Canada: Top 5 Civil Appeals from the Court of Appeal (February 2017)

Last Updated: February 24 2017
Article by William E. Pepall

1. Roulston v. McKenny, 2017 ONCA 9 (Doherty, Brown and Huscroft JJ.A.), January 5, 2017

Paul Penner died in March 2013, survived by his sister, the appellant Rita Roulston, who was his estate trustee as well as a beneficiary under his will. Penner was also survived by his former wife, the respondent Pauline McKenny. Penner and McKenny signed a separation agreement in 2002, which provided that Penner would maintain $150,000 in life insurance designating McKenny as the beneficiary and that in the event Penner failed to maintain the insurance, McKenny would have a first charge against his estate in the amount of $150,000. Penner failed to pay the premiums on the life insurance policy, which lapsed before his death. Under his will, Penner's estate of slightly more than $100,000 was to be divided between Roulston, on the one hand, and several nieces and nephews on the other.

In September 2015, more than two years after Penner's death, McKenny commenced an action against Penner's estate, seeking payment of $150,000.

In an application for directions brought by Roulston as estate trustee, the parties asked the court to determine McKenny's claim against the estate.

The application judge rejected Roulston's assertion that McKenny's claim for a first charge against the estate was statute barred, holding that the application of the doctrine of fraudulent concealment tolled the two-year limitation period until at least September 25, 2013. Citing the decision of the Court of Appeal in Giroux Estate v. Trillium Health Centre, 2005 CanLII 1488 (ON C.A.), the application judge found that (i) Roulston was in a special relationship with McKenny because she had exclusive possession of knowledge and information as to whether an insurance policy existed and whether McKenny had a claim against the estate, (ii) Roulston acted in an unconscionable manner by withholding from McKenny material facts about the status of the policy, and (iii) as a result of the withholding of that information McKenny had a reasonable belief, at least until September 25, 2013, that Penner's insurance policy had been in good standing at the time of his death.

Roulston appealed in her personal capacity as a beneficiary under her brother's will. She argued that the application judge erred in finding that a special relationship existed between her as estate trustee and McKenny, and in finding that her conduct as estate trustee was such as to attract the operation of the doctrine of fraudulent concealment.

The Court of Appeal rejected these submissions.

In a brief endorsement, the court held that the application judge was correct to find that a special relationship existed between Roulston, as estate trustee, and McKenny. This relationship arose from a combination of the duties owed at law by an estate trustee to estate creditors pursuant to the Estates Administration Act, R.S.O. 1990, c. E.22, and Roulston's control over information about insurance policies owned by her brother.

The court noted that counsel for McKenny wrote to counsel for the estate asking for particulars of any insurance policy under the separation agreement and also contacted the insurer, Sun Life Financial, seeking information, but was advised that Sun Life could only release information to the estate trustee. Because McKenny was unable to obtain information about a policy directly from the insurer, the court held that there was no error in the application judge's findings that (i) the estate trustee had exclusive possession of knowledge and information of whether McKenny's debt actually existed and that (ii) since the estate trustee was in a unique and privileged position to obtain information, it was reasonable for McKenny to rely on what she was being told.

The court also found no error in the application judge's finding that the estate trustee's conduct was unconscionable or in his conclusion that the doctrine of fraudulent concealment applied. McKenny's action claiming a first charge of $150,000 on the estate's assets was, accordingly, not statute barred.

The appeal was dismissed.

2. Nissen v. Durham Regional Police Services Board, 2017 ONCA 10 (Sharpe, Pepall and van Rensburg JJ.A.), January 9, 2017

What are the required elements for a claim for damages against the police for breach of a promise of confidentiality made to a citizen reporting wrongdoing? In this decision, the Court of Appeal considered this question.

