Hello again.

Most of the Court of Appeal civil decisions this week were procedural in nature.  Topics included the standard of review of discretionary orders (deference), municipal law, leave to appeal and stays pending appeal in the CCAA context and the consolidation of appeals to the Court of Appeal as of right with Divisional Court appeals requiring leave.

Have a nice weekend.

Table of Contents

Civil Decisions

Pickering (City) v. Slade, 2016 ONCA 133

Keywords: Municipal Law, Bylaws, Building Permits, Statutory Interpretation, Injunctions,Farming and Food Production Protection Act, ss. 6(2), Procedural Unfairness, Limitation Period, Evidence

Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131

Keywords: Civil Procedure, Consolidation of Appeals, Appeal as of Right, Appeal with Leave, Divisional Court, Limitation Periods, Discoverability, Competition Act, Courts of Justice Act, s. 6(2), Rules of Civil Procedure, Rule 61.12(3)(d)

Popack v. Lipszyc, 2016 ONCA 135

Keywords: International Commercial Arbitration, International Commercial Arbitration Act, UNCITRAL Model Law on International Commercial Arbitration, Article 34(2)(a)(iv), Setting Aside Arbitral Decisions, Breach of Natural Justice, Denial of Procedural Fairness, Discretionary Orders, Standard of Review, Deference

Essar Steel Algoma Inc. (Re) 2016 ONCA 138

Keywords: Bankruptcy and Insolvency, Companies’ Creditors Arrangement Act, Section 13, Civil Procedure, Leave to Appeal, Stay Pending Appeal,  RJR-MacDonald

Civil Decisions

Pickering (City) v. Slade, 2016 ONCA 133 [Simmons, van Rensburg and Roberts JJ.A.]

Counsel:

James Slade and Nancy Slade, in person

Cameron Murkar, for the respondents

Keywords: Municipal Law, Bylaws, Building Permits, Statutory Interpretation, Injunctions,Farming and Food Production Protection Act, ss. 6(2), Procedural Unfairness, Limitation Period, Evidence

Facts:

The appellants, James and Nancy Slade (the “Slades”) appealed a judgment granting an injunction that prevents them from depositing additional fill on their property.  The judgment also requires the Slades to remove deposited fill and to ensure that the grade and elevation of their property complies with what was approved when the building permit was issued. They also appealed the granting of certain ancillary relief.

Issue:

Did the application judge err in granting the injunction application?

Holding: Appeal dismissed.

Reasoning:  No. The Slades did not show any procedural unfairness or any issue with the applicable limitation period. The bylaw relied on by the respondent, the City of Pickering, prohibits the deposit of fill without a permit. The definition of “fill” includes soil. The application judge made no error in concluding that the Slades deposited fill beyond what is allowed under their building permit.

Also, their operation did not “resemble a normal farming operation” that may have fallen under any applicable exemption.  The Slades provided no evidence at the hearing that they intended to commence farming operations as they had asserted. They also failed to apply for an order under ss. 6(2) of the Farming and Food Production Protection Act.

Fanshawe College of Applied Arts and Technology v. Au Optronics Corporation, 2016 ONCA 131 [Huscroft J.A. (In Chambers)]

Counsel:

Paul J. Bates and Kerry McGladdery-Dent, for the appellant Fanshawe College

Kenneth McEwan, for the respondent AU Optronics Corporation

John Callaghan, for the respondent Hannstar Display Corporation

Keywords: Civil Procedure, Consolidation of Appeals, Appeal as of Right, Appeal with Leave, Divisional Court, Limitation Periods, Discoverability, Competition Act, Courts of Justice Act, s. 6(2), Rules of Civil Procedure, Rule 61.12(3)(d)

Facts:

Two motions were brought before the Court of Appeal. The first concerned an appeal by the Fanshawe College of Applied Arts and Technology (“Fanshawe”) from the order of the motion judge denying a request to amend its statement of claim to add MASS Engineered Design Inc. (“MASS”) as a plaintiff in its class action against AU Optronics Corp (“AU”) and HannStar Display Corp. (“HannStar”). The motion judge concluded that the proposed amendments expanded the scope of Fanshawe’s claim and that MASS’s claim was statute-barred. On appeal, Fanshawe claimed AU’s factum raised issues beyond the scope of the motion judge’s reasons and its appeal and sought an order to strike those paragraphs, or leave to file a reply factum.

