The recent decision of the Ontario Court of Appeal in Khan v. Metroland Printing, Publishing and & Distributing Ltd. et al is a useful reminder that even though the wheels of justice may feel like they turn slowly, there is a limit to everything.

This case arose out of a mayoral election in Richmond Hill, Ontario in 1997. The successful candidate in that election was William Bell. The unsuccessful candidate was Colleen Khan. Both are now deceased.

In January 1998, Ms. Khan and others commenced this action alleging that defamatory statements, including statements allegedly made by Mr. Bell, were published in Metroland’s newspaper. The action was defended and Bell also delivered a counterclaim alleging that Ms. Khan’s campaign literature included defamatory statements about him.

The pleadings and examinations for discovery were completed in late 1998.

Nothing else happened to move the case forward. In 2001, the Court made an Order requiring Mr. Bell to pay security for costs into Court. That Order was finally set aside in May 2005.

Nothing took place between May 2005 until February 2013 when the Defendants brought a motion to dismiss the action for delay. In response, the Plaintiffs insisted that they still intended to proceed with the case.

The Judge hearing the motion pointed out that over fifteen years had passed since the alleged defamation took place and fourteen years had passed since the action was started. While the position of the Khans on the motion was that they wanted to proceed to trial, there was simply no explanation as to why the action was not set down on the trial list in the subsequent fourteen years.

In this case, there was evidence of actual prejudice as a result of the loss of witnesses, as well as a presumption of prejudice arising from the delay.

The action was dismissed and on appeal to the Court of Appeal, the appeal was dismissed with costs.

Notwithstanding efforts that have been made in the administration of our court system, there are delays inherit in the system. At the moment, in Toronto, it can take seven months to obtain time from the Court for the hearing of a Masters motion. A motion before a judge will take at least four months, and only if it is relatively short. So an action can still take a long time to get to trial, even if both sides move the case along in a reasonable way. But if the parties allow an action to languish, this case is a useful reminder that there is indeed a limit to how long that will be tolerated.

Aside from the nuisance caused during the construction process, the construction of new highways to replace routes through small towns is usually welcomed by motorists simply because it tends to expedite travel. Unfortunately, the rerouting of a highway will damage a business built along a well-traveled road if it depends on passing motorists for business, and if the road is no longer used.

The recent Supreme Court of Canada decision in Antrim Truck Centre v. Ontario (Minister of Transportation) provides an interesting insight into the law governing the circumstances under which such a property owner can obtain compensation.

In this case, the Plaintiff operated a truck stop on Highway 17 near the hamlet of Antrim from 1978 until 2004 when construction was completed on a new section of Highway 417 running parallel to Highway 17. Motorists travelling on the new highway did not have direct access to the truck stop and as a result, in effect, it was put out of business.

The Plaintiff brought a claim for damages against the Province before the Ontario Municipal Board under the Expropriations Act on the basis that the highway project substantially interfered with its use and enjoyment of its property. The OMB awarded damages of $393,000.00 for loss of business and the decrease to the value of the property.  On appeal, the Divisional Court affirmed the OMB’s decision. On further appeal to the Ontario Court of Appeal, the Board’s decision was reversed.  At the final appeal stage, before the Supreme Court of Canada, the Supreme Court restored the Board’s decision.

The legal doctrine governing the issue is the law of nuisance. The issue in the case was quite simply whether or not the rerouting of a highway constituted a nuisance as a matter of law, and if so, what right the Plaintiff might have to compensation.

The Court defined the main question in the case as how to decide whether an interference with the private use and enjoyment of land is unreasonable, and therefore a nuisance, when it results from construction that serves an important public purpose. The Court decided that one determines the reasonableness of such interference by balancing the competing interests of the public and the land owner. This involves answering the question of whether, in all of the circumstances, the private party has shouldered a greater share of the burden of construction then it would be reasonable to expect individuals to bear without compensation.

Given the public interest served in the construction of a new highway, if the penalty suffered by an individual land owner is no more than his or her fair share of the costs associated with providing a public benefit, there will be no recovery. In this case, the Court found that the interference with the truck stop caused by the construction of the new highway inflicted significant and permanent loss, and as a result, the Plaintiff was entitled to compensation.

