COURT OF APPEAL SUMMARIES (NOVEMBER 7 – NOVEMBER 10, 2016)

Good Afternoon.

Below are the summaries for this week’s civil decisions of the Court of Appeal.

Topics covered this week included interlocutory vs final orders for the purpose of appeal in the context of summary judgment, the triggering of the duty to defend under a CGL insurance policy, MVA, re-opening an appeal on a new ground not previously raised, real and substantial connection, and exclusion clauses in equipment leases.

Please feel free to share this blog with anyone whom you think might be interested. As always, we welcome your comments and feedback.

Have a nice weekend.

John Polyzogopoulos

Blaney McMurtry LLP

jpolyzogopoulos@blaney.com

Tel: 416.593.2953

http://www.blaney.com/lawyers/john-polyzogopoulos

Table of Contents

Civil Decisions (click on case name to read summary):

Cook v. 1293037 Alberta Ltd. (Traveller’s Cloud 9), 2016 ONCA 836

Keywords: Endorsement, Torts, Negligence, Conflict of Laws, Jurisdiction, Real and Substantial Connection, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Forum of Necessity, Limitation Periods

Jugmohan v. Royle, 2016 ONCA 827

Keywords: Endorsement, Insurance Law, Insurance Act, MVA, Damages, Non-Pecuniary Loss, Juries, Charge to Jury, Evidence, Expert Opinion Evidence, Credibility

Laughlin v. Esmaeili, 2016 ONCA 826

Keywords: Torts, Negligence, MVA, Municipal Liability, Municipal Act, s. 44(1), Summary Judgment, Costs, Sanderson Order

Froehlich-Fivey v. Fivey, 2016 ONCA 833

Keywords: Endorsement, Family Law, Appeals, Security for Costs, Rules of Civil Procedure, Rule 61.06, Frivolous and Vexatious Appeal, Insufficient Assets in Ontario

John Deere Financial Inc v 1232291 Ontario Inc (Northern Haul Contracting), 2016 ONCA 838

Keywords: Contracts, Leases, Interpretation, Exclusion Clauses, Unconscionability, Tercon Contractors Ltd v British Columbia (Transportation and Highways), 2010 SCC 4, Assignments, Summary Judgment, Stay of Execution, Appeals, Jurisdiction, Interlocutory Orders

Parkhill Excavating Limited v. Royal & Sunalliance Insurance Company of Canada, 2016 ONCA 832

Keywords: Contracts, Interpretation, Insurance, Commercial General Liability Policies, Coverage, Consequential Damages, Exclusions, Exceptions, Burden of Proof, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33

Skunk v. Ketash, 2016 ONCA 841

[Hoy A.C.J.O., Lauwers and Benotto JJ.A.]

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory Orders, Res Judicata, Summary Judgment, Insurance Law, Insurance Act, MVA, Uninsured Motorist Coverage

Chuang v. Toyota Canada Inc., 2016 ONCA 852

Keywords: Endorsement, Civil Procedure, Appeals, Re-Opening

Rougemount Capital Inc. v. Computer Associates International Inc., 2016 ONCA 847

Keywords: Contracts, Damages for Breach, Standard of Review

Civil Endorsements (click here for decisions)

Criminal Decisions (click here for decisions)

Civil Decisions:

Cook v. 1293037 Alberta Ltd. (Traveller’s Cloud 9), 2016 ONCA 836

[Blair, Epstein and Huscroft JJ.A.]

Counsel:

R. Kerr, for the appellants
D. W. Powrie and N. Galanis, for the respondent

Keywords: Endorsement, Torts, Negligence, Conflict of Laws, Jurisdiction, Real and Substantial Connection, Club Resorts Ltd. v. Van Breda, 2012 SCC 17, Forum of Necessity, Limitation Periods

Facts:

The Appellants, Gary Cook and Jennifer Corswandt, brought an action against the Respondent in Ontario. The Respondent brought a motion to stay the appellant’s action against the respondent corporation on the basis that it has no real and substantial connection to Ontario.

Issue:

Did the motion judge err in concluding that the appellants failed to establish that the action has a real and substantial connection to Ontario?

Holding:

Appeal dismissed.

Reasoning:

No. The motion judge did not err in concluding that the appellants had failed to establish that the action has a real and substantial connection to Ontario. First, none of the presumptive factors set out by the Supreme Court in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, are satisfied on the facts of this case. The motion judge found that the respondent is an Alberta corporation, resident or domiciled in Alberta, and that the accident giving rise to the action occurred when the appellant, Gary Cook, was staying at the hotel while he worked temporarily in Alberta. Further, there is no reason to create a new presumptive factor.

Second, Ontario is not a forum of necessity. The appellants argue that it is necessary to bring the action in Ontario because the limitation period for bringing the action in Alberta has expired. The forum of necessity doctrine is an exception to the real and substantial connection test, and operates only in extraordinary and exceptional circumstances. This is not an appropriate case for the exercise of the court’s discretion because the appellants made a tactical decision not to bring their action in Alberta and it would not be appropriate to relieve them of the consequences of that decision.

Jugmohan v. Royle, 2016 ONCA 827

[Blair, Epstein and Huscroft JJ.A.]

Counsel:

Elkin and N. Mester, for the respondents Gordon Royle and Frank Naccarato

Yoo and P. Pollack, for the respondent Ivon Bascom

Keywords: Endorsement, Insurance Law, Insurance Act, MVA, Damages, Non-Pecuniary Loss, Juries, Charge to Jury, Evidence, Expert Opinion Evidence, Credibility

Facts:

The appellant sought to appeal from the jury award of zero damages arising out of her injuries sustained in a car accident, and the trial judge’s ruling that her claim for non-pecuniary loss was barred because her injuries did not fall within the exceptions to statutory immunity provided under the Insurance Act.

