DIGEST
OF RECENT DECISIONS FROM CANADA’S COURTS
Michael Hamilton, LL.B. E-mail: jandm@hfx.eastlink.ca
BANKRUPTCY
& INSOLVENCY
CLAIMS – All employees of bankrupt
company who had not waived their
recall rights entitled to benefits under
Wage Earner Protection Act (Ont.).
Determination of the entitlement of
former employees of the bankrupt company to benefits under the Wage Earner
Protection Act (Ont.). The bankrupt was
in the business of manufacturing lumber
products. Many of its employees were
unionized. The collective agreement in
force at the time of the bankruptcy provided for 24 months of recall rights, after
which time employees would be deemed
terminated if not recalled. Recall rights
would also terminate in the event of a
permanent vacancy. The bankrupt began
winding down its operations in the summer of 2007. Layoffs continued into the
fall of 2008 when the company permanently ceased operations. The receiver
took the position only those employees
laid off after July 4, 2008 had rights to
benefits under the Act. The union took the
position neither the company nor its
employees intended that the cessation of
operations would be the end of the company or would trigger the lapse of recall
rights. The union’s representative deposed
regular discussions continued through the
fall of 2008 about restarting operations,
resulting in an oral agreement between
the bankrupt and the union that recall
rights would be extended until a new collective agreement was signed. The union
filed a grievance seeking severance pay for
the former employees. The bankrupt and
the union settled the grievance in writing.
The settlement, executed July 6, 2010,
acknowledged the employees had recall
rights if they had not elected to seek severance earlier. The receiver was appointed
just short of six months later.
HELD: All the employees were entitled
to benefits under the Act. The effect of
the July 6, 2010 settlement agreement
was that employees had recall rights that
extended to the date of the agreement,
when their layoffs became a termination
of their employment. Those employees
who had not waived their recall rights as
of that date were entitled to benefits
under the Act because they had accrued
earnings within the six-month preceding
the bankruptcy. Employees who had
waived their recall rights, but never
received any severance pay, were also
entitled to benefits. Their waivers were
void for lack of consideration.
G.E. Canada Equipment Financing
G.P. v. Northern Sawmills Inc., [2011]
O.J. No. 3429, Ont. S.C.J., Perell J.,
July 25/11. Digest No. 3116-001
(Approx. 7 pp.)
DISCHARGE – Court changed bank-
rupt’s conditional discharge to uncon-
ditional discharge because of change in
bankrupt’s circumstances.
Application for an unconditional dis-
charge. The bankrupt had been granted a
conditional discharge in October 2009
suspending his discharge for nine consecutive months and requiring him to pay
his trustee $31,000 at a rate of $600 per
month until fully paid or until 2014. The
bankrupt was 62 years old and had been
on long term disability since suffering a
mental breakdown in 2004. He had moved
to Montreal to be close to his siblings and
friends. His gross annual income was
$35,436 and his monthly expenses $3049.
After making four payments under the
order, the bankrupt was unable to meet his
obligations. He had since had two hip
replacements and suffered from a variety
of health problems, including diabetes.
HELD: Application granted. Circumstances had changed since the initial order.
It was evident that the bankrupt was now
unable to obtain work or earn enough to
continue to make the payments required
under the original conditional discharge
order. He was doing his best to rehabilitate
himself and turn his life around. He should
be encouraged in his efforts. The bankrupt
was granted an unconditional discharge.
Connor v. Rumanek & Co., [2011]
O.J. No. 3463, Ont. S.C.J., Newbould J.,
July 26/11. Digest No. 3116-002
(Approx. 4 pp.)
BANKS & BANKING
LIABILITY TO CUSTOMER –
Defendant bank only liable to plaintiff
for fraudulent cheques identified by
plaintiff within 30 days of receipt of its
bank statement.
Action to recover from defendant bank
losses associated with the misappropriation of funds by applicant’s bookkeeper, S.
S worked for plaintiff, a real estate broker,
for more than 10 years in a trusted position. Through a fraudulent scheme which
involved changing the payees on plaintiff’s
cheques to herself, S was able to misappropriate over $400,000 between 2003
and 2008. Plaintiff’s two principals were
both required to sign all cheques from the
company’s general account, but S was able
to perpetrate the fraud by obtaining one
principal’s signature, then changing the
payee to herself and depositing cheques
into her own account. The second principal ultimately discovered the fraud in
2009. S was criminally charged and convicted of fraud. Her subsequent bankruptcy precluded any meaningful recovery
by plaintiff of the misappropriated funds.
Plaintiff looked to the bank to recover its
losses because the bank had honoured
cheques with only one signature. The bank
relied on the financial services agreement
it had with plaintiff, which required plaintiff to report errors in its monthly statement within 30 days, failing which it was
not liable for covering any errors.
