Several days ago, the Ontario Court of Appeal released its judgment in a class action against Toronto’s George Brown College of Applied Arts and Technology. The representative Plaintiffs were students in the school’s Graduate International Business Management program.

In this case, the school’s program description stated that the program provided students “with the opportunity to complete three industry designations/certifications in addition to the George Brown College Graduate’s Certificate”

As the Court found, the promise of these industry designations made the program very attractive to prospective students. However, when the students graduated, they found that they did not automatically receive the designations and were not automatically eligible to write the industry examinations necessary to obtain the designations. That was because the school had no agreements in place with the industry associations with respect to awarding these designations. Students would have to apply separately to each industry association, write the exam, pay the sometimes hefty fee, and take additional courses and/or submit proof of work experience.

At the trial of the common issues in the case, the judge found that graduates of the program reasonably expected that if they completed the program they would have fulfilled the necessary qualifications to obtain the promised industry designations even though they also understood that they would still have to write industry examinations and pay requisite fees to do so.

Because these reasonable expectations could not be realized, the trial judge concluded that the program description in the course calendar negligently misrepresented the benefits of the program and thereby breached the unfair practices provisions of the Consumer Protection Act.

The school appealed on a number of grounds.

Firstly, the school argued that the judge was wrong to find that the school owed a duty of care to its students. The school argued that a duty of care would only arise out of the finding of a special relationship which in turn would only be created if the students were shown to have acted reasonably in relying on the program description. The school argued that the students could have obtained all of the relevant information directly from the various industry association websites and had they done so, they would have known what was required in order to receive the designations.

The Court of Appeal disagreed. The Court felt that it was completely reasonable for the students to rely on the statements contained in the course calendars because they had been published with the intention that the students read and rely on them in deciding which academic program to pursue. As a result, there was a special relationship giving rise to a duty of care which the school had breached.

Next, the school took issue with the trial judge’s finding that the students were consumers, and therefore entitled to the protections available to consumers under the Consumer Protection Act.

The Court had little difficulty in determining that students are indeed consumers and that they had been misled. Although the school insisted that the promise contained in the calendar was only that the students would have an “opportunity” to obtain the designations, which was true, and furthermore there was ample information available elsewhere that would show the requirements for the industry association designations, the representations were misleading and it was unreasonable to expect students to conduct independent research to verify the accuracy of the statements made on the course calendar.

As a result, the case will now proceed to a trial on damages. In the meantime, this case provides valuable guidance for any institution of higher learning and students of such institutions. The information contained in course calendars is to be taken seriously and schools must make sure the information is accurate, because students do have the right to rely on it in planning their future.

Marshall University in Huntington, West Virginia has seen its share of misfortune, particularly in 1970 when it lost its football team and a number of fans in a tragic air crash. Not that this compares, but Marshall University is now making legal news as the Defendant in an action brought by a student named Louis Helmberg III. It appears that Mr. Helmberg, a member of the Alpha Tau Omega fraternity, was standing by when one of his fraternity brothers, Travis Hughes, decided to launch a bottle rocket while standing on the deck of the fraternity house. Remarkably enough, the adventurous Mr. Hughes had inserted the bottle rocket in his rear end and planned to shoot the rocket out of his rear end. Unfortunately for all concerned, the rocket prematurely detonated. Mr. Helmberg alleged that he was so startled that he jumped backwards and fell off the deck. He then sued the fraternity, Mr. Hughes, and Marshall University. He alleged that his injuries have resulted in significant medical expenses and rendered him unfit to play for the University’s baseball team.

Those American college kids certainly know how to have fun.

In his claim, he specifically alleged that “firing bottle rockets out of one’s own anus constitutes an ‘ultra-hazardous’ activity”. It’s hard to disagree.

Thankfully, in early June, a court dismissed the action as against Marshall University for procedural reasons.

Some time ago, I posted an item about Kingston Penitentiary, which I visited in connection with a lawsuit by an inmate in which I was acting for the Ministry of Correctional Services.

Somewhat reminiscent of that lawsuit is a recent action brought in Arizona by a prison inmate against the prison over a severe stomach ache. The inmate claims that prison officials recently fed him a diet that left him with a severe case of stomach cramps. The cramps allegedly were so severe that he lost the ability to sleep and caused him to wonder if the prison officials were trying to kill him.

The same inmate has also sued the prison for delivering his food late two days in a row, allegedly giving rise to the development of an eating disorder.

