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Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254 (Hourigan, Benotto and Huscroft JJ.A.), April 2, 2019
The parties to this appeal agreed to arbitrate their contractual dispute under the Arbitration Act. The arbitrator’s award was supposed to be final: the parties chose not to establish a right of appeal on any basis from the arbitrator’s award. Nonetheless, the respondent successfully brought an application to set aside the award. The Court of Appeal heard the appellant’s appeal from the application judge’s decision.
The parties entered into a purchase and management agreement whereby the respondent, Alectra Utilities Corporation, agreed to finance the construction of solar power projects. The projects were to be developed and operated by the appellant, Solar Power Network Inc. pursuant to a provincial program known as the Feed in Tariff program, whereby the appellant would apply for contracts from the Ontario government and would earn income by receiving revenue from construction and operational and maintenance services, in addition to a share of residual profits.
The respondent issued a Defunct Project Notice, purportedly exercising its discretion to end the agreement and terminate the parties’ relationship, depriving the appellant of the value of the contracts that they had been awarded.
The appellant then invoked the agreement’s arbitration clause, challenging the respondent’s right to deliver the notice and seeking $19.5 million in damages for lost profit for the alleged breach of the agreement. The respondent counterclaimed for amounts paid to the appellant.
Following a seven-day hearing, the arbitrator found that the respondent unlawfully terminated the contract and awarded the appellant more than $12.3 million in damages.
The arbitrator found that although the respondent had the ability to deliver a Defunct Project Notice in its sole discretion under the parties’ agreement, that discretion had to be exercised in good faith. The respondent could not rely on its allegation that certain conditions precedent could not be satisfied because it had not fulfilled its obligation to use commercially reasonable efforts to finalize the required documents. The arbitrator also found that the respondent’s statement that the economic return was insufficient was not an honest one, as no attempt had been made to calculate the rate of return. Further, the respondent’s assertion that it did not wish to develop the projects was untrue in light of its ongoing negotiations to purchase the appellant’s interest in the projects.
The arbitrator rejected the respondent’s argument that the appellant was barred from claiming lost profits as damages. The agreement required each party to indemnify the other with respect to breaches of covenants, but also provided that the indemnifier shall not be liable for damages for lost profit. The arbitrator found that the appellant’s claim was not for breach of a covenant, but for improper exercise of the right to issue notice. The arbitrator concluded that he could award lost profits because the resolution process for indemnity claims under the agreement was separate from the arbitration process, which contemplated the award of damages without regard to the more limited concept of damages that applied in the indemnity claims resolution process.
When the appellant brought an application to enforce the arbitrator’s award under section 50 of the Arbitration Act, 1991, S.O. 1991, C. 17, the respondent brought an application to set aside the award, relying on section 46(1)3 of that statute. Section 46(1)3 provides that the court may set aside an arbitration award if the award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement. The application judge found in favour of the respondent and set aside the award.
The Court of Appeal held that the application judge so erred.
Writing for the court, Huscroft J.A. noted that because the agreement expressly excluded the possibility of appealing from the arbitrator’s award, the only basis for the respondent to challenge the award was under section 46(1) of the Arbitration Act, 1991. Section 46(1)3 is not an alternate appeal route. It simply requires arbitrators to act within the bounds of the authority granted by the agreement pursuant to which they are appointed.
In Justice Huscroft’s view, the application judge ignored the relevant provision of the agreement that conferred a plenary jurisdiction on the arbitrator, instead taking a much narrower view of the arbitrator’s jurisdiction as a result of emphasizing the wrong provisions of the agreement. This led him to the incorrect conclusion that an arbitration award that is not subject to appeal must be set aside because, in essence, the arbitrator had only the jurisdiction to make an award that was reasonable or correct. In fact, as a result of the provision in the agreement which foreclosed the possibility of an appeal from the arbitral award, it was within the arbitrator’s jurisdiction to make an unreasonable or incorrect award. In other words, an arbitrator’s wrong decision does not mean that he has exceeded his jurisdiction.
