Top 5 Civil Appeals from the Court of Appeal
4. Silva v. John Doe, 2016 ONCA 700 (Cronk, Rouleau and Huscroft JJ.A.), September 23, 2016 1. 495793 Ontario Ltd. (Central Auto Parts) v. Barclay, 2016 ONCA 656 (Juriansz, Epstein and Pepall JJ.A.), September 2, 2016
Ricardo Mercuri ran an auto recycling business known as Central Auto Parts in Thunder Bay. In April 1999, in connection with an investigation into stolen vehicles and auto parts in the community, the Thunder Bay Police Service – led by Officer Frank Barclay – executed a search warrant on Mercuri’s business premises, and subsequently charged him with eleven counts of possession of stolen property.
Mercuri was committed for trial on all eleven counts. After the Crown was required to disclose information on the confidential vehicle identification number following an unsuccessful application under section 37 of the Canada Evidence Act, R.S.C. 1985, c. C-5, six charges were withdrawn to avoid making the disclosure. An amended indictment of five charges was presented at trial, but the Crown withdrew two more charges. Three charges proceeded to trial before Wright J. of the Superior Court of Justice. Mercuri was acquitted (after directed verdicts) of two of them and, on June 8, 2005, Wright J. found Mercuri not guilty on the remaining charge, without calling on the defence for submissions.
In December 2005, Mercuri and Central Auto Parts sued Barclay and the Thunder Bay Police Service alleging negligent investigation.
The trial judge found in favour of Mercuri and Central Auto Parts, concluding that the police failed to meet the standard of care. The judgment included an award of $200,000 in non-pecuniary damages for the humiliation and worry suffered by Mercuri while the charges remained outstanding for six years.
Barclay and the Thunder Bay Police Services Board appealed.
The appellants argued that the trial judge erred in determining the standard of care without expert evidence as well as in her formulation of the standard of care. The appellants further submitted that the trial judge ignored or misapprehended relevant factors including the committal of Mercuri to trial.
The Court of Appeal agreed.
Writing for the Court, Juriansz J.A. noted the general rule that the content of the standard of care of a professional, such as a police officer, will require expert evidence. In Krawchuk v. Scherbak, 2011 ONCA 352, the Court identified two exceptions to this rule: first, in the case of nontechnical matters within the knowledge and experience of the ordinary person; second, where the impugned actions are so egregious that it is obvious that the defendant’s conduct has fallen short of the standard of care, without knowing its precise parameters. Juriansz J.A. held that the trial judge erred in departing from the general rule and that neither exception applied in this case. Rather, this was a technical, complicated investigation and there were no grounds for finding “egregious” conduct by the police. Without expert evidence, there was no basis for determining the content of the standard of care of a reasonable police officer in the circumstances, and no basis upon which the trial judge could find that the standard had been breached. It was also held that the requirement for expert evidence extends to what normal police practices in communicating with the media are or should be, in regards to complaints related to press coverage.
Juriansz J.A. further held that even if the trial judge could have determined the standard of care without relying on expert evidence, she erred in formulating the content of the standard of care by considering whether the police could prove that Mercuri had knowledge that the auto parts were stolen, rather than whether the officers had reasonable and probable grounds to believe that an offence had been committed.
In Juriansz J.A.’s view, these errors were compounded by the trial judge’s failure to give proper consideration to the fact that there had been a committal to trial on all charges after a preliminary hearing, or to the role of the Crown as the prosecution proceeded. The issue was whether the police had reasonable and probable grounds at the time they laid the charges. The committal supported the existence of reasonable and probable grounds. Thereafter, the ball was “in the hands of the Crown and the judiciary”.
Although it was unnecessary to address damages, Juriansz J.A. observed that the trial judge failed to distinguish between Mercuri and Central Auto Parts in awarding damages. As well, the evidence did not support the trial judge’s substantial non-pecuniary award. As upset as Mercuri may have been as a result of the charges against him, there was no basis for finding that this rose to the level of personal injury.
The appeal was allowed.
2. U.S. Steel Canada Inc. (Re), 2016 ONCA 662 (Strathy C.J.O., Lauwers and Benotto JJ.A.), September 9, 2016
At issue in this appeal was whether a judge had jurisdiction under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”) to apply the American legal doctrine of “equitable subordination”.
