This week was a busy one at the Court of Appeal. In two important decisions Deslauriers Custom Cabinets and Howard v Benson Group, the Court further chipped away at Sattva and the Supreme Court's pronouncement in that case that contractual interpretation is now an issue of mixed fact and law and therefore subject to a more deferential standard of review. In Deslauriers, which involved the interpretation of a commercial lease to determine whether it was the landlord or the tenant that bore the risk of fire loss, the Court applied a correctness standard rather than the deferential Sattva standard. In doing so, Justice Cronk relied on Sattva itself, which leaves room for the application of the correctness standard when there are "extricable" questions of law involved. "Extricable questions of law" include legal errors involving "the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor." The Court found that the motion judge in Deslauriers had failed to properly consider and apply prior case law that held that when a commercial lease provides for a party to the lease (whether a landlord or a tenant) to insure the premises against loss, it normally precludes that party and its insurer from subsequently claiming over against the other party for the very losses to be insured against. The Court therefore applied the correctness standard and set aside the motion judge's decision, siding with the landlord in this case.
In Howard v Benson Group, the Court again applied the correctness standard when interpreting an employment contract rather than the deferential Sattva standard. The Court held that where there is a fixed term employment contract with no early termination provision (the provision in this case was found ambiguous and therefore unenforceable), the wrongfully terminated employee is entitled to be paid damages for the entire balance of the term of the employment contract and has no duty to mitigate. The Court held that these were extricable questions of law that arose in this case, and therefore the correctness standard of review was more appropriate than the deferential Sattva standard.
Another significant decision this week was the decision in Good v Toronto (Police Services Board), the class action brought against the Toronto Police as a result of Charter breaches perpetrated during the mass arbitrary arrests and detentions that took place during the G20 Summit in Toronto in the summer of 2010. The Court upheld the Divisional Court's certification of two class actions and increased the costs award made in favour of the plaintiffs.
In Fontaine v Canada, the Residential Schools class action, the Court largely upheld the supervising judge's decision to leave it up to the victims as to whether the evidence they gave during the ADR and claims processes during the class proceeding ought to be preserved with the National Centre for Truth and Reconciliation and/or the Truth and Reconciliation Commission.
Finally, there were several other decisions covering topics such as MVA limitation periods, debtor-creditor, consumer protection class action (prepaid phone cards), insolvency and architects' E&O insurance.
Have a nice weekend.
[Weiler, Hourigan and Huscroft JJ.A.]
Sukhjinder Bhangu, for the appellants
Clark Peddle, for the respondent
Keywords: Debtor-Creditor, Civil Procedure, Summary Judgment, Adjournments
The respondent was granted summary judgment but agreed to seek having the judgment set aside as the appellants, who did not appear on the summary motion, believed they were consenting to an adjournment. The respondent then brought a motion to set aside the summary judgment, as well as an additional motion for summary judgment.
The appellants were served with notice of the motions but did not file any materials. The motion judge then denied their request for a further adjournment to afford them an opportunity to file responding material. The motions judge set aside the initial summary judgment and then granted summary judgment to the respondent.
On appeal, the appellants argued that the motion judge erred in granting summary judgment to the respondent while the first summary judgment was in place. The appellants also submitted that the motion judge acted unfairly in denying the adjournment and erred in calculating the amounts owing in the matter.
Issues: Did the motions judge err in refusing the adjournment, granting the second summary judgment and in calculating the amounts owing?
Holding: No to all – Appeal dismissed.
The motion to set aside the first summary judgment was dealt with prior to the second motion being heard and decided. The appellants had ample notice of the second motion date and simply chose not to file materials. While the second motion was not in the court file, it was still properly before the court and it was open to the motion judge to refuse the adjournment.
The appellants did not raise any specific issues with respect to the amounts owing and alleged that they had never received a proper statement as to what they owed. However, the parties had agreed that prior payments made by the appellant would be credited following the judgment. The appellant sought to adduce one annual statement with respect to one of the loan facilities, but the court find that this was an incomplete statement of the entire account. Ultimately, the court was satisfied there was no dispute as to the amount owing.
[Strathy C.J.O., LaForme and Huscroft JJ.A.]
Louis Sokolov, Jean-Marc Leclerc and Christine Davies, for the appellant
Steve Tenai and Guy White, for the respondent
Keywords: Contracts, Consumer Protection, Class Actions, Consumer Protection Act, Gift Card Regulation
The Defendant ("Bell") sold pre-paid wireless services under three different brand names: Bell Mobility, Solo Mobile and Virgin Mobile. The service agreements had different active periods and pricing, and provided that pre-paid credits would expire after a specified time period. If customer topped-up the prepaid account balance before the service period expired, any unused balance was carried over or added to the topped-up amount and made subject to the new service period. If not, the unused balance was forfeited.
The Plaintiff customer commenced a class action alleging Bell had wrongfully seized unused balances remaining in a customer's top-up account on the stated expiry date as opposed to the day after the expiry date as required by the contracts. The Plaintiff also alleged that top-up payments were gift card agreements which, pursuant to the Gift Card Regulation under the Consumer Protection Act ("CPA"), were prohibited from expiring. The action was certified as a class proceeding on behalf of all pre-paid customers who had balances remaining in their accounts at the end of the service period expiring after May 4, 2010.
The parties brought cross-motions for summary judgment. The motion judge ruled that Bell did not breach its contract and that the Gift Card Regulations of the CPA do not apply to prepaid phone cards. He granted summary judgment answering the common issues in Bell's favour and dismissed the class action.
(1) Did the motion judge fail to consider the prepaid wireless contract as a whole, having regard to the expiry dates assigned by Bell and communicated to subscribers?
(2) Did the motion judge err in finding that the Gift Card Regulation is inapplicable to Bell's phone cards?
Holding: Appeal dismissed.
(1) No. The breach of contract claim boiled down to whether the prepaid card expired at the end of the last day of the active period, or the day after. If the card did not expire until the day after the end of the active period, then Bell had breached its contract by treating the purchaser as having forfeited the unused balance on that day.
