Canada: Court Of Appeal Summaries (November 24 – 28, 2014)

Last Updated: December 8 2014
Article by John Polyzogopoulos

Good afternoon.  Our Court of Appeal released thirteen civil decisions this week.  Topics covered included construction liens, summary judgment in several different contexts, including an interesting decision in a wills and estates matter involving allegations of undue influence, family law, employment law, MVA (insurance law and whether an offer to settle was beaten for the purpose of costs), Rule 21 in the context of a malicious prosecution and Charter damages claim, and a labour law decision involving alleged reasonable apprehension of bias of an OLRB panel member.

1475707 Ontario Inc. Operating as Action Electric Construction and Maintenance v. Foran, 2014 ONCA 830

[MacFarland, LaForme and Lauwers JJ.A.]

Mark Abradjian and Renata Kis, for the appellant, David Foran
David Thompson, for the respondent, 1475707 Ontario Inc.

Keywords:  Construction Law, Construction Lien Act, Section 37, Actions, Rules of Civil Procedure, R. 2.01(1), R. 48.01

Facts: In its statement of claim the respondent alleged that it was owed money for construction work performed on the appellant's property. A claim for lien was registered on March 20, 2009, and the lien was perfected by issuance of the statement of claim and registration of the Certificate of Action on May 11, 2009. The appellant served a statement of defence and counterclaim. The respondent set the action down for trial on April 28, 2011, even though it had not filed any defence to the counterclaim. The counter staff could have refused to set the matter down as the pleadings were neither closed, nor had the appellant noted the respondent in default. However, the trial record was accepted and the matter was set down for trial, contrary to Rule 48.01 of the Rules of Civil Procedure ("Rules"). The respondent served its defence to the counterclaim on October 16, 2012.

The motion judge held that setting the matter down for trial while pleadings were still open was not just an irregularity. The motion judge determined that the respondent's lien claim had expired because it had not been set down within two years from the commencement of action, as required by ss. 37(1) of the Construction Lien Act ("CLA"). The respondent appealed to the Divisional Court and was successful before a divided court. The appellant appealed the decision of the Divisional Court to the Court of Appeal.

(1) Was there compliance with ss. 37(1) of the CLA?

(2) Whether Rule 2.01 may apply to relieve a party from the effects of non-compliance with Rule 48.01 in the context of a construction lien action.

Holding:  Appeal dismissed.

(1) Yes.  If the counter staff refused to accept the record and had declined to set the matter down, the respondent could have simply drafted a pro forma defence and filed it. The respondent set the action down within the two year period provided by s. 37(1) of the CLA, although there was an irregularity. However, such an irregularity was curable by Rule 2.01.

(2) Yes.  Rule 2.01 applies because the record was irregular. Even though Rule 48 directs setting a matter down for trial, it must be read in conjunction with Rule 2.01, which allows the court to grant relief where there has been an irregularity unless it would not be in the interests of justice to do so. Subsection 67(3) of the CLA permits for such rules to apply, unless there is a conflict with the CLA, and there was no such conflict in this case.

The majority of the Divisional Court relied on the decision in 310 Waste Ltd. v. Casboro Industries Ltd. (2006), 83 O.R. (3d) 314, for the "proposition that imperfect compliance with the rules regarding setting a matter down for trial may be the better course when faced with a looming s. 37 deadline, implicitly leaving it open that there could be relief granted against irregularities at a later date". The Court held that 310 Waste Ltd. could not be read as widely as the Divisional Court had proposed. 310 Waste Ltd. did not deal with the imperfect compliance with the Rules or procedural irregularities. The plaintiff, in 310 Waste Ltd. made no attempt to set the action down for trial. 310 Waste Ltd. was a "case where a lien claimant failed to make any effort to set the action down for trial within the two-year period prescribed by s. 37(1) of the CLA".

Ho v World Financial Group Insurance Agency of Canada Inc., 2014 ONCA 832

[Sharpe, Rouleau and Pardu JJ.A]

Helena Ho, acting in person
Doug McLeod, for the respondents

Keywords: Summary Judgment, Wrongful Dismissal, Independent Contractor

Facts: Summary judgment was granted by the motions judge dismissing the claim. The motions judge found the appellant was not an employee, but rather an independent contractor, and that there could be no claim for wrongful dismissal.

Issue: Did the motions judge err in granting summary judgment?

Holding: Appeal dismissed.

Reasoning:  No, the motions judge gave careful and thorough reasons for granting summary judgment. The appellant was an independent contractor and no claim for wrongful dismissal could be made. Also the respondents were entitled to terminate the contract. The court held there was no other basis upon which a claim could be made out on the record.

