Hello everyone. Below are summaries of this week’s OCA civil decisions (non-criminal). Topics covered include certification of a copyright class action brought by land surveyors against Teranet Inc for providing access to their plans, reasonable notice of termination of employment, stay of proceedings in both the creditor-debtor and immigration law context, and franchise law.
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Blaney McMurtry LLP
Siskinds LLP v. Canadian Imperial Bank of Commerce, 2015 ONCA 265 [Hoy A.C.J.O., Cronk and Watt JJ.A.] Counsel: E.A. Cherniak and J. Squire, for the plaintiff (appellant) P.H. Le Vay and J. Safayeni, for the defendant (respondent)
Keywords: Endorsement, Contract Interpretation, Good Faith, Bhasin v Hrynew
The appellant, Siskinds LLP, performed collection work on behalf of the respondent, Canadian Imperial Bank of Commerce (“CIBC”) pursuant to a written agreement of the parties. When CIBC terminated the agreement, the parties disagreed about the interpretation of a provision that allowed Siskinds LLP to invoice CIBC “for Services performed up to the date of termination of the Agreement.”
The motion judge agreed with CIBC’s interpretation and granted its cross-motion for summary judgment.
Holding: Appeal dismissed.
Deference is owed to the motion judge’s interpretation of the agreement, and there was no palpable or overriding error. The motion judge considered and properly applied the applicable principles of contract interpretation.
When the entirety of his reasons are considered, it is apparent that the motion judge appreciated and took into account factors related to the work/commission payment profile, and simply concluded that they were not controlling of the meaning to be accorded to the words used by the parties in the agreement. The motion judge held, and the Court agreed, that the appellant’s proposed interpretation would require “a radical change in the methodology for calculating [the appellant’s compensation]” that was not contemplated by the agreement, and was inconsistent with the historical commission structure and pattern of dealings between the parties.
Lastly, Bhasin v. Hrynew, 2014 SCC 71, which recognized a general duty of honesty in contractual performance, does not affect the interpretation of the provision at issue.
United States v. Huang, 2015 ONCA 266 [Strathy C.J.O., Doherty and Gillese JJ.A.] Counsel: R. Pillay, for the appellant N. Dennison, for the respondent
Keywords: Extradition Law, Expert Opinion, Foreign Law
Facts: Kai Guo Huang (the “appellant”) appeals an order committing him for extradition to the United States to stand trial for the offences of murder and interfering with a dead human body.
The appellant is accused of committing murder in the United States in 1998. A few days after the murder was committed, the appellant’s sister and brother-in-law (the “Witnesses”) allegedly gave police statements implicating the appellant in the murder. The Witnesses’ evidence is essential to the American murder prosecution. However, the Witnesses have since sworn affidavits denying that they made the police statements. They have returned to China and have no intention of testifying against the appellant.
The appellant argued that he should not be extradited because the crucial evidence of the Witnesses is not available for his murder prosecution in the United States. The appellant sought to introduce the expert opinion of a law professor from China who stated that under Chinese law, authorities do not have the power to compel the Witnesses to testify in the American proceedings. The extradition judge however, held that it was not the role of an extradition judge to conduct an inquiry into foreign law. She found that the Witnesses’ evidence was available for the murder prosecution and ordered the appellant’s committal.
On appeal, the appellant argues that the extradition judge erred in failing to admit the expert opinion.
Holding: Appeal dismissed.
Reasoning: It is not the role of the extradition judge to determine issues of foreign law, absent exceptional circumstances.
The court found that it is beyond the scope of the extradition hearing to determine the extent to which Chinese authorities, under local Chinese law, could compel the Witnesses to testify in the American prosecution. Accordingly, the extradition judge made no error in refusing to conduct such an inquiry.
Caffé Demetre Franchising Corp v 2249027 Ontario Inc., 2015 ONCA 258 [Doherty, Epstein and Tulloch JJ.A.] Counsel: D. S. Altshuller, for the appellants J. H. McNair, for the respondents
Keywords: Franchise Law, Summary Judgment, Rescission, Arthur Wishart Act (Franchise Disclosure), 2000, ss. 5, 6(1), 6(2), Disclosure, Material Fact, Stark and Material Deficiency
The respondent, Caffé Demetre Franchising Corp., was the franchisor of a franchise specializing in freshly made desserts and ice cream. The appellant, 2249027 Ontario Inc., purchased a Caffé Demetre franchise.
