ONTARIO COURT OF APPEAL SUMMARIES (MAY 23 – 26, 2017)

Good afternoon,

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

In an important employment law decision in Brake v PJ-M2R Restaurant Inc., a majority of the Court clarified that while employment income earned during the notice period of a wrongful dismissal is generally treated as mitigation of loss, income earned during the notice period are not always deductable if they fall within one of the following three categories: First, EI benefits are not deducted. Second, statutory entitlements (under the ESA, for example) are not subject to mitigation. Third, where an employee commits to full-time employment, but the contract permits simultaneous alternate employment, and the first employer terminates her without notice, any income from the second employer that she could have earned while continuing with the first is not deductible. All of these reasons in the present case supported the trial judge’s determination not to deduct from the plaintiff’s damages aware her income derived from a much inferior job that she took after she was constructively dismissed.

The majority left open the question of when supplementary employment income and/or income obtained in the balance of the notice period rises to a level that it, or a portion of it, should be considered as a substitute for the amounts that would have been earned under the original contract, and, accordingly, be treated as deductible mitigation income.

Feldman, J.A., concurring in the result, went further, and held that where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not in mitigation of damages and need not be deducted from the amount the employer must pay. This is because, at law, the employee is not obligated to accept the much inferior position in mitigation of damages.

In Gilmor v. Nottawasaga Valley Conservation Authority, the Court of Appeal applied Dunsmuir in concluding that the appropriate standard for review on an appeal from a decision of the Commissioner under the Conservation Authorities Act is reasonableness.  In so doing, the Court overturned the Divisional Court and restored the Commissioner’s decision not to permit construction of a building in a flood plain.

In Belanger v Sudbury (Regional Municipality), the Court reviewed the statutory defences to a municipality being found negligent under s.284(1) of the Municipal Act for failing to keep a roadway or highway in a reasonable state of repair. The damage award in that sad case of catastrophic injury was agreed at $12 million.

Other topics covered include the retroactivity/retrospectivity of municipal by-laws, contractual interpretation, repair and storage liens (no limitation period applicable to possessory liens), patent infringement, and leave to commence fourth party claims in the construction law context.

Have a great weekend.

John Polyzogopoulos
Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416 593 2953
http://www.blaney.com/lawyers/john-polyzogopoulos

Table of Contents

Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402

Keywords: Employment Law, Wrongful Dismissal, Constructive Dismissal, Employment Standards Act, Notice, Statutory Entitlements, Damages, Mitigation

Gilmor v. Nottawasaga Valley Conservation Authority, 2017 ONCA 414 

Keywords: Municipal Law, Administrative Law, Standard of Review, Correctness, Reasonableness, Dunsmuir v. New Brunswick

Belanger v Sudbury (Regional Municipality), 2017 ONCA 428

Keywords: Torts, Negligence, MVA, Contributory Negligence, , Municipal Liability, Highway Maintenance, Municipal Act, R.S.O. 1990, c. M.45, s. 284, Lloyd v. Bush, 2017 ONCA 252, , Frank v Central Elgin (Municipality), 2010 ONCA 574 

Burlington (City) v Burlington Airpark Inc., 2017 ONCA 420

Keywords: Municipal Law, Statutory Interpretation, Retroactivity, Retrospectivity, Legislation Act, 2006, S.O. 2006, c.21, Sch. F., s.52, Municipal Act, 2001, S.O. 2001, c. 25, s.440

OrthoArm Incorporated v GAC International LLC, 2017 ONCA 418

Keywords: Intellectual Property, Patents, Infringement, Contracts, License, Costs, Rules of Civil Procedure, Rule 57.01

Eden Agency Inc. v. Palinkas, 2017 ONCA 421

Keywords:  Contracts, Bailment, Repair and Storage Liens Act, R.S.O 1990, c. R.25, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

TMS Lighting Ltd. V. KJS Transport Inc., 2017 ONCA 427

Keywords: Damages, Tort Damages, Evidence, Deference

56 King Inc. v. Aviva Canada Inc., 2017 ONCA 408

Key Words: Insurance Law, Appraisals, Insurance Act, s. 128

Bentivoglio v Groupe Brigil Construction, 2017 ONCA 413

Keywords: Civil Procedure, Construction Law, Third and Subsequent Party Claims, Leave to Commence, Nunc Pro Tunc, Construction Lien Act, s. 56

Allied Properties Reit v 1064249 Ontario Inc., 2017 ONCA 419

Keywords: Real Property, Municipal Law, Zoning, Legal Non-Conforming Use, Injunctions, Standard of Review

Best Source Inc. v. International Industries Corporation, 2017 ONCA 411

Keywords: Contracts, Assignment, Contractual Interpretation, Standard of Review

For Civil Endorsements, click here.

For Criminal and Ontario Review Board Decisions, click here. 

Civil Decisions:

Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402

[Gillese, Pepall, and Feldman JJ.A.]

Counsel:

J.F. Lalonde, for the appellant

M.V. Peters, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Constructive Dismissal, Payment In Lieu of Notice, Employment Standards Act, Statutory Entitlements, Damages, Mitigation, Michaels v. Red Deer College, [1976] 2 S.C.R. 324, Sylvester v. British Columbia, [1997] 2 S.C.R. 315, Jack Cewe Ltd. v. Jorgenson, [1980] 1 S.C.R. 812, Karas v. Rowlett, [1944] S.C.R. 1

Facts:

A long-serving McDonald’s restaurant manager, Ms. Brake, who had received “excellent” performance reviews for over a decade, was dismissed from her position without notice or payment of her statutory entitlements. She successfully sued for wrongful dismissal and was awarded damages representing 20 months’ compensation in lieu of notice, inclusive of statutory severance under the Employment Standards Act. The employer appealed.

Issues: Did the trial judge err:

(1) By failing to give adequate reasons for his findings of fact and credibility determinations?

(2) In finding that Ms. Brake had been constructively dismissed?

(3) By failing to find that Ms. Brake’s decision to not accept the offer of continued employment as a First Assistant amounted to a failure to mitigate her damages, thus disentitling her to any damages?

