COURT OF APPEAL FOR ONTARIO

CITATION: Sam's Auto Wrecking Co. Ltd. (Wentworth
    Metal) v. Lombard General Insurance Company of Canada, 2013 ONCA
    186

DATE: 20130328

DOCKET: C54634

Laskin, Rosenberg and Tulloch JJ.A.

BETWEEN

Sam's Auto Wrecking Co. Ltd., c.o.b. as Wentworth
    Metal

Plaintiff (Appellant)

and

Lombard General Insurance Company of Canada,
Dalton Timmis Insurance Group Inc., and George McCarter

Defendants (
Appellants
/Respondent)

Mark M. O'Donnell, for the appellants

Jack F. Fitch and Jason Arcuri, for the respondent

Heard: September 10, 2012

On appeal from the judgment of Justice Alan C.R. Whitten
    of the Superior Court of Justice, dated October 28, 2011, with reasons reported
    at 2011 ONSC 6441.

Laskin
    J.A.:

A.

overview

[1]

The question on this appeal is whether Lombard General Insurance Company
    is required to indemnify its insured, Wentworth Metal, and Wentworths
    insurance broker, Dalton Timmis Insurance Group Inc., for money they paid to
    settle a personal injury claim brought by Wentworths former operations
    manager, John Ferber.

[2]

Ferber was badly injured in a workplace accident caused by one of
    Wentworths employees, Bill Cooper.  At the time, Ferber was an executive
    officer of Wentworth and was not covered by Workers Compensation.  He sued
    Wentworth and Cooper for damages for his injuries.  Wentworth then sued
    Lombard, Dalton, and Daltons broker, George McCarter, who had secured
    Wentworths insurance.  Dalton and McCarter in turn cross-claimed against
    Lombard.  Wentworth alleged that Ferbers claim was covered by its commercial
    general liability policy with Lombard and, in the alternative, that Lombard,
    Dalton, and McCarter were negligent in failing to provide insurance if it was
    sued by an employee not covered by Workers Compensation.

[3]

Ferbers action was settled.  Wentworth and Dalton contributed to the
    settlement.  Wentworth then discontinued its action against Dalton and
    McCarter, and proceeded against Lombard.  After a trial, Whitten J. dismissed
    Wentworths claim.  He held that at the time of the accident, Ferber was an
    employee of Wentworth and was working in the course of his employment. Therefore
    insurance coverage was unavailable because of the employee injury exclusion
    in Lombards commercial general liability policy.

[4]

Wentworth, Dalton, and McCarter appeal.  The main issue on the appeal is
    whether the trial judge erred in holding that the employee injury exclusion
    applied.  The appellants say that he erred because the exclusion did not apply
    to executive officers.  Lombard says that the trial judge was correct because
    the exclusion applied to all employees, including executive officers like Ferber.

[5]

The appellants also raise three other grounds of appeal.  They submit:

·

The umbrella policy later purchased by Wentworth provides
    coverage for Ferbers injuries;

·

Lombard is obligated to indemnify Wentworths employee Cooper;
    and

·

Lombard is vicariously liable for Daltons negligence.

B.

background facts

(1)

Wentworth

[6]

Sams Auto Wrecking Co. Ltd., c.o.b. as Wentworth Metal, has operated a
    scrap metal business in Hamilton for over 90 years.  When this litigation took
    place, Wentworths principal owners were two brothers, Ken and Lorne Rochwerg.

[7]

All of Wentworths employees were covered by Workers Compensation, as
    required by Ontario law.  However, in 1989 or 1990, Wentworth purchased
    disability insurance for its management team and removed these employees from Workers
    Compensation coverage.  Wentworth determined that the disability insurance was
    less expensive than Workers Compensation premiums.  Lorne Rochwerg testified
    he did not appreciate the relationship between Workers Compensation and the
    coverage purchased from Lombard.

(2)

John Ferber

[8]

In October 1989, John Ferber was hired by Wentworth as its operations
    manager.  He signed an employment contract, which described him as an
    employee.  His responsibilities included overseeing the operation of the
    plant and acting as safety coordinator.  Ken Rochwerg called him an excellent
    employee.

[9]

Ferber was one member of the management team Wentworth removed from Workers
    Compensation and for whom it purchased disability insurance.  In 1990, Ferber
    was made an executive officer: he was appointed vice-president of Wentworths
    parent company.  The appointment was necessary because Workers Compensation
    coverage is automatic and mandatory for workers but optional for executive
    officers.

[10]

Ferber
    stopped working for Wentworth after he sued the company for injuries caused by
    his workplace accident.  On his termination, he was paid all of his outstanding
    vacation pay in accordance with the
Employment Standards Act
, R.S.O.
    1990, c. E.14
[1]
.
    Also, Wentworth prepared and issued a Record of Employment, as it was required
    to do for all of its terminated employees.

(3)

Wentworths insurance policies with Lombard

[11]

Lombard
    is a commercial liability insurer.  It first insured Wentworth in April 1997,
    several years after Ferber had been removed from Workers Compensation
    coverage.  Lombard sold Wentworth a comprehensive business policy with a
    one-year term, which was later extended.  The policy included commercial
    general liability (CGL) insurance of $2 million.

[12]

The
    CGL insuring agreement provided broad coverage for bodily injury and property
    damage liability.  It also contained exclusions.  One exclusion was the
    employee injury exclusion: the insurance coverage did not apply to bodily
    injury to an employee of the Insured arising out of and in the course of
    employment by the Insured.  The scope of this exclusion is at the heart of
    this appeal.

[13]

In
    February 1998, Wentworth amended its insurance policy to include umbrella
    liability coverage, which provided an additional $3 million in liability
    insurance.  The umbrella policy similarly included an employers liability
    exclusion endorsement, which stipulated that this insurance did not apply to
    personal injury to an employee of the Insured arising out of and in the course
    of employment by the Insured.

(4)

The role of Dalton and McCarter

[14]

Dalton
    was an insurance brokerage firm in Hamilton.  McCarter was one of its insurance
    brokers.  Wentworth relied on McCarter to secure the insurance coverage that it
    needed.  Wentworth had no direct dealings with Lombard.  McCarter acknowledged
    that Wentworth relied on his expertise.

[15]

McCarter
    arranged with Lombard for both the initial comprehensive business policy, which
    included CGL coverage, and the amending umbrella liability policy.  However,
    Wentworth did not tell McCarter and he did not know that Wentworth had
    purchased disability insurance for Ferber and a few other employees and had
    removed those employees from Workers Compensation coverage.  Wentworth also
    did not tell Lombard that it had done so.

(5)

The workplace accident

[16]

On
    May 26, 1998, Ferber was seriously injured in a workplace accident.  He was
    supervising the unloading of a truck.  Wentworth was using one of its crawler
    cranes to do the unloading.  Cooper operated the crane.  Unfortunately, the
    crane struck Ferber and ran over him.  His foot and leg were badly injured.

