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Hunt v. Worrod, 2019 ONCA 540 (Sharpe, Pepall and Roberts JJ.A.), June 27, 2019
Hurst v. Hancock, 2019 ONCA 483 (Feldman, Paciocco and Fairburn JJ.A.), June 11, 2019
Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512 (Pepall, Trotter and Harvison Young JJ.A.), June 19, 2019; Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515 (Lauwers, Fairburn and Nordheimer JJ.A.), June 20, 2019
The Court of Appeal released decisions in two employment law cases, one day apart, coming to markedly different results on post-termination benefits.
In Dawe v. The Equitable Life Insurance Company of Canada, the respondent Michael Dawe was employed by the appellant, The Equitable Life Insurance Company of Canada, for thirty-seven years when he was terminated without cause.
Dawe sued for wrongful dismissal; both parties moved for partial summary judgment on two issues relating to the calculation of damages: (i) the proper notice period and (ii) Dawe’s entitlement under Equitable Life’s bonus plans. Dawe’s other claims, including claims for punitive and moral damages, were left to be determined at trial.
The motion judge held that thirty months was the appropriate notice period and that Dawe was entitled to bonus payments over this period.
Equitable Life appealed, arguing that the motion judge’s determination of reasonable notice was excessive, and that he erred by failing to find that Dawe’s bonus entitlement was limited by a termination provision contained in its bonus plans.
The Court of Appeal allowed the appeal on the issue of notice, reducing it to twenty-four months. Writing for the court, Justice Trotter held that there were no exceptional circumstances that warranted a longer notice period.
The court dismissed the appeal as it related to bonus entitlement, noting however that Dawe’s receipt of bonus payments was an integral part of his compensation package and agreeing with the motion judge that the termination provision was unenforceable because it was imposed unilaterally and was not brought to Dawe’s attention by Equitable Life at any time before his termination.
In Mikelsteins v. Morrison Hershfield Limited, the respondent Ivars Mikelsteins was employed by the appellant Morrison Hershfield Limited for thirty-one years when he was notified that his employment was being immediately terminated without cause.
Mikelsteins commenced an action for wrongful dismissal, and then brought a motion for summary judgment: the motion judge awarded Mikelsteins damages for wrongful dismissal based on a notice period of twenty-six months. The motion judge also made a determination regarding the value that Mikelsteins was entitled to be paid for the shares that he held in MHL’s parent corporation, along with his entitlement to a share bonus. Under the terms of the Shareholders’ Agreement, shareholders are eligible to receive annual “Share Bonuses”. The motion judge determined that Mikelsteins was entitled to: (i) hold his shares until the end of the reasonable notice period and (ii) receive damages for the loss of the share bonus that would have been payable during such twenty-six month period.
MHL appealed those conclusions. This time, the Court of Appeal held that the motion judge erred in finding that the respondent was entitled to receive payment for his shares with the value calculated at the end of the reasonable notice period.
Writing for the court, Nordheimer J.A. held that the motion judge improperly conflated the respondent’s entitlement to compensation arising from the breach of his contract of employment with his contractual entitlements respecting his shares. The shares were received pursuant to the Shareholders’ Agreement, not his employment contract. Therefore, the terms of the Shareholders’ Agreement governed the respondent’s rights with respect to those shares.
Justice Nordheimer went on to hold that the Shareholders’ Agreement did not violate the Employment Standards Act, 2000, S.O. 2000, c. 41. The Shareholders’ Agreement did not alter any term or condition of employment, as it related only to the rights of an employee with respect to any shares he or she may hold. The argument that the Shareholders’ Agreement violated the Employment Standards Act, 2000 makes the same error as the argument that the respondent is entitled to receive payment for his shares with the value calculated at the end of the reasonable notice period, namely, treating the employment contract and the Shareholders’ Agreement as if they are one and the same.
Hengeveld v. The Personal Insurance Company, 2019 ONCA 497 (Hoy A.C.J.O., Lauwers and Zarnett JJ.A.), June 17, 2019
This appeal arose from the destruction of evidence which the plaintiffs believed would assist them in proving their case.