The appeal was accordingly allowed and the decision of the arbitrator reinstated.
Clark v. Ontario (Attorney General), 2019 ONCA 311 (Lauwers, Huscroft and Trotter JJ.A.), April 18, 2019
The Attorney General of Ontario and police officers Jamie Clark, Donald Belanger and Steven Watts, brought three separate appeals from two orders addressing a bifurcated motion.
The appeals arise out of the officers’ arrest of two men in connection with an armed robbery that occurred in February 2009. Both men alleged that the officers assaulted them during the course of their arrests, and these allegations resulted in one man’s charges being stayed and the other’s conviction being set aside.
In October 2015, the officers served notice on the Attorney General under the Proceedings Against the Crown Act, R.S.O. 1990, c. P. 27, of their intention to commence an action. They commenced their action on June 22, 2016, asserting claims in negligence and misfeasance in public office. They alleged that the prosecuting Crown attorneys failed to adequately investigate the assault allegations and failed to call evidence to refute the allegations against them.
The Attorney General moved under Rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to strike the action on the grounds that it was barred by the two-year limitation period in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., and under Rule 21.01(1)(b) because it disclosed no reasonable cause of action. The Attorney General also moved under Rules 21.01(3)(d) and 25.11 to strike the claims as scandalous and/or vexatious, on the basis that the officers’ statement of claim did not contain full particulars and pleaded bald allegations of malice.
The motion judge dismissed the motion to strike based on the limitations issue, struck the negligence claim as disclosing no reasonable cause of action, and allowed the misfeasance claim to proceed. He made no order under Rules 21.01(3)(d) or 25.11.
The officers appealed from the negligence ruling, while the Attorney General appealed the limitations and misfeasance rulings.
In an expansive decision, the Court of Appeal affirmed the existing case law, holding that an action against the Crown does not lie in negligence, but it does for misfeasance in public office.
The court first held that the motion judge did not err in dismissing the motion to strike the action as time-barred. Although it rejected the motion judge’s conclusion that this case constituted a novel claim and was therefore an “arguable exception” to the limitation period, the court nevertheless found that it would be incorrect to find that the action was time-barred in the context of a Rule 21.01(1)(a) motion. An argument that a claim is time-barred is a defence to a claim, and as such, it must be pleaded. There may be an issue of discoverability, which is fact-based. Although there may be certain very limited circumstances in which a Rule 21.01(1)(a) motion would be appropriate, a limitation issue in the vast majority of cases should not be determined absent a full record.
The Court of Appeal went on to uphold the motion judge’s decision to strike the negligence claim as disclosing no cause of action, but for different reasons.
The court took issue with the motion judge’s analysis in reaching his conclusion, particularly his finding that the existing Supreme Court jurisprudence was not dispositive of the officers’ negligence claim. The court emphasized that it is in fact settled law that no claim lies against the Crown in negligence. Notwithstanding recent Supreme Court jurisprudence permitting a claim against the Crown to proceed on the basis of wrongful non-disclosure and awarding Charter damages, Canada’s highest court has been consistent in its position that the Crown is immune from negligence claims.
The motion judge treated the matter as an open question, however, conducting his own duty of care analysis: he found that there was a prima facie duty of care, limited to allegations of serious misconduct by police officers in the context of Charter motions, but concluded at the second stage of the analysis that public policy considerations defeated the duty of care.
In the court’s view, the motion judge so erred. Notwithstanding that courts have not considered potential Crown Attorney civil liability to police officers, prior Court of Appeal authority has confirmed that it is not determinative, on a motion to strike, that the law has not yet recognized a particular claim. Rather, the court must ask whether it is plain and obvious that the claim has no reasonable prospect of success.