Steel producer U.S. Steel Canada Inc. (“USSC”) was under CCAA protection. The appellants, its former employees, claimed that USSC’s American parent, United States Steel Corporation (“USS”), ran the company into insolvency to further its own interests.
An issue arose as to whether the CCAA judge could apply an American doctrine known as “equitable subordination” to subordinate USS’s claims to those of the appellants. Equitable subordination provides that a creditor’s claims can be subordinated to the claims of other creditors, in effect reordering the priorities between creditors, where the claimant has engaged in some type of inequitable conduct, the misconduct resulted in injury to creditors of the bankrupt or conferred an unfair advantage on the claimant, and equitable subordination of the claim is not inconsistent with the provisions of the bankruptcy statute.
The CCAA judge held that he had no jurisdiction to grant this remedy.
The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union appealed the CCAA judge’s decision. The union claimed that it was blindsided by the argument of equitable subordination on what was a mere scheduling motion, so it made no submissions to address it; accordingly, it was inappropriate and unnecessary for the CCAA judge to determine whether he had jurisdiction to grant the remedy. The union further argued that s. 11 of the CCAA gives the CCAA judge jurisdiction to grant equitable subordination, and he therefore erred in his conclusion.
The Court of Appeal rejected these submissions.
Chief Justice Strathy noted that the issue of equitable subordination was plainly before the CCAA judge in the submissions made before and after the hearing. Moreover, the motion before the CCAA judge was not simply about scheduling; it sought directions on the extent and nature of production and discovery with respect to various objections. It was therefore appropriate for the CCAA judge to consider whether he had jurisdiction to address those issues and, if so, how and when. Strathy C.J.O. also pointed out that an evidentiary record was not required because the CCAA judge was not applying equitable subordination but merely deciding whether he had jurisdiction to grant that remedy.
Turning to the substance of the CCAA judge’s decision, Strathy C.J.O. rejected the union’s submission that the CCAA judge erred in concluding that he had no jurisdiction to grant equitable subordination under the statute. Guided by the decision of the Supreme Court in Century Services v. Canada (Attorney General), 2010 SCC 60, Strathy C.J.O. emphasized that when considering the scope of remedies under the CCAA, the court must consider the words of the statute in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the legislation, its object and the intention of the legislature.
Applying this principle, Strathy C.J.O. held that the wording of the CCAA does not give authority, express or implied, to apply the doctrine of equitable subordination. Nor does the doctrine fall within the purpose or scheme of the statute, which is to facilitate the implementation of compromises and arrangements between companies and their creditors. The CCAA does not legislate priorities or distribution; rather, these are to be worked out in each plan of compromise or arrangement. Strathy C.J.O. distinguished the CCAA’s scheme for the subordination of “equity claims” from the concept of equitable subordination, noting that the former is directed towards shareholders or those with similar claims and is consistent with the CCAA’s goal of facilitating compromise or arrangement without shareholders’ involvement, while the latter involves the subordination of a creditor’s claim due to its inequitable conduct.
Justice Strathy noted that while s. 11 of the CCAA gives the court broad powers to make orders, these powers are not limitless, and are shaped by the purpose and scheme of the legislation. The court must find that the order is “appropriate in the circumstances” and, even if it does deem the order appropriate, the court must consider whether there are restrictions set out in the CCAA that preclude it. In Strathy C.J.O.’s view, the union failed to identify how equitable subordination would further the remedial purpose of the statute.
Strathy C.J.O. noted the Supreme Court’s observation in Century Services that in most cases, the court’s jurisdiction in CCAA matters will be found through statutory interpretation, and its caution in Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, against courts using equitable remedies to achieve what they wish Parliament had done through legislation. In Strathy C.J.O.’s view, there is no gap in the legislative scheme to be filled by equitable subordination. At the same time, however, he held that the Supreme Court’s silence on the issue of equitable subordination cannot be taken as an outright rejection of the doctrine, suggesting that the Supreme Court “simply left the issue for another day”. He opined that a judge under the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 may have jurisdiction to grant the remedy. In any event, assuming the remedy of equitable subordination is available under Canadian law, it is not available under the CCAA, and the CCAA judge was correct to conclude that he did not have jurisdiction to grant it.
The appeal was dismissed.
