Ontario Court Of Appeal Summaries (October 16 – October 20, 2017)

This week's summaries of the civil decisions of the Court of Appeal follow.

The most noteworthy decision was in Airia Brands Inc. v. Air Canada, a class action case. This is a case involving an allegation of conspiracy to price fix the cost of air freight services to and from Canada. The certification judge had refused to include foreign class members who shipped goods to and from Canada as part of the class. In doing so, the certification judge decided not to apply the familiar "real and substantial connection" test regarding jurisdiction simpliciter. The Court of Appeal reversed that decision and included the foreign plaintiffs as part of the certified class. In doing so, the court confirmed that the real and substantial connection text applies, and set out a three-part test for a court taking jurisdiction over foreign class members:

there is a real and substantial connection between the subject matter of the action and Ontario, and jurisdiction exists over the representative plaintiff and the defendants; there are common issues between the claims of the representative plaintiff and foreign members of the class; and the procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out as described in Currie v. McDonald's Restaurants of Canada Ltd. (2005), 74 O.R. (3d) 321 (C.A.) are provided, thereby serving to enhance the real and substantial connection between the foreign class members and Ontario. In North v. Metaswitch Networks Corporation, a wrongful dismissal case, the court confirmed that if a clause in a contract is illegal, the whole clause becomes inoperative and cannot be partially saved by using the severability clause in the contract to excise only the illegal portion of the clause.

In Jay-Pee Drycleaners Inc. v. 2321324 Ontario Inc., the court set aside summary judgment in favour of a landlord who terminated a lease because the tenant had failed to take a course on the handling of dry cleaning chemicals. In doing so, it granted summary judgment in favour of the tenant and remitted the matter to the court below to assess damages for wrongful termination of the lease.

Other topics covered included standing in the condominium law context and extensions of time to appeal in the municipal law context.

Table of Contents:

North v. Metaswitch Networks Corporation, 2017 ONCA 790

Keywords: Contracts, Illegality, Severability Clauses, Employment Law, Wrongful Dismissal, Employment Standards Act, 2000, S.O. 2000, c. 41, s. 5, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, Oudin v. Centre Francophone de Toronto, Inc., 2015 ONSC 6494, 2176693 Ontario Ltd. v. Cora Franchise Group Inc., 2015 ONCA 152

Airia Brands Inc. v. Air Canada, 2017 ONCA 792

Keywords: Torts, Conspiracy, Price Fixing, Competition Act, R.S.C. 1985, c. C-34, Civil Procedure, Class Actions, Foreign Class Members, Class Proceedings Act, 1992, ss 27(3), 28(1), and 29(3), Jurisdiction, Real and Substantial Connection, McCutcheon v. The Cash Store (2006), 80 O.R. (3d) 644 (S.C.J.), Van Breda v. Village Resorts Ltd., 2012 SCC 17, [2012] 1 S.C.R, Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP, 2016 ONCA 916, Currie v. McDonald's Restaurants of Canada Ltd. (2005), 74 O.R. (3d) 321 (C.A.), Forum Non Conveniens, LaPointe Rosenstein Marchand Melançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30

Jay-Pee Drycleaners Inc. v. 2321324 Ontario Inc., 2017 ONCA 798

Keywords: Real Property, Commercial Leases, Termination, Notice, Commercial Tenancies Act, ss. 19(2) and 28, Environmental Protection Act, R.S.O. 1990, c. E. 19, Dry Cleaners, O. Reg. 323/94, Summary Judgment

Saadilla v. York Condominium Corporation No. 187, 2017 ONCA 797

Keywords: Real Estate Law, Condominium Law, Summary Judgment, Condominium Act, 1998, Standing, Fresh Evidence

Sutherland Lofts Inc. v. Peck, 2017 ONCA 803

Keywords: Municipal Law, Building Code Violations, Building Code Act, 1992, S.O. 1992, c. 23, s. 15.9(2)(b), Civil Procedure, Appeals, Extension of Time

North v. Metaswitch Networks Corporation, 2017 ONCA 790

Keywords: Contracts, Illegality, Severability Clauses, Employment Law, Wrongful Dismissal, Employment Standards Act, 2000, S.O. 2000, c. 41, s. 5, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, Oudin v. Centre Francophone de Toronto, Inc., 2015 ONSC 6494, 2176693 Ontario Ltd. v. Cora Franchise Group Inc., 2015 ONCA 152

Civil Cases:

North v. Metaswitch Networks Corporation, 2017 ONCA 790

[Feldman, Sharpe and Roberts JJ.A]

Counsel:

Ben Hahn, for the appellant

Tracy Kay and Carrington Hickey, for the respondent

Keywords: Contracts, Illegality, Severability Clauses, Employment Law, Wrongful Dismissal, Employment Standards Act, 2000, S.O. 2000, c. 41, s. 5, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, Oudin v. Centre Francophone de Toronto, Inc., 2015 ONSC 6494, 2176693 Ontario Ltd. v. Cora Franchise Group Inc., 2015 ONCA 152

Facts:

Doug North's employment with Metaswitch Networks Corporation was governed by a written employment contract (the "Agreement"). When North's employment was terminated without cause, a dispute arose as to whether he was entitled to be paid in accordance with the Agreement, or based on common law reasonable notice.

The Agreement contained a termination clause that amounted to a contracting out of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the "ESA"). However, the Agreement also contained a severability clause. The issue before the application judge and on this appeal is the interpretation and application of the two clauses in light of s. 5 of the ESA, which prohibits employers and employees from waiving or contracting out of any employment standard prescribed by the ESA, except to provide a greater benefit to the employee. The application judge used the severability clause to excise what she found to be the offending part of the termination clause, but applied the rest of the termination clause.

Doug's employment was terminated in accordance with paragraph 9(c) of the Agreement, the relevant part of which provides:

Termination of Employment (c) Without Cause - The Company may terminate your employment at any time in its sole discretion for any reason, without cause, upon by [sic] providing you with notice and severance, if applicable, in accordance with the provisions of the Ontario Employment Standards Act (the "Act"). In addition, the Company will continue to pay its share all [sic] of your employee benefits, if any, and only for that period required by the Act. The reference to notice in paragraphs 9(b) and (c) can, at the Company's option, be satisfied by our provision to you of pay in lieu of such notice. The decision to provide actual notice or pay in lieu, or any combination thereof, shall be in the sole discretion of the Company. All pay in lieu of notice will be subject to all required tax withholdings and statutory deductions.

In the event of the termination of your employment, any payments owing to you shall be based on your Base Salary, as defined in the Agreement.

Issues:

(1) Did the application judge err in law by using the severability clause of the Agreement to save the termination clause that contravened the ESA?

(2) Did the application judge err in law by failing to find that the severability clause had no application to a clause of the Agreement that was rendered void by s. 5(1) of the ESA?

Holding: Appeal allowed.

Reasoning:

(1) Yes. The application judge erred in her approach to the interpretation and application of the severability clause. It is convenient to restate para. 17(a) of the agreement here for ease of reference:

General Provisions (a) If any part of the Agreement is found to be illegal or otherwise unenforceable by any court of competent jurisdiction, that part shall be severed from this Agreement and the rest of the Agreement's provisions shall remain in full force and effect. The severability clause directs that the part of the agreement that is to be severed is the part that a court would find to be illegal. The rule from Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, following Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986, is that where a termination clause contracts out of one employment standard, the court is to find the entire termination clause to be void, in accordance with s. 5(1) of the ESA. It is an error in law to merely void the offending portion...