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Civil Writes - July 2012
The Canadian Bar Association
Civil Writes - CBA National Civil Litigation Section Newsletter

Canada’s newest tort
By John Finnigan and Jessica Prince, Thornton Grout Finnigan LLP
In January, the Ontario Court of Appeal created a new right of action for breach of privacy in Jones v. Tsige. This new tort — called “intrusion upon seclusion” — provides monetary compensation for breaches of privacy without publication or pecuniary loss. It has been considered and rejected in two subsequent decisions, as both cases involved legitimate requests for private information.

Club Resorts Ltd v. Van Breda: The Supreme Court of Canada considers the test for jurisdiction
By Ilana Schrager and Rahool P. Agarwal, Norton Rose Canada LLP, Toronto
The Supreme Court of Canada’s decision in Club Resorts Ltd. v Van Breda addresses the legal test for when a Canadian court should assume jurisdiction over an out-of-province defendant. For businesses with Canadian ties, Van Breda is a critical decision, as it outlines the circumstances under which foreign companies may be exposed to litigation in Canada.

Fully appreciating Ontario’s new summary judgment rule: An explanation of the Court of Appeal’s decision and its subsequent application
By Ranjan K. Agarwal and Stephen N. Libin, Bennett Jones LLP
In December 2011, the Court of Appeal for Ontario provided much-needed clarification on the scope and purpose of Ontario’s new summary judgment rule (Combined Air Mechanical Services Inc. v Flesch, 2011 ONCA 764). The issue was important enough that the Court joined together five very different appeals from summary judgment motions, and the appeals were heard by a rare five-judge civil panel.

Agreed statements of fact in settlements with securities regulators are admissible in subsequent civil litigation
By Samuel M. Robinson, Heenan Blaikie LLP, Toronto
A recent decision of a trial judge in Nova Scotia in National Bank Ltd. v. Potter, [2012] N.S.J. No. 97 (N.S.S.C.) has confirmed the admissibility at trial of an agreed statement of facts contained in the settlement of an enforcement proceeding by the Investment Dealers Association of Canada (a predecessor to the Investment Industry Regulatory Organization of Canada). This is the first time an agreed statement of facts from a regulatory settlement has been used at trial, and it provides insight into how these statements may be used in the future.

Nova Scotia automobile insurance reforms
By Peter C. Rumscheidt and Amy E. MacGregor, Cox & Palmer, Halifax
In November 2011, Nova Scotia's Government introduced the Fair Automobile Insurance (2011) Act, which contained significant amendments to automobile insurance in the province. The reforms are intended to provide better coverage and more choice for consumers and are being implemented in two phases. Phase 1 changes took effect on April 1, 2012. Phase 2 changes are effective April 1, 2013. 

Section events at the Canadian Legal Conference in Vancouver

Effective Advocacy ‘At the Top’: Appearing in the S.C.C.
August 13, 8:35 a.m. – 9:55 a.m.

Presented by the National Civil Litigation Section at the Canadian Legal Conference in Vancouver, this informative session will feature Eugene Meehan, Q.C., and the Hon. John C. Major, Q.C., giving their perspectives on appearing before the S.C.C. Topics include written and oral advocacy as well as the “dos and don’ts” in preparing for the S.C.C. Practical management tips will also be provided and professionalism and ethical concerns related to the lawyer as advocate before the S.C.C. will be addressed. Moderated by former CBA President, Bernard Amyot.


Useful Expert Evidence: The Evolution of Rule and Practice
August 13, 2:00 p.m. – 3:25 p.m.

Expert evidence in civil litigation has been an area of much growth in recent years both in focus and expense. Yet many judges express concern that battles of highly partisan experts do little to assist them in deciding cases. Experienced panelists will consider how experts can play a useful role in civil litigation, how rule changes in various jurisdictions have affected the role of experts, and what counsel can do in practice to make their expert evidence more effective. The Hon. Christopher Hinkson, Kevin Feehan, Q.C., David Sterns and Charles Willms presenting.


National Civil Litigation Law Section Business Meeting
August 13, 11:45 a.m. – 1:00 p.m.

