Canada: Court Of Appeal Summaries (February 9 To February 13, 2015)

Last Updated: February 18 2015
Article by John Polyzogopoulos

Hello again to everyone. Below are summaries of this week's Ontario Court of Appeal civil decisions (non-criminal). Topics include nuisance, occupier's liability, estates, procedure to be taken where it is unclear whether an arbitrator has jurisdiction, an unsuccessful attempt to invalidate the actions of a Union at a national convention, summary dismissal of a subrogated action and unconscionability of an exclusion clause under an insurance policy.

1317424 Ontario Inc., v. Chrysler Canada Inc., 2015 ONCA 104

[Feldman, Simmons and Pardu JJ.A.]
R. F. Leach and M. A. Polvere, for the appellants
B. Bresner, for the respondent, Chrysler Canada Inc.

Keywords: Torts, Environmental Law, Nuisance, Requirement of Emanating from Other Land Contamination, Remediation

The land in issue was operated as a foundry and asbestos insulation producer for several decades, resulting in significant contamination. It was acquired by Chrysler in 1987 and decommissioned to then-current standards. In 1989, Chrysler sold the land to The D'Andrea Group Inc., with a certificate from the Ministry of the Environment confirming that the land had been decommissioned in accordance with existing regulatory requirements. The D'Andrea Group in turn sold the land to the appellants in 1999. The appellants' suit against Chrysler is for negligence in decommissioning the property and failing to remediate it, negligent misstatement that Chrysler had properly remediated the land, and the creation of a stigma to the land.

The appellants later sought to amend to add a claim against Chrysler for nuisance by failing to remediate, causing an unreasonable interference with the use and enjoyment of the land. That amendment was denied by the motion judge. He concluded that, to form a tenable nuisance claim, the interference with the use and enjoyment of the claimant's land must originate outside the plaintiff's land. The appellants appealed, arguing that the scope of nuisance was not finally settled, and that the claim should therefore be allowed to proceed.

Issue: Can a claim in nuisance be made when the nuisance emanates from the plaintiff's own land and not from outside that land?

Decision: Appeal dismissed.

The issue of whether a nuisance must emanate from another's land was recently specifically addressed by the Nova Scotia Court of Appeal in W. Eric Whebby Ltd. v. Doug Boehner Trucking & Excavation Ltd., 2007 NSCA 92, 258 N.S.R. (2d) 41. In Whebby, at para. 128, Cromwell J.A. (as he then was) stated that regardless of who causes the nuisance, the interference with the plaintiff's land must be indirect and not direct, meaning it must originate elsewhere than on the plaintiff's land. Therefore, the alleged nuisance must originate somewhere other than on the plaintiff's land.

Home Trust Company v Fierro Estate, 2015 ONCA 106

[MacFarland, Hourigan and Benotto JJ.A]
G. Gryguc, for the appellant Fierro
R. Migicovsky, for Rose and Rose
A. Jackson, for the responding party Home Trust

Keywords: Family Law, Estates, Matrimonial Home, Setting Aside Mortgage, Family Law Act, ss. 21, 23, Summary Judgment

Victoria Fierro mortgaged a residential property in Vaughan on July 8, 2009, to the respondent as mortgagee. Ms. Fierro died in July 2011. The mortgage went into default in October 2011 and subsequently matured. In March 2012, the respondent commenced an action for payment and possession under the mortgage against Mr. Fierro in his capacity as the estate trustee. In June 2013, a counterclaim was filed arguing the mortgage should be set aside pursuant to ss.21 and 23(3) of the Family Law Act. A third party claim was also commenced against the law firm acting for the parties on the mortgage, alleging they were negligent for not making inquiries into Ms. Fierro's marital status. Mr. Fierro ceased being the estate trustee in 2013.

In March 2014 on a respondent motion for summary judgement, the motion judge found that Mr. Fierro had no claim to the mortgaged property under the FLA. She further found that sections 21 and 23(3) should not be applied to set aside the mortgage as the evidentiary onus had not been met to establish the respondent had actual or constructive notice that Ms. Fierro was a spouse and the mortgaged property was a matrimonial home. Mr. Fierro appeals the order of the motion judge granting summary judgment on the mortgage action against the estate of Victoria Fierro.