Approximately a year after the franchise was purchased in 2011, difficulties arose between the parties that led the franchisor to sue the franchisees claiming, among other things, a declaration that the franchise agreement was at an end and damages for breach of contract. The franchisees had failed to perform repairs requested by the franchisor and failed to provide information explaining why customer orders at their location were cancelled at point of sale roughly three times more often than at other outlets. Furthermore, the franchisees had failed to improve the appearance of the location, and failed to provide financial statements and tax returns, in breach of their obligations under the franchise agreement.
The franchisees counterclaimed, adding the principal of the franchisor to the action, and claiming rescission of the franchise agreement on the basis of alleged deficiencies in the disclosure document the franchisor had provided at the time of purchase of the franchise.
The motion judge granted partial summary judgment to the franchisor and dismissed the franchisees’ counterclaim for rescission. He found that three of the four alleged disclosure omissions relied upon by the franchisees were not disclosure deficiencies at all. With respect to the fourth alleged omission – the non-disclosure of ongoing litigation commenced by the franchisor against a competing business – the motion judge concluded that while the franchisor should have disclosed the ongoing litigation in which it was involved, this omission failed to “come anywhere close” to the type of deficiency that entitled the franchisees to rescind the franchise agreement under ss. 6(2) of the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”).
On appeal, the franchisees challenged the motion judge’s decision that the summary judgment procedure was appropriate in the circumstances as well as his conclusion that the undisclosed litigation did not entitle them to rescission under ss. 6(2) of the Act.
- Did the motion judge err in concluding that the claim for rescission advanced in the counterclaim could be determined by way of summary judgment?
- Did the motion judge misapprehend the evidence and otherwise err in finding that the failure to disclose the existence of the litigation against the competing business did not give rise to rescission rights under ss. 6(2) of the Act?
Holding: Appeal dismissed.
- No. The Court rejected the franchisees’ argument that it was not in the interests of justice to determine the rescission claim on a motion for summary judgment as other matters between the parties arising out of the franchise investment, including a claim for damages for misrepresentation under s. 7 of the Act, were proceeding to trial in any event.
The Court agreed with the motion judge’s conclusion that there was no risk of inconsistent findings of fact as the facts were essentially undisputed. Further, on appeal, the franchisees did not challenge the motion judge’s findings with respect to the three alleged deficiencies. The motion judge found the undisclosed litigation to be a material fact, leaving the franchisees free to pursue a claim for misrepresentation on the basis of that omission. Lastly, using the summary judgment mechanism to deal with the discrete matter of the franchisees’ right to rescission was an expeditious and effective approach to resolving an important issue.
- No. The Court rejected the franchisees’ argument that it was unreasonable for the motion judge to infer that the undisclosed litigation had no impact on their decision to purchase the franchise or on the price they agreed to pay for the franchise outlet. The Court further rejected the franchisees’ submission that the motion judge further erred by finding that the franchisees’ failure to complain about the litigation was relevant to whether the existence of the litigation could reasonably be expected to have affected their purchase decision.
Ongoing or prospective litigation involving a franchisor is not, by definition, a material fact. The litigation must be disclosed if it falls within the description contained in ss. 2(5) of O. Reg. 581/00. But if the litigation in issue does not fall within that description, then whether it is a material fact, as contemplated by the Act, will be a question of fact determined on a case-by-case basis. The analysis is highly fact-specific and no bright-line rule can be articulated. In light of the motion judge’s observations about the undisclosed litigation – that it was a protective measure taken by the franchisor at the request of and for the benefit of the franchisees – it did not constitute a potential liability that might attach to the franchise system and would not financially impact the franchisees’ Caffé Demetre outlet. The lawsuit was not a material fact. Thus, the disclosure document given to the franchisees was not deficient by reason of the franchisor’s failure to reference the litigation. Furthermore, even if the undisclosed litigation did amount to a disclosure deficiency, it was not sufficiently significant to entitle the franchisees to rescission under ss. 6(2) of the Act.