The court accepted Bell's submissions that the contract terms were contained not only in the agreements made when customers initially signed up for wireless service, but also in pricing and other contractual information, including expiry dates, set out in the prepaid cards and PIN receipts, which customers obtained when they bought top-ups. The court found the motion judge was entitled to rely on these documents that formed part of the contractual relationship between the parties in deciding the issue. The court found that the motion judge correctly held that the card expired at the end of the last day of the active period, not on the day after. Bell was therefore entitled to collect the unused balances after the last day of the active period.
The court also noted that the appellant's real complaint, and the real complaint in the class action, was that Bell's subsequent communications to its customers – made after they had purchased their top-ups and as the top-up was about to expire – were misleading. That is because they may have created the impression that subscribers had an additional day after the end of the active period to "top up" before their funds expired. However, it agreed with the motion judge that this was essentially a claim for misrepresentation or promissory estoppel, neither of which was before the motion judge, because neither was held to be amenable to resolution as a common issue in the class proceeding.
(2) No, the motion judge was correct to grant summary judgment in favour of the respondent on the common issue relating to the Gift Card Regulation. The court did not find it necessary to address the issue of whether the Gift Card Regulation applies only to gift cards purchased as gifts. It rested its conclusion on the interpretation of the regulation. The regulation prohibits an expiry date on the "future performance of the agreement". It provides that a future performance agreement with an expiry date is to be effective "as if it had no expiry date". Its purpose is to prevent the expiry of the agreement before the seller of the card has delivered the goods or performed the services promised under the agreement. It does not prohibit an agreement being time-limited.
The court found the plain meaning of the contracts was that customers were buying a defined period of wireless service. Bell was required to perform the agreement once the consumer decided to activate the service, and the agreement was fully performed by Bell when it gave the customer access to its wireless services for the agreed-upon period. The court reasoned that the fact that the service purchased was for a defined period, calculated on the dollar value of credits the consumer added to the account, was not a breach of the regulation. To hold otherwise would mean that Bell was required to keep the wireless service and number available to the customer indefinitely, a patently unreasonable outcome.
[Weiler, Hourigan and Huscroft JJ.A.]
Dannial E.S. Baker, for the appellants, unsecured creditors, Frank Santaguida and Victor Santaguida
Craig A. Mills, for the respondent Enroute Imports Inc.
Graham Phoenix, for the Proposal Trustee
Keywords: Bankruptcy and Insolvency, Proposals, Leave to Appeal, Bankruptcy and Insolvency Act, sections 193(c), 193(e)
The appellants are unsecured creditors who recovered 52.3% of their claim against the respondent, Enroute Imports ("Enroute"), prior to Enroute filing a notice of intention to make a proposal under the Bankruptcy and Insolvency Act (the "BIA"). The proposal was filed, amended, and accepted by 92% of the creditors which represented 87% of the value of the outstanding debt – more than the required majority of creditors (the "Amended Proposal").
The appellants objected to the Amended Proposal and conducted an out-of-court examination of Enroute's president. The motion judge approved the Amended Proposal and declined the appellants' request to adjourn the approval motion so that they could compel answers to undertakings and continue the examination of Enroute's president.
(1) Is leave to appeal the motion judge's order required under s. 193 of the BIA?
(2) Should leave to appeal under s. 193(e) of the BIA be granted?
Holding: Motion for leave to appeal is dismissed.
(1) Yes. The appellants require leave to appeal except where the property involved in the appeal exceeds ten thousand dollars in value, as set out in s. 193(c) of the BIA. The right of appeal without leave under s. 193(c) must be narrowly construed and the right to conduct an examination is procedural and does not directly involve property. The appellants' argument that the motion judge erred in finding that the proposal was reasonable and made in good faith is not a situation where property is directly in issue.
(2) No. In determining whether to grant leave to appeal under s. 193(e) of the BIA, a court will consider whether the proposed appeal: (i) raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or the administration of justice as a whole; (ii) is prima facie meritorious; and (iii) would unduly hinder the progress of the bankruptcy/insolvency proceedings.
This appeal is focused on fact-specific issues and is not of significance beyond the interested parties. The discretionary considerations of the motion judge do not rise to the level of general significance to bankruptcy/insolvency matters or to the administration of justice as a whole. The court held that there was no merit to the appeal because the decision not to grant an adjournment is highly discretionary and that there were a number of grounds for the motion judge to refuse the adjournment.
The motion judge carefully reviewed the Amended Proposal and concluded that it had strong support from the creditors and was to the benefit of the general body of creditors. The proposal trustee had conducted a reasonable review and found that there was no realistic possibility that the unsecured creditors would receive any money in a bankruptcy. The motion judge considered the appellants' concerns regarding the Amended Proposal and made no error in dismissing them on the basis that they were mostly speculative and ignored the reality of Enroute's difficulties and finding that the Amended Proposal was made in good faith.
The court held that whether the appeal would unduly hinder the progress of the bankruptcy/insolvency proceedings was an "artificial analysis" in the circumstances because the appellants did not first move to obtain leave to appeal before a single judge of the court and so granting leave would not unduly delay the proceedings.
The parties filed fresh evidence on consent that Enroute failed to disclose a partially subrogated lawsuit prior to the approval of the Amended Proposal. The existence of this lawsuit, which is still at the pleadings stage, did not change the analysis of the court.
[Cronk, Pepall and Miller JJ.A.]
D.H. Rogers, Q.C. and Rebecca Moore, for the appellant
Matthew J. Halpin, for the respondent
Keywords: Real Property, Commercial Leases, Insurance Covenants, Allocation of Risk of Loss or Damage to Property, Contractual Interpretation, Standard of Review, Sattva Capital Corp. v. Creston Moly Corp.
