Law Times

Law Times • sepTember 21, 2009 Lawsuit just one of many headaches They're back. With the kids in school again, it's time for the bigger kids to get down to work at Queen's Park. Al- ready, the fall session of the Ontario legis- lature promises to be at least a little more entertaining given the truck load of ammunition Premier Dalton McGuinty's government has kindly parked at the opposition parties' doors. Between the harmonized sales tax, eHealth Ontario, the Inside Queen's Park By Ian Harvey Ontario Lottery and Gaming Corp., nuclear power, and the prospect of more profligate spending by appointees on the taxpayers' tab, there are plenty of issues to make headlines over the next few weeks. Adding to the mess is the wrongful-dismissal claim launched by fired OLG CEO Kelly McDougald, who was pulling in $400,000 a year as head of the Crown corporation. As Whitten & Lublin LLP managing partner Daniel Lu- blin noted in his blog, this is a sticky situation. The firing, according to Finance Minister Dwight Dun- can, was "for cause." However, as of now it will be up to the government to prove the cause was not just miscon- duct but was serious enough to warrant dismissal without notice or severance. "Cause for dismissal is typically seen as the capital pun- ishment in workplace law as policy and the courts will find that only the most serious forms of misconduct, proven on the evidence, can justify the penalty," Lublin, an employment lawyer, noted. Some mitigating factors, he pointed out, include whether there was an employment agreement, if a bonus was payable, and how long it takes McDougald, whose allegations have yet to be proven in court, to find work. "Even in cases of misconduct, courts have overturned the dismissal and awarded severance pay where the inves- tigation into the incidents was faulty or incomplete," Lu- blin wrote. So you can forgive Progressive Conservative Leader Tim Hudak and NDP Leader Andrea Horwath for drooling in anticipation. Both are newly minted in their positions and both are eager to draw first blood. Not surprisingly, both came out with fangs bared as the session opened. Taking in the big picture, one has to wonder: was it just a year ago that the McGuinty government seemed firmly in the driver's seat? At the time, the Conservatives were still licking their wounds from the 2007 election, a vote widely seen as having been lost on the ill-advised promise to fund religious schools by former leader John Tory. The NDP had managed a small gain, adding a couple of percentage points to its vote, but was never really a threat to the Grits. What a difference a year makes. Cracks are steadily show- ing around the foundations of the government, not least of which is the revelation that Energy and Infrastructure Minister George Smitherman is mulling running for mayor in Toronto against David Miller, who is also looking more vulnerable each day. "There is a bit of a consensus forming in the city that the status quo is not getting the job done," Smitherman said. "I just thought it was important to publicly acknowledge that is something I'm thinking about." Smitherman's smoke signals — he's thinking, not con- firmed — could be taken as an astute piece of political op- portunism or it's possible he's making for the lifeboats be- fore the ship really goes down. As the weekly newsletter Ontario Legislative Highlights noted last week, the political scene is in a fluid state. With rumours that other heavyweights thinking of jumping ship include Economic Development and Trade Minister San- dra Pupatello, McGuinty is reportedly planning on sitting down one-on-one with the troops to get commitments go- ing forward. Meanwhile, Hudak and Horwath can be counted on to raise pointed questions as the session gets underway. For observers at Queen's Park, it will make for a sporting spec- tacle as the premier is grilled and roasted on the spit. All in all, it looks like the government will be feeling the heat this fall. Stay tuned and bring the marshmallows while the getting's good. LT Ian Harvey has been a journalist for 32 years writing about a diverse range of issues, including legal and political affairs. His e-mail address is ianharvey@rogers.com. COMMENT PAGE 7 Appeal ruling ripe for Supreme Court consideration BY JEAN-MARC LECLERC For Law Times I n a dispute that may be destined for the Su- preme Court of Canada, in July a divided Ontario Court of Appeal addressed the issue of appropriate standards for appellate reviews in contract disputes. Central to the case, Bell Canada v. The Plan Group, was the issue of whether appellate reviews should turn on questions of law or questions of fact, a key consideration for law- yers practising litigation. In this instance, the facts were straightforward. Bell Canada and The Plan Group entered into an agreement on joint projects. But later, a dispute between the two companies arose about the payment of Plan's invoices. Under the agreement, Bell and Plan agreed that any disputes they couldn't resolve would go to arbitration. The arbitration clause in the agreement stated that the "failure to file a notice of arbitration . . . within 12 months after the occurrences supporting a claim constitutes an ir- revocable waiver of that claim." But while Plan served draft