Lerners' Monthly Lists
October 2017
 
Top 5 Civil Appeals from the Court of Appeal
 
1. Grand River Enterprises Six Nations Ltd. v. Ontario (Finance), 2017 ONCA 680 (Strathy C.J.O., Cronk and Pepall JJ.A.), September 5, 2017
 
2. Farley v. Ottawa (Police Services Board), 2017 ONCA 689 (Watt, Huscroft and Trotter JJ.A), September 6, 2017
 
3. Morwald-Benevides v. Benevides, 2017 ONCA 699 (Feldman, Gillese and Pepall JJ.A.), September 12, 2017
 
4. Cobb v. Long Estate, 2017 ONCA 717 (Doherty, MacFarland and Rouleau JJ.A.), September 19, 2017
 
5. Yaiguaje v. Chevron Corporation, 2017 ONCA 741 (Epstein J.A. (In Chambers)), September 21, 2017
 
 

1. Grand River Enterprises Six Nations Ltd. v. Ontario (Finance), 2017 ONCA 680 (Strathy C.J.O., Cronk and Pepall JJ.A.), September 5, 2017

In this decision, the Court of Appeal considered s. 12(2)(f.1) of the Tobacco Tax Act, R.S.O. 1990, c. T.10 (“TTA”) which requires the Minister of Finance to demand security from parties who manufacture and sell tobacco intended for export or for sale on First Nations reserves.
 
Grand River Enterprises Six Nations Ltd. (“Grand River”), the largest Canadian exporter of tobacco, manufactures tobacco on the Six Nations of the Grand River Reserve Territory in Ontario.
 
In addition to producing tobacco for export, Grand River produced tobacco products for sale to “Indians” and “bands” located on “reserves”, within the meaning of the Indian Act, R.S.C. 1985, c. I-5. It did not sell tobacco to retailers outside of reserves, nor did it sell to consumers who were required to pay taxes under the TTA. The TTA imposes a tax on consumers of tobacco products with the exception of tobacco products sold to “Indians” on a “reserve” for use by “Indians”.

As part of the regulatory system established by the TTA, each party in the distribution chain is required to obtain a permit or registration certificate and to account for its tobacco supplies. This includes entities whose tobacco is not subject to taxable sale in Ontario because it is intended for export or for sale on reserves.

In December 2013, the respondent, the Minister of Finance for Ontario, issued two permits to Grand River: one authorizing the possession, storage and sale of unmarked fine cut tobacco (“UFCT”) for export, and the other authorizing the sale of UFCT to First Nations retailers. The Minister subsequently informed Grand River that he would be seeking security in relation to those permits pursuant to s. 12(2)(f.1) of the TTA and, in September 2014, security in the amount of $3,209,000 was demanded. The amount of the demand – which was calculated based on the monthly returns filed by Grand River – was later reduced to $1,397,000 when Ministry staff determined that some of the tobacco used in the original calculation was not UFCT. The Minister determined that, by virtue of s. 12(2)(f.1) of the TTA, Grand River was required to provide security even though the tobacco was not intended to be sold in taxable transactions. Grand River took the position that this interpretation was erroneous and that the demand for security unlawful.

When the issue was not resolved, Grand River brought an application for judicial review. 

The Divisional Court dismissed the application, holding that the Minister’s interpretation of s. 12(2)(f.1) and his calculation of the amount of security were reasonable and entitled to deference. 

The Court of Appeal granted Grand River leave to appeal.

Grand River argued that the Minister erred in his interpretation and application of s. 12(2)(f.1) of the TTA, and, in the alternative, that the provision was unconstitutional because it was an indirect tax on exported goods.

The court rejected both submissions. 

Writing for the court, Strathy C.J.O. held that the Minister’s interpretation of s. 12(2)(f.1) was reasonable and entitled to deference. 

The Divisional Court had found that the requirement for security applied to every person who held a permit to purchase and sell UFCT. Strathy C.J.O. noted that Grand River –which held two such permits – never objected to their issuance. The words of s. 12(2)(f.1) of the TTA are mandatory. Accordingly, the Minister was required to demand security.  