Facts: In 2007, the respondent, Deslaurier Custom Cabinets Inc. (the "Tenant") entered into a written lease with the appellant, 1728106 Ontario Inc. (the "Landlord"), for the rental of several units in the Landlord's commercial building (the "Lease"). The Lease obliges the parties to obtain insurance coverage for specified risks. Other provisions of the Lease impose insurance obligations on the Tenant. The Lease also contains cross-indemnity covenants. In 2009, John Faught Steel Inc. ("Faught Steel"), a welding contractor engaged by the Landlord, carried out repairs at the Premises, and a fire broke out. The fire resulted in significant damage to the Landlord's building, which was eventually demolished, and to the Tenant's property and business at the Premises. The Tenant claimed indemnification under its insurance policy for its losses and was paid approximately $10.861 million by its insurer. Unfortunately, the limits of the policy were insufficient to cover the Tenant's full losses. As a result, in 2010, the Tenant sued the Landlord and Faught Steel in negligence for damages in respect of its full property and business losses caused by the fire. The Tenant sought recovery for subrogated losses ($10.861 million) and uninsured losses (approximately $4.138 million). The Landlord defended the action, denying any negligence and any liability to the Tenant for its claimed losses. The Landlord pleaded that the Tenant and its insurer bore all responsibility for the Tenant's damages. The Landlord also took the position that the Tenant had failed to add the Landlord as an additional insured on its property damage insurance policy, thereby precluding the Tenant or its insurer from suing the Landlord under the Lease. In 2014, the motions judge dismissed the Landlord's motion and granted a declaration that the Landlord was liable to indemnify the Tenant for its claimed losses, subject to quantification. She subsequently awarded $100,000 in costs and disbursements to the Tenant. The Landlord appealed.
(1) What standard of review applies to the motions judge's decision?
(2) Did the motions judge err in her interpretation of the Lease:
(a) by failing to hold that the Tenant had contractually assumed the risk of any damage to its property and business arising from fire?
(b) by relying on extrinsic evidence concerning the Landlord's leases with other tenants in the building to aid in her interpretation of the Lease?
(c) by failing to hold that the Tenant's claim is barred as a result of its failure to add the Landlord as an additional insured on its property damage insurance policy?
Holding: Appeal Allowed.
(1) The recent decision of the Supreme Court in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 makes clear that the interpretation of a negotiated contract is generally subject to a deferential standard of review. However, this general rule is not absolute. Sattva recognizes that the correctness standard may apply to questions of contractual interpretation where it is possible to identify an extricable question of law from within what was initially characterized as a question of mixed fact and law. Extricable questions of law in this context include legal errors involving the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor. The motions judge erred in law by failing to apply binding appellate authority regarding contractual allocation of risk. She also erred in law by failing to assign meaning to all the contested terms of the Lease and by adopting a construction of the Lease that fails to accord with the governing principles of contractual interpretation. As these errors involve extricable questions of law within the meaning of Sattva, the correctness standard of review applies.
(2)(a) Yes. The motions judge erred by holding that the Landlord's Indemnity Covenant overtakes the Tenant's Insurance Covenants and the Immunity Provision, such that the Landlord, rather than the Tenant, is responsible for loss or damage to the Tenant's property and business caused by fire. Here, the parties specifically agreed that the Tenant would insure against the risk of loss or damage to its property by fire. That is the very risk that materialized. No coverage exclusion applied under the insurance policy and the Tenant's claim was paid to the extent of the policy limits. The fact that, as it happens, the Tenant was underinsured for this risk does not mean that its failure to obtain full protective coverage can be laid at the Landlord's door.
(2)(b) Yes. The motions judge erred in admitting extrinsic evidence regarding the terms of the Landlord's leases with other tenants at the building, and relying on it to interpret the Lease. Sattva confirms that evidence of the circumstances surrounding the formation of a contract is admissible as an aid to ascertaining the parties' contractual intentions. However, Sattva also warns that such evidence should consist only of objective evidence of the background facts at the time of the execution of the contract; that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. The record before the Court does not establish that the admissibility pre-requisite set out in Sattva was satisfied in this case. In addition, Sattva holds that, while surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement. In this case, even assuming that the evidence of the Landlord's other leases was admissible before the motions judge, the contents of those leases do not control the proper interpretation of the Lease. They neither establish nor alter the contractually agreed allocation of risk in this Lease. For these reasons, there is no need to go beyond the words of the Lease to determine the legal effect of the Tenant's Insurance Covenants and the scope of the Landlord's Indemnity Covenant and the Immunity Provision. The Tenant's Insurance Covenants assign the risk of loss or damage to the Tenant's property due to fire to the Tenant by requiring that it obtain insurance coverage against that risk.
(2)(c) Yes. Under section 8(5) of the Lease, the Landlord was to be added as an additional insured on the Tenant's liability and property damage insurance policies. This provision, had it been honoured, would operate as a subrogation bar to claims by the Tenant's insurer for the Tenant's fire losses. Had the Tenant complied with its obligations under the Lease, neither it nor its insurer would have any viable subrogated claim against the Landlord for loss or damage to the Tenant's property arising from the fire. The Tenant cannot benefit from its admitted breach of section 8(5) of the Lease to found a subrogated claim in respect of such loss or damage against the Landlord. Having assumed the risk of fire loss or damage to its own property, the Tenant bears the risk of underinsuring for such loss or damage.
[Strathy C.J.O., Lauwers and Benotto JJ.A.]
Gary Mazin and Supriya Sharma, for the appellant
Bruce Chambers, for the respondent
Keywords: Torts, Negligence, MVA, Insurance Law, Collateral Benefits, Deductions, Insurance Act, s.267.8, Jury Award, Ambiguity
The appellant was injured in a motor vehicle accident. The jury found the respondent liable and, consistent with the jury questions, awarded damages. Unfortunately, the jury questions had grouped together damages for medical/rehabilitation, attendant care, and housekeeping. As a result, the trial judge could not deconstruct the award to make the necessary statutory reductions on a benefit-by-benefit basis pursuant to s. 267.8 of the Insurance Act.
Following the rendering of the verdict, counsel informed the trial judge that they were unable to agree on the impact of collateral benefits on the damages award. They moved for an order determining whether and how the grouped jury awards, specifically the $55,000 for "past loss of care, medical/rehabilitation and housekeeping" and $50,000 for "future care, medical/rehabilitation and housekeeping", should be reduced under the provisions of the Insurance Act to account for the statutory accident benefits received by the appellant for healthcare and housekeeping.
The trial judge accepted the appellant's evidence regarding the medical rehabilitation benefits, attendant care benefits, and housekeeping benefits. She also acknowledged that, in light of Bannon v. McNeely, "there is no question that it is the defendant that bears the onus of establishing beyond dispute that the deduction should occur." She then noted that the sheer quantum of the collateral benefits already received under the three heads was "significantly higher than the jury award." The trial judge then concluded that the jury's awards for past and future attendant care, medical/rehabilitation, and housekeeping costs should be reduced from $105,000 to zero.
