Ontario Court Of Appeal Summaries (July 1 – 5, 2019)

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

Although it was a short week, the Court released a couple of decisions that may be of interest to our readers. For a great summary of the principles governing a motion for security for costs on appeal, see Brown J.A.'s analysis in Health Genetic Center Corp. (Health Genetic Center) v. New Scientist Magazine.

For those interested in contractual interpretation disputes, the Court set aside a partial summary judgment order and substituted an order dismissing the respondents' action for breach of contract and negligent misrepresentation in Environs Wholesale Nursery Ltd. v Environs Landscape Contracting Ltd., a case involving an Asset Purchase Agreement for the sale of tree farm assets. The Court also dealt with the proper interpretation of a lease governing a rooftop, and certain rights of way for operating a solar power generation project, in Nissa Corporation v. Enviro Park Solar Ltd. Both referred to the SCC's decision in Sattva.

Unfortunately, we do not have any inside information on whether a certain basketball player will be returning to the Toronto Raptors next year, but maybe that decision will be released next week!

CIVIL DECISIONS

Dare Human Resources Corporation v. Ontario (Revenue), 2019 ONCA 549

[Hourigan, Paciocco and Fairburn JJ.A.]

Counsel:

G. Sanders and A. Mar, for the appellants

J. Vlasis and J. Elcombe, for the respondent

Keywords: Labour and Employment, Payroll Tax, Temporary Workers, Placement Agencies, Tripartite Employment Relationship, Employer Health Tax Act, RSO 1990, c E.11, Public Service Employment Act, SC 2003, c 22, ss. 12 & 13, Financial Administration Act, RSC 1985, c F-11, Pointe-Claire (City) v. Quebec (Labour Court), [1997] 1 SCR 1015, IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216, 89 OR (3d) 641, International Brotherhood of Electrical Workers, Local 586 v. Dare Personnel Inc., [1995] OLRB Rep. 935 (Ont. LRB), aff'd [1996] OLRB Rep. 1014 (Ont. CJ (Div. Ct.))

FACTS:

The appellants are placement agencies based in Ottawa who supply temporary workers to the Public Service of Canada and federal agencies under agreements between the appellants and the Government of Canada. When clients put out a call for temporary workers, the appellants identify appropriately qualified persons from their inventory of candidates, ascertain the person's willingness to apply, and negotiate an hourly rate of pay for the placement. The appellants' primary function is to pay the worker and administer the payroll, on the basis of time sheets signed off by the client, and client manages and directs the workers while they carry out their assignment. However, both the appellants and the client may be involved in dealing with performance or discipline issues.

The respondent issued assessments directing the appellants to pay an employer health tax under the Employer Health Tax Act ("EHTA"). The appellants appealed to the Superior Court of Justice, arguing that they were not obliged to pay the tax because they were not the employers of the workers placed with their clients for temporary work.

In affirming the assessments, the appeal judge recognized that he was bound by the Supreme Court's "comprehensive and flexible approach" to determine whether an employment relationship exists. That approach was provided for in Pointe-Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015 and was subsequently adopted by the Ontario Court of Appeal in the context of the EHTA in IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216.

ISSUES:

(1) Did the appeal judge err in his interpretation of the EHTA?

(2) In the alternative, did the appeal judge err in his consideration of the evidence?

HOLDING:

Appeal dismissed.

REASONING:

(1) No. The appeal judge undertook a comprehensive review of all of the circumstances in concluding that the appellants were employers for EHTA purposes. There was no error in his analysis.

The appellants' first submission was that instead of answering the real issue of whether the appellants were employers for the purposes of the EHTA, the appeal judge wrongly determined the appellants' liability by default because he was of the view that someone must be the employer and chose between them and the Government of Canada. The workers, appellants, and the Government of Canada were involved in a tripartite relationship where the appellants and the Government of Canada each possessed some of the traditional attributes of an employer. The whole point of the analysis provided for in IBM is to determine the employer for EHTA purposes in such a tripartite arrangement. On the facts of this case, that had to be either the appellants or the Government of Canada.

