Court Of Appeal Summaries (April 4-8, 2016)

Hello Everyone.

This week was a busy one at the Court of Appeal. In two important decisions Deslauriers Custom Cabinets and Howard v Benson Group, the Court further chipped away at Sattva and the Supreme Court's pronouncement in that case that contractual interpretation is now an issue of mixed fact and law and therefore subject to a more deferential standard of review. In Deslauriers, which involved the interpretation of a commercial lease to determine whether it was the landlord or the tenant that bore the risk of fire loss, the Court applied a correctness standard rather than the deferential Sattva standard. In doing so, Justice Cronk relied on Sattva itself, which leaves room for the application of the correctness standard when there are "extricable" questions of law involved. "Extricable questions of law" include legal errors involving "the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor." The Court found that the motion judge in Deslauriers had failed to properly consider and apply prior case law that held that when a commercial lease provides for a party to the lease (whether a landlord or a tenant) to insure the premises against loss, it normally precludes that party and its insurer from subsequently claiming over against the other party for the very losses to be insured against. The Court therefore applied the correctness standard and set aside the motion judge's decision, siding with the landlord in this case.

In Howard v Benson Group, the Court again applied the correctness standard when interpreting an employment contract rather than the deferential Sattva standard. The Court held that where there is a fixed term employment contract with no early termination provision (the provision in this case was found ambiguous and therefore unenforceable), the wrongfully terminated employee is entitled to be paid damages for the entire balance of the term of the employment contract and has no duty to mitigate. The Court held that these were extricable questions of law that arose in this case, and therefore the correctness standard of review was more appropriate than the deferential Sattva standard.

Another significant decision this week was the decision in Good v Toronto (Police Services Board), the class action brought against the Toronto Police as a result of Charter breaches perpetrated during the mass arbitrary arrests and detentions that took place during the G20 Summit in Toronto in the summer of 2010. The Court upheld the Divisional Court's certification of two class actions and increased the costs award made in favour of the plaintiffs.

In Fontaine v Canada, the Residential Schools class action, the Court largely upheld the supervising judge's decision to leave it up to the victims as to whether the evidence they gave during the ADR and claims processes during the class proceeding ought to be preserved with the National Centre for Truth and Reconciliation and/or the Truth and Reconciliation Commission.

Finally, there were several other decisions covering topics such as MVA limitation periods, debtor-creditor, consumer protection class action (prepaid phone cards), insolvency and architects' E&O insurance.

Have a nice weekend.

CIVIL DECISIONS

Royal Bank of Canada v. Uni-Can Linen & Uniform Supply Company Inc., 2016 ONCA 245

[Weiler, Hourigan and Huscroft JJ.A.]

Counsel:

Sukhjinder Bhangu, for the appellants

Clark Peddle, for the respondent

Keywords: Debtor-Creditor, Civil Procedure, Summary Judgment, Adjournments

Facts:

The respondent was granted summary judgment but agreed to seek having the judgment set aside as the appellants, who did not appear on the summary motion, believed they were consenting to an adjournment. The respondent then brought a motion to set aside the summary judgment, as well as an additional motion for summary judgment.

The appellants were served with notice of the motions but did not file any materials. The motion judge then denied their request for a further adjournment to afford them an opportunity to file responding material. The motions judge set aside the initial summary judgment and then granted summary judgment to the respondent.

On appeal, the appellants argued that the motion judge erred in granting summary judgment to the respondent while the first summary judgment was in place. The appellants also submitted that the motion judge acted unfairly in denying the adjournment and erred in calculating the amounts owing in the matter.

Issues: Did the motions judge err in refusing the adjournment, granting the second summary judgment and in calculating the amounts owing?

Holding: No to all - Appeal dismissed.

Reasoning:

The motion to set aside the first summary judgment was dealt with prior to the second motion being heard and decided. The appellants had ample notice of the second motion date and simply chose not to file materials. While the second motion was not in the court file, it was still properly before the court and it was open to the motion judge to refuse the adjournment.