Issue: Did the motion judge err in not finding that ss. 21 and 23(3) of the Family Law Act should be applied to set aside the mortgage?

Holding: Appeal dismissed.

No. Given that Mr. Fierro is no longer an estate trustee and was not sued in his personal capacity, he has no capacity to bring the appeal. In any event, the court found the motions judge correctly found that Mr. Fierro had not met his onus of establishing that the respondent had actual or constructive notice that Ms. Fierro was a spouse and the mortgaged property was a matrimonial home.

D'Alimonte v. Weber, 2015 ONCA 79

[MacFarland, Hourigan and Benotto JJ.A.]
C. Weber, acting in person
A. R. Leardi, for the respondent

Keywords: Power of Attorney, Standard of Review, Palpable and Overriding Error

The appellant appealed the order removing her as the power of attorney for property and care on behalf of her elderly mother.

Holding: Appeal dismissed.

The application judge's findings were factual in nature. There was sufficient evidence before her to support the order. Absent any palpable and overriding error, the Court of Appeal would not interfere.

MacQuarrie v. National Bank Life Insurance Company, 2015 ONCA 100

[Doherty, Gillese and Lauwers JJ.A.]
R. Andal, for the appellant
C. Carter, for the respondents

Keywords: Insurance Law, Contract Interpretation, Critical Illness Insurance, Exclusion Clause, Unconscionability

The trial judge dismissed the appellant's claim for payment under a critical illness insurance policy on the basis that the appellant's claim fell within the 90-day exclusion clause in the policy. The trial judge found that the clause referred to any sign of cancer that appeared before the 91st day after the certificate of insurance came into effect, whether that was before or after the date on which the certificate of insurance came into effect.

(1) Is the claim excluded by the 90-day exclusion clause in the agreement?
(2) Did the trial judge err in enforcing the 90-day exclusion clause in the circumstances of this case?

Holding: Appeal dismissed.

(1) There is no suggestion that the trial judge misapprehended any relevant evidence in her interpretation of the 90-day exclusion clause. That interpretation was reasonable and the Court would not interfere with it.

(2) Like the trial judge, the Court found that it would not be unconscionable to enforce the 90-day exclusion clause in these circumstances.

Zuk v. Atkinson, 2015 ONCA 96

[MacFarland, Hourigan and Benotto JJ.A.]
J.V. Allen, for the appellant
T. Hartley, for the respondents

Keywords: Civil Procedure, Undertakings, Sanction for Failure to Comply, Striking Claim, Motion to Set Aside

Justice O'Connor made an order setting a deadline of April 2, 2012 for the appellant to comply with outstanding undertakings. The appellant did not comply with the order of O'Connor J. Wein J. then made an order extending the time to answer undertakings to June 29, 2012. Justice Wein also ordered that if the appellant did not comply with her order, the respondents could move without notice to dismiss the action. The appellant did not comply with the order of Wein J. and the respondents brought a successful ex parte motion before Murray J. to dismiss the action.

The appellant then brought a motion before Lemon J. to set aside the order of Murray J. That motion was dismissed. Justice Lemon found that there was no adequate explanation for the delay in bringing the motion before him. He held that there was nothing in the explanation offered by the appellant for his non-compliance with the previous court orders that would have made any difference in the motion before Murray J. Further, the motion judge was satisfied that there was some prejudice to the respondents because certain outstanding undertakings were required to allow them to properly respond to the claim. He went on to observe that tactical decisions by counsel to avoid their obligation to answer undertakings should be discouraged by the court.

Issues: Did the motion judge err in:

(1) finding that the appellant's counsel deliberately did not comply with the orders of O'Connor and Wein JJ.?

(2) finding that the delay resulted in prejudice to the respondents? or

(3) basing his decision on a perceived litigation context beyond the facts of this case?

Held: Appeal dismissed.

(1) No. The court found that there was no reasonable explanation for the non-compliance with the orders.

(2) No. The lack of explanation made the issue of prejudice suffered by the respondents less of a factor on the motion before Lemon J. However, the motion judge did find prejudice to the respondents and the court saw no error in this conclusion.

(3) No. The court was not satisfied that the motion judge based his decision to dismiss the motion on his observations regarding the practice of some counsel to avoid their obligation to answer undertakings.