(6)

The litigation

(a)

Ferbers action

[17]

In
    May 2000, Ferber sued Wentworth and Cooper for damages for the injuries he sustained
    in the workplace accident.  Lombard denied coverage.

(b)

Wentworths action

[18]

In
    September 2000, Wentworth started the present action against Lombard, Dalton,
    and McCarter.  It sought coverage and indemnity for Ferbers claims against
    it.  And it alleged negligence for failing to provide insurance coverage for
    claims by an employee not covered by Workers Compensation.

[19]

Dalton
    and McCarter cross-claimed against Lombard.  Lombard, however, did not assert a
    cross-claim.

(c)

The settlement of Ferbers action and its aftermath

[20]

In
    September 2003, the Ferber action settled.  Ferber received $950,000:  $200,000
    was paid by or on behalf of Wentworth and Cooper; and $750,000 was paid by or
    on behalf of Dalton and McCarter.

[21]

After
    the settlement, Wentworth discontinued its action against Dalton and McCarter
    but continued its claim against Lombard.  Dalton and McCarter continued their
    cross-claim against Lombard.

[22]

In
    addition, after the settlement, Wentworth amended its statement of claim.  In
    the amendment, it pleaded that Ferber was an executive officer and not its
    employee. Therefore it alleged that the employee injury exclusion in the CGL
    coverage did not apply.

[23]

After
    the settlement and the amendment, Dalton and McCarter became, in effect,
    co-plaintiffs with Wentworth.  They all sought indemnification from Lombard for
    the money they had paid to settle the Ferber action.

C.

analysis

Issue 1  Did the trial judge err
    in holding that the employee injury exclusion in the CGL coverage disentitled
    Wentworth to indemnification?

[24]

This
    is the main issue on the appeal.   To frame the issue, it is necessary to
    consider the wording of the relevant provisions of the CGL coverage in
    Wentworths insurance policy.  Two provisions are relevant: Section I on
    coverage and Section II on who is an insured.

[25]

Section
    I contains a broad grant of coverage and certain listed exclusions, including
    (d) the employee injury exclusion:

SECTION I  COVERAGES

COVERAGE A.  BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1.       Insuring Agreement

a.       We will pay those sums that the Insured becomes
    legally obligated to pay as compensatory damages because of bodily injury or property
    damage to which this insurance applies

2.       Exclusions.

This insurance does not apply to:

d.       Bodily injury to an employee of the Insured
    arising out of and in the course of employment by the Insured.

This exclusion applies:

1)       Whether the Insured may be liable as an employer or in
    any other capacity; and

2)       To any obligation to share compensatory damages with
    or repay someone else who must pay compensatory damages because of the injury.

This exclusion does not apply:

1)       To liability assumed by the Insured under an Insured
    contract; or

2)       To employees on whose behalf contributions are made by
    or required to be made by the Insured under the provisions of any workers
    compensation law.

[26]

The
    employee injury exclusion in commercial general liability policies has a sound
    rationale.  Commercial general liability coverage is intended to protect the
    insured against losses to third parties or to the public arising out of the
    operation of the insureds business:  see
Alie v. Bertrand & Frere
    Construction Co. Ltd.
(2002), 62 O.R. (3d) 345 (C.A.), at para. 27.  The
    coverage is not intended to protect the insured against losses to its own
    employees from workplace injuries.

[27]

Turning
    to the language of the exclusion, it is evident from its wording that it does
    not refer to executive officers.  It simply says, in substance, that Wentworth
    is not covered for bodily injury to one of its employees arising out of and in
    the course of employment with it.

[28]

However,
    Section II, on who is an insured, appears to distinguish between employees and
    executive officers:

SECTION II  WHO IS AN INSURED

1.       If you are designated in the Schedule of Part VI as:

c.       An organization other than a partnership or joint
    venture, you are an Insured.  Your executive officers and directors are
    Insureds, but only with respect to their duties as your officers or directors

2.       Each of the following is also an Insured:

a.       Your employees, other than your executive officers,
    but only for acts within the scope of their employment by you.  However, none
    of these employees is an Insured for:

1)  Bodily injury or personal injury to you or to
    a co-employee while in the course of his or her employment

[29]

Ferber
    was undoubtedly an executive officer at the time he was injured.  Although the
    insurance policy does not define executive officer, the Procedure Manual of
    the former Workmens Compensation Board defined executive officers to include
    among others, vice-presidents: see
Ryan v. Ontario (Workmens Compensation
    Board)
(1984), 6 O.A.C. 33.  Similarly the Ontario Workplace Safety and
    Insurance Appeals Tribunal has defined an executive officer as anyone holding
    the position, among others, of vice-president: see
Decision No. 14/98
,
    [1999] O.W.S.I.A.T.D. No. 199 (Ont. W.S.I.A.T.).

[30]

Ferbers
    injuries undoubtedly arose out of and in the course of his employment with
    Wentworth.  He was injured while supervising the unloading of a truck.  The
    trial judge concluded that the employee injury exclusion disentitled Wentworth
    to coverage.  He found that Ferber was an employee of Wentworth.  However, in
    his view, any distinction between employee and executive officer was
    academic.  Wentworth had no coverage for Ferbers injury, no matter how
    Ferber was classified.  The trial judge wrote at, para. 68 of his reasons:

There was no coverage for the personal injury to Mr. Ferber
    either as an employee or an executive officer.  The distinction between the two
    terms is academic.  If it were not, the court would be inclined to say that Mr.
    Ferber was within the classic definition of an employee.  He was not an
    independent contractor.  He was an employee subject to the terms of his
    employment contract and the appreciation of the Rochwergs.  He was described as
    such by the latter.

[31]

Wentworth
    challenges the trial judges holding on two grounds: first, it argues that
    Ferber was not an employee; second, it argues that even if he was an
    employee, the employee injury exclusion does not extend to employees who are
    also executive officers.  Lombard says in response that the evidence amply
    supports the trial judges finding that Ferber was an employee and that the
    employee injury exclusion applies to all employees whether or not they are
    executive officers.  I agree with the trial judges conclusion, though my
    reasons differ somewhat.

[32]

In
    my view, this ground of appeal raises two questions. One, was Ferber an
    employee of Wentworth? And two, if he was, does the employee injury exclusion apply
    to employees who were also executive officers?

(1)

Was Ferber an employee of Wentworth?