3. Williams v. Toronto (City), 2016 ONCA 666 (Sharpe, Lauwers and Miller JJ.A.), September 12, 2016
In this decision, which arose from a class action against the City by rooming house tenants, the Court of Appeal engaged in a thorough analysis of the legal test for finding a duty of care in negligence.
In 2003, the province changed the classification of rooming houses for assessment purposes, lowering their property tax rates. Legislation required landlords to reduce rents payable by tenants in accordance with the lowered tax rates. It also required municipalities to provide notice of the rent reduction to affected rooming house landlords and tenants.
The City of Toronto failed to do so.
Terence Williams brought a class action against The Corporation of the City of Toronto for negligence, alleging that he and the class members (tenants who occupied rooming houses) overpaid rent because the City failed to provide them with timely notice of the required rent reduction. The tenants moved for summary judgment on the common issues of whether the City owed them a duty of care and whether it had breached the standard of care by failing to notify them.
The motion judge held that the tenants’ negligence claim was made out, finding that there was foreseeability of harm and a sufficiently proximate relationship between class members and the City for a duty of care to exist, and further that the City’s failure to send notices to class members breached the standard of care. He granted summary judgment in favour of the class members.
The City’s appeal turned on whether the motion judge was correct in determining that there was sufficient relational proximity between the City and the class members to justify imposing on the City a private law duty of care in addition to its public obligations under the Residential Tenancies Act, 2006, S.O. 2006, c. 17, and its precursor legislation, the Tenant Protection Act, 1997, S.O. 1997, c. 24.
The Court of Appeal agreed that there was sufficient proximity.
As the Supreme Court explained in Cooper v. Hobart, 2001 SCC 79, in order to find a duty of care in negligence, the harm complained of must have been reasonably foreseeable, there must have been sufficient proximity between the plaintiff and the defendant such that it would be fair and just to impose a duty, and there must be no residual policy reasons for declining to impose it.
With the first element, foreseeability, not in dispute, the analysis turned on the issues of proximity and policy considerations. The motion judge noted that there is no category of analogous cases in which a duty of care has previously been recognized. The Supreme Court held in Cooper that courts may determine proximity in new situations, however, by considering the expectations, representations, reliance, and the property or other interests involved, in order to “evaluate the closeness of the relationship” between the parties, and by inquiring whether it is “just and fair”, having regard to that relationship, to impose a duty of care in law upon the defendant.
Writing for the Court of Appeal, Lauwers J.A. held that the motion judge was correct to find sufficient relational proximity between the class members and the City to attach to the City a prima facie duty of care. In particular, the class members were the subject of a pilot project that placed them in a closer relationship with the City than other tenants in Toronto who were also entitled to receive the notices.
In order to oust a prima facie duty of care once the first two Cooper elements have been established, residual policy considerations must be more than speculative. They must be compelling, and a real potential for negative consequences of imposing a duty of care must be apparent. Lauwers J.A. considered three potentially significant policy considerations: the possibility of indeterminate liability, the undesirability of inhibiting the policy making functions of public authorities, and the imposition of liability for negligence triggering a conflict with the City’s public duty. He held, however, that none of these provided a reason for declining to impose a duty of care in the circumstances of this case.
Lauwers J.A. accordingly concluded that the motion judge was correct in determining that the City owed a private law duty of care to the class members in addition to its public obligations.
Turning to the standard of care, Lauwers J.A. noted that the overarching standard is that of a reasonable person in similar circumstances; or, in this case, the standard of a reasonably competent municipality. While the parties agreed that the City had a statutory obligation to provide notice to the class members and failed to do so, the City correctly noted that failure to comply with a statute is not itself proof of negligence. Lauwers J.A. emphasized, however, that this does not preclude a court from treating the statutory requirement as relevant to the standard of care. Here, the City had a clear statutory obligation under s. 131 of the Residential Tenancies Act, 2006 and its precursor legislation to send notices to certain tenants. The statute and regulations specified the content and timing of those notices. Meeting those specifications was what the standard of care required and the City failed to do. Lauwers J.A. accordingly held that the motion judge made no error in finding that the City’s failure to send the required notices to the class members fell below the standard of care.
The appeal was dismissed.
4. Silva v. John Doe, 2016 ONCA 700 (Cronk, Rouleau and Huscroft JJ.A.), September 23, 2016
In April 2011, Jarley Silva was struck by an unidentified motorist while crossing a Toronto street. He sustained multiple personal injuries as a result. At the time of the accident, Silva, a citizen of Brazil, had been living in Ontario illegally for approximately nine years.
