Ontario Court Of Appeal Summaries (December 3 – 7, 2018)

Good evening,

Following are our summaries of the civil decisions of the Court of Appeal for Ontario released this past week.

Topics covered included:

1. A review of the conflicting case law relating to the deduction of statutory accident benefits ("SABs") paid before a trial from the amount of tort damages awarded at trial. The Court rejected the approach that requires temporal and qualitative matching of SABs to heads of tort damages (the strict matching approach), finding that that approach was based on an earlier, outdated statutory scheme and case law, the authority of which had been overtaken by amendments to the legislation. The Court instead opted for a "silo" approach, which requires the tort award only to match generally with the broad corresponding SABs categories or silos.

2. A review of the test for lifting an automatic stay pending appeal of a money judgment.

3. Several appeals from motions for summary judgment in the context of equitable set-off, agreements of purchase and sale of land, and a matrimonial proceeding.

4. Discoverability.

5. A pleadings motion regarding whether lawyers owe a duty to third parties to verify the accuracy of the information contained in affidavits they draft or commission (no).

6. Setting aside separation agreements for non-disclosure under section 56(4) of the Family Law Act.

7. The Court's consideration of a series of questions concerning successive employment contracts executed after the sale of a business partially owned by the employee.

8. We included a summary of provincial/regulatory offences decision in the environmental context. The Court made it clear that minimum fines are not to be varied by a trial judge using their sentencing discretion except in very exceptional circumstances. The decision will have broad application across all manner of regulatory offences moving forward, from environmental to workplace safety, and a whole host of other contexts.

Wishing everyone a pleasant weekend.

John Polyzogopoulos

Blaney McMurtry LLP

416.593.2953 Email

CIVIL DECISIONS

Popa v. Popa, 2018 ONCA 972

[Lauwers J.A. (Motions Judge)]

Counsel:

18. Gilliland and C. Groper, for the moving parties

19. Cadili, for the responding parties

    Keywords: Civil Procedure, Recognition of Foreign Judgments, Orders for the Payment of Money, Stay Pending Appeal, Lifting of Stay, Rules of Civil Procedure, Rule 63.01, S.A. Horeca Financial Services v Light, 2014, ONCA 811

    FACTS:

    This is a motion to lift an automatic stay pending appeal.

    In the court below, the respondents on appeal/moving parties on this motion obtained an order recognizing and enforcing a Kentucky, USA, court judgment. In the course of her reasons, the application judge set out at length the basis for the decision of the Kentucky court, and added several of her own observations. The respondents on this motion appealed the judgment enforcing the Kentucky judgment.

    On appeal, the appellants/responding parties on this motion took no issue with the application judge's recital of the facts. Of particular importance, the application judge stressed that the appellant's own testimony in the Kentucky action corroborated the allegation that he was perpetuating a fraud on the applicants and the court. Among other things, he did so by breaching a settlement agreement and depleting the value of the corporate appellants in order dissipate funds and impede the respondents from collecting amounts awarded.

    ISSUE:

    (1) Should the Court of Appeal lift the automatic stay of proceedings pending appeal?

    HOLDING:

    Motion granted.

    REASONING:

    (1) Yes. The Court of Appeal explained that the test for lifting an automatic stay requires review of three factors: the financial hardship to the respondent if the stay is not lifted; the ability of the respondent to repay any amounts it receives as a result of the lift of the stay or its ability to provide security for the amount; and the merits of the appeal.

    The Court of Appeal swiftly disposed of the first two factors. First, if the stay were not lifted, there would be a serious risk that the funds in question would be siphoned off and the interests of the moving parties would be defeated. Second, the moving parties proposed that third parties affected by the order be obliged to hold funds covered by the order until further order of the Court of Appeal. Both of these factors therefore weighed in the moving parties' favour.

    Regarding the merits of the appeal, the Court of Appeal rejected all four grounds on which the appellants alleged that the application judge erred, noting that the application judge's reasons expressly and fully addressed each of the proposed grounds of appeal.

    Lastly, the Court of Appeal rejected the appellants' arguments with respect to the terms of the order lifting the stay, noting that they provided no evidence related to their operating needs or margins to assist in crafting terms for the order, and that a previous version of such an order produced little return to the moving parties.

    1652620 Ontario Inc. v. Cornerstone Builders Ltd., 2018 ONCA 973

    [Feldman, van Rensburg and Nordheimer JJ.A.]

