Fairhurst v. De Beers Canada Inc., 2012 BCCA 257

The British Columbia Court of Appeal considered whether harm caused by conspiracy fits under the mandatory presumption categories under s. 10 of the Court Jurisdiction and Proceedings Transfer Act (CJPTA) that determine a real and substantial connection to the jurisdiction of British Columbia. Justice Newbury held that a conspiracy causing harm in British Columbia is sufficient to establish the real and substantial connection necessary to prove jurisdiction under these provisions. Jurisdiction had been established and the appeal dismissed. 

The significant issue arose in the context of a cluster of inter-connected companies alleged to be conspiring to fix diamond prices worldwide. The plaintiff represented a class of consumers in British Columbia who bought the diamonds in the province at an increased price due to conspiracy. The defendants argued that they were not involved in selling gem-grade diamonds and, with the exception of De Beers Canada, did not perform any operations in Canada throughout the relevant period. Sections 10(g) and 10(f) of the CJPTA state that a real and substantial connection is presumed to exist where the facts allege restitutionary obligations that arose in British Columbia or where the facts allege a tort committed in British Columbia. Justice Newbury held that a conspiracy causing harm in British Columbia is sufficient to establish the real and substantial connection necessary to prove jurisdiction under these provisions. She noted a similar approach was taken in both Ontario (Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd. [2002] O.J. No. 298) and in Quebec (Option Consommateurs v. Infineon Technologies AG, 2011 QCCA 2116), where purely economic harm caused in the jurisdiction by conspiracies originating abroad is regarded as appropriate proof of a real and substantial connection to the jurisdiction. The Court of Appeal dismissed the defendants’ appeal and maintained that jurisdiction had been established.  

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Rebecca Vasluianu

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Morrison v Van Den Tillaart, 2012 BCCA 185

In this case, the British Columbia Court of Appeal holds that time for appealing the allowance of a no-evidence motion pursuant to the Court of Appeal Act, R.S.B.C. 1996, c. 77, begins to run once the motion is ruled on and not once the trial has concluded. In other words, the allowance of a defendant’s no evidence motion at trial triggers a right of appeal for the plaintiff.

Section 14(1)(a) of the Court of Appeal Act imposes a 30-day time limit for filing an appeal. The plaintiff at trial appealed the allowance of the defendant’s no evidence motion after the trial against the other defendants had concluded – more than 30 days after the motion was allowed. The Court departs from the “order” approach taken in Glover v Magark ([1997] B.C.J. No. 766, 31 B.C.L.R. (3d) 9). In that case, a decision on a non-suit motion was deemed not appealable because it was not an interlocutory order or an order authorized by the rules of civil procedure. Rather, it was a ruling on evidence which formed part of the trial process. To support its conclusion, the Court cites the reasoning in Ceapro Inc. v Saskatchewan (2008 SKCA 64, [2008] S.J. No. 316):  A non-suit judgment is a final judgement which disposes of the issues between the parties; it is not subsumed in the final judgment to be delivered against the other defendants at the end of the trial; the appeal would not interrupt or delay the trial. The Court also cites Stanley v Godwin (2002 BCCA 166, [2002] B.C.J. No. 451) for its proposition that a non-interlocutory order may still trigger a right of appeal.

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Dane Richard

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General Electric Canada Company v. Aviva Canada, Inc. and The Dominion of Canada General Insurance Company, 2012 ONCA 525

At issue in this case was whether an insurer who agrees to defend suits, under a general liability insurance policy, must pay the insured’s costs of voluntary compliance with a regulator’s requirements. The Court of Appeal for Ontario ruled in the negative, approving the lower court’s distinction between defence costs and compliance costs while rejecting the reasoning of some US courts.

The respondent insurers agreed, under a general liability policy, to defend suits on behalf of the insured General Electric (GE), and to investigate or pay the costs of investigating those claims. GE received a letter from the Ontario Minister of Environment (MOE) requiring that GE investigate and report on contamination of groundwater near land it had owned and occupied. GE voluntarily complied, and incurred significant costs in doing so. GE then sought a declaration that its insurers should bear those costs. The trial judge had held that by complying, GE did not defend; therefore, it could not claim the associated costs under the insurer’s duty to defend. The Court of Appeal for Ontario agreed. Armstrong JA declined to follow those US courts which had held that an adversarial process commenced upon receipt of a regulator’s letter, triggering an insurer’s duty to defend. Rather, he held that any potential liability which GE might face under the Environmental Protection Act, R.S.O. 1990 was at that stage only speculative, and therefore irrelevant to the characterization of the costs in question.