Issue:

(1) Did the trial judge err by correcting his jury charge from his initial instructions, in which he expressed the view that an assessment of zero damages would not be appropriate, to an instruction that if the jury were to find that the accident did not cause any new injury, or exacerbation of any pre-existing injury, an award of zero damages would be available?

(2) Did the trial judge err by disregarding relevant medical evidence that supported the plaintiff’s position on the threshold motion and arrived at an unsupported conclusion?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The appellant’s assertion that a properly instructed jury would have awarded damages cannot succeed. Although after the accident, the appellant underwent a right knee replacement and right shoulder rotator cuff repair, there was evidence that prior to the accident, she experienced osteoarthritis and degenerative changes in her right shoulder and right knee. There was expert evidence that the jury was entitled to accept that the appellant’s post-accident difficulties were inevitable, given her prior conditions.

The findings of a jury are entitled to great deference, particularly in cases such as this that depended largely on credibility. A jury verdict will not be set aside unless it was 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. On the evidence, it was open to this jury to conclude that the injuries that formed the basis of the appellant’s claim were not caused by the accident and therefore that the appellant was not entitled to any damages.

As to the correcting jury charge, although appellant’s trial counsel initially objected to the proposed correction, he ultimately agreed to it after the trial judge reworded it to his satisfaction. The charge was clear. The members of the jury were not left with any misapprehension with respect to their duties or the principles to apply, in reaching their verdict.

(2) No. The Court of Appeal did not accept the argument that the trial judge failed to consider material evidence. In his reasons, the trial judge made repeated reference to all of the evidence he heard at trial – evidence that he had an opportunity to weigh and from which he was entitled to make credibility findings. There was ample evidence upon which the trial judge could properly rely to find that the threshold was not met, particularly in the light of the jury award. Decisions of this nature are afforded the highest degree of deference and should not be interfered with absent palpable and overriding error. In this case, there was no reason for the Court of Appeal to interfere.

Laughlin v. Esmaeili, 2016 ONCA 826

[Hoy A.C.J.O., Benotto and Huscroft JJ.A.]

Counsel:

  1. C. Cashman, for the Defendant (Respondent in Motion/Appellant), the Corporation of the City of Toronto
  2. Boghosian, for the Defendant (Applicant in Motion/Respondent in Appeal), the Corporation of the Town of Markham

Keywords: Torts, Negligence, MVA, Municipal Liability, Municipal Act, s. 44(1), Summary Judgment, Costs, Sanderson Order

Facts:

The plaintiff’s vehicle struck a concrete curbstone that had somehow made its way into the curb lane of Steeles Avenue East. The plaintiff sued both Markham and Toronto, because Steeles Ave is the border between these municipalities. Toronto then cross-claimed against Markham. The motion judge granted summary judgment in favour of Markham, finding that the curbstone emanated from a portion of the grassy boulevard beside the north side of Steeles over which Toronto had exclusive jurisdiction. The judge found that it was “just and fair in the circumstances of this case” that Toronto alone be responsible for Markham’s costs and characterized the order as a “Sanderson order”.

Toronto appealed the motion judge’s dismissal of its cross-claim against Markham. It also sought leave to appeal the motion judge’s costs disposition.

Issues:

(1) Will there be a duplication of proceedings and possibility of inconsistent findings as a result of the judge having granted summary judgment?

(2) Was the finding that the curbstone was a hazard that Toronto had an obligation to remove a finding of fact that ought to have been left to the trial judge?

(3) Did the motion judge err in concluding that Toronto had exclusive jurisdiction over the portion of the grassy boulevard from which the curbstone emanated; that Markham was not liable to the plaintiff or that Markham did not owe Toronto a duty of care?

(4) Did the judge err in making a Sanderson order and requiring Toronto to pay Markham’s costs?

Holding:

Appeal of summary judgment dismissed. Appeal of motion judge’s costs disposition allowed.  

Reasoning:

(1) No. With the release of Markham from the litigation, the trial will address whether Toronto breached s. 44(1) of the Municipal Act, and the quantum of damages suffered. The motion judge was clear that he made no binding determination of whether or not Toronto breached its obligation under s. 44. Therefore there is no risk of an inconsistent finding at trial.

(2) No. There was no dispute that at the time of the accident the curbstone was in the curb lane of Steeles Avenue East and that Toronto had an obligation to keep the roadway in a state of repair that was reasonable in the circumstances.

(3) No. Toronto had exclusive jurisdiction over the portion of the grassy boulevard beside Steeles Avenue. Markham did not owe Toronto a duty of care because Toronto had specifically assumed jurisdiction from Markham for this area under an agreement signed in 1974.

(4) Yes. A Sanderson order requires the unsuccessful defendant to pay the successful defendant’s costs. The motion judge specifically acknowledged that there had been no finding of liability against Toronto. It was premature to order Toronto to pay Markham’s costs. Markham is entitled to costs against Toronto on the summary judgment motion and the cross-claim and costs against the plaintiff of the summary judgment motion and the action against the plaintiff. If the plaintiff succeeds against Toronto at trial, it shall be open to the trial judge in his or her discretion to direct that Toronto reimburse the plaintiff for any portion of the amount that the plaintiff paid to Markham.

Froehlich-Fivey v. Fivey, 2016 ONCA 833

[Lauwers J.A. (In Chambers)]

Counsel:

B.C. Oldham, for the moving party

A. Thomson, for the responding party

Keywords: Endorsement, Family Law, Appeals, Security for Costs, Rules of Civil Procedure, Rule 61.06, Frivolous and Vexatious Appeal, Insufficient Assets in Ontario

Facts:

The respondent (the moving party on this motion) moved for an order under r. 61.06 of the Rules of Civil Procedure for security for costs of the appeal. He submitted that there are good reasons to believe the appeal was frivolous and vexatious and that the appellant (the responding party on this motion) had insufficient assets in Ontario to pay the costs of the appeal.

