Ontario Court Of Appeal Summaries (June 4 – June 8)

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

Off the top, I would like to congratulate our very own Thomas Durcan on successfully representing the respondents in Farmer v. 145 King Street West, 2018 ONCA 525, which resulted in a dismissal of the claim against our clients.

The theme of this week was real property. In an important environmental law decision involving the contamination of lands from dry cleaning solvents, Huang v. Fraser Hillary's Limited, the Court acknowledged an apparent divergence in the law of nuisance between Canada and England, but confirmed that in the absence of any binding Supreme Court of Canada authority to the contrary, foreseeability is not a necessary element of the tort of nuisance in Canada. The lower court's decision was upheld and the appeals by both sides were dismissed. This case, along with the Court's recent decision in Sorbam v. Litwack, 2017 ONCA 850, focuses liability on the polluter, rather than landlords and neighbours through whose lands contamination may pass but who were not themselves the source of the contamination.

In Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, the Court was tasked with determining the proper measure of damages for breach of a commercial lease. The tenant repudiated the lease. In mitigation of its damages, the landlord could not quickly re-let the premises, but also could not afford the carrying costs of the property. It was therefore forced to sell the property. The landlord claimed that it was forced to sell at below market value and claimed, and was awarded, these damages from the tenant. The landlord also claimed, and was awarded, damages for the lost capital appreciation of the property that the landlord would have enjoyed during the balance of the term of the lease. The Court of Appeal set aside both these elements of the damages awarded. Damages for lost capital appreciation were found not to meet the second branch of the two-part Hadley v. Baxendale foreseeability of damage test for breach of contract. It was not in the reasonable contemplation of the parties that the tenant would be responsible for lost capital appreciation upon breach. The Court also did not agree that the evidence supported a finding that the property had been sold for less than fair market value, and accordingly reduced the damage award in that regard as well. The damages were ultimately calculated as the lost rents during the balance of the term of the lease, minus any savings the landlord enjoyed by no longer owning the property (like the interest on its mortgage payments).

In Smiles First Corporation v. 2377087 Ontario Limited (International Union of Painters), the Court granted relief against a landlord's attempt to terminate Smiles First's tenancy on the basis that the landlord had not consented to an assignment of the head lease to Smiles First (which also had a sublease with the head tenant). Given that the landlord was not enforcing a right of re-entry, the Court held that this was not a case for relief from forfeiture under section 98 of the Courts of Justice Act, RSO 1990, c C43. Nevertheless, the Court found that Smiles First was entitled to possession until the end of the term of the sublease. The Court found that the application judge erred in law when he concluded that the sublease terminated upon the abandonment of the premises by the head tenant. The Court cited Kowalski and Shoota v. Gale, [1947] 1 DLR 354 (Ont CA) for the proposition that where a tenant surrenders a head lease to the landlord, the subleases with the surrendering tenant survive until the end of their stated terms and do not fall away with the head lease.

Other topics covered this week included the test required to establish a right to a prescriptive easement, striking pleadings without leave to amend, summary judgment in the commercial finance context and the prevailing issue of whether an order is final or interlocutory.

CIVIL DECISIONS

Farmer v. 145 King Street West, 2018 ONCA 525

[MacPherson, LaForme and Roberts JJ.A.]

Counsel:

Antal Bakaity, for the appellant

Thomas Durcan, for the respondents, 145 King Street West and 2748355 Canada Inc.

Jennifer A Reid, for the respondent, JM

Keywords: Torts, Negligence, Slip and Fall, Motor Vehicle Accident, Civil Procedure, Dismissal for Delay, Langenecker v. Sauvé, 2011 ONCA 903

Facts:

This is an appeal from a judgment dismissing the appellants' action against the respondents. The action arises out of two separate events in 2009 - an alleged slip and fall accident and a motor vehicle accident. After various procedural issues over the years, an order for a timetable was imposed on the parties. There was non-compliance with the timetable, leading the respondents to bring a motion to dismiss the action for delay. The appellant then initiated a motion to amend the timetable. The motions were heard together. The motion judge found that the plaintiff provided no explanation for the delay. The motion judge found that the plaintiff failed to rebut the presumption of prejudice and that there was a substantial risk that there could no longer be a fair trial. The motion judge granted the defendants' motion to dismiss the action for delay.

