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

Last Updated: October 31 2013
Article by Mark J. Freiman

1. Delicata v. Incorporated Synod of the Diocese of Huron, 2013 ONCA 540 (Rosenberg, Rouleau and Pepall JJ.A.), September 4, 2013

2.  Kutlesa v. Kutlesa, 2013 ONCA 549 (Cronk, Blair and Strathy JJ.A.), September 9, 2013

3.  Apotex Inc. v. Abbott Laboratories, Limited, 2013 ONCA 555 (Goudge, Watt and Pepall JJ.A.), September 12, 2013

4.  Detlor v. Brantford (City), 2013 ONCA 560 (Doherty, Laskin and Simmons JJ.A.), September 13, 2013

5.  Durham (Regional Municipality) v. Oshawa (City), 2013 ONCA 573 (Weiler, Sharpe and Rouleau JJ.A.), September 25, 2013

1.  Delicata v. Incorporated Synod of the Diocese of Huron, 2013 ONCA 540 (Rosenberg, Rouleau and Pepall JJ.A.), September 4, 2013

What began as a theological conflict within the Anglican Church devolved into a dispute over church property and, ultimately, the interpretation of three words in a governing Canon.

In 2008, the membership of St. Aidan's Anglican Church in Windsor voted to leave the Anglican Diocese of Huron. This decision, which reflected fundamental differences within the Anglican Church with respect to Biblical interpretation, came about due to the position adopted by the Diocese and the Anglican Church of Canada on blessing same-sex unions. This position was unacceptable to the members of St. Aidan's, a theologically conservative, evangelical congregation.

After breaking with the Diocese, the churchwardens of St. Aidan's, Christine Delicata and Pat Hyttenrauch, brought an action in Superior Court against the Incorporated Synod of the Diocese of Huron and its bishop, Robert Bennett, seeking, among other things, a declaration that the members of the church were the beneficial owners of the church property and of the St. Aidan's Bequeathment and Financial Fund, a charitable foundation established and maintained by St. Aidan's members. Delicata and Hyttenrauch were designated representative plaintiffs for the more than one hundred congregants who voted to leave the Diocese. The Diocese and Bennett sought its own declaration of ownership of the church property. The Diocese also sought an accounting of the charitable foundation's funds and an order directing transfer of the foundation to the parish.

The actions, which were heard together, turned on the interpretation of Canon 14, which governs the Diocese of Huron. Canon 14 stipulates in part that the Diocese holds all real property "in trust for the benefit of the Parish or congregation."

The central issue at trial was the meaning of the words "Parish or congregation". The St. Aidan's parties argued that a parish is a fluid concept that describes the people who comprise a congregation at any one time, while the Diocese submitted that a parish is a static entity that continues in perpetuity regardless of changes in membership. The trial judge preferred the Diocese's position, finding that while members in a parish may come and go, the parish itself remains and cannot sever itself from the Diocese. The trial judge concluded that the Diocese was the beneficial owner of both the church property and the St. Aidan's Bequeathment and Financial Fund.

The St. Aidan's parties appealed, arguing that the trial judge erred by treating the words "Parish or congregation" as interchangeable and, in the alternative, in failing to grant an equitable remedy on the basis of unjust enrichment over the church building and the charitable foundation. The Diocese sought leave to cross-appeal the order that each party bear its own costs in the interest of preserving harmony within the church.

Writing for the Court of Appeal, Pepall J.A. agreed with the trial judge's analysis, finding that the words "Parish or congregation" refer to a "static entity that may not be severed from the Diocese and that is not defined by any particular group of members at any particular time." Pepall J.A. explained that the appellants' interpretation of the provision was contrary to the language and purpose of Canon 14, which states that church property cannot be sold, mortgaged or otherwise disposed of without the Bishop's prior consent. This indicates that the Diocese controls all church property for the benefit of its members, an objective which would be frustrated by the appellants' interpretation. The appellants' "snapshot" vision of a parish as the people who comprise a congregation at a particular time would allow the Diocese's property to be dispersed at the will of its congregants.

Moreover, under the appellants' interpretation, any group of congregants composing a vestry in accordance with the minimal requirements outlined in Canon 18 could constitute a parish and, upon leaving the Diocese, take church property with them.