The parties were married for 18.5 years. Before their separation, the parties both drew income from the same business and used the business to pay many of their personal expenses. The appellant continued to access company accounts after their separation and ran up debts. The net result was that the appellant was obliged to pay to the respondent approximately $114,000. The trial judge issued his costs decision on September 2, 2016, reported at 2016 ONSC 5541, in which he awarded the respondent the sum of $63,940.80 for fees and $14,093.64 for disbursements, plus HST where applicable.

In the notice of appeal, the appellant asked that the judgment be set aside in part and a judgment be granted on a number of different issues. The notice of appeal listed thirteen grounds of appeal, all of which took issue with factual determinations made by the trial judge.

For such an order to be granted, the motion judge must:

(a) Have good reason to believe the appeal has no merit and is therefore frivolous and vexatious, and

(b) Have good reason to believe the appellant has insufficient assets in Ontario to cover the costs of the appeal: Schmidt v. Toronto-Dominion Bank

Issues:

  1. Is the appeal frivolous and vexatious?
  2. Does the appellant have insufficient assets in Ontario to cover the costs of appeal?

Holding:

Motion Granted. The Appellant was ordered to post security for the costs in the amount of $20,000.

Reasoning:

(1) There was good reason to believe that the appeal had no merit. It did not raise any arguable error of law. It only challenged the trial judge’s findings of fact and credibility that were sound on their face. Therefore, to succeed, the appellant must ultimately demonstrate that the trial judge made a number of palpable and overriding errors in his findings, such as failing to address a material issue, failing to take into account relevant evidence, or taking into account irrelevant evidence. The trial judge did not commit any palpable or overriding errors.

The Appellant alleged that the trial judge showed bias against the Appellant. The trial judge was simply attending to the situation as he understood it, given the appellant’s request for an adjournment and the prejudice it would cause to the respondent. Furthermore, the trial judge’s reasons for judgment exhibit a balanced approach to the issues. Counsel for the appellant does not point to any particular portions of the trial judgment as exhibiting bias.

The second ground is that the trial judge “erred in fact and in law” in finding that the appellant “is not entitled to compensatory support given the length of the marriage and the circumstances of the parties.” The trial judge was alive to the issue and addressed it fully.

The third ground relates to the imputation of income to the appellant of $35,000 to $40,000 annually. The trial judge explained his reasoning, which he based on the evidence. He grounded his finding, on the availability of work for the appellant, which he based on the evidence of a local high school principal.

The fourth, and related, ground of appeal concerns the trial judge’s limitation on the duration of spousal support. The trial judge’s determination was firmly rooted in the evidence.

The fifth ground of appeal is that the trial judge failed to take into account the appellant’s health “as a limiting factor in her ability to earn a greater income”. There is no obvious error in this finding.

The final ground of appeal concerned the fact that the respondent called Christine Larkin as an expert valuation witness. She is an accountant at the firm to which responsibility for maintaining the company’s books and records was transferred after the parties’ separation. Her impartiality was challenged at trial. The trial judge rejected the challenge.

(2) The evidence on the appellant’s financial responsibilities and means did not provide sufficient evidence that she had sufficient liquid assets to cover the costs of the appeal. Indeed, if she was unsuccessful on appeal then the current state of her finances would leave the respondent with a formidable collection problem. Further, if the appellant actually had equitable room in her assets to pay a costs award, then she should be in a position to provide security for costs by, for example, posting a letter of credit: See Perron v. Perron, 2011 ONCA 776.

John Deere Financial Inc v 1232291 Ontario Inc (Northern Haul Contracting), 2016 ONCA 838

[Hoy A.C.J.O., Lauwers and Benotto JJ.A.]

Counsel:

C.J. Cosgriffe and R. R. Watkins, for the appellants

P. O’Toole, for the respondent

Keywords: Contracts, Leases, Interpretation, Exclusion Clauses, Unconscionability, Tercon Contractors Ltd v British Columbia (Transportation and Highways), 2010 SCC 4, Assignments, Summary Judgment, Stay of Execution, Appeals, Jurisdiction, Interlocutory Orders

Facts:

The appellants appealed the grant of summary judgment against the appellant 1232291 Ontario Inc, carrying on business as Northern Haul Contracting, in the amount of $2,206,448, and against the other appellants in the amount of $500,000. The respondent, John Deere Financial Inc, cross-appealed the stay of execution of the judgment pending the completion of the trial of, and release of a decision on, the counterclaim.

The appellant, Northern Haul Contracting, entered an agreement with Eacom Timber Corporation (“the Eacom Contract”) to harvest and deliver timber to Eacom. To fulfil its obligations to Eacom, it needed forestry equipment. Northern Haul entered into six Commercial Lease Agreements (the “Leases”) with Nortrax Canada Inc. between February 22, 2011 and April 29, 2011, pursuant to which it leased six pieces of forestry equipment. The Leases required Northern Haul to make monthly payments over 48 months. The aggregate rental payments required under the Leases for the entire term amounted to $3,462,545. Each lease provided that at the end of its 48-month term, Nothern Haul would have the option to purchase the leased equipment for $1.

The Leases contained broad exclusion clauses, including a provision that stated that Northern Haul’s obligations under the Leases “shall continue in full force and effect regardless of the inability of Lessee to use the Equipment for any reason whatsoever.” Section 28 of each of the Leases provided that the lease is entered into with a view that it will be assigned immediately by Nortrax to John Deere Limited, and may be further assigned by John Deere Limited. The Lessee thereby consented to the assignment of the Lease to John Deere Limited or any other assignee. On their face, the Leases provided that all lessor’s rights and benefits under this lease, and all lessor’s interests in the property had been assigned to John Deere Limited. The evidence indicated that John Deere Limited assigned the Leases to the respondent.

