Good Afternoon,

Following are the summaries of civil decisions for the week.

In Biancaniello v. DMCT LLP, the Court of Appeal reversed the Divisional Court and the original motion judge, and held that a full and final release is just that, a full and final release. The fact that the plaintiff may not have discovered the claim until after giving the release did not mean that the claim had not been released.

In Bollman v. Soenen, a medical negligence case, the court discussed the principles surrounding informed consent, which contain subjective and objective aspects

In Black v. Owen, the Court reaffirmed its decision in Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123, which held that the common law rule that positive covenants do not run with freehold land is settled law in Ontario.

Finally, in Usanovic v. Penncorp Life Insurance Company (La Capitale Financial Security Insurance Company), an insured missed the normal two-year limitation period to sue his insurer for the alleged wrongful termination of disability benefits. The plaintiff argued that when it wrote to him to terminate his benefits, the insurer should have advised him of the limitation period and that the failure to do so was a breach of the insurer's duty of good faith. Although acknowledging the commentary of our partner, Rod Winsor, in his book, Good Faith in Canadian Insurance Law, suggesting that good faith or other principles might support a duty to advise of a limitation period in some circumstances, notwithstanding authority to the contrary, the court was not prepared to create a duty on an insurer to inform an insured of the limitation period. The legislature had created such a duty in certain circumstances, and could choose to expand that duty to other circumstances if it wanted to do so.

Other topics covered include dismissal for delay, family law (setting aside domestic contracts), wrongful dismissal and construction law (breach of trust).

Have a great weekend.

Civil Decisions:

De Jesus v. Linamar Holdings Inc. (Camcor Manufacturing), 2017 ONCA 384

[Rouleau, Pardu and Roberts JJ.A.]

Counsel:
R. A. Konduros, for the appellant
M. MacKillop and Todd Weisberg, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Just Cause, Burden of Proof, McKinley v. BC Tel, 2001 SCC 38, Reasonable Apprehension of Bias

Facts:

The appellant was employed as a production supervisor with the respondent. On October 8, 2013, his employment was terminated for cause after approximately 19.5 years of continuous employment, without notice or compensation in lieu of notice. The respondent terminated the appellant's employment because of a series of incidents that culminated in his having allowed 1,500 defective camshafts to be processed with "roping" marks during his shift and then in his having lied to the respondent about what had happened.

The trial judge accepted the respondent's evidence that 1,500 defective camshafts had been produced during the appellant's shift and that, if the appellant and his team had in fact been carrying out the mandated checks as often as they said they had, it would have been impossible for the appellant or his team members not to have discovered the defective camshafts. Indeed, the trial judge accepted the evidence of one of the packers that she and other packers had brought the roping issue to the appellant's attention on three occasions during their shift. The trial judge concluded that the appellant had lied about the roping issues that had occurred during his shift.

The trial judge held that the appellant's failure to supervise and to take any remedial steps once the roping problem was brought to his attention, combined with his dishonesty about what had happened, went to the heart of the employment relationship. Accordingly, the trial judge concluded that these facts, when taken together with the appellant's earlier disciplinary incidents, established on a balance of probabilities that the respondent had just cause to terminate the appellant's employment.

The employee appealed the trial judge's dismissal of his wrongful dismissal action.

Issues:

  • Did the trial judge reverse the onus that the respondent had to meet, erroneously requiring the appellant to prove that his employment had not been terminated for cause?
  • Is there a reasonable apprehension of bias?

Holding:

Appeal dismissed.

Reasoning:

  • The appellant submits that an improper reversal of the employer's onus resulted in the trial judge erroneously accepting the respondent's "impossibly exaggerated" evidence that 1,500 defective camshafts were produced during the appellant's shift and the respondent's hearsay evidence that 604 of those defective camshafts had to be scrapped. In support of his allegation of the trial judge's error, the appellant points to the following sentence near the end of the trial judge's conclusion, at para. 163: "On all of the evidence, the plaintiff has not met his onus that he was wrongfully terminated from his employment with the defendant." This concluding sentence referring to "onus" must be read in the context of the entirety of the trial judge's reasons. From the respondent's written and oral submissions at trial, it is apparent that the respondent accepted that it had the onus to demonstrate, on a balance of probabilities, that it had just cause to terminate the appellant's employment without notice or compensation in lieu of notice. Moreover, the trial judge applied the correct analysis for determining whether just cause has been established, as set out by the Supreme Court of Canada in McKinley v. BC Tel, 2001 SCC 38. Taken in this context, the trial judge's above-noted sentence at para. 163 of her reasons merely alludes to the fact that the appellant was unsuccessful at trial. Her analysis itself does not reflect a reversal of the employer's onus

The trial judge did err in accepting the hearsay evidence about the 604 scrapped defective camshafts. However, this was not a palpable and overriding error because it did not affect the trial judge's assessment of the evidence or her ultimate determination of the issues. As the trial judge stated several times in her reasons, the key factual issue that she had to decide was whether 1,500 defective camshafts had been produced during the appellant's shift. Whether or not 604 of those camshafts were ultimately scrapped was immaterial to the trial judge's determination of the total number of defective camshafts.

  • Judges are afforded a strong presumption of impartiality that is not easily displaced, although that presumption can be rebutted by the trial judge's conduct. In support of his allegation of bias, the appellant places particular emphasis on the trial judge's negative reaction to counsel's failure to bring to the court's attention a decision of the Court of Appeal that questioned a procedural ruling that the trial judge had made earlier. The trial judge initially chastised appellant's counsel, describing his failure to bring the case to the court's attention as "bad advocacy". However, once counsel for both parties apologized and explained that the failure was unintentional, the trial judge's initial annoyance immediately disappeared.