Kelly (Re), 2015 ONCA 95

[Watt, Pepall and Huscroft JJ.A]
H. Kelly, acting in person
A. Szigeti, for the appellant
P.G. Cowle, for the Attorney General of Ontario
B. Walker-Renshaw, for Ontario Shores Centre for Mental Health Sciences

Keywords: Administrative Law, Not Criminally Responsible, Ontario Review Board, Significant Threat Standard

Mr. Kelly was found not criminally responsible on account of mental disorder on charges of uttering threats of death or bodily harm and a failure to comply with a probation order on July 9, 2008. He has been under the supervision of the Ontario Review Board since that time. Kelly appeals from the disposition made by the Ontario Review Board on April 7, 2014, with reasons released on May 5, 2014. Counsel argues that the Board erred in giving effect to the position of counsel without discharging its inquisitorial function and making an independent determination of the significant threat threshold. It is argued there is no evidence that Mr. Kelly constituted a real risk of physical or psychological harm to members of the public from conduct that is criminal in nature.

Issue: Should the decision by the Ontario Review Board be changed?

Holding: Appeal dismissed.

The Board was entitled to rely and act on counsel's acknowledgment that the significant threat standard had been met. It was an acknowledgment by counsel that coincided with a robust history of such findings during Mr. Kelly's tenure under the supervision of the Review Board. It turned its mind to the issue of significant threat and gave brief reasons to explain why it considered the standard to have been met. The court was satisfied that the Board gave the issue adequate consideration in the circumstances. The finding was not unreasonable.

Matthews v. Andrushko, 2015 ONCA 92

[Rouleau, van Rensburg and Pardu JJ.A.]
M. Merchant, for the appellant
No one appearing for the respondents

Keywords: Endorsement, Settlement Agreement

Holding: Matter dismissed. The parties reached a settlement agreement before the appeal was heard, which included the matter that costs were payable to the respondents.

Winters v Haldimand (County), 2015 ONCA 98

[MacFarland, Hourigan and Benotto JJ.A.]
N.R. Jones and J.P. Cavanagh, for the appellants
S. Handler and B. McCall, for the respondents

Keywords: Torts, Personal Injury, Occupier's Liability, Trees, Standard of Care, Duty to Warn, Costs, Family Law Act Claimants

The plaintiff/appellant fell from a tree and was rendered paraplegic. The tree was located in a park in Cayuga, Ontario.

The appellant submitted that the trial judge erred in three ways: (1) failing to make a finding as to whether the premises were reasonably safe; (2) finding that the monitoring the town had in place was reasonable; and (3) not finding it was obvious that the tree in question was not reasonably safe and that it was inherently unsafe in the absence of appropriate monitoring.

The appellant also sought leave to appeal the trial judge's costs award and, in particular, the costs award made against the Family Law Act claimants. The trial judge awarded costs against each of the six FLA claimants in the amount of $5,000 for a total of $30,000.

Holding: Appeal dismissed. Leave to appeal the costs award was granted, but the cost appeal was dismissed. Costs of the appeal were agreed in the sum of $15,000 apportioned $500 against each of the five remaining FLA claimants and $12,500 against the appellant, Eric Winters.

The trial judge did not err. He was alive to the three issues as they had been put to him in oral and written argument. The evidence did not disclose any prior complaint or injury with respect to the tree. The evidence was that the tree was healthy and typical of its type. Further, the trial judge concluded that the Town's monitoring of the park and visits by maintenance personnel were reasonable in all the circumstances. Any danger posed by the tree was an obvious one. There is no duty to warn of such an obvious and self-evident danger nor any duty to monitor beyond what the Township was doing at the time of the accident.

On costs, leave to appeal was granted but the appeal was dismissed. While in some cases there have been no costs awarded against FLA claimants, there is no general rule that that should be so. The awarding of costs is a matter for the discretion of the trial judge. While the awards here seemed somewhat high, to interfere the Court must be satisfied that the trial judge committed an error in principle or was clearly wrong. This case did not rise to that standard.

