Hello again.

Welcome to another week of summaries of civil decisions of the Court of Appeal for Ontario. There was a lengthy labour law decision this week in which the court agreed with the application judge that the Expenditure Restraint Act, which capped public service employee wages during the global recession arising out of the financial crisis of 2008 and did not allow unions to try and make up those losses at a later date, did not infringe the federal unions’ right to freedom of association under s. 2(d) of the Charter. Other topics covered this week include administrative law, securities class actions, mortgagees’ rights as against residential tenants, easements of necessity and costs.

Have a great weekend.

John Polyzogopoulos

Blaney McMurtry LLP

Table of Contents:

Civil Decisions:

Gordon v. Canada (Attorney General), 2016 ONCA 625

Key Words:  Labour Law, Government of Canada, Unions, Collective Bargaining, Expenditure Restraint Act, Constitutional Law, Canadian Charter of Rights and Freedoms, s. 2(d), Freedom of Association, Substantial Interference Test, s. 1, Oakes Test, Evidence, Opinion Evidence, R. v. Mohan, [1994] 2 S.C.R. 9, Rules of Civil Procedure, Rule 53, Form 53, Experts, Duty to Court, Participant Experts, Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721

Ottawa Police Services v. Diafwila, 2016 ONCA 627

Keywords: Administrative law, Police, Discipline Proceedings, Police Services Act, Standard of Review, Reasonableness, Correctness

R & G Draper Farms (Keswick) Ltd v Nature’s Finest Produce Ltd2016 ONCA 626

Keywords: Civil Procedure, Costs, Proportionality, Reasonableness, Reasonable Expectations,Rules of Civil Procedure, Rule 1.04(1.1), Rule 49.10

Toronto-Dominion Bank v. Hosein, 2016 ONCA 628

Keywords: Real Property, Mortgages, Residential Tenancies, Mortgages Act, s. 52, Residential Tenancies Act, s. 37(1), 39, Statutory Interpretation, Rizzo & Rizzo Shoes Ltd. (Re), Presumption of Coherence and Consistency, Presumption Against Absurd Consequences

Toronto-Dominion Bank v. Wise, 2016 ONCA 629

Keywords:  Real Property, Easements of Necessity, Water Access, Public Policy

Rooney v. ArcelorMittal S.A., 2016 ONCA 630

Keywords: Securities, Class actions, Secondary Market Misrepresentations, Securities Act, s. 131(1), Takeover Bid Circulars, Statutory Interpretation, Rizzo & Rizzo Shoes Ltd. (Re)

For Criminal Law Decisions, click here

 

Civil Decisions:

Gordon v. Canada (Attorney General), 2016 ONCA 625

[Hoy A.C.J.O., Blair and Lauwers JJ.A.]

Counsel:

A. Raven and A. Astritis, for the appellants, the Public Service Alliance of Canada et al

F. Faraday, for the appellants, the Professional Institute of the Public Service of Canada et al.

K. Hucal and J. Bricker for the respondent, Attorney General of Canada

Key Words:  Labour Law, Government of Canada, Unions, Collective Bargaining, Expenditure Restraint Act, Constitutional Law, Canadian Charter of Rights and Freedoms, s. 2(d), Freedom of Association, Substantial Interference Test, s. 1, Oakes Test, Evidence, Opinion Evidence, R. v. Mohan, [1994] 2 S.C.R. 9, Rules of Civil Procedure, Rule 53, Form 53, Experts, Duty to Court, Participant Experts, Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721

Facts:

In response to the global recession that occurred from August 2007 until early 2009, the federal Department of Finance was looking to cut costs and give leadership to the public in addressing the harsh economic downturn. Since compensation costs were a significant component of government spending, the Department of Finance asked the Treasury Board Secretariat for options to limit compensation costs in the round of collective bargaining then occurring with the federal unions. The Secretariat produced a paper that set out three options. One option – the option recommended by the Treasury Board Secretariat – was to limit salary increases by freezing or limiting wage increases. The Treasury Board Secretariat advised that this option could be completed by attempting, through collective bargaining, to reach agreements consistent with wage increase limits. The Government took that advice.

