THE LAWYERS WEEKLY
April 1, 2011 | 17
DIGEST
OF RECENT DECISIONS FROM CANADA’S COURTS
Michael Hamilton, LL.B. E-mail: jandm@hfx.eastlink.ca
ARBITRATION
VOLUNTARY BINDING ARBITRATION – Appellants’ claims against
respondents involved interpretation
of contract and were subject to arbitration clause.
Appeal from a finding that allegations of
breach of fiduciary duties and taking of
secret profits in the context of a contract to
manage the construction of a residence fell
within the scope of an agreement to arbitrate. Appellant property owners entered
into a project manager building contract
with respondents for the construction of a
residence on property they owned. The contract provided that any disagreement which
arose between the parties would be referred
to arbitration. The construction of the residence was completed in October 2006. In
2009 appellants raised various issues concerning deficiencies in the completed work
and alleged that respondents breached fiduciary duties owed to them and took secret
profits by hiring a related entity. Respondents commenced arbitration proceedings in
September 2009 but appellants took the
position that the allegations of breach of
fiduciary duty and taking secret profits were
not within the scope of the arbitration
clause. They commenced an action. The
chambers judge held that the allegations fell
within the scope of the arbitration agreement and stayed the action.
HELD: Appeal dismissed. As appellants’ allegations of breach of fiduciary
duty and secret profits turned on a finding that a fiduciary relationship existed
between the parties, and the source of
their relationship was the contract, it was
arguable that the disagreement was as to
the interpretation of the agreement and
therefore fell within the terms of the
arbitration clause. Furthermore, the
question of the parties’ relationship
involved a factual inquiry which was to
be resolved by the arbitrator.
St. Pierre v. Chriscan Enterprises
Ltd., [2011] B.C.J. No. 342, B.C.C.A.,
per Levine J.A. (Frankel and Grober-man JJ.A. concurring), Mar. 4/11.
Digest No. 3044-001 (Approx. 8 pp.)
BANKRUPTCY
& INSOLVENCY
PRIORITIES – Consent order did
not grant unproven claims of secured
creditors priority over receiver’s charge.
Appeal by a mortgagee from an order
which granted the receiver’s charge priority
to proceeds of sale of land that were held in
a solicitor’s trust account. The bankrupt was
engaged in a multi-million dollar project
constructing cottages on a three-acre parcel
of land. In October 2006 it filed notice of its
intention to make a proposal in bankruptcy.
One month prior to the filing of the notice,
appellant issued a demand in excess of
$1,000,000 under its mortgage. The interim
receiver initially proposed to complete the
construction of the development out of the
proceeds of sale of the cottages without any
borrowing. By February 2007 five sales were
approved by the court and completed. The
receiver wished to use the proceeds of the
sales for the continued construction. How-
ever, the secured creditors and various lien
claimants sought, and obtained, orders
requiring that 50 per cent of the sales be
held in trust. Additional funding was there-
fore required to complete the project. When
the receiver applied for approval of a sixth
sale, appellant consented to 50 per cent of
the sale proceeds being used and 50 per cent
being added to the funds held for the credit-
ors. The consent order also provided that
the funds held in trust could be borrowed by
the receiver, used to complete construction,
and then repaid out of the net proceeds of
subsequent sales. The receiver expended the
entire fund, but was unable to complete the
construction of the project. The remaining
land was ultimately sold for $1,500,000.
The receiver then applied for an order
approving the repayment of the $500,000
loan, which had become $845,000 with
interest and charges, with the balance of the
proceeds being paid out pro rata against
charges and debts incurred by the receiver
in endeavouring to complete the develop-
ment. The judge granted the order, finding
that the consent order gave priority to the
receiver’s charge.
BUILDING CONTRACTS
BREACH – Sufficient evidence to
support finding that homeowners had
breached contract for construction of
a home.
Appeal from a judgment for damages.
Appellant homeowners and respondent
contractor were parties to a contract for the
construction of a house. Construction proceeded through the drywall stage of construction. The contractor sought the third
payment of $55,000 pursuant to the contract. The homeowners refused to make the
payment alleging deficiencies. The contractor stopped work and commenced litigation. The trial judge concluded that the
conditions for the third payment had been
met, that the homeowner’s refusal to make
the payment was a breach of contract and
that there were only three aesthetic deficiencies, which entitled the homeowners to
a nominal set-off. She awarded the contractor $48,700, the balance of the third
payment, and $15,750 for loss of profit, with
a set-off of $5,000 for deficiencies.
HELD: Appeal allowed in part. The
judge correctly concluded that the contractor met the contractual condition for the
third payment, that the homeowners’ refusal
to make the payment was a breach of the
contract and that the deficiencies were not
sufficiently material. However, there was
insufficient evidence to support the contractor’s claim for loss of profits, such that it
should be dismissed. The set-off for the
deficiencies was modestly increased.
Western Homes & Management Ltd.
v. Yusuf, [2011] B.C.J. No. 318, B.C.C. A.,
per Mackenzie J.A. (Saunders and
Chiasson JJ.A. concurring), Mar. 2/11.