The plaintiffs, Ryan Hengeveld and his family, sued the appellant, The Personal Insurance Company, for failing to preserve the car that Hengeveld was driving when he was seriously injured in a motor vehicle accident. They alleged that the appellant’s failure to preserve the car might impair their ability to prove their case in a separate personal injury action against those the Hengevelds alleged caused the accident.
The appellant in turn brought third party proceedings for contribution and indemnity against the Hengevelds’ lawyers, the respondents James Virtue and Rasha El-Tawil, alleging that they breached their duty to the Hengevelds to ensure that evidence necessary for their personal injury action was preserved.
The respondents moved successfully to strike out the third party claim on the basis that it disclosed no reasonable cause of action.
The motion judge held that because the allegations in the third party claim related to conduct falling within the scope of the lawyers’ retainer by the Hengevelds, it was conduct that was attributable in law to the Hengevelds. The respondents’ alleged negligence could therefore be raised by the appellant in its defence to the Hengevelds’ claim, and the third party claim was unnecessary.
The Court of Appeal dismissed the appeal, holding that the motion judge correctly concluded that the third party claim should be struck.
Zarnett J.A. explained that a defendant may not “double dip” by asserting both the contribution and indemnity provisions and the contributory negligence provisions of the Negligence Act, R.S.O. 1990, c. N.1. Accordingly, whether a claim by a defendant seeking contribution and indemnity from a third party for alleged negligence discloses a reasonable cause of action depends on whether that negligence is attributable to the plaintiff. If it is, the defendant has no cause of action against the third party.
Here, the appellant’s own pleadings made it clear that the retainer of the respondents included taking steps, on behalf of the Hengevelds, to preserve evidence, and that the respondents’ dealings with the appellant were dealings undertaken on the Hengevelds’ behalf. This was a situation of agency. Where there is an agency situation, it bars a third party claim on its own.
Hunt v. Worrod, 2019 ONCA 540 (Sharpe, Pepall and Roberts JJ.A.), June 27, 2019
This appeal addressed an award of costs of $192,639.77 ordered to be paid by Legal Aid Ontario due to its role in funding a party in a family law dispute.
In June 2011, the respondent Kim Hunt suffered a catastrophic brain injury. His sons, Justin and Bradley Hunt, were appointed as his guardians of property and personal care.
Kim had an on-and-off relationship with Kathleen Worrod for several years prior to his accident. They had jointly purchased a home in Novar, Ontario in June 2010. In December 2010, they had entered into a signed “Property Settlement Agreement” pursuant to which Kim paid Kathleen for her share of the down payment on the home. However, title to the property was never transferred into Kim’s name alone. Three days after Kim’s release from hospital in October 2011, he married Kathleen.
In their capacity as Kim’s litigation guardians, Justin and Bradley commenced an application against Kathleen seeking a declaration that the marriage was void ab initio, and that Kim was the sole owner of the Novar property. They also requested an order prohibiting contact between Kim and Kathleen. They took the position that their father did not have capacity to marry, that Kathleen had no interest in the property, and that further contact with Kathleen would be detrimental to their father’s health.
Legal Aid Ontario ("LAO") granted Kathleen a legal aid certificate and funded her legal fees throughout the proceedings. Kathleen hired the respondent, Andrew Thomson, to be her counsel in the litigation. LAO was not a party to the application and did not participate in the trial.
The Hunt respondents succeeded on all claims.
The application judge found that Kim lacked capacity to marry and that the marriage was void ab initio. He concluded that the Property Settlement Agreement was enforceable, and that Kim held the sole equitable title to the Novar property. The application judge also granted an order permanently prohibiting all contact between Kim and Kathleen. He ordered Kathleen to pay costs of $385,279.54 on a full recovery basis, noting that it was highly unlikely that she would ever be in a financial position to pay them.
Turning to the Hunt respondents’ request for costs against Thomson personally, the application judge declined to order costs against him, stating that his communications with LAO were privileged and there was therefore no evidentiary basis for finding that he acted improperly in his reporting requirements. Turning then to the Hunt respondents’ request for costs against LAO, the application judge concluded that LAO had failed to properly carry out its mandate to monitor the proceedings, contributed significantly to the hardships and challenges faced by the Hunt respondents, and needlessly wasted judicial resources. He held that this constituted an abuse of process and ordered LAO to pay $192,639.77 to the Hunt respondents.