Want to learn more about the CBA National Civil Law Section? Come meet your Civil Litigation Section Officers at the CLC Section Business Meeting on Monday, August 13. All Section members are welcome! Please email Gathoni Njuguna for more information.

 

Canada’s newest tort

By John Finnigan and Jessica Prince

In January, the Ontario Court of Appeal created a new right of action for breach of privacy in Jones v. Tsige1. This new tort — called “intrusion upon seclusion” — provides monetary compensation for breaches of privacy without publication or pecuniary loss. It has been considered and rejected in two subsequent decisions, as both cases involved legitimate requests for private information.

Intrusion upon Seclusion

Jones v. Tsige involved two Bank of Montreal employees: Sandra Jones (“Jones”) and Winnie Tsige (“Tsige”). Tsige was dating Jones’ ex-husband, but the two women had never met. Contrary to bank policy, Tsige had surreptitiously looked at Jones’ banking records at least 174 times over a four-year period. When Jones discovered this, she advised her employer. After an internal investigation, Tsige admitted to viewing the records and she admitted that she had no legitimate reason for doing so.

Jones brought a claim against Tsige for damages in the amount of $70,000 for, amongst other things, invasion of privacy and punitive and exemplary damages. Jones brought a motion for summary judgment and Tsige brought a cross-motion to dismiss the action. The motion judge held that there is no free-standing right to privacy in Ontario and dismissed the action, awarding costs against Jones.

The central issue for the Ontario Court of Appeal was whether the motion judge erred by dismissing Jones’ claim on the ground that Ontario law does not recognize the tort of breach of privacy.

Writing for an unanimous bench, Justice Sharpe held that the tort of intrusion upon seclusion – which is recognized in American jurisprudence – consists of three elements:  (1) the defendant’s conduct must be intentional and this includes reckless conduct; (2) the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and (3) a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. Publication or dissemination of private affairs or information is not required. Proof of economic loss or harm is also not required.

The Court of Appeal gave a four-part rationale for the new tort: First, the case law, although not conclusive, supports the recognition of this cause of action. Second, rapid technological change that impacts people’s privacy rights demands a legal response. Third, the common law is capable of incremental evolution.  Finally, and most importantly, the facts in this case call out for a remedy.

Justice Sharpe emphasized that the tort will only arise for deliberate and significant invasions of privacy. Claims from individuals who are unusually sensitive about their privacy will be excluded. Justice Sharpe also noted that, although not relevant in this case, claims for privacy protection can give rise to competing claims, such as freedom of the press.

Areas over which an individual might have a reasonable expectation of privacy include: one’s financial and health records, sexual practices and orientation, employment, diary or private correspondence,2 electronic data bases that record the books we borrow or buy, the movies we rent or download, where we shop, where we travel, and communications by cell phone, e-mail or text message.3

Individuals may be awarded up to $20,000 in damages if there has been no pecuniary loss. Justice Sharpe stated that aggravated and punitive damages are neither encouraged nor excluded.

The Court of Appeal found that Tsige had committed the tort of intrusion upon seclusion. Jones was awarded $10,000 in damages. No aggravated or punitive damages were awarded. The Court declined to award costs to Jones, given the novel nature of the issues.

Establishing the Ambit of the Tort

The Ontario Arbitration Board (the “Board”) considered this new tort in Complex Services Inc. v. O.P.S.E.U., Local 278.4 The matter concerned the balance between a disabled employee’s right to accommodation and the employer’s right to that employee’s confidential medical information.5

In order to evaluate the employee’s need for accommodation, the employer requested that the employee undergo a medical examination and turn over certain medical documentation.6 Counsel for the employee argued that such a request constituted a breach of the employee’s privacy.7

The Board held that although Jones v. Tsige “reinforces the premium value of privacy in Canadian society… [it] does not establish an additional premium or value in that respect.”8

The Board stated that Jones v. Tsige does not establish an absolute right to privacy. It“…does not stand for the proposition that asking for or even demanding that an employee disclose confidential medical information for a legitimate purpose constitute an improper or actionable intrusion on the employee’s right to privacy.”9

Ultimately, the Board decided that the employer had taken a reasonable approach to the employee’s request for accommodation.10

The new tort was also considered in Connolly v. Telus Communications Co.,11 in which the defendant provided the plaintiff with a cell phone contract. When setting up his contract, the plaintiff accidentally provided his deceased mother’s Social Insurance Number (“SIN”) as his own. The defendant eventually identified a discrepancy between the plaintiff’s age and the SIN number sequence, and suspended the account. The defendant informed the plaintiff that in order to reactivate his account, he had to provide them with two pieces of identification via fax machine. The plaintiff refused and sued for, amongst other things, breach of privacy.