Silva did not have motor vehicle or other insurance, and therefore sued the unidentified driver and the Superintendent of Financial Services under the Motor Vehicle Accident Claims Act, R.S.O. 1990, c. M.41 for compensation from the Motor Vehicle Accident Claims Fund. The Superintendent defended the action on the basis that the appellant’s claim was barred by s. 25(1) of the Act, which prohibits payments from the Fund to a person “who ordinarily resides in a jurisdiction outside Ontario.”
Both parties moved for summary judgment to determine Silva’s entitlement to access the Fund.
Silva lived in Ontario continuously from 2002 until the date of the accident. He claimed that his intent was to remain in Ontario indefinitely. He supported himself working construction jobs. He also obtained and renewed an Ontario driver’s licence, registered a drywall sole proprietorship, applied for a tax number as a non-resident, and joined a union. Silva did not possess a Canadian social insurance number or an Ontario health card, however, nor did he report his income to the Canada Revenue Agency or pay taxes in Canada.
After the accident, Silva applied for refugee status in Canada. His application was denied, and a deportation order issued. Silva returned to Brazil, where he currently resides.
The motion judge found that Silva’s presence in Ontario was the result of deception and illegality. He concluded that Silva was not “ordinarily resident” in Ontario at the time of the accident within the meaning of the Act and that he was therefore precluded from accessing the Fund. The motion judge dismissed Silva’s motion for summary judgment and his claim against the Superintendent.
Silva appealed, challenging the motion judge’s conclusion that payment of his claim from the Fund was barred by s. 25(1) of the Act. He argued before the Court of Appeal that the motion judge erred by applying the wrong test for determining ordinary residency, focusing on whether he was ordinarily resident in Ontario rather than on whether he was ordinarily resident in another jurisdiction on the date of the accident. He argued that the motion judge further erred by relieving the Superintendent of his onus of proof and evidentiary burden.
In a brief decision, the Court rejected these submissions.
The Court held that the motion judge correctly recognized that for purposes of s. 25 of the Act, residency must be determined as of the date of the relevant motor vehicle accident. Further, to defend against the appellant’s claim based on s. 25(1), the Superintendent bore the onus of establishing that the provision precluded the appellant’s access to the Fund. In this case, contrary to the appellant’s submission, the motion judge held that the Superintendent was not required to establish that the appellant was ordinarily resident in Brazil or some other foreign jurisdiction, but rather that he was not ordinarily resident in Ontario.
The Court agreed with the motion judge that on a plain reading, s. 25(1) distinguishes between Ontario and non-Ontario residents. It contains no language requiring proof of the precise jurisdiction outside of Ontario in which a Fund claimant was ordinarily resident. In order to successfully invoke s. 25(1), the Superintendent was required to establish simply that the appellant did not ordinarily reside in Ontario as of the date of the accident.
On the motion judge’s uncontested findings, the Superintendent met this onus.
The Court of Appeal found that the motion judge fully considered all the relevant factors surrounding the appellant’s residency and correctly recognized that de facto physical presence in Ontario, even if continuous, does not automatically establish ordinary residency in Ontario for the purpose of access to the Fund. The appellant’s knowing and continuing unlawful presence in the province and his failure to seek to regularize his status at any point prior to the accident weighed heavily against the conclusion that he was ordinarily resident in Ontario within the meaning of s. 25(1).
The appeal was dismissed.
5. 407 ETR Concession Company Limited v. Day, 2016 ONCA 709 (Laskin, MacFarland and Roberts JJ.A.), September 28, 2016
407 ETR Concession Company Limited, the company that operates Highway 407 and collects tolls from drivers who use it, sued a driver for unpaid invoices. The case raised two significant questions about how the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, applies in view of the methods available to collect unpaid tolls under the Highway 407 Act, 1998, S.O. 1998, c. 28.
Toronto’s Highway 407 is an “open access” toll highway. Unlike other toll roads, fees for use of the 407 are not collected at points of entry or exit; instead, drivers’ use of the highway is captured by a scanner if they have a transponder, or by a camera if they do not, and they are invoiced monthly.