Margaret Stack brought an action against the appellants, the Durham Regional Police Services Board and certain police officers, for what was pleaded as a breach of informer privilege. Stack had approached the appellants and advised them that P.E., the teenaged son of her neighbours, had broken into another neighbour's house and stolen some guns. Stack claimed that she had asked the police and was promised by them that her identity and the fact that she had reported the theft would be treated as confidential. Unbeknownst to Stack, the police videotaped her interview and a recording was included in the disclosure provided to P.E. and his brother S.E. in criminal proceedings against them. Stack was subsequently subjected to threatening and harassing conduct by the parents of P.E. and S.E. She and her family were so distressed that they sold their home and moved to another community. As a result, Stack suffered from symptoms of post-traumatic stress disorder.

The trial judge found that Stack had been promised confidentiality, and that she was therefore a confidential informant to whom the privilege attached. He held that Stack, her husband and children were entitled to substantial damages.

The appellants argued on appeal that the trial judge erred in finding that they promised Stack confidentiality, that the elements necessary for a claim of damages for breach of informer privilege were not made out, and that the general damages awarded to Stack ($345,000) were excessive.

The Court of Appeal rejected these submissions.

Writing for the court, Sharpe J.A. found no reason to interfere with the trial judge's conclusion that Stack was promised confidentiality.

The appellants also argued that the trial judge erred in finding that a plaintiff only need prove that the police made a promise of confidentiality in exchange for information in order to establish the privilege. They asserted that a civil claim for damages for breach of a promise of confidentiality by the police requires two additional elements, namely (i) that the information provided must be difficult or impossible to obtain, and (ii) that the informer must be likely to suffer harm or danger if his or her identity is disclosed.

Sharpe J.A. disagreed, holding that the "fundamental point" is that, on the findings of the trial judge, Stack was promised confidentiality and anonymity in exchange for the information she provided. This promise was breached and Stack suffered damages as a result. These facts, Justice Sharpe held, brought the case within the cause of action for breach of confidence, and Stack was entitled to recover on that basis.

Turning to the matter of damages, Sharpe J.A. held that although the general damages award was generous, the trial judge made no error in law or principle justifying intervention. Justice Sharpe noted the damages awarded in Cinar Corporation v. Robertson, 2013 SCC 73 ($400,000 for psychological injury arising from breach of copyright) and Young v. Bella, 2006 SCC 3 ($430,000 for psychological injury arising from defamation), in which the Supreme Court of Canada also held that the personal injury damages "cap" did not apply to damages for psychological injury.

The appeal was dismissed.

3. Dale v. Frank, 2017 ONCA 32 (Strathy C.J.O., MacPherson and Hourigan JJ.A.), January 17, 2017

The appellants were patients of the respondent. Between September 2012 and August 2013, they brought separate claims alleging medical negligence and breach of fiduciary duty. The respondent brought motions for summary judgment on the basis that all of the actions were brought outside of the two year limitation period set out in s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

The appellants conceded that they did not commence their proceedings before the second anniversary of the medical procedures. They relied on the principle of discoverability, citing the fact that their counsel had issued a press release on November 4, 2011 indicating that the respondent was being sued by other patients.

The motion judge granted the motions for summary judgment, concluding that the appellants failed to demonstrate that they acted with reasonable diligence to discover their claims.

The appellants argued on appeal that the motion judge erred in holding that ss. 5(1)(a)(ii) and (iii) of the Limitations Act, 2002 do not require a plaintiff to have knowledge that an act or omission causing injury is wrongful for a claim to be discovered: to discover a claim, the appellants contended, a plaintiff must know that the impugned acts or omissions are "culpable" ones.

The Court of Appeal rejected this submission, upholding the motion judge's conclusion that a plaintiff need not know that a defendant's act or omission was "culpable" in order for the claim to be discovered. To require a plaintiff to know with certainty that her injuries were caused by the fault of the defendant would require her to have come to a legal conclusion as to the defendant's liability – too high a bar for a plaintiff to meet. Citing its decision in Lawless v. Anderson, 2011 ONCA 102, the court noted that the proper test, as applied by the motion judge, requires that a prospective plaintiff know enough material facts on which to base an allegation of negligence.

