Canada: Court Of Appeal Summaries (August 22 – August 26, 2016)

Last Updated: September 1 2016
Article by John Polyzogopoulos

Civil Decisions:

Fantl v. Transamerica Life Canada, 2016 ONCA 633

[Strathy C.J.O., Blair and Lauwers JJ.A.]

Counsel:

M.J. Stitt and D. McLeod, for the appellant

D. F. O'Connor and J. A. Dewar, for the respondent

Keywords: Torts, Negligent Misrepresentation, Insurance Act, Class Actions, Class Proceedings Act, Certification, Preferable Procedure, Common Issues, Individual Issues, Access to Justice, AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R. 949

Facts:

The proposed class is composed of investors in Transamerica's Can-Am Fund, an investment vehicle offered under insurance contracts sold by Transamerica between October 1992 and March 2001.

The respondent's class action encompasses 53 different insurance contracts. Five of these contained an express statement that the fund would "on a best efforts basis replicate the performance of the S&P 500 Total Return Index." The other 48 contracts did not contain this express statement. However, beginning in 1994, every investor in the Can-Am Fund received an information folder containing a statement that the goal of the fund was to replicate, on a "best efforts" basis, the performance of the S&P 500 Total Return Index.

The information folder was provided pursuant to regulations under the Ontario Insurance Act, which required that investors receive a disclosure document before investing in a segregated fund like the Can-Am Fund. That document, referred to as an "information folder," is required to disclose the fund's investment policy and objectives. Investors are required to acknowledge receipt of the information folder.

The respondent's negligent misrepresentation claim arises from the "best efforts" statement in the information folder. The respondents argue this representation was untrue. The certification judge held that a class action was not the preferable procedure for the negligent misrepresentation claims. The Divisional Court overturned this ruling, noting that the certification judge did not have the benefit of the Supreme Court of Canada's decision in AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R. 949.

Issues:

Whether a class action for negligent misrepresentation would be a fair, efficient and manageable proceeding, having regard to the common issues in the context of the action as a whole and the individual issues that would remain after the common issues are resolved?

Holding: Appeal dismissed.

Analysis:

The court found that a class action was the preferable procedure.

In Fischer, Cromwell J. emphasized that the preferability analysis is a comparative one that considers whether the proposed class action will achieve the goals of the Class Proceedings Act, 1992, S.O. 1992, c. 6, as compared to other means of resolving the claim. Fischer requires us to consider (a) the barriers to access to justice; (b) the potential of a class action to address those barriers; and (c) the alternatives to a class action, including the extent to which the alternatives address the relevant barriers and how the two proceedings compare. As Cromwell J. noted, the most common barrier to access to justice is an economic one, which is the case here. The Court distinguished this case from Kinross, where the Ontario Court of Appeal denied certification for a negligent misrepresentation claim.

Mr. Fantl's claim could not reasonably be viewed as economically viable to litigate in the Superior Court. The cost of expert evidence to establish that the representation was untrue or misleading, and that the misrepresentation was made negligently, would be out of all proportion to the amount at issue. That cost would be a significant barrier to access to justice. That barrier would not be addressed by joinder, which is not a practical means of bringing access to justice to a class of thousands. A class proceeding, on the other hand, has the potential to address this economic barrier by distributing the costs over thousands of class members, rather than one or even a few.

The court determined that if the common issues are resolved in favour of the class, a class proceeding can provide a framework for the resolution of the individual issues. While damages might be a more complex individual issue, s. 6.1 of the CPA expressly provides that the need for individual assessments of damages is not, in itself, a bar to certification. It is realistic to expect that having tried the common issues, the trial judge will have a full appreciation of the individual issues and will be well equipped to devise a procedure for the resolution of those issues. Section 25 of the CPA gives the judge authority to craft fair, inexpensive and efficient procedures in order to do so. This is ancillary to the broad discretion conferred on the court under s. 12 to "make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination".

