[The misdirected link to the reasons in this case has now been repaired, as has the rather embarrassing confusion of John Laskin with Bora Laskin, all courtesy of our eagle-eyed friend (well, he didn't have to be too eagle-eyed on this occasion) David Cheifetz. All we can say is that eventually, the decades all become a blur...)

In Macchi S.P.A. v. New Solution Extrusion Inc., the Court of Appeal (Justices Rosenberg, Gillese and Blair) upheld the dismissal, by Mr. Justice Herman Wilton-Siegel, of a third party claim brought by the plaintiff against the defendants’ former lawyer. (The decision of Mr. Justice Wilton-Siegel can be accessed here.)

The Court of Appeal’s reasons are very brief. For a complete understanding of the case, it is important to read the reasons of Justice Wilton-Siegel as well as those in Adams v. Thompson, Berwick, Pratt & Partners (1987), 39 D.L.R. (4th) 314 and in 478649 Ontario Limited v. Corcoran (1994), 20 O.R. (3d) 28 (C.A.) (No links available, unfortunately.)

In this action, the plaintiff sought payment for a packaging machine that it had sold to one of the defendants on a deferred payment basis. It instructed Farb, its solicitor and the proposed third party, to register a security interest under the PPSA. The registration named the wrong entity (”New Solution Extrusion Inc.” instead of “New Solutions Extrusion  Corporation”). By the time the error was discovered, another security interest had been registered, naming the purchaser correctly. The holder of that security interest took the position that its registration had priority over that of the plaintiff.

The plaintiff did not sue Farb but the defendants brought a third party action against him under s. 1 of the Negligence Act. They took the position that Farb’s negligence had been the proximate cause of the plaintiff’s loss.

Farb moved to dismiss the third party claim against him on the basis that it disclosed no cause of action. The motion succeeded before Justice Wilton-Siegel, whose order was upheld by the Court of Appeal.

The defendant relied on a decision of Mr. Justice Laskin in the Corcoran case, supra, where Laskin J.A. had refused to strike a third party claim in somewhat similar circumstances. He held that the plaintiff in that case might be able to say that he had acted reasonably in retaining a solicitor to review an agreement and that, for that reason, was not liable for the solicitor’s negligence.

The plaintiff in the present case, on the other hand, relied on the Adams decision of the B.C. Court of Appeal. There, McLachlin J.A. (as she then was), said that “Generally speaking, all acts falling within the scope of an agency between the proposed third party and the plaintiff fall into the category of acts for which the plaintiff is responsible and hence are not the proper subject to third party claims.”

 Justice Wilton-Siegel said that Adams, not Corcoran, applied here and the Court of Appeal agreed. The reasoning of Wilton-Siegel J. was that Farb had not been retained to advise the plaintiff but to carry out a task on its behalf (registration of the security interest). Further, the Corcoran principle would only apply where the plaintiff “had a pre-existing duty, the performance of which can be said to be discharged by retaining qualified legal counsel to advise it”. In Corcoran, that duty was to complete the transaction. But in the present case, the plaintiff owed no duty to anyone to register a security interest; it did so entirely for its own benefit. Thus, in retaining Farb as its solicitor, it could not be said to have been discharging a duty owed to anyone else.

Justice Wilton-Siegel ruled that all of the allegations sought to be made against the third party solicitor were attributable to the plaintiff and that therefore, third party proceedings were unnecessary.

Thus, the two factors that Justice Wilton-Siegel weighed were: (1) that the solicitor had not been retained to give advice; and (2) that he had also not been retained to discharge the plaintiff’s performance of a duty owed by it. But what if we were to change the facts of this case slightly, such that the plaintiff retained Farb to counsel it about the advisability of registering its interest under the PPSA before actually doing so? That would satisfy the first criterion but not the second because there would still not have been any independent duty owed by the plaintiff to which the retainer of the solicitor related. Would the result be different?

Unfortunately for the legal profession, the net result of this decision will probably be that out of an abundance of caution, plaintiffs will sue their lawyers whenever the other defendant relies on the solicitor’s actions as part of its defence.