This exchange and the other concerns raised by the appellant do not demonstrate bias on the part of the trial judge. There is no evidence of inappropriate treatment by the trial judge of the appellant and his counsel. Criticism of counsel by the trial judge, as occurred here, or disagreement with the findings urged upon her by counsel, does not amount to bias or give rise to a reasonable apprehension of bias.

Biancaniello v. DMCT LLP, 2017 ONCA 386

[Feldman, Epstein and Miller JJ.A.]

Counsel:

T. Galligan, for the appellants

A. Pantel, for the respondents

Keywords: Torts, Professional Negligence, Accountants, Contracts, Settlements, Releases, Standard of Review, Correctness, Sattva Capital Corp. v. Creston Moly Corp.

Facts:

The respondent, Prinova Technologies, was incorporated in 1998 as a consulting business offering advice on document automation. It also developed a software business. From 2004 to 2007, the appellant, DMCT LLP, acted as Prinova's accountant. DMCT billed Prinova a total of $66,632.45 for services rendered on three separate matters, including a butterfly transaction. Prinova objected to paying the fees. Prinova alleged that it obtained little value for the services rendered and incurred damages as a result of some of the advice provided by DMCT. DMCT sued for its fees. Before a statement of defence was delivered, the parties agreed to settle the litigation for a total payment by Prinova of $35,000. As part of the settlement, the parties executed a mutual release dated March 31, 2008 (the "2008 Release").

In late 2011, in the course of a restructuring, Prinova learned that far from being tax-free, the butterfly transaction DMCT had structured could be subject to an income tax liability of approximately $1.24 million. As a result, Prinova obtained a court order dated January 23, 2013, rescinding the steps taken to implement the butterfly transaction. As part of the rescission application, Prinova included an affidavit from Enzo Testa, the DMCT partner who had advised Prinova on the butterfly transaction. In that affidavit, Testa acknowledged, without explanation, that the transactions as designed by DMCT did not comply with the relevant provisions of the Income Tax Act, and therefore were contrary to Prinova's intentions. Prinova incurred over $250,000 in legal and accounting fees in the process of obtaining the rescission order.

In May 2012, Prinova filed a notice of action against DMCT seeking an order setting aside the 2008 Release and claiming damages for negligence, breach of contract, misrepresentation and breach of fiduciary duty. DMCT moved for summary judgment to dismiss the action on the basis that Prinova's claim was barred by the 2008 Release.

The motion judge dismissed DMCT's motion for summary judgment, finding that the release did not bar Prinova's claim. She explained that the wording of the 2008 Release refers to claims "existing to the present time" – i.e., in 2008. DMCT's "admitted negligence" only came to light in 2011.

The Divisional Court dismissed DMCT's appeal, stating: "Unless a release has exceptionally comprehensive language, it applies only to claims that were known to the parties at the time that it was executed. A dispute that had not emerged, or a question which had not arisen, cannot be absorbed by the words of a general release. If the parties want to bar unknown claims, they must use clear and unequivocal language to express that intention." The Divisional Court agreed with the motion judge that at the time it signed the release, Prinova did not know that DMCT's advice on the butterfly transaction had been negligently given, and therefore it did not know that it had a claim for negligence against DMCT.

Issues:

Did the Divisional Court err in law in its interpretation of the standard language used in the 2008 Release?

Holding: Appeal allowed.

Reasoning:

Yes. First, the Court of Appeal addressed the issue of standard of review. The appeal came before the Court as an appeal from the Divisional Court with leave. This affected the applicable standard of review. Leave will only be granted in a second appeal in exceptional circumstances, specifically where the court would be giving guidance on certain types of issues of general public importance. In the present case, the question before the Court was of general public importance because although the release was not on a standard form, it used language that is standard in many common release documents. From a standard of review perspective, the appeal raised a question of law to which the correctness standard applies.

The seminal decision on the proper approach to the interpretation of a release is the House of Lords' decision in London and South Western Railway v. Blackmore (1870), L.R. 4 H.L. 610. At p. 263, Lord Westbury stated: "The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time the release was given." In Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69, Cory J. cited this principle with approval: "What the statement quoted means is that in determining what was contemplated by the parties, the words used in a document need not be looked at in a vacuum. The specific context in which a document was executed may well assist in understanding the words used. It is perfectly proper, and indeed may be necessary, to look at the surrounding circumstances in order to ascertain what the parties were really contracting about."

After quoting the decision in Bank of Credit and Commerce International SA v. Munawar Ali, [2001] UKHL 8 at length, the Court enumerated the principles to be applied in interpreting a release clause:

  1. "One looks first to the language of a release to find its meaning";
  2. "Parties may use language that releases every claim that arises, including unknown claims. However, courts will require clear language to infer that a party intended to release claims of which it was unaware";
  3. "General language in a release will be limited to the thing or things that were specially in the contemplation of the parties when the release was given";
  4. "When a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them"; and
  5. "One can look at the circumstances surrounding the giving of the release to determine what was specially in the contemplation of the parties".

Applying these principles to the mutual release at issue, although the release did not specifically say that it included unknown claims, it included all claims arising from the services provided by the accountants up to the end of December 2007. By including all claims, but limiting the description of the claims that are intended to be covered both by subject matter and by time frame, there was no need to further specify the types of claims that were included. The language was specific and fully understandable: it included all claims related to professional services provided during the specified time frame. There was no need, for example, to say, "including tort claims, negligence claims, breach of contract claims, costs claims", etc. They were all included unless specifically excluded. The same analysis applied to unknown claims – by specifying the claims contemplated by the parties and describing them inclusively, all claims in the defined category were included unless specifically excluded. Had the client wished to exclude claims it might later discover arising from that work, it could have bargained for that result.

The Divisional Court had held that because the parties were not aware that the accountants had given negligent advice on the butterfly transaction, the client's claim for negligence did not exist when the release was signed. This finding constituted an error of law.