One would have thought that if the food was giving him cramps, he would have been only too pleased to have it delivered late…

The recent decision of the Ontario Superior Court in Strashin v. Benzacar is a useful reminder of the relationship between guarantees and limitation periods.

For a number of years, cases involving attempts by lenders to enforce guarantees gave rise to highly creative and ingenious defences being asserted by guarantors who, generally speaking, knew full well they were liable to pay on their guarantees. The incentive to defend these claims using imaginative and sometimes novel approaches was provided by a number of cases, some of which were exceedingly high authority, that made it clear that guarantees are highly technical documents and that lenders were going to be put to a standard of perfection in terms of both the guarantee document and the circumstances surrounding the execution of the guarantee before the Court would enforce payment.

It seemed that every time the Court dismissed an action on a guarantee for some technical reason, institutional lenders revised their standard form guarantees to cover whatever loophole some imaginative lawyer had been able to find.

As a result, there seems to have been a significant decrease in a number of these cases. In ordinary circumstances, it is probably safe to say that it is exceedingly difficult in the current jurisprudence for a guarantor to escape liability.

Nevertheless, such efforts continue to be made.

In Strashin v. Benzacar, the defendant had signed a guarantee in August, 2001 in respect of the indebtedness of a corporation under certain promissory notes. The creditor made demand on the guarantee in April, 2010, almost 9 years later. The defendant refused to pay and the creditor sued.

The defendant’s main defence was that the creditor was out of time, whether the applicable limitation period was 6 years as had been provided by the legislation in force at the time of the guarantee, or 2 years as is currently the case.

The Court disagreed and made it clear, yet again, that the limitation period for an action on a guarantee commences on the date of demand for payment. This is because demand is a condition precedent to the guarantor’s obligation to pay. The date that the guarantee was provided is not relevant.

As a practical matter, then, it is important for business people to remember that if they provide guarantees when financing is originally arranged for their corporations, for example, and the company remains in business with the same financing in place for any number of years, the lender can call on the guarantor to repay the debt long after the guarantor has forgotten about his or her potential liability.

It is worth noting that guarantees usually contain termination rights. It is ordinarily the case that a guarantor can simply terminate his obligation under a guarantee by means of written notice to the lender. Whether or not this is a realistic step to take as a practical matter it will depend on the circumstances of each case. However, if you signed a guarantee many years or decades ago and you have forgotten about it until you found a copy of it at the bottom of your desk drawer, don’t assume that it is no longer enforceable by the lender simply because of its age

Do you remember when flying was actually fun? You could arrive at the gate minutes before departure, you did not have to go through security, and you were served a meal for free.

Flying is not as much fun any more. Lineups can be discouraging, luggage gets lost, food has to be brought on board or purchased, people get bumped from oversold flights, and flights get cancelled if they are not full.

One feature that has not changed is the possibility of a rough flight. The recent decision of the Ontario Superior in a proposed class action called O’Mara v. Air Canada et al. included a fact situation to which we can all relate.

On the evening of January 13, 2011, Air Canada flight 878 took off from Toronto on route to Zurich with 95 passengers on board.

Several hours later, over the Atlantic, a US air force plane flying westbound appeared on flight 878’s navigational display as a traffic alert and collision avoidance system target.

The Captain awoke the First Officer, who had been sleeping, to advise him of this traffic.

Over the next minute or so, the Captain adjusted the map scale on the navigational display to view the traffic alert and collision avoidance system target and occasionally looked out the forward windshield to see if he could see the oncoming aircraft. He had made it clear to the First Officer that the aircraft of concern was flying 1,000 feet below flight 878.

Somehow, notwithstanding this information, the First Officer mistook the planet Venus, visible from the windshield, for an aircraft. Believing that the oncoming aircraft’s position was above and descending towards flight 878, without warning, he forced the control column forward, causing the plane to enter a sudden and steep dive. This actually took flight 878 into the path of the oncoming air force plane.

The Captain had to execute an emergency maneuver to restore the plane to a straight and level path. This entire episode lasted approximate 46 seconds.

The Statement of Claim, issued by one of the passengers as a proposed class action, alleged that the passengers on the plane were “violently shaken and thrown”. It was alleged that many of them were catapulted into the aircraft’s ceiling and interior, and objects were dangerously projected throughout the interior of the plane. It was alleged that the passengers, or many of them, suffered “serious physical and psychological injuries”.

