Top 5 Civil Appeals from the Court of Appeal
1. Abdollahpour v. Banifatemi, 2015 ONCA 834 (Gillese, Blair and Brown JJ.A.), December 2, 2015
It is a custom in Iran for a groom or his family to provide a dowry, or mahr, to the bride. In accordance with this tradition, when their son Reza married the respondent Shakiba Sadat Banifatemi in Ottawa in March, 2012, Sima and Hamid Abdollahpour transferred to Shakiba a fifty percent interest in a home they owned, by way of Deed of Gift. The marriage dissolved less than two years later, when Shakiba moved out. Reza initiated divorce proceedings. Along with his parents, Reza sought to have Shakiba’s fifty percent interest in the property transferred back to them, as well as repayment of the costs of the wedding and the return of all wedding gifts. They argued that the transfer was made as part of the mahr and therefore, according to Iranian culture and tradition, subject to the condition that Shakiba not leave the marriage and that, if she did, the property would be transferred back to the donors. They also asserted that Shakiba’s father had promised that the property would be returned if she left the marriage, that Shakiba entered the marriage with the fraudulent intent to obtain the property interest and permanent residency in Canada and that Sima and Hamid had signed the Deed of Gift under duress or as a result of undue influence. Shakiba brought a motion for summary judgment dismissing the claims on the ground that the transfer of the fifty percent interest in the property was an irrevocable and unconditional gift. She denied the other allegations. The motion judge granted summary judgment in Shakiba’s favour. Reza and his parents appealed from the judgment only with respect to the property interest. They sought to introduce as fresh evidence a translated copy of the marriage contract, in which the fifty percent interest in the property was listed as part of the dowry, and an expert report from an Islamic scholar confirming that, in certain circumstances, the dowry must be returned by the wife upon breakdown of the marriage, and opining that that is what the parties intended at the time of the transfer. Writing for the Court of Appeal, Blair J.A. did not determine whether the proposed fresh evidence met the necessary requirements for admission on appeal, noting that even if it were admitted, the evidence would not change the outcome of the appeal. At issue was not what Iranian culture or tradition dictates, but whether the parties agreed to the transfer being subject to the conditions imposed by their culture. An expert cannot give an opinion as to what the parties’ intentions were. Blair J.A. agreed with the motion judge that the transfer of the fifty percent interest in the property to the respondent was an irrevocable, unconditional gift and that there was no genuine issue requiring a trial. Blair J.A. noted that the motion judge applied the proper test for the determination of a gift, as outlined by the Court in McNamee v. McNamee, 2011 ONCA 533: a gift requires an intention on the part of the donor to make a gift without consideration or expectation of remuneration, an acceptance of the gift by the donee and a sufficient act of delivery or transfer of the property to complete the transaction. The appellants conceded that the second and third criteria were satisfied in the circumstances of this case, but submitted that the motion judge erred in finding that Sima and Hamid’s intention was to make an unconditional gift of the property to Shakiba. They argued that the intention was to provide Shakiba with a mahr, distinct from an irrevocable gift in that it was subject to the condition that the property would be returned to them if Shakiba left the marriage. Justice Blair rejected this submission, holding that it was open to the motion judge to conclude that the terms of the Deed of Gift, as well as the evidence of the negotiations leading up to its execution, confirmed that the parties intended for the transfer to be irrevocable and unconditional. The motion judge found that the intentions of the parties were clearly stated in the Deed of Gift, which was prepared to clarify and remove any uncertainty about the gift, in addition to registering the transfer of a fifty percent interest in the property to Shakiba. He noted that the Deed of Gift document did not mention any conditions, nor did any of the documents prepared by lawyers acting for the parties to complete the gift. Moreover, Sima and Hamid signed the documents confirming the gift with the benefit of legal advice. Blair J.A. found that the motion judge did not misapprehend the evidence or make incorrect findings of fact that affected his conclusions regarding the Deed of Gift. These findings were open to him on the record. With respect to the alleged verbal promise made by the respondent’s father that the property would be returned to Sima and Hamid if Shakiba left the