Canada: Top 5 Civil Appeals from the Court of Appeal (October 2015)

Last Updated: October 27 2015
Article by Cynthia B. Kuehl

1.  Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 (Sharpe, Lauwers and van Rensburg JJ.A.), September 2, 2015

2.  Sandu v. Fairmont Hotels Inc., 2015 ONCA 611 (Weiler, van Rensburg and Roberts JJ.A.), September 11, 2015

3.  DBDC Spadina Ltd. v. Walton, 2015 ONCA 628; 2015 ONCA 625; 2015 ONCA 624 (Gillese, Lauwers and Benotto JJ.A.), September 17, 2015

4.  Hanif v. Ontario College of Pharmacists, 2015 ONCA 640 (Laskin, MacPherson and MacFarland JJ.A.), September 21, 2015

5.  White v. White, 2015 ONCA 647 (Feldman, Simmons and Miller JJ.A.), September 25, 2015

1.  Carioca's Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 (Sharpe, Lauwers and van Rensburg JJ.A.), September 2, 2015

The appellant brought this appeal to restore its action to the trial list under Rule 48.11 of the Rules of Civil Procedure.

Carioca's Import & Export Inc. commenced an action against the respondent, Canadian Pacific Railways Limited, in March, 2007. It claimed $125,000 for negligence with respect to a fire that took place the year before on railway lands owned by the respondent which spread to its business, causing damage and loss.

The respondent defended the action, and examinations for discovery took place in 2008. Thirty-nine undertakings were given in the examination for discovery of the appellant's representative. In June, 2009, the appellant set down the action for trial.

The case was struck from the trial list in October, 2010, due to the appellant's alleged failure to fulfill its undertakings on discovery and the respondent's refusal to sign the trial certification form on that basis. The action was restored to the trial list in January, 2012, however, on an unopposed motion.

Over the next year and a half, the respondent sought answers to three outstanding undertakings. The appellant responded with updates explaining the delay in producing the required documents. In June, 2013, the respondent indicated that the trial would need to be adjourned, as it had not yet received certain records it required for its expert's review. Soon after, the appellant advised that while the majority of the documents were available, some tax records remained outstanding. The appellant agreed to adjourn the pre-trial and trial dates in order to facilitate the preparation of expert reports.

In October, 2013, when the appellant requested new dates on consent, the presiding judge struck the action from the trial list. Over the next few months, however, the remaining documents were exchanged and the appellant advised that its expert report would be delivered by October, 2014.

In May, 2014, the appellant served a motion to restore the action to the trial list. A status notice was issued by the court shortly thereafter under Rule 48.14(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, indicating that more than 180 days had passed without the action being restored to the list. The notice stated that the action would be dismissed within ninety days unless restored to the list, terminated, documents were filed providing a consent timetable or a judge or master ordered otherwise.

At the appellant's August, 2014 motion to restore, the motion judge refused to restore the action to the trial list under Rule 48.11. Accordingly, the action was administratively dismissed with costs, pursuant to Rule 48.14. Carioca appealed, seeking to have its action restored to the trial list.

Writing for the Court of Appeal, van Rensburg J.A. noted that the motion judge correctly identified the test for rule 48.14 dismissals, as set out by the Court in Nissar v Toronto Transit Commission, 2013 ONCA 361: in deciding whether to restore an action to the trial list, the judge must determine whether the plaintiff has provided an acceptable explanation for the delay in the litigation and demonstrated that, if the action is allowed to proceed, the defendant would suffer no non-compensable prejudice.

Justice van Rensburg found, however, that the motion judge's analysis revealed errors in principle in applying both parts of the test, and that he erred in exercising his discretion not to restore the action to the trial list.

The motion judge decided the delay issue based on an allocation of blame for the delay, when he ought to have considered whether there was a reasonable explanation for it. Had he evaluated whether the appellant's explanation was reasonable, he would have taken into account important factors such as the circumstances under which the action came to be struck from the trial list and the fact that the case was ready for trial when the motion came before him. Moreover, while the plaintiff bears the burden of proof on the motion, the conduct of all parties to the litigation is relevant in determining whether to restore an action to the trial list. The motion judge focused almost exclusively on the appellant's conduct, failing to consider the overall dynamics of the litigation.

Justice van Rensburg emphasized that applying too high a standard for restoring an action which has been struck from the trial list may hinder the objective of an efficient justice system: fighting highly contested motions over cases being struck from the trial list is not an effective use of judicial resources. She noted that Ontario courts are discouraging a "motions culture" and noted the Supreme Court's admonition in Hryniak v. Mauldin, 2014, SCC 7 for a judicial process that is proportionate, timely and affordable.

