Canada: Top 5 Civil Appeals From The Court Of Appeal (March 2013)

Last Updated: March 22 2013
Article by Stuart Zacharias
  1. 1043 Bloor Inc. v. 1714104 Ontario Inc., 2013 ONCA 91 (Laskin, MacPherson and Gillese JJ.A.), February 14, 2013
  2. Blue Mountain Resorts Limited v. Ontario (Labour), 2013 ONCA 75 (MacPherson, Armstrong and Blair JJ.A.), February 7, 2013
  3. Lavier v. MyTravel Canada Holidays Inc., 2013 ONCA 92 (Laskin, MacPherson and Gillese JJ.A.), February 14, 2013
  4. Martin v. ConCreate USL Limited Partnership, 2013 ONCA 72 (Weiler, Juriansz and Hoy JJ.A.), February 5, 2013
  5. Moreira v. Ontario Lottery and Gaming Corporation, 2013 ONCA 121 (Simmons, Armstrong and Watt JJ.A.), February 26, 2013

1. 1043 Bloor Inc. v. 1714104 Ontario Inc., 2013 ONCA 91 (Laskin, MacPherson and Gillese JJ.A.), February 14, 2013

Can a single incident interrupt the prescriptive period in a prescriptive easement?

The parties, who own adjacent properties on Toronto's Bloor Street, both access their parking spots via a lane which lies almost entirely on the respondent's property. The appellant sought a declaration that it has a prescriptive easement and right of way over the lane, while the respondent wanted any suggestion of an easement to be removed. The trial judge dismissed the appellant's claim, finding that although there had been continuous and open use of the lane by the appellant's predecessors in title, an incident that took place in February of 1987 interrupted the prescriptive period. That date therefore became the new starting point for the running of the period and, as the appellant's property was converted to the Land Titles System less than twenty years later, in April 2003, there was no prescriptive easement.

The appeal turned on the interpretation of an incident which occurred in 1987, in which a Mr. Vilhena, the owner of the appellant's property at that time, approached a Dr. Sochaniwskyj, then-owner of the respondent's property, seeking permission to use the lane. Vilhena requested that Sochaniwskyj sign a right of way agreement, drafted by Vilhena's lawyer. Sochaniwskyj refused.

Citing Henderson v. Volk, (1982), 35 O.R. (2d) 379 (C.A.), the provincial authority on the doctrine of lost modern grant, Gillese J.A. explained that to acquire an easement by prescription, a claimant must demonstrate "a use and enjoyment of the easement under a claim of right that is continuous, uninterrupted, open and peaceful" for twenty years.

Key to the requirement are the words "under a claim of right". Gillese J.A. clarified that the enjoyment of the right of way must not be permissive, or provided at the will of the owner of the property over which the easement is sought; rather, the claimant's use of the easement "must be as if it had obtained a legal grant of the easement from the owner of the servient tenement."

Gillese J.A. agreed with the trial judge that the impugned incident demonstrated an acknowledgment by Vilhena that he did not have a right to use the lane and that he required Sochaniwskyj's permission to do so. Vilhena's behaviour is inconsistent with the notion that he used the lane "under a claim or right" or "as of right".

The appellant had submitted that because Sochaniwskyj refused to sign the right of way agreement, Vilhena's subsequent use of the lane was without permission and "as of right" within the Court's definition in Kaminskas v. Storm, 2009 ONCA 318, namely "uninterrupted, open, peaceful and without permission". Gillese J.A. rejected this interpretation of the incident. It failed to appreciate the implications of Sochaniwskyj's refusal to sign the agreement and was contrary to the policy considerations underpinning the doctrine of lost modern grant. Sochaniwskyj's refusal to grant Vilhena a right of way did not simply deny Vilhena permission to use the lane; it made clear that Vilhena's use of the lane was solely at his discretion, with permission given or withdrawn at his pleasure.

In Temma Realty Co. Ltd. v. Ress Enterprises Ltd., [1968] 2 O.R. 293, the Court of Appeal urged against applying the doctrine of lost modern grant in a manner that would "discourage considerate neighbourly behaviour by creating the fear that those acts will later be construed as acquiescence sufficient to give your neighbour rights over your land." The doctrine of lost modern grant should not be interpreted so as to punish Sochaniwskyj for being a generous neighbour, nor reward Vilhena for his aggression.

Gillese, J.A. concluded that Vilhena's failed attempt to gain Sochaniwskyj's permission to use the lane demonstrated an acknowledgement that his use of it was not as of right and, in accordance with the Court of Appeal's decision in Garfinkel v. Kleinberg and Kleinberg, [1955] O.R. 388, this acknowledgement interrupted the running of the prescriptive period.

