Friday, December 23, 2011

This Week at the Ontario Court of Appeal - December 23, 2011

Each Week Wise Blog analyzes recent decisions from the Ontario Court of Appeal.

Tarion Warranty Corporation v. Kozy

The main issue on appeal was whether the Respondent was considered a “builder” within the meaning of the term in the Ontario New Home Warranties Plan Act (“ONHWP Act”). The appellant, Tarion Warranty Corporation appealed the decision of the Ontario Court of Justice in December 13, 2010, where Downie J. dismissed an appeal of the Justice of the Peace’s acquittal of the respondent, David Kozy on two charges under the ONHWP Act.

Tarion is the corporation that administers the ONHWP Act. The Act is consumer protection legislation designed to protect purchasers of new homes in Ontario. In 2006, Joseph and Irena Kobylinski purchased a property in Simcoe County. They entered into a contract with the respondent for the construction of a house on the property. The contract between the parties stated that the Contractor was to supply all the materials and perform all the work. The respondent performed the majority of the construction work for a price of $153,594.00. The Kobylinski's paid for several items not completed by the respondent. They paid $6,600.00 for driveway work and the septic system, $6,254.00 for the well and water system connected to the house and $4,458.00 for two fireplaces. The respondent was charged with two offences under the ONHWP Act for violating ss.6 and 12 of the Act.

At trial, the Justice of the Peace acquitted the respondent of both charges and held that he did not fall within the definition of “builder” or “vendor”. Justice Downie dismissed an appeal from the Justice of the Peace’s acquittal of the respondent. The appeal judge held that the addition of fireplaces by the owner’s (Kobylinski's) did not take the construction by the respondent out of the definition of “builder” but the owners’ involvement in arranging and paying for the well and septic system did take the construction by the respondent out of the definition of “builder”.

The appellant was granted leave to appeal by Chief Justice Winkler. Downey, J.had declared that the definition of “builder” under the ONHWP is a person who undertakes the performance of “all the work and supply of all the materials” necessary to construct a completed home. Moreover, he held that the septic system was essential for a home to be considered functional and the fact that the owners arranged for this work meant that the respondent did not complete all work and supply of materials and thus could not be considered a “builder”.  The Court of Appeal did not agree with this analysis.  They commenced their review by discussing the purpose of the ONHWP Act and found that the Act required that a broad and liberal approach be taken to interpreting the meaning of the term “builder” in order to reflect the remedial purpose of the Act.

Further, the Appellate Court held that the Act contemplates that owners will often perform some work relating to a construction project. Given the purpose of the Act, it was important not to deny such owners New Home Warranty Program coverage. Moreover, the Court noted that a finding that a contractor who leaves some work for the owners to complete is not a “builder” would be inconsistent with the purpose of the Act. The jurisprudence is clear that the fact that the owners installed the water and septic systems did not mean that the respondent was not a “builder”.

The Court declared that the respondent’s unfinished work in constructing the home did not remove his duty to comply with the ONHWP Act and did not negate the owners’ warranty coverage under the Act.

The main issue that was decided on appeal was whether the appellant’s claim to long-term disability benefits was time-barred beyond the limitation period prescribed by her Employee Benefit Plan. The relevant provision of the “Claims” provision of the Plan read as follows:
No action or proceeding against the Planholder in respect of a claim under this plan shall be commenced within 60 days of the date on which proof of the claim is filed with the Administrator, nor after 2 years from the date of the happening of the covered event.
The appellant had suffered injuries from two accidents, one at work in 1993 and a subsequent motor vehicle accident in 1994. She applied for and received short-term disability benefits for 26 weeks. She subsequently applied for long-term disability benefits but her application was denied by Canada Life, the Plan administrator. An appeal was denied. In its reasons for denying the appeal, Canada Life stated that the medical opinion that the appellant provided was unsupported by any objective tests or other  substantiation of her claim. The appellant received a letter from Canada Life terminating her benefits effective November 21, 1995.

The appellant did not commence an action until 2006, 11 years after her claim was denied. She submitted that her claim was not time-barred for several reasons. The appellant stated there was ambiguity in the Plan document as there was no definition of “the covered event”. Thus, she claimed that the document must be read contra proferentem against the insurer. As a consequence, the appellant stated that there was no identifiable starting point for the limitation period, with the result that the claim was not time barred. Additionally, the other argument advanced by the appellant was that jurisprudence established that long term benefits that are payable monthly are governed by a rolling limitation period that runs for two years from each month that no payment was forthcoming. The effect was that the claim was commenced in time in respect of the payment for November 2004 and for all following payments as long as her disability continued.