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Aaron SanFilippo

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Steinberg v. Ellis Entertainment Corp., 2012 ONCA 362

In this case, the Ontario Court of Appeal considered a complicated pleadings issue. A corporation and an individual jointly defended an action; the corporation also counter-claimed. When the corporation became insolvent, it failed to pursue its defence. Its defence was struck out, and a creditor assigned the counterclaim to the individual, who obtained an order to continue the counterclaim. Is the individual permitted to amend his pleadings to make them consistent with the counterclaim? The court unanimously dismissed the appeal, stating that to allow the amendments would be an abuse of process.

Steinberg, a former employee of Ellis Entertainment Corporation, began a wrongful dismissal action against the corporation and against Ellis, its CEO, personally. The corporation and Ellis jointly defended the action, stating in their statement of defence that Steinberg voluntarily resigned from his employment with the corporation or, alternatively, that Steinberg had engaged in serious misconduct that justified termination of his employment for cause. When the corporation become insolvent, its first-ranking secured creditor acquired the counterclaim, and in turn, assigned it to Ellis. Steinberg obtained an order striking the corporation’s defence, and consequently, the corporation was deemed to have admitted the allegations in the statement of claim, including that Steinberg was wrongfully dismissed. The corporation's counterclaim did not contain any allegations specific to it, but rather recited a number of allegations of misconduct by Steinberg during his employment with the corporation. These allegations were inconsistent with and contrary to the corporation's deemed admissions.

Ellis argued that the deemed admissions of the corporation had no impact on the legal viability of the counterclaim because the corporation lost all of its rights and interests in the counterclaim when the secured creditor had acquired its assets; by the time the corporation's statement of defence was struck out, the corporation no longer had the right to advance that counterclaim since Ellis had acquired it personally by assignment. However, Gillese JA stated that the effect of the assignment was to give Ellis the right to pursue the counterclaim on behalf of the corporation, due to which Ellis could not have a better claim than the Corporation.

In response to Ellis's argument that Steinberg's appeal constituted a collateral attack on the order to continue, Gillese JA wrote that the striking out of its statement of defence meant that the Corporation could not succeed in establishing the claims in the counterclaim.  Because of this, the amendments that Ellis sought to make were not tenable at law, and as a result, the order of Hainey J had not allowed a collateral attack.

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Bhuvana Sankaranarayanan

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Pridgen v. University of Calgary, 2012 ABCA 139

In Pridgen v University of Calgary, the Alberta Court of Appeal considered whether universities are Charter-free zones, and whether the University exercised reasonable discretion in its decision to impose disciplinary sanctions on students who had publicly criticized their instructors and educational institution on social networking sites. All three judges in the Court of Appeal ultimately upheld the decision of the Alberta Court of Queen’s Bench, which quashed the disciplinary measures taken against the students, but the three concurring judgments had nuanced differences in their opinions.

Paperny JA held that McKinney v University of Guelph, [1990] 3 SCR 229 did not rule out Charter applicability on university campuses for all purposes. In Greater Vancouver Transportation Authority v Canadian Federation of Students - British Columbia Component, 2009 SCC 31, the Supreme Court of Canada held that the Charter applies: (i) where the entity itself is a body of government; or (ii) to certain activities conducted by a non-governmental entity, where the activities are considered governmental in nature. Further, Eldridge v British Columbia (Attorney General), [1997] 3 SCR 624 affirmed that the actions of otherwise private entities may be subject to Charter review if they are classified as “governmental” activities. Paperny JA, in emphasizing that the university-student relationship is not a matter of purely contractual relations, held that the imposition of discipline by universities, an activity considered governmental in nature, should attract Charter scrutiny. She further emphasized that the application of the Charter in these circumstances does not undermine or interfere with academic freedom. Consequently, the university’s decision to discipline the students was quashed as it infringed on the students’ freedom of expression, and could not be saved by section 1 of the Charter.