On appeal, the appellant argued that the defence had the onus to prove how the jury award should be reduced and that the trial judge erred by reducing the jury's total award to zero. The respondent argued that the lack of clarity in the jury questions is the fault of the appellant, who should not now be permitted to separate the various heads of expenses so as to frustrate the application of the Insurance Act.
Issues: Did the trial judge err by reducing the jury's awards for past and future attendant care, medical/rehabilitation and housekeeping costs from $105,000 to zero in the absence of clear evidence about the quantum of each collateral benefit?
Holding: Appeal Dismissed.
No. After reviewing various legal principles associated with Ontario's no-fault automobile insurance regime, the Court held that the trial judge was faced with a mandatory statutory direction to deduct collateral benefits under s. 267.8 of the Insurance Act. Moreover, the judge was reasonably assured, by comparing the quantum of benefits awarded to the appellant by the jury with the benefits that he had already received, that the appellant had been fully compensated for the applicable heads of damage, despite the fact that they were lumped together.
The Court held that it was reasonable for the trial judge to consider that the defendant had met the onus of proof for the reduction of the jury award for pecuniary losses pursuant to s. 267.8 of the Insurance Act and under Bannon v. McNeely. The trial judge correctly commented that it would have been preferable for the jury questions to have reflected the statutory scheme, and the Court reasoned that, in the context of this case, she committed no error. Instead, she reasonably gave effect to the policy objective of full compensation while respecting the policy objective of not overcompensating. Finally, the Court found that the trial judge reasonably apprehended that if she did not make the reductions sought by the defence, the appellant would have been overcompensated.
[Hoy A.C.J.O., Pardu and Roberts JJ.A.]
Kevin McGivney, Cheryl M. Woodin and Damian Hornich, for the appellant
Eric K. Gillespie, Kent Elson, Kiel Ardal and Priya Vittal, for the respondent
David Morritt and Alexis Beale, for the intervener, Canadian Civil Liberties Association
Keywords: Torts, Police Liability, Arbitrary Arrest and Detention, Civil Procedure, Class Actions, Class Proceedings Act, 1992, section 5, Certification, Costs
The plaintiff/respondent was among the individuals detained at specially constructed Detention Centres during the G20 summit held in Toronto in June, 2010. She commenced a proposed class action against the Toronto Police Services Board ("'TPS") and three other defendants, asserting multiple claims, including a breach of her Charter rights and that of other detainees who would be included in the class.
The motion judge dismissed the plaintiff's motion for certification, and the plaintiff narrowed her proposed class proceeding before appealing to the Divisional Court. The Divisional Court allowed the appeal and certified the narrowed claim as two separate class proceedings. It also awarded the plaintiff costs of the original certification in the amount of $125,728.03, which was reduced from the costs sought to reflect the time that was spent on the unsuccessful aspects of the claim as originally advanced.
TPS appealed the order of the Divisional Court certifying the two proceedings, and the plaintiff sought leave to cross-appeal the costs awarded by the Divisional Court.
TPS argued that in certifying the action the Divisional Court made the following errors:
(1) It improperly conducted a de novo review of the issue of whether the requirements of s. 5(1) of the Class Proceedings Act, 1992 had been met, rather than applying an appellate standard of review to the motion judge's determination that they had not met those requirements.
(2) It erred in concluding that the plaintiff had met the s. 5(1)(b) identifiable class criterion.
(3) It erred in identifying the following as common issues, when they are not:
- Did each mass detention and/or arrest (or the prolonged duration thereof) constitute (a) false imprisonment of the respective subclass members at common law and/or (b) arbitrary detention or imprisonment contrary to s. 9 of the Charter, including a determination of whether the mass detentions and/or arrests are justified under s. 1?
- If TPS breached the class members' common law or Charterrights, can the court make an aggregate assessment of damages as part of the common issues trial?
iii. Was TPS guilty of conduct that justifies an award of punitive damages?
(4) It erred in concluding that a class proceeding would be the preferable procedure for the resolution of the common issues.
(5) It certified two class proceedings in the absence of discrete Statements of Claim for each.
The Plaintiff seeks leave to cross-appeal the Divisional Court's cost award.
Holding: Appeal dismissed. Cross-appeal allowed.
TPS' Appeal of Certification
(1) The court found that the Divisional Court's intervention was valid because the proposed class action on appeal was significantly narrower than the proposed class action considered by the motion judge. Where the Divisional Court reversed determinations made by the motion judge, it was justified in doing so because of the narrowed scope of the proposed class proceeding. In addition, the court found the motion judge made errors in principle that had no significance on the certification motion, but became significant in the context of the proposed class action on appeal.
(2) The court did not give effect to any of TPS' arguments. It found that the Divisional Court correctly found "the commonality of an alleged command order being made ordering the detention of the class members without regard for the individual characteristics or conduct of each class member." In addition, the court agreed that the combination of classes in a single proceeding is not prohibited. It also rejected TPS' argument that the motion judge correctly concluded that the location-based subclass definitions should exclude individuals who engaged in unlawful conduct during the protests. Instead, it agreed with the Divisional Court that it is of no consequence whether any member of the class did commit a criminal offence or a breach of the peace, because the police cannot justify detaining a person based on information they either did not have, or did not rely on, in ordering a person's detention.
(3) No. With regard to false imprisonment, it agreed with the Divisional Court's analysis that the motion judge's conclusion that the issue was not a common issue was rooted in her focus on the extent of varying individual conduct by the detained or arrested individuals, which was an error in principle in the context of the class as cast on appeal. With regard to the aggregate assessment of damages, the court agreed that this should be open to the common issues judge to consider whether it would be an appropriate remedy.
As for punitive damages, the court did not find the Divisional Court erred in its conclusion that, in this case, it is a proper common issue. Here, the common issues dealing with alleged breaches of the class members' rights contemplate that liability will be determined at the common issues trial. The common issue proposed, and certified, is only whether TPS' conduct justifies an award of punitive damages. The court held if liability were found, and at least part of the compensatory damages were assessed on an aggregate basis, it would be open to the trial judge to consider whether she had a sufficient measure of the compensatory damages to determine entitlement to and the quantum of punitive damages, consistent with the principles in Whiten, or whether this could be determined only after any individual assessment phase.