The motion judge further erred by deciding the prejudice issue simply on the passage of time, instead of considering the evidence in order to evaluate the defendant's ability to defend the action as a result of the delay. In fact, the action was ready for trial, oral discoveries had been completed relatively soon after the events in question, transcripts were available and the documents authored by the missing witness were available. The record of the litigation did not indicate any serious concern on the respondent's part about the delay.

Justice van Rensburg observed that a decision on a rule 48.11 motion is discretionary and entitled to deference by the Court; however, it may be set aside if made on an erroneous legal principle or infected by a palpable and overriding error of fact. This was one such case.

Reweighing the evidence, van Rensburg J.A. concluded that the appellant provided an acceptable explanation for the delay and that the respondent would not suffer non-compensable prejudice if the action is restored to the trial list.

Of the thirty-nine undertakings from the appellant's examination for discovery, several were answered in 2009 without any demand or request from the appellant. The respondent made no effort to compel answers to undertakings before relying on unfulfilled undertakings in refusing to agree to pre-trial and trial dates after the action was first set down for trial. The respondent, a large corporation, insisted on strict compliance from this small business with limited resources, and was unwilling to facilitate moving the case forward. Nonetheless, the appellant made "slow but steady" progress in fulfilling its undertakings and, when the motion to restore the action to the trial list was brought, no outstanding undertakings remained. In van Rensburg J.A.'s view, these factors weighed in favour of restoring the action to the trial list.

Turning to the issue of prejudice, van Rensburg J.A. rejected the respondent's suggestion that the case might depend in part on oral evidence, which becomes less reliable over time. She held that, without more evidence of actual prejudice, this was insufficient to prevent the appellant from satisfying the second part of the Nissar test. The appellant demonstrated that there was no non-compensable prejudice as a result of the action being restored to the trial list by adducing evidence that its witnesses and experts as well as transcripts of examinations for discovery were available.

Justice van Rensburg noted in a footnote to the decision that the relevant events in this case occurred prior to the changes to rule 48.14, which came into force on January 1, 2015. Pursuant to these changes, actions will now be automatically dismissed for delay without notice the later of January 1, 2017 and the fifth anniversary of the commencement of the action, unless they have been listed for trial, terminated by any means or the court orders otherwise. Further, any action struck from the trial list after January 1, 2015, and not restored by the later of January 1, 2017 and the second anniversary of being struck off, will be dismissed on that date, without notice to parties or their counsel, unless the court orders otherwise.

2.  Sandu v. Fairmont Hotels Inc., 2015 ONCA 611 (Weiler, van Rensburg and Roberts JJ.A.), September 11, 2015

Sevillya Sandu's claim for defamation against Fairmont Hotels Inc. and Darren Skomorowsky was dismissed. The trial judge determined, however, that if she had found that the claim had merit, she would have assessed damages at $25,000.

The defendants brought a motion to quash Sandu's notice of appeal on jurisdictional grounds. They cited section 19(1.2)(d) of the Courts of Justice Act, which provides that the Divisional Court has jurisdiction where the Superior Court makes an order dismissing a claim for an amount that is more than $50,000 and in respect of which the judge or jury indicates that, if the claim had been allowed, the amount awarded would have been not more than $50,000.

Sandu countered that the trial judge's award would have been for general damages only, arguing that she did not consider an appropriate award for aggravated and punitive damages. He submitted that unless one assumes that the trial judge would have awarded nothing for these heads of damages – an inference which one cannot make – the total of the amounts awarded might have exceeded $50,000.

In a brief endorsement, the Court of Appeal rejected Sandu's submission. The trial judge assessed damages globally: the hypothetical award would have been for the entire claim.

The trial judge dismissed the claim for an amount that was more than $50,000 but indicated that if she had allowed the claim, the amount awarded would have been less than $50,000. Accordingly, section 19(1.2)(d) of the Courts of Justice Act applies,

The motion to quash was allowed and the appeal transferred to the Divisional Court.

3.  DBDC Spadina Ltd. v. Walton, 2015 ONCA 628; 2015 ONCA 625; 2015 ONCA 624 (Gillese, Lauwers and Benotto JJ.A.), September 17, 2015

In this decision, the Court of Appeal addressed one part of a multi-party insolvency proceeding.