Pepall J.A. went on to note that the appellants' interpretation is inconsistent with the Anglican Church of Canada Act, S.O. 1979 c. 46, which provides at s. 2(1) that land "shall not be sold or leased, mortgaged or otherwise encumbered ... except with the consent of the vestry of the church or congregation interested therein and of the bishop of the diocese ...".

Pepall J.A. also rejected the appellants' unjust enrichment claim, finding that those congregants who contributed to the maintenance of the church property knew that they were doing so for the benefit of St. Aidan's Parish of the Diocese of Huron.

With respect to the St. Aidan's Bequeathment and Financial Fund, Pepall J.A. agreed with the trial judge that funds provided by it to the dissident Anglican Network in Canada constituted a breach of the objects of the charitable foundation to "preach, promote and advance the spiritual teachings of the parish of St. Aidan's Anglican Church of Windsor." Because "parish" is not synonymous with the current membership of the church but is in fact inextricably linked to the Diocese, it was a breach of trust for the appellants to use foundation funds to advance claims in opposition to the Diocese.

Turning to the cross-appeal on costs, Pepall J.A. agreed with the Diocese that the judge erred in departing from the presumption that the successful party is entitled to its costs. As Pepall J.A. explained, "litigation over spiritual or religious convictions should not presumptively have a safe harbour from costs." The respondents were successful at trial and are therefore entitled to their costs. A desire for harmony does not rebut this presumption.

2.  Kutlesa v. Kutlesa, 2013 ONCA 549 (Cronk, Blair and Strathy JJ.A.), September 9, 2013

As part of the disposition of a family law proceeding between Maryann and Jozo Kutlesa, Justice M.D. Parayeski of the Superior Court of Justice made an order vesting in Maryann Kutlesa title to a cottage property on Browning Island in Lake Muskoka. A property parcel registry search conducted about a month prior to the trial had revealed that the impugned property was owned by a numbered company of which Jozo Kutlesa was the sole shareholder and officer.

A third party, John Kotsiou, appealed this order, claiming that in the period between the registry search and the trial he had purchased a fifty percent interest in the property from Mr. Kutlesa and the numbered company. He argued that the trial judge erred in law in vesting in Ms. Kutlesa the fifty percent interest in property that her husband no longer owned or controlled.

At the time of the trial, Ms. Kutlesa and her counsel were unaware of the sale. Mr. Kutlesa, the respondent in the family law proceeding, did not attend at court. Having since discovered the sale, Maryann Kutlesa commenced an action –still pending– against Jozo Kutlesa and Kotsiou under the Fraudulent Conveyances Act, seeking to set aside the transfer of the fifty percent interest.

With respect to Kotsiou's purported appeal, the Court of Appeal noted that he was not a party to the family law proceeding and did not take any steps to be added as a party to that action or to set aside or vary the order. The Court held that Kotsiou has no standing to bring an appeal and that there was therefore no appeal properly before it.

The Court dismissed the purposed appeal, without prejudice to any actions that may be available to Kostiou to address the vesting order.

3.  Apotex Inc. v. Abbott Laboratories, Limited, 2013 ONCA 555 (Goudge, Watt and Pepall JJ.A.), September 12, 2013

The appellant appealed from a partial summary judgment of Quigley J. dismissing its unjust enrichment claim for disgorgement of the respondents' profits or revenues.

The appellant submitted before the Court of Appeal that it should be entitled to assert its claim because it may be determined at trial that the settlement agreement between the parties, which gave the Federal Court jurisdiction to award damages between September 2008 and May 2009, is unenforceable under s. 8 of the Patented Medicines Regulations, in which case the trial judge should be able to make a disgorgement order so as to make up for its unenforceable right to damages.

Noting that the appellant conceded that the settlement agreement provided it with no more than the damages calculated under s. 8 of the Regulations up to May 2009 and that those damages do not include the claimed disgorgement, the Court held that if the agreement is indeed unenforceable, the deprivation suffered by the appellant could not be greater than its damages for that period pursuant to the Regulations. That deprivation could not extend to disgorgement of the respondents' profits or revenues.