The court rejected the argument that the negligence claim should not have been struck because of the lack of a proper evidentiary record and because it was speculative that policy considerations accepted in the Supreme Court jurisprudence were applicable here. It observed that a policy analysis can be conducted on a pleadings motion where there is no indication that a factual record could be of assistance. Moreover, such an analysis is appropriate where there exists a significant body of jurisprudence to assist in answering the question. Both sets of circumstances were applicable here, as there was no indication that a factual record would have been of assistance, and the relevant case law was extensive.
The court considered the applicability of the Supreme Court’s decision in Henry v. British Columbia (Attorney General), 2015 SCC 24, in which Moldaver J. found that the “good governance” concerns of the Supreme Court’s malicious prosecution jurisprudence informed the proper scope of Crown liability for Charter damages. The court concluded that these two policy concerns were relevant here. The first, the diversion of Crown attorneys from their primary duties, would expose Crown attorneys to innumerable claims of police officers who feel aggrieved by decisions with which they do not agree, while the second, encouraging defensive lawyering by Crown attorneys, would mean exposure to negligence claims by the police and would encourage Crown attorneys to focus on extraneous factors during the course of a prosecution.
The Court of Appeal also upheld the motion judge’s decision to allow the misfeasance claim to proceed.
The court held first that the appellants properly pleaded misfeasance in public office, and second, that the motion judge correctly found that Crown attorneys are not immune from liability for misfeasance in public office. Noting that a court is only required at the pleadings stage to assume the plaintiffs can prove their allegations, the court concluded that the pleading of misfeasance in public office was adequate, properly particularized, and carefully tracked the elements of the tort.
The court rejected the same arguments advanced by the respondent in respect of the negligence claim because misfeasance in public office provided a very high threshold for liability and therefore did not engage the same policy concerns. The court concluded that the tort already established a high threshold by requiring claimants to advance cogent evidence to substantiate the presence of bad faith or improper motives.
The appeals were therefore dismissed.
College of Optometrists of Ontario v. Essilor Group Inc., 2019 ONCA 265 (Juriansz, Brown and Huscroft JJ.A.), April 4, 2019
This case arose from a conflict between an online vendor of eye glasses and contact lenses and the professional health care body charged with the regulation of the sale of prescription eyewear.
The appellant, Essilor Group Canada Inc., a federally incorporated company, is a subsidiary of Essilor International Compagnie Générale d’Optique S.A., one of the largest manufacturers of ophthalmic lenses in the world. As a wholesaler, Essilor supplies lenses to Ontario optometrists and opticians. Since its 2014 acquisition of Clearly Contacts Ltd. and Coastal Contacts Inc., Essilor has also carried on business as an online retailer of contact lenses and eye glasses.
Essilor’s head office is located in Quebec; however, the online business of Essilor’s Clearly and Coastal divisions is conducted in British Columbia through their websites clearly.ca and coastal.com.
The respondents, the College of Optometrists of Ontario and the College of Opticians of Ontario, are self-governing professional regulatory bodies pursuant to the Regulated Health Professions Act, 1991, S.O. 1991, c. 18. They regulate the practices of optometry and opticianry the Optometry Act, 1991, S.O. 1991, c. 35 and the Opticianry Act, 1991, S.O. 1991, c. 34, respectively.
In September 2014, the Registrars of both Colleges wrote a joint letter to Essilor alleging that the company was engaged in unlawful behaviour “by dispensing prescription eyewear through the Internet to Ontario consumers without involving an Ontario-licensed health care provider.” Discussions ensued amongst Essilor, the Colleges, and the Ontario associations of optometrists and opticians, but no agreement was reached.
On December 13, 2016, the respondents brought an application alleging that the appellant was in breach of section 27 of the RHPA by accepting orders for prescription eyewear online and shipping it to patients in Ontario. The respondents sought a declaration that the appellant had breached that provision, and an injunction prohibiting the appellant from engaging in such dispensing, except where the dispensing is performed by one of their members or a delegate.