DBDC Spadina Ltd. and a number of corporations known as the Bernstein applicants are involved in ongoing litigation with the Waltons. The Bernstein applicants brought a motion seeking an order for a constructive trust over certain properties and the cancellation of the Waltons' shares in certain corporations. Parties known as the DeJong appellants meanwhile brought a cross-motion that was heard at the same time as the Bernstein applicants' motion. They claimed that they, like the Bernstein applicants, had invested funds with the Waltons which the Waltons had wrongfully diverted. The DeJong appellants further claimed that some of their funds had been diverted into properties over which the Bernstein applicants sought constructive trusts. They sought an order cancelling the Waltons' shares in United Empire Lands Ltd. ("UEL") or, in the alternative, an order approving a proposed settlement agreement, in which the Waltons agreed to transfer a property at 3270 American Drive to them.

Based on tracing principles, the motion judge ordered constructive trusts over certain properties, including 3270 American Drive, in favour of the Bernstein applicants. He dismissed the DeJong appellants' cross-motion.

The DeJong appellants argued before the Court of Appeal that the motions judge erred in three respects.

The DeJong appellants first claimed that the motion judge erred by failing to adjudicate on their requested relief that the Waltons' shares in UEL be cancelled and on their request for directions on their tracing rights.

The Court of Appeal rejected this submission, noting that the motion judge dealt with their request that the Waltons' shares in UEL be cancelled, but was not prepared to grant the relief sought because the proposed settlement would prefer the DeJong appellants' interests as creditors of the Waltons over other creditors. The motion judge held that the legal entitlement, if any, of the DeJong appellants, as preferred shareholders, to the proceeds of the sale of 3270 American Drive should be dealt with in the claims process for that property.

The Court noted that the DeJong appellants' objection to the motion judge's failure to give directions on their tracing rights was related to the work of the Inspector: they believed that he ought to have done a full tracing of all monies, rather than tracing only the Bernstein applicants' funds. The Court emphasized, however, that the Bernstein applicants retained the Inspector for the purpose of tracing their funds. They paid his fee. The Inspector's obligations do not require that he trace the monies of all parties into and out of the various companies and properties. As the motion judge pointed out, the DeJong appellants can assert their rights in the claims process, and must take the steps necessary to do so.

Second, the DeJong appellants submitted that the motion judge erred by failing to correctly apply the test for a constructive trust and in finding that the Bernstein applicants were entitled to constructive trusts over certain properties. They claimed that, because the Bernstein applicants got what they bargained for, they suffered no deprivation and were not entitled to a constructive trust based on unjust enrichment.

The Court rejected this ground of appeal as well, noting that the motion judge applied the correct test and found that the Bernstein applicants and the Waltons had agreed that the funds invested by the Bernstein applicants in a given property would be used only for the development of that property; contrary to their contractual obligations, however, the Waltons used the Bernstein applicants' funds in an unauthorized fashion for their own benefit. The Court held that, on the record, the motion judge's findings were unassailable.

The Court also held that the motion judge did not err in his tracing analysis and was entitled to prefer the Inspector's analysis over that of the Waltons' expert. Further, the motion judge made no error in terms of commingling, imposing constructive trusts only on those properties where commingling was not an issue.

Finally, the DeJong appellants argued that the motion judge failed to apply the correct legal test when finding that the settlement agreement constituted a preference under the Assignments and Preferences Act, R.S.O. 1990, chapter A.33.

The Court rejected this submission as well. The motion judge was concerned that enforcement of the proposed settlement agreement between the DeJong appellants and the Waltons would constitute a preference over the interests of other creditors in respect of 3270 American Drive. While he did not explicitly refer to the Assignments and Preferences Act, the motion judge's reasons permitted the Court to know why he found that the proposed settlement agreement would constitute a preference within the meaning of the statute. In the Court's view, it was undeniable that the intent and effect of the proposed settlement agreement was to prefer the interests of the DeJong appellants over other creditors. When the proposed settlement agreement was reached, the DeJong appellants had notice that the Bernstein applicants, creditors of the Waltons, were seeking a certificate of pending litigation and a charge over 3270 American Drive. The DeJong appellants knew, or ought to have known, that the Waltons were insolvent or on the verge of insolvency.

4.  Hanif v. Ontario College of Pharmacists, 2015 ONCA 640 (Laskin, MacPherson and MacFarland JJ.A.), September 21, 2015

Under the Health Professions Procedural Code, any sexual activity between a health professional and a patient constitutes sexual abuse. Moreover, a finding of sexual abuse results in mandatory revocation of the health professional's certificate of registration.

