- Cavanaugh v. Grenville Christian College, 2013 ONCA 139 (O'Connor A.C.J.O., Doherty and Blair JJ.A.), March 8, 2013
- Sam's Auto Wrecking Co. Ltd. (Wentworth Metal) v. Lombard General Insurance Company of Canada, 2013 ONCA 186 (Laskin, Rosenberg and Tulloch JJ.A.), March 28, 2013
- Lipson v. Cassels Brock & Blackwell LLP, 2013 ONCA 165 (Goudge, Simmons and Gillese JJ.A.), March 19, 2013
- 1654776 Ontario Limited v. Stewart, 2013 ONCA 184 (Laskin, Juriansz and Tulloch JJ.A.), March 27, 2013
- Keewatin v. Ontario (Natural Resources), 2013 ONCA 158 (Sharpe, Gillese and Juriansz JJ.A.), March 18, 2013
1. Cavanaugh v. Grenville Christian College, 2013 ONCA 139 (O'Connor A.C.J.O., Doherty and Blair JJ.A.), March 8, 2013
In this decision, the Court of Appeal considered the matter of appellate jurisdiction under the Class Proceedings Act 1992, S.O. 1992, c. 6. It also revisited its recent decision in Taylor v. Canada (Attorney General), 2012 ONCA 479, 111 O.R. (3d) 161 in determining whether the relationship between a defendant and class members was such as to give rise to a duty of care.
The appellants brought a motion to certify their action against the respondents - Grenville Christian College, two former headmasters at the school, and the Synod Diocese of Ontario - as a class proceeding. The proposed actions in negligence, assault, battery, intentional infliction of mental suffering and breach of fiduciary duty arose from alleged abuse suffered while the appellants attended the College.
Justice Perell dismissed the motion, refusing to certify the action against the respondents. However, he made two different orders. He held that the claim did not reveal a cause of action against the Diocese as required under s. 5(1)(a) of the CPA, and ordered the action against the Diocese immediately dismissed. With respect to the other respondents, Perell J. found that the appellants failed to demonstrate that a class proceeding was the "preferable procedure" under s. 5(1)(d) of the CPA. He dismissed the motion to certify against those respondents with leave to apply under s. 7 of the CPA to continue the proceedings in an amended form.
The appellants appealed from both parts of the motion judge's order.
With appellate jurisdiction under the CPA divided between the Court of Appeal and the Divisional Court, the parties agreed that the former had jurisdiction to hear the appeal from the order dismissing the claim against the Diocese while the appeal from the order in respect of the other respondents was properly to the latter. The parties requested that the Court exercise its discretion under s. 6(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 to join the appeals.
Writing for the Court, Doherty J.A. confirmed that the Court of Appeal has jurisdiction to hear the appeal from the order in respect of the claim against the Diocese. Perell J.'s order was not one simply granting or refusing certification, but rather an order that the action be "immediately dismissed". Pursuant to s. 6(1)(b) of the CJA, a final order is appealable to the Court of Appeal unless an appeal lies to the Divisional Court under another Act. Because none of the provisions of s. 30 of the CPA directing appeals to the Divisional Court have any application to an order dismissing an action, the appeal properly lies to the Court of Appeal.
Turning to the merits of the appeal, Doherty J.A. explained that the appellants' claim against the Diocese, founded in negligence and breach of fiduciary duty, rests on the existence of a duty of care owed by the Diocese to the appellants. The duty of care inquiry necessitates a determination of whether the facts of the case disclose a relationship between the parties that is sufficiently close as to establish a prima facie duty of care.
Doherty J.A. agreed with Perell J. that the relationship between the Diocese and the appellants was not such as to impose a duty of care on the former. A diocese does not owe an automatic duty of care to those who engage with priests working under its auspices. Rather, the existence of a duty must be determined by the unique relationship between the diocese, the priests and those affected by their coduct. Moreover, the impact of the relationship on a potential duty of care must be examined in light of the principles of foreseeability of harm and proximity of relationship as outlined by the Supreme Court in R. v. Imperial Tobacco Canada Limited, 2011 SCC 42, [2011] 3 S.C.R. 45.