1044589 Ontario Inc. (Nantucket Business Centre) dealt with the frequently-litigated issue of the right of a landlord’s insurer to advance a subrogated claim against a tenant. Here, Madam Justice Ruth E. Mesbur held that the landlord’s insurer was entitled to proceed with the subrogated claim, even though payment of the premiums had come, in part, from the tenant.

This was a commercial tenancy in a strip mall. A fire broke out in the tenant’s automobile repair shop and the landlord’s insurer sued the tenant for recovery, alleging negligence on the part of the tenant. The relationship between the parties was governed by an offer to lease, a formal lease not yet having been entered into by the time of the fire.

The tenant was contributing a proportionate share to the cost of the landlord’s fire insurance premiums. On this motion, the tenant argued that this fact resulted in the risk of loss by fire having been assumed by the landlord, with the result that the landlord could not sue the tenant for damages caused by its negligence.

Justice Mesbur did not accept the tenant’s argument. Key to her decision was the fact that the lease did not contain an express provision requiring the landlord to insure the premises against loss by fire. Her Honour relied on the case of Lee-Mar Developments Ltd. v. Monto Industries Ltd. [2000] O.J. No 1332 (S.C.J.), affirmed [2001] O.J. No. 987 (C.A.).

The Court of Appeal’s ruling in Lee-Mar actually said very little. In fact, it is a little difficult to follow. The following is the entire decision:

1 We wish to thank both counsel for their able arguments. This case arose on a Special Case under Rule 22 of the Rules of Civil Procedure.

2 The question passed restricts the court to determining the issue on its basis of the terms of the legal only. We are not persuaded that the judge below erred in her interpretation of the parties’ intentions based on those provisions. Accordingly the appeal is dismissed with costs.

(What does “on its basis of the terms of the legal only” mean?)

In any event, Justice Mesbur said that this case was like Lee-Mar, in that:

1. There was no covenant to insure on the part of the landlord;
2. The reference to the landlord’s insurance appeared in a section of the lease that dealt with payments to be made under it;
3. Both contained “entire agreement” clauses;
4. Both the Lee-Mar lease and the offer to lease in this case were described as a “completely carefree” net lease to the landlord.

Her Honour considered that these and some other factors led to the conclusion that it had been the intention of the parties, that the tenant be responsible for damage resulting from its failure to operate the business in a safe manner.

As mentioned above, it appears that a factor that was of particular significance to Justice Mesbur was the fact that the offer to lease contained no express covenant to insure. She said, “Here, the landlord points to the fact that in each of the trilogy cases, there was an express provision requiring the landlord to insure the premises against loss by fire. Here, there is no such express provision, and thus the landlord says the trilogy cannot apply. The landlord goes further, and says that the express wording of the offer to lease leads to the same conclusion. I agree.”

The “trilogy” refers to a series of Supreme Court of Canada cases that dealt with the issue of the right on the part of a landlord’s insurer to bring a subrogated action against a tenant: Agnew-Surpass Shoe Stores Ltd. v. Cummer-Yonge Investments Ltd.,  [1976] 2 S.C.R. 221; Ross Southward Tire Limited v. Pyrotech Products Ltd.,  [1976] 2 S.C.R. 35, and T. Eaton Co. v. Smith et al., [1978] 2 S.C.R. 749, [1978] 2 S.C.R. 749.

In fact, contrary to what this decision indicates, in Ross Southward v. Pyrotech, there was not an express covenant by the landlord to insure. Despite that, the Supreme Court concluded there, that because the tenant was obliged to pay the insurance premiums, no subrogated action could be maintained against it. In Ross Southward, the tenant had argued that the court should infer a covenant by the landlord to insure (this is made clear in the reasons of the Court of Appeal in that case). The reasons of Chief Justice Laskin make it clear that the Court’s decision was not based on the existence of a covenant by the landlord to insure:

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In Cartner v. Burlington (City), a recent slip and fall action, Mr. Justice Michael Quigley found for the plaintiffs. In doing so, he applied the “but for” test of causation that was endorsed by the Supreme COurt of Canada in Resurfice v. Hanke.