The respondents did not file any evidence of specific harm to a member of the public caused by the appellant’s conduct, instead relying on the principle that if a person performs a controlled act in contravention of section 27 of the RHPA, harm to the public is presumed.
The application judge granted the requested declaration and injunction, making two key findings: first, that the appellant was dispensing eyewear to those who require corrective lenses to assist with less than perfect vision, and second, with respect to the applicability of provincial legislation to out-of-province defendants, that a sufficient connection exists between Ontario and the appellant’s conduct to fall within the prohibition contained in section 27 of the RHPA.
In another lengthy decision, the Court of Appeal allowed the appellant’s appeal from that decision.
Brown J.A. found no error in the application judge’s conclusion that the appellant performed the “controlled act” of “dispensing” in Ontario within the meaning of the RHPA. He held that the application judge did err, however, in finding that a sufficient connection existed between appellant’s provision of eyewear and Ontario so as to bring it within the ambit of the RHPA. The mere delivery in Ontario of an order for prescription eyewear that has been processed in compliance with the British Columbia regulatory regime, without more, does not establish a sufficient connection between the appellant’s online sales and the controlled acts proscribed by section 27 of the RHPA. In Brown J.A.’s view, the act of delivery had primarily a commercial aspect, not a health care one.
Justice Brown also cautioned that applying the Ontario legislation to out-of-province suppliers would effectively sanction the creation of a monopoly over the importation of prescription eyewear into Ontario from other provinces.
Gendron v. Doug C. Thompson Ltd. (Thompson Fuels), 2019 ONCA 293 (Hourigan, Miller and Paciocco JJ.A.), April 12, 2019
In this decision, the Court of Appeal considered a number of issues in connection with a 2008 oil spill into Sturgeon Lake.
On December 18, 2008, Thompson Fuels delivered seven hundred litres of fuel oil to two oil tanks located in the basement of a home owned by Wayne Gendron. Almost immediately, oil began to leak from one of the tanks. Hundreds of litres of oil leaked and drained through a crack between the basement wall and the floor. From there, it drained under Gendron’s house, where some of it remained and soaked into the soil. The rest of the oil made its way through a drainage system under the house and into the city’s culvert, which carried it into nearby Sturgeon Lake.
Over the next several months, a massive remediation project was undertaken as a consequence of the leak. Nearly $2 million was spent on remediating both the contaminated land in the surrounding area and the damage to Sturgeon Lake. Gendron’s house was demolished as part of the effort to remove contaminated soil.
Gendron sued in negligence against Thompson Fuels, his fuel supplier and service technician, the Technical Standards and Safety Authority, which is the administrative authority responsible for regulation and enforcement of fuels in Ontario, and Les Reservoirs D’Acier de Granby Inc., the manufacturer of the oil tanks.
Granby settled with Gendron shortly after the trial began, signing a Pierringer agreement that, in return for its settlement, released it from the action and removed the risk that co-defendants might have to pay its share of damages if could not do so.
At the conclusion of a twenty-seven day trial, the trial judge found that Thompson Fuels was negligent for failing to perform inspections and to test the tanks, but that the TSSA was not because the inspection performed after the spill did not breach the duty of care owed to Gendron. He also found that Gendron had been contributorily negligent for failing to have his tanks inspected annually, improper instruction of water into the tanks, and failure to promptly report the leak. The trial judge apportioned liability as follows: Gendron 60% at fault and Thompson Fuels 40% at fault. Thompson Fuels was ordered to pay Gendron $864,628 in damages and $465,000 in costs. Costs of the trial were also awarded to the TSSA in the amount of $150,000. In a post-trial ruling on several motions, the trial judge held that Thompson Fuels did not have a right of set-off against the amount paid by Granby to Gendron under the Pierringer agreement. A second costs award arising out of the post-trial ruling was also made.
