Court Of Appeal Summaries (August 28 – September 1) - Trials & Appeals & Compensation

Good afternoon.

Following are this week's summaries of the Court of Appeal for Ontario for the week of August 28, 2023.

I hope everyone is enjoying the last long weekend of the summer.

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General) is a 125-page decision dealing with the claim of the Saugeen Ojibway Nation to submerged lands in Lake Huron and Georgian Bay. The claim was mostly unsuccessful.

In US Steel, the Court refused a stay pending an appeal by DGAP challenging the transfer of certain Stelco lands to special purpose entity. The Stelco insolvency has been ongoing since 2014.

In Covant v. College of Veterinarians of Ontario, a licensed veterinarian was found guilty of professional misconduct by the College of Veterinarians of Ontario for reselling veterinary drugs to human pharmacies in violation of a new regulation. The Court dismissed the appeal, finding that the regulation in question was not vague, and that the vet had been clearly operating a sub-distribution business.

EF Institute for Cultural Exchange Limited is a breach of restrictive covenant case. The action against the departing employee was dismissed by way of summary judgment. The appeal was also dismissed.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Ines Ferreira
Blaney McMurtry LLP
416.593.2953 Email

Civil Decisions

U.S. Steel Canada Inc. (Re), 2023 ONCA 569

Keywords: Bankruptcy and Insolvency, Restructuring, Civil Procedure, Stay Pending Appeal, Companies' Creditors Arrangement Act, RSC 1985, c. C-35, RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 SCR 311, Longley v Canada (Attorney General), 2007 ONCA 149, International Corona Resources Ltd v Lac Minerals (1986), 21 CPC (2d) 252 (Ont CA), Royal Bank of Canada v Soundair Corp (1991), 4 OR (3d) 1 (CA), Urbancorp Toronto Management Inc. (Re), 2021 ONCA 613

EF Institute for Cultural Exchange Limited v WorldStrides Canada, Inc. , 2023 ONCA 566

Keywords: Contracts, Employment, Restrictive Covenants, Confidentiality Agreements, Civil Procedure, Summary Judgement, Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, Guzzo v. Randazzo, 2015 ONSC 6936

Bon-Star Inc. v First National Financial GP Corporation , 2023 ONCA 567

Keywords: Contracts, Real Property, Mortgages, Prepayment Privileges, Civil Procedure, Adjournments

Bell v Long , 2023 ONCA 563

Keywords: Contracts, Solicitor and Client, Professional Negligence, Civil Procedure, Limitation Periods, Discoverability, Capacity, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, s.7, Deck International Inc. v. The Manufacturers Life Insurance Company, 2012 ONCA 309

Covant v College of Veterinarians of Ontario, 2023 ONCA 564

Keywords: Regulated Professions, Veterinarians, Professional Misconduct, Administrative Law, Judicial Review, Constitutional Law, Charter Rights, Jurisdiction, Veterinarians Act, R.S.O., c. V.3., s. 30(6.1), “Part III – Drugs”, R.R.O. 1990, Reg. 1093, ss. 32(2)(d), 33(1)(a) and 33(2)(d), Regulated Health Professions Act, 1991, S.O. 1991, c. 18., Health Professions Procedural Code, Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 65, [2013] 3 S.C.R. 810, Mussani v. College of Physicians and Surgeons of Ontario (2004), 74 O.R. (3d) 1, Leering v. College of Chiropractors of Ontario, 2010 ONCA 87, Tanase v. College of Dental Hygienists of Ontario, 2021 ONCA 482, Shaulov v. Law Society of Ontario, 2023 ONCA 95, Committee for the Commonwealth of Canada v. Canada, [1991] 1 S.C.R. 139, Clublink v. Town of Oakville, 2018 ONSC 7395, Wainfleet Wind Energy Inc. v. Wainfleet (Township), 2013 ONSC 2194, R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606, Wakeling v. United States of America, 2014 SCC 72, R. v. Heywood, [1994] 3 S.C.R. 761, Law Society of New Brunswick v. Ryan, 2003 SCC 20

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General), 2023 ONCA 565

Keywords: Aboriginal Law, Aboriginal Rights, Water Rights, Aboriginal Title, Sui Generis Fiduciary Duties, Ad Hoc Fiduciary Duties, Honour of the Crown, Remedies, Constructive Trust, Native Title Act 1993 (Cth), 1993/110, Canadian Navigable Waters Act, R.S.C. 1985, c. N-22, Act of Union (British North America Act, 1840, 3 & 4 Vict, c. 35, Indian Act, R.S.C. 1985, c. I-5, Proceedings Against the Crown Act, 1962-63, S.O. 1962-63, c. 109, Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, s 27, Crown Liability and Proceedings Act, S.C. 1952-53, c. 30, Mental Health Act, R.S.O. 1990, c. M.7, Petition of Right Act, S.C. 1875, c. 12, Municipal Institutions Act, S.U.C. 1858, 22 Vic., c. 99, Municipal Act, 2001, S.O. 2001, c. 25, ss. 44, 55, Tsilhqot'in Nation v. British Columbia, 2014 SCC 44, Delgamuukw v. British Columbia, [1997] 3 S.C.R. 1010, Guerin v. The Queen, [1984] 2 S.C.R. 335, R. v. Van der Peet, [1996] 2 S.C.R. 50, Lax Kw'alaams Indian Band v. Canada (Attorney General), 2011 SCC 56, R. v. Marshal; R. v. Bernard, 2005 SCC 43, Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, McKie v. The K.V.P. Co. Ltd., [1948] O.R. 398 (H.C.), aff'd [1948] O.W.N. 812 (C.A.), aff'd [1949] S.C.R. 698, Keewatin Power Co. v. Kenora (Town) (1908), 16 O.L.R. 184 (C.A.), Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, R. v. Nikal, [1996] 1 S.C.R. 1013, Commonwealth of Australia v. Yarmirr, [2001] HCA 56, 184 A.L.R. 113, Mitchell v. M.N.R., 2001 SCC 33, Regina v. Meyers, [1853] O.J. No. 204 (U.C. Ct. Com. Pl.), Keewatin Power Co. v. Kenora (Town) (1908), 16 O.L.R. 184 (C.A.), Caldwell v. McLaren, [1884] UKPC 21, 9 A.C. 392, St. Catharines Milling & Lumber Company v. The Queen, [1888] UKPC 70, 14 A.C. 446, Re Provincial Fisheries (1896), 26 S.C.R. 444, Dixson v. Snetsinger (1873), 23 U.C.C.P. 235, Attorney General v. Emerson, [1891] A.C. 649, Ngati Apa v. Attorney-General, [2003] NZCA 117, 3 N.Z.L.R. 643, Restoule v. Canada (Attorney General), 2021 ONCA 779, Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40, Madawaska Maliseet First Nation v. Canada, 2017 SCTC 5, Ross River Dena Council Band v. Canada, 2002 SCC 54, Haida Nation v. British Columbia (Minister of Forests), 2004 SCC 73, Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, Williams Lake Indian Band v. Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4, Wewaykum Indian Band v. Canada, 2002 SCC 79, Galambos v. Perez, 2009 SCC 48, K.L.B. v. British Columbia, 2003 SCC 51, Ermineskin Indian Band and Nation v. Canada, 2009 SCC 9, Beckman v. Little Salmon/Carmacks First Nation, 2010 SCC 53, M.(K.) v. M.(H.), [1992] 3 S.C.R. 6, Feather v. The Queen (1865), 122 E.R. 1191 (K.B.), Matthews v. Ministry of Defence, [2003] UKHL 4, [2003] 1 A.C. 1163, M. v. Home Office, [1993] UKHL 5, [1994] 1 A.C. 377, Dyson v. Attorney-General, [1911] 1 K.B. 410 (Eng. & Wales C.A.), Slark (Litigation Guardian of) v. Ontario, 2010 ONSC 1726, Canada v. Thouin, 2017 SCC 46, Mitchell v. Peguis Indian Band, [1990] 2 S.C.R. 85, Richard v. British Columbia, 2009 BCCA 185, Cloud v. Canada (Attorney General) (2003), 65 O.R. (3d) 492 (Div. Ct.), rev'd (2004), 73 O.R (3d) 401 (C.A.), Seed v. Ontario, 2012 ONSC 2681, Templin v. Ontario, 2016 ONSC 7853, Restoule v. Canada (Attorney General), 2020 ONSC 3932, , aff'd 2021 ONCA 779, 466 D.L.R. (4th) 1, Cloud and Carvery v. Nova Scotia (Attorney General), 2015 NSSC 199, aff'd 2016 NSCA 21, R. v. Sullivan, 2022 SCC 19, Barker v. Barker, 2022 ONCA 567, Rudolph Wolff & Co. v. Canada, [1990] 1 S.C.R. 695, S.M. v. Ontario (2003), 67 O.R. (3d) 97 (C.A.), Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), 2005 SCC 69, [2005] 3 S.C.R. 388, Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, Southwind v. Canada, 2021 SCC 28, Moore v. Sweet, 2018 SCC 52, Chippewas of Saugeen First Nation v. Town of South Bruce Peninsula, 2023 ONSC 2056, Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574

