Hi everyone. Here are this week’s Court of Appeal summaries. Another light week from the Court of Appeal. This week’s topics include abuse of process, partnership law and attornment.
Enjoy your weekend.
[Hoy A.C.J.O., Gillese and Lauwers JJ.A.]
Appellant appearing in person
K. C. Dickson, for the respondent
Keywords: Abuse of Process, Costs, Duty of Care, Collateral Attacks.
In a separate small claims court proceeding, the appellant, Cristian Biron, was sued for damages relating to a car accident with a person insured by the respondent, Aviva. Aviva appointed the co-respondent, Sylvia Robin, to defend the insured. The small claims court action was ultimately dismissed.
In this action, Biron sued Robin for a number of intentional torts relating to trial tactics. The claims were for breach of duty, non-compliance with the rules of Small Claims Court, intrusion of privacy and infliction of mental stress. Specifically, Biron claimed that Robin gave notice of an intention to rely on information that was embarrassing and irrelevant. This information was not relied on at trial, but Biron claimed he was harmed nonetheless and that it prevented him from pursuing his claim effectively. The motion judge dismissed the claim on the basis that it was an abuse of process and that it disclosed no cause of action.
Costs of $5,000.00 were awarded against the plaintiff (now appellant).
(1) Did the motion err in dismissing the appellant’s claim as an impermissible collateral attack on the decision of another court, an abuse of process, and for disclosing no cause of action?
(2) Did the motion judge err in their costs award?
Appeal dismissed and leave to appeal costs denied.
(1) The action was an impermissible collateral attack on a decision of the Small Claims Court. The motion judge correctly held that Biron’s claim could not succeed based on the legal principle in Admassu v. Pantel, 2009 CarswellOnt 4047, that in litigation, the opposing counsel owes no duty of care to the opposing party. The Court saw no error with the motion judge’s decision that the action was an abuse of process and that it disclosed no cause of action, and agreed that Robin owed no duty to the appellant.
(2) The court held that no issue of principle was engaged by the motion judge’s costs award and that it was an exercise of her discretion.
[Hoy A.C.J.O., Gillese and Lauwers JJ.A.]
Michael J. Campbell, for the appellant
Benjamin J. Rutherford, for the respondents
Keywords: Condominium Act, s.56(6) Condominium Act, Board of Directors, Code of Ethics.
The board of directors of York Region Condominium Corporation No. 181 had disqualified the appellant from being a director, pursuant to its By-law No. 9, for violating the Directors’ Code of Ethics during the term he was in office. The application judge found that the board had violated principles of natural justice and procedural fairness. The application judge (i) set aside a decision made by the defendant’s board of directors disqualifying the appellant as a director due to his alleged violations of the defendant’s Directors’ Code of Ethics and (ii) provided for a new ethics review of the appellant. The appellant was given a second review, where he was disqualified.
The appeal was brought on three arguments: (1) By-law 9 contradicts s.56(6) of the Condominium Act (“Act”); (2) the By-law is inconsistent with democratic condominium governance as found in the Act; and (3) the application judge erred in not immediately re-instating him. The appellant sought an order declaring By-law 9 inconsistent with the Act (and thus invalid) and re-instatement as a director.
(1) Is By-law 9 valid? (2) Did the application judge err in not re-instating the appellant?
(1) Yes (2) No (Appeal dismissed).
(1) It is not unreasonable to allow a board to make determinations into ethical violations, and the provisions are not inconsistent with democratic governance as expressed by the Act.
(2) The vacancy had been filled, and any reinstatement would have required making an order against an individual not before the court. Moreover, the application judge’s remedy did not preclude the applicant from standing for re-election and, pursuant to the By-laws, an ethics violation during a prior term is not a basis for disqualifying a board member if re-elected. This decision was “eminently “fair and equitable””.
[Hoy A.C.J.O, Gillese and Lauwers JJ.A.]
H. G. Elston, A. L. Anderson, for the appellant
R. Carr and S. Nishikawa, for the respondent Her Majesty the Queen in Right of Ontario
N. Finkelstein, E. S. Block, and S. C. D’Souza, for the respondent Swift River Energy Limited
Keywords: Judicial Review, Crown Lands, Public Access, Portage, Public Lands Act.