Thompson Fuels appealed from the trial decision, the post-trial ruling, and the costs awards. Gendron and the TSSA are respondents to this appeal. Gendron meanwhile appealed from the trial decision only. Thompson Fuels and the TSSA are respondents to that appeal.
The two appeals were heard together.
The Court of Appeal found no error in the trial judge’s assessment of Thompson Fuels’ liability. Justice Hourigan noted that he made a series of factual findings and findings of mixed fact and law that were open to him on the evidence. His reasons on the issue of Thompson Fuels’ liability evinced a proper understanding of the principles of negligence, including causation, and were amply supported by the evidence. He also properly exercised his gatekeeper function in admitting expert evidence. Further, he correctly concluded that Thompson Fuels could not avoid liability on the basis of its standard form contract.
Hourigan J.A. also found no error in the trial judge’s assessment of the TSSA’s liability. He was correct in applying Ingels v. Tutkaluk Construction, 2000 SCC 12, and concluding that the TSSA owed Gendron no private law duty of care other than conducting an inspection with reasonable care. As the trial judge noted, neither Gendron nor Thompson Fuels tendered any expert evidence regarding the standard of care of a prudent TSSA inspector. In these circumstances, Gendron and Thompson Fuels failed to meet their onus to establish liability on the part of the TSSA.
Justice Hourigan held that the trial judge did not err in finding Gendron contributorily negligent or in assessing the extent of such negligence. He properly found that Gendron failed to take the steps of a reasonably prudent homeowner in the circumstances. Hourigan J.A. found that the trial judge properly considered Gendron’s efforts to mitigate, and did not err in finding that he was contributorily negligent for failing to report the leak.
Justice Hourigan held that the trial judge did not err in his apportionment of liability, noting that he had carefully considered the comparative blameworthiness of the parties before correctly concluding that Gendron was responsible for the majority of the loss. Nor did the trial judge err in his assessment of damages. In Hourigan J.A.’s view, the trial judge had been mindful of the principle that damages should be awarded in a way that best ensures that the environment is returned to its pre-contamination condition. He made one adjustment, however, reducing damages by deducting the line of credit payment.
Hourigan J.A. rejected the submission that the trial judge failed to provide adequate reasons, observing that inadequacy of reasons has become “a boilerplate ground of appeal” before the Court of Appeal. Noting that the trial judge wrote seventy-nine pages of coherent and thoughtful reasons in which he meticulously considered both the evidence and the legal issues at play, Justice Hourigan remarked that this case “represents perhaps the high water mark of this unfortunate trend”.
Justice Hourigan held that the trial judge did not err in failing to reduce the amount awarded against Thompson Fuels by the amount of the Granby settlement. The trial judge correctly concluded that there was no double recovery until Gendron had been fully compensated for his loss, a decision consistent with the policy objectives underlying Pierringer agreements.
He further held that the trial judge did not err in dismissing the claim under section 100.1 of the Environmental Protection Act, R.S.O. 1990, c. E 19 for contribution and indemnity against Thompson Fuels. The trial judge properly rejected Gendron’s argument that Thompson Fuels was the owner of the oil immediately before the leak or that it had charge, management or control of the oil immediately before the first discharge. Thus, a claim for contribution and indemnity under the EPA was unavailable.
The appeal was dismissed.
Merino v. ING Insurance Company of Canada, 2019 ONCA 326 (Feldman, Pepall and Pardu JJ.A.), April 25, 2019
The appellant, Karla Merino, was seriously injured when she was struck by a car driven by Timothy Klue. Klue and his wife, Sonia Abou-Khalil, were joint owners of the car. Klue and Abou-Khalil had applied for automobile insurance coverage over three months before the accident and the respondent had issued a one-year policy. Because of misrepresentations in the application regarding Abou-Khalil’s driving record, however, the respondent purported to rescind the policy shortly after issuing it, a couple of months before the accident. Klue did not drive the car from then until the day of the accident.