Deputy Justice L. Gilbert of the Small Claims Court held that the defendant’s request for identification did not constitute intrusion upon seclusion. Specifically, “[t]he Plaintiff… failed to prove any of the elements of the tort: a) the invasion was authorized… and it was not an invasion per se; b) there was nothing nefarious about the use of the SIN…  c) there was no expectation of seclusion in that it was commercially reasonable to have the SIN…  and d) there was no evidence of anguish...”12

While the above cases fall outside the bounds of this new tort, intrusion upon seclusion signals a judicial willingness to expand the common law to provide recourse for invasions of privacy in the digital age.


1 Jones v. Tsige, 2012 ONCA 32. [Jones]
2 Ibid., at para. 72.
3 Ibid., at para. 67.
4 Complex Services Inc. v. O.P.S.E.U., Local 278, 2012 CarswellOnt 3177 (Ont. Arb. Bd. Feb 22, 2012). [Complex Services]
5 Ibid., at para. 2.
6 Ibid., at para. 5.
7 Ibid., at para. 96.
8 Ibid., at para. 92.
9 Ibid., at para. 93.
10 Ibid., at paras. 91 and 124.
11 Connolly v. Telus Communications Co. [2012] O.J. No. 465. [Connolly]
12 Ibid., at para. 43.

John Finnigan and Jessica Prince practise at Thornton Grout Finnigan LLP in Toronto.

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Club Resorts Ltd v. Van Breda: The Supreme Court of Canada considers the test for jurisdiction

By Ilana Schrager and Rahool P. Agarwal

The Supreme Court of Canada’s decision in Club Resorts Ltd. v Van Breda1 addresses the legal test for when a Canadian court should assume jurisdiction over an out-of-province defendant.

For businesses with Canadian ties, Van Breda is a critical decision, as it outlines the circumstances under which foreign companies may be exposed to litigation in Canada.

Background

The decision deals with two actions that were consolidated on appeal. Both cases involved personal injury claims by Canadian citizens arising from accidents they suffered while vacationing in Cuba. One of the named defendants was the company that managed the two hotels where the accidents took place, Club Resorts Ltd. (“Club Resorts”).

Club Resorts argued that Ontario lacked jurisdiction over the actions, or in the alternative, that the doctrine of forum non conveniens should apply. The motion judges in both cases dismissed Club Resorts’ argument and held that the Ontario courts had jurisdiction. The Ontario Court of Appeal upheld both decisions.

The Supreme Court of Canada Decision

The Supreme Court’s decision, written by Justice LeBel for a unanimous court, centres on two key issues: (i) the “real and substantial connection” test for the assumption of jurisdiction; and (ii) the doctrine of forum non conveniens.

Real and substantial connection

The Court affirmed the “real and substantial connection” test as the appropriate common law rule for the assumption of jurisdiction. Justice LeBel emphasized the importance of having a set of specific presumptive factors outlining when the assumption of jurisdiction is appropriate, as opposed to a regime based purely on individualized judicial discretion. He identified the following factors that will, on their face, entitle a court to assume jurisdiction over a claim:

  1. the defendant is domiciled or resident in the province;
  2. the defendant carries on business in the province;
  3. the tort was committed in the province; or
  4. a contract connected with the dispute was made in the province.

Where a connecting factor is established, a presumption of jurisdiction will arise, but that presumption may be rebutted by the party challenging jurisdiction.

The Court noted that the list of factors is not exhaustive and that lower courts have the discretion to recognize additional factors. Justice LeBel set out the following framework with respect to the evaluation of new presumptive factors: (i) the court’s analysis should be guided by the values of order, fairness and comity; and (ii) new presumptive factors should create similar connections to the forum to those created by the presumptive factors already listed.