[33]

Ferber
    was an executive officer of Wentworth.  However, as the trial judge noted,
    there is no inconsistency in being both an executive officer and an employee.  Neither
    the insurance policy nor the
Workplace Safety and Insurance Act, 1997
,
    S.O. 1997, c. 16, Sched. A, states that an employee does not include an
    executive officer. Compare:
Berger v. Willowdale A.M.C.
(1983), 41
    O.R. (2d) 89 (C.A.).  Executive officers who work for a company typically will
    also be employees of the company.  American courts have so held, and their
    holdings seem to me to be reasonable.  It accords with commercial and business
    reality:  see
Fontana v. Zurich Insurance Company
, 430 So.2d 718
    (1983) (Court of Appeal of Louisiana) and
Zaiontz v. Trinity Universal
    Insurance Company
, 87 S.W. 3d. 565 (2002) (Court of Appeals of Texas).

[34]

Whether
    a person is an employee is largely a question of fact.  The evidence at trial
    reasonably  indeed, overwhelmingly  supports the trial judges factual finding
    that Ferber was an employee when he was injured.  Some of that evidence is the
    following:

·

Ferbers employment contract referred to him as an employee;

·

Ferbers employment contract prescribed his hours of employment;

·

Ferber did not have an ownership interest in Wentworth;

·

Ken Rochwerg, one of Wentworths owners, called Ferber an
    excellent employee;

·

Ferber was part of Wentworths management team, but Ken Rochwerg
    testified that management had titles for the sake of titles;

·

Ken Rochwerg also testified that though Ferber was an executive
    officer, he was like all of them a salaried employee of the company;

·

Ferber was not a signing officer of Wentworth and had no
    authority to sign cheques;

·

When his employment ended, Ferber was paid his outstanding
    vacation pay under the
Employment Standards Act
;

·

When he stopped working for Wentworth, the company issued a
    Record of Employment, as it was required to do for all of its employees whose
    employment was terminated.

[35]

Thus,
    I see no basis to interfere with the trial judges finding that Ferber was an
    employee of Wentworth.  Ferber was, therefore, both an employee and an
    executive officer of Wentworth when he sustained a workplace injury.

(2)

Did the employee injury exclusion apply to employees who were also
    executive officers?

[36]

This
    is a question of contract interpretation.  The employee injury exclusion
    provides:

This insurance does not apply to:

d.       Bodily injury to an employee of the Insured
    arising out of and in the course of employment by the Insured.

This exclusion does not apply:

(2) To employees on whose behalf contributions are made by or
    required to be made by the Insured under the provisions of any workers
    compensation law.

[37]

The
    principles for interpreting insurance policies, and in particular exclusion
    clauses, are well-established.  The policy should be interpreted to promote a
    reasonable commercial result; provisions granting coverage ought to be
    construed broadly; provisions excluding coverage ought to be construed
    narrowly; in the case of ambiguity, the interpretation most favourable to the
    insured should be adopted; and even a clear and unambiguous clause should not
    be given effect if to do so would nullify the coverage provided by the policy.

[38]

The
    trial judge considered these various principles.  He concluded, at para. 62,
    that there was no ambiguity in the insuring agreement or the employee injury
    exclusion and that the exclusion did not nullify coverage:

There is no ambiguity in subsections 1 and 2.  The
    Insuring Agreement and Exclusions (specifically subsection (d)), Personal
    Injury to the public described above is covered.  However, what is
    exempted is personal injury to an employee working in the course of his or her
    employment.  Given the nature of the business, that exemption could be
    anticipated to be covered by the WSIB regime.  That exception is
    understandable in such coverage and is a function of the existence of the WSIB
    scheme and the need to avoid double indemnification.  The exemption per se
    does not render the coverage a nullity or a departure from reasonable
    commercial expectations.

[39]

Wentworth
    submits that the trial judge erred in two ways: first, he failed to consider
    the interplay between Sections I and II of the CGL coverage  between the
    insuring agreement and who is an insured; and second, he erred by not at least
    finding ambiguity in the interpretation of the employee injury exclusion.  I do
    not agree with Wentworths submission.

[40]

Wentworth
    says that because Section II of the CGL coverage differentiates between
    employees and executive officers, then logically that differentiation should
    also apply to Section I, absent contrary language.  Thus, according to
    Wentworths argument, the employee injury exclusion should apply only to
    employees, not to executive officers even if they are also employees, because
    executive officers are not expressly referred to in Section I.  At worst,
    Wentworth argues, the interpretation of the exclusion is ambiguous and so
    should not apply to Ferbers injury.

[41]

I
    reach the opposite conclusion.  In my opinion, the employee injury exclusion is
    unambiguous and applied to all employees including those, like Ferber, who were
    also executive officers.  Section II of the CGL coverage differentiates between
    employees who are not executive officers and those who are solely for the
    purpose of determining who is an insured and in what circumstances.  A person
    sued as an executive officer is treated differently from a person sued as an
    employee.  And, presumably, a person can be an insured in both capacities.

[42]

However,
    Section I of the CGL coverage, and in particular the employee injury exclusion,
    does not distinguish executive officer employees from non-executive officer employees.
    As Section II does differentiate between these two types of employees, one can
    reasonably infer that the lack of differentiation in Section I was intended.
    All employees, including those who are executive officers, come within the
    exclusion.  To give effect to Wentworths position would require reading words
    into the exclusion.  The exclusion would have to read:

d.       Bodily injury to an employee of the Insured
other than an employee who is also an executive officer

[43]

Reading
    words into a provision that is unambiguous in its scope is not justified.
    Wentworth is not entitled to insurance coverage for the workplace injury to
    Ferber because Ferber was an employee of Wentworth at the time, yet not covered
    by Workers Compensation.

[44]

I
    acknowledge that my interpretation of the exclusion seems to produce an odd
    result, perhaps because the language of the policy is drawn from American
    usage.  The exclusion takes away coverage where an Ontario employer might wish
    to have it: for a workplace injury not covered by workers compensation legislation.
    The exception to the exclusion brings back into coverage claims by employees for
    whom the employer paid or was required to pay workers compensation premiums:
    that is, for a workplace injury where insurance coverage is not needed because
    of Workers Compensation.

[45]

Ferbers
    claim does not fall within the exception to the exclusion because Wentworth did
    not pay nor was it required to pay Workers Compensation premiums on his
    behalf.  Thus, his claim is one of an undoubtedly small group of workplace
    injuries for which the employer has neither workers compensation nor insurance
    coverage.  In short, there is a coverage gap.  See Mark G. Lichty and Marcus
    B. Snowden,
Annotated Commercial General Liability Policy
, Loose Leaf
    Edition (Aurora: Canada Law Book, 2006), pp. 16-02  16-17.

[46]

Wentworth,
    however, had at least one and likely two ways to eliminate this coverage gap,
    one through Workers Compensation and the other through insurance.