marriage, Blair J.A. agreed with the motion judge that even if that statement had been made – which the motion judge deemed “unlikely” – it would not affect the result. The respondent’s father was not a party to the transaction and such a representation could not bind the respondent, who was an adult in control of her own decisions and who, on the evidence, was not even aware that it had been made. Moreover, a verbal representation or promise to transfer the interest back to Sima and Hamid would be ineffective due to section 1(1) of the Statute of Frauds, R.S.O. 1990, chapter S.19, which requires written corroboration of a disputed oral deal. Justice Blair acknowledged that a “wide variety of cultures, and their norms and traditions, form an integral part of the Canadian mosaic”, but emphasized that even if a marriage is entered into in the context of the cultural norms and traditions of a couple and their families, they cannot simply be imported into a transaction involving the transfer of real property by reference to a concept such as a dowry. This would be inconsistent with the purpose of the Statute of Frauds and the public policy need for certainty in real property transactions. If the families of a bride and groom wish to incorporate such a concept into the transfer of property, they can simply specify in the Deed of Gift expressly what it is that they intend with respect to the terms of the transfer. The parties did not do so in this case. Blair J.A. cautioned that if references to cultural norms and traditions were enough to incorporate them into a real property transaction, “there would be a danger of underlying expectations and motivations arising from the cultural context easily becoming conflated with intention”. It is the law that the parties’ intention and their actual agreement must be ascertained, and nothing more. Further, even if Sima and Hamid had an underlying motivation for the transfer or some expectation in relation to it arising from their culture and tradition, a valid gift, once made, cannot be revoked or retracted, and the failure of a donee to fulfill a donor’s expectations does not vitiate a valid gift. As the Court held in Berdette v. Berdette (1991), 81 D.L.R. (4th) 194 (Ont. C.A.), it is not the task of the court to correct a mistake of judgment, but to ascertain the intent of the parties at the time of the transaction. Lastly, Blair J.A. agreed with the motion judge in rejecting the submission that the Deed of Gift should be set aside on the basis that it had been obtained by undue influence or fraud. There was no evidence to support the allegation that Sima and Hamid, both sophisticated business people who were represented by counsel, were coerced or pressured. 2. Carriere Industrial Supply Limited v. Toronto-Dominion Bank, 2015 ONCA 852 (Simmons, van Rensburg and Hourigan JJ.A.), December 7, 2015 In this decision, the Court of Appeal considered the doctrines of knowing assistance in a breach of trust and knowing receipt of trust funds. 2026227 Ontario Inc. (“TPC”) carried on a payroll processing and payment business and used the Toronto-Dominion Bank ("TD") to service its clients. 2140074 Ontario Inc. (“TPN”), a wholly owned subsidiary and franchisee of TPC, carried on a similar business. The respondents, Carriere Industrial Supply Limited and Dibrina Sure Benefits Consulting Inc., were representative plaintiffs appointed to represent the interests of several hundred claimants who were customers of TPC and its franchisees and suffered a loss as a result of a breach of trust. TPC had used surplus funds in its trust tax account to pay its operating expenses, with an average of $65,000 per year withdrawn from the tax account from 2003 to 2011. Funds were never restored, and the tax account often went into overdraft. TPC told the bank that this was a result of timing differences, and TPN loaned money to TPC to cover the overdrafts. As a result of an investigation, it was determined that in January, 2011, TPC made a significant overpayment from its tax account to the Canada Revenue Agency, which the CRA refused to return, causing an overall shortfall in TPC’s tax account of $2.4 million dollars. On January 20 and 21, 2011, TPC transferred $1,327,616 from its payroll account to its tax account to reduce, but not eliminate, the overdraft. TD responded by setting up an unsolicited demand loan for TPC, reducing the overdraft to zero, and advising TPC that no further overdrafts in its tax account would be permitted. On February 2, 2011, TPC made an electronic transfer of $1,000,000 from its payroll account to TPN’s payroll account, in a purported repayment of a loan between them. TPC advised TD that it could no longer carry on business, and the bank froze TPC’s accounts. Following a four-day trial, the trial judge found TD liable to the respondents for knowing assistance in a breach of trust in relation to the February 2, 2011 transfer of $1,000,000 from the TPC payroll account to the TPN payroll account. The trial judge dismissed the respondents’ claim against the bank, however, for knowing receipt of trust funds in relation to TPC’s January 20 and 21, 2011 transfer of $1,327,616 from its payroll account to its tax account, which reduced its overdraft. TD appealed and the respondents cross-appealed. The bank challenged the trial judge’s finding of liability for its knowing assistance in a breach of trust on three grounds. First, it submitted that the trial judge misapplied the knowledge requirement. The bank further claimed that the trial judge erred in finding that it could have implemented a system of pre-approval for the electronic bank facilities in relation to the payroll account in the absence of any evidence concerning that issue. Finally, it argued that the trial judge erred in holding that its failure to do so, or to withdraw TPC’s electronic banking services, constituted “assistance” for the purposes of liability under the doctrine of knowing assistance in a breach of trust. The bank asserted that the trial judge effectively imposed liability on it for nonfeasance. The Court of Appeal rejected each of these submissions. The Court noted that the trial judge accurately set out the knowledge requirement for knowing assistance in a breach of trust. The trial judge correctly found the requisite knowledge existed based on TD’s awareness of the deficit in the tax account and the possibility of fraud, and its actions in permitting the account to continue to operate on the basis of the funds at hand. The trial judge correctly applied the Supreme Court’s definition of recklessness in R. v. Sansregret, [1985] 1 S.C.R. 570, in concluding that the bank acted recklessly in continuing to allow TPC unmonitored access to electronic banking services. Moreover, even if there was limited evidence that a system was available requiring pre-approval of payments from the TPC payroll account, the bank could have frozen TPC’s payroll account. Given TD’s knowledge, it was not justified in giving TPC open access to electronic banking during the investigation. The Court held that the trial judge was correct to conclude that by continuing to permit TPC access to electronic banking services, TD participated in a breach of trust. The bank’s conduct went beyond a failure to act; it provided TPC with the means to perpetrate a fraudulent breach of trust. The respondents’ cross-appeal from the trial judge’s determination that TD was not liable for knowing receipt of trust funds challenged his finding that the bank had no obligation to inquire into the reasons for the overdraft. The Court observed that the trial judge’s conclusion that the bank had no obligation to inquire into the reason for the overdraft was based on findings of fact: he was satisfied that as of the date of the transfers, TD was not aware that TPC’s tax account was operating at a deficit and therefore had no basis to inquire into TPC’s explanation for why the overdrafts were occurring. The trial judge assessed the bank’s conduct on an objective basis and the respondents failed to demonstrate any palpable and overriding error in his findings. 3. Stechyshyn v. Domljanovic, 2015 ONCA 889 (Weiler, Pardu and Benotto JJ.A.), December 14, 2015 In this decision, the Court of Appeal clarified the jurisprudence governing misnomer. In June, 2006, the appellant, Vladimir Stechyshyn, was struck by a vehicle operated by the respondent. He took down the respondent’s license plate number, insurance policy and driver’s license information before proceeding to the hospital. At the hospital, the appellant gave the sheet of paper containing the respondent’s information to the police officer investigating the accident, whom he believed was named Olson. The paper was not returned to the appellant, however, and he was unable to find the officer prior to leaving the hospital. The appellant later attempted to determine the identity of the respondent, including inquiring with the Toronto Police Service, but was unsuccessful. Unable to recall or ascertain the name of the respondent, the appellant filed a claim in June, 2008, identifying the defendant as John Doe. Counsel for the appellant requested a copy of the accident investigation file from the Toronto Police Service in January, 2010, referencing the appellant, the location of the accident and Officer Olson, but it was not until July, 2011, that the appellant received a copy of the police file which indicated that the investigating officer’s name was, in fact, Officer Ollos, and that the respondent was Dusan Domljanovic. In November, 2011, the appellant was granted leave to amend his Statement of Claim to substitute the respondent as named defendant. The respondent did not attend on the motion, but subsequently brought a motion for an order dismissing the appellant’s claim on the ground that it was brought after the expiry of the two-year