Digest No. 3044-003 (Approx. 6 pp.)
CHARTER OF RIGHTS
& FREEDOMS
EQUALITY RIGHTS – Reduction
provisions of Public Service Superannuation Act and Canadian Forces
Superannuation Act did not infringe
subs. 15(1) of Charter.
Appeal from a Court of Appeal judgment
upholding the trial judge’s decision rejecting
appellants’ claim that the reduction provisions of the Public Service Superannuation Act and the Canadian Forces Superannuation Act infringed subs. 15(1) of the
Charter and were of no force and effect. The
Acts provided federal civil servants and
members of the Canadian Forces and their
families with a suite of work-related benefits both during employment and after
retirement, including a package of survivor
benefits provided to the surviving spouse
and dependants of a plan member after his
or her death. The package of survivor benefits included a supplementary death benefit,
which provided for a lump sum payment to
be made to a plan member’s designated
beneficiary at the time of the member’s
death. The supplementary death benefit
was reduced by 10 per cent for each year by
which the plan member exceeded a certain
age. The federal supplementary death benefits of appellants were reduced because of
the age of their husbands at the time of
death. Appellants contended that the reduction provisions were of no force and effect
because they infringed subs. 15(1) of the
Charter, as they discriminated on the basis
of age and were not justified under s. 1. They
also sought a monetary judgment. The trial
judge dismissed the actions.
HELD: Appeal dismissed. The reduction provisions constituted an obvious disadvantage on an enumerated ground, but
did not perpetuate any disadvantage and
did not violate subs. 15(1) of the Charter.
The age-based rules were effective in
meeting the actual needs of the claimants
and in achieving important goals such as
ensuring that retiree benefits were meaningful. The degree of correspondence
between the differential treatment and the
claimant group’s reality confirmed the
absence of any negative or invidious
stereotyping on the basis of age.
Withler v. Canada (Attorney General), [2011] S.C.J. No. 12, S.C.C., per
McLachlin C.J. and Abella J. (Binnie,
LeBel, Deschamps, Fish, Charron,
Rothstein and Cromwell JJ. concurring), Mar. 4/11. Digest No. 3044-004
(Approx. 23 pp.)
CIVIL PROCEDURE
DISCLOSURE OF IDENTITIES –
Appellate court upheld dismissal of
appellant’s request to pursue defamation claim under pseudonym or for partial publication ban.
Appeal from the dismissal of appellant’s
request for permission to pursue a defamation claim under a pseudonym and her
alternative request for a partial publication
ban relating to the proceedings. Appellant
was a 15-year-old who had discovered that
persons unknown had created a fake Facebook profile for her, complete with derogatory sexual comments and information. She
and her father were able to obtain information on the origin of the fake profile from
Facebook. Respondent B Inc. did not
oppose appellant’s application to compel it
to disclose the identity of the user associated with the IP address identified by Facebook. Media outlets opposed appellant’s
claims for an order concealing her identity
or for a publication ban. At the hearing of
the application, B Inc. was ordered to disclose the user’s identity and appellant’s
requests were dismissed.
HELD: Appeal dismissed. Appellant
had no common law right to confidentiality. Appellant’s age alone did not mean
that her interests were more important
than the constitutional rights of others.
Openness was necessary to safeguard judicial impartiality and independence. It was
essential to preserving the public confidence in the justice system while enriching
the public’s understanding of the administration of justice. Public embarrassment or
a stated interest in privacy was not sufficient to entitle litigants to anonymity. To
initiate a defamation action, appellant
needed to present herself and the alleged
defamatory statements in open court.
When she chose to avail herself of the
court process in pursuit of damages for
defamation, she submitted to whatever
public scrutiny attached to civil litigation
and had to accept the attendant diminished expectation of privacy.
A.B. v. Bragg Communication Inc.,
[2011] N.S.J. No. 113, N.S.C.A., per
Saunders J. A. (MacDonald C.J.N.S. and
Oland J.A. concurring), Mar. 4/11.
Digest No. 3044-005 (Approx. 22 pp.)
CLASS ACTIONS
SET TLEMENT – Claims Administra-
tor of settlement in class action did not
err in rejecting class member’s claim.
Appeal from a decision of the Claims
Administrator. In 2009 the court issued a
judgment approving the settlement of a
certified class action. The settlement
agreement provided that the compensation fund would be distributed by the
Claims Administrator. If the Claims
Administrator disallowed a claim in its
entirety, the claimant was entitled to have
a hearing before a judge. In 2010 class
member M’s claim was denied. M
requested a hearing to appeal the decision.
In 1998 M had assigned all rights to his
freelance articles to his company. He submitted two claims: one by M as creator of
the works and the other by the company as
assignee of the creative works.
HELD: Appeal dismissed. The fact that
the settlement agreement distinguished
between the creator and the assignee did
not mean that each could claim compensation for the same works. Since M assigned
all of his rights in the works to his com-
