Canada: Court Of Appeal Summaries (October 13 To 17, 2014)

Last Updated: October 23 2014
Article by John Polyzogopoulos

Below are this week's summaries.  Topics include summary judgment in the limitation period context, property disputes involving religious organizations, family law, appellate jurisdiction for appeals from small damages awards, concurrent liability in tort and contract in the context of an agreement of purchase and sale of land and municipal freedom of information requests.  Have a nice weekend.

Hanisch v. McKean, 2014 ONCA 698

[MacPherson, Simmons and Gillese JJ.A]

Scott Turton, for the appellant
Gabrielle K. Kramer, for the respondent

Keywords: Appellate Jurisdiction, Sections 6 and 19, Courts of Justice Act, Final order, Negligent misrepresentation

The respondent purchased a 97-acre hobby farm from the appellant in 1998. The appellant and his wife then retained a 3-acre property adjacent to the respondent's newly purchased farm and built a retirement home where they have lived full-time since 2008. The appellant did not disclose to the respondent that there was an underground waterline originating from a spring on the farm that supplied water to the farm and to some of the neighbouring properties. Instead of disclosing it, the appellant provided the respondent a statutory declaration indicating among other things, that he was "not aware of any person or persons ... having any claim or interest in the said lands or any part thereof adverse to or inconsistent with [his] title and that [he was] positive that none such exists."

The respondent learned about the underground waterline in June 2007 when one of the neighbours supplied by the underground waterline complained about receiving contaminated water. The respondent immediately cancelled an order for 1000 turkey poults scheduled to be delivered to her farm. In a proceeding involving the appellant, the respondent and the neighbour (who complained about the contaminated water), the trial judge found that the appellant and the neighbour did not have a prescriptive easement for the use of the water supply from the respondent's land. The trial judge also held that the appellant was liable for negligent misrepresentation, and awarded the respondent damages in the amount of $25,500.

The respondent contended that the Court of Appeal lacked jurisdiction to entertain this appeal because it related solely to the damages awarded to her in the amount of $25,500.

(1) Does the Court of Appeal have jurisdiction to hear this appeal?

(2) Did the trial judge err in relying on a tortious duty of care distinct from the contract when the contract contained an entire agreement clause specifying that there was "no representation, warranty, collateral agreement or condition which [affected the] Agreement other than as expressed [therein]"?

(3) As per Central Trust Co. v. Rafuse, did the trial err in making a finding of negligent misrepresentation when the parties' relationship was premised on a contract (the agreement of purchase and sale for the farm) and their duties and obligations to each other flowed from that contract?

(4) Did the trial judge err in holding that the respondent relied on the statutory declaration or that her reliance was reasonable?

(5) Did the trial judge err in law by effectively acting as his own damage expert in the calculation of damages?

Appeal dismissed.

(1) Yes.  When determining the court's jurisdiction over orders having both final and interlocutory aspects, the Court of Appeal has generally distinguished between the final and interlocutory aspects of the order. Distinction is required by ss. 6(1)(b) of the Courts of Justice Act (CJA), which limits the appellate jurisdiction of the Court of Appeal to final orders. "Final order" as it appears in ss. 6 and 19 of the CJA must be read as meaning the entire final order, irrespective of what portions of the final order are under appeal.

When ss. 6(1), 6(2) and 19 of the CJA are read together, it is clear that the scheme of the sections is to give the Court of Appeal default jurisdiction over appeals from final orders of the Superior Court of Justice, subject only to the exceptions created by s. 19 of the CJA (and other specific statutory provisions). However, ss. 6(2) of the CJA underlines the intention to give the Court of Appeal default jurisdiction by providing that, where more than one court has jurisdiction over appeals in the same proceeding, the Court of Appeal may assume jurisdiction. Thus, "final order" as it seems in ss. 6 and 19 can only be "sensibly interpreted as meaning the whole of the final order". Otherwise, the proper appeal route from an order could change, depending on the terms of the order and the grounds of the appeal or cross-appeal.

(2) No.  "[A] separate Hedley Byrne duty of care in tort" in relation to a false statement should not be excluded by the entire agreement clause contained in the agreement of purchase and sale. The appellant's false statement was contained in the solemn declaration executed under oath and was delivered as part of a process contemplated by the agreement of purchase and sale.

(3) No.  The appellant's duty of care arose specifically from the respondent's foreseeable and reasonable reliance on the appellant's representations contained in the statutory declaration. Since the appellant's duty of care was not precluded by any specific term of the contract, Central Trust v. Rafuse does not exclude concurrent liability in tort.