The Government also created the Expenditure Restraint Act, S.C. 2009, c. 2, s. 393 (“ERA”). TheERA was introduced in Parliament on February 6, 2009, and received Royal Assent on March 12, 2009. The ERA applied to all employees within the federal government’s core public administration (“CPA”), employees of Crown corporations and those employed by Parliamentary employers such as the Senate and House of Commons. The ERA did not freeze wages, reduce wages or eliminate existing merit or similar types of increases. Rather, for the fixed restraint period, it implemented an upper limit on wage increases, prohibited the restructuring of pay rates, and prohibited any increase in additional remuneration, with certain limited exceptions. The wage caps were consistent with the Statement but also capped wage increases for the fiscal year 2006-2007, except for collective agreements concluded or arbitral awards issued before December 8, 2008. The ERA also prevented unions from making up any losses in bargaining after the end of the restraint period.

There are a total of 62 bargaining units represented by the appellant unions, which were each at different stages of collective bargaining in the fall of 2008. Many of the bargaining units represented by the appellants reached collective agreements that are not challenged in this case. However, the core of the unions’ complaints is that the ERA conclusively excluded wage increases beyond the caps. They point to several situations where the collective bargaining process continued after the ERA came into force, and argue the ERA’s provisions substantially interfered with their members’ collective bargaining rights.

The appellant unions seek declarations that provisions in the ERA limited their members’ freedom of association under s. 2(d) of the Canadian Charter of Rights and Freedoms. They also challenge the Government’s conduct in collective bargaining, before and after the ERA’s enactment. They submit the Government’s conduct and provisions in the ERA substantially interfered with their right to a meaningful collective bargaining process by interfering with bargaining on wages, overriding freely negotiated wage increases, capping wage increases during the restraint period, and preventing bargaining for catch-up after the restraint period. They assert these alleged limits have not been demonstrably justified under s. 1, and seek relief under s. 24 of the Charter.

The application judge dismissed the unions’ applications because their associational rights under s. 2(d) of the Charter were not impermissibly limited by the Government’s conduct in collective bargaining or provisions in the ERA. Alternatively, the application judge held that the Government had demonstrably justified any such limits under s. 1 of the Charter in light of the global economic crisis then affecting Canada.

Public Service Alliance of Canada (“PSAC”) and the Professional Institute of the Public Service of Canada (“PIPSC”) appeal the application judge’s decision. Together, PSAC and PIPSC represent about 88% of unionized employees in the federal public service. They submit that the application judge’s findings on the Charter should be overturned. Further, they submit that the application judge erred in accepting the opinion expert evidence of Associate Deputy Minister Paul Rochon.

Issue:

  • Did the application judge err in concluding that neither the ERA nor the Government’s conduct in collective bargaining limited the union members’ associational rights under s. 2(d) of the Charter?
  • Did the application judge err in concluding that the Government justified any such limits under s. 1 of the Charter?
  • Did the application judge err in accepting the opinion evidence of Associate Deputy Minister Paul Rochon in preference to the evidence of economics professor Dr. Lars Spencer Osberg?

Holding:  Appeal dismissed.

Reasoning:

(1) Did the application judge err in concluding that neither the ERA nor the Government’s conduct in collective bargaining limited the union members’ associational rights under s. 2(d) of the Charter?

No. Neither the ERA nor the Government’s conduct before or after the enactment of ERA limited the appellants’ s. 2(d) rightsIn labour relations, s. 2(d) protects a meaningful process of collective bargaining that gives employees a degree of choice and independence that allows them to determine their collective interests and meaningfully pursue them.

The test for determining whether there has been a breach of s. 2(d) is the substantial interference test from BC Health Services. Under the substantial interference test, the question is “whether the process of voluntary, good faith collective bargaining between employees and the employer has been, or is likely to be, significantly and adversely impacted”. The inquiry is contextual and factual. To determine whether a government measure affecting the protected process of collective bargaining amounts to substantial interference involves two inquiries: The first inquiry is into the importance of the matter affected to the process of collective bargaining, and more specifically, to the capacity of the union members to come together and pursue collective goals in concert. The second inquiry is into the manner in which the measure impacts on the collective right to good faith negotiation and consultation.

Section 2(d) protects the process of bargaining and not outcomes, but that does not mean that what is being bargained over or the outcomes of bargaining are irrelevant to the s. 2(d) analysis. An employer that adversely affects the ability of unions to bargain about significant matters – such as salary, hours of work, job security and seniority, health and safety protections, and equitable and humane working conditions –  may be constitutionally suspect. As such, the outcome of bargaining is relevant to assessing whether there has been substantial interference with the collective bargaining process.

  • Did the Government undermine good faith collective bargaining, within the meaning of s. 2(d) of the Charter, when it threatened to legislate wage rate increase caps if the unions did not enter into collective agreements that respected those caps?