Muskoka Lakes’ (“Township”) application for judicial review was dismissed. It sought forms of relief to stop the Minister of Natural Resources (“Minister”) from leasing Crown land to Swift River Energy (“Swift River”) who wanted to construct a hydro-electric facility. The Minister wanted to prohibit access to certain Crown lands under s. 28(1) of the Public Lands Act (the “Act”) which had been used as a portage. The provision permits the Minister to prohibit the possession, occupation or use of public lands. The Township wanted to ensure that a claimed portage over the lands would be preserved.
The Township argued that a portage protected by s. 65(4) of the Act passes over the site. The Township also argued that there is little remaining public frontage on the “body of water,” and s. 3 of the Act requires the Minister to set aside the frontage at the site for recreational and access purposes. The Township also claimed a common law right of passage over a navigable waterway.
Did the Divisional Court err in its orders and standard for judicial review?
Appeal dismissed. The respondents are entitled to costs fixed at $8,500, inclusive of HST and disbursements.
The Divisional Court applied the appropriate standard for judicial review. The Minister’s decision was reasonable and fell within a range of possible and acceptable outcomes.
The Township argued a common law public right of passage over a navigable waterway. However, such a right does not extend to permit portage over another’s land (Canoe Ontario v Reed, 1989, 69 O.R. (2d) 494). Subject to any aboriginal and treaty rights, the Minister has the right to make an order under s. 28(1) that has the effect of prohibiting passage over portages. Transport Canada said that navigation would not be substantially impacted by the proposed waterpower generation facility.
The Court stated that s. 28 of the Act is not made subject to another provision of the Act, and ss. 3 (requiring the Minister to set aside a certain percentage of public lands fronting on a body of water “for recreational and access purposes,”) and 65.4 (providing a right to pass over a portage) does not prevail over s. 28, which permits the Minister to prohibit the possession, occupation or use of public lands. The Court specifically did not address whether the words “sold or otherwise disposed of” in s. 65.4 does not include a lease. They specifically stated that they were not endorsing the Divisional Court’s reasons on this point.
[Juriansz, Tulloch and Strathy JJ.A.]
Marc Munro, for the appellants
Michael R White, for the respondents
Keywords: Partnership Law, Breach of Contract, Limitation Period, Laches, Estoppel, Judicial Accounting, Judicial Review.
The appellant and respondent were partners in a dental practice for twenty years. In 1997, they negotiated an agreement whereby it was understood that each partner would be allocated 100% of the income he produced, minus the specific expenses incurred to generate the income. The agreement was formalized in 2004 (the “2004 Agreement”), and contained specific provisions dealing with the termination of the partnership.
The appellant provided notice to terminate the partnership in 2008, at which time the parties attempted, for tax purposes, to negotiate a new and discrete agreement regarding termination. The new agreement was contingent upon, among other things, the provision of a tax plan and recommendations by the partnership’s accountant, which were in turn dependent upon the accountant receiving year-end financial statements.
The draft financial statements (which were never finalized) disclosed that the partnership’s bookkeeper, the appellant’s wife, had never allocated partnership profits in accordance with the clear terms of the 2004 Agreement. As a result, the respondent had born a disproportionate share of the expenses since 2004. A dispute ensued between the parties, and no new agreement regarding the termination of the partnership was reached.
At trial, the judge concluded that the 2004 Agreement was binding and that it was clear and unambiguous in its treatment of the allocation of partnership profits. The trial judge found that a new agreement was not entered into in 2008 as the requisite financial statements were never finalized. The trial judge further determined that the improper treatment of the expenses constituted a breach of the 2004 Agreement, and rejected the appellant’s argument that the respondent’s action was out of time, or barred by reason of laches or estoppel, as he did not know of the mistreatment of the expenses until October 2009.
The appellant raised four grounds of appeal:
(1) Did the trial judge err in determining that the limitation period for the respondent’s action had not expired?
(2) Did the doctrine of laches preclude the respondent’s claim?
(3) Was the respondent estopped from pursuing his action by reason that he knew or ought to have known of the improper profit allocation formula?
(4) Did the trial judge err in ordering a judicial accounting given that the parties had negotiated several aspects of the termination themselves?
No to each submission; appeal dismissed.
