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

1.    Myers-Gordon v. Martin, 2014 ONCA 767 (MacFarland, LaForme and Lauwers JJ.A.), November 4, 2014

Randy Martin was driving his mother's SUV when he struck and killed two people and seriously injured two others. He pled guilty to charges including impaired driving causing death and bodily harm.  He admitted that he did not have his mother's consent to drive her car at the time of the accident. Karen Martin corroborated Randy's admission. Presented with no evidence to the contrary, Kent J. granted Karen's motion for summary judgment and dismissed the action as against her.

State Farm Mutual Automobile Insurance Company, one of the defendants in the action, appealed from that order.

State Farm submitted that the motion judge applied the wrong test for implied consent, challenging his characterization of the test as subjective. Upon reviewing the evidence surrounding Randy's use of his mother's vehicle and assessing Randy's credibility, the motion judge concluded: "The test is subjective. It is what Randy believed at the time that is determinative." Citing the Supreme Court's decision in Palsky (Next friend of) v. Humphrey, [1964] S.C.R. 580, the appellant argued that the test is not purely subjective, but that there is an objective element to it as well.

In Palsky, the Supreme Court restored the decision of the trial judge, who had concluded:

State Farm submitted that the words "somewhat subjective fashion" and "under all the circumstances" import an objective element into the test, and that the motion judge erred in law in describing the test as subjective.

The Court of Appeal disagreed, finding that the motion judge demonstrated that he considered all of the evidence, including those facts which supported a finding of implied consent. He concluded that, with Randy and Karen both stating that he did not have her consent to drive the vehicle on the night of the accident, the central issue was Randy's credibility. Nothing on the record challenged his credibility, or Karen's.

The Court held that it was open to the motion judge to find that Karen had not given Randy consent to drive her car.

State Farm also argued that the motion judge, who heard the motion before the Supreme Court released its decision in Hryniak v. Mauldin et al., [2014] S.C.C. 7, ought to have ordered a trial of an issue. The Court again disagreed, finding that although the motion judge relied on the more restrictive test which it outlined in Combined Air Mechanical Services Inc. v. Flesch, [2011] ONCA 764, he did not err in concluding that he could decide the issue of implied consent on a motion for summary judgment. The motion judge found that the case did not involve significant contentious facts. Karen relied on the evidence of three parties, all of whom had been examined for discovery, while the responding parties led none.

The Court held that it was open to the motion judge to find that he could decide the issue of implied consent on a motion for summary judgment.  The appeal was dismissed.  

2.    Hazelton Lanes Inc. v. 1707590 Ontario Limited, 2014 ONCA 793 (Sharpe, Simmons and Benotto JJ.A.), November 12, 2014

In this decision, the Court of Appeal considered whether the conduct of a judge during the trial of a commercial action gave rise to a reasonable apprehension of bias.

The action arose from disputes between the appellants, John Faraci and 1707590 Ontario Limited, and the respondents, Stephen Chan and Hazelton Lanes Inc., over the Toronto shopping mall known as Hazelton Lanes.

The trial judge did not decide this case on the merits. Rather, on day 36 of a trial that was originally estimated to last three days, he permitted the respondents to add several defendants and new causes of action, including fraud and conspiracy. He granted to the respondents an ex parte Mareva injunction against the appellants and the added parties, finding that they had all engaged in a fraudulent scheme to hide assets. The trial judge also ordered that the appellants comply within six business days with 19 directions which he had given to Faraci during his cross-examination. These directions required Faraci to obtain, produce and organize for inspection documents that had never previously been requested.

The appellants produced many documents in accordance with the order; however, the trial judge found that they were in contempt of court for failing to comply fully with his 19 directions, and ordered that they post $35,000 as security for costs. When the appellants failed to comply with that order, the trial judge struck their statement of defence and counterclaim and granted partial default judgment, by way of two judgments and one order, on all major aspects of the respondents' original claims against them. He awarded the respondents $650,000 in costs on a substantial indemnity basis.