Short Civil Decisions

Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2023 ONCA 573

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeal, Abandonment

Nordik Windows Inc. v. Aviva Insurance Company of Canada, 2023 ONCA 571

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Limitation Periods, Class Proceedings, Class Proceeding Act, 1992 SO 1992, c 6, s 28(1)

CIVIL DECISIONS

U.S. Steel Canada Inc. (Re) , 2023 ONCA 569

[Pepall J.A. (Motions Judge)]

COUNSEL:

R.B. Bell, E. Y. Fan, L. Sun, and R. Jaipargas, for the moving party, DGAP Investments Ltd.

G. R. Hall, J. Gage, and S. Tanvir, for the responding party, Stelco Inc.

R.B. Swan, R. Sahni, T. Gray, A. Morrison, and D. Saldanha, for the Monitor and Land Restructuring Officer, Ernst & Young Inc.

D. Stampley, for the responding party, USW Local 1005 Employee Life Health Trust and the Pension Deficit Funding Trust

L. Harmer, for the responding party, USW Local 8782 Employee Life Health Trust

A. Hatnay and A. Shamim, for the responding party, Representative Counsel to Non-USW employees and retirees of Stelco Inc. and counsel to the Non-USW Employee Life Health Trust

C. Koopman, for the responding party, LifeWorks (Canada) Limited

FACTS:

In September 2014, U.S. Steel Canada Inc., now Stelco Inc. (“Stelco”), was granted protection under the Companies' Creditors Arrangement Act (“CCAA”). In June 2017, the Court approved Stelco's restructuring plan that provided for Stelco's transfer of industrial land to a group of special purpose entities designed to hold land (the “Land Vehicle”). The land in the Land Vehicle was then to be sold for the benefit of the Stakeholders. LandCo was a limited partner in the broader limited partnership collectively known as the Land Vehicle Stakeholders.

The moving party, DGAP Investments Ltd. (“DGAP”), sought a stay pending leave to appeal the May 5, 2023 order of the supervising judge, McEwen J. In that order, the supervising judge authorized Ernst & Young Inc., in its capacity as the court appointed interim Land Restructuring Officer of the Land Vehicle (“LRO”), to enter into a Securities Purchase Agreement (“SPA”) with the respondent, Stelco. Under that Agreement, Stelco would acquire all the partnership units of the Land Vehicle.

The supervising judge rejected DGAP's cross-motion seeking a timetable under which various transactions would take place before the closing of the SPA.

On May 5, 2023, the supervising judge made a second order discharging the LRO and authorizing the Monitor to carry out specified remaining incidental duties. He directed the Monitor to remain engaged as the eyes and ears of the court with respect to the completion of the SPA, but also with respect to the completion of the Reconveyance Agreement and the DGAP Sale Agreement. Once the SPA closed, Stelco and DGAP were to pay the Monitor and its counsel's fees equally. The order provided for the termination of the CCAA proceeding and release of the Monitor upon completion of those duties.

ISSUES:

1. Based on the merits of the case, was there a serious issue to be determined?

2. Would the moving party suffer irreparable harm if the stay were refused?

3. Based on a balance of convenience, would the parties suffer greater harm from the granting or refusal of the stay pending a decision on the merits?

HOLDING:

Motion dismissed.

REASONING:

1. No.

The supervising judge's decision in approving the SPA in the absence of a sequencing order was discretionary in nature and largely fact based. Similarly, the supervising judge's conclusion that he was not prepared to find that Stelco had failed to act in good faith was open to him based on the record before him. Deference was owed to his factual findings absent palpable and overriding error. Lastly, s. 36 of the CCAA applied to a sale of assets by a debtor company and would not appear to be applicable. Although the Court considered the moving party's case for leave to appeal to be weak on the merits, the Court was not prepared to conclude that it was frivolous or vexatious. Leave to appeal in a CCAA proceeding by its nature often is of some significance to the proceeding.

The Court recognized that the serious issue to be determined threshold was a low one, however, the Court concluded that the moving party did not meet it insofar as it related to leave to appeal in a CCAA proceeding. The supervising judge found that the SPA would benefit the Stakeholders, was consistent with the objectives of the CCAA Plan that was approved, would monetize the Land Vehicle, and would permit the Stakeholders to be paid. His order also permitted the Stakeholders to extricate themselves from the CCAA proceedings which were ongoing since 2014. This included the lengthy, expensive, and acrimonious litigation between Stelco and DGAP.

2. No.

Irreparable harm is harm which cannot be quantified in monetary terms. If the SPA closed before the DGAP Sale Agreement and the reconveyance, DGAP's concern was that Stelco would use the SPA to upend the DGAP Sale Agreement and avoid its obligation to reconvey. DGAP maintained that the planned development was a once-in-a-generation opportunity that could not be compensated through damages. It argued that if the SPA closed, the Court was hesitant to reverse the intricacies of that agreement. Stelco's CEO denied that the purpose of the SPA was to upend the DGAP Sale Agreement.

The Court did not accept DGAP's arguments. If the SPA closed absent DGAP's requested sequencing order, Stelco would still be bound by its agreements and undertaking. The supervising judge took measures to address DGAP's concerns and directed that the Reconveyance Agreement be completed as soon as possible. These provisions were designed to mitigate DGAP's speculative concerns. The Court concluded that consideration of irreparable harm also favoured a dismissal of the motion for a stay.

