Court Of Appeal Summaries (June 1 ' 5, 2020)

Published date16 June 2020
AuthorMr John Polyzogopoulos
Subject MatterFinance and Banking, Litigation, Mediation & Arbitration, Financial Services, Fund Management/ REITs, Trials & Appeals & Compensation
Law FirmBlaney McMurtry LLP

Good afternoon.

Please find our summaries of last week's civil decisions of the Court of Appeal for Ontario.

The most interesting and notable decision this week was Justice Thorburn's decision in Wright v. Horizons ETFS Management (Canada) Inc. Like Darmar Farms, which was featured in our Top Appeals of 2019 CLE (and is awaiting to hear if leave to the Supreme Court will be granted), it would appear that the Court has once again expanded the scope of negligence claims for pure economic loss that can be brought.

In this class action, the plaintiff sued the fund manager of an ETF that tracked the VIX volatility index. On a single day in February 2018, the ETF lost 90% of its value and investors were wiped out. The fund manager subsequently wound up the ETF as non-viable. The allegation made was that such an ETF, by its very design, was doomed to catastrophically fail, and that the fund manager was therefore negligent in designing such a fund and in the disclosure made to investors.

The certification judge, Perell J, dismissed the entire action as disclosing no reasonable cause of action. The Court set aside that decision. While it agreed with the certification judge that the claim did not fit within the shoddy goods exception to claims for pure economic loss (since the financial product in this case was not a physical danger to person or property), it held that the negligence claim in this case fell within the negligent performance of a service exception. In the alternative, the Court determined that if the claim was novel and did not fit within one of the five recognized exceptions to the bar against claims for pure economic loss, it should be allowed to proceed and be determined on a full evidentiary record.

Other topics covered this week included the apportionment of liability in a social host MVA case where the amount of insurance available was not enough to satisfy the judgment obtained, the test for being awarded advance costs under s. 124 of the CBCA to defend a D&O claim, relief from forfeiture from the failure to properly exercise an option to renew a commercial lease, solicitor and client (claim on account for services rendered), striking pleadings on the basis of no reasonable cause of action, a multiplicity of proceedings, abuse of process and issue estoppel, dismissal for delay and rights of first refusal.

Table of Contents

Civil Decisions

Tuffnail v. Meekes, 2020 ONCA 340

Keywords: Torts, Negligence, MVA, Social Host Liability, Apportionment of Fault, Automobile Insurance, Coverage, Under-Insured Motorist, Subrogation, Damages, Recovery, Apportionment, Civil Procedure, Pre-judgment Interest, Amending Pleadings, Limitation Periods, Insurance Act, RSO 1990, c I8, s 278(2), Ontario Policy Change Form 44R - Family Protection Coverage endorsement, s. 7, Courts of Justice Act, RSO 1990, c C43, s 130, Freudmann-Cohen v. Tran (2004), 70 O.R. (3d) 667 (C.A.), Endean v. St. Joseph Hospital, 2019 ONCA 181

Wright v. Horizons ETFS Management (Canada) Inc., 2020 ONCA 337

Keywords: Securities, Prospectuses, Material Misrepresentation, Secondary Market Misrepresentation, Torts, Negligence, Duty of Care, Damages, Pure Economic Loss, Civil Procedure, Class Proceedings, Certification, Striking Pleadings, No Reasonable Cause of Action, Securities Act, R.S.O. 1990, c. S.5, ss. 116, 130, 138.3, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, [2017] 2 S.C.R. 855, Darmar Farms Inc. v. Syngenta Canada Inc., 2019 ONCA 789, leave to appeal to S.C.C. requested, 38915, Arora v. Whirlpool Canada LP, 2013 ONCA 657, leave to appeal refused, [2013] S.C.C.A. No. 498, Lavender v. Miller Bernstein LLP, 2018 ONCA 729, leave to appeal refused, [2018] S.C.C.A. No. 488, Martel Building Ltd. v. Canada, 2000 SCC 60, Mandeville v. The Manufacturers Life Insurance Company, 2014 ONCA 417, leave to appeal refused, [2014] S.C.C.A. No. 390, Childs v. Desormeaux, 2006 SCC 18, Cooper v. Hobart, 2001 SCC 79, Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021, Whittingham v. Crease & Co. (1978), 88 D.L.R. (3d) 353, at p. 373 (B.C.S.C.), Cannon v. Funds for Canada Foundation, 2012 ONSC 399, leave to appeal refused, 2012 ONSC 6101 (Div. Ct.), Pacific Coast Coin Exchange v. Ontario Securities Commission, [1978] 2 S.C.R. 112, Growthworks WV Management Ltd. v. Growthworks Canadian Fund Ltd., 2018 ONSC 3108, Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, Hodge v. Neinstein, 2017 ONCA 494, leave to appeal refused, [2017] S.C.C.A. No. 341

Lee v. Lalu Canada Inc. , 2020 ONCA 344

Keywords: Corporations, Directors and Officers, Liability, Defence Costs, Advance Funding, Contracts, Interpretation, Unanimous Shareholder Agreements, Canada Business Corporations Act, R.S.C. 1985, c. C-44, s. 124, Cytrynbaum v. Look Communications Inc., 2013 ONCA 455, leave to appeal refused, [2013] S.C.C.A. No. 377, 379, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53,

Burns v. RBC Life Insurance Company, 2020 ONCA 347

Keywords: Employment Law, Liability of Employees, Breach of Contract, Breach of Duty of Good Faith, Insurance, Long-Term Disability Benefits, Torts, Negligence, Negligent Misrepresentation, Civil Procedure, Striking Pleadings, No Reasonable Cause of Action