limitation period. The motion judge granted summary judgment and dismissed the action, concluding that the identity of the respondent was discoverable since the date of the accident and that the appellant did not exercise the due diligence required to ascertain it within the two-year limitation period. The Court of Appeal disagreed, holding that the jurisprudence on misnomer governed and that, in the circumstances, summary judgment ought not to have been granted. Citing its decisions in Kitcher v. Queensway General Hospital (1997), 44 O.R. (3d) 589 (C.A.), and Lloyd v. Clark, 2008 ONCA 343, the Court emphasized that on a motion to correct the name of a defendant on the basis of misnomer, as long as the true defendant would know on reading the statement of claim that he was the intended defendant, a plaintiff need not establish due diligence in identifying the true defendant within the limitation period. In the Court’s view, Domljanovic would have known, on reading the statement of claim, that he was the intended defendant. In these circumstances, due diligence did not apply, nor did the law governing the addition of a party after the expiry of a limitation period. The Court pointed out that allowing the correct defendant to be added on a motion for misnomer only to then allow a motion for summary judgment on the basis that the correction was made after the expiry of the limitation period would be impractical, as well as a waste of money, time, and judicial resources. The law avoids such wastefulness, treating the identification of the correctly named defendant as a mere substitution for the incorrectly named defendant, rather than as the addition of a new party or the initiation of the action against the correctly named defendant. 4. Carneiro v. Durham (Regional Municipality), 2015 ONCA 909 (Strathy C.J.O., LaForme and Huscroft JJ.A.), December 22, 2015 When Antonio Carneiro Jr. died in a car accident in Pickering, in the Regional Municipality of Durham, his family claimed damages for the alleged negligence of the municipality, the province of Ontario, two individual defendants and Miller Maintenance Limited, which was under contract with Durham to plow its roads in the winter. The plaintiffs alleged that the accident occurred when Carneiro’s car slid on an icy road and down a hill, where it collided with vehicles operated by the individual defendants. Their claim listed a number of particulars of negligence against Miller, the municipality and the province, including a failure to keep the road free of ice and snow, inadequate design and construction of the road and failure to close it during a snowstorm. In accordance with the requirements of its agreement with Durham, Miller’s liability policy with Zurich Insurance Company Ltd. included the municipality as an additional insured. Durham and Miller cross-claimed against each other, and Durham brought a third party claim against Zurich, seeking a declaration that the insurer had a duty to defend it in the action, to pay for counsel of its choice and to indemnify it for any amounts for which it may be found liable to the plaintiffs. The motion judge dismissed Durham’s motion. He held that Zurich was required to defend Durham only with respect to the claims insured for Miller and that Durham ought to continue with its own counsel to defend itself with respect to all other causes as alleged in the claim. Durham appealed. The Court of Appeal noted that Durham was an additional insured under Miller’s insurance policy with Zurich, and that the policy contained an unqualified promise to defend the insured for actions covered by it. Citing its decision in Hanis v. Teevan, 2008 ONCA 678, the Court held that Zurich must pay the reasonable costs of Durham’s defence of covered claims, even if that defence furthers the defence of uncovered claims, but added that the insurer is not obligated to pay costs related solely to the defence of uncovered claims. The Court arrived at this conclusion for five reasons. First, the allegations in the statement of claim triggered Zurich’s duty to defend Durham. As the Supreme Court held in Monenco v. Commonwealth, 2001 SCC 49, when pleadings allege facts that, if true, require the insurer to indemnify the insured, the insurer is obliged to defend the claim. The mere possibility that a claim may fall within the policy is sufficient to trigger this duty. In this case, the claim that Carneiro lost control of his car because it slid on the icy road, combined with the allegation that Durham and Miller failed to keep the road clear of ice and snow, related directly to Miller’s obligations under the contract, triggering Zurich’s obligation to defend Durham. Second, nothing in the policy qualified Zurich’s duty to defend. The policy required Zurich to defend its insured – including an additional insured – against “any action” seeking damage to which the insurance applied, not just the covered claims. The action