There are a number of instances in common-law jurisprudence generally in which such a balancing of competing interests is required. This circumstance probably arises most frequently in the context of applications for injunctions. In such cases, the Court must consider a test known as the “balance of convenience” i.e. the Court must balance the apparent harm to the party seeking the injunction if the injunction is not granted against the apparent harm to the other party if the injunction is granted. This is often a particularly difficult exercise because in most injunction cases, the facts are heavily disputed and the Judge must make the decision without being able to determine exactly what did or did not happen. In many cases, this makes it very difficult for parties and their lawyers to be able to predict with any reasonable certainty what the outcome of an application for injunction is likely to be.

The outcome of this case would have been similarly difficult to predict. The Ontario Municipal Board and the Divisional Court balanced the competing interests of the truck stop owner and the Province in a particular way. The Ontario Court of Appeal had the opposite opinion of the same facts. The Supreme Court of Canada disagreed with the Ontario Court of Appeal. All of this serves to demonstrate quite clearly the difficulty faced by land owners having to decide whether or not to seek compensation from the Province in such circumstances.

Adding to the difficulty, of course, is the fact that if the construction of a new highway has effectively put the land owner out of business, the land owner might have difficulty being able to afford to fund an application for compensation – especially if the Province is intent on taking the dispute all the way up to the Supreme Court of Canada for a final resolution. Conversely, if the impact of the new highway is not so severe as to out the land owner out of business, so that the land owner can be expected to be able to fund an application for compensation, its case might not be as compelling simply because it has not been put out of business. Based on this case, however, it would appear that any time a land owner is victimized this way, some consideration should be given to an application for compensation.

In the recent decision of a Superior Court Master in Garacci vs. Ross, the Court dealt with a motion by the Defendant in a personal injury action to force the Plaintiff to disclose photographs on the private portion of her Facebook account.

The Plaintiff had been involved in a car accident and claimed that she had sustained serious and permanent injuries to her left leg and ankle. At Discovery, she testified that she was now unable to pursue recreational activities that she previously enjoyed, including soccer, waterskiing, competitive dancing, and snowboarding. She admitted that she could still swim, go to the gym, and travel among other things.

The Defendant found a dozen pictures on public areas of her Facebook page showing the Plaintiff kneeling on the ground, climbing a tree, and wrestling a friend to the ground. The Defendant argued that there must be other similar photographs showing her engaged in similar activities among her 1,100 private photographs and asked that all of them be produced.

It appears that the Plaintiff either produced or provided the Court with access to these photographs and the Court reviewed about 10% of them at random. The Court concluded that none of them showed the Plaintiff engaged in any significant physical activity. The Court observed that most of the photographs were taken from the waist up and only showed her involved in low impact activities.

The Court dismissed the motion on a number of grounds.

Firstly, the Court did not consider the photographs to be particularly relevant.

Secondly, given the number of photographs involved, the Court considered the request that every single one taken since the accident be produced, to be “merely a high-tech fishing expedition” which was “not an appropriate or proportional form of discovery”.

This leaves one to wonder as to whether or not the result might have been different if instead of 1,100 photographs, there were perhaps two dozen.

Of more significance is the fact that in principle, private photographs on a Facebook account are not out of bounds in appropriate cases. If one of the photographs viewed by the Court had shown the Plaintiff involved in a significant physical activity, the result might have been different and it is possible that the Plaintiff would have had to produce all of them. This result would have been even more likely if the Plaintiff would have been foolhardy enough to post such photographs on the public portion of her Facebook account.

This case is yet another useful reminder to litigants to be extremely careful about how they manage their Facebook or other social media accounts, both with respect to photographs and texts, and both with respect to the public and private sections of their accounts.

Mark Twain once made a comment about how reports of his death were highly exaggerated.

Perhaps the same can be said about the chances of a corporate plaintiff obtaining specific performance of an agreement of purchase and sale for commercial property, given the recent decision of the Superior Court of Ontario in 2329131 Ontario Inc. v. Carlyle Development Corporation.

This case involved an agreement of purchase and sale for 3 adjacent buildings in Espanola, Ontario which contained a gas bar, a convenience store, several quick service restaurants, and some smaller tenants.