Yussuf-Mohamed v. Robleh, 2014 ONCA 833

[Weiler, Sharpe and Rouleau JJ.A.]

S. Simard, for the applicant
W. Fuhgeh, for the respondent

Keywords: Family Law, Separation Agreement, Enforcement Order, Adjournment

Facts: The appellant husband appeals the order of Beaudoin J. of the Superior Court, which enforced the separation agreement that he previously entered into with the respondent wife. The matter initially arose when the appellant failed to pay the respondent child support, contrary to his obligation under the separation agreement. The respondent then brought a motion to enforce the agreement, which was granted.

(1) Did Beaudoin J. err in refusing to grant the appellant an adjournment of the motion at which the separation agreement was enforced?

(2) Did Beaudoin J. err in ordering the enforcement of the separation agreement?

Holding:  The appeal was dismissed and costs of $4,782.84 were awarded to the respondent.

(1) No. Beaudoin J. reviewed the history of the proceedings and made no error in finding that the appellant had received ample notice of the hearing. Therefore, the appellant was not entitled to the adjournment which he requested on the day of the hearing. Furthermore, the appellant's argument about inadequate notice of an affidavit filed by the respondent at the hearing was also rejected as a basis for an adjournment, given that Beaudoin J. did not rely on that affidavit.

(2) No. The appellant advanced several arguments that the entire separation agreement should be declared invalid: he was not represented by counsel at the time he signed it, he was dealing with emotional stress, and a provision in the agreement that deals with the calculation of child support is ambiguous. It was found on appeal that none of these arguments form a basis to invalidate the separation agreement or the court order enforcing it.

Cash Store Financial Services Inc. (Re), 2014 ONCA 834

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

R.W. Staley, J. Bell and I. Ishai, for 0678786 B.C. Ltd.
B. Harrison, for Trimor Annuity Focus LP No. 5
A. Hatnay and A. Scotchmer, for T. Yeoman
A. Merskey and A. McCoomb, for DIP Lenders and Ad Hoc Committee of Noteholders
A. Mark and B. O'Neill, for DIP Lenders and Ad Hoc Committee of Noteholders
J. Dacks, for the Chief Restructuring Officer
H. Meredith, for FTI Consulting Canada Inc., in its capacity as Monitor

Keywords: Bankruptcy and Insolvency Law, Companies' Creditors Arrangement Act, Creditor-Debtor Relationship, Deference

Facts: The appellants, 0678786 B.C. Ltd. and Trimor Annuity Focus Limited Partnership #5, advanced funds to Cash Store Inc. and 1693926 Alberta Ltd. (collectively "Cash Store") – a payday lending company now operating under the protection of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 ("CCAA").

The appellants moved for a determination that they were the sole legal and beneficial owners of both the proceeds on hand from loan payments made by, and accounts receivable from, Cash Store's customers at the time that Cash Store sought protection under the CCAA. Loan payments by Cash Store's customers were commingled with Cash Store's funds and it was not possible to identify the source of the funds on hand at the time of the initial order under the CCAA. Relying on a series of "Broker Agreements" entered into with Cash Store, the appellants argued that they had loaned funds to Cash Store's customers, and Cash Store merely operated as a broker to facilitate placement and collection.

The motions judge disagreed, finding that the appellants and Cash Store were in a debtor-creditor relationship. The appellants loaned money to Cash Store, which in turn made loans to customers. The appellants were required to stand in line with Cash Store's other creditors.

Holding: Appeal dismissed.

Reasoning: The principal argument put forth by the appellants on appeal was not argued before the motion judge. The appellants were seeking to have the Court of Appeal re-visit the factual determinations of the motion judge. There was no error in the approach of the motion judge. He considered the terms of the Broker Agreements and the manner in which the parties actually operated.  He found that the Broker Agreements "did not accord with reality" and that the actual practices followed by the parties were not consistent with the Broker Agreements. In reality, the appellants and Cash Store were in a debtor-creditor relationship, and not the principal-broker relationship contemplated by the Broker Agreements. The motion judge's conclusion was amply supported by the record and was entitled to deference.

Cosentino v. Sherwood Dash Inc., 2014 ONCA 843

[Simmons, MacFarland and Benotto JJ.A.]

Lori Samfiru and Lia Preyde, for the appellant
Eric Turkienicz, for the respondent

Keywords: Employment Law, Employment Standards Act, Resignation

Facts:  The appellant was Vice President of Operations and a signing officer of the respondent  corporation.  He signed a full and final release whereby he released the respondent from any and all claims as a shareholder, director, officer, creditor and/or employee. The share purchase agreement contemplated continued employment only if requested by the respondent and then only for a period of one month.  The motion judge concluded that the appellant's assertion that he resigned from the respondent corporation only as an officer and director, but not as an employee, was untenable.

