Canada: Top 5 Civil Appeals From The Court Of Appeal (October 2014)

Last Updated: October 27 2014
Article by Mark J. Freiman
1. Cowderoy v. Sorkos Estate, 2014 ONCA 618 (Blair, Watt and Lauwers JJ.A), September 3, 2014

2.  Mauldin v. Cassels Brock & Blackwell LLP, 2014 ONCA 641 (Strathy C.J.O. (In Chambers)), September 16, 2014

3. Mangal v. William Osler Health Centre, 2014 ONCA 639 (Feldman, MacPherson and Hourigan JJ.A.), September 17, 2014

4.  Algonquins of Pikwakanagan v. Children's Aid Society of the County of Renfrew, 2014 ONCA 646 (Doherty, Tulloch and Benotto JJ.A.), September 23, 2014

5.  Wallace v. Crate's Marine Sales Ltd., 2014 ONCA 671 (Juriansz, LaForme and Lauwers JJ.A.),September 30, 2014

1. Cowderoy v. Sorkos Estate, 2014 ONCA 618 (Blair, Watt and Lauwers JJ.A), September 3, 2014

In these appeals, which arose from a dispute over the division of an estate, the Court of Appeal addressed the consequences of a failure to allow joinder.

Gus Sorkos and Victoria Cowderoy were in a common law relationship for 40 years. A year after Victoria's death, Gus married Rena. Gus died in 2008, having named Rena the beneficiary of his Registered Retirement Income Fund, valued at $287,185.

Paul and Mark Cowderoy were Victoria's natural grandchildren. Gus treated them as his own grandchildren and they saw him as a grandfather.  These appeals arose from claims made against Gus's estate by the Cowderoy brothers for the transfer of real property and cash and by Rena for dependant's relief under the Succession Law Reform Act, R.S.O. 1990, c. S. 26.

Key to the appeals was the fact that the trial judge declined to consolidate the cases for trial, instead hearing the Cowderoy action followed by Rena's application.  After hearing the cases separately, the trial judge held that the Cowderoys were entitled to a farm and cottage properties but dismissed their claim that Gus had promised them $350,000 each. He gave some dependant's relief to Rena under the SLRA.

The Estate Trustee submitted before the Court of Appeal that the order that the Estate convey its two most valuable assets to the Cowderoys constituted a legal error. The brothers cross-appealed, seeking an order for payment of $350,000 to each of them from the Estate.

Rena sought a new trial in which her action and the Cowderoy action would be tried together. She argued that a consolidated trial would allow for a proper assessment of the priority between the claims and potentially result in a higher value for the Estate against which her support claim would be calculated. She and the Estate Trustee, which also sought a consolidated trial, brought fresh evidence motions intended to show that the Estate was much smaller than determined by the trial judge and therefore would not have sufficient funds to secure the SLRA payments if the transfer of the properties to the Cowderoys was upheld. The Court admitted the fresh evidence and granted Rena leave to intervene in the Cowderoy appeal under Rule 13 of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194.

Lauwers J.A. found that the trial judge failed to conduct a proper analysis of the priority between the claims made by the Cowderoy brothers and by Rena. While it was open to him to conclude that Gus had promised the properties to Paul and Mark during a 1985 "breakfast agreement" and to order specific performance of the agreement, he erred in requiring the Estate to convey the properties to them as a remedy for Gus's failure to bequeath them as promised. As Lauwers J.A. succinctly put it: "He found a promise to bequeath, but turned it into an obligation to convey." The appropriate remedy would have been to order that the promise be enforced and the bequest deemed to have been in Gus's will. The properties would then be part of the Estate, subject to the term that they go to the Cowderoys.

Further, the brothers' claim that they should take the properties free of Rena's claim under the SLRA must fail because it flowed from the trial judge's erroneous characterization of their entitlement. In ordering that the Estate convey the properties to them, the trial judge recognized Paul and Mark as creditors entitled to specific performance. In fact, they were no more than "beneficiaries by specific bequest" and their entitlement is subject to the application of the SLRA.

