Canada: Ontario Court Of Appeal Summaries (April 27 – May 1, 2015)

Last Updated: May 7 2015
Article by John Polyzogopoulos

Hello everyone. Below are summaries of this week's Ontario Court of Appeal civil decisions (non-criminal). Topics covered include family law, construction liens, constructive dismissal, insurance law in relation to the calculation of the amount of a subrogated claim by OHIP in a personal injury action and in the reduction of benefits under an LTD policy upon receipt of CPP payments, and a motion to strike for no cause of action and the right to amend pleadings in that context.

Erickson & Partners v. Ontario (Health and Long-Term Care), 2015 ONCA 285

[Feldman, Benotto and Brown JJ.A.]

B. A. Babcock, for the appellant
R. V. Bambers and S. Gandhi, for the respondent

Keywords: Insurance Law, Ontario Health Insurance Act, Personal Injury, OHIP, Calculation of Subrogated Claim

Facts: Under the Ontario Health Insurance Act, any person who commences an action to recover damages arising out of the negligence or other wrongful act of a third party must include a claim on behalf of the Ontario Health Insurance Plan (the "Plan") for the cost of any insured medical services provided to the insured person in respect of the injury or disability suffered. Section 39(6) of the General Regulation made under the Act (the "Regulation") prescribes the portion of the costs of the insured person's action which the Plan must bear. At issue on this appeal is the proper interpretation of that section.

The appellant, Erickson & Partners, is a Thunder Bay law firm (the "Law Firm"). A dispute arose between the Law Firm and the Plan about how to calculate the Plan's share of costs payable by the insured person under ss. 39(6) of the Regulation.

The Law Firm commenced an application which sought a declaration regarding how the Plan's share of costs should be calculated, specifically the meaning of the phrase "the total recovery of the insured person" found in ss. 39(6) of the Regulation.

The application judge interpreted ss. 39(6) of the Regulation in a manner which accepted only part of the Law Firm's submissions.

The Law Firm appealed from the Judgment in respect of the interpretation of ss. 39(6) of the Regulation. The respondent Plan submitted that although the Judgment in large part was correct, the application judge unduly complicated the calculation required by ss. 39(6) of the Regulation and the Court of Appeal should simplify it.

(1) Did the application judge err in his interpretation of "the total recovery of the insured person in the action" under ss. 39(6) of the Regulation?
(2) Did the application judge unnecessarily complicate the treatment of costs recovered by judgement or settlement under ss. 39(6) of the Regulation?

Decision: Appeal Dismissed

(1) No. The Law Firm submitted that the phrase "the total recovery of the insured person in the action" is limited to the amount of the personal damages recovered by the insured person, such as general damages and loss of income, and should not include the amount recovered under the Plan's subrogated claim. The court disagreed. Since the cause of action for the recovery of the costs of medical services incurred as a result of the injury remains that of the injured person, it follows that "the total recovery of the insured person in the action" would include the amounts recovered in respect of the subrogated claim advanced on behalf of the Plan for the cost of insured medical services.

(2) Yes. The application judge created a four-step approach to calculating the portion of the costs the Plan should bear. The approach proposed by the application judge was inconsistent with ss. 39(6) of the Regulation. Where an insured person recovers costs as part of a judgment or settlement, those costs should be deducted from the total costs in order to determine "the taxable costs otherwise payable by the insured person" to their lawyer. Once the net costs due to the lawyer are ascertained, one then can proceed to calculate the Plan's proportionate share of those net costs by using the formula found in ss. 39(6) of the Regulation.

Prystupa v. Desjardins Financial Security Life Assurance Company, 2015 ONCA 298

[Hoy A.C.J.O., Watt and Brown JJ.A.]

A. Rouben, for the appellant
G. Patenall and E. Caputo, for the respondent

Keywords: Insurance Law, Long Term Disability, Calculation of Benefits, Canada Pension Plan

Facts: The plaintiff, Ms. Prystupa, had sought declarations interpreting section 3 of Minutes of Settlement entered into on April 13, 2011, with Desjardins and the Canadian Bar Insurance Association (the "Minutes"). The settlement resolved a 2008 action commenced by Ms. Prystupa in which she had sought payment by Desjardins of disability benefits under a group insurance policy (the "Policy").

In 2013, Ms. Prystupa applied for disability benefits under the Canada Pension Plan ("CPP"). In January, 2014, Ms. Prystupa was informed that she was eligible for the CPP Disability Benefit, retroactive to January, 2013, in an initial monthly amount of $1,101.08.