The Court also rejected the appellant's submission that despite the Regulations it should be allowed to pursue an unjust enrichment claim for disgorgement, finding that the profits or revenues for which the appellant claimed disgorgement were due to the operation of the scheme of the Patent Regulations. By affording the respondents the right to be in the market to the exclusion of the appellant, the Regulations provide a "valid juristic reason" for the profits and revenues earned during the relevant time period.

The appeal was dismissed.

4.  Detlor v. Brantford (City), 2013 ONCA 560 (Doherty, Laskin and Simmons JJ.A.), September 13, 2013

In this decision, the Court of Appeal considered a challenge to two by-laws passed by the City of Brantford.

At the heart of this case was a land dispute between the city and the Haudenosaunee people. Brantford lies within an area of land known as the Haldimand Tract, once held by the Haudenosaunee pursuant to the Nanfan Treaty of 1701 and the Haldimand Proclamation of 1784. The Haudenosaunee claim that they never surrendered the land and maintain that they alone have the right to control how it is developed. In 2007, the Haudenosaunee Confederacy Chief's Council created the Haudenosaunee Development Institute (HDI) which, despite having no legal authority to do so, claimed the right to regulate development within the Haldimand Tract. HDI demanded that developers obtain its approval and pay it substantial administrative fees. When met with resistance by developers, HDI and its supporters engaged in a series of activities to stifle urban development. These measures, which included blockading development sites, obstructing public roads and causing work stoppages, led to violence and intimidation and had a disruptive effect on the city.

In response to these activities, Brantford City Council passed two by-laws pursuant to its authority under s. 128(1) of the Municipal Act, 2001, S.O. 2001 c. 25: by-law 63-2008 prohibited unauthorized interference with development and construction on private property and by-law 64-2008 prohibited the imposition of unauthorized fees or other conditions on development. Significantly, Council discussed the proposed by-laws with the City solicitor behind closed doors before proceeding to pass them quickly and unanimously without discussion.

Following Council's passage of the by-laws, the City of Brantford sought an injunction to restrain HDI and its supporters from participating in the activities prohibited under them. The appellants brought an application to quash the by-laws, challenging the process and procedures by which they were enacted. The application judge granted the City's injunction and dismissed the application to quash. HDI unsuccessfully sought leave to appeal the injunction.  The Court of Appeal heard HDI's appeal of the dismissal of their application to quash the by-laws.

HDI submitted before the Court that the application judge erred in holding that the passage of the by-laws complied with the open meeting requirement in s. 239 of the Municipal Act, 2001 and in finding that the by-laws were not passed in bad faith. HDI also challenged the by-laws on constitutional grounds, claiming that the application judge erred in finding that they did not breach s. 2(b) or s. 15 of the Charter as well as in holding that by-law 64-2008 was not rendered invalid or inapplicable to the Haudenosaunee by s. 91(24) of the Constitution Act 1867.

Writing for the Court, Laskin J.A. dismissed the appellants' submission that Council's decision to discuss the two by-laws behind closed doors violated the open meeting requirement. While s. 239(a) of the Municipal Act, 2001 does require that "all meetings shall be open to the public," s. 239(2) lists a number of exceptions to that requirement, including s. 239(2)(f) which holds that a meeting or part of a meeting may be closed to the public if the subject matter under consideration is advice that is subject to solicitor-client privilege. Laskin J.A. rejected the notion that the City's claim of solicitor-client privilege was specious. Faced with a crisis, City Council had to protect the citizens of Brantford without overstepping its authority. Litigation was a likely outcome. Council needed to seek advice from the City solicitor on how best to proceed. Laskin J.A. also dismissed the appellants' claim that Council waived any privilege by including the Chief and Deputy Chief of Police in its discussion with the City solicitor, finding that Council and the police shared the common interest of ensuring that the by-laws were lawful and enforceable and would address the disturbances caused by HDI.

Noting that s. 239.1 of the Municipal Act, 2001 entitles any party to challenge a municipality's decision to close a meeting to the public by requesting an investigation into whether Council complied with the open meeting provisions of the statute, Laskin J.A. found that the appellants' submission was further undermined by its failure to exercise the right to seek an independent investigation.