There was no question that the plaintiff purchaser was trying to buy this property to own and maintain for the profit to be derived from the leases to the various tenants.

The agreement of purchase and sale was amended by the parties on a number of occasions. The last written amending agreement provided for a specific closing date, which passed without either side attempting to close. Both sides continued to behave as if the transaction was still valid but neither party identified a new closing date.

Ultimately, and after the parties encountered difficulty obtaining estoppel certificates from the tenants and confirmation from the plaintiff’s bank that the bank would finance the purchase, the plaintiff purchaser announced that it was ready to close. The defendant vendor took the position that the transaction was no longer alive and refused to complete the transaction.

The purchaser sued and moved for summary judgment, alleging that the vendor had breached the agreement of purchase and sale for a number of reasons and asking the Court to order specific performance by requiring the defendant to hand over a deed to the property.

After reviewing the facts, the Court was satisfied that it was in a position to render a summary judgment simply because the documents were sufficiently clear as to illustrate what had actually happened.

The interesting aspect of the case has to do with the issue of remedy.

The Court observed that the plaintiff had explained why the property was special to the principals of the plaintiff company, using the language “it provides a good opportunity for them to carry on a business and to have good tenants in the other buildings”. The Court also observed that the plaintiff’s principals had “put much effort into obtaining the property”.
Of some significance was the fact that strangely, the defendant did not take issue with the appropriateness of an order for specific performance.

There is an abundance of authority for the proposition that specific performance will not be granted with respect to a commercial property, at least where the only thing special or unique about the property is its ability to generate revenue. This is because it is assumed that a commercial buyer will be able to find another revenue–generating property elsewhere. These types of properties, in this context, are considered commodity items.

Nevertheless, and presumably assisted by the defendant’s failure to challenge the plaintiff’s right to an order for specific performance, the Court determined that “it would not be unjust” to grant specific performance in these circumstances. The Court ruled that a substitute property “is not readily available”.

In my view, this decision is completely inconsistent with both the trend in the jurisprudence over the last number of years and specific comments made in earlier decisions.

Nevertheless, it does provide some support for the idea that specific performance may be available with respect to commercial properties. Reports of the death of that remedy, apparently, are greatly exaggerated.

In the recent case of Pet Valu Canada Inc. v. 1381114 Ontario Limited, the Court dealt with a motion by a franchisor, Pet Valu Canada Inc., against a numbered company operating as “Pet Stuff & Supplies” and its principals. Pet Valu was seeking an injunction stopping the defendants from operating a pet supply store which allegedly breached a non-competition covenant in a franchise agreement.

Robin Martin, as sole officer and director of 1381114 Ontario Limited, entered into a franchise agreement with Pet Valu that contained a restrictive covenant. Ms. Martin personally operated the Pet Valu franchise store until the franchise agreement was terminated.

At that point, according to the franchise agreement, she was prohibited from operating or participating in a competing business for 2 years within a 20 kilometer radius of the store.

Ms. Martin’s husband was one Mark Fingarson. He was the long-time owner and operator of Alfa Security Systems, a security services company.

In the month prior to the termination of Ms. Martin’s franchise agreement, Mr. Fingarson directed a numbered company which he had incorporated earlier to register the business names “Pet Stuff & Supplies” and “Alfa Systems”.

After the termination of the franchise agreement, that numbered company began to operate a pet supply store 450 meters from a Pet Valu store. In addition to pet supplies, the store sold spy equipment and skateboards. Ms. Martin’s former manager was employed there after having set up the store. Shelving, racking and inventory with distinctive labels, price tags and product codes from Ms. Martin’s Pet Valu franchise were in use at the new store.

A private investigation firm hired by Pet Valu conducted surveillance of the store on a Saturday in the month following the termination of the franchise agreement and observed Ms. Martin attending there on two occasions throughout the day including dropping off several roles of change at the business.

Pet Valu sought an injunction to require the new store to close. The judge had no difficulty granting the injunction. The judge found that while Mr. Fingarson had not been a signatory to the franchise agreement, he clearly set up the new company to assist his wife to compete with Pet Valu when she had undertaken not to do so. It was plain to the judge that the new company had been incorporated by Mr. Fingarson to hide his wife’s involvement, and that she was involved in the operation of the new store.