In a concurring opinion, Laskin J.A. took the appellant's approach, finding that Vilhena's request for permission to use the lane did not interrupt the running of the prescriptive period. Had Sochaniwskyj signed the right of way agreement, Vilhena's later use of the lane would have been with permission, thereby breaking the prescriptive period. Because Sochaniwskyj refused, however, Vilhena's subsequent use of the lane was not with permission, therefore falling into the definition of "as of right" in Kaminskas. Laskin J.A. nonetheless found that Sochaniwskyj's later posting of "Private Driveway" signs along the lane was "an overt act of protest against Vilhena's use of the lane", which interrupted the running of the prescriptive period.

In the result, the Court dismissed the appeal, concluding that the appellant is not entitled to an easement by lost modern grant.

2. Blue Mountain Resorts Limited v. Ontario (Labour), 2013 ONCA 75 (MacPherson, Armstrong and Blair JJ.A.), February 7, 2013

How broad is the definition of a "workplace"? At issue in this appeal was whether Blue Mountain Resorts was required to report the death of one of its guests to the Ministry of Labour on the basis that it was a death of a person at a workplace pursuant to the Occupational Health and Safety Act, R.S.O. 1990, c. O.1. (the "Act").

Section 51(1) of the Act stipulates that a written report must be made when "a person is killed or critically injured from any cause at a workplace..."

The respondent, an inspector under the Act, claimed that Blue Mountain Resorts was required to report that one of its guests had drowned while swimming in an unattended indoor pool, and issued an order to that effect. The Ontario Labour Relations Board upheld the order. An application for judicial review from the order was dismissed by the Divisional Court, which held the Board's determination that the swimming pool was a "workplace" to be reasonable. The Divisional Court accepted the Board's presumption that resort employees would have been present at the pool at other times, finding that "it is common ground that the swimming pool is a place where one or more workers work."

Blue Mountain appealed.

Writing for the Court of Appeal, R.A. Blair J.A. found that the Board's interpretation of s. 51(1) would make virtually any place in Ontario a workplace, leading to the "absurd" situation where nearly every death or critical injury to anyone, anywhere in Ontario, whatever the cause, must be reported because a worker may, at some time, have been there. Almost no place could escape the ambit of the provision under this analysis, with, as Blair J.A. mused, parents arguably having to report to the Ministry when their children are injured at home, if they employ a nanny.

Sometimes, as Blair J.A. concluded, "a swimming pool is just a swimming pool."

Blair J.A. held that the ramifications of the Board's and the Divisional Court's reading of the provision go well beyond the proper reach of the legislation and the mandate of the Ministry to promote worker safety in the workplace. Their interpretation is therefore unreasonable and cannot stand.

Turning to the proper interpretation of the provision, Blair J.A. recalled the case of Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031, in which Gonthier J. held that broad language in a statute may be given a somewhat restricted reading where necessary in order to avoid absurdity and give the words their appropriate meaning, with regard to their context, the intention of the legislature and the purpose of the statute.

Blair J.A. found that the expression "from any cause" is the most problematic aspect of the provision. He concluded that a reportable incident must require a "reasonable nexus" between the hazard giving rise to the death or critical injury and a realistic risk to worker safety at the site. Blair J.A. explained that limiting the interpretation of the words "from any cause" in this way is sufficiently broad to capture incidents related to worker safety without leading to absurd results, "ground[ing] the limiting interpretation of s. 51(1) in cause rather than location." This honours the purpose and focus of the Act, which is not the protection of all persons but of workers in the workplace and injuries that pose a risk to workers. Blair J.A. also held that reportable incidents should be limited to those where a worker is carrying out his employment duties at the time the incident occurs, or where he "might reasonably be expected to be carrying out such duties" in the course of his work.

The Court allowed the appeal and set aside the decision of the Divisional Court and the original order of the inspector.

3. Lavier v. MyTravel Canada Holidays Inc., 2013 ONCA 92 (Laskin, MacPherson and Gillese JJ.A.), February 14, 2013.

In this decision, the Court considered the relationship between the reasonableness of a class action fee and the take-up rate of a settlement.

The class proceeding was commenced by Lavier on behalf of a class of approximately four thousand travellers, alleging that the appellant, MyTravel Canada Holidays Inc., knowingly sent them to resorts in the Dominican Republic which were stricken with an outbreak of norovirus during the winter of 2004-2005. The parties reached a settlement agreement, approved by Perell J. in February 2011, which created a settlement fund capped at $2.25 million.

Pursuant to the settlement agreement, MyTravel agreed to pay an initial counsel fee of $600,000 in addition to the funds made available to settle class claims. The agreement provided that if, at the end of the claims process, any surplus funds remained, class counsel would be able to apply to court for additional fees, with MyTravel reserving the right to oppose. The settlement agreement also stipulated that if any funds remained after the payment of all eligible claims, administration costs, or additional counsel fees, then the residue would revert to MyTravel.