No. The Government bargained in good faith before the ERA’s enactment. There are no palpable and overriding errors in the application judge’s factual determinations.  The application judge took a contextual approach in his assessment of the collective bargaining that took place starting in November 2008. The application judge’s reasons demonstrate both the complexity of the situation and the care taken by the application judge in assessing the appellants’ arguments and the evidence. His assessment of the evidence attracts this court’s deference.

The application judge rightfully noted that the Government did partake in hard bargaining, but that the dialogue or process was never rendered meaningless. Hard bargaining is a permissive form of good faith bargaining. There was never a significant disparity of bargaining power between the Government and the unions. Limits on compensation were not actually imposed until the ERA was passed in 2009. As such, the Government’s conduct was a permissive form of good faith bargaining.

  • Did the Government’s failure to consult with the unions about the prospective scope of the ERA infringe s. 2(d) of the Charter?

No. The appellants’ complaint about the lack of consultation has no merit. Legislators are not bound to consult with affected parties before passing legislation. The appellants had the same right to participate in the democratic process leading to the introduction and passage of legislation as any Canadian.

  • Does the ERA breach the appellants’ s. 2(d) Charter right to meaningful collective bargaining by imposing wage increase caps?

No. The wage increase caps in the ERA did not amount to substantial interference with the collective bargaining process contrary to s. 2(d) of the Charter. The large majority of unionized federal employees covered by the ERA had already reached collective agreements consistent with it. Only a minority did not reach settlement. The level at which the ERA capped wage increases was consistent with the going rate reached in agreements concluded with other bargaining agents inside and outside of the core public administration and so reflected an outcome consistent with actual bargaining processes. Though outcomes are not determinative, outcomes are evidence that support the conclusion that the enactment of the ERA had a minor impact on the appellants’ associational activity. Therefore, the ERA did not amount to substantial interference with the collective bargaining process.

  • Do the limits imposed by the ERA on the arbitration process limit the s. 2(d) Charterrights of the appellants?

No. The limits imposed by the ERA on the arbitration process did not limit the s. 2(d) Charterrights of the appellants. Even if it is assumed that alternative dispute resolution mechanisms are associational in nature, it does not necessarily follow that any limits on interest arbitration would amount to a breach of s. 2(d). The legislated wage increase caps on the awards of interest arbitrators simply implemented replication of the results of free collective bargaining.

  • Do the ERA’s rollbacks substantially interfere with the appellants’ s. 2(d) collective bargaining rights?

No. The ERA’s rollbacks did not unconstitutionally limit the appellants’ s. 2(d) Charter rights. The Supreme Court has identified rollbacks as a potential interference with collective bargaining that could limit associational rights under s. 2(d) since they nullify the outcomes of free collective bargaining.  However, whether or not it does interfere with collective bargaining depends on the context. The level of capped wage increases imposed by the ERA reflects the results of free collective bargaining. Further, section 8 of the ERA provides relief that can be used by the unions to make substantial gains other than wage increases.

  • Do sections 57-58 of the ERA substantially interfere with the appellants’ s. 2(d) collective bargaining rights?

No. Ss. 57-58 of the ERA does not substantially interfere with collective bargaining for s. 2(d) purposes. Section 57 of the ERA prohibits future bargaining or arbitral agreements from making up for the effects of the restraints imposed by the ERA. Section 58 overrides provisions in collective agreements entered into and arbitral awards made, before the enactment of the ERAthat provide “for compensation for amounts that employees did not receive as a result of the restraint measures in this Act”.

While taking matters off the table might generally be inconsistent with the principles in the 2015 labour trilogy, the context must be kept in mind. Bargaining about wages was limited during the temporary restraint period. It was not permanent. As such, the prohibition on future bargaining relates only to the Government’s need to retain the savings obtained during the restraint period. It is a corollary of the wage increase caps.

The application judge rightfully examined the entire context and facts before him. As such, there was no palpable or overriding error in the application judge’s decision.

(2) Did the application judge err in concluding that the Government justified any such limits under s. 1 of the Charter?

No. The application judge did not err in concluding that the Government justified any such limits under s. 1 of the Charter. The Crown has the onus to satisfy the elements of the Oakes test and did so in this case. The application judge rightfully identified that the Oakes test must be applied flexibly, having regard to the factual and social context of each case.

  • The First Oakes Test Stage: Did the application judge err in finding that the Government had pressing and substantial objectives?

No. The application judge did not err in finding that the Government asserted pressing and substantial objectives. Under the first stage of the Oakes test, the Government must establish that there is an objective of sufficient importance to warrant overriding a constitutionally protected freedom.

