Court Of Appeal Summaries (November 24 – 28, 2014)

Good afternoon. Our Court of Appeal released thirteen civil decisions this week. Topics covered included construction liens, summary judgment in several different contexts, including an interesting decision in a wills and estates matter involving allegations of undue influence, family law, employment law, MVA (insurance law and whether an offer to settle was beaten for the purpose of costs), Rule 21 in the context of a malicious prosecution and Charter damages claim, and a labour law decision involving alleged reasonable apprehension of bias of an OLRB panel member.

1475707 Ontario Inc. Operating as Action Electric Construction and Maintenance v. Foran, 2014 ONCA 830

[MacFarland, LaForme and Lauwers JJ.A.]

Counsel: Mark Abradjian and Renata Kis, for the appellant, David Foran David Thompson, for the respondent, 1475707 Ontario Inc.

Keywords: Construction Law, Construction Lien Act, Section 37, Actions, Rules of Civil Procedure, R. 2.01(1), R. 48.01

Facts: In its statement of claim the respondent alleged that it was owed money for construction work performed on the appellant's property. A claim for lien was registered on March 20, 2009, and the lien was perfected by issuance of the statement of claim and registration of the Certificate of Action on May 11, 2009. The appellant served a statement of defence and counterclaim. The respondent set the action down for trial on April 28, 2011, even though it had not filed any defence to the counterclaim. The counter staff could have refused to set the matter down as the pleadings were neither closed, nor had the appellant noted the respondent in default. However, the trial record was accepted and the matter was set down for trial, contrary to Rule 48.01 of the Rules of Civil Procedure ("Rules"). The respondent served its defence to the counterclaim on October 16, 2012.

The motion judge held that setting the matter down for trial while pleadings were still open was not just an irregularity. The motion judge determined that the respondent's lien claim had expired because it had not been set down within two years from the commencement of action, as required by ss. 37(1) of the Construction Lien Act ("CLA"). The respondent appealed to the Divisional Court and was successful before a divided court. The appellant appealed the decision of the Divisional Court to the Court of Appeal.

Issues: (1) Was there compliance with ss. 37(1) of the CLA?

(2) Whether Rule 2.01 may apply to relieve a party from the effects of non-compliance with Rule 48.01 in the context of a construction lien action.

Holding: Appeal dismissed.

Reasoning: (1) Yes. If the counter staff refused to accept the record and had declined to set the matter down, the respondent could have simply drafted a pro forma defence and filed it. The respondent set the action down within the two year period provided by s. 37(1) of the CLA, although there was an irregularity. However, such an irregularity was curable by Rule 2.01.

(2) Yes. Rule 2.01 applies because the record was irregular. Even though Rule 48 directs setting a matter down for trial, it must be read in conjunction with Rule 2.01, which allows the court to grant relief where there has been an irregularity unless it would not be in the interests of justice to do so. Subsection 67(3) of the CLA permits for such rules to apply, unless there is a conflict with the CLA, and there was no such conflict in this case.

The majority of the Divisional Court relied on the decision in 310 Waste Ltd. v. Casboro Industries Ltd. (2006), 83 O.R. (3d) 314, for the "proposition that imperfect compliance with the rules regarding setting a matter down for trial may be the better course when faced with a looming s. 37 deadline, implicitly leaving it open that there could be relief granted against irregularities at a later date". The Court held that 310 Waste Ltd. could not be read as widely as the Divisional Court had proposed. 310 Waste Ltd. did not deal with the imperfect compliance with the Rules or procedural irregularities. The plaintiff, in 310 Waste Ltd. made no attempt to set the action down for trial. 310 Waste Ltd. was a "case where a lien claimant failed to make any effort to set the action down for trial within the two-year period prescribed by s. 37(1) of the CLA".

Ho v World Financial Group Insurance Agency of Canada Inc., 2014 ONCA 832

[Sharpe, Rouleau and Pardu JJ.A]

Counsel: Helena Ho, acting in person Doug McLeod, for the respondents

Keywords: Summary Judgment, Wrongful Dismissal, Independent Contractor

Facts: Summary judgment was granted by the motions judge dismissing the claim. The motions judge found the appellant was not an employee, but rather an independent contractor, and that there could be no claim for wrongful dismissal.

Issue: Did the motions judge err in granting summary judgment?

