Canada: Top 5 Civil Appeals From The Court Of Appeal (December 2015)

1. Evans Sweeny Bordin LLP v. Zawadzki, 2015 ONCA 756 (Gillese, Lauwers and Brown JJ.A.), November 9, 2015

 

In this decision, the Court of Appeal considered the enforceability of a contingency fee agreement. While most think of contingency fee agreements in the personal injury context, the agreement under review in this appeal arose in the commercial litigation context. The Court was unsympathetic to a client who tried to wiggle out of paying a large bonus after his law firm achieved the excellent result that they had agreed would trigger a bonus.

 

The appellants, the owners and developers of lands in Fort Erie, and the respondent lawyers entered into an agreement whereby the appellants agreed to pay the respondents a bonus of $500,000 if their appeal from a final order of foreclosure over their lands was granted. Their appeal was successful, and the law firm rendered an account for the bonus. The appellants obtained an order to assess the account, along with two other accounts, before an assessment officer, who held that the contingency fee agreement was not fair or reasonable. The legal account of the respondents was reduced by nearly forty-five thousand dollars and the bonus was disallowed completely.

 

On competing motions to oppose confirmation of the assessment officer's report, the motion judge dismissed the appellants' motion to further reduce the amount payable and granted the respondents' claim to the bonus. He found that the assessment officer lacked the jurisdiction to consider the fairness and reasonableness of the contingency fee agreement and held that, in any event, he would have set aside the assessment officer's conclusion that the agreement was not fair and reasonable.

 

On appeal to the Court of Appeal, the appellants sought a restoration of the decision of the assessment officer or, in the alternative, an order directing the assessment of the agreement before a judge of the Superior Court of Justice.

 

Writing for the Court of Appeal, Brown J.A. held that the motion judge correctly applied the principles in Cookish v. Paul Lee Associates Professional Corporation, 2013 ONCA 278, to conclude that the assessment officer lacked jurisdiction to consider the enforceability of the agreement. In that case, the Court considered the jurisdiction of assessment officers, who are not Masters, to consider issues relating to contingency fee agreements, and held that issues involving the enforceability of contingency fee agreements – including whether they are fair and reasonable – should be resolved by judges, not by assessment officers.

 

While a judge can refer issues to an assessment officer for determination pursuant to the reference procedure in Rule 54 of the Rules of Civil Procedure, a judge should not refer issues concerning the enforceability of a contingency fee agreement. At most, a judge may refer to an assessment officer the calculation of the quantum of a contingency fee under a valid agreement. Moreover, where a judge does order a reference to an assessment officer, the assessment order must contain clear language of delegation. An assessment order which simply refers a bill to an assessment officer for assessment is insufficient to vest in the officer jurisdiction to determine disputes arising under a contingency fee agreement. In this case, the assessment order did not refer to the assessment officer any questions about enforceability of the agreement. The motion judge therefore correctly concluded that the assessment officer lacked jurisdiction to determine whether the agreement was fair and reasonable.

 

The appellants submitted that if the assessment officer lacked jurisdiction to consider the fairness and reasonableness of the contingency fee agreement, the motion judge should have referred those issues to another judge of the Superior Court of Justice for an assessment hearing. They asserted that the motion judge should not have engaged in his own consideration of the agreement because he lacked an adequate record on which to determine its fairness and reasonableness. They further argued that in considering the agreement, the motion judge failed to accord proper deference to the assessment officer's findings.

 

Brown J.A. also rejected these submissions, noting that, unlike the assessment officer, the motion judge did have jurisdiction to consider the fairness and reasonableness of the contingency fee agreement. Rule 54.09(5) of the Rules of Civil Procedure provides that a judge hearing a motion to oppose confirmation of a report "may confirm the report in whole or in part or make such other order as is just." Moreover, pursuant to Bales Beall LLP v. Fingrut, 2012 ONSC 4991, if a judge hearing a motion to oppose finds that an assessment officer committed an error in principle, the judge may either correct the error or refer the matter back for correction. Having concluded that the assessment officer lacked the jurisdiction to consider the fairness and reasonableness of the contingency fee agreement, the motion judge was entitled to consider that issue.

 

In Brown J.A.'s view, the record before the motion judge enabled him to exercise that jurisdiction and fairly consider the enforceability of the agreement. The parties agreed that each could file whatever evidence it considered relevant, and the appellants knew that the issue of the fairness and reasonableness of the agreement would be argued on the motion. The motion judge was therefore presented with and able to review all pertinent documentation concerning the negotiation and execution of the agreement.

