COURT OF APPEAL SUMMARIES (NOVEMBER 21, 2022 – NOVEMBER 25, 2022)

November 27, 2022

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Good afternoon.

Following are this week’s summaries of the Court of Appeal for Ontario for the week of November 21, 2022.

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The Court heard three appeals in class proceedings which all related to whether the tort of intrusion upon seclusion is a viable claim against custodians of personal information whose databases and security protocols are breached by unknown third party hackers. The Court ultimately held that while such custodians of personal data can be sued in negligence, contract or breach of statutory obligations to protect personal information, they cannot be sued for the tort of inclusions upon seclusion.

In National Organized Workers Union v. Sinai Health System, the union sought injunctive relief to prohibit the respondent from enforcing a mandatory vaccination policy pending a related grievance arbitration. The Court held that the application judge did not err in refusing to exercise her discretion to use the residual jurisdiction of the Superior Court to grant the injunctive relief. She correctly found that there was no remedial gap in the remedies available to a labour arbitrator, who could award reinstatement and compensation for lost wages to workers who were suspended or terminated for failing to abide by an unlawful vaccination policy.

The Court in Hybrid Financial Ltd. v. Flow Capital Corp. considered whether a buyout provision in a financing agreement, resulting in the appellant having to pay several times the initial loan amount received, constituted a violation of the usury laws set out in s. 347 of the Criminal Code. The Court found that the application judge had erred in finding that the Agreement’s buyout provision was not captured by s. 347, which makes it illegal to charge interest at rate of 60% or more per year. The Court must look to the substance of the transaction, rather than the form or characterization of payments.

In Beaudin v. Travelers Insurance Company of Canada, the Court upheld the Divisional Court’s decision holding that the respondent, who was catastrophically injured in a dirt bike accident in a closed course competition, was eligible for statutory accident benefits under the Statutory Accident Benefits Schedule of the Insurance Act. The Court held that the Divisional Court’s decision was consistent with the case law and the modern approach to statutory interpretation in deciding that the respondent’s injury occurred as a result of an “accident” through the use of an “automobile” as defined in the Insurance Act.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.597.4895 Email

Civil Decisions

Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 807

Keywords: Civil Procedure, Orders, Enforcement, Contempt, Sentencing, Fines, Fresh Evidence, R. v. Palmer, [1980] 1 S.C.R. 759, The Corporation of the Township of King v. 11547372 Canada Inc. et al, 2022 ONSC 2261, College of Optometrists of Ontario v. SHS Optical Ltd., 2008 ONCA 685

Studley v. Studley, 2022 ONCA 810

Keywords:Family Law, Real Property, Marriage Property, Remedies, Constructive Trust, Resulting Trust, Civil Procedure, Amending Pleadings, Limitation Period, Jurisdiction, Family Law Act, R.S.O. 1990, c. F.3, s. 7(3)(a), Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., s. 4, Real Property Limitations Act, R.S.O. 1990, c. L.15, s. 4, s. 23, Family Law Rules, O. Reg. 114/99, s. 5(1), r. 2(5)(a), r. 11(3), Pecore v. Pecore, 2017 SCC 17, Moghimi v. Dashti, 2016 ONSC 216, Greenglass v. Greenglass, 2010 ONCA 675, McConnell v. Huxtable, 2014 ONCA 86, Bakhsh v. Merdad, 2022 ONCA 130, 1250140 Ontario Inc. v. Bader, 2022 ONCA 197

National Organized Workers Union v. Sinai Health System, 2022 ONCA 802

Keywords: Labour Law, Labour Relations, Labour Arbitration, Grievances, Jurisdiction, Discretion, Injunctions, Vaccination Policies, Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A, ss. 48, 49, St. Anne Nackawic Pulp & Paper v. CPU, [1986] 1 S.C.R. 704, Weber v. Ontario Hydro, [1995] 2 S.C.R. 929, Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, Northern Regional Health Authority v. Horrocks, 2021 SCC 42, Ontario Nurses Assn. v. Toronto Hospital, [1996] O.J. No. 3861 (Gen. Div.), Rattai v. Hydro One Inc., 2005 CanLII 13786, Housen v. Nikolaisen, 2002 SCC 33, H.B. Fuller Company v. Rogers (Rogers Law Office), 2015 ONCA 173, Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, Wojdan v. Canada (AG), 2021 FC 1341, Lachance c. Procureur général du Québec, 2021 QCCS 4721, Kotsopoulos v. North Bay General Hospital, [2002] O.J. No. 715 (S.C.), Lavergne-Poitras v. Canada (AG), 2021 FC 1232, Amalgamated Transit Union, Local 113 v. Toronto Transit Commission, 2017 ONSC 2078, Vaughan v. Canada, 2005 SCC 11, RJR-MacDonald Inc. v. Canada (AG), [1994] 1 S.C.R. 311, Toronto Catholic District School Board v. Ontario English Catholic Teachers’ Association, 2021 CanLII 44852 (Ont. L.A.), Lakehead University v. Lakehead University Faculty Association, 2018 CanLII 112407 (Ont. L.A.), Milka Cavic v. Canadian Union of Public Employees Union Local 905, 2022 CanLII 5015 (Ont. L.R.B.), James T. Casey and Ayla Akgungor, ed., Remedies in Labour, Employment and Human Rights Law, loose-leaf (Toronto: Carswell, 2022).

Rosehaven Homes Limited v. Aluko, 2022 ONCA 817

Keywords:Civil Procedure, Summary Judgment, Evidence, Admissibility, Expert Evidence, Damages, Rules of Civil Procedure, r. 53.03, Form 53 Acknowledgment of Expert’s Duty, Karami v. Kovari, 2019 ONSC 637

Obodo v. Trans Union of Canada, Inc., 2022 ONCA 814

Keywords: Torts, Negligence, Intrusion Upon Seclusion, Breach of Privacy, Vicarious Liability, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Appeals, Jurisdiction, Final or Interlocutory, Class Proceedings Act, 1992, S.O. 1992, c. 6, ss. 30 and 39(1), Courts of Justice Act, R.S.O. 1990, c. C.43, s. 6(1)(b), Civil Code of Quebec, CQLR c CCQ-1991, art. 25 and 37, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Winder v. Marriott International, Inc., 2022 ONSC 390, Jones v. Tsige, 2012 ONCA 32, Owsianik: Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, R. v. Meltzer, [1989] 1 S.C.R. 1764, Cavanaugh v. Grenville Christian College, 2013 ONCA 139, Bazley v. Curry, [1999] 2 S.C.R. 534, 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59

Winder v. Marriott International, Inc., 2022 ONCA 815

Keywords: Torts, Intrusion Upon Seclusion, Privacy, Civil Procedure, Class Proceedings, Certification, Reasonable Cause of Action, Rules of Civil Procedure, r. 21.01(1)(a), Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Das v. George Weston Ltd., 2018 ONCA, Jones v. Tsige, 2012 ONCA 32 1053

Hybrid Financial Ltd. v. Flow Capital Corp., 2022 ONCA 820

Keywords: Contracts, Interpretation, Debtor-Creditor, Criminal Law, Interest, Usury, Criminal Rate of Interest, Criminal Code, R.S.C., 1985, c. C-46, s. 347, Garland v. Consumers’ Gas Co., [1998] 3 S.C.R. 112, Degelder Construction Co. v. Dancorp Developments Ltd., [1998] 3 S.C.R. 90, Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, Mira Design Co. v. Seascape Holdings Ltd. (1981), 34 B.C.L.R. 55 (S.C.), Cirius Messaging Inc. v. Epstein Enterprises Inc., 2018 BCSC 1859, Nelson v. C.T.C. Mortgage Corp. (1984), 59 B.C.L.R. 221 (C.A.), 16 D.L.R. (4th) 139, aff’d [1986] 1 S.C.R. 749

Beaudin v. Travelers Insurance Company of Canada , 2022 ONCA 806

Keywords: Contracts, Insurance, Coverage, Statutory Interpretation, Automobile Insurance, Statutory Accident Benefits, Definition of “Accident”, Definition of “Automobile”, Catastrophic Injury, Insurance Act, R.S.O. 1990, c. I.8, s. 2, Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25, s. 11(6), Licence Appeal Tribunal Act, s. 1, Highway Traffic Act, R.S.O. 1990, c. H.8, Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, s. 2(1)5, General Regulation, R.R.O. 1990, Reg. 863 of Off-Road Vehicles Act, R.S.O. 1990, c. O.4, s.224(1),Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Adams v. Pineland Amusements Ltd., 2007 ONCA 844, Benson v. Belair Insurance Company Inc., 2019 ONCA 840, Matheson v. Lewis, 2014 ONCA 542, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, Bristol-Myers Squibb Co. v. Canada (Attorney General), 2005 SCC 26, Haliburton (County) v. Gillespie, 2013 ONCA 40