The case involved a slip and fall accident in Burlington, Ontario in which the plaintiff, a 52 year-old woman, broke her leg and was unable to return to work. She slipped on a “muddy concrete slurry substance” that had pooled on the city sidewalk. She claimed that the substance had originated with “Crystal Shoes”, a nearby store, and sued the owners, who were husband and wife. She also sued the City of Burlington as it had been responsible for the maintenance of the sidewalk. Justice Quiqley found both defendants to be liable for the damages and apportioned 80% of the liability to Crystal Shoes and 20% to the City of Burlington.

Justice Quigley relied on the decision in Resurfice Corp v. Hanke, 2007 SCC 7 (CanLII), [2007] 1 S.C.R. 333, when dealing with the issue of causation. In that decision, the Supreme Court of Canada reaffirmed that the “basic test” for determining causation is the “but for” test and that this test applies to multi-cause injuries. It is only in special circumstances, in other words, where it is impossible to apply the “but for” test because of factors out of the plaintiff’s control, that a “material contribution” test can be applied. Justice Quigley said this was not the case here but he went on to say that even using the material contribution test he would have reached the same conclusion.

With respect to liability, the husband who co-owned Crystal Shoes testified at trial and was found not to be credible and it was stated that much of his evidence had “no air of reality”. Justice Quigley found his evidence to be “largely contrived, internally contradictory, and “cooked up”". On other evidence, including testimony and photographs, it was concluded that the obvious and evident source of the concrete slurry substance was the owner of Crystal Shoes who used a hose to wash concrete residue off of his property and onto the City’s sidewalk the day before the accident. Justice Quigley found the owner of Crystal Shoes liable in both negligence and nuisance. The co-owner of Crystal Shoes, the wife, who did not testify and was not involved in the proceedings despite being a defendant, was found to be severally and jointly liable.

As for the liability of the City, it took the position that it did not know and could not have known about the concrete slurry, a fact which was admitted by the plaintiff. Given this fact, the City’s liability had to be based on the physical state of the sidewalk itself. Justice Quigley stated that while the City is not an insurer of pedestrians and it is not required to maintain its sidewalks in a perfect condition, it did have obligations under section 284(1) of the Municipal Act. It was found that the City breached its statutory obligation to maintain the sidewalk and that this state of non-repair was a cause of the plaintiff’s injuries. Justice Quigley said that the plaintiffs did not need to prove that the state of non-repair of the sidewalk was the cause only that it was acause but for which the accident would not have happened. The City did not satisfy the court that it had taken reasonable steps to maintain the sidewalk in a state of repair or that it could not have known that the sidewalk was in a state of non-repair and therefore the court held that it had not met its required standard of care. Justice Quigley found that the sidewalk was constructed improperly, and while the City undertook remedial work a few years prior to the accident, it was inadequate, leaving the sidewalk in a state of non-repair on the day of the accident. The non-repair created a sidewalk condition that permitted the concrete slurry to become trapped when it pooled on the sidewalk. This accumulation of the slurry which was caused by the condition of non-repair caused the plaintiff to slip and fall making the City liable. In this case, the City could not escape liability by claiming it could not reasonably know of the state of repair of the sidewalk or that it took reasonable steps to prevent the disrepair. Justice Quigley found that the City knew of the state of non-repair, that its system of inspection was inadequate and that even if it was adequate, the City failed to comply with it.

Justice Quigley accepted the evidence of the plaintiff and her medical experts regarding her injuries and inability to work and awarded $120,000 in general damages. He awarded the plaintiff’s husband $20,000 for his loss of care, guidance and companionship under the FLA. The plaintiff’s past and future loss of income was fixed at $171,000 after a 10% reduction had been made because despite a recommendation from her family doctor, the plaintiff had failed to seek sedentary work.