(4) In setting the notice period at 20 months?

(5) In his treatment of mitigation during the notice period?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The trial judge articulated the relevant legal principle, reviewed the evidence, made his findings, and indicated how he applied the legal principles in light of those findings. The trial judge did not make a palpable and overriding error in his findings. Accordingly, the first ground of appeal was dismissed.

(2) No. When the appellant offered Ms. Brake the non-supervisory position of First Assistant, with “meaningfully inferior benefits,” or to face termination, it unilaterally made a substantial or fundamental change to her employment contract, and in so doing, it constructively dismissed her.

(3) No. A reasonable person in Ms. Brake’s position would not have been expected to accept the demotion to First Assistant. Since there was no palpable and overriding error in the finding of law and fact, the third ground of appeal was dismissed.

(4) No. The trial judge based the reasonable notice period of 20 months on the Bardal factors. The trial judge added seven years of full-time service at a previous McDonald’s franchise with the thirteen years of actual service with PJ-M2R. The trial judge’s finding in this regard was owed considerable deference.

(5) No. First, there is no “magic formula” that an employee must follow when making reasonable efforts to obtain other employment and thereby mitigate her loss. When an employer alleges that a former employee has not reasonably mitigated his or her losses, “the question is whether [the employee] has stood idly or unreasonably by, or has tried without success to obtain other employment:” Michaels v. Red Deer College, [1976] 2 S.C.R. 324, at p. 331. The fact that Ms. Brake did not apply for other restaurant management positions does not mean that she did not make reasonable efforts to mitigate, as she was entitled to consider her long-term interests.

Second, the trial judge did not err when he did not reduce the damages award by the amounts that Ms. Brake received during the notice period, or the “amounts received in mitigation of loss.”

The controlling rule here is that an employee who is dismissed without reasonable notice is entitled to damages for breach of contract based on the employment income the employee would have earned during the reasonable notice period, less any amounts received in mitigation of loss during the notice period: Sylvester v. British Columbia, [1997] 2 S.C.R. 315, at paras. 14-17.

Gillese J.A. (Pepall J.A. concurring) disagreed with the trial judge’s interpretation of analyzing loss mitigation, stating that the court does need to consider whether income received from a job that was inferior to the one from which the employee was dismissed was mitigation income.

The controlling general principle here is that employment income earned during the notice period is generally to be treated as mitigation of loss. The income earned by Ms. Brake during the notice period need not be deducted from the damages award for the following three reasons:

(a) Employment Income benefits are not to be deducted from damages awarded for wrongful dismissal. Jack Cewe Ltd. v. Jorgenson, [1980] 1 S.C.R. 812, at p. 818.

(b) Statutory entitlements are not subject to mitigation. Any employment income earned during a statutory entitlement period is not deductible as mitigation income. This is because the Employment Standards Act benefits are minimum entitlements and may not be reduced whether sought in an action or by the administrative route. Boland v. APV Canada Inc., (2005), 250 D.L.R. (4th) 376 at paras. 21-22.

Gillese J.A. was of the view that where a blended damages award is made on the basis of wrongful dismissal and statutory entitlements, the burden is on the employer to prove what employment income is attributable to the statutory entitlement period and what employment income is attributable to the balance of the notice period. Red Deer College, at p. 331.

(c) During the balance of the notice period, where an employee has committed herself to full-time employment with one employer, but her employment contract permits for simultaneous employment with another employer, and the first employer terminates her without notice, any income from the second employer that she could have earned while continuing with the first is not deductible from her damages.

As Rand J. explained in Karas v. Rowlett, [1944] S.C.R. 1, at p. 8, for income earned by the plaintiff after a breach of contract to be deductible from damages, “the performance in mitigation and that provided or contemplated under the original contract must be mutually exclusive, and the mitigation, in that sense, is a substitute for the other.”

Gillese left open the question as to when supplementary employment income and/or income obtained in the balance of the notice period rises to a level that it, or a portion of it, should be considered as a substitute for the amounts that would have been earned under the original contract, and, accordingly, be treated as deductible mitigation income.

Feldman, J.A., concurring in the result, was of the view that where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not in mitigation of damages and need not be deducted from the amount the employer must pay. This is because the employee was not obligated, at law, to accept such inferior position in mitigation of damages.

Gilmor v. Nottawasaga Valley Conservation Authority, 2017 ONCA 414

[Doherty, Brown and Huscroft JJ.A.]

Counsel:

Alex Gilmor and Tania Gilmor, in person

J. Thomas Curry and Andrew M. Porter, for the intervener, Conservation Ontario

J.A. Olah, for the appellant, Nottwasaga Valley Conservation Authority

S.Blake and J. Glick, for the intervener, Minister of Natural Resources

D. N. Germain, for the respondent, The Township of Amaranth

J. Opolsky and J. Toshach Weyman, Amicus Curiae

Keywords: Municipal Law, Administrative Law, Standard of Review, Correctness, Reasonableness, Dunsmuir v. New Brunswick

Facts:

Alex and Tania Gilmor (“the respondents”) decided to build a home without first obtaining any of the required approvals. Part of their lot is on a floodplain – “hazardous land” within the meaning of the Conservation Authorities Act, R.S.O. 1990, c. C.27 (“CAA”). The land is subject to the control of the Nottawasaga Valley Conservation Authority (“the NVCA”).

The NVCA denied the respondents’ application for approval to build in 2011. The respondents appealed the NVCA’s decision to the Mining and Lands Commissioner, who conducted a hearing de novo in 2013. The Commissioner found that the respondents’ proposed development was neither appropriate nor safe, and consequently denied approval.

The respondents appealed the Commissioner’s decision to the Divisional Court. The Divisional Court allowed their appeal. On the question of standard of review, the Divisional Court acknowledged that reasonableness is normally the standard of review applied to questions of law involving the interpretation of a tribunal’s home statute, but held that the correctness standard applied in this case for two reasons.