The court also rejected the appellants' submission that the motion judge erred by failing to consider the element of discoverability in s. 5(1)(a)(iv) of the Limitations Act, 2002 (knowledge that a proceeding would be an appropriate means to seek a remedy). Although the motion judge did not undertake a distinct analysis under this provision, the court held that her conclusion that each of the appellants knew or ought to have known of the other elements in s. 5(1)(a) was sufficient to infer that she also concluded that the appellants knew or ought to have known that a proceeding would be an appropriate means to seek a remedy even before the November 2011 press release. The court dismissed the notion that the press release was a "game-changer" on the issue of discoverability, emphasizing that the discovery of a new fact – unrelated to the specific medical procedure at issue – does not restart the limitation period.

Finally, the court rejected the appellants' assertion that the motion judge focused exclusively on the negligence claims and ignored the breach of fiduciary duty claims. In the court's view, the essence of the appellants' claims was negligence, and the pleaded particulars grounding the negligence and fiduciary duty claims were "explicitly linked and virtually identical". The breach of fiduciary duty claims did not introduce a different analysis into the limitation period issue.

The appeal was dismissed.

4. Independence Plaza 1 Associates, L.L.C. v. Figliolini, 2017 ONCA 44 (Strathy C.J.O., Pardu and Brown JJ.A.), January 18, 2017

What limitation period applies to an Ontario proceeding on a foreign judgment? When does that limitation period begin to run? This appeal addressed these questions.

On January 24, 2013, the respondent obtained a judgment against the appellant in the New Jersey Superior Court for payment of US$115,248. An appeal to the Appellate Division was dismissed on July 17, 2014.

On May 1, 2015 – more than two years after the New Jersey judgment was rendered but less than two years after the dismissal of the appeal – the respondent brought an application in the Ontario Superior Court of Justice to recover damages based on the New Jersey judgment, in an equivalent amount in Canadian dollars.

The appellant pleaded that the proceeding was time barred. He argued that the limitation period was two years under s. 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, and that time ran from the date of the first-instance New Jersey judgment, with the result that the limitation period expired before the application was commenced in Ontario.

The application judge rejected this defence and granted judgment in favour of the respondent. While he agreed that the applicable limitation period was the two-year "basic limitation period" specified in s. 4 of the Ontario limitations statute, he held that it began to run when the appeal of the foreign judgment was dismissed.

The Court of Appeal agreed.

Writing for the court, Chief Justice Strathy rejected the respondent's submission that no limitation period applies to a proceeding on a foreign judgment because it falls under s 16(1)(b) of the Limitations Act, 2002. He recognized that s. 16(1) – which created a class of claims that are subject to no limitation period – has been the subject of conflicting decisions, but held that it would be contrary to the purposes of limitations statutes to interpret that provision as exempting foreign judgments from any limitation period. If it were always possible to bring a proceeding on a foreign judgment in Ontario without a time limitation, the debtor would be indefinitely exposed to the prospect of defending such proceedings. Moreover, exempting such proceedings from a limitation period would not encourage "diligence or reasonable dispatch" on the part of the foreign judgment creditor.

Accordingly, s. 16(1)(b) of the Limitations Act, 2002 does not apply to proceedings on foreign judgments. The applicable limitation period for the respondent's proceeding on the New Jersey judgment was the basic two year period in s. 4, and time began to run when the claim was "discovered" within the meaning of s. 5.

Strathy C.J.O. rejected the appellant's submission that the application judge erred in holding that the limitation period began to run from the disposition of the New Jersey appeal. As the Chief Justice explained, it is not "legally appropriate" to commence a proceeding on a foreign judgment in Ontario until the time to appeal the judgment in the foreign jurisdiction has expired or all appeal remedies have been exhausted. The foreign appeal process has the potential to resolve the dispute: if the judgment is overturned, the debt obligation underlying the judgment creditor's proceeding on the foreign judgment disappears.