2324702 Ontario Inc. v. 1305 Dundas W Inc., 2020 ONCA 353

Keywords: Contracts, Real Property, Commercial Leases, Options to Renew, Relief from Forfeiture, Waiver, Estoppel, Commercial Tenancies Act, R.S.O. 1990, c. L.7, ss. 19, 20, Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, Ross v. T. Eaton Co. (1992), 11 O.R. (3d) 115 (C.A.), 1383421 Ontario Inc. v. Ole Miss Place Inc. (2003), 67 O.R. (3d) 161 (C.A.), Mapleview-Veterans Drive Investments Inc. v. Papa Kerollus VI Inc., 2016 ONCA 93

Birdseye Security Inc. v. Milosevic , 2020 ONCA 355

Keywords: Civil Procedure, Striking Pleadings, Frivolous, Vexatious, Abuse of Process, Other Proceeding Pending, Appeals, Jurisdiction, Final or Interlocutory, Rules of Civil Procedure, Rules 21.01(1)(b), 21.01(3)(c), 21.01(3)(d) and 25.11, Farris v. Staubach Ontario Inc. (2004), 32 C.C.E.L. (3d) 265 (Ont. S.C.)

Couper v. Rueter Scargall Bennett LLP , 2020 ONCA 352

Keywords: Contracts, Solicitor-Client, Contingency Fee Agreements, Accounts for Services Rendered, Civil Procedure, Reasonable Apprehension of Bias, Contingency Fee Agreements, O. Reg 195/04 to the Solicitors Act, R.S.O. 1990, c. S. 15, Watt v. Beallor Beallor Burns Inc., 2004 CanLII 19821 (Ont. C.A.)

Short Civil Decisions

Kazen v. Whitten & Lublin Professional Corporation , 2020 ONCA 325

Keywords: Torts, Professional Negligence, Lawyers, Breach of Confidence, Solicitor Client Privilege, Waiver, Civil Procedure, Striking Pleadings, Issue Estoppel, Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248

Home Town Financial (Timmins) Corporation v. Levesque , 2020 ONCA 349

Keywords: Civil Procedure, Dismissal for Delay, Rules of Civil Procedure, Rule 48.14(7), Faris v. Eftimovski, 2013 ONCA 360, Kara v. Arnold, 2014 ONCA 871

Taylor v. 864773 Ontario Inc., 2020 ONCA 345

Keywords: Contracts, Interpretation, Real Property, Rights of First Refusal

CIVIL DECISIONS

Tuffnail v. Meekes , 2020 ONCA 340

[Hoy A.C.J.O., Doherty J.A. and Marrocco A.C.J. (ad hoc)]

Counsel:

Peter W. Kryworuk and Jacob R.W. Damstra, for State Farm Mutual Automobile Insurance Company

James D. Virtue and Rasha M. El-Tawil, for GAT, PDT, DAT, and MAT

D. Romano Reid, for the Litigation Administrator for the Estate of TMB

Brian A. Pickard, James K. Brown and Ayren J. Brown, for SC

Keywords: Torts, Negligence, MVA, Social Host Liability, Apportionment of Fault, Automobile Insurance, Coverage, Under-Insured Motorist, Subrogation, Damages, Recovery, Apportionment, Civil Procedure, Pre-judgment Interest, Amending Pleadings, Limitation Periods, Insurance Act, RSO 1990, c I8, s 278(2), Ontario Policy Change Form 44R - Family Protection Coverage endorsement, s. 7, Courts of Justice Act, RSO 1990, c C43, s 130, Freudmann-Cohen v. Tran (2004), 70 O.R. (3d) 667 (C.A.), Endean v. St. Joseph Hospital, 2019 ONCA 181

facts:

GAT was seriously injured in a single-vehicle crash on September 13, 2009, following a rural wedding reception. The other passenger, KP, was killed. GAT and the driver, SM, had been served alcohol at the reception. The groom, TMB, had hosted the reception. SC was the bartender.

GAT and his family (collectively GAT), commenced an action against SM, TMB and State Farm, GAT's automobile insurer. GAT claimed that the collision and resulting injuries were caused by SM and TMB's negligence and/or, in the case of TMB, breach of the provisions of the Liquor Licence Act. In the case of State Farm, GAT sought a declaration that they were entitled to coverage under the OPCF 44R (Ontario Policy Change Form 44R - Family Protection Coverage endorsement), the optional underinsured motorist coverage GAT had purchased from State Farm.

State Farm defended GAT's claim for a declaration that GAT was entitled to coverage under the OPCF 44R and brought a third party claim against SC for contribution and indemnity in respect of amounts it was required to pay under the OPCF 44R. TMB also brought a third party claim against SC. Both State Farm and TMB alleged that SC's negligence and/or breach of the Liquor Licence Act caused or contributed to the accident. GAT did not sue SC.

On May 10, 2017, following a six-week trial, the jury awarded damages and apportioned liability among SM, TMB, SC and GAT as follows:

SM (the driver) - 65%

TMB (the host) - 20.03%

SC (the bartender) - 11.12%

GAT (the plaintiff) - 3.85%

Taking GAT's contributory negligence into account, the net amount payable to GAT is $3,435,034.71.

TMB died during the litigation. The litigation was continued by SCD, as Litigation Administrator for the Estate of TMB (together TMB).

The following insurance coverage was available to the tortfeasors:

SM -...

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