Strathy C.J.O. further held that s. 12(2)(f.1) is constitutionally valid because it is incidental to a scheme of direct taxation within the province. The pith and substance analysis supports the constitutionality of the provision. Its pith and substance is plainly the imposition of a tax on the consumption of tobacco. This is direct taxation within the province and falls squarely within provincial jurisdiction.

The appeal was dismissed. 

2. Farley v. Ottawa (Police Services Board), 2017 ONCA 689 (Watt, Huscroft and Trotter JJ.A), September 6, 2017*

The Court of Appeal heard George Farley’s appeal from a decision granting the Ottawa Police Services Board summary judgment dismissing Farley’s action, in which he had claimed damages for malicious prosecution, negligent investigation, and breach of his Charter rights.

Farley’s claims arose out of an investigation conducted by the Ottawa Police Service which resulted in his arrest on charges of first degree murder, conspiracy to commit murder, and possession of explosives with the intent to cause bodily harm or death. 

Farley was found guilty by a jury, but successfully appealed his conviction on the basis of misdirection of the jury and misreception of hearsay evidence. At a second trial, which took place several years later, two of the Crown’s key witnesses were unavailable. Characterizing the Crown’s evidentiary problems as “simply overwhelming”, the judge presiding over the second trial acquitted Farley. 

Farley subsequently commenced proceedings against the Ottawa Police Services Board. 

On the Board’s motion for summary judgment, the motion judge found that there was no evidence of malicious prosecution, nor was there evidence that the investigation fell below the standard of care. The motion judge also found no basis for a Charter infringement claim. Satisfied that there was no genuine issue requiring a trial, the motion judge granted the motion and dismissed the action.

In succinct reasons, the Court of Appeal dismissed Farley’s appeal, holding that summary judgment was properly granted.

The appellant’s action turned on his assertion that the police did not have reasonable and probable grounds upon which to believe that he committed the offences with which he was charged. The court noted that Farley’s criminal defence counsel had conceded committal for trial at the conclusion of the preliminary inquiry, and in particular that the court had ordered a new trial (as opposed to entering an acquittal following the conviction at the first trial). In the court’s view, in the absence of a “fundamental flaw” in the criminal proceedings, namely the committal for trial and the order for a new trial, these antecedent judicial determinations could support a finding by a civil court that there were reasonable and probable grounds for the criminal prosecution.

Accordingly, Farley had no prospect of success at trial, the motion for summary judgment was properly granted, and the appeal was dismissed.

*Lerners acted for the respondent.

3. Morwald-Benevides v. Benevides, 2017 ONCA 699 (Feldman, Gillese and Pepall JJ.A.), September 12, 2017

When a friend of the court is required to assist an unrepresented party, what are the rules around the choice of counsel and the scale of fees payable to counsel? To answer this question, the Court of Appeal was required to interpret and apply the Supreme Court’s decision in Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43.

During a complex custody and access trial in which the two parties eventually became unrepresented, the trial judge appointed an amicus curiae on behalf of each party to assist the court. The Attorney General’s challenge of the appointments was rejected by the trial judge. On the Attorney General’s appeal, the appeal judge determined that he required the assistance of amicus to resolve the issues raised on the appeal, and appointed the same two lawyers who had served as amicus at trial. The lawyers would not accept legal aid rates for acting on the appeal, and wanted to negotiate rates with the Attorney General. The Attorney General instead provided the court with the names of three highly qualified counsel who were prepared to assist the court at legal aid rates. The appeal judge maintained that he required the assistance of the two lawyers who were already familiar with the case, and ordered a stay of the appeal until the amici and the Attorney General negotiated a mutually acceptable rate of compensation. 

The non-party Crown appealed this decision.