Turning to the appellants' claim that the application judge erred in finding that the by-laws were not passed in bad faith, Laskin J.A. noted that while the Superior Court has the power to quash by-laws passed in bad faith, municipalities are presumed to have acted in good faith. As the Supreme Court held in Ottawa (City) v. Boyd Builders Ltd., [1965] S.C.R. 408, the party seeking to quash the by-law bears the onus of proving otherwise. Although the Court of Appeal accepted an expansive definition of bad faith in Equity Waste Management of Canada v. Halton Hills (Town) (1997), 35 O.R. (3d) 321 (C.A.), Laskin J.A. agreed with the application judge that the appellants failed to rebut the presumption that both by-laws were passed in good faith. 

Laskin J.A. considered and rejected each of the "badges" of bad faith which the appellants pointed to as evidence that Council acted unreasonably in passing the by-laws. Laskin J.A. dismissed the appellants' claim that Council's resolution to close the meeting was deficient and that it failed to give meaningful advance notice to the public about the nature of the by-laws under consideration, finding that given the context of what was occurring in Brantford at the time, no reasonable citizen would have had any doubt about was to be discussed. The Haudenosaunee and HDI would or should have been aware that the two proposed by-laws may affect their interests. Nonetheless, while the actions of HDI were the catalyst for the passage of the by-laws –as acknowledged in the preamble to each by-law—neither of them targeted or singled out the Haudenosaunee or HDI but in fact applied to anyone who engages in the prohibited activities. Laskin J.A. concluded that the appellants were therefore not entitled to any special notice of the by-laws beyond the general notice which was provided to the public.

With respect to the appellants' Charter claims, Laskin J.A. agreed with the application judge that there was no breach of s. 15 because the by-laws did not specifically target the Haudenosaunee. He found, however, that while most of the infringements on freedom of expression could be justified under s. 1, the ban on a "request" and an "invite" in by-law 64-2008 failed the proportionality branch of the Oakes test. Pursuant to the Court's discretion under s. 273(1) of the Municipal Act, 2001 to quash a by-law for illegality in whole or in part, Laskin J.A. ordered those words struck from by-law 64-2008 and the word "sign" struck from by-law 63-2008. Laskin J.A. concluded that with the offending words severed, the by-laws were constitutional and did not prevent lawful and peaceful protest.

Finally, on the appellants' submission that by-law 64-2008 was rendered invalid or inapplicable to the Haudenosaunee by s. 91(24) of the Constitution Act 1867, Laskin J.A. found that the federal legislative power in relation to "Indians, and Lands reserved for the Indians" does not render either by-law ultra vires or inapplicable to the Haudenosaunee. Laskin J.A. rejected the appellants' claim that the purpose and effect of the by-law was to regulate the Haudenosaunee's assertion of its treaty rights, infringing on s. 91(24) of the Constitution Act 1867. He noted that by-law 64-2008 was enacted under provincial power in relation to property and civil rights. Moreover, it did not single out the Haudenosaunee, but rather prohibited everyone from engaging in the enumerated activities.

Laskin J.A. also dismissed the appellants' claim that by-law 64-2008 was nonetheless inapplicable to the Haudenosaunee because it affects the "core of Indianness" as prohibited by Paul v. British Columbia (Forest Appeals Commission), [2003] 2 S.C.R. 585. Laskin J.A. explained that the "core of Indianness" includes only matters that concern the status and rights of Aboriginal peoples as protected under s. 35(1) of the Constitution Act, 1982.  The City of Brantford "has every right to pass legislation to control lawlessness and nuisances on its streets" and the Haudenosaunee, as citizens of Brantford, are subject to the by-law.

5.  Durham (Regional Municipality) v. Oshawa (City), 2013 ONCA 573 (Weiler, Sharpe and Rouleau JJ.A.), September 25, 2013

At issue in this appeal was the application of the two-year limitation period in the Limitations Act, 2002, S.O. 2002, c. 24, to a dispute involving the transfer of responsibility for public transit from the City of Oshawa to the regional municipality of Durham.

This dispute arose from a 2004 recommendation of Durham's Commissioners of Planning, Finance and Works that responsibility for operating public transportation systems be transferred from eight lower-tier municipalities, including the City of Oshawa, to the upper-tier municipality of Durham. Consideration of the transfer by Oshawa and Durham centred on responsibility for unfunded liabilities. Oshawa was particularly concerned about being liable for significant unfunded liabilities owed to unionized transit employees.

