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

Last Updated: July 26 2017
Article by Peter W. Kryworuk and Jacob R.W. Damstra

1. Ivic v. Lakovic, 2017 ONCA 446 (Hoy A.C.J.O., Blair and Hourigan JJ.A.), June 2, 2017

2. Hodge v. Neinstein, 2017 ONCA 494 (Hoy A.C.J.O., Gillese and Brown JJ.A.), June 15, 2017

3. Bruff-Murphy v. Gunawardena, 2017 ONCA 502 (Lauwers, Hourigan and Benotto JJ.A.), June 16, 2017

4. Tracy v. Iran (Information and Security), 2017 ONCA 549 (Hoy A.C.J.O., Blair and Hourigan JJ.A.), June 30, 2017

5. Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor (City), 2017 ONCA 555 (Hoy A.C.J.O., van Rensburg and Roberts JJ.A.), June 30, 2017*

1. Ivic v. Lakovic, 2017 ONCA 446 (Hoy A.C.J.O., Blair and Hourigan JJ.A.), June 2, 2017
Is a taxi company vicariously liable for an assault committed by one of its drivers? In this decision, the Court of Appeal considered this question. 
Tanja Ivic alleged that she was sexually assaulted by a cab driver who drove her home from a party. In addition to suing the driver personally, she brought a claim against the taxi company, pleading that it was vicariously liable for the acts of the driver, that it was negligent, and that it breached its fiduciary duty to her. 
On a motion for summary judgment, the motion judge dismissed Ivic's claim against the taxi company. 
Ivic did not challenge the motion judge's conclusion that her claim in negligence failed on the ground that she led no evidence with respect to the applicable standard of care in the circumstances nor regarding any breach on the part of the taxi company. She also did not challenge the motion judge's conclusion that she did not establish any basis for the existence of a fiduciary duty. Her appeal turned on whether the taxi company should be held liable for the assault, in the absence of any fault on its part.
The Court of Appeal agreed with the motion judge that the taxi company was not vicariously liable.
Hoy A.C.J.O. emphasized that in order for there to be a finding of vicarious liability, there must be a strong connection between what the employer was asking the employee to do and the wrongful act. She concluded that there was no such connection in this case. 
The Supreme Court of Canada outlined the test for assessing vicarious liability in Bazley v. Curry, [1999] 2 S.C.R. 534. When considering whether an employer is liable for unauthorized, intentional wrongdoing on the part of one of its employees, courts must consider: 
(i) the opportunity that the enterprise afforded the employee to abuse his or her power;
(ii) the extent to which the wrongful act may have furthered the employer's objectives;
(iii) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer's enterprise;
(iv) the extent of power conferred on the employee in relation to the victim; and 
(v) the vulnerability of potential victims to wrongful exercise of the employee's power.