Royal Bank of Canada v. Hussain, 2016 ONCA 637

[MacPherson, Simmons and Lauwers JJ.A.]

Counsel:

A. Hussain, in person

A. Jackson, for the Royal Bank of Canada

Keywords: Civil Procedure, Summary Judgment, Pre-Trial Conferences, Rules of Civil Procedure, Rules 1.04, 20, 50.09, 50.10

Facts:

The Bank (the "respondent") issued a statement of claim against the appellant claiming amounts owing on various loan facilities. After obtaining an order setting aside a default judgment, the appellant delivered a statement of defence and counterclaim. The motion judge conducted a pre-trial conference. Subsequently, the motion judge heard the Bank's summary judgment motion. The motion was granted and the appellant's counterclaim was dismissed.

Issue:

Absent the written consent of the parties, do rules 50.09 and 50.10 of the Rules of Civil Procedure (the "Rules") prohibit a judge who conducts a pre-trial conference from presiding on a summary judgment motion?

Holding:

Appeal allowed.

Reasoning:

Yes. Subject to certain exceptions, rule 50.09 prohibits communication to a judge presiding on a motion "with respect to any statement made at a pre-trial conference". Rule 50.10(1) prohibits a pre-trial judge from presiding "at the trial of the action or the hearing of the application, except with the written consent of all parties". Rule 50.10(2) clarifies that rule 50.10(1) does not prohibit a hearing judge from holding conferences before or during the hearing "that may assist in the just, most expeditious and least expensive disposition of the proceeding".

The Bank contended that this situation did not fall squarely within the prohibition contained in the Rules. Nothing was communicated to the motion judge about the pre-trial conference; rather, he presided over the conference. Rule 59.09 therefore did not strictly apply.

First, the Court of Appeal rejected these submissions because rule 50.09 reflects the intention that a judge hearing a motion in a proceeding should be insulated from knowledge of statements made at a pre-trial conference. It is designed to reassure litigants that any information revealed in the pre-trial will not be used against them at a hearing, in order to encourage a full and frank exploration of settlement prospects at an early stage of the proceeding.

Furthermore, having regard to rule 50.10(1), absent written consent from the parties, a judge who conducts a pre-trial should not be the judge who determines the merits of the issues in a proceeding. This is particularly true with the expanded powers available to motion judges under the amended Rule 20.

Although neither rule 50.09 nor rule 50.10 contains language expressly prohibiting a pre-trial judge from presiding on a summary judgment motion, the rules are to be "liberally construed", and where matters are not provided for in the rules, "the practice shall be determined by analogy to them". Having regard to these factors, rules 50.09 and 50.10 must be read as prohibiting a judge who conducts a pre-trial conference from presiding on a summary judgment motion in the action, except with all parties' written consent.

According to the Court of Appeal, this case highlights the need for parties to remind a judge who has been scheduled to dispose of an action or application on the merits that the judge previously presided at the pre-trial conference. That way, the judge will have the opportunity to determine if the parties are willing to provide their written consent to the judge presiding at the hearing, in accordance with rule 50.10(1).

Therefore, in light of the purpose of rules 59.09 and 59.10, which is to protect the efficacy of pre-trial conferences in facilitating settlements, upholding the result in this case would undermine public confidence in the administration of justice. Accordingly, the appeal is granted and the summary judgment is set aside.

Mask v. Silvercorp Metals Inc., 2016 ONCA 641

[Strathy C. J. O., Brown and Huscroft JJ. A.]