Since the broader context is a national emergency, the broader context of the ERA must be kept in mind through the analysis. Courts have recognized, through a series of limiting principles, that judicial deference to government policy determinations is prudent as a matter of institutional capacity and the constitutional legitimacy of judicial review. The determination of economic policy is among the core competencies of the legislature and the executive, not the judiciary, particularly in circumstances of national importance where the solutions to a problem are uncertain. Budgeting decisions, the regulation of labour relations, and offering leadership in a time of crisis are all core government competencies. In difficult times governments have a large ‘margin of appreciation’ within which to make choices. As such, in these circumstances, judicial deference to legislative choices is plainly supported by the authorities. Therefore, the application judge rightfully deferred to the Government’s policy choices after giving due consideration to the context, experts, and law in the circumstances.

  • The second Oakes Test Stage: Did the application judge err in finding that the ERA’s limits on the appellants’ rights were rationally connected with the Government’s objectives?

No. The application judge did not err in finding that the ERA’s limits on the appellants’ rights were rationally connected with the Government’s objectives. At this stage in the Oakes test, the court must assess whether the means chosen by the Government to accomplish its ends were: first, rationally connected with the ends; second, minimally impairing; and third, proportional as between the deleterious and salutary effects of the law, making it just for the Government to require some individuals or groups to bear the negative effects of the means in order to secure the positive effects of the ends for the common good.

  • Rational Connection:

The application judge did not err in holding that the ERA’s limits on the appellants’ rights were rationally connected with the Government’s objectives. At most, the appellants’ submissions have pointed to competing evidence that the application judge chose not to accept. The appellants have not demonstrated that the application judge’s decision is unsupported, arbitrary, insufficiently precise, or otherwise in error, so appellate intervention is not justified.

  • Minimally Impairing:

The application judge did not err in holding that the ERA’s limits on the appellants’ rights were minimally impairing. The application judge properly instructed himself to view economic justifications for Charter infringements with strong skepticism. He found the Government made efforts to minimize the ERA’s impacts. First, the ERA did not single out union members, but applied to the federal public sector as a whole. A large majority of the unionized federal employees covered by the ERA had already reached agreements consistent with it. Second, a freeze was not imposed, although it was considered. Third, the right to strike was not removed, and the 2007-2008 year wage cap was eventually increased through bargaining from 1.5% to 2.3%.

No less impairing alternative was found to be acceptable to the court. The application judge rightfully recognized that the Government’s legitimate objective was not only related to cost savings. The ERA also served a leadership function in managing the economic crisis. As such, the alternatives proposed by the appellants’ expert, Dr. Osberg, were rejected by the application judge for having a single-minded focus on cost savings and missing the leadership function of the ERA in managing the economic crisis. The appellants have not demonstrated that the judge made any palpable and overriding errors or errors of principle in his assessment.

Further, the Government’s approach in reaching back to include 2006-2007 in setting the restraint period was done so that all federal employees would be treated fairly and equally.

Therefore, the Government’s choices in managing the labour relations dynamic to achieve its objectives in responding to the 2008 financial crisis fall within a range of reasonable alternatives. The application judge properly deferred to the Government’s selection of measures to achieve its objectives, given the severity of the crisis, the complexity of the issues, and the need to respond with alacrity.

  • Proportionality:

The application judge did not err in holding that the deleterious and salutary effects of the ERAwere proportional. In the balancing step of the Oakes test, the court is required to consider proportionality as between the deleterious and salutary effects of the law, and determine whether it is just for the legislation to require some individuals or groups to bear the negative effects of its measures in order to secure the positive effects of the ends for the common good.

Any reduction in wages that would otherwise have been received clearly has an adverse effect on individuals. Since the settlement with the majority of the public service drove the determination of the wage increase caps, it is difficult to imagine that continuation of an unfettered bargaining process for the remaining minority of units would have produced significantly different outcomes.

The societal benefits flowing to the common good from the imposition of the ERA were considerable. The Government was able to find some of the savings needed to finance its stimulus measures, which were necessary to the Canadian economy in a time of crisis, without sacrificing its long-term commitment to return to fiscal balance. The Government was also able to lead employers in the broader public sector to similar fiscal responsibility by example. This was, in turn, of assistance to the struggling private sector. The Government was able to persuade Canadians that the Canadian economy was being well managed and would survive global economic crisis in reasonable shape.

The court approached the determination of overall proportionality deferentially.

Therefore, the negative effects of the ERA were not egregious, and the positive effects were real. As such, the application judge did not err in holding that the ERA’s deleterious and salutary effects were proportional.

