In the Trenches

(picture from Court of Appeal Website)

By Jason Botelho, Associate

In December 2011, the Ontario Court of Appeal rendered a landmark decision in Combined Air Mechanical v. Flesch which sought to provide greater clarity on the recently amended Summary Judgment rule (Rule 20) of the Rules of Civil Procedure. Although the test for summary judgment was similar to the previous one (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 Court of Appeal provided three types of cases that lend themselves to summary judgement motions. They are:

• the parties agree to use summary judgment;
• the claims or defences are without merit; or,
• the motion judge can “fully appreciate” all of the evidence and issues required to make dispositive finding without a trial.

As part of their decision the Court of Appeal established the ‘Full Appreciation Test’ which allows use of the Rule in cases where the judge can fully appreciate the evidence without a trial.

If a judge finds that that they are able to have a full appreciation of the evidence without the necessity of hearing and observing witnesses and having the full experience of the fact-finding process first hand, then the Summary Judgment motion will be appropriate in these instances. The Court of Appeal cautioned motion judges to only use the rule if the judge can fully appreciate the evidence without a trial. Cases which are more reliant on documents than witness testimony would seem to lend themselves more appropriately to this motion.

Remember not all cases are appropriate for the summary judgment motion. It is best to speak with one of the fine lawyers on our litigation team to help clarify all the nuances involved in this and other legal issues.

With a few magic words at a ceremony in June this year I was transformed from a mere Student-at-Law into a Lawyer, with all the powers, privileges and responsibilities that come as part of the profession.  It was a great feeling to be leaving behind my life as a student, all that learning, tests, and constant evaluation and joining the world of the professional, no more evaluations, no more tests, and having the answers for all of the questions.

Well not really, just like every transformation I had experienced previously, child to teenager, teenager to adult, elementary school student to high school student, high school to University there was no abrupt change from before and after a ceremony, aside from having a socially acceptable excuse for wearing robes in public of course.  It turns out that those magic words did not give me all the knowledge and wisdom to be able to answer any question, and there still are evaluations and tests; every time you interact with a client or stand before a judge you most certainly are being tested and evaluated. 

The most important thing that I have learned from the transition from Student-at-Law to Lawyer is that change, personal growth and learning is fundamental to our profession and never ending, each day you should be building on the last, becoming a better lawyer by improving our skills, learning about and keeping up with advances in the law, and providing more efficient and effective service to our clients.   This is not something that ends at the Call to the Bar, but continues right on through a lawyer’s entire career.

By John Barzo, Associate

We hear a lot about environmental issues these days: Climate Change is a very current topic of conversation.  The focus used to be smog.  Anyone remember acid rain?

Anyhow, there are also day to day issues that come up that can present sticky (sorry, couldn’t resist) legal problems.  True, these are not the ‘big’ issues of national or global importance, but they are important nonetheless.

The most common issues relate to property.  Owner ‘A’ runs a business using chemicals that spill onto Owner ‘B’s’ land.  There is now a maze of regulatory issues, statutory claims, and claims arising pursuant to the common law.  Not to mention the insurance coverage issues.  In many cases there are leasing issues as well.  Let’s talk about that.

For example, owner of commercial lands leases to a business that utilizes chemical processes, or operates a gas bar, or pretty much anything else.

Leases will have (or should have) provisions dealing with contamination.  In certain circumstances, based upon the wording of the lease, the risk of damage to the property as a result of environmental contamination can be deemed to be allocated to the landlord/owner.  For example, if in the provisions dealing with which party is to obtain insurance for such an event, and if it calls for the landlord to do so, a court could conclude that the parties agreed that the risk of loss falls on the landlord, and therefore cannot sue the tenant for the tenants negligence.

The more common situation are provisions that make it clear that the tenant is responsible.  Of course that is of little use unless there is insurance to back it up.  In these cases, the lease will call for the tenant to obtain insurance, and that such insurance is to include coverage for environmental contamination.  Further, the lease will call for the tenant to produce a ‘certificate of insurance’ to confirm such coverage upon request by the landlord.  This is where things usually breaks down.