While acknowledging that the opportunity for a taxi driver to assault a passenger was not negligible, Hoy A.C.J.O. found that the driver's opportunity for misconduct was not intimately connected to his functions. She distinguished the circumstances of this case from those in Bazley, where a non-profit organization that operated residential care facilities for the treatment of emotionally troubled children was held vicariously liable for an employee's sexual abuse. In Hoy A.C.J.O.'s view, the taxi driver's opportunity for misconduct did not rise to the level of what existed in Bazley.
Hoy A.C.J.O. disposed of the second, third and fourth factors noting that the alleged assault did not further the taxi company's aims in any respect and was not related to friction, confrontation or intimacy inherent in the employer's aims. Unlike the employee in Bazley, taxi drivers do not have physical contact with their customers in the course of carrying out their duties. In fact, the taxi company's Rules and Regulations sought to prevent such contact, explicitly providing: "Do not touch any customer if possible". Hoy A.C.J.O. noted that in dispatching the driver to pick up the appellant, the taxi company did not confer any power on him. "What power the driver had, he arrogated to himself through his own decisions", the court held.
Turning to the issue of the vulnerability of potential victims to the wrongful exercise of the employee's power, Hoy A.C.J.O. acknowledged that a lone, intoxicated woman out late at night is vulnerable. However, she is "prey" not only to taxi drivers. Any power wrongfully exercised by this driver was not predicated on his employment. Hoy A.C.J.O. agreed with the motion judge that the requisite strong connection between what the taxi company was asking the driver to do and the alleged sexual assault was not present. The company did not materially increase the risk of the appellant being sexually assaulted by permitting the driver to drive the taxi and dispatching him. The alleged assault was only "coincidentally linked" to its activities. 
Hoy A.C.J.O. also noted that the appellant failed to demonstrate that the imposition of vicarious liability in this case would further the broader policy rationales of fair compensation and deterrence. 
The appeal was dismissed. 
2. Hodge v. Neinstein, 2017 ONCA 494 (Hoy A.C.J.O., Gillese and Brown JJ.A.), June 15, 2017
In this decision, the Court of Appeal considered whether solicitors who allegedly violated the Solicitors Act, R.S.O. 1990, c. S. 15 are immune from a class proceeding brought on behalf of their former and current clients.
The respondent Cassie Hodge was injured in a motor vehicle accident in 2002. She retained the appellants, Gary Neinstein and Neinstein & Associates LLP, and signed a contingency fee arrangement with the firm. The agreement provided that the firm's legal fees would be equal to twenty-five per cent of the damages recovered on her behalf, plus partial indemnity costs and disbursements. 
Hodge entered into a settlement and the firm rendered a final account. 
It was undisputed that the contingency fee agreement and the amount the appellants charged were in violation of the Solicitors Act in two respects. First, contrary to s. 28.1(8), the firm did not obtain approval to include in its fee the costs obtained as part of Hodge's settlement. Second, in violation of s. 33(1), the firm charged interest from the date disbursements were incurred and not from a date one month after its bill was delivered. 
Hodge brought a motion to certify a class proceeding against the firm on behalf of all its contingency fee clients since October 2004. In her Amended Notice of Application, she sought a declaration that the firm was in violation of the Solicitors Act and breached its fiduciary duties to and contracts with the class members. She also sought an order that the firm repay any amounts taken for costs in addition to a percentage of damages. In all, 37 common issues were sought to be certified.
The certification judge found that Hodge failed to satisfy the five-part test for certification under s. 5(1) of the Class Proceedings Act, 1992, S.O. 1992, c. 6. Specifically, the proposed class proceeding did not satisfy the "common issues" requirement in s. 5(1)(c) or the "preferable procedure" requirement in s. 5(1)(d).
The Divisional Court allowed Hodge's appeal and certified the matter as a class proceeding. It certified 19 common issues, including those based on the alleged breach of ss. 28.1(8) and 33(1) of the Solicitors Act. The court denied Hodge's motion to amend her Amended Notice of Application to plead the tort of conversion, however, concluding that it added nothing of substance to the proceeding as currently drafted. 