The doctrine of forum non conveniens

Even where jurisdiction has been established, the doctrine of forum non conveniens gives a court the residual power to decline jurisdiction in order to ensure fairness to the parties and an efficient resolution of the dispute.

The court’s application of this doctrine will be context-driven and is ultimately discretionary. However, Justice LeBel outlined the following factors to help guide the analysis:

  1. the location of the parties and witnesses;
  2. the cost of transferring the case to another jurisdiction, or the cost of declining the stay;
  3. the impact of a transfer on the conduct of the litigation or on related or parallel proceedings;
  4. the possibility of conflicting judgments;
  5. problems relating to the recognition and enforcement of judgments; and
  6. the relative strengths of the connections of the two parties.

Outcome of the appeals

The Supreme Court of Canada dismissed the appeals on the basis that, applying the recognized presumptive connecting factors, the Ontario court had jurisdiction, and Club Resorts had failed to rebut those presumptions. The Court also declined to exercise its discretion under the doctrine of forum non conveniens in both cases, on the basis that considerations of fairness weighed in favour of the plaintiffs.2

Implications

Van Breda confirms that a foreign business that is domiciled, conducts business, or concludes contracts in a Canadian province may be exposed to litigation in Canada, unless the business is able to rebut the presumption of jurisdiction.

The clarified “real and substantial connection” test and its use of objective connecting factors should bring greater predictability and consistency to jurisdictional assessments by Canadian courts.

Consequently, this decision should enable foreign businesses to better assess and manage litigation risk when transacting with Canadian parties or conducting business in Canada. The inclusion of arbitration or exclusive forum clauses in contracts concluded in Canada, for example, may help foreign businesses limit their litigation exposure.

The decision is also of interest to businesses engaged in Internet and/or e-commerce operations. The Court explains that for the purposes of the “real and substantial connection” test, carrying on business in a Canadian province entails “some form of actual, not only virtual, presence in the jurisdiction”.

The list of presumptive connecting factors in Van Breda is not exhaustive, and foreign businesses with Canadian ties should continue to monitor developments in this area of the law. Future decisions may add or modify presumptive connecting factors and provide further clarification with respect to the application of the test.


1 2012 SCC 17 [Van Breda].
2 The Supreme Court applied its reasoning in Van Breda in the dismissal of two other jurisdiction appeals released the same day and involving the torts of libel and defamation: see Breeden v. Black, 2012 SCC 19, and Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18.

Ilana Schrager and Rahool P. Agarwal are members of the litigation group of the Toronto office of Norton Rose Canada LLP. They would like to thank Leo Wang, summer student, for his assistance in preparing this article.

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Fully appreciating Ontario’s new summary judgment rule: An explanation of the Court of Appeal’s decision and its subsequent application

By Ranjan K. Agarwal and Stephen N. Libin

In December 2011, the Court of Appeal for Ontario provided much-needed clarification on the scope and purpose of Ontario’s new summary judgment rule (Combined Air Mechanical Services Inc. v Flesch, 2011 ONCA 764). The issue was important enough that the Court joined together five very different appeals from summary judgment motions, and the appeals were heard by a rare five-judge civil panel.

In the Court’s view, summary judgment motions should be limited to cases where (a) the parties agree to use summary judgment; (b) the claim or defence is without merit; or (c) where the motion judge can “fully appreciate” all of the evidence needed to dispose of the case without a trial. In the intervening six months, Ontario courts have applied Combined Air with varying outcomes . The courts have also had the opportunity to consider the new “motion for directions”, which allows responding parties to stay an inappropriate or premature summary judgment motion. In this comment, we discuss the Court of Appeal’s decision and the cases that have applied it.

The Former Summary Judgment Rule

Since 1985, Ontario’s Rules of Civil Procedure have allowed all parties to move for summary judgment.1 In practice, this means that a motion judge decides whether there is a genuine issue for trial based on a “paper” record without a trial. Prior to January 2010, the summary judgment rule and the case law restricted motion judges’ powers to assess the quality and cogency of the evidence on a summary judgment motion. In particular, judges could not assess credibility, weigh evidence or draw inferences of fact. In practice, summary judgment was generally limited to clearly unmeritorious litigation.