The second motion was brought by the respondents, in the context of their appeal from an order by the motion judge dismissing their motion for summary judgment against Fanshawe. The respondents appealed the motion judge’s order to this court which was quashed on the basis that the order was interlocutory. The Divisional Court granted leave to appeal, but no date for that appeal has been set. The respondents moved before this court to consolidate their Divisional Court appeal with Fanshawe’s appeal because they arise from the same proceedings, were decided by the same motion judge and concern the same facts and overlapping issues.

Issues:  

(1) Should the impugned paragraphs be struck from the respondent’s factum?

(2) Should both Fanshawe’s appeal to this court and the respondents’ appeal to the Divisional Court be consolidated?

Holding: First motion denied, second motion granted.

Reasoning: 

(1) No. The court found the respondents were entitled to raise the issues and arguments in its factum, even though the court may not deal with all of the issues and arguments raised. The court reasoned that the appeal lies from the order, not the reasons for the order, and accordingly, the respondents were not limited to making arguments in response to the reasons proffered by the motion judge. Rule 61.12(3)(d) of the Rules of Civil Procedure allowed the respondents to raise additional issues in their facta.

In addition, Fanshawe acknowledged that the paragraphs it sought to strike were not inappropriate as the respondents raised arguments concerning defences to the proposed claim. Lastly, the court found that the arguments were raised by the respondents in their facta and in oral argument before the motion judge, who acknowledged that he did not deal with all of them in his decision.

(2) Yes. Fanshawe’s motion to amend its statement of claim was brought in response to the respondents’ motion for summary judgment. Further, the parties agreed that the question whether the discoverability rule applies to the limitation period set out in the Competition Act arises in both Fanshawe’s appeal to this court and the respondents’ appeal to the Divisional Court. The court found there was not only an overlap on the discoverability issue, but also in the evidence required for the two appeals.  The two appeals were therefore consolidated to be heard together by the Court of Appeal.

Popack v. Lipszyc, 2016 ONCA 135 [Doherty, Pardu and Benotto JJ.A.]

Counsel:

Marlys A. Edwardh and Daniel Sheppard, for the appellants

Colin P. Stevenson and Neil G. Wilson, for the respondents

Keywords: International Commercial Arbitration, International Commercial Arbitration Act, UNCITRAL Model Law on International Commercial Arbitration, Article 34(2)(a)(iv), Setting Aside Arbitral Decisions, Breach of Natural Justice, Denial of Procedural Fairness, Discretionary Orders, Standard of Review, Deference

Facts: The appellant, Joseph Popack, and the respondent, Moshe Lipszyc, agreed to submit their dispute concerning certain properties in Ontario to arbitration by a New York Rabbinical Court (the “panel”), subject to procedures outlined in an arbitration agreement. During the hearing, Mr. Lipszyc’s representative suggested that the panel should hear from the arbitrator in a previous attempted arbitration, Rabbi Schwei. Without notice to either Mr. Lipszyc or Mr. Popack, the panel met ex parte with Rabbi Schwei on July 8, 2013. The panel issued its award in August 2013. Mr. Popack brought an application pursuant to the International Commercial Arbitration Act (the “ICAA”), to set aside the award on the ground that the panel, by conducting the ex parte meeting with Rabbi Schwei without notice, had breached the procedure agreed upon by the parties.  Mr. Popack argued that the failure to follow the procedure necessitated the setting aside of the award under Article 34(2)(a)(iv) of the UNCITRAL Model Law on International Commercial Arbitration (a schedule to the ICAA). The application judge found that the ex parte meeting with Rabbi Schwei breached the procedure the parties had agreed upon.  She also accepted that the breach provided a ground upon which she could set aside the award under Article 34(2)(a)(iv) of the Model Law.  The application judge went on, however, to hold that under Article 34(2)(a)(iv) she had a discretion as to whether to set the award aside.  After referring to several factors relevant to the exercise of that discretion, the application judge concluded she would not set aside the award despite the procedural error by the panel.  She dismissed Mr. Popack’s application.

Issues:

(1) Although Article 34(2)(a)(iv) gave the application judge a discretion as to whether the award should be set aside, did the application judge err by drawing the boundaries of that discretion far too widely and considering immaterial factors in arriving at her decision?

Holding: Appeal dismissed.

Reasoning:

(1) No. The order under appeal was discretionary. In most cases, the existence of discretion implies that different judges can reasonably arrive at different results.  Consequently, appellate courts will defer to the exercise of discretion at first instance absent a clearly identifiable error, a material misapprehension, or a result that is clearly wrong. In addition, the nature of the specific order under appeal can also enhance the deference rationale. The application judge’s decision to not set aside the award was consistent with the well-established preference in favour of maintaining arbitral awards rendered in consensual private arbitrations.

