1. R.G. v. K.G., 2017 ONCA 108 (Gillese, Benotto and Roberts JJ.A.), February 9, 2017 2. Jarbeau v. McLean, 2017 ONCA 115 (Simmons, LaForme and Pardu JJ.A.), February 13, 2017 1. R.G. v. K.G., 2017 ONCA 108 (Gillese, Benotto and Roberts JJ.A.), February 9, 2017
A 16 year old minor successfully brought an application for a declaration that she had withdrawn from parental control. Her father’s appeal of the declaration was essentially a dispute over the application process: while he submitted that a minor’s parents must be parties to an application for a declaration, with full rights to object, file evidence and cross-examine, the child and her mother argued that the parents were not required to be parties because a child has an absolute right to the declaration.
Due to a problematic relationship with her father, O.G. applied for a declaration under s. 65 of the Children’s Law Reform Act, R.S.O. 1990, c. C.12 (CLRA) that she had withdrawn from parental control. Kiteley J. granted the application, declaring that “O.G. is an independent minor with all of the statutory and common law rights and privileges of a minor who has withdrawn from parental control”. Notably, Justice Kiteley made the following endorsement:
[T]he evidence indicates that [O.G.] is a remarkable young woman. I have no hesitation in making the order. There are no respondents in this application because counsel takes the position that the parents are not entitled to notice either of the Application or of the order. I accept his submissions.
O.G.’s father made several attempts to have the declaration set aside and restore his sole custody of his daughter. He argued that he was entitled to be a party to, or at least to have been given notice of, the application which led to the declaration – relying on s. 62(3) of the CLRA which provides that on an application under Part III in respect of a child, the parties shall include the child’s parents. O.G. meanwhile asserted that she had an absolute right to withdraw from parental control and that her father was not entitled to be a party or to receive notice of her application. The only consideration for the court was proof that she had reached the age of 16 in accordance with s. 65 of the CLRA.
Kiteley J. dismissed the motion to set aside the declaration, holding that since the hearing was not for “custody, access or guardianship”, s. 62(3) did not apply and O.G.’s father was not entitled to be named as a party or to receive notice. She framed O.G.’s application not as a request to withdraw from parental control but rather a declaration that her right to do so had been exercised.
O.G.’s father repeated his arguments before the Court of Appeal, submitting that the application judge’s failure to add him as a party was a ground to overturn the declaration. The respondents, O.G. and her mother, claimed that a child has an absolute right to a declaration that she has withdrawn from parental control.
The Court of Appeal rejected both positions.
Writing for the court, Benotto J.A. noted that pursuant to basic principles of declaratory relief and the provisions of the CLRA, parents must be parties to a minor child’s application for a declaration that she has withdrawn from parental control. As the Supreme Court explained in R. v. Solosky, 1979 CanLII 9, declaratory relief involves “persons sharing a legal relationship” in respect of which the “relative interests” of each are to be determined. In this case, the legal relationship shared was that of parent and child, and the relevant interests were the independence of the child and the custodial interests of the parent. Moreover, s. 62(3) of the CLRA provides that the parents must be before the court in an application “in respect of” a child. Although the heading under Part III states “Custody, Access and Guardianship”, the language of s. 62(3) does not limit applications to those issues.
Although she concluded that parents are to be parties to the application, Justice Benotto emphasized that the court retains discretion “to direct their involvement and participation” in the application. The judge hearing the application will determine, based on the unique facts of the case, what degree of participation is appropriate. Benotto J.A. also noted that Rule 1(7.2) of the Family Law Rules gives the court authority to make orders for directions and conditions respecting procedural matters as it deems just.
Benotto J.A. found that while the application judge incorrectly rejected the appellant’s submission that he should be a party to the application, her error was cured by her conduct of the hearing. The appellant was permitted to file material and make submissions, and the application judge “fully and thoroughly” considered all of the evidence before her.
Turning to the factors that ought to be considered on a minor’s application for a declaration that she has withdrawn from parental control, Justice Benotto rejected O.G.’s submission that the court should consider nothing but her age, automatically granting the declaration if the child is at least 16. She emphasized that when declaratory relief is sought, the court should canvass “the reasons why the declaration is sought, the utility of the remedy and whether, if it is granted, it will resolve the issue between the parties”.
