1. Douglas v. Stan Fergusson Fuels Ltd., 2018 ONCA 192 (Hoy A.C.J.O., Rouleau, Hourigan, Benotto and Roberts JJ.A.), March 9, 2018 In this appeal, a five-judge panel of the court considered the intersection of bankruptcy law and the doctrine of subrogation, and in particular whether an insurer is entitled to commence a subrogated claim in the name of its bankrupt insured.
The case dealt with a subrogated insurer which brought a claim against the appellants for contamination of property resulting from a home oil spill. As was required, the insurer, State Farm Fire and Casualty Company, brought the claim in the name of its insured.
At the time the claim was brought, however, the insured was an undischarged bankrupt who no longer had an ownership interest in the property.
The appellants, who had been sued for causing the spill, brought a motion to dismiss the claim on the basis that it was a nullity because the insured was bankrupt when it was commenced, and therefore the cause of action had vested in the Trustee in Bankruptcy, who was not the named plaintiff.
The motion judge and the Divisional Court both allowed the action to proceed, finding that the bankruptcy did not preclude the insurer’s subrogated claim.
The majority of the five-judge panel of the Court of Appeal disagreed, concluding that the action was not properly constituted. At the time the action was commenced, the insured’s cause of action had vested in the Trustee. The insured lacked capacity to bring the action, and the insurer could not commence a subrogated claim on the insured’s behalf.
In coming to this conclusion, the court overruled its prior decision in Mariner Foods Ltd. v. Leo-Progress Enterprises Inc., 2017 ONCA 7, leave to appeal dismissed, [2017] S.C.C.A. No. 64. Hoy A.C.J.O., writing for the majority, noted that the court’s decision in Mariner was a brief endorsement disposing of an application to admit fresh evidence on appeal. The court in that case had cited the Divisional Court’s decision in this case for the principle that a subrogated claim brought by an insurer is not caught by a bankruptcy. Mariner was decided while the appeal in this case was pending, without reference to binding judicial authority or analysis.
The five-judge panel was convened to permit the court to consider over-ruling Mariner to the extent that, in reliance on the Divisional Court’s decision in this case, it stood for the principle that a subrogated claim brought by an insurer is not caught by a bankruptcy. In Hoy A.C.J.O.’s view, the broad principle enunciated in Mariner conflated the concepts of subrogation and assignment and was incorrect in law. Accordingly, the court applied the per incuriam exception to stare decisis and overruled Mariner to the extent it stood for that principle.
The majority dismissed the claim.
Dissenting in part, Rouleau and Roberts JJ.A. did not agree that the claim should be dismissed outright. They would have remitted the matter back to the Superior Court to permit State Farm to bring a motion to regularize the pleading by substituting the Trustee, as trustee of the estate of the insured, as plaintiff.
2. Benarroch v. Abitbol, 2018 ONCA 203 (Doherty, MacFarland and Paciocco JJ.A.), March 1, 2018
In the recent case of Houle v. St. Jude Medical Inc., the Court of Appeal heard a motion in what it deemed the “seemingly never ending battle over what orders are final and what orders are interlocutory”. Last month, yet another round of this battle was fought before the court, the results providing a cautionary tale on getting the distinction right.
The impugned order was made in the course of ongoing family law proceedings. It required that the appellant make certain payments, including spousal and child support, to the respondent. The order went on to provide in paragraph 7:
In the event that the Husband fails to comply with paragraph 5 above, the Wife may move without further notice to the Husband to strike his pleadings involving all financial issues between the parties.
The basis of the appellant husband’s appeal was his argument that he could not pay the amounts ordered and that the effect of the order was to deny him the opportunity to participate any further in the proceedings.
The appellant’s claimed impecuniosity was disputed by the respondent wife.
She brought a motion to quash the appeal on the ground that the order was interlocutory and therefore the Court of Appeal had no jurisdiction to hear it.
The court agreed.
A provision like that in paragraph 7 of the order, above, directed at the consequences of non-compliance with the order, cannot alter the nature of the order. The court quashed the appeal on the basis that the terms of the order requiring payments towards spousal and child support were interlocutory.
The court went on to award substantial indemnity costs of $22,000, both in respect of the motion and the appeal itself, against the appellant husband. The court held that it was plain and obvious on the authorities that the order was interlocutory and not appealable to the Court of Appeal. Moreover, counsel for the respondent had put counsel for the appellant on notice of its position shortly after the appeal was initiated. The motion to quash the appeal should not have been necessary.
