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Heller v. Uber Technologies Inc., 2009 ONCA 1
Heller addresses the validity of an arbitration clause in the proposed class proceedings against Uber. The Court of Appeal invalidated the arbitration clause in question, which paves the way for the drivers’ proposed class action to proceed.
The appellant was licensed to use the respondents’ driver app (“Uber Eats”) to provide food delivery services. The appellant entered into a driver services agreement with the respondent, which included an arbitration clause requiring all disputes arising out of the agreement to be resolved by arbitration in Amsterdam under the Rules of Arbitration of the International Chamber of Commerce. The up-front administrative costs for a driver to participate in arbitration were a minimum of US$14,500. The appellant commenced a class action against the respondents, seeking a declaration that Uber drivers in Ontario are employees of the respondent and are therefore governed by the provisions of the Employment Standards Act (“ESA”). The claim also sought a declaration that the respondents violated the provisions of the ESA, and that the arbitration provisions of the service agreements entered into between the parties were unenforceable.
At first instance, the motion judge granted the respondents’ motion for a stay of proceedings of the class proceeding in favor of arbitration, observing that courts must enforce arbitration agreements freely entered into, even in contracts of adhesion. Any restriction on the parties’ freedom to arbitrate must be found in legislation. He further concluded that the plain language of the ESA did not restrict the parties from arbitrating, and that the arbitrability of employment agreements was not a question of pure statutory interpretation. Rather, it raised a “complex issue of mixed fact and law” for an arbitrator to decide at first instance under the competence-competence principle, which dictates that challenges to the arbitrator’s jurisdiction should be resolved by the arbitrator. Finally, he rejected the argument that the agreement was unconscionable.
The Court of Appeal allowed the appeal and reversed the motion judge’s decision, reviewing it on the standard of correctness. The Court found that the arbitration clause amounted to an illegal contracting out of the ESA on the basis that the appellant would be prevented from making a complaint to the Ministry of Labour about employment standards violations. For the purpose of this analysis, the Court commenced its consideration from the premise that drivers were employees, stating that courts must “start with the presumption that the appellant can prove that which he pleads[.]” The Court also held that the clause was unconscionable at common law on the basis that it represented a substantially improvident or unfair bargain, there was a significant inequality in bargaining power, and there was no evidence that the respondent received legal advice.
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Presley v. Van Dusen, 2019 ONCA 66
Presley is an important decision from the Court of Appeal addressing the Limitations Act, 2002. It holds that, in accordance with section 5(1)(a)(iv) of that statute, the limitation period does not run while a claimant does not either know, or ought to know, that a proceeding would be an appropriate means to remedy a claim. In product liability cases, where a defendant provides representations about the nature and quality of the issue and assurances about it being fixed, plaintiffs may not be barred from relying on those representations and assurances for a period of time before the limitation period begins to run.
The appellants retained the respondent, Van Dusen, to install a septic system in 2010. The respondent Health Unit approved the proposed septic system the same year. In the spring of 2011, 2012 and 2013, there was a problem with a smell emanating from the system. In 2011 and 2012, Van Dusen provided an explanation for the problem and an apparent fix. When the problem recurred in 2013, Van Dusen provided an explanation and a proposed fix, though he did not implement the fix, contrary to the appellants’ expectations. Through 2013 and 2014 the respondent did not fix the issue despite his continued assurances that he would do so. In the spring of 2015, the appellants called the respondent Health Unit, which resulted in an inspection of the system and of Van Dusen. The Health Unit ultimately condemned the system and ordered the appellants to replace it.
The appellants commenced an action in small claims court against Van Dusen in August 2015 and added the Health Unit in January 2016. The claim was for negligent design, installation, approval and inspection of the septic system. The trial judge found that by the spring of 2013, when there was a smell and effluent from the system, a reasonable person would have discovered the claim as defined in section 5 of the Limitations Act, 2002. The trial judge also found that there was insufficient evidence to rebut the presumption under section 5(2) that the appellants knew all the matters referred to in section 5(1)(a). The Divisional Court upheld the trial judge’s decision.
The Court of Appeal allowed the appeal, holding that both the trial judge and the Divisional Court erred in law by failing to conduct a proper analysis under section 5(1)(a)(iv) of the Limitations Act and that the action was commenced within the limitation period. Consideration of when a plaintiff knew or ought to have known that a proceeding was an appropriate means to remedy a claim is an essential element in the discoverability analysis; a failure to consider it is an error of law. In the Court’s view, it was appropriate for the appellants to delay bringing an action based on their reliance on Van Dusen’s expertise and assurances about rectifying the issue, and accordingly the limitation period did not begin to run until it became clear that those attempts to fix the issue had failed. With respect to the Health Unit, the Court held that the appellants could not have known an action against the Health Unit was appropriate at an earlier date than when they knew an action against Van Dusen was appropriate.