Landlords rarely, in my experience, ask for the certificate during the currency of the lease.  More importantly, in my view, a landlord should look at the specific policy in place at the time of entering the lease to ensure coverage is appropriate.  Even if there is coverage, the extent of exclusions and escape clauses for the insurance company to deny coverage are often vast and numerous.

Because insurance does not seem to be an issue until there is a problem, a landlord can find out too late that there is no adequate insurance available to address cleanup and damages. What’s worse, the statutory and regulatory requirements are such that the landlord is now on the hook for the cost of cleanup.  And heaven help the landlord if any of the contamination has migrated to a neighbour’s property!

By Scott Fairley, Partner

During the summer months construction projects are in full swing.  As the construction season progresses and projects near completion, the time comes when contractors and subcontractors start to review their accounts and start to ask questions such as: When can I expect to receive my final draw?  Am I going to get paid?  Do I need to register a construction lien?  While the hope is that full payment is made on all projects, it is worthwhile to take some time to be prepared to protect your interests as project move towards completion, in case funds don’t flow.  The following is an outline of various items to consider in determining if you are prepared for the possibility that you may have to take steps to get paid, with particular reference to Construction Lien Act issues:

• Has a certificate of substantial performance been published for the contract under which you are working.  If so, it can affect the deadline for registering a claim for lien.  The time to register a claim for lien runs from the last supply / completion date or the date of publication of a certificate of substantial performance, whichever is earlier.  It is up to you to keep track of whether certificates are published on your projects.  Refer to the following website to review published certificates:  http://www.dcnonl.com/csp/
• If you have contracted directly with the owner of the land, the 45 day time to register a lien begins to run on the date on which you completed or abandoned the project, unless a certificate of substantial performance was published prior to that date, in which case the date of publication governs.    
• If you are a subcontractor, the 45 day period begins to run on the date of last supply of services or materials, unless a certificate was published prior to that date, in which case the date of publication governs. 
• A lien exists once materials or labour are supplied to a project.  To keep a lien, it must be “preserved”  by registering it on title and “perfected”  by commencing a court action or sheltering under another perfected lien.  If a lien is lost it cannot be revived.
• Are you aware of the proper legal name of the party with whom you have contracted?
• Are you aware of the name of the owner of the project and the municipal address to allow title searches to be completed?
• If possible, you should obtain the proper legal description of the project to ensure that you are able to register your lien on the correct property. 
• Have you calculated the amount owing, and to be included in the lien, without interest?  The Construction Lien Act does not allow you to lien for interest, so it will be necessary to be able to separate the principal amount of the account.
• Is there a Labour and Material Payment Bond against which you could advance a claim

The above information will be useful in expediting your claim and ensuring that you do not run out of time before a claim for lien is registered. 

by John Barzo, Associate

I previously wrote on this issue at: INFIDELITY, MATRIMONIAL HOME AND MORTGAGES.

In order to stop the lender from selling the property via Power of Sale, we had to argue a hard fought motion in court. Victory!

A redacted copy of the decision can be found below.  What is clear is that the lender's multimillion dollar mortgage is seriously at risk.

By Eric Finn, Associate

Rarely do expropriation cases get leave to appeal to the Supreme Court of Canada; so, it is interesting to see that the claim for compensation for injurious affection by Antrim Truck Centre Ltd. against the Province of Ontario, as represented by the Minister of Transportation, will be given consideration by Canada’s highest court.  The Supreme Court will be called upon to give consideration not only to the injurious affection provisions of the Ontario Expropriations Act but also, because of the nature of the claim, to the principles relating to the application of the tort of nuisance.

Antrim owned a property which it operated as a truck stop on Highway 17 in the vicinity of Ottawa.  As a result of concerns for traffic safety, the Ministry of Transportation decided to design and construct a new four-lane section of Highway 417 which bypassed the site of the truck stop.  Prior to the construction, motorists could access the site directly from Highway 17; subsequently, access from Highway 17 was by way of an exit and a route of approximately two kilometres.  As a result of the construction of the bypass, Antrim decided to relocate its truck stop business on a property in the Arnprior area.

