Canada: Ontario Court Of Appeal Summaries (January 7 – 11, 2019)

Blaney's Appeals
Last Updated: January 18 2019
Article by John Polyzogopoulos

Good evening.

There were only three substantive civil decisions released by the Court of Appeal this week.

In TD General Insurance Company v Intact Insurance Company, the Court examined two insurance policies that had overlapping coverage. The Court reiterated the rule from Family Insurance Corp v Lombard Canada Ltd that where insurers have not intended to limit their obligations to contribute to a loss or claim or where those intentions cannot be reconciled, the insurers must share the burden equally under a coordinate obligation to make good the loss or claim.

In Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., the Court set aside summary judgment on a guarantee, finding that the motion judge should not have granted judgment simply because the appellants did not clearly articulate a defence of "no consideration" in their pleadings. A generous reading of the pleading disclosed the "no consideration" defence. On the evidentiary record, the guarantee at issue was signed days after the advance had already been made. The defence of "no consideration" therefore raised a genuine issue for trial.

In Lee v. Richcraft Homes Ltd., 2019, a panel of the Court extended the time to seek leave to appeal from a Divisional Court order (upholding a Master's order) after a nine-month delay in bringing the motion. This, after two of their colleagues had denied motions for extension of time. The panel felt that the appeal may have merit. The Master apparently decided the pleadings motion at issue under Rule 21, which only a judge has jurisdiction to hear. Moreover, the Master had denied leave to amend, but should not have done so.

Wishing everyone a pleasant weekend.

John Polyzogopoulos

Blaney McMurtry LLP

416.593.2953 Email

CIVIL DECISIONS

TD General Insurance Company v. Intact Insurance Company, 2019 ONCA 5

[Juriansz, Brown and Roberts JJ.A.]

Counsel:

Marc D. Isaacs and Arie Odinocki, for the appellant

Gary J. Marcuccio, for the respondent

Keywords: Contracts, Insurance, Interpretation, Homeowners' Insurance Policy, Primary Coverage, Excess Coverage, Other Insurance Clauses, "Closeness to the Risk" Approach, "Minnesota" Approach, Family Insurance Corp v Lombard Canada Ltd, 2002 SCC 48, Lawyers' Professional Indemnity Company v Lloyd's Underwriters, 2017 ONCA 858

Facts:

A boat's passenger claimed she was injured when the boat struck the shoreline. The passenger sued the boat's driver and owner. The driver was covered by two policies of insurance. The boat's owner held a TD insurance policy that covered the driver, who had the owner's permission to drive the boat. The driver was covered by his Intact homeowner's policy.

The two policies had identical "other insurance clauses" that provided that where other insurance applied to a loss or claim, the policies would be considered excess insurance. TD brought an application seeking an order that both insurance companies were on equal footing and had to share equally in the defence and indemnity of the driver stemming from the passenger's claim.

The application judge noted that the governing authority was the Supreme Court of Canada's decision in Family Insurance Corp v Lombard Canada Ltd, 2002 SCC 48 ("Family Insurance"). The application judge also noted that in Family Insurance the Court held that the insurance policies themselves must be construed to determine the liability of each insurer, and the Court should not refer to surrounding circumstances or look outside the policies.

The application judge observed that the TD policy insured liability arising from the specific boat involved in the accident (through a personal liability extension), while the Intact policy insured liability arising from the use of any type of watercraft. The application judge reasoned that the personal liability extension demonstrated TD's intention to cover a different type of risk than that covered by the basic watercraft coverage in each policy.

The application judge found that it was clear "that TD intended to provide the primary insurance coverage for the watercraft." Since the TD policy provided the "primary insurance" and since Intact conceded that it provided excess insurance, TD's application was dismissed.

Issues:

(1) Did the application judge err in dismissing TD's application?

Holding:

Appeal allowed.