The appellants' appeal of five orders and judgments made by the trial judge raised several issues: loss of jurisdiction due to reasonable apprehension of bias, lack of evidence capable of proving contempt, misapplication of the rules relating to default judgment, insufficiency of reasons and failure to apply the principles of proportionality and reasonableness in awarding costs.

Writing for the Court of Appeal, Simmons J.A. found the issue of reasonable apprehension of bias dispositive of the appeal.  

Simmons J.A. noted that the prevailing test for reasonable apprehension of bias is that set out in de Grandpré J.'s dissenting opinion in Committee for Justice and Liberty v. Canada (National Energy Board) (1976), [1978] 1 S.C.R. 369 (S.C.C.). As Cory J. explained in R. v. S. (R. D.), [1997] 3 S.C.R. 484, the test contains a two-fold objective element: not only must the person considering the alleged bias be reasonable, but the apprehension of bias itself must also be reasonable under the circumstances. Simmons J.A. also recalled the principle that the appearance of judicial impartiality is as important as the reality. The Supreme Court held in Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, that "the relevant inquiry is not whether there was in fact either conscious or unconscious bias on the part of the judge, but whether a reasonable person properly informed would apprehend that there was."

Simmons J.A. accepted the appellants' submission that the trial judge demonstrated a reasonable apprehension of bias through a number of actions, finding that an informed person, viewing this conduct realistically and practically, would reasonably conclude that at least three aspects of the trial judge's conduct, considered together, gave rise to a reasonable apprehension of bias.

Simmons J.A. found that certain statements and findings made by the judge during the trial indicated that he had prejudged Faraci's conduct and credibility. During Faraci's cross-examination, the judge interjected with adverse comments on his credibility, saying that the witness' evidence made no sense and was "gobbledygook". Simmons J.A. noted that when considered alone, these comments could be seen as merely a reflection of the trial judge's frustration with a difficult witness. When considered along with his other conduct, however, they formed part of a pattern that gave rise to a reasonable apprehension of bias.

This other conduct included the trial judge's exceptional suggestion that the respondents bring a mid-trial motion for a Mareva injunction and his findings on that motion and a related ruling that Faraci had engaged in a fraudulent scheme to conceal his assets. These actions created an appearance that he had prejudged Faraci's conduct and that he was aligning himself the respondents.

Simmons J.A. found that the trial judge further demonstrated a reasonable apprehension of bias in his 19 directions for mid-trial production of a large quantity of documents that had not previously been requested, and the relevance and probative value of which had not been established. She held that the number, breadth and "fundamental lack of relevance" of the documents created the appearance that the trial judge was disdainful of the appellants and prepared to "accede unquestioningly" to respondents' counsel's production requests.  With these 19 directions, the trial judge "aligned himself with the respondents on the production issue and lost all sense of what was proportionate and necessary to preserve trial fairness and efficiency."

Simmons J.A. went on to observe that if the trial judge's mid-trial directions contributed to a reasonable apprehension of bias, his willingness to resort to the quasi-criminal remedy of contempt for failure to comply with them only added to that appearance. Simmons J.A. noted that the trial judge's contempt finding contained no analysis of the extent to which the appellants had complied with his directions or to which any non-compliance was excusable. His failure to refer to Farci's affidavits – in which he provided particulars of what had and had not been produced and the reasons for any non-production – further demonstrated that he was aligned with the respondents.

Simmons J.A. concluded that when considered cumulatively, the trial judge's conduct of the trial created an appearance that he prejudged Faraci's conduct and credibility and aligned himself with the respondents on the issue of mid-trial production. A reasonable, properly informed person, viewing this conduct realistically and practically, would conclude that it gave rise to a reasonable apprehension of bias.

The appeal was allowed, the judgments and orders under appeal set aside, and a new trial – before a different judge – ordered.

3.    SA Horeca Financial Services v. Light, 2014 ONCA 811 (Weiler J.A. (In Chambers)), November 17, 2014

Last August, after pursuing Andrew Light across three international jurisdictions, and finally inadvertently locating him in Toronto with the help of LinkedIn, SA Horeca Financial Services and SA Horeca Logistic Services obtained a summary judgment against Light, recognizing and enforcing the foreign judgment of EUR 214,562.29 that Horeca had obtained against him in a Belgian court in 2011. Light appealed, triggering an automatic stay on enforcement of the monetary judgment.