Desjardins subsequently told Ms. Prystupa that the CPP Disability Benefits were a direct offset from LTD benefits under the Policy and requested that she refund $14,314.04 as overpayments made to her from the commencement of her receipt of the CPP Disability Benefit. Desjardins also advised that upon receipt of the overpayment, Ms. Prystupa's benefits would resume at a revised monthly LTD benefit amount of $898.92.

In June 2014, Ms. Prystupa commenced an application in which she sought a declaration that section 3 of the Minutes be interpreted so that the direct offset provisions of the Policy concerning CPP Disability Benefits did not apply to her.

The application judge found that when Ms. Prystupa agreed as part of the settlement that the policy provisions would still be in effect, subject to the amendments in the Minutes of Settlement, the clear implication was that any deductions for Canada Pension Plan amounts found in the policy itself would be applicable. Ms. Prystupa appealed this decision.

(1) Did the application judge err in interpreting the Minutes by failing to consider the surrounding circumstances which led to their execution?
(2) Did the application judge fail to consider the Minutes as a whole?
(3) Did the application judge err by failing to treat the absence of any mention of the CPP Disability Benefits in the Minutes as an ambiguity in the contract which should be resolved against the insurer?
(4) Did the application judge err by in failing to direct a trial of her claim in respect of the Minutes and her claim for punitive damages?

Holding: Appeal dismissed.

(1) No. The Minutes had to be interpreted in light of the context in which they arose – i.e. the settlement of the disputed issues in Ms. Prystupa's 2008 action. The proper treatment of CPP Disability Benefits under the Policy was not in issue in that action, and it was common ground between the parties that there had been no discussion about the treatment of CPP Disability Benefits during the negotiations which led to the signing of the Minutes. The application judge was correct in finding that the Minutes did not contain any discussion or modification of the Policy's general provision that the LTD benefit should be reduced by the amount of any CPP Disability Benefits.

(2) No. The opening language of section 3 of the Minutes clearly stated that the agreement made by Desjardins was "for purposes of the interpretation of its disability policy into the future." A Release, which Ms. Prystupa had executed pursuant to section 5 of the Minutes, contained a clear agreement by her "that the Policy continues to apply to the Releasor with respect to disability benefits," subject only to the alterations agreed to by the parties in section 3 of the Minutes. Although the Minutes expressly provided that one provision of the Policy would no longer apply to Ms. Prystupa's claim – the "Benefit Under Rehabilitation" clause – neither the Minutes nor the Release amended the provisions of the Policy concerning the direct offset of CPP Disability Benefits. Consequently, it was open to the application judge to conclude that "when [Prystupa] agreed that the policy provisions would still be in effect, subject to the amendments in the Minutes of Settlement, the clear implication was that any deductions for Canada Pension Plan amounts found in the policy itself would still be applicable."

(3) No. The evidence disclosed that the Minutes were the product of a negotiated settlement of the action, with counsel for both parties participating in the drafting of the Minutes. Two consequences resulted from that. First, the contra proferentem principle did not apply in the circumstances. Second, there was no merit to Ms. Prystupa's submission that in those circumstances, Desjardins owed her a duty to spell out specifically in the Minutes that the CPP Disability Benefit offset would continue. The parties were free to raise and settle those matters they considered appropriate in those arm's-length negotiations.

(4) No. The material facts before the application judge were not in dispute, and the application procedure provided a fair and proportionate means by which to adjudicate the interpretation of the Minutes. The application judge ruled in favour of Desjardin's interpretation of the Minutes, so there was no basis for Ms. Prystupa's claim for punitive damages.

Gallicano v. Faber, 2015 ONCA 290

[Laskin, Lauwers and Hourigan JJ.A.]

D. Gallicano, acting in person
A. Faber, acting in person

Keywords: Family Law, Family Law Rules, Active Case Management, Functus Officio

Facts: The motion judge set the appellant's child support obligation and her contribution to the children's day care expenses. She also permitted the respondent to move with the children from Halton to Hamilton and ordered the appellant to pay trial costs. The motion judge's task was to complete the review of the case ordered by the trial judge, and to deal with trial costs. At every opportunity, including this appeal, the appellant earnestly sought to reverse the trial judge's award of custody to the respondent and supervised access to the appellant.

The appellant argued that once the motion judge completed the tasks left by the trial judge in his decision, she was functus officio and could no longer exercise jurisdiction.

