- Martin v. Fleming, 2012 ONCA 750 (Sharpe, Rouleau and Hoy JJ.A.), November 6, 2012
- Locking v. Armtec Infrastructure Inc., 2012 ONCA 774 (Armstrong, Watt and Pepall JJ.A.), November 14, 2012
- AIM Health Group Inc. v. 40 Finchgate Limited Partnership, 2012 ONCA 795 (Feldman, Gillese and Epstein JJ.A.), November 20, 2012
- Sino-Forest Corporation (Re), 2012 ONCA 816 (Goudge, Hoy and Pepall JJ.A.), November 23, 2012
- Treat America Limited v. Leonidas, 2012 ONCA 748 (Goudge, Feldman and Blair JJ.A.), November 27, 2012
1. Martin v. Fleming, 2012 ONCA 750 (Sharpe, Rouleau and Hoy JJ.A.), November 6, 2012
In this brief endorsement, the Court of Appeal settled the long standing debate as to whether a plaintiff who is injured in successive automobile accidents is subject to an individual deductible for each accident.
The appeal turned on the interpretation of s. 267.5(7) of the Insurance Act, which specifies certain amounts to be deducted from non-pecuniary damages awards for bodily injury or death arising directly or indirectly from the use or operation of an automobile. On a Rule 21 motion, Justice Herman of the Superior Court held that where a plaintiff has been involved in two accidents and the actions are tried together to facilitate the assessment of damages, the plaintiff is subject to one deductible for each claim.
The Court dismissed the appeal, agreeing with the motion judge that the application of individual deductibles to each accident is consistent with the wording of the provision. The Court of Appeal held that the wording of s. 267.5(7) is unambiguous: an individual deductible must be applied to the portion of the damages arising from each accident.
The Court also upheld the motion judge's finding that the court is to determine the amount of general damages in an action by first determining the general damages in that action and then reducing that amount in accordance with the statutory deductible.
2. Locking v. Armtec Infrastructure Inc., 2012 ONCA 774 (Armstrong, Watt and Pepall JJ.A.), November 14, 2012
This decision addresses the appropriate appeal route for appeal of a carriage order made under the Class Proceedings Act, 1992.
Locking, represented by Siskinds LLP, commenced proceedings against Armtec Infrastructure Inc. under the Class Proceedings Act, 1992. So, however, did three other plaintiffs represented by Sutts, Strosberg LLP. On January 20, 2012, Justice Thomas of the Superior Court granted carriage of the class action to the plaintiffs represented by Sutts, Strosberg LLP, ordering that Locking's action be stayed. Locking appealed to the Court of Appeal.
The Court declined to hear Locking's appeal, holding that it did not have jurisdiction and that the appeal lay to the Divisional Court with leave.
The Court explained in its brief reasons that the majority of appeals under the Class Proceedings Act, 1992 are to the Divisional Court. Rights of appeal to the Court of Appeal, as set out in s. 30(3) of the Act, exist only in rare cases, such as appeals from a judgment on common issues or a final order that deals with an assessment of monetary relief.
Where the Class Proceedings Act, 1992 is silent, the Courts of Justice Act governs the appeal route and, pursuant to s. 6(1)(b) of that Act, an appeal lies to the Court of Appeal only from a final order of a judge of the Superior Court, except an order referred to in section 19(1)(a) or an order from which an appeal lies to the Divisional Court under other legislation.
Carriage orders are not specifically addressed in the Class Proceedings Act, 1992; therefore, the Courts of Justice Act applies and the appropriate appeal route then becomes a matter of determining whether the order below was final or interlocutory.
Citing the decision in Hendrickson v. Kallio, [1932] O.R. 675 (C.A.), in which Justice Middleton stated that an interlocutory order is one "which does not determine the real matter in dispute...but only some matter collateral," the Court concluded that the order of the motion judge was interlocutory.
Although this was the first time that the Ontario Court of Appeal had occasion to address this issue, the Court noted that courts in other jurisdictions in Canada had considered the matter, and had come to the conclusion that an order granting carriage of a proposed class action was interlocutory in nature. The Courts of Appeal for British Columbia and Newfoundland and Labrador held in W.(A.) (Litigation Guardian of) v. British Columbia, 2003 BCCA 448, 17 B.C.L.R. (4th) 263 and H.P. Management Inc. v. Newfoundland and Labrador (Minister of Finance), 2007 NLCA 65, 270 Nfld. & P.E.I.R. 277, respectively, that a stay of action of the unsuccessful party on a carriage motion does not bring about an end to the proceedings because the action is stayed only as a class action and may continue to be prosecuted as an individual action.