(4) No.  The statutory declaration was intended to protect the respondent against not only existing interests inconsistent with her title to the farm but also against the risk that there were persons with a "claim" against her title. The appellant was such a person and he knew it. The appellant knew he relied on the shared waterline originating at the farm and he knew he was claiming the right to continue to use it. The appellant knew or ought to have known that his representation in the statutory declaration (executed under oath), was false. Therefore, in swearing the statutory declaration in the face of such knowledge, and in failing to consult with his long time lawyer about the shared waterline, the appellant failed to exercise the reasonable care that the circumstances demanded.

There was ample evidence in the record to indicate that the appellant had a direct financial interest in the transaction, that he had special knowledge of the underground shared water supply, that he made the representation in the statutory declaration deliberately, and that he provided the statutory declaration in response to a specific request from the respondent. Thus, the respondent's reliance on the statutory declaration was reasonable.

(5) No.  The trial judge calculated the respondent's damages arising from the appellant's misrepresentation by estimating that the lost revenue from the sale of five turkey flocks between 2007 and 2009. The trial judge arrived at a figure for expenses by examining the respondent's 2009 to 2011 income statements. The Court relied on McLean v. Shedden, 2012 ONCA 860, and held that because there was evidence capable of supporting the trial judge's damages calculation, which there was, it was open for him to calculate damages.

Okel v Misheal, 2014 ONCA 699

[Juriansz, Rouleau and Pepall JJ.A]

Mona Okel, acting in person
Peter Misheal, acting in person

Keywords: Civil Procedure, Family Law, Support Obligations, Rule 2.1.02(1), Rules of Civil Procedure, Motion for an Extension of Time to Appeal, Motion to Stay Court Order

There was a protracted dispute regarding Mr. Misheal's support obligations towards his former wife, Ms. Okel, and their children. In February 2013 an oral hearing was ordered to determine the enforceability of a court order terminating the support obligations and cancelling the arrears. Ms. Okel was unable to attend the scheduled hearing and judgment was granted in favour of Mr. Misheal. In December 2013, the Court of Appeal set aside the judgment and ordered the matter to proceed to another oral hearing.  Mr. Misheal brought a motion seeking to stay the court's order pending his appeal to the Supreme Court of Canada and a motion for an extension of time to file an appeal from the December 2013 order. Both motions were dismissed in July 2014. Mr. Misheal brought a motion to review that decision and stay the December 2013 order of the court.

(1) Should the decision to dismiss Mr. Misheal's motions to stay the court order pending his appeal to the Supreme Court of Canada and motion for an extension of time to appeal the December 2013 order be reviewed?

Motion dismissed

(1) No, the court held that both aspects of the motion were devoid of merit. The issue of a stay was moot because leave to appeal to the Supreme Court of Canada had been refused. The issue of an extension of time to appeal from the order of December 2013 was also moot because the Court of Appeal had already determined that the hearing should proceed and leave to appeal that decision was denied. The court held that Mr. Misheal's motion was another vexatious step in a protracted matrimonial dispute. The motion was dismissed on the basis of Mr. Misheal's written submissions pursuant to rule 2.1.02(1) of the Rules of Civil Procedure. They did not squarely address the December 2013 decision, but instead set out why he believes his support obligations should be terminated. The court held this was exactly the issue that it had ordered to proceed to an oral hearing, which had yet to occur.

Olumide v. Ottawa (City), 2014 ONCA 703

[MacFarland, LaForme and Lauwers JJ.A.]

A. Olumide, acting in person
J. Wright, for the respondent

Keywords: Application for Judicial Review, Information and Privacy Commissioner, Jurisdiction, Municipal Freedom of Information and Protection of Privacy Act, Request for Information from Municipality Denied.

This case involves an appeal of the Superior Court's dismissal of the appellant's motion to compel the City of Ottawa and politicians to disclose information about its transit system.

(1) Does the Court of Appeal have jurisdiction to hear this appeal?

The appeal was quashed and no costs were awarded.

(1) No. The appellant's motion and appeal were premature because the appellant had not yet exhausted all remedies under the applicable Municipal Freedom of Information and Protection of Privacy Act. Furthermore, the appellant needed to seek leave to appeal on this matter before it could be heard, but failed to so.

Gay Company Limited v General Sprinklers Inc., 2014 ONCA 707

[Hoy A.C.J.O., Feldman and Blair JJ.A.]

R.J. Mazar, for the appellant
C. Valente, for the respondent

Keywords:  Limitation period, Limitations Act, 2002, s. 4, discoverability, summary judgment, breach of contract

The appellant, a general contractor, hired the respondent to install a sprinkler system in a commercial building. The sub-contract between them required the respondent to "save harmless" the appellant from "any fines, cost, expenses, claims and charges". The appellant brought an action for breach of contract, alleging that defects in the sprinkler system caused water damage to the building. The action was commenced nearly 3 ˝ years after the water damage occurred.