 

Brown J.A. rejected the appellants' submission that the motion judge failed to give proper deference to the assessment officer's findings about the circumstances that gave rise to the agreement, pointing out that without jurisdiction to consider the fairness and reasonableness of the agreement, the assessment officer's findings on that issue were not entitled to any deference. Brown J.A. observed that, in any event, the motion judge did give extensive consideration to the assessment officer's findings and provided detailed reasons why the assessment officer's criticisms of the solicitors' work arose from palpable and overriding errors of fact.

 

Brown J.A. noted that the motion judge considered the fairness of the agreement as of the date it was entered into, reviewing the documents recording the parties' negotiation of the agreement, the agreement itself and the broader factual matrix before concluding that the assessment officer erred "by making the contract something he thought it should be, instead of deciding what the parties agreed to". The motion judge also properly informed himself of the factors relevant to determining the reasonableness of the agreement as of the date of the assessment hearing, placing the greatest weight on the value of the property and the risk of the lawyers not getting paid. Brown J.A. found that he committed no errors in doing so, nor was his allowance of the bonus unreasonable. After all, the respondents' success saved the appellants the potential loss of lands worth $20 million, and allowed them to re-gain their lands free and clear of the two mortgages.

 

2. Catanzaro v. Kellogg's Canada Inc., 2015 ONCA 779 (Cronk, Epstein and Huscroft JJ.A.), November 16, 2015

 

This case reviews the circumstances when a party can resile from a settlement negotiated by counsel. It began when a piece of chicken found its way into a box of breakfast cereal. The appellants, Claudia and Nick Catanzaro, and their young daughter Alessia, through her mother, as litigation guardian, sued the respondent, Kellogg's Canada Inc. for damages suffered when they discovered a mouldy piece of chicken in a box of cereal that they had purchased.

 

A few years after the Catanzaros issued their statement of claim, counsel for Kellogg's served an offer to settle on the plaintiffs' counsel, in which Kellogg's agreed to consent to an order dismissing the action without costs. The Catanzaros' lawyer informed counsel for Kellogg's that her clients accepted the offer and provided him with draft motion materials to have the court approve the Rule 7 settlement relating to Alessia and a dismissal of the action. Shortly thereafter, counsel for the Catanzaros notified the Court that the matter had been settled.

 

Several months later, however, new counsel for the plaintiffs notified Kellogg's that his clients were resiling from the agreement and intended to proceed with the action. Kellogg's moved to enforce the settlement pursuant to Rule 49.09 of the Rules of Civil Procedure, seeking approval of the settlement with respect to Alessia and the dismissal of the action.

 

The motion judge ordered enforcement of the settlement as it affected Claudia and Nick. The motion judge found that the Catanzaros' previous counsel had the authority to settle the case, that they had agreed to settle on the terms set out in the offer and that they failed to meet the onus of establishing that the settlement, as it related to them, ought to be set aside. The motion judge also dismissed the motion in relation to Alessia on the basis that it was not supported by the material required under Rule 7.08(4) of the Rules of Civil Procedure.

 

In a brief endorsement, the Court of Appeal dismissed Claudia and Nick's appeal.

 

The Court emphasized that the policy of the courts is to promote settlement. The discretion to refuse to enforce a settlement therefore ought to be exercised rarely.

 

Citing the decision of the Court of Appeal in Milios v. Zagas (1998), 38 O.R. (3d) 218, the Catanzaros argued that the motion judge erred by failing to consider the circumstances surrounding the acceptance of the settlement, circumstances which they claimed supported their position that the settlement ought to be set aside. The Court distinguished Milios, however, noting that the factors on which it relied in allowing the plaintiffs to resile from their settlement agreement in that case, namely mistake, significant compromise and prompt notification of the mistake, were not present in the case at bar.

 

While the factors identified in Milios were relevant to the motion judge's analysis, the Catanzaros' claim that the settlement should not be enforced turned on their assertion that Claudia accepted the offer in haste and under stress. The Court noted that the evidence did not support either of these claims. Rather, the record supported the motion judge's conclusion that the appellants were unable to satisfy their onus of demonstrating that the circumstances surrounding the acceptance of the offer to settle were such that they should be allowed to resile from the agreement.

 

The Court concluded that the evidence before the motion judge did not support a refusal to enforce the settlement. His decision to exercise his discretion to enforce the settlement was entitled to deference.