Ciano Trading & Services C.T. v. Skylink Aviation Inc., 2015 ONCA 89

[MacFarland, Hourigan and Benotto JJ.A.]
M.L. Solmon and R. Sparano, for the appellant
F. Kussner and B. Halfin, for the respondent

Keywords: Civil Procedure, Stay Pending Arbitration, Jurisdiction of Arbitrator, Competence-Competence Principle

The appellant commenced an action against the respondent because the respondent terminated a Service Agreement between the parties. The appellant brought an application for a declaration that the arbitration clause in the Service Agreement did not apply. The respondent brought a motion to stay the proceedings pending arbitration.

The motion judge granted the respondent's motion and dismissed the appellant's application. He found that it was unclear whether the arbitration clause survived the termination of the Services Agreement. The arbitration clause was not listed in the Service Agreement's survival clause. Pursuant to the competence-competence principle, the motion judge referred the matter to an arbitrator to determine whether the arbitrator had jurisdiction.

Holding: Appeal dismissed. Matter referred to arbitration.

The motion judge did not err in his interpretation of the Service Agreement, nor his finding that the survival of the termination clause was arguable.

Under the International Commercial Arbritration Act, R.S.O. 1990, c.I.9 and the UNCITRAL Model Law on International Commercial Arbitration, the motion judge was obliged to defer the issue of applicability of the arbitration clause to the arbitrator unless the agreement was null and void, inoperative or incapable of being performed. Further, the case law recognizes that where it is unclear if the arbitrator has jurisdiction, then it is preferable to leave the issue to the arbitrator pursuant to the competence-competence principle. In these circumstances, the motion judge was under no obligation to make a determinative finding regarding the operability of the arbitration clause.

Branch 1 of the Polish National Union of Canada v. Polish National Union of Canada Inc., 2015 ONCA 91

[MacFarland, Hourigan and Benotto JJ.A.]
J.F. Diamond, for the appellants
R.S. Segal and Maria Constantine, for the respondents

Keywords: Labour Law, Property, Injunctions, Union Governance, Elections, Natural Justice

This litigation arises as the result of a disagreement between the Branch and the Union over the ownership and the use of certain property. There were two central issues. The first was the ownership of the properties where Branch 1 had been meeting for many years and the second was described as "governance issues". The application judge decided the property issue and no appeal was taken from that decision. On the governance issues, the court determined that the appellants had not been afforded natural justice at a special meeting called by the president of the HEB on February 15, 2013. As a result, the appellants asked the court to invalidate many actions taken by the Union at that meeting.

Before the application was heard, the appellants sought an injunction to prevent the Union from holding its national convention on December 14, 2013. The motion proceeded before Brown J. who refused the injunction and the convention took place.

After hearing the application, the court quashed only a few of the actions of the Union at the meeting in question. On appeal, the appellants argued that their victory was a hollow one because the decision did not take the further step and invalidate all of the actions taken at the national convention in December 2013. They say that because of the actions taken by the HEB in February of 2013 where their membership was effectively terminated, they were precluded from participating att the convention held in December.

The appellants appealed the judgment of the application judge and argued essentially that he failed to deal with all of the issues that were before him. The appellants maintained invalidation of the elections held at the national convention were not collateral and this issue was put before the motion judge.

Issue: Did the application judge err by failing to deal with all the issues before him?

Holding: Appeal dismissed.

Reasoning: No.
First, the application judge in his reasons specifically stated that other than the matters he did deal with, the other matters raised in the draft forms of judgment were collateral, and because they were not specifically addressed he would not make orders in relation to them. If, as the appellants now argue, these matters were specifically addressed, then the court stated that the obligation was to return to the application judge and seek adjudication on those issues, not to raise them by way of appeal.

Second, the order of Brown J. specifically permitted the Union to carry on with the national convention and the elections as specifically set out in the agenda. That order was not appealed and the elections proceeded as authorized by it. The damage had been done and the "irreparable harm" foreseen by the motion judge had occurred, yet the injunction did not issue and the application judge stated the matter to be collateral and not specifically addressed.