In dismissing the appellant’s position, the Court noted that although there was no specific definition of the “covered event” in the Plan document, the covered event was discernable after reading the first three paragraphs in the document.  The Court asserted that there were two possible “covered events”. The first was the date when the individual provides initial proof of disability following 26 weeks of being continuously disabled. If payment did not occur, then the individual has two years to commence an action. The second covered event occurs when the individual is deemed no longer to be disabled because they have not provided satisfactory proof of their continuing disability. The individual would also have two years following that date to commence an action.

The Court referred to Wilson’s Truck Lines Ltd. v. Pilot Insurance Co., which involved a claim for accident benefits payable under the Insurance Act and contained a limitation period of one year “from the date on which the cause of action arose”. In that case, the court stated that the right to sue arose when the claimant had a right to what was being claimed, which was 31 days after the claim was filed with the insurer. Moreover, if the claimant was entitled to the benefits claimed, then his right to sue them accrued every 30 days thereafter and lasted for one year in duration each time. The Court considered the foregoing to be a prime example of a rolling limitation period.

The Court dismissed the appellant’s application of the rolling limitation period to his claim. For the rolling limitation to apply, the “covered event” would have had to occur every month, just as the cause of action accrued every month in the Wilson’s Truck case. However, each of the “covered events” only occurred once, not every month on an ongoing basis.

The Court agreed with the motion judge that the appellant’s action exceeded the two-year limitation period set out in the Benefit Plan. The appeal was dismissed. 


Langenecker v. Sauve


The appellant, Peter Langenecker, suffered significant injuries in a motorcycle accident in June 1994. In June 1995, he brought an action against the respondents and others alleging that their negligence caused him permanent injuries and disabilities. Fifteen years later (September 2010), the respondents brought a motion under Rule 24.01 seeking an order dismissing the action for delay. The motion judge granted the motion and dismissed the action. The appellant appealed the motion judge’s decision.

In reviewing the motion judge's decision, the Court applied the test under rule 24.01 for dismissal of an action for delay. They discussed three types of cases that justify an order for delay according to Lord Diplock.  The first are cases where the delay is caused by intentional conduct by the plaintiff or his/her counsel that demonstrates a disdain  or disrespect to the court process. This type of delay did not apply to the appellant's situation.

The second type of case discussed by the Court that justifies an order dismissing an action for delay has three characteristics.  The delay must be inordinate, inexcusable, and must give rise to a substantial risk that a fair trial of the issues in the litigation will not be achievable as a consequence of the delay. The inordinance of the delay is determined by reference to the length of time from the commencement of the proceeding to the motion to dismiss. The Court stated that there was no doubt that 15 years from the appellant's commencement of this action to the moment where the motion was dismissed, constituted inordinate delay.

The third requirement concerned the prejudice caused by the delay associated with to the defence's ability to put forward its case for adjudication on the merits. The Court emphasized that prejudice is inherent in long delays as memories fade, witnesses become unavailable, and as such there is a greater likelihood that documents and other potential exhibits may be lost. The respondents claimed that their inability to obtain an expert was caused by the delay in the prosecution of the claim and resulted in prejudice to their clients.
The Court declared that the appellants were unable to demonstrate that the motion judge committed a factual error in his characterization that the delay was "inexcusable". In support of the appellant's submission that the inference of prejudice was rebutted, counsel for the appellant submitted that two experts, one for each side, had been able to give written opinions on the reasonableness of the doctors' conduct based on the medical records. Furthermore, the appellant's proclaimed that the respondents were examined for discovery many years ago and therefore they had the ability to refer to the discovery transcripts to refresh their memory.  The Court rejected the appellant's arguments.  The experts' ability to offer an opinion based on the medical records presumed that the records provided an accurate or complete basis upon which to assess the reasonableness of the respondent doctors' conduct and the care they rendered.

In denying the appeal, the Court held that the motion judge applied the correct test for delay.  Moreover, the Court found that the motion judge's assessment of the facts revealed no reversible error.

- Alim Ramji, Toronto

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