The motion judge allowed the respondent's motion for summary judgment, dismissing the appellant's action.

Appeal dismissed.

The appellant's claim was statute-barred by the Limitations Act, 2002, s. 4. The motion judge correctly concluded that the appellant's cause of action arose when the water damage occurred, and not when, more than three years later, the appellant sent the respondent an invoice for the out-of-pocket expenses it had incurred in repairing the building. From the date that the water damage occurred, the appellant asserted that the respondent was responsible for the damage, sending letters to put the respondent on notice for the damage and estimating the repair costs. The discovery date of the appellant's claim was accordingly when the loss occurred.

Pankerichan v. Djokic, 2014 ONCA 709

[Doherty, Lauwers and Strathy JJ.A.]

Elena Mamay, for the appellant
Milena Protich, for the respondent

Keywords: Trusts, Real Property, Religious Institutions, Religious Organizations' Lands Act, "Neutral Principles of Law" Doctrine

The appellants are members of a Hamilton, Ontario congregation of the Serbian Orthodox Church (the "Church"), known as the Serbian Orthodox Church-School Congregation of St. Nicholas in Unity (the "Congregation"). The Congregation occupies a number of properties that it uses for religious and ancillary purposes. Its properties are held in trust under the provisions of the Religious Organizations' Lands Act ("ROLA"). The deeds to the Congregational properties convey them to, variously, certain named individuals as "Trustees of the Congregation of the Serbian Eastern Orthodox Church of St. Nicholas in Unity", or "In trust for the Congregation of the Serbian Eastern Orthodox Church of St. Nicholas in Unity", and in one instance, without naming the individuals, to "Trustees of St. Nicholas Serbian Orthodox Church". The deeds had the standard habendum clause, namely: "To have and hold unto the said grantees, their successors, and assigns, to and for their sole and only use forever." There are, however, no express trust terms in any of the deeds.

On September 1, 2005, the Diocesan Administrative Board, with the support of the Bishop, removed the Congregation's elected Executive Board and replaced it with a Temporary Trusteeship. This eliminated the Executive Board's ability to control and manage the property and financial affairs of the Congregation. The appellants applied for a declaration that the Congregation's elected trustees hold the Congregational properties in trust and that the elected trustees, not the Temporary Trusteeship appointed by the Diocesan Administrative Board, have authority to manage and deal with the properties. They also sought a declaration that the replacement of the Congregation's Executive Board by the Temporary Trusteeship "wrongfully invaded" a property trust.

The application judge refused to make the declarations or to order the requested consequential relief of reinstating the Executive Board, requiring new elections, and requiring an accounting by the Temporary Trusteeship.

The application judge concluded that the Diocese acted in compliance with the ROLA when it replaced the Executive Board of the Congregation with the Temporary Trusteeship. The members of the Temporary Trusteeship are now the trustees for the purposes of the ROLA.

He found that it was reasonable under both the Congregation's bylaws and ROLA, that the actions of the trustees are directed by the administrative decisions of the Executive Board (or temporary trusteeship) and subject to diocesan approval.

He further concluded that the Congregation's property is held in a charitable trust for the benefit of its members. "The Congregation falls within the definition of a 'religious organization' in section 1(1) of ROLA." He also found that "the Congregation's trustees fall within the definition of trustees in the [ROLA] as regards of the holding of real property." He noted, consistent with s. 3 of the ROLA, that "the religious organization may 'by resolution adopted at a meeting of the organization' provide for the appointment and removal of trustees," and that a trustee is to hold office until he or she dies, resigns or ceases to be a member of the organization, "unless the constitution or a resolution of the religious organization otherwise provides."

On appeal the appellants take the position that the Congregation, through the trustees and the Executive Board elected in 2005, has "overriding authority over matters relating to the Real Property which was granted to them [by] the Deeds." The appellants argue that under the ROLA, it was "not legal to constructively remove the trustees of the real property."  They assert that the Diocese's "purported authority" to do so, "must be subservient to provincial legislation and was therefore invalid in these circumstances."

The appellants also argue that the application judge erred by looking beyond the deeds to base his analysis on "the Statute, the resolutions made by the Diocese based upon the Statute, and the Diocese's Trusteeship that was imposed pursuant to the Statute." These documents, according to the appellants, are "irrelevant and extraneous factors." They argue that the application judge should have taken a rigorously secular, American approach to resolving church property disputes known as the "neutral principles of law" doctrine ("NPL doctrine").