The responding amici asserted that the appeal judge’s decision to impose a stay was consistent with Criminal Lawyers’ Association, above, which obliges the Attorney General to negotiate compensation rates in good faith with court-appointed amicus, failing which courts may be entitled to impose a stay of proceedings. The Crown countered that Criminal Lawyers’ Association neither requires the Attorney General to negotiate in good faith with court-appointed amicus nor permits a court to impose a stay conditional on such negotiations taking place. Rather, a stay is only appropriate when the appointment of amicus is “truly essential” and a qualified amicus cannot be found.

The Court of Appeal agreed with the Crown’s interpretation. 

Writing for the court, Feldman J.A. held that the appeal judge erred in finding that the Attorney General had an obligation to negotiate a fair and reasonable fee agreement with the appointed amici. Pursuant to the Criminal Lawyers’ Association decision, there is no such obligation. Feldman J.A. noted that while the Attorney General did not meet with counsel appointed as amicus, they did correspond to discuss rates. This correspondence fulfilled the expectations set out by the Supreme Court. 

Feldman J.A. held that the appeal judge further erred in staying the Crown’s appeal. Criminal Lawyers’ Association made the remedy of a stay available to a judge where the assistance of amicus is “truly essential”, the appointed amicus and the Attorney General cannot agree on a rate of remuneration, and there is no other recourse but to stay the proceedings until another appropriate amicus is found. Feldman J.A. explained that although the appeal judge’s preferred counsel were not available, a court is not necessarily entitled to amicus of its choice where other appropriate counsel have been made available by the Attorney General. A stay was not required in this case, as the Attorney General offered three experienced counsel for the appeal judge’s consideration. 

Finally, Feldman J.A. found that the appeal judge erred in holding that two amici, as opposed to a single amicus, were required to provide responding submissions. Applying the “truly essential” test, there was no basis for the decision to appoint two amici.

The appeal was allowed, the stay was set aside, and the matter was remitted back to the appeal judge to select one of the three amicus counsel originally proposed by the Attorney General.

4. Cobb v. Long Estate, 2017 ONCA 717 (Doherty, MacFarland and Rouleau JJ.A.), September 19, 2017

This decision, released concurrently with El-Khodr v. Lackie, 2017 ONCA 716, answered a question plaguing the personal injury bar ever since legislative amendments to s. 258.3(8.1) of the Insurance Act, R.S.O. 1990, c. I.8 came into force on January 1, 2015: did those amendments, which only apply to motor vehicle claims, have the effect of reducing the prejudgment interest payable on pain and suffering retrospectively on all unresolved claims as at January 1, 2015, or did they only have a prospective application to claims arising after January 1, 2015? The Court of Appeal determined that the amendments applied retrospectively to all motor vehicle actions. At current Courts of Justice Act, R.S.O. 1990, c. C.45 prejudgment interest rates, the difference between the two approaches results in a decrease in prejudgment interest from 5% per annum to 0.8% per annum.

In July 2008, Martin T. Long and the plaintiff, Wade Cobb, were involved in a motor vehicle collision. Long pled guilty to the charge of operating a motor vehicle while impaired. He was sentenced to a fine of $1,300 and a one-year driving prohibition. 

In December 2009, the plaintiffs brought this action claiming $2.35 million in compensatory damages and $3 million in punitive damages. Long died before the trial, so his estate became the defendant in the litigation.  

The primary issue at the 19 day trial in the fall of 2015 was the quantum of benefits to which Cobb – who claimed to be permanently disabled as a result of the collision and unable to work – was entitled. The jury awarded $220,000 in compensatory damages. After deducting amounts pursuant to the Insurance Act for collateral benefits that Cobb had received from his insurer, and the statutory deductible for general damages, the trial judge calculated a final judgment amount of $34,000. The trial judge rejected the plaintiff’s request to put the question of punitive damages to the jury.