Reasoning:

(1) Yes, the application judge erred in dismissing TD's application. The application judge erred in law by applying the "closeness to the risk" approach characterizing the "Minnesota" approach, which was expressly rejected in Family Insurance.

The Court in Family Insurance provided the approach to overlapping coverage. Where there is overlapping coverage "the focus of the examination is to determine whether the insurers intended to limit their obligation to contribute, by what method, and in what circumstances vis-à-vis the insured." Where there are no limiting intentions or where those intentions cannot be reconciled, the insurers must share the burden equally under a coordinate obligation to make good the loss.

The first question proper is whether there is overlapping coverage. In this case, there was. The second question proper is whether the insurers intended to limit their obligation to contribute, by what method, and in what circumstances vis-à-vis the insured. The focus in answering the second question is on the excess insurance clauses. Since both policies had identical "other insurance clauses," the limiting obligations in the two policies were irreconcilable.

The proper application of Family Insurance leads to the result that the two insurers must share the burden equally under a coordinate obligation to make good the loss.

Lee v. Richcraft Homes Ltd., 2019 ONCA 7

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

Counsel:

B. L., acting in person

J. D. Dempster, via teleconference, for the responding party

Keywords: Contracts, Real Property, Commercial Leases, Civil Procedure, Appeals, Extension of Time, Striking Pleadings, No Reasonable Cause of Action, Standing, Rules of Civil Procedure, Rules 5.04(2), 21.01(b), 25.11 & 26, Re Sault Dock Co. Ltd. and City of Sault Ste. Marie, [1973] 2 OR 479 (C.A.), Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131, Wernikowski v Kirkland, Murphy & Ain (1999), 50 OR (3d) 124 (C.A.)

Facts:

B.L., the owner of a dry-cleaning business, commenced an action against his landlord, the respondent, Richcraft Homes Ltd., for business losses and special damages of loss of income and equipment stemming from a series of allegations about the respondent's conduct during their lease and in terminating it. The respondent brought a motion to strike out the statement of claim as disclosing no reasonable cause of action under rule 21.01(1)(b) of the Rules of Civil Procedure. The respondent's motion was supported by an affidavit that had a draft statement of defence appended to it stating that B.L. was not a party to the lease and had no cause of action in his personal capacity. Neither party's materials included a copy of the lease. When asked by the master, the respondent provided a lease between the respondent and B.L.'s business. B.L. contended that the respondent misled the master by providing the wrong lease, and provided a copy of a later lease including his name as guarantor.

The master concluded that B.L. had no apparent standing under the lease. He found it did not articulate a claim for damages based on a recognizable cause of action, and noted that nothing in the claim alleged that the lease was not properly terminated or explained how B.L. had a right to sue in his personal capacity. The master refused leave to amend because the plaintiff was not a proper party to sue for damages under the lease. B.L. appealed this order to a single judge of the Divisional Court. This was dismissed. The judge found that the master had good reason to refuse leave to amend the statement of claim and that a dismissal of the action was the only possible outcome.

B.L. then sought leave to appeal the Divisional Court order to the Court of Appeal but emailed the respondent's counsel his notice of motion for leave to appeal three days late. Nine months later, he brought a motion for an order to extend the time for leave to appeal. The first motion judge dismissed the motion on the grounds that B.L. had not adequately explained his delay in moving forward with the motion for leave to appeal and that the motion appeared to lack merit. The second motion judge dismissed B.L.'s motion for an extension of time to seek a panel review of the order of the first motion judge on the grounds that B.L.'s explanation for a delay in bring his application for review of the first motion judge's order was without merit. B.L. then brought a motion for a panel review of the order of the second motion judge.

Issues:

(1) Should the order of the first motion judge to refuse the extension of time for leave to appeal, and the order of the second motion judge to refuse an extension of time to seek a panel review of the first motion judge's order, be set aside?

Holding:

Motion granted.