(3) Did the application judge err in accepting the opinion evidence of Associate Deputy Minister Paul Rochon in preference to the evidence of economics professor Dr. Lars Spencer Osberg?

No. The application judge did not err in accepting his evidence. The application judge received expert evidence from both sides. Mr. Rochon swore three affidavits on behalf of the Federal Government. For the unions, Dr. Osberg provided an affidavit and a reply affidavit.

To be admissible, expert evidence must (1) be provided by a properly qualified expert; (2) be relevant; (3) be necessary; (4) be reliable; (5) pass a prejudice/probative value analysis; and (6) not be subject to an exclusionary rule. R. v. Mohan, [1994] 2 S.C.R. 9, at p. 25, clearly stated that an expert may obtain the necessary qualifications through study or experience. Given Mr. Rochon’s background and experiences, the application judge did not err by accepting that he was a qualified expert witness.

Though Mr. Rochon did not execute From 53, he was not required to. According to Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721, a number of obligations for expert witnesses, including the obligation to provide Form 53, do not apply to “participant experts” and “non-party experts”. Since Mr. Rochon fits within the definition of a participant expert, he did not need to comply with Form 53.

Further, the appellants failed to demonstrate an error in the application judge’s reasoning that Mr. Rochon is impartial. As such, the application judge’s decision is owed deference and should not be overturned because he applied the proper legal principles and his conclusions are supported by the evidence.

The application judge’s evidentiary preference for Mr. Rochon’s evidence also attracts deference because the appellants failed to prove the existence of any palpable and overriding error, error in principle, or error of law.

 

Ottawa Police Services v. Diafwila, 2016 ONCA 627

[B.W. Miller J.A., K. Feldman J.A., J.C. MacPherson J.A.]

Counsel:

P. Cham, for the appellant

R. E. Houston, for the respondent, Ottawa Police Services

B. Cowan and M. Goren, for the respondent, Ontario Civilian Police Commission

Keywords: Administrative law, Police, Discipline Proceedings, Police Services Act, Standard of Review, Reasonableness, Correctness

Facts:

The appellant was hired by the Ottawa Police Services (“OPS”) in 2006 as a fourth class constable. He received annual performance reviews in 2007 and 2008, and was promoted to third and then second class constable. There were concerns about his technical policing skills and his ability to make sound, independent decisions in the patrol setting. The OPS made efforts to bring the appellant up to an adequate standard of policing. His performance on patrol remained problematic and the OPS removed him from patrol and assigned him to an information desk for  eleven months. Following an investigation, the Chief of the OPS brought a Notice of Chief’s Complaint charging the appellant with unsatisfactory work performance pursuant to the Police Services Act (the “Act”) and its Regulations.

A hearing was held before a hearing officer acting as the Chief’s delegate, pursuant to s. 76(9) of the Act. After a 24 day hearing and evidence from 18 witnesses, the Hearing Officer found the appellant guilty of unsatisfactory work performance. The Hearing Officer ordered that the appellant be given seven days to voluntarily resign from the OPS, failing which he would be dismissed. The appellant appealed the decision of the Hearing Officer to the Ontario Civilian Police Commission (the “Commission”), which allowed the appeal and set aside the decision of the Hearing Officer. The decision of the Commission was then set aside by the Divisional Court on judicial review. The Divisional Court ordered the matter to be remitted back to the Commission for a rehearing of the appeal. The appellant appealed the Divisional Court decision to the Court of Appeal.

Issues:

  1. What is the correct standard of review for the internal appeal to the Commission?
  2. Did the Divisional Court err in its application of the reasonableness standard to the decision of the Commission in respect of the interpretation of the Regulation and OPS Policies 3.14 and 3.19?
  3. Did the Divisional Court err in its reasonableness analysis by finding that the Commission erred in concluding that the Hearing Officer violated natural justice by not referring to material evidence of the appellant?

Held: Appeal allowed.

Reasoning:

  1. As per the decision of OPP v Purbrick, 2013 ONSC 2276 (Div Ct), the standard of review to be applied by the Commission on an appeal from a Hearing Officer’s decision is reasonableness for questions of fact and correctness for questions of law. The minority decision of the Divisional Court below on this issue was incorrect.
  2. The Commission is entitled to a high level of deference (reasonableness) and the majority of the Divisional Court erred in granting the application for judicial review and setting aside the decision of the Commission. The finding by the Commission that the Hearing Officer misinterpreted the law when he determined that the OPS was entitled to depart from the strict adherence to its policies and apply an ad hoc procedure was not unreasonable.
  3. This ground of appeal was not strenuously pursued and given the above conclusion on the second ground of appeal, it was not necessary to address it.