3. Ferreira v. St. Mary's General Hospital, 2018 ONCA 247 (Juriansz, Miller and Nordheimer JJ.A.), March 14, 2018
In December 2016, Fernando Ferreira was involved in a motor vehicle accident. He retained Georgiana Masgras in respect of his claims for compensation for neck and lower back pain and other injuries arising from the accident.
On July 3, 2017, Ferreira was unexpectedly found in cardiac arrest at his home. He was brought to St. Mary’s General Hospital in Kitchener, where he was provided with life support. A few days later, with his condition deteriorating and no prospect of recovery, Ferreira’s family decided to remove him from life support. The withdrawal of life support was scheduled for July 8, 2017, and Ferreira’s family prepared for his death.
When Masgras learned of Ferreira’s condition, she urged his family to reconsider their decision. They declined. Masgras then, on her own initiative, obtained an interim injunction that prohibited the removal of Mr. Ferreira from life support. Ultimately, the injunction was set aside, with costs ordered against Masgras personally.
Ferreira was removed from life support and passed away.
Masgras then purported to bring this appeal on Ferreira’s behalf. She appealed both the reviewing judge’s decision to set aside the interim injunction that prohibited the removal of Ferreira from life support, and the application judge’s order of costs against her.
The Court of Appeal dismissed the appeal, noting that while Masgras had the right to appeal the order of costs against her, she had no right to appeal the reviewing judge’s decision with respect to the injunction.
Writing for the court, Nordheimer J.A. explained that Masgras had no instructions to bring the appeal on behalf of Ferreira. Moreover, the underlying application was stayed as a result of Ferreira’s death by virtue of r. 11.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, unless and until an order to continue was granted under r. 11.02. No such order had ever been obtained. Once death occurred, the right to bring an appeal vested in the trustee of Ferreira’s estate. The appeal was therefore improperly constituted as it had not been brought by the estate trustee, nor had it been assigned by the estate trustee to Masgras. In any event, the appeal was moot.
The appeals, including Masgras’ appeal of the application judge’s order of costs against her, were dismissed with costs payable by Masgras personally on a substantial indemnity basis.
4. The Catalyst Capital Group Inc. v. Moyse, 2018 ONCA 283 (Doherty, MacFarland and Paciocco JJ.A.), March 22, 2018
This dispute arose out of the sale of WIND Mobile Inc. The appellant, The Catalyst Capital Group Inc., and the respondent, West Face Capital Inc., both investment management firms, made separate efforts to acquire WIND in 2014. While it appeared that Catalyst and WIND had reached an agreement in early August of that year, that agreement soon fell apart. West Face, along with a consortium of other entities, came forward with a new, and eventually successful, bid for WIND. West Face and the consortium later sold WIND to Shaw Communications for a substantial profit.
In the lawsuit, Catalyst essentially alleged that West Face “stole” the WIND deal by improperly using confidential information from the respondent Brandon Moyse, an analyst who worked for Catalyst before quitting in May 2014 and going to work for West Face.
Catalyst claimed that the respondents’ misuse of its confidential information caused it damage, and sought an accounting of the profits made by West Face and the consortium upon the sale of WIND to Shaw. Catalyst also sued West Face and Moyse for spoliation, claiming that Moyse destroyed relevant evidence on his cellphone and computer.
The trial judge dismissed all of Catalyst’s claims, awarding costs to West Face on a substantial indemnity basis and costs to Moyse on a partial indemnity basis.
Catalyst appealed on three bases: it asserted that the trial judge erred in his fact-finding process, it alleged procedural unfairness, and it claimed that the trial judge erred in his treatment of the spoliation arguments. It also sought leave to appeal the costs order.
The Court of Appeal rejected Catalyst’s submission that the trial judge erred in his fact-finding process and in particular that his findings were the product of uneven scrutiny and tainted by material misapprehensions of the evidence.
In the court’s view, the trial judge approached the evidence of the appellant’s witnesses no differently than he did that of the respondents’.
With respect to the trial judge’s alleged misapprehensions of evidence, overall the trial judge simply preferred the evidence of the respondents’ witnesses and the inferences that flowed therefrom.
In terms of alleged procedural unfairness, the appellant argued that the trial judge made a series of factual findings against it in respect of the negotiations between WIND and West Face in August 2014 despite having refused to allow it to amend its claim to allege that West Face had induced WIND to breach its earlier agreement with Catalyst in the course of those negotiations. The appellant took the position that these findings were beyond the scope of the claim as framed in the pleadings and were based on an inadequate evidentiary record.