Holding: Appeal dismissed.

Reasoning: No, the motions judge gave careful and thorough reasons for granting summary judgment. The appellant was an independent contractor and no claim for wrongful dismissal could be made. Also the respondents were entitled to terminate the contract. The court held there was no other basis upon which a claim could be made out on the record.

Yussuf-Mohamed v. Robleh, 2014 ONCA 833

[Weiler, Sharpe and Rouleau JJ.A.]

Counsel: S. Simard, for the applicant W. Fuhgeh, for the respondent

Keywords: Family Law, Separation Agreement, Enforcement Order, Adjournment

Facts: The appellant husband appeals the order of Beaudoin J. of the Superior Court, which enforced the separation agreement that he previously entered into with the respondent wife. The matter initially arose when the appellant failed to pay the respondent child support, contrary to his obligation under the separation agreement. The respondent then brought a motion to enforce the agreement, which was granted.

Issues: (1) Did Beaudoin J. err in refusing to grant the appellant an adjournment of the motion at which the separation agreement was enforced?

(2) Did Beaudoin J. err in ordering the enforcement of the separation agreement?

Holding: The appeal was dismissed and costs of $4,782.84 were awarded to the respondent.

Reasoning: (1) No. Beaudoin J. reviewed the history of the proceedings and made no error in finding that the appellant had received ample notice of the hearing. Therefore, the appellant was not entitled to the adjournment which he requested on the day of the hearing. Furthermore, the appellant's argument about inadequate notice of an affidavit filed by the respondent at the hearing was also rejected as a basis for an adjournment, given that Beaudoin J. did not rely on that affidavit.

(2) No. The appellant advanced several arguments that the entire separation agreement should be declared invalid: he was not represented by counsel at the time he signed it, he was dealing with emotional stress, and a provision in the agreement that deals with the calculation of child support is ambiguous. It was found on appeal that none of these arguments form a basis to invalidate the separation agreement or the court order enforcing it.

Cash Store Financial Services Inc. (Re), 2014 ONCA 834

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

Counsel: R.W. Staley, J. Bell and I. Ishai, for 0678786 B.C. Ltd. B. Harrison, for Trimor Annuity Focus LP No. 5 A. Hatnay and A. Scotchmer, for T. Yeoman A. Merskey and A. McCoomb, for DIP Lenders and Ad Hoc Committee of Noteholders A. Mark and B. O'Neill, for DIP Lenders and Ad Hoc Committee of Noteholders J. Dacks, for the Chief Restructuring Officer H. Meredith, for FTI Consulting Canada Inc., in its capacity as Monitor

Keywords: Bankruptcy and Insolvency Law, Companies' Creditors Arrangement Act, Creditor-Debtor Relationship, Deference

Facts: The appellants, 0678786 B.C. Ltd. and Trimor Annuity Focus Limited Partnership #5, advanced funds to Cash Store Inc. and 1693926 Alberta Ltd. (collectively "Cash Store") – a payday lending company now operating under the protection of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 ("CCAA").

The appellants moved for a determination that they were the sole legal and beneficial owners of both the proceeds on hand from loan payments made by, and accounts receivable from, Cash Store's customers at the time that Cash Store sought protection under the CCAA. Loan payments by Cash Store's customers were commingled with Cash Store's funds and it was not possible to identify the source of the funds on hand at the time of the initial order under the CCAA. Relying on a series of "Broker Agreements" entered into with Cash Store, the appellants argued that they had loaned funds to Cash Store's customers, and Cash Store merely operated as a broker to facilitate placement and collection.

The motions judge disagreed, finding that the appellants and Cash Store were in a debtor-creditor relationship. The appellants loaned money to Cash Store, which in turn made loans to customers. The appellants were required to stand in line with Cash Store's other creditors.

Holding: Appeal dismissed.

Reasoning: The principal argument put forth by the appellants on appeal was not argued before the motion judge. The appellants were seeking to have the Court of Appeal re-visit the factual determinations of the motion judge. There was no error in the approach of the motion judge. He considered the terms of the Broker Agreements and the manner in which the parties actually operated. He found that the Broker Agreements "did not accord with reality" and that the actual practices followed by the parties were not consistent with the Broker Agreements. In reality, the appellants and Cash Store were in a debtor-creditor relationship, and not the...