The Claim alleged that for the rest of the flight, which took approximately 3 hours, the passengers remained terrified. They were given no explanation by the flight crew as to what had happened. After the plane landed, an Air Canada spokesperson indicated that the incident had taken place when the plane hit some unexpected turbulence. No other explanation was ever given by Air Canada.

The Transportation and Safety Board of Canada subsequently investigated and published a report identifying the inappropriate actions of the First Officer as the cause of the incident rather than turbulence.

This action was brought in the form of a class action for damages resulting from this incident. The claim was for physical, psychological and emotional injuries as well as punitive damages. The claim for punitive damages arose out of the allegation that Air Canada tried to cover up the cause of the incident.

Air Canada brought a motion to strike out all of the claims other than those for physical injuries.

In Canada, liability of an airline for passenger claims arising out of international flights is governed by an international treaty system. These treaties, or conventions, are incorporated into Canadian law by the federal Carriage by Air Act.

The first treaty was entered into in 1929 in Warsaw, Poland and is typically referred to as the Warsaw Convention. Canada was a signatory to it. A major purpose of the treaty was to regulate the conditions of international air traffic in a uniform way.

The Warsaw Convention was amended a number of times including at Montreal in 1999. At that point, what is referred to as the Montreal Convention was entered into by most of the world’s countries. It became operational in 2003.

Among other things, these conventions address liability of airlines for damages suffered by a passenger arising from death, wounding or other bodily injury. There is no reference in these conventions to emotional and psychological damage, and no allowance for punitive damages. Air Canada’s argument on the motion was that the conventions formed a complete code as to passengers’ rights in circumstances such as those at hand, and given the absence of any allowance for any claim for damages other than for bodily injury, no such damages could be awarded by the court.

The court agreed. Conventions are indeed meant to be a complete code as concerns an airline’s liability for damages, regardless of the source of this liability. All references in the Statement of Claim to psychological and emotional injuries, as well as the claims for punitive damages, were struck out.

So at the end of the day, insult has been added to injury. Not only is flying no longer fun, it is clear that an airline cannot be sued for any emotional distress arising out of an unpleasant flight – even if the unpleasantness was caused by the negligence of airline personnel.

Given the conservative nature of the Canadian approach to litigation, we are always fascinated by some of the cases we see coming out of the U.S.A. The classic in terms of bizarre results, for most people, is probably the case of the woman who sued McDonald’s for serving overly hot coffee. The woman burnt herself after she spilled the coffee and a jury felt that this was worth $7 million dollars or so. An appeal court later reduced the award, but left it at what most Canadians would consider to be an absurd amount.

The whole idea of lawsuits of this nature is probably related to a significant degree to three prevailing factors that set American cases apart from ours.

Firstly, a far greater percentage of U.S. cases proceed on the basis of contingency fees for plaintiffs’ lawyers than in Canada. Secondly, far more cases in the U.S. proceed before juries. In Canada, juries are rarely involved in business disputes, for example. Thirdly, in most American jurisdictions parties are left to bear their own costs regardless of the result. There is very little in the way of a “loser pays” system as we have in Canada.

Some of the cases that arise are truly bizarre.

For example, it appears that an Illinois resident and long-time fan of the Chicago Bulls has filed a law suit against Bulls star player Derrick Rose. After tearing his ACL in the first round of the 2012 playoffs, Rose was cleared by team doctors to play but took the position that he was not mentally ready to do so.

As a result, one Matthew Thompson claimed that Rose’s extended absence from the team resulted in Thompson suffering multiple mental breakdowns and mental distress. Apparently, Thompson grew obese over the course of the NBA season and claimed that the weight gain resulted from these breakdowns and distress. He alleged that these breakdowns and distress, and his weight gain, were linked directly to what he alleged to be Rose’s “negligent behaviour”.

I have no idea if this law suit will ever get anywhere but if it does, I wonder whether or not a class action on behalf of Toronto Maple Leafs fans against the team’s players and management might have been worth considering (at least, before this past season). Talk about mental distress…

On a less amusing note, in Helena, Montana, a judge has ordered the Fort Harrison VA Medical Centre to pay about $60,000.00 to a local resident wrongly diagnosed with brain cancer.

The court ruled that Dr. Patrick Morrow was negligent in delivering that diagnosis to his patient, the plaintiff Mark Templin, in 2009 causing tremendous distress to Templin and his family.