 

R & G Draper Farms (Keswick) Ltd v Nature’s Finest Produce Ltd2016 ONCA 626

[Blair, MacFarland and Lauwers JJ.A.]

Counsel: 

R. G. Colautti and A. Landry, for the appellants/respondents by way of cross-appeal

M. Manning, Q.C., for the respondent/appellant by way of cross-appeal

Keywords: Civil Procedure, Costs, Proportionality, Reasonableness, Reasonable Expectations,Rules of Civil Procedure, Rule 1.04(1.1), Rule 49.10

Facts:

The appeal of the defendants, Nature’s Finest Produce Ltd was dismissed in another set of reasons, leaving the issue of costs to be determined. The motion judge fixed costs of the summary judgment motion in the amount of $75,000 plus disbursements and HST. In his costs ruling, the motion judge observed that there was a “complete lack of cooperation amongst counsel with respect to the conduct of this litigation.” He noted that the parties, and especially the defendants, chose to make a relatively uncomplicated issue (i.e. whether or not there was a settlement) into a very complicated piece of litigation” that involved a counterclaim.

The motion judge took into account the principle of proportionality when evaluating the total amount of costs claimed in relation to the amount awarded to the plaintiff on the summary judgment motion ($169,000). The motion judge noted that the plaintiff had offered to settle the action as a whole for $150,000.

The successful respondent on the appeal, R & G Draper Farms (Keswick) Ltd, sought costs of the appeal on a substantial indemnity basis given the outcome and the offer to settle, amounting to $93,000 (in addition to the $75,000 ordered by the motion judge for costs of the summary judgment motion). The appellants argued that sum was excessive, given that the respondent filed four separate confusing notices of motion raising over eleven issues, and was not entirely successful, since the individual defendants in the action were found not to have been bound by the settlement.

Issue:

  1. Whether the principle of proportionality warranted the quantum of costs sought by the respondent.

 Holding: Costs of the appeal to the respondent in the amount of $44,500.

Reasoning:

1. No. The overriding principle in determining costs is reasonableness. If the judge fails to consider the reasonableness of the costs award, the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. The judge must fix costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. A relevant factor is the losing party’s reasonable expectation as to the costs payable.

The Court of Appeal canvassed the various costs claimed by the respondent, and  awarded less than half of the costs claimed by the respondent relying largely on the principle of overall proportionality, taking into account all the costs awards made in the court below and on the appeal.

 

Toronto-Dominion Bank v. Hosein, 2016 ONCA 628

[MacPherson, Rouleau and Benotto JJ.A.]

Counsel:

A. Jackson and J. Riewald for the appellant

J. Fleming for the respondent Meera Boodhoo

No one appearing for the respondent Jeunesse Hosein

Keywords: Real Property, Mortgages, Residential Tenancies, Mortgages Act, s. 52, Residential Tenancies Act, s. 37(1), 39, Statutory Interpretation, Rizzo & Rizzo Shoes Ltd. (Re), Presumption of Coherence and Consistency, Presumption Against Absurd Consequences

Facts:

The Toronto-Dominion Bank (the “appellant”) took a mortgage over a condominium owned by the respondent Jeunesse Hosein (“Hosein”). Hosein has made no mortgage payments since 2012. After her default, Hosein leased the property to the respondent Meera Boodhoo (“Boodhoo”) on terms very favourable to Boodhoo. The appellant applied to terminate the tenancy agreement pursuant to s. 52 of the Mortgages Act (“MA”).

The application judge concluded that she could not grant the relief requested because s. 52 of the MA conflicts with the Residential Tenancies Act (“RTA”) and, pursuant to s. 3(4) of the RTA, in case of conflict the provisions of the RTA apply. The application judge also held that the RTAousted the jurisdiction of the Superior Court to make an order requiring Boodhoo to vacate the premises. The application was dismissed on the basis that s. 52 of the MA conflicts with the RTAand is therefore of no effect.

Issues:

  1. Is there a conflict between the RTA and s. 52 of the MA?
  2. Is the Superior Court’s jurisdiction ousted by provisions of the RTA?

Holding:  Appeal allowed.