The nature of the discretion in Article 34(2) is a balancing exercise. A court called upon to adjudicate such a proceeding must balance the nature of the breach in the context of the arbitral process that was engaged, determine whether the breach is of such a nature to undermine the integrity of the process, and assess the extent to which the breach had any bearing on the award itself. The discretion must be exercised in accordance with the purposes and policy of the Act which emphasizes the finality of arbitral awards and reduces the scope for curial intervention in accordance with the intentions of the parties to arbitration. All of the factors identified by the application judge as relevant to the exercise of her discretion were properly considered in deciding whether the improper ex parte meeting with Rabbi Schwei produced “real unfairness” or “real practical injustice”.  The relevance of the seriousness of the breach (factors one and two) and the potential impact of that breach on the result (factors three and four) to the fairness of the arbitral proceedings were obvious.  The potential prejudice flowing from the need to redo the arbitration if the order was set aside could also be relevant in assessing “real practical injustice” (factors five and six).  Mr. Popack’s conduct after learning of the procedural breach (factors seven and eight) was also significant in this case. Mr. Popack sought to gain an advantage in the arbitration proceedings when he learned of the ex parte meeting with Rabbi Schwei, positioning himself so that he could decide to raise the issue formally and on notice to Mr. Lipszyc only if he was not satisfied with the award given by the panel. Mr. Popack’s conduct after he learned of the ex parte meeting spoke loudly against setting aside this award.

Essar Steel Algoma Inc. (Re) 2016 ONCA 138 [Brown J.A. (In Chambers)]

Counsel:

Markus Koehnen and Jeffrey Levine, for the moving parties/responding parties by way of cross-motion, The Cleveland-Cliffs Iron Company, Cliffs Mining Company and Northshore Mining Company

Eliot Kolers and Maria Konyukhova, for the responding parties/moving parties by way of cross-motion, Essar Steel Algoma Inc., Essar Tech Algoma Inc., Algoma Holdings B.V., Essar Steel Algoma (Alberta) ULC, Cannelton Iron Ore Company and Essar Steel Algoma Inc. USA

Nicholas Kluge and Delna Contractor, for the Monitor, Ernst & Young Inc.

Keywords: Bankruptcy and Insolvency, Companies’ Creditors Arrangement Act, Section 13, Civil Procedure, Leave to Appeal, Stay Pending Appeal,  RJR-MacDonald

Facts:

Essar Steel Algoma Inc. (“Essar”) manufactures steel in Sault Ste. Marie, Ontario. In 2002, Essar’s predecessor entered into a long-term iron ore pellet supply contract (the “Contract”) with Cleveland-Cliffs Iron Company, Cliffs Mining Company, and Northshore Mining Company (collectively, “Cliffs”). Essar was required to purchase iron ore pellets exclusively from Cliffs until 2016, and a portion of its pellets from Cliffs from 2017 until 2024. Essar and Cliffs have had disputes regarding the quantity of iron ore pellets that would be provided.

In January 2015, Cliffs filed a complaint in the United States District Court for the Northern District of Ohio (Eastern District) (the “Ohio Court”) alleging that Essar breached the Contract by failing to take timely delivery of iron ore pellets in the requisite amounts.  Later that year, Cliffs brought a motion for partial summary judgment, which was dismissed. Trial was scheduled for late 2015.

In November 2015, Essar obtained an initial order under the Companies’ Creditors Arrangement Act (“CCAA”) and orders under the U.S. Bankruptcy Code to recognize and enforce orders from the CCAA proceedings in the U.S. That same month, Essar filed a notice that the Ohio litigation be automatically stayed. A month later, the Ohio Court dismissed Cliffs’ action without prejudice and the action did not proceed. Cliff has moved in Ohio to vacate the dismissal, but no decision has been made.

Now, Essar is protected under the CCAA. Cliffs moved for directions as to whether they require leave to appeal from the order of the CCAA judge. Cliffs is seeking a stay of the contract dispute motion Essar brought against Cliffs before the CCAA judge pending Cliffs’ exercise of its appeal rights with respect of the CCCA order. Essar brings a cross-motion for an order expediting Cliffs’ the hearing of its motion for leave to appeal, or its appeal.

Issue:

(1) Does Cliffs require leave to appeal the CCCA order?

(2) Should Essar’s cross-motion to expedite the hearing or appeal be granted?

(3) Should Essar’s contract dispute motion be stayed?

Holding: Cliffs is required to seek leave to appeal, the leave to appeal motion hearing will be expedited and a stay pending the disposition of the leave to appeal motion was granted.