3. Yes.

The Court stated that the sooner the SPA closed, the sooner the fruits of that agreement would be paid to the aging population of beneficiaries that comprised the Stakeholders. They would be able to exit the protracted and expensive litigation. Monetizing the Land Vehicle's assets was a key objective of the CCAA Plan. The longer the CCAA proceeding dragged on, the greater the professional fees which were born by the Land Vehicle, a construct designed to benefit these aging individuals. As stated by the supervising judge, there was no allegation that the Stakeholders failed to act in good faith or were in any conflict of interest. Nor was there any evidence that they had acted dishonestly or unreasonably in negotiating the SPA. The balance of convenience favoured a dismissal of the stay motion. The interests of justice did not call for a stay.

EF Institute for Cultural Exchange Limited v. WorldStrides Canada, Inc. , 2023 ONCA 566

[Lauwers, Zarnett and Thorburn JJ.A.]

COUNSEL:

B. Fromstein, for the appellant
B. Berg and A. Li, for the respondents

Keywords:Contracts, Employment, Restrictive Covenants, Confidentiality Agreements, Civil Procedure, Summary Judgement, Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, Guzzo v. Randazzo, 2015 ONSC 6936

FACTS:

Mr. C had begun his employment with the appellant in May 2005 and rose to the position of president in October 2011. His Employment Agreement contained a Confidential Information clause and a Restrictive Covenant. After his dismissal, he negotiated and signed a Severance Agreement effective September 30, 2014. Key terms included compliance with the Confidential Information clause of the Employment Agreement; compliance with the Restrictive Covenant; access to outplacement services at the appellant's expense; and the payment of $225,000 to Mr. C in two tranches, within 30 days of his signing the Severance Agreement and the second on the one-year anniversary, when the one-year Confidentiality Clause expired (the “Non-Compete period”). During the Non-Compete period, Mr. C interviewed and was verbally offered a position as General Manager, which the appellant learned of. Mr. C had started his employment with the respondent one day following the completion of the Non-Compete period. The appellant subsequently sued Mr. C and the respondent.

The motion judge had taken the analytical approach laid out by the Court in Royal Bank of Canada at para 24. The appellant's key evidence included: an email exchange between the CEO and President of the respondent's parent company and Mr. C; Mr. C's resume; notes taken by the respondent's senior executive JC at the interview in Charlottesville; a May 2015 email from a Respondent regional sales manager, DS,promoting a “massive campaign” to celebrate the 100th anniversary of Vimy Ridge; and an email exchange with a terminated employee of the appellant.

The motion judge had found that this evidence did not amount to any breach of the confidentiality commitments Mr. C made to the appellant: the correspondence with the Respondent CEO and Mr. C's resume contained no sensitive financial information; JC's interview notes had not disclosed any breach; there was no evidence linking the respondent's planning for the Vimy Ridge centennial to Mr. C; and Mr. C's advice to the former employee was not connected to changes in the terms of her termination, any loss by the appellant, or increased payment to the former employee.

ISSUES:

1. Did the motion judge err by failing to consider the appellant's arguments that Mr. C breached the Severance Agreement by assisting a competitor during the relevant one-year period?

2. Did the motion judge err in requiring that the appellant prove damages on the appellant's claim that Mr. C assisted the appellant's departing employee in negotiating a termination package?

3. Did the motion judge err by reversing the onus on the summary judgment motion?

4. Did the motion judge err by granting summary judgment?

HOLDING:

Appeal dismissed.

REASONING:

1. No

The motion judge was aware of the competition issue by virtue of Mr. C's conversation with senior vice-president of the respondent about the location of office space in Toronto. The Court considered this a de minimis communication. Furthermore, neither the notes of the interview, which had consisted mostly of questions that would be expected at a job interview, nor the resume, contained the appellant's “sensitive” confidential information. Non-sensitive information was considered to have little if any impact on competition.

The Court noted that the motion judge had stated that meeting with a prospective future employer that is a competitor is not, on its own, a breach of fiduciary duties: Guzzo at para 27. The Court concluded that the motion judge had properly considered Mr. C's non-compete obligations.

2. No

The Court noted that the motion judge had considered the issue of Mr. C's contact with the appellant's departing employee. Further, given that during subsequent litigation, no evidence had come up that this perfunctory exchange changed the terms of the employee's termination or resulted in any loss to the appellant, the motion judge had found that it would not be reasonable to consider the de minimus action a breach of Mr. C's obligations. The Court concluded that the motion judge's instinct of advice provided by Mr. C was innocuous, if not entirely obvious advice, was sound.

3. No

The motion judge properly understood and applied the onus. The motion judge was alive to the lack of affidavit evidence concerning the meeting with JC, noting that for the “key meeting in Charlottesville…notes (but no evidence) have been produced.” Lastly, the the motion judge addressed the issue of the origin of an email from DS. While the onus was on the respondent on the motion, the respondent's evidence had met the evidentiary burden to the motion judge's satisfaction. There was not enough evidence to require a further response, and the Court ultimately deferred to the motion judge's assessment.

4. No

The appellant argued that the motion judge granted summary judgment when it was not in the interests of justice to do so. This argument was related to the claimed third error, which, having failed, negated this fourth argument. The Court was of the opinion that it was clearly in the interests of justice to grant summary judgment. The Court concluded the expenditure of additional resources by the parties, and the additional use of scarce judicial resources was not warranted in this case.

Bon-Star Inc. v. First National Financial GP Corporation, 2023 ONCA 567

[Simmons, Harvison Young and George JJ.A.]

COUNSEL:

A. Camporese, for the appellant
D.P. Preger and D.Z Seifer, for the respondent

Keywords: Contracts, Real Property, Mortgages, Prepayment Privileges, Civil Procedure, Adjournments

FACTS:

The appellant appeals from an order which declared that a mortgage given by the appellant as mortgagor to the respondent as mortgagee is a closed mortgage with no prepayment privilege and that the mortgage cannot be pre-prepaid without compensating the respondent for lost interest through to maturity.

ISSUES:

1. Did the application judge err in refusing the request for a third adjournment of the proceedings, in requiring it to proceed without counsel, and in appointing Mr. N to act on behalf of the corporation without a request for that relief from the appellant?

2. Did the application judge err in entertaining the respondent's request for a declaratory relief concerning the terms of the mortgage between the parties?

3. Did the application judge err in making a broad declaration?

HOLDING:

Appeal allowed, in part.

REASONING:

1. No.

The Court concluded that the decision whether to grant an adjournment is a matter of discretion entitled to deference on appeal. The proceeding was set in May 2021 to be heard in September 2021. At the September 2021 hearing date, the appellant had not filed any material. The adjournment to October 18, 2021, and a subsequent adjournment to November 1, 2021, were both peremptory on the appellant. Although the application judge's decision not to grant a third adjournment of the November 1, 2021 hearing date meant the appellant was required to proceed without counsel, the Court was not persuaded that the application judge erred in refusing to grant a further adjournment or in appointing Mr. N to act for the corporation.

The application judge was aware of Mr. N's connection to the corporation. In the Court's view, appointing Mr. N to act for the appellant was preferable to having the matter proceed without anyone to speak for the appellant.

2. No.

The Court held that the application judge did not err in entertaining the respondent's request for declaratory relief concerning the terms of the mortgage between the parties. The appellant brought a counter-application seeking a declaration concerning amounts owing in the event of a sale of the property subject to the mortgage, rather than challenging the propriety of granting declaratory relief in the court below. Whether there was an existing binding agreement for the sale of the property subject to the mortgage, the appellant had requested a discharge statement for a sale and a dispute existed between the parties concerning whether the subject mortgage could be prepaid and/or prepaid without a penalty.