Owsianik v. Equifax Canada Co., 2022 ONCA 813

Keywords: Torts, Intrusion Upon Seclusion, Breach of Privacy, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 21.01(1)(a), Jones v. Tsige, 2012 ONCA 32, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Winder v. Marriott International, Inc., 2022 ONSC 390, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Bowman v. Ontario, 2022 ONCA 477, Agnew-Americano v. Equifax Canada Co., 2019 ONSC 7110, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Bennett v. Lenovo (Canada) Inc., 2017 ONSC 1082, Kaplan v. Casino Rama, 2019 ONSC 2025, Tucci v. Peoples Trust Company, 2020 BCCA 246, Nelles v. Ontario, [1989] 2 S.C.R. 170, Ontario (Attorney General) v. Clark, 2021 SCC 18, Arora v. Whirlpool Canada LP, 2013 ONCA 657, Del Giudice v. Thompson, 2021 ONSC 5379, Piresferreira v. Ayotte, 2010 ONCA 384, Demme v. Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503, Merrifield v. Canada (Attorney General), 2019 ONCA 205, Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, P. Perl (Exporters) Ltd. v. Camden London Borough Council, [1983] EWCA Civ 9, [1984] Q.B. 342, Allgood v. Paperlesspay Corp., 2022 WL 846070 (M.D. Fla.); Burton v. MAPCO Exp., Inc., 47 F. Supp. (3d) 1279 (N.D. Ala. 2014), Stephens v. Availity, 2019 WL 13041330 (M.D. Fla.), Purvis v. Aveanna Healthcare, LLC, 563 F. Supp. (3d) 1360 (N.D. Ga. 2021), Damner v. Facebook Inc., 2020 WL 7862706 (N.D. Cal.), Savidge v. Pharm-Save, Inc., 2021 WL 3076786 (W.D. Ky.), McKenzie v. Allconnect, Inc., 369 F. Supp. (3d) 810 (E.D. Ky. 2019), Carter v. Innisfree Hotel, Inc., 661 So. (2d) 1174 (Ala. 1995), re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F. (3d) 625 (3rd Cir. 2017), Moore v. New York Elevated Railroad Co., 130 N.Y. 523 (1892), Remijas v. Neiman Marcus Group, LLC, 794 F. (3d) 688 (7th Cir. 2015), Thetford v. City of Clanton, 605 So. (2d) 835 (Ala. 1992), Stephen G.A. Pitel & Matthew B. Lerner, “Resolving Questions of Law: A Modern Approach to Rule 21” (2014) 43:3 Adv. Q. 344, Philip H. Osborne, The Law of Torts, 6th ed. (Toronto: Irwin Law, 2020), at p. 268, Lewis N. Klar & Cameron Jefferies, Tort Law, 6th ed. (Toronto: Carswell, 2017)

Short Civil Decisions

Amerato v. TST-CF Solutions LP , 2022 ONCA 808

Keywords: Employment Law, Wrongful Dismissal, Damages, Vacation Pay, Canada Labour Code, R.S.C. 1985, c. L-2, s. 188

Benson v. Cichorczyk, 2022 ONCA 800

Keywords: Torts, Negligence, Damages, Punitive Damages

Cardinal Investments Inc. v. Ultra Depot (Ontario) Inc., 2022 ONCA 827

Keywords: Civil Procedure, Striking Pleadings, Rules of Civil Procedure, rr. 21, 26.01, and 25.06(8)

CIVIL DECISIONS

Caledon (Town) v. Darzi Holdings Ltd., 2022 ONCA 807

[Paciocco, George and Favreau JJ.A.]

Counsel:

K. D. Sherkin and K. Sonshine, for the appellants

M. Winch and R. Sniderman, for the respondent The Corporation of the Town of Caledon

A. Hershtal, for the respondent B. R.

facts:

The appellants, Darzi Holdings Ltd. (“Darzi”) and Rafat General Contractor Inc. (“Rafat”) were closely held corporations controlled by the appellant, L.R.S. Rafat, a construction company, carried on business on properties owned by Darzi in the Town of Caledon (the “Town”).

In 2017, under L.R.S.’ direction, Rafat was parking hundreds of vehicles outdoors on Darzi’s properties in violation of a city by-law, even after having been fined for doing so. Rafat also trespassed on adjacent Town property and illegally constructed a fence on the Town’s land.

On September 12, 2019, the appellants were enjoined to: (1) stop trespassing on the Town’s land; (2) remove the fence by January 11, 2020; and, (3) refrain from using Darzi’s properties for outdoor vehicle storage (the “Order”).

On February 8, 2021, after continued non-compliance with terms (2) and (3) of the Order, the appellants were found in civil contempt. That finding was not appealed. The fence was removed soon after, on March 25, 2021, while sentencing on the finding of civil contempt was pending.

On December 9, 2021, the sentence for civil contempt of a $1,000,000 fine was imposed.

issues:

(1) Should the Court grant the appellant’s application for leave to admit fresh evidence on appeal?

(2) Did the sentencing judge err in their consideration of mitigating circumstances?

(3) Did the sentencing judge err in determining the appropriate fine?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court noted that the appellants sought to impugn the conduct of their trial counsel who had ceased representing the appellants months before the sentencing hearing where they were represented by other counsel who presented evidence during the sentencing hearing. Because this was a sentencing appeal, with due diligence, any fresh evidence the appellants sought to admit on appeal could have been presented at the sentencing hearing by their new counsel, who was not the subject of an ineffective assistance of counsel appeal. The Court stated that the due diligence requirement of the “Palmer test” (R. v. Palmer) for the admission of fresh evidence was not overcome by alleging the ineffective assistance of trial counsel, B.R., for having failed to present this evidence.

The Court further noted that some of the evidence offered as fresh evidence was before the sentencing judge or was offered to prove facts that the sentencing judge accepted. The Court ultimately held that none of the proposed evidence was reasonably capable of affecting the result of the sentencing. For example, the fact that trial counsel did not bring an application to vary the injunction could not reasonably have affected the outcome, given that the grounds available to support a variation application did not forestall the sentencing judge’s conclusion at the time of sentencing that the breaches were flagrant, protracted, deliberate and profitable.

Lastly, the Court noted that the appellants submitted that L.R.S’ trial counsel provided ineffective assistance by crafting inadvisable statements in his affidavit. The Court held that the proposed evidence could not alter the outcome. Although trial counsel may have drafted L.R.S’ affidavit, L.R.S. swore its contents to be true and offered no evidence that he did not understand what he was swearing to. Moreover, L.R.S. reaffirmed his affidavit evidence during oral cross-examination. Accordingly, the Court dismissed the application for leave to admit fresh evidence.

(2) No.

The Court held that the sentencing judge committed no palpable and overriding error in finding that the appellants had exaggerated their compliance efforts, and there was no basis for concluding that he failed to consider the efforts that the appellants claim to have undertaken. The Court noted that the sentencing judge was entitled to accept evidence and conclude that the profit that was earned by the appellants was earned in defiance of the court order.

(3) No.

The Court rejected the submission that the sentencing judge erred by equating the fine he selected with the profit earned. The Court held that the sentencing judge used the profit earned as a “benchmark”, as he was entitled to do. The Court agreed with the observation made by Akbarali J. in The Corporation of the Township of King v. 11547372 Canada Inc. et al, that “when determining a fit fine, the court should consider the economic circumstances of the contemnor, and the amount of fine that will have enough of an impact on the contemnor to induce future compliance with the court’s orders”. The Court concluded that this included consideration of whether the needs of sentencing can be met without requiring disgorgement through a fine of all or a significant part of the profit attributable to the breach.

The Court held that the sentencing judge reasonably found the appellants’ disobedience of the Court order to be flagrant, protracted, deliberate and profitable. The Court stated that the sentencing judge clearly reasoned that the appellants would not be deterred from future breaches if permitted to profit from their conduct, given the history of this matter. The Court was unpersuaded that the fine was unfit.