First, the court characterized the question before the Commissioner as a matter of general importance to the legal system that was beyond the Commissioner’s expertise. Second, the court stated that the Commissioner’s reliance on safety considerations in rejecting the appellant’s application “amounted to a positive assertion of jurisdiction to scrutinize applications on the basis of safety”, which overlapped with municipal authority to administer the Building Code Act, 1992, S.O. 1992, c. 23 (“BCA”) and possibly the Planning Act, R.S.O. 1990, c. P.13. The court therefore applied a correctness test to the Commissioner’s decision, ultimately allowing the respondents’ appeal.

The NVCA appealed.

Issues:

(1) Was correctness the appropriate standard of review?

(2) If reasonableness was the appropriate standard of review, was the Commissioner’s decision reasonable?

Holding:

Appeal allowed.

Reasoning:

(1) The Appropriate Standard of Review

No. For reasons summarized below, the Court found that reasonableness was the applicable standard of review, not correctness.

The presumption of reasonableness applies

Following the decision of the Supreme Court in Dunsmuir v. New Brunswick, 2008 SCC 9, there are only two standards of review – correctness and reasonableness. The Court of Appeal went on to list a series of cases, including Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd., 2016 SCC 47, in which the courts have established that the reasonableness standard applies presumptively when a tribunal is interpreting its home statute or statutes that are closely related to its function. On the contrary, correctness review is confined to a narrow range of cases in which the presumption of reasonableness review is rebutted.

Was the presumption of reasonableness review rebutted?

The Commissioner had considerable institutional expertise when it comes to interpreting and applying the CAA, and relative expertise compared to the court in any event. The mere existence of a right of appeal from the Commissioner’s decision did not rebut the presumption that reasonableness review applies in this case. Dunsmuir limits correctness review to four categories of questions:

  1. constitutional questions;
  2. jurisdictional questions;
  3. questions of general law both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise;
  4. questions concerning the jurisdictional lines between two or more competing specialized tribunals.

When a tribunal is required to decide one of these questions, the presumption of reasonableness review is rebutted. The question raised in this case was whether either of the latter two exceptions applies: whether a general question of law of central importance was raised or whether jurisdictional lines between two or more competing tribunals had to be determined.

Was a question of law of central importance raised?

In order for correctness review to apply, a question of law must be not only a general question of central importance to the legal system as a whole, but also a question that is beyond the tribunal’s specialized expertise. The questions of law arising in this case were not general in nature; they concerned the interpretation of specialized legislation and regulations governing flooding and development which have no impact beyond the specialized administrative regime in which they arise, nor were the answers to these questions beyond the Commissioner’s expertise. 

Did a question concerning jurisdictional lines arise?

Correctness review is required only if it is necessary to determine jurisdictional lines between competing specialized tribunals. The decision impugned in this case arose out of an application to build a home on hazardous land – a floodplain under the jurisdiction of the NVCA at first instance and the Commissioner on appeal. Although the BCA regulation specifically adverted to construction standards for buildings constructed on floodplains, neither the regulation nor the BCA purported to authorize development on floodplains. They simply established the relevant construction standards in the event that development on a floodplain is permitted.

The Court therefore held here that the Divisional Court erred in concluding that the Commissioner’s authority overlapped with authority under the BCA, and that correctness review applied as a result. Reasonableness was in fact the correct standard.

(2) Was the Commissioner’s Decision Reasonable?

Yes. The Court held that the reasonableness of the Commissioner’s decision depended on the answer to two specific questions:

(a) Was the Commissioner’s interpretation of ss. 2 and 3 of O. Reg. 172/06 reasonable?

(b) Was the Commissioner’s exercise of discretion under s. 3 reasonable?

The interpretation of ss. 2 and 3

The Commissioner had to determine whether the respondents were entitled to build a home on their land which is “hazardous land” within the meaning of the CAA. The starting point was the NVCA’s mandate under the CAA and its regulations. Section 28 (1)(c) of the CAA authorized the NVCA to make a regulation prohibiting development, and O. Reg. 97/04 specifically required that the regulation prohibit development in or on hazardous lands, wetlands, and river or stream valleys.

The Commissioner interpreted s. 2(1) as prohibiting development within the floodplain, with the burden on the respondents to convince the Commissioner to permit their development pursuant to the exercise of the discretion under s. 3(1). The Commissioner refused to exercise the discretionary power under the regulation to permit the proposed development.

The exercise of discretion under s. 3

Having established that the respondents’ proposed development was prohibited by s. 2 of the regulation unless the Commissioner exercised her discretion to permit it under s. 3, the Commissioner had to exercise the discretion under s. 3 reasonably. The Commissioner asserted that the discretionary power to permit development “indicates concern regarding any development in the floodway which might damage people and property.” The appellant and interveners submitted that the discretion under s. 3 may be exercised on the basis of safety concerns. The Divisional Court did not deny that safety was a relevant consideration. However, the court insisted that safety could not be elevated to a stand-alone head of jurisdiction in the control of flooding.

The Court of Appeal was of the view that although the Commissioner took an arguably strict approach to public safety by denying approval even though the proposed development met some of the flood safety guidelines, the Commissioner’s decision was not an unreasonable one. The court’s task in conducting reasonableness review is not to weigh the evidence, reach its own judgment, and then use that judgment as a benchmark for assessing the reasonableness of the Commissioner’s decision. Accordingly, the Divisional Court’s order was set aside and the Commissioner’s order was restored. 

Belanger v Sudbury (Regional Municipality), 2017 ONCA 428

[Strathy C.J.O., Cronk and Pepall JJ.A.]