Ontario auto insurers might be surprised to learn that the Insurance Act and the standard auto policy do not require persons claiming against the uninsured motorist coverage to pursue anyone whose negligence might have contributed to the plaintiff’s injuries or “to pursue anybody at all; they require that the insured person simply submit the claim to the insurer and the insurer will pay”.

So said Justice Barry MacDougall in Loftus v. Robertson et al. in a decision released last Friday.

The plaintiff had been injured while driving her car, which was insured by Security National. That car was involved in a collision with a car driven by one Robertson, who was uninsured. At the time of the accident, Robertson was being chased by a member of the Peterborough Lakefield Community Police Services, who was driving a police cruiser.

The plaintiff sued only her insurer, Security National, under its uninsured motorist coverage. Security National brought third party proceedings against the City of Peterborough, alleging that the negligence of the police officer caused or contributed to the collision and to the plaintiff’s injuries.

In this Rule 22 “special case” motion, Security National asked the court to determine the following question:

Assuming negligence on the part of the Third Parties [the police], or any of them, caused or contributed to the injuries and damages sustained by the Plaintiff, is Security National liable to make any payment to the Plaintiff pursuant to the coverage required under s. 265 of the Insurance Act, R.S.O. 1990, c. I.8 ?

The genesis of the dispute was s. 2 of Regulation 676 under the Insurance Act (the “Uninsured Motorist Coverage Schedule”). Paragraphs 2(1)(a) and (c) [the judgment mistakenly refers to subparagraph 2(1)(b), but that paragraph has been repealed] of the regulation read as follows:

2. (1) The insurer shall not be liable to make any payment,

…

(a) where a person insured under the contract is entitled to recover money under any valid policy of insurance, other than money payable on death, except for the difference between such entitlement  and the relevant minimum limits determined under clause (a);
(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy.

As noted above, it was assumed, for purposes of the motion, that negligence on the part of the police had caused or contributed, to some degree, to the plaintiff’s injuries.

Security National relied upon a decision of the Court of Appeal in Barton v. Aitchison (1982), 39 O.R. (2d) 282 (C.A.), for the proposition that “where there is more than one tortfeasor at fault with respect to an accident giving rise to injuries and damages and at least one of those tortfeasors is insured under any valid policy of insurance which will respond to the claims arising out of the accident, the insured person is prevented from suing his own insurer under the s. 265 coverage [uninsured motorist coverage] even if another of the tortfeasors is uninsured. The insured person must recover his or her damages from the insurer of the insured tortfeasor.”

However, Justice MacDougall concluded that “under s. 265 of the Insurance Act [which deals with uninsured motorist coverage], there would be no obligation on the plaintiff to sue the alleged tortfeasor, i.e., the third parties in this case.” To hold otherwise, he said, would “render the mandatory uninsured coverage as ‘illusory and worthless’.”

Accordingly, His Honour answered “yes” to the question posed on the motion and quoted above.

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This afternoon, the Court of Appeal released its decision in AXA Insurance v. Ani-Wall Concrete Forming. (We previously commented here on the decision of Perell J. from which the appeal was taken.)

The issue in the case was whether Ani-Wall was entitled to indemnity from AXA, its liability insurer, in relation to a claim against Ani-Wall for defective concrete footings supplied to some building projects. At first instance, Mr. Justice Paul Perell had ruled that the claim was covered. Today, the Court of Appeal dismissed  AXA’s appeal.

Because Ani-Wall does not manufacture concrete, it had entered into a contract with Dominion Concrete Group to supply the concrete that Ani-Wall had contracted to provide to its customers. This fact turned out to be key to the coverage issue.

AXA had sought to rely on three exclusions in the CGL policy: (1) “Your work”; (2) “Rip and tear”; and (3) “Your product”. On the appeal, it pursued only the first two of these.

The “Your work” exclusion in AXA’s policy, which excluded coverage for the cost of making good faulty work, contained an exception which, if applicable, restored coverage. The “your work” exclusion was stated not to apply “if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor”. Justice Perell had held that the exception applied because the defective concrete had been supplied by Dominion, which he held to have been a subcontractor of Ani-Wall.