Issues:

(1) Did the motion judge err by failing to address first the appellant's motion to dispense with mediation?

(2) Did the motion judge err by reviewing the entirety of the case as opposed to examining the narrow circumstances of the events subsequent to the imposition of the timetable?

Holding: Appeal dismissed.

Reasoning:

(1) No. It is not clear from the record that the appellant ever made such a motion. In any event, even if it were made and were before the court, the motion judge was entitled to focus on the respondents' broader motion which also involved consideration of the mediation step in the litigation.

(2) No. The motion judge was obliged to take into account the entire background of the case to put the parties' motions into their proper context. However, she clearly focussed on the imposition of the timetable in 2015. Indeed, she described it as a "lifeline" that the appellant had failed to grasp.

It was open to the motion judge on this record to conclude that the appellant's delay was inordinate and inexcusable and that she failed to rebut the presumption of prejudice to the respondents. This gave rise to a substantial risk that a fair trial would not be possible because of the delay: see Langenecker v. Sauvé, 2011 ONCA 903, at paras. 6-7. The motion judge's findings are entitled to deference. There was no error that would permit appellate intervention.

Huang v. Fraser Hillary's Limited, 2018 ONCA 527

[Hourigan, Benotto and Fairburn JJ.A.]

Counsel:

Michael S Hebert and Cheryl Gerhardt McLuckie, for the appellant/respondent, EH

Jonathan O'Hara and Michael Rankin, for the appellant/respondent, Fraser Hillary's Limited

Christopher Reil and Jeremy Rubenstein, for the respondent, DH

Keywords: Torts, Nuisance, Negligence, Trespass, Environmental Law, Contamination, Statutory Liability, Environmental Protection Act, Sections 93 and 99(2), Rylands v. Fletcher, (1868) LR 3 HL 330, Smith v. Inco, 2011 ONCA 628, Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, Windsor v. Canadian Pacific Railway Ltd., 2014 ABCA 108

Facts:

Fraser Hillary's Limited ("Fraser") has operated a dry cleaning business since 1960. DH is the president and sole director of Fraser. DH is also the owner of a residential property that abuts Fraser's property. EH owns properties directly adjacent to Fraser, but not abutting DH's residential property.

During the period 1960 to 1974, solvents used in Fraser's dry cleaning operations spilled onto the ground. Trichloroethylene ("TCE") was an ingredient in the dry cleaning solution that Fraser used during this time. The environmental danger caused by this chemical was unknown at that time. In 2003, after environmental reports by the Ministry of Environment and Climate Change (MOECC) confirmed the soil and groundwater in EH's property have a concentration of TCE that exceeds MOECC standards, EH put Fraser on notice about the contamination of his properties. In 2013, the MOECC concluded that it was not receiving significant communications from Fraser and that its remedial efforts to date did not appear to have had a significant impact on the contamination. Consequently, the MOECC issued two Provincial Officer's Orders requiring Fraser to retain a qualified person and submit a detailed work plan to remediate the contamination. Fraser did not comply with either order and the MOECC initiated enforcement proceedings against Fraser under the Environmental Protection Act ("EPA").

EH sued Fraser and DH for damages suffered as a result of the contamination of his property. The trial judge held Fraser liable in nuisance and under the EPA for approximately $1.8 million in damages arising from contamination of EH's land by pollutants from Fraser's dry cleaning business. The claim against DH in his capacity as landowner of land adjacent to that owned by Fraser was dismissed.

Both Fraser and EH appealed the decision. Fraser submitted that the trial judge erred in finding it liable, both in nuisance and under the EPA, for the remediation costs. EH's primary submissions were that the trial judge erred in failing to find Fraser negligent, in failing to find DH liable in nuisance or in negligence, and in his assessment of damages.

Issues:

(1) Did the trial judge err in finding Fraser liable in nuisance?

(2) Did the trial judge err in not finding DH liable in nuisance?

(3) Did the trial judge err in finding Fraser liable under s. 99 of the EPA?

(4) Did the trial judge err in not finding Fraser and/or DH negligent?

(5) Did the trial judge err in not finding Fraser liable in trespass?

(6) Did the trial judge err in his assessment of damages?

Holding: Appeals dismissed.

Reasoning:

(1) No. Fraser argued that the trial...