against Durham sought damages to which the insurance policy applied; accordingly, Zurich had a duty to defend it. Third, Zurich could not satisfy its duty to Durham through its defence of Miller. This would render Durham’s status as an additional insured “meaningless” and would mean that an insurer would rarely be required to provide a defence to an additional insured because it would usually be defending the named insured against identical liabilities. As an additional insured, Durham was entitled to independent rights, including a right to a defence, regardless of the defence provided to the named insured. Fourth, Zurich’s best interests did not negate its obligation to Durham. The motion judge erred in giving preference to the insurer’s interests over those of the insured, disregarding Zurich’s duty to defend. Finally, the duty to defend is a separate contractual obligation that is not met by Zurich indemnifying Durham. While the motion judge observed that Durham was protected because it would be entitled to recover its costs if it were not found liable, the Court pointed out that the outcome of the trial is irrelevant to the duty to defend. Zurich is not simply obligated to indemnify its insured. When it named Durham as an additional insured, it promised to defend the municipality. It must be held to that promise. The Court concluded that, in light of Zurich’s unqualified contractual undertaking to defend Durham and the conflict of interest between Durham and Miller, and between Durham and Zurich, the motion judge ought to have ordered that Zurich provide Durham with independent counsel to defend the action in its entirety. Recalling its decision in Tedford v. TD Insurance Meloche Monnex, 2012 ONCA 429, the Court added that Zurich was entitled, at the conclusion of the proceedings, to seek an apportionment of the defence costs that dealt solely with uncovered claims or exceeded the reasonable costs associated with the defence of the covered claims. 5. Ramdath v. George Brown College of Applied Arts and Technology, 2015 ONCA 921 (Feldman, Cronk and Huscroft JJ.A.), December 24, 2015 In this decision, the Court of Appeal considered the relationship between class actions and consumer protection legislation, and the ability to award aggregate damages to a class of claimants in a consumer protection action. The appellants, students who enrolled in a post-graduate program in International Business Management at George Brown College (“GBC”) in 2007 and 2008, commenced a class action against GBC for negligent misrepresentation, breach of contract and unfair practice under the Consumer Protection Act, 2002, S.O. 2002, chapter 30, Schedule A. The action was based on the misleading statement in GBC’s course calendar that program graduates would have “the opportunity to complete three industry designations/certifications” in addition to the GBC graduate certificate. In fact, students were required to complete additional courses and/or work experience, as well as exams, at their own expense, in order to fulfill the requirements for the industry designations. The class action was certified and a common issues trial was held where the court found that the course calendar statement was a negligent misrepresentation and a breach of the unfair practices provision of the Consumer Protection Act. That decision was upheld by the Court of Appeal. This appeal concerned the matter of damages. At the damages trial, the court awarded aggregate damages for the statutory cause of action, the first award of aggregate damages at trial under section 24 of the Class Proceedings Act, 1992, S.O. 1992, chapter 6 (“CPA”) in an Ontario class action. However, the court removed one cohort of students from the certified class. The appellants appealed the change to the class composition and the respondent cross-appealed the aggregate damages award. Writing for the Court of Appeal, Feldman J.A. found that the trial judge erred in removing the third cohort of students – those who began the eight-month post-graduate program in International Business Management in September, 2008 – from the certified class. The trial judge erred in law in finding that the third cohort was excluded from the class and was not entitled to damages under section 18(2) of the Consumer Protection Act. Feldman J.A. emphasized that a claim under the Consumer Protection Act based on an agreement entered into following an unfair practice does not require any reliance on or even knowledge of the unfair practice. Accordingly, once the plaintiffs chose to pursue only that claim at the damages trial, reliance on the misrepresentation was no longer at issue. The students in the third cohort, like those who began the program earlier, were equally subject to the unfair practice, and were entitled to a remedy under the statute. To the extent that the misrepresentation in the course calendar was orally corrected, the correction had no legal