Airex Inc. v. Ben Air System Inc., 2017 ONCA 390

[Simmons, Rouleau, and Roberts JJ.A.]

Counsel:

C. Holland, for the appellants

J.L. Faso and D. Morawetz, for the respondent

Keywords: Construction Law, Breach of Trust, Construction Lien Act, R.S.O. 1990, c. C.30, ss. 8 to 11, Summary Judgment, Burden of Proof

Facts:

The appellants appeal from a summary judgment declaring them in breach of the trust provisions of the Construction Lien Act, R.S.O. 1990, c. C.30 (the "Act") and ordering them to jointly and severally pay $216,662.84 to the respondent, Airex Inc. ("Airex").

The corporate appellant, Ben Air System Inc. ("Ben Air") entered into a subcontract with Omico Mechanical Ltd. ("Omico") to do a portion of Omico's HVAC work on a TTC facility ("the project"). Ben Air subsequently ordered certain HVAC equipment for the project from Airex.

The appellant, Beny Quattrociocchi, is the president of Ben Air. The appellant, Juan Cumming, is the project manager of Ben Air. There was no dispute on the motion that Mr. Quattrociocchi signed a guarantee in favour of Airex, guaranteeing Ben Air's present and future indebtedness to Airex. Further, subject to one issue regarding a claimed set-off and an argument concerning mitigation, there was no issue on the motion that Ben Air owed Airex monies on account of HVAC equipment for the project. There was also no issue that Omico paid $387,228.32 plus HST to Ben Air on account of Ben Air's subcontract and that those funds are trust funds in relation to the project under s. 8 of the Act.

Issue: Did the motion judge err in failing to find a genuine issue requiring a trial concerning whether Ben Air breached s. 8 of the Act?

Holding: Appeal dismissed.

Reasoning:

No. Ben Air failed to file evidence on the motion that carried sufficient weight to support its position. It was Airex's role to demonstrate no genuine issue requiring a trial. However, once Airex demonstrated the following facts (which were never really in dispute), Airex had established that it was the beneficiary of trust monies under s. 8(1) of the Act:

  • it was a sub-contractor on the project;
  • it supplied materials to Ben Air, a contractor on the project, for which it (Airex) had not been paid; and
  • Ben Air had received payments on account of the project from Omico, another contractor on the project.

It was then for Ben Air to show that the trust monies had been properly applied. Moreover, the appellants were required to put their best foot forward on the summary judgment motion. Viewed as a whole, the evidence the appellants filed was contradictory and lacked documentary support. It did not carry sufficient weight to support their assertions that they had paid out more money than they received in relation to the contract – or even that payments they had made on the contract left them without sufficient trust funds to pay Airex.

As for the claimed set-off, the respondent produced documents indicating it complied with the contract at issue. The appellants did not produce documents to demonstrate otherwise. The court found no basis on which to interfere with the motion judge's decision that there was no genuine issue requiring a trial concerning the set-off.

Bollman v. Soenen, 2017 ONCA 391

[Simmons, Pepall and Huscroft JJ.A.]

Counsel:

A. I. G. Michael and K. N. Knight, for the appellant/respondent by way of cross-appeal

R. G. Slaght and L. N. Beck, for the respondent/appellant by way of cross-appeal

Keywords: Torts, Negligence, Medical Malpractice, Informed Consent, Reibl v Hughes, [1980] 2 SCR 880, Expert Evidence

Facts:

In June 2008, the respondent, Dr. Gary Soenen, performed a laparoscopially assisted vaginal hysterectomy ("LAVH") on the appellant, Barbara Young (formerly Bollman). In the days and weeks following the surgery, Ms. Young experienced significant pain and complications. During subsequent corrective surgery, it was determined that her left ureter was transected.

Ms. Young sued Dr. Soenen for negligence. Among other things, she claimed that, as a general surgeon, he was not qualified to perform the surgery; that he did not adequately explain the risks of or alternatives to surgery, thus failing to obtain her informed consent; and that he did not meet the standard of care either in performing the surgery or in his post-operative care.

The trial judge found that Dr. Soenen severed Ms. Young's left ureter during the hysterectomy. Nonetheless, he rejected Ms. Young's claims that Dr. Soenen was not qualified to perform the surgery and failed to meet the standard of care in performing it. Further, while the trial judge was not satisfied that Dr. Soenen met his duty of fully informing Ms. Young about the risks of surgery and other treatment options, and found that Ms. Young "met the subjective component of the test" for informed consent, he concluded that a reasonable person experiencing Ms. Young's symptoms would have chosen to proceed with the surgery had full disclosure been made. The trial judge therefore rejected Ms. Young's negligence claim based on lack of informed consent.

However, the trial judge found Dr. Soenen negligent in his post-operative care. In particular, he found that Dr. Soenen's failure to consider and investigate a surgical injury on July 7, 2008 (which was a week before the date of the scan that revealed the ureteric injury) breached the standard of care. He noted that Ms. Young suffered pain and complications for an additional week and had to undergo an additional laparoscopic surgery. He concluded that both would have been avoided had Dr. Soenen ordered a CT scan with contrast on July 7, 2008. He awarded Ms. Young $35,000 in damages.

Ms. Young appeals the dismissal of her claim for negligence based on lack of informed consent. Dr. Soenen cross-appeals the finding of post-operative negligence.

Issues:

  1. Whether the trial judge erred in the application of the test for informed consent in medical negligence cases.
  2. Whether the trial judge erred by finding that Dr. Soenen's failure to consider and investigate a surgical injury a week before the date of the scan that revealed the ureteric injury breached the standard of care.

Holding:

Appeal dismissed, cross-appeal allowed.

