September 2010

Inside this Issue:This month we have summarized what we consider to be the five most interesting cases from the Ontario C.A. in August.

We highlight cases from the following areas of law: Limitations (p.3); Defamation (pp.4 and 6); Costs (p.8); and Contracts and Remedies (p.9)

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Safai v. Bruce N. Huntley Contracting Ltd., 2010 ONCA 545Areas of Law: Civil Procedure; Limitations; Discoverability Under Appeal: Justice Mullins

The appellant slipped and fell in a parking lot on February 17, 2000 and broke her ankle. On February 23, 2006, she and members of her family began an action against the owner of the parking lot. Six months later they brought an action against the company responsible for winter maintenance of the lot. The appellant first saw a lawyer about initiating a claim the month after she fell. The lawyer diarized the limitation period at February 17, 2006, ascertained the owner of the parking lot and wrote them regarding the claim. The lawyer indicated the reason for the delay in issuing the statements of claim was inadvertence. The respondents were successful in a motion for summary judgment on the basis that the six-year limitation period had expired. The chambers judge held that the discoverability rule did not apply to extend the limitation period beyond the six-year period.

The Court allowed the appeal in respect of the claim against the maintenance company, but not in respect of the claim against the parking lot’s owner. The discoverability principle operates to delay the onset of the limitation period until the time the plaintiff discovers or ought reasonably to have discovered the critical facts giving rise to the remedy being sought, including the acts or omissions of a tortfeasor which could give rise to liability. The discoverability principle will not apply in cases where a plaintiff can reasonably assume who the tortfeasor is: in this situation, the owner of the parking lot where she slipped, in the case of a car accident, the owner of a motor vehicle. However, the discoverability principle will apply in cases where the identity of the tortfeasor cannot be reasonably assumed, such as in the case where the property owner contracts out the maintenance work on his property to a third party. The Court pointed out that there is no simple way to determine the involvement of the third party, such as searching a public registry to find the name of a property or motor vehicle owner. As such, the Court concluded that a genuine issue for trial exists, namely, when the appellant ought reasonably to have discovered that a third party winter maintenance company may have played a role in her injury.

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Black v. Breeden, 2010 ONCA 517Area of Law: Defamation Under Appeal: Justice Belobaba

The appellants are directors, advisors, and a vice-president for Hollinger International, Inc. (“Hollinger”). The respondent, Conrad Black, sued the appellants for libel in Ontario as a result of statements on the Hollinger website. The allegedly defamatory statements were downloaded, read and republished in Ontario by various newspapers. The respondent claimed his reputation was damaged in Ontario as a result. The statements included press releases and other information on the website that related to an investigation of the respondent’s receipt of unauthorized payments from Hollinger in the form of management and non-competition payments while he was in control of the company. The

statements alleged that the respondent committed tax evasion and violated securities laws, among other allegations of impropriety. Hollinger was at all times headquartered in either New York or Chicago and was incorporated in Delaware. The judge rejected a motion by the appellants to stay the action on the basis that Ontario did not have jurisdiction to hear the claims, or in the alternative, that Ontario was not the convenient forum for the action. [continued on the next page]

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Black v. Breeden (cont.)

The appeal was dismissed. The Court applied the

reformulated test for assumed jurisdiction established in Van Breda v. Village Resorts Limited, a 2010 decision of the Court for which leave to appeal has been granted to the Supreme Court of Canada. The Court concluded that the motion judge’s determination that Ontario could assume jurisdiction, though based on jurisprudence pre-dating Van Breda, was correct. In this case, a “real and substantial connection” is presumed to exist because, as the motion judge found, the alleged tort was committed in Ontario. The Court in Van Breda made clear that where the case is one in which the Rules of Civil Procedure permit service ex juris, such as where a tort is committed within the province, a real and substantial connection