Counsel:

C. Boggs and D. Litwin, for the appellants

P. Pape, S. Chaudhury, J. Morse, and J. Nairn for the respondents

Keywords: Torts, Negligence, MVA, Contributory Negligence, , Municipal Liability, Highway Maintenance, Municipal Act, R.S.O. 1990, c. M.45, s. 284, Lloyd v. Bush, 2017 ONCA 252, , Frank v Central Elgin (Municipality), 2010 ONCA 574

Facts:

On November 22nd, 2000, the respondent, Lisa Marie Belanger was involved in a serious motor vehicle accident during a winter storm while driving on Regional Road 35 (“RR35”) in the Regional Municipality of Sudbury (the “Region”). She sustained catastrophic injuries, and sued the appellant, Region and the City of Greater Sudbury in negligence. She claimed that they had failed to meet their obligations under s.284(1) of the Municipal Act, R.S.O. 1990, c. M.45 as then in force to keep RR35 in a reasonable state of repair. At trial, only liability was in issue, with the parties agreeing that an appropriate quantum of damages was $12 million.

The trial judge ruled in favour of the respondents, holding that the Region was 100% liable for the damages claimed. He found that the conditions on RR35 at the time of the accident constituted a state of non-repair within the meaning of 284(1), and held that but for these conditions, the accident would not have occurred.

On appeal, the Region did not contest the trial judge’s threshold finding that RR35 was in a state of non-repair at the time of the accident, and instead relied on the statutory defences to negligence set out in ss. 284(1.2) and 284(1.3) of the Act. At the time of the accident, those sections provided that a municipality was not liable for failing to keep a highway or bridge in a reasonable state of repair: i) “if it did not know and could not reasonably have been expected to know about the state of repair of the highway or bridge” (s. 284(1.2)); or ii) “if it took reasonable steps to prevent the default from arising” (s. 284(1.3)).

Relying on those statutory defences, the Region appealed from the trial judge’s liability findings. The Region maintained that both defences were established at trial and the trial judge erred in holding to the contrary. The Region also argued that the trial judge erred in his apportionment of liability by failing to find Belanger contributorily negligent.

Issues:

  1. Did the trial judge err in his treatment of the statutory defences in s. 284(1.2) of the Act?
  2. Did the trial judge err in his treatment of the statutory defences in s. 284(1.3) of the Act?
  3. Did the trial judge err in his treatment of the Region’s contributory negligence claim?

Holding: Appeal dismissed.

Reasoning:

(1) Justice Cronk, writing for a unanimous court, found that the trial judge made no palpable and overriding error in making the findings of fact concerning the conditions on RR35 and is entitled to deference on his conclusion that the City had failed to make out the statutory defence n ss. 284(1.2) of the Act. The trial judge held that the Region’s employees reasonably ought to have been expected to know of the emergence of conditions on RR35 giving rise to the risk of a refreeze, conditions that were caused by the Region’s failure to employ the plowing and salting sequence of preventative maintenance works outlined by expert evidence and contemplated by the Region’s own standards and procedures.

The trial judge was entitled to find that the Region was negligent under s.284(1.2) based on the findings of fact he made. The Court of Appeal previously considered the duty of a municipality regarding road maintenance and statutory defences to a claim against a municipality based on its alleged non-repair of a road, including in winter storm conditions in Lloyd v. Bush, 2017 ONCA 252, which confirms that proof of a state of non-repair, as in this case, is not in itself sufficient to establish a municipality’s liability for the alleged failure to meet its duty of road maintenance. The Court cited para. 64 of Lloyd, where the Court of Appeal had held:

Rather, a municipality will only be liable for failing to salt and/or sand and clear the road of snow where it had actual or constructive knowledge that road conditions created an unreasonable risk of harm to users of the highway, and where the municipality unreasonably neglected that risk.

The Court reviewed the findings of fact made by the trial judge regarding the Region’s procedures and maintenance activities, the applicable weather conditions, and the road conditions, and found that there was no palpable and overriding error present. The trial judge was entitled to accept expert evidence that the Region’s crews ought to have known of a risk of a refreeze on RR35 that caused the conditions leading to the accident, and to find that the Region’s failure to follow its own policies that morning were applicable to determining that the Region’s crews ought to have known about the conditions.

(2) Since the trial judge had a clear understanding of the operative standard and was entitled to make the applicable findings of fact, there was no palpable and overriding error. The trial judge’s reasons clearly indicated that he appreciated the requirement that he assess the reasonableness of the road maintenance works actually performed by the Region on the day in question and that he undertook this analysis in dismissing the Region’s defence under s.284(1.3). He relied on the Court of Appeal’s decision in Frank v Central Elgin (Municipality), 2010 ONCA 574 in appreciating that the operative standard was reasonableness, as opposed to perfection, in assessing the Region’s efforts at rectifying the conditions on RR35. The trial judge made specific findings of fact about the nature and timing of the Region’s road maintenance and was entitled to rely on these facts when considering the reasonableness of the Region’s steps.

The Court also dismissed the Region’s argument that the trial judge erred by asking whether the Region could have acted differently rather than assessing whether the Region acted reasonably  in the circumstances it faced. Justice Cronk found that the trial judge had conducted a detailed analysis that did not just rely on consideration of alternative or additional steps, and was entitled to find that the Region had failed to meet its onus to establish the s.284(1.3) statutory defence.

(3) The trial judge was entitled to find that Belanger was not contributorily negligent. The Region argued that the trial judge’s finding was fatally flawed because the trial judge failed to appreciate, as a matter of law, the presumption of negligence against the driver when their vehicle crossed the centre line of the road in expressly noting the presumption in his reasons. Although it would have been preferable for the trial judge to do so, the Region’s invocation of the presumption was specifically addressed at trial, and the Region appeared to have acknowledged that the presumption of negligence was rebutted if Belanger lost control of her car. The Court was of the view that the trial judge had implicitly found the presumption as having been rebutted and was entitled to find no contributory negligence.

Burlington (City) v Burlington Airpark Inc., 2017 ONCA 420

[Feldman, Sharpe and Roberts JJ.A.]