effect on their claim. Because the students in the third cohort entered into their agreements with GBC after the unfair practice occurred but before the correction, their claim under the Consumer Protection Act had already crystallized. The plaintiffs made the strategic decision to proceed at the damages phase of the action only on the Consumer Protection Act claim for damages under section 18(2) and to claim aggregate damages based on the unfair practice, which did not require proof of reliance by any of the class members. GBC took the position that damages could still only be assessed on an individual basis, however, as they were dependent on individual causation, mitigation and individual expenditures for the direct costs of taking the program. The trial judge approached the question of damages from the position that “aggregate damages are essential to the continuing viability of the class action” and should be more the rule than the exception to it. Feldman J.A. agreed with this approach, emphasizing that it is desirable to award aggregate damages where the criteria under section 24(1) of the Class Proceedings Act are met, in order to make the class action “an effective instrument to provide access to justice”. She also agreed with the trial judge’s focus on the “reasonableness” standard for determining aggregate liability and with the criteria he used to ensure that both sides were treated fairly by the assessment: whether the non-individualized evidence presented by the plaintiff is sufficiently reliable, whether the use of that evidence will result in unfairness or injustice to the defendant, such as overstatement of its liability, and whether the denial of an aggregate approach will result in a “wrong eluding an effective remedy” and a denial of access to justice. At issue before the trial judge was whether aggregate damages could be awarded as the remedy for an unfair practice under section 18(2) of the Consumer Protection Act. GBC argued both at trial and on appeal that to claim and be awarded damages under section 18(2), a consumer still needed to establish causation. While Feldman J.A. agreed that the consumer must have suffered damages that flowed from entering into an agreement after or while an unfair practice was occurring, she emphasized that a causal link between the actual unfair practice and the damages is not required. Damages are payable regardless of reliance. To require the causal link suggested by GBC would wrongly reintroduce the need for reliance into the remedy for an unfair practice. Feldman J.A. dismissed GBC’s submission that the trial judge erred by not requiring individual proof of reliance in order to quantify and award damages. In a statutory claim for an unfair practice under the Consumer Protection Act, reliance is not a component of the claim. Justice Feldman further held that it was open to the trial judge to accept the parties’ agreement to use the tort measure of damage and also to apply their agreed-upon formula, which would put the plaintiffs back into the position they were in before they entered into the agreement, except for having taken the course and paid what it was actually worth. Feldman J.A. rejected GBC’s claim that the trial judge erred in permitting students who either failed or withdrew from the program to remain in the class because they could never have obtained the industry designations. Those students qualified for damages because they entered into their agreements with the college following the unfair practice. Their direct costs were the same as those of the other members of the class. Feldman J.A. noted that the trial judge correctly recognized that a deduction from their damages of any tuition refunds they received would be required to ensure that they were not doubly compensated, and held that the residual value of the program ought to be deducted as well. Feldman J.A. also rejected the GBC’s submission that the trial judge erred in his assessment of aggregate damages by relying on the evidence of individual plaintiffs and extrapolating from that evidence for the whole group. She observed that the trial judge looked for reliable evidence in order to reasonably determine components of aggregate damages, as required by section 24(1)(c) of the CPA. The GBC also challenged the method the trial judge used to assess the residual value of the program, his reliance on expert evidence and his decision to deny it the chance to examine each class member for discovery. Feldman J.A. rejected each of these submissions as an attack on the trial judge’s evidentiary decisions, which were entitled to deference. The Court dismissed the cross-appeal, affirming the aggregate damages award to the first two cohorts. The Court allowed the appeal and reinstated the third cohort into the class, but referred the assessment of damages in relation to that cohort back to the trial judge.
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