Having determined that the motion judge's order was interlocutory, the Court held that Locking's appeal should be heard by the Divisional Court with leave.
3. AIM Health Group Inc. v. 40 Finchgate Limited Partnership, 2012 ONCA 795 (Feldman, Gillese and Epstein JJ.A.), November 20, 2012
This appeal concerns the interpretation of a lease, and specifically whether a lease gave the tenant the right to stay in occupation upon its expiration.
The tenant, AIM Health Group ("AIM"), operated a chronic pain management clinic from premises leased from the landlord. The landlord and tenant entered into a five-year commercial lease set to set to expire on December 31, 2011, with an option to renew for an additional five years. In the spring of 2011, the tenant informed the property manager that it did not intend to renew the lease, but would likely need to remain in the premises for a few weeks or months after the expiry of the term due to a government-mandated inspection by the College of Physicians and Surgeons of Ontario.
The following months brought a series of delays with respect to the inspection, and the tenant continued to communicate that it would need to remain in the premises after the expiry of the lease. Meanwhile, the landlord procured a new tenant and entered into a lease with it beginning January 1, 2012. When the lease with AIM expired on December 31, 2011, AIM continued to occupy the premises. The following day, the landlord changed the locks and subsequently removed AIM's property.
AIM brought an emergency application seeking a declaration that it was entitled to re-enter the premises. It claimed to be an overholding tenant pursuant to s. 3.05 of the lease and submitted that the lease had become a month-to-month tenancy which the landlord had not given notice to terminate. The landlord argued that pursuant to s. 7.08 of the lease, the tenant was required to surrender the premises on December 31, 2011, when the term expired.
The application judge found in favour of the tenant, holding that the tenant was validly overholding pursuant to s. 3.05 of the lease and was entitled to re-enter the premises. By the time the landlord's appeal came before the Court, the dispute had been resolved, but the Court of Appeal exercised its discretion to hear the appeal due to the significant issues raised.
The appeal turned on the language of the overholding clause at s. 3.05 of the lease. The tenant pointed to the fact that the clause did not stipulate that a month to month tenancy is created only on the payment and acceptance of rent or on the consent of the landlord. AIM claimed that because those words were absent, the effect of the clause was to give it the unilateral option not to vacate the premises at the end of the term, as required by the surrender clause at s. 7.08 of the lease, but to remain in possession, creating a new month to month tenancy without the landlord having accepted rent or otherwise given consent.
Writing for the Court, Feldman J.A. rejected this argument, explaining that an overholding clause that does not refer to the consent of the landlord has nonetheless been interpreted to mean that it is only with the consent of the landlord that a month to month tenancy is created when the tenant overholds by remaining in possession following the termination of a lease. Citing Re Imperial Oil Ltd. & Robertson, [1959] O.R. 655 (C.A.) and Rafael v. Crystal, [1966] 2 O.R. 733 (H.C.J.), Feldman J.A. held that for an overholding tenancy to arise, the landlord must agree that the tenant may stay in the premises, which is generally evidenced by the payment and acceptance of rent.
Feldman J.A. found that the jurisprudence on overholding tenancy reflects commercial sense. Interpreting the overholding clause as giving the tenant the unilateral option to remain in the premises provides no benefit to the landlord and "would make the clause commercially unreasonable." Feldman J.A. further noted that only this interpretation of the overholding clause gives effect to the surrender clause at s. 7.08 of the lease. When the landlord has consented to the overholding by accepting rent, the landlord has waived the tenant's obligation to vacate. Without that waiver, however, the tenant must comply with the surrender clause.
Feldman J.A. concluded that in interpreting the overholding clause in accordance with judicial authority and commercial reasonableness, AIM was not entitled to remain in the premises without evidence that the landlord consented. AIM was therefore in breach of its obligation to vacate the premises at the end of the term of the lease and became a trespasser.
Gillese J.A. dissented on the interpretation of the overholding clause, finding that the tenant lawfully occupied the premises on January 1, 2012 on the basis of a month to month tenancy. According to Gillese J.A., the mere fact that the tenant continued to occupy the leased premises upon the expiry of the initial term without further agreement meant that s. 3.05 applied. Gillese J.A. held that if the landlord's consent was intended to be a precondition to the tenant's remaining in the premises, that should have been included in the clause.