Counsel:

J. Groia and M. M. A. Stroh, for the appellants

D. Peebles, M. Lam, and P. Davis, for the respondents

Keywords: Torts, Negligent Misrepresentation, Securities, Secondary Market Misrepresentations, Class Actions, Securities Act, s.138.3, Leave to Commence Proceeding, Standard of Review, Correctness

Facts:

In August and September 2011, Silvercorp Metals Inc. ("Silvercorp") was targeted by investors who "shorted" its shares, expecting to profit when the price fell. To ensure this, one of the short-sellers anonymously released false reports on the Internet. The share price fell and he made a profit of $2.8 million. Silvercorp's shareholders lost $288 million in equity as a result. The appellant commenced this proposed class action against the company, two executives and a mining engineering firm. He claimed that Silvercorp's share price was inflated by misrepresentations in its public disclosures in 2010 in 2011 and that he and other shareholders lost money when the share price fell after "corrective disclosures" in September 2011.

The class action judge dismissed the appellant's motion for leave to bring a class action for secondary market misrepresentation under s. 138.3 of the Securities Act. He also dismissed a motion to certify the action under the Class Proceedings Act. The appellant argues that the motion judge erred in applying the leave test and misapprehended the evidence.

Issues:

1) Did the judge error in applying the leave test?

2) Did the judge mischaracterize or ignore relevant evidence?

Holding: Appeal dismissed.

Reasoning:

1) The appellant argued that the motion judge misapplied the test by applying a higher leave standard than that set out by the Supreme Court in Theratechnologies Inc. v 121851 Canada Inc. The appellant argues that by weighing the evidence on a balance of probabilities, the motion judge turned the leave application into a mini-trial, contrary to the Supreme Court's ruling.

In this case, the application of the leave test to a body of facts is a question of mixed fact and law. The issue, as framed, raises questions about the motion judge's characterization of the legal test and asserts that he applied an overly onerous test. As such, it attracts a correctness standard of review.

The appellant argued that the motion judge went too far in analyzing the evidence, arguing that this approach is inconsistent with the purpose and spirit of the legislation to screen out only plainly meritorious claims. The Court of Appeal disagreed, holding that such scrutiny of the entire body of evidence is necessary to give effect to the purpose of the screening mechanism.

The appellant also argued that the motion judge made erroneous findings which led him to conclude that the appellant had no chance of success at trial. Again, the Court of Appeal disagreed. The motion judge is open to examine the factual underpinnings of the expert witness' opinion and conclude based on the evidence before him that the opinion had been completely undermined by flawed factual assumptions.

2) The Court of Appeal did not accept the appellant's submission that the motion judge, in focusing his analysis on the key documents, ignored other evidence relevant to the appellant's argument that certain reports were negligently prepared. Based on the evidence before him, or the lack of evidence, the motion judge concluded that the allegations of negligence in the preparation of certain reports were not sufficient to "clear the leave hurdle".

Yim v. Song, 2016 ONCA 642

[Miller J.A.]

Counsel:

C. Chang, for the respondents/moving parties/responding parties on cross-motion

S. Bae, for the appellants/responding parties/moving parties on cross-motion

Keywords: Motion to Quash Appeal, Interlocutory and Final Orders, Practice Direction Concerning Civil Appeals, 5.2.2.

Facts:

The appellants brought an undertakings and refusal motion that was largely unsuccessful. They then sought leave to appeal the decision to the Divisional Court, which was the correct path for an interlocutory order. Leave was denied. They appealed the denial of leave to the Court of Appeal.

The general rule is that decisions refusing or granting leave to appeal are not subject to appeal. The appellants argued, however, that the motion judge's order was final because it deprived them of a substantial part of their cause of action. Therefore, they came within the exception to the general rule.

The respondents brought a motion to quash the appeal of the Divisional Court order. If successful, the respondents would avoid the significant expense associated with arguing the appeal. Accordingly, they sought the appellants' consent to extend the time to deliver their responding materials until after their motion to quash the appeal. The appellants would not agree to this.

The appellants took the position that the motion to quash the appeal should be heard together with the appeal; hence, they brought a cross-motion seeking that relief. They argued that in order to defend the motion to quash, they will need to argue the entirety of the appeal to demonstrate that the undertaking and refusals motion was a final order.

Issues:

What is the appropriate sequence for scheduling a motion to quash an appeal in respect of the underlying appeal?