The Court of Appeal agreed. The main bone of contention on this aspect of the case was whether Dominion could be said to have been a “subcontractor” of Ani-Wall. Counsel for AXA urged the Court to adopt a three-pronged test that has been used by some American courts:

(1)        The product supplied should be custom made according to specifications identified in the prime contract;

(2)        The supplier should provide on-site installation or supervision services; and

(3)        The product supplied should form an integral or substantial part of the prime contract.

AXA argued that according to this test, Dominion was not a “subcontractor” of Ani-Wall and so, the exception did not apply. The Court of Appeal rejected that argument. Justice Michael Moldaver, writing for the Court, said:

I prefer to retain a degree of flexibility in the realm of insurance coverage, especially in cases like this, where coverage is acknowledged but the insurer seeks to rely on exclusionary provisions to limit its scope. As Ani-Wall points out, if insurers want to lay down hard and fast criteria, they can do so by defining the word “subcontractor” to their choosing. Insured persons who pay substantial premiums would then know where they stand and would not be left guessing about the extent of the coverage available to them. To date, for reasons unknown, AXA has chosen not to define the word “subcontractor” in the policy. Unless and until it does so, I believe the word should be construed broadly, lest it become a trap for the unwary.

(He went on to find that even if the three-part test were applied, he would still find that the exception applied.)

The Court then considered the “rip and tear” exclusion. Justice Perell had found that this exclusion was “unclear and therefore unenforceable”. The Court of Appeal agreed. In argument, counsel for Ani-Wall made use of a technique which we have found useful in coverage litigation: “exploding” policy provisions by replacing defined terms with the definition that appears in the policy. Justie Moldaver quoted the “exploded” version of the rip and tear exclusion, which read as follows:

This insurance does not apply to any liability for physical injury to tangible property, including all resulting loss of use of that property, or loss of use of tangible property that is not physically injured for the actual expenses incident to the intentional destruction and removal of concrete products which are found to be defective.

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Roma Construction (Niagara) Ltd. v. Dykstra Bros. Roofing (1992) Limited was a dispute about roofing deficiencies. The plaintiff had served an offer to settle in a letter that was marked, “Without Prejudice”. The defendant had orally rejected the offer but, as the trial approached, more problems with roofs built by the defendant were discovered, potentially increasing the amount of damages recoverable by the plaintiff. Accordingly, the defendant then accepted the “Without Prejudice” offer that it had previously rejected.

The plaintiff took the position that its offer was no longer open for acceptance by the defendant. The defendant moved for an order compelling the plaintiff to settle according to the terms of its offer. The motion was heard by Madam Justice Linda M. Walters. She ruled in favour of the plaintiff, that the offer had lapsed before the purported acceptance by the defendant. It seems to us that the decision is wrong.

Her Honour began by distinguishing between offers to settle at common law and offers under Rule 49 of the Rules of Civil Procedure. She noted that, at common law, once an offer to settle had been rejected, “it was at an end” and was no longer open for acceptance. The plaintiff in the present case claimed that it had intended to make such an offer.

Under Rule 49 however, offers to settle are not affected by rejection. They remain outstanding unless and until they are withdrawn in writing.

Her Honour referred to Clark Agri Services Inc. v. 705680 Ontario Ltd. for the characteristics of a Rule 49 offer:

4.  An offer to settle made pursuant to Rule 49 (”Rule 49 offer”) has the following features:

(a)   It must be in writing.

(b)   It must be effectively delivered to the opposing party.

(c)   it must be a proposal that can be construed as an offer to settle, open for acceptance and binding if accepted.

(d)   It must be in Form 49A, but the use of that form is permissive.

(e)     It may be communicated in correspondence between counsel.

5.   If these features are present, an offer will be presumed to be a Rule 49 offer unless expressly stated otherwise or unless the offeror can demonstrate that he or she did not intend the offer to be a Rule 49 offer.