Ultimately, Durham council adopted by-law 85-2004 transferring the responsibilities for public transportation from the lower-tier municipalities to Durham. The by-law, which had an effective date of January 2006, was approved by Oshawa council on February 7, 2005. The transfer of assets and liabilities was addressed in section 2 of the by-law. Section 2(k) stipulated that the amount and payment of unfunded liabilities existing at the effective date should be negotiated by Durham and the lower-tier municipalities. Section 2(o) provided for a right to request arbitration of any unresolved matters under the by-law in the event that no agreement could be reached by the parties by April 1, 2006.

On April 1, 2006, Oshawa and Durham had not reached an agreement with respect to responsibility for employee-related unfunded liabilities in the amount of $8.9 million. However, neither party requested arbitration at that time and negotiations continued.

By 2009, the issue of unfunded employee-related liabilities had come to a head. On April 20, 2009, Oshawa council passed a resolution denying responsibility for the unfunded liabilities and stating that the limitation period for referring the matter to arbitration had expired on March 31, 2008. Two days later, Durham council adopted a resolution referring the issue to arbitration within ninety days. The following month, Oshawa adopted a further resolution holding that the time for referring the matter to arbitration had passed. Durham countered with a resolution to commence legal proceedings against Oshawa to compel it to arbitration on the issue of unfunded liabilities.

The matter under appeal arose from a statement of claim issued by Durham against Oshawa on March 22, 2011, seeking payment for unfunded liabilities. Oshawa responded with a motion for summary judgment seeking to dismiss Durham's claim on the basis that it was commenced after the two-year limitation period had expired. Oshawa's motion was dismissed, the judge finding that the two-year limitation period did not begin to run against Durham until April 21, 2009, when Durham received notice that Oshawa city council had passed a resolution denying responsibility for the unfunded liabilities and holding that the limitation period for referring an unresolved matter to arbitration had expired. The motion judge held that because municipal staff cannot bind a municipality, the limitation period cannot be triggered until municipal council formally confirms its position denying liability. Accordingly, Durham's action was commenced within the limitation period. 

The appeal turned on the interpretation of the discoverability principle, specifically when the two year limitation period began to run having regard to the definition of when a claim is "discovered" pursuant to s. 5(1) of the Limitations Act.

Writing for the Court, Rouleau J.A. dismissed Oshawa's claim that the limitation period began to run on April 1, 2006 because Durham knew that there was no agreement on the issue of unfunded liabilities. Rouleau J.A. noted that although by-law 85-2004 provided that the liabilities of the lower-tier municipalities relating to public transit were to be transferred to Durham, the amount and payment of those liabilities was to be negotiated between the parties. The by-law did not create a debt or impose an obligation to pay; it simply imposed an obligation on Durham and Oshawa to negotiate. Rouleau J.A. also pointed out that the by-law provided a right to submit outstanding disputes to arbitration beginning on April 1, 2006, but did not require the parties to arbitrate or to do so by a particular date. 

Therefore, the inability of the parties to resolve the issue of unfunded liabilities by April 1, 2006 did not trigger the running of the limitation period from that date. It was only when Oshawa council passed a formal resolution refusing to continue the negotiations and refusing to arbitrate that Durham council ought reasonably to have known that its action was the appropriate means to seek to remedy its loss.

Rouleau J.A. also dismissed Oshawa's alternative position that, even if the discoverability principle applied, it was by no later than June 2007 –when Oshawa's position that it would not agree to assume the unfunded liabilities was acknowledged by Durham in a staff report presented to council – that a reasonable person exercising due diligence would have known of a potential claim against Oshawa for the unfunded liabilities. In Rouleau J.A.'s view, the fact that a decision was made at the June 2007 Durham council meeting to withhold the tabling of the report indicated that a compromise on the unfunded liabilities was still possible and that negotiations had not yet run their course. It was not until April 20, 2009, when Oshawa council adopted its resolution, that Durham knew that the unfunded liabilities issue was no longer negotiable and could be said to have "discovered" its claim under s. 5(1) of the Limitations Act.

The Court concluded that Durham's claim was commenced within the two-year limitation period and that there is no genuine issue for trial on the limitation issue. 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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