The appellants sued Klue and Abou-Khalil, and obtained judgment in the amount of $2,000,000.
Having been advised by the respondent that Klue and Abou-Khalil were not insured by it because the policy had been rescinded, the appellants also sued Merino’s mother’s insurer, Allianz, in the same action pursuant to the uninsured automobile coverage it provided to the appellants. After non-pecuniary accident benefits of $181,107 paid by the Société de l’assurance automobile du Québec were deducted, Merino obtained a net award of $18,893 against Allianz. The respondent did not seek to be added to that action.
Despite delivering a copy of its underwriting file to counsel for the appellants in the context of an arbitration hearing among insurers over the obligation to pay accident benefits, the respondent maintained that the policy had been rescinded before the accident.
After obtaining judgment against Klue, Abou-Khalil, and Allianz, the appellants commenced the action under appeal against the respondent under section 258(1) of the Insurance Act, R.S.O. 1990, c. I.8, on the basis that the insurance contract had not been properly terminated by the respondent, and that Klue and Abou-Khalil were in fact insured by the respondent on the date of the accident.
The motion judge dismissed the appellants’ action by way of summary judgment. He found that the respondent was entitled to rescind the insurance contract based on a material misrepresentation, making it void ab initio, that it had done so effectively, and that, as a result, section 258(1) was not available to the appellants, as there was no contract with the respondent that provided indemnity to the at-fault driver or owner at the time of the accident.
The Court of Appeal allowed the appellants’ appeal from that decision.
Writing for the court, Feldman J.A. agreed with the motion judge that section 258(1) of the Insurance Act can have no application where an automobile insurance policy is no longer in existence at the date of the accident if it was properly and effectively terminated by either party before that date.
She found that the motion judge did err, however, in finding that an insurer may effectively terminate a contract at common law, making it void ab initio, based on a misrepresentation in the application. The motion judge’s conclusion on this issue is inconsistent with the statutory scheme created by the Insurance Act, the Compulsory Automobile Insurance Act, RSO 1990, c. C.25, and associated regulations. If an insurer were permitted to rescind an insurance contract at common law ab initio, a person who believed they were operating a vehicle with insurance could have that contract rescinded with retroactive effect, putting the person in automatic contravention of the Compulsory Automobile Insurance Act, a result which is clearly inconsistent with the intent of the legislature. The purpose of these requirements is to ensure that a person who drives a car always knows whether they are insured, so that they can take steps to bridge any gap in their coverage, both for their own benefit and for the benefit of other drivers.
Justice Feldman then found that the appellants’ entitlement was not limited to the statutory minimum of $200,000 because the respondent did not prove the defence of knowing misrepresentation. While the misrepresented facts related to Abou-Khalil’s application for insurance, only Klue signed the application. On the record before the motion judge, there was no basis to find that Klue signed the application as his wife’s’ agent or on her behalf. Because Abou-Khalil was an applicant for insurance who did not sign the application either personally or by her agent, the respondent could not rely on the defence of knowing misrepresentation. Further, it was not possible to find on a balance of probabilities that Klue was the applicant who made the misrepresentations and knowingly misrepresented the facts about his wife. Feldman J.A. further held that the appellants are not barred from recovery under section 258(1) because they initially pursued uninsured motorist claims against another insurer.
An automobile insurer in Ontario is not entitled to rescind a contract at common law ab initio, but it is bound by the statutory scheme contained in the Insurance Act and the Compulsory Automobile Insurance Act. Because the respondent’s letter did not give fifteen days’ notice of termination, it did not have the effect of terminating the contract under section 11 of the applicable Regulation. The contract therefore remained in effect on the date of the accident, and the appellants were entitled to sue the respondent under section 258 of the Insurance Act to directly recover the amount of the judgment awarded them, up to the policy limits. Further, because the respondent did not establish a defence under section 258(11), it is liable for the full amount of the policy limits.
The judgment of the motion judge was accordingly set aside.
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