Ontario Court Of Appeal Summaries (October 30 – November 3rd, 2017)

Good evening.

Below are this week's summaries of the civil decisions of the Court of Appeal for Ontario.

Another decision in the Yaiguaje v. Chevron Corporation case was released this week which ensures that there will be at least one further decision of the Court of Appeal to come in this case. Readers will recall that Chevron had obtained an order from a single judge of the Court of Appeal requiring the Ecuadorean villagers to post $942,951 as security for costs. It appeared that this might end the case before the appeal dismissing the claim to enforce their multi-billion dollar Ecuadorean judgment could be heard. However, a full panel of the Court set aside their colleague's order and held that it was not in the interests of justice to order security for costs in this case. The Court rested its decision on the fact that this was public interest litigation on behalf of 30,000 Ecuadorean villagers whose environment had suffered ecological devastation, the judgment they sought to enforce was to benefit all of them, and that Chevron, a multi-billion dollar international conglomerate, did not require the protection of a security for cost order.

Other topics covered included habeas corpus in the immigration context, construction law (liability for exaggerated claims), varying orders, approving MVA settlements involving parties with disabilities, family law (enforcing an Islamic marriage contract), class actions (judicial discretion in defining common issues), insurance coverage in the MVA context, the rectification of a will, and administrative law (Ontario Racing Commission).

Have a great weekend,

Civil Decisions:

Welton Estate v. Haugrud, 2017 ONCA 831

[MacFarland, Hourigan and Pardu JJ.A.]

Counsel:

Robert Rueter and David Barbaree, for the appellant

Craig Vander Zee, for the respondent The Bank of Nova Scotia in its capacity of Estate Trustee

Justin de Vries, for the respondent Catherine Haugrud

Michael Bordin and Karen Watters, for Simpson Wigle Law LLP

Bianca La Neve, for the Office of the Children's Lawyer

Keywords: Wills and Estates Law, Wills, Rectification

Facts:

The appellant was the widow of the deceased testator. She did not challenge the will, and elected to take under it. A motion was brought to correct an error made by the drafting solicitor. The evidence of the drafting solicitor was corroborated by that of the deceased's accountant. The motion was opposed only by the appellant.

Issues:

(1) Was the motion judge correct to proceed with the rectification motion before her?

(2) Should leave be granted to appeal costs?

Holding: Appeal dismissed.

Reasoning:

(1) Yes. The motion judge was correct to proceed with the rectification motion. The deceased's intention to liquidate shares that he owned in order to provide money to his children was apparent on the face of the will. The redemption of shares which he did not own when the will was drafted would not have provided this necessary funding. The motion judge made no error in receiving evidence of the drafting error, and the motion judge's factual findings were amply supported by the evidence.

(2) No. The motion judge was alive to the different considerations that apply in estate matters in relation to public policy issues.

Yaiguaje v. Chevron Corporation, 2017 ONCA 827

[Hoy A.C.J.O., Cronk and Hourigan JJ.A.]

Counsel:

Alan Lenczner, Brendan Morrison, Kirk Baert and Celeste Poltak, for the appellants

Peter Grant, for the appellants

Benjamin Zarnett, for the respondent Chevron Canada

Larry Lowenstein, for the respondent Chevron Corporation

Keywords: Civil Procedure, Security for Costs, Rules of Civil Procedure, Rules 56.01(1)(a), 61.06(1)(b), Standard of Review, Discretionary Orders, Errors in Principle

Facts:

The appellants bring a motion to vary or set aside the order of the motion judge requiring them to post $942,951 as security for costs of the proceeding and the appeals in Yaiguaje v. Chevron Corporation (C63309 and C63310), both now pending in the Court of Appeal, prior to the hearing of the appeals.

The appellants, Yaiguaje et al, are residents of Ecuador who hold a judgment of US$9.5 billion against the respondent, Chevron Corporation, obtained in 2011. The judgment was the result of a claim for environmental damage that the appellants allege was caused by Texaco Inc., a company that later merged with Chevron Corporation. The appellants are representative plaintiffs for approximately 30,000 indigenous Ecuadorian villagers who have been affected by the environmental pollution.