is presumed but may be rebutted by a defendant. Libel jurisprudence makes clear that “the heart of a libel action is publication,” and as such, the tort is committed where publication occurs. The appellants argued unsuccessfully that permitting republication by third parties to constitute “the place of publication” for libel actions would lead to libel tourism when the defamation is alleged to have occurred over the internet. The Court declined to adopt a “targeting approach” to internet libel actions, which has been advanced in the United States, that looks to whether the defendant targeted the forum in question with the libelous content. In this case, it was reasonably foreseeable to the appellants that publication on the website would lead to republication in Ontario and resulting harm to the respondent’s reputation. The Court considered several

other factors, including that the statements were aimed at Canadian media outlets, that it would not cause unfairness to the appellants to defend an action in Ontario, and that Ontario courts would enforce an extra-provincial judgment rendered on the same basis.

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The appellant Valcom is a consulting company whose business was to contract with the federal government to provide it with the services of engineers and other consultants. The respondent is a consultant with expertise in performance-based project management in the aerospace and military industries. Her work with the appellants was conducted through a company she owned jointly with her husband. The parties worked together to prepare a response to a request for proposal for a government project, which they obtained. When initially approached by the appellant, the respondent contacted a large American company, ARINC, with expertise in the aerospace and military industries to assist as a subcontractor. The respondent was named as the project manager on the response, and once a second manager was named, the respondent would be a subcontractor of ARINC. Once work started on the project, Volcom directed ARINC to terminate the respondent’s position as project manager. When ARINC failed to do so, two Valcom managers effectively locked her out of her position. These managers also circulated e-mails both within Valcom and to ARINC stating that the respondent was untrustworthy and lacked the management skills necessary to keep the project staffed. ARINC extricated itself from the relationship with Valcom due to its view that Valcom was rash and unprofessional. The respondent has not obtained a contract in the aerospace or military industries since her work with Valcom. At trial, the appellants were found liable for defamation against the respondent personally, intentional interference with economic relations against both the respondent and her company, and for inducing breach of contract with the respondent’s company. [continued on the next page]

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Alleslev-Krofchak v. Valcom Limited, 2010 ONCA 557Area of Law: Defamation; Damages Under Appeal: Justice Aitken

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Alleslev-Krofchak v. Valcom Ltd. (cont.)

The appeal was dismissed, though the reasoning of

the Court differed on several points from that of the trial judge. Of the six grounds of appeal, the Court focused much of the discussion on the doctrinal requirements for establishing the torts of inducing breach of contract and intentional interference with economic relations. Citing the 2008 House of Lords decision in OBG v. Allan, the Court set out the three requisite elements for the tort of intentional interference with economic relations: first, the injuring party must intend injury to the plaintiff; second, the conduct must interfere with the business or livelihood of the plaintiff by unlawful or illegal means; and third, the plaintiff must suffer economic loss because of the conduct. The plaintiff’s loss must be more than just

foreseeable to the defendant, it must be intended either for the sole purpose of harming the plaintiff or for another purpose, such as personal enrichment. The Court clarified a point of divergence in the decision of OBG, the scope of “unlawful means”. In Ontario, the jurisprudence supported the holding of the majority of Lords that in order to fit within the tort, the conduct cannot be directly actionable by the plaintiff against the defendant. The trial judge erred in her reasoning that the acts of defamation constituted the unlawful means because the defamation was actionable directly by the respondent against the appellant. However, the Court accepted the respondent’s argument that a civil conspiracy by Volcom and the two managers to undermine ARINC’s ability to compete in the Canadian military and the aerospace

industry caused the damage to the respondent, and she could not bring an action against the appellants for the conspiracy because she was the impacted third party, not the direct target of the conspiracy. The Court also referred to OBG to clarify a point about the tort of inducing breach of contract and the relationship between that tort and the tort of interfering with economic relations. To satisfy the requirements for the former, an actual breach of contract must be occasioned by the conduct of the defendant. Otherwise, the conduct falls within the scope of interfering with economic relations rather than inducing breach of contract.