Issue: Did the motion judge err in finding that the appellant's assertion that he did not resign as an employee is untenable?

Holding: Appeal dismissed.

Reasoning: No.  While the appellant placed great reliance on the record of employment (ROE) issued by the respondent, the motion judge dealt with that document in his reasons and was not persuaded by it in the face of all of the other evidence and the fact that the appellant never made any effort to continue his employment.  The motion judge stated that he felt confident that he was able to resolve the dispute on the record before him and the court found that in the circumstances of this case, it was appropriate for him to do so.

Gresty v. Howard Mutual Insurance Company, 2014 ONCA 845

[Simmons, MacFarland and Benotto JJ.A.]

David M. Miller, for the appellant
James E.S. Allin, for the respondent

Keywords:   Limitation Period, Commencement

Facts: On appeal from the order/judgment of Justice Bruce Thomas of the Superior Court of Justice dated March 24, 2014.

On appeal, the panel raised the issue that the limitation period for the benefits that may be owing to the respondent for the two years preceding the issuance of the respondent's statement of claim had not expired. This point was not addressed by the motions judge.

The appellant conceded this point, but the parties disagreed over when the applicable limitation period(s) commenced.

Issue: When does the applicable limitation period(s) commence?

Holding: Appeal allowed. Paragraph 1 of the motion judge's order is set aside. No costs awarded.

Reasoning:  The court was unable to determine this issue on the record before it and based on the arguments advanced. Accordingly, the issues would be more properly determined in the court below on a more fulsome evidentiary record and with the benefit of more focused submissions.

Terceira v. Labourers International Union of North America, 2014 ONCA 839 

[Feldman, Blair and Pepall JJ.A.]

Paul J.J. Cavalluzzo and Elichai Shaffir, for the appellant Labourers International Union of North America
Ian J. Roland and Debra Newell, for the appellant Universal Workers Union – Labourers International Union of North America Local 183
Tim Gleason and Sean Dewart, for the respondents Durval Terceira, Jaime Melo, Michael O'Brien, Gaetano Strazzanti and Cesar Daniel Avero
Leonard Marvy, for the Ontario Labour Relations Board
Sara Blake and Kisha Chatterjee, for the intervener the Attorney General for Ontario

Keywords: Administrative Law, Labour and Employment Law, Ontario Labour Relations Act, Ontario Labour Relations Board, Judicial Review, Reasonable Apprehension of Bias, Conflict of Interest, Procedural Fairness, Standard of Review, Reasonableness, Deference

Facts: This is an appeal from a Divisional Court order disqualifying a Vice-Chair of the Ontario Labour Relations Board (OLRB). The respondents were former employees, members and officers of the appellant, Local 183 (the "Employees"). They brought proceedings before the OLRB that were dismissed by the Vice-Chair. They then brought an application for judicial review before the Divisional Court. That court quashed the OLRB decisions on the grounds that the Vice-Chair was in an actual or perceived conflict of interest. The main ground for the decision was that the Vice-Chair had represented, as counsel, one of the Employees in an unrelated dispute against Local 183 seven years earlier, which had been resolved at the pleadings stage.

The appellant trade unions took the position that in disqualifying the Vice-Chair, the Divisional Court incorrectly applied the test in MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235 relating to conflict of interest of a lawyer and therefore incorrectly quashed the OLRB decision. They argued that the correct test to be applied to an adjudicator for reasonable apprehension of bias is described in Committee for Justice v. National Energy Board, [1978] 1 S.C.R. 369 and Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259.

The respondents agreed that the Divisional Court applied the incorrect test but submitted that the correct test yields the right result and that the OLRB decisions were properly quashed.

(1) Did the trial judge apply the correct test in the disqualifying an OLRB Vice-Chair on the basis of reasonable apprehension of bias?

(2) Was there a denial of procedural fairness by the Vice-Chair?

(3) Was the Vice-Chair's exercise of discretion unreasonable?

Holding: Appeal Allowed. Decisions of the OLRB Vice-Chair reinstated.

(1) No. The Divisional Court incorrectly concluded that MacDonald Estate was the applicable test, misuse of confidential information was presumed and the Vice-Chair was in actual or perceived conflict of interest.

The distinction between a claim of conflict of interest by a lawyer and reasonable apprehension of bias by an adjudicator is significant for a number of reasons. In MacDonald Estate, which addressed a lawyer's potential conflict of interest, the Supreme Court found that the imparting of confidential information is presumed to occur. In contrast, in Wewaykum, which addresses a claim of reasonable apprehension of bias of an adjudicator, the Supreme Court established that impartiality of the adjudicator is presumed. There is a strong presumption of judicial (or in this case adjudicative) impartiality and integrity.