Strathy C.J.O. accordingly concluded that the respondent's claim based on the New Jersey judgment was discoverable on July 17, 2014, the date the appeal was dismissed in that jurisdiction. The May 1, 2015 proceeding was therefore brought within the applicable two year limitation period.

The appeal was dismissed.

5. Ontario v. Chartis Insurance Company of Canada, 2017 ONCA 59 (Sharpe, Pepall and Hourigan JJ.A.), January 24, 2017

The respondent, Her Majesty the Queen in Right of the Province of Ontario, sued the appellants, Chartis Insurance Company and American Home Assurance Company, as a result of an insurance coverage dispute. Ontario retained Theall Group LLP as its counsel. Michael Foulds, a lawyer at Theall Group, was intimately involved in working with senior counsel to Ontario on the dispute. Foulds left the firm, however, and became a partner at Lloyd Burns McInnis LLP (LBM), the law firm representing the appellants in the litigation. Although Foulds did not work on the coverage action at his new firm, he did work on other files for the appellants and spent at least half of his time working with Douglas McInnis, counsel to the appellants on the dispute.

The integrity of counsel was unchallenged, and there was no suggestion of any actual impropriety on the part of counsel. However, this case raised the issue of conflict of interest and the possibility of inadvertent disclosure of confidential information.

The appellants moved for a declaration that the ethical screen put in place by LBM was sufficient to prevent disclosure of Ontario's confidential information and that it was in the interests of justice that the firm continue to act in the action. Ontario responded with a cross-motion seeking an order that LBM be disqualified from continuing to act for the appellants due to an inherent conflict of interest caused by Foulds joining the firm to work with senior counsel to the appellants.

The application judge agreed with the appellants' position, granted their motion, and dismissed Ontario's cross-motion. The Divisional Court overturned that decision.

The applicable test to determine whether a disqualifying conflict exists was set out in MacDonald Estate v. Martin, [1990] 3 S.C.R. 1235:

The test must be such that the public represented by the reasonably informed person would be satisfied that no use of confidential information would occur.

According to Sopinka J., that overriding policy must inform the court in answering (i) whether the lawyer received confidential information attributable to a solicitor and client relationship relevant to the matter at hand, and (ii) whether there is a risk that it would be used to the prejudice of the client.

The appellants conceded that Foulds was in possession of such confidential information. The appeal therefore turned on the question of whether there was a risk that the information would be used to the prejudice of the respondent.

The Court of Appeal concluded that there was.

Writing for the court, Pepall J.A. held that the Divisional Court properly applied the correctness standard of review, identifying a disqualification motion as being discretionary in nature. Such a decision is reversible where the court has misdirected itself, has come to a decision so clearly wrong that it amounts to an injustice, or has given no or insufficient weight to relevant considerations.

Justice Pepall agreed with the Divisional Court that the application judge misdirected himself in two respects: by treating the Law Society of Upper Canada Guidelines as an exhaustive answer and by treating the examination of the conflict issue as a balancing exercise between protecting Ontario's confidential information, the integrity of the legal system, and the right to choose one's own counsel.

Considering the integrated nature of Foulds' and McInnis' practices and the fact that the two lawyers worked together 50 to 60 percent of the time, Justice Pepall found that the potential for inadvertent disclosure was "significant" and noted that any such disclosure could be "very prejudicial" to the respondent. Pepall J.A. was not persuaded that there was clear and convincing evidence that all reasonable measures were being taken to ensure that no disclosure would occur. The public, represented by the reasonably informed person, could not be satisfied that no use of confidential information would occur between two people with such an intense working relationship.

Pepall J.A. went on to explain that although the right to one's choice of counsel is one of the three values identified in MacDonald Estate as bearing on the issue of conflict, it is not paramount. As the Supreme Court held in that case, primacy is given to the integrity of the legal profession and the administration of justice over a client's choice of counsel and lawyer mobility.

The appeal was dismissed.

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