The appellants did not raise any specific issues with respect to the amounts owing and alleged that they had never received a proper statement as to what they owed. However, the parties had agreed that prior payments made by the appellant would be credited following the judgment. The appellant sought to adduce one annual statement with respect to one of the loan facilities, but the court find that this was an incomplete statement of the entire account. Ultimately, the court was satisfied there was no dispute as to the amount owing.

Sankar v. Bell Mobility Inc., 2016 ONCA 242

[Strathy C.J.O., LaForme and Huscroft JJ.A.]

Counsel:

Louis Sokolov, Jean-Marc Leclerc and Christine Davies, for the appellant

Steve Tenai and Guy White, for the respondent

Keywords: Contracts, Consumer Protection, Class Actions, Consumer Protection Act, Gift Card Regulation

Facts:

The Defendant ("Bell") sold pre-paid wireless services under three different brand names: Bell Mobility, Solo Mobile and Virgin Mobile. The service agreements had different active periods and pricing, and provided that pre-paid credits would expire after a specified time period. If customer topped-up the prepaid account balance before the service period expired, any unused balance was carried over or added to the topped-up amount and made subject to the new service period. If not, the unused balance was forfeited.

The Plaintiff customer commenced a class action alleging Bell had wrongfully seized unused balances remaining in a customer's top-up account on the stated expiry date as opposed to the day after the expiry date as required by the contracts. The Plaintiff also alleged that top-up payments were gift card agreements which, pursuant to the Gift Card Regulation under the Consumer Protection Act ("CPA"), were prohibited from expiring. The action was certified as a class proceeding on behalf of all pre-paid customers who had balances remaining in their accounts at the end of the service period expiring after May 4, 2010.

The parties brought cross-motions for summary judgment. The motion judge ruled that Bell did not breach its contract and that the Gift Card Regulations of the CPA do not apply to prepaid phone cards. He granted summary judgment answering the common issues in Bell's favour and dismissed the class action.

Issues:

(1) Did the motion judge fail to consider the prepaid wireless contract as a whole, having regard to the expiry dates assigned by Bell and communicated to subscribers?

(2) Did the motion judge err in finding that the Gift Card Regulation is inapplicable to Bell's phone cards?

Holding: Appeal dismissed.

Reasoning:

(1) No. The breach of contract claim boiled down to whether the prepaid card expired at the end of the last day of the active period, or the day after. If the card did not expire until the day after the end of the active period, then Bell had breached its contract by treating the purchaser as having forfeited the unused balance on that day.

The court accepted Bell's submissions that the contract terms were contained not only in the agreements made when customers initially signed up for wireless service, but also in pricing and other contractual information, including expiry dates, set out in the prepaid cards and PIN receipts, which customers obtained when they bought top-ups. The court found the motion judge was entitled to rely on these documents that formed part of the contractual relationship between the parties in deciding the issue. The court found that the motion judge correctly held that the card expired at the end of the last day of the active period, not on the day after. Bell was therefore entitled to collect the unused balances after the last day of the active period.

The court also noted that the appellant's real complaint, and the real complaint in the class action, was that Bell's subsequent communications to its customers - made after they had purchased their top-ups and as the top-up was about to expire - were misleading. That is because they may have created the impression that subscribers had an additional day after the end of the active period to "top up" before their funds expired. However, it agreed with the motion judge that this was essentially a claim for misrepresentation or promissory estoppel, neither of which was before the motion judge, because neither was held to be amenable to resolution as a common issue in the class proceeding.

(2) No, the motion judge was correct to grant summary judgment in favour of the respondent on the common issue relating to the Gift Card Regulation. The court did not find it necessary to address the issue of whether the Gift Card Regulation applies only to gift cards purchased as gifts. It rested its conclusion on the interpretation of the regulation. The regulation prohibits an expiry date on the "future performance of the agreement". It provides...