Reasoning:

  1. No. In the trial judge's view, the Supreme Court's decision in Reibl v Hughes, [1980] 2 SCR 880 established a two-part test for informed consent, both components of which must be established on a balance of probabilities: (i) what the patient would have agreed to if the risks were known, a subjective test; and (ii) what a reasonable person would have done, an objective test. The duty to fully inform Ms. Young of the risks of surgery and available alternative options rested with Dr. Soenen. The trial judge was not satisfied Dr. Soenen made full disclosure to his patient. His notes were of no assistance and he provided minimal detail of what his usual practice in terms of disclosure actually was. The trial judge therefore concluded that Ms. Young met the subjective component of the test. However, in his view, it was impossible for her to meet the second component. The trial judge concluded a reasonable person experiencing Ms. Young's symptoms would have chosen a surgical solution if all treatment options and material risk, including ureteric injury, had been disclosed.

The Supreme Court of Canada discussed the modified objective test for informed consent in Arndt v Smith, [1997] 2 SCR 539. The test enunciated relies on a combination of objective and subjective factors in order to determine whether the failure to disclose actually caused the harm of which the plaintiff complains. It requires that the court consider what the reasonable patient in the circumstances of the plaintiff would have done if faced with the same situation. The trier of fact must take into consideration any "particular concerns" of the patient and any "special considerations affecting the particular patient" in determining whether the patient would have refused treatment if given all the information about the possible risks.

Although the trial judge expressed the test somewhat differently, the Court of Appeal was not persuaded that that he erred in applying the test as set out and explained by the Supreme Court. The trial judge's reasons demonstrate that he believed Ms. Young when she said that she would have tried medical management had full disclosure been made. However, he found her evidence in that respect tainted by hindsight and therefore unreliable. Taking account of her circumstances at the time, and assessing her situation from the perspective of a reasonable person, he concluded that what was the most important was a final solution. The trial judge concluded that Ms. Young wanted relief, having had two failed surgical procedures and having experienced considerable pain and fatigue. Rather than a trial of medical management, a reasonable person who had experienced Ms. Young's symptoms over the same time frame and with the attempts at correction she had tried, would have opted for surgery – which carried a very small risk of injury to the ureters – to resolve her problem, rather than medical management which might do no more than ameliorate her symptoms.

The Court of Appeal was not persuaded that the trial judge ignored or failed to consider the evidence of Ms. Young's expert in reaching this conclusion. In reaching his conclusion, the trial judge considered all the evidence and applied the test for informed consent as enunciated and explained by the Supreme Court. In the absence of error, his conclusion is entitled to deference.

  1. Yes. The expert evidence read as a whole did not support the trial judge's finding that Dr. Soenen breached the standard of care. Although two doctors gave the opinions relied on by the trial judge when testifying in-chief, during cross-examination, both acknowledged that had Dr. Soenen taken certain steps he said he had taken (performing a pelvic examination, reviewing ultrasound and blood test reports and speaking to the radiologist) before deciding on a course of action, declining to order a CT scan would be a reasonable decision and within the standard of care (or at least not an unreasonable decision). Considering the evidence as a whole, the trial judge's conclusion that Dr. Soenen fell below the standard of care in his post-operative care was not supported by the expert evidence.

Virc v. Blair, 2017 ONCA 394

[Laskin, Benotto and Trotter JJ.A.]

Counsel:

M. F. L. Blair, in person

B. R.G. Smith and S. Conlin, for the respondent

Keywords: Family Law, Domestic Contracts, Setting Aside, Misrepresentation, Family Law Act, R.S.O. 1990, c. F.3, s 56, LeVan, 2008 ONCA 388, Equalization of Net Family Property, Child Support, Retroactive Child Support, Fresh Evidence, R. v. Palmer, [1980] 1 S.C.R. 759, Standard of Review, Findings of Fact, Palpable and Ovveriding Error

Facts:

The appellant (husband) is a businessman. He and the respondent (wife), a lawyer, were married for 14 years when they separated. They signed a separation agreement prepared by the husband. The wife did not seek independent legal advice, believing that the husband's financial disclosure was accurate. She later determined that he had misstated the value of his assets at the date of marriage. She brought an application to set aside the agreement.

The trial judge set aside the separation agreement. He found that the husband had misled the wife with respect to the value of his company at the date of marriage. The trial judge revised the calculations to determine the appropriate amount of equalization and support payments.

The husband appeals the trial judge's decision to set aside the separation agreement, as well as the amount he awarded for the equalization payment and retroactive child support. He does not contest the spousal support award.

Issue:

(1) Is the fresh evidence admissible?

(2) Did the trial judge err in setting aside the Separation Agreement?

(3) Did the trial judge err in calculating the equalization payment?

(4) Did the trial judge err in awarding retroactive child support for Michael and Jeffrey?

Holding: Appeal dismissed.

Reasoning:

(1) No. The principles governing the admissibility of fresh evidence on appeal are outlined in R. v. Palmer. The Palmer test requires the applicant to satisfy four criteria: (i) the evidence could not have been adduced at trial; (ii) the evidence must be relevant in that it bears on a decisive or potentially decisive issue; (iii) the evidence must be reasonably capable of belief; and (iv) the evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

The proposed evidence does not meet the test. The correspondence could have been adduced at trial. It also could not reasonably have affected the result at trial, since the trial judge had the benefit of the same information in the husband's sworn financial statements.

(2) No. The husband submits that the trial judge misapprehended the evidence and consequently erred in setting aside the Separation Agreement.

However, the Court of Appeal determined that the trial judge correctly followed the two-step process directed by the Court of Appeal in LeVan, 2008 ONCA 388. Step one requires the party seeking to set aside the agreement to demonstrate that one or more of the circumstances in s. 56(4) of the Family Law Act is engaged. The trial judge concluded that the husband had breached his disclosure obligations (s. 56(4)(a)) and, in accordance with the law of contract (s. 56(4)(c)), had materially misrepresented his assets. The trial judge then moved to step two and exercised his discretion to set aside the Separation Agreement.