[47]

One
    certain way to have provided coverage would have been to have had Ferber
    covered by Workers Compensation.  Section 12(2) of the
Workplace Safety
    and Insurance Act
, allows a company to have its executive officers covered
    by Workers Compensation:

Upon the application
    of a Schedule 1 or Schedule 2 employer who is a corporation, the Board may
    declare that an executive officer of the corporation is deemed to be a worker
    to whom the insurance plan applies. The Board may make the declaration only if
    the executive officer consents to the application.
[2]

[48]

Wentworth
    elected not to do this.  Instead, to save money, it decided to take Ferber and its
    other executive officers out of Workers Compensation and pay for a private
    disability insurance policy.  It was, of course, entitled to do so, but its
    decision had the consequences that have led to this litigation.

[49]

The
    second way Wentworth could have eliminated the coverage gap would have been by
    buying an employers bodily injury liability coverage extension endorsement.
    Wentworth did not purchase this endorsement before Ferbers injury.  There
    appears to be conflicting evidence in the record on whether Wentworth could
    have obtained this endorsement from Lombard.  It also appears, however, that neither
    Wentworth itself nor McCarter on its behalf tried to purchase this
    endorsement.  But the existence of this endorsement combined with Wentworths
    decision to take Ferber out of Workers Compensation coverage shows that in
    this litigation, Wentworth is seeking a benefit it never paid for: insurance
    coverage for an employee not covered by Workers Compensation.

[50]

I
    would not give effect to this ground of appeal.

Issue 2  Did the umbrella policy provide coverage for
    Ferbers claim?

[51]

The
    umbrella policy amended the comprehensive business policy, which Lombard had
    sold to Wentworth in April 1997.  It provided an additional layer of liability
    insurance above the primary liability insurance in the CGL coverage.  McCarter
    testified that umbrella liability insurance would provide primary coverage for
    defence costs and indemnity if the primary policy does not provide coverage or
    if the limits under the primary policy are exhausted.

[52]

The
    umbrella policy was added to Wentworths liability insurance by a Change
    Endorsement, which Dalton received from Lombard in February 1998.  The Change
    Endorsement listed a schedule of coverages.  One of the coverages was the Employers
    Liability Exclusion endorsement which provided:

This Insurance shall not apply to "personal injury"
    to:

1.       An employee of the insured arising out of and in the
    course of employment by the Insured;

This exclusion applies:

1.       Whether the Insured may be liable as an employer or in
    any other capacity; and

2.       To any obligation to share damages with or repay
    someone else who must pay damages because of injury.

[53]

On
    its face, this exclusion endorsement, like the employee injury exclusion in the
    CGL coverage in the original policy, would disentitle Wentworth to coverage for
    Ferbers injury.  However, Wentworth submits that Lombard is not entitled to
    rely on this exclusion endorsement because it was not delivered to Wentworth
    in accordance with Section 124.(1) of the
Insurance Act
, R.S.O. 1990
    c. I.8.  I do not accept this submission.

[54]

Section
    124.(1) of the
Insurance Act
states:

All the terms and conditions of the contract of
    insurance shall be set out in full in the policy or by writing securely
    attached to it when issued, and, unless so set out, no term of the contract or
    condition, stipulation, warranty or proviso modifying or impairing its effect
    is valid or admissible in evidence to the prejudice of the insured or
    beneficiary.

[55]

The
    delivery of the umbrella policy, including the exclusion endorsement, complied
    with s. 124.(1).  The terms and conditions of the umbrella policy were set out
    in policy forms.  Those forms were specified in the schedule of coverages
    listed on the Change Endorsement and were in Daltons possession in Lombards
    forms book.  This book was available to McCarter, who accepted the umbrella
    policy for Wentworth.

[56]

McCarter
    did not forward the policy forms to Wentworth.  However, I do not think his
    failure to do so matters.  He was Wentworths agent, at least for the purpose
    of accepting delivery of the umbrella policy.  Wentworths past practice shows
    this to be so.  All of the communications for its insurance were between
    McCarter and Lombard.  Wentworth had no direct dealings with Lombard.  It
    relied on McCarter to take care of its insurance needs.  Implicitly, if not
    explicitly, Wentworth authorized McCarter to accept delivery of the umbrella
    policy on its behalf.  See
Barnet Properties Ltd. v. Commonwealth Insurance
    Co.
(1998), 113 B.C.A.C. 31.  Indeed, Lorne Rochwerg testified that he
    would not have looked at the policy forms even if they had been sent to him.

[57]

Thus,
    I am satisfied that when Lombard delivered the Change Endorsement to
    Wentworths agent, McCarter, it complied with its obligation under s. 124.(1)
    of the
Insurance Act
to provide the policy wordings to Wentworth.
    McCarter had the policy wording.  And when he received the Change Endorsement
    listing the coverages and referencing the policy forms, he must be taken to
    have known what coverages were provided and what exclusions applied.  Wentworth
    does not suggest otherwise.  I would not give effect to this ground of appeal.

Issue 3  Is Wentworth obligated to
    indemnify Wentworths employee Cooper?

[58]

Wentworth
    submits that Lombard is obligated to indemnify Cooper.  Wentworth points out
    that Cooper was a defendant in Ferbers action and claims that it contributed
    $200,000 to settlement on Coopers behalf as well as on its own behalf.
    Wentworth submits that the employee injury exclusion does not apply in respect
    of claims against an employee. Even without considering whether the exclusion
    applied to a claim against a co-employee, I would not give effect to this
    ground of appeal.

[59]

Wentworth
    never asserted before the trial judge or at any time in the eight year period
    between the settlement of the Ferber action and the trial that Lombard was
    obligated to defend or indemnify Cooper.  Wentworth is the sole plaintiff in
    this action.  Cooper is not a plaintiff.  The amended statement of claim makes
    no claim on behalf of Cooper.  In it, Wentworth does not allege: that it made a
    payment on behalf of Cooper; that Cooper incurred any costs to defend Ferbers
    action; or that Cooper contributed any money to the settlement of that action.
    Moreover, no evidence was led at trial that he did so.  As there is no
    allegation or evidence that Cooper sustained a monetary loss or that Wentworth
    sustained a loss on his behalf, Lombard cannot be required to indemnify him.

[60]

For
    these reasons I would not give effect to this ground of appeal.  It is
    therefore unnecessary to consider whether the exclusion applied to Cooper.

Issue 4  Is Lombard vicariously liable for Daltons
    negligence?

[61]

Wentworth
    submits that Lombard is vicariously liable for Daltons negligence.  It
    contends that Dalton was Lombards agent and thus legally responsible for
    Daltons acts and omissions.  Its contention of agency rests on an admission in
    Lombards pleadings.  In paragraph 4 of its amended statement of claim,
    Wentworth alleges that at all material times Dalton was an agent of Lombard.
    In paragraph 1 of its statement of defence, Lombard admits the allegations in
    paragraph 4 of the amended statement of claim.