The trial judge’s decision turned on certain key findings. In particular, the trial judge:

- did not determine whether the amendment of s. 258.3(8.1) of the Insurance Act, which reduced the default rate of prejudgment interest for non-pecuniary losses for bodily injury or death, applied retrospectively. Rather, he exercised his discretion pursuant to s. 130 of the Courts of Justice Act and set the prejudgment interest rate at three percent;

- determined that the August 1, 2015 increase of the statutory deductible applicable to an award for non-pecuniary damages – from $30,000 to $36,540 through an amendment to s. 5.1(1) of the Court Proceedings for Automobile Accidents that Occur on or After November 1, 1996 regulation under the Insurance Act, O. Reg. 461/96 – was “substantive” as opposed to “procedural”, and, accordingly, should not be applied retrospectively to the action.

The Court of Appeal heard the appeals from both this decision and El-Khodr v. Lackie, as the two cases raised common issues regarding the Insurance Act regime for the treatment of statutory accident benefits (“SABs”) in the calculation of damages arising from motor vehicle accidents and the applicable rate of prejudgment interest under the Courts of Justice Act.

The plaintiffs submitted before the Court of Appeal that the trial judge erred (i) in deducting, pursuant to s. 267.8(1) of the Insurance Act, the amounts allocated to income replacement benefits in the SABs settlement from the jury awards for past and future income loss, (ii) in refusing to put the question of punitive damages to the jury, and (iii) in his determination of prejudgment interest. The defendant further argued that the trial judge erred (iv) in failing to deduct the full amount of the housekeeping and home maintenance benefits received by the plaintiff before the trial from the damages awarded for the housekeeping loss, (v) in applying the statutory deductible in force prior to August 1, 2015 rather than the deductible in force at the time of judgment, and (vi) in his assessment of costs.

Writing for the court, MacFarland J.A. upheld the trial judge’s decision to reduce the jury award for past and future income loss to zero, explaining that s. 267.8(1) of the Insurance Act requires the deduction of all income replacement SABs, and all payments in settlement of claims for income replacement SABs, that the plaintiff receives before trial from the total of all damages awarded at trial for past and future income loss arising from the same incident.

MacFarland J.A. also upheld the trial judge’s refusal to put the question of punitive damages to the jury, noting that there was no evidence to suggest that Long’s criminal sentence was insufficient to meet the objectives of retribution, deterrence, and denunciation.

On the matter of prejudgment interest, MacFarland J.A. explained that the effect of s. 258.3(8.1) of the Insurance Act is that in an action for damages arising out of a motor vehicle accident, the prejudgment interest rate on non-pecuniary damages will now be the rate provided for in ss. 127 and 128(1) of the Courts of Justice Act, subject to the overriding discretion of the court in s. 130 to increase or reduce the rate, change the interest period, or disallow interest altogether. In MacFarland J.A.’s view, it was open to the trial judge to exercise his discretion to fix the interest rate for non-pecuniary damages at three percent. Subject to such discretion, the amendment in the Insurance Act to the prejudgment interest rate was intended to have retrospective effect and applies to all actions that are tried after its commencement. The plaintiff failed to demonstrate that he had any “crystallized” or certain right to a particular rate of prejudgment interest. 

MacFarland J.A. also agreed with the defendant that the trial judge erred in failing to deduct the full amount of the housekeeping and home maintenance benefits received by the plaintiff before the trial from the damages awarded for past and future housekeeping loss. As she explained, this head of damage is designed to compensate for loss of the ability to carry out housekeeping and home maintenance duties both in the past and the future. There is no reason to distinguish between the past and future awards. The language of the legislation requires a deduction based on all applicable SABs payments received before the trial.

MacFarland J.A. held that the trial judge further erred in applying the statutory deductible in force prior to August 1, 2015 ($30,000) rather than the deductible in force at the time of judgment ($36,540). The legislature intended for the 2015 amendment to s. 5.1(1) of the Court Proceedings regulation to have retrospective application to outstanding actions; therefore, the amendment applied at the time of the judgment.

The plaintiffs’ appeal was dismissed and the defendant’s appeal allowed.