The rules governing a lawyer's conflict of interest stem, in part, from the existence of a fiduciary relationship and a duty of loyalty owed to the client. In contrast, the adjudicator's duty is anchored in principles of procedural fairness including impartiality.

By applying the incorrect test, the Divisional Court failed to apply the presumption of impartiality. The Divisional Court also failed to conduct a contextual analysis, which required consideration of a number of factors that are relevant to the reasonable apprehension of bias test. The inquiry into an allegation of apprehension of bias by an adjudicator is highly fact-specific and is evaluated on an objective standard. The person considering the alleged bias must be reasonable and the apprehension of bias must be reasonable. To succeed in this case, the Employees would have to establish that reasonable, right-minded and properly informed persons would think that the Vice-Chair was consciously or unconsciously influenced by his participation, seven years earlier, in a matter resolved at the pleadings stage and of which the Vice-Chair said he had no knowledge of any parts material to the proceeding before him.

Because of this, the Court considered anew the issue of reasonable apprehension of bias. It reinstated the Vice-Chair's decision for the following reasons.

First, the employees failed to rebut the presumption of impartiality.  No materials or record of any kind were filed in support of a claim of reasonable apprehension of bias.

Second, the Court noted that the Vice-Chair's prior retainer ended seven years earlier and settled at the pleadings stage. It did not include unfair labour practice complaints against the appellants. Examined objectively, there was an inadequate nexus between the factual matrix before the Vice-Chair and the prior retainer. In his decision, the Vice-Chair noted that there was no suggestion by counsel for the applicants that the Vice-Chair was in possession of confidential information that would negatively affect the interests of the employee in question in these proceedings. The Court highlighted that an adjudicator's statement that he or she knew nothing about the case and had no involvement in it will ordinarily be accepted at face value unless there is good reason to doubt it.

Third, appellants argued that there was potential for the Vice-Chair to become a witness in the application. The Court held that there was no evidence of material facts on which the Vice-Chair might be called to testify nor was there any representation that the employee in question would waive any solicitor-client privilege that might govern the Vice-Chair's anticipated testimony.

The court therefore concluded that the Vice-Chair's decision be reinstated.

(2) No. The Employees submitted that the Vice-Chair determined that the Application should be dismissed because it served no labour relations purpose. However, neither the parties nor the Vice-Chair raised this issue during the hearing. The Employees also argued that the parties were not given an opportunity to address the decision in Wal-Mart Canada Corp. (2011), 197 C.L.R.B.R. (2d) 104 (OLRB), on which the Vice-Chair anchored his decision. Accordingly, the Employees argued that the Vice-Chair breached their natural justice rights by depriving them of the opportunity to challenge the theory and jurisprudence on which his decisions were based. The Court rejected these arguments. It found that the labour relations purpose argument was both raised and argued by the parties during the hearing. It found that the Wal-Mart Canada Corp. decision raised no new principles of law.

The Employees submitted that they were deprived of their right to call oral evidence. The Court found no support for this in the record.

The Employees argued that the Vice-Chair made factual findings that were unsupported by the evidence. The Court reviewed the record and concluded that the Vice-Chair did have a foundation for his factual findings.

(3) No. The exercise of discretion in question is at the core of the OLRB's expertise and is reviewable on a standard of reasonableness. In addition, when the OLRB applies its constituent statute, as it did here by applying s. 96 of the Labour Relations Act, a reasonableness standard applies.

Subsection 96(4) of the Labour Relations Act provides the OLRB with the discretion to refuse to entertain an application. Here, the Vice-Chair considered the relevant factors. He recognized that the Employee's Application was both arguable and timely. He weighed this against other relevant factors, including the unavailability of primary remedies and the cost of the potential proceeding, and determined that it was important for the OLRB to expend its limited resources in a way that was consistent with the objectives of its governing statute and statutory mandate. The unavailability of the primary remedies and the significant estimated cost of the proceeding outweighed any competing factors. The Court concluded that the Vice-Chair was in the best position to make this assessment and his discretionary decision not to inquire into the Application was entitled to deference.

Trotter Estate, 2014 ONCA 841

[van Rensburg, Hourigan and Benotto JJ.A.]