After all payments were made to the class members who submitted eligible claims, representing only 8.85% of the class members and 16.7% of the settlement fund, class counsel successfully sought approval of an additional fee in the amount of $395,000.

MyTravel appealed that order.

Writing for the Court of Appeal, MacPherson J.A. noted that an appellate court will generally be reluctant to interfere with the exercise of judicial discretion by a class action judge. Citing the Court's decision in Gagne v. Silcorp (1998), 41 O.R. (3d) 417 (C.A.), MacPherson J.A. explained that the court will only reverse the decision of a motion judge on a motion for the approval of class counsel fees "if the motion judge gave either no weight or insufficient weight to considerations relevant to the decision."

As the Court held in Gagne, whatever the fee arrangement, it must be "fair and reasonable". Class counsel must satisfy the court that the fee meets this standard in light of the objectives of the class proceeding, the risks assumed by class counsel, and the results achieved for the class.

MacPherson J.A. found that, while the motion judge correctly identified the factors to be considered on approval of the fee, his analysis disregarded the actual benefit to the class, leading him to award a total fee that is "grossly disproportionate to the results achieved and the risks undertaken." When considering class counsel's application for an additional fee, Perell J. assessed the value of the settlement on the basis of the total funds made available; MacPherson J.A., however, found that he erred in failing to adequately recognize the significance of the take-up rate.

While acknowledging that it was necessary to cast a broad net when determining the class size due to the nature of the claim, MacPherson J.A. noted that the difference between the class size and the potential recovery for the class highlights the importance of the take-up rate in assessing the benefit to the class. In this case, access to justice is better represented by the actual distribution to the class than by the total fund. MacPherson J.A. looked to the decision in Stewart v. General Motors of Canada Ltd., [2008] O.J. No. 4426 (S.C.), in which Cullity J., after considering a similar issue of class indeterminacy, held that when it is uncertain how many class members will make claims under a settlement, it is only when the take-up rate is known that the court can assess the connection between the effort of counsel and the achievement of the class. Otherwise, a disproportionate fee might result.

And that, in MacPherson J.A.'s view, is precisely what occurred.

MacPherson J.A. noted that the initial counsel fee of $600,000 was considered to be fair and reasonable in light of the prospective value of the fund achieved. In order to obtain an award of a greater amount, class counsel would need to justify it. Yet the litigation risk ended with the conclusion of the settlement agreement and was recognized and rewarded by the initial fee. Moreover, the initial counsel fee was not a base fee, but already represented a multiplier of approximately 1.2 on counsels' time.

Assessing the cumulative counsel fee according to the "yardsticks" set out in Gagne, MacPherson J.A. noted that only nine percent of the class received compensation, amounting to one-sixth of the total fund; meanwhile, the total counsel fee of nearly $1 million represents almost three times the value of the settlement to the class. Class counsel's compensation, concluded MacPherson, is therefore "manifestly disproportionate" to the results actually achieved by the class.

The Court allowed the appeal and set aside the additional fee of $395,000 to class counsel.

4. Martin v. ConCreate USL Limited Partnership, 2013 ONCA 72 (Weiler, Juriansz and Hoy JJ.A.), February 5, 2013

In this decision, the Court of Appeal gave guidance on when a restrictive covenant will be interpreted as reasonable and enforceable.

Over the course of his twenty year employment with ConCreate USL Ltd., the appellant Derek Martin acquired a minority interest in the company and in a related business, Steel Designed & Fabricators (SDF) Ltd. When these businesses were sold to entities controlled by TriWest Construction Limited Partnership, Martin signed agreements containing non-competition and non-solicitation provisions in their favour which would end two years after his disposal of the interest he retained in the two companies. Key to the covenants was the provision that Martin could not dispose of his interest without the approval of the board of TriWest LP's general partner and any required approvals from the respondents' and their subsidiaries' lenders from time to time.

Martin subsequently applied unsuccessfully to the Superior Court for a determination that the restrictive covenants were unenforceable.

Martin's appeal turned on the reasonableness and possible ambiguity of the duration of the restrictive covenants. Writing for the Court of Appeal, Hoy J.A. considered the factors outlined in Shafron v. KRG Insurance Brokers (Western) Inc. 2009 SCC 6, [2009] 1 S.C.R. 157 to assess the restrictive covenants: the geographic coverage of the covenant; the duration; and, the activity prohibited. As the Supreme Court held in Shafron, if a covenant is not clear with respect to any of these factors, it is not possible to demonstrate that it is reasonable.