This offer met all of these requirements (although it had been made in a letter). Justice Walters said that “unless the plaintiff can demonstrate that it did not intend the offer to be a Rule 49 offer, it will be presumed to be one”.

In our view, the application of a subjective test to this issue is very problematical. Admittedly, the Clark Agri decision, referred to by Justice Walters, supports such an interpretation. But in the passage from that decision quoted above, it is difficult to reconcile para. 4 (which details five objective criteria) with para. 5 (which appears to suggest that even if all of those indicia are present, evidence of a contrary subjective intent will override).

Justice Walters’ finding that the plaintiff’s offer was not one made under Rule 49 was based primarily on the fact that the letter in which the offer was made had been marked, “Without Prejudice”. She said, “in such a case an offer to settle is not admissible on the issue of costs”.

However that appears to us to be a mischaracterization of the meaning of the phrase, “Without Prejudice”. Subrule 49.05 (not referred to in the decision) provides that “an offer to settle shall be deemed to be an offer of compromise made without prejudice.” So, in other words, all Rule 49 offers are deemed to be “without prejudice”, whether that phrase is used or not. The underlying idea, it seems to us, is that a party’s offer to compromise its position cannot be used against it as some sort of admission.

Thus, we have some difficulty with the analysis of Justice Walters. The use of the phrase, “without prejudice” does not alter the character of an offer that otherwise meets the criteria outlined in Clark Agri, as this one did. In our view, the offer should have been held to be a Rule 49 offer, capable of acceptance by the defendant.

In Kayhan v. Greve, the Divisional Court (Cunningham A.C.J., Stayshyn and Kiteley JJ.) considered whether the fact that the plaintiff in a personal injury action was a Muslim woman of Afghani descent was a sufficient basis to warrant striking the defendant’s jury notice. It concluded that the trial judge (Mr. Justice Nick Borkovich) had erred in making such an order. In the course of its reasons, the Court also commented on the notion of introducing jury challenges for cause in civil cases.

The plaintiff’s motion to strike the jury notice had been brought at the opening of trial. It was supported by the affidavit of an associate lawyer at the firm that was representing the plaintiff. Justice Borkovich had ruled that the affidavit was inadmissible (it evidently contained a good deal of legal argument and opinions of various people about interaction between Muslims and the Western world). Accordingly, as the Divisional Court observed, Justice Borkovich’s order had been made without any evidence.

Nevertheless, Justice Borkovich had held he would “have to be a pretty dumb citizen to not think that there is a considerable amount of animosity against Muslims and Arabs that’s alive because of the circumstances that are happening in the world” and on that basis, took judicial notice ”that there is a strong risk, a reasonable apprehension that there could be bias on the part of the jury based on a system where there are no checks”.

The Divisional Court ruled that the trial judge was not entitled to take judicial notice of the possibility of jurors’ prejudice against this particular plaintiff, in the absence of any evidence: “It is not possible to recognize the ‘facts’ that he did, as being so notorious as to be beyond the scope of reasonable debate.  Furthermore, the behavioural link between the existence of a lack of impartiality and the inability to set those biases aside was not established.  Accordingly, the appeal must be allowed and the matter remitted to a different trial judge.”

Although the improper exercise of judicial notice was sufficient to decide the appeal, the Court also discussed whether the time had come (as the trial judge believed) to allow challenges of jurors for cause in civil cases. Two of the three members of the panel (Cunningham A.C.J. and Stayshyn J.) were of the view that no such reform should be introduced in Ontario and that allowing parties to challenge jurors for cause would only add to the cost and delays that already exist in the system.

Justice Kiteley, on the other hand, disagreed. She pointed to the fact that other provinces do have such a procedure and said that ” it is clear that this is a matter which needs a legislative response”.

We have been aware since June 9 of the release of the decision in Isildar v. Kanata Dive Supply, however the reasons have only now become available on CanLII.  They’re 250 pages long though, so perhaps it’s taken CanLII’s editors until now to digest them.