Martin Teplitsky, Q.C., for the appellants
Brian A. Schnurr and Jordan D. Oelbaum, for the respondent estate trustees
Michael Adams, for the respondent Johnstone Dempsey Trotter

Keywords: Wills and Estates, Undue Influence, Rules of Civil Procedure, Rules 20.04(2.1) and (2.2), Summary Judgment, Hryniak v. Mauldin, Credibility

Facts: The parties to this appeal involved children in a dispute over the estate of their mother, Audrie. The appellants challenged the validity of Audrie's wills and certain inter vivos transfers of land. They argued that there was undue influence in respect of the wills and transfers, and they further alleged that the transfers were procured by fraud. The parties made vastly different factual assertions.

There was an old barn on Audrie's property. Her son, John, the respondent, claimed that he and Audrie had come to an arrangement for him to rebuild the barn for a fee; therefore, he recorded his time and expenses in rebuilding the barn. The invoices totaled approximately $740,000, which Audrie signed. John stated that the transfer of the residence and farm to him and his mother jointly was in lieu of payment for the invoices. The appellants alleged that John fraudulently issued the invoices to obtain title to the house and farm. The motion judge found that John cared for and looked after Audrie and supported her financially and improved the state of her properties. The appellants' evidence portrayed a pattern of isolation, domination and influence that John exerted over Audrie. There were detailed descriptions of John's anger and temper, and evidence of Audrie's fear of displeasing John.

The motion judge allowed the respondent's motion for summary judgment, and thereby dismissed the claim of undue influence. The motion judge found that the claim of undue influence was based on "bald allegations". With respect to the allegedly fraudulent invoices, the motion judge found that they were for John's work and the money he spent. The motion judge further determined that there was no evidence of any demand being made for payment, and nothing supported the appellants' contention that John compelled the transfers. The motion judge did not hear any oral evidence.

Issue: Did the motion judge use the correct approach to summary judgment in the face of highly contested facts?

Holding:  Appeal allowed.

Reasoning:  No.  The motion judge erred in fact and law. She incorrectly labelled the appellants' evidence "bald allegations", failed to make credible findings, erred in her analysis of undue influence and failed to properly consider the barn invoices.

"Bald Allegations" and Conclusionary Findings
A review of the record showed that the appellants' allegations were not bald. There was enough evidence to support what the appellants were arguing. There was evidence that Audrie transferred the farm property to John because she felt indebted to him for the money he put into the barn. He sent her invoices of roughly $200,000 more than the value of the barn itself. The invoices alone supported the appellants' claims of undue influence and fraud. There was also evidence of control and domination on the one hand, and fear and vulnerability on the other. These were important factors to consider regarding an allegation of undue influence.

Since the evidence presented was capable of supporting an allegation of undue influence, the motion judge had to explain why she rejected it. This required a credibility analysis pursuant to the expanded judicial powers under rule 20.04(2.1) to weigh the evidence, evaluate the credibility of the appellants' deponents and draw reasonable inferences. It can be difficult to assess credibility on a written record; therefore, if it cannot be done, oral evidence or a trial is required. The motion judge failed to engage in a credibility analysis or attempt to provide conclusions on credibility. As per Sagl v. Cosburn, Griffiths and Brandham Insurance Brokers Ltd., where important issues turn on credibility, failure to make credibility findings amounts to reversible error. The Court found that the motion judge did not make proper use of the expanded powers under rule 20.04.

Undue Influence
"Undue influence involves the domination of the will of one person by another." The burden rests with the party asserting it. Circumstantial evidence can be used by those challenging a will to discharge their burden. However, the motion judge did not address the circumstances that were potentially indicative of undue influence: Audrie's vulnerability and dependency.

The Barn Invoices
The motion judge failed to adequately address the reasonableness of the invoices and their possible effects on Audrie's intentions. They were an important feature of the allegations of fraud and undue influence. The motion judge found that the invoices were legitimate, or did not affect Audrie. The Court held this to be a palpable and overriding error. John's affidavit had provided that the transfers were in lieu of payment for the invoices. This directly supported the appellants' position that Audrie was influenced by the amount owing when she made the transfers to John. There was also little, if any, evidence supporting the reasonableness of the invoices John presented to Audrie. He was unable to substantiate the amounts that were included. This was an issue as the invoices exceeded his own estimation of the value of the entire farm property. Furthermore, John's evidence during cross-examination was insufficient to refute the appellants' allegations that he inflated the cost of renovations.

The Hryniak Framework
The Court set out the test in Hryniak v. Mauldin and concluded that the motion judge recited the evidence but failed to weigh it, evaluate it or make findings of credibility. Therefore, even on a lower threshold of Hryniak, the approach used by the motion judge was flawed.