In the months after the diagnosis was given, Templin quit his job, sold his vehicle, celebrated a “last” birthday, bought a pre-arranged funeral service and contemplated suicide. His son-in-law built a box for his ashes.

The court determined that Templin lived for 148 days under the mistaken impression that he was dying of brain cancer. After that period of time, as he began to feel better, he underwent additional testing that determined that rather than terminal brain cancer, he had instead suffered several small strokes. He was awarded a fixed amount per day as well as reimbursement for the costs of his birthday party and funeral.

In the town of Keene, New Hampshire (population 23,000), the city is suing a 6-person group which calls itself “Robin Hood and His Merry Men” for harassing the City’s three parking enforcement officers and causing them so much anxiety and distress that they’ve considered leaving their jobs. This is a group that refills expired parking meters for strangers. It searches downtown Keene for cars in danger of being ticketed and then refills the meter and leaves a note reading “Your meter expired; however we saved you from the King’s tariffs, Robin Hood and His Merry Men. Please consider paying it forward.” The note includes an address where people can send donations for the effort.

The city is asking the court to establish a “safety zone” blocking the group members from coming within fifty feet of the parking enforcement officers. The city alleges that the group has intentionally taunted and harassed the officers by closely following them on foot and by car in groups of varying numbers, often with video camera equipment. One officer claims that the group followed her, crowded around her, video taped her activities, deposited coins in expired meters to prevent her from writing tickets, and repeatedly taunted her by asking why she was stealing people’s money. Another officer complains of being bumped into and taunted, including the use of profanities.

The group claims to have prevented thousands of tickets from being issued. Presumably, the city is not pleased about the obvious loss of revenues.

Finally, a woman in Iowa is suing a hospital for refusing to hire her due to excessive shyness. The issue, however, is not her personality but her bladder.

The plaintiff claims that after she interviewed for a job at the Iowa Methodist Medical Centre, she received an offer contingent on her passing a drug test.

She claims to have been unable to complete the test because she suffers from parueresis, also known as “shy bladder syndrome”. This prevents her from urinating in public restrooms or anywhere in the vicinity of other people. She did offer to undergo a blood based drug test but the hospital refused to conduct one. After losing out on the job she sued the hospital for allegedly violating the Americans Disability Act.

Would anyone care for some excessively hot coffee?

The recent Superior Court decision of McCready v. De Dwa Dehs Nyes provides interesting observations about the rights of independent contractors upon termination.

In this case, the Plaintiff was a social worker with years of experience working with aboriginal communities.

The Defendant was a non-profit organization providing health care and related services to aboriginal people.

In 2009, the Defendant obtained funding for a six-month research project to collect information relating to aboriginal health care issues. The Defendant was referred to the Plaintiff in September, 2009 as a person who might be able to supervise the project. In one single phone call, the Plaintiff and a representative of the Defendant discussed the project and the Defendant hired the Plaintiff as an independent consultant for the six month timeframe in which the project was to be completed. A total fee for the Plaintiff’s work was also agreed on.

Both parties agreed that the consulting contract would ultimately be put into writing. In the telephone call, however, they agreed that the Plaintiff would start work with a training session at the Defendant’s premises on October 1st and that the written contract would follow at a later date.

A key fact to note was that the consulting contract was non-exclusive. In other words, the Plaintiff was free to take on other consulting work during the six months that the project was anticipated to last.

The Plaintiff started his training on October 1st as planned. By the end of the week, on October 8th the Defendant had made the decision that the position actually required a full-time research co-ordinator, and the Plaintiff was fired.

The Plaintiff then sued for the entire amount that would have been payable to him for the six months’ worth of work. The Defendant responded by insisting that no firm contract had been entered into since whatever had been discussed on the telephone was never reduced to writing and signed.

The Court had little difficulty dispensing with the Defendant’s argument, and found that a binding agreement for a non-exclusive consulting arrangement had been made on the telephone and was enforceable.

However, in response to the Plaintiff’s argument that given that there was a contract for a fixed term with a fixed price, and that in the absence of any termination provision, he was entitled to have the contract price paid in full, the judge responded by analogizing the situation to that of a lawyer.

Where a lawyer is retained, even if it is for a specific task or term, no one would expect the lawyer to get paid for work expected to be done but not yet reached if the lawyer’s retainer is terminated before the task has been completed. As far as the Court was concerned, this is a function of the fact that typically, lawyers are engaged by clients on the basis that they are at liberty to work for other clients at the same time, i.e., on a non-exclusive basis.