In Benotto J.A.’s view, it was clear that the declaration was necessary to resolve the dispute between O.G. and her father and allow O.G. to move forward with her life. The application judge considered the extensive record and based her conclusions on O.G.’s best interests.
The court dismissed the appeal with respect to the declaration, rendering the custody issue moot.
2. Jarbeau v. McLean, 2017 ONCA 115 (Simmons, LaForme and Pardu JJ.A.), February 13, 2017
Darren and Lillian Jarbeau purchased a home from Thermolith Homes Limited. The home was defective, failing to meet the standards set by Ontario’s building code. Unfortunately, the Jarbeaus’ problems did not end there: the lawyer they retained to sue those responsible for building and selling them the home was also negligent.
The Jarbeaus hired Ian McLean, who sued Thermolith, the City of North Bay and Tarion Warranty Corporation on their behalf. He did not, however, sue Larry Nelson, the engineer who had negligently certified the design and construction of the home, advising his clients – incorrectly – that they did not have a cause of action against the engineer because they did not have a contract with him.
After settling their action, the Jarbeaus sued McLean, pleading that but for his negligence they would have successfully sued Nelson and recovered all of their losses from him.
Prior to trial, McLean admitted that he was negligent. In light of McLean’s admission, the trial of the action against him turned on whether his negligence caused the Jarbeaus any damage.
Following a trial within a trial of the cause of action that could have been brought against the engineer, a jury found in the Jarbeaus’ favour. The jury assessed the cost to repair the home at $433,000 and the diminution in value of the home because of the defects at $265,000. The jury then deducted $75,000 being the amount that the Jarbeaus received in the settlement of the first action.
The trial judge characterized the jury’s cost of repair finding as “perverse” and granted judgment for $190,000, the lesser of the cost to repair and the diminution of value. His judgment also cut over $100,000 from the costs claimed by the Jarbeaus, even though they had bettered a settlement offer before trial, explaining that the jury’s diminution in value finding was also perverse.
McLean submitted on appeal that the trial judge erred in his instructions on causation by failing to instruct the jury that the Jarbeaus’ claim should be framed as a claim for a loss of the chance to have the engineer present at the settlement table in the first action. This would have entitled the Jarbeaus to damages in proportion to the likelihood that their action against Nelson would have succeeded; an amount that, in McLean’s view, was less than one hundred percent. McLean further submitted that the award for diminution in value was perverse, as the jury must have attributed zero value to the home and concluded that only the land had value, despite the absence of evidence to support this conclusion.
The Jarbeaus cross-appealed on three grounds. First, they submitted that neither of the jury’s assessments of damages was perverse and that the trial judge ought to have granted judgment for the cost to rebuild their home rather than diminution of the value of the home due to the defects. They further argued that the trial judge erred by refusing to allow them to advance a claim for legal costs incurred in the first action as damages in the proceeding against McLean on the ground that it was not pleaded in the Statement of Claim. Finally, they argued that the trial judge erred by reducing their claim for legal costs when they ultimately recovered judgment exceeding the amount for which they had offered to settle.
Writing for the Court of Appeal, Justice Pardu rejected McLean’s assertion that the trial judge erred in his instructions on causation, noting that the “but for” test set out by the Supreme Court in Clements v. Clements, 2012 SCC 32 is the appropriate test for causation in negligence in all but rare cases.
In Pardu J.A.’s view, McLean’s submission misunderstood the nature of the Jarbeaus’ claim. If they had brought a claim against the engineer, the court would have inquired whether, but for Nelson’s negligence, they would have suffered their loss. If the Jarbeaus had succeeded in persuading the court that they would indeed have suffered their loss, they would have been entitled to full recovery. However, McLean’s negligent advice precluded them from bringing that claim.
Pardu J.A. noted that the Jarbeaus reproduced the evidence they would have led at that unrealized trial through the trial within a trial in the action against McLean, and were able to prove that they would have recovered all of their loss against the engineer.