(4) The court agreed with the Divisional Court that a class proceeding is the preferable procedure for the resolution of the common issues and with its reasons for so concluding. Since the Divisional Court correctly concluded both that the plaintiff had satisfied the identifiable class criterion in s. 5(1)(b) of the Act and that the core allegation in the action was indeed a common issue, these conclusions radically altered the landscape in which the preferability analysis was conducted.
(5) The court rejected the TPS' argument that the Divisional Court's certification of the plaintiff's claim as two separate proceedings in the absence of discrete statements of claim was procedurally unfair because it deprived TPS of the ability to make submissions on the certification test with reference to a pleading. It found there was no procedural unfairness and TPS' ability to make submissions on the certification test was unaffected by the absence of separate pleadings.
Plaintiff's Cross-Appeal of Costs Award
The court granted leave to the plaintiff to cross-appeal the Divisional Court's cost award, allowed the cross-appeal and awarded the plaintiff costs of the certification motion in the all-inclusive amount of $315,000. It agreed that a reduction in the costs sought by the plaintiff was warranted to reflect the change in the scope of the plaintiff's claim. However, the Divisional Court erred in principle in two respects in arriving at its costs disposition. First, in determining the quantum of the award, the Divisional Court relied on inapplicable benchmarks. Second, it failed to consider the impact of its costs award on access to justice.
On the first issue, it noted that the Divisional Court focused on the fact that TPS sought costs on the certification motion in the amount of $393,233.37, and was only awarded $223,233.37 in costs. It was an error in principle to use those amounts as a benchmark. Public interest is a factor to be considered in fixing costs of class proceedings. The motion judge tempered the costs she awarded to TPS to reflect access to justice concerns. However, such a reduction was similarly not appropriate when awarding costs of a certification motion to a successful plaintiff. On the second issue, it accepted the plaintiff's submission that, left untouched, the Divisional Court's costs award would have a chilling effect on public interest class actions and would substantially hinder access to justice.
[Strathy C.J.O., Sharpe and MacFarland JJ.A.]
Charles Gibson and Ian Houle, for the Sisters of St. Joseph of Sault Ste. Marie
Janine Harding, for Twenty-Two Catholic Entities
Pierre Baribeau and Paul Lepsoe, for Nine Catholic Entities
Peter Grant, Diane Soroka and Sandra Staats, for Independent Counsel
Gary Penner and Diane Fernandes, for the Attorney General of Canada
Julian N. Falconer and Julian Roy, for the Truth and Reconciliation Commission of Canada
Joanna Birenbaum, for the National Centre for Truth and Reconciliation
Kate Wilson and Regan Morris, for the Privacy Commissioner of Canada
Stuart Wuttke, for the Assembly of First Nations
Joseph Arvay, Q.C., Catherine Boies Parker and Susan Ross, for the Chief Adjudicator of the Indian Residential Schools Adjudication Secretariat
Keywords: Torts, Assault, Aboriginal Law, Residential Schools, Civil Procedure, Class Actions, Confidential Settlement Documents, Deemed Undertaking, Privacy, Access to Information, , Document Retention and Destruction
The Indian Residential Schools Settlement Agreement ("IRSSA") is a comprehensive settlement of class actions and other litigation by former residential school students. The parties agreed to establish the Independent Assessment Process ("IAP") as an aspect of the settlement in order to compensate survivors who suffered sexual abuse, physical abuse, or serious psychological harm when they were students at Indian Residential Schools. Under the IAP, a survivor can apply for additional compensation above a minimum amount given to all class members.
The appeal and cross-appeal concern the disposition of the highly confidential documents created within the IAP. These include the survivors' application forms, the written and audio records of their own evidence about their abuse and suffering and the compensation decisions written about their claims by the adjudicators (collectively, the "IAP Documents").
The Supervising Judge held that other individuals and institutions affected, including the alleged perpetrators and the churches, do not hold a veto over the survivors' right to share their own IAP Documents. He held that IAP Documents could be archived with the claimants' consent alone. He ordered a notice program to inform claimants of their right to do so. He also held that the court, not the government, controls the IAP Documents and that federal legislation does not require their archiving at the government's discretion. The court was required to give effect to the survivors' wishes about their own stories. The Supervising Judge ordered that there be a 15-year retention period, during which survivors could decide whether they wanted to transfer their documents to the National Centre for Truth and Reconciliation ("NCTR"). The Truth and Reconciliation Commission ("TRC") or the NCTR would notify survivors of their option to transfer their documents to the NCTR. At the end of the 15-year period, all IAP Documents in the possession of others, including the government, would be destroyed.
On the appeal, the Sisters of St. Joseph of Sault Ste. Marie, the Twenty-Two Catholic Entities, and the Nine Catholic Entities (the "Catholic Entities") appealed the Supervising Judge's order that the IAP Documents may be archived at the NCTR at the request of an IAP claimant alone. They claimed that the IRSSA expressly provides that archiving may only take place with their consent. On the cross-appeal, Canada, supported by the TRC and the NCTR, claimed that it controls the IAP Documents and that they are subject to federal privacy, access to information and archiving legislation. The Chief Adjudicator and the Assembly of First Nations ("AFN") disagreed and generally supported the Supervising Judge's decision. They stated that the records in the possession of everyone but class members should ultimately be destroyed. Class members will have the right to archive their statements and to transfer their IAP Documents to the NCTR, but the choice is theirs. Independent Counsel also assert that the notice program should not be run by the TRC or NCTR, that the retention period for IAP Documents should be lowered to two years, and that the order should include documents from the alternative dispute resolution (ADR) process.
In regards to the Appeals:
(1) Who must consent to archiving the IAP Documents?
(2) Is the notice program a material amendment to the IRSSA?
In regards to the Cross-Appeals:
(3) Are the IAP Documents government records?
(4) Is the order to destroy IAP Documents reasonable?
(5) Is the 15-year retention period reasonable?
(6) Was it reasonable to order the TRC and NCTR to conduct the notice program?
(7) Should the orders on IAP Documents apply to the ADR documents?
Majority Holding: Appeal and cross-appeals dismissed. Order varied to include the ADR documents and to require the Chief Adjudicator to conduct the notice plan. Sharpe J, dissenting, would have allowed the cross-appeals.