On the date the first Lease was signed, the other appellants – Ryan Bignucolo, Richard Bignucolo, Lucia Bignucolo, Bugnicolo Incorporated, Chapleau Village Shops Inc., 1039442 Ontario Inc. and 1558738 Ontario Inc. – executed guarantees in favour of the respondent of any obligations of Northern Haul to the respondent. The obligation of the guarantors under the guarantees is limited to $500,000 plus interest and costs of enforcing the guarantee on a solicitor and client basis.

On July 6, 2011, Nortrax, as seller, and Northern Haul as buyer, entered into a Repair and Engine Overhaul Finance Agreement (the “Finance Agreement”) for an engine. The price of the engine was $35,084 and it was to be paid through five monthly installments. Like the Leases, the Finance Agreement provided for immediate assignment to John Deere Limited and for further assignments without the consent of Northern Haul. John Winger’s evidence was that the Finance Agreement was assigned to the respondent.

On August 2, 2011, Eacom terminated the Eacom Contract. On August 22, 2011, Northern Haul defaulted in payment under the Leases. On August 22 and 23, 2011, the respondent issued demand letters to Northern Haul and the other appellants. Northern Haul subsequently returned the leased equipment to the respondent, and the respondent sold the six pieces of leased equipment. It recovered approximately $1,900,000, net of tax and inclusive of repairs. The appellants did not argue that the sale process was commercially unreasonable.

The respondent commenced an action against the appellant Northern Haul for the balance owing under the Leases and Finance Agreement and against the other appellants under the guarantees they had provided.

In their statement of defence, the appellants pleaded that the assignments of the Leases and the Finance Agreement to the respondent were invalid and the respondent had no capacity to make any claim thereunder. In the alternative, they pleaded that: Nortrax failed to provide the leased equipment in good condition and failed to keep an appropriate supply level of parts; the respondent, as assignee of the Leases, was liable for all losses caused by Nortrax; and they were entitled to legal or equitable set-off of any damages Northern Haul suffered due to the malfunctioning equipment. They also pleaded that because Nortrax breached the Leases, the respondent, as assignee, was estopped from asserting a claim against the appellants.

The appellants counter-claimed against Nortrax, the respondent and Eacom. They alleged that Nortrax breached the Leases by failing to supply properly working equipment and that the respondent, as assignee, was also liable for this breach. They further alleged that Eacom wrongfully terminated the Eacom Contract.

The respondent brought a motion for summary judgment on its claim against the appellants. Summary judgment was not sought in relation to the counterclaim.

The motion judge found that the respondent was the assignee of the Leases. He also found that the exclusion clause was clearly drafted, was applicable and was not unconscionable. The contracts were not improvident. The parties were sophisticated commercial entities who had independent legal advice and equal bargaining power. There was no public policy that would justify overriding the parties’ freedom of contract. He granted summary judgment against Northern Haul and the other appellants, relying on the calculations of John Winger as to the amount owing, but stayed execution pending the completion of the trial and release of a decision on the counterclaim. The respondent cross-appealed the judge’s order staying execution.

Issue:

(1) Whether the motion judge should have concluded that the issue of whether the respondent was the assignee of the Leases, and therefore had capacity to make its claim, was a genuine issue requiring a trial.

(2) Whether the amount owed under the Leases and the Financing Agreement was a genuine issue requiring a trial.

(3) Whether the motion judge erred in his application of Tercon Contractors Ltd v British Columbia (Transportation and Highways), 2010 SCC 4.

(4) Whether the grant of summary judgment before trial of the appellants’ counterclaim raised the risk of inconsistent decisions (the appellants argued that their counterclaim against Nortrax involved the same issues as their defence to the respondent’s claim).

(5) Whether the Court had jurisdiction to hear and determine the respondent’s cross-appeal of the motion judge’s stay of execution of the judgment against the appellants.

Holding:

Appeal dismissed. Cross-appeal quashed for lack of jurisdiction.

Reasoning:

(1) No. The respondent was the assignee of the Leases. The motion judge was entitled to accept the evidence of John Winger that the respondent was the assignee of the Leases without requiring a mini-trial or a trial. In addition to Mr. Winger’s evidence, the following supported the motion judge’s decision: (i) The Leases provided for the immediate assignment from Nortrax to John Deere Limited and further assignment in the lessor’s discretion, without consent of the lessee; (ii) The assignor, John Deere Limited, did not contest the assignment; (iii) It was undisputed that Nortrax, John Deere Limited and the respondent were within the same corporate group of companies; (iv) The 1996 agreement between John Deere Limited and the respondent provides for the assignment of leases from John Deere Limited to the respondent;  (v) The guarantees were provided to the respondent and not John Deere Limited; (vi) On cross-examination, Ryan Bignucolo admitted that the party that Northern Haul owed money to was John Deere Credit, which was the respondent, carrying on business under its former corporate name; (vii) The leased equipment was returned to, and sold by, the respondent.

(2) No. There was no evidence before the motion judge that the respondent did not make the calculation of the amount owing as stipulated in the Leases. The amount owing did not appear to have been a serious issue before the motion judge. He accepted the calculation in Mr. Winger’s second affidavit. There was no basis to interfere with his decision to do so.

(3) No. Whether the exclusion clause applied in the circumstances was a question of mixed fact and law. The motion judge’s conclusion that the exclusion clauses to prevent Northern Haul from raising equipment malfunction as a defence to the respondent’s claim for unpaid rent was reasonable, and there was no basis to interfere with it. The exclusion clauses were not unconscionable at the time that the Leases were entered into and the appellants did not identify any public policy that would justify overriding the very strong public interest in the enforcement of contracts. Whether Northern Haul did or did not receive what it bargained for from Nortrax did not affect the respondent’s ability to rely on the exclusion clause.