The construction of the new highway did not require the expropriation of any land from Antrim but the Expropriations Act does provide that, even where no land has been expropriated, an owner may claim compensation for injurious affection in the nature of a reduction in the market value of the land and personal or business damages arising out of the “construction and not the use of the works”.  The provision goes on to state that the claims must be such that “the statutory authority would be liable if the construction were not under the authority of a statute.”  The requirement therefore has two key elements:

1.      The claim must arise from the construction, and

2.      The authority would have to be liable at common law, usually on the basis of nuisance.

Antrim decided to proceed to the Ontario Municipal Board, as provided for in the Expropriations Act, with an injurious affection claim.  The claim had several elements to it.  First, Antrim claimed that the value of its property on Highway 17 had been reduced by $335,000 as evidenced by the sale of the property shortly after the opening of the new site.  Second, there was a claim of $58,000 for loss of business at the original Antrim site.  Third, there was a large claim for the relocation costs involved with the move of the business.

The Board concluded that none of the relocation costs were compensable under the Expropriations Act in the absence of an expropriation.  As noted, a claim for injurious affection where no land is taken has to relate to a reduction in value of the affected land and personal or business damages arising out of the use of that land.

With regard to the claims for the loss in value to the land and the business loss arising out of the use of the land, the Board had to decide whether the two required elements had been met.   It was found that the claims did arise from the construction of the bypass as it effectively left the property fronting on what was left of the old Highway 17.  Determining whether the activities of the Ministry would have been actionable at common law was somewhat more difficult.  Reasonableness is normally a defence to nuisance and the Board had no difficulty in finding that the Ministry had been reasonable in its design of the new highway in light of the public interest in highway safety.  However, the Board found that where the construction resulted in a “serious impairment” to the claimant, a claim in nuisance could succeed.  The Board found that the Highway 17 access which the property had after the construction was “but a shadow of what it was before Highway 417”  and that was “serious impairment.”  As a result, the claims for the reduction in value and business loss were allowed.

The Province appealed the award to the Divisional Court and Antrim cross-appealed the disallowance of the claim for relocation costs.  The Court gave a substantial review of the applicable provision of the Expropriations Act and the law of nuisance but came to the same conclusion as the Board.  Both the appeal and the cross-appeal were dismissed.

Again the Province appealed to the Court of Appeal and Antrim cross-appealed.  The decision of the Court of Appeal is an in depth analysis of the law of nuisance.  The Court held that the Board and the Divisional Court had concluded reasonably that there had been substantial interference with the access to Antrim’s property.  However, the Court went on to decide that the interference was not unreasonable.

            “The interference was such that it fell within the boundaries of what the reasonable property owner in the area should be expected to tolerate and was the result of a project that served the public interest – more, was actually essential to public safety.”

The Court allowed the Province’s appeal and dismissed the cross-appeal of Antrim.  In the end result, the claim of Antrim was completely dismissed.

As noted above, Antrim sought, and was granted, leave to appeal to the Supreme Court of Canada.  The Supreme Court last dealt with a claim for injurious affection where no land was expropriated in 1987 in the case of  St. Pierre v. Ontario.  That case also involved claims for damages arising out of the construction of a highway and the Supreme Court denied the claim concluding that “highway construction will cause disruption” and “to fix the Minister with liability for damages to every landowner whose property interest is damaged … would place an intolerable burden on the public purse.”  The Court also concluded, however, that there is a “balancing process inherent in the law of nuisance” between the public good and the disruption and injury.  We will have to wait to see what the Supreme Court will conclude in the balancing of interests involved in the Antrim case.

By Jason Botelho, Associate

Ok, so you decided to commence a claim for monetary damages and after some hard work by either yourself or your lawyer, you win and you get judgment; congrats! Now, while you may think that the cheque will arrive any day, the truth of the matter is that you may be waiting quite some time before you receive a penny. Unless the person you sued has assets, or you are a secured creditor, it may be that the satisfaction of the judgment may never come to fruition. Don’t despair though, there are steps that you can take that may increase your recovery rate. 