The Court of Appeal rejected this submission as well, noting that Catalyst did not move in this proceeding to amend its claim to include an allegation that West Face induced WIND to breach its agreement with the appellant. While the appellant did unsuccessfully seek to make that amendment in a related proceeding, the refusal had no impact on the conduct of the trial. The court also noted that the trial judge heard considerable evidence about the dealings between WIND and West Face and the consortium, and that the appellant did not object to any of it. In the court’s view, there was no unfairness to the appellant in the way in which these issues were litigated.
The court also rejected Catalyst’s submission that the trial judge erred in his analysis of the spoliation claim, noting that any inference that may be drawn against the respondents could only arise after a finding that Moyse had destroyed relevant evidence. The trial judge found as a fact that Moyse did not destroy relevant evidence, and the appellant failed to establish any basis upon which to interfere with that finding.
Finally, the court upheld the trial judge’s assessment of costs, holding that this was a case that warranted costs on a substantial indemnity scale. The appellant made serious allegations against West Face, maintained those allegations in the face of substantial evidence refuting them, and ultimately “utterly failed” to substantiate any of the claims.
The appeal was dismissed.
5. Schnarr v. Blue Mountain Resorts Limited, 2018 ONCA 313 (Doherty, Brown and Nordheimer JJ.A.), March 28, 2018
The Court of Appeal heard these two appeals together, considering whether occupiers of recreational properties such as ski resorts are entitled to include limitation of liability clauses in their agreements with guests. The specific issue was whether the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A (CPA) took precedence over the Occupiers’ Liability Act, R.S.O. 1990, c. O.2 (OLA) in this context.
In both cases, the plaintiffs were patrons of ski resorts. Both plaintiffs executed the ski resort’s waiver of liability as a condition of their tickets, and both were subsequently injured on the resort’s premises.
On a Rule 21 motion under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, in the case of the plaintiff David Schnarr and Blue Mountain Resorts, the parties agreed that there was a “consumer agreement” as defined under s. 1 of the CPA. On that basis, the motion judge found that Blue Mountain’s waiver under s. 3(3) of the OLA partially offended ss. 7(1) and 9(3) of the CPA. She held that Blue Mountain’s waiver, insofar as it purported to waive liability in contract, was void and severed from the consumer agreement.
On a Rule 22 motion in the case of the plaintiff Elizabeth Woodhouse and Snow Valley Resorts, the motion judge found that Snow Valley’s waiver was void in respect of both tort and contract claims. He held, however, that a court had the equitable power to enforce a void waiver in a consumer agreement pursuant to s. 93(2) of the CPA.
Blue Mountain and Woodhouse appealed, while Snow-Valley cross-appealed.
With none of the underlying facts yet proven in court, the appeals turned on the question of which statute governed the relationship between the parties. Specifically, the appeals raised the issue of whether ss. 7 and 9 of the CPA vitiate or void an otherwise valid waiver of liability under ss. 3 of the OLA, where the party seeking to rely on the waiver is both a “supplier” under the CPA and an “occupier” under the OLA.
Writing for the court, Nordheimer J.A. found that there is a clear and direct conflict between the CPA and the OLA. While the latter permits an occupier to obtain a waiver of liability, the former precludes a supplier from obtaining a waiver of liability. The conflict between these statutes is unavoidable: what one prohibits, the other permits.
Having determined that the statutes are in conflict, Nordheimer J.A. turned to a discussion of how this clash might be resolved.
The principles of statutory interpretation urge an approach that allows both statutes to maintain their maximum application and effectiveness. The principles affecting the analysis with respect to which statute should take precedence include:
(i) where a class of things is modified by general wording that expands the class, the general wording is usually restricted to things of the same type as the listed items;
(ii) when one or more things of a class are expressly mentioned, others of the same class are excluded;
(iii) the exhaustiveness doctrine;
(iv) the provisions of a general statute must yield to those of a special one; and
(v) the absurdity doctrine.
Dealing with each principle in turn, Nordheimer J.A. concluded that ss. 7 and 9 of the CPA do not operate to void otherwise valid waivers executed under s. 3(3) of the OLA. The more specific provision in the OLA prevails over the general provisions in the CPA.
In the result, both plaintiffs were held to be bound by their waivers with the respective ski resorts.
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