[Cronk, Gillese and Brown JJ.A.]
A.R. Kerr, for the appellant
D. Konduros, for the respondent
Keywords: Insurance Law, Endorsement, LTD Benefits, Limitation Period, Summary Judgment
Facts: The appellant appeals from the judgment of Salmers J., which granted summary judgment dismissing her action. The appellant was employed by a casino for over twelve years, and during this time the casino purchased a group policy of insurance from the respondent for its employees. The appellant was an eligible employee of the casino for the purposes of long-term disability benefits under the policy. The appellant’s employment was subsequently terminated by the casino. Two years after her termination, the appellant brought an action seeking payment of disability benefits under the policy. The appellant had not made any claim for disability benefits during the time she worked for the casino.
Issue: Did Salmers J. err in granting the respondent’s summary judgment motion?
Holding: The appeal was dismissed and costs fixed at $2,700 were awarded to the respondent.
No. While Salmers J. did err by dismissing the appellant’s action on the basis that it was barred by virtue of the contractual one-year limitation provision contained in the policy, he made other findings that supported the dismissal. Specifically, Salmers J. found that the appellant had not met the qualifying conditions of the policy, because the coverage for disability benefits ended when her employment was terminated, and she had not made any claim for these benefits when she was an employee of the casino. Furthermore, the appellant failed to make a claim for benefits within the 60 day period after she discovered her disability, as required by the policy. These conclusions were based upon the uncontroverted evidence filed by Sun Life, and there was no reason to interfere with them.
Salmers J. also correctly concluded that the appellant’s action was by barred by the two year limitation period in section 4 of the Limitations Act, 2002, as she did not commence this action until more than two years after she discovered her disability.
[Weiler, Sharpe and Blair JJ.A]
P. Morrison, J. Parla, S. D’Souza and T. Chapman-Smith, for the appellant
K. Baert and C. Poltak, for the respondent
Keywords: Copyright Law, Copyright Act, Class Proceedings, Class Proceeding Act, 1992, Certifiable Class, Land Surveyors, Common Issues, Representative Plaintiff, Litigation Plan
The plaintiff Keatley Surveying Ltd. is a professional corporation owned and operated by Mr. Keatley, a land surveyor. The defendant Teranet Inc. manages Ontario’s electronic land registry system as a service provider to the government. Documents prepared by land surveyors are registered in the electronic land registry system and are provided to members of the public for a fee prescribed by statute. No fees or royalties are paid to the land surveyors who prepare the plans of survey. Keatley asserted copyright in the plans or survey it prepares and owns. It seeks certification of the action as a class proceeding on behalf of approximately 350 land surveyors in private practice in Ontario whose survey documents appear in digital format in Teranet’s database.
The class proceedings judge refused to certify the action finding that Keatley had failed to show an identifiable class, only one proposed common issue was potentially certifiable, a class proceeding was not the preferable procedure, Keatley was not representative of the proposed class, and the litigation plan was not workable. On appeal to the Divisional Court, the action was certified on the basis of a revised class definition and revised common issues. Teranet appeals that decision.
- Did the Divisional Court err by considering revised proposals for certification that differed from those presented before the class proceeding judge?
- Did the Divisional Court err by granting certification on the basis of the revised proposals as to identifiable class, common issues, preferable procedure, and representative plaintiff?
- Did the Divisional Court err in holding that it is not necessary that there be anyone other than the plaintiff who wishes to pursue its claims as a class action, or at all?
- Did the Divisional Court err in certifying the proceeding without requiring the plaintiff to propose a workable litigation plan?
Holding: Appeal dismissed.