(3) No. The husband claimed $1,500,000 as part of his date of marriage deduction from his net family property for a number of inter-related legal proceedings in which he was involved. The amount claimed was the proceeds of the legal proceedings that were not resolved until after the marriage date, but were based on pre-marriage events. The husband submits that these litigation receivables were contingent assets at the date of marriage and the trial judge erred in finding their value at the date of marriage to be nil.

After reviewing the facts in some detail, the trial judge concluded that the husband had not met his onus of proving that the various legal proceedings in which he was personally involved would be either adjudicated or settled in his favour in the amounts claimed. This issue is a factual one. Accordingly, the Court of Appeal saw no palpable or overriding error in the trial judge's reasons.

(4) No. The husband submitted that the trial judge erred in awarding retroactive support for Jeffrey and Michael for three reasons: (i) the trial judge relied on an understated 2008 income figure for the wife; (ii) the wife acknowledged in her application that the children "generally" spent equal time with each parent, so the presumptive Guideline amount does not apply; and (iii) Jeffrey (age 19) and Michael (age 21) were not children of the marriage at the time of the award.

The Court of Appeal disagreed with the appellant. First, the trial judge carefully outlined the wife's income sources and determined her income for each of the relevant years. The husband had failed to identify a palpable and overriding error in the trial judge's findings of fact. Second, the trial judge conducted a detailed analysis of the children's primary residence for the years 2008-2015. He made findings of fact that although the children went back and forth between the parents' homes, for the period from July 2000 to March 2009, the children resided primarily with the wife. Third, at the time of the trial, both Michael and Jeffrey were in university and thus qualified as children of the marriage.

The trial judge's reasons, read as a whole, make it clear that the husband's conduct was blameworthy. The trial judge also addressed the circumstances of the children. Although the children lived a privileged lifestyle, the husband's assets, according to the trial judge, "enabled him to fund a lifestyle for himself and the children that was materially different from what the wife could offer".

Ultimately, the trial judge determined that the wife had made an early request for child support; he turned his mind to the fact that the children lived at a high standard and the award would amount to a transfer of wealth; and he found the husband had engaged in blameworthy conduct. In considering the appropriateness of the award determined by the Guidelines, the trial judge exercised his discretion to reduce it from $506,865 to $450,000. The Court of Appeal found no error in the trial judge's analysis and therefore would not interfere with the award of retroactive child support.

Black v. Owen, 2017 ONCA 397

[Feldman, Cronk and Miller JJ.A.]

Counsel:

S. Hutchison and M. Gourlay, for the appellants

A. Spafford and S. Gaudet, for the respondents

Keywords: Real Property, Positive Covenants Rule, Benefit and Burden Exception, Conditional Grant of Easement Exception, Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 58 O.R. (3d) 481 (CA)

Facts:

This appeal concerned the alleged obligation of the appellants, Gerald Owen and Katherine Anderson, to pay an annual levy as a contribution to maintenance costs and taxes for certain private property situated in Toronto. The payment obligation was said to arise under an 1891 trust deed concerning certain common property in the Park (the "Trust Deed").

Under the terms of the Trust Deed, the original covenantors agreed to appoint trustees to hold certain roadways, drives, a park reserve and stipulated land reservations in Wychwood Park (the "Common Property") as private property for the benefit of the original covenantors and "all persons hereinafter claiming through or under them any portion of the said property". For this purpose, the original contracting parties granted their respective interests in the lands comprising the Common Property in Wychwood Park to the trustees, upon several express trusts.

All the covenants contained in the Trust Deed are expressed to bind both the original covenantors and their heirs, executors, administrators or assigns. The Trust Deed also expressly states that the annual levy contemplated under the first trust provision constitutes a charge upon the lands held by each landowner in the Park or "his, her or their executors, administrators or assigns or anyone claiming under him, her or them." [emphasis added]

Unlike many of the other properties in Wychwood Park, the appellants' property is accessed and serviced by a public, municipal road. The appellants assert that they derive no benefit from the expenditure of the annual levy imposed under the Trust Deed, they disclaim any benefit from their property's inclusion in Wychwood Park, they maintain that they have never agreed to pay the annual levy contemplated by the Trust Deed and, further, they wish to be excluded from any use of the Common Property. They rely on the Positive Covenants Argument (defined below) to defeat the respondents' debt action against them. The respondents are the current trustees of the Wychwood Park trust.

The appellants deny any liability for the contested levies. They contend that the covenant to pay contained in the Trust Deed offends the well-established common law rule that positive covenants do not run with freehold land, whether in law or in equity. This rule is commonly referred to as the rule in Austerberry v. Oldham Corpn. (1885), 29 Ch. D. 750 (C.A.), which has clearly been adopted in Canada: Parkinson v. Reid, [1966] S.C.R. 162. The appellants argue that, as no exception to this general rule is recognized under Ontario law, the requirement under the Trust Deed to pay the annual levy is unenforceable as against them (the "Positive Covenants Argument").

In Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 58 O.R. (3d) 481 (CA), leave to appeal to S.C.C. abandoned, [2002] S.C.C.A., the Ontario Court of Appeal held that the common law rule that positive covenants do not run with freehold land is settled law in Ontario and that legislative action is required and advisable for any reform of it. The Court also considered whether two exceptions to this rule recognized under English law, known as the "benefit and burden exception" and the "conditional grant of easement exception", could and should be adopted in Ontario.

The majority in Amberwood concluded that it would be inadvisable to adopt the benefit and burden exception to the rule about positive covenants in Ontario. The majority also declined to import the conditional grant exception.

