Court Of Appeal Summaries (October 26, 2015 – October 30, 2015)

The Court of Appeal released a number of civil decisions this week. Topics include a class action lawsuit involving alleged bribery, non-disclosure and other serious corruption allegations, whether an accepted offer to settle included the payment of costs, a Rule 21 motion argued in the middle of a wills and estates trial, MVA/SABs, dismissal for delay, a messy and lengthy custody and access case, and the enforceability of a settlement agreement arrived at between separated spouses, where one spouse was incompetent and acting through a litigation guardian.

Enjoy your weekend and watch out for little ones while you are driving tomorrow evening. Happy Halloween!

Civil Cases

Chrisjohn v Riley, 2015 ONCA 713

[Gillese, van Rensburg and Miller JJ.A.]

Counsel:

D. M. Bryce, for the appellants

L. N. Bloom and A. Fazel, for the respondent

Keywords: Torts, Negligence, Motor Vehicle Accident, Dismissal for Delay, Lawyers' Negligence, Remedies, Prejudice, Burden of Proof

Facts: The appellants appealed an order refusing to set aside an administrative dismissal of their personal injury action. One appellant was seriously injured in a motor vehicle accident in 2002. In 2004, an action was commenced by the appellants' first lawyer seeking damages for the appellant accident victim's injuries, and damages under the Family Law Act for the other appellants, who are the injured appellant's family members As a result of the delay, negligence, and deliberate actions of the appellants' first and second lawyers, no motion to set aside the dismissal was brought until more than five years after the dismissal. After the dismissal, the respondent (who had never been formally added as a defendant to the action) was told that the appellants would no longer pursue the personal injury action and would instead be suing their first lawyer. The respondent did not hear anything from the appellants for almost three years, until it received a notice of a motion to set aside the dismissal. At the hearing, the motion judge dismissed the motion on the basis that the motion was not brought promptly as there was a delay of five and a half years from when the appellants became aware of the dismissal. This delay gave rise to a presumption of prejudice that was not rebutted by the appellants. Furthermore, the motion judge found there was a "compelling consideration" of finality as the respondent has assumed for almost three years that the case was over.

Issues:

(1) Did the motion judge err in his consideration of the explanation for the litigation delay by ignoring, or failing to give proper weight to, the uncontroverted evidence that the appellants always intended to proceed with the personal injury action?

(2) Did the motion judge refuse to consider as relevant the prospect that, if the action were not restored, the appellants may be without any real remedy for the serious personal injuries sustained by an appellant after a head-on collision with an impaired driver?

(3) Did the motion judge err in his assessment of prejudice?

Holding: Appeal dismissed with costs to the respondent in the amount of $12,500.

Reasoning:

(1) No, the motion judge was well aware that it was the conduct and inaction of the appellants' counsel, and not of the appellants themselves, that led to the administrative dismissal and the failure to move to set aside the dismissal promptly. The motion judge considered the evidence in the appellant's two affidavits that made it clear that she relied on her lawyer's assurances that the action would continue after the administrative dismissal occurred. The appellant also stated that it was always her intention to pursue her claim for compensation. The Ontario Court of Appeal in Finlay v Van Paassen found that on a motion to set aside a dismissal order, the court should be concerned primarily with the rights of the litigants, and not with the conduct of their counsel. However, the court also recognized that the situation may change if the lawyer's conduct is deliberate and not inadvertent. Although the appellant always intending to pursue her claim weighs in favour of setting aside the administrative dismissal, it is not sufficient. The rights of all the parties must be considered to determine ultimately whether it would be fair and just to set aside the dismissal and to allow the action to proceed.

(2) No, the motion judge did not err in refusing to consider the appellants' chances in their solicitors' negligence actions. He did not fail to appreciate the very serious consequences to the appellants if the personal injury action were not restored. Instead, his decision turned on the question of prejudice - whether the respondent, after such a significant delay and after being informed that the action was at an end, would fairly be able to defend the appellants' claims if the action were restored. The lack of a guaranteed alternative recovery against the appellant's former counsel cannot be determinative. The motion judge specifically stated that he did not take into account whether the plaintiffs had another remedy against either solicitor for negligence. This followed the Finlay v Van Paassen decision where the Court of Appeal cautioned against weighing the plaintiff's ability to sue her former counsel as a factor.

