Court Of Appeal Summaries (February 16 - 20, 2015)

Hello everyone. Below are summaries of this week's Ontario Court of Appeal civil decisions (non-criminal). Topics include privacy, franchise law, issue estoppel, appellate jurisdiction over a trial judge's decision to strike a jury (with a strongly-worded dissent by Laskin J.A.), and the permissibility of using surveillance evidence at trial without disclosing it to the opposing party.

In addition, the Court of Appeal released its highly-anticipated, yet unsurprising decision in Hopkins v. Kay. It confirmed that individuals whose medical records are unlawfully accessed, contrary to the Personal Health Information Protection Act, can pursue remedies with both the Privacy Commissioner and the Courts.

Salasel v. Cuthbertson, 2015 ONCA 115

[Hoy A.C.J.O., van Rensburg and Brown JJ.A.] Counsel: J.G. Hodder, for the appellant E.J. Baron and A. McCutcheon, for the respondents

Keywords: Civil litigation, Legal costs as damages, Rule 21.01(3)(d) of the Rules of Civil Procedure, Currie v. Halton Regional Police Services Board, Action barred, Issue estoppel, Toronto (City) v. C.U.P.E., Local 79, Absolute privilege, Amato v. Welsh

Facts: In October 2010, Hassan Rasouli ("Mr. Rasouli") suffered debilitating complications following surgery and was kept alive by mechanical ventilation. The respondents, three doctors, recommended withdrawal of such mechanical ventilation. The appellants opposed the decision and did not consent. The respondents were in the view that the Consent and Capacity Board's ("CCB") approval of the withdrawal was not necessary. The appellants applied for a declaration that in the absence of consent, the matter had to go to the CCB, and the respondents applied for a declaration that it did not. The appellants were successful, and the decision was affirmed by the Court of Appeal and the Supreme Court of Canada ("Prior Proceedings"). The application judge and Court of Appeal made cost orders against the respondents, and such orders were complied with. In this action, the appellants sued the respondent physicians and were seeking to recover the balance of their legal costs, $1 million in special damages and $1 million general, aggravated and punitive damages. In addition, there was another claim for $250,000 under s. 61 of the Family Law Act and for the intentional infliction of mental suffering.

The respondents brought a motion under Rule 21.01(3)(d) of the Rules of Civil Procedure ("Rules") to stay or dismiss the action on two grounds. First, the respondents argued that to the extent the action sought the recovery of legal fees incurred in the Prior Proceedings, it was barred by the doctrine of issue estoppel because it sought to re-litigate cost awards made in the Prior Proceedings. Second, the respondents contended that the balance of the claims were frivolous, vexatious or an abuse of process in that they were barred by the doctrine of absolute privilege. The motion judge agreed and dismissed the action.

Issues: (1) Did the motion judge err in dismissing the appellants' claim for legal fees as special damages on the basis of issue estoppel?

(2) Did the motion judge err in dismissing the rest of the appellants' claims on the ground that they were barred by absolute privilege?

Holding: Appeal dismissed.

Reasoning: Rule 21.01(3)(d) of the Rules allows a defendant to move to stay or dismiss an action on the ground that the "action is frivolous or vexatious or is otherwise an abuse of the process of the court". As per Currie v. Halton Regional Police Services Board (2003), 233 D.L.R. (4th) 657 (Ont. C.A.), a court only invokes its authority under this rule or pursuant to its inherent jurisdiction to dismiss or stay an action in the clearest of cases.

(1) No. As per Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, to invoke issue estoppel, a party must meet three pre-conditions: (1) the issue in the proceeding must be the same as the one decided in the prior decision; (2) the prior judicial decision must have been final; and, (3) the parties to both proceedings must be the same or their privies.

The appellants argued that they were unable to raise the issue of damages in the nature of legal fees in the Prior Proceedings because they could not assert a claim for damages in an application. Thus, they submitted that they should be permitted to assert a claim for monetary relief in this action. The Court held there was no merit in this submission. The appellants could have requested larger cost awards in the Prior Proceedings.