3. Yes.

The Court held that the application judge erred in making the broad declaration that the mortgage cannot be prepaid without compensating the respondent for lost interest through to maturity. The Court noted that whether the appellant could ever prepay the mortgage without paying an interest penalty would depend on the circumstances then existing, the specific terms of the mortgage at issue, and the negotiation positions of the parties. The Court varied the formal order to reflect this change.

Bell v Long , 2023 ONCA 563

[Lauwers, Zarnett and Thorburn JJ.A.]

COUNSEL:

M. Bell, acting in person
J.E. Sirdevan, for the respondent

Keywords:Contracts, Solicitor and Client, Professional Negligence, Civil Procedure, Limitation Periods, Discoverability, Capacity, Summary Judgment, Limitations Act, 2002, S.O. 2002, c. 24, s.7, Deck International Inc. v. The Manufacturers Life Insurance Company, 2012 ONCA 309

FACTS:

The respondent is a lawyer who represented the appellant in a family law motion in 2015. The appellant was unsuccessful on the motion, and subsequently terminated the solicitor-client relationship. In 2016, the appellant brought a motion to change the 2015 order. The appellant commenced the present action in 2020 for solicitor's negligence in relation to the 2015 motion, more than four years after the appellant terminated the respondent's retainer. The respondent brought a motion for summary judgment on the basis that the claim was barred by the Limitations Act, 2002.

The appellant presented two responses: (1) that the claim was not discoverable until less than two years before she commenced it; and (2) that the limitation period was suspended by s. 7(1) of the Limitations Act, 2002, as the appellant was incapable of commencing a proceeding by reason of mental disability.

The motion judge found that the order that identified the respondent's negligence was more than two years before the appellant commenced her action, so it did not assist the appellant in extending the limitation period. The motion judge also found that the Law Society of Ontario's complaint for professional misconduct had no effect on whether a civil proceeding was appropriate. Finally, the motion judge found that the discovery of new facts because of the respondent's document production did not affect the limitation period.

ISSUES:

1. Did the motion judge err in determining that the limitation period expired?

2. Did the motion judge err in not extending the limitation period due to a lack of capacity?

HOLDING:

Appeal dismissed.

REASONING:

1. No.

The motion judge made no error of law or palpable and overriding error of fact in reaching their conclusions. The motion judge indicated that the appellant clearly discovered her negligence claim prior to receiving the respondent's productions. This was evidenced by the fact that she started her action in January 2020 and that the limitation period ceases to run once the claim has been issued.

2. Yes.

Under s.7 of the Limitations Act, 2002, a lack of capacity can extend the limitation period. However, a mere diagnosis is insufficient to show incapacity. There must be specific medical evidence that the party claiming incapacity was unable to conduct litigation at the relevant time. The appellant presented no such evidence. There was no evidence that the appellant was unable to manage her personal or financial affairs or that she required a litigation guardian for her other proceedings. The motion judge identified and applied the correct legal principle and was correct to find that the appellant was capable throughout.

Covant v. College of Veterinarians of Ontario, 2023 ONCA 564

[Benotto, Trotter and Zarnett JJ.A.]

COUNSEL:

L. Honickman and L. Brown, for the appellant
B. LeBlanc and A. Hountalas, for the respondent

FACTS:

Dr. C is a veterinarian who is licensed to practice in Ontario. He is the owner and operator of Bayview Seven Animal Hospital (“BSAH”). A panel of the Discipline Committee (“the Committee”) of the College of Veterinarians of Ontario (“the College”) found that Dr. C engaged in professional misconduct by re-selling large quantities of veterinary drugs to human pharmacies, contrary to a newly amended regulation. The Committee imposed a one-month suspension from practice, along with other sanctions and costs. Both dispositions were upheld by the Divisional Court. Dr. C obtained leave to appeal to the Court.

ISSUES:

1. Did the Divisional Court err in failing to find that s. 32(2)(d) of “Part III – Drugs”, R.R.O. 1990, Reg. 1093 under the Veterinarians Act, R.S.O., c. V.3. (the “Regulation”) is unconstitutionally vague and/or overbroad?

2. Did the Divisional Court err in upholding the Committee's finding that Dr. C engaged in professional misconduct?

3. Did the Divisional Court err in upholding the penalty imposed by the Committee?

HOLDING:

Appeal dismissed.

REASONING:

1. No

Whether rooted in the Charter or in more general rule of law considerations, the Court agreed with the findings of the Committee and the Divisional Court that s. 33(2)(d) of the Regulation is not impermissibly vague, nor is it overbroad.

In R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606, Gonthier J.A. wrote: “[t]he doctrine of vagueness can therefore be summed up in this proposition: a law will be unconstitutionally vague if it so lacks precision as not to give sufficient guidance for legal debate”: at p. 643; see also Wakeling v. United States of America, 2014 SCC 72, [2014] 3 S.C.R. 549, at para. 62. Building on this analysis in Mussani, Blair J.A. wrote that, “unconstitutional vagueness stems from language that is so imprecise neither the individual concerned nor the agency enforcing the provision can determine whether the conduct in question is prohibited or not”: at para. 63.

Section 33(2)(d) does not fun afoul of this standard. The two phrases under attack – “in reasonable quantities” as a result of a “temporary shortage” – provide permissible room for legal debate. The fact that a regulation requires interpretation in the context of a specific factual matrix does not suffice for a finding of vagueness. The impugned phrases are complementary – they inform the content of each other, and in so doing, achieve an acceptable level of clarity. The Court agreed with the observation that, “[b]ased on the context, ‘reasonably limited quantities' would mean quantities proportionate to the temporary shortage”: at para. 33 of the Divisional Court reasons.

The question of overbreadth was even more straightforward. Returning to Mussani, the question is whether the means chosen by the legislator are “unnecessarily broad, going beyond what is needed to accomplish the governmental objective”: at para. 69, citing R. v. Heywood, [1994] 3 S.C.R. 761. The rationale provided for the amendment by the College's Council was “to mitigate the risk of veterinarians engaging in the purchase and sale of drugs for purposes other than to ensure a substance required by patients is legitimately available via a pharmacy or another member.” In the Court's view, the Divisional Court reached the correct conclusion on this issue.

The College has no control over the sales and marketing strategies of private pharmaceutical entities, something that may or may not shift over time. While pharmaceutical companies may refuse to supply human pharmacies with certain drugs, this does nothing to demonstrate that the impugned section of the Regulation captures conduct beyond what is required to achieve the College's objective. Section 33(2)(d) is sufficiently tailored to its objective of mitigating the risk of re-sale of drugs for certain purposes, regardless of how this may impact pharmacies' inventories.

Lastly, Dr. C's conduct did not amount to anything close to being a borderline case. He was engaged in an ongoing sub-distribution enterprise, whereby staff would place orders one day, receive them the next, repackage the products, then wait for them to be picked up by the purchasing pharmacists, who paid a handling fee.

2. No

The allegations against Dr. C concerned a course of conduct involving many similar transactions. The College was not required to prove that any single re-sale amounted to an infringement of s. 33(2)(d).