The appellants argued before the Court of Appeal that the matter should not have been certified as it failed to disclose a cause of action, fundamentally lacked in commonality and failed the preferable procedure requirement. They also submitted that ss. 23-25 of the Solicitors Act preclude the possibility of a class proceeding against the firm because those provisions form a "complete code" and require individual assessments of client accounts. The appellants asserted that in any event, solicitor-client privilege shielded them from the class proceeding. Hodge cross-appealed, arguing that the Divisional Court erred by denying her leave to amend her Amended Notice of Application to plead the tort of conversion and failing to certify further common issues.
The Court of Appeal dismissed the appeal.
Writing for the Court, Hoy A.C.J.O. held that it was not plain and obvious that a cause of action relying on s. 28.1 had no reasonable prospect of success. She also held that it was not plain and obvious that an application under ss. 23-25 was not available to review the impugned contingency fee agreements. Finally, she found that Hodge's pleadings disclosed a cause of action for breach of fiduciary duty and breach of contract.
Citing the decision of the Supreme Court in Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, Hoy A.C.J.O. noted that the underlying commonality question was whether allowing a proceeding to continue as a class proceeding would avoid duplication of fact-finding or legal analysis. She ultimately found no basis to interfere with 18 of the 19 common issues found by the lower court, taking issue only with the third common issue of whether the firm actually took amounts arising from costs in an award or settlement in contravention of the Solicitors Act. This, she held, should be characterized as an individual issue. 
Hoy A.C.J.O. held that the Divisional Court was correct in certifying the class proceeding on the basis that it was the preferable procedure for the resolution of these disputes, noting the three principal goals of judicial economy, behaviour modification and access to justice. She also agreed that the issue of solicitor-client privilege should not be a bar to certification because the court retains power under s. 10(1) of the Class Proceedings Act to decertify the class proceeding if it appears that the certification criteria are no longer satisfied.
Turning to the cross-appeal, Hoy A.C.J.O. rejected Hodge's submission that the Divisional Court erred by denying leave to amend her Amended Notice of Application to plead the tort of conversion. She agreed with Hodge, however, that the Divisional Court erred in failing to certify further common issues, holding that the court ought to have certified the issues of (i) whether the conduct of the firm – in allegedly failing to disclose information required by the Solicitors Act and the Regulation in its contingency fee agreements and taking as part of the fees amounts arising from awards or settlements for costs – breached fiduciary duties to class members, and (ii) whether there was entitlement to punitive damages.
3. Bruff-Murphy v. Gunawardena, 2017 ONCA 502 (Lauwers, Hourigan and Benotto JJ.A.), June 16, 2017
In this decision, the Court of Appeal revisited the role of the trial judge as "gatekeeper" to the admission of expert opinion evidence. 
The appellant, Liese Bruff-McArthur, was hit from behind by the respondent while stopped in her car. She alleged that she suffered multiple physical and mental injuries as a result of the accident, which left her unable to work and with a substantially diminished quality of life. Bruff-McArthur commenced an action against the respondent, who admitted liability. There was a 23 day jury trial on damages.
The appellant called a number of physicians who had either treated or examined her, two of whom were retained by the respondent's insurer to conduct assessments. These witnesses agreed that she suffered in the manner claimed and that the cause of her suffering was the motor vehicle accident. 
In support of its case, the defence called two medical expert witnesses which it had retained to conduct defence medical assessments. One of these witnesses, psychiatrist Dr. Monte Bail, raised a number of concerns. Counsel for the appellant objected to Dr. Bail's testimony, arguing that he was biased against her client and that his report was essentially an attack on Bruff-McArthur's credibility. 
The trial judge did not express any concerns with respect to Dr. Bail's testimony or his independence at the time, nor did he instruct the jury regarding the duty of expert witnesses. 
The jury returned with a verdict assessing general damages at $23,500 and rejecting all other heads of damages, including special damages, future care costs and past and future income loss.
Shortly thereafter, the trial judge released his decision on a threshold motion in which defence counsel had argued that Bruff-McArthur failed to meet the requirements in s. 267.4(12) of the Insurance Act, R.S.O. 1990, c. I. 8, i.e., of suffering a permanent serious impairment of an important physical, mental or psychological function. In his reasons – in which he concluded that the appellant's claim for general damages did meet the threshold – the trial judge was highly critical of Dr. Bail's evidence, expressing concerns about the expert's methodology and independence. He found that Dr. Bail was not a credible witness and did not honour his obligation and written undertaking to be fair, objective and non-partisan pursuant to Rule 4.1.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Rather, he crossed the line from an objective witness to an advocate for the defence. 