Lauwers J.A. found a number of errors in the trial judge's application of the SLRA. On consideration of the fresh evidence introduced by Rena and the Estate Trustee, he found that the trial judge relied on a vastly overestimated value of the Estate when determining Rena's entitlement to dependant's relief.  Moreover, as noted, he disposed of the farm and cottage properties prior to making the relief order. Further, the trial judge reduced the specific bequest to Rena, when he instead should have considered it when assessing the quantum of support that was reasonable on her claim for dependant's relief. Finally, once Gus's bequest to the Cowderoy brothers was deemed to have been made, s. 71 of the SLRA - which provides that when a contract results in the transfer of property by will, dependant's relief claims can attach to the value of the property in excess of the consideration given under the contract - ought to have been considered. The failure of the trial judge to consider s. 71 left the Cowderoys better off than if Gus had fulfilled his promise to them and bequeathed the farm and cottage properties in his will.

With respect to the Cowderoys' cross-appeal, Lauwers J.A. noted that the trial judge found that the alleged bequest of $350,000 to each of the brothers lacked the necessary corroboration. The Cowderoys failed to demonstrate that the trial judge made an error in arriving at this factual conclusion.  The cross-appeal was dismissed.

The Court allowed the Estate Trustee's appeal in the Cowderoy action. It set aside the judgment in Rena's application, remitting it for trial on the narrow issue of her entitlement to dependant's relief, taking into account the value of the Estate including the farm and cottage properties.

2. Mauldin v. Cassels Brock & Blackwell LLP, 2014 ONCA 641 (Strathy C.J.O. (In Chambers)), September 16, 2014

In this cost appeal arising from the Combined Air litigation, the Court of Appeal considered the priority in which the parties are entitled to funds held as security in court. 

The successful plaintiffs, the "Mauldin Group", sought payment of about $1 million in funds posted by the defendant, Hryniak, to the Accountant of the Superior Court of Justice pursuant to a prior order of the Court. These funds would partially satisfy their judgment.  

The motion was opposed by Hryniak, who argued that his lawyers, McCarthy Tétrault LLP, should be paid first.

Hryniak relied on the 2011 order of Weiler J.A. requiring that he post an irrevocable letter of credit in the amount of $950,000 as a condition of granting his request for an extension of time to perfect his appeal. He submitted that the order was dispositive, and required that McCarthys fees be paid in full in priority to all other claims. Hryniak argued that Weiler J.A. knew that the $950,000 she ordered paid was his only asset and that, if he was to pursue his appeal, he would incur legal fees that would be paid out of these funds.

Strathy C.J.O. rejected this submission, finding that there was no indication that Weiler J.A. knew that the $950,000 was Hryniak's only asset when she made the order, or, more importantly, that she was concerned about his ability to pay his legal fees in order to pursue his appeal. Strathy C.J.O. held that Weiler J.A.'s overriding concern was not for Hryniak but to protect the Mauldin Group by preserving Hryniak's asset and preventing its dissipation.

Strathy C.J.O. noted that Hryniak did not raise the issue of his legal fees before Weiler J.A. He applied to the Court for an extension of time to perfect his appeal. The Mauldin Group, having discovered that he was attempting to encumber his interest in his matrimonial home, sought to enforce their judgment against him. The order was made for that reason. Had Hryniak addressed his legal fees at the time, the Mauldin Group likely would have requested further security.

Strathy C.J.O. also rejected Hryniak's second claim that McCarthys was entitled to a solicitor's lien under s. 34(1) of the Solicitor's Act, R.S.O. 1990, c. S.15, finding that the amount held by the Accountant was not "property recovered or preserved through the instrumentality of the solicitor" for the purposes of the statute. McCarthys' motion to vary Weiler J.A.'s order allowed Hryniak to comply with a precondition for obtaining an extension of time to bring his appeal, but the property was preserved through Weiler J.A.'s order. Moreover, an order under s. 34(1) is discretionary.

Strathy C.J.O. emphasized that "the equities in this case are overwhelmingly against granting a charge." McCarthys accepted a risk of non-payment when it began working on Hryniak's behalf, and continued to work when non-payment became a reality. The firm did not seek directions or an amendment to Weiler J.A.'s order to provide for payment of its fees from the amount paid into court. Further, if McCarthys were given a priority charge on the full amount of its claim, the Mauldin Group would be left with very little, an unjust result given its successes on the summary judgment motion, before the Court of Appeal, on the appeal to the Supreme Court and on the motion for rehearing before the Supreme Court.