Reasoning:

(1) Yes. The justice of the case strongly favoured an extension of time for B.L. to file his notice of leave to appeal, and these grounds applied equally to the review of the second motion judge's order. The test for extending time is whether the justice of the case requires that an extension be given. While each case depends on its own circumstances, the court will typically take into consideration (a) whether the moving party formed a bona fide intention to appeal within the relevant time period; (b) the length of, and explanation for, the delay in filing; (c) any prejudice to the responding parties occasioned by the delay; and (d) the merits of the proposed appeal. This is the appropriate test whether the motion is to extend time to appeal, or to extend time to file a motion for leave to appeal: Enbridge Gas Distribution Inc. v. Froese, 2013 ONCA 131 at para. 15

The Court of Appeal found that the first three elements of the test were satisfied. B.L. had an intention to move for leave to appeal to the Court of Appeal and communicated his intention to the respondent by preparing and sending by email his notice of motion for leave to appeal. This was only three days late, and the real delay was in the motion to extend time for leave to appeal, which B.L. brought more than nine months after purporting to serve the respondent. Although this was a significant delay, B.L. always maintained an intention to appeal and the respondent did not claim prejudice. In the absence of prejudice, this unexplained delay, on its own, was not sufficient to deny B.L.'s request for an extension of time.

In considering the merits of the proposed appeal, the Court of Appeal found that the leave to appeal motion had a reasonable chance of success because of arguable errors in the orders of the courts below in striking the statement of claim without leave to amend. The respondent's motion to strike was brought under rule 21 of the Rules of Civil Procedure as a motion to dismiss a claim that discloses no reasonable cause of action. This was required to be heard by a judge, and since the master was unable to hear the motion under this rule, the master agreed to consider the motion to strike under rule 25.11. However, the master was required to adjourn the motion to a judge if it was in fact a motion to strike for failure to disclose a reasonable cause of action, under rule 21. The primary reason for the master's dismissal of the claim without leave to amend was that B.L. lacked standing, and standing is properly addressed in a rule 21 motion.

The master also concluded that the claim was "frivolous" and "an abuse of process". However, the exercise of the power set out in rule 25.11 must be exercised in only the clearest of cases: Wernikowski v Kirkland, Murphy & Ain (1999), 50 OR (3d) 124 (C.A.), leave to appeal to the SCC refused, [2000] SCCA No. 98 at para. 12. The master ought to have considered whether the pleading deficiencies identified could have been addressed through amendment to the statement of claim under rules 26 and 5.04(2).

The Court of Appeal then applied the test for leave to appeal an order of the Divisional Court exercising its appellate jurisdiction from Re Sault Dock Co. Ltd. and City of Sault Ste. Marie, [1973] 2 OR 479 (C.A.) and found that the motion for leave to appeal had apparent merit based on the errors of the court below. The master's order dismissing B.L.'s claim without leave to amend upheld by order of the Divisional Court disposed of B.L.'s claim against the respondent. If the order dismissing the claim had been made on a rule 21 motion before a judge, B.L. would have been able to appeal the order directly to the Court of Appeal without leave, and therefore, the overall justice of the case strongly favoured granting the extension of time.

Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6

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

Counsel:

P. Robson and K. Randhawa, for the appellants

J. L. Rosenstein, for the respondents

S. Hutchison and L. Taylor, for the intervenors

Keywords: Contracts, Breach, Consideration, Civil Procedure, Pleadings, Defences, Summary Judgment, Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Mason v. Perras Mongenais, 2018 ONCA 978

Facts:

At the request of their son, the appellants signed a guarantee in favour of the respondents, guaranteeing the debts of Healthy Lifestyle Medical Group Inc. in the principal sum of about $607,000. The motion judge granted summary judgment in favour of the respondents against the appellants in the amount of $954,842.55. If the judgment stood, the appellants would lose their home. The motion judge stated that since the appellants did not plead the defence of "no consideration" in their defence, given that the guarantee was signed after the loan monies were advanced, the motion judge had no option but to find that this defence could not be considered.

