A.), June 14, 2012

 

This appeal applies the new test for summary judgment to the issue of defamation in the context of political blogging.

 

In the course of an exchange concerning Omar Khadr between the appellant John Baglow (blogging under the pseudonym, "Dr. Dawg") and the respondent, Roger Smith, Smith referred to Baglow as "one of the Taliban's more vocal supporters." Baglow sued for defamation.

 

On a motion for summary judgment, Justice Annis dismissed Baglow's claim against Smith for defamation, finding that there was no genuine issue for trial as to whether the impugned statement was defamatory. Baglow appealed to the Court of Appeal.

 

Writing for the court, Blair J.A. held that the motion judge erred in the finding that there was no genuine issue for trial and noted specifically that this was not a case appropriate for summary judgment. 

 

As Blair J.A. explained, summary judgment has historically rarely been granted in defamation cases, in part because the question of whether a statement is defamatory has long been considered to be in the purview of a trier of fact. The motion judge nonetheless concluded that it was appropriate to grant summary judgment, principally because "the factual foundation of the case is largely captured in the extensive materials taken from the parties' blogs" and because "there seems little in dispute of a factual nature that would be different were [the case] to proceed to trial."

 

Blair J.A. disagreed with this conclusion, holding that while the motion judge did have an extensive record before him in the form of the exchanges between the parties, it was not sufficient to make a proper determination. Determining whether the impugned statement is in fact defamatory of the appellant would require a careful analysis of the context in which the statement was made, including not just a review of the electronic dialogue between the parties but also an assessment of the two individuals and the view they took of the exchange.  The latter would at least require cross-examination on the positions they initially put forward, which was not possible on the motion as the matter had proceeded under rule 76, Simplified Procedure, which does not permit cross-examinations on affidavits.

 

The analysis further requires a consideration of the view that a reasonable reader of the exchange might take of the exchange in its particular context, an issue that might require expert testimony concerning the expectations and understanding of participants in political discourse in the Internet blogosphere. The unique nature of the forum in which the alleged defamation occurred raised issues that must be threshed out at trial.

 

Blair J.A. further noted that this dispute concerned a scenario that has, thus far, received little judicial consideration, namely an allegedly defamatory statement made in the course of "a robust and free-wheeling exchange of political views in the internet blogging world." Although both parties had suggested that "anything goes" in exchanges laden with often caustic, hyperbolic and vulgar language, Blair J.A. questioned: "Is that the case in law?... Do different legal considerations apply in determining whether a statement is or is not defamatory in these kinds of situations than apply to the publication of an article in a traditional media outlet?"

 

As Blair J.A. noted, these issues have not been addressed in the jurisprudence in any significant way. Their responses may have far-reaching implications, and are best crafted on the basis of a full record after a trial, "at least until the law evolves and crystallizes to a certain point." A trial would allow these conclusions to be formulated on the basis of a record informed by the examination and cross-examination of witnesses and possibly with the assistance of expert evidence to provide the court with insight into how the Internet blogging world functions and what may or may not be the expectations and sensibilities of those who engage in such discourse.

 

The court allowed the appeal, directing the action to proceed to trial.

 

2.   Bowes v. Goss Power Products Ltd., 2012 ONCA 425 (Winkler C.J.O., Simmons, Cronk, Armstrong and Watt JJ.A.), June 21, 2012

 

On this appeal, the Court of Appeal – in a five member panel – held that an employee who is terminated without cause is not required to mitigate his loss when the parties contractually agreed to a fixed term of notice or pay in lieu, and the employment agreement is silent with respect to mitigation.

 

The appellant Bowes entered into a written contract of employment with the respondent, Goss Power Products Ltd., which provided that he would receive six months' notice or pay in lieu thereof if his employment was terminated without cause. The employment agreement, prepared by the respondent employer, was silent with respect to a duty to mitigate. The appellant's employment was later terminated without cause pursuant to a letter of termination which stated that he would be paid his salary for six months but was required to seek alternative employment during this period and keep the respondent apprised of his efforts.

 

Shortly after his employment was terminated, the appellant obtained a new position at the same salary he had been earning with the respondent. After paying him the three weeks' salary mandated by the Employment Standards Act, 2000, S.O. 2000, c. 41, the respondent ceased making salary payments to the appellant on the basis he had mitigated his loss successfully, ending the respondent's obligation to continue paying his salary. The appellant brought an application under rule 14.05 of the Rules of Civil Procedure seeking a determination of his rights pursuant to the employment agreement.

