Court of Appeal Summaries (June 30 to July 4, 2014)

Hello everyone and welcome. I’m very excited to announce in this posting the official launch of a brand new blog called the Blaneys Ontario Court of Appeal Summaries Blog (or Blaneys OCA Blog for short).

For years, our firm has been preparing weekly summaries of all decisions just released by the Court of Appeal for Ontario (other than criminal law decisions) for internal distribution, usually on Friday afternoons. On more than one occasion, our litigators (we have over 80 of them) have relied on decisions they learned about over the weekend at their hearings the following week.

We have now decided to share our summaries with the Ontario bench and bar. If you find this blog and the weekly emails useful, please feel free to forward the emails you receive or a link to our blog to any colleagues or friends who you think may be interested in following the blog.

As the editor, I welcome any feedback or comments you may have that can help us to improve the blog or weekly emails. This is a new initiative and we are still working out the kinks, so please bear with us.

I hope everyone has a wonderful summer.

John Polyzogopoulos
Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos

 

Turfpro Investments Inc. v Heinrichs, 2014 ONCA 503
[Hoy A.C.J.O., Cronk and Pepall JJ.A.]
Counsel:
I. A. Duncan and M. A. van Bodegom, for the appellants
P. D. Amey, for the respondent

Keywords: Summary Judgment, Loan Agreement, Material Alteration, Laches

Facts:
The appellants, the Heinrichs, guaranteed a loan made by the respondent, Turfpro Investments Inc., to Rose of Sharon Retirement Community (“Rose”) that was due in 2007. Rose entered into a loan agreement with the respondent dated May 4, 2006, for the advance of $500,000 in standby funds to be used for the construction of retirement residences by Rose. The loan agreement provided, among other things, that the debt was due and payable on October 1, 2007; Rose granted the respondent an irrevocable option to purchase a specific unit in the retirement development at a specified price; and the appellants guaranteed repayment of the standby debt plus interest and agreed to observe the covenants, terms and conditions of the loan agreement. In the event of default by Rose, the appellants, upon demand, would pay any amounts in default. The language of the guarantee was very sparse and did not contain any provisions that expressly allowed for time extensions for repayment, renewal or forbearance.

The respondent demanded payment on the guarantee in 2012, subsequently sued the appellants and then brought a motion for summary judgment. The motion judge awarded judgment in favour of the respondent in the amount of $994,728.92 plus interest.

On appeal, the appellants claim that four amendments were made to the loan agreement by the respondent and Rose without the appellants’ consent: These include the short-term fixed term loan payable on October 1, 2007 was converted into a demand loan; the respondent and Rose agreed that the respondent would not demand payment of the standby loan while the construction project was ongoing (the “forbearance agreement”); and two different units were substituted for the one unit that was subject to the respondent’s option to purchase and which was specified in the loan agreement.

Issues:
Did the motion judge err in finding there was no genuine issue requiring a trial with respect to:
(1) the material alteration of the terms of the loan agreement?
(2) the respondent’s action being premature?
(3) the defence of accord and satisfaction?
(4) the defence of laches?

Holding:
Appeal allowed. Summary judgment set aside and the action referred to trial on the defences of laches and the material alterations to the loan agreement which related to the repayment date and the alleged forbearance agreement.

Reasoning:
(1) Yes. The motion judged failed to consider the factual matrix underlying the arrangements between the respondent and Rose and also failed to apply the appropriate legal principles. He failed to consider the totality of the evidence that supported the appellants’ position that there were material alterations to the loan agreement with respect to the repayment date and the alleged forbearance agreement.
As an alternative basis for his decision, the motion judge focused his attention on whether each alteration fell within an exception to the material alteration test: was the alteration necessarily beneficial to the guarantor; that is, could it be prejudicial to the guarantor or otherwise than beneficial to the guarantor? The motion judge applied the incorrect test. He considered that the parties had knowledge of the continuation of the standby debt and that there was “a clear benefit” to the appellants that arose from any forbearance by the respondent. Knowledge is not determinative and the motion judge failed to decide whether the alterations were necessarily beneficial or otherwise than beneficial to the appellants. His finding that there was no prejudice was infected with an absence of any consideration of the impact of the potential for prejudice arising from a change in, or extension of, the due date in the loan agreement.

(2) No. There was ample evidence to support the motion judge’s conclusion that construction had been completed and that the action was not premature.

(3) No. There was no evidence the respondent ever accepted any units in satisfaction of the debt owing under the loan agreement with Rose. The original unit was not pledged as security and the respondent never exercised the option to purchase.