The motion judge did not err in concluding that the exclusion clauses applied. The motion judge reasonably concluded that the combined effect of the provisions was that Northern Haul’s obligation to make payments under the Leases was not affected by the defence it advanced. Northern Haul’s defence was founded on representations and warranties allegedly made by Nortrax to Northern Haul with respect to the Equipment and Northern Haul’s inability to use some of the equipment.  Non-performance by Nortrax did not affect the respondent’s ability to rely on the exclusion clause. The exclusion clauses were not unconscionable and there was no overriding public policy that outweighs the very strong public interest in the enforcement of contracts. The Leases were not improvident and the parties were sophisticated commercial entities who had independent legal advice and legal bargaining power. There was no basis to interfere with those findings.

The onus was on Northern Haul to prove that there was an overriding public policy that outweighed the very strong public interest in the enforcement of contracts. The motion judge concluded that there were no public policy reasons not to enforce the Leases and on appeal the appellants did not point to any public policy that militates against enforcement. The appellants cannot argue that the exclusion clause is not applicable because Nortrax repudiated the Leases. The exclusion clause specifically addressed non-performance by Nortrax. As such, the exclusion clause is part of the bargain between the parties, and non-performance by Nortrax cannot be said to deprive the appellants of “substantially the whole benefit of the contract” and render the clause of no effect.

(4) No. The appellants’ counterclaim against Nortrax did not raise the same issues as its defence to the respondent’s claim. The appellants’ counterclaim was primarily directed at Nortrax, as the supplier of the leased equipment. Whether or not the leased equipment was in new and good working order at the time of delivery and whether Nortrax and the respondent sought to accommodate Northern Haul’s parts’ requirements in a timely and commercially reasonable fashion were not issues on the summary judgment motion. The motion judge made no findings on these issues. They will be issues at the trial of the counterclaim. Conversely, the applicability of the exclusion clauses will not be an issue at the trial of the counterclaim. The appellants plead, as a defence, that they are entitled to set off any damages Northern Haul suffered due to the malfunctioning equipment against any amounts owed to the respondent. In these circumstances the pleaded defence of set-off did not raise the possibility of inconsistent verdicts.

(5) No. A stay of execution was an interlocutory order. An appeal of an interlocutory order lies to the Divisional Court, with leave, pursuant to the Courts of Justice Act, RSO 1990, c. C.43, s 19(1). Section 6(2) of the Courts of Justice Act provides the Court of Appeal with jurisdiction to hear and determine an appeal that lies to the Divisional Court if an appeal lies to and is taken to the Court of Appeal. However, since the respondent did not obtain leave to appeal the stay of execution to the Divisional Court, no relevant appeal lies to that court, and therefore, the Court of Appeal did not have jurisdiction under s 6(2).

Parkhill Excavating Limited v. Royal & Sunalliance Insurance Company of Canada, 2016 ONCA 832

[LaForme, Hourigan and Pardu JJ.A.]

Counsel:

Theall and C. Dunbar, for the appellants, Parkhill Excavating Limited, Arthur Thomas Barker and Randy Arthur Barker

Snowden and S. Kamayah, for the respondent, Economical Mutual Insurance Company

O’Donnell, for the respondent, Royal & Sunalliance Insurance Company of Canada

Stock, for the respondent, Northbridge General Insurance Corporation

Keywords: Contracts, Interpretation, Insurance, Commercial General Liability Policies, Coverage, Consequential Damages, Exclusions, Exceptions, Burden of Proof, Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33

Facts:

In 2004, BGS Homes and B.G. Scugog Inc. (“BGS”) retained Parkhill Excavating Limited (“Parkhill”) to design, install and supervise the construction of 36 septic systems in homes it built and sold. Parkhill performed the work from 2004 to 2010. In May 2010, the local health unit wrote to 25 homeowners warning them of potential problems with their sewage septic systems installed by Parkhill.

The health unit issued Orders to Comply to 36 homeowners under the Building Code Act, 1992. BGS and Tarion Warranty Corporation replaced the septic systems in August 2011. In 2012, BGS sued Parkhill for negligence and breach of contract relating to deficiencies arising from Parkhill’s design and installation work on the septic systems (the “Underlying Action”). BGS alleged that from 2004 to 2010 the appellants supplied and installed incorrect and non-compliant filter mediums, also known as filter sand. As well, BGS alleged that the calculations and designs Parkhill used to obtain the permits for the septic systems in 11 of the homes did not conform to the features of the houses, as larger tanks and septic beds were required under the Building Code Act. The appellants defended the Underlying Action and commenced a third party claim against Robert E. Young Construction Ltd. (“Young Construction”).

Young Construction was a wholesaler of sand and gravel products, including septic filter mediums. Young Construction supplied the allegedly deficient filter sand used in the septic systems in issue.

Parkhill carried Commercial General Liability policies (“CGLs”) from three insurance companies from 2004 to 2010. The appellants alleged that each of the respondent insurers was at risk for a share of the relevant time and had a duty to defend them in the Underlying Action. The respondent insurers denied that they had a duty to defend the appellants, relying on various exclusion clauses in their policies.

Issues:     

Did the motion judge err in ruling that the respondent insurers were not obliged to provide a defence to the appellants under their respective CGL insurance policies?

Holding:

Appeal allowed.

Reasoning:

Yes. The insured had the initial onus of establishing that the allegations made by a plaintiff against it, if proven, would bring the claim within coverage under the insurance policy. The duty to defend was not dependent on the insured actually being liable or the insurer actually being required to indemnify. All that was required to trigger the duty was the mere possibility that a claim fell within coverage under the insurance policy.

Pleadings must be given the widest latitude to determine whether the mere possibility of a claim under the policy existed. Once the insured satisfied the initial burden, the onus shifted to the insurer to establish that the claim fell outside of coverage as a consequence of the operation of an exclusion clause. If the insurer can bring the claim within an exclusion clause, the burden then shifts back to the insured to establish that its claim fell within an exception to the operative exclusion clause. Exceptions do not serve to create coverage; they only bring an otherwise excluded claim back within coverage that has been satisfied by the mere possibility threshold.