Sanofi Pasteur Limited v. UPS SCS, Inc., 2015 ONCA 88

[Hoy A.C.J.O., Simmons and Tulloch JJ.A.]
S.K. Faguy and V. Doré, for the appellant
K. Podrebarac and A. Melamud, for UPS SCS Inc.
D. Hillel, for Automation Components Inc.
L. Matthews and D. Milligan, for Industrial Technical Services (ITS) Inc.
D.S. Young and K.R. Bridel, for Airon HVAC Service Ltd. and Airon HVAC and Control Ltd.
M. Shortreed and E. Lawrence, for Honeywell Limited and Honeywell International Inc.
B. Benning, for Maple Reinders Constructors Ltd. and Maple Reinders Construction Ltd.
P. Duffy, for Heraeus Sensor Technology, USA

Keywords: Insurance Law, Contract of Insurance, All-Risks Policy, Summary Judgment, Negligence, Privity of Contract, Third Party Beneficiary of Contract, Fraser River Pile v Can-Drive Services, Costs

The respondent, UPS SCS, Inc. (UPS), stored the vaccines of the appellant, Sanofi Pasteur Limited, in a dedicated, temperature-controlled warehouse. As required by the storage contract between them, the appellant insured its vaccines under an all-risks policy. The warehouse cooling system malfunctioned. After a weekend at below the contractually-stipulated temperatures, the vaccines were unsaleable. The appellant was fully indemnified by its insurer. The appellant's insurer subrogated itself to the appellant and commenced an action against UPS and a number of other defendants (the Other Defendants). On summary judgment motions brought by most of the defendants, the motion judge dismissed the action in its entirety and awarded costs to UPS and the Other Defendants. He also ordered the appellant to pay one-half of the costs sought by the third parties to the action. The appellant appealed.

(1) Did the motion judge err in concluding that the effect of the covenant (the Insurance Covenant) in the storage contract between the appellant and UPS, that required the appellant to maintain all-risk insurance, could be determined on a summary judgment motion?

(2) Did the motion judge err in concluding that the Insurance Covenant signified that the appellant had assumed all risk of damage to the vaccines and in barring the appellant's claim against UPS?

(3) Did the motion judge err in concluding that the Other Defendants were third-party beneficiaries of the Insurance Covenant and insulated from a law suit?

(4) Did the motion judge err in his costs awards?

Holding: Appeal dismissed in part.

(1) No. The effect of the Insurance Covenant could be determined on summary judgement. The appellant argued that because the parties advanced competing interpretations of the Agreement, the motion judge needed to engage in an exercise of contractual interpretation and a complete factual matrix relating to the incident and its cause was necessary before this task could be undertaken. The appellant argued that the complete factual matrix could only be determined after it has had an opportunity to examine an individual who allegedly suppressed a temperature alarm in the warehouse. Therefore, it submitted, a trial of the action was required. The court disagreed. It held that a trial was not required to determine whether – or to what extent – the appellant contractually assumed the risk of damage to its vaccines and, to the extent the appellant had assumed the risk, whether the parties intended to extend the benefit of the Insurance Covenant to all of the defendants.

(2) Yes. The motion judge failed to consider a material provision of the agreement. Section 1 of the Master Services Agreement (MSA), mandated that in the event of any conflict between a provision in the MSA (such as the Insurance Covenant) and a provision in Service Schedule 1, the terms of Service Schedule 1 would prevail. As a result, the appellant assumed all risk of damage to its vaccines except for damages of up to $100,000 solely due to the negligence of the defendants. The motion judge erred to the extent that he concluded otherwise.

(3) No. The Other Defendants are third-party beneficiaries and benefit from this limitation of liability. The Supreme Court of Canada (SCC) adopted a principled approach to determine when the doctrine of privity of contract should be relaxed. In Fraser River Pile & Dredge Ltd. v. Can-Drive Services Ltd, [1999] 3 S.C.R 108, the SCC articulated the following two-part test to be applied in determining if a third-party should be permitted to enforce the benefit of a contractual provision to defend against an action by one of the contracting parties: (1) did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provision; and (2) are the activities performed by the third party seeking to rely on the contractual provision the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, again as determined by reference to the intentions of the parties? The court found that the Other Defendants met the threshold set out in Fraser River Pile.

(4) No. The court held that "a court should set aside a costs award on appeal only if the [motion] judge has made an error in principle or if the costs award is plainly wrong": Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303. The court was not persuaded that the motion judge made an error in principle or that his costs awards were plainly wrong. Provided UPS paid to the appellant $100,000 plus pre-judgment interest within 10 days, the court would uphold the motion judge's costs awards and dismiss the appeal.

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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