(4) Yes. There is a genuine issue requiring a trial with respect to the defence of laches and more particularly, its requisite component of prejudice. Apart from a blanket finding of no prejudice, the motion judge did not assess the evidence of potential prejudice found in the record. This included the significant time that had elapsed between the due date of the standby loan and demand for payment from the guarantors and the ramifications associated with that delay.

Langstaff v. Marson, 2014 ONCA 510
[MacPherson, Watt and Benotto JJ.A.]
Counsel:
D. Rogers and D. Rogers, for the appellant
R. S. Baldwin, for the respondent

Keywords: Admissibility of Fresh Evidence; Reasonable Apprehension of Bias; Judicial Impartiality;

Facts:
The respondent brought an action based on the sexual abuse he suffered at the hands of his teacher in 1976 and 1977. At trial, a jury found the appellant school board negligent and vicariously liable. Around the same time the respondent brought his action, another former student brought a very similar case (“the Mead action”) which was to be heard after the respondent’s. At a pre-trial conference for the Mead action, the judge realized that he knew both the plaintiff and his family and recused himself after making statements on liability. The same lawyer represented the appellant in both actions.

Four months after the pre-trial, the appellant’s lawyer retired and the files were transferred to a new lawyer (“Mr. Morris”). After the jury had been selected in the respondents trial, an adjuster with the appellants insurer commented to Mr. Morris that she recognized the trial judge as the pre-trial judge in the Mead action. Mr. Morris had no issue with this because he believed any conflict issues would have been disclosed prior to trial. At this point in time, Mr. Morris was also unaware of the similarities between the two actions. It was only in preparation for the Mead case that Mr. Morris learned what had transpired at the respondents pre-trial conference. Mr. Morris testified that if had known this prior to the respondent’s trial, he would have asked the trial judge to recuse himself.

Issues:
(1) Is the fresh evidence admissible?
(2) Does the evidence disclose a reasonable apprehension of bias?

Holding:
Appeal allowed. A new trial is ordered.

Reasoning:
(1) The Court held the fresh evidence should be admitted. The Palmer test for the admissibility of fresh evidence on appeal does not always apply when the proposed fresh evidence “raises issues connected to the validity of the process itself”. The fresh evidence sought to be introduced in this case deals with subsequently discovered facts that challenge the very validity of the trial process.

(2) Rule 50 of Ontario’s Rules of Civil Procedure does not preclude a pre-trial judge from presiding at a trial of a related matter. The issue in this case was the unique combination of the “pre-trial judge’s opinion on the matter; his association with a party; and his decision in an identical matter which might reasonably assist that party he had an association with”.
The test for whether a reasonable apprehension of bias exists is “what would an informed person, viewing the matter realistically and practically, and having thought the matter through conclude? Would he think more likely than not that [the judge], whether consciously or unconsciously, would not decide fairly”. The Court held that a person viewing this matter would likely conclude there was an apprehension of bias. Before withdrawing himself from the pre-trial, he gave an opinion on an issue of liability which was consistent with his decision in the respondents trial.
The respondent also submitted that Mr. Morris should have objected to the trial judge because of what he was told by the claims adjuster. The Court rejected this based on the presumption of impartiality and Mr. Morris’ belief at the time that there was nothing to object to given the information he knew in the moment.

Whitley v. Homma, 2014 ONCA 509 [Endorsement]
[Laskin, MacFarland and LauwersJJ.A.]
Counsel:
G. Sheppard,, for the appellant
A. Mills and S. Beattie, for the respondent

Keywords: Summary Judgment

Holding:
The Court held that this was a proper case for summary judgment and agreed with the reasons of the motion judge.

Hopkins v Kay, 2014 ONCA 514
[Feldman, Watt and van Rensburg JJA]
Counsel:
J.M. Leclerc and M.A. Crystal, for the moving parties
P.J. Hawkins and D. Girlando, for Peterborough Regional Health Centre

Keywords: Civil Practice and Procedure, Motion to Strike, Privacy and freedom of information, Intrusion Upon Seclusion

Facts:
The moving parties are the representative Plaintiffs (the “Plaintiffs”) in a proposed class proceeding. They claim damages alleging that the Peterborough Regional Health Centre (the “Hospital”) breached the privacy interests of approximately 280 patients when their records were accessed. The claim in tort is based on the tort of intrusion upon seclusion based on this court’s decision in Jones v Tsige. The Hospital brought a motion under rule 21.01 to strike the claim for no reasonable cause of action. The motion was dismissed. The Hospital filed a notice of appeal, the Plaintiffs filed a motion on the basis that the route of appeal was to seek leave to appeal to the Divisional Court.