The respondent insurers submitted that the true nature of the Underlying Action was an attempt to recover the costs the plaintiff was forced to incur in correcting deficiencies in Parkhill’s work. They submitted that there was no allegation of any consequential damage, whether express or implied, in the Underlying Action. However, this submission was inconsistent with the motion judge’s findings.

The plaintiffs in the Underlying Action claimed losses arising from deficiencies in the septic systems. Accordingly, in addition to the question of whether defective work can be an accident, which has been answered affirmatively by Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, it was not at all clear from the claim that the damages sought were restricted only to the replacement of the allegedly deficient systems due to the work performed by Parkhill.

The motion judge’s finding that the damages claimed in the Underlying Action should not be restricted to the cost of replacing the allegedly deficient systems was well grounded in the pleadings. As she noted, the statement of claim made repeated reference to remedial work. In particular, the claim for the increased cost of remedying work once the homes had been sold by implication engaged consequential damages claims. There was no basis for appellate interference with this finding. Having made that finding, the motion judge should have concluded that there was a mere possibility that claims for consequential damages were being asserted in the Underlying Action.

The duty to defend was established, as the potential consequential damages claims could not be excluded by the Your Work Exclusion. The motion judge erred in going on to consider the applicability of the Your Work Exclusion because the exclusion could not apply to the consequential damages claims.

Although a declaration was granted that the respondent insurance companies were obliged to provide a defence to the Underlying Action, the Court issued two caveats to the foregoing. First, the motion judge did not consider the respondent insurance companies’ alternative argument that coverage was excluded by the Professional Services Exclusion. Therefore, the declaration granted by the Court did not affect the rights of the respondents to advance that argument on a summary judgment motion. Second, on the motion it was conceded that there was no obligation to defend allegations of fraud, deceit and dishonesty as against one of the appellants.

Skunk v. Ketash, 2016 ONCA 841

[Hoy A.C.J.O., Lauwers and Benotto JJ.A.]

Counsel:

M. Brochu and D. Treilhard, for the appellant

S.E. Kim, for the respondent

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory Orders, Res Judicata, Summary Judgment, Insurance Law, Insurance Act, MVA, Uninsured Motorist Coverage

Facts:

The underlying action arose out of a motor vehicle accident in October 2012. The respondent, Christopher Skunk alleged that he was a passenger in a motor vehicle owned by his spouse, Maureen Skunk, but driven by a friend of his, Laurel Ketash. He alleged that the accident arose from the negligence of Ms. Ketash, who did not have automobile insurance at the time of the accident.

In addition to suing Ms. Ketash, Mr. Skunk commenced an action against the appellant, Jevco Insurance Company (“Jeveco”), pursuant to s. 265 of the Insurance Act and a standard Ontario Automobile Policy – OAP 1 (the “Policy”) and the optional OPCF 44R Family Protection Coverage Endorsement (the “Endorsement”) issued to his spouse. In suing Jevco, Mr. Skunk sought to recover under the uninsured provisions in the Policy and Endorsement.

In Ontario, if a person is injured by the operation of the motor vehicle in which he or she is a passenger, the vehicle owner’s insurer must respond. However, if owners fail to insure their automobile, or their insurance is voided, the automobile is not insured. The Insurance Act mandates a scheme to provide for limited insurance coverage where the operation of an uninsured automobile injures a person. The coverage is provided by the injured person’s own insurer but coverage is limited to $200,000 for liability claims per s. 251 of the Insurance Act. To mitigate the consequences of being injured by an uninsured or underinsured motor vehicle, purchasers of automobile insurance policies in Ontario may purchase, for an additional premium, additional coverage in the form of the OPCF 44R Family Protection Coverage Endorsement.

Mr. Skunk did not sue his wife because he takes the position that Ms. Ketash was driving without Ms. Skunk’s consent so that under s. 192(2) of the Highway Traffic Act, Ms. Skunk was not directly liable. Instead, Mr. Skunk sued Jevco. He took the position that his spouse’s vehicle ceased to be insured when Ms. Ketash drove it without Ms. Skunk’s consent, he sued under the “uninsured automobile coverage” provisions in s. 5 of the Policy, the “inadequately insured motorist” provisions in the Endorsement, and s. 265 of the Insurance Act, which defines the term “uninsured automobile”.

In its statement of defence, Jevco pleaded that Mr. Skunk took possession of his spouse’s vehicle without her consent. It also took the position that Ms. Ketash drove the vehicle without Ms. Skunk’s consent and consequently the vehicle became uninsured. However, Jevco took the position that Mr. Skunk was excluded from uninsured coverage as the spouse of the vehicle’s owner, based on the Insurance Act, the Policy and the Endorsement.

Jevco brought a motion for summary judgment in an effort to have Mr. Skunk’s claim against it dismissed. The narrow issue before the motion judge was whether the vehicle was excluded from the definition of “uninsured automobile” because it was owned by Mr. Skunk’s spouse.

In response to Jevco’s motion, Mr. Skunk argued that reading the Endorsement purposively, an automobile owned by or registered in the name of the insured or his or her spouse would be excluded from the definition of an “uninsured automobile” only if the insured or his or her spouse had chosen not to insure the automobile. Moreover, a vehicle taken without consent of the owner is an “uninsured automobile”. The motion judge accepted Mr. Skunk’s argument.

It was the motion judge’s conclusion – which Jevco characterized as a binding determination of law – that Jevco sought to appeal. The motion judge concluded: “As such, I conclude that there may be coverage and Jevco’s motion for summary judgment is dismissed.” [emphasis added.]

Jevco appealed and Mr. Skunk argued that the appeal should be quashed on the basis that the order appealed from was interlocutory, not final.

Issue:

(1) Did the motion judge err by making a final determination of law that was wrong and that will be binding on the trial judge?

(2) Should the appeal be quashed for lack of jurisdiction?

Holding:

Appeal quashed.

Reasoning:

(1) No. The issue of whether an automobile taken without the consent of the owner is excluded from the definition of “uninsured automobile” is not res judicata. The motion judge’s order dismissing Jevco’s summary judgment motion was therefore not a final order.