(1) IAP Documents may be archived with the consent of the claimant alone. A claimant's archiving of documents with the NCTR does nothing more than preserve the documents for what they are: the stories of claimants who say they suffered mistreatment and abuse in residential schools. By allowing claimants to archive their IAP transcripts, the IRSSA merely provides claimants with an alternative and expeditious means of preserving their stories as part of the TRC process. There was nothing to stop an IAP claimant from entering the TRC process and telling his or her story there so that it would be preserved for all to see. The IAP claimant would not have required anyone's permission or consent to take that step. Thus, the majority of the Court of Appeal failed to see any reason why a claimant should require permission or consent to accomplish the same result simply by depositing the IAP transcript with the NCTR.
(2) No, the notice plan was not a material amendment to the IRSSA. It does not alter the terms of the IRSSA, create new rights or ignore other rights. It serves only to ensure that the rights accorded by the IRSSA are understood and respected.
(3) No. The IAP Documents are not government records. The IAP Documents were documents obtained and created through a litigation process within the settlement of civil litigation. When the government is in possession of records only as a result of litigation, and is constrained in its use of those records by the court process or a specific court order, those records are not "under the control of a government institution." The Settlement Agreement Operations Branch ("SAO") obtained the IAP Documents through a court-controlled process, so it could only use those documents for the purpose of that process, and when the process had run its course, the documents had to be returned or destroyed. Its possession of the documents was always constrained by the court's inherent jurisdiction and the principle underlying the implied/deemed undertaking.
(4) Yes, the order was reasonable. Ordering the eventual destruction of the IAP Documents was within the Supervising Judge's supervisory jurisdiction as a class action judge. It was a reasonable response to a gap in the IRSSA, based on his thorough and thoughtful interpretation of that agreement and the surrounding factual matrix. The Supervising Judge's exercise of his broad, discretionary jurisdiction to remedy administrative gaps in the IRSSA, as well as his factual findings and interpretation of the IRSSA, are owed deference on review. The disposal or destruction of the documents is not prohibited by law as the IAP Documents are not government records subject to the Library and Archives Act.
(5) Yes. The 15-year retention period was reasonable. The 15-year period was based on the ultimate limitation period in the Limitations Act, 2002. It recognizes that the IAP Documents may unexpectedly become relevant years after the claim process appears to have been completed.
(6) No. It was unreasonable to order the TRC and NCTR to conduct the notice program. The notice does not fall within the mandate of either entity and, most importantly, it would be a breach of confidence to provide them with the information necessary for a notice program. The notice program should be carried out by the Chief Adjudicator, on such terms as may be approved by the Supervising Judge. As the Supervising Judge indicated, this should be determined after an evidence-based inquiry.
(7) Yes. The order should have included the ADR documents. Since the intent of the IRSSA was to roll all existing litigation into the IAP, the records of the predecessor process are subject to the court's supervisory jurisdiction. Consistency and fairness require that they be treated in the same manner as the IAP Documents.
Justice Sharpe, in dissent, would have allowed the cross-appeals, dismissed the appeals, and set aside the Supervising Judge's order to the extent that it required destruction of the IAP documents possessed and controlled by Canada through the SAO.
[Sharpe, Juriansz and Roberts JJ.A.]
John J. Chapman and Jennifer Bush, for the appellant
Robert H. Ratcliffe and Edmund Huang, for the respondent
Keywords: Regulation of Professions, Architects, Architects Act, ss. 2(5), Insurance Law, Professional Liability Insurance, , Insurance Act, ss. 27(2), Determination of Rights Arising out of Interpretation of Statute, Rules of Civil Procedure, Rule 14.05(3)(d)
Facts: The Pro-Demnity Insurance Company provides professional liability insurance to Ontario architects. The Ontario Architects' Association, the body that regulates architects in Ontario pursuant to the Architects Act, is authorized by s. 2(5) of that Act to own shares in Pro-Demnity. Pro-Demnity is licenced under the Insurance Act to sell liability insurance to architects. Pro-Demnity brought an application under r. 14.05(3)(d) of the Rules of Civil Procedure, seeking a determination that s. 2(5) of the Architects Act does not prevent it from expanding the scope of its insurance business beyond liability insurance for architects. The application judge held that he had jurisdiction to hear the application, but declined to exercise it.
(1) Did the application judge err in declining his jurisdiction?
Holding: Appeal dismissed.
(1). No. The motion judge's decision was discretionary and reasonable. Pro-Demnity commenced its application after it had submitted an application to the Superintendent to amend its licence to sell insurance. Section 27(2) of the Insurance Act gives the Superintendent exclusive jurisdiction to determine all questions of fact and law that arise in dealing with that application. In response to Pro-Demnity's application, the Superintendent expressed a concern in relation to ss. 2(5) of the Architects Act. While the motion judge determined he had jurisdiction to rule on the application, he explained that he regarded it as more appropriate for the Superintendent to determine the question in the context of the licence amendment application, and then allow any challenge to the Superintendent's decision to come before the court on judicial review.
[Sharpe, Juriansz and Roberts JJ.A.]
Sandi J. Smith, for the appellant
Harry P. Brown, for the respondent
Torts, MVA, Statutory Accident Benefits, Catastrophic Injury Determination, Limitation Periods, Do v Guarantee Insurance Co.
The appellant completed an OFC-19 form seeking a "catastrophic determination," but no claim was made for specific benefits. The respondent denied the request, stating the assessors determined the appellant did not sustain catastrophic impairment. At the end of the denial, the respondent wrote "and therefore you do not qualify for the increased benefits."
The appellant commenced an action for catastrophic injury, as per the Statutory Accident Benefits. The motion judge dismissed the action by deciding it was barred by ss. 281(1) of the Insurance Act, . The appellant's claim was barred because a mediation proceeding had not been commenced "within two years after the insurer's refusal to pay the benefits claimed."
Did the motion judge err by dismissing the claim as statute-barred?
Yes. The motion judge erred and the claim is not statute-barred.
The motion judge decided that the decision in Do v Guarantee Insurance Co, 2015 ONSC 1891 did not apply to this case. Do upheld a consistent line of decisions holding that an insurer's denial of a catastrophic impairment does not amount to a denial of a benefit, and that it is only where a specific benefit is denied that the limitation period begins to run against the claimant.
