Court of Appeal Summaries (September 8 to 12, 2014)

Here are this week’s Court of Appeal Summaries of civil law decisions.  If you find this blog interesting, please feel free to spread the word.

John Polyzogopoulos Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
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Sant v. Sekhon, 2014 ONCA 623
[Weiler, Laskin and van Rensburg JJ.A.]
Counsel:
David, J. Tomlinson and A. Nicolini, for the appellants
A. Cherniak and J. Akbarali, for the respondent

Keywords: Personal Injury, Negligence, Motor Vehicle Accident, Apportionment of Liability, Misdirection in Jury Instructions, Improper Cross Examination

Facts: Sant, the Respondent, was a passenger in a pick-up truck hit by a freightliner driven by Sekhon, the Appellant. The pick-up truck proceeded through an intersection against a red light and was hit by the freightliner, which had the right of way. At trial, the jury found Sant 95% liable and Sekhon 5% liable. Sekhon appealed the apportionment of liability.

Issues:
(1) Was the jury’s verdict regarding Sekhon so plainly unreasonable and unjust as to satisfy the court that no jury reviewing the evidence as a whole and acting judicially could have reached it?

(2) Did the trial judge misdirect the jury on the element of causation and did the jury fail to make a cogent finding on the critical issue of causation?

(3) Was there improper and inflammatory cross-examination of Sekhon which may have influenced the jury to decide as it did?

Holding:
Appeal dismissed.

Reasoning:
(1) No. There was evidence from which the jury could infer that a reasonably prudent driver should have been aware of the hazard posed by the pick-up.

(2) No. The trial judge’s charge to the jury dealing with the standard of care, to which there was no objection at trial, did not misdirect the jury on the element of causation.

(3) No.  Counsel for Sant repeatedly asked Sekhon during cross-examination whether his lawyers had instructed him to provide particular answers during his testimony. This line of questioning was improper because its only purpose was to suggest that Sekhon’s evidence had been fabricated.  There was no basis for this suggestion.  However, the improper conduct must be sufficiently serious so as to undermine the fairness of the trial or put the validity of the verdict into doubt. The conduct in question did not meet this threshold.

Martenfeld v. Collins Barrow Toronto LLP, 2014 ONCA 625
[Cronk, Doherty, Hourigan JJ.A.]
Counsel:
Lou Brzezinski and Catherine MacInnis, for the appellant
Michael Tamblyn and Ryan Hauk, for the respondent

Keywords: Contractual interpretation, Sattva Capital Corp. v. Creston Moly Corp.[1], Eli Lilly & Co. v. Novopharm Ltd., Partnership Agreement, Permanent Capital, Stated Capital

Facts:  This appeal concerns the financial consequences of the respondent, Marvin Martenfeld’s withdrawal from an accounting partnership with the appellant, Collins Barrow LLP (“CBT LLP”), to join a competitor firm. CBT LLP’s partnership agreement allowed Martenfeld to withdraw and compete; however, he would have to pay liquidated damages of two times his Permanent Capital.

Pursuant to a partnership agreement between the parties, on his departure Martenfeld was to receive: (1) his Permanent Capital, if any, standing to the credit of his Capital Account as at the end of the partnership fiscal year immediately preceding his departure date; (2) the amount of any declared dividends on his shares in Collins Barrow Toronto (“CBT Inc.”), and the required amount for redemption of those shares; and (3) his share of net income for the year of withdrawal, pro-rated to the date of his departure.  This dispute centres on the meaning of “Permanent Capital” as used in the partnership agreement.  As part of the factual matrix, CBT LLP sought to rely on a document drafted by Martenfeld in advance of the partnership agreement being signed to define “Permanent Capital” (the “April 2004 Memorandum”).

Issues:
While there were several issues on this appeal, the central issues were: What is the correct approach to contractual interpretation and standard of review?

Holding:
Appeal dismissed. The trial judge’s $3,281.25 award of management fees in favour of Jekel is set aside.

Reasoning:
(1) Approach to Contractual Interpretation and Standard of Review
The fundamental task of a reviewing court is to determine the objective intentions of the parties and the scope of their understanding regarding the rights and obligations at issue. The Court of Appeal reiterated the approach taken in Sattva Capital Corp. v. Creston Moly Corp, and stressed that reviewing courts should undertake the task of examining a contract as a whole, and the words should be given their ordinary and grammatical meaning, while remaining consistent with the surrounding circumstances known to the parties at the time of the formation of the contract. This interpretive approach governed the construction of the partnership agreement.

As per Sattva, “the interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract”. Contractual interpretation involves a mixed question of fact and law. Using Sattva, the Court emphasized the importance to contractual interpretation of the factual matrix in which a contract is formed. The Court of Appeal also reaffirmed the well-known principle that an appellate court will only intervene if there is a palpable and overriding error made by the trial judge. Deference must be provided.

The CBT Group argued that the trial judge erred in her interpretation of Permanent Capital by failing to consider the context surrounding the formation of the partnership agreement. The CBT Group claimed that reference to the April 2004 Memorandum should have been made. The Court concluded that the trial judge was mindful of the principles governing contractual interpretation and her failure to refer to the April 2004 Memorandum was of no consequence.

The trial judge interpreted a partner’s “Permanent Capital” as the same as the amount in that partner’s Capital Account under the partnership agreement. The Court of Appeal disagreed. Despite the trial judge holding that a partner’s Capital Account and Permanent Capital are “one and the same”, the Court of Appeal found that the error was not an overriding one.

[1] Sattva was rendered by the SCC between the hearing of this appeal and the date when the decision was made. Counsel for CBT Group requested that additional submissions be made on the impact of the Sattva decision on this appeal. The Court denied this request.

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

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