In this decision, the Court of Appeal considered two motions brought by Horeca: one to lift the automatic stay on enforcement pending appeal or, in the alternative, for an order allowing for an examination of Light in aid of execution, and the other to obtain security for costs in respect of the appeal.

Weiler J.A. noted that when considering whether to lift a stay pursuant to its discretion under rule 63.01(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, an appellate court ought to consider (i) the financial hardship to the respondent if the stay is not lifted, (ii) the ability of the respondent to repay or provide security for the amount paid, and (iii) the merits of the appeal.

Despite Light's suggestion that Horeca, as a sizable financial institution, did not suffer any hardship, Weiler J.A. found that the first requirement was satisfied. While Horeca might not have suffered financial hardship "in an absolute sense", it was prejudiced by the substantial delays and significant additional expenses incurred in having to pursue Light through Belgium, the United Kingdom and finally Canada in an attempt to enforce its judgment. Weiler J.A. was not required to consider the second factor, as Horeca's counsel undertook to hold in trust any proceeds realized from lifting the stay pending the outcome of the appeal. Turning to the merits of Light's appeal, Weiler J.A. noted that the motion judge's strong factual findings were supported by the record, and concluded that the appeal appeared to be frivolous and vexatious.  She also expressed concern over Light's loss of employment and his refusal to give any undertaking with respect to his assets, leaving Horeca unprotected pending the appeal.

Weiler J.A. ordered that the stay pending appeal be lifted such that Horeca may examine Light in aid of execution, following which Horeca may bring a further motion to lift the stay in its entirety.

Turning to Horeca's motion seeking $11,740.68 as security for costs of the appeal, Weiler J.A. noted that security for costs may be ordered under rule 61.06(1)(a) where there is good reason to believe that the appeal is frivolous and vexatious and that the appellant has insufficient assets in Ontario to pay the costs of the appeal. Despite believing the appeal to be frivolous and vexatious, Weiler J.A. dismissed Horeca's motion, holding that she could not assume that Light has insufficient assets in Ontario to pay costs on the basis that he had been terminated from his job in Toronto. Light's evidence indicated that he is self-employed and working under contract.

Weiler J.A. dismissed Horeca's motion for security for costs, without prejudice to it bringing a further motion once it had conducted an examination of Light in aid of execution.

4.    Terceira v. Labourers International Union of North America, 2014 ONCA 839 (Feldman, Blair and Pepall JJ.A.), November 26, 2014

In this appeal, the Court of Appeal considered the application of the test for the disqualification of an Ontario Labour Relations Board Vice-Chair on the basis of reasonable apprehension of bias.  

The respondents, former employees, members and officers of the appellant trade union, the Universal Workers Union – Labourers International Union of North America Local 183, brought proceedings before the OLRB arising from Local 183's termination of their employment. At the outset, they requested that the Vice-Chair recuse himself on the basis of a reasonable apprehension of bias, citing the fact that he had acted for one of the parties in an employment dispute seven years earlier. The Vice-Chair declined to recuse himself, asserting that he could not recall any of the terms of the individual's employment and that an informed person, viewing the matter realistically and practically, would not think that there was any possibility of bias. He went on to dismiss the proceeding on the basis that it would serve no labour relations purpose. The respondents filed a Request for Reconsideration on the basis of a reasonable apprehension of bias and other grounds. That too was dismissed.

The respondents sought judicial review of both decisions and asked that they be quashed. Finding that the Vice-Chair was in an actual or perceived conflict of interest, the Divisional Court quashed the decisions and remitted the matter back for reconsideration by a differently constituted Board.  

The Court of Appeal granted leave to appeal that order.

The appellants, supported by the OLRB and the Attorney General of Canada, which intervened in the appeal, submitted that the Divisional Court erred in quashing the OLRB decisions. They claimed that the lower court incorrectly applied the test in MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235, relating to a lawyer's potential conflict of interest, arguing that the correct test to be applied to an adjudicator for reasonable apprehension of bias is that set out in Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259.