Counsel:

J. Laskin and P. Wells, for the appellants

I. Blue and A. Husa for the respondents

Keywords: Municipal Law, Statutory Interpretation, Retroactivity, Retrospectivity, Legislation Act, 2006, S.O. 2006, c.21, Sch. F., s.52, Municipal Act, 2001, S.O. 2001, c. 25, s.440

Facts:

The appellant, Burlington Airpark Inc., (“Airpark”) owns an aerodome located in the City of Burlington, the respondent in this appeal. Airpark began fill and site alteration work in 2008, and Burlington accepted until 2013 that the work was part of airport improvement and therefore not subject to regulation by a municipality. In 2013, Airpark applied for a severance to obtain land needed to extend the main runway. Burlington subsequently investigated, taking the position that Airpark was conducting a commercial fill operation and that By-Law 6-2003 applied. A consent order was entered into precluding Airpark from conducting any further fill or site alteration work pending the determination of Burlington’s application to enforce compliance with the by-law. Both the Ontario Superior Court and the Ontario Court of Appeal held that Airpark was subject to the by-law.

While the cross-applications were before the courts, Burlington passed a more stringent by-law, By-Law 64-2014. This repealed By-Law 6-2003 and provided no transitional provision to continue it. Burlington requested Airpark file an application under By-Law 64-2014 but Airpark refused, maintaining that the 2014 by-law could not be applied retroactively. Airpark subsequently applied under By-Law 64-2014 to complete its work, but Burlington refused to process the application unless Airpark submitted an application for a permit under By-Law 64-2014 for work done previous to that by-law’s enactment.

In 2015, Burlington commenced an application seeking a mandatory order under the Municipal Act, 2001, S.O. 2001, c. 25, s.440 requiring Airpark to remove all fill deposited since 2008, or, in the alternative, an order requiring Airpark to submit an application under By-Law 64-2014 for all work performed since 2008. Airpark argued that (1) the by-law could not be applied retroactively, that it was (2) constitutionally inapplicable to its operations because Burlington had in effect enacted the by-law to specifically target Airpark’s aeronautics operation, (3) that the by-law was impermissibly vague, and (4) that the application was out of time and barred by the Limitations Act, 2002.

The application judge found in Burlington’s favour, declining to consider the issue of retroactivity while dismissing Airpark’s other arguments.

Issues:

Can Burlington require Airpark to apply for a permit under the 2014 by-law for work done prior to the enactment of that by-law?

Holding:

Appeal allowed.

Reasoning:

No. Justice Sharpe, writing for the Court, found that there is nothing in By-Law 64-2014 that can justify requiring remediation of work conducted, or a situation conducted, before the by-law came into force. The thrust of the by-law is prospective and makes no provision for remediating work done without a permit under By-Law 6-2003. Accordingly, the Court held that Airpark cannot be held to the standard of work under By-Law 64-2014 for work conducted years earlier under a different by-law.

Second, the Court found that By-Law 64-2014 is not retroactive in nature. The Court found that the by-law does not operate retrospectively by attaching new consequences for the future, and there is no language to suggest it was intended to operate retroactively. Therefore, requiring Airpark to obtain a permit in 2014 based upon standards set in 2014 for work conducted years before would plainly change the law from what it was at the time the work was undertaken.

Finally, the Court found that the Legislation Act, 2006, S.O. 2006, c.21, Sch. F., s.52, does not operate to continue the application of By-Law 6-2003. Burlington argued that s.52(3) served to continue the application of By-Law 6-2003 in providing that, if an Act or regulation was repealed, revoked, replaced, or amended, “[p]roceedings commenced under the former Act or regulation shall be continued under the new or amended one, in conformity with the new or amended one as much as possible”. The Court found that s.52(3) does not apply to municipal by-laws since the Legislation Act, 2006, applies to only “Acts and regulations”, precluding application to by-laws. A municipal by-law in not an Act, and s.17(a) of Part III of the Legislation Act, 2006, provides that “regulation” does not include a by-law of a municipality.

The Court closed by noting that although there is public importance in enforcing standards designed to protect the public from environmental harm, the important principle that enactments not be interpreted as declaring past law to be different from what it was barring clear legislative intention must be respected under the rule of law.

OrthoArm Incorporated v GAC International LLC, 2017 ONCA 418

[MacFarland, van Rensburg and Huscroft JJ.A.]

Counsel:

A. J. Sanche and D. Murynka, for the appellant

J. A. Aucoin and A. Kapur, for the respondent

Keywords: Intellectual Property, Patents,  Infringement, Contracts, License, Costs, Rules of Civil Procedure, Rule 57.01

Facts:

OrthoArm Incorporated (OrthoArm) invented a type of “self-ligating” orthodontic bracket. OrthoArm’s bracket is covered by U.S. Patent No. 5,630,715 (the “715 Patent”). In 1997, OrthoArm licensed the worldwide rights to manufacture, use, market, and sell products covered by the 715 Patent to the respondent GAC International, LLC (“GAC”). Under the agreement, OrthoArm was entitled to receive a license fee based on net sales of such products.

In 2007, GAC began to market and sell orthodontic brackets it had developed with a third party manufacturer, without accounting to OrthoArm for profits under the License Agreement. OrthoArm alleged that these brackets (the “Accused Products”) were an extension of its original invention and were covered by the 715 Patent. GAC denied the allegation, and claimed that the Accused Products were developed by the third party in accordance with its own U.S. patent. Because the 715 Patent is a U.S. patent, the trial proceeded on the basis of American patent law.

The trial judge accepted that one element, a “slidable locking shutter”, was not present in the Accused Products. If even one element of a claim is not found in an Accused Product, the product does not infringe the patent claim. Every claim contained language identical or similar to the requirement of “a slidable locking shutter movable between open and closed positions”. The trial judge interpreted “slidable locking shutter” to mean that the shutter must only slide in moving between the open and closed positions to trap the wire. In the Accused Products, she found a small sliding action when the locking shutter is moved within the occlusal-gingival opening but, for the most part, that the locking shutter moves from open to closed position and back through a rotating motion. As such, she found the Accused Products not to be covered by the 715 patent.

In dismissing the action, the trial judge awarded costs against the appellant of $300,000 for fees and $90,000 for disbursements, plus HST.

Issues:

(1) Did the trial judge err in determining the Accused Products were not covered by the 715 Patent?