[62]

Lombards
    admission in paragraph 1 of its statement of defence is obviously an unintended
    slip.  It is inconsistent with its overall position and with express
    allegations in other paragraphs of its pleading.  For example, in paragraph 5
    of its statement of defence, Lombard expressly denies that McCarter was its
    employee, servant, or agent.  In paragraph 23, Lombard pleads that at all
    material times, Dalton and McCarter were Wentworths insurance brokers.  Thus,
    I would hold that the so-called admission in paragraph 1 of Lombards
    pleading is not determinative of whether Dalton was Lombards agent.

[63]

In
    my opinion, Wentworths submission of vicarious liability cannot succeed for
    either of two reasons.  First, Wentworth did not pursue its negligence claim against
    Dalton and McCarter.  Thus, there is nothing for which Lombard could be
    vicariously liable.

[64]

Second,
    no evidence was led at trial to support Wentworths contention that Dalton was
    Lombards agent.  At trial, McCarter called himself a property and casualty
    insurance broker for Dalton, a Tier 2 insurance brokerage.  He marketed
    himself as an independent broker, entitled to sell the products of various
    insurance companies.  He acted quite differently from the insurance agent of a
    particular insurer.  He was not beholden to Lombard or any other insurance
    company.  If anything, as I have said earlier, he was Wentworths agent.  He
    certainly was not Lombards agent.  See
Keddie v. Canada Life Assurance Co.
,
    1999 BCCA 541, 179 D.L.R. (4
th
) 1, especially at paras. 41-43.

[65]

I
    would not give effect to this ground of appeal.

D.

conclusion

[66]

I
    have concluded that the appellants are not entitled to be indemnified for the
    money they paid to settle Ferbers personal injury claim.  I would, therefore,
    dismiss the appeal with costs in the agreed-upon amount of $20,000, inclusive
    of disbursements and applicable taxes.

Released: Mar 28, 2013                                         John
    Laskin J.A.

JL                                                                     I
    agree M. Rosenberg J.A.

I
    agree M.H. Tulloch J.A.

[1]
This act has been superseded. The reference here reflects the version that was
    in force until 2001.

[2]
This version of s. 12(2) was in force until December 31, 2012. On January 1,
    2013, an amended version came into force.


COURT OF APPEAL FOR ONTARIO

CITATION: Stone Mills (Township) v. Rebel Scrap
    Metal Inc., 2013 ONCA 172

DATE: 20130321

DOCKET: C56157

Rosenberg, Gillese and Rouleau JJ.A.

BETWEEN

The Corporation of the Township of Stone Mills

Applicant/Respondent by Appeal

and

Rebel Scrap Metal Inc., Parts-A-Plenty Inc.,
    James (Jim) Sinclair, Todd Sinclair, Arrowstar Terminals Inc. and 816 Goodyear
    Rd. Inc.

Respondents/Appellants

Mark A. Klaiman, for the appellants

Timothy J. Wilkin and James L. McDonald, for the
    respondent

Heard and released orally: March 19, 2013

On appeal from the order of Justice Rick Leroy of the Superior
    Court of Justice, dated September 24, 2012.

ENDORSEMENT

[1]

In this court the appellants restricted their appeal to the submission
    that the chain link fence was the principal structure. When s. 5.16.6 is read
    in accordance with the applicable principles of interpretation as set out in
Berjawi
    v. Ottawa (City)
,[2011] O.J. No. 379, especially considering the by-law as
    a whole, we are satisfied that the principal structure must have a wall. A
    chain link fence does not constitute a wall. Section 5.16.6 deals separately
    with fencing in a manner that implies that a principal structure must have a
    wall and therefore be something other than a chain link fence.

[2]

Accordingly, the appellants use of the property does not comply with
    the by-law. Given this conclusion we need not determine the broader question as
    to whether the principal structure must also meet the definition of building.

[3]

Accordingly the appeal is dismissed with costs fixed at $25,000
    inclusive of disbursements and HST.

M. Rosenberg J.A.

E.E. Gillese J.A.

Paul Rouleau J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Sunlife Assurance Company of
    Canada v. Premier Financial Group Incorporated (Premier Financial), 2013
    ONCA 151

DATE: 20130312

DOCKET: C56053

Sharpe, Epstein and Pepall JJ.A.

BETWEEN

Sunlife Assurance Company
    of Canada

Respondent
/Plaintiff

and

Premier Financial Group
    Incorporated o/a Premier Financial, Premier Financial Capital Investments, and
    Premier Mortgage-Mortgage Alliance, David K. Chung a.k.a. Cheechul Chung and
    David Kee Choi Cheung, Kay Kim a.k.a. Youngchol Chung, Kyung-Sook Kiim and
    Kyung-Sook Kim, 2234170 Ontario inc.,
and Mohammad H. Khosprowbeygi

Appellants
/Defendants

Stefan A. De Smit, for the appellants

B. Phillips, for the respondent

Heard: March 11, 2013

On appeal from the judgment of Justice B.P. OMarra of
    the Superior Court of Justice, dated August 22, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The motion judge found that there was overwhelming evidence that the
    appellants were personally served and that they decided to ignore the process.
    There is ample evidence, including video recordings, to support the finding. It
    is established that a conscious decision not to participate in the proceedings
    bars consideration of a defence for the merits, even if one exists:
Schill
    & Beninger Plumbing & Heating Ltd. v. Gallagher Estate
(2001) 140
    OAC 353.

[2]

Accordingly, the appeal is dismissed. Costs to the respondent fixed at
    $15,000 inclusive of disbursement and applicable taxes. The respondent agrees
    that the judgment be amended to delete the name Youngchol Chung.


COURT OF APPEAL FOR ONTARIO

CITATION:
Trisolino v. De
    Marzi, 2013 ONCA 135

DATE: 20130306

DOCKET: C55851

Winkler C.J.O., Armstrong and Hoy JJ.A.

BETWEEN

Antonella Trisolino

Applicant (Respondent)

and

Alexander Christian David De Marzi

Respondent (Appellant)

Darrell S. Waisberg and Jennifer A. Greenwood, for the
    appellant

Phyllis Brodkin, for the respondent

Heard: February 27, 2013

On appeal from the order of Justice Michael A. Penny of
    the Superior Court of Justice, dated July 5, 2012.

ENDORSEMENT

[1]

The father appeals the July 5, 2012 order of the trial judge, permitting
    the respondent mother to move to Italy with the two children of the marriage,
    aged 10 and 7.