The litigation history in this matter involved two Small Claims Court actions for unpaid annual levies and two subsequent appeals to a single judge of the Divisional Court. Regarding the second action, Deputy Judge Caplan accepted the Positive Covenants Argument advanced by the appellants. However, the appeal judge allowed the appeal, set aside Deputy Judge Caplan's judgment and ordered the appellants to pay the unpaid levies for 2010 to 2013 in the amount of $12,799.81. The appeal judge also granted an unqualified declaration that they were liable to pay the annual levies assessed against their property in accordance with the Trust Deed.

Issues:

(1) Did the appeal judge err by failing to follow binding appellate precedent, namely, the majority decision in Amberwood?

(2) Did the appeal judge err by finding that the benefit and burden exception forms part of the law of Ontario and applies on the facts of this case?

(3) Did the appeal judge err by finding that the conditional grant exception forms part of the law of Ontario and applies on the facts of this case?

(4) Did the appeal judge err by finding that the principle of res judicata operates to prevent the appellants from arguing that they receive no benefit under the Trust Deed? and

(5) Did the appeal judge err by granting declaratory relief requiring the appellants to pay the annual levies under the Trust Deed in perpetuity?

Holding:

Appeal allowed.

Reasoning:

(1) Yes. The Court held that it was unnecessary for the disposition of the appeal to address all the grounds of appeal raised by the appellants. The Court concluded that the appeal judge erred in law by failing to follow binding appellate precedent, namely, the Court's majority decision in Amberwood, and by holding that the benefit and burden and conditional grant exceptions to the positive covenants rule applied in this case. The appeal judge was not entitled to adopt, as she did, the minority opinion in Amberwood as reflecting current Ontario law, either on the basis of an alleged evolution in the English jurisprudence concerning the positive covenants rule or in reliance on her interpretation of the decision of another Superior Court judge in another case.

The majority decision in Amberwood remains good law in Ontario. Recently, in Heritage Capital Corp. v. Equitable Trust Co., the Supreme Court cited Amberwood, at para. 25, for the proposition that the positive covenants rule applies "even if an agreement contains an express intention to the contrary". The Court went on to state: "As a result, the common law rule is that '[n]o personal or affirmative covenant, requiring the expenditure of money or the doing of some act can, apart from statute, be made to run with the land.'"

Amberwood was directly relevant to the matters in issue before the appeal judge. It was also a precedent binding on her. Absent reconsideration by the Court of Appeal of its decision in Amberwood (which is not requested by the parties), or an authoritative pronouncement by the Supreme Court of Canada that displaces the majority's holdings in Amberwood (which not only has not occurred, but would run contrary to Heritage Capital), it was not open to the appeal judge to disregard the binding majority opinion in Amberwood and, instead, to adopt and follow the minority opinion in that case. She erred in law in so doing.

(2) Yes. The benefit and burden exception to the positive covenants rule does not form part of Ontario law at the present time. In Amberwood, the majority unequivocally held that the principle of benefit and burden, often referred to as the doctrine in Halsall v. Brizell, [1957] 1 All E.R. 371, has not been and should not be imported into Ontario law absent legislative reform in this area of the law.

Thus, the acceptance of a benefit under a deed, by itself, will not trigger liability under a positive covenant set out in the same deed. Based on her extensive review of the English authorities, Charron J.A. concluded in Amberwood, at para. 73: "The simple fact that Amberwood received certain benefits upon obtaining title to the Phase 2 lands is clearly not sufficient, without more, under the English common law to render it liable under the positive covenant contained in the same instrument." Rather, to trigger liability under the positive covenant, there must be a correlation, evident in the deed itself, between the benefits received and the burden of the positive covenant. The operation of the rule is not defeated merely by reason of a successor landowner having acquired the lands in question with notice of the positive covenant.

Accordingly, some other recognized legal principle, other than acquisition of the property in question with notice of the term under the Trust Deed providing for payment of the annual levy, must apply in order to conclude that the appellants are bound under the Trust Deed to pay the annual levy.

(3) Yes. The majority in Amberwood, did not accept that a conditional grant exception should be recognized under Ontario law as a separate and distinct exception to the positive covenants rule. The majority concluded that none of the grants of benefit or easement in the agreement at issue in Amberwood was framed in a manner that limited the scope of the grants themselves. At its highest, all that the agreement did was reflect the parties' intention to write in, as a term of their contractual bargain, the benefit and burden principle. This attempt to create a contractual exception to the positive covenants rule, while binding on the original contracting parties, could not displace the rule that positive covenants do not bind successors-in-title.

The Court disagreed with the appeal judge's conclusions that under Ontario law, the conditional grant principle applies as a free-standing exception to the positive covenants rule, separate and apart from the benefit and burden principle. Moreover, the Court held that the fact that the appellants had knowledge of the Trust Deed is no bar to the operation of the positive covenants rule. The appellants had never agreed to pay the levies, and they disclaim any benefits under the Trust Deed. Further, there had been no binding judicial finding that the appellants are beneficiaries of the trust or that, in fact, they have derived benefits from it.

Usanovic v. Penncorp Life Insurance Company (La Capitale Financial Security Insurance Company), 2017 ONCA 395

[Strathy C.J.O., Laskin and Trotter JJ.A.]

Counsel:

D. J. Fife and M. Anne Cameron, for the appellant
V. Genova, for the respondent

Keywords: Insurance Law, Duty of Good Faith, Duty to Inform, Limitation Periods, Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, Insurance Act, R.S.O. 1990, c. I.8

Facts:

The appellant was a self-employed eaves trough installer. In 1999, he bought an insurance policy from the respondent. The policy insured him against disability arising from accidents. In 2004, he purchased additional coverage for disability arising from sickness.

In September 2007, the appellant fell from a roof and suffered serious injuries. He received disability benefits until November 2011, when the respondent terminated its payments because he no longer had a "total disability", as defined by the policy. On January 12, 2012, the respondent's lawyer wrote to the appellant explaining that since benefits had been paid for 24 months, he was not entitled to receive further benefits unless he was unable to engage in any and every occupation for which he was reasonably fit by reason of his education, training and experience.