The Amended Summary Judgment Rule

In January 2010, the Ontario Rules of Civil Procedure were amended, based on recommendations made by Hon. Coulter Osborne, QC. He recommended broadening judges’ powers on summary judgment motions to make the rule more effective in disposing of cases earlier in the litigation process.

Although the test for summary judgment was similar (the test was changed from “no genuine issue for trial” to “no genuine issue requiring a trial”), judges are now allowed to weigh the evidence, evaluate credibility and draw reasonable inferences from the evidence. The amendments also allowed judges to hear evidence from witnesses in court on specific, narrow issues and removed the costs presumptions that made parties reluctant to use the rule.

The Full Appreciation Test

In Combined Air, the Court of Appeal interpreted the amendments to mean that summary judgment motions should be brought in three types of cases: (a) the parties agree to use summary judgment; (b) the claims or defences are without merit; or (c) the motion judge can “fully appreciate” all of the evidence and issues required to make a dispositive finding without a trial.

The full appreciation test is novel. Because motion judges only review a paper record and do not see witnesses giving oral testimony, it is more difficult to make findings of credibility. As such, the Court of Appeal cautioned motion judges (and parties bringing summary judgment motions) only to use the rule if the judge can fully appreciate the evidence without a trial. In cases where there are many affiants or where the parties agree that oral evidence would be helpful, it is unlikely that a summary judgment motion is appropriate. It is not enough for the motion judge to be knowledgeable about the motion record or understand the evidence. The judge must decide whether the trial process (including hearing and observing witnesses, listening to the trial narrative and experiencing the fact-finding process first-hand) is required to fully appreciate the evidence and issues.

The Court of Appeal provided guidance on some of the hallmarks of cases appropriate for summary judgment, including document-driven cases with limited testimonial evidence and cases with limited contentious factual issues. In contrast, summary judgment is likely inappropriate in cases involving voluminous motion records, many witnesses, different theories of liability against multiple defendants, conflicting evidence and assessments of credibility.

The New Judicial Tools

The Court explained how some of the new judicial tools should be used on summary judgment motions but cautioned that these tools should only be used by motion judges when they will be satisfied that the motion record, as supplemented by these new tools, will allow them to fully appreciate the evidence. The Court warned that it would be inappropriate to use these new tools when the nature and complexity of the case require the traditional discovery process.

Oral Evidence. The Court of Appeal cautioned that oral testimony cannot replace a full trial and its accompanying narrative. It can assist judges in fully appreciating the evidence to determine if a trial is required. For example, oral evidence may be appropriate where: (i) there are a small number of witnesses that can be gathered in a manageable period of time; (ii) oral evidence will have a significant impact on whether summary judgment is granted; or (iii) there is a narrow and discrete issue.

Trial Management. The motion judge may dismiss the summary judgment motion but give directions to facilitate a more expeditious trial. This power salvages the resources that went into the summary judgment motion but should not result in the identical evidence being presented at trial (i.e., affidavits and cross-examination transcripts should not be treated as a substitute for oral testimony).

Costs. If a party successfully defends a summary judgment motion, it must demonstrate that the moving party acted unreasonably or in bad faith to obtain substantial indemnity costs. There will likely be litigation over whether a summary judgment motion that does not allow the judge to fully appreciate the evidence will be considered unreasonable for costs purposes.

Simplified Rules (Actions Less Than $100,000). Summary judgment motions should rarely be brought in simplified rules actions. Judges must consider whether they can satisfy the full appreciation test, in part because parties are prohibited from cross-examining witnesses in simplified rules motions. Summary judgment motions will only be appropriate for simplified rules cases when the case is based on specific documents and with limited contested evidence.