[2]

The father submits that the trial judge correctly identified
Gordon
    v. Goetz
(1996), 2 S.C.R. 27, 134 D.L.R. 321 (S.C.C.), the leading
    authority on parental mobility, as the governing authority.  He argues,
    however, that the trial judge erred in his application of the principles of
Gordon
    v. Goetz
to the facts of this case.  In particular, he asserts that the
    trial judge (i) focussed almost entirely on the mothers reasons for moving and
    confused her best interests with those of the children, (ii) failed to take
    into account and give sufficient weight to the disruption to the children
    should they be taken to Italy, particularly given the fact that the children
    are benefitting from Independent Educational Programs in their school in
    Toronto, and (iii) failed to give sufficient weight to the desirability of
    maximizing the childrens contact with both parents.

[3]

As to the first alleged error, the father notes that
Gordon v. Goetz
directs that the judge should consider the parents reason for moving only in
    the exceptional case where it is relevant to that parents ability to meet the
    needs of the child.  At para. 61, the trial judge wrote:

The reasons for the move are only relevant insofar as they have
    a direct bearing on the best interests of the children.  In the circumstances
    of this case, I believe the reasons for the move do have a direct bearing on
    the childrens best interests, both emotionally and financially.

[4]

We agree that in this case the reasons for the move are relevant. The mothers
    reasons for the move reflect her perception of the needs of the children, and
    her judgment about how those needs may best be fulfilled.  We accordingly do
    not give effect to the first ground of appeal.

[5]

As to the second alleged error, the trial judge noted that the father
    placed great weight on the disruption to the children that would arise from the
    move, including to their educational progress.  The trial judge reviewed the
    fathers submissions on the issue of disruption, and the mothers plan for the
    children.  The trial judge noted that the children hold Italian citizenship and
    are fluent in Italian. (Indeed, the evidence with respect to the childrens
    problems in school is that they are especially with the English.) Moreover,
    the trial judge found that the mother, the childrens primary caregiver, had
    identified a good school in Rome which is sensitive to foreign students. The
    trial judge concluded, at para. 73:

Thus, while there will, no doubt, be significant disruptions,
    there are offsetting benefits in Mothers plan for relocation which will
    mitigate the negative impact of these disruptions, at least to some extent.

[6]

There is no basis for interfering with this conclusion.

[7]

As to the third issue, namely whether the trial judge gave sufficient
    weight to the principle of maximizing contact with both parents, it must be
    noted that this is an unusual case. The parties have not yet separated; the
    parties will separate if the mother and children are not permitted to relocate.
    The trial judge noted, at para. 56 of his reasons, that the father did not know
    whether he would re-locate to Italy if the mother were permitted to move there
    with the children.  The trial judge fully appreciated that if the father chose
    not to accompany the mother and children to Italy, his contact with the
    children would necessarily be significantly curtailed.

[8]

Notably, the mother and father met in Italy. The mother is Italian, the
    children were born in Italy and the family lived in Italy during the childrens
    early years. The mother  a lawyer  can only practice her profession in Italy.
    The father  a waiter  is Canadian but speaks fluent Italian, can work in
    either country, and, in fact, worked in Italy as a waiter when the children
    were younger. The father wanted to return to Canada and ultimately threatened
    that he would do so  with or without the mother and children.  While the
    father says he did not mean it, to keep the family together, the mother
    capitulated and they moved to Canada. In Canada, the father has been the
    familys sole financial provider. The children have a large, supportive family
    in Rome who are well-known to them.

[9]

Balancing the risks and benefits associated with permitting the mother
    to move to Italy, the trial judge concluded that it was in the best interests
    of the children to permit the mother to relocate to Italy with them.

[10]

The
    trial judge in our view conducted the full and sensitive inquiry into the best
    interests of the children mandated by
Gordon v. Goetz
and made no
    reversible error in doing so.  We accordingly dismiss this appeal.

[11]

In the circumstances, there will be no award as to costs.

Warren K. Winkler C.J.O.

Robert P. Armstrong J.A.

Alexandra Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Tyrell (Re), 2013 ONCA 170

DATE: 20130319

DOCKET: C56213

Goudge, Simmons and Tulloch JJ.A.

IN THE MATTER OF: LEON TYRELL

AN APPEAL UNDER PART XX.1 OF THE
CODE

Barbara Walker-Renshaw and Ewa Krajewska, for the
    appellant, Person in Charge for Ontario Shores Centre for Mental Health
    Sciences

Leon Tyrell, respondent appearing in person

Suhail Akhfar, for the respondent Her Majesty the Queen

Anita Szigeti,
amicus curiae

Heard: March 15, 2013

On appeal against the disposition of the Ontario Review
    Board dated, October 11, 2012.

APPEAL BOOK ENDORSEMENT

[1]

The appeal in this case was commenced within the time limit prescribed
    by s. 672.72 of the
Criminal Code
. There is no question of the
    timeliness of this appeal.  We also do not agree that the decision of this
    court in
R. v. Kobzar
is material to the appeal, given that the court
    in that case suspended its order for a year and that year has not yet expired.

[2]

The central issue in the case is the fresh evidence, its admissibility
    and its impact.  In our view, the fresh evidence tendered by the appellant is
    in the language of
R. v. Owen
, [2003] 1 S.C.R. 779, trustworthy and
    touches on the issue of risk to public safety.  It is therefore in the
    interests of justice that this evidence be before this court on this appeal.  See
    s. 672.73 of the
Code
.

[3]

We are all also of the opinion that the fresh evidence, had it been
    before the Board, could reasonably have affected its decision.  For that reason
    we would order a new hearing before the Board, see
McDonell v. Edgar
,
    [2006] O.J. No. 4923.

[4]

For these reasons, the appeal is allowed.


COURT OF APPEAL FOR ONTARIO

CITATION: Warner (Re), 2013 ONCA 181

DATE: 20130326

DOCKET: C56212

Sharpe, Watt and Hoy JJ.A.

IN THE MATTER OF:  Michael Warner

AN APPEAL UNDER PART XX.1 OF THE
CODE

Michael Warner, acting in person

Anita Szigeti, as
amicus curiae

James P. Thomson, for the Centre for Addiction and
    Mental Health

Randy Schwartz, for the Attorney General

Heard: March 19, 2013

On appeal against the disposition of the Ontario Review
    Board, dated April 23, 2012.

ENDORSEMENT

[1]

Michael Warner appeals the April 23, 2012 Disposition of the Ontario
    Review Board (the Board).

[2]

The Board found that if Mr. Warner were granted an absolute discharge,
    he would stop medication, the symptoms of his medical illness would quickly
    resume and he would present a clear and palpable risk to the safety of the
    public. It concluded that the least onerous and least restrictive disposition
    in the circumstances was a continuation of his conditional discharge.

[3]

Mr. Warner argues: (1) that the Boards finding that he is a significant
    threat to public safety is unreasonable and not supported by the evidence; and
    (2) if he does present such a risk, a Community Treatment Order (CTO) is a
    less onerous and restrictive disposition and would manage the risk he poses to
    the public and the Board, accordingly, erred by failing to order a CTO.