- No, the Divisional Court did not err in considering revised proposals for certification that differed from those before the class proceedings judge. The issue was whether Keatley’s reformulation of the class definition and common issues exceeded the type of adjustment that is contemplated by the jurisprudence and whether Teranet was prejudiced by the changes. The Court held that the recast definition did not fundamentally change the nature of the case presented on appeal in a way that would prejudice Teranet. The change did not deprive Teranet of an opportunity to respond and Teranet neither required nor sought an adjournment to consider the change. Any prejudice having to deal with the new class definition on appeal was dealt with in its costs order. Additionally the Court found that there was substantial similarity between the two sets of proposed common issues. The conceptual core of the case remained unchanged and Teranet was not at any disadvantage in presenting arguments on the revised set of common issues. The court held that the revised common issues on appeal neither expanded nor altered the scope of the litigation that was presented at first instance.
- No, the Divisional Court did not err by certifying the action. Teranet submitted the words “whose plan of survey” referred to ownership of copyright and as that is an issue to be determined in the action, the proposed class definition remained merits-based. The court found this submission to be without merit and held the revised class definition did not rest upon or require a determination of copyright ownership.
Teranet argued that the central common issues proposed by Keatley could not significantly advance the litigation. The court held that the resolution of the common issues would turn on legal interpretations having general application to class members that did not require any inquiry into the individual circumstances of the class member. The court agreed with the Divisional Court that the resolution of the issues would significantly advance the litigation and found that the Divisional Court’s assessment of the proposed common issues was entirely consistent with decisions dealing with certification in other copyright cases.
Teranet argued that the Divisional Court erred in finding that the preferable procedure requirement was satisfied. The court agreed with the Divisional Court’s conclusion that the common issues identified significant elements of the litigation that, if resolved in Teranet’s favour, would be fatal to the claim. If Teranet does not succeed on the common issues, the remaining issues requiring individual trials would be fewer and simpler by virtue of the determination of the common issues.
Additionally Teranet argued that Mr. Keatley was not a suitable representative plaintiff for the action. The court agreed with the Divisional Court’s finding that while Keatley stands to gain more than other surveyors from the outcome of the litigation, his situation is not so different or distinct as to give rise to a conflict or make him unsuitable to represent the interests of the class.
- No, the Divisional Court did not err in rejecting the proposition that under s.5(1)(b) of the Class Proceedings Act, 1992 it is necessary to show that there are class members, other than the plaintiff, who wish to pursue claims as a class action. The proposed representative plaintiff must show that there are two or more individuals who have the same claim as the representative plaintiff to advance. Often the existence of one claim will be apparent from the nature of the claim being advanced. The court held that if the representative plaintiff has a claim for breach of copyright, it is apparent that the other surveyors will have a like claim. Where the existence of multiple claims is not apparent, some evidence that multiple claims exist may be required. The court held that the Divisional Court was correct that a distinction must be drawn between the existence of multiple claims and the subjective wishes or intentions of individual class members to assert a claim.
- No, it was reasonable for the Divisional Court to accept the plan Keatley provided and to refer the details to the common issues judge. In the circumstances of the case, the litigation plan was adequate as the common issues judge would be in the best position to determine how to resolve the individual issues which were complex. The court found that developing a full laid out litigation plan at this stage of the proceeding would be difficult, if not impossible.
[Gillese, van Rensburg and Pardu JJ.A.] Counsel: F. Cesario and S. M. O’Brien, for the appellant G. B. Fraser, for the respondent
Keywords: Employment Law, Wrongful Dismissal, Reasonable Notice, Bardal v. The Globe and Mail Ltd., Mitigation
Facts: The respondent moved for summary judgment in a wrongful dismissal action. The motion judge granted partial summary judgment, and directed that the claims for aggravated, punitive and special damages proceed to summary trial. The appellant sought to set aside the judgment and to have the respondent’s claim dismissed, or alternatively that a trial be ordered in respect of the period of reasonable notice and mitigation.
The respondent was 58 years old when his employment was terminated with 12 weeks’ salary and benefit continuation. He had 16 years of continuous employment with the appellant and its predecessors.
- Did the motion judge err in his determination of the reasonable notice period of 16 months?
- Did the motion judge err in concluding that the respondent made reasonable efforts to mitigate?
Holding: Appeal dismissed.