Issue:
Whether this court has jurisdiction to hear the appeal, which depends on whether the order under appeal is final.

Holding:
Motion dismissed with costs payable to the respondents.

Reasoning:
The motion judge’s refusal to dismiss or stay the action based on lack of jurisdiction was a final order. Where, as here, the effect of the order is that the action is going to proceed in the Superior Court, the consequence is that the defendant is precluded from continuing to dispute the court’s jurisdiction over the subject matter of the action. The order therefore is final on the jurisdiction question.

Further, a review of the reasons of the motion judge suggests that the issues of whether the pleading disclosed a cause of action and jurisdiction were bound up in the same question, and the issue is properly characterized as one of jurisdiction. As such, the entire appeal is properly before this court.

Boone v. Ontario (Community Safety and Correctional Services), 2014 ONCA 515
[MacPherson, Blair and Pepall JJ.A.]
Counsel:
Paul Champ and Christine Johnson, for the appellant
Brian G. Whitehead and Melanie Goren for the respondents

Keywords: Procedural Fairness, Habeas Corpus, s.10 Canadian Charter of Rights and Freedoms, Ministry of Correctional Services Act

Facts:
The appellant, an inmate in solitary confinement at Ottawa-Carleton Detention Centre (“OCDC”), is HIV-positive and prone to sexual contact with other male prisoners, some of which are unaware of his condition. He had been convicted of multiple very serious offences, including intent to inflict victims with HIV. The application judge held that while the OCDC did not completely comply with procedural fairness regarding the transfer process, the detention was not unlawful and necessary to ensure the safety of the other inmates or potential cellmates. The OCDC’s position in this application was that the confinement was necessary to protect both the inmate and other inmates; the OCDC had also offered several alternatives, though each still required solitary confinement at night. The appellant claims he was never provided with any reasons for being segregated and that he was not given a meaningful explanation or an opportunity to respond. He sought an order to be returned to the general inmate population and to be placed with a cellmate. Specifically, the appellant argues that once a breach of procedural fairness was found, the application judge had no discretion to refuse to issue a writ.

Issues:
(1) Did the application judge err in assuming he had residual discretion to deny the remedy of habeas corpus?
(2) Did the application judge err in finding that the appellant posed a threat to other inmates?

Holding:
No to both (Appeal dismissed)

Reasoning:
(1) Solitary confinement is a serious deprivation of individual liberty. Section 34 of the Ministry of Correctional Services Act requires the Superintendent of the correctional institution to conduct reviews and make notifications to the Minister depending on how long the inmate has been in solitary confinement.  The Deputy Superintendent failed to fully comply with these and other provisions.  Nonetheless, the breaches to procedural fairness were minor and technical and the application judge had authority to determine whether they rendered the detention unlawful. Moreover, not all procedural breaches result in procedural unfairness.  The appellant was fully aware of the reasons for his segregation and took advantage of various opportunities to make submissions to authorities.  The application judge’s decision was thus reasonable and based on sufficient evidence and the appellant was not denied a fair hearing.

(2) There was enough evidence to justify the application judge’s findings with respect to the threat posed by the appellant and therefore the Court’s analysis was confined to the first issue.

 

Verschuren v Verschuren, 2014 ONCA 518
[Sharpe, Simmons and Benotto JJ A]
Counsel:
P. McInnis, for the appellant
R. Snell, for the respondent

Keywords: Family law, Divorce, Separation Agreement; Spousal Support; Income

Facts:
At issue in this appeal was the trial judge’s determination that a non-arm’s length transaction to hide certain assets did not constitute a decrease in income as contemplated by the separation agreement. The parties had been married for nearly 15 years when they separated. Following the separation, the two children of the marriage then aged nine and thirteen were placed in the custody of the respondent mother. The parties entered into a separation agreement in 2008, which along with the subsequent divorce order provided as follows: “[The appellant] shall pay child and spousal support based on an imputed income of $200,000 and child and spousal support in any given year shall not be subject to variation unless [the appellant’s] income changes by more than 10%.” The $200,000 threshold was derived partly from the appellant’s interest in MAD Designs and the income that it produced. In 2011, the appellant brought a motion to change, alleging that his income had changed by more than 10% as a result of the transfer of this interest. The trial judge rejected this argument, finding that the appellant had voluntarily transferred his interest in the company to his common law spouse for the sole purpose of having his spousal and child support payments reduced. This, in the opinion of the trial judge, did not have the effect of a decrease in income as contemplated by the terms of the separation agreement.

Issue:
Did the motion judge err in law or fact in determining that the appellant’s income had not dropped by more than 10%?