The Application to the Five Appeals

The Court applied this new framework to each of the five cases on appeal. In Combined Air Mechanical v Flesch and Lakeshore Oakville Holdings Inc. v Misek, the Court affirmed the motion judges’ respective decisions because they each had a full appreciation of the case. In Mauldin v Hryniak and Bruno Appliance and Furniture v Hryniak, which involved allegations of fraud, conspiracy, negligence and breach of contract and 28 volumes of evidence and 18 witnesses, the Court held that these actions should have been resolved at a trial. However given the costs and resources expended by the parties, the Court allowed one of the judgments to stand on the basis that the motion judge did fully appreciate the evidence before him. In Parker v Casalese, a simplified rules case, the Court upheld the Divisional Court’s decision not to grant summary judgment on the basis that a simplified rules motion in these circumstances did not allow for a full appreciation of the evidence. The Court of Appeal did provide directions to narrow the issues at trial. The appellant in Bruno Appliance has sought leave to appeal the decision to the Supreme Court of Canada.

Subsequent Consideration of the Summary Judgment Test by the Courts

In the six months since the Court of Appeal’s decision, the courts have had numerous opportunities to consider the new full appreciation test and to apply it to a variety of situations. The Court of Appeal has itself considered the new test on at least four occasions.2

In light of the “hallmarks” of inappropriate cases for summary judgment identified in Combined Air, Ontario courts have been hesitant to grant summary judgment when there is a voluminous record or multiple findings of fact on conflicting evidence coming from multiple witnesses (e.g., William Grey v Norman Boyd, 2011 ONSC 7288). However, as explained in Honest Art v Decode Entertainment, 2012 ONSC 580, the assessment of the record must be qualitative not quantitative. As such, a voluminous evidentiary record by itself will not prevent a motion judge from fully appreciating the evidence when the documentary evidence is uncontroverted and demonstrates that the other party cannot succeed at trial (Fairview Donut Inc. v The TDL Group Corp., 2012 ONSC 1252).

With respect to cases involving conflicting evidence, courts have been very reluctant to grant summary judgment in such instances. Instead, the courts have indicated that they cannot fully appreciate the evidence without a full trial (e.g., Kastner v Davis, 2012 ONSC 2100, Lefebvre-Jackson v Salt, 2012 ONSC 1719). However, the mere existence of conflicting evidence has been insufficient for the courts to automatically dismiss motions for summary judgment. In both Byfield v Toronto-Dominion Bank, 2012 ONCA 49, and Business Development Bank of Canada v 1626012 Ontario Inc, 2012 ONCA 56, the Court of Appeal rejected evidence that was “bald” or “vague” and instead preferred the testimony supported by documentary evidence.

The Timing of Summary Judgment Motions

In Combined Air, the Court of Appeal delivered a clear message to counsel that the obligation to formulate a proper litigation strategy rests with them. More importantly, the Court provided responding parties with a way to challenge premature or inappropriate summary judgment motions by way of a “motion for directions”. Effectively, such a motion gives the responding party to a summary judgment motion two chances to defend the motion--once on the procedure and once on the merits.

In Livingston v Gravel ((8 March 2012), Toronto CV-08-359997 (Sup Ct)), the respondent brought a motion for directions seeking to stay the summary judgment motion. The court dismissed the motion for directions and, instead, issued a timetable for the summary judgment motion. The motion judge indicated that motions for direction were only available in respect of summary judgment motions brought prior to the completion of discovery such that the motion may be “premature”. Given that discoveries were already complete in this case, there were no further “hurdles”, the motion was not premature and the summary judgment motion could proceed.

In 1318214 Ontario Limited v Sobeys Capital Incorporated (2012 ONSC 2784), Justice David Brown strongly cautioned against lengthy post-discovery summary judgment motions. The court noted that it was often faster and a more efficient use of court resources to hold a trial rather than hear a summary judgment motion that carried with it a risk that the motion would not be successful and a trial would be necessary. As such, parties seeking to schedule or oppose the scheduling of a post-discovery summary judgment motion are required to file detailed, focused and reasoned (i.e. not speculative) information which will allow the court to answer the following questions: (a) What will the proposed summary judgment motion look like?; (b) What will the proposed trial look like?; and (c) If full or partial summary judgment were granted, what amount of preparation and time would be saved?