The Court of Appeal allowed the appeal and set aside the award of costs.
In Pepall J.A.’s view, the application judge fundamentally misconstrued the role of LAO. As she explained, LAO does not represent the client nor does it direct the litigation; rather, it simply provides funding to the client to retain counsel from the private bar. The statutory system does not require LAO to engage in a detailed factual and legal analysis independent of and disconnected from counsel’s legal opinion. The costs award against LAO based on its failure to adequately monitor the litigation is inconsistent with and would frustrate the statutory scheme.
Pepall J.A. also noted that when exercising inherent jurisdiction against a non-party, courts must do so “sparingly and with caution”. Without evidence of something more, such as bad faith or a collateral or improper purpose in granting funding to a litigant, LAO’s conduct in funding litigation pursuant to its statutory purpose, and any conduct incidental thereto, including its monitoring of the litigation it funds, cannot support a finding of abuse of process.
Justice Pepall pointed out that even if the application judge’s finding of abuse of process was correct, any conclusion of improper conduct by LAO would require the impermissible review of the reporting and opinion letters of the lawyer holding the legal aid certificate. Allowing this type of scrutiny would risk putting LAO in a position where it must seek a waiver of privilege from clients in order to mount a defence to claims against it for non-party costs. She noted that the crux of the allegations against Thomson were substantially the same as those asserted against LAO. Therefore, the application judge’s findings with respect to LAO were inconsistent with his conclusions relating to the claim for costs against Thomson personally.
Hurst v. Hancock, 2019 ONCA 483 (Feldman, Paciocco and Fairburn JJ.A.), June 11, 2019
The plaintiff, Craig Hurst, was an employee of the respondent Darwin Productions Inc. The respondent, James Hancock, was the principal of Darwin. Hurst consulted a law firm, the appellants, intervenors Graham Partners LLP, Graham, Wilson & Green and HGR Graham Partners LLP, when he was not being paid extra salary he claimed was agreed upon together with a percentage interest in the respondent company.
Hurst sued the respondents more than two years after Graham’s initial correspondence with them and after they declined to acknowledge the terms of their agreement.
When the respondents moved for summary judgment claiming that the action was statute-barred, Hurst commenced an action against Graham for negligence. Graham was permitted to intervene on the summary judgment motion, because if the claim against the respondents was dismissed as statute-barred, the plaintiff would use that finding as the basis to recover against Graham.
The motion judge granted the summary judgment motion, dismissing the plaintiff’s claim against the respondents as statute-barred.
Graham appealed. The plaintiff took no position on the appeal.
The court allowed the appeal, holding that the plaintiff’s claim against the respondents was not statute-barred.
The appellants took the position that the motion judge erred in law by failing to address the issue of anticipatory breach of contract. In this light, the respondents’ position in December 2009 could be characterized as notice that they intended to breach the agreement. Specifically, the position can be viewed as evidence that they intended to breach the obligation to pay the unpaid salary in the future when the company could afford to do so.
As the court explained in Ali v. O-Two Medical Technologies Inc., 2013 ONCA 733, the plaintiff could either accept that anticipatory breach and sue, or choose to wait until performance was due. The court agreed with the appellants that the motion judge erred by failing to address the issue of anticipatory breach. In the court’s view, based on the evidence, this was a case of anticipatory breach, and therefore no cause of action accrued until the breach was accepted.
Accordingly, the claim was in time.
Shuttleworth v. Ontario (Safety, Licensing Appeals and Standards Tribunals), 2019 ONCA 518 (Tulloch, Hourigan and Fairburn JJ.A.), June 21, 2019
This appeal arose from serious allegations challenging the independence of the Licence Appeal Tribunal (“LAT”).
Mary Shuttleworth suffered physical and psychological injuries as a result of a motor vehicle accident which occurred on September 28, 2012. In December 2014, she applied to her insurer, Peel Mutual Insurance Company, for a determination that her accident injuries met the statutory threshold for a “catastrophic impairment” as defined in the Statutory Accident Benefits Schedule, O. Reg. 34/10.