The trial judge was Madam Justice Giovanna Toscano Roccamo. The action arose out of an incident in which the deceased, a novice diver, drowned in the St. Lawrence River while receiving instruction as part of a scuba certification program. The suit was brought by the wife and child of the deceased, against the individual instructor who was leading the dive when the accident occurred and against the organization that had offered the certification course.

Much of Justice Toscano Roccamo’s lengthy reasons consist of a detailed review of the evidence. Ultimately, she found that both defendants had fallen below the applicable standard of care and that their actions “were a necessary and proximate cause temporally and substantially connected to the tragic outcome”.

However, the action was dismissed on the strength of a release or waiver that had been signed by the deceased prior to diving. Justice Toscano Roccamo’s reasons provide a very useful discussion of the law relative to releases.

Her Honour approached the analysis as one having three stages:

1. Is the release valid in the sense that the plaintff knew what he was signing? Alternatively, if the circumstances are such that a reasonable person would know that a party signing a document did not intend to agree to the liability release it contains, did the party presenting the document take reasonable steps to bring it to the attention of the signator?
2. What is the scope of the release and is it worded broadly enough to cover the conduct of the defendant?
3. Whether the waiver should not be enforced because it is unconscionable?

Her Honour concluded that in this case, all of these questions should be answered in the defendants’ favour.

The actual text of the release document does not appear in the reasons, but it provided in part, that the deceased agreed to waive his legal rights and to exempt the released parties from “all liability or responsibility whatsoever for personal injury, property damage or wrongful death however caused, including, but not limited to, the negligence of the released parties, whether passive or active.”

The evidence satisfied Toscano Roccamo J., that one of the instructors had reviewed the wording of the release in the presence of the deceased at the initiation meeting at which he had signed the document. The evidence also indicated that the deceased had signed three other releases in the past, which apparently had had similar wording. Her Honour said of this release, that it was “contained on one page, easy to read and there was no fine print”.

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In Leader Media Productions v. Sentinel Hill Alliance Atlantis Equicap Limited Partnership, the Court of Appeal confronted an issue that a number of lawyers of our acquaintance (including some in our office) have encountered: what to do when the trial judge falls asleep?

This case involved an appeal from a decision of Mr. Justice William P. Somers. Counsel for the defendants had never tried a case before. In argument before the Court of Appeal, five affidavits were filed that said that the trial judge had frequently fallen asleep during the trial, albeit only for brief periods.

Counsel for the defence consulted with more senior lawyers at her firm while the trial was progressing and a tactical decision was made not to confront the trial judge about his slumbers. Instead, the defendants elected to “wait and see how things played out”. In the result, the defendants lost and it was only on the appeal that the issue surfaced.

(There did not seem to be any dispute on the argument of the appeal, as to whether the trial judge had really been asleep.)

The Court of Appeal rejected this ground of the defendants’ appeal. It noted that there was little authority on this issue, but reviewed some Australian jurisprudence and an Alberta decision in coming to the following conclusion:

While appellants’ trial counsel was not experienced (this was her first trial), the record discloses that she did consult with senior litigation counsel in her firm about the judge’s inattention. Together they made the decision to do nothing about it at the time but to, as respondent’s counsel put it, “roll the dice”.

Counsel was obliged to bring the trial judge’s inattention home to him at the time. Not having done so, and having decided to wait and see what happened, they cannot now raise that inattention for the first time as a ground of appeal on either a substantive or contextual basis.

Today, the Court of Appeal released two decisions which address the problem of whether a limitation period can be extended on the basis of “special circumstances” when commencing proceedings or adding defendants to existing proceedings. The answer is a qualified “no”.

The two cases are Joseph v. Paramount Canada’s Wonderland and Meady v. Greyhound Canada Transportation Corp.

Joseph v. Paramount

In Joseph, the cause of action arose on September 5, 2004, after the coming into force of the Limitations Act, 2002 (January 1, 2004). The plaintiff had been injured at an amusement park. Through inadvertence of the plaintiff’s solicitor, no action was commenced within the two year limitation period prescribed by s. 4 of the Act. When he learned of the error, the solicitor caused a statement of claim to be issued on October 31, 2006, almost two months after the limitation period had expired.