[4]

In our view, the opinion of the attending outpatient psychiatrist at the
    Centre for Addiction and Mental Health (CAMH), Dr. Earys, provided a basis
    upon which the Board could reasonably conclude that Mr. Warner would pose a
    significant threat to the safety of the public if discharged.  Dr. Eayrs indicated
    that Mr. Warner has no intention of continuing on his antipsychotic medications
    indefinitely and will decompensate and become a significant threat to public
    safety if he ceases to take his medication.

[5]

Mr. Warner takes issue with the Boards conclusion that the evidence of
    his mother, Ms. Rhodine Kirlew, and Mr. Fred Williams, who has been part of Mr.
    Warners life since he was a young boy, should be given no weight in assessing
    the potential risk Mr. Warner poses if discharged. The Board concluded that Ms.
    Kirlew and Mr. Williams were attempting to frame their evidence to downplay the
    risk that Mr. Warner poses. There is no basis for this court to interfere with
    the Boards assessment of the credibility of these witnesses.

[6]

As
amicus
notes, the index offences with which Mr. Warner was
    charged  criminal harassment and failure to comply with a recognizance  were
    relatively minor and non-violent. They arose out of his repeated, uninvited
    phone calls to a female police officer in March of 2006 and subsequent
    attendance at a shopping mall in September of 2007, unaccompanied by his surety
    or an adult approved by his surety, with five butcher knives in his backpack.

[7]

In assessing the risk that Mr. Warner would present if discharged, the
    Board had specific regard to the evidence that Mr. Warner thought family
    members were clones and had expressed the belief that if the clone dies, its
    not a problem.   It identified this as an example of the disturbed thinking
    Mr. Warner experiences when he is unwell and which could lead to a real risk to
    the public.

[8]

In
Winko v. British Columbia (Forensic Psychiatric Institute)
(1999),
    135 C.C.C. (3d) 129 (S.C.C.), the Supreme Court held that significant threat
    to the safety of the public means a real risk of physical or psychological
    harm to members of the public  [that goes] beyond the merely trivial or
    annoying. The conduct giving rise to the harm must be criminal in nature. In
    our view, the Board applied this test.

[9]

As to Mr. Warners second argument, it was not open to the Board to
    order a CTO. Only a physician can issue a CTO: s. 33.1(4) of the
Mental
    Health Act,
R.S.O. 1990 Chapter M. 7. Dr. Eayrs had not issued one; her
    opinion was that a conditional discharge represented the least onerous
    disposition.  This may well be a matter that she will wish to reconsider in
    advance of Mr. Warners next disposition hearing.
Amicus
suggests
    that Dr. Eayrs did not fully appreciate that where, as here, the person at
    issue has been found incapable of making his own treatment decisions and a
    substitute decision maker has been appointed, and assuming the support of the
    substitute decision maker, a CTO can be utilized to compel medication
    compliance and certification under the
Mental Health Act
is
    facilitated.

[10]

In
    the result, this appeal is dismissed.  However, we add the following.  Mr.
    Warner has been subject to the jurisdiction of the Board since December 13,
    2007, when he was found not criminally responsible on account of mental
    disorder of the index offences. Given the relatively minor nature of the index
    offences and the fact that any danger he poses to public safety can be avoided
    through medication, he should not remain under Board oversight indefinitely and
    it is important that transitional mechanisms leading to his ultimate discharge
    be fully explored.

Robert
    J. Sharpe J.A.

David
    Watt J.A.

Alexandra
    Hoy J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Ziaie v. Ziaie, 2013 ONCA 156

DATE: 20130315

DOCKET: C56159

Doherty, MacPherson and Watt JJ.A.

Saeed Ziaie

Appellant

and

Shaliyah Ziaie

Respondent

Saeed Ziaie, appearing in person

Shaliyah Ziaie, appearing in person

Heard and released orally:  March 11, 2013

On appeal from the order of Justice H. McGee of the
    Superior Court of Justice, dated December 3, 2010.

ENDORSEMENT

[1]

Custody of children upon the dissolution of a marriage depends
    exclusively on a determination of the best interests of the child.  We see no
    reason to interfere with the motion judges decision.

[2]

The appellant sought sole custody of the two children, but also agreed
    that the children should continue to reside with the respondent.  They had
    lived with their mother since separation in 2008.  The motion judge quite
    properly observed that these two positions were irreconcilable.

[3]

In the end, the motion judge had a difficult decision to make.  We would
    not interfere with the discretion as exercised by the motion judge.

[4]

The appeal dismissed.

Doherty J.A.

J.C. MacPherson J.A.

David Watt J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Zefferino v. Meloche
    Monnex Insurance Company, 2013 ONCA 127

DATE: 20130301

DOCKET: C54965

Rosenberg, MacPherson and LaForme JJ.A.

BETWEEN

Nicola Zefferino

Plaintiff/Appellant

and

Meloche Monnex Insurance Company

Defendant/Respondent

Jane L. Poproski and Andrew L. Rudder, for the appellant

R. Donald Rollo, David Visschedyk and Stuart M. Ghan,
    for the respondent

Heard: February 22, 2013

On appeal from the judgment of Justice R.B. Reid of the Superior
    Court of Justice, dated January 9, 2012.

ENDORSEMENT

[1]

The appellant commenced an action against the respondent relating to an
    insurance contract between the parties. The appellant alleged that the respondent
    failed to offer optional income replacement benefits and claimed a loss of
    income replacement benefits the appellant says should have been available.

[2]

The appellant brought a summary judgment motion; the respondent agreed
    to this route for disposing of the action.

[3]

In a judgment dated January 9, 2012, Reid J. dismissed the appellants
    action. He accepted the appellants submissions that the respondent owed him a
    duty of care and breached the applicable standard of care by failing to
    properly offer optional income replacement benefits. However, he held against
    the appellant, saying that he fails in the third issue necessary to establish
    a successful claim in negligence in that he has not shown on a balance of
    probabilities the necessary causal connection between the defendants breach of
    duty and his loss.

[4]

The appellant appeals on the causation issue. The respondent
    cross-appeals on the standard of care issue.

[5]

The appellant submits that on a claim arising out of insurance broker
    negligence, the plaintiff need not prove that the acts or omissions of the
    insurer caused the loss. In her very helpful submissions, Ms. Poproski argues
    that the insured need only show that the insurer had a duty to inform the
    insured, that it breached its duty of care and that there was a gap in
    coverage. The appellant submits that this exception from the normal rule that a
    plaintiff must prove causation can be justified by the fact that insurance
    contracts are different from normal contracts and that to do otherwise would place
    an impossible burden on the insured. The appellant relies upon the following
    passage from the leading case of
Fletcher v. Manitoba Public Insurance
    Company
, [1990] 3 S.C.R. 191 at 226-27:

The respondent submits that even if it had provided more
    information in its flyer, Mr. Fletcher would not have purchased UMC since he
    failed to read the flyer. Therefore, MPIC argues that it should not be held
    liable for the appellants' loss since its acts or omissions did not cause that
    loss. Mr. Fletcher was the author of his own misfortune.