(3) No, the motion judge did not err in his assessment of prejudice. According to the Court of Appeal in MDM Plastics Ltd. v Vincor International Inc., the relevant prejudice is the defendant's ability to defend the action that would arise from steps taken following dismissal or which would result from the restoration of the action. The onus is not on the respondent to demonstrate "significant and actual" prejudice, but on the appellants to rebut the inference of prejudice relating to the respondent's ability to defend the action. The motion judge correctly concluded that the onus was not met in this case, and that actual prejudice relevant to the ability to defend the action on damages and liability had been established. The motion judge relied on the extensive evidence put forward by the respondent of actual prejudice to its ability to defend the action. Although the appellant's counsel went to considerable lengths to attempt to address the question of prejudice, the motion judge noted that there were important gaps in the available medical evidence as a result of the passage of time. Consequently, the respondent's ability to assess and evaluate the appellants' claim for damages was impaired. In addition, liability would be a live issue in this case, and significant evidence regarding liability was also no longer available.

Holgate v. Sheehan Estate, 2015 ONCA 717

[Cronk, Hourigan and Benotto JJ.A.]

Counsel:

Ronald Petersen, for the appellants Paul A. Dancause, for the respondents

Keywords: Wills and Estates, Interpretation, Trusts, Resulting Trust, Constructive Trust, Determination of an Issue Before Trial, Rules of Civil Procedure, Rule 21, Appeal Dismissed

Facts: John Holgate and May Sheehan married, each having children from previous marriages. Mr. Holgate's will and codicil provided the new Mrs. Holgate (formerly Sheehan) a life interest in two trusts, which she used after his death for her expenses and for accumulating savings. Upon her passing, she left the bulk of her estate to her biological children rather than Mr. Holgate's. Mr. Holgate's sons alleged that Mrs. Holgate violated the trusts by accumulating wealth. They sought against Mrs. Holgate's estate and her daughter an accounting, freezing of funds and general damages of $5 million, as well as a declaration that they were entitled to an interest in both estates. Mid-trial, both counsel agreed, at the request of the presiding judge, to bring a Rule 21 motion to determine whether the trust provisions precluded Mrs. Holgate from accumulating wealth. The court held that she was not prevented from doing so.

Mr. Holgate's sons appealed on two grounds: that the trial judge erred in his interpretation of the trusts and that he had no jurisdiction to hear a Rule 21 motion during the trial. They also sought leave to appeal the trial judge's award of costs. Finally, they submitted that costs should have been paid by the estate and, in the alternative, that the costs award was excessive.

Issues:

(1) Did the trial/motions judge err in his interpretation of the trusts?

(2) Did the trial judge have jurisdiction to hear the Rule 21 motion during the trial?

(3) Should costs have been paid by the estate?

Holding:

The answer to all three questions was "no." The appeal was dismissed.

Reasoning:

(1) The Court agreed that the first trust allowed for the depletion of the capital of the estate. Moreover, the will had no limitations on the use of income, on the recapitalization of unused income, or any requirement on behalf of Mrs. Holgate to first replenish her own resources before using trust income. The second trust also placed no limitations on the use of trust assets. Ultimately, both trusts contained an intention that there be no limitation on the discretion of the trustees to draw on income or (with respect to the first trust) to encroach on capital and that there be no prohibition on accumulating funds.

The language of the first trust "indicated a clear intention on Mr. Holgate's part to allow his wife unrestricted access to the funds," while the second trust contained "no words of limitation regarding access to and use of income; the trustees [were] empowered to draw on the income of the estate for the use and benefit of Mrs. Holgate."

(2) The Court reasoned that the appellants consented to the Rule 21 process without objection to timing and participated in the drafting of the question to be answered. They did not receive the decision they had hoped for, but could not now claim that there was a lack of jurisdiction.

The Court also rejected the appellant's submission that the trial judge improperly relied on assertions made by the respondents when interpreting the...