Reasoning:

  1. Section 52 of the MA incorporates the objective of protecting the tenant by directing the court to have “regard to the interests of the tenant and the mortgagee.” In this way, the interests of the purported tenants are recognized and balanced against the interests of the mortgagee seeking to nullify an alleged agreement. In light of the words used by the legislature and the context of the provisions, it is clear that s. 52 of the MA and the provisions of the RTA can be read together harmoniously. The RTA is concerned with the regulation and termination of valid tenancies. Section 52 of the MA provides a remedy to have an alleged tenancy set aside with the result that a valid tenancy never existed in the first place. Further, s. 52 would have no meaning or possible application if the respondent’s argument is accepted and the mortgagee can only apply to terminate the tenancy under the RTA rather than set it aside under the MA.
  2. The respondent relied on the Court of Appeal’s decision in Fraser v. Beach. That decision held that the inherent jurisdiction of the courts to make an order evicting a residential tenant is ousted by the RTA. However, in this case, jurisdiction is specifically given to the Superior Court by s. 52 of the MA, not to terminate, but to set aside a tenancy agreement, when it was entered into by a mortgagor under certain conditions.

 

Toronto-Dominion Bank v. Wise, 2016 ONCA 629

[Weiler, Hourigan and Huscroft JJ.A..]

Counsel:

M. Simaan and J. McNamara, for the appellants

D. Dooley, for the respondent

Keywords:  Real Property, Easements of Necessity, Water Access, Public Policy

Facts:

Ben and Sheila Wise (the “Wises”) owned lakefront property, which was severed into two lots in 2003. Part 1 was gifted to their daughter and son-in-law, Jordanna and Earl Lipson (the “Lipsons”). Sheila Wise retained Part 2. The lot gifted to the Lipsons connected with a local road, but the lot the Wises retained for themselves did not have road access. The Wises did not reserve an easement over the Lipsons’ lot when the gift was completed. Though impractical, Part 2 had water access from the lake, which had not been used.

The respondent bank, which held a mortgage over Part 2, brought an application for an order declaring that an easement exists for the benefit of the Wise property. Citing the impracticality of water access, the application judge recognized the bank’s claim for an easement of necessity over the Lipson property. The Lipsons appealed.

Issues:

  1. What is the appropriate legal test for granting an easement of necessity?
  2. Are easements of necessity determined based on public policy considerations or the intention of the parties?

Holding: Appeal allowed.

Reasoning:

  1. The Court cited McClatchie v. Rideau Lake (Township), 2015 ONCA 233 (“McClatchie”) at para 48 as setting out the basic requirements for obtaining an easement of necessity. Easements of necessity are “presumed to have been granted when the land that is sold is inaccessible except by passing over adjoining land retained by the grantor. The concept arises from the premise that the easement is an implied grant allowing the purchaser to access the purchased lot.”

Regarding the effect of impracticality, the Court cited McClatchie yet again: an easement of necessity “must be necessary to use or access the property; if access without it is merely inconvenient, the easement will not be implied.” Therefore, water access to property defeats a claim of necessity. Illustrating the point, the Court cited the recent decision in Barbour v. Bailey,2016 ONCA 98, in which water access to an island by rowboat and walking at low tide defeated an easement of necessity.

The application judge erred “in holding that water access had to be sufficient for reasonable enjoyment of the property in order to render an easement of necessity unnecessary.” Furthermore, the application judge’s error flowed from his conclusion that the necessity test had moved from strict necessity to “practical necessity”.

     2. The application judge incorrectly relied on Hirtle v. Ernst (1991), 10 N.S.R. (2d) 216 (S.C.) for the proposition that easements of necessity are creatures of public policy. The                  Court  held that “public policy does not provide an independent basis for a court to recognize an easement of necessity,” rather “easements of necessity flow from the intentions of          the parties to a grant.”

 

Rooney v. ArcelorMittal S.A., 2016 ONCA 630

[Simmons, Gillese and Hourigan JJ.A.]

Counsel:

M. G. Robb, D. M. Worndl, E. Maxwell, for the appellants

S. Tenai and S. Teebi, for the respondents ArcelorMittal S.A., Lakshmi N. Mittal, Aditya Mittal, 1843208 Ontario Inc., Philippus F. Du Toit, Baffinland Iron Mines Corporation

A. Burke and M. Finley, for the respondents Nunavut Iron Ore Acquisition Inc., Iron Ore Holdings, LP, NGP Midstream & Resources, L.P., NGP M&R Offshore Holdings L.P., Jowdat Waheed, Bruce Walter, John T. Raymond and John Calvert

A. L.W. D’Silva, for the respondents Richard D. McCloskey, John Lydall, and Danielle Dimitrov

Keywords: Securities, Class actions, Secondary Market Misrepresentations, Securities Act, s. 131(1), Takeover Bid Circulars, Statutory Interpretation, Rizzo & Rizzo Shoes Ltd. (Re)

Facts:

The appellants were security holders of the respondent, Baffinland Iron Mines Corporation. On September 22, 2010, Baffinland was the target of a hostile take-over bid by a group headed by the respondent, Jowdat Waheed. ArcelorMittal S.A. ultimately submitted a joint take-over bid with Waheed’s group. As required, the bid included a bid circular.