According to Doherty J.A., the pleadings alleging that the Diocese knew or ought to have known of the ongoing abuse at the school lacked any material facts to substantiate the claim. "A bald assertion of foreseeability cannot suffice to establish foreseeability for the purposes of the duty of care inquiry." Further, the pleadings failed to establish sufficient proximity in the relationship between the Diocese and the students to warrant the imposition of a duty of care. The pleadings did not allege any direct relationship between the Diocese and the appellants or even a direct relationship between the Diocese and the College or the respondent headmasters.
The relationship between the Diocese and the appellants did not give rise to a duty of care. As the Court recently held in Taylor, absent a duty of care, there can be no liability for negligent conduct.
Doherty J.A. continued that having found that the facts as pleaded did not support a finding of sufficient proximity such that the Diocese owed a duty of care to the appellants in negligence, they could not support the finding of a fiduciary relationship. The fiduciary relationship claim must therefore fail as well.
In the result, the Court held that the appeal from the order dismissing the action against the Diocese had no merit.
On the matter of joinder of the appeals, the Court held that it would not exercise its discretion under s. 6(2) of the CJA to hear the appeal from the order in respect of the other respondents. The two appeals raised very different issues. One raised only the adequacy of the pleadings against the Diocese, while the other addressed certification issues. There was no risk of inconsistent results if were heard in separate courts.
Moreover, the nature of the issues raised on the two appeals contraindicated joinder. The issues raised on the appeal concerning the claim against the other respondents engaged the "core" of the certification process and ought to be addressed by those with experience in the management of class proceedings. According to Doherty J.A., joining an appeal which raises certification issues with one that has nothing to do with those issues would circumvent the intent of s. 30 of the CPA. In this instance, "factors relevant to the administration of justice" overrode the wishes of the parties to the appeals and the potential efficiencies achieved by joinder.
The Court dismissed the appeal from the order dismissing the action against the Diocese and transferred the remainder of the appeal to the Divisional Court.
2. Sam's Auto Wrecking Co. Ltd. (Wentworth Metal) v. Lombard General Insurance Company of Canada, 2013 ONCA 186 (Laskin, Rosenberg and Tulloch JJ.A.), March 28, 2013
In this appeal, the Court considered whether Lombard General Insurance Company of Canada was required to indemnify its insured, Wentworth Metal, for money the company paid to settle a personal injury claim brought by its former operations manager. The appeal turned on the interpretation of the "employee injury exclusion" in Lombard's commercial general liability policy.
John Ferber was injured in a workplace accident caused by one of Wentworth's employees. At the time of the accident, Ferber was an executive officer of Wentworth and was not covered by Workers' Compensation. He sued Wentworth, which in turn sued Lombard, its insurance brokerage Dalton Timmis Insurance Group Inc. and George McCarter, the broker who had secured its insurance with Lombard.
Ferber's action settled, with both Wentworth and Dalton Timmis contributing to the settlement. Wentworth discontinued its action against Dalton Timmis and McCarter but proceeded against Lombard seeking indemnification for the money it had paid to settle the Ferber action. Dalton Timmis and McCarter also sought indemnification from Lombard and cross-claimed against the insurance company.
After a trial, Whitten J. dismissed Wentworth's claim, holding that at the time of the accident, Ferber was an employee of Wentworth and therefore insurance coverage was unavailable due to the "employee injury exclusion" in Lombard's commercial general liability policy.
Wentworth, Dalton Timmis and McCarter appealed.