The defendant moved under Rule 21.01(1) of the Rules of Civil Procedure, for a determination of whether the action was prescribed. The motions judge, Justice Gerald F. Day, concluded that he still had a discretion, under the common law doctrine of “special circumstances”, to extend the time for commencement of an action. He found that such circumstances existed here, since there had been inadvertence on the part of the plaintiff’s solicitor and no prejudice to the defendant.

Interestingly, the Court of Appeal not only said that the common law “special circumstances” power has been taken away by the new Act, it noted that even when courts had had that power, it only allowed defendants to be added to an existing action after the expiry of a limitation period. The discretion did not permit the commencement of a new action beyond the limitation period. In making the latter ruling, the Court seems to have overruled a series of cases in the last several years, in which judges have done exactly that: St. Denis v. TD Insurance Home and Auto Liberty Insurance Co of Canada (2005), 80 O.R. (3d) 76 (S.C.J.); Doyley v. York Condominium Corp. No. 487 (2006), 82 O.R. (3d) 629 (S.C.J.); and Munshaw v. Economical Mutual Insurance Co. (2007), 84 O.R. (3d) 785 (S.C.J.).

With respect to “special circumstances”, the Court of Appeal noted that neither Justice Day nor counsel arguing the motion before him had addressed the effect of the new Act; everyone seems to have assumed that the “special circumstances” power still existed. (There have been many cases decided since January 1, 2004 in which the same assumption has been made.) The Court noted that s. 4 of the Act “mandates a two-year limitation period ‘[u]nless this Act provides otherwise’”. As a result, relief from a limitation period imposed by that statute must derive from the legislation itself, not from common law.

The principal argument made on behalf of the plaintiff seems to have been based on s. 20 of the Act. It permits the extension, suspension or other variation of a limitation period “by or under another Act.” Counsel for the plaintiff argued that the “special circumstances” power has historically been applied by the courts in conjunction with Rules 5.04(2) (”adding, deleting or substituting parties”) and 26.01 (”amendment of pleadings”) of the Rules of Civil Procedure. Because the Rules are enacted under the authority of the Courts of Justice Act, so the argument went, the “special circumstances” power was still available by virtue of being an extension “by or under another Act”.

However, the Court rejected this submission. It said that it is not the Rules themselves that have incorporated the doctrine of “special circumstances”; it has been the overlay of a common law principle on the Rules. The Court pointed out that if the plaintiff’s argument were accepted, s. 20 of the Act would conflict with s. 21, which specifically prohibits the addition of parties to an existing action after the expiry of a limitation period.

In the result, the appeal was allowed and the Court declared that the plaintiff’s action was statute-barred.

Meady v. Greyhound

The second case considered by the Court involved a more typical fact situation. As a result of a motor vehicle accident that occurred on December 23, 2000, an action had been commenced within the two-year limitation period then provided for by s. 206 of the Highway Traffic Act. Four years after the expiry of that limitation period, the plaintiffs sought to add another defendant and relied on the principle of “special circumstances”. The proposed new defendant opposed the motion on the basis that s. 21(1) of the Limitations Act, 2002 had eliminated that discretion and, in the alternative, that no special circumstances existed in this case.

Mr. Justice George P. Smith accepted both of these arguments. He held that s. 21(1) precluded the addition of the new defendant and that, even if that were not the case, no special circumstances existed in this case.

The Court of Appeal said that Smith J. had been wrong in his first conclusion but correct about the second, and dismissed the appeal.

With respect to s. 21(1), the key point about which the Court of Appeal disagreed with Justice Smith was as to whether that section applied to acts or omissions where the transition provisions of s. 24 of the Act apply. Here, the act or omission occurred years prior to the Act coming into force on January 1, 2004 but the motion to add a defendant was brought after that date. Smith J. held that s. 21(1) nevertheless applied, but the Court of Appeal disagreed.

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