The evidence was clear, especially from Ms. B, that BSAH was not responding to temporary shortages of drugs; they filled orders without requiring an explanation. And in any event, Ms. C testified that she ordered pharmaceutical products to a keep a supply for future demand. In short, the evidence proved in a clear and convincing manner that the drugs were resold without regard to the requirement of a temporary shortage. As the Committee found, these are concepts that are capable of evaluation on a commonsense basis. As the Committee found, “reasonable quantity” and a “temporary shortage” are concepts that are capable of evaluation on a commonsense basis.

The evidence before the Committee revealed that the pharmaceutical companies were not really concerned with the quantities that were re-sold; instead, they objected to any re-sales at all because this activity hampered their ability to trace their products to end-users, and thereby compromised quality control.

That the manufacturers and distributors of veterinary products had different priorities than the College was of no import for the purposes of this appeal. The value in the evidence from representatives of these entities was in detailing the volume of drugs sold to Dr. C. Combined with the evidence of Ms. Bastos and the pharmacists, it amounted to an overwhelming case against Dr. C that he was infringing the Regulation by engaging in a sub-distribution business.

The pharmacies with whom Dr. C did business never experienced a “temporary shortage.” This is because manufacturers and distributors of veterinary products never sold to pharmacies in the first place. The pharmacies' arrangements with Dr. C amounted to an end-run around the decisions taken by pharmaceutical companies not to sell animal medicines to human pharmacies, which was behaviour that s. 33(2)(d) forbade Dr. C from engaging in.

The evidence adduced established that Dr. C was aware of the regulatory amendment to s. 33(2)(d). It also proved that he had been warned about his conduct but persisted in his sub-distribution enterprise.

3. No

The Court saw nothing clearly unreasonable, demonstrably unfit, or representing a substantial and marked departure in the Committee's penalty decision, as upheld by the Divisional Court: see Peirovy, at paras. 56-57; Mitelman, at para. 41. Neither the reasons of the Committee nor the Divisional Court revealed an error in principle.

The most serious component of the sanction was the suspension from practice for a one-month period. Given the nature of Dr. C's conduct, and his ongoing conduct in the face of numerous red flags, the sanction was appropriate. In imposing the sanction that it did, the Committee also intended to deter other veterinarians from engaging in similar conduct, and at the same time, maintain the public's confidence in the ability of the College to regulate its members. There was no error in this approach.

The Committee commanded a wide discretion in determining whether the College's costs should be paid under ss. 30(6.1) of the Act. The Committee reduced what might have otherwise been a greater costs award based on its assessment of the role of both parties in lengthening the proceedings, which was a fair approach. The costs award was reasonable in all of the circumstances.

Chippewas of Nawash Unceded First Nation v. Canada (Attorney General), 2023 ONCA 565

[Lauwers, Pardu and George JJ.A.]

COUNSEL:

R. Townshend, C. Guirguis, R. Pelletier, J. McNamara, K. Nerland and B. Brookwell, for the appellants (C69830) and the appellants/respondents by way of cross-appeal (C69831) Chippewas of Nawash Unceded First Nation and Saugeen First Nation

M. Beggs, M. McCulloch, B. Ennis, C. Tsang, and S. Voleti, for the respondent (C69830 & C69831) the Attorney General of Canada

D.J. Feliciant, R. Ogden, J. Mc Randall, and J. Le Pan, for the respondent (C69830) and the respondent/appellant by way of cross-appeal (C69831) His Majesty the King in Right of Ontario

M.J. Dougherty and D. McKenna, for the respondent/appellant by way of cross-appeal (C69831), the Corporation of the Township of Georgian Bluffs

FACTS:

The appellants, the Chippewas of Nawash Unceded First Nation and the Saugeen First Nation, collectively referred to as “SON”, sued Canada and Ontario for a declaration that they have Aboriginal title to submerged lands in a large section of Lake Huron and Georgian Bay, (the “Title Claim”). SON claimed the right to control every aspect of occupation of those waters, consistent with the rights associated with Aboriginal title, and argued that any incursion on that right, whether for national defence, border control, recreation, commerce, or navigation must comply with s.35 of the Constitution Act, 1982. The trial judge dismissed their claim. SON appealed.

SON also sued Canada and Ontario for breach of the promise made by the Crown in 1836, in Treaty 45 ½, to protect SON's land from encroachments by “the whites” (the “Treaty claim”). SON alleged that the Crown did not fulfill its promise that the Crown misconducted itself during treaty negotiations. As a remedy for the Crown's breach of fiduciary duty, being the misconduct and failure to act with diligence to fulfill the treaty promise in Treaty 45 ½, SON sought a declaration that it is the beneficial owner, by way of constructive trust, of certain road allowances in the municipalities, including those in active use as public roads.

SON appealed from findings respecting the consequences of Crown misconduct, as well as her conclusion that the treaty promise did not create fiduciary obligations. Ontario appealed the trial judge's conclusion that the Crown failed to act with sufficient diligence to fulfil the treaty promise. Ontario also asserted that the Crown was immune to suit for any breaches of fiduciary duty.

Finally, the municipalities appealed the trial judge's refusal to dismiss the action against them.

The Title Claim

In its Title claim, SON sought a declaration of Aboriginal title over a large section of Lake Huron and Georgian Bay surrounding the Bruce Peninsula. At trial, SON argued that the test from Tsilhqot'in, which has been applied to determine claims for Aboriginal title to dry land, should apply to their claim. Ontario and Canada did not agree that the Tsilhqot'in test applied, and in any event, SON could not satisfy the test. On appeal, the parties agreed that Tsilhqot'in establishes the test for proof of Aboriginal title to submerged lands, although Ontario argued that the application of that test should be nuanced by the more general test for Aboriginal rights, of which it is a subset.

The Tsilhqot'in test requires an examination of Aboriginal occupation of land prior to the assertion of British sovereignty and requires that the occupation be sufficient, continuous, and exclusive.

SON's choice of the boundaries of the area it claimed was not made to reflect physical occupation of that area. Rather, it was made to reflect the reality of the international border in the west and to divide the lake evenly between the First Nations on the north and east sides of the lake. SON's claim asserted title to the submerged land, with the rights to minerals and other resources that would be associated with that title, the right to exclude others from the space above the land, as well as the right to the things in the water above that land. It did not claim title to the water.

The Treaty Claim

At trial, SON's Treaty claim had two parts. The first focussed on the implementation of Treaty 45 ½, which was signed in 1836. SON argued, and the trial judge found, that the Crown breached its treaty obligation to protect the Peninsula from settler encroachments. She also found that the Crown breached its honour.

Second, SON challenged the treaty negotiation process and Crown's conduct leading up to the signing of Treaty 72 in October 1854. At trial, SON submitted that the Crown did not act honourably and that it breached its fiduciary duties. The trial judge found that some of the Crown conduct breached the honour of the Crown. She concluded there was no fiduciary duty.

On appeal, Ontario challenged the trial judge's findings concerning settler encroachments and her resulting determination that the Crown breached both its obligations under Treaty 45 ½ and the honour of the Crown. SON argued that the trial judge erred in not finding that certain Crown conduct in the leadup to the signing of Treaty 72 also breached the honour of the Crown, and in not concluding that the Crown owed and breached a fiduciary duty. Ontario responded that, if the Court concluded that the Crown owed SON a fiduciary duty, then Crown immunity applied.