Before the Court of Appeal, the appellants submitted that the trial judge erred in holding that the employee injury exclusion in the policy disentitled Wentworth to indemnification, arguing that Ferber was not an employee and that regardless, the exclusion does not apply to employees who are executive officers. Lombard countered that Ferber was indeed an employee and that the exclusion applies to all employees, whether they are executive officers or not. The scope of the exclusion, which provided that the coverage did not apply to "'bodily injury' to an employee of the Insured arising out of and in the course of employment by the Insured" was the central issue on appeal.
Writing for the Court, Laskin J.A. held that the evidence
overwhelmingly supported Whitten J.'s finding that Ferber was
an employee of Wentworth at the time of the accident. Noting that
neither the Workplace Safety and Insurance Act, 1997, S.O.
1997, c. 16, Sched. A nor the insurance policy itself precludes a
person from being both an employee and an executive officer, Laskin
J.A. turned to a consideration of whether the exclusion applies to
employees who, like Ferber, are also executive officers.
Laskin J.A. explained that insurance policies should be interpreted to promote a "reasonable commercial result". Provisions granting coverage must be construed broadly, those which exclude coverage, narrowly, and where the policy is ambiguous, the court should adopt the interpretation most favourable to the insured.
Laskin J.A. found that the exclusion was unambiguous and applied to all employees, including executive officers. While the section of the policy that defined who is an insured explicitly distinguished between executive and non-executive employees, the exclusion provision did not; therefore, one could reasonably infer that the lack of differentiation in the impugned provision was intended and that all employees came within the exclusion.
The Court therefore held that Wentworth was not entitled to insurance coverage for the injury suffered by Ferber because he was an employee of Wentworth at the time of the accident.
The Court dismissed the appeal.
3. Lipson v. Cassels Brock & Blackwell LLP, 2013 ONCA 165 (Goudge, Simmons and Gillese JJ.A.), March 19, 2013
Lipson commenced a proposed class action in which he sued Cassels Brock & Blackwell for negligence and negligent misrepresentation relating to legal opinions provided by the firm with respect to a Timeshare Tax Reduction Program. Lipson and others donated cash and resort timeshare weeks to registered athletic associations through the program, anticipating significant tax credits which were ultimately disallowed by the CCRA. Lipson claimed that he and the other class members participated in the program in reliance on the Cassels Brock opinions, which indicated in the program's promotional materials that the CCRA would be unlikely to successfully deny the tax credits.
On a motion for certification, Perell J. found that Lipson's pleading disclosed a cause of action in negligence and negligent misrepresentation and that it was not plain and obvious that the claims would fail. He also found that the question of whether Cassels Brock owed the class a duty of care and whether it had breached that duty were common issues. The motion judge found, however, that for both causes of action, the matter of causation was not a proper common issue but had to be answered on an individual basis for each class member. Despite his finding that the proposed class action satisfied the criteria for certification, Perell J. dismissed the action, holding that the claims for negligence and negligent misrepresentation were statute-barred by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
The appeal turned on whether the motion judge erred in dismissing the action as statute-barred and whether causation should have been certified as a common issue for the claim in simple negligence.
Goudge and Simmons JJ.A. found that the motion judge's decision to dismiss the proposed class action as statute-barred rested on a flawed interpretation and application of the Supreme Court's decision in Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 17. In that case, Justice Le Dain did not hold that the limitation for a claim of solicitor's negligence began to run with the manifest challenge to the solicitor's opinion, as Perell J. understood, but rather that the date on which the opinion was challenged was merely the earliest on which the claim could have commenced.
Moreover, the judges noted that Central Trust Co. is not binding authority for the proposition that the limitation period in an action for solicitor's negligence begins to run on the date of a manifest challenge to the solicitor's opinion. In Ferrara v. Lorenzetti, Wolfe Barristers and Solicitors, 2012 ONCA 851, the Court of Appeal adopted the notion that the date on which the plaintiff can be said to have sufficient information to cause the limitation period to commence in accordance with the Limitations Act is dependent upon the unique circumstances of the case.