The court explained that “motions for direction” should not be brought as a formal “motion” (as was done in Livingston) but should instead be dealt with by way of a more informal scheduling appointment or case conference. The response to these decisions may depend on local practice. In Toronto, parties must schedule summary judgment motions at Toronto Region Civil List Motions Scheduling Court, where the same issues may be canvassed without a motion for directions or scheduling a case conference.

Conclusion

The Court of Appeal’s decision brings some clarity to Ontario’s summary judgment rule. Litigants in Ontario are justifiably concerned about the costs of litigation and are looking for cost effective means to resolve their disputes. Although the amendments to the summary judgment rule give judges increased powers to determine if a trial is necessary and aid the goal of access to justice, it now appears clear that judges can only give heed to that objective when they have a full appreciation for the factual and legal issues in dispute. However, notwithstanding the presence of certain “hallmarks” of cases where summary judgment should not be granted, judges have not shied from granting summary judgment as some counsel thought might happen.


1 Prior to 1985, the summary judgment mechanism was very limited and rarely used.
2Caton v Devecseri Estate, 2012 ONCA 6,  Business Development Bank of Canada v 1626012 Ontario Inc, 2012 ONCA 56, Byfield v Toronto-Dominion Bank, 2012 ONCA 49 and Cosford v Player, 2012 ONCA 276.

Ranjan K. Agarwal and Stephen N. Libin, Bennett Jones LLP

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Agreed statements of fact in settlements with securities regulators are admissible in subsequent civil litigation

By Samuel M. Robinson

A recent decision of a trial judge in Nova Scotia in National Bank Ltd. v. Potter, [2012] N.S.J. No. 97 (N.S.S.C.) has confirmed the admissibility at trial of an agreed statement of facts contained in the settlement of an enforcement proceeding by the Investment Dealers Association of Canada (“IDA”, a predecessor to the Investment Industry Regulatory Organization of Canada). This is the first time an agreed statement of facts from a regulatory settlement has been used at trial, and it provides insight into how these statements may be used in the future.

The issue arose during the trial of the action this past winter. In the action, it is alleged by certain defendants (plaintiffs by counterclaim) that National Bank Financial Limited (“NBFL”) failed to adequately supervise an employee at its Halifax Branch office, and that this resulted in losses for this those defendants.

These defendants/plaintiffs by counterclaim sought leave to admit as evidence for proof of its contents an agreed statement of facts contained in a settlement agreement made by NBFL with the IDA in August, 2007. The settlement agreement related to an enforcement proceeding by the IDA regarding inadequate supervision at NBFL’s Head Office Branch in Montreal.

NBFL objected to the statement of facts being read in as evidence at trial. It argued that the entire settlement agreement (including the agreed statement of facts) is protected by a settlement privilege that has not been waived by either NBFL or IDA. It further argued that the admission of settlement agreements would be bad public policy because it would create a disincentive to settlement. Finally, NBFL argued that the agreed statement of facts was irrelevant and prejudicial.

Justice Warner held that settlement privilege does not attach to a concluded settlement agreement with a securities regulator. “Admitting such agreements”, he wrote, “serves an overriding interest of justice…in that admission maintains public confidence in the governmental and self-regulation of investment dealers in Canada” (at paragraph 37).

Having found the settlement agreement is not privileged, Justice Warner concluded it is relevant and admissible as similar fact evidence because it related to a failure to supervise by NBFL (albeit at a different branch office). He therefore concluded that its probative value exceeded its prejudicial effect.

In coming to these conclusions, the trial judge considered the decisions in Hill v. Gordon-Daly Grenadier Securities (2001) 56 O.R. (3d) 338 (Div. Ct.), Clarke v. Yorkton Securities Inc. (2003), 46 C.P.C. (5th) 294 (S.C.J.) and Buckingham Securities Corp. (Receiver of) v. Miller Bernstein LLP (2008), 91 O.R. (3d) 207 (Ont. S.C.J.), in which Ontario judges had held that agreed statements of fact made between a party and the OSC can be read used as evidence against that party in a civil action arising out of the same transactions.