Writing for the Court of Appeal, Pepall J.A. confirmed that the courts and the OLRB have consistently applied a reasonable apprehension of bias test in addressing adjudicators' prior professional relationships. She emphasized that the difference between a claim of conflict of interest by a lawyer, such as in MacDonald Estate, and a reasonable apprehension of bias by an adjudicator, as in Wewaykum, is significant. Notably, the impartiality of an adjudicator is presumed. While the rules governing a lawyer's conflict of interest flow from the fiduciary duty owed to his client, the adjudicator's duty is anchored in principles of procedural fairness, including impartiality. Pepall J.A. noted the particular importance of this distinction for the OLRB, which selects its adjudicators from within the labour and employment bar. Pepall J.A. held that in incorrectly applying the test in MacDonald Estate, the Divisional Court failed to apply the presumption of impartiality.

Pepall J.A. found that the lower court also failed to conduct a contextual analysis, which requires consideration of a number of factors that are relevant to the test. As the Supreme Court held in Wewaykum, the inquiry into an allegation of apprehension of bias by an adjudicator is highly fact-specific and is evaluated on an objective standard. Not only must the person considering the alleged bias be reasonable, but the apprehension of bias must also be reasonable.

Applying the Wewaykum test to the facts at issue, Pepall J.A. explained that in order to succeed in demonstrating a reasonable apprehension of bias, the respondents must establish that a reasonable, right-minded and properly informed person would think that the Vice-Chair was consciously or unconsciously influenced by his participation, about seven years earlier, in a matter resolved at the pleadings stage and of which the Vice-Chair claimed he had no knowledge of anything material to the proceeding before him.

She found that the respondents fundamentally failed to demonstrate this.

Pepall J.A. noted that the proceedings at issue were limited to preliminary motions. If the Vice-Chair's prior relationship had any relevance, it was only to the remedial stage of the respondents' claim. This was not before the Vice-Chair. Pepall J.A. also observed that the respondents failed to file any material in support of their claim of reasonable apprehension of bias. While the respondents asserted that they were unaware that the Vice-Chair would be presiding until the hearing itself, they did not seek an adjournment. Pepall J.A. finally recalled the principle outlined in Rando Drugs Ltd. v. Scott, 2007 ONCA 553, 86 O.R. (3d) 641 (Ont. C.A.), leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 494, that an adjudicator's statement about his knowledge of and involvement in another case and its potential impact on the current proceeding is generally accepted at face value unless there is good reason to doubt it.

 
In Pepall J.A.'s view, the respondents failed to rebut the presumption of impartiality of the Vice-Chair and demonstrate a reasonable apprehension of bias.

Pepall J.A. briefly considered and dismissed the respondents' additional arguments in support of their position that the Vice-Chair's decisions should be quashed. She rejected their assertion that they were denied procedural fairness and that their natural justice rights were breached, noting that they had the opportunity to make submissions on the procedural deficiencies of which they complained in their Request for Reconsideration. They either did so unsuccessfully, or elected not to. Pepall J.A. also rejected the respondents' claim that in dismissing the proceedings on the basis that they served no labour relations purpose, the Vice-Chair's exercise of discretion was unreasonable. She noted that the Vice-Chair had discretion to dismiss the proceedings under the Labour Relations Act. He did so after carefully weighing the relevant factors, and his decision was entitled to deference.

The appeal was allowed and the orders of the OLRB restored.   

5.    Wilson v. Cranley, 2014 ONCA 844 (Laskin, Gillese and Pardu JJ.A.), November 27, 2014

In this decision, the Court of Appeal considered whether notional pre-judgment interest ought to be added to the quantum of general damages when determining whether an offer to settle attracts the cost consequences of rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Dean Wilson claimed damages of more than $800,000 arising from a car accident with Stephen Cranley. Prior to the trial, Wilson submitted two settlement offers. Cranley also made an offer to settle. His offer of $50,000, with interest under the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA), totalled $61,609.56, plus costs, disbursements and taxes. A jury ultimately awarded Wilson $45,000 for loss of future income and $15,000 for general damages, the latter of which was reduced to zero after applying the statutory deductible of $30,000 mandated under the Insurance Act, R.S.O. 1990, c.I.8.