(1) Did the motion judge improperly seize herself of the matter?
(2) Does the Supreme Court's decision in Doucet-Boudreau v. Nova Scotia (Minister of Education) have application?

Holding: Appeal dismissed.

(1) No. Active case management is one of the underlying philosophies of the Family Law Rules ("Rules"). Rule 2(5) places an obligation on courts to actively manage cases in order to promote just resolutions. Active case management is defined in the Rules as including the early identification of issues in a case, setting timetables or otherwise controlling the process of the case. Rule 39(9) lists the functions of a case management judge, who is required to supervise the progress of the case, to conduct conferences and to hear motions. It is also seen as the gold standard of case management, but it only applies to cases in unified Family Court jurisdictions. Nothing in the Rules precludes a judge from using her inherent jurisdiction, and the obligation to actively case manage under rule 2(5), to seize herself of a case.

(2) No. The reasoning in Doucet-Boudreau, which deals with the issue of when the court is functus officio, has only limited application to this appeal, for the following reasons. First, the court must exercise great caution before migrating concepts from constitutional cases to other areas of the law. For example, the separation of powers principle was engaged in Doucet-Boudreau, and formed the basis of the minority's position that implementation of the Charter remedy was the exclusive responsibility of the provincial government. No similar concept applies in this family law case.

Second, the majority in Doucet-Boudreau found that the requirement for the province to report back to the trial judge did not engage the functus officio doctrine since it "did nothing to undermine the provision of a stable basis for launching an appeal". That is also true in this case. Any successful motion to vary would result in a final order that would be appealable, just like the appellant's appeal of the motion judge's decision.

Third, the majority in Doucet-Boudreau found that the functus officio doctrine yields to the rules of civil procedure insofar as they allow courts "to vary or add to their orders so as to carry them into operation or even to provide other or further relief than originally granted".

This fits comfortably with the concept of motions to change in family cases. Family law orders sometimes need to be varied, rescinded or altered based on changing circumstances. The Divorce Act, the Federal Child Support Guidelines, and the Rules all expressly contemplate that final orders will, on occasion, need to be altered. In this case, the respondent followed the procedure set out in the Rules, by bringing a motion to change. In such circumstances, the doctrine of functus officio was not violated.

TRS Components Ltd. v Devlan Construction Ltd., 2015 ONCA 294

[Gillese, van Rensburg and Pardu JJ.A]

R.J. Kennaley and D. Perry, for the moving party
J. Margie, for the responding party

Keywords: Construction Law, Construction Lien Act, Jurisdiction, Appeal Route, Courts of Justice Act, Divisional Court

Facts: On October 15, 2010, the appellant, TRS Components Ltd., registered a construction lien in relation to unpaid invoices for labour and materials. It commenced an action against the respondent Devlan Construction Ltd. seeking to enforce the lien under the Act. Devlan delivered a statement of defence and counterclaim alleging TRS's work was incomplete or deficient and claimed damages for breach of contract and negligence. Devlan later brought a motion to have the TRS' claims dismissed as a result of its failure to answer undertakings and refusals. On September 6, 2013, Parayeski J. ordered that TRS' lien be discharged and its action dismissed. At the trial of the counterclaim, Flynn J. granted judgment on the counterclaim in the sum of $69,432 plus interest.

TRS appealed the judgment on the counterclaim to the Court of Appeal. A motion was brought to quash the appeal of a judgment under the Construction Lien Act, for want of jurisdiction.

Issue: Whether ss. 6(1)(b) of the Courts of Justice Act requires the appeal to be brought before the Divisional Court.

Holding: The appeal is transferred to the Divisional Court under s. 110 of the Courts of Justice Act. Costs are fixed at $3,000, inclusive of taxes and disbursements in favour of the moving party.

Reasoning: Yes, in the absence of an order directing that the proceeding is to continue as an ordinary action, the appeal of a judgment in a construction lien proceeding, whether or not in respect of a lien claim, and including any counterclaim, is subject to ss. 71(1) of the Act and the Divisional Court has exclusive jurisdiction over the appeal.

Part VIII of the Act provides for a summary procedure for the determination of construction lien proceedings. The Courts of Justice Act and Rules apply to pleadings and proceedings under the Act, except to the extent that they are inconsistent with the Act (ss. 67(3)). In response to an action to enforce a lien, a defendant may assert a counterclaim, crossclaim or third party claim. Devlan asserted its counterclaim in the construction lien proceeding commenced by TRS. It did not seek enforcement of a lien, rather it claimed damages for breach of contract and negligence. The court held that "judgment...under this Act" in s. 71 included a judgment granted in an action commenced and continued under Part VIII of the Act, including a counterclaim, unless the action was removed from the construction lien proceeding and directed to proceed under the Rules. This interpretation is supported by s. 51 of the Act and by the decision of the High Court in Steeplejack Services (Sarnia) Ltd. v Davis (1990).