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Apotex Inc. v. Nordion (Canada) Inc., 2019 ONCA 23 Another important limitations decision last month from the Court of Appeal. This decision serves as a reminder that the limitation period for breach of contract cases does not necessarily run from the date of the breach, and that the requirements of section 5(1)(a) of the Limitations Act, 2002 are conjunctive.
The appellants appealed a judgment in favour of the respondent awarding damages of approximately $11.3 million, plus prejudgment interest of approximately $3.4 million. The respondent claimed damages for breach of contract and negligence in relation to the appellants’ performance of three “bioequivalence” studies to support the respondent’s submissions to the United States Food and Drug Administration (“FDA”) for the approval of two generic drugs for sale in the United States. The respondent commenced the action against the appellants on November 10, 2008. The trial judge found that the appellants had breached their contract and were negligent in their performance of the clinical trials and studies. The appellants asserted a limitations defence, claiming that the two-year discovery period had lapsed before the respondent brought its claim.
The trial judge concluded that, although the first three requirements set out in section 5(1)(a) of the Limitations Act, 2002 had been met on May 8, 2006, when the respondent changed its internal estimate for FDA approval of its filings, discoverability was postponed by virtue of section 5(1)(a)(iv), which requires a claimant to know that a proceeding is an appropriate means to seek a remedy. The trial judge held that such requirement was met on December 11, 2006, when a representative of the respondent spoke to the FDA and learned that it would not accept the appellants’ studies. The trial judge awarded approximately $8.3 million for lost profits caused by the delay in approval of the drugs for sale in the US market, and approximately $3 million for the costs of repeating and certifying the studies.
On appeal, the appellants argued that the trial judge erred in finding a breach of contract, that the claim was not statute-barred, that the respondent had reasonably mitigated its damages, and in the calculation of prejudgment interest. By way of cross-appeal, the respondent argued that the trial judge erred in his assessment of damages for lost profits.
The Court of Appeal rejected all of these arguments and dismissed the appeal and cross-appeal. In a lengthy decision, the Court agreed with the trial judge that the claim was not statute-barred, but disagreed with how he reached that conclusion. The Court held that the first three elements of section 5(1)(a) of the Limitations Act, 2002, were not met on May 8, 2006, but rather were met on December 11, 2006. The Court emphasized that the elements of section 5(1)(a) are conjunctive, such that the plaintiff must know that the damage suffered was caused by an act or omission of the defendant. In cases of breach of contract, the limitation period does not necessarily run from the date of the breach, since all of the conditions under section 5(1)(a) must be met. The plaintiff must know about the damage it suffered, and must know that the defendant caused that damage by an act or omission. In the Court’s view, the respondent only became fully aware of the damage and the fact that the appellants had caused it on December 11, 2006, when the FDA communicated that the studies were not acceptable due to regulatory compliance issues. The Court went on to reject the appellants’ submissions that the trial judge erred in finding that they were liable for breach of contract and that the respondent had mitigated its damages. The trial judge’s interpretation of the parties’ contract was reasonable and entitled to deference, and his findings in this regard were fully supported by the evidence. The Court found no error in the trial judge’s assessment of pre-judgment interest or in his calculation of damages for lost profits.
Welsh v. Ontario, 2019 ONCA 41
In this appeal from a fee approval decision, the Court of Appeal rejected the motion judge’s condition requiring class counsel to make a substantial donation to charity from the fees received. It was critical of the motion judge’s decision on the basis that it interfered in a material way with the terms of the settlement reached by the parties and approved in a separate decision not under appeal.
The appellant, the representative plaintiff in a class proceeding, appealed from the order of the motion judge approving the legal fees of class counsel. The class consisted of approximately 4500 former students of three provincial schools for the deaf. The common issues centred on whether the respondent was negligent in its management and operation of these schools and whether it breached fiduciary duties to the class members. The claims included serious allegations of physical, sexual and emotional abuse. Through mediation, the parties achieved a settlement and entered into a settlement agreement. The settlement, which was approved in a separate decision not under appeal, provided that the respondent would establish a $15 million settlement fund, with funds first to be applied toward payment of class counsel’s fees and disbursements, which could be up to twenty-five percent of the funds and in an amount to be approved by the court. The settlement agreement expressly provided that if any amounts remained after payment of all fees, claims and costs, and the claims period had come to an end, the funds were to revert to the respondent.
Class counsel requested that the motion judge approve fees of $3.75 million, which represented twenty-five percent of the $15 million settlement fund. The motion judge found that this counsel fee was not fair and reasonable to all class members because the results achieved for the whole of the class were disappointing, in that only about ten percent of the class would benefit from the settlement. The motion judge approved the fees on the condition that class counsel would donate $1.5 million of its fees to a charity for the deaf to be approved by the motion judge, and determined that the $2.25 million balance would be subject to a proportionate reduction depending on the reversion to the respondent of the settlement funds not taken up by the class claimants.
