Ontario Court Of Appeal Summaries (March 5 – March 9)

Good evening,

Below are this week's Court of Appeal summaries. Topics included security for costs, bankruptcy and insolvency, family law, real property & condo law, as well as several procedural decisions.

Douglas v. Stan Fergusson Fuels Ltd. is a rare example of the Court of Appeal convening a five-member panel in order to overrule itself. The case dealt with a subrogated insurer who sued the appellants for contamination of property resulting from a home oil spill. As is required under the law of subrogation, the insurer brought the claim in the name of its insured. However, at the time the claim was brought, the insured was an undischarged bankrupt who no longer had an ownership interest in the property. By virtue of the bankruptcy, title vested with the Trustee in Bankruptcy.

The appellants, who had been sued by the insurer for causing the spill, brought a motion to dismiss the claim on the basis that it was a nullity because the insured was bankrupt when it was commenced, and therefore the cause of action had vested in his Trustee in Bankruptcy, who was not the named plaintiff. The motion judge and the Divisional Court had both allowed the action to proceed, finding that the bankruptcy did not catch the insurer's subrogated claim.

However, a five-panel member of the Court of Appeal determined that the action was not properly constituted, as the cause of action vested in the Trustee when it was commenced. The action therefore was caught by the bankruptcy. The Court extensively discusses the doctrine of subrogation, as well as bankruptcy law principles regarding the vesting of property in a Trustee upon bankruptcy and the inability of undischarged bankrupts to bring claims in their name.

In coming to its conclusion, the Court overruled its own decision in Mariner Foods Ltd. v. Leo-Progress Enterprises Inc., 2017 ONCA 7, leave to appeal dismissed [2017] S.C.C.A. No. 64. The Court noted that its decision in that case was a short, five-paragraph endorsement disposing of an application to admit fresh evidence on appeal. The Court in that case had cited the Divisional Court's decision in this case for the principle that a subrogated claim brought by an insurer is not caught by a bankruptcy. Mariner was decided while the appeal in this case was pending, without reference to binding judicial authority or analysis. The five-judge panel was convened to permit the Court, if warranted, to over-rule Mariner to the extent that, in reliance on the Divisional Court's decision in this case, it stands for the principle that a subrogated claim brought by an insurer is not caught by a bankruptcy. In the Court's view, the broad principle enunciated in Mariner conflates the concepts of subrogation and assignment and is incorrect in law. Accordingly, the Court applied the per incuriam exception to stare decisis and overruled Mariner to the extent it stands for that principle.

The majority dismissed the claim outright, without giving the insurer the chance to regularize the pleading by substituting the name of the Trustee for the name of the insured. The minority would have allowed the insurer to bring a motion to the lower court to substitute the name of the Trustee for the name of the insured.

Wishing everyone an enjoyable March break.

John Polyzogopoulos

Blaney McMurtry LLP

jpolyzogopoulos@blaney.com

Tel: 416 593 2953

http://www.blaney.com/lawyers/john-polyzogopoulos

Civil Decisions:

Novak v. St. Demetrius (Ukrainian Catholic) Development Corporation, 2018 ONCA 219

[Juriansz, Miller and Nordheimer JJ.A.]

Counsel:

S Novak, acting in person

N Brankley, for the responding parties

Keywords: Civil Procedure, Appeals, Security for Costs, Chevron Corp. v. Yaiguaje, 2017 ONCA 827

Facts:

The appellant, Novak, brings this motion to review the decision of Epstein J.A. sitting as a single judge in motions court ordering her to post security of costs of the appeal in the amount of $20,000. The appellant confirms that she does not have the ability to pay any costs that may be awarded against her in the event that she loses the appeal. Further, she hints that she would refuse to pay costs in any event.

Issues:

(1) Did the motion judge err by ordering the appellant to post security for costs of the appeal in the amount of $20,000?

Holding: Motion dismissed.