Hoy J.A. agreed with the application judge that the activity prohibited by the covenants is not ambiguous, nor is the geographic scope unreasonable. Hoy J.A. found, however, that the duration of the restrictions was unreasonable because it depended on the consent approval of third parties who owed no contractual duty to Martin to act promptly or reasonably and may even have a commercial interest in limiting his competition with the respondents. It cannot be assumed that the third party approvals would be forthcoming. The covenants were therefore for a potentially indefinite duration, with no fixed, outside limit on their term. For this reason, the provisions were unreasonable and therefore unenforceable.

The fact that Martin agreed to the provisions and acknowledged their reasonableness, with the representation of counsel, did not save the covenants from judicial scrutiny. "Safeguarding the public interest in free and open competition [...] requires that the court conduct a greater level of independent analysis."

The appeal was allowed to the extent of declaring the general non-competition and non-solicitation provisions unreasonable and therefore unenforceable.

5. Moreira v. Ontario Lottery and Gaming Corporation, 2013 ONCA 121 (Simmons, Armstrong and Watt JJ.A.), February 26, 2013

In this case, the Court of Appeal took a spin in the high-stakes world of roulette.

The appellants are gamblers who lost approximately $2.1 million playing roulette at the Niagara Fallsview Casino Resort. They commenced actions against the casino operators and the Alcohol and Gaming Commission of Ontario, claiming $14 million in damages for negligence, breach of contract, unjust enrichment and misrepresentation under the Consumer Protection Act, 2002, S.O. 2002, c.30, Sched. A.

The appellants' claim centers on their assertion that casino operators used what gambling aficionados refer to as a "floating ball rule", which allows roulette dealers to remove a "floating ball" from a spinning roulette wheel and to call a "no-spin", ending the game and voiding all wagers. The appellants assert that the floating ball rule should have been approved as a rule of play by the AGCO, which regulates provincial lottery schemes. Since it was not so approved, the appellants claim that the roulette games they played did not qualify under the Criminal Code exemption against gambling and were therefore illegal.

On a summary judgment motion to dismiss the appellants' actions, Belobaba J. concluded that, even if the roulette games were illegal, the appellants would not be entitled to a remedy. He also granted summary judgment to the Ontario Lottery and Gaming Corporation with respect to two actions brought by the OLGC against the appellants for recovery of the amount owing on gambling loans.

At issue before the Court of Appeal was whether the games played by the appellants were illegal and whether the motion judge erred in finding that, even if they were, the appellants were not entitled to a remedy because their wagers were voided when the floating ball practice was used.

Writing for the Court, Simmons J.A. found that the floating ball practice is not a "rule of the game" that required approval by the AGCO. Reading the Gaming Control Act, 1992, S.O. 1992, c. 24 in accordance with the ruling in Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, Simmons J.A. held that the requirement to provide a complete description of the "rules of the game" is a requirement to describe the rules by which the game is played. It does not include an obligation to address every irregularity that may occur during a game of roulette, nor does it encompass a requirement to describe practices that do not affect the fairness and integrity of the game.

As Simmons J.A. explained, the practice of removing a floating ball results in a "no spin" being declared and all wagers voided. It is a relatively rare event and, due to the house advantage, casinos are more likely to lose money when the practice is used because they lose that opportunity to win. It is a "non-event" that has no impact on the fairness and integrity of the game and therefore need not be submitted to the AGCO for approval.

Despite concluding that casino operators were not required to obtain AGCO approval for their floating ball practice and that their failure to do so did not render the roulette games played by the appellants illegal, Simmons J.A. addressed the second ground of appeal, namely whether the appellants were entitled to a remedy for unjust enrichment had the roulette games been deemed illegal.

Simmons J.A. agreed with the appellants that, assuming the roulette games were illegal, all bets that they placed and lost would constitute enrichment of the casino operators at their expense. Simmons J.A. found, however, that the casino operators established "another juristic reason" for the enrichment. Citing the decision of the Supreme Court in Garland v. Consumers' Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629 Simmons J.A. explained that after a plaintiff has shown that no juristic reason exists to deny recovery for unjust enrichment, a defendant can attempt to demonstrate that there is a reason to deny recovery, with regard to the reasonable expectations of the parties and public policy considerations.

Simmons J.A. noted that during the period that the appellants were playing roulette at the casino, the casino was subject to thorough supervision by the AGCO to ensure that it was complying with the Gaming Control Act and the rules of play. Moreover, there is no evidence that the appellants complained to the AGCO about the conduct of the casino or that the AGCO had to issue any warnings or penalties in relation to the roulette games. All of the evidence indicates that it was reasonable for the casino operators to believe that the roulette games were legal.

In the result, the Court held that the roulette games played by the appellants were not illegal, and even if they were, the appellants would not be entitled to a remedy in unjust enrichment. The appeal was dismissed.

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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Stuart Zacharias
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