In early 2015, the appellant consulted counsel, who told him that there was a two-year limitation period on his claim protesting the termination of his benefits. The appellant alleges that, had the insurance company told him about the limitation period when it denied his claim, he would have brought an action earlier. He commenced this action in April 2015, more than two years after the termination of his benefits and receipt of the letter from the respondent's lawyer.

Before the motion judge, the appellant argued that the respondent's denial was not sufficiently clear and unequivocal to trigger the limitation period. The motion judge found against him, holding that the limitation period began to run when the appellant received the lawyer's letter on January 12, 2012. The appellant did not pursue that argument on appeal.

The appellant's alternative submission in the court below, and the one advanced on appeal, was that the insurer's duty of good faith and fair dealing obliged it to advise its insured of the applicable limitation period on denying or discontinuing insurance benefits and that the two-year limitation period did not begin to run until the insurer gave this notice. The motion judge rejected this argument. The appellant appealed on this ground.

Issue:

Does the insurer's common law duty of good faith and fair dealing require it to inform he insured of the existence of the limitation period?

Holding:

Appeal dismissed.

Reasoning:

No. Under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, the limitation period began to run when the claim was "discovered", as determined by s. 5.

The insurer's duty of good faith did not require it to give notice of the limitation period to its insured. There is no doubt that parties to an insurance contract owe each other a duty of utmost good faith. The duty of good faith is not the same as a fiduciary duty. At its highest, the obligation of good faith and fair dealing arguably carries with it a positive obligation on an insurer to inform its insured of the nature of the benefits available under the policy. In this case, however, the appellant asks the court to extend the duty of good faith to require an insurer to disclose information outside the policy – namely, the existence of a limitation period.

Some commentators have suggested that it would be severe and unfair for the insured to be denied benefits when the insurer was aware of the limitation period, but the insured was not: see, for example, Roderick Winsor, Good Faith in Canadian Insurance Law (Toronto: Thomson Reuters Canada, 2016), at para. 2.30. However, the appellant acknowledges that no Canadian case has gone that far. While no court has imposed a duty on the insurer to inform the insured of the limitation period, some legislatures have done so. Ontario's Insurance Act, R.S.O. 1990, c. I.8 was amended in 2012 to require life, disability and creditors insurers to include a statement in regards to the Limitations Act, 2002 in the insurance policy and certificate; however, the Ontario legislature could have gone much further, for example, by adopting the approach taken in Alberta or British Columbia (which both require notice of the limitation period). The Ontario legislature presumably chose not to do so and the court should not impose consumer protection measures on insurers, outside the terms of their policies, that the legislature has not seen fit to require.

The consequences of the appellant's proposed expansion of the duty of good faith are significant. The appellant's interpretation would effectively judicially overrule the provisions of the Limitations Act, 2002 by making notice given by an insurer to an insured the trigger for the limitation period, rather than discoverability of the underlying claim. This would defeat the purpose of the statute and bring ambiguity, rather than clarity, to the process.

Under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, the limitation period began to run when the claim was "discovered", as determined by s. 5. The insurer's duty of good faith did not require it to give notice of the limitation period to its insured. While the legislatures of some provinces have imposed a statutory obligation to that effect, there is no such requirement in Ontario. Whether there should be is a matter left to the legislature.

Temelini v. Canada Permanent Trust Company, 2017 ONCA 410

[Lauwers, Hourigan and Benotto JJ.A.]

Counsel:

H. Walch, for the appellant

G. B. Dingle and A. Laskin, for the respondents

T. Gleason and R. Glass, for the interveners, Claudio Martini and Shulgan Martini, Marusic LLP

Keywords: Civil Procedure, Dismissal for Delay

Facts:

In 1984, the appellant, Paul Temelini, commenced an action against the RCMP and other defendants for, among other things, malicious prosecution resulting from fraud charges, for which he was ultimately acquitted (the "RCMP Action"). In the RCMP Action, documentation was produced by the RCMP that led Mr. Temelini to believe that he had a cause of action against the respondents. Specifically, Mr. Temelini alleges that the respondent, Robert Thorn, an employee of the respondent Canada Permanent Trust Company, provided confidential financial information about him and his businesses to the RCMP during the course of the RCMP's criminal investigation.

Mr. Temelini commenced this action against Canada Permanent Trust Company, a successor company, and Mr. Thorn (the "Canada Permanent Action") in 2004, seeking damages for the alleged wrongful disclosure. By 2016, the Canada Permanent Action had not progressed beyond the pleading stage. Mr. Temelini had not delivered an affidavit of documents, no discoveries had taken place, and no production had been made. The respondents brought a motion to dismiss for delay.

In granting the respondents' motion, the motion judge found that the lengthy delay in this case was inexcusable and was attributable to Mr. Temelini's decision to prioritize the RCMP Action over the Canada Permanent Action. He concluded that while the actions were subject to a common timetable and joint case management, the appellant consigned the Canada Permanent Action to "dormancy" while the RCMP Action proceeded to trial. The motion judge also found that the death of the key witness for the RCMP constituted prejudice to the respondents and that a fair trial was no longer possible.

Issues:

  1. Did the motion judge err in not considering all of the relevant circumstances in determining whether there was a reasonable explanation for the delay?
    1. Specifically, did he err in failing to take into account the status of the RCMP Action and the alleged deliberate deceit perpetrated by his second counsel regarding the status of the Canada Permanent Action?
  2. Did the motion judge err when he found that he had prioritized the RCMP Action?

Holding: Appeal dismissed.