One option in enforcing a judgment is to file a “Writ of Seizure and Sale of Land”. This is done at the local Sheriff’s Office in the region where the debtor owns land, most likely in the jurisdiction where the debtor lives. These executions then attach to any property owned by the debtor in that particular region. This writ will cause problems for the debtor should the debtor attempt to sell or mortgage the land as the writ will show up on an execution search. The writ is effective for 6 years and can be renewed for a further 6 years indefinitely and, yes, there are fees associated with these filings and renewals. 

What happens if the debtor has no property? Well that’s when things get a bit trickier and more costly. A judgment creditor does have the option of bringing the debtor to a judgment debtor exam in order to question them about his/her assets and find out where he/she works and banks. This information is useful as it leads to another option for a judgment creditor - garnishment. This form of enforcement allows the judgment creditor to garnish bank accounts and wages to satisfy a judgement. Please note that there are some exemptions; not all sources of monies are subject to garnishment and there are limitations on the percentage an employer can deduct from a debtor’s wages for garnishment. It is best to speak to a lawyer to find out what can be garnished and by how much. 

So, while you may think that obtaining judgment is the final chapter in your quest for recovery of money, the unfortunate reality is that it is not. The hard and fast truth is that a successful judgment is the end of one journey and the beginning of another.

One would assume, given that I’m highly allergic, I would avoid having egg on my face; however, as a litigator I recently learnt that, despite having thoroughly vetted my client, it is unfortunately part of my job description.

Although we’ve all experienced it at one point or another during our career - no one, least of all me, likes looking like a fool, especially in the presence of an adjudicator. There is nothing worse than walking into the Courtroom after hours of preparation only to discover that your client has fabricated his or her story (in whole or in part). Regardless of their reasoning, this can and will destroy the client’s creditability and their chance of success at trial. 

Knowledge is power - without it, my ability to review, assess and formulate an effective strategy is difficult, if not impossible. It is far easier to deal with/overcome the skeletons in one’s closet if I’m made aware of them in advance, rather than being blindsided in the Courtroom when it is usually too late to help the client recover from them. 

For those of you who think the truth will not come out, you are sadly mistaken. In civil litigation, it is always in your best interest to tell your legal representative the truth, the whole truth and nothing but the truth!

On May 24 and 25, 2012, the community of Paisley, Scotland, celebrated the 80^th anniversary of a landmark House of Lords legal decision that changed the law of negligence and paved the way for products liability cases of the present day.

On August 26, 1928, May Donoghue, a modest shop worker on a daytrip to Paisley from nearby Glasgow, stopped for refreshment at the Wellmeadow Café, where a friend bought her a bottle of Stevenson’s Ginger Beer. Unbeknownst to Mrs. Donoghue, according to the documents in a subsequent law suit, the opaque bottle hid its deep dark secret – a snail.  Imagine Mrs. Donoghue’s delight when she emptied the bottle of liquid refreshment to find the carcass of a snail.  This was not the proverbial worm in the tequila!!

No doubt Mrs. Donoghue had splendid legal advice for she immediately commenced a lawsuit to recover damages for the shock of coming across the surprise in her ginger beer.  There were a couple of hurdles, however.  First, the friend had purchased the ginger beer so Mrs. Donohue had no contract with the Café.  Second, the most obvious culprit was Stevenson, the manufacturer of the ginger beer but likewise she had no contract with that company.  Nevertheless, the action was commenced against Stevenson alleging that the company was negligent and owed a duty not to harm Mrs. Donoghue even though she had no contract.

As the position taken by Mrs. Donoghue in the lawsuit was novel, the lawyers for Stevenson brought a motion in court to strike out the action without having to proceed to a trial.  The legal issue raised by the motion eventually made its way to the House of Lords, where, in 1932, the decision was made that Mrs. Donoghue was entitled to proceed with her action against Stevenson in negligence even though there was no contractual relationship.