Issue:

(1) Was the motion judge correct in refusing to consider the defence of no consideration for the guarantee because it was not pleaded?

Holding:

Appeal allowed.

Reasoning:

(1) No. Although the original statement of defence did not refer to a "no consideration" defence, what was before the motion judge was a fresh as amended statement of defence, which provided, inter alia, that the appellants received no monies or monetary benefit by signing the loan documents, and received no consideration in return for their having executed any of the documents.

The intervenors were former counsel for the appellants, against whom the appellants made allegations of ineffective representation. Counsel argued that the amended statement of defence advanced two versions of the "no consideration" argument. The first was that the appellants "received no monies or monetary benefit by signing the promissory note, and received no consideration in return for their having executed any of the Documents". The second, according to the intervenors, was the issue that past consideration is no consideration, since the amended statement of defence alleged that the signing of the Documents by the appellants followed by several days, the actual advance of the monies by the creditor to their son, facts from which that legal issue could be argued.

The motion judge observed the potential for the defence that past consideration is not valid consideration, which could have been a genuine issue for trial, but she refused to consider it. In the Court of Appeal's view, the motion judge erred. The motion judge did not consider the principles by which a court assesses the adequacy of pleadings. In considering whether a pleading discloses a reasonable defence, a court is obliged to read the pleading generously to allow for drafting deficiencies, and if the defence has some chance of success, it must be permitted to proceed. Read generously, the amended statement of defence plead the defence of "no consideration".

Accordingly, the appeal was allowed and the matter was directed to proceed to trial on all issues, without prejudice to the rights of the parties to file amended pleadings and to seek further relief under the Rules of Civil Procedure.

CRIMINAL DECISIONS

R. v. Stipo, 2019 ONCA 3

[MacFarland, Watt and Paciocco JJ.A.]

Counsel:

James V. Palangio, for the appellant Attorney General of Ontario

A. Huckins, for the appellant Ontario Provincial Police

M. Halfyard and L. R. Genova, for the respondent

Howard L. Krongold and Chris Sewrattan, for the intervener Criminal Lawyers' Association

Keywords: Criminal Law, Motor Vehicle Accidents, Impaired Driving, Crown Disclosure, First-Party Disclosure, Third-Party Disclosure, Certiorari, Admissibility, Relevance, Statutory Interpretation, R. v. Stinchcombe, [1991] 3 SCR 326, R. v. O'Connor, [1995] 4 SCR 411, R. v. Gubbins, 2018 SCC 44, R. v. Awashish, 2018 SCC 45, s. 258(1) of the Criminal Code

R. v. Soltan, 2019 ONCA 8

[Watt, van Rensburg and Brown JJ.A.]

Counsel:

D. C. Santoro and Z. Shariff, for the appellant

J. Epstein, for the respondent

Keywords: Criminal Law, Possession for the Purpose of Trafficking, section 8 of the Charter of Rights and Freedoms, Inadequacy of Reasons, Leave to Cross-Examine, R. v. Garofoli, [1990] 2 SCR 1421, R. v. R.E.M., 2008 SCC 51

R. v. Hernandez-Mejia, 2019 ONCA 16

[Doherty, Hourigan and Harvison Young JJ.A.]

Counsel:

E. Nakelsky, for the appellant

E. Tache-Green, for the respondent

Keywords: Criminal Law, Sexual Interference, Sexual Assault, Sentencing, Deference

R. v. P.B., 2019 ONCA 13

[MacPherson, Paciocco and Nordheimer JJ.A.]

Counsel:

P. Thorning and D. Negandhi, for the appellant

J. Reid, for the respondent

Keywords: Criminal Law, Sexual Interference, Sexual Assault, Incest, Crown Disclosure, Double Jeopardy, Sentencing, R. v. Dixon, [1998] 1 SCR 244, R. v. Yumnu, 2012 SCC 73

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.

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