- No. The motion judge considered factors from Bardal v. The Globe and Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.) at p. 145: the character of the respondent’s employment, his length of service, his age and the availability of similar employment, having regard to his experience, training and qualifications. He considered various reported cases cited by the respondent where notice periods in the range of one month per year of service were applied to long service employees in senior technical positions, and concluded that these cases were comparable. He observed that the appellant’s position that 12 weeks’ notice was sufficient was “remarkable” and “with no real rationale”. The motion judge did not apply a “rule of thumb” of one month per year of service; rather, he considered all of the Bardal factors, including, importantly, the specialized character of the respondent’s employment.
- No. First, mitigation is not simply a question of counting up the number of job applications submitted by a terminated employee. The entire job search must be considered. Second, pursuant to Link v. Venture Steel Inc.,  O.J. No. 779 (C.A.), the onus was on the appellant to prove that the respondent failed to take reasonable steps to find “a comparable position reasonably adapted to his abilities”. All of the relevant evidence was before the motion judge on the mitigation issue, and the only reasonable conclusion was that the respondent acted reasonably in mitigating his losses when, ten months after his termination, he was able to secure a contract position in the nuclear field.
[Huscroft J.A. (In Chambers)]
M. Adilman, for the applicants
M. Marrie, for the moving party LAWPRO
B.N. Radnoff, for Jeff Landmann, Yan Wang and Darren Smith
Keywords: Solicitor’s Liability, Errors & Omissions Insurance, LawPro, Civil Procedure, Stay of Proceedings, Rule 63.01(1), s. 134(2) of the Courts of Justice Act
LAWPRO brought this motion for directions concerning the order of Penny J., dated October 28, 2014, which ordered LAWPRO pay to the Abuzours the available proceeds of the 2013 insurance policy of the Respondents, Javad Heydary and Heydary Hamilton Professional Corporation. That order was not appealed. Jeff Landmann, Yan Wang, and Darren Smith, three lawyers formerly employed by the Heydary law firm, were not able to appeal the October 28 motion because they were not given proper notice of the motion.
A second order by Penny J., dated January 29, 2015, dismissing a motion to vary his October 28 order, is subject to an appeal by Landmann, Wang, and Smith.
LAWPRO asked whether the October 28 order was automatically stayed by operation of Rule 63.01(1). In the event that the October 28 order was not automatically stayed, LAWPRO asked whether it should be stayed in the interests of justice.
- Is the October 28 order automatically stayed by Rule 63.01(1)?
- Should the October 28 motion be stayed in the interests of justice?
Holding: Stay granted.
- No. Landmann, Wang, and Smith were not party to the October 28 order because they were not provided with notice of the motion. That failure of notice resulted in proceedings culminating in the January 29 order. The appeal of the January 29 order will determine the obligation to pay money under the insurance policy. However, these considerations did not affect the operation of Rule 63.01(1), which has always been interpreted narrowly. The January 29 order contained no provisions requiring the payment of money and could not properly be characterized as an order for the payment of money. It could not be stayed automatically under Rule 63.01(1) without undermining one of the primary purposes of the rule itself, which is to provide a measure of certainty. It would be counterproductive to encourage litigation over whether a particular order is tantamount to an order to pay money. It is appropriate that the rule is interpreted narrowly.
- A Court has jurisdiction to grant a stay pursuant to s. 134(2) of the Courts of Justice Act. That subsection establishes a broad jurisdiction for the court to make interim orders necessary to avoid prejudice to a party pending an appeal. The term “party” in s. 134(2) is not restricted to a party to the action. Therefore, there is no impediment to granting relief to Landmann, Wang, and Smith in the context of this motion. In order to grant interim relief under s. 134(2) a party must establish that: 1) there is a serious question to be tried; 2) the applicant would suffer irreparable harm if the application were refused; and 3) the balance of convenience favours the applicant (i.e., the applicant would suffer greater harm if the stay were not granted than the respondent would suffer if the stay were granted). That test was made out in the circumstances of this case. The October 28 order was stayed pending the appeal of the January 29 order.
[Laskin, Lauwers and Hourigan JJ.A.]
S. P. Murphy, for the appellant
M. Katzman, for the respondent
Issue: Robar cross-appealed and asked that the Court of Appeal dismiss Enviro’s claim on the ground that it is frivolous and vexatious, or an abuse of process.