4. Sino-Forest Corporation (Re), 2012 ONCA 816 (Goudge, Hoy and Pepall JJ.A.), November 23, 2012
The Companies' Creditors Arrangement Act (the "CCAA") provides that general creditors are to be paid in full before equity claims are paid. This appeal turns on the definition of "equity claim" in s. 2(1) of that statute.
The Court of Appeal considered whether claims by the appellant auditors and underwriters against the respondent debtor Sino-Forest Corporation fall within that definition. The appellants' claims for contribution and indemnity arose out of proposed shareholder class actions against Sino-Forest and the appellants for misrepresentation.
Earlier this year, Sino-Forest, unable to satisfy all of the claims against it, sought protection under the CCAA. After the appellants filed individual proofs of claim against Sino-Forest, it applied for an order stipulating that the appellants' claims are equity claims under the CCAA. On July 27, 2012, Justice Morawetz, the supervising judge of the CCAA proceedings, granted the order, holding that it was not premature to determine the equity claims issue at that time and that the impugned claims should be characterized as equity claims.
Section 2(1) of the CCAA defines an "equity claim" as a "claim that is in respect of an equity interest, including a claim for, among others,
(a) a dividend or similar payment,
(b a return of capital,
(c) a redemption or retraction obligation,
(d) a monetary loss resulting from the ownership, purchase or sale of an equity interest or from the rescission [...] of a purchase or sale of an equity interest, or
(e) contribution or indemnity in respect of a claim referred to in any of paragraphs (a) to (d)"
The Court of Appeal engaged in a thorough analysis of the provision, concluding that the appellants' claims for contribution and indemnity are indeed equity claims.
The Court first considered the expansive language of the provision, notably Parliament's use of the phrase "in respect of" twice in the definition. As the Supreme Court held in CanadianOxy Chemicals Ltd. v. Canada (Attorney General), [1999] 1 S.C.R. 743, the words "in respect of" are of the widest scope possible, "conveying some link or connection between two related subjects".
Because the shareholders' claims against Sino-Forest fall within the meaning of paragraph (d) of the definition of "equity claim" and the appellants' claims against the respondent are directly linked to the shareholder claims, the appellants' claims for contribution and indemnity are therefore connected to or "in respect of" a claim referred to in paragraph (d).
The Court went on to explain that the phrase "including a claim for, among others", indicates that the words preceding it – "a claim that is in respect of an equity interest" – should be given an expansive interpretation pursuant to the Supreme Court's decision in National Bank of Greece (Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029, encompassing "matters which might not otherwise be within the meaning of the term." The Court also noted the significance of the language absent from the impugned provision, pointing out that "equity claim" is deliberately not limited to a claim advanced by the holder of an equity interest.
The Court further posited that paragraph (e) of the provision was drafted in regard to claims for contribution or indemnity by non-shareholders because if only a person with an equity interest could assert such a claim, that paragraph would be rendered meaningless. The court cited the decision in R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61, in which Lamer C.J. held that "[i]t is a well accepted principle of statutory interpretation that no legislative provision should be interpreted so as to render it mere surplusage."
In the view of the Court, this interpretation is consistent with the remainder of the section, which addresses remedies available to shareholders. If ss. 2(1)(a) to (d) refer to shareholders, then it follows that paragraph (e) refers to claims for contribution or indemnity not by shareholders.
On the issue of the timing of the supervising judge's characterization of the appellants' claims, the Court declined to find that the supervising judge determined the equity claims issue prematurely. The Court noted that Sino-Forest had wanted the proceedings completed as soon as possible and that it was made clear from the outset that the appellants' claims had to be characterized. The Court further held that the appellants failed to identify any prejudice that arose from the supervising judge's determination of the issue.
The Court therefore concluded that there was no basis on which to interfere with the supervising judge's determination of the claims issue and that the appellants' claims for contribution or indemnity are equity claims within the meaning of s. 2(1)(3) of the CCAA.