Conclusion on Summary Judgment
The Court stated that a motion judge exercising the expanded powers under rule 20.04(2.1) is entitled to deference on appeal. But, as per Hryniak, when a motion judge misdirects herself, errs in principle or comes to a decision that is so clearly wrong that it results in an injustice, the decision cannot stand.

When conflicting evidence is presented on factual matters, a motion judge must articulate specific findings that support a conclusion that a trial is not required. While summary judgment may have been appropriate had the motion judge exercised her powers under rule 20.04(2.2) to hear oral evidence, she did not seek to do so.

Finally, there were disparaging comments about the appellants and their counsel that should not have been made.  The matter should proceed to trial before a different judge.

Biladeau v Ontario (Attorney General), 2014 ONCA 848

[Juriansz, LaForme and Lauwers JJ.A]

Bill Biladeau, in person
Nadia Laeeque, for the respondent

Keywords: Civil Litigation, Rules of Civil Procedure, Rule 21, No Reasonable Cause of Action, Malicious Prosecution, Canadian Charter of Rights and Freedoms, Charter Damages, Self-Represented Litigants

Facts: In May 2007 the appellant was criminally tried for sexual assault. He did not testify. At the criminal trial, Crown counsel commented on the appellant's failure to testify in reference to the appellant's belief in consent. The appellant was convicted, and on December 9, 2008 the court Ontario Court of Appeal overturned the conviction and a new trial was ordered (R v. Biladeau). Sharpe J.A., writing for the court, concluded that the comments of Crown counsel violated the appellant's statutory right under s.4(6) of the Canada Evidence Act and prejudiced the appellant's right to a fair trial. The Crown determined it would not proceed with a new trial. In August 2011 the appellant commenced an action against the Ministry of the Attorney General (MAG) claiming damages for malicious prosecution, breach of professional conduct and alleged that the conduct of the prosecution had breached his right to a fair trial under the Charter. He was self-represented throughout. MAG brought a motion under rule 21 of the Rules of Civil Procedure to strike the claim for failing to disclose a reasonable cause of action. On October 15, 2013 the appellant's amended statement of claim was stuck out and his action dismissed. The motions judge found the claim did not meet the test for malicious prosecution. Specifically, there were no material facts supporting a claim of malice, and an absence of reasonable and probable grounds to initiate the proceeding. No reference was made to the Charter damages claim. The appellant appealed this decision and argued the facts he pleaded supported his allegations of malicious prosecution and breach of Charter rights.

(1) Were there sufficient facts pleaded to support a claim for malicious prosecution, keeping in mind the test applied on a rule 21 motion?

(2) Are the elements of the Charter damages claim similar to the elements of malicious prosecution?

(3) If the court concludes additional facts are required in the appellant's pleadings, can the appellant further amend his claim?

Holding:  Appeal allowed. Although the amended statement of claim had drafting deficiencies, when read generously and having due allowance for the deficiencies that one might expect from a self-represented litigant with no legal training, it was not plain and obvious that no reasonable cause of action was disclosed.

(1) On the rule 21 motion it had to be demonstrated by MAG that neither the malicious prosecution claim nor the public law claim for Charter damages had a chance of succeeding, or that it was plain and obvious that no reasonable cause of action was disclosed. The alleged facts are taken to be true and the statement of claim is to be read as generously as possible with a view to accommodating inadequacies in the allegations. The court held it was not satisfied MAG had discharged this heavy burden. The tort of malicious prosecution has four elements, namely, that the proceedings must have been: (1) initiated by the defendant; (2) terminated in favour of the plaintiff; (3) undertaken without reasonable and probable cause to commence or continue the prosecution; and (4) motivated by malice or a primary purpose other than that of carrying the law into effect (Nelles v Ontario). The question before the motions judge was whether there was a sufficient factual foundation in the pleadings to indicate that the Crown proceeded to prosecute the appellant without reasonable or probable cause for success, and that the Crown acted with malice in doing so. A perfect pleading is not required. The third and fourth elements were at issue in this case.

The third element of the tort requires the Crown have reasonable or probable cause to both commence and continue the prosecution.  The court held the motions judge erred in only considering the Crown's cause to commence the prosecution. Although the appellant's pleadings made no reference to facts that supported an allegation that the trial Crown had no reasonable cause to continue the prosecution, the record suggests there were facts the appellant could have pleaded in support of the third element. The court found that if these facts had been pleaded, taken as true, and the claim had been read generously with inadequacies in the allegations being accommodated, it would have been sufficient to survive the rule 21 motion in connection with the third element.