 

3. Hoang v. Vicentini, 2015 ONCA 780 (Laskin J.A. (In Chambers)), November 16, 2015

 

This appeal in a motor vehicle personal injury action explored and clarified the dual obligations of an insurer to defend and indemnify and analyzed the uneasy tension that can exist for defence counsel, whose prime responsibility remains to the insured, but who can get into a conflict with respect to that duty as a result of coverage-related issues which might arise.

 

Six year-old Christopher Hoang was seriously injured when his father, Can Hoang, dropped him off at Queens Quay and Yonge Street in Toronto. Christopher ran into the intersection trying to catch his wind-blown hat, when, tragically, he was struck by a car driven by Adriano Vicentini. Christopher, by his litigation guardian, sued his father, Vicentini, and Ford Credit Canada Leasing Company, which owned the car driven by Vicentini, for damages for negligence.

 

Mr. Hoang's automobile insurer, The Personal Insurance Company, had him sign a non-waiver agreement which gave him notice that The Personal might dispute whether he was covered under his car insurance policy for any liability for the accident. The Personal appointed the law firm Flaherty McCarthy to act for Hoang.

 

A jury found Mr. Hoang solely responsible for the accident, and assessed Christopher's damages at approximately $835,000. The jury particularized Can Hoang's negligence. All but one of those particulars concerned Hoang's negligent parental supervision of his son and accordingly did not give rise to coverage under his policy with The Personal. The jury did, however, identify one particular that could give rise to coverage under the policy: Can Hoang's negligence in his "unsuitable choice of unloading area" when he dropped off his son.

 

The Personal did not add itself as a third party in the action against Can Hoang. It became a defendant in an action brought by Can Hoang for indemnification and another by Christopher Hoang for direct payment of the judgment under section 258(1) of the Insurance Act, R.S.O. 1990, chapter 18. These claims, both of which remain unresolved, rely on the jury's finding of "unsuitable choice of unloading area".

 

Christopher and the other plaintiffs appealed the trial decision, requesting that the judgment dismissing the action against Vicentini and Ford Credit be set aside, that liability be apportioned equally between those two defendants and Can Hoang and that the amount of damages be increased. Flaherty McCarthy meanwhile filed a notice of cross-appeal on behalf of Can Hoang, asking that the particulars of negligence against Hoang be set aside and the action against him dismissed.

 

One of these particulars of negligence was, of course, Can Hoang's "unsuitable choice of unloading area", the one particular under which Hoang could claim coverage under his automobile insurance policy.

 

Flaherty McCarthy's notice of cross-appeal triggered two motions to disqualify the firm from continuing to represent Can Hoang on the appeal and cross-appeal. The moving parties – the appellants and Can Hoang, in his personal capacity – claimed that by challenging the jury's finding of "unsuitable choice of unloading area", a particular for which Hoang could claim under his policy with The Personal, the insurer has put itself in a conflict of interest with its insured or, at the very least, created a reasonable apprehension of a conflict. They submitted that if that challenge was successful and the other particulars of negligence found by the jury were not set aside, then Can Hoang would lose any chance of being indemnified by The Personal for the judgment against him.

 

Laskin J.A. granted the moving parties' requested orders, removing Flaherty McCarthy as counsel of record for Can Hoang on the appeal and cross-appeal. Laxton Glass was appointed in its place.

 

Laskin J.A. identified three governing principles: First, where a lawyer is appointed by an insurer to defend its insured, the lawyer's primary duty is to the insured, even though the lawyer is paid by the insurer and the insurer may eventually have to pay the claim against its insured; second, an insurer may be required to relinquish control of the defence and pay for independent counsel retained by its insured only if there is, in the circumstances of the particular case, a reasonable apprehension of conflict of interest on the part of counsel appointed by the insurer; and third, where the insurer has insisted on a reservation of rights or its insured has signed a non-waiver agreement, then a conflict of interest may arise if coverage under the policy turns on the insured's conduct in the accident giving rise to the litigation.

 

Applying these principles to the motions before him, Laskin J.A. noted that while the potential for conflict between the interests of an insurer and its insured invariably exists because of the insurer's dual obligations to defend and to indemnify, it was even greater when the insurer insists on a reservation of rights or when its insured signs a non-waiver agreement. The potential for conflict is greater still in this particular case because Can Hoang's coverage under his insurance policy was dependent on the Court's view of his conduct at the time of the accident and because he is the appellant's father.