Holding: Appeal dismissed.
Reasoning: Before Firestone J., Robar sought either a stay or a dismissal. Firestone J. granted the stay request and therefore, the court found that it would be inappropriate to vary that order.
Tarion Warranty Corporation v. New Millennium Homes Inc., 2015 ONCA 246 [Laskin, Lauwers and Hourigan JJ.A.] Counsel: S. A. Rosen, for the appellants Spencer A. Hill, for the plaintiff (respondent)
Keywords: Endorsement, Tarion Warranty Corporation, Limitation Periods
On appeal from the judgment of Justice Dale Parayeski of the Superior Court of Justice, dated July 8, 2013.
Issue: Is Tarion’s claim caught by section 18 of the Limitations Act?
Holding: Appeal dismissed.
Since Tarion was not sued, section 18 of the Limitations Act does not apply.
[Weiler J.A. (In Chambers)]
B. Jackman and R. Lockwood, student at law, for the applicant
M. Anderson, for the Minister of Public Safety and Emergency Preparedness and Minister of Citizenship and Immigration
M. Mathieu, for the Attorney General of Canada
Immigration Law, Immigration and Refugee Protection Act, Habeas Corpus, Courts of Justice Act, ss. 134(2), Deportation, Reasonable Apprehension of Bias, Charter of Rights and Freedoms, s. 1
The applicant was a permanent resident of Canada. He was being detained in custody as a flight risk and a danger to the public based on an investigation of his potential inadmissibility to Canada for being a member of an organization engaged in organized criminal activity under s. 37(1)(a) of the Immigration and Refugee Protection Act, S.C. 2001, c. 27 (“IRPA”).
The applicant brought an application before a judge of the Superior Court of Ontario for habeas corpus with certiorari in aid, seeking his immediate release from custody and claiming that his continued detention was unlawful. The judge declined to exercise his habeas corpus jurisdiction.
The appeal was set to be heard on May 6, 2015. In the interim, and in the event that a deportation order was made prior to the Ontario Court of Appeal deciding his appeal, the applicant sought a an order that until the Court decided his appeal no final deportation order was to be enforced against him.
Holding: Application for stay dismissed.
The Court had jurisdiction to issue a stay of an issued deportation order pursuant to ss. 134(2) of the Courts of Justice Act. In this case, however, the stay was for a possible future deportation order. A deportation order had yet to be made and the applicant had thus not exhausted his rights under the IRPA. Subsection 134(2) did not give the Court the discretion to prevent potential future prejudice that might never arise.
In any event, the applicant did not meet the test for a stay. The applicant did not satisfy the Court that there was a serious question to be tried as to whether the judge at first instance erred in declining to exercise his jurisdiction to issue a writ of habeas corpus with certiorari in aid.
One of the circumstances in which the Supreme Court of Canada has held that a provincial superior court judge should decline to exercise habeas corpus jurisdiction is where legislation has put in place a complete, comprehensive and expert procedure for the review of an administrative decision regarding the detention of individuals. The applicant was subject to a comprehensive scheme under the IRPA and decisions made were subject to review by the Federal Court. The applicant did not show that alternative remedies available under the IRPA were inadequate or ineffective.
The applicant also argued that the proceeding under the IRPA was a disguised extradition in the sense that IRPA was being used because extradition was not available. The Court rejected this submission, finding that the Federal Court could properly assess this issue.
The applicant also argued that the adjudicator hearing his case, who had made an earlier ruling against him, erred in refusing to recuse himself on the grounds of an apprehension of bias. The Court rejected this submission, noting that the mere fact that an adjudicator sat on a previous matter involving the same applicant did not give rise to actual bias or an apprehension of bias.
Finally, the Court rejected the applicant’s argument that the statutory limit on his right to review an unfavourable decision under the IRPA was not a reasonable limit under s. 1 of the Charter of Rights and Freedoms. In Baroud v Canada (MCI)  O.J. No. 43, the Court held that an alternative remedy was a full answer to the claim that the denial of a right to issue a writ of habeas corpus was not a justifiable limit. There was no reason to depart from this precedent.