Goudge and Simmons JJ.A. went on to find that on a proper interpretation of the jurisprudence, the record before Perell J. did not disclose whether the claim was statute-barred. Neither the fact that the CCRA was disputing the claimed tax credits nor the fact that class members may have been incurring professional fees to challenge the CCRA was determinative of when they knew, or ought to have known, that they suffered a loss resulting from Cassels Brock's opinion on the program.
Cassels Brock's opinion was that it was unlikely that the CCRA could successfully deny the tax credits. The class members could not have reasonably known that the CCRA would indeed be successful in challenging the tax credits until after they initiated test case litigation to challenge the CCRA. The test case litigation settled in 2008 when, according to Lipson's claim, he and other class members became aware that it was "at least likely, if not certain" that the CCRA would be successful in challenging the tax credits.
Goudge and Simmons JJ.A. found that Lipson's pleadings demonstrate that it was not until January 2008 that he was advised that the CCRA would likely be successful in challenging his claimed tax credits. Until that time, he could not reasonably have known that he suffered a loss resulting from Cassels Brock's opinion. Therefore, his claim was not statute-barred when he commenced his action in April 2009.
Turning to the matter of the proposed common issues, Goudge and Simons JJ.A. agreed with Lipson that for the action in simple negligence, causation should have been certified as a common issue. Lipson's claim in negligence alleged that the Cassels Brock opinion was a fundamental aspect of the program's promotion. Class members suffered damage due to their participation in the program, which, but for the opinion, would not have been marketed and available to class members. Cassels Brock ought to have foreseen that those who participated in the program would suffer damage if the opinion was negligently prepared.
The judges held that the cause of action in simple negligence does not, like the claim in negligent representation, require proof of reliance on the opinion by individual class members. The issue is common to the claims of all class members.
The Court allowed the appeal, substituting an order certifying the action as a class proceeding with the addition of the common issue of causation in simple negligence.
4. 1654776 Ontario Limited v. Stewart, 2013 ONCA 184 (Laskin, Juriansz and Tulloch JJ.A.), March 27, 2013
The Norwich and Wigmore tests collided in this case when the Court of Appeal considered the requested disclosure of a journalist's confidential sources for use in a proposed action for securities fraud.
The appellant appealed from a judgment dismissing its application for a Norwich order for disclosure of the identities of confidential sources for an article written by the respondent Sinclair Stewart and published by the respondent The Globe and Mail. The appellant, whose sole officer, director and shareholder is Jeffrey MacIntosh, the Toronto Stock Exchange Chair in Capital Markets at the University of Toronto Law School, sought the identities of Stewart's sources to proceed with a proposed class action against BCE arising from fluctuations in the price of BCE shares during the attempted leveraged buy-out of the company in 2007-2008.
In a June 2007 press release, BCE announced that it had entered into an agreement with 6796508 Canada Inc. for the acquisition of all of BCE's common shares. A year later, after the Supreme Court had approved the transaction and the parties had issued a joint public statement confirming their commitment to the deal, Stewart wrote the impugned article, in which he cited "high level" confidential sources who predicted that the transaction would be delayed, if it proceeded at all.
In the days following the publication of the article, the price of BCE shares fell and then rose again after BCE issued a press release announcing that a final agreement had been reached and that the transaction would proceed.
The appellant, which disposed of its shares at a significant loss during this period, believes that Stewart's confidential sources breached the Ontario Securities Act, R.S.O. 1990, c. S.5 by manipulating the options market during the failed bid. The appellant brought a claim against BCE, Canada Inc. and John or Jane Doe for violation of the Act, relying on the provisions of the legislation that create private rights of action.
Belobaba J. regarded the appellant's proposed claim as serving private interests and found that it had little merit and would likely fail. He concluded that the public interest in preserving journalist-source privilege outweighed any interest in the appellant's claim, and declined to grant a Norwich order compelling the disclosure of Stewart's sources.
The appellant appealed to the Court of Appeal.