The judge found that this was all a “transparent effort by all of the defendants to avoid the restrictive covenant”. She regarded all of this as “no more than a feeble attempt” to do so.

Mr. Fingarson had insisted that Pet Stuff was not actually competing business within the meaning of the restrictive covenant because it also sold spy equipment and skate boards. This argument was completely rejected as well.

The judge went on to make a significant point on the law relating to injunctions relating to restrictive covenants.

In a normal injunction proceeding, the party seeking the injunction must show that there is evidence supporting a valid complaint. In addition, it must show if the injunction is not granted, the party seeking the injunction will suffer harm which is “irreparable” which is to say that compensation in damages will not be adequate. Finally, the party must demonstrate that the harm to it if the injunction is not granted outweighs the harm to the defendant if it is granted. This is what is referred to as the “balance of convenience” test.

However, as the Court pointed out, a fundamental aspect of any franchise system is the protection of its method of operation, goodwill, products and services. Accordingly, where there is a clear breach of a negative covenant in a franchise agreement, the elements of irreparable harm and balance of convenience are not required. All the moving party has to do is to demonstrate that it has a valid and supportable claim for a breach of a non-competition provision or other restrictive covenant.

This is a useful reminder of the law relating to the enforcement of restrictive covenants in franchise agreements. It is also a useful reminder to the public generally that transparent attempts to circumvent these covenants will never be tolerated.

In my last blog post, I discussed the ready availability of summary judgments in wrongful dismissal cases.

Several weeks ago, the Superior Court of Justice released a summary judgment in a bank claim on a guarantee, reinforcing another aspect of summary judgment motions that might be of interest.

In this case, the Toronto Dominion Bank v. 1745361 Ontario Corporation, Glenn Carter and Jennifer Smith, the bank made a small business loan to the corporate Defendant. The Defendant Carter gave a personal guarantee to the extent of 25% of that loan. The loan went into default and the bank sued Carter on his guarantee.

Whether or not this evidence, taken on its own, would have been sufficient to justify the Court in granting summary judgment in the face of Carter’s story will never be known

Carter’s defence centered around discussions and an “understanding” that he had reached with the bank representative at the time that he signed the guarantee.

Carter claimed that at that time, he had not yet finalized his arrangements with Smith, the principal of the company, on the terms of his involvement in the business venture. Accordingly, he claimed that he had told the bank representative that he was signing the guarantee on a conditional basis only, i.e., conditional on his finalizing his arrangements with Smith.

He claimed that he had never actually done so and as a result, the guarantee could not be enforced.

The evidence showed that Carter advanced funds into the company’s account, took back something in the nature of a fee for doing so, and obtained an indemnity from the company in respect of his guarantee. There was also evidence before the court that he never actually followed up with the bank with respect to his concern that his execution of the guarantee was conditional on the completion of his business arrangement with Smith.

These facts all seemed to suggest that Carter’s story was not true. Whether or not this evidence, taken on its own, would have been sufficient to justify the Court in granting summary judgment in the face of Carter’s story will never be known, because the Court based its judgment on the legal principles involved, having nothing to do with those facts.

The guarantee itself took the form that is almost universally used by banks these days, and specifically excluded any prior representations or discussions inconsistent with what the guarantee said. It specifically provided that the Guarantor’s liability was “continuing, absolute, and unconditional”. Carter’s attempt to introduce evidence suggesting that the guarantee was conditional was inconsistent with the wording in the guarantee. That type of evidence, referred to as parol evidence, is not available where the terms of a guarantee are clear and unambiguous. That has been the law in Canada for decades.

As a result, the judge had no difficulty granting judgment to the bank.

This is another aspect of the summary judgment rule that one might bear in mind. It is not sufficient to raise any number of factual disputes in the hope of derailing a summary judgment motion on the basis that one has raised triable issues, where there is a legal principle that is crystal clear and squarely against you. In those circumstances, the party whose position is consistent with the clear legal principle will succeed no matter what factual controversies the other side might be able to create.

