Court Of Appeal Summaries (February 2-6, 2015)

Hello again to everyone. Below are summaries of this week's Ontario Court of Appeal civil decisions (non-criminal). This week's topics include the contractual interpretation of a lease agreement in the context of an option to renew, the calculation of an award for wrongful dismissal, the availability of summary judgment in the context of third party claims, and the removal of counsel where a conflict of interest existed between an insured motorist and his insured.

Arnone v Best Theratronics Ltd., 2015 ONCA 63

[Strathy C.J.O., Laskin and Brown JJ.A]

Counsel: Cesario and S. O'Brien, for the appellant C. Rootham, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Termination Without Cause, Summary Judgment, Reasonable Notice

Facts:

On November 26, 2012, the appellant, Best Theratronics Ltd., terminated without cause the employment of the respondent, Matthew Arnone, who had worked for the company and its predecessor for 31 years. He was 53 years old at the time. Arnone commenced a wrongful dismissal action and moved for summary judgment. The motion judge granted the motion for summary judgment and ordered Best Theratronics to pay (i) damages equal to the gross amount of salary Arnone would have earned until he qualified for an unreduced pension, less payments made to him to satisfy the statutory obligations of the employer, (ii) $65,000, representing the present value of the loss of an unreduced pension, (iii) a retirement allowance equal to 30 weeks' pay, and (iv) costs totalling $52,280.09.

Best Theratronics appealed the judgment, seeking an order dismissing Arnone's claim. Arnone cross-appealed, seeking to increase the damages awarded for wrongful dismissal and to increase costs to a substantial indemnity level.

Issues:

(1) Did the motion judge err in concluding that no genuine issue requiring a trial existed regarding the character of the employee's duties and responsibilities?

(2) Did the motion judge err in his calculation of the period of reasonable notice to which Arnone was entitled upon termination without cause?

(3) Did the motion judge err by failing to deduct the income earned by Arnone from his new employment from the damage award?

(4) Did the motion judge err in awarding Arnone a retirement allowance?

(5) Did the motion judge err in awarding Arnone compensation to replace the loss of his pension benefits during the notice period?

(6) In assessing costs, did the motion judge err by failing to afford the parties an opportunity to disclose their respective offers to settle?

Holding:

Appeal allowed in part, setting aside the motion judge's calculation of damages for wrongful dismissal and requiring income earned by Arnone during the notice period to be deducted from the award of damages. Cross-appeal allowed, increasing the period of reasonable notice for calculating damages for wrongful dismissal from 16.8 months to 22 months and remitting the issue of costs to the motion judge.

Reasoning:

(1) No, the motion judge's findings about the character of Arnone's employment provided enough support for the conclusion that no genuine issue requiring a trial existed on the issue of the character of employment. Arnone conceded for the purposes of the summary judgment motion that he was a supervisor and not a manager and the motion judge made findings of fact about his employment that were supported by the record. Additionally, although Thorne v Hudson's Bay Co. stands from the proposition that in appropriate cases the character of the employee's employment may give rise to a genuine issue requiring a trial, those circumstances differed materially from the present case. In the present case, the motion judge had the cross-examinations of the affiants to assist him in making necessary findings of fact and the employee was prepared to accept the employer's characterization of the nature of his employment for the purposes of summary judgment. The present claim was straight-forward and amenable to a Rule 20 summary judgment motion.

(2) The motion judge erred in setting the period of reasonable notice at 16.8 months, the period of time needed to "bridge" his entitlement to a full pension. Calculating the period of reasonable notice by reference to the amount of time required to "bridge" the dismissed employee to his date of eligibility for a full pension did not accord with the Bardal analysis in this case. However, the motion judge's alternative finding of a reasonable notice period amounting to 22 months fell within an acceptable range of notice periods for employees in circumstances similar to those of Arnone. There was no basis for the court to interfere with the alternative finding.

(3) Yes, the order should be varied accordingly. The parties agreed that the judge erred in law by failing to deduct income earned from new employment during the claimed notice period from the wrongful dismissal damage award.

(4) No. The retirement allowance formed part of the contract of employment between Best Theratronics and its employees. The interpretation of that aspect would involve a question of mixed law and fact which an appellate court should defer to the motion judge, except in cases of a palpable and overriding error. Here the motion judge approached the issue as one involving pension benefits. The court found this approach misapprehended the evidence since eligibility for the retirement allowance was not tied to entitlement to a pension, but was a separate contractual entitlement based upon length of service. As a result of that error, the conclusion about entitlement to a retirement allowance was not entitled to deference. The court held that the operation of the retirement allowance had an implied term that if the employee was terminated without cause, he would be entitled to payment of the accumulated retirement allowance in consideration for the long service and fidelity to the company. Since there was no written term to the contrary, the court gave effect to this implied term.

(5) No, the award made by the motion judge was consistent with the principle expressed in Taggart v Canada Life Assurance Co., where a terminated employee is entitled to claim damages for the loss of pension benefits that would have accrued had the employee worked until the end of the notice period, unless some contractual term limits that right. There was no limit before the motion judge and the amount of damages was based on a calculation performed by an actuary contained in an expert opinion. The court found there was no basis to interfere with the award.

(6) Yes, a motion judge should take into account the effect, if any, of offers to settle on the ultimate award of costs for the motion. The court set aside the costs award and remitted the issue of costs back to the motion judge.

Hamilton (City) v. Thier + Curran Architects Inc., 2015 ONCA 64

[Strathy C.J.O., Laskin and Brown JJ.A.]

Counsel:

P.J. Brunner, for the appellant Bisceglia, for the respondents

Keywords: Construction Law, Summary Judgment, Third Party Claims, Rules of Civil Procedure, Rule 20.09

Facts:

Difficulties arose during the reconstruction and redevelopment of the Wentworth Lodge in Hamilton. The City of Hamilton, the project owners, and the general contractor, The Atlas Corporation, asserted claims against the project's architect, the appellant, Thier + Curran Architects Inc. ("TCA"). In turn, TCA commenced Third Party Claims seeking contribution and indemnity against the project's mechanical sub-contractor, Urban Mechanical Contracting Ltd., and its electrical sub-contractor, Tricin Electric Ltd.

Urban and Tricin successfully moved for summary judgment, and by orders dated January 30, 2014 (the "Orders"), the motion judge dismissed TCA's Third Party Claims. TCA appeals those Orders.

Issue(s): Did the motion judge err in dismissing the Third Party Claims when genuine issues requiring a trial existed as to whether the two sub-trades were directly liable to the general contractor, Atlas, and to the City, issues which in turn necessitated a trial with respect to TCA's claims for contribution and indemnity?

Held: Yes. Appeal allowed.

Reasoning:

Summary judgment is available in the case of third party claims. Rule 20.09 of the Rules of Civil Procedure so provides, and in Bongiardina v. York (Regional Municipality) the Court of Appeal observed that nothing in Rule 20 suggested that third party claims were to be considered on a different footing from the main action. However, in Bongiardina there is a caveat:

There might well be cases in which it would be inappropriate to bring a motion for summary judgment in respect of a third party claim. For example, if the third party claim could not be resolved without detailed knowledge of the factual circumstances that gave rise to the main action, a motion for summary judgment would be premature.

In his reasons, the motion judge acknowledged that dismissing the Third Party Claims would not put to rest the issue of any responsibility Urban and Tricin might bear for the construction delays at the project: "delay will still be dealt [with] within the various claims for lien and counter-actions." Therefore, the court found that granting of the summary judgment motion dismissing the Third Party Claims creates a risk...