In this case, the Court concluded that as the Plaintiff had been hired on a non-exclusive basis only, he was not entitled to the full contract price. He was entitled only to the value of the time he actually spent on the project prior to termination.

As a result, the Plaintiff’s damages were fairly limited.

However, and as an aside, the Court did wish to express its disapproval for what it considered to be the disrespectful way in which the Plaintiff was treated. Accordingly, punitive damages in the amount of $15,000 were awarded. This may not seem like a significant amount but the fact is that punitive damages are only rarely awarded in breach of contract cases.

The Plaintiff was also awarded a substantial amount for costs. In fact, the costs award was roughly eight times the amount of the damages awarded. Presumably, this was also a reflection of the judge’s distaste for the Defendant’s conduct.

The important point to be taken in this case, of course, has to do with the nature of the consulting agreement. The fact that a consulting agreement is non-exclusive in nature will have a very dramatic effect on the damages that might be claimed by a consultant in the event of early termination.

The recent decision of the Ontario Superior Court in Whittemore v. Open Text Corporation provides useful illustration of the rollercoaster ride that an employee might experience when his corporate employer goes through changes in its status.

Mr. Whittemore started work in 1994 with a small company called SoftArc Inc., as a software developer.

Five years later, SoftArc was taken over by another small company, MC2. MC2 had Mr. Whittemore sign an employment agreement at that time. It included a provision that on termination, an employee with more than 4 years service was entitled to 4 weeks salary in addition to the minimum statutory notice regardless of his actual length of service. It also provided for a sabbatical every 5 years.

Mr. Whittemore’s salary and job functions did not change after the takeover. His years of employment with SoftArc were recognized in terms of his seniority. The company was listed on the TSX in March 2000 at which time its name was changed to Centrinity Inc.

In 2002, Centrinity was purchased by Open Text Corporation. At this point, a change was made to the sabbatical provision in the employment agreement which he had signed with MC2. Open Text informed the former employees of Centrinity Inc. that its corporate policy was not to provide any sabbatical so anyone intending to stay on with Open Text would have to agree to give that up. Whittemore did so.

As far as Whittemore was concerned, his employment contract with Centrinity was over and he had a new agreement with Open Text along the same terms except for the sabbatical. In all other ways, his job remained the same.

The more interesting question was whether or not that contract continued to be in effect after the takeover

In 2011 Open Text terminated Whittemore’s employment. He was given the minimum statutory notice together with a lump sum payment of 4 weeks’ base pay, in accordance with his original employment agreement. By that time he had over 17 years of service which, at common law, would have entitled him to substantially more.

Whittemore sued for damages for wrongful dismissal. Open Text responded by insisting that Whittemore remained bound by the original employment agreement and accordingly, he had been paid all that he was owed.

A judge had little difficulty concluding that his employment agreement entered into with SoftArc continued to apply when it was taken over by MC2/Centrinity Inc.

The more interesting question was whether or not that contract continued to be in effect after the takeover by Open Text.

The critical question on this point related to the way in which the takeover had taken place. Where a company taking over a business does so by purchasing shares, the law is clear that there is no change in the corporate identity of the employer and therefore no termination of employment. In other words, the result of an amalgamation through a share transaction is not the death of a company but rather its continuation in a new form. In this case, the Court characterized the Open Text transaction as an amalgamation with MC2/Centrinity. As a result there was no change in the identity of the employer and the existing employment contract continued.

The question of the elimination of the sabbatical privilege was discussed as well. The judge considered that it had been open to Whittemore to advise Open Text that its refusal to continue the sabbatical program constituted a breach of the terms of his employment contract and therefore a constructive termination. However, he did not do so. Instead, he agreed to the change and carried on as usual. As a result, he lost any right to complain about the loss of the sabbatical or insist that the original employment agreement had come to an end.

As Whittemore had condoned the change to the employment agreement by his conduct, the employment agreement remained in force and Open Text was entitled to rely on its termination provisions.

This case highlights the importance of exercising great care when a person’s corporate employer is acquired or in some way taken over by a new entity. An existing employment agreement may or may not continue to apply, depending on the circumstances.

It also highlights the importance of being careful in the way one responds to a change in terms of employment. Accepting a change without taking the appropriate legal position may have unintended consequences down the road.