Reasoning:

  1. No. The motion judge carefully reviewed the circumstances surrounding the failure of Mr. Temelini to advance the Canada Permanent Action. He specifically considered the impact of an order made in 2008 by Master Beaudoin that the two actions be case managed together and subject to a common timetable. The motion judge's conclusion was amply supported by the evidence. The incontrovertible fact is that, while the RCMP Action proceeded to trial, the Canada Permanent Action never advanced beyond the pleading stage after 12 years. The court accepted that the RCMP Action was complex and time-consuming, but that did not excuse Mr. Temelini's failure to take any steps to advance the Canada Permanent Action.
  2. No. In finding that the delay was inexcusable, the motion judge also considered and rejected Mr. Temelini's argument that the delay was attributable to the conduct of his second counsel in the Canada Permanent Action, Mr. Martini. The motion judge recognized the disputed evidence regarding Mr. Martini's role in the delay, but he reiterated his conclusion that the appellant made a decision "to prioritize the RCMP action over that as against Canada Permanent" and found that "the time scope of [Mr. Temelini's] non-disclosure to Canada Permanent is so broad that it cannot be explained away by the narrow involvement of Mr. Martini." The motion judge held that any production failures that took place during Mr. Temelini's retainer of Mr. Martini were "typical" of Mr. Temelini's approach to the Canada Permanent Action throughout its duration, "not just the discrete part handled by Mr. Martini."

The motion judge was aware of the allegation that Mr. Martini deliberately misled Mr. Temelini by telling him that production had been made in the Canada Permanent Action. However, he was entitled to discount that evidence given that production had not been made prior to Mr. Martini's retainer or after his withdrawal from the case.

Criminal Decisions:

United States v. Lane, 2017 ONCA 396

[Laskin, Watt, and Hourigan JJ.A.]

J. Norris, for the applicant

R. Kramer and M. Rahman, for the respondent

Keywords: Criminal Law, Child Pornography, Extradition, Treaty on Extradition Between the Government of Canada and the Government of the United States of America, Judicial Review

R. v. J. C. (Publication Ban), 2017 ONCA 392

[Strathy C.J.O., Cronk and Pepall JJ.A.]

Counsel:

G. Cudmore, for the appellant

J. Witkin, for the respondent

Keywords:

Criminal Law, Publication Ban, Sexual Interference, R. v. W.(D.), (1991), 63 C.C.C. (2d) 399, Evidence, Credibility, Deference

R. v. Kossyrine, 2017 ONCA 388

[Laskin, Watt and Hourigan JJ.A.]

Counsel:

V. Rondinelli, for the appellant

M. Bernstein, for the respondent

Keywords: Criminal Law, First Degree Murder, Juries, Challenges for Cause, Discharging Juror, New Trial

R. v. Bullock, 2017 ONCA 398

[MacPherson, Blair and Epstein]

Counsel:

J. Shanmuganathan, for the appellant

A. Cappell, for the respondent

Keywords: Criminal Law, Armed Robbery, Aggravated Assault, Assault with a Weapon, Unlawful Confinement

R. v. Murray (Publication Ban), 2017 ONCA 393

Counsel:

P. Campbell, for the appellant

G. Choi and L. Schwalm, for the respondent

Keywords: Criminal Law, Publication Ban, First Degree Murder, Accessory, State of Mind, Knowledge, Juries, Challenges for Cause, Charge to the Jury, Evidence, Credibility, Reliability, Inconsistent Statements

R. v. Agtual, 2017 ONCA 404

[Rouleau, Trotter and Paciocco JJ.A.]

Counsel:

I. Grant, for the appellant

R. Shallow, for the respondent

Keywords: Criminal Law, Possession of Weapon, Evidence

R. v. Ibrahim, 2017 ONCA 400

[Hoy A.C.J.O., LaForme and Benotto JJ.A.]

Counsel:

S. Ibrahim, appearing in person

R. De Filippis, for the respondent

Keywords: Criminal Law, Criminal Code, s. 839(1), Summary Conviction, Question of Law

R. v. Mathur, 2017 ONCA 403

[Gillese, Huscroft and Trotter JJ.A.]

Counsel:

E. Taché-Green, for the appellant

E. Carley, for the respondent

Keywords: Criminal Law, Fraud, Criminal Code, s. 380(1)(a), Sentencing, Character Reference, Restitution

R. v. Pearson, 2017 ONCA 389

[Watt, van Rensburg and Pardu JJ.A.]

Counsel:

M. Halfyard and B. Vandebeek for the appellant

B. Wassenaar and H. Leibovich for the respondent

Keywords: Criminal Law, Murder, Pre-Trial Ruling, Admissibility of Evidence, Voluntariness, Canadian Charter of Rights and Freedoms, s. 10(b), Search Incident to Arrest, Evidence, Admissibility, Probative Value, Prejudice

R. v. Pitt, 2017 ONCA 401

[Hoy A.C.J.O., Feldman and Benotto JJ.A.]

Counsel:

R. Pitt, appearing in person

H. Pringle, appearing as amicus

C. Harper, for the respondent

Keywords: Criminal Law, Criminal Code, s. 259(4)(b), Driving While Disqualified, Possession of Prohibited Items, Sentencing, Forfeiture Order, Vehicle Seizure, Probation

R. v. Last (Publication Ban), 2017 ONCA 406

[MacPherson, Blair and Epstein JJ.A]

Counsel:

D. J. Brodsky, for the appellant

D. Arron, for the respondent

Keywords: Criminal Law, Publication Ban, Dangerous Offender, Repetitive Behaviour, Severe Psychological Damage, Criminal Code, s. 753(a)

R. v. Burke, 2017 ONCA 405

[MacPherson, Blair and Epstein JJ.A.]

Counsel:

M. Halfyard and C. McKeown, for the appellant

H. Loubert, for the respondent

Keywords: Criminal Law, Robbery, Aggravated Assault, Repeat Offender, Sentencing, Proportionality, Mitigating Circumstances

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.