Law Times

Page 14 March 20, 2017 • Law TiMes www.lawtimesnews.com CASELAW Transportation RAILWAYS Federal regulatory boards Agency erred in finding railway failed to meet its level of service of obligation to shippers With record grain crop, there was surge in demand by Canadian grain shippers for freight service that railway company was un- able to fully satisfy. Railway im- plemented car rationing meth- odology, assigning percentage of available rail car supply to ship- pers. Respondent shippers, who were provided with number of rail cars falling short of percent- age shares calculated by railway's methodology, complained to Canada Transportation Agency. Agency held that railway failed to meet its level of service of obliga- tion to respondents and ordered remedial measures. Railway ap- pealed. Appeal allowed. Agen- cy erred in treating rationing methodology as if it constituted confidential contract, which led to failure to investigate whether railway had provided respon- dents with adequate and suitable accommodation for their traffic. Agency's investigation amount- ed to determining railway's com- mitment to respondents pursu- ant to its rationing methodology and then giving effect to terms of that commitment. Rationing methodology did not constitute confidential contract or other written agreement pursuant to which parties had agreed on manner in which obligations were to be fulfilled by railway as set out in s. 113(4) of Canada Transportation Act. Agency was required under s. 116(1)(a) of Act to determine whether number of rail cars provided to respon- dents during weeks in issue constituted adequate and suit- able accommodation in regard to traffic. Instead of conducting required investigation, agency erred in assuming that ration- ing methodology and percent- age shares allocated to respon- dents constituted level of service obligation that railway owed to respondents. Railway was under no duty to deliver fixed percent- age of cars or fixed number of cars per week to respondents, but was obligated to provide them with adequate and suitable ac- commodation in regard to their traffic. Matter would be remitted back for reconsideration. Canadian National Rail- way v. Viterra Inc. (2017), 2017 CarswellNat 107, 2017 FCA 6, M. Nadon J., Donald J. Rennie J.A., and Mary J.L. Gleason J.A. (F.C.A.). Ontario Civil Cases Financial Institutions ISSUANCE OF CREDIT Miscellaneous Creditor's action against bank for declaration that it had priority over funds was dismissed Overdrafts. Creditor financed its sale of debtor with vendor take back note that was secured by general security agreement covering debtor's assets. Debtor started using services of bank H after creditor refused to subordi- nate its security to bank H. Debt- or opened two related chequing accounts in different currencies and obtained company credit card. Accounts did not allow overdrafts, but debtor frequently went into overdraft and provided funds to cover overdrafts before cheques were at risk of being dishonoured. After debtor went bankrupt, creditor brought ac- tion against bank H for decla- ration that it had priority over funds in accounts used to pay overdrafts and credit card debt and for payment of amounts al- leging owing. Creditor brought motion for summary judgment, and bank brought cross-motion for summary judgment dismiss- ing action. Motion dismissed; cross-motion granted. Creditor had not established bank H had extended credit to debtor by way of overdrafts. Overdrafts were created when bank made deci- sion to cover cheque that put account into negative balance. Under bank H's system, decision to create overdraft could not be made until day after cheque was posted to account. Until such time as bank H made decision to honour or return cheque, it was not providing any credit to debtor or assuming any risk on debtor's behalf. Debtor always covered cheques with its own funds before bank H made deci- sion to honour cheque, and in- terest charges were in nature of penalty rather than proof of loan. Kari Holdings Inc. v. HSBC Bank Canada (2017), 2017 Car- swellOnt 566, 2017 ONSC 437, Conway J. (Ont. S.C.J.). Professions and Occupations BARRISTERS AND SOLICITORS Negligence Negligence claim against lawyer was ordered to proceed to trial Lawyer G represented plaintiffs in settlement of tort and acci- dent benefit claims. Plaintiffs re- tained lawyer C with respect to issues with retainer of G. Plain- tiffs brought claims against C, which were dismissed on sum- mary judgment motion. Motion judge found that plaintiffs re- tained C to represent them only with respect to assessment of G's accounts, and that they did not retain C in relation to any pos- sible negligence action against G. Judge found that C advised plaintiffs to seek legal advice on negligence issue. Judge found that C did not owe plaintiffs duty of care to either pursue or provide them with legal advice about possible negligence ac- tion, including limitation pe- riod. Plaintiffs appealed. Appeal allowed; trial ordered. Judged erred in determining that C met burden to establish that there was no genuine issue for trial on issue of duty of care to advise as to limitation period. Where it is alleged that lawyer's duty of care arises out of and extends beyond retainer, court must me- ticulously examine all relevant surrounding circumstances, including form and nature of client instructions and sophis- tication of client, to determine whether duty is owed beyond four corners of retainer. This was not done in present case. Judge did not explain how she was able to conclude that C did not owe plaintiffs duty to advise about existence of limitation period. There was change over course of C's assessment retainer of his views about competency of G's representation; C advised plaintiffs that in assessment pro- ceeding they should allege G had been negligent; and, C ad- vised plaintiffs that they might have negligence claim against G. Judge did not take into account all material facts. Meehan v. Good (2017), 2017 CarswellOnt 1351, 2017 ONCA 103, Janet Simmons J.A., David Brown J.A., and L.B. Roberts J.A. (Ont. C.A.). Real Property EASEMENTS Disturbance of easements Application claiming interference with use and enjoyment of right of way was dismissed Applicant and respondents owned adjoining properties. Applicant had right of way over strip of land between proper- ties, which her predecessor in title had used to access property. Right of way was extinguished by 1993 court order, except for allowing predecessor in title to access