Reasoning:

(1) Yes. Section 13 of the CCCA requires leave to appeal because the order appealed from was “made under” the CCAA.  The order in question was made by a judge supervising an active CCAA proceeding according to the CCAA and the contractual disputes were pursuant to the CCAA.

The judge examined the legislative purpose of the leave requirements of section 13. Case law indicates that leave is meant to further the objects and purpose of the CCAA.

Cliffs argued that this case should be distinguished from previous CCAA decisions. Cliffs argued that Sandvik Mining and Monarch Land employed different interpretations of the words “made under”, which should govern in this case. The judge did not accept Cliffs’ submission. Sandvik Mining concluded that the decision was not “made under” the CCAA despite the application styled as a CCAA proceeding because the business decision was made under the Sale of Goods Act.  Essentially, the CCAA proceedings had run their course and failed but the CCAA court file had not yet been closed and the receiver took advantage of the situation. That decision was specific to that fact scenario.  In Monarch Land, two secured creditors were added to the trial of an issue in the CCAA proceeding for convenience. These cases extend beyond the usual boundaries of a usual CCAA proceeding.

The inquiry should be purpose-focused. Appellate courts should determine whether the order was made in a CCAA proceeding where the judge was exercising their power under the CCAA. If the order resulted from this, then it is an order “made under” the CCAA. Case law provides guidance on the factors to consider. Courts should determine whether the order was “necessarily incidental to the proceedings under the CCAA” or “incidental to any order made under the CCAA.” The judge in Concrete Equities decided the CCAA applies if “CCAA considerations informed the decision of and the exercise of discretion by the chambers judge” or “if a claim is being prosecuted by virtue of or as a result of the CCAA.” Further indicia come from Re Hemosol Corp.: (A) the notice of motion and the reasons of the motion judge stated that the matter is a CCAA proceeding; (B) directions were sought to determine rights and requirements of corporate matters; (C) there was no independent originating process to justify any other conclusion; and (D) the order determined rights arising under an agreement that arose out of and that was related entirely to the CCAA proceeding.

(2) Yes. The cross-motion was granted and Cliffs’ motion for leave to appeal will be heard by a panel of the court on an expedited basis.

(3) Yes. The stay should be granted pending the disposition of the leave to appeal motion.

Cliffs’ seeks a stay of Essar’s contract dispute omtion before the CCAA judge pending its leave to appeal motion. Essar opposes the request for a stay.

The judge applied the test for a stay adopted from RJR-MacDonald: (A) there is a serious question to be determined on the appeal; (B) the moving party will suffer irreparable harm if the stay is not granted; and (C) the balance of convenience favours granting the stay.

With regards to (A), Cliffs demonstrated that its leave to appeal motion raises a serious question to be determined. For question (B), Cliffs did not demonstrate that they would suffer irreparable harm. Cliffs claimed that if stay is not issued, it would be deprived of the right to seek leave to appeal because Essar’s contract dispute motion would proceed in front of the CCAA judge despite Cliffs’ jurisdictional challenge. For question (C), balance of convenience favours granting a stay because both parties relied on “big picture” factors, but the judge relied on a narrower factor. Rather, neither party’s proposal contemplated Cliffs delivery of materials over the following two weeks. Instead, Essar was required to deliver productions.

Criminal Law Decisions

R v. Freckleton, 2016 ONCA 130 [Laskin, Juriansz and Roberts JJ.A.]

Counsel:

John Norris and Meara Conway, for the appellants

Carolyn Otter, for the respondent

Keywords:  Criminal Law, Trafficking Cocaine, Sentencing, Immigration, Deportation, Faster Removal of Foreign Criminals Act, 2013, Fresh Evidence, Appeal Dismissed

R v. Chen, 2016 ONCA 132 Huscroft J.A. (In Chambers)

Counsel:

Erika Chozik, for the moving party Chen

Jeanette Gevikoglu, for the respondent

Keywords: Criminal Law, Conspiracy to Produce Marijuana, Failure to Comply with Recognizance, Theft, Possession for Purposes of Trafficking, Extension Time to file Notice of Appeal, Motion Granted

R v. Richmond, 2016 ONCA 134 [Cronk, Epstein and Brown JJ.A.]

Counsel:

Apple Newton-Smith, for the appellant

Alison Wheeler, for the respondent

Keywords: Criminal Law, Second Degree Murder, Not Criminally Responsible (NCR) by Reason of Mental Disorder, Expert Evidence, Fresh Evidence, Appeal Dismissed