 

In Laskin J.A.'s view, a reasonable apprehension of conflict was "readily apparent" in this case. A reasonable bystander might think that insurer-appointed counsel would focus on overturning the one finding for which the insurer could be liable to indemnify the insured and downplay or focus less on the jury's findings of negligent parental supervision for which the insurer had no obligation to indemnify. Laskin J.A. emphasized that the test is not actual conflict of interest, but merely a reasonable apprehension thereof: "appearances count".

 

Moreover, for Mr. Hoang, an appellate decision overturning the finding of "unsuitable choice of unloading area", but upholding the findings of negligent parental supervision would leave him without any prospect of indemnification and his son without any hope of recovery.

 

Laskin J.A. concluded that the test of reasonable apprehension of conflict of interest was established and granted the orders sought.

 

4. Forsythe v. Westfall, 2015 ONCA 810 (Gillese, Blair, MacFarland, Pepall and Benotto JJ.A.), November 24, 2015

 

In this case, a victim of a motorcycle accident unsuccessfully asked the Court to reconsider its decision in Tamminga v. Tamminga, thus requiring a five-member panel to hear the appeal.

 

The appellant, Rennie Forsythe, was a passenger on a motorcycle owned and operated by Michael Westfall when the motorcycle was involved in a single vehicle accident in British Columbia. Westfall claimed that the accident was caused solely by an unidentified driver who crossed into his lane of traffic, causing him to lose control of his motorcycle. Forsythe, who suffered a severe concussion and brain injury, was treated initially in British Columbia and Alberta, and later in Ontario.

 

An Ontario resident, Forsythe was insured by AXA Insurance (Canada) under a standard automobile policy which required that she sue in Ontario to determine whether she had coverage. She commenced an action against Westfall, his insurer Jevco Insurance Company, AXA and John Doe, representing the unidentified driver, seeking damages for her injuries. In her statement of claim, she alleged that the accident was caused by the unidentified driver, or, in the alternative, that it was caused or contributed to by Westfall's negligence.

 

Westfall moved to have the action against him stayed on the basis that the Ontario court lacked jurisdiction over him.

 

The motion judge noted the significance of the fact that the unidentified driver did not make contact with Westfall's motorcycle. Under Westfall's policy with Jevco, he was only entitled to coverage when an unidentified automobile was in involved in an accident with his motorcycle in which there was physical contact between the two vehicles. Because no actual collision occurred, Forsythe might ultimately not have a claim under her own coverage. The absence of physical contact between the vehicles meant that if Westfall was not found culpable for the accident, he might be an uninsured driver for the purposes of the appellant's policy. If he was found culpable to any degree, however, then he would be an insured driver and there would be no need for the appellant to claim under her uninsured motorist coverage, unless Westfall's liability limits were not sufficient to compensate her for her injuries. The motion judge noted the further complication that the appellant's policy required that she sue in Ontario in order to determine whether she was entitled to coverage.

 

Forsythe accordingly argued on the motion that the Court had jurisdiction simpliciter over her claim against Westfall or that it should assume jurisdiction under the forum of necessity doctrine. The motion judge disagreed, however, permanently staying the action against Westfall on the basis that Ontario lacked jurisdiction over the claim. Following the Court of Appeal's recent decision in Tamminga v. Tamminga, 2014 ONCA 478, he held that Forsythe's automobile insurance policy was not a factor that satisfied the real and substantial connection test set out by the Supreme Court in Club Resorts Ltd. v. Van Breda, 2012 SCC 17. The motion judge declined to distinguish Tamminga on the basis that the claim in that case was speculative or contingent; in his view, the appellant's claim under her insurance policy remained speculative and contingent as well. The motion judge further held that the forum of necessity doctrine required that the appellant establish that there was no other forum in which she could reasonably obtain access to justice. He concluded that she failed to do so.

 

Forsythe argued before the Court of Appeal that because section 4(1)(c) of Uninsured Automobile Coverage, R.R.O. 1990, Regulation 676, and her automobile insurance policy, issued to her in Ontario, required that an Ontario court determine issues of liability and damages, her policy was a presumptive connecting factor that satisfied the real and substantial connection test set out in Van Breda and gave the Court jurisdiction over the entire dispute, including her claim against Westfall. This submission directly challenged the Court's decision in Tamminga, in which it held that a contract between a plaintiff and her insurer is not a presumptive connecting factor that would give an Ontario court jurisdiction over a claim against an extra-provincial defendant.