 

The application judge held that an employment agreement is subject to a duty to mitigate unless the agreement, either directly or by implication, relieves the employee of that obligation. In arriving at his conclusion that the impugned employment agreement is subject to a duty to mitigate, the application judge relied upon the decision in Graham v. Marleau, Lemire Securities Inc. (2000), 49 C.C.E.L. (2d) 289 (S.C.), in which Nordheimer J. stated:

 

[A contractually fixed term of notice] is nothing more than an agreement between the parties as to the length of the reasonable notice to terminate the contract. I see no reason why there should be any distinction drawn between contracts of employment where the notice period is not stipulated and those where it is with the result that there would be a duty to mitigate in the former but not in the latter.

 

Finding that mitigation was applicable pursuant to Graham, the application judge determined that the agreement required explicit terms to negate the duty to mitigate. Since the agreement provided no such exemption, the appellant was not entitled to the full amount provided for under the agreement as he had mitigated his loss by finding new employment.

 

The appellant appealed to the Court of Appeal.

 

Writing for the court, Winkler C.J.O. noted that employment agreements are subject to the ordinary principles of contract law, except that, unless otherwise stated, an employer must provide reasonable notice to an employee prior to the termination of employment. If the employer fails to provide such notice, the employee is entitled to damages that flow from this breach. The employee, however, is bound at law to mitigate such damages by seeking an alternate source of income. 

 

Parties to employment agreements are entitled to and often substitute a fixed period of notice in the contract, displacing the common law period of "reasonable notice".  Winkler C.J.O. held that both Nordheimer J. in Graham and the application judge in this case erred in treating a contractually fixed term of notice as effectively indistinguishable from common law damages for reasonable notice and, having incorrectly equated them, erred in concluding that the duty to mitigate applied to contractual terms as it did at common law.

 

Rather, an employment agreement that stipulates a fixed term of notice or payment in lieu should be treated as fixing liquidated damages or a contractual amount. Because the damages are liquidated, a duty to mitigate does not automatically attach. As Winkler C.J.O. noted, this decision was consistent with appellate decisions in other jurisdictions. 

 

While the parties could have specified in the agreement that mitigation did apply, "no presumption exists in law necessitating that it must be contracted away expressly." Winkler C.J.O. concluded that, if parties who enter into an employment agreement specifying a fixed amount of damages intend for mitigation to apply upon termination without cause, they must express such an intention in clear and specific language in the contract.

 

The court allowed the appeal, setting aside the decision of the application judge and issuing a declaration that the appellant is entitled to the amount of salary in lieu of notice specified in the employment agreement, notwithstanding any salary earned from his new employer.

 

3.  Galganov v. Russell (Township), 2012 ONCA 410 (Weiler, Sharpe and Blair JJ.A.), June 15, 2012

 

This appeal addresses the circumstances in which an award of costs can be made against a lawyer personally.

 

The appellant Bickley represented Galganov and Brisson in their respective applications to quash a by-law which required that the content of new exterior commercial signs be in French and in English. The application judge dismissed both applications and ordered that forty percent of the costs be payable by Bickley personally pursuant to rule 57.07(1) of the Rules of Civil Procedure, on the basis that his conduct was negligent and that he caused unnecessary costs to be incurred by the respondent. The Court of Appeal upheld the dismissal of the applications. This decision on costs was released concurrently with those reasons.

 

Writing for the court, Weiler J.A. reviewed the governing principle in awarding costs personally against a lawyer, as set out by the Supreme Court in Young v. Young, [1993] 4 S.C.R. 3.  She explained that rule 57.07(1) is not concerned with the discipline or punishment of a lawyer, but only with compensation for conduct which has caused unreasonable costs to be incurred.

 

Weiler J.A. then outlined the two-part test established in Carleton v. Beaverton Hotel (2009), 96 O.R. (3d) 391 (Div. Ct.) for determining the liability of a lawyer for costs under rule 57.07(1). The first step is to inquire whether the lawyer's conduct falls within the rule in the sense that it caused costs to be incurred unnecessarily.

 

As stated in Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (1998), 16 C.P.C. (4th) 201 (Ont. Gen. Div.), mere negligence can attract costs consequences in addition to actions or omissions which fall short of negligence. "Bad faith" on the part of the lawyer is not a requirement for imposing costs consequences under rule 57.07(1). However, in determining whether a lawyer's conduct falls within rule 57.07(1), the court must consider the facts of the case over the entire course of litigation and the particular conduct which has been attributed to the lawyer.

 

Weiler J.A. noted that a court must also consider "specific incidents of conduct" in determining whether the conduct falls within rule 57.07(1). In Carleton, the court confirmed that a general observation "does not permit identification of what conduct may have contributed to delay and unnecessary costs." Above all, rule 57.07(1) is not concerned with a lawyer's professional conduct generally, but with whether such conduct caused unreasonable costs to be incurred.