Studley v. Studley, 2022 ONCA 810

[Lauwers, Roberts and Trotter JJ.A]

Counsel:

E. Birnboim, M. Crampton and H. Corrigan, for the appellant

D. Winnitoy, for the respondent

facts:

The appellant and the respondent were married in May 1995 and separated in August or September 2015. The appellant commenced family law proceedings in October 2015, and the matter remained dormant until 2019. Three properties were acquired during the marriage; (1) the matrimonial home, (2) a cottage, and (3) a property in Florida. Although the three properties were in the appellant’s name, the funds to purchase each of them came from the respondent. The respondent was aware of the sale of each property at the time it was sold.

The appellant appealed an order granting the respondent leave to amend his Answer seven years after filing and allowing him to advance constructive and resulting trust claims in the three properties which were purchased during the marriage.

issues:

(1) Did the motion judge err by granting leave because the appellant was prejudiced by the timing of the amendment?

(2) Did the motion judge err by granting leave because the respondent’s claims were statute-barred?

(3) Did the motion judge err by granting leave because with respect to the Florida property, the Ontario courts have no jurisdiction to make an in rem order in relation to land in a foreign jurisdiction?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court found no error in the motion judge’s decision to permit the respondent to amend his answer. The appellant attempted to argue, on three grounds, that permission to amend would disadvantage her in a way that could not be compensated with costs, and accordingly, would go against r.11(3) of the Family Law Rules.

First, the appellant submitted that there was prejudice arising from her claimed inability to access documents that were essential to meet the respondent’s constructive and resulting trust claims. The Court disagreed, stating that there was no dispute that the properties in question were purchased with funds earned from the respondent’s company. The Court found that the appellant was unable to point to any evidence related to the proposed amendments that the appellant would be unable to locate or recall due to the passage of time.

Second, the appellant contended that prejudice could be presumed due to the unexplained delay. The Court rejected this submission, finding that it was the appellant who had failed to promptly move the litigation forward since October 2015, placing much of the delay on the appellant. As the respondent was not seeking to amend his Answer on the eve of trial, like in Moghimi v. Dashti, the Court found that the appellant could not be considered to have been taken by surprise at the last minute. The next scheduled event was instead a settlement/trial management conference.

Finally, the appellant submitted she would be prejudiced by the fact that, if the respondent was allowed to assert his trust claims after the general two-year limitation period, she will be unable to make corresponding claims on his business interests. The Court found that this submission had no merit as, had there been a basis for such claims, they would have been made at the outset of the litigation. The Court found that differing limitation periods could not alone create prejudice.

(2) No.

The appellant contended that as the trust claims were, in essence, equalization claims, the applicable limitation period was two years. The Court rejected this argument and held that the applicable limitation period was 10 years, as it involved a trust interest in land, pursuant to s. 4 of the Real Property Limitations Act (“RPLA”).

The Court further rejected the appellant’s submission that this was not an action to “recover any land”, as the land had been sold. The Court found that, although the trust claim was not an alternate claim, the claim fell within the scope of a claim for damages sheltered under a trust claim. The Court noted that a contrary interpretation might incentivize strategic, covert sales designed to reduce the limitation period from 10 years to two, extinguishing an otherwise viable claim.

The appellant also contended that the motion judge should not have determined the limitations issue on a final basis because it prematurely extinguished her substantive defence to the respondent’s new claims. The Court disagreed, as the appellant failed to identify any “facts in dispute” that prevented the motion judge from determining the limitations issue. Further, the Court held it was desirable for the motion judge to resolve the issue sooner, rather than later, given the slow pace of the litigation.

(3) No.

Lastly, the appellant submitted that the motion judge made a further error in relation to the Florida property because the Ontario courts have no in rem jurisdiction over the Florida property. The Court held that it was not necessary for the motion judge to address this issue as it was not relevant to the respondent’s request for leave to amend his Answer.

National Organized Workers Union v. Sinai Health System, 2022 ONCA 802

[van Rensburg, Huscroft and Copeland JJ.A.]

Counsel:

I.J. Perry and M. Joseph, for the appellant

B.R. Jones, E.C. Jamieson-Davies, and R.M. Counsell, for the respondent

F. Cesario, E.A. Vaughan, and D.L. Winkel, for the intervener

facts:

On August, 17, 2021, Ontario’s Chief Medical Officer of Health mandated every healthcare sector employer to develop and implement a policy that required hospital employees to provide their vaccination status to their employer and, if not fully vaccinated, to submit to regular testing and reporting. The respondent complied and implemented a “vaccinate or test” policy. However, on October 26, 2021, the respondent then implemented a workplace mandatory vaccination policy (the “Policy”). The Policy required employees to be fully vaccinated against COVID-19 by December 9, 2021, or their employment would be terminated, subject to medical or non-medical exemptions.

On November 3 and 4, 2021, the appellant filed a number of grievances against the Policy. The grievances alleged that the Policy was unreasonable, and that it violated various articles of the collective agreement as well as various pieces of legislation. On November 5, 2021, the appellant brought an application seeking an injunction to enjoin the respondent from enforcing the Policy pending arbitration.

The application judge dismissed the application for an interlocutory injunction. She was not satisfied that it was appropriate for the Superior Court to exercise its residual jurisdiction in labour relations matters on the record before her. She concluded that there was no remedial gap in the labour relations regime that would support the exercise of the Superior Court’s residual jurisdiction. The appellant union appealed.

Against this backdrop, the Court noted that the labour relations arbitral regime has the exclusive jurisdiction over matters arising out of a collective agreement. Labour arbitrators have broad remedial authority, which allows them to flexibly craft labour relations remedies to workplace issues. Therefore, the Superior Court has residual discretion to grant injunctive relief only if the arbitral process cannot provide an adequate alternative remedy.

issues:

(1) Did the application judge err in finding that if an injunction were not granted, the harm at issue was employees being placed on unpaid leave or terminated from employment?

(2) Did the application judge err by failing to engage in an analysis of all three branches of the RJR-MacDonald test in considering whether to exercise the court’s residual jurisdiction to grant an interlocutory injunction?

(3) Did the application judge err in finding that assessing the harm element in the jurisdictional analysis based on the subjective reaction of individual employees would be legally unworkable?

holding:

Appeal dismissed.

reasoning:

(1) No.

The appellant argued that the harm that arose for workers who did not comply with the Policy was compelled vaccination without their informed consent. The appellant further submitted that since vaccination cannot be undone, if injunctive relief were not granted, the harm would be irreparable, would render the arbitration moot, and could not be remedied by a grievance arbitrator. The application judge determined that the harm at issue was that some members of the appellant may be placed on unpaid leave or terminated from employment. She held that this loss could be remedied by an arbitrator through reinstatement and compensation for lost wages. Thus, there was no remedial gap warranting the discretionary exercise of the Superior Court’s residual jurisdiction.

The Court held that the application judge correctly stated the legal principles and did not make an overriding and palpable error in characterizing the harm that would result if injunctive relief was not granted. In addition, the Court noted that if the Superior Court were to intervene to grant injunctive relief pending a grievance arbitration every time a member of a bargaining unit felt pressure to comply with an employer policy because of the risk of employment discipline, it would fundamentally undermine the principle that the Superior Court’s jurisdiction in labour relations matters is residual.

(2) No.

The appellant argued that the application judge considered the irreparable harm branch of the RJR-MacDonald test, and erred in failing to consider the other branches of the test for an interlocutory injunction. The Court found that this argument failed for two reasons: 1) the application did not actually apply any branch of the RJR-MacDonald test because, on the preliminary issue, the potential harm that union members may face if the injunctive relief was not granted was only characterized for the purpose of determining the remedies available to a grievance arbitrator, and 2) the application judge was not required to make a determination on injunctive relief on the merits because the application was dismissed on the threshold jurisdictional issue.

(3) The Court held that it was not necessary to determine if the application judge erred on this issue because the finding did not impact her decision not to exercise the court’s residual jurisdiction.

Rosehaven Homes Limited v. Aluko, 2022 ONCA 817

[Simmons, van Rensburg and Favreau JJ.A.]

Counsel:

D. Milosevic and A. Moslehi, for the appellants

W. Jiang and S. S. Gill, for the respondent

Keywords: Civil Procedure, Summary Judgment, Evidence, Admissibility, Expert Evidence, Damages, Rules of Civil Procedure, r. 53.03, Form 53 Acknowledgment of Expert’s Duty, Karami v. Kovari, 2019 ONSC 637

facts:

On April 13, 2017, the appellants entered into an agreement of purchase and sale (“APS”) with Rosehaven Homes Limited (“Rosehaven”) to purchase a new home (the “Property”) to be constructed. Rosehaven was unwilling to accept any conditions in the APS concerning financing. Accordingly, no financing condition was included.