Mohamed Hanif is a pharmacist who was involved in a consensual relationship with a patient. He challenged the constitutional validity of the mandatory revocation provisions of the Code, claiming that they intruded into federal jurisdiction over criminal law under section 91(27) of the Constitution Act, 1867. The application judge dismissed Hanif's application, finding that the impugned provisions are not criminal law, but are "in pith and substance" concerned with the regulation of health professionals.

In accordance with Reference re Firearms Act, 2000 SCC 31, the application judge considered both the purpose and effects of the Code. Hanif did not challenge the application judge's conclusion with respect to the purpose of the impugned provisions: "the protection of the pubic by the imposition of clear and unequivocal standards of professional behaviour".

Hanif did, however, challenge the application judge's effects analysis, submitting that it was too narrow. He noted that the effect of the mandatory revocation of a professional licence on the health professional is not only a loss of livelihood, but also the imposition of the substantial stigma of being identified as a sexual abuser. Hanif submitted that this stigma takes the Code over the line from the permissible regulation of a profession to the impermissible regulation of morality in the context of consensual sexual relationships, which intrudes into a core component of federal criminal law under section 91(27) of the Constitution, Act, 1867.

The Court of Appeal rejected this submission.

The Court held that the impugned provisions do not have the effect of regulating morality. Their intended effect is, rather, to protect the public. Legislation that deems even consensual sexual activity between a health professional and a patient inconsistent with the professional-patient relationship does not make a statement about morality; it merely speaks to the maintenance of the integrity of that relationship, which is undermined when a health professional treats a patient with whom he or she is sexually involved. Nor do the provisions have the effect of importing sexual morality on consenting adults or criminalizing activities beyond the delivery of health services. They simply require that a health professional choose whether to treat the patient or to sever the professional-patient relationship and begin a sexual relationship with him or her. The Court agreed with the appellant that his contravention of the Code in the form of engaging in a sexual relationship with a patient carried a social stigma, but noted that the commission of any offence, be it federal, criminal or regulatory, does so: "[i]f you break the law, you may lose respect in the public eye." The Court disagreed, however, that this takes the law from regulation of the health professions into the realm of criminal law.

The Court concluded that the mandatory revocation provisions of the Code are in pith and substance the regulation of health care professionals, not criminal law. That Parliament may criminalize the same behaviour is irrelevant; both levels of government can regulate different aspects of the same activity under their respective heads of power.

5.  White v. White, 2015 ONCA 647 (Feldman, Simmons and Miller JJ.A.), September 25, 2015

In this decision, the Court of Appeal considered whether Sonia and Neville White's marriage was terminated by death or divorce.

Neville White was granted a divorce from his wife Sonia in June, 2013. However, Sonia's Answer opposing the divorce on substantive grounds was not brought to the judge's attention. Not long after, Sonia brought a motion and obtained an order staying the divorce order "pending further court order". While the stay was in effect, Neville died.

A dispute arose between Sonia and Neville's children, the respondents on appeal, as to whether the marriage was terminated by death or by divorce.

Sonia brought a motion for an order discontinuing or terminating the divorce order or, in the alternative, for a declaration that she and Neville had not been divorced and that their marriage was terminated upon his death. The motion judge dismissed the motion, finding that rule 11.01 of the Rules of Civil Procedure, R.R.O. 1990, Regulation 194 was a bar to the motion and that a declaration was not the appropriate remedy as the issued orders speak for themselves. Sonia appealed, seeking a declaration that her marriage to Neville was terminated by his death.

The Court of Appeal found that the divorce order did not dissolve the marriage.

Section 14 of the Divorce Act, R.S.C. 1985, chapter 3 (2nd Supplement) stipulates that on "taking effect", a divorce granted under the statute dissolves the marriage. Under section 12(1) of that statute, a divorce takes effect on the thirty-first day following the judgment granting the divorce. In the intervening period, however, the parties remain married: if one should die during those thirty-one days, the judgment granting the divorce cannot take effect.

In this case, the divorce order had been stayed, preventing it from taking effect under section 12(1) of the Divorce Act and dissolving the marriage. When Neville died, the divorce order remained stayed, and he and Sonia were still married. Therefore, Neville's death ended the marriage.

The Court noted that the only relief sought in Neville's divorce application was a termination of the parties' marriage. With the marriage ended by virtue of Neville's death, the divorce order should be permanently stayed.

The appeal was allowed and the divorce order permanently stayed without prejudice to any relief that Sonia might claim against Neville's estate.

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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Cynthia B. Kuehl
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