Citing the Court of Appeal's most recent consideration of Norwich orders in GEA Group AG v. Ventra Group Co., 2009 ONCA 619, 96 O.R. (3d) 481, Juriansz J.A. found that the appellant met the requirements of the first four Norwich factors. Notably, he emphasized that "the threshold for granting disclosure is designed to facilitate access to justice by victims of wrongdoers whose identity is not known" and therefore declined to apply a narrow approach to the first Norwich factor. The applicant need not demonstrate a prima facie case at this stage. Juriansz J.A. found that the appellant was not engaged in "mere fishing" and its proposed action was not frivolous. He concluded that "sufficient bona fides has been shown to justify consideration of the case as a whole." The strength of the potential action could be determined in the final weighing of all the relevant factors.
It is at the fifth Norwich factor, which is whether the interests of justice favour disclosure, that Norwich meets the Wigmore test. The fifth Norwich factor is a broad one, requiring consideration of the interests of the applicant, the respondents, the alleged wrongdoers and the administration of justice. The interests of the respondents and the public raise the issue of journalist-source privilege, which must be determined by application of the Wigmore test, as outlined by the Supreme Court in R. v. National Post, 2010 SCC 16, [2010] 1 S.C.R. 477.
Juriansz J.A. found that the first two factors of the Wigmore
test are easily satisfied. The appellant did not contest that the
communications originated in confidence or that confidence was
essential to the relationship between Stewart and his sources. With
respect to the third prong of the test, Juriansz J.A. characterized
the relationship generally, concluding that the relationship
between a journalist and a source should indeed be sedulously
fostered in the public interest.
Turning to the final consideration of whether the public interest served by protecting the identity of a source outweighs its interest in the truth, Juriansz J.A. looked to the approach outlined by Binnie J. in National Post. "The court must weigh up the evidence on both sides, supplementing it with judicial notice, common sense, good judgment and appropriate regard for the 'special position of the media."
After an extensive discussion of the public interest in the media's use of confidential sources and in compliance with the Securities Act, the strength of the proposed action, the potential harm that would flow from upholding or rejecting the claim of privilege, and other issues, Juriansz J.A. concluded that the public interest was best served by upholding the respondents' claim of privilege. "The public interest in free expression must always be weighed heavily in the balance."
Juriansz J.A.'s conclusion rested on the strength of the appellant's proposed action. He noted that the appellant put forward a claim that, except for the respondents' claim of privilege, would have entitled it to disclosure. The balance might have shifted in favour of the appellant had its case been more compelling; however, Juriansz J.A. agreed with the application judge that the appellant's action was not likely to be successful.
The Court concluded that the respondents satisfied the Wigmore test and therefore the appellant failed to satisfy the Norwich test. The appeal was dismissed.
5. Keewatin v. Ontario (Natural Resources), 2013 ONCA 158 (Sharpe, Gillese and Juriansz JJ.A.), March 18, 2013
This case concerned Treaty 3, an agreement reached in 1873 between Canada and the Saulteaux Tribe of the Ojibway Indians with respect to a large tract of land in northwestern Ontario and eastern Manitoba. In entering into the treaty, the Ojibway surrendered their interest in the lands in exchange for reserves, payments and other benefits. However, the treaty contained a "harvesting clause" whereby the Ojibway retained the right to hunt and fish on parts of the land except on areas "required or taken up for settlement, mining, lumbering or other purposes" by the Canadian government. That clause was at the heart of these appeals.
In 1997, Ontario's Minister of Natural Resources issued a sustainable forest licence to Abitibi-Consolidated Inc. to carry out clear-cut forestry operations in certain parts of the Whiskey Jack Forest, which falls within the Keewatin portion of the Treaty 3 territory. Members of the Grassy Narrows First Nation applied for judicial review to set aside all licences, permits, plans and schedules that Ontario had granted to Abitibi, claiming that the forestry operations were in violation of the Treaty 3 harvesting clause. The Divisional Court quashed the application for judicial review on the grounds that it lacked the jurisdiction to grant the relief sought and that there were complex questions of fact and law that required a trial.