The purchase price for the Property was $1,523,162.00, including requested upgrades of $6,723.40. The appellants paid an initial deposit of $20,000.00 plus the cost of the upgrades. Later, they paid further deposits, totaling $70,000.00, in accordance with a schedule set out in the APS.

The original closing date was November 6, 2018. The appellants were unable to close on that date. They sought, and were granted, two extensions of the closing date. In each case, the appellants paid an additional $20,000.00 deposit to obtain the extension.

The appellants failed to close the transaction on the latest closing date because they were unable to obtain sufficient financing. Rosehaven declined the appellants’ request that it accept a vendor-take-back mortgage for a portion of the purchase price. Rosehaven eventually resold the Property on July 10, 2019 for the sum of $1,060,000.00.

The motion judge granted summary judgment to Rosehaven for the difference between the original sale price and the resale price, including carrying costs and less a credit for the deposits and the cost of the upgrades. In assessing damages, the motion judge relied on an affidavit appending an expert report that had been marked draft, which affidavit was sworn by one of the report’s co-authors.

issues:

(1) Did the motion judge err in admitting and relying on Rosehaven’s r. 53.03 litigation expert report (“Rosehaven’s expert report”) concerning the value of the Property?

(2) Did the motion judge err in law and make palpable and overriding errors regarding Rosehaven’s mitigation efforts and the quantification of damages?

holding:

Appeal dismissed.

reasoning:

(1) No.

The Court rejected the appellants’ submission that the motion judge erred in admitting Rosehaven’s expert report as evidence on the summary judgment motion. Rosehaven’s expert had adopted the contents of the Reports as drafted. Rosehaven’s expert report may not have been in perfect compliance with rule 53.03(2), however, any failure to fully comply was not material.

Further, the Court noted that the fact that r. 53.03 sets out rules for the exchange of expert reports for the purposes of a trial does not undermine the ability of a party to introduce expert evidence on a motion, provided that the rules relating to the admissibility of evidence, in general, and expert evidence, in particular, are respected.

The appellants submitted that Form 53 (Acknowledgment of Expert Duty Form ) was not signed notwithstanding that Rosehaven’s expert swore that Form 53 had been executed. The Court held the appellants had the opportunity to clarify the discrepancy or object to the admissibility of Rosehaven’s expert report if they were concerned about this issue, but they failed to do so.

Lastly, the appellants submitted that Rosehaven’s expert report failed to include a separate section entitled, “Instructions”. The Court held that a review of the report and accompanying covering letter revealed some of the instructions given. The appellants could have raised any issues concerning non-compliance with specific aspects of r. 53.03(2.1) on cross-examination. The appellants did not file a transcript of the cross-examination on the summary judgment motion. Most importantly, the appellants did not object to the admissibility of Rosehaven’s expert report on the summary judgment motion. Thus, the Court concluded that the motion judge had not erred in admitting it.

The appellants further argued that there were various deficiencies in the report, which should have precluded reliance on it or diminished the weight afforded to it. The Court noted again that the appellants did not object to the expert report or its contents before the motion judge. Nor did they file a transcript of their cross-examination of one of the co-authors. They could have raised the alleged deficiencies on cross-examination and the motion judge would then have had the opportunity to evaluate the deponent’s response. Equally importantly, the appellants did not file admissible competing expert evidence which could have challenged or undermined the methodology and conclusions in Rosehaven’s expert report. Accordingly, the Court was not persuaded that the motion judge made any error in his treatment of Rosehaven’s expert report.

(2) No.

The appellants argued that the motion judge erred in law and made palpable and overriding errors regarding Rosehaven’s mitigation efforts and the quantification of damages. For example, the appellants argued that Rosehaven failed to provide any adequate explanation for its delay in reselling the Property or for its failure to list the Property on MLS, as opposed to marketing it in-house.

The motion judge recognized there had been delay in reselling the Property and found that there was no evidence before him to show that the Property “would have received more and better offers to purchase if Rosehaven had conducted the sale in a certain way.” The Court held that there was nothing unreasonable about the valuation dates relied on in Rosehaven’s expert report. They reflected the dates on which Rosehaven became legally bound to sell the Property, first to the appellants, and, later, to the subsequent purchasers. There was no basis to interfere with the motion judge’s conclusions.

Obodo v. Trans Union of Canada, Inc., 2022 ONCA 814

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

C. DU Vernet and C. McGoogan, for the appellant

C. T. Lockwood, L. Harper and J. Habib, for the respondent

facts:

Trans Union of Canada, Inc. (“Trans Union”) is in the same business as Equifax Canada Co. and Equifax Inc. (collectively, “Equifax”). Like Equifax, Trans Union accumulates and stores in its database the personal information of millions of people for reasons associated with the credit-related services provided by Trans Union to its customers. The database was breached by unknown third-party hackers.

In the Amended Statement of Claim, the appellant (“Mr. O”) alleged that Trans Union, in furtherance of its business activities, gathered and aggregated a significant volume of personal and private information belonging to Mr. O and other class members. Trans Union used that information in providing services to its clients. The information included names, birthdates, addresses, information on debts owing, payment histories, and social insurance numbers.

Over a two-week period in June and July 2019, hackers, using credentials stolen from a Trans Union customer, accessed the database through a customer portal. In early October 2019, Trans Union notified the affected parties that their information had been improperly accessed by hackers. Trans Union offered certain compensation to affected parties.

Mr. O claimed that Trans Union represented that it took reasonable steps to secure the information in the database and that its protective measures were consistent with industry standards. He alleged, however, that the steps taken by Trans Union to secure the information were woefully inadequate and below industry standards. Mr. O further alleged that Trans Union did not have procedures in place to identify the intrusion in a timely fashion and minimize the harm caused by the hackers.

The Amended Statement of Claim alleged that the hackers’ intrusion upon the seclusion of Mr. O and the other class members was “enabled and facilitated” by Trans Union by: (1) gathering the information; (2) aggregating the information into a central location; (3) setting up a portal which allowed access to the database by customers of Trans Union; (4) failing to implement effective security measures; (5) failing to effectively monitor access through the portal; (6) failing to implement other security measures; and (7) failing to have in place measures that would minimize the negative impact of any unauthorized intrusion into the database.

Mr. O moved to certify various claims in a class proceeding. The motion judge certified claims based in negligence, and some of the claims based on various provisions in provincial privacy legislation. He declined to certify the intrusion upon seclusion claim, holding that he was bound by Owsianik.

issues:

(1) Do the amendments governing appeals under the Class Proceedings Act, 1992, that came into effect after this proceeding was commenced, apply?

(2) Is the distinction between Trans Union’s liability for the actions of an employee and its liability for the actions of a third-party hacker untenable?

(3) Is there a connection between the terms of articles 35 and 37 of the Civil Code of Quebec in the context of determining whether a claim based expressly on those provisions should be certified?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court agreed with Trans Union that the appeal routes applicable to class proceedings in effect at the time this proceeding was commenced were applicable, and an appeal from certification would normally lie to the Divisional Court.

However, the motion judge’s order did more than identify the claims that can and cannot go forward as part of the class action. The Court found that by holding that the intrusion upon seclusion claim did not disclose a cause of action against Trans Union, the motion judge effectively determined that the claim could not go forward. That order was a final order. Mr. O could not pursue the intrusion upon seclusion claim against Trans Union in any forum, absent a successful appeal.

After discussing the Court’s decision in Cavanaugh v. Grenville Christian College, the Court concluded that it had jurisdiction to hear the appeal under s. 6(1)(b) of the Courts of Justice Act.

(2) Yes.

The Court found that Mr. O described Trans Union as “an enabler”, but did not allege that Trans Union and the unknown hacker were co-conspirators, acted in concert, or in pursuit of a common unlawful goal. The Court clarified that absent a properly pleaded allegation of conspiracy or common enterprise, Trans Union could only be liable for the intrusion upon seclusion perpetrated by the third-party hacker if Trans Union was somehow vicariously liable for the actions of the hacker.