5. Yaiguaje v. Chevron Corporation, 2017 ONCA 741 (Epstein J.A. (In Chambers)), September 21, 2017

The Court of Appeal heard a motion by Chevron Corporation and Chevron Canada Limited seeking an order for security for costs of more than a million dollars in an appeal by a number of parties residing in Ecuador. 

The appellants hold a judgment of approximately 9.5 billion dollars from an Ecuadorian court against the respondent, Chevron Corporation. They seek to enforce that judgment in Ontario against Chevron and its seventh level, indirect subsidiary, Chevron Canada. Chevron Corporation and Chevron Canada initially contested the jurisdiction of Ontario courts to enforce the Ecuadorian judgment but the Supreme Court affirmed Ontario’s jurisdiction over the appellants’ action: Chevron Corp. v. Yaiguaje, 2015 SCC 42.

Following the Supreme Court’s ruling, Chevron Corporation and Chevron Canada brought motions for summary judgment before the Ontario Superior Court of Justice seeking dismissal of the appellants’ claims against Chevron Canada, on the basis of its separate corporate personality from Chevron Corporation. 

The appellants brought a cross-motion for summary judgment, seeking a declaration that Chevron Canada’s assets were exigible to satisfy Chevron Corporation’s judgment debt. The appellants also brought a motion to, among other things, add Chevron Canada Capital Company as a defendant in the action, and to strike Chevron Corporation’s Statement of Defence. 

The motion judge granted the respondents’ motion for summary judgment. He dismissed the appellants’ cross-motion to add a new defendant, but partially granted their motion to strike. 

The appellants appealed.

The respondents sought an order for security for costs totalling $1,022,951.47. They argued that such an order was appropriate as the appellants were not ordinarily resident in Ontario, had not provided evidence of impecuniosity, and had not established a good chance of success in the pending appeal. The appellants took the position that security for costs should not be awarded given the merits of their appeal and Chevron’s delay in bringing the motion.

Epstein J.A. noted it was undisputed that the appellants were normally resident outside of Ontario. This triggered the inquiry into security for costs, requiring the court to consider a number of factors including the merits of the claim and the possible effect of an order for security preventing a bona fide claim from proceeding. 

Epstein J.A. accepted the submission of Chevron Corporation and Chevron Canada that security for costs was warranted in this case because the appellants had neither provided evidence of impecuniosity nor established a good chance of success in the pending appeal.

Epstein J.A. cited the principle that a party who seeks to establish impecuniosity must lead evidence of “robust particularity”, with full and frank disclosure and supporting documentation as to income, expenses and liabilities. She held that the evidence provided by the appellants did not meet this standard, noting that the court knew nothing of the individual circumstances of any of the forty-seven individuals or their financial backers. She therefore concluded that the appellants had failed to demonstrate impecuniosity. 

Epstein J.A. explained that where the moving party has met its initial onus under r. 56.01 and where the responding party fails to establish that it is impecunious, security for costs will generally be appropriate unless the responding party can demonstrate that its appeal has a good chance of success. 

In Epstein J.A.’s view, the appellants failed to do so. 

In order to demonstrate that they were entitled execute the judgment against Chevron Canada, despite its separate legal personality from Chevron Corporation, the appellants had to either establish a proper basis for execution against Chevron Canada under the Execution Act, R.S.O. 1990, c. E.24, or provide “some compelling reason for lifting the corporate veil”. Epstein J.A. found that they did neither, noting among other things that the Execution Act does not create rights in property where there were none before.

Epstein J.A. considered and rejected the appellants’ submission that, in its decision in this matter, the Supreme Court endorsed a “new approach” to the law of security for costs which demonstrates sensitivity to the principle of international comity and the similarity of the proceeding to a class action. She noted that the case dealt only with jurisdiction and did not establish any principle that plaintiffs seeking to enforce a foreign judgment should be treated differently than any other litigant. 

The court granted the motion, holding that the respondents are entitled to security for costs in the amount of $591,335.14 for Chevron Canada and $351,616.33 for Chevron Corporation.


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