The decision in Donoghue v. Stevenson changed the law of negligence and products liability when Lord Atkins pronounced the following words:

“Love your neighbour becomes in law you must not injure your neighbour…You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour… a duty of reasonable care.”

 So Mrs. Donoghue’s lawsuit survived this attack on her right to sue and the case could proceed.  The unfortunate conclusion to the story is that there is no record of there ever being a trial.  There was, therefore, no proof in a court of law that the snail was in the bottle, that Mrs. Donoghue had drunk the ginger beer (or the snail) or what consequences Mrs. Donoghue suffered as a result of the presence of the creature.

Fast forward to 2008 and the decision of the Supreme Court of Canada in Mustapha v. Culligan of Canada Ltd.  This was a case where there literally was a fly in the ointment.  While in the course of replacing an empty bottle of drinking water with a full one, Mr. Mustapha saw a dead fly and part of another dead fly in the unopened replacement bottle.  Obsessed with the event and its “revolting implications” for the health of his family, he developed a major depressive disorder, phobia and anxiety.  He sued Culligan, the supplier of the bottle of water, for psychiatric injury.  The trial judge awarded him general and special damages, as well as damages for loss of business, but the Court of Appeal overturned the judgment on the basis that the injury was not reasonably foreseeable and hence did not give rise to a cause of action.

The Supreme Court of Canada held that Culligan had breached the duty of care which it owed to Mr. Mustapha.  However, the Court held that Mr. Mustapha had failed to show that it was foreseeable that a person of ordinary fortitude would suffer serious injury from seeing the flies in the bottle of water he was about to install.  In the end result, Mr. Mustapha received no compensation for the psychiatric injury.

When the celebrations in Paisley took place, I am sure that all participants examined their bottles, whether of water or other liquid refreshment, to make sure that no unusual creatures were present.  As summer approaches, we might all want to do the same! 

The trust provisions of the Construction Lien Act (“The Act”) can provide an effective way to pursue repayment of an account even after the time to register a lien has lapsed.  Essentially, the funds that are intended for the financing of an improvement are deemed to be trust funds that cannot be used for any purpose other than to fund the project.  The trust provisions can be used to avoid or minimize the impact of having the person who owes money on a construction project going bankrupt.  A breach of trust action can be allowed to continue against a person even if he or she has filed for bankruptcy prior to or during the lawsuit.     The trust provisions of the Act also allow a party to pursue payment from a director, officer or certain employees of a debtor company personally in appropriate circumstances.  These provisions can also provide a creditor with the right to trace the trust funds into other property that was purchased with trust funds.  In light of recent economic performance and the increasing number of bankruptcies, breach of trust is a potential remedy that should be considered. 

It is important to note the trust claim is an additional remedy to the lien on the land and the charge on the holdbacks.   Breach of trust must be pursued through a separate law suit and cannot be joined together in a lien action.  The separate action can be commenced against the debtor as well as the director, officers or employees having effective control of the company’s activities. 

Requirement of An Improvement 

To benefit from the trust provisions the plaintiff (the person bringing the law suit) must be someone who was entitled to a lien.  The claimant must prove that there was an improvement and that a supply of labour or material was made.  It is necessary to establish a link between the materials and an improvement, although it may not be necessary to prove that the supplier intended for a supply to be incorporated into a known and specific project.  It is a good practice for a supplier to ensure, to the extent possible, that purchase orders or other documents reflect the address and project to which the equipment or services are going to avoid uncertainty. 

It is the plaintiff’s onus to prove the existence of a trust. Once this is done, the onus shifts to the defendant to show that it applied funds in a manner that is consistent with the trust.  So, if a defendant can demonstrate that payments were made out of the trust funds to a proper beneficiary of the trust, there is no liability. Thus it is not a breach of trust to pay subcontractors and supplier on Project A with trust funds received on Project A, even if there is not enough to pay everyone.  However, it is a breach of trust for a trustee to pay itself, fund a personal expense, or pay its own overhead before making payments to the beneficiaries of the trust.  It is important that a trustee keep good records of the money flow on a project in order to be able to satisfy this onus if it is called upon to do so.