The appellant’s submission was that the nature of the loss suffered by Mr. O and other members of the class dictates that Trans Union is liable for the actions of the independent third-party hacker. This submission ignored the rationale for the doctrine of vicarious liability and the limits on that doctrine. An employer may be liable for the torts of its employees. Liability rests primarily on policy considerations which are, in turn, predicated on the existence of an employer-employee relationship and a connection in some sense between that relationship and the employee’s tortious misconduct. The appellant’s submission came down to an attempt to impose the equivalent of vicarious liability on Trans Union in the absence of any employer-employee relationship between the actual intruder and Trans Union. That relationship is a precondition to the imposition of vicarious liability on Trans Union. Trans Union remained liable for any damages flowing from its negligence, or from breaches of any contractual, or statutory duties potentially owing to Mr. O and the other class members.

(3) No.

The Court held that the terms of articles 35 and 37 of the Civil Code of Quebec did not assist the question of whether the intentional common law tort of intrusion upon seclusion should be extended to Trans Union based on its failure to adequately protect against third-party hackers accessing information. The Court noted that the obligations found in the articles are akin to the obligations already placed on database holders by the common law of negligence, contract law, and, in some cases, statutory provisions.

Winder v. Marriott International, Inc., 2022 ONCA 815

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

M. Robb and A. Manduric, for the appellant

R. Agarwal, R. Promislow, M. Eizenga, N. Butz and M. Kawatra, for the respondents

facts:

In 2018, Marriott International, Inc. and various subsidiaries and affiliates (“Marriott”) disclosed that unauthorized persons had accessed the reservation database of Marriott’s Starwood hotels. The database contained the personal information provided by customers for purposes associated with reserving and using the hotel facilities. The information included customers’ names, phone numbers, passport numbers, account information and, in some instances, credit card information. The unauthorized access had apparently been going on since 2014.

The appellant, Mr. W, sued Marriott on his own behalf and on behalf of the proposed class members. Mr. W claimed negligence, breach of contract, and breach of various statutory provisions. He alleged that Marriott was liable for the intentional tort of intrusion upon seclusion claiming that Marriott invaded the privacy of its customers when it collected and stored their personal information inconsistent with the representations Marriott had made to its customers and that did not meet Marriott’s legal obligations in respect of maintaining the security of the information. These legal obligations, the Mr. W alleges, included contractual and statutory obligations, as well as obligations imposed by industry standards and practices. On this approach, Marriott is said to have invaded the privacy of its customers by collecting and storing the information in contravention of its representations and obligations, regardless of whether any third party ever actually gained access to the customers’ information stored in the database.

Mr. W brought a motion to certify the proceeding as a class proceeding. Before the certification motion proceeded, the parties agreed to state a question of law for determination under r. 21.01(1)(a): “Does the Fresh as Amended Statement of Claim dated July 2, 2021 in the within proceeding disclose a cause of action against the Defendants under the tort of intrusion upon seclusion?” The motion judge held that the Fresh as Amended Statement of Claim (the “Claim”) did not.

issues:

Is Mr. W’s invasion of privacy claim viable?

holding:

Appeal dismissed.

reasoning:

No.

The Court reviewed the viability of Mr. W’s invasion of privacy claim in light of his pleading. In Mr. W’s factum and oral argument, Mr. W submitted that Marriott gained access to the customers’ personal information under “false pretences” when it represented that it would comply with its obligations to maintain the confidentiality of the information. The Court described the submissions as suggesting allegations of deceit or civil fraud, and dishonesty or fraudulent misrepresentations. However, none of these were pleaded.

The Court turned to paragraph 6 of the Claim, which alleged that Marriott disclosed personal information to unauthorized parties, or caused personal information to be disclosed to unauthorized parties. The Court clarified that those allegations could in law support an intrusion upon seclusion claim. However, the Court found that there were no material facts pleaded capable of supporting the allegation that Marriott either disclosed personal information to unauthorized parties, or caused it to be disclosed.

The Court found that the material facts pleaded in Mr. W’s Claim that are said to constitute an intrusion or invasion of his privacy by Marriott are the same facts said to support the claim that Marriott was negligent, breached its contractual obligations to Mr. W, and failed to comply with its statutory obligations. The Court found that there was no allegation that Marriott accumulated, stored or used the personal information provided by its customers for any purpose other than the purposes reasonably contemplated by the customers. However, what was alleged was that the manner in which Marriott stored the information did not comply with its representations or its obligations, and that this allowed third-party hackers to gain access to the information for their purposes. The Court concluded that, on the facts as pleaded, Marriott’s misconduct lied, not in any breach of the customers’ privacy rights, but in the failure to safeguard those privacy rights from intrusion by others.

The Court concluded that, based on the allegations in the pleading, the only interference with the customers’ ability to control access to, and use of their personal information occurred when unknown third-party hackers breached Marriott’s database. Until the hackers acted, there was no breach of the customers’ privacy rights and no intrusion.

Hybrid Financial Ltd. v. Flow Capital Corp., 2022 ONCA 820

[van Rensburg, Pardu and Copeland JJ.A]

Counsel:

K. Sherkin, for the appellant

J. Renihan, for the respondent

facts:

The appellant, Hybrid Financial Ltd. (“Hybrid”), carried on business as a sales and distribution company involved in the provision of capital market services. The respondent, Flow Capital Corp. (“Flow”) provided growth capital for companies in North America and the United Kingdom. In 2017, Hybrid was indebted to the Bank of Montreal, and the Hybrid’s CEO secured the debt with a personal guarantee. In a search for alternative financing to pay off the bank loan, Hybrid approached Flow. The parties agreed to a transaction with terms reflected in a document entitled the “Amended and Restated Royalty Purchase Agreement” dated August 10, 2017 (the “Agreement”).

Under the Agreement, Flow agreed to provide $750,000 to Hybrid, paid in two installments. In exchange, Flow acquired rights to receive payments, subject to a buyout option exercisable by Hybrid. There was no obligation on Hybrid to repay the initial $750,000 provided by Flow by any fixed date, but there was an acceleration clause requiring, at Flow’s option, payment of the amount advanced and any outstanding royalty payments, upon the occurrence of an “Event of Default” or “Bankruptcy Occurrence” as defined by the Agreement.

The buyout option gave Hybrid the right to end the obligation to make monthly payments once Hybrid had made payments totaling at least $750,000. The option required Hybrid to pay the greater of $1,500,000 or 5 per cent of Hybrid’s net equity value. Unless it exercised the buyout option, Hybrid was required to make the stipulated monthly payments in perpetuity.

In June 2020, Hybrid gave notice of its intention to exercise the buyout option. At the time, Hybrid had paid $828,205.34 in monthly payments. Flow rejected Hybrid’s offer to buy out the royalties for $1,500,000 over three years, insisting the payment be paid as a lump sum. Flow suggested the parties engage an independent valuator to determine Hybrid’s net equity value pursuant to the terms of the Agreement. On July 30, 2020, the parties jointly retained KPMG to conduct a valuation of Hybrid’s net equity.

KPMG delivered a draft valuation report on November 16, 2020 estimating Hybrid’s net equity value to be approximately $75,500,000. Using the 5 per cent net equity valuation stipulated in the Agreement, the cost of exercising the option to terminate the monthly payments would be $3,775,000. Hybrid disputed the valuation and claimed the net value of the company was under $30,000,000. On November 26, 2020, Hybrid asserted its claim that the Agreement was in violation of s. 347 of the Criminal Code (“CC”). Hybrid then brought an application seeking an order that the financial formula stipulated in the Agreement exceeds the criminal interest rate under s. 347 of the CC. Flow brought an application for an order declaring Hybrid in default under the Agreement and requiring Hybrid to pay the buyout amount.

The application judge dismissed the Hybrid’s application and granted relief to Flow.

The application judge found that the agreement was a “hybrid agreement”, and that the Agreement lacked most of the benchmarks of a loan, and accordingly the $750,000 was not credit advanced for the purposes of s.347(2) of the CC. The application judge also found that the payments under the agreement were not “interest” because they were not sufficiently fixed or readily calculable. Finally, the application judge determined that even if the Agreement were captured by the CC, Hybrid had voluntarily triggered the alleged criminal rate when it sought to exercise its right to end the payments to Flow, resulting in the payment being outside the reach of s.347.

issues:

(1) Did the trial judge err by finding that the Aggregate Installment Amount did not constitute “Credit Advanced” for the purposes of s. 347 of the CC?

(2) Did the trial judge err by finding that the mode of calculating the amounts to be paid by the appellant removed the Agreement from the application of s. 347 of the CC?

(3) Did the trial judge err by finding that the exercise of the buyout was a voluntary act by the appellant making s. 347 of the CC inapplicable to the payment?

holding:

Appeal allowed.

reasoning:

(1) Yes.