The final element of the tort requires the motions judge to generously read the claim to determine whether it is plain and obvious that the allegation of malice would fail. The court held it was not plain and obvious the facts underpinning the allegations of malice were deficient. Had the motions judge read the claim generously and accommodated the drafting deficiencies, he would have concluded differently. By including Sharpe J.A.'s findings from the conviction appeal, a generous reading of the appellant's claim disclosed that the appellant was attempting to demonstrate that the experienced trial Crown's actions were wilful and intentional, not mere mistakes. The court held the appellant's pleadings allowed for the inference that the Crown may have been motivated by the improper purpose of getting a conviction of all costs.

(2) Vancouver v Ward sets out a four part approach to determine what is "appropriate and just" to award constitutional damages to individuals for Charter infringements. First, it must be determined if there has been a Charter breach. Second, it must be determined whether damages are a just and appropriate remedy, considering whether damages would fulfill any of the related functions of compensation for loss, vindication of the right, or deterrence of future breaches. Third, the court must determine whether the state has established other countervailing considerations rendering damages inappropriate or unjust. Lastly, the quantum of damages must be assessed.

The court held that in malicious prosecution cases, there is a high degree of overlap between the elements of the tort and a corresponding claim for Charter damages, where malice is a component of both actions. The court held that the facts alleged by the appellant in regard to malicious prosecution were equally applicable to the corresponding claim for Charter damages. The court's reasons for allowing the appeal in regards to the malice requirement of malicious prosecution applied equally to the damages claim.

(3) The self-represented appellant was granted leave to further amend his statement of claim in accordance with the appeal.

Carbone v. Zderic, 2014 ONCA 849

[Simmons, MacFarland and Benotto JJ.A.]

R.W. Wilson, for the appellant
R. Sparano, for the respondent

Keywords: Civil Procedure, Summary Judgment, Promissory Note, Fraud, False Pretences, Costs

Facts: The appellant appeals the judgment of Edwards J. of the Superior Court of Justice, which found her liable to pay the plaintiff for the amounts set out in two promissory notes plus punitive damages, and also found that she acted fraudulently.

Issue: Should part of the judgment of Edwards J. in relation to the promissory notes, punitive damages, and fraudulent conduct be set aside?

Holding: The appeal was allowed and the appellant was awarded $7,500 in costs on a partial indemnity scale.

Reasoning: Yes. Neither the statement of claim nor the initial affidavit on the respondent's motion for summary judgment allege that the appellant signed the promissory notes at issue, nor do they allege that her conduct was fraudulent in nature. The respondent's second affidavit in support of his motion for summary judgment was not served on the appellant and he did not obtain any order dispensing with service. Therefore, the portions of the judgment of Edwards J. on these matters, as well as the related punitive damages awarded for the unsupported allegations that the appellant acted fraudulently, are set aside. The order for the appellant to pay the respondent's costs of the motion on a full indemnity basis were reduced, as that order must also have been based on the unsupported allegation of fraud.

Mehedi v 2057161 Ontario Inc. (Job Success), 2014 ONCA 847

[Juriansz J.A. (In Chambers)]

G. Mehedi, acting in person
C. Stanek, duty counsel for the moving party
No one appearing for the responding party

Keywords: Civil Procedure; Motion for Directions; Service

Facts: This was an addendum to the decision in Mehedi v 2057161 Ontario Inc. (Job Success), 2014 ONCA 604, released on August 21, 2014.

Mr. Smith, a responding party, sent a letter to the Court of Appeal and Superior Court seeking "clarification and direction" and claiming that he knew nothing of Mr. Mehedi's (the moving party's) motion on July 30, 2014. Mr. Smith explained his delay in writing to the court, stating that he became ill after his first inquiry to the court in early August. He stated that he had not received service of any documents by Mr. Mehedi and asked for advice in order to "receive proper notice".

Holding: Future service of Mr. Smith could be made by ordinary mail at the address provided in his letter.

Reasoning: The contents of Mr. Smith's letter did not affect the substance of the decision relating to the motion for directions and Mr. Mehedi's motion to introduce new evidence. However, given that Mr. Smith provided a new mailing address and email address, future service upon Mr. Smith could be made by ordinary mail at both the address for service indicated in the endorsement and at the address provided in the addendum.

Security National Insurance Co. v. The Wawanesa Mutual Insurance Company, 2014 ONCA 850

[Simmons, MacFarland and Benotto JJ.A.]

Kevin D.H. Mitchell and Monica Cop, for the appellant, Wawanesa Mutual Insurance Company
J. Jason Kerr, for the respondent, Security National Insurance Co.

Keywords: Insurance Law, Motor Vehicle Policy, Interpretation, Financial Dependence

Facts: This is an appeal from the judgment of Morgan J. setting aside the award of Arbitrator Robinson dated April 30, 2012.  The issue in this case was whether or not Mr. Kibria was dependent on his son and daughter-in-law within the meaning of that term in the policy of insurance owned by his son. If he was principally dependent for financial support, Security National pays.  If not, Wawanesa pays.