The Court of Appeal held that the motion judge erred in making his approval of class counsel’s fees subject to the charitable donation, particularly in the absence of submissions from the parties. By requiring class counsel to donate part of its fees to a designated charity, without the parties’ input or consent, the motion judge inserted into the settlement a material condition not agreed to by the parties. This altered the settlement provision that surplus settlement funds would revert to the respondent. In the Court’s view, the appropriate course of action would have been for the motion judge to allow the parties an opportunity to make submissions, and, if they desired to do so, to address his concerns and obtain approval of class counsel’s fees. Although it was within the motion judge’s discretion to express concerns about the amount of class counsel’s fees, he was not permitted to modify unilaterally the terms of a negotiated settlement without the consent of the parties. The Court held that the entire analysis necessary to determine and approve class counsel’s fees had to be undertaken afresh without regard to the motion judge’s findings, and stated that this would be best made at first instance by an experienced class action judge. Accordingly, the appeal was allowed and the matter remitted to another judge of the Superior Court.
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Belwood Lake Cottagers Association Inc. v. Ontario (Environment and Climate Change), 2019 ONCA 70
In this decision, the Court of Appeal applied the “modern approach” to statutory interpretation, emphasizing that the plain meaning of the words of a statute is just one factor in this approach and that the scheme of the statute, object of the statute, and legislative intent are also important. The Court also provided clarity on standard of review in statutory interpretation cases. The Court reviewed the application judge’s interpretation of a section of the Ontario Water Resources Act (“OWRA”) as a question of law on a correctness standard. The application judge’s application of that interpretation to the facts of the case, however, was a question of mixed fact and law and was thus entitled to deference, reviewable on the standard of palpable and overriding error or extricable error in principle. In the result, the Court upheld the decision below.
The appellants, two cottage associations, and the respondent, the Ministry of the Environment (the “MOE”), disagreed about the regulatory regime applicable to the construction and operation of the cottagers’ sewage systems. If the OWRA applied, the MOE had jurisdiction and an expensive Environmental Compliance Approval had to be obtained for each cottage sewage system, including the possibility that replacement or repair of the systems could be required. If the Building Code Act applied, the local municipalities had jurisdiction.
This question of jurisdiction turned on the total design capacity of the sewage systems(s) located on a particular “lot or parcel of land”: section 53(6.1) of the OWRA specifically excludes systems located on one “lot or parcel of land” with a total capacity greater than 10,000 litres per day. The cottages in question (of which there were over 700), were located on five parcels of land owned by the Grand River Conservation Authority and registered under the Ontario Land Registry System. The land was not subject to a formal plan of subdivision. Each cottage had its own sewage system and each cottage’s system, on its own, had less than 10,000 litres per day of capacity. At issue was whether the relevant “lot or parcel of land” for the purposes of determining total design capacity was one of the five parcels registered on title, or the individual cottage lots described in each cottager’s lease with the Grand River Conservation Authority. Resolution of this question depended on the interpretation of the phrase “lot or parcel of land” within the meaning of the OWRA.
The application judge held that the cottages were subject to the OWRA on the basis that “lot or parcel of land” referred to land for which title could be legally conveyed from one party to another and a lot which was “legally recognized for municipal and planning law purposes.” The application judge held that each cottage was not located on a separate “lot” in these terms, and that they were collectively located within five “parcels” of land.
The Court of Appeal dismissed the appeal, upholding the application judge’s interpretation of “lot or parcel of land” and its application to the facts in question. The Court held that the question of whether the trial judge correctly interpreted the meaning of “lot or parcel of land” was an “an extricable question of law of relatively broad application that is to be reviewed on the correctness standard.” However, the application judge’s determination of whether the individual cottages fell within the definition of “lot or parcel of land” was a question of mixed fact and law, and was therefore entitled to deference. The Court went through the exercise of the “modern approach” to statutory interpretation, which involves analyzing the words of the statute “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.” The Court emphasized that the plain meaning of the words of a statute is only the starting point of the “modern approach” to statutory interpretation and that the scheme and object of the legislation and legislative intent are also important.
Applying the “modern approach” to statutory interpretation in this case, the Court held that the application judge correctly found that permitting the appellants to rely on the descriptions in their leases, a purely private contractual division of the larger registered parcels, would promote arbitrariness rather than certainty, which would undermine the purpose of the OWRA. The application judge’s interpretation of the legislation advanced the purpose of the OWRA by ensuring that high-volume sewage systems are subject to the regulatory oversight of the MOE, which is equipped to determine the cumulative effect of the operation of several hundred sewage systems on the local environment and to ensure the protection of both the cottagers and the environment.
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