McDonald JA, in a concurring judgment, affirmed the Chambers judge’s decision that the students’ conduct did not warrant disciplinary measures. However, the decision was based entirely on administrative law grounds, as he found it was unnecessary to perform a Charter analysis. In the third judgment, O’Ferrall JA found that the university ought to have considered whether its discipline violated the students’ rights to freedom of expression and freedom of association, and noted that they were concepts that long pre-dated the Charter.

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Bhuvana Sankaranarayanan

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Valgardson v. Valgardson, 2012 ABCA 124

In Valgardson v. Valgardson, the Alberta Court of Appeal considered the appropriate standard of proof to establish a complainant’s good faith when seeking leave to bring a derivative action pursuant to s.240(2)(b) of the Alberta Business Corporations Act. The Court of Appeal allowed the appeal, and held that the chambers judge erred in holding the complainant to a higher standard of proof than the balance of probabilities to establish good faith. The Court of Appeal also held that on the balance of probabilities, the complainant had demonstrated good faith.

The issue of whether or not there should be a “high onus” on the complainant to demonstrate good faith in a derivative action arose in the context of one brother seeking leave to bring a derivative action against two other brothers and their jointly owned family businesses. The chambers judge held that there was a high onus on the complainant to demonstrate that the action was brought in good faith, and that the animosity between the brothers and the fact that there was other unresolved litigation between them demonstrated that the action did not meet this high standard of proof. The chambers judge had relied on holdings from courts in Alberta, Newfoundland and British Columbia stating that there is a high onus on the complainant to establish good faith when seeking leave to commence a derivative action. However, the Alberta Court of Appeal confirmed that absent any statutory language to the contrary, the standard of proof in civil suits is the balance of probabilities, without any elevated high onus for questions of good faith. 

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Penny Garnsworthy

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Karafiat v. Webb, 2012 ABCA 115

In this case, the Court of Appeal of Alberta considered whether the Appellant’s secured interest in land was defeated by operation of the Dower Act, RSA 2000, c. D-15. The majority held that s. 3(2)(a) of the Act, which provides that a homestead is terminated upon registration of a title transfer, is inapplicable to transfers between spouses. The Court also considered the boundaries of the spousal consent requirement as a precondition to a married person’s disposition of the homestead, under s. 2(1) of the Act. Berger JA, for the majority, maintained that the requisite consent must operate in connection with the specific transaction in question; a transaction invalid at its inception for lack of dower consent will be cured neither by consent in connection with another transaction, nor by the subsequent cessation of the dower interest.

Co-respondent Franklin Webb, as sole titleholder to his and Carmen Webb’s matrimonial home, had granted an interest in their home via a promissory note as security for his debt to the Appellant. Subsequently, Mr. Webb had registered a transfer of title to joint tenancy in common with Mrs. Webb. Berger JA found that the s. 3(2)(a) provisions for termination of a homestead upon registration of a title transfer, read alongside s. 11(1), must exclude transfers between spouses; transfers registered in the name of a third party would terminate the homestead and extinguish dower rights, but transfers between spouses, including transfers to joint tenancy, would not. Also, Berger JA rejected arguments that either a) Mrs. Webb’s implied dower consent, under s. 25(2), in favour of mortgagee Alberta Treasury Branches, or b) the ultimate cessation of her dower interest due to foreclosure, relieved the Appellant of the burden to prove Mrs. Webb’s consent – knowledge and intent – in connection with the promissory note. The majority declined to validate the transaction merely because the homestead was now defunct. It affirmed the lower court’s decision barring the Appellant’s claim.

Slatter JA dissented as to the consequence of the initial lack of dower consent. He viewed the Appellant’s interest as merely voidable, subject to Mrs. Webb’s dower interest, and fully enforceable upon termination of her dower rights. Moreover s. 3(2)(a) of the Act, in his view, should apply to all registered transfers including those between spouses. Accordingly, Slatter JA found that the transfer to joint tenancy had terminated the Respondent’s original homestead rights and immediately replaced them with new rights under a new title subject to the Appellant’s prior claim. Stressing that the purpose of the Dower Act was to protect a spouse’s interest in the homestead, and not to reorder the priority of creditors or to enable escape from agreements honestly made, Slatter JA would have allowed the appeal.

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Aaron SanFilippo
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