Holding:

The motion to quash the appeal was granted. The cross-motion was dismissed.

Reasoning:

The procedure to be followed on a motion to quash an appeal depends on the basis for the motion. According to 5.2.2 of the Court's Practice Direction Concerning Civil Appeals, motions can be based on either (1) jurisdictional grounds or (2) that the appeal is devoid of merit. In the case of the former, the motion is heard by a panel of the Court at an earlier date than the appeal. In the case of the latter, the motion is heard together with the appeal because the court is obliged to consider the appeal's merits in determining the motion to quash.

The respondents' motion to quash was based on jurisdictional grounds. Therefore, it should be scheduled at an earlier date than the appeal. "It is not relevant, for scheduling purposes, that the appellants intend to defend by arguing the merits."

Walchuk v. Houghton, 2016 ONCA 643

[Feldman, Simmons and Lauwers JJ. A.]

Counsel:

M. Jaeger, for the appellant

A. Sheremeta, for the respondent

Keywords: Endorsement, Bankruptcy and Insolvency, Bankruptcy and Insolvency Act, s. 69.3 Stay of Proceedings, Contempt Proceedings

Facts:

The respondent obtained a money judgment against the appellant in February 2011 and the appellant failed to subsequently attend an examination in aid of execution. On September 5, 2014, the motion judge issued an order compelling the appellant to attend to be examined on September 17, 2014, and to bring specified documents to the examination. On September 16, 2014, the appellant made an assignment in bankruptcy. The appellant attended the examination scheduled for September 17, 2014 but did not bring the specified documents. Instead, he brought a Notice of Stay of Proceedings issued in accordance with s. 69 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

The respondent then moved for an order finding the appellant in contempt of the court's September 5, 2014 order. The motion judge ruled that the motion could proceed despite the appellant's bankruptcy.

Issue:

Can the appellant be found in contempt of the court's order for not bringing the specified documents?

Holding:

Appeal allowed.

Reasoning:

Contempt proceedings are not a claim provable in bankruptcy. However, this does not end the inquiry as to the effect of the stay in this instance.

Given the order to attend the examination was stayed as of Mr. Houghton's bankruptcy on September 16, 2014, the court was unable to see how his failure to bring the specified documents could possibly found contempt. Further, it was observed that the bankruptcy process is intended to be a single forum for creditors and permitting the contempt process to unfold in the present circumstances would offend this principle.

The appeal is allowed with costs payable to the appellant by the respondent in the amount of $10,000 net of previous costs awards, inclusive of interest, taxes and disbursements.

A.M. v. J.M., 2016 ONCA 644

[Feldman, Gillese and Brown JJ.A.]

Counsel:

E. Rae, for the appellant

M. M. Soczka, for the respondent

Keywords: Family Law, Custody, Best Interests of the Child, Ex Parte Orders, Full and Frank Disclosure, Reasonable Apprehension of Bias

Facts:

This is a custody dispute involving the parties' two young boys. The trial judge found both parents to be very good parents and that custody could be awarded to either one in the best interests of the children.

At the time of the trial, the children had been residing with the father and his partner for approximately one year, with access to the mother, pursuant to an ex parte order that had been confirmed on a full hearing a month later. The trial judge concluded that the father had created an unlawful status quo by failing to make full disclosure on the ex parte motion, suggesting that had the father made full disclosure, the ex parte order would not have been granted. All other matters being equal, the trial judge decided that the mother should be awarded custody of the children since they had lived with her and thrived in her care for most of their young lives.

On appeal to the Superior Court, the appeal judge held that it was open to the trial judge to find that the father obtained an unlawful status quo, and that the confirmation of the ex parte order at the comeback hearing one month later did not cure the problem. He also rejected the father's alternative submission that the trial judge displayed a reasonable apprehension of bias by raising the issue of non-disclosure and the lawfulness of the status quo on his own motion.