The Nova Scotia decision arguably goes much further than the Ontario cases, however, for two reasons. First, the Ontario decisions were made on motions rather than at trial. These decisions are all subject to the overriding power of the trial judge to determine the admissibility of evidence; nor do they address how prior regulatory settlements will actually be used at trial. This question is now answered by the Nova Scotia case. Second, and more significantly, the Ontario decisions all contemplated the use of the statements of fact in a civil action arising out of the very same transaction that was the subject of the regulatory enforcement action and settlement. The Nova Scotia case, by contrast, allows the use of the admitted facts as similar fact evidence in an action related to a different branch (and different employees) of the defendant dealer.

If the law as found in the Nova Scotia case is generally followed, this will substantially increase the risks for parties settling regulatory enforcement proceedings that any admissions made in the settlement will come back to haunt them.

Samuel M. Robinson is a partner, litigation, at Heenan Blaikie LLP in Toronto.

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Nova Scotia automobile insurance reforms

By Peter C. Rumscheidt and Amy E. MacGregor

In November 2011, Nova Scotia's Government introduced the Fair Automobile Insurance (2011) Act, which contained significant amendments to automobile insurance in the province. The reforms are intended to provide better coverage and more choice for consumers and are being implemented in two phases. Phase 1 changes took effect on April 1, 2012. Phase 2 changes are effective April 1, 2013.

The most significant change in the Phase 1 reforms is enhanced mandatory no-fault benefits. Under the enhanced mandatory no-fault benefits, medical/rehabilitation benefits have doubled from $25,000.00 to $50,000.00 and benefits for loss of income have increased from $140.00 per week to $250.00 per week. Funeral benefits, death benefits and unpaid housekeeper benefits have also increased.

Also included in the Phase 1 changes are a volunteer fire department levy, intended to help offset the costs incurred by volunteer fire departments when responding to motor vehicle collisions; a prohibition on premium increases where an insured pays the cost of damage themselves and no claim is made; and a provision for a periodic review of automobile insurance law at least once every seven years.

In Phase 2, the Province will introduce diagnostic and treatment protocols for minor injuries. These protocols will be based on Alberta’s model, which has been in place since 2004. The protocols are intended to ensure that people with minor injuries do not have to wait for approval from their insurer before they begin treatment and are premised on the belief that early diagnosis and treatment will speed up recovery times for those who sustain a minor injury in a motor vehicle collision. Under the diagnostic and treatment protocols, it is expected that people who suffer sprains, strains, and minor whiplash injuries will be able to access certain treatments in a specified time period without insurer approval. The protocols will likely remain flexible and provide for treatment outside the protocols subject to insurer approval.

The Phase 2 reforms will also introduce an optional full tort product for minor injuries, giving consumers the right to pursue further compensation outside the minor injury scheme. Phase 2 will also bring in direct compensation for property damage and limited liability and new priority of pay rules for rental companies.

These reforms represent a major change to Nova Scotia's automobile insurance law. 

Peter C. Rumscheidt and Amy E. MacGregor practise at Cox & Palmer in Halifax.

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JULY 2012

Editor:
Daniel M. Glover
Production:
Rose Wilson
Staff Liaison:

Gathoni Njuguna

Contributors:
Rahool P. Agarwal
Ranjan K. Agarwal
John Finnigan
Stephen N. Libin
Amy E. MacGregor
Jessica Prince
Samuel M. Robinson
Peter C. Rumscheidt
Ilana Schrager

Published by the Canadian Bar Association's National Civil Litigation Section.

The views expressed in the articles contained herein are solely the views of the authors, and do not necessarily represent the views of the Canadian Bar Association.

 

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• Assessing Your Case for Appeal
• Written Advocacy: Drafting the Winning Factum
• Risk Management for Litigators

Corporate
• Effective use of technology in corporate transactions
• Tips for Negotiating and Drafting Purchase and Sale Agreements
• Tricks and Traps of Financial Statements: A Lawyer's Guide
• Labour & Employment Due Diligence
• Environmental Issues in Corporate Transactions
• Share Capital Design
• Cross-Border Deals
• Risk Management for Business Lawyers

 

THE CANADIAN BAR ASSOCIATION:

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Tel: 613-237-2925
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Fax: 613-237-0185

E-mail: cbanews@cba.org

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