The appellant commenced a class action alleging that the circulars failed to disclose material information and that the information that was disclosed was materially misleading and misrepresented the business and affairs of Baffinland. They sued the persons and companies who signed and filed the circulars, alleging that, as a consequence of the defendants’ conduct, they received less for their securities than they otherwise would have.

The respondents brought various motions to strike the appellants’ statement of claim. Those motions were largely unsuccessful. However, there are two rulings on the motions to strike that the appellants appealed to this court. First, the ruling that the appellants are required under s. 131(1) of the Securities Act to elect whether to sue the offerors under the joint bid or their respective directors and signatories. Second, the ruling that security holders who transacted in the secondary market may not assert a claim pursuant to s. 131(1) of the Act.

Issues:

1) Must the security holder choose between suing the offeror and suing the offeror’s directors and other individuals who signed or approved the take-over bid circular?

2) Can security holders who sold their shares in the secondary market rely on s.131(1) of  theSecurities Act to assert a claim based on a misrepresentation in a take-over bid circular?

Holding: Appeal allowed, in part.

Reasoning:

As the issues in this case revolved around an interpretation of various provisions of the Securities Act, the starting point in a review of the modern principle of statutory interpretation is Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27. Iacobucci J. repudiated the view that statutory interpretation could be “founded on the wording of the legislation alone.” Instead, he articulated that the modern principle of statutory interpretation requires the words of the statute to be read in their entire context, having regard not just to their ordinary and grammatical meaning but also to the scheme and object of the Act in question and to the legislature’s intention.

1) No. Section 131(1) of the Securities Act holds that, in the context of a misrepresentation in a take-over bid circular, the security holders of the offeree issuer may sue on account of that misrepresentation. The motion judge erred in holding that the plaintiff had to choose between suing the offeror or the offeror’s directors and officers. The Court found that were this the case, the scheme would collapse, as it would force the plaintiff to make an election that could let wrong-doers off the hook. This interpretation would put the security holder in an untenable position, since if the security holder sues the offeror, the offeror could go bankrupt before the security holder could collect, and if the security holder sues the directors and officers, they could make themselves judgment-proof.

2) Yes. The Court also found that the legislature would not include circulars within the definition of core documents if the intention was not to grant a right to sue with respect to these documents, thus security holders who sold securities on the secondary market are able to make a claim of misrepresentation arising out of a take-over bid circular.

 

Criminal Decisions:

R. v. de Boerr, 2016 ONCA 634

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

Counsel:

Lesley de Boerr, acting in person

G. T. Uyeno, for the respondent

Keywords: Endorsement, Provincial Offences, Building Code Act, Property Standards Orders, Summonses

R. v. Dhami, 2016 ONCA 632

[Doherty, van Rensburg and Roberts JJ.A.]

Counsel:

G. Lafontaine, for the appellant

J. Neander, for the respondent

Keywords: Endorsement, Criminal Law, Evidence

R. v. Middleton2016 ONCA 631

[Doherty, van Rensburg and Roberts JJ.A.]

Counsel:

A. Richter, for the appellant

M. Morley, for the respondent

Keywords: Endorsement, Criminal Law, Sentencing, Prior Criminal Record

R. v. Nielsen, 2016 ONCA 635

[Doherty, van Rensburg and Roberts JJ.A]

Counsel:

G. Bogue, for the appellant (moving party)

N. Devlin, for the respondent

W. Wright, for the Attorney General for Canada

Keywords: Endorsement, Criminal Law, Habeus Corpus, Bail

R. v. Shahbaz (Publication Ban), 2016 ONCA 636

[Doherty, van Rensburg and Roberts JJ.A.]

Counsel:

G. Lafontaine, for the appellant

B. Jones, for the respondent

Keywords: Publication Ban, EndorsementCriminal Law, Sexual Assault, Evidence, Testimony, Interpreter

R. v. Tran, 2016 ONCA 638

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

Counsel:

Jenny Tran, acting in person

H. Loubert, for the respondent

Keywords: Endorsement, Criminal Law, Adjournments, Release Pending Appeal