Despite expressing a “conclusion” about the interpretation of the Endorsement in his reasons, the motion judge may simply have determined that there “may” have been coverage, which was a genuine issue for trial.

The Court of Appeal stated that to understand the parties’ submissions on whether the motion judge had made a binding determination of law, it was necessary to delve into the substance of the appeal. Having done so, the temptation is to find jurisdiction and rule on the merits, which would avoid the need for a further attendance by the parties. The efficiencies of time and cost for the parties are obvious. However, it would take away from the force of the Court of Appeal’s directive and increase the considerable uncertainty about when an appeal of the dismissal of a summary judgment motion lies to the Court. That confusion would result in costs and inefficiencies – to both litigants and the court system – on a wider scale. Post-Hryniak, the volume of summary judgment motions, and, anecdotally, the volume of appeals from the dismissal of summary judgment motions, have increased.

Accordingly, in an attempt to provide greater clarity, the Court of Appeal summarized the effect of its jurisprudence:

  1. The general rule is that an order dismissing a motion for summary judgment is an interlocutory, and not a final, order.
  2. If a party argues that the motion judge made a final, binding determination of law that disposes of the substantive rights of one of the parties (“Binding Legal Determination”) in dismissing the summary judgment motion, then the Court of Appeal will consider whether the motion judge’s order invokes r. 20.04(4) and references the legal determination that the party argues is a Binding Legal Determination.
  3. If the order does not invoke r. 20.04(4) and reference the legal determination that the party argues is a Binding Legal Determination, the Court of Appeal will usually consider whether the precise scope of the point of law determined by the motion judge is clear and whether it is clear that the motion judge intended that her determination be binding on the parties at trial.

In this case, it was not clear that the motion judge intended his determination to be binding on the parties at trial.

The Court of Appeal noted two additional points.  First, in the absence of an express indication by a motion judge that her determination was to be binding on the parties at trial, it should be presumed that in expressing a conclusion on a point of law when dismissing a summary judgment motion, she was simply explaining why she concluded that there was a genuine issue requiring a trial, and did not intend her determination to be binding on the parties.

Second, while the Court of Appeal may take into account a party’s concession that an issue is or is not res judicata in determining whether an order is final or interlocutory, a concession cannot confer or deprive the court of jurisdiction. The previous jurisprudence does not suggest otherwise.

(2) Yes. Because the order dismissing Jevco’s motion for summary judgment is not a final order, it is an interlocutory order and an appeal lies to the Divisional Court, with leave.

Chuang v. Toyota Canada Inc., 2016 ONCA 852

[Doherty, MacPherson and Miller JJ.A.]

Counsel:

A. Platt, for the appellants/respondents by cross-appeal
T. Pinos, for the respondent/appellant by cross-appeal

Keywords: Endorsement, Civil Procedure, Appeals, Re-Opening

Facts:

The appellants, Dr. Sylvester Chuang and several related companies brought an action against Toyota. The trial judge interpreted a commercial contract between the Chuang plaintiffs and the corporate defendant Toyota Canada Inc. The central issue at trial was whether Toyota’s termination of the contract was reasonable. The trial judge held that it was not, but went on to hold that an exclusion clause referring to Toyota’s exercise of its termination rights protected Toyota from any obligation to pay damages or other losses caused to Dr. Chuang by termination of the agreement. Based on his interpretation of the contract, the trial judge dismissed the Chuang action.

The Court of Appeal dismissed the appeal.

The appellants sought to re-open their appeal in reliance on a new ground of appeal not previously raised.

Issues:

Should the Court of Appeal re-open the appeal on an entirely new ground of appeal not argued in the trial court or at the appeal?

Holding:

Motion dismissed.

Reasoning:

No. First, the new ground of appeal (repudiation) was not argued at the trial level or on the appeal. Courts have long frowned on the practice of raising new arguments on appeal. The concerns are two-fold: first, prejudice to the other side caused by the lack of opportunity to respond and adduce evidence at trial and second, the lack of a sufficient record upon which to make the findings of fact necessary to properly rule on the new issue.

Second, it is not in the interests of justice to re-open the appeal. A party seeking to re-open an appeal after the appeal decision has been rendered faces a high hurdle. After more than 10 years of litigation, it would be unfair to permit the appellants to re-open their appeal on a different legal issue.

Rougemount Capital Inc. v. Computer Associates International Inc., 2016 ONCA 847

[LaForme, Pardu and Roberts JJ.A.]

Counsel:

J.W. Round and N. Robar, for the appellant

J.E. Cronyn, for the respondent

Keywords: Contracts, Damages for Breach, Standard of Review

Facts:

Sixdion Inc. (“Sixdion”) described itself as an Aboriginal IT company. Its goal was to market comprehensive IT systems to Aboriginal communities. Computer Associates International Inc. (“CA”) carries on the business of developing, manufacturing and licensing proprietary computer software programs in the U.S. and elsewhere. It has a subsidiary that markets and sells CA’s products in Canada.

In 2004, Sixdion believed that it had a contract with CA. Sixdion claimed that CA breached the contract, resulting in Sixdion’s assignment in bankruptcy in 2005. Rougemount Capital Inc. (“Rougemount”), a former Sixdion creditor, purchased the action against CA from Sixdion’s trustee for $5,000. It was common ground that this entitled Rougemount to 60% of any damages assessed to have been incurred by Sixdion as a result of CA’s breach of their agreement. Rougemount claimed damages suffered by Sixdion of $20 –to $54 million.

The trial judge found that there was a contract that CA breached and awarded $11 million in damages. CA appealed and argued that the trial judge made fatal errors in reaching her decision on both the issue of the validity and nature of the contract and in her assessment of damages.

Issues:

(1) Did the trial judge err by concluding that Quinn or Devlin had the authority to enter into the contract with Sixdion?