Did the application judge err in finding that the Congregational properties are held in trust by the Temporary Trusteeship?

No. Appeal dismissed.


(1) The Purpose and Genesis of the ROLA
The appellants' argument is based on a misapprehension of the nature and purpose of the ROLA.

The Ontario Law Reform Commission's report on "Mortmain, Charitable Uses and Religious Institutions" noted that the Religious Institutions Act (the predecessor Act) was "originally designed to permit religious societies to acquire and hold land for places of public worship and related uses in a convenient way." The main advantage of the legislation, according to the Commission, was the benefit of perpetual succession for trustees. Without legislation these organizations would be treated in law like any other unincorporated association, and could "hold land only through individual trustees whose appointment, tenure and power would be governed by the more onerous provisions of The Trustee Act." However, there is no hint in the Commission's report or in the ROLA of any intention to force governance changes on religious organizations, for example, by making congregational democratic practices mandatory for hierarchical organizations. Section 3(2) of the ROLA, provides that "[u]nless the constitution or a resolution of the religious organization otherwise provides, a trustee holds office until he or she dies, resigns or ceases to be a member of the organization." This was the provision on which the application judge based his decision.

(2) The Court's Approach to Disputes within a Religious Organization
The law relating to property disputes within a religious organization can be resolved using a mix of ordinary trust and contract law principles the court applies to voluntary associations and analogous relationships.  Also, the application judge accurately observed that courts are reluctant to exercise jurisdiction over disputes within religious organizations that involve issues of church governance.

While it is fair to say that Canadian courts are still feeling their way through the principles underpinning the connection between civil law, on the one hand, and religious organizations and their internal laws, on the other, a relatively consistent method or pattern has emerged in property disputes. This can be seen in two recent decisions involving the Anglican Church of Canada, one by the British Columbia Court of Appeal and the other by this court: Bentley v. Anglican Synod of the Diocese of New Westminster, 2010 BCCA 506, 11 B.C.L.R. (5th) 209, leave to appeal refused, [2011] S.C.C.A. No. 26, and Incorporated Synod of the Diocese of Huron v. Delicata, 2013 ONCA 540, 117 O.R. (3d) 1, leave to appeal refused, [2013] S.C.C.A. No. 439. Each appeal court saw its task as construing the terms of the trust on which the properties were held. In doing so, each court considered the deeds, the applicable legislation, the canons or church law promulgated by each diocese, and, to some extent, the doctrinal context.

Therefore, while courts are cognizant of the unique implications of property disputes within religious organizations, they have nonetheless been willing to imply trust terms and to construe institutional documents that involve some aspect of religious doctrine.

(3) Application to this Dispute
The court concluded that the trustees who took title did so in accordance with The Religious Institutions Act or the ROLA and were properly empowered to do so by the Congregation under the terms of each statute, and that the Congregation's properties are held in trust under the ROLA.

The appellants take issue with the application judge's finding that the actions of the Diocese in replacing the Executive Board of the Congregation with Temporary Trustees complied with s. 3 of the ROLA. However, the court found that the Bylaws make it clear that the powers of trustees under the ROLA with respect to the acquisition, disposition and mortgaging of land are clearly subject to the approval of the Diocese. The application judge therefore correctly concluded that the Temporary Trusteeship holds the Congregational properties in trust. The duty of the trustees to hold the properties under the direction of the Temporary Trusteeship follows from s. 3 of the ROLA, art. 29.9 of the Statute and arts. 41 and 56 of the Bylaws.

(4) The American "Neutral Principles of Law" Doctrine
The appellants argue that the application judge erred by failing to apply a strict interpretation of the American NPL doctrine. Under this approach, they argue, he should have excluded from consideration virtually all of the Church, Diocesan and Congregational documents.

The court notes that the NPL doctrine is not the mandatory approach to all church property disputes, and the trial judge effectively took the approach required by it.

First, the court notes that it is important to keep in mind that the NPL doctrine is rooted in the First Amendment of the American Constitution and American constitutional law is "not particularly helpful" since the Canadian Constitution does not contain an "anti-establishment principle" analogous to the American First Amendment. In the absence of the anti-establishment concerns that exist under the American constitution, Canadian courts have not hesitated to interpret religious documents that involve doctrinal matters when adjudicating church property cases.

Second, contrary to the appellants' argument, when the NPL doctrine is viewed in its full scope, it is clear that the application judge's decision is consistent with both this court's usual approach and the neutral principles approach. In so finding that the Diocese had the administrative authority to replace the Executive Board with the Temporary Trusteeship, the application judge did not determine any doctrinal issues.

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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John Polyzogopoulos
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