First, the Court dealt with the proper standard of review to be applied. The Court held that on either standard of review, correctness or the more deferential standard applicable to questions of mixed fact and law, the application judge had made errors of law. The application judge failed to consider the substance of the Agreement as opposed to its form, and failed to give effect to the specific contractual provision dealing with the possibility that the amounts to be paid by the appellant might exceed the rate prohibited by s. 347 of the CC.

The Court noted that the interpretation of “interest” mandated by s. 347 of the CC may not follow intuitively from the concepts of “credit” and “interest” as those terms are employed at common law and in everyday life. What was crucial was the substance of the transaction and the plain terms of s. 347 of the CC must govern its application.

The Court found that the substance of the transaction was that Flow had advanced money to Hybrid, and Hybrid was required to pay money in return. The money Hybrid had to pay in return was an expense incurred for the advance of credit and was subject to the strictures of s. 347. The Court adopted the Supreme Court’s finding in Garland v. Consumers’ Gas Co. that “[t]he thrust of the definitions of “credit advanced” and “interest” is to cover all possible aspects of any transaction to ensure that the cost of using someone else’s money never exceeds the criminal rate. […] Clearly the intention of the legislature was to concentrate on the substance of the transaction, not on its mechanics or form.” Accordingly, the Court found that the application judge erred when she emphasized the form of the transaction over its substance. Further, the Court found that the fact that the payments Hybrid had to make were styled as “royalties” did nothing to alter the substance of the Agreement.

The Court also found that the application judge had erred by failing to consider s.6.13 of the Agreement, the Maximum Permitted Rate provision, which stipulated that under no circumstances could Flow receive a payment “rate that is prohibited under Laws”. The application judge had rejected the relevance of this section because it did not specifically reference s. 347 of the CC. The Court found that, as there was no other law that would apply to the present transaction and would prohibit a rate, other than s. 347, the application judge had erred by not giving s.6.13 legal significance. The Court found that this section of the agreement meant that the parties had contemplated s. 347, and that they had contracted for an adjusted rate in the event s. 347 was triggered.

(2) Yes.

The Court found that the application judge had erred when she concluded that repayment mechanisms in the Agreement lacked the features of “interest” as defined in the CC, and applied in the jurisprudence. Flow argued that the buyout payment was not “interest”, because only payments of a fixed amount can qualify as interest, whether the agreement was a debt instrument or equity investment.

The Court disagreed and found that the parties had chosen a contractual mechanism to resolve the issue of how much had to be paid (i.e., KPMG valuator). The amount to be paid could be determined with precision by following the method required by the Agreement. The Court found that the fact that different valuators might come to different conclusions about value was not a factor.

Further, the Court found that s. 347(2) of the CC defined “interest” very broadly, and in the present context, the buyout payment was an expense payable for the advancing of credit under the Agreement, and therefore constituted interest for the purposes of s. 347 of the CC.

(3) Yes.

Flow relied on the fact that the Agreement did not, on its face, require the payment of an illegal interest rate, and that a rate over 60% was only triggered when Hybrid chose to exercise the buyout option, thus preventing s. 347 from applying. The Court disagreed and found that it was unnecessary to consider the scope and application of the voluntary act exception outlined in caselaw due to the inclusion of the Maximum Permitted Rate provision in the Agreement. The Court found that when Hybrid elected to pay out its obligations, to the extent that the buyout amount would otherwise have exceeded the prohibited rate of interest, the parties had provided for a reduced rate. The Court stated that there was no question of Hybrid’s unilateral act rendering an otherwise legal rate of interest illegal. Rather, by including s.6.13, the parties provided in the Agreement for a lawful rate of interest if the buyout option were exercised.

The Court found that both parties were sophisticated and must have recognized that there was a risk that payment under the Agreement could run afoul of s. 347 of the CC, so they included contractual terms to deal with the possibility. The Court stated that there was no reason why they should not be held to the agreement.

Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806

[Gillese, Miller and Coroza JJ.A.]

Counsel:

D. Strigberger, C. Morrison, and D. Marr, for the appellant

N.G. Wilson and S. Romeih, for the respondent

facts:

On July 9, 2017, the respondent suffered catastrophic injuries as a result of a dirt bike accident at a closed course motorcycle competition. The respondent’s automobile insurance policy was with the appellant insurer, but his dirt bike was not listed as an insured vehicle. The respondent applied to the appellant for statutory accident benefits and was denied coverage on the basis that the incident was not an “accident” as defined in the Statutory Accident Benefits Schedule (the “SABS”) because the respondent’s dirt bike was not an “automobile” within the meaning of s. 224(1) of the Insurance Act, and s. 3(1) of the SABS which states that an “accident” must involve an “automobile”.

The respondent unsuccessfully applied to an adjudicator of the Licence Appeal Tribunal (“LAT”) for a declaration that he was entitled to accident benefits. The LAT decision turned on whether the respondent was involved in an “accident” as defined in s. 3(1) of the SABS. The LAT found that a dirt bike driven in any closed course competition was exempt from the Off-Road Vehicles Act (“ORVA”) and was therefore not an “automobile” under the Insurance Act. Accordingly, the LAT decided in favour of the appellant.

On a reconsideration hearing, the LAT’s decision was set aside by the Associate Chair of the LAT, and the respondent was found eligible for SABS benefits (the “Reconsideration Decision”) as the exemption under the ORVA only applied to closed course competitions that were sponsored by a motorcycle association. The Associate Chair found that the first adjudicator erred in holding that the purpose of the ORVA was to protect the public when off road vehicles are driven in public areas. A narrow interpretation of the exemption was consistent with the legislative intent behind Ontario’s automobile insurance scheme requiring universal insurance coverage, subject to limited exceptions. Therefore, a “clear and rational reading of the provision” led the Associate Chair to conclude that to be exempt from the requirement of being insured, a closed course competition would need to be sponsored by a motorcycle association.

The appellant insurer appealed the Reconsideration Decision to the Divisional Court. The Divisional Court held that the Associate Chair was correct to follow the modern contextual interpretive approach in interpreting s. 2(1)5 of Regulation 863 and dismissed the appeal.

issues:

(1) Did the Divisional Court err by concluding that the Court in Benson v. Belair Insurance Company Inc. (“Benson”) had already ruled that only sponsored closed course competitions are exempt from the ORVA?

(2) Did the Divisional Court err in its application of Matheson v. Lewis (Matheson) and subsequently in accepting the Associate Chair’s conclusion that the purpose of the ORVA is to promote universal insurance coverage for all drivers of off-road vehicles?

(3) Did the Divisional Court err in failing to properly interpret the ORVA within the entire legislative scheme of auto insurance?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court held that the Divisional Court erred by concluding that the Court had previously ruled that only sponsored closed course competitions are exempt from the ORVA. However, the Court held that this error was inconsequential, as the Divisional Court’s interpretation of the obiter in Benson was entirely consistent with the purposes of the overall scheme of automobile insurance.

(2) No.

The Court held that the Divisional Court did not err in its application of Matheson or in accepting the Associate Chair’s conclusion that the purpose of the ORVA is to promote universal insurance coverage for all drivers of off-road vehicles. The Court noted that the Divisional Court recognized that one aspect of the ORVA is that it forms one part of a comprehensive legislative scheme for automobile insurance in Ontario. The Court stated that any interpretation of the ORVA must keep in mind that it is just one piece of a comprehensive scheme of automobile insurance that must be read harmoniously with other legislation that makes up that scheme. The goal of the statutory automobile insurance scheme is to protect victims of automobile accidents by promoting universal coverage. The Court concluded that one of the ORVA’s purposes is to promote the safe operation of off-road vehicles, while another is to protect innocent victims of automobile accidents through the imposition of mandatory insurance.

The Court held that although Matheson was decided in the context of driving on a highway, the factual context underlying Matheson does not detract from the fact that if drivers without insurance are in an accident, they are faced with a serious risk of not being able to obtain damages and benefits. The conclusion that sponsorship is required for closed course competitions to be exempt from the ORVA aligns with the view set out by the Court in Matheson and the principle of statutory interpretation that harmony should be achieved between the various statutes enacted by the same government, especially when the statutes relate to the same subject-matter.

(3) No.