(2) Did the trial judge err in awarding costs in favour of the respondent?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The court held the trial judge correctly interpreted the words “slidable” and “movable” within the context of the specification. She looked at how the terms were employed together in claim 1, as well as in the other claims that were part of the specification, noting that the claims also referred to the locking shutter being “slidably mounted on said bracket between open and closed positions” and “a locking means slidably carried by the bracket member between open and closed positions”. The court held she was correct in finding the term “between”, in the context in which it is used, to mean from a point to a point. The trial judge correctly concluded that the words and the figures were consistent with the conclusion that the sliding motion must take the locking shutter from the open to the closed position and back again. She observed that the only thing that gives the locking shutter the ability to slide between the open and closed positions is the guide bar sliding in the occlusal-gingival opening. In this context, “between” does carry the meaning of “from and to”, and does not reasonably carry the alternative meaning argued by the appellant of “at”, “into” or “across”.

(2) No. The court held the trial judge’s reasons demonstrate she considered and applied the relevant factors under rule 57.01 of the Rules of Civil Procedure. She addressed the appellant’s concern about proportionality when she awarded the respondent less than 65% of its claim for partial indemnity costs. The court also found that this was not a case of divided success. The respondent was entirely successful in the proceedings and it would have been an error for the trial judge to focus on individual issues in awarding costs.

Eden Agency Inc. v. Palinkas, 2017 ONCA 421

[Lauwers, Hourigan and Benotto JJ.A.]

Counsel:

B. L. Yellin, for the appellant

M. A. Munro, for the respondent 

Keywords:  Contracts, Bailment, Repair and Storage Liens Act, R.S.O 1990, c. R.25, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

Facts:

The respondent, Palinkas, stored food processing equipment owned by the appellant, Eden Agency Inc., and claimed a storage lien under the Repair and Storage Liens Act, R.S.O 1990, c. R.25. The respondent retained the equipment in breach of his obligation under s. 17 of the Act to sell it after receiving a letter from the appellant dated May 30, 2012. Under s. 21 of the Act, the effect of his failure to comply was that the respondent became liable to pay damages. The trial judge ordered him to pay damages to the appellant in the amount of US$129,500. The trial judge then reduced the damages to be paid by giving the respondent a credit of $27,900 for storage fees calculated at $900 a month for 31 months, from January 1, 2010 to July 31, 2012.

Issue(s):

  1. Should credit have been given to the respondent?
  2. If credit should have been given to the respondent, does the Limitations Act, 2002 affect the amount of credit that should be given?

Holding:

Appeal dismissed. 

Reasoning:

(1) Yes. The appellant made two arguments. First, the respondent is not entitled to a credit because he did not claim a set-off in the statement of defence and did not counterclaim for the credit. The Court of Appeal rejected that argument. As noted in theCanadian Encyclopedic Digest(Ont. 4th), vol. 37, title 94 at § 3:

A legal lien is a defence rather than a cause of action, although it will usually relate to a cause of action. Generally speaking, such liens are not subject to limitations periods, since under the law of Ontario limitation periods generally tend only to bar recourse to judicial remedies, rather than to extinguish rights. However, in the case of some statutory liens, the lien expires at the end of a relevant limitation period and ceases to exist as a right.

Citing Debor Contracting Co. v. Core Rentals Ltd, (1982), 40 O.R. (2d) 24, the Court of Appeal concluded that it was open to the trial judge to reduce the measure of damages by the value of the amount of the lien.

Second, the appellant argued that there was no evidence to support the amount of the credit for storage fees. The Court of Appeal also rejected that argument. There was evidence before the trial court that the consignor of the equipment (not the appellant) and the respondent had agreed on a storage fee of $900 per month. This was known to the appellant’s principal who acknowledged by letter of May 30, 2012, to pay at that rate for a short period of time. The Act does not require the relevant agreement to be between the owner of an article and the storer. Further, there was no evidence that the amount charged was unreasonable. The trial judge properly exercised her authority under s. 4 of the Act by providing for a credit.

(2) No. The appellant submitted that the time period for the credit should be no longer than the two year limitation period under theLimitations Act, 2002, S.O. 2002, c. 24, Sched. B. This would reduce the credit from $27,900 to $21,600. However, the Court of Appeal reiterated that the limitation period does not generally run against possessory liens. Since the appellant offered no contrary submissions, the Court of Appeal rejected the appellant’s argument.

TMS Lighting Ltd. V. KJS Transport Inc., 2017 ONCA 427

[Pepall, Lauwers and Huscroft JJ.A.]

Counsel:

T. Slade and C. Giordano, for the appellants

P. Pape and J. Nairn, for the respondents

Keywords: Damages, Tort Damages, Evidence, Deference

Facts:

This appeal concerns the awarding of damages in trespass and nuisance, and has been tried at the trial level twice. The first trial awarded damages for all three of lost productivity, trespass and nuisance, but the decision was set aside because the respondent had failed to establish damages due to lost productivity. A second trial was ordered and was limited to assessing damages for trespass and nuisance. At the second trial, Justice Tzimas of the Superior Court of Justice awarded damages in the amount of $532,000.

The appellant appeals the second trial decision for the same reason as the first, alleging that the respondent has once again failed to present a reasonable and reliable basis on which to quantify damages. The appellant claims that the trial judge erred in misapprehending the evidence and should have only awarded nominal damages.

Issues:

  • Did the trial judge err in her understanding of the evidence?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The trial judge did not err in her understanding of the evidence. The question at issue in the second trial was how much of the respondent’s diminished productivity was caused by the appellant. In answering the question, the respondent produced evidence that it had not provided at the first trial, as well as an expert opinion about the quantification of damages.

The evidence produced by the respondent was sufficient to make a decision on damages. While the respondent’s records were lacking in some respects as a result of his business being relatively small and unsophisticated, the trial judge nonetheless found there to be enough evidence and an explanation to account for these deficiencies.

The trial judge interpreted the evidence appropriately. After carefully reviewing the evidence, the trial judge used it to make inferences from lost revenue and lost net income in order to reach the fixed damages amount of $532,000. Her conclusion factored in external factors such as the impact of the recession and a difference between lost sales in the Canadian and US markets.

