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

Last Updated: November 28 2013
Article by Andrew C. Murray

1.  Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601 (Goudge, Gillese and Pepall JJ.A.), October 2, 2013 

2.  Bennett Estate v. Iran (Islamic Republic of), 2013 ONCA 623 (Hoy ACJO, Laskin and Tulloch JJ.A.), October 22, 2013 

3.  Arora v. Whirlpool Canada LP, 2013 ONCA 657 (Hoy ACJO, Feldman and Simmons JJ.A.), October 31, 2013 

4.  Lauzon v. AXA Insurance (Canada), 2013 ONCA 664 (MacPherson, Gillese and Hourigan, JJ.A.), October 31, 2013 

5.  Dickerson v. 1610396 Ontario Inc. (Carey's Pub & Grill), 2013 ONCA 653 (MacFarland, Watt and Epstein, JJ.A.), October 31, 2013

1.  Central Sun Mining Inc. v. Vector Engineering Inc., 2013 ONCA 601 (Goudge, Gillese and Pepall JJ.A.), October 2, 2013

Following a major landslide in 2007 at a Costa Rican gold mine, litigation was advanced against the consultants who had completed studies related to the building and operation of the mine, which studies turned out to be badly flawed.  This appeal related to whether Ontario should assume jurisdiction over the action. 

The appellant, Central Sun Mining, brought a claim against the respondent engineering consultants for negligent misrepresentation, negligence and breach of contract in providing services to Central Sun. The U.S.-based respondents moved for an order that the Ontario court should not assume jurisdiction over the action because there was no real and substantial connection to the province.  The motion judge dismissed the action on that basis.   

At issue before the Court of Appeal was whether the motion judge correctly concluded that neither Central Sun's claim for negligent misrepresentation nor its claim for negligence occurred in Ontario. Also at issue was whether the respondents had successfully rebutted the presumption of connection with Ontario if the torts were committed in Ontario. 

Citing the factors outlined in the Supreme Court's decision in Van Breda, the Court found that the negligent misrepresentation – the studies provided by the respondents and relied upon by the appellant - took place in Ontario, at Central Sun's Toronto offices. There was therefore a presumptive connection between the action and Ontario. Moreover, even if the studies had only been received at the Vancouver office, the respondents foresaw that they would have been acted upon in Toronto. Where corporations have various offices in various locations, a defendant cannot escape liability simply because it sent its studies to the plaintiff outside of Ontario.

Since the tort was committed in Ontario, Ontario must take jurisdiction over the entire action unless the respondents could rebut the presumptive connection to the province. The Court rejected the motion judge's finding that the respondents did so by demonstrating the relative weakness of the Ontario connection, holding that it is at the forum conveniens stage that such a comparison is important. At the jurisdiction stage of the analysis, the respondents' task is to show no real relationship or, at most, a weak relationship, and that had not been shown. The Court allowed the appeal and referred the respondents' motion back to the motions court for consideration of the forum conveniens issue.

2.  Bennett Estate v. Iran (Islamic Republic of), 2013 ONCA 623 (Hoy ACJO, Laskin and Tulloch JJ.A.), October 22, 2013

This case relates to a fascinating cross-border and multi-jurisdictional lawsuit.  At the Court of Appeal, the proposed intervenor, Dr. Sherry Wise, successfully appealed the motion judge's dismissal of her motion for leave to intervene as an added party in a proceeding to enforce in Canada a US judgment against Iran.  The underlying subject-matter of the proceeding related to a 1997 terrorist attack in Israel that caused injury and damages.

Dr. Wise commenced an action in British Columbia against the Islamic Republic of Iran and the Iranian Ministry of Information and Security for the damages she sustained in the 1997 attack in Israel, pursuant to the 2012 Justice for Victims of Terrorism Act (JVTA). The U.S. respondents had already obtained a significant judgment in the United States in 2007 against Iran under American legislation similar to the JVTA. The American legislation was enacted prior to the JVTA; therefore, the U.S. respondents were able to secure a judgment before Dr. Wise could do so.  The U.S. respondents sought to have their judgment recognized in Canada pursuant to s. 4(5) of the JVTA. Iran was noted in default and the Attorney General of Canada was granted intervenor status.