Morgan v. Vitran Express Canada Inc., 2015 ONCA 293

[Hoy A.C.J.O., Watt and Brown JJ.A.]

T. A. Stefanik, for the appellant
C. Davies, for the respondent

Keywords: Employment Law, Constructive Dismissal

Facts: The appellant, Vitran Express Canada Inc., employed the respondent, Mr. Morgan, as a dock supervisor for almost 25 years. Shortly before the end of the respondent's employment, the appellant changed his job responsibilities and his title. This job was created specifically for the respondent. The respondent subsequently brought an action against the appellant for constructive dismissal. At trial, Wilson J. held that the respondent had been constructively dismissed, and that he was not obliged to continue working for the appellant in order to mitigate his damages. Wilson J. awarded the respondent damages of over $80,000. The appellant appeals this judgment, claiming that Wilson J. erred in reaching both of her conclusions.

(1) Did Wilson J. err in finding the appellant constructively dismissed the respondent?
(2) Did Wilson J. err in finding that the respondent was not required to continue working for the appellant, after the change in job responsibilities and title, to mitigate his damages?

Holding: The appeal was dismissed and costs fixed at $7,500 were awarded to the respondent.

(1) No. Wilson J. did not err in either of her findings. She correctly applied the two step test for constructive dismissal from Farber v. Royal Trust Co., [1997] 1 S.C.R. 846, the operative case at the time of trial.

Applying the first step of the test from Farber, Wilson J. correctly held that terms of the respondent's employment had been unilaterally altered in a substantial way by the appellant. Specifically, the respondent's responsibilities changed from the joint management and supervision of many employees, to one where he only supervised two part-time employees. On this point, Wilson J found that the respondent was given a position of "less importance and prestige, with very little supervisory function and little opportunity to make decisions and exercise discretion."

Regarding the appellant's argument that Wilson J. erred by taking into account evidence of the way the appellant treated the respondent prior to his job transfer, it was held that she did not err by doing so. She correctly considered and applied the second step from Farber – whether the appellant's conduct, in light of the circumstances and viewed objectively, would lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract. She concluded that the respondent had been demoted and the appellant could not support this with any evidence that his performance had been sub-standard. Therefore, she correctly concluded that these factors would lead a reasonable person to conclude that the appellant employer no longer intended to be bound by the terms of the respondent's employment contract.

(2) No. Wilson J. correctly found that the respondent's decision not to return to work was reasonable, applying the principles in Evans v. Teamsters Local Union No. 31, 2008 SCC 20. Specifically, she reviewed the relevant evidence and made several findings on this issue: the respondent's work environment was unfriendly, the change in work that the respondent was offered was of lesser importance than his previous position, other employees would have viewed the respondent's change in job responsibilities as amounting to a demotion as a result of his ineptitude because the new job had not been posted beforehand, the respondent had been treated in an unacceptable manner by the appellant in the period leading up to his constructive dismissal, and the respondent's personal relationships with his supervisors were bitter because they continued to criticize him. In sum, many of these factual findings were based on the credibility of witnesses, and these attract significant deference.

Finally, the appellant argued that Wilson J. erred by not hearing evidence from any of the appellant's employees (besides the respondent) to determine whether a reasonable person in the respondent's position would have accepted the appellant's new job offer. It was held that she considered all relevant evidence and circumstances in reaching her conclusion that the respondent's decision not to return to work was reasonable.

Tran v. University of Western Ontario, 2015 ONCA 295

[Blair, Pepall and Lauwers JJ.A.]

M. B. Fraleigh and M. Garland, for the appellant
S. Jones, for the respondents

Keywords: Torts, Intimidation and Conspiracy, Civil Procedure, Motions to Strike, No Reasonable Cause of Action, Leave to Amend Pleadings

Facts: The appellant was a radiology resident at the University of Western Ontario ("UWO"). She was eventually dismissed from the programme for unprofessional conduct.

She brought claims against UWO and the individual faculty members, who were administrators and supervisors in the residency programme, for, inter alia, intimidation and conspiracy. She argued that unfair treatment by the respondents ultimately led to her being unable to complete the programme and to practise as a radiologist.