The Claims Against the Municipalities

Three municipalities appealed from the trial judge's refusal to dismiss the action against them. SON's action against the municipalities was based on the Crown's alleged breaches of duty to SON before its surrender of lands to the Crown through Treaty 72. SON argued that the surrendered lands should be impressed with an institutional constructive trust by reason of those breaches, and that SON was entitled to follow the lands impressed with that trust into the hands of the municipalities. The trial judge refused to dismiss the action against the municipalities, holding that the issue of whether a municipality had expended money on maintaining any particular road was a property-specific inquiry, more properly dealt with at Phase 2 of the proceedings.

The municipalities also submitted that since the trial judge dismissed the arguments alleging that the Crown breached fiduciary duties owed to SON, the entire foundation of the action against them had crumbled. Further, the municipalities argued that a constructive trust impressed upon the road allowances would, in any case, not be an appropriate remedy.

On appeal, the municipalities renewed their arguments made before the trial judge that the action against them should be dismissed. SON argued that, even if its claims alleging breach of fiduciary duty are ultimately dismissed, there may be some equitable relief available for breaches of treaty and the honour of the Crown and, thus, that a constructive trust entitling SON to the roads and road allowances cannot be foreclosed as a possible remedy for the latter breaches.

ISSUES:

Issues in the Title claim:

1. Did the trial judge confuse the tests for Aboriginal rights and Aboriginal title?

2. Did the trial judge give sufficient weight to the Aboriginal perspective?

3. Did the trial judge fail to take into account the submerged nature of the land claimed?

4. Did the trial judge set too high a threshold for determining control by SON of the claimed land in her application of the Tsilhqot'in test?

5. Did the trial judge misperceive the common law regarding navigable waters and its relationship to Aboriginal title?

6. Should the trial judge have invited further submissions to determine a process as to whether a claim to Aboriginal title to a smaller area could be established?

Issues in the Treaty claim:

1. Did the trial judge err in finding that the Crown breached the honour of the Crown and the treaty promise in Treaty 45 ½ by failing to act with diligence to protect SON's lands from encroachments by white settlers?

2. Did the trial judge err in finding that certain Crown conduct in the negotiation of Treaty 72 did not breach the honour of the Crown?

3. Did the Crown owe and breach a fiduciary duty to SON?

4. Is the Crown immune to claims for breach of fiduciary duty?

Issues in SON's claims against the municipalities:

1. Did the trial judge err in not dismissing the action against the municipalities?

HOLDING:

Title Claim appeal allowed, in part. Treaty Claim appeal dismissed. Municipalities' appeal allowed.

REASONING:

The Title Claim

1. Did the trial judge confuse the tests for Aboriginal rights and Aboriginal title? No.

At the time of the trial, the Tsilhqot'in test had not yet been applied to submerged land. SON urged the trial judge to apply that test to their claim. Since the application of the test to land was novel, the trial judge took the precaution of considering whether the claimed right also met the test for Aboriginal right. The test for an Aboriginal right is different from the test for Aboriginal title.

The Court held that the trial judge correctly applied the test for Aboriginal title, as established in R v. Van der Peet. The trial judge went on later to apply the Tsilhqot'in test for Aboriginal title. The Court further held that the trial judge's analysis under the umbrella of an Aboriginal rights claim did not taint her analysis of the test for Aboriginal title. As recently reaffirmed by the Supreme Court, Aboriginal title is thus a sub-category of Aboriginal rights.

The Court rejected SON's argument that the trial judge erred by analyzing their claim for Aboriginal title through the lens of the test for an Aboriginal right.

2. Did the trial judge give sufficient weight to the Aboriginal perspective? No.

The Court held that it was clear from the trial judge's reasons for judgment that in evaluating SON's claim to Aboriginal title, she considered the Anishinaabe perspective in many ways.

The trial judge noted that she did not consider the lack of evidence of actual use of the lakebed to be determinative, given SON's submission that the water and lakebed were regarded by them as one. She reviewed the Creation Story of the Anishinaabe. Water was one of the four levels of creation. She explained that water ceremonies were, and are, very important to the community. They were usually not held on water, except for a specific location at Nochemowenaing. The Nochemowenaing ceremony took place on the water, but other water ceremonies did not have to be held in, or near, the water of the Great Lakes.

The trial judge further found that SON are “a fishing people” and that they have relied heavily on fishing for sustenance, and sometimes for trade and commercial purposes. She concluded that, while fishing was important, it had limited connection to the claimed land.

On appeal, SON argued that the trial judge failed to give sufficient weight to the Aboriginal perspective. SON contended that giving dual weight to the Aboriginal and common law perspectives means assessing physical possession or control in light of how SON's ancestors conceived of possession and that this modified the standard set by Tsilhqot'in. Tsilhqot'in, however, mandates that there must be a strong physical presence on or over the land claimed and that possession cannot be established based purely on subjective or internal belief.

The Court held that trial judge adequately considered the Aboriginal perspective. The trial judge noted that spiritual connections with the whole Earth or the whole of a territory, land and water, may be relevant to occupation. They were relevant in this case. But they were not sufficient to show occupation of the claim area for the purpose of Aboriginal title.

3. Did the trial judge fail to take into account the submerged nature of the land claimed? No.

SON argued that the trial judge erred by failing to consider the nature of the land claimed and the uses to which it could be put, in light of SON's ancestors' manner of living.

The trial judge was aware of the claimants' ancestors' way of life. The trial judge acknowledged that actual physical interaction with the lakebed was not determinative, though it was relevant. The trial judge found the physical contact SON had with the lakebed itself was minimal.

The Court held that while not dispositive, the trial judge's consideration of SON's interaction with the lakebed was relevant to determining connection. It is the most direct way of establishing occupation, especially in the common law perspective.

The Court also held that there was no doubt that fishing is relevant to both a claim for an Aboriginal right and to Aboriginal title. Ultimately, the Court held that the trial judge appropriately took into account the submerged nature of the land claimed and did not err in her consideration of the importance of fishing to SON's ancestors.

4. Did the trial judge set too high a threshold for determining control by SON of the claimed land in her application of the Tsilhqot'in test? No.

SON submitted that the trial judge ought to have weighed the evidence about control of the claimed lands differently. The Court held that no palpable and overriding error resulted from the trial judge not being persuaded SON's submissions.

The trial judge acknowledged SON's argument “that there was an alliance or co-operative effort among Anishinaabe to take certain steps to control access to the Great Lakes in the 18th century,” but concluded that the evidence did not prove the existence of such an alliance in the 18th or 19th century (or control of all the access points). The trial judge refused to draw the inference that SON controlled the Title claim area. Ultimately, the trial judge concluded that SON had not proven that they, and their ancestors, had satisfied the Tsilhqot'in test. They did not have the control over the Title claim area needed to show exclusivity, nor did they occupy it.

The Court held that the trial judge's review and assessment of the conflicting evidence was fair and that her findings were not tainted by any palpable and overriding error. She recognized that occupation sufficient to ground Aboriginal title was not confined to specific sites of settlement, but extended to tracts regularly used for hunting, fishing or otherwise exploiting resources.