Holding:
No. Appeal dismissed with costs to the respondent.

Reasoning:
The motion judge made the factual determination that the $200,000 figure agreed to had specifically incorporated the income that the appellant would derive from his interest in MAD Designs. Moreover, the motion judge determined that when the appellant transferred this interest to his new common law spouse, he had made a “voluntary non-arms-length transfer of an income producing asset for nominal if any compensation”, solely for the purpose of shirking his spousal and child support obligations. In addition, it was shown that the appellant continued to live lavishly with his common law spouse, partially as a result of the income derived from the MAD Designs investment. As a result, there was no error in fact or law in the trial judge’s determination that (a) the appellant’s interest in MAD Designs formed an essential ingredient of the separation agreement, and (b) that the appellant had not truly divested himself of this interest.

Monette v Tebo, 2014 ONCA 516 [Endorsement]
[Feldman, Watt and van Rensburg JJ.A]
Counsel:
P. Tunley, for the appellants
K. R. Pearson, for the Respondents

Keywords: Property, Construction, Injunction, Counterclaim, Flooding; Nuisance, Harassment

Facts:
The appellants appeal from a judgment dismissing their counterclaim for damages and an injunction. The parties are neighbours with large rural properties near Napanee, Ontario. The Tebo property is 11 acres and the Monette property is 30 acres. The Monettes built a six-hole golf course on their property. The Tebo’s claim that construction of the golf course has caused excessive flooding and pooling of water on their property. They also claimed harassment for golf ball related incidents and the burial by the Monettes of their dog near the property line.

Issues:
(1) Did the trial judge err on the finding of fact on the amount of flooding on the property after the golf course was constructed?
(2) Did the trial judge err by not finding that the failure to fully comply with the Quinte Conservation Authority’s requirements constituted evidence that it was not constructed in a reasonable manner and was evidence of nuisance?
(3) Did the trial judge make findings of credibility against Mr. Tebo on a basis that constituted a misapprehension of certain evidence?

Holding:
Appeal dismissed. The trial judge made no reversible error.

Reasoning:
(1) The trial judge did not err. He had to determine whether the flooding conditions on the Tebo property after construction of the golf course were worse than before the construction. He concluded that they were not.

(2) Because of the finding of fact for Issue #1, this issue became moot because there was no causal connection between the golf course and the alleged flooding. The trial judge “was not satisfied that any accumulation of water on the Tebo land was exacerbated by the golf course or that it constituted a nuisance.”

(3) The trial judge did not err. He was entitled to prefer Mrs. Tebo’s evidence and discount Mr. Tebo’s credibility on the other bases even if the trial judge misapprehended the reason for the discrepancy.

Stevenson v. Smit, 2014 ONCA 521
[Weiler, MacPherson and Cronk JJ A]
Counsel:
D. S. Melamed and C. Levitan, for the appellant
H. I. Fogelman and O. Weinberg, for the respondent

Keywords: Family Law, Separation Agreements, Child Support, Material Change in Circumstances

Facts:
Following a separation in 2005, the parties entered into a separation agreement (the “Agreement”) setting out that the parties would share equally in major expenses concerning their children and that neither party would pay child support in accordance with the Child Support Guidelines (the “Guidelines”).  The father’s income declined over the years and he was forced to liquidate some of his capital assets to meet his obligations.  In 2008, the appellant (the “father”) informed the respondent (the “mother”) that he could no longer satisfy his child support obligations.  The mother applied to the Ontario Court of Justice for an order quantifying the father’s arrears of child support and the father countered with an application to terminate his child support obligations under the Agreement and instead pay child support in accordance with the Guidelines.  The application judge held that the father failed to established a material change in circumstances and dismissed the application.

Issue:
(1) Did the application and appeal judges err by failing to find a material change in circumstances as contemplated by s. 14 of the guidelines?
(2) Is the foreseeability of a change in circumstances the appropriate test for variation under the Guidelines of contractual child support obligations?
(3) Did the judges err by, in effect, requiring him, without imputing income to him, to comply with a child support order that he cannot possibly honour.

Holding:
Appeal Dismissed.

Reasoning:
(1) The findings of the application judge that the father’s need to resort to liquidating capital assets to meet his obligations and that his income was in decline were plainly known to the parties at the time they entered into the Agreement were “amply supported by evidentiary record”.  The father failed to establish a material change in circumstances.

(2)  Both the application and appeal judge correctly identified that foreseeability was a key in the test for the variation of special contractual child support obligations on the basis of a material change in circumstances.  The Court stated that “ if the matter relied upon as constituting a material change in circumstances was known at the time of contract formation, it cannot ground a variation request”.