Further, the appellants argued that the cost awards in the Prior Proceedings were not fundamental to the injunctive relief granted to Mr. Rasouli, and was therefore open to them to bring an action to recover legal costs as damages. The position taken by the appellants was incorrect. The Court referred to the motion judge's reasoning where it was stated that "[a]n award of costs may not be the very subject matter of the litigation, but it is not incidental in the sense that the prior court did not specifically turn its mind to the issue". There was reference to Danyluk v Ainsworth Technologies Inc., [2001] 2 SCR 460, where it was stated that the costs rulings form part of the conclusions "that were necessarily ... determined in the earlier proceedings".

(2) No. This was a clear case in which the communication was protected by the doctrine of absolute privilege. Pursuant to Amato v. Welsh, 2013 ONCA 258, the doctrine of absolute privilege contains several basic elements: no action lies, whether against judges, counsel, jury, witnesses or parties, for words spoken in the ordinary course of any proceedings before any court or judicial tribunal recognised by law; the privilege extends to documents properly used and regularly prepared for use in the proceedings; and, a statement will not be protected if it is not uttered for the purposes of judicial proceedings by someone who has a duty to make statements in the course of the proceedings.

The issue in this case was communication ("the Underwood Letter") made by counsel for the respondents before the actual commencement of legal proceedings. In 1522491 Ontario Inc. v. Steward, Esten Professional Corp., 2010 ONSC 727, 100 O.R. (3d) 596, it was held that in Ontario, absolute privilege may extend to communications by a party's solicitor made before the actual commencement of proceedings.

The appellants submitted that the doctrine of absolute privilege for pre-litigation communication only prevented the bringing of defamation claims in respect of the communication. This view was rejected. As per Samuel Manu-Tech Inc. v. Redipac Recycling Corp. (1999), 124 O.A.C. 125, it was held that absolute privilege "extends to any action, however framed, and is not limited to actions for defamation".

The appellants further advanced that absolute privilege did not attach to the Underwood Letter because at the time it was written no substantive steps had been taken to prepare for litigation (in the sense that the respondent physicians had not made a decision to litigate, it was the appellants, not the respondents, who first commenced a legal proceeding following the communication of the Underwood Letter). However, the Underwood Letter was written at a time when it was clear that the respondent physicians would be required to respond to the litigation that was intended to be initiated against them. Furthermore, before the Underwood Letter was written, it was clear that judicial proceedings would take place over the issue of whether consent was required to withdraw mechanical ventilation. Shortly after the Underwood Letter was written, the proceedings commenced. Since the privilege extends to communications directly concerned with actual contemplated proceedings, it would be inconsistent to afford the protection to communications by counsel for one party, and to deny it to communications by counsel for another party.

In addition, the appellants argued that the motion judge failed to consider the implications of the decision of Amato v. Welsh, 2013 ONCA 258, 305 O.A.C. 155 ("Amato"). The Court found there was a material difference between Amato and the present case. In Amato the disputed statements were made by lawyers during the course of their retainer by the plaintiff clients, thereby giving rise to a possible conflict between the lawyers' duty of loyalty to their clients and absolute privilege. However, in the present case the statutory regime concerning consent to medical treatment established by the Health Care Consent Act ("HCCA") recognizes that disputes over appropriate medical treatment may arise between treating physicians and a patient's substitute decision-maker, and the HCCA establishes a mechanism for resolving such disputes through applications to the CCB. The Court found that it was difficult to see how a duty of loyalty by the physician in respect of treatment decisions for a patient - akin to the duty of loyalty owed by a lawyer to a client discussed in Amato - could arise when the statutory regime governing treatment decisions specifically recognizes that the physician and the substitute decision-maker may disagree about a treatment plan.

The appellants also characterized the Underwood Letter as a threat. When considering the doctrine of absolute privilege, the analysis focuses on occasion on which a communication was made, not its content.

2147191 Ontario Inc. v. Springdale Pizza Depot Ltd., 2015 ONCA 116

[Doherty, Gillese and Lauwers JJ.A.] Counsel: D. Altshuller, for the appellants S.P. Murphy, for the respondents

Keywords: Franchise Law, Arthur Wishart Act, Resale Exemption from Disclosure

Facts: This is...