Hryniak finally submitted that Mareva case law holds that a defendant is entitled to access its funds in order to pay its legal expenses. Strathy C.J.O. rejected this argument as well, noting that Hryniak made no request to permit payment of his legal fees at the time of Weiler J.A.'s order or on the motion for variation. Moreover, such an order is generally made while the litigation is ongoing, not after a judgment has been rendered.

Strathy C.J.O. emphasized that Hryniak no longer required payment of his legal fees in order to proceed with the litigation. Any unfairness would be borne not by him but by McCarthys, which would remain unpaid. Strathy C.J.O. commended McCarthys for accepting the risk of nonpayment in order to work on such an important case. He concluded, however, that the potential unfairness to the Mauldin Group, which, if paid second, would recover almost nothing in spite of its successes at court, far outweighed any unfairness to McCarthys or to Hryniak.

3. Mangal v. William Osler Health Centre, 2014 ONCA 639 (Feldman, MacPherson and Hourigan JJ.A.), September 17, 2014

How much latitude does a judge have in drawing his own conclusions? In this appeal, which arose from the death of a woman during childbirth, the Court of Appeal considered that question. 

The action arose from the death of Sharon Mangal shortly after she gave birth to a girl at the William Osler Health Centre. The appellants alleged at trial that she died of post-partum hemorrhaging that the medical team caring for her failed to properly diagnose and treat. The trial judge found that one of the respondent physicians, Dr. Bohay, an anesthetist, breached his duty of care by failing to notify an obstetrician about Mangal's condition at a critical stage in her post-partum care. Significantly, however, he determined that Mangal died not from hemorrhaging, as asserted by the appellants, but due to an untreatable blockage in her lung. He dismissed the appellant's claim.

The central issue on appeal was the appellants' submission that the trial judge made a palpable and overriding error in reaching a cause of death conclusion that was not advanced by either party. They argued that they were prejudiced because they could not have anticipated a judge-made cause of death theory, and that a new trial was required in the interest of fairness. The appellants further submitted that the trial judge erred in finding that there was no causal connection between the respondents' acts or omissions - particularly the timing of the administration of blood products - and Mangal's death.

Writing for the Court of Appeal, Hourigan J.A. held that the trial judge was entitled to consider and reject the theories advanced by both parties. The trial judge's role was not to engage in an "either-or-exercise" where he must accept one theory of liability or the other. Rather, his task was to determine whether the appellants had established on a balance of probabilities that, but for the negligence of the respondent nurses and physicians, Mangal would not have died. In making this assessment, the trial judge could accept some, none, or all of a witness' evidence.

Hourigan J.A. deferred to the trial judge's dismissal of the appellants' cause of death theory, finding that it was open to him to reject the submission that Mangal died from ongoing post-partum hemorrhaging. The appellants failed to introduce evidence that supported their theory that Mangal was actively bleeding for hours or that any hemorrhage went unnoticed or untreated.  

Hourigan J.A. emphasized that the trial judge did not create his own cause of death theory, as the appellants claimed, but rather "drew reasonable inferences and reached conclusions based on the evidentiary record". Upon considering the evidence put forward by the parties, he found that there was no causal link between various omissions by the respondent medical team, notably the delay in surgery and the administration of blood products, and Mangal's death. The appellants failed to establish that the trial judge erred in arriving at that conclusion.

Hourigan J.A. also considered the respondent physicians' cross-appeal on the trial judge's finding that Dr. Bohay breached his standard of care, but held that it was open to the trial judge to find that the anesthetist should have prioritized the order to contact the obstetrician and that his failure to do so fell below the standard of care.

Feldman J.A. dissented, finding that the trial judge made a palpable and overriding error and misapprehended the evidence in determining Mangal's cause of death and by finding a cause of death that was not put forward by either the appellants or the respondents or by the witnesses at trial.  

4. Algonquins of Pikwakanagan v. Children's Aid Society of the County of Renfrew, 2014 ONCA 646 (Doherty, Tulloch and Benotto JJ.A.), September 23, 2014

Decisions relating to the custody and care of children are guided by principle that that the court must act in the best interests of the child. This appeal raises the issue of the significance of a child's cultural heritage and its role in determining her best interests. The case concerns two children, members of the Algonquins of Pikwakanagan, who were removed by child protection workers from their troubled family and placed with a non-Aboriginal foster family. Faced with the responsibility of determining the children's future custody and care, the Court of Appeal reflected on their Aboriginal heritage in its overall consideration of their best interests.