HELD: Action allowed in part. The
bank was liable to reimburse plaintiff for
only those cheques identified by plaintiff
within 30 days of its receipt of its bank
statements, totalling $7,809. Plaintiff
lacked efficient systems, procedures and
controls to prevent and detect fraud. Its
principals were experienced businessmen
who understood they were bound by the
bank documents they signed. The bank
had no obligation to bring to their atten-
tion the specific terms of the agreement.
CHARTER OF RIGHTS
& FREEDOMS
SEARCH AND SEIZURE – No basis
to exclude telewarrant based on infor-
mation supplied by four informants.
Motion to quash a telewarrant and to
exclude the evidence obtained pursuant
thereto on the basis that the information
to obtain did not disclose reasonable and
probable grounds that an offence had been
committed or that the evidence sought
would be found at applicant’s residence.
Applicant resided in an apartment in Orillia. The investigating police officer swore
an information setting forth the basis for
his belief that applicant was trafficking in
cocaine at the apartment. The officer’s
belief was based on confidential information received from four informants. Since
there was no sitting justice of the peace in
Orillia, an application for a telewarrant
was made. The telewarrant was issued and
authorized any peace officer to enter the
apartment. The police entered the apartment and seized various items, including
firearms, ammunition, crack cocaine, a
bank card, a cell phone and $9,695 in Canadian currency. Applicant was changed
with firearms and drug offences. He sought
to quash the telewarrant and exclude the
seized evidence.
HELD: Motion dismissed. There was
no basis to exclude the evidence obtained
pursuant to the telewarrant. Applicant’s
rights under s. 8 of the Charter were not
violated. If the information had been comprised of information from just one
informant, there may have been substance
to applicant’s argument. The justice of the
peace, however, was entitled to look at all
of the information. Taken as a whole, the
information before the justice of the peace
was corroborative of all four informants.
The information from the informants all
corroborated the gender, age, height, body
build, skin colour and the fact that an individual going by the name of Jamall was
dealing cocaine in the Orillia area and,
more importantly, out of the apartment.
R. v. Moran, [2011] O.J. No. 3476,
Ont. S.C.J., Edwards J., July 28/11.
Digest No. 3116-004 (Approx. 7 pp.)
CIVIL PROCEDURE
DISMISSAL OF ACTION – Court
dismissed plaintiff’s defamation action
against sole remaining defendant for
abuse of process.
Motion by defendant V to dismiss the
action as an abuse of the process of the
court and for failure of plaintiff to pay
costs ordered on a motion. Plaintiff sued a
newspaper and its owner, two reporters
and V for $25,000,000 for libel and slan-
der. The newspaper published an article
about plaintiff under the headline “Ex-con
now has church.” V was alleged to have
libelled plaintiff in two blog postings con-
nected to the article on the newspaper’s
website. Plaintiff discontinued his action
against all defendants except V. After
being served with the statement of claim,
V sent a letter to the plaintiff, stating that
she intended to defend the action. When V
attempted to file her statement of defence,
she was not able to because plaintiff had
noted her in default. V had the notice of
default set aside and was awarded costs of
$3,000. After having V noted in default a
second time, the court set aside the second
default and provided that V could move to
dismiss the claim if the costs order was not
paid. She filed her statement of defence
and moved to dismiss the action.
STRIKING OUT PLEADINGS –
Court did not err in striking out appel-
lants’ originating notice seeking declar-
ation that respondent city had violated
Animal Protection Act (Alta.).
Appeal from an order striking out
appellants’ originating notice. Respondent
city held a license under the Wildlife Act
(Alta.) to operate a zoo, which housed a
lone Asian elephant named Lucy. Appellants believed that Lucy’s facilities and
situation at the zoo were detrimental to
her health and that Lucy should be moved
to an elephant sanctuary in a warmer climate where she could enjoy the companionship of other elephants. The city conceded that Lucy had some health problems
but denied that her situation and facilities
were inadequate or illegal and argued that
in any event, she was not healthy enough
to survive a long-distance move. Appellants brought an action by originating
notice for an order declaring that the city
was in violation of s. 2 of the Animal Protection Act (Alta.). The city brought an
application to have the originating notice
struck out on the basis that appellants had
no standing, that the proceedings were an
abuse of process. The chambers judge
granted the application and struck out the
originating notice. He concluded that the
proceedings were an abuse of process
because a private litigant could not seek a
declaration that the city was in breach of a
penal provision in a statute.
HELD: Appeal dismissed. The chambers judge correctly concluded that the
proceedings were an abuse of process.
Civil proceedings of this nature might have
undermined the jurisdiction of the crim-