Issues:

  1. Did the appeal judge err by upholding the trial judge's finding that the father obtained an unlawful status quo on the ex parte motion?
  2. Did the appeal judge err by rejecting the allegation of reasonable apprehension of bias?

Holding: Appeal allowed in part.

Analysis:

  1. The appeal judge erred by upholding the trial judge's finding that the father obtained an unlawful status quo on the ex parte motion.

Notice and the opportunity to be heard are basic tenets of our justice system. Ex parte orders are therefore made only in very limited circumstances. The requirement for full and frank disclosure is essential to allow a court to fairly make a temporary order that will affect the rights of another person in an emergency situation where the court has not heard both sides of the story.

The trial judge found that the status quo that had been established by the October 18, 2013 ex parte order and confirmed at the November 22, 2013 comeback hearing was unlawful because the father had failed to make full and fair disclosure. The trial judge made two errors in his apprehension of the evidence and of the submissions in making this finding.

First, in his reasons for discounting the status quo, the trial judge stated: "The father urges that I maintain [the] status quo. The mother claims that the father's failure to disclose all the information that was known to him set up an unlawful status quo or a status quo that was obtained without full disclosure". This statement constituted an error of fact by the trial judge. At no time did the mother take the position that the father had not made full disclosure on the ex parte motion or that he had created an unlawful status quo.

Second, the trial judge erred in finding that the father had not made full disclosure because he had not indicated that any concern he had about the mother "was tempered drastically by his knowledge, given in evidence at trial, that Aunt D.M. would never do anything to put [the children] in jeopardy." D.M. did not have legal custody of the children. The mother did. Although D.M. tried to be available to help her sister, she could not be available all the time, nor was it her legal obligation to do so. Nor did the father in any way suggest that he did not trust D.M. To the contrary, the affidavit disclosed that he had delivered the children to D.M. after his Thanksgiving access visit, and D.M. had indeed removed the children from her sister's care, and although she could not take them herself that night, her mother did.

  1. The appeal judge did not err by rejecting the allegation of reasonable apprehension of bias.

The test for reasonable apprehension of bias was recently stated by this court in Martin v. Martin, 2015 ONCA 596, 127 O.R. (3d) 1, at para. 68: "Would a reasonable and informed person viewing the matter realistically and practically and having thought it through conclude that the judge, consciously or unconsciously would not decide fairly". The threshold for finding a reasonable apprehension of bias is extremely high. There is a strong presumption in favour of the judge's impartiality and the question of a reasonable apprehension requires a highly fact-specific inquiry.

The appeal judge considered this issue in the context of the test as set out in Martin, quoted above. He noted that the trial judge appeared to have been gentler with the mother in his questioning than with the father, but on his review of the record he could not discern a predisposition to decide the issues in favour of the mother. He concluded that there was no reasonable apprehension of bias.

Viewing the proceeding as a whole, it is clear that the trial judge was focused on deciding the custody issue by determining the best interests of the children. Applying the strong presumption in favour of impartiality, the Court of Appeal did not interfere with the conclusion reached by the appeal judge that there was no reasonable apprehension of bias.

Criminal Decisions:

R v. Grant, 2016 ONCA 639

[Laskin, Cronk and Juriansz JJ.A.]

Counsel:

D. Doucette and P. J. I. Alexander, for the appellant Grant

L. Beechener and G. Gross-Stein, for the appellant Vivian

L. Paine and M. Adams, for the respondent

Keywords: Criminal Law, Murder, Attempted Murder, Aggravated Assault, Juries, Impartiality, Challenge for Cause, Jury Instructions, Reasonable Doubt, W.D. Instruction, Self-Defence, Provocation, Air of Reality, Reasonable Apprehension of Bias, Character Evidence, Sentencing, Aggravating and Mitigating Factors

R v. Wardle, 2016 ONCA 640

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

Counsel:

R. Sellar, for the appellant

R. Direnfeld, for the respondent

Keywords: Endorsement, Criminal Law, Leave to Appeal

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