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The appeal was allowed and an order to increase the costs award by $40,000 was made. The Act’s mediation provision requires insurers to attend mediation when requested and specifically guides a court to consider the refusal to participate when making cost orders. The Court considered five facts giving rise to the increased costs order they substituted: the two refusals by the insurer to participate, the “hardball” approach of the insurer in asserting the claim did not meet the statutory threshold, the offer to settle which was an implicit acknowledgement of a claim worthy of litigating, the size of the recovery by the appellant and the length of the trial at 11 days. A trial judge faced with a case where the insurer fails to participate in mediation has discretion to determine the cost consequences based on the facts of the case, but is obliged by the Act to consider a remedial costs penalty regardless of who is successful in the action. The rationale for the inclusion of costs consequences in the Act is to compel insurers to comply with statutory obligations as well as to remedy the position of the other party that was deprived of an opportunity for earlier settlement through mediation.

The parties were in a motor vehicle accident

in which the appellants suffered damages. The respondents’ insurer refused to participate in mediation because it believed the damages did not meet the statutory threshold for a claim pursuant to the Insurance Act (the “Act”). Following the insurer’s refusal to participate in mediation, the respondents served an offer to settle for $17,500 in damages, $2,500 greater than the statutory minimum for a claim pursuant to the Act.

Keam v. Caddey, 2010 ONCA 565Areas of Law: Civil Procedure; Costs Judge Under Appeal: Justice Whitten

The offer was refused and the matter proceeded to trial, where the appellants succeeded. The appellants sought a remedial costs order against the respondents for their failure to participate in mediation, seeking substantial indemnity costs rather than the partial indemnity costs to which they were entitled by virtue of their success in the action. The trial judge considered the mandatory mediation provision in the Act to impose an obligation on parties to attempt a settlement and found that

the insurer’s conduct in refusing to participate did not meet the “reprehensible, scandalous or outrageous” conduct threshold required by Supreme Court of Canada jurisprudence to justify the imposition of a substantial indemnity costs award. The judge found that, in light of all known circumstances, the insurer took a justifiable and reasonable position in not participating.

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The appeal was dismissed. The trial judge’s reasons for granting the equitable remedy of rectification were in line with existing jurisprudence, as set out by the Supreme Court of Canada in Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., [2002] 1 S.C.R. 678. In that case, the Court indicated that rectification is a tool to return parties to their original bargain, though it is a rare remedy in agreements between reasonably sophisticated business people. The Court agreed with the trial judge’s findings that the appellant’s conduct, both during negotiations and following the execution of the contract, was consistent with the knowledge that the figure of 1,300 must have included both institutional and individual subscribers. Further, the appellant’s own documents and e-mails between the parties made clear the understanding that the figure was not limited to institutional subscribers. The Court found that the trial judge made factual findings supported by evidence, did not engage in speculation about what the bargain may have been, or correct a bad bargain by the parties.

The appellant publisher agreed with the

respondent societies to publish an academic journal. The request for proposal indicated that there were about 1,100 institutional and individual subscriptions to the societies existing journals, which were being combined into this one journal. In the agreement for publication, a clause required the respondents to provide a list of subscribers to their current journals, including “no fewer than thirteen hundred (1,300) institutional subscribers in the aggregate.” The list that was ultimately provided contained 1,346 subscribers, but there were many duplicate names, resulting in 758 unique institutional subscribers and 193 unique individual subscribers. The appellant did not fulfill its financial obligations to the respondent under the contract because the journal was not financially successful. The respondents brought an action to recover the amount owed under the contract,

The British Society of Audiology v. B. C. Decker Inc., 2010 ONCA 543

Areas of Law: Contracts; Remedies Under Appeal: Justice Taliano

which the appellant resisted on the basis that the respondent did not fulfill the requirement of providing 1,300 institutional subscribers. The trial judge agreed with the respondent that the wording of the clause at issue was the result of a mutual mistake and that rectification was the appropriate remedy. The trial judge agreed that the clause ought to have included both institutional and individual subscribers and that the number included duplicate names.

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