    Counsel:

20. Storms and C. Hammond, for the appellant

18. S. Baldwin, for corporate respondent A, respondent B and corporate respondent C

    Keywords: Contracts, Debtor-Creditor, Promissory Notes, Non-competition Agreements, Breach of Fiduciary Duty, Equitable Set-Off, Civil Procedure, Summary Judgment, Stays, Striking Pleadings, Appeals, Failure to Give Reasons, Rules of Civil Procedure, Rules 21.01 or r. 25.11, Iraco Ltd. et al. v. Staiman Steel Ltd. (1986), 54 O.R. (2d) 488 (H.C.J.), aff'd (1987), 62 O.R. (2d) 129 (C.A.), Jones Collombin Investment Counsel Inc. v. Fickel, 2016 ONSC 6536

    FACTS:

    Corporate respondent A was the personal corporation of respondent B. In 2005, corporate respondent A became a shareholder in the appellant and a shareholders' agreement was signed which provided that upon ceasing to be a shareholder, respondent B would sign a non-competition agreement. Respondent B had been employed by the appellant since 1995. In 2011, the appellant purchased the shares held by corporate respondent A and gave a promissory note for $1,344.540. The promissory note was to be paid in monthly installments of $10,000, did not bear interest, and was not a demand promissory note. After a falling out, respondent B left his employment and established his own business, corporate respondent C. No non-competition agreement was signed. That new company was alleged to have competed with the appellant. Subsequently, the appellant stopped making the monthly payments on the promissory note. Corporate respondent A commenced this action seeking the payment of the remaining amount under the promissory note. The appellant counterclaimed alleging that respondent B, through corporate respondent C, had unfairly competed with the appellant in breach of an alleged non-competition agreement and in breach of respondent B's fiduciary duty.

    Respondent A brought a motion for summary judgment which was granted by the motion judge, who found no genuine issue for trial of the monies due under the promissory note. However, in the absence of any acceleration clause he concluded he could not award judgment for the payments that were not yet due. The motion judge also struck out various allegations contained in the counterclaim that he concluded were untenable on the evidence before him. The appellant claimed an equitable set-off of the amounts under the promissory note against the damages it incurred as a result of the improper conduct of the respondents. The motion judge rejected this position and found that equitable set-off was not available where a claim is made on a bill of exchange such as a promissory note. The motion judge also decided not to stay execution of the judgment awarded pending prosecution of the counterclaim. Finally, the motion judge adjourned the claim and the motion for summary judgment for approximately six months to see if future payments would be made.

    ISSUES:

    (1) Did the motion judge err in finding equitable set-off was not available?

    (2) Did the motion judge err in refusing to stay the execution of the judgment pending prosecution of the counterclaim?

    (3) Did the motion judge err in adjourning the claim and the motion for summary judgment?

    (4) Did the motion judge err in striking out part of the counterclaim in the absence of a motion to strike?

    HOLDING:

    Appeal allowed in part.

    REASONING:

    (1) No. The Court did not see any error in the motion judge's conclusion.

    (2) Yes. The Court found that the failure of the motion judge to give any reasons for his decision not to stay execution of the counterclaim was an error in principle. The two claims were interrelated and both arose out of the relationship between the parties. In those circumstances, a stay ought to have been granted.

    (3) Yes. The Court stated the motion judge did not have jurisdiction to keep alive a summary judgment motion that had been finally determined.

    (4) Yes. The Court stated that it was not open to the motion judge to strike out portions of the counterclaim in the absence of a motion to strike. In addition, some of the struck out portions could have been seen as particulars of the appellant's breach of fiduciary duty claim, which it would be entitled to explore on discovery.

    Cadieux v. Cloutier, 2018 ONCA 903

    [Strathy C.J.O., Hoy A.C.J.O., Feldman, Brown and Paciocco JJ.A.]

    Counsel:

    D.A. Zuber and J.J.A. Henderson, for the appellant/respondent by way of cross-appeal

1. Rouben and E. Lachaîne, for the respondents/appellants by way of cross-appeal

11. Bonn, for the intervener Ontario Trial Lawyers Association

    Keywords: Torts, Negligence, MVA, Several Liability, Damages, Apportionment, Statutory Accident Benefits, Pierringer Settlements, Non-Settlement Defendants, Pre-Judgment Interest, Costs, Offers to Settle, Statutory Interpretation, Insurance Act, RSO 1990, c I.8, s. 267, Carroll v McEwen, 2018 ONCA 902, Bannon v McNeely (1998), 38...