In 2012, the appellants commenced an action in the Ontario Superior Court of Justice for the recognition and enforcement of the Ecuadorian judgment against Chevron Corporation and Chevron Canada, a seventh level, indirect subsidiary of Chevron Corporation.

The defences raised by Chevron Corporation include that the Ecuadorian judgment cannot be recognized or enforced in Ontario because, as the United States District Court for the Southern District of New York found in 2014, it was obtained by fraudulent means.

Chevron Corporation and Chevron Canada moved for summary judgment, submitting that the shares and assets of Chevron Canada are not exigible pursuant to the Execution Act, R.S.O. 1990, c. E.24, and that there is no basis to pierce the corporate veils between Chevron Canada and its indirect parent Chevron Corporation, in order to make Chevron Canada's shares and assets available to satisfy the Ecuadorian judgment against Chevron Corporation.

Justice Glenn Hainey accepted these submissions, granted summary judgment in favour of Chevron Corporation and Chevron Canada, and dismissed the plaintiffs' claim against Chevron Canada.

The appellants appealed the order of Hainey J., and Chevron Corporation and Chevron Canada brought a motion for security for costs of the proceeding and the appeals.

The motion judge found that the appellants had not established that they were impecunious or that third party litigation funding was unavailable. Because she found that impecuniosity had not been established, the motion judge ruled that the appellants had to demonstrate that their claim has a good chance of success. On a review of the merits of the claim, she found that the appellants had not met that onus. She therefore ordered the appellants to post security for costs and the appellants moved before a full panel to vary or set aside that order.

Issues: Did the motion judge err in ordering that the appellants post security for costs before the appeals could be heard?

Holding: Motion granted.

Reasoning:

Yes. Chevron Corporation and Chevron Canada relied on rules 56.01(1)(a) and 61.06(1)(b) of the Rules of Civil Procedure in support of their motion for security for costs. In an appeal, rule 61.06(1)(b) authorizes the Court of Appeal to make such an order for security for costs of the proceeding and the appeal "as is just" where an order for costs could be made under r. 56.01.

The appellants move pursuant to s. 7(5) of the Courts of Justice Act to review and set aside the order.

In support of their motion, the appellants question whether the motion judge erred in principle in determining the justness of the order sought. An error in principle is one of the bases on which the court may interfere with a discretionary order.

Even if the requirements of the rule are met, there is no entitlement to security for costs and the court may still exercise its discretion to refuse to order security for costs. In determining whether an order should be made for security for costs, the "overarching principle to be applied to all the circumstances is the justness of the order sought". In deciding motions for security for costs, judges are obliged to first consider the specific provisions of the Rules governing those motions and then to consider the justness of the order sought in all the circumstances of the case, with a focus on the interests of justice. The court held that the motion judge failed to undertake the second part of that analysis in this case.

The Rules explicitly provide that an order for security for costs should only be made where the justness of the case demands it. The court stated that judges must be vigilant to ensure that an order that is designed to be protective in nature, is not used as a litigation tactic to prevent a case from being heard on its merits - even in circumstances where the other provisions of Rules 56 or 61 have been met.

Factors to consider in determining the justness of security for costs orders include: the merits of the claim, delay in bringing the motion, the impact of actionable conduct by the defendants on the available assets of the plaintiffs, access to justice concerns, and the public importance of the litigation.

For the following reasons, the court concluded that in the interests of justice, no order for security for costs ought to have been made, and set aside the motion judge's order for security for costs:

1. This is a public interest litigation. The appellants are seeking to enforce a judgment in which they have no direct economic interest. Funds collected on the judgment will be paid into a trust and net funds are to be used for environmental rehabilitation or health care purposes.

2. Although there was no direct evidence of impecuniosity before the motion judge, it would be highly impractical to obtain this evidence from the representative plaintiffs, let alone the 30,000 people who would indirectly benefit from the enforcement of the judgment. There can be no doubt that the environmental devastation to the appellants' lands has severely hampered their ability to earn a livelihood.

3. In contrast to the position of the appellants, Chevron Corporation and Chevron Canada have annual gross revenues in the billions of dollars. It is difficult to believe that either of these two corporations would require protection for cost awards.

4. While the question of whether the Ecuadorian plaintiffs have third party litigation funding available to...