and final notices of arbitration within the 12 months, no notice of arbitration was ever filed. As a result, Bell argued Plan had waived its claim. Plan, though, argued it only had to comply with provisions in Ontario's Arbitration Act and that it had done so by serving draft and final notices. To resolve the dispute, Plan brought an ap- plication to determine whether the agreement required a notice of arbitration to be filed in or- der to launch an arbitration. Plan won. Bell then went to the appeal court, where it won. The appeal court's decision is particularly notable for its ruling on the appropriate standard of review of an application judge's analysis of a contractual dispute and the impact that may have on the reso- lution of contractual disputes more generally. Writing for the majority of the court, Justice Robert Blair held that a dispute involving con- tractual interpretation is generally to be charac- terized as a question of law and must therefore attract a standard of review of correctness. In this respect, Blair held that "the interpretation of a contract . . . is very much a legal exercise" and "not essentially a fact-finding exercise." It is only where "the factual context in which the contract was negotiated or considerations of extrinsic evi- dence" arise that a trial judge's decision is to be reviewed by reference to the palpable and over- riding error standard. In a dissenting opinion, Justice Eileen Gillese held that Justice Herman J. Wilton-Siegel's contrac- tual analysis was reviewable on a standard of palpa- ble and overriding error because the interpretation rested on a "context-driven inquiry that depended on the weighing of documentary and other evi- dence, findings of fact, and factual inferences." Although the ruling is framed as a decision Speaker's Corner that addresses the standard of review of contrac- tual disputes, it is important for reasons that go beyond that issue. Contractual disputes are com- mon. When a dispute arises, clients want advice on how to resolve it quickly. The lawyer's advice on whether it's worthwhile to seek a quick means to resolve a contractual dis- pute will turn on his or her view of whether a court is likely to conclude there are disputed facts to resolve at trial. For example, in deci- sions such as Hi-Tech Group Inc. v. Sears Canada Inc., the Court of Appeal held that a motions judge was incorrect to grant summary judgment in a contract dispute because a provision in the contract was ambiguous, which made evidence surrounding the making of the contract relevant and gave rise to a genuine issue for trial. But unlike the decision in Hi-Tech, the major- ity's view in The Plan Group suggests that in a number of cases, it will be appropriate to resolve a contractual dispute without the need for full- blown discovery and trial. However, Gillese's dissenting opinion demon- strates how difficult it can be to identify whether a contractual dispute is appropriate to determine in a summary way. She held that the decision raised questions of mixed law and fact because the in- terpretation depended on "the application of legal principles to the language used by the parties with due consideration for the factual matrix, partic- ularly the facts as he found them to be in 1999 when [the agreement] was entered into." At the same time, in ruling in The Plan Group, the majority recognized that the jurisprudence on the standard of review in contract interpreta- tion cases varies among appellate courts across the country and that the Supreme Court of Canada "has yet to consider the standard of review in con- tractual interpretation cases post-Housen [v. Niko- laisen]." This fact alone would appear to make the issue ripe for the top court to determine. As well, the case for the Supreme Court to grant leave in The Plan Group becomes stronger considering that the court's conclusions may af- fect not only the appropriate standard of review of contractual interpretation decisions but also the circumstances under which it may be appro- priate for a court to grant summary disposition of a contractual dispute, an issue that confronts litigators frequently. LT Jean-Marc Leclerc practises in the litigation depart- ment at Osler Hoskin & Harcourt LLP. He can be reached at jleclerc@osler.com. Letter to the Editor In his editorial about the censorship powers of the Canadian Human Rights Commission, Glenn Kauth calls free-speech advocates in Can- ada "right-wingers." Some of us are. But free speech is a liberal value, too. I'm proud to stand in solidarity with organizations like the Canadian Civil Liberties Association, the Canadian Association of Jour- nalists, Egale Canada, and PEN Canada; with Liberal MPs like Keith Martin and Liberal sena- tors like Jerry Grafstein; with Muslim liberals www.lawtimesnews.com like Salim Mansur and Tarek Fatah; with leftist icons like Noam Chomsky; and with every lib- eral newspaper in the country from the Toronto Star to the Montreal Gazette to Eye Weekly. Each of these has called for the repeal of the Canadian government's censorship powers. Censorship violates true liberal values. With the recent ruling in the Warman v. Lemire case, we now know it violates the Charter, too. Ezra Levant Calgary

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