There is no difference in substance between the denial in this case and the denial in Do. Do stands for the proposition that the two-year limitation period only applies to claims for specific benefits and not to a claim for the determination of catastrophic injury status. Adding the words at the end of the denial, the respondent was merely telling the appellant that she lacked status to claim increased benefits. The wording did not convert denial of a catastrophic determination into a denial of specific benefits that would have triggered the two-year limitation period.
[Cronk, Pepall and Miller JJ.A.]
Kevin Sherkin and Ryan Wozniak, for the appellant
Albert Campea and Rachel Goldenberg, for the respondent
Keywords: Contracts, Employment Law, Wrongful Dismissal, Fixed Term Contract, Early Termination, Damages, Reasonable Notice of Termination, Payment in Lieu of Notice, Duty to Mitigate
John Howard, the appellant, was employed by the respondent, Benson Group Inc. ("Benson") as the Truck Shop Manager and then as Sales Development Manager of an automotive service
centre. Howard signed a written employment contract with a five-year term (the "Employment Contract") which Benson terminated, without alleging cause, 23 months later.
Howard brought an action for breach of contract, seeking payment of his compensation for the remaining period of the contract which was more than three years' salary. On summary judgment, Howard was not awarded payment of salary to the end of the term of the contract as he sought. Instead, he was awarded common law damages for wrongful dismissal, subject to mitigation, to be assessed at a mini trial.
Did the motions judge err in finding that:
(1) the respondent is liable for damages according to the common law of reasonable notice, rather than damages for termination of a fixed term contract?
(2) an award of damages for early termination of the Employment Contract is subject to a duty to mitigate?
Holding: Appeal allowed.
(1) Yes. The motion judge found that the early termination clause in the Employment Contract was sufficiently ambiguous as to be unenforceable. Without an enforceable early termination clause, Benson's obligations are governed by "an implied term under the common law requiring 'reasonable notice' for the termination of the employment of the [appellant]". Howard argued that even if the early termination clause was not enforceable, the other contractual provisions with respect to term and termination remained in effect, and the Employment Contract remained a fixed term contract.
Benson argued that the Employment Contract must be interpreted in accordance with the parties' intentions. Clause 1.3 provided that the Employment Contract could be terminated "at any time". Based on this clause, they argued that on early termination, Howard cannot be entitled to compensation that he would have earned to the end of the Employment Contract. Otherwise, Howard's right to compensation would be the same regardless as to whether there was an early termination clause or not. The employer would receive no benefit from contracting for early termination if that were the case.
At common law, there is a presumption that every employment contract includes an implied term that an employer must provide reasonable notice to an employee prior to the termination of employment. Without an agreement to the contrary, an employee is entitled to common law damages as a result of the breach of that implied term and this presumption can only be rebutted if the contract clearly specifies some other period of notice.
The motion judge erred in holding that the Employment Contract, without the early termination clause, did not rebut that presumption by clearly specifying some other period of notice, expressly or impliedly. An employment agreement with a fixed term automatically terminates at the end of the term with no obligation on the employer to provide notice or payment in lieu of notice. This will oust the implied term that reasonable notice must be given for termination without cause. Parties to a fixed term employment contract can specifically provide for early termination. However, if they do not specify a pre-determined notice period, an employee is entitled on early termination to the wages the employee would have received to the end of the term.
The Employment Contract, without the early termination clause, remains a fixed term contract. Benson argued that this interpretation produces a windfall to Howard and is unfair to the employer. The court disagreed on the basis that it was the employer, Benson, that drafted the Employment Contract and it was a sophisticated party. Benson attempted to use a fixed term contract to either eliminate its obligation entirely or to limit it to two weeks' notice on an early termination. While Benson were free to do this, courts have consistently held that an employer must communicate clearly in the contract that this is what they are intending to do because of the significant consequences to an employee in such a situation.
(2) Yes. There is no basis to depart from the rule in Bowes v. Goss Power Products Ltd., 2012 ONCA 425 that there is no duty to mitigate where the contract specifies the penalty for early termination. It does not matter if, as in this case, the penalty is the default wages and benefits for the remaining term of the contract or whether the penalty is specified expressly, as in Bowes.
The court held that neither of the cases relied on to argue mitigation helped Benson. Benson relied on the decision Loyst v. Chatten's Better Hearing Service, 2013 ONCA 781, but the trial decision in Loyst predates Bowes. On appeal in Loyst, the issues of duty to mitigate or Bowes were not raised. In Graham v. Marleau, Lemire Securities Inc. (2d) 289 (Ont. S.C.), the judge held the duty to mitigate applied to both fixed term contracts and contracts of indefinite duration. However, Graham has been overtaken by Bowes on this point.
If there is no enforceable contractual provision for a fixed term of notice, or any other provision to the contrary, a fixed term employment contract requires an employer to pay an employee to the end of the term and will not be subject to mitigation.
[MacPherson, van Rensburg and Miller JJ.A.]
William G. Scott, for the appellant
Agatha Dix, for the respondent and appellant by way of cross-appeal
Cary N. Schneider and Philip Pollack, for the respondent by way of cross-appeal
Keywords: Torts, Negligence, MVA, Limitation Periods, Limitations Act, 2002, Discoverability, Reasonable Diligence
In August 2010, the appellant, Daniel Fennell ("Fennell") was in a four vehicle accident. There was a problem in determining the identities of the other drivers in the accident. At the time of the accident, Fennell's wife noted the respondent, Gurjinder Deol's ("Deol") license plate number. The police only gave Fennell one page of the motor vehicle accident report ("MVAR") which named Boota Shergill ("Shergill") and another driver (not Deol).
In August 2012, Fennell's lawyer received the complete MVAR from the police. The next day, Fennell issued a statement of claim and Shergill was served in September. Deol was not named in the action. In January 2013, Shergill's lawyer received the MVAR from the police and contacted Fennell's lawyer in March with regards to Deol's identity. Fennell amended the statement of claim to include Deol. In the interim, Fennell's lawyer wrote to the police and obtained the police notes. In October 2014, Shergill crossclaimed against Deol.