When the parties were unable to agree on whether that threshold was met, Shuttleworth sought a hearing before the LAT to resolve the issue.
At the time, the LAT –which had acquired jurisdiction over SABs disputes on April 1, 2016-- was a part of a cluster of tribunals known as the Safety, Licensing Appeals and Standards Tribunals Ontario.
Shuttleworth’s case was the first catastrophic impairment decision that the LAT was to release.
On April 21, 2017, LAT vice-chair Susan Sapin released a decision determining that the threshold was not met. Approximately two months later, Shuttleworth’s counsel received an anonymous letter stating that Sapin had initially decided that Shuttleworth’s injuries qualified as a catastrophic impairment, but that the Executive Chair of SLASTO had altered the decision prior to its release to determine that Shuttleworth did not meet the threshold. The letter also indicated that Sapin was reluctant to sign the decision.
Shuttleworth attempted to obtain information about the process followed in her case, including an access to information request. The LAT asserted a broad claim of adjudicative privilege and maintained its position that there was no interference in Sapin’s decision.
Shuttleworth then brought an application for judicial review and sought an order reversing the decision or referring the matter back to the LAT for a rehearing.
The Divisional Court granted Shuttleworth’s application and set aside the LAT’s decision, finding that the LAT’s decision-making process did not meet the minimum standards required to ensure both the existence and appearance of adjudicative independence.
While it accepted that an adjudicator’s discussion of a draft decision with colleagues does not in and of itself breach the rules of natural justice, the Divisional Court emphasized that the institutional consultation procedure must be designed to safeguard a decision-maker’s ability to independently decide the facts and the law. The court concluded that the LAT breached the rule of consultation from Ellis Don Ltd. v. Ontario (Labour Relations Board), 2001 SCC 4, and subjected the decision to a peer review process that lacked the required safeguards of adjudicative independence. The court emphasized the lack of a formal or written policy protecting the adjudicator’s right to decline to participate in a review by the executive chair or make changes proposed by the executive chair. This absence was “significant” because it was required by sections 7 and 8 of the Adjudicative Tribunals Accountability, Governance and Appointments Act, 2009, S.O. 2009, c. 33, Sched. 5, and because the existence of such a policy would have safeguarded the appearance of propriety.
The Divisional Court accordingly concluded that there was a reasonable apprehension of a lack of independence, and referred the matter back to the LAT for a new hearing.
The LAT and SLATSO appealed; writing for the Court of Appeal, Hourigan J.A. found no error in the Divisional Court’s articulation or application of the test for reasonable apprehension of bias. As the Supreme Court explained in IWA v. Consolidated Bathurst Packaging Ltd., [1990] 1 S.C.R. 282, and more recently confirmed in Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), 2015 SCC 25, that test poses the question of whether “an informed person, viewing the matter realistically and practically – and having thought the matter through” would think that it is more likely than not that the decision-maker would decide fairly. In Justice Hourigan’s view, the lower court correctly identified and applied this test.
Nor did Hourigan J.A. find any error in the lower court’s application of the trilogy of Supreme Court cases involving the preparation of reasons by administrative tribunals. These decisions - Consolidated-Bathurst, Tremblay v. Quebec (Commission des affaires sociales), [1992] 1 S.C.R. 952, and Ellis-Don - set out a framework of considerations for assessing whether there is a reasonable apprehension of bias or lack of independence. The guiding principle is that the decision-maker must be free to decide cases “in accordance with his own conscience and opinions”.
Hourigan J.A. upheld the Divisional Court’s finding that sections 7 and 8 of the ATAGAA required SLATSO to have written consultation procedures. He also rejected the appellants’ submission that the lower court erred in failing to conduct a holistic analysis as mandated by Khan v. College of Physicians & Surgeons of Ontario (1992), 9 OR (3d) 641 (ON CA).
Justice Hourigan found no error in the lower court’s conclusion that there was a reasonable apprehension of a lack of independence on the facts of this case. The Divisional Court correctly found that the executive chair’s imposition of the review on the adjudicator breached the rules set out in the Supreme Court trilogy, it found that the breach was significant because of the power of the SLATSO executive chair, and it correctly concluded that the review process lacked the appropriate procedural safeguards.
The appeal was dismissed.
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