Sisters S. and Z. were in the care of their maternal grandmother, M.B., when they were apprehended by the Children's Aid Society of the County of Renfrew. The children were made Crown wards with access to M.B.

The Algonquins of Pikwakanagan and M.B. appealed the judgment which dismissed an appeal from the original judgment ordering Crown wardship. The appellants sought to have the children returned to the custody of M.B. The Society and the children themselves, through the Office of the Children's Lawyer, sought the dismissal of the appeals.  The Algonquins of Pikwakanagan and M.B. submitted before the Court of Appeal that the trial judge erred in determining that the apprehension was justified and in his consideration of the children's Aboriginal heritage.

Central to this case was the fact that despite its efforts, the Society was unable to place the girls with a First Nations family. S. and Z. lived - and thrived - with the non-Aboriginal D. family for four and a half years.

Writing for the Court, Benotto J.A. held that the removal of the children from their grandmother's care was justified and that they were in need of protection within the meaning of s. 37(2) of the Child and Family Services Act, R.S.O. 1990, c. C.11 ("CFSA"). There was ample evidence to support the trial judge's finding that, at the time of the apprehension, M.B. was unable to care for or protect her grandchildren, that she failed to comply with instructions from the Society and that her behaviour placed the children at risk. Benotto J.A. found that the trial judge's conclusion that the children's best interests required that they remain with their foster family was open to him on the record.

Turning to the issue of the children's First Nations heritage, Benotto J.A. noted that the apprehension of an Aboriginal child and her placement in a non-Aboriginal home causes "great distress" in the First Nations community, characterized by a lack of trust borne from the historical mistreatment of Aboriginal children. In recognition of this dark piece of Canada's history, the CFSA was amended to include extensive provisions relating to the welfare of Aboriginal children. The statute requires that the court consider the uniqueness of Aboriginal culture, heritage and traditions and the importance of preserving an Aboriginal child's cultural identity when determining her best interests. To that end, the CFSA provides that the Society ought to regularly consult with First Nations communities about the apprehension and placement of, and plans of care for, Aboriginal children, and that unless there is a substantial reason for placing her elsewhere, an Aboriginal child should be placed with a member of her extended family, a member of the child's "band or native community", or "another Indian or native family."

The trial judge emphasized that where a court must balance the best interests of a child with the need to ensure the development of her culture, heritage and history, the latter is always subordinate to the former. The court's ultimate responsibility is to ensure the safety, security and protection of the child. This principle, coupled with his findings on M.B.'s fitness to care for her grandchildren, formed the basis of the order that S. and Z. become Crown wards.  

Benotto J.A. rejected the appellants' claim that the children's First Nations status ought to be "super-weighted". While the CFSA emphasizes the importance of an Aboriginal child's identity and directs that it be taken into account when assessing her best interests, nothing in the statute suggests that one consideration be given greater weight than another. All factors must be considered "with the over-arching goal of determining the best interests of the child".

Moreover, the notion that the compatibility of a child's cultural, racial and linguistic heritage be given greater consideration in assessing a child's placement is less relevant where the matter involves not adoption but, as in the present case, Crown wardship with access, particularly when the access is in favour of a member of the First Nations community. The access provisions made by the trial judge demonstrated his consideration of the girls' Aboriginal status in assessing their best interests as well as his recognition of its significance.

Benotto J.A. emphasized the paramount purpose of the CFSA "to promote the best interests, protection and wellbeing of children". Any "additional" purposes of the statute, including the recognition that services to Aboriginal children and families be provided with consideration for their unique culture, must be read and exercised with this objective in mind, and are in fact subject to the express proviso that they be consistent with statute's fundamental principle. The requirement that an Aboriginal child be placed with an Aboriginal family therefore cannot be read as overriding her best interests.