With all of the above in mind, the trial judge’s reasoning was sound and her decision on damages was therefore entitled to deference.

56 King Inc. v. Aviva Canada Inc., 2017 ONCA 408

[Lauwers, Hourigan and Benotto JJ.A.]

Counsel:

S. J. Winny, for the appellant

E. Bowker, for the respondent

Key Words: Insurance Law, Appraisals, Insurance Act, s. 128

Facts:

The appellant commenced a claim under an insurance policy for damage to a commercial property caused by windstorms in July 2013. The statement of claim was issued on February 14, 2014. On January 25, 2016, the insurer elected an appraisal under s. 128 of the Insurance Act. The appellant rejected the appraisal on the basis that it was too late.

The insurer brought a motion requesting a declaration that the appellant’s losses could be determined by appraisal. The motions judge granted the insurer’s motion.

The appellant appealed the motion judge’s decision.

Issues:

  • Did the motion judge have jurisdiction to make the order?
  • Is the two-year delay prior to the demand for appraisal a bar for appraisal?
  • Is the effect of the motion judge’s decision to bifurcate the jury trial?

Holding:

Appeal dismissed.

Reasoning:

  • The appellant’s action was based on claims under an insurance policy. Similarly, the respondent sought relief that flowed from this policy. This relief was sought pursuant to the Insurance Act, which does not define application. Finally, it is illogical to commence an additional proceeding by way of application for relief arising from the same insurance contract.
  • The statutory condition does not impose a time limit on the insurer’s right to invoke appraisal. While the court has discretion to refuse an appraisal, this is only the case when the respondent has been abusive. In the current case, there was no abuse on the part of the respondent.
  • The independent operation of the Insurance Act appraisal process will simply limit and narrow the issues left for trial.

Bentivoglio v Groupe Brigil Construction, 2017 ONCA 413

[LaForme, van Rensburg and Huscroft JJ.A.]

Counsel:

C. O’Brien, for the appellants

H. Borlack and J. M. Brown, for the respondent (Third party)

G. Poliguin for the respondents

Keywords: Civil Procedure, Construction Law, Third and Subsequent Party Claims, Leave to Commence, Nunc Pro Tunc, Construction Lien Act, s. 56

Facts:

Genivar moved for an order dismissing the third party claim, or in the alternative, granting leave to continue its fourth party claim against Mastron. The basis for the motion to dismiss was that the defendant Brigil had not obtained leave to commence the third party claim under the Construction Lien Act. Mastron argued that the fourth party claim should be dismissed because it too had been commenced without leave. The motion judge refused to dismiss the third and fourth party claims. In doing so, he held that an order by Hackland J. dated December 10, 2013, was intended to continue the proceedings under the “ordinary track,” and, as such, the proceedings continued to be governed by the Rules of Civil Procedure. He granted leave nunc pro tunc to Genivar to issue its fourth party claim against Mastron.

Issues:

(1) Did the motion judge err in granting leave to commence the fourth party claim?

Holding:

Appeal dismissed.

Reasoning:

(1) No. The court held that the motion judge correctly found that the intention of the order of Hackland J. — made on consent of Genivar — was to continue the action on the “ordinary track”. After disposing of the lien claim entirely, the order of Hackland J. did not expressly state whether the remainder of the action would continue under the “ordinary track”, but merely that the third party claim would “survive”. The third party claim sought damages for breach of contract and negligence in addition to contribution and indemnity. Since only claims for contribution and indemnity are permitted in construction lien third party proceedings under s. 56 of the Construction Lien Act, a third party claim that asserts other claims can only proceed on the ordinary track. As a practical matter, the third party claim here could only “survive” in proceedings on the “ordinary track”. The decision to allow Genivar to continue the fourth party claim was correct. The court noted, however, that since the third party proceedings continued on the ordinary track, there was no need for the nunc pro tunc order for leave.

Allied Properties Reit v 1064249 Ontario Inc., 2017 ONCA 419

[LaForme, van Rensburg and Huscroft JJ.A.]

Counsel:

P. DiMonte, for the appellants

D. Reiter and M. Cowan for the respondents

Keywords: Real Property, Municipal Law, Zoning, Legal Non-Conforming Use, Injunctions, Standard of Review

Facts:

The appellant conceded that its commercial parking lot was not in compliance with the Zoning By-Law and wished to defeat the respondent’s request for an injunction restraining operation of the lot. To do so, the appellant needed to establish that its property was a legal non-conforming use by demonstrating that a commercial parking lot had operated continuously and without interruption on the property since the passage of the Zoning By-Law in 1993.

The application judge stated that the appellant failed to do so because there was no evidence to support its position that the use of the property had not changed since the passage of the By-Law. She accepted expert evidence that the lot was used as an accessory lot rather than a stand-alone commercial parking lot between 1993 and 1996, and granted the injunction along with declaratory relief.

Issues:

Did the application judge make a palpable and overriding error warranting setting aside the injunction?

Holding:

Appeal dismissed.

Reasoning:

No. The application judge made findings that were open to her based on the record. The role of the Court of Appeal is not to make different findings than the application judge. There is no basis for the Court of Appeal to interfere with the facts found.

Best Source Inc. v. International Industries Corporation, 2017 ONCA 411

[Strathy C.J.O., Cronk and Pepall JJ.A.]

Counsel:

Ryan Wozniak and Carmine Scalzi, for the appellant

Michael F. Smith, for the respondents

Keywords: Contracts, Assignment, Contractual Interpretation, Standard of Review

Facts:                  

Headwaters Inc. (“Headwaters”) was the exclusive sales agent in Canada for the respondent, International Industries Corporation (“IIC”) with respect to several products, including one called “Mean Green”. The respondent David Cloer is the principal of IIC. Headwaters had two operative agreements with IIC – the Joint Venture Marketing Agreement (“JVMA”), and the International Sales Agency Agreement (“ISAA”). In February 2009, the appellant, Best Source Inc., offered to purchase from Headwaters the exclusive right to sell “Mean Green” in Canada. Negotiations culminated in the execution of a letter agreement dated March 10, 2009, whereby Headwaters, with IIC’s consent, assigned its rights and obligations with respect to “Mean Green” under the JVMA to the appellant. The assignment agreement contemplated that the parties would negotiate an “agency agreement” and that “in the interim and ultimately upon completion of a satisfactory agency agreement with IIC, [the appellant] will now stand in the position of [Headwaters] under the [JVMA] with respect to the Mean Green product.”  The motion judge found that the parties conducted themselves as if the sales agency agreement was in place even though the agency agreement was never finalized.