Accordingly, they were entitled to present their case on an “all-or-nothing” basis by claiming that Nelson was negligent and that they would have made full recovery if they had brought an action against him.
Moreover, the trial judge’s instructions on causation were consistent with the notion of a trial within a trial in a solicitor’s negligence case, particularly where the lawyer’s negligence is admitted. The jury found that Nelson failed to meet the standard of care expected of a reasonable and competent professional engineer, and that but for his negligence the Jarbeaus would not have suffered the harm they did. Given the jury’s finding regarding the engineer’s negligence and McLean’s admission of negligence in advising the Jarbeaus not to sue him, it was clear that an action brought against Nelson would have succeeded.
Pardu J.A. found that the trial judge did err, however, in his assessment of damages and with respect to his costs award. There was evidence before the jury justifying its assessment both of diminution of value and cost to repair.
In James Street Hardware and Furniture Co. v. Spizziri, 1987 CanLII 4172, the Court of Appeal set out the general proposition that the damages awarded to a plaintiff should put him in the same position that he would have been in had he not sustained the wrong for which he is receiving compensation or reparation. Turning to the question of whether damages should be assessed on a diminution of value or cost to repair basis, Pardu J.A. held that, accepting the jury’s assessment that the home itself had no value, damages should not be awarded on the lesser diminution of value basis because it failed to account for the difficulty of selling the home or the cost of demolition if the property were to be sold as vacant land. Moreover, there was no risk of a windfall or betterment in this case if the cost to repair were awarded.
The court set aside the verdict entered by the trial judge and substituted judgment in favour of the Jarbeaus for $433,000, as assessed by the jury. The court did not deduct the $75,000 recovered by the Jarbeaus in settling the first action. Finding that the trial judge also erred by failing to give effect to the purposes of Rule 49.10(1) of the Rules of Civil Procedure, the court set aside the trial judge’s decision on costs and substituted an award of $231,000 in favour of the Jarbeaus.
The court therefore dismissed McLean’s appeal and allowed the Jarbeaus’ cross-appeal.
3. St. Jean v. Armstrong, 2017 ONCA 145 (MacFarland, van Rensburg and Huscroft JJ.A.), February 21, 2017
In this decision, the Court of Appeal considered an appeal by the lawyers who represented the plaintiffs in proceedings which led to a motion for approval of an infant settlement. The lawyers appealed the motion judge’s decision to reduce their fee on an accident benefits claim and not to award them GST/HST (at a “prorated” rate of eight percent) in addition to the amount claimed for fees.
The appellants were retained to act in relation to tort and accident benefit claims following a motor vehicle accident in which the infant plaintiff suffered a traumatic brain injury. The plaintiffs signed a contingency fee agreement which stipulated that, if they succeeded in obtaining a settlement on the plaintiffs’ behalf, the appellants would charge “one third of your recovery, plus GST and disbursements”.
Both actions settled before trial. The global settlement, inclusive of costs, was $1,719,510. In accordance with the contingency fee agreement, counsel sought fees in the amount of $466,000, plus GST/HST of $37,280, plus disbursements of $84,510, for a total of $587,790.
The motion judge approved the contingency fee agreement in relation to the tort claim. He allowed fees in the amount of $183,333, reflecting one third of the amount awarded for damages, but made it inclusive of HST. The motion judge then reduced the amount sought for legal fees in relation to the accident benefits claim from $280,500 to $170,000, also inclusive of HST. The disbursements were approved as claimed.
In arriving at his conclusion, the motion judge considered the nature of each of the claims and the risks associated with each. He found that while there was a serious risk that there could be no recovery on the tort claim, no such risk existed with respect to the claim for accident benefits – where it was not a question of “if” but of “how much” would be recovered within the limits prescribed by the legislation.
The Court of Appeal agreed, finding no errors in the motion judge’s consideration of the claims.
The court agreed with the motion judge’s conclusion that the accident benefits claim did not entail the same risk and complexity as the tort claim; noting that while there were some differences over the amount to be paid for attendant care benefits, payments were made and the claim was settled after pleadings.