The appellant, 407 ETR Concession Company Limited, has authority to collect tolls from those who use the 407. Under the Highway 407 Act, 1998, unpaid tolls can be collected by one of two methods: a civil action in the courts, or a process known as “licence plate denial”, in which the Registrar of Motor Vehicles will not renew or issue a vehicle permit to any person with an outstanding debt to the appellant.
The respondent Ira Day, a frequent user of the 407, had a long record of refusing to pay his debts to the appellant on time. He was placed in licence plate denial three times and, each time, facing the expiry of his vehicle permit, he eventually paid his debt. When a December 2010 invoice remained unpaid, Day was once again placed in licence plate denial. His vehicle permit expired on December 31, 2011 and was not renewed. Day continued, however, to use the highway.
In June 2013, the appellant commenced an action against Day, seeking payment of the debts he owed – $13,719.00 plus interest. In his Statement of Defence, Day pleaded that the appellant’s claim was partly barred by the Limitations Act, 2002.
The appellant brought a motion under Rule 21 of the Rules of Civil Procedure, R.R.O. 1994, Reg. 194, to determine two issues arising under the Limitations Act, 2002: first, when its claim was “discovered”, triggering the start of the two-year limitation period; second, whether the fifteen-year limitation period in Day’s March 2010 transponder lease agreement was enforceable.
The motion judge held that the appellant’s claim was discovered on May 26, 2011, which was the earliest date under the Highway 407 Act, 1998 that it could have given notice to the Registrar of Motor Vehicles to put Day into licence plate denial. He further held that the appellant could not rely on s. 22 of the Limitations Act, 2002, which permits parties to contract out of the standard two-year limitation period and agree to a longer period, because Day’s transponder agreement was not a “business agreement” as defined in that provision.
Section 5(1)(a)(iv) of the Limitations Act, 2002 provides that a claim is not discovered until a civil action “would be an appropriate means to seek a remedy”. Citing this provision, the appellant submitted that the motion judge erred in his determination of the date of discovery, arguing that it was not appropriate to sue Day until the date the licence plate denial process had run its course and his vehicle permit expired on December 31, 2011. The appellant submitted that the motion judge further erred in law in his interpretation of s. 22 of the Limitations Act, 2002 which, it argued, permits parties to agree to extend a limitation period even if their agreement is not a “business agreement”.
The Court of Appeal agreed.
Writing for the court, Laskin J.A. held that the action against Day became an “appropriate means” for the appellant to recover its loss only when the appellant had reason to believe that it would not otherwise be paid, or when the “usually effective” licence plate denial process had run its course. In Laskin J.A.’s view, the date when a vehicle permit expires due to the failure of the driver to pay a toll debt is the date on which a civil action becomes an appropriate means to recover that debt. It is on this date that the claim is discovered and the two-year limitation period begins to run. Day’s vehicle permit expired on December 31, 2011. Therefore, the appellant’s claim, commenced on June 14, 2013, was not statute-barred.
Justice Laskin agreed with the motion judge that Day’s transponder lease agreement was not a “business agreement” under s. 22 of the Limitations Act, 2002, as Day checked off the box for “personal use”, not “business use”, in his application for a transponder. Laskin J.A. held that the motion judge erred, however, in focusing on ss. 22(5) and 22(6) of the statute and not considering s. 22(3), which provides that parties may agree to suspend or extend – but not shorten – the two-year limitation period even if one of the parties is a “consumer” under the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A, and their agreement is, accordingly, not a business agreement. Because Day’s transponder lease agreement extended the two-year limitation period to fifteen years, it was enforceable under s. 22(3) of the Limitations Act, 2002.
Day argued that the provision for a fifteen-year limitation period in his transponder lease agreement was enforceable at common law, precluding the appellant from relying on s. 22 of the Limitations Act, 2002. He submitted that for an agreement to be enforceable under s. 22, the common law has imposed certain additional requirements, including that the agreement must expressly refer to and exclude the application of the standard two-year limitation period. Justice Laskin disagreed. As the Court of Appeal explained in Boyce v. The Co-operators General Insurance Co., 2013 ONCA 298, an agreement is enforceable under s. 22 if the contractual term in “clear language” describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods. In Laskin J.A.’s view, Day’s transponder lease agreement met these requirements. While the agreement did not refer expressly to exclusion of the two-year period, that was also the case in Boyce where the Court held the agreement to be enforceable under s. 22.
The appeal was allowed.
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