 

Writing for the five-judge panel of the Court, MacFarland J.A. rejected the appellant's claim that her automobile insurance policy was a "contract connected with the dispute", one of the presumptive connecting factors in Van Breda, giving Ontario jurisdiction over the dispute. The appellant sued Westfall in tort. Her potential claim against her insurer arose from a private contract between them. Westfall was not a party to the insurance policy, nor was he a named insured under its provisions. The contract neither caused nor increased the likelihood of the accident; it did not even contemplate the accident. Simply put, Forsythe's insurance policy "has nothing to do with Westfall" or with the accident.

 

The Court of Appeal addressed this issue in Tamminga, in which an Ontario resident was injured when she fell off of a truck in Alberta. Strathy C.J.O. held that her Ontario insurance contract was not a sufficient presumptive connecting factor under Van Breda to give the Court jurisdiction over the non-resident defendants.

 

An automobile insurance contract "anticipates" accidents generally, but the tortfeasor will not be identifiable in advance. Unlike the contract in Van Breda, there is nothing that connects the appellant's insurance contract to the respondents. They are not parties to or beneficiaries of the contract. The connection between the insurance policy and the dispute only arises in the aftermath of the tort and its application is conditional on the outcome of the appellant's claim against the tortfeasors.

 

The decision in Tamminga applied directly to this case and, as Strathy C.J.O. concluded in Tamminga, there was no nexus between the insurance contract and respondents.

 

MacFarland J.A. rejected the appellant's submission that her claim was distinguishable from Tamminga. She emphasized that the appellant had a direct claim against her insurer and was entitled to pursue that claim independently of her claim against Westfall. Neither Tamminga, nor prior cases such as Gajraj v. DeBernardo (2002), 60 O.R. (3d) 68, interfere with that right. However, there was no error in the motion judge's finding that the appellant's claim against her insurer was speculative or contingent. If a British Columbia court found Westfall culpable to any degree, then the appellant might recover all her damages against him and would no longer need to proceed with the claim against AXA. The claim in Tamminga was similarly speculative. MacFarland J.A. noted that the principles set out in Tamminga applied to the unidentified driver in this case just as they did to an uninsured or underinsured driver. She further observed that in deciding Tamminga, the Court was aware that the plaintiffs were required to litigate their claims against their insurers in Ontario, just as the appellant was in this case.

 

MacFarland J.A. rejected the submission advanced by the appellant and the Ontario Trial Lawyers Association that the Court ought to recognize a new presumptive connecting factor based on the appellant's insurance contract, the fact that she resided in Ontario and sustained damages in Ontario and the requirement that she bring suit in two jurisdictions, which might give rise to inconsistent verdicts. While these factors may be appropriate in a forum non conveniens discussion, they do not go to the distinct concept of jurisdiction simpliciter which, as Lebel J. explained in Van Breda, must be established on the basis of objective factors connecting the legal situation or the subject matter of the litigation with the forum.

 

Justice MacFarland also rejected the appellant's claim that an Ontario court should assume jurisdiction on the basis of the forum of necessity doctrine in order to avoid a multiplicity of proceedings and the potential for inconsistent judgments in Ontario and British Columbia. MacFarland J.A emphasized that this doctrine is only available in "extraordinary and exceptional circumstances". In order for Ontario to accept jurisdiction as the forum of necessity, the appellant must establish that there was no other forum in which she could reasonably seek relief. The appellant could pursue a claim against Westfall in British Columbia while continuing her claim against AXA in Ontario. The appellant was not at risk of being denied access to justice.

 

5. Midwest Properties Ltd. v. Thordarson, 2015 ONCA 819 (Feldman, Hourigan and Benotto JJ.A.), November 27, 2015

 

This appeal allowed a civil remedy to be added onto an existing regulatory penalty imposed following an environmental spill. Such an approach did not constitute double recovery and was consistent with the legislative goal of creating liability for polluters.

 

The appellant, Midwest Properties Ltd., and the respondent, Thorco Contracting Limited, own adjoining properties in Toronto. For more than twenty years, Thorco was in near-constant breach of its license and compliance orders issued by Ontario's environment ministry, storing large volumes of waste petroleum hydrocarbons ("PHC") on its property. The PHC contaminated the soil and groundwater, which flowed from Thorco's property into Midwest's property, contaminating the latter with significant concentrations of PHC.

 

The Ontario Ministry of the Environment and Climate Change ("MOE") ordered Thorco and its owner, John Thordarson, to investigate and remediate Midwest's property. This work was never undertaken.