Fearing that enforcement of the American judgment against Iran's assets in Canada would leave no funds to satisfy her own potential judgment or the potential claims of other Canadian claimants, Dr. Wise sought leave to intervene in the respondents' motion to recognize the US judgment in Canada.  She wanted the chance to make her own submissions that the JVTA does not suspend the limitation period which normally applies to an action to recognize a foreign judgment and that, as such, the U.S. respondents' action was statute-barred.  The motion judge dismissed Dr. Wise's motion, holding that she had not met any of the three criteria to intervene outlined in Rule 13.01(1) of the Rules of Civil Procedure.

Dr. Wise argued before the Court of Appeal that the motion judge erred in concluding that she had not met any of the criteria outlined in Rule 13.01(1), that granting her intervenor status would result in further delay and that she would not make a useful contribution to the hearing. She submitted that, if her appeal was allowed, she would file a factum by October 25 addressing the limitation period issue, and not seek to alter the October 31 date set for the continuation of the motion. 

The Court of Appeal found that the motion judge had mischaracterized the nature of the respondents' interest, therefore erring in concluding that the appellant did not satisfy the criteria in Rule 13.01(1). Until the U.S. respondents succeed in having their judgment recognized in Canada, they were not judgment creditors in Canada. The Court also noted that a person need satisfy only one of the criteria in Rule 13.01(1), not all three, in order to be able to successfully intervene.

The Court found that Dr. Wise satisfied two of the three applicable criteria:  she had a contingent interest in the subject-matter of the proceeding and might be adversely affected by a judgment recognizing the American judgment. The Court also held that Dr. Wise would make a useful contribution to the hearing, as no other party sought to make the arguments that she advanced, notably the limitation period argument. Moreover, these arguments would not necessitate the filing of further evidence and would not cause further delay. The appeal was granted and Dr. Wise was permitted to intervene in the enforcement proceedings. 

3.  Arora v. Whirlpool Canada LP, 2013 ONCA 657 (Hoy ACJO, Feldman and Simmons JJ.A.), October 31, 2013

Sometimes the focus of a case involves the airing of dirty laundry.  In this case, however, it literally involved the dirty laundry machine itself!  To the chagrin of the plaintiffs in this proposed class action, dirty laundry might have yielded a better outcome.  This is the rare example of an unsuccessful certification motion solely on the basis that the claim failed to disclose a cause of action. 

The appellants sought to certify a class action against Whirlpool.  They claimed damages for breach of express and implied warranty, breach of the Competition Act, negligence and waiver of tort. They alleged that Whirlpool's front-loading washing machines were poorly designed, making them vulnerable to a build-up of sludge, soils, mould, fungi, and mildew, collectively called "scrud", and prone to unpleasant odours.  There was no suggestion that the machines were dangerous or could cause injury; the crux of the claim was that the machines were poorly designed, not worth their purchase price.  The design flaws in these front-loading machines were notorious.  The class sought entitlement to damages for their alleged overpayment. The motion judge refused certification, finding that none of the claims disclosed a cause of action.  The Court of Appeal agreed, dismissing each of the four primary grounds of appeal.

The first argument rejected by the Court of Appeal related to breach of express warranty.  The Court held that the motion judge had correctly concluded that it was plain and obvious that the express warranties provided by Whirlpool did not cover the claims advanced by the appellants. The appellants did not sue to correct defects in material or workmanship, only alleged defects in design.

On the claim for breach of implied warranty, the Court again agreed with the motion judge – the claim against Whirlpool for breach of the warranty of fitness for purpose implied under the Sale of Goods Act had no reasonable prospect of success. The remedy under the Sale of Goods Act is against the seller, not the manufacturer, and Whirlpool did not sell the machines directly to consumers.  There was no basis, in this case, to relax the doctrine of privity of contract. 

With respect to the Competition Act claim, the Court held that there was no common express representation pleaded which could convert an omission into a misrepresentation by implication. There was also no duty to disclose.  Thus, it was plain and obvious that a claim for breach of s. 52 of the Competition Act could not succeed.  A failure to disclose an alleged defect is not a representation for the purpose of s. 52 of the Act.