 

The second step in the Carleton test is to consider, as a matter of discretion and applying the "extreme caution" principle enunciated in Young, whether, in the circumstances, the imposition of costs against the lawyer personally is warranted. The "extreme caution" principle refers to the fact that these awards must only be made sparingly, with care and discretion, and only in clear cases.

 

Weiler J.A. determined that the application judge's decision to award costs personally against Bickley was based on "the cumulative effect of what she found to be his negligent conduct which caused the Township to incur costs unnecessarily." Turning to an examination of the specific incidents of Bickley's conduct that were alleged to cause unreasonable costs to be incurred, Weiler J.A. found that the application judge erred in principle in not separating Bickley's conduct from that of his clients and in relying on hindsight when considering the reasonableness of conduct by Bickley with respect to the proposal of a particular expert witness. These incidents were so important to, and so intertwined with the overall conclusion that the award of costs against Bickley personally must be set aside.

 

Weiler J.A. also pointed out that if an order of costs is to be made against a lawyer personally on the basis of negligence, then that negligence must be based on a breach of the objective standard of care of a reasonably competent lawyer in the same position. The court must bear in mind that the lawyer's duty is to his client and to the court. Rule 57.07(1) is not a means for redress by a frustrated opposing counsel.

 

The court allowed the appeal, setting aside the order of costs against Bickley personally.

4.  Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 (Winkler C.J.O., Lang and Watt JJ.A.), June 26, 2012

 

This decision was released concurrently with those in Fulawka v. Bank of Nova Scotia, 2012 ONCA 443, and McCracken v. Canadian National Railway, 2012 ONCA 445. All three cases involve class actions initiated by employees seeking unpaid overtime from employers pursuant to the Canada Labour Code (the "Code").

 

This action was brought by the representative plaintiff Fresco on behalf of some 31,000 customer service employees of the defendant CIBC. The pleadings allege that CIBC breached its contractual and statutory duties to pay class members for overtime work that they were routinely required or permitted to perform in order to complete their employment duties. Central to the case was CIBC's overtime policy, which required that employees obtain management approval of overtime hours in advance of working overtime or as soon as possible thereafter in "extenuating circumstances". The pre-approval requirement, which was alleged to expressly place barriers to class members' claims for overtime in violation of the Code, was a key element of the case.

 

The motion judge held that the pre-approval requirement in the defendant's overtime policy was not unlawful. She refused to certify the action as a class proceeding, finding that none of the appellant's nine proposed common issues satisfied the test for commonality under s. 5(1)(c) of the Class Proceedings Act, 1992 ("CPA").

 

A majority of the Divisional Court agreed with the motion judge with respect to the lawfulness of the pre-approval requirement as well as with the motion judge's conclusion that there were no common issues that would significantly advance the litigation.  The majority emphasized that the pre-approval requirement did not cause the wrongs alleged by the plaintiff.

 

Sachs J. of the Divisional Court wrote a detailed dissent, explaining why she would have certified the action. She asserted that the motion judge erred in law in holding that the respondent's overtime policy was lawful under the Code and committed a palpable and overriding error of fact in overlooking evidence in the record supporting the certification of most of the proposed common issues. Sachs J. explained that the motion judge's rejection of the proposed common issues flowed from her erroneous holding that it was "plain and obvious" that that the overtime policy was lawful. The premise of legality resulted in the motion judge failing "to consider the evidence as to systemic policies and practices" that would satisfy the minimum evidentiary basis of showing "some basis in fact" for the existence of a common issue, the evidentiary threshold established in Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158.

 

Fresco appealed to the Court of Appeal.

 

Writing for the court, Winkler C.J.O. held that the motion judge and the majority of the Divisional Court erred when determining that the respondent's overtime policy complied with the minimum standards for overtime compensation as set out in the Code. Winkler C.J.O. agreed with Sachs J. that the accepted test that a plaintiff must meet at the certification stage under s. 5(1)(a) of the CPA is to establish that it is not plain and obvious that its action will fail. As McLachlin C.J. stated in Hollick, the test is not merits-based.

 

Winkler C.J.O. further noted that the appellant's claim does not turn exclusively or even primarily on the per se legality of the respondent's overtime policy. The pleadings allege that CIBC's systems for assigning work, recording hours of overtime work, and its actual practices for compensating such work, breached the terms of class members' contracts of employment and unjustly enriched CIBC at the expense of class members. Winkler C.J.O. held that these "systemic elements of the claim give shape to the common issues".