The court rejected the appellants’ submission that the motion judge erred in considering the two claims separately, holding that the claims were different, with different risks attached to each. The court dismissed the notion that the motion judge ought to have considered the “big picture”, taking an aggregate view of the amount claimed for fees in relation to the total amount of the settlement. It was appropriate for him to treat the claims separately.
The court held that the motion judge did err, however, on the issue of tax. The contingency fee agreement clearly stipulated that the lawyers were to be paid one third of any settlement plus GST and disbursements. The motion judge approved the contingency fee agreement in relation to the tort claim; therefore, GST/HST on fees of $183,333 at the prorated rate of eight percent ought to have been paid. Although the motion judge reduced their fee on the accident benefits claim to $170,000, the lawyers should have been paid GST/HST of $13,600 in addition to that fee amount.
The court amended the judgment accordingly and otherwise dismissed the appeal.
4. Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (Laskin, Feldman and Hourigan JJ.A.), February 23, 2017
At issue in this appeal was whether a termination clause in an employment agreement was unenforceable because it contravened Ontario’s Employment Standards Act, 2000 (ESA).
The respondent, Fred Deeley Imports Ltd., was the exclusive Canadian distributor for Harley-Davidson motorcycles, parts, apparel and accessories. In April 2007, Deeley hired the appellant, Julia Wood, as a Sales & Event Planner. At the end of April 2015, Harley-Davidson Canada entered into an agreement with Deeley to buy all of its assets. As a result of the buyout, Deeley immediately advised all of its employees, including Wood, that their employment would terminate on August 4, 2015.
By the date of termination, Wood had worked for Deeley for eight years and four months. Her last annual compensation – including a base salary, an incentive bonus and contributions by Deeley to a health and dental plan as well as an RRSP – was approximately $100,000. When her employment ended, she was 48 years old.
Wood had signed an employment agreement one day after she started working for Deeley. The agreement contained a termination provision which stated that:
[The Company] is entitled to terminate your employment at any time without cause by providing you with 2 weeks’ notice of termination or pay in lieu thereof for each completed or partial year of employment with the Company. If the Company terminates your employment without cause, the Company shall not be obliged to make any payments to you other than those provided for in this paragraph…. The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000.
Deeley paid Wood her salary and benefits from May 1, 2015 to August 4, 2015 – 13 weeks’ working notice – and an additional lump sum equivalent to eight weeks’ pay.
Wood commenced an action against Deeley, alleging that the entire employment agreement was unenforceable or, in the alternative, that the termination clause was unenforceable. She sought damages equivalent to 12 months’ notice of termination. On her unsuccessful motion for summary judgment, the motion judge held that both the employment agreement and the termination clause were enforceable. He also held, however, that if he erred in this conclusion, Wood would be entitled to damages equal to her salary and benefits for a reasonable period of notice, which he deemed to be 39 weeks.
The Court of Appeal held that the motion judge did so err, finding that the termination clause contravened the ESA.
As a preliminary matter, the court considered and rejected Wood’s submission that the employment agreement was unenforceable because she signed it after she started working with Deeley and was not provided with fresh consideration. Citing the court’s recent decision in Holland v. Hostopia.com Inc., 2015 ONCA 762, Laskin J.A. explained that a written employment agreement is not unenforceable simply because an employee signs it after beginning work. While it may be unenforceable if an employer includes in it a material term that was not part of the original employment relationship, the motion judge reasonably inferred that the terms of Wood’s employment agreement mirrored those contained in an email that she received after accepting the job offer over the phone and prior to her first day of work. Laskin J.A. noted that Wood never claimed that she was seeing her employment agreement for the first time when she signed it on her second day of work, nor did she claim that the agreement contained a new material term. Wood’s execution of the employment agreement after commencing her job was simply “a matter of administrative convenience”, reflecting terms already presented to her. Fresh consideration was therefore not required.
Justice Laskin agreed with Wood, however, that the termination clause contravened the ESA.
An employee hired for an indefinite period may be dismissed without cause only if the employer provides her with reasonable notice. In Machtinger v. HOJ Industries Ltd., 1992 CanLII 102, the Supreme Court characterized the principle of termination on reasonable notice as “a presumption, rebuttable if the contract of employment clearly specifies some other period of notice”. In Ontario, employers and employees can rebut this presumption by agreeing to a different notice period. Their agreement will only be enforceable, however, if it complies with the minimum standards in the ESA; if it does not, the presumption is not rebutted and the employee is entitled to reasonable notice of termination.