Issue: Did the motion judge err in finding that Mr. Kibria was not dependent on his son and daughter in law within the meaning of the term "dependent" in the policy of insurance owned by his son?

Holding: Yes.  Appeal allowed.

Reasoning: Miller v. Safeco Insurance Co. (1985), 50 O.R. (2d) 797 (Ont. C.A.) is the seminal case in this area. The factors that must be considered are the amount and duration of the financial dependency, financial or other needs of the claimant and the ability to be self-supporting.

The issue of principal financial dependency is a question of fact, and absent palpable and overriding error the finding is entitled to deference on appeal.

The Arbitrator applied the Safeco test. First, he considered the duration and the amount of the dependency and found that there was dependency from the time Mr. Kibria came to Canada in October 2006 to the date of the motor accident. He then turned to Mr. Kibria's needs and found that Mr. Kibria relied on his son and daughter-in-law for his personal needs and his financial needs. He considered Mr. Kibria's ability to earn income, the fact that he was 81 years of age and the fact that he looked after his grandchildren. He knew and was aware of the fact that Mr. Kibria had lived in Bangladesh and that he had property there.

The Arbitrator concluded, on the evidence before him, that for the duration of his time in Canada, Mr. Kibria was principally financially dependent. The appeal judge found that Arbitrator Robinson erred in failing to account for the voluntary nature of Mr. Kibria's dependence on his son and daughter-in-law.  The appeal court disagreed. The Arbitrator made a factual determination of principal financial dependency premised on the unique circumstances of this case.  The court found that it was open for the Arbitrator to do so and his finding was a reasonable one.

Wilson v. Cranley, 2014 ONCA 844

[Laskin, Gillese and Pardu JJ.A.]

Chris G. Paliare and Andrew Lokan, for the appellant
James L. Vigmond and Brian Cameron, for the respondent

Keywords:  Civil Litigation, Motor Vehicle Accidents, Costs, Offers to Settle, Rules of Civil Procedure, Rule 49.10, Notional Pre-Judgment Interest, Near Miss Offers

Facts:  The parties were involved in motor vehicle accident litigation. They exchanged a number of offers to settle, including the defendant's offer of $50,000 in damages, plus interest under the Courts of Justice Act, which totalled $61,609.56, plus costs, disbursements and taxes.

Following a six-day trial, the jury awarded the plaintiff $15,000 for general damages and $45,000 for loss of future income, for a total award of $60,000.  After applying the $30,000 statutory deductible mandated by s. 267.5(7) of the Insurance Act (The "Act"), the award for general damages was reduced to zero.

The defendant sought partial indemnity costs from the date of his offer, and also argued that the costs consequences of Rule 49.10 should apply.  In making this argument, he compared the offer of $61,609.56 (plus costs, disbursements and taxes) to the total jury award of $60,000 ($15,000 for general damages and $45,000 for loss of future income).

The trial judge found that the plaintiff "beat" the offer.  In so finding, the trial judge added notional pre-judgment interest of $2,299.31 to the $15,000 award for general damages.  By notional, the trial judge meant the amount of prejudgment interest that would have accrued on the general damages award but for the application of the statutory deductible.  The general damages award plus notional pre-judgment interest amounted to $17,299.31.  When the trial judge added that sum to the award of $45,000 for loss of future income, the total amount was $62,299.31. The offer was for $61,609.56.

Thus, the trial judge reasoned, for the purposes of Rule 49.10, the judgment was more favourable than the offer by $689.75 and the plaintiff was presumptively entitled to costs.

(1) Did the trial judge err by adding notional pre-judgment interest to the general damages award for the purposes of Rule 49.10?

(2) If not, then did the trial judge err by failing to properly consider the "near miss" offer?

Holding: Appeal dismissed.

(1) No. When comparing the judgment with a Rule 49 offer, the court is to consider not the judgment awarded by the jury but the amount finally awarded by the trial judge plus pre-judgment interest. As pre-judgment interest would, in the ordinary course, be added to the general damages award, and the general damages award should be considered absent the statutory deductible, it follows that pre-judgment interest should be notionally added to the general damages award from the date of the notice of claim, for the purpose of determining whether the judgment was more favourable than the Offer.

(2) No. There is no "near miss" policy in respect of Rule 49.10. The trial judge gave due consideration to the offer  when he acknowledged that the difference between the offer and judgment was a mere $689.75, and arose only because notional pre-judgment interest had been applied to the general damages award.

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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