Deol successfully moved for summary judgment dismissing the claim against him as being out of time, but failed on his motion to have the crossclaim against him brought by Shergill also dismissed on that basis. Fennell and Deol appealed.
(1) On Fennell's appeal, did the motion judge err by granting summary judgment dismissing the claim against Deol?
(2) On Deol's appeal, did the motion judge misapprehend the facts and applicable law?
Holding: Fennell's appeal is allowed. Deol's appeal is dismissed.
(1) Yes. The motion judge was wrong to dismiss Fennell's claim against Deol. The motion judge found that Fennell discovered the claim no later than when he issued the claim against Shergill. The finding was based on the motion judge's conclusion that Fennell and his lawyer did not exercise due diligence. Although due diligence factors into the analysis for when a claim ought to have reasonably been discovered, it is not in itself a reason to dismiss the plaintiff's claim.
Due diligence is not referred to in the Limitations Act, 2002, but it is a principle that underlies and informs limitations periods. Plaintiffs are required to act and not sit idle. Due diligence is part of the section 5(1)(b) evaluation in deciding when a person in the plaintiff's circumstances and abilities ought to have reasonably discovered the claim. The motion judge erred by focusing on whether Fennell exercised due diligence and by concluding the onus was on Fennell to show due diligence to rebut the presumption in section 5(2). However, to overcome the presumption, Fennell only needed to prove that on the date of the accident, he did not know about his permanent and serious impairment, not whether or not he exercised due diligence.
Fennell claimed he discovered his claim in August 2014 when a doctor told him his injuries were permanent. The motion judge considered this but did not make a specific finding as to when Fennell had actual knowledge of his permanent and serious impairment. Fennell could not have known of his permanent and serious impairment at the time of the accident. Therefore, Fennell successfully rebutted the presumption in section 5(2) that he knew of all of the elements of his claim on the date of the occurrence.
The motion judge's only finding of when the claim ought reasonably have been discovered was that had Fennell fulfilled his due diligence obligation, the permanent and serious impairment would have been discovered no later than around the time he commenced his action against Shergill. The action was commenced against Shergill in August, 2012. Deol was added as a defendant within two years of that date (in March, 2014). As such, the motion judge's conclusion that Fennell's claim against Deol was statute-barred was inconsistent with his own finding as to when the claim was reasonably discoverable.
(2) No. The motion judge did not misapprehend the facts or the applicable law in finding that Shergill ought to have discovered his claim for contribution and indemnity in the fall of 2012. The presumptive two-year limitation period for Shergill's claim against Deol for contribution and indemnity began running in September, 2012 when Shergill was served the statement of claim.
The motion judge's determination of when Shergill's claim for contribution and indemnity against Deol ought reasonably have been discovered was founded on the evidence and is entitled to deference. The motion judge decided that Shergill acted reasonably after having the necessary information in waiting to commence a crossclaim rather than commencing a third party claim at an earlier date (before Deol had been added). The court repeated that due diligence is not a separate question in determining whether a limitation period has begun to run. The issue was when a person with Shergill's abilities and in his circumstances ought to have discovered his claim for contribution and indemnity.
[Doherty, Cronk and Pepall JJ.A.]
Shahzad Siddiqui, for the appellants
Paul Robson, for the respondent
Keywords: Civil Procedure, Certificate of Pending Litigation, Failure to Plead, Rules of Civil Procedure, Rule 42.01(2)
[MacPherson, MacFarland and LaForme JJ.A.]
Dean Embry, for the appellant
Eric Siebenmorgen, for the Crown
Keywords: Ontario Review Board, Conditional Discharge, Absolute Discharge, Liberty Interest, Appeal Dismissed
[Feldman, MacPherson and Miller JJ.A.]
A.E., acting in person
Lisa Feinberg, amicus curiae
Joanne Stuart, for the respondent
Keywords: Criminal Law, Driving Without Insurance, Fines, Sentencing, Fresh Evidence, Appeal Allowed
[Doherty, Simmons and van Rensburg JJ.A.]
Catriona Verner, for the appellant
Joanne Stuart, for the respondent
Keywords: Criminal Law, Break In and Enter, Vetrovec Instruction, Identification of Accused, Sentencing, Appeal Dismissed
[Laskin, Cronk and Miller JJ.A. ]
Elmé G. Schmid and Lina Anani, for the appellant
Mabel Lai, for the respondent
Keywords: Criminal Law, Sexual Assault, Imprisonment, Fresh Evidence, The Rule in Browne v. Dunn, Charter of Rights and Freedoms, s. 14, Appeal Dismissed
[Feldman, Simmons and Pepall JJ.A. ]
Patrick Horgan, in person
Apple Newton-Smith, duty counsel
Brock Jones, for the respondent
Keywords: Criminal Law, Sentencing, Pre-Trial Custody, Theft, Driving Offences, Genuine Remorse, Appeal Allowed
[Watt, Epstein and Tulloch JJ.A]
Venus Sayed, for the appellant
Stephen Dawson, for the respondent
Keywords: Criminal Law, Possession, Trafficking, Imprisonment, Unreasonable Search and Seizure, Charter of Rights and Freedoms, ss 24(2), Appeal Dismissed
[MacPherson, MacFarland and LaForme JJ.A]
Jonathan Dawe, for the appellant
Karen Papadopoulos, for the respondent
Keywords: Criminal Law, Abduction, Assault with a Weapon, Forcible Confinement, Attempted Murder, Identification Issue, Appeal Dismissed
[Watt, Lauwers and Pardu JJ.A.]
Malcolm McRae and Erec Rolfe, for the appellant
Rick Visca, for the respondent
Keywords: Criminal Law, Highway Traffic Act, Suspended License, Possession of Marijuana, Trafficking, Charter of Rights and Freedoms, s. 8, R v. Grant, Appeal Allowed
[MacPherson, MacFarland and LaForme JJ.A]
Bernadette Saad, for the appellant
Sandy Thomas, for the respondent
Keywords: Criminal Law, Trafficking, Sentencing, Appeal Dismissed
[Blair, Tulloch and Pardu JJ.A.]
Lisa Gunn, for the appellant
Katie Doherty, for the respondent
Keywords: Criminal Law, Sentencing, Driving Prohibition, Leave to Appeal Granted, Appeal Dismissed
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