(2) Did the trial judge err in her award of damages?

Held:

Appeal allowed, in part.

Reasoning:

(1) No. Quinn and Devlin did have authority to enter into the contract and that CA breached the contract.

a) Nature of the Contract

CA argued that the trial judge made a palpable and overriding error by disregarding the equity component of this transaction in her findings in deciding Quinn’s authority. The contract included a purchase of share warrants that could lead to a ten percent equity interest in Sixdion only if CA chose to exercise the warrants. In other words, the trial judge did not disregard the equity component; rather, she put it in proper perspective in the larger scheme of the deal.

b) Actual Authority

CA argued that the trial judge made a palpable and overriding error in finding that Quinn had authority to approve the deal with Sixdion. It was a question of fact to be determined in light of the circumstances, including the conduct or situation of the parties. In this case, it was important to note that the trial judge did not receive any direct evidence about the scope of Quinn’s authority. CA did not provide any written record of its policies and did not call any senior officers or directors to testify. The trial judges’ conclusion was reasonable and supported by the evidence.

(2) Yes. The trial judge erred in assessing damages as of 2010, rather than as of 2004, when the breach of contract occurred.

Damages awards attract considerable deference. It is well established that the general measure of damages for breach of contract is the amount of damages that will, so far as money can, place the aggrieved party in the same position as if the wrong had not been done: Ticketnet Corp. v. Air Canada (1997). The focus is on the injured party’s loss and on the measure of compensation required to restore it to the position that it would have been in had the contract been performed.

With respect to the appropriate date for the assessment of damages, the presumption is that damages, including those for loss of a business or opportunity, should generally be assessed as of the date of breach: Johnson v. Agnew, [1980] A.C. 367 (H.L.). The general presumption that damages will be assessed as of the date of breach may be subject to exceptions where fairness requires it. However, this presumption should not be easily displaced; any deviation from it must be based on legal principle. No special circumstances existed in this case. The trial judge did not reference any. The circumstances of this case were no different than any other case where damages for future loss have to be determined.

In concluding that the circumstances of the present case constituted the kind of unfairness that would allow an exception to the calculation of damages as at the date of breach, the trial judge erred. The discounted cash flow analysis prepared by the appellant’s expert, calculating damages as of the date of breach in 2004, would be the fairest method to assess Sixdion’s damages. The Court held that Sixdion’s unstable financial past, as well as the uncertainty of the new venture, justified a substantial discount. The $11 million damages award was set aside and substituted for a damages award of $1.3 million.

Civil Endorsements 

Walchuk v. Houghton, 2016 ONCA 839

[Feldman, Simmons and Lauwers JJ.A.]

Counsel:

Jaeger, for the appellant

Sheremeta, for the respondent

Keywords: Endorsement, Costs

Diallo c. Compagnie Nationale Royale Air Maroc, 2016 ONCA 842

[Weiler, Rouleau and Roberts]

Abdourahmane Diallo, in person

A.. MacDonald, for the respondent

Keywords: Endorsement, Civil Procedure, Limitation Periods, Limitations Act, 2002

Criminal Decisions

R. v. Ahmed, 2016 ONCA 831

[Feldman, Gillese and Benotto JJ.A.]

 Counsel:

Ahmed, acting in person

Hasan, appearing as duty counsel

Thompson, for the respondent

Keywords: Endorsement, Criminal Law, Conspiracy, Drug Trafficking, Sentencing

R. v. Johnston, 2016 ONCA 834

[MacPherson, Cronk and Watt JJ.A.]

Counsel:

Beaudoin, for the appellant

Friedman, for the respondent

Keywords: Endorsement, Criminal Law, Impaired Drivin

R. v. Martin, 2016 ONCA 840

[Weiler, Simmons and Epstein JJ.A.]

Counsel:

Proestos, for the appellant

Halfyard and Breana P. Vandebeek, for the respondents

Keywords: Criminal Law, Income Tax Act, Jurisdiction, Summary Conviction, Canadian Charter of Rights and Freedoms

R. v. Carr, 2016 ONCA 837

[Feldman, Gillese and Benotto JJ.A.]

Counsel:

Dawe, for the appellant

Schwalm, for the respondent

Keywords: Endorsement, Criminal Law, Sexual Assault, Break and Enter, Evidence, Admissions, Voluntary Statements

R. v. P.M.C, 2016 ONCA 829

[Laskin, Sharpe and Huscroft JJ.A]

Counsel:

P. Millar, for the appellant

R. Direnfeld, for the respondent

Keywords: Criminal Law, Sexual Assault, Youth Criminal Justice Act, Historic Allegations

R. v. Singh, 2016 ONCA 835

[MacPherson, Cronk and Watt JJ.A.]

Counsel:

Navarrete, for the appellant

Chorney, for the respondent

Keywords: Endorsement, Criminal Law, Sexual Assault

R. v. McIntyre, 2016 ONCA 843

[MacPherson, Cronk and Watt J.A.]

Counsel:

Halfyard and Breana Vandebeek, for the appellant

Wakely, for the respondent

Keywords: Criminal Law, Drug Trafficking, Sentencing

R. v. Lam, 2016 ONCA 850

[Watt, Lauwers and Benotto JJ.A]

Counsel:

Lindsay, for the applicant/appellant

Perlmutter, for the respondent

Keywords: Criminal Law, Impaired Driving

R. v. McNeil, 2016 ONCA 844

[Feldman, Gillese and Benotto JJ.A]

Counsel:

Chozik, duty counsel

Latimer, for the respondent

Keywords: Endorsement, Criminal Law, Aggravated Assault, Uttering a Death Threat, Possession of a Weapon

R. v. Zeisig, 2016 ONCA 845

[Feldman, Gillese and Benotto JJ.A]

Counsel:

Bojanowska, duty counsel

Wilson, for the respondent

Keywords: Endorsement, Criminal Law, Drug Trafficking

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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