Deeley and Wood did agree to a different notice period; accordingly, the appeal turned on whether the termination clause contravened the ESA.
Under the ESA, Deeley was obliged to provide Wood with at least eight weeks’ notice of termination of her employment, to continue the contributions to her benefit plans during the notice period, and to pay her severance pay of eight and one-third weeks’ salary. Contracting out of any of these standards without substituting a greater benefit for Wood rendered the termination clause void and unenforceable and entitled Wood to reasonable notice of termination.
Justice Laskin observed that on its plain wording, the termination clause excluded Deeley’s obligation to contribute to Wood’s two benefit plans during the notice period. It also failed to satisfy Deeley’s obligation to pay severance pay, allowing Deeley not to pay Wood her statutory severance pay or to pay her less than she was entitled under the ESA. The clause was therefore void and unenforceable.
Laskin J.A. noted that the motion judge’s suggested notice period of 39 weeks, or nine months, took account of the relevant factors – the character of Wood’s employment, her length of service, her age, and the availability of similar employment – and fell within a reasonable range.
The court allowed the appeal and declared that Wood was entitled to reasonable notice of nine months or pay in lieu thereof.
5. Barber v. The Manufacturers Life Insurance Company (Manulife Financial), 2017 ONCA 164 (LaForme, Pepall and Pardu JJ.A.), February 27, 2017
Adrian Barber was a constable with the Port Hope police force. When she became disabled in 2009, she applied for long-term disability benefits under a group policy of insurance issued by Manulife Financial. Manulife paid LTD benefits until January 2013, then terminated them.
Barber commenced an action against the insurer, claiming that her benefits ought to have continued.
Manulife brought a motion under Rule 21.01(3)(a) of the Rules of Civil Procedure to have the claim dismissed because Barber’s collective agreement granted exclusive jurisdiction over her matter to the labour arbitration process. The motion judge agreed that the Superior Court lacked jurisdiction and dismissed Barber’s action.
Barber appealed.
In a brief endorsement, the Court of Appeal noted that although the case concerned jurisdiction, its resolution turned on the interpretation and application of the collective agreement, which was a negotiated contract. The issue before the motion judge –whether the Superior Court had jurisdiction over the dispute – was therefore a question of mixed law and fact, reviewable on the standard of palpable and overriding error.
The parties agreed that the essential character of the dispute concerned LTD benefits. The motion judge therefore turned directly to the question of whether the claim’s essential character arose from the interpretation, application, administration, or violation of the collective agreement. If it did, then an arbitrator – not a court – had exclusive jurisdiction over the issue.
In London Life Insurance Co. v. Dubreuil Brothers Employees Association, 2000 CanLII 5757, the Court of Appeal adopted the following categories for determining the arbitrability of benefit entitlement claims:
1. Where the collective agreement does not set out the benefit sought to be enforced, the claim is inarbitrable.
2. Where the collective agreement stipulates that the employer is obliged to provide certain medical or sick pay benefits, but does not incorporate the plan into the agreement or make specific reference to it, the claim is arbitrable.
3. Where the collective agreement only obliges the employer to pay the premiums associated with an insurance plan, the claim is inarbitrable.
4. Where the insurance policy is incorporated into the collective agreement, the claim in arbitrable.
The motion judge had found that the relevant language of the collective agreement rendered Barber’s matter “arbitrable” because it fell within the second of these categories.
The Court of Appeal observed that the collective agreement established Barber’s rights to long-term disability benefits. The provisions did not just oblige the employer to pay premiums for insurance; they addressed terms, the amount of the disability benefits as well as the definition of total disability, and made specific reference to the insurance policy. While the LTD benefits were paid under the policy, Barber’s entitlement to them arose from the collective agreement. The collective agreement was “the root of the contractual entitlement” to the relevant disability insurance.
The court therefore concluded that the motion judge correctly determined that jurisdiction over the dispute belonged to an arbitrator. The appeal was dismissed.
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