The appellant pled that, at all material times, the individual appellants were "employees, agents, principals and/or legal representatives of UWO." UWO admitted this in its statement of defence. In her reply, the appellant pled that the individual respondents "were not, at all material times, acting within the scope of their duties and authority on behalf of UWO."

The respondents brought a motion pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure, to strike: (i) all claims against the individual respondents, on the basis that they disclosed no reasonable cause of action; and (ii) the claim of intimidation against all respondents, due to a failure to plead facts in support of the essential elements of the cause of action.

The motion judge struck the entire statement of claim against the individual respondents, holding that their actions were indistinguishable from those of UWO. The motion judge also struck the claim of intimidation against all of the respondents because all of the elements were not pleaded.

He refused to grant the appellant leave to amend her statement of claim.

(1) Did the motion judge err in finding there was no reasonable chance of success in finding that the individual respondents were personally liable?
(2) Did the motion judge err in refusing to grant the appellant leave to amend her statement of claim?

Holding: Appeal allowed to grant leave to the appellant to amend her statement of claim within 20 days.

(1) No. The appellant failed to plead sufficient particulars to the attach liability to the individuals in their personal capacities. A separate claim must be stated against the individual, whereas the appellant simply enumerates "the defendants' failures." The global failures pleaded do not reflect elements of any cause of action.

(2) Yes. Leave to amend should be denied only in the clearest of cases. The appellant had not made any prior amendments to her statement of claim.

Welsh v. Ashley, 2015 ONCA 297

[Juriansz, MacFarland and Lauwers JJ.A.]

J. Stark, for the appellant
J. P. Howie, for the respondents Michael Ashley and Michele Ashley

Keywords: Endorsement, Family Law, Separation Agreement, Pension Benefits

Facts: This is an appeal from the decision of the motion judge interpreting the provisions of a Separation Agreement.

The Separation Agreement between the parties distinguished between what the appellant was to receive in the event her husband lived and received pension benefits and what she was to receive in the event he died before the pension ever came into pay. The husband died before his pension came into pay.

(1) Did the motion judge err by not distinguishing between the terms meant to govern when the pension was in pay and those meant to govern in the event Mr. Poisson died before he ever received his pension?
(2) Did the motion judge err in law in finding a conflict between ss. 48(3) and ss. 48(13) of the Pension Benefit Act?

Holding: Appeal allowed. Cross-appeal dismissed.

(1) Yes. Paragraph 16.5 of the Separation Agreement specifically contemplated what was to occur in the event Michael died before he was in receipt of his pension. In that event, the appellant was to be "considered the sole surviving spouse and shall receive all benefits payable to a surviving spouse under the plan".

(2) Yes. The court found that the motion judge erred in law in finding a conflict between ss. 48(3) and ss. 48(13) of the Pension Benefit Act. Subsection 48(13) clearly gives a statutory priority to the provisions of a domestic contract such as the Separation Agreement and therefore the court concluded that there is no conflict.

Hrycko v Miller Estate, 2015 ONCA 296

[Doherty, Pepall and van Rensburg JJ.A.]

W. G. Scott, for the defendants (appellants)
R. Bohm, for the plaintiff (respondent)

Keywords: Endorsement, Assessment of Damages, Ontario Evidence Act, s. 13, Costs

Holding: Appeal dismissed.

Reasoning: The Court of Appeal did not agree that the motion judge applied the wrong test in assessing damages for the admitted breach. She identified and articulated the correct test. Furthermore, the motion judge's findings of fact were reasonably available for her to conclude.

The Court also agreed with the motion judge's analysis and conclusion with respect to s. 13 of the Ontario Evidence Act.

Costs of $13,000 were awarded to the respondent, inclusive of disbursements and relevant taxes.

Baiu v. Baiu, 2015 ONCA 288

[Doherty, Pepall and van Rensburg JJ.A.]

L. Baiu, appearing in-person
P. Rodriguez-McNeill, for the applicant (respondent in appeal)

Keywords: Endorsement, Family Law, Spousal Support, Equalization

Facts: On appeal from the order of Justice Gilmore of the Superior Court of Justice, dated January 13, 2014.

Holding: Appeal allowed with regard to the $1 per year in spousal support award.

Reasoning: Though it appears the trial judge made the order to open the possibility of a support application in the future, the order should not have been made in the absence of any request for support at trial. The trial judge was correct in concluding that the appellant's loan to his company was "property" for the purposes of calculating an equalization payment, and she did not misapprehend the evidence or consider irrelevant factors in her valuation.

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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