The two-part test mandated by IBM first requires determination of whether an employment relationship existed and then whether the putative employers paid remuneration. The appellants argued that the appeal judge improperly focused on the fact that they paid remuneration, however this argument was rejected. The Court found that the appeal judge properly considered the issue of who paid remuneration as part of his analysis of whether an employment relationship existed. He did not rely on this fact exclusively. He carefully reviewed the statutory context including the provisions of the EHTA, noting that the legislation provides that the employer is the party who pays remuneration to the employee. Additionally, ss. 12 and 13 of the Public Service Employment Act, and the Financial Administration Act are inconsistent with the notion of the Government of Canada being the employer of the workers.

The appeal judge also analyzed the factual circumstances surrounding the tripartite relationship. The appellants were the only parties who had contractual relationships with the workers and the contractual documentation with the Government of Canada made clear that it was the government's intention that the workers be the employees of the placement agencies.

The appellants' second submission was that the appeal judge ignored a previous decision of the Ontario Labour Relations Board that held that they were not employers of the workers for labour legislation purposes. The Court found that no error of law was made as the appeal judge considered but declined to follow that decision. The Court agreed with the appeal judge's reasoning and affirmed that it was possible to find that a placement agency was an employer for taxation purposes and not labour relations purposes.

(2) No. The appellants and the Government of Canada each appeared to possess some of the traditional attributes of an employer, as is typical in a tripartite arrangement. The trial judge explicitly referenced recruitment, payroll administration, discipline issues, testing, and security clearances. After an analysis of all of the factors, the trial judge determined that the appellants were the employers, not the Government of Canada. As the appeal judge did not misapprehend the evidence or fail to consider any relevant factor, no error was made.

Environs Wholesale Nursery LTD. v. Environs Landscape Contracting LTD., 2019 ONCA 547

[Feldman, Paciocco and Fairburn JJ.A.]

Counsel:

C.G. Paliare and T.H. Lie, for the appellants

MacKenzie and B. MacKenzie, for the respondents

Keywords: Contract Law, Principles of Contractual Interpretation, Agreement of Purchase and Sale, Representations and Warranties, Breach Of Contractual Warranty, Negligent Misrepresentation, Practical Investigations, Economically Feasible Investigations, Pre-Contractual Representations, Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246, Trade Finance Solutions Inc. v. Equinox Global Ltd., 2018 ONCA 12, Actuate Canada Corp. v. Symcor Services Inc., 2016 ONCA 217, Golden Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460, Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.)

FACTS:

The appellants, Environs Landscape Contracting Ltd., and its officer and director, appeal a partial summary judgment order that they are liable for "breach of contractual warranty and/or negligent misrepresentation" to the respondents, Environs Wholesale Nursery Ltd., and its officers and directors.

That liability finding arose from an Asset Purchase Agreement (the "APA") relating to the sale of tree farm assets to the respondents. Attached to the APA was a "tree inventory" produced by the appellants, which contained inaccurate facts.

In July of 2012, the appellants accepted a conditional offer from the respondents to purchase the business assets. The conditional offer provided for a due diligence period during which the respondents were entitled to inspect the business assets and declare the offer to be null and void if not satisfied.

The respondents were provided with the tree inventory, setting out what the appellants believed to be the type, size and location of the saleable trees. The respondents were given access to the business, attending with an arborist. The arborist could have spent as much time as desired examining the plant stock, but only spent one and a half to two hours inspecting the trees.

The tree inventory attached to the APA noted 236,341 saleable trees on the business property. However, when the respondents conducted a post-closing count, they concluded there were 83,106 fewer saleable trees. The respondents contended that this shortfall was a breach of a material representation made by the appellants in the APA.

ISSUES:

(1) Did the motion judge err in finding that the APA contained at least a representation respecting the number of saleable trees?

(2) Did the motion judge err in finding liability for negligent misrepresentation?

HOLDING:

Appeal allowed.

REASONING:

(1) Yes. The Court found that the motion judge committed an extricable error of law by failing to apply the principles of contractual interpretation to s. 3.1(13) of the APA. Section 3.1(13) reads as...