 

Turning to the common issues, Winkler C.J.O. found that the fundamental flaw by the motion judge was to focus on the personal circumstances in which the individual claimants' claims for overtime arose, as the approach to the analysis of commonality.  The evidentiary inquiry under s. 5(1)(c) of the CPA ought not to have been focused on whether individual class members actually worked overtime for which they were not compensated, but rather required asking whether there is some basis in fact for the appellant's allegations that CIBC's bank-wide practices and policies prevented class members from receiving overtime compensation in accordance with their employment contracts.

 

Winkler C.J.O. held that the motion judge and the majority of the Divisional Court incorrectly concluded that the differences in the individual experiences of class members undermine the existence of a common issue of systemic wrongdoing. These alleged differences were not relevant to the systemic issues raised by the appellant and do not preclude a finding of some basis in fact for the common issues concerning liability. The terms and conditions in CIBC's overtime policies governing overtime compensation and the standard forms that class members submit when requesting such compensation apply to all class members regardless of their particular job titles or responsibilities. To the extent that the respondent's policies are alleged to fall short of its duties to class members, or to constitute a breach of class members' contracts of employment, these elements of liability can be determined on a class-wide basis.  They do not depend on individual findings of fact.

 

Winkler C.J.O. concluded that the motion judge committed an error of law in her analysis under s. 5(1)(a) of the CPA and, in conducting the common issues analysis under s. 5(1)(c), misconceived the appellant's action as being, in essence, a collection of individual claims for unpaid overtime. These errors displaced the substantial deference otherwise owed to certification judges when considering the common issues criterion and called for appellate intervention. The court allowed the appeal, concluding that an order should be granted certifying the action.

 

5.  Windsor (City) v. Paciorka Leaseholds Limited, 2012 ONCA 431 (Doherty and LaForme JJ.A., and Turnbull J. (ad hoc)), June 22, 2012

 

Portions of the respondents' lands were expropriated by the City of Windsor. At issue on appeal was the test for determining compensation of expropriated and other affected lands. 

 

The Expropriations Act (the "Act") requires the expropriating authority to pay to the owner the "market value of the land".  A highest and best use analysis – without regard for the expropriation scheme – applies. In addition to compensation for the market value of the expropriated property, the owner is also entitled to damages for injurious affection, representing the reduction in the market value of the remaining land held by the owner which is caused by the acquisition of part of the land.

 

The respondents brought claims before the Ontario Municipal Board for the market value of the expropriated lands and for injurious affection damages.  The key factor in determining the market value of the expropriated land and assessing the injurious affection in respect of the remaining land was the scope of the expropriation scheme and when that scheme began. While the respondents argued that the expropriation scheme embraced certain governmental activities beginning in 1983, the City submitted that it did not begin until 2002. Central to the City's argument on value was a 1996 Provincial Policy Statement ("PPS") which, independent of any expropriation, placed limits on the development of environmentally sensitive lands, such as those that were being expropriated. 

 

The Board rejected the City's position, ultimately ordering the City to pay the respondents for the market value of the expropriated properties and the loss in value of the remaining properties. The Board's decision was upheld by a majority of the Divisional Court, with Sachs, J. dissenting.

 

The Court of Appeal agreed with the dissenting opinion of Sachs J., holding that, while the Board was entitled on the evidence to favour the respondent's position as to the timing of the scheme, the Board failed to adequately consider the impact of the PPS on the market value of the lands. The evidence did not support that any consideration was given by the owner's experts to what the market value of the land would be when subject to the limits imposed by the PPS.  The majority of the Divisional Court erred in law in deferring to the Board's decision "in the face of the Board's unreasonable treatment of the potential impact of the PPS on the market value of the respondents' expropriated lands."

 

The court further held that the Board erred in its calculation of injurious affection damages. The Board's reference to the "scheme" (the same term used in respect of the expropriated property) demonstrated that it did not limit the injurious affection damages to the diminution in value caused by the acquisition of the property, but considered decreases in value caused by other aspects of the broader expropriation scheme.  The court determined that the Board erred in its interpretation of the Act.

 

The court concluded that the Board treated the entire expropriation scheme as crucial to both market value under s. 14(4)(b) of the Act and to the calculation of loss in value of the remaining lands for the purposes of the injurious affection claim under s. 13(2)(c). Its failure to distinguish between its approach to market value assessment and its approach to the assessment of injurious affection damages resulted in a "fundamentally flawed assessment of those damages."

 

The court held that the majority of the Divisional Court erred in law in deferring to the Board's unreasonable assessment. The court allowed the appeal, directing that a new hearing be held before a differently constituted panel of the Board.