When the scope of the authority of motions court judges hearing motions for summary judgment was expanded by the Ontario Court of Appeal, a trend toward using the summary judgment rule in wrongful dismissal cases was accelerated considerably. We may well be at a point now in which routine wrongful dismissal claims and perhaps even those with some unusual fact circumstances can be concluded summarily. This is my conclusion from my review of the trial judgment released last month by the Superior Court of Justice in Bernier v. Nygard International Partnership.

In that case, Bernier was fired by the Defendant after 13 years of work at a management level and at the age of 54. She was given only minimum statutory salary and benefits required under the Employment Standards Act. She sued and then brought a motion for summary judgment for the difference between those benefits and her common law entitlement.

The Defendant argued that at the very least, there were enough questions raised about the claim that a trial of the issues was necessary and that summary judgment ought not to be granted.

Specifically, the Defendant raised four issues:

(a) Whether or not the Plaintiff’s statutory entitlements were modified by a contract between the parties;

(b) Even if there was no enforceable contract, did the Defendant’s general policy limiting notice periods provide guidance for assessing what reasonable notice at common law would be;

(c) Was the Plaintiff entitled to a bonus; and

(d) Did the Plaintiff make reasonable efforts to mitigate her damages.

Before the recent change in the law relating to summary judgments, it is probably safe to say that any one of these issues would have met the threshold test of a genuine issue for trial. In fact, I doubt that any experienced wrongful dismissal plaintiff’s lawyer would ever have even attempted a motion for summary judgment on these facts.

Under the current regime, however, it’s a different story.

In this case, the judge considered himself able to examine each of these issues and come to a conclusion. His conclusion was that none of them raise a triable issue.

On the question of an employment agreement, it appears that the Plaintiff had signed such a document at the outset of her employment, providing that her employment could be terminated with 30 days’ notice. Unfortunately for the Defendant, this provision was contrary to the minimum notice requirements contained in the legislation, which cannot be waived by contract. As a result, that provision in the contract was void and unenforceable.

The Defendant produced a letter written 8 years after the commencement of the Plaintiff’s employment, signed by the Defendant but not by the Plaintiff, containing amended notice provisions. The Plaintiff denied ever having entered into any such amending agreement and the individual who signed the letter on behalf of the Defendant never swore an affidavit to the contrary. This was enough for the judge to dispense with that argument, finding that there was no evidence suggesting that the parties had actually agreed to any amended arrangement.

The Defendant argued that it had a general policy of limiting the amount of notice to which its employees were entitled. The Defendant insisted that this limitation was well known to the Plaintiff. However, the judge was satisfied that if any such policy existed, it was not binding on the Plaintiff.

On the issue of bonus, the judge found sufficient evidence before him that the bonus was a regular feature of the Plaintiff’s compensation that she had come to expect and that accordingly, and pursuant to well-established legal principles, she was entitled to her bonus in the year of termination.

Finally, on the question of mitigation, the mere suggestion by the Defendant that the Plaintiff had not pursued sufficient efforts to find a new job was not enough to derail the motion. There was no evidence that appropriate employment would have been available to the Plaintiff had she done more than what she did or that she declined to pursue any appropriate opportunity. On the evidence, it appeared that the Plaintiff made very substantial efforts to find a new job. The judge concluded that these efforts were reasonable and appropriate.

Having disposed of the various defenses, the judge went on to assess reasonable notice on the basis of the evidence before him as to the nature of her employment, the length of her employment, her age, and the realistic possibility of finding similar employment appropriate to her experience, responsibility, and qualifications. He then concluded that the notice period suggested by the Plaintiff’s lawyer, namely 18 months, was the appropriate measure and issued a judgment accordingly.

Given that the motion was heard 7 months after termination and therefore 11 months short of the 18-month notice period, the judge ordered that the entire award would be impressed with a trust and that at the end of the 18-month notice period, the Plaintiff would have to account to the Defendant for any new employment income that she might receive during the notice period and reimburse the Defendant for any such amount.

In the vast majority of cases, summary judgments are and should remain the exception rather than the rule. Given this case, one is left to wonder whether or not the opposite will become true in wrongful dismissal cases.