On the motion, and in the Court of Appeal, the appellant claimed that the only contract assigned to it was the JVMA. The appellant’s principal, Mr. Calabrese, said that he was unaware of the ISAA until after litigation commenced. The motion judge rejected that evidence. He found that Mr. Calabrese was not only aware of the ISAA, but that he had received a copy of it. The motion judge noted that, while the assignment agreement was being negotiated, Mr. Calabrese’s lawyer advised Mr. Calabrese that he had spoken to Mr. Cloer, who told him that IIC had a “written brokerage/sales agency agreement” with Headwaters, covering a number of different products, and was prepared to consent to the assignment of the agreement with respect to “Mean Green”. The motion judge also found that the reasonable interpretation of the assignment agreement was that the parties intended that the appellant would step into the shoes of Headwaters as IIC’s sales agent. In so doing, the appellant took on all the obligations of the ISAA, including the arbitration clause.

Issues:

  • Were the contractual rights assigned to the appellant limited to those set out in the JVMA?

Holding:

Appeal dismissed.

Reasoning:

No. While it is true that the assignment agreement made no reference to the ISAA, and only referred to the JVMA, the assignment agreement contemplated that pending the negotiation of an agency agreement, the appellant would “stand in the position” of Headwaters in relation to the “Mean Green” product. In order to “stand in the position” of Headwaters, the appellant required an assignment of the ISAA, which set out the essential business terms of the sales agency arrangement. The appellant referred to a letter from IIC’s lawyer, written in response to a letter from the appellant’s lawyer protesting IIC’s decision not to renew the agreement. The letter from the appellant’s lawyer made reference to the sales agency agreement with Headwaters and took the position that the agency agreement expired in 2010, and any rights inherent in the agency terminated with the lapse of the agreement.

While the motion judge did not address this issue directly, he found as a fact that the appellant and IIC conducted themselves as if the sales agreement were in place. The appellant operated under the sales agreement and had the benefit of it. The parties’ conduct did not constitute a waiver of the sales agreement or the arbitration clause in it. In the Court of Appeal’s view, the lawyer’s letter did not undermine the motion judge’s conclusion that the ISAA was assigned to the appellant and that the parties acted in accordance with its terms.

The Court of Appeal concluded that the motion judge’s findings of fact were entitled to deference, as is his interpretation of the contractual documents, which was grounded in his appreciation of the factual matrix. Those findings supported the conclusion that the bundle of rights possessed by Headwaters included those under both the JVMA and the ISAA, that both agreements were necessary to enable the appellant to act as the sales agent for “Mean Green” in Canada, and that both agreements were assigned to the appellant.

Short Civil Endorsements

DeMarco v Nicoletti (Appeal Book Endorsement), 2017 ONCA 417

[LaForme, van Rensburg and Huscroft JJ.A.]

Counsel:

M. DeMarco, acting in person

K. Watters, for the respondent

Key Words: Security for costs order

Duff (Duff Capital Group) v. Genesys Laboratories Canada Inc. (Appeal Book Endorsement), 2017 ONCA 429

[LaForme, van Rensburg and Huscroft, JJ.A]

Counsel:

J.B. Simpson, for the appellant

R.S. Duff, acting in person

Key Words: Standard of Review, Contracts

Ontario Review Board

Parsons v. Komer, 2017 ONCA 407

[Gillese, Benotto, and Roberts JJ.A.]

Counsel:

T. Whillier, for the appellant

J.P. Thomson, for the respondent

Key Words: Health Law, Ontario Review Board, Administrative Law, Criminal Law, Health Care Consent Act, Self-represented Litigant, Procedural Fairness, Adjournments

Criminal Decisions

R. v. E.H. (Publication Ban), 2017 ONCA 423

[Rouleau, Trotter, and Paciocco JJ.A.]

Counsel:

E. Chozik, for the appellant

A. Wheeler, for the respondent

Key Words: Criminal Law, Publication Ban, Sexual Assault, Sexual Interference, Ineffective Assistance of Trial Counsel, Credibility Assessment

R. v. I.W.S. (Publication Ban), 2017 ONCA 409

[MacPherson, Blair and Epstein JJ.A.]

Counsel:

M. Webb, for the appellant

N. Dennison, for the respondent

Key Words: Criminal Law, Publication Ban, Sexual Assault, Sexual Touching, Kiennaple, W(D) Principles,

R. v. Richards, 2017 ONCA 424

[Watt, Lauwers and Benotto JJ.A.]

C. Rippell and M. Salih, for the appellant

J. Streeter, for the respondent

Key Words: Possession for the Purpose of Trafficking, Trial Fairness, Reasonable Apprehension of bias, Presumption of Judicial Integrity, Admissibility of Evidence, Voluntariness, Oickle, s.10(b) Charter Right to Counsel, Grant

R. v. Sliwka (Publication Ban), 2017 ONCA 426

[Doherty, MacFarland and Paciocco JJ.A.]

K. Shai, for the appellant

D. Derstine, for the respondent

Key Words: Physical Assault, Sexual Assault, Failure to Give Reasons, Teskey, Error of Law, Appellate Review

R. v. Sohal, 2017 ONCA 425

[Rouleau, Trotter and Paciocco JJ.A.]

M. Halfyard and B. Vandebeek, for the appellant

A. Hotke, for the respondent

Key Words: Assault, Suspended Sentence, Appeal of Summary Conviction, Immigration, Deportation, Pham

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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