5. Treat America Limited v. Leonidas, 2012 ONCA 748 (Goudge, Feldman and Blair JJ.A.), November 27, 2012
The appellant, Robert Leonidas, former President and CEO of Nestlé Canada, is the subject of a criminal investigation by the Competition Bureau in respect of an alleged conspiracy to unreasonably enhance the price of chocolate in Canada. Meanwhile, as result of information made public in the course of that investigation, a number of class actions were commenced in the United States against chocolate manufacturers there and in Canada for damages suffered as a result of the alleged conspiracy. These class actions were combined into Multidistrict Litigation (MDL) in Re: Chocolate Confectionary Antitrust Litigation.
Although neither the appellant nor Nestlé Canada are parties to the MDL, the plaintiffs, represented by the respondent Treat America Limited, sought to examine Leonidas on the merits of its claim. The case management judge overseeing the MDL issued a Letter of Request for International Judicial Assistance (LOR) seeking an order from the Ontario Superior Court compelling Leonidas to appear as a witness in the MDL. On December 9, 2011, Justice Campbell of the Superior Court granted an order enforcing the LOR, adding a number of conditions designed to protect the appellant.
Leonidas appealed to the Court of Appeal, submitting, as he had before the application judge, that the order was contrary to Canadian public policy in respect of his right against self-incrimination and was unduly burdensome.
The appellant, who refused to be examined voluntarily in the MDL, was primarily concerned with the possible prejudice to him if the Commissioner of Competition were to obtain access to his deposition while he is under investigation by the Competition Bureau. The Commissioner, which was granted intervener status in the MDL, could obtain access to the appellant's deposition either directly, or through one of the parties to the MDL which is co-operating with, and has been granted immunity by, the Commissioner.
Writing for the Court, Feldman J.A. outlined the six-part test for enforcement of an LOR, as set out in Re Friction Division Products, Inc. and E. I. Du Pont de Nemours & Co. Inc. (No.2) (1986), 56 O.R. (2d) 722 (H.C.). The appellant's claims relied on the fourth and sixth parts of the Friction test, which hold, respectively, that the order sought by the LOR must not be contrary to public policy and must not be unduly burdensome, "having in mind what the relevant witnesses would be required to do, and produce, were the action to be tried here".
Feldman J.A. rejected the appellant's submission that the Commissioner's role in events leading up to the MDL rendered the Commissioner responsible for the appellant "losing his right to remain silent". Citing the importance of the open court principle, Feldman J.A. explained that the Commissioner acted in accordance with normal practice in not seeking to seal materials discovered in the course of its investigation.
Turning to the issue of the appellant's Charter right to remain silent in the face of an investigation and the potential for the LOR to circumvent that right if his testimony were to become available to the Commissioner, Feldman J.A. noted that pursuant to the Supreme Court's decisions in R. v. Henry, 2005 SCC 76, [2005] 3 S.C.R. 609 and the recent case of R. v. Nedelcu, 2012 SCC 59, the use immunity protection provided by s. 13 of the Charter is reserved for previously compelled incriminating evidence. Because the appellant is being compelled to testify under the LOR, he is protected by s. 13 of the Charter such that his testimony, to the extent that it may be self-incriminating, cannot be used in subsequent proceedings against him.
Feldman J.A. further explained that the s. 7 Charter right not to be compelled to provide information to an investigating authority does not grant an accused person immunity from compulsion in a civil action. As the Supreme Court held in R. v. Jarvis, 2002 SCC 73, [2002] 3 S.C.R. 757, there must be a balance "between the principle against self-incrimination and the principle that all relevant evidence should be available to the trier of fact in a search for the truth."
Feldman J.A. held that the protective conditions imposed by Justice Campbell sufficiently addressed the potential prejudice to the appellant and were properly based on public policy considerations. Moreover, she noted that the Commissioner had also addressed the appellant's concerns, assuring the court that counsel for Hershey Canada (the only Canadian party remaining in the MDL) would not be permitted to share the contents of the appellant's examination with its client or the Commissioner and that the Commissioner has no intention to seek the appellant's deposition transcript.
Noting that the Commissioner had advised the Court that it was prepared to consent to further conditions designed to protect the appellant, Feldman, J.A. added three additional provisions to the order enforcing the LOR. Pursuant to these conditions, the Commissioner agreed not to seek or receive information regarding the contents of the appellant's examination or to seek a court order for access to his testimony. Feldman J.A. held that the addition of these conditions ensured that the Commissioner will not have access to the appellant's examination unless and until his deposition is sought to be used in public in the MDL or until any trial of the appellant in Canada.
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