Benotto J.A. found that the trial judge's reasons reflected that he performed a thoughtful assessment of the girls' best interests, giving consideration to their Aboriginal heritage, as required by the CFSA. He referred to expert evidence regarding the struggles of Aboriginal youth placed with non-Aboriginal families and the confusion and crises of identity that may occur, as well as to the testimony of Chief Kirby Whiteduck with regard to the historical mistreatment of Aboriginal children. The trial judge appreciated the importance of these issues and the need to consider the placement least challenging in that regard.

Along with the childrens' First Nations heritage, the trial judge also considered evidence of the girls' attachment to their foster family and the upset they would suffer if removed from their care. Remaining with the D. family would provide safety, security, continuity and, significantly, would be consistent with the children's wishes. Benotto J.A. held that it was open to the trial judge to conclude that the continued connection to their heritage through access visits with their grandmother and the encouragement of the D. family was more responsive to their needs than their removal from a home in which they were happy, comfortable and, by all accounts, "thriving".

First Nations issues must be seriously considered. However, they, like all considerations, are subject to the ultimate question of what is in the best interests of the child. Nothing can displace that fundamental principle. In this case, it was in the best interests of S. and Z. to remain with their non-Aboriginal foster family with continued access to the First Nations community.

5. Wallace v. Crate's Marine Sales Ltd., 2014 ONCA 671 (Juriansz, LaForme and Lauwers JJ.A.), September 30, 2014

Faced with a decade-long delay in litigation arising from the purchase of a defective yacht, the Court of Appeal considered when "enough is enough".

In 2000, the appellants purchased a $1 million yacht from the respondent, Crate's Marine Sales Ltd. They returned the yacht to the respondent in 2003, alleging that it was defective.

The appellants commenced an action against the respondents in 2003, arguing that the alleged defects amounted to a fundamental breach of the purchase agreement. They sought rescission of the contract and the return of the purchase money, or damages for the breach.

Proceeding at an ordinary pace until the close of pleadings in 2004, the action ground to a halt at the discovery phase. On the respondents' recent motion for summary judgment, the motion judge found that the delay of more than ten years was "inordinate and inexcusable" and created a presumption that the defendant had been prejudiced. The appellants failed to rebut that presumption or persuade the court that a fair trial would still be possible. The motion judge estimated that if the action were permitted to proceed, it would not be ready for trial until at least 2015. Pursuant to his discretion under Rule 24 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, and as an exercise of the court's inherent jurisdiction, he dismissed the action for want of prosecution.

The appellants submitted before the Court of Appeal that they had successfully rebutted the presumption of prejudice and that the evidence was sufficient to provide a fair trial.

Lauwers J.A. appreciated the appellants' claim that the factors cited by the motion judge as examples of prejudice to the respondents, including the depreciation of the yacht and the bankruptcy of the co-defendant Carver Boat Corporation, were in fact their own litigation risks. However, the motion judge also noted that the litigation was driven not solely by documentation, but was based on the parties' - now ten year-old - recollections of what occurred with respect to the use and repair of the yacht. Lauwers J.A. concluded that the motion judge's finding of prejudice on this basis was reasonable.

While Lauwers J.A. accepted the appellants' submission that the respondents bore some responsibility for the delay, he noted the principle that it is incumbent on the plaintiff to move the action along. In this case, the appellants "manifestly failed" in this regard.

Lauwers J.A. rejected the appellants' submission that Rule 24 exhausts the court's jurisdiction to address delay, defending the motion judge's dismissal of the action on the basis of the court's "inherent jurisdiction" as consistent with the Court's decision in Marché D'Alimentation Denis Thériault Ltée v. Giant Tiger Stores Ltd., 2007 ONCA 695.  In that case, Sharpe J.A. held a court has inherent jurisdiction to control its own process, which includes the discretion to dismiss an action for delay, "even when the relevant rules do not mandate it."

Lauwers J.A. recalled the Court's decision in Langenecker v. Sauvé, 2011 ONCA 803, in which Doherty J.A. observed that an order dismissing an action for delay is a "severe remedy" but nonetheless sometimes the only order "that can adequately protect the integrity of the civil justice process and prevent an adjudication on the merits that is unfair to a defendant." Lauwers J.A. succinctly concluded: "There comes a time, in short, when enough is enough, and the civil justice system will no longer tolerate inordinate and inexplicable delay." This was one such time.

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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