The Court held that the Divisional Court properly interpreted the ORVA within the entire legislative scheme of auto insurance by finding the respondent eligible for statutory accident benefits under SABS. The Court held that the Divisional Court’s conclusion that only sponsored closed course competitions and rallies are exempt from the provisions of the ORVA is correct in light of context and purpose of the entire legislative scheme. Further, an interpretation of s. 2(1)5 that exempts participants in all closed course competitions regardless of sponsorship is inconsistent with the remedial purposes of the ORVA. The Court stated that this interpretation is supported by s. 1 of Regulation 863 which defines a “motorcycle association” as a motorcycle club or association that has (or is affiliated with a motorcycle club or association that has): first, a published constitution and, second, a membership roster of more than twenty-four persons. The organizations must have a public constitution, are organized, and contain several members. The Court found that permitting an exemption only for sponsored events aligns with the public safety focus of the ORVA. Finally, the Court held that the Divisional Court’s interpretation makes sense when one considers the protections that these types of sponsored events provide to participants and the general public.

Owsianik v. Equifax Canada Co., 2022 ONCA 813

[Doherty, Tulloch and Miller JJ.A.]

Counsel:

J.-M. Leclerc, T. Poynter and A. Abdulla, for the appellant

L. F. Cooper, A. D. Cameron, S. J. Armstrong, V. Toppings and P. Sergeyev, for the respondent

Keywords:

Torts, Intrusion Upon Seclusion, Breach of Privacy, Civil Procedure, Class Proceedings, Reasonable Cause of Action, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 21.01(1)(a), Jones v. Tsige, 2012 ONCA 32, Obodo v. Trans Union of Canada, Inc., 2021 ONSC 7297, Winder v. Marriott International, Inc., 2022 ONSC 390, R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, Bowman v. Ontario, 2022 ONCA 477, Agnew-Americano v. Equifax Canada Co., 2019 ONSC 7110, Owsianik v. Equifax Canada Co., 2021 ONSC 4112, Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Bennett v. Lenovo (Canada) Inc., 2017 ONSC 1082, Kaplan v. Casino Rama, 2019 ONSC 2025, Tucci v. Peoples Trust Company, 2020 BCCA 246, Nelles v. Ontario, [1989] 2 S.C.R. 170, Ontario (Attorney General) v. Clark, 2021 SCC 18, Arora v. Whirlpool Canada LP, 2013 ONCA 657, Del Giudice v. Thompson, 2021 ONSC 5379, Piresferreira v. Ayotte, 2010 ONCA 384, Demme v. Healthcare Insurance Reciprocal of Canada, 2022 ONCA 503, Merrifield v. Canada (Attorney General), 2019 ONCA 205, Fullowka v. Pinkerton’s of Canada Ltd., 2010 SCC 5, Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, P. Perl (Exporters) Ltd. v. Camden London Borough Council, [1983] EWCA Civ 9, [1984] Q.B. 342, Allgood v. Paperlesspay Corp., 2022 WL 846070 (M.D. Fla.); Burton v. MAPCO Exp., Inc., 47 F. Supp. (3d) 1279 (N.D. Ala. 2014), Stephens v. Availity, 2019 WL 13041330 (M.D. Fla.), Purvis v. Aveanna Healthcare, LLC, 563 F. Supp. (3d) 1360 (N.D. Ga. 2021), Damner v. Facebook Inc., 2020 WL 7862706 (N.D. Cal.), Savidge v. Pharm-Save, Inc., 2021 WL 3076786 (W.D. Ky.), McKenzie v. Allconnect, Inc., 369 F. Supp. (3d) 810 (E.D. Ky. 2019), Carter v. Innisfree Hotel, Inc., 661 So. (2d) 1174 (Ala. 1995), re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F. (3d) 625 (3rd Cir. 2017), Moore v. New York Elevated Railroad Co., 130 N.Y. 523 (1892), Remijas v. Neiman Marcus Group, LLC, 794 F. (3d) 688 (7th Cir. 2015), Thetford v. City of Clanton, 605 So. (2d) 835 (Ala. 1992), Stephen G.A. Pitel & Matthew B. Lerner, “Resolving Questions of Law: A Modern Approach to Rule 21” (2014) 43:3 Adv. Q. 344, Philip H. Osborne, The Law of Torts, 6th ed. (Toronto: Irwin Law, 2020), at p. 268, Lewis N. Klar & Cameron Jefferies, Tort Law, 6th ed. (Toronto: Carswell, 2017).

facts:

Equifax and related companies (referred to collectively as “Equifax”) operated around the world providing credit reporting services and credit protection services to customers. For the purposes of providing credit ratings to its customers, Equifax collected and aggregated financial and other information relating to millions of individuals and various corporate entities (“consumers”).

Between mid-May and late July 2017, hackers gained unauthorized access to the personal information stored by Equifax. The information accessed included individuals’ social insurance numbers, names, dates of birth, addresses, driver’s licence numbers, credit card numbers, email addresses, and passwords. The data breach affected persons around the world. Equifax estimated that about 20,000 Canadians were affected by the breach.

The appellant, in its Statement of Claim, alleged that Equifax knew that it was a prime target for cybercriminals. The Statement of Claim further alleged deficiencies in the security systems put in place by Equifax to protect access to the database. It also alleged that Equifax was fully aware of the inadequacies of its system. Specific shortcomings were brought to Equifax’s attention after security audits in 2014 and 2016. The appellant further alleged that when Equifax became aware that its database has been improperly accessed, it failed to respond to the intrusion in a timely or effective manner.

The appellant pleaded that Equifax’s failure to take appropriate steps to guard against unauthorized access to sensitive financial information in the database constituted an intentional or reckless intrusion upon her privacy.

The Divisional Court granted Equifax leave to appeal on a single question of law: “Did the motion judge err in finding that the tort of intrusion upon seclusion is available against collectors and custodians of private information, such as the defendants in this case, where the private information is improperly [accessed] by a third party, including in circumstances where the defendants are alleged to have acted recklessly?”

The motion judge concluded, assuming the truth of the alleged facts, that it was not “plain and obvious” the intrusion upon seclusion claim could not succeed against Equifax. He stressed that a certification motion, and in particular a determination of whether the plaintiff had pleaded a cause of action, was not the forum in which to determine “what the law should be in novel circumstances or how unsettled existing law should be reconciled.” If the law was not “fully settled”, the case “must be permitted to proceed”.

In the Divisional Court, the majority, relying on Atlantic Lottery Corp. Inc. v. Babstock held that novel legal claims which are doomed to fail even if the alleged facts are true, should be disposed of at the certification stage: Owsianik. The majority concluded the intrusion upon seclusion claim advanced by the appellant fell within the “doomed to fail” category. The appellant had not alleged that Equifax perpetrated any act capable of amounting to an intrusion or invasion of her privacy, but had instead alleged that Equifax failed to take appropriate steps to protect the appellant from intrusions perpetrated by independent third-party hackers. In the majority’s view, the pleadings mischaracterized Equifax’s failure to protect the appellant from the invasion of her privacy by third-party hackers, as an intrusion into the appellants privacy by Equifax.

issues:

(1) Did the majority in the Divisional Court properly address the legal viability of the intrusion upon seclusion claim?

(2) Is Equifax liable for the tort of intrusion upon seclusion?

holding:

Appeal dismissed.

reasoning:

(1) Yes.

The Court held that the facts as pleaded did not constitute an act of intrusion or invasion into the privacy of the plaintiffs. The intrusions alleged were committed by unknown third-party hackers, acting independently from, and to the detriment of, the interests of Equifax. The Court held that there were no facts pleaded which could in law provide a basis upon which the actions of the hackers could be attributed to Equifax. There were no material facts pleaded which indicated that Equifax acted in consort with, or were vicariously liable for, the hackers’ conduct.

The Court commented that on the claims as pleaded, Equifax’s fault lied in their failure to take adequate steps to protect the plaintiffs from the intrusion upon their privacy by hackers acting independently of Equifax. The Court noted that Equifax may be liable for its failure to protect the plaintiffs’ privacy interests in the stored material in negligence, contract and under various statutes. The Court held that Equifax’s failure to meet their common law duty of care, or their contractual and statutory responsibilities to the plaintiffs to properly store the data, cannot, however, be transformed by the actions of independent third-party hackers into an invasion by Equifax of the plaintiffs’ privacy

The Court stated that a court cannot certify a class proceeding unless the prerequisites to certification set out in s. 5(1) of the Class Proceedings Act, 1992 are met. Section 5(1)(a) requires the pleadings to disclose a cause of action. Counsel for the appellant submitted that the requirement in s. 5(1)(a) that the claim “disclose a cause of action” sets a low bar and is not intended to pre-empt novel, or tenuous claims. On the motion, the court must read the pleadings generously, accept as true the facts as pleaded and determine whether, on those facts, it is “plain and obvious” that the plaintiff has no cause of action against the defendant.