5. Did the trial judge misperceive the common law regarding navigable waters and its relationship to Aboriginal title?

The trial judge noted that flowing water was incapable of ownership at common law because it is a common resource. She observed that SON's claim for ownership of the lakebed, the contents of the water, and the right to exclude others from the water above the submerged land, was a claim for exclusivity, an element that was not part of the historical practices SON relied upon. SON relied upon the common law presumption ad medium filum aquae (“as far as the middle of the stream”) to show that the common law would recognize ownership of the bed of a body of water. The ad medium presumption is a common law rule by which the owner of land adjacent to non-tidal waters is presumed to own the waterbed to the midpoint of those waters. The trial judge observed that, whether tidal or non-tidal, navigable waters were subject to the public right of navigation which, she concluded, was incompatible with SON's claim of exclusivity.

The trial judge reviewed law from the United States, Australia, and New Zealand to assess SON's argument that whatever portion of the common law right of public navigation is ruled to be a justified infringement of Aboriginal title, it can co-exist easily with Aboriginal title to the beds of navigable waters. The trial judge concluded that the nature of SON's connection to the claimed land in Lake Huron and Georgian Bay did not translate into title to that submerged land.

The trial judge declined to grant Aboriginal title to the area claimed, citing the fundamental inconsistency between Aboriginal title and common law rights.

In closing argument at trial and on appeal, SON submitted that it would be open to a court to define Aboriginal title by removing from it the right to exclude the public for the purposes of navigation. Ontario argued that it holds sovereign ownership of the lakebed by way of a public trust, for the protection of public interests in navigation and fishing.

The Court held that for the purposes of assessing jurisprudence about title to submerged lands, the Great Lakes are analogous to English tidal waters and that the rule of the English law as to navigable and tidal waters applies to them. The result is a rebuttable presumption of Crown ownership of the lakebed. The Court concluded that not every submerged land will interfere with navigation, and that some instances of Aboriginal title to submerged lands may have no practicable effect on the public right of navigation and may be entirely compatible with it.

The common law has permitted private ownership of discrete areas of property on the seabed or lakebed of tidal waters or waters like the Great Lakes. The Court held that whether or not Aboriginal title to a portion of the Great Lakes is compatible with the right of public navigation cannot be assessed until the extent of Aboriginal title in submerged lands is determined.

6. Should the trial judge have invited further submissions to determine a process as to whether a claim to Aboriginal title to a smaller area could be established? Yes.

At trial, SON made two arguments about changing the physical dimensions of the area to which it claimed Aboriginal title. First, SON amended their pleadings to seek Aboriginal title to “such portions” of the Title claim area, but they did not put forward alternative boundaries in their pleadings or at trial. Second, in closing submissions, SON suggested that the Aboriginal title could be subject to the public right of navigation. SON advanced no alternative boundaries and, therefore, the invitation to change the boundaries was left to guesswork.

The trial judge noted that, in light of the lack of submissions and evidence with respect to Nochemowenaing, she did not have sufficient information to define the area.

SON asked the court to remit the claim to the trial judge for a judgment, after further evidence and submissions, on the question of Aboriginal title to a portion of the Aboriginal title area claimed. The Court acceded to this request.

Issues in the Treaty claim:

The Court held that in arriving at her conclusion that the Crown breached its honour by failing to act diligently, and thereby breached Treaty 45 ½, the trial judge cited and applied the correct legal test and did not misapprehend the evidence.

The trial judge found that the Crown did not act diligently to protect the Peninsula from the encroachment of white settlers. While Ontario contested a number of findings that led the trial judge to conclude that the Crown breached the honour of the Crown and the treaty promise in Treaty 45 ½ by failing to act with diligence to protect SON's lands from encroachments by white settlers, the Court found no basis to interfere with these findings.

The trial judge examined complaints and considered individual conduct from the historical record. She considered the issue of squatting throughout the province and on the Peninsula. In the end, she found that encroachment on the Peninsula was (1) significant, and (2) an escalating problem.

In terms of what the Crown could and should have done to prevent encroachment, Ontario raised other points related to the trial judge's alleged error on the significance of squatting. According to Ontario, the different approaches can be explained by the fact that, unlike in the Grand River area, there was not a significant problem with squatting on the Peninsula. It submitted that it was wrong for the trial judge to reach a finding that the Crown breached its honour and the treaty by being reactive, without proactive steps to control encroachment. Ontario further claimed that there was nothing the Crown realistically could have done to prevent the encroachments we know did occur.

The Court held that what the Crown did elsewhere to combat encroachment identified the tools available to the Crown to achieve that purpose and was therefore relevant.

The Court held that the trial judge was correct to look beyond how the Crown treated the property interests of squatters because Treaty 45 ½ already promised the Peninsula to SON. The purpose of the encroachment clause was to protect the Peninsula for SON's benefit, as a collective, and actual encroachments were barriers to the fulfillment of the Crown's promise to achieve that purpose. Accordingly, there were no adverse property interests for the Crown to refuse to legally recognize.

Ontario submitted the trial judge erred by treating the requirement to pay attention to the issue of squatting as distinct from the duty to act diligently, and therefore did not take it into account. The Court held that the trial judge did not commit this error. Rather, she treated the duty to act diligently in the fulfillment of a treaty promise as having two components: (i) to pay attention to the problem of squatting, and (ii) to act diligently with the purpose of preventing it.

Finally, Ontario argued that the trial judge erred by suggesting that the Crown could not take competing responsibilities into account when implementing a treaty promise. The Court concluded that the trial judge's analysis recognized the obvious, which is that the Crown's honour cannot be compromised by interests that are axiomatically opposed to those that the Crown has promised to protect. The Court ultimately held that there was no basis to interfere with the trial judge's finding. The trail judge applied the correct legal test and did not misapprehend the evidence.

2. Did the trial judge err in finding that certain Crown conduct in the negotiation of Treaty 72 did not breach the honour of the Crown? No.

SON argued both that the Crown's negotiator at the time, Oliphant, had the obligations of a fiduciary while negotiating Treaty 72 and that he was obligated to disclose material steps that the Crown should have taken to protect the Peninsula from encroachments. The trial judge found that Oliphant's conduct did not breach the honour of the Crown.

The Court found no basis to interfere with the trial judge's findings concerning Oliphant's conduct in the negotiation of Treaty 72 and her determination that this conduct did not breach the honour of the Crown. The Crown was not under a fiduciary obligation when negotiating Treaty 72.

3. Did the Crown owe and breach a fiduciary duty to SON? No.

The Court agreed with the trial judge that there was no additional fiduciary duty in the circumstances of this case.

SON argued that Treaty 45 ½ created a reserve, which, as such, gave rise to fiduciary duties on the Crown's part. SON also argued that both the breaches of the honour of the Crown and the Crown's failure to act with diligence to fulfil the promise in Treaty 45 ½ to protect the Peninsula from encroachment also amounted to breaches of both ad hoc and sui generis fiduciary duties owed by the Crown.

The trial judge noted that, where lands qualify as a “reserve” under the Indian Act, a myriad of statutory provisions under the Act then apply, including many Crown obligations. SON relied on the leading case interpreting the term “reserve” under the Indian Act: Ross River Dena Council Band v. Canada, 2002 SCC 54.

In the appeal, the Court noted that there was obvious difficulty in determining whether, in 1836, the Crown intended to create a reserve within the meaning of detailed legislation that arrived many years later. Despite the plethora of expert evidence at trial, no expert gave focused expert opinion evidence on how reserves were created in what is now Ontario at the relevant time. The question of whether a reserve was created is a question of mixed fact and law. The question of whether Bond Head, as a Crown agent, had the intention to create a reserve is particularly fact-specific. The Court was not persuaded that there was any palpable and overriding error that would justify the Court's departure from the trial judge's conclusion that Treaty 45 ½ did not create a reserve.