(3) No.  The application judge correctly considered and rejected the father’s contention that the mother’s application constituted a request to impute income to him.

Ferreira v Esteireiro, 2014 ONCA 523
[Feldman, MacPherson and Cronk JJA]
Counsel:
J M DeMarco for the appellant
J M Nicoll for the respondent

Keywords: Matrimonial Dispute; Separation Agreement; Spousal Support; Arbitration Act; Section 47(1)

Facts:
In 2005, the parties entered into a separation agreement (the “agreement”) which provided for lump sum and periodic spousal support to be paid by the respondent to the appellant.  In 2012, the respondent ceased making support payments on the basis that the appellant was in a relationship resembling marriage, thus terminating his support obligations under the agreement.  The agreement contained an arbitration/mediation dispute resolution mechanism.  The arbitrator ruled in favour of the respondent.  After unsuccessfully seeking leave to appeal the arbitral award, the appellant commenced a fresh application.  The motions judge dismissed the application.  The appellant appealed.

Issue:
Did the motion judge err in dismissing the application as an abuse of process?

Holding:
Appeal dismissed based on res judicata.  The appellant’s repeated attempts to re-litigate issues previously determined by the courts was an abuse of process.

Reasoning:
No.  The record on appeal overwhelmingly demonstrated that the appellant was dissatisfied with the outcome of the arbitration, and that the sole purpose of the proceedings was to avoid enforcement of the arbitrator’s ruling.  This strategy was misconceived and duplicative of the court’s process.  In any event, the appellant’s application was time-barred under ss.47(1) of the Arbitration Act.  Therefore, there was no basis for interference with the motions judge’s decision.

Jennings v. Latendresse, 2014 ONCA 517 [Endorsement]
[Doherty, Epstein and Benotto JJ.A.]
Counsel:
J. Poproski, for the appellant
C. G. Paliare and T. H. Lie, for the respondent

Keywords:  Personal Injury, Causation, Insurance Act, Chronic Pain

Facts:  The appellant Jennings claimed damages against the respondent as a result of a motor vehicle accident. After a nine-day trial, the jury returned a verdict that stated the appellant had recovered from her injuries as a result of the accident.  They awarded her $58,000 for loss of competitive advantage and marketability in the workplace.

While the jury was deliberating, the respondent brought a motion pursuant to s. 267.5(3) of the Insurance Act requesting that the trial judge dismiss the action on the basis that the appellant had not met the “threshold” for damages because she had not sustained a “permanent serious impairment of an important physical, mental or psychological function” from the accident.

The trial judge reserved his decision and rendered it after the jury returned its verdict. He dismissed the appellant’s action on the basis that she had “failed to establish on a balance of probabilities that her injuries from the accident are permanent.”  The trial judge awarded costs to the respondent in the amount of $61,912.64.

Issues:
(1)  Was the jury’s verdict that she had recovered from her injuries perverse and internally inconsistent?
(2)  Did the trial judge err by concluding the appellant’s chronic pain was not permanent and dismissing the action?
(3)  Did the trial judge err in the costs award?

Holding: Appeal dismissed.  Costs payable to the respondent.

Reasoning:
(1)  No.  There was evidence on which the jury could have reached the conclusion that the appellant had recovered from injuries sustained as a result of the accident. This includes medical evidence that the appellant was improving and would continue to improve; expert testimony from a neurologist who said the fact that the appellant’s pain improved and then returned years later demonstrates that the recurring pain was not caused by the original injury; and evidence that pre-accident and post-accident stressors, both physical and psychological, had contributed to the appellant’s chronic pain but had nothing to do with the accident.  The appellant failed to show a causal link between her medical problems as described in the evidence at trial (chronic pain) and the injuries she suffered in the accident.  The evidence was open to that interpretation. A high degree of deference is accorded to a jury verdict even if there is another conclusion that the evidence could have supported.

The jury’s award of $58,000 for loss of competitive advantage and marketability was not internally inconsistent with the finding that the appellant had recovered from her injuries because the jury was asked to assess damages for loss of competitive advantage and marketability independent of its determination on the issue of causation.

(2)  No.  Section 267.5(5) of the Insurance Act provides that the permanent impairment must have been “a result of the use or operation of the automobile”.  The trial judge’s conclusion that the appellant’s chronic pain was not caused by the motor vehicle accident is supported by the evidence and consistent with the jury verdict.  The dismissal of the action was correct even though $58,000 was awarded for loss of competitive advantage/marketability because there was no causation.  Absent causation, the appellant was not entitled to recover any amount from the respondent.

 

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