Cranley sought partial indemnity costs from the date of his settlement offer, submitting that Wilson's total judgment of $60,000 was only as favourable as, or less favourable than his offer of $61,609.56, and therefore that the costs consequences of rule 49.10 ought to apply. The trial judge found, however, that Wilson's jury award beat Cranley's offer. He came to this conclusion by adding notional pre-judgment interest of $2,299.31 to the $15,000 award for general damages, the amount of interest that would have accrued on that award but for the statutory deductible. Combined with the award for loss of future income, the total amount of damages awarded Wilson was $62,299.31. With a judgment $689.75 more favourable than the defendant's offer, Wilson was presumptively entitled to costs. The trial judge awarded Wilson costs of $45,200, plus disbursements of $41,040.86.

Cranley appealed, claiming that the trial judge erred by adding notional pre-judgment interest to the general damages award and by failing to consider his "near miss" offer in awarding costs.

Writing for the Court of Appeal, Gillese J.A. endorsed the trial judge's costs award, noting that his approach was consistent with the Court's position that when calculating a judgment for the purpose of determining whether it is more or less favourable than an offer to settle, the court ought to consider the amounts awarded, without regard to the statutory deductible, together with notional pre-judgment interest added to the award for non-pecuniary loss.

As the Court held in Rider v. Dydyk, 2007 ONCA 687, 286 D.L.R. (4th) 517, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 594, while s. 267.5(7) the Insurance Act mandates that in actions involving motor vehicle accidents the general damages award be reduced by the statutory deductible, s. 267.5(9) of the statute provides that the deductible shall not be taken into account when determining whether a plaintiff obtained a judgment more or less favourable than an offer to settle. Moreover, in Pilon v. Janveaux, [2006] O.J. No. 887 (C.A.) and Lawson v. Vierson, 2012 ONCA 25, 346 D.L.R. (4th) 518, the Court held that when comparing a judgment with an offer to settle, the court is not to consider the judgment awarded by the jury but rather the amount "finally awarded by the trial judge" plus pre-judgment interest.

Gillese J.A. rejected Cranley's submission that the amount finally awarded by the trial judge would be reduced by the amount of the statutory deductible, and that he accordingly erred in adding notional pre-judgment interest to the full amount of the general damages award. If, as the Court held in Pilon, pre-judgment interest is ordinarily added to the general damages award and, as the Court held in Rider, the general damages award ought to be considered absent the statutory deductible, it follows that, in accordance with s. 128 of the CJA, pre-judgment interest should be notionally added to the general damages award from the date the cause of action arose. Adding notional pre-judgment interest is not, as Cranley suggested, an unwarranted extension of Rider and Pilon, but is in fact a logical conclusion of the Court's reasoning in those cases.

Gillese J.A. also dismissed Cranley's claim that, in awarding costs, the trial judge erred by failing to properly consider his "near miss" offer to settle. Cranley acknowledged that the Court's recent decision in Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616, leave to appeal to S.C.C. requested, confirmed that there is no "near miss" policy in respect of rule 49.10. He observed, however, that the Court found that even where an offer does not attract rule 49.10 consequences, rule 49.13 directs the court to consider such offers when considering costs. As Rosenberg J.A. explained, rule 49.13 calls on the judge to take a "holistic approach".

Gillese J.A. found that although the trial judge did not expressly refer to rule 49.13, his endorsement complied with the approach mandated in Elbakhiet, demonstrating that he was fully aware that Cranley's offer was a "near miss" and that he took that into consideration when exercising his discretion in awarding costs. In fact, his endorsement explicitly referred to the jury award as "only slightly more favourable" than the offer. Moreover, the trial judge considered not just the offer, but the circumstances surrounding it, including Wilson's own offers to settle and, notably, Cranley's failure to participate in the statutorily mandated mediation despite Wilson's requests.  In considering all of these factors, the trial judge took the "holistic approach" directed by the Court of Appeal in Elbakhiet.