The Court concluded that the first three grounds of appeal revolved around a common premise, namely, that the respondent knew or ought to have known that profits were not being allocated according to the terms of the 2004 Agreement. The Court reasoned that the question of whether the respondent knew of the misallocation was one of fact, meaning that the trial judge’s finding could not be overturned absent a “palpable and overriding error”. The question of whether the respondent ought to have known of the misallocation of expenses as early as 2004 is one of mixed fact and law. Since the question is one that is closer to the “fact end” of the “fact-law spectrum”, the Court held that the trial judge’s reasoning warranted deference. Here, the Court found no error in the trial judge’s finding that the respondent did not know, and could not reasonably have known, about the improper accounting practice. Because the respondent did not know of the facts that gave rise to the claim before October 2009, he cannot be said to have acquiesced in the treatment of the expenses. The respondent was entitled to rely on the terms of the 2004 Agreement, and, as a result, his action was not (i) out of time, (ii) barred by laches, or (iii) prohibited by estoppel.
Finally, with respect to the fourth ground of appeal, the Court found that the trial judge did not err in ordering a judicial accounting. The appellant argued that the 2008 negotiations resulted in discrete, enforceable agreements relating to the value and split of certain assets. The trial judge made the factual determination that, as a result of the parties’ intentions, none of the 2008 negotiations resulted in binding agreements. Again, the Court found no error in the trial judge’s findings of fact, which were in any event entitled to deference.
[Sharpe, Simmons and Benotto JJ.A.]
Jeffrey E. Goodman and Kathryn J. Bird, for the appellants
Nadine Cote, for the respondent
Keywords: Wrongful Dismissal, Bankruptcy, Jurisdiction, Attornment, Temporary Stay.
The respondent plaintiff brought this action for wrongful dismissal. Initially, the claim was against three corporate defendants. The corporate defendants moved for an order staying or dismissing the action on the ground that the respondent’s claim was governed by a jurisdiction clause in his employment contract that required disputes to be litigated in England. In the face of the jurisdiction motion, the respondent obtained an order adding as parties the appellants, two individuals who were officers and directors of the corporate defendants.
Before the corporate defendants’ jurisdiction motion was heard, the corporate defendants were placed into receivership, staying the action against them. Following bankruptcy proceedings, the individual defendants filed an amended notice of motion to bring forward the jurisdictional issue. The notice asked for a temporary stay of the action against the personal defendants until the stay of the action against the corporate defendants had been lifted or the proceedings had been resolved. The basis for the appellants’ request for a temporary stay was that the claims against them (the individual defendants) were inextricably tied to the claim of wrongful dismissal against the corporate defendants, and that the jurisdictional issue was entirely predicated upon the terms of the respondent’s employment contract.
The individual defendants also asked that the amended statement of claim be struck, so that the jurisdiction motion would eventually proceed on the basis of the pleadings as they existed at the time the motion was first brought.
The motion judge ruled that by asking for the temporary stay, the individual defendants had attorned to the jurisdiction of the court. He further ruled that as his ruling on attornment resolved the issue of jurisdiction, the request for a temporary stay was rendered moot. The motion judge refused to strike out the amended statement of claim.
(1) Did the motion judge err in law by concluding that the appellants, the individual defendants, attorned to the jurisdiction by taking certain procedural steps in conjunction with their motion to stay or dismiss the action on the ground that the Ontario courts have no jurisdiction?
(2) If no attornment found, should the court grant a temporary stay motion on its merits?
(3) Should the amended statement of claim have been struck out?
Appeal allowed. Order of the motion judge set aside.
(1) Yes. By asking for a temporary stay, the appellants were asserting their position that proper resolution of the jurisdictional motion required that the corporate defendants be present before the court. The temporary stay was for this specific and limited purpose. A party who challenges the jurisdiction of the court is entitled to insist upon a proper procedural foundation for the determination of the challenge. Provided that the party’s steps request no more than that, they do not amount to attornment.
(2) No. The appellants’ request for a temporary stay was dismissed. The action against the corporate defendants was stayed by virtue of the bankruptcy proceedings. There was nothing in the record to suggest that there was any realistic prospect that the bankruptcy stay would be lifted or that the claims against the corporate defendants would ever proceed. There was no reason why what appeared to be the purely theoretical possibility of the claims proceeding against the corporate defendants should preclude the respondent from proceedings with his claims against the appellants.
(3) No. The individual appellants’ interest in proceeding with the jurisdiction motion arose from the amended statement of claim. “We find it difficult to understand how the appellants could ask the court to strike the amended statement of claim on the basis that the amendment had followed the original jurisdiction motion since it was only through the amendment that they became parties with an interest in proceeding with the motion.” (paragraph 13)
The Court of Appeal expressed no view as to the merits of the appellants’ position as to jurisdiction. The Court only dealt with attornment and the request for a temporary stay.