Reasoning:

(1) No. The appeal has scant prospects of success and there is good reason to believe the appeal is frivolous. To succeed, the appellant would have to show that the trial judge made a palpable and overriding error in concluding she commenced the action out of time, and also in dismissing her case on the merits.

Although Justice Epstein's order was made prior to the release of Chevron Corp. v. Yaiguaje, 2017 ONCA 827, which was included in the appellant's materials, the decision did not alter the established test for ordering security for costs. The established test requires a judge, after analysing the specific factors spelled out in the rules, to consider the overall justness of the order sought. Epstein J.A. did not err in determining that ordering security for costs would be just. Unlike in Yaiguaje v. Chevron Corp, the appellant in this case has a direct economic interest in the appeal. The respondent is not a global enterprise but a not-for-profit senior citizens care centre operated by a church. Unrecoverable costs will reduce the respondent's resources it can dedicate to the care of its clients. There is no indication the respondent sought security for costs as a litigation tactic to end the appeal. The appeal raises no overarching, important, or novel issue. There is no apparent overriding public interest in allowing the appeal to proceed without the posting of security for costs.

Hampton Securities Limited v. Dean, 2018 ONCA 216

[Fairburn J.A]

Counsel:

S J Erskine and D Barbaree, for the moving party

C J Somerville and D Hooper, for the responding party

Keywords: Civil Procedure, Appeals, Stay Pending Appeal, Rules of Civil Procedure, Rule 63.02(1), RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311

Facts:

The applicant is a registered investment firm. The respondent was employed at the firm as a trader. Her employment ended in 2009. The applicant maintains that the respondent was terminated with cause. The respondent maintains that she was constructively dismissed. On the day following the events leading to the respondent's termination, the applicant filed a Notice of Termination (NOT) on the National Research Database (NRD). The NRD is maintained by the Investment Industry Regulatory Organization of Canada (IIROC). The NOT read: "Dismissed for cause...Failed to follow trading desk policies & procedures- unauthorized trading resulting in losses." The applicant commenced an action against the respondent, claiming damages from losses she incurred as a trader. The respondent defended the action and counterclaimed for constructive dismissal and defamation. The trial judge found that the respondent had been constructively dismissed and defamed and ordered that the NOT be corrected. The applicant appealed that finding. This motion was for an order staying the trial judge's order to correct the NOT, pending the determination of the appeal.

Issues:

(1) Should the order requiring that the NOT be changed be stayed until after disposition of the appeal?

Holding:

Motion dismissed.

Reasoning:

(1) No. Pursuant to rule 63.01(1), the monetary award against the applicant is automatically stayed pending resolution of the appeal. This motion relates to the applicant's request under rule 63.02(1), that the trial judge's order to amend the NOT be stayed pending disposition of the appeal. The test for a stay of a mandatory order pending appeal is the same as the test in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 for an injunction: First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

The applicant raised numerous grounds of appeal. For purposes of this motion, he focusses on the suggestion that the trial judge erred in finding that the NOT was defamatory, that the defamation claim was properly met by the defence of qualified privilege, and that the trial judge exceeded his jurisdiction by making the mandatory order to amend the NOT. The Court found that this was sufficient to satisfy the first stage of the analysis.

The applicant argued that the appeal could be rendered moot if the NOT were to be amended, as the order rests on a finding of defamation, which is subject to the appeal. The applicant argues that this would cause irreparable harm to its interests. The Court of Appeal disagreed, noting that if the appeal succeeds the NOT can simply be changed back to what it was originally or amended to reflect any remedy granted. Accordingly, irreparable harm was not established. Not having established irreparable harm, the applicant could not establish that the balance of convenience was in its favour either. The motion for a stay of the mandatory aspect of the trial judge's order was therefore dismissed.

Susin v. Susin, 2018 ONCA 220

[Fairburn J.A.]

Counsel:

John Susin, in person

Sarah Whitmore, duty counsel

Margaret Hoy, via...