The appellant took the position that trial fairness had been compromised, necessitating a new trial.
The Court of Appeal agreed.
Writing for the court, Hourigan J.A. noted the evolution of the role of expert witnesses from a "hired gun" or advocate for the party that retained him or her to an independent source of fair and objective opinion to assist the trier of fact. The role of the trial judge in relation to expert witnesses has evolved in tandem: as the "gatekeepers" to the admission of expert opinion evidence, trial judges are required to carefully scrutinize an expert witness's training and professional experience, and the necessity of his or her testimony, before the expert is qualified to give evidence in court. Hourigan J.A. emphasized that the gatekeeper function is especially important in jury cases as the jury may inappropriately defer to the expert's opinion rather than evaluate the expert evidence on their own.
Hourigan J.A. found that the trial judge failed to properly discharge the gatekeeper function at the qualification stage and held that had he done so, he would have concluded that the risks of permitting the expert to testify far outweighed any potential benefit from the proposed testimony. In Hourigan J.A.'s view, the concerns identified by the trial judge in his decision on the threshold motion were substantially correct: Dr. Bail "crossed the boundary of acceptable conduct and descended into the fray as a partisan advocate". In fulfilling his ongoing gatekeeper function, the trial judge ought to have excluded Dr. Bail's testimony, in whole or in part. He failed to do so, and trial fairness was "irreparably compromised".
The appeal was allowed and a new trial ordered.
4. Tracy v. Iran (Information and Security), 2017 ONCA 549 (Hoy A.C.J.O., Blair and Hourigan JJ.A.), June 30, 2017
In 2012, Parliament enacted the Justice for Victims of Terrorism Act, S.C. 2012, c. 1 (JVTA), which was designed to "deter terrorism by establishing a cause of action that allows victims of terrorism to sue perpetrators of terrorism and their supporters". The statute provides for a direct cause of action and an ability to sue on a foreign judgment obtained for loss or damage suffered as a result of terrorist activities. 
The respondents held judgments issued by courts in the United States for the sponsorship of terrorism by one or more of the appellants, the Islamic Republic of Iran, the Iranian Ministry of Information and Security, and the Islamic Revolutionary Guard Corps, a military wing of that ministry. They sued in Ontario to enforce their judgments under the provisions of the JVTA
The appellants did not defend the respondents' enforcement actions, and ultimately a series of judgments and enforcement orders were granted. The appellants then moved unsuccessfully to set aside the judgments and orders in a series of motions before the motion judge.
The Court of Appeal dismissed the appellants' appeals, holding that if their submissions were accepted, they would have the effect of rendering enforcement actions under the JVTA "a cumbersome and largely unworkable process" that would provide limited recourse to victims of terrorism. 
Writing for the court, Hourigan J.A. held that the appellants' immunity from the jurisdiction of the Canadian courts was removed by the JVTA and s. 6.1 of the State Immunity Act, R.S.C. 1985, c. S-18 (SIA) with respect to its sponsorship of terrorist acts that occurred on or after January 1, 1985, but not before. Hourigan J.A. rejected the appellants' submission that the JVTA could not apply retroactively, noting that Parliament has the power to make legislation retroactive as well as the authority to ignore international law through the use of clear statutory language. Hourigan J.A. also rejected the submission that the appellants were immune because the respondents failed to prove that the appellants were supporters of terrorism, explaining that the only proof necessary to maintain an enforcement action under s. 4(5) of the JVTA is the listing of the state sought to be sued under s. 6.1(1) of the SIA. In Hourigan J.A.'s view, the trial judge properly relied upon the facts found in the U.S. judgments and the respondents were not required to prove the commission of a specific offence beyond a reasonable doubt.
Hourigan J.A. held that the motion judge applied the correct test for setting aside a default judgment and that the appellants did not meet their onus in establishing that even a single factor militated in favour of setting aside the judgments in question.
The Court of Appeal therefore dismissed the appeals, except for judgments based on acts of terrorism that occurred prior to January 1, 1985.
5. Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor (City), 2017 ONCA 555 (Hoy A.C.J.O., van Rensburg and Roberts JJ.A.), June 30, 2017*