his garage. After appli- cant purchased her property in 2014, respondents erected fence, including gates, around their property. Applicant claimed that respondents had interfered with her use and enjoyment of right of way and applied for injunc- tive relief and damages, as well as order requiring respondents to contribute to maintenance of right of way. Application was dismissed. Application judge found that at time of 1993 order, easement was clearly for pur- pose of accessing garage of appli- cant's property by its owner; and that fence did not substantially interfere with her use and enjoy- ment of easement, noting that gates had been removed. Appeal by applicant dismissed. Applica- tion judge did not err in holding that right of way provided appli- cant only with access to garage along existing laneway, and did not extend to access to her prop- erty from any point along estab- lished laneway. He made no legal error and did not misapprehend evidence in determining nature and scope of applicant's right of way. Application judge found that fence posts did, to small ex- tent, intrude on right of way, but did not find that posts interfered with use of right of way as means of getting into and out of garage. Issue was moot as posts had been removed. Application judge ac- cepted undertakings from re- spondents not to reinstall gates that had been removed and to move posts. While those under- takings were not made part of formal order, form of order was at judge's discretion and there was nothing to suggest that re- spondents were not complying with undertakings. Szymanski v. Alaimo (2017), 2017 CarswellOnt 1016, 2017 ONCA 86, Doherty J.A., David Brown J.A., and B.W. Miller J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 5705, 2016 ONSC 2527, Gray J. (Ont. S.C.J.). SALE OF LAND Remedies Purchaser breached agreement and was obliged to forfeit deposit I Ltd. agreed to purchase one property from each of three numbered companies ("appli- cants"). Contract made time of essence and made specific pro- vision as to how and to whom notice was to be given. I Ltd.'s obligation to complete agree- ment was subject to several con- ditions, which were to be satis- fied or waived by purchaser on or before 5:00 p.m. on April 15, 2014. Contract allowed purchas- er to provide written notice to vendors if purchaser determined that particular condition was to be waived, but if by specified time purchaser had not given notice to vendors that conditions had not been satisfied or waived, such conditions were deemed to have been either waived or sat- isfied. I Ltd. did not complete transaction. Applicants sought declaration that I Ltd. breached agreement and was obliged to forfeit deposit. Application granted. Applications judge held that I Ltd. forfeited deposit and was in default. Proper notice advising that conditions were not satisfied and were not being waived was not given. Contract placed obligation on purchaser to have regard for take-up of time and to have had obligation to act as it ran out. There was no failure of good faith and nothing dishonest in leaving it to pur- chasers to look after their own interests when terms of agree- ment were known to all. Proper notice advising that conditions had not been satisfied and were not being waived was not given. Conditions were deemed to be satisfied or waived. Purchasers were obliged to complete con- tract; they were in default. De- posit of $400,000 was forfeited to applicants. I Ltd. appealed. Appeal dismissed. Applica- tions judge's finding that draft extension agreement amounted to offer to extend was fully sup- ported by evidence. There was no reversible error. Neither draft extension agreement nor its ac- companying transmittal email contained any language sug- gesting I Ltd. intended docu- ment to serve as written notice or that conditions had not been satisfied or waived. Applications judge correctly concluded that agreement placed on I Ltd. obli- gation to act as time for waiving conditions in its favour ran out. There was no error in his conclu- sion that "[t]here is no failure of good faith and nothing dishon- est in leaving it to the purchasers to look after their own interests when the terms of the agreement are known to all". 2260695 Ontario Inc. v. In- vecom Associates Ltd. (2017), 2017 CarswellOnt 834, 2017 ONCA 70, Janet Simmons J.A., David Brown J.A., and L.B. Rob- erts J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 8583, 2016 ONSC 3327, Lederer J. (Ont. S.C.J.). Securities BROKERS Rights of broker Action by investment firm against former employee for payment of trading losses was dismissed Defendant worked for plaintiff investment firm as trader since 1997. Defendant's job was to buy and sell publicly traded securi- ties in name of plaintiff, using capital supplied by plaintiff, with view to making profits arising from those trades. At time de- fendant left, he had accumulated over $500,000 in trading losses, largely due to one specific invest- ment in company that became insolvent. Plaintiff brought ac- tion against defendant for those losses. Defendant and his wife brought motion for partial sum- mary judgment. Defendant sought determination of wheth- er, as former employee, he must reimburse plaintiff for his accu- mulated losses. Motion for par- tial summary judgment granted; claim for payment of accumu- lated losses in excess of personal reserve dismissed. Plaintiff ap- pealed. Appeal dismissed. Mo- tion judge clearly recognized that issue of defendant's liabil- ity for losses in his inventory ac- count when employment ended turned on terms of his contract of employment, including what, if any, obligation defendant had to compensate or indemnify plaintiff for losses in inventory account. Motion judge's reasons could not be read as contain- ing finding that defendant was required to indemnify plaintiff for losses suffered due to his trading. Motion judge's find- ing about terms constituting employment contract between parties and their interpretation was entitled to deference, and motion judge committed no pal- pable or overriding error. Plain- tiff did not adduce any indepen- dent expert evidence of industry practice to effect that departing employees were responsible for accumulated trading losses. Plaintiff did not raise issue of whether defendant failed to give adequate notice of his cessation of employment or whether trad- ing gains he might have made during proper notice period would reduce losses in inventory account.

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