A fiduciary duty may arise in two circumstances. Crown fiduciary duties to Aboriginal peoples can arise either in accordance with the sui generis test or according to the ad hoc test.

An ad hoc fiduciary duty arises where there is: (1) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiaries; (2) a defined class of beneficiaries vulnerable to the fiduciary's control; and (3) a legal or substantial practical interest of the beneficiaries that stands to be adversely affected by the alleged fiduciary's exercise of discretion or control.

A sui generis fiduciary duty can arise where the Crown assumes a sufficient amount of discretion over a sufficiently specific Aboriginal interest. The interest must be cognizable, and the Crown's assumption of discretion must be such that it invokes responsibility in the nature of a private law duty. Where a non-conventional fiduciary duty exists, the Crown is required to act with diligence and in accordance with the honour of the Crown.

The Court held that while a fiduciary relationship between the Crown and Aboriginal peoples exists, there are limits to the circumstances in which a fiduciary duty can be imposed on the Crown.

At trial, SON submitted that, in addition to the obligations arising out of Treaty 45 ½ and the honour of the Crown, the Crown had additional obligations to SON arising from both an ad hoc and a sui generis fiduciary duty. Both Ontario and Canada argued that there was no ad hoc fiduciary duty, but they disagreed about whether there was a sui generis duty. However, they both argued that, if there was a duty, it was not breached. The trial judge ultimately concluded that there was no fiduciary duty owed by the Crown to SON in this case.

The Court concluded that the trial judge did not err in concluding that SON had not established a conventional fiduciary duty. The treaty promise cannot be construed as an undertaking by the Crown to forsake the interests of all others in the province and act exclusively for SON's benefit, which is an essential element of the conventional fiduciary duty test. The Court further held that the trial judge did not err in rejecting the imposition of a non-conventional fiduciary duty. Here, the imposition of a fiduciary duty would add nothing to the Crown's obligations to diligently and purposively perform the treaty promise. Where a Crown obligation is grounded in the honour of the Crown, it may not be necessary to invoke fiduciary duties; the Crown is still obliged to comply with its constitutional obligations in a manner consistent with the honour of the Crown.

4. Is the Crown immune to claims for breach of fiduciary duty? No.

In response to SON's fiduciary duty claims, Ontario pleaded the defence of Crown immunity. The trial judge did not address this defence because she found that the Crown owed no fiduciary duties to SON. The Court noted that a number of cases have concluded that the Crown may be held liable for breaches of fiduciary duty. Those cases include: Seed v. Ontario, Templin v. Ontario, and Restoule v. Canada (Attorney General).

The Court concluded that Ontario was not immune from claims for breach of fiduciary duty in this case. The Court took seriously the Supreme Court's statement in Mikisew Cree, at para. 33, that reconciliation “is the ‘fundamental objective of the modern law of aboriginal and treaty rights'” (citing Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), and that “[t]he purpose of s. 35 … is to facilitate this reconciliation”. Ontario asked the Court to ignore the principles behind Crown immunity and to keep to a technical approach, which was quite inconsistent with the honour of the Crown, in order to dismiss SON's fiduciary breach claim on the ground of Crown immunity. The Court concluded that it would be wrong to apply regressive procedural bars to Aboriginal claims for breach of fiduciary duty.

Issues in SON's claims against the municipalities:

1. Did the trial judge err in not dismissing the action against the municipalities? Yes.

SON relied on Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, to assert that when Treaty 72 was signed, the surrendered lands were impressed with an institutional constructive trust in its favour because of the Crown's wrongdoing, consisting of Anderson's inappropriate remarks and the failure to diligently enforce the promise in Treaty 45 ½ to protect SON's lands from incursions by settlers and trespassers. The Soulos court noted, however, that not all breaches of fiduciary duty give rise to such a remedial constructive trust.

The Soulos court, at para. 45, identified four elements which should generally be satisfied to justify imposition of a constructive trust based on wrongful conduct:

The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, in relation to the activities giving rise to the assets in their hands;
The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of their equitable obligation to the plaintiff;
The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties; and
There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case (e.g., the interests of intervening creditors must be protected).

The Supreme Court more recently considered principles of equitable compensation in Southwind v. Canada. The SCC noted that the constructive trust is a gains-based remedy, measured by the fiduciary's gain rather than the plaintiff's loss. It indicated that, when the Crown breaches its fiduciary duty, the remedy will seek to restore the plaintiff to the position the plaintiff would have been in had the Crown not breached its duty. When it is possible to restore the plaintiff's assets in specie, a constructive trust and accounting for profits are often appropriate, but when restoring the plaintiff's assets in specie is not available, equitable compensation is the preferred remedy.

SON also relied upon Moore v. Sweet, for the proposition that a constructive trust can be imposed upon property in the hands of a person who is innocent of any wrongdoing.

The Court concluded that to impress the municipal roads and road allowances with a constructive trust is not an appropriate remedy and the action against the municipalities should be dismissed.

SON argued that the trial judge erred in making findings of causation and, in particular, that these findings should have been left to Phase 2 of the trial. The Court rejected this argument. The trial judge did not err in making these findings. She had to assess all of the circumstances surrounding the signing of both treaties and the effects of the impugned conduct on SON. There was no basis to interfere with the trial judge's findings as no palpable or overriding error was argued or shown.

The Court was persuaded that equitable compensation, payable by the Crown, would be an effective remedy, taking into consideration the importance SON attached to its lands, surrendered for reasons it considered appropriate. The Court noted that it was not satisfied that “good conscience” demanded that the municipalities' roads and road allowances be transferred to SON.

The Court ultimately dismissed the claim against the municipalities.

SHORT CIVIL DECISIONS

Business Development Bank of Canada v. 170 Willowdale Investments Corp., 2023 ONCA 573

[van Rensburg, Nordheimer and George JJ.A.]

COUNSEL:

M. Spence and M. Lici, for the respondent
D. Trafford, for the appellant
B.N. Radnoff, for the intervener 729171 Alberta Inc.
T. Klink, for the Court-appointed Receiver The Fuller Landau Group Inc.]

Keywords: Bankruptcy and Insolvency, Civil Procedure, Appeal, Abandonment

Nordik Windows Inc. v Aviva Insurance Company of Canada, 2023 ONCA 571

[van Rensburg, Nordheimer and George JJ.A.]

COUNSEL:

C.G. Smith, J.C Mastrangelo, and S. M. Birman, for the moving party Nordik Windows Inc.
A.L.W. D'Silva and G. Zacher, for the responding parties Aviva Insurance Company of Canada, Aviva General Insurance Company and Aviva Canada Inc

Keywords: Civil Procedure, Appeals, Jurisdiction, Final or Interlocutory, Limitation Periods, Class Proceedings, Class Proceeding Act, 1992 SO 1992, c 6, s 28(1)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be ought about your specific circumstances.

Canada: Court Of Appeal Summaries (August 28 – September 1)
Blaney's Appeals

Table of Contents

Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

Canada: Court Of Appeal Summaries (August 28 – September 1) Blaney's Appeals

Table of Contents

Civil Decisions

CIVIL DECISIONS

SHORT CIVIL DECISIONS

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Canada: Court Of Appeal Summaries (August 28 – September 1)
Blaney's Appeals