The Court endorsed that the test to be applied in deciding whether a claim discloses a cause of action for the purposes of s. 5(1)(a) is the same as the test to be applied on a motion to strike a pleading as disclosing no reasonable cause of action under r. 21.01(1)(b): Babstock. The Court accepted that a claim should only be struck if it is “plain and obvious” that the claim cannot succeed. The Court also agreed that Babstock had not altered that test.

The Court stated that no decision has held that the tort of intrusion upon seclusion applies to companies like Equifax who hold and store private information (the Court used the term ‘Database Defendants’) based on negligent or reckless storage of private information. Such claims have been certified in class actions, but on the basis that it is not “plain and obvious” the claim cannot succeed. The legal viability of the intrusion upon seclusion claim was also amenable to determination based exclusively on the facts as pleaded. The Court held that there was no reason to think evidence adduced at the trial would have any effect on the determination of whether, as a matter of law, the tort could apply to Database Defendants whose failure to properly protect the data permits independent hackers to access the data.

The Court, in agreeing with Babstock, reiterated that when the validity of a claim turns exclusively on the resolution of a legal question, the court may on a pleadings motion, even if the answer to the legal question is complex, policy-laden and open to some debate, determine the law and apply the law as determined to the facts as pleaded to decide whether “the claim is plainly doomed to fail and should be struck”. The Court noted that Babstock was consistent with prior Supreme Court of Canada authorities.

The Court held that there were advantages to determining the viability in law of a claim on a pleadings motion when that viability turns exclusively on a question of law and the only material facts relevant to the question are those pleaded by the plaintiff. Deciding those questions early in the litigation serves judicial efficiency, enhances access to justice, and promotes certainty in the law.

The Court accepted there were legitimate arguments on both sides over the legal viability of the intrusion upon seclusion claim against Database Defendants. The parties did not refer to any appellate authority in Canada or elsewhere in the Commonwealth directly on point. However, the Court noted that uncertainty in the law did not require the motion judge to decline to resolve the legal question at the certification stage. Four factors offered strong justification for deciding the legal viability of this claim on the certification motion:

(1) the question fell to be answered on the facts as pleaded. There was no dispute as to the facts that were relevant and material to the legal viability of the cause of action pleaded. There was no chance any evidence could be led at trial that would impact on the answer to the legal question posed;

(2) there was no unfairness to either party in deciding the merits of the legal question on the pleadings motion;

(3) the issue was fully briefed and argued on the pleadings motion; and

(4) the institutional considerations articulated in Babstock favoured deciding the legal question on the merits

The Court found the majority in the Divisional Court properly determined whether the claim as pleaded could in law amount to an intrusion by Equifax into the privacy of the plaintiffs. The majority’s finding that the facts could not amount in law to the required intrusion meant that it was “plain and obvious” the claim could not succeed and should be struck.

(2) No.

The tort of intrusion upon seclusion is one of several intentional torts which, when taken together, provide “broad protection of the plaintiff’s personal integrity and autonomy. The elements of the tort of intrusion upon seclusion were laid down in Jones:

the defendant must have invaded or intruded upon the plaintiff’s private affairs or concerns, without lawful excuse [the conduct requirement];
the conduct which constitutes the intrusion or invasion must have been done intentionally or recklessly [the state of mind requirement]; and
a reasonable person would regard the invasion of privacy as highly offensive, causing distress, humiliation or anguish [the consequence requirement].

The plaintiffs alleged that Equifax’s conduct constituted interference with their privacy. Equifax stored the data and accessed and used the data for commercial purposes. The plaintiffs alleged that the intrusion occurred when the defendants failed to take appropriate steps to guard against unauthorized access to sensitive financial information involving the class members’ private affairs or concerns.

The Court commented that on the allegation made, Equifax failed to take steps to prevent independent hackers from conduct that clearly invaded the plaintiffs’ privacy interests in the documents stored by Equifax. Equifax did not, however, itself interfere with those privacy interests. The wrong done by Equifax arose out of Equifax’s failure to meet its obligations to the plaintiffs to protect their privacy interests. The Court concluded the claim failed at this fundamental level as the claim did not include conduct capable of amounting to an intrusion into, or an invasion of, the plaintiff’s privacy alleged against Equifax.

The appellant submitted that her claim alleged an intrusion upon seclusion because she pleaded that the defendant acted recklessly. Jones recognized that recklessness would suffice to establish liability. The Court found the appellant’s submission misunderstood the relationship between the two elements of the tort. The first element, the conduct requirement, required an act by the defendant which amounted to a deliberate intrusion upon, or invasion into, the plaintiffs’ privacy. The prohibited state of mind, whether intention or recklessness, must exist when the defendant engaged in the prohibited conduct. The state of mind must relate to the doing of the prohibited conduct. The defendant must either intend that the conduct which constitutes the intrusion will intrude upon the plaintiffs’ privacy, or the defendant must be reckless that the conduct will have that effect. The Court clarified that if the defendant does not engage in conduct that amounts to an invasion of privacy, the defendant’s recklessness with respect to the consequences of some other conduct, for example the storage of the information, cannot fix the defendant with liability for invading the plaintiffs’ privacy.

Thus, the Court held that the claim failed at the conduct component of the tort of intrusion upon seclusion. Equifax’s negligent storage of the information could not in law amount to an invasion of, or an intrusion upon, the plaintiffs’ privacy interests in the information. Equifax’s recklessness as to the consequences of its negligent storage could not make Equifax liable for the intentional invasion of the plaintiffs’ privacy committed by the independent third-party hacker. Equifax’s liability, if any, lies in its breach of a duty owed to the plaintiffs, or its breach of contractual or statutory obligations.

The Court rejected extending liability for the commission of the intentional tort of invasion of privacy by a stranger to Equifax would amount to an incremental change in the law. The Court noted that on the alleged facts, Equifax did not unlawfully access any information; no one acting on Equifax’s behalf, or in consort with Equifax, did so; and no one for whom Equifax could be held vicariously liable accessed any private information. A third-party stranger to Equifax accessed the information.

The Court was not prepared to impose liability on Equifax for the tortious conduct of unknown hackers, finding that it would create a new and potentially very broad basis for a finding of liability for intentional torts. The Court cautioned that this would lead to a scenario where a defendant could be liable for any intentional tort committed by anyone, if the defendant owed a duty, under contract, tort, or perhaps under statute, to the plaintiff to protect the plaintiff from the conduct amounting to the intentional tort.

The Court found the appellant did not make out the case for extending the tort of intrusion upon seclusion to Database Defendants whose negligent storage of information permitted independent hackers to access that information. The Court signaled that it is possible that existing common law remedies do not adequately encourage Database Defendants to take all reasonable steps to protect private information under their control. However, it is open to Parliament and legislatures to expand these protections to provide for what Parliament and the legislatures might regard as more effective remedies against Database Defendants who do not take proper steps to secure the information under their control.

SHORT CIVIL DECISIONS

Amerato v. TST-CF Solutions LP , 2022 ONCA 808

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

L. Hone, for the appellant

R. Flom, for the respondent

Keywords: Employment Law, Wrongful Dismissal, Damages, Vacation Pay, Canada Labour Code, R.S.C. 1985, c. L-2, s. 188

Benson v. Cichorczyk,, 2022 ONCA 800

[Doherty, Feldman and Trotter JJ.A.]

Counsel:

R. A. Levin, for the appellant

D. O. Smith and J. Thoburn, for the respondents D.D. and the City of Toronto

Keywords: Torts, Negligence, Damages, Punitive Damages

Cardinal Investments Inc. v. Ultra Depot (Ontario) Inc. , 2022 ONCA 827

[van Rensburg, Sossin and Copeland JJ.A.]

Counsel:

J.R. Smith, for the appellant

A.S. Cofman, for the respondents

Keywords: Civil Procedure, Striking Pleadings, Rules of Civil Procedure, rr. 21, 26.01, and 25.06(8)

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

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John Polyzogopoulos Blaney McMurtry LLP 416.593.2953 Email

Ines Ferreira Blaney McMurtry LLP 416.597.4895 Email

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CIVIL DECISIONS

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SHORT CIVIL DECISIONS

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John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.597.4895 Email