These appeals arose in the context of class actions commenced in 2008 and certified in 2012. The appellant charitable organizations sought remedies for what they characterized as unconstitutional or illegal taxation by the respondent municipalities, relating to bingo licence and administration fees charged by the municipalities. 
The appeals were from four orders of the case management judge, Patterson J., two in each proceeding. 
On January 13, 2017, Patterson J. made orders granting a motion to lift orders in the two proceedings dated June 9, 2016, protecting from disclosure the identities of persons who opted out of the class. The respondents moved to quash the appeals on the basis that the orders lifting the protective orders were interlocutory and that the route of appeal was to the Divisional Court with leave, pursuant to section 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43. 
The Court of Appeal granted the motion to quash the appeals from these orders. 
Writing for the court, van Rensburg J.A. agreed with the respondents that the protective orders were interlocutory. The orders were res judicata on the question of whether the identities and other information concerning opt-outs could be revealed; however, they did not determine on any final basis any substantive issue or right that could be determinative of the action. Justice van Rensburg rejected the appellants' submission that the orders were final because they may affect the rights of those who had opted out of the class, noting that as between the parties to the litigation, they were interlocutory orders that did not determine any rights or issues in the proceeding on a final basis. As the case management judge observed, the protective orders were designed to safeguard the integrity of the reconsideration period and should not outlast it. A decision to lift a protective order that was in place for a period that has expired is effectively a decision not to continue a protective order. Such an order is interlocutory. 
On November 1, 2016, Patterson J. refused leave to the appellants to amend their Amended Statements of Claim. The amendments, which the appellants proposed after the opting out period had expired, sought an accounting of licence and administration fees received by the municipalities found to be levied without authority or ultra vires, and disgorgement of such fees, with an alternative claim of restitution of fees charged to the plaintiffs and other class members in accordance with the accounting. The effect of the proposed amendments, if allowed, would have been to allow for the right to claim a recovery for the class of fees received by the respondents from persons no longer in the class.
The Court of Appeal dismissed the appeals from Patterson J.'s orders. 
Justice van Rensburg held that the proposed amendments were not simply the clarification of a cause of action already pleaded, nor did they advance a different remedy for the same alleged cause of action. Rather, they sought to recast the claim from one for the return of fees paid by class members to a claim for disgorgement of all illegal licence and administration fees paid to the respondent municipalities within the class period, including those not paid by members of the class. In van Rensburg J.A.'s view, the acknowledgment that the claim, as originally pleaded, disclosed a cause of action did not assist the appellants in respect of amendments that sought to reconfigure the claims.
Justice van Rensburg rejected the appellants' reliance on Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, noting that while that case recognized that a claim can be made for repayment of illegal taxes as a public law remedy, it was not authority for a claim for the "disgorgement" of all allegedly illegal fees obtained by the respondents during the class period, including those paid by persons other than class members. Moreover, characterizing the remedy as a "disgorgement" did not assist the appellants. Disgorgement permits a plaintiff to claim not only its own loss but also the profit or gain of the defendant as a result of the wrong; it is not a vehicle for a plaintiff to pursue a claim for relief owed to someone who is a "stranger" to the action. Justice van Rensburg found that there was no reasonable prospect that the appellants' proposed claim for repayment of allegedly illegal taxes paid by persons other than class members would succeed. 
The Court of Appeal did not agree with the case management judge's suggestion that the Supreme Court of Canada's decision in Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, narrowed the Kingstreet constitutional/public law remedy to cases where the statute was subsequently declared unconstitutional.
Justice van Rensburg also held that there was no need for the proposed amendments to claim aggregate damages, noting that the appellants would be able to advance such a claim in the proceedings whether or not it was asserted in the pleadings. 
*Lerners LLP acted as counsel for the appellants on this appeal.

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Peter W. Kryworuk
Jacob R.W. Damstra
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