 

Midwest sued Thorco and Thordarson on the basis of breach of section 99(2) of the Environmental Protection Act ("EPA"), R.S.O. 1990, chapter E.19, nuisance and negligence. The trial judge dismissed Midwest's claim under section 99(2) of the EPA on the basis that the MOE had already ordered the respondents to remediate the property and that the EPA cannot be interpreted in an "expansive manner" that might permit double recovery. She also held that Midwest had not introduced evidence of loss or damage as required under section 99(2)(a)(i), such as loss in property value. The trial judge dismissed Midwest's nuisance and negligence claims on the basis that it had failed to prove damages. She also dismissed Midwest's claim for punitive damages.

 

Midwest appealed, seeking judgment for the cost to remediate its property, approximately $1.3 million. The MOE intervened in the appeal to challenge the trial judge's finding that its order that the respondents remediate the property precluded recovery under section 99(2) of the EPA.

 

Writing for the Court of Appeal, Hourigan J.A. held that the trial judge erred in finding that the remediation order precluded recovery under section 99(2) of the EPA. The private right of action contained in the impugned provision was designed to overcome the inherent limitations in the common law in order to provide an effective process for restitution to parties whose property has been contaminated. The trial judge's interpretation and application of section 99(2) was inconsistent with the wording of legislation and undermined the objective of establishing a distinct ground of liability for polluters. Her interpretation would also permit a polluter to avoid its no-fault obligation to pay damages solely on the basis that a remediation order exists. Hourigan J.A. emphasized that remedial legislation should be construed purposively: courts must not "thwart the will of the Legislature" by imposing additional requirements for those seeking compensation for pollution that are not contained in the statute. Justice Hourigan noted that in addition to violating the general rules of statutory interpretation, the trial judge's interpretation of section 99(2) was also inconsistent with the interpretive approach to the EPA mandated by the Supreme Court in R. v. Consolidated Maybrun Mines Ltd., [1998] 1 S.C.R. 706.

 

Justice Hourigan held that the trial judge further erred in dismissing Midwest's section 99(2) claim on the basis that the appellant failed to establish compensable "loss or damage", such as actual loss in property value, business losses or the inability to use its property to operate its business. He found that the trial judge ought to have considered the cost of restoration of the property as opposed to the diminution in its value, noting that the former approach is preferred in environmental cases because the cost of restoration may exceed the value of the property and an award based on diminution of value may not adequately fund clean-up. This approach to damages reflects the "polluter pays" principle, which holds that, whenever possible, the party that causes pollution should pay for remediation, compensation and prevention.

 

Hourigan J.A. rejected the respondents' submission that compensation under section 99(2) depends on the establishment of an actionable nuisance, which requires proof of physical injury to the land or substantial interference with the use or enjoyment of the land in order to claim damages. The notion that a plaintiff can only recover if it can prove that the defendant's conduct constituted a nuisance at common law is "entirely incongruous" with the purpose of the provision. He also held that the respondents are not absolved from liability under section 99(2) on the basis that Midwest cannot specify what level of contamination occurred before and after it purchased the property. There is no requirement under the EPA for them to do so; moreover, the respondents should not be able to use their long history of pollution and non-compliance as a shield.

 

Justice Hourigan considered the negligence and nuisance claims in order to determine whether Midwest was entitled to punitive damages, concluding that the trial judge erred in dismissing both claims on the basis that the appellant failed to establish damage. He found that the trial judge erred by failing to consider evidence that established a diminution in the value of Midwest's property and a health risk, holding that she committed a palpable and overriding error in not considering that evidence and in reaching the conclusion that damage had not been proven. Hourigan J.A. noted that the other elements of the torts of nuisance and negligence were also established: the migration of PHC onto Midwest's property was not "trivial, insubstantial or unreasonable", and Midwest established that Thorco owed it a duty of care which it breached, causing the damage suffered. The appellant established an entitlement to damages under both nuisance and negligence.

 

Hourigan J.A. found Thordarson personally liable for the appellant's damages, observing that Thorco was a small corporation and that Thordarson controlled its operations. Parties with control of a pollutant cannot rely on separate ownership of the pollutant or hide behind the corporate veil to shield themselves from liability. Hourigan J.A. accordingly held Thorco and Thordarson jointly and severally liable to Midwest. Finally, Justice Hourigan held that the trial judge erred in dismissing Midwest's claim for punitive damages. Thorco's conduct, including its history of non-compliance with MOE orders, demonstrated "a wanton disregard for its environmental obligations", warranting punitive sanctions.

 

The Court allowed the appeal, substituting judgment against both respondents jointly and severally for $1,328,000 in damages under section 99 of the EPA, and awarding Midwest $50,000 in punitive damages against each of the Thorco and Thordarson.

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