Grassy Narrows then launched an action against the government of Ontario. Spies J. made a case management order dividing the trial into two phases, the first of which would involve the trial of two issues, framed as follows:
- Does Ontario have the authority to exercise the right to "take up" tracts of land for forestry, within the meaning of Treaty 3, so as to limit the rights of the plaintiffs to hunt or fish as provided for in Treaty 3?
- If the answer to the foregoing question is "no," does Ontario have the authority pursuant to the division of powers under the Constitution Act, 1867 to justifiably infringe the rights of the plaintiffs to hunt and fish as provided for in Treaty 3?
After a lengthy trial, Justice Sanderson answered both questions in the negative, finding in favour of Grassy Narrows on every issue. Most notably, she found that in the Keewatin Lands, Ontario could not take up land so as to limit harvesting rights without first obtaining Canada's approval, interpreting the harvesting clause such that the taking up required a two-phased authorization process.
The appeals, which saw the participation of ten parties, turned on the issue of whether Ontario required the approval of the government of Canada before exercising its right to take up land in accordance with the harvesting clause.
In an extensive decision, the Court held that the trial judge erred in concluding that Ontario cannot authorize the taking up of land in the Keewatin lands without Canada's approval or permission. The Court found that Justice Sanderson's interpretation failed to apply the governing constitutional provisions and principles. Citing case law from St. Catherine's Milling and Lumber Co. v. The Queen (1888), 14 A.C. 46, aff'g [1887] 13 S.C.R. 577, aff'g (1866), 13 O.A.R. 148 (C.A.), aff'g (1885), 10 O.R. 196 (Ch. Div.) to Delagamuuk v. British Columbia, [1997] 3 S.C.R. 1010, the Court explained that Canada was not a party to Treaty 3. The treaty promises were made by the Crown, not by a particular level of government. Fulfillment of the Crown's covenants under the agreement must occur within the framework of the division of powers. Moreover, contrary to the trial judge's finding, those who negotiated the treaty had no authority to depart from the Constitution's allocation of powers and responsibilities and no power to deprive Ontario of the beneficial ownership that passed to the province when Ontario's borders were expanded.
The Court went on to find that Justice Sanderson's interpretation of the harvesting clause could not be reconciled with the text of the provision. The Court noted that the text did not contemplate a two-step approval process involving two levels of government, as suggested by the trial judge's reading of the clause. The text provided for taking up by only one level of government, namely the Dominion of Canada. When beneficial ownership was transferred to Ontario, Ontario took the place of Canada as the level of government with the capacity to take up lands.
The Court also rejected the trial judge's conclusion on the basis of her factual findings that the Commissioners appointed by Canada to negotiate the treaty deliberately contemplated and intended a two-step authorization process. The Court found that nothing in the well-documented treaty negotiations suggested that any representation was made to the Ojibway that the taking up clause would be subject to approval by two levels of government. Moreover, Justice Sanderson's interpretation of the events surrounding the negotiation of the treaty was inconsistent with the evidence as to the contemporary understanding of the harvesting clause. Notably, the Provisional Boundary Agreement, entered into between Canada and Ontario within a year of the execution of the treaty, reflected the understanding that the right to take up lands lay with the level of government that enjoyed beneficial ownership of the lands.
Finally, the Court found that Justice Sanderson erred in holding that subsequent legislation which gave Ontario the power to take up lands in the treaty territory did not apply in respect of the Keewatin Lands and that Ontario required Canada's authorization to take up in that area. The Court held that this legislation merely confirmed Ontario's right to take up under the treaty without Canada's approval. Moreover, once the Keewatin Lands became part of Ontario in 1912, Ontario stepped into the shoes of Canada for the purposes of the treaty's harvesting clause in the Keewatin Lands.
Having answered the first question in the affirmative, the Court did not address the question of whether Ontario could resort to a Sparrow justification. The appeals were allowed.
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