Turning to the appellants' claim for economic loss for negligent design, the Court agreed with the motion judge that the appellants did not have a claim for damage to property.  The Court also found that the motion judge was entitled to decide on the certification motion that any duty of care should be negated for policy reasons.  A full factual record after a trial was not required.  The Court upheld the motion judge's conclusion that the negligence claim had no reasonable prospect of success.  The law of negligence would have to be fundamentally altered for the claim to succeed. 

Finally, the Court agreed with the motion judge that there was no predicate wrongdoing on which to base a claim of waiver of tort.

4.  Lauzon v. AXA Insurance (Canada), 2013 ONCA 664 (MacPherson, Gillese and Hourigan, JJ.A.), October 31, 2013

The appeal answers an important question concerning procedural protocols when the Insurance Act appraisal process has been invoked, as it relates to an insurer's request for the attendance by an insured at an examination under oath.

The plaintiff, Daniel Lauzon, who was the appellant before the Court of Appeal, made a claim against his insurer, AXA Insurance, for damage to his property caused by a flood. He provided AXA with a proof of loss for approximately $172,000.00, but did not provide documentation to support the amounts claimed. AXA initiated the appraisal process under s. 128 of the Insurance Act and, when Lauzon refused to attend an examination under oath or to answer any questions relating to the quantum of claimed losses, AXA moved for an order compelling him to be examined on the scope and quantum of his damages and to produce documentation in support of his claim. Lauzon was ordered to produce documentation in support of his claim and to submit to an examination on the scope and quantum of his damages.  AXA was awarded costs of the motion.

Lauzon appealed, submitting that the motion judge lacked jurisdiction to make the order because AXA's invocation of the appraisal process extinguished its right to examine him. Case law existed which confirmed that the initiation of litigation did not oust the obligation to participate in an examination under oath, but there was not a specific prior case dealing with the same question in the appraisal context.

The Court dismissed Lauzon's appeal, agreeing with the motion judge that Lauzon's proof of loss was "substantially deficient" and fell "far short" of what was required. The Court held that AXA's invocation of the appraisal process did not oust its contractual right to compel the appellant to attend to be examined. The Court also denied Lauzon's request for leave to appeal the costs order, finding that he failed to show any error in the motion judge's exercise of his discretion.

5.  Dickerson v. 1610396 Ontario Inc. (Carey's Pub & Grill), 2013 ONCA 653 (MacFarland, Watt and Epstein, JJ.A.), October 31, 2013

This appeal deals with the complicated intersection of judgments for personal injuries and the application of the Bankruptcy and Insolvency Act (BIA).

The respondent, David Radcliffe, was convicted of the criminal charge of aggravated assault against the appellant.  The appellant brought a civil suit against the respondent for damages for personal injury. At trial, a civil jury found that the appellant's injuries were caused or contributed to by deliberate or negligent acts of the respondent and awarded damages in favour of Dickerson of more than $1 million. Radcliffe then filed a proposal under s. 62(1) of the Bankruptcy and Insolvency Act. Dickerson brought a motion seeking declarations that:

  1. s. 69.39 of the BIA does not operate with respect to enforcement of the judgment against the bankrupt;
  2. the damages were awarded in accordance with s. 178(1)(a.1) of the BIA, which applies to an award of damages in a civil proceeding for bodily harm intentionally inflicted; and
  3. the judgment survived the bankruptcy and was not a debt released by an order of discharge.

The motion judge found that the civil judgment obtained against the respondent did not fall within s. 178(1)(a.1)(i) of the BIA and dismissed the motion.  If this section of the BIA applied, a discharge order would not release the bankrupt from the judgment.  

The Court of Appeal agreed with Dickerson's arguments, noting that the intentional infliction of bodily harm falls within the scope of s. 178(1)(a.1)(i). The Court distinguished this case from those in which courts concluded that the provision did not apply by finding that the intent to inflict bodily harm could be proved directly or reasonably inferred from the facts. The respondent had been convicted of aggravated assault and the civil judgment was based on the same assault. The Court held that the motion judge committed a palpable and overriding error in concluding that the respondent did not intentionally injure the appellant. The appeal was allowed.

The decision strikes a fair balance for victims – if you intend to cause physical harm to another, you cannot obtain relief from paying the damages you caused by going bankrupt or making a proposal under the BIA

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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Andrew C. Murray
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