This argument is without merit. The finding that MPIC did not
    discharge its duty to inform the appellants does not hinge solely on the
    adequacy or inadequacy of the flyer. Rather, it rests on the combined effect of
    MPIC's initial omission to tell Mr. Fletcher about UMC when he first bought his
    coverage, the misleading renewal form and flyer, and MPIC's failure to mention
    UMC when he paid for his renewal in person. Faced with this combination of acts
    and omissions by the respondent, the appellants cannot be viewed as the authors
    of their own misfortune.

[6]

We cannot agree with this submission. First, the immediately following
    paragraph from
Fletcher
indicates that the insured in that case was
    entitled to succeed because he had proved that the insurers negligence
    resulted in damages:

The trial judge found that Mr. Fletcher would have
    purchased UMC had he been told of its availability. Had MPIC not breached its
    duty, the Fletchers would have been covered against loss caused by an underinsured
    motorist up to a limit of $2,000,000.
The shortfall between the
    underinsured motorist's insurance and the appellants' loss was $887,090. I
    therefore find that the respondent's breach of duty caused the appellants' loss
    and hold it liable for damages in the amount of the shortfall. [Emphasis
    added.]

[7]

Second, earlier in her reasons for judgment in
Fletcher
, Wilson
    J. makes clear that whether the negligence caused a loss is a question of fact.
    There is no suggestion that because of the insurance broker context the
    plaintiff is relieved of the normal burden of proof. See, for example, the
    following excerpts from pages 204-6:

These authorities, in my view, make crystal clear the test for
    determining when it is appropriate for an appellate court to depart from a
    trial judge's findings of fact: appellate courts should only interfere where
    the trial judge has made a "palpable and overriding error which affected
    his assessment of the facts." The very structure of our judicial system
    requires this deference to the trier of fact. Substantial resources are
    allocated to the process of adducing evidence at first instance and we entrust
    the crucial task of sorting through and weighing that evidence to the person
    best placed to accomplish it. As this Court and the House of Lords have
    repeatedly emphasized, it is the trial judge who is in the best position to
    assess the credibility of testimony. An appellate court should not depart from
    the trial judge's conclusions concerning the evidence "merely on the
    result of their own comparisons and criticisms of the witnesses": see Lord
    Sumner in
The S.S. Hontestroom, supra
, at p. 47.

In the appeal now before us Finlayson J.A. departed from the
    trial judge's findings of fact on at least two counts. He did not accept
    McKeown J.'s finding that Mr. Fletcher had relied on the respondent's employees
    for information and advice.
Nor did he accept McKeown J.'s finding that had
    Fletcher been offered UMC, he would have purchased it. Yet at no point did
    Finlayson J.A. apply the test that this Court set out in "Kathy K",
    supra, and Lewis v. Todd and McClure, supra. No attempt was made to spell out
    whether and in what respects the trial judge's findings of fact constituted
    "palpable and overriding errors"
. Instead, Finlayson J.A.
    explained his decision to depart from the trial judge's findings of fact by
    observing that the trial judge had "stretched the evidence in favour of
    Fletcher". He refused to give much credence to the testimony of Fletcher,
    calling it "self-serving" and "entirely subjective", and
    concluded by observing that he did not propose to give much weight to the trial
    judge's findings of fact.

With respect, I do not think that it was open to the Court
    of Appeal to depart from the trial judge's findings of fact absent evidence of
    a palpable and overriding error.
An appellate court should not substitute
    its views about the facts for those of the trial judge without carefully
    applying the strict test which has been developed over the years by the highest
    courts in England and Canada. Absent some manifest and palpable error, the
    trial judge's assessment of the witnesses' credibility must be allowed to
    stand.

Mr. Fletcher also testified that if he had been advised
    about the availability of UMC, he would have purchased it for additional safety.
McKeown J. commented, at p. 632, that "This is credible since the cost was
    only $15. He had always followed his insurance broker's advice in Ontario, and
    [his former insurance broker] said that he was an insurance conscious
    person." In summarizing his findings
McKeown J. said: "I find
    that if John  Fletcher had been offered underinsured motorist coverage he would
    have purchased the coverage."

McKeown J.'s findings of fact must stand. There is no
    reason to believe that he made a "palpable and overriding error".
He concluded, as he was entitled to do, that Mr. Fletcher was an extremely
    credible witness. On that basis he found that Mr. Fletcher relied on the
    respondent's employees for information and advice and that he would have
    purchased UMC had it been offered.
These findings are entirely reasonable
    and it is no more open to this Court than it was to the Court of Appeal to
    depart from them.

[Emphasis added.]

[8]

Thus, the Supreme Court treated it as a question of fact whether the
    insured would have purchased the additional insurance, if there had not been a
    breach of the duty of care. In
Fletcher
, the trial judges finding of
    fact that the insured would have purchased the additional insurance stood,
    absent a palpable and overriding error.

[9]

In this case, the trial judge came to the opposite conclusion. He found
    as a fact, after assessing the evidence in a procedure agreed to by the
    appellant, that the appellant would not have purchased the additional
    insurance. We have not been persuaded that the trial judge made any palpable
    and overriding error in making this finding of fact.

[10]

In
    our view, the trial judge carefully reviewed the relevant facts and reached a
    conclusion that was open to him. He noted that the appellant had never before
    purchased anything other than basic automobile insurance coverage and that according
    to the insurers records, the appellants wife indicated that optional coverage
    was declined because there was no need. He also drew, permissibly in our view,
    an adverse inference against the appellant because his wife, who dealt with the
    respondents representatives, provided no evidence about her dealings with
    those respondents.

[11]

Finally,
    we do not agree that requiring proof of the elements of the tort would put an
    impossible burden on the insured. Each case will turn on its own facts. In
Fletcher
,
    the insured adduced a body of evidence that led the trial judge to find that he
    would have purchased the insurance had it been offered. The difficulty in this
    case is that there was nothing but the bald and self-serving assertion in the
    appellants affidavit. There was nothing in the record to explain why the
    appellant would have taken the additional insurance. Against the bald assertion
    was the appellants history of never taking the additional coverage although he
    and his wife had dealt with at least five different insurance companies over
    the years. And, as we have said, there was the significant gap in the
    appellants case because of his failure to call his wife, who had dealt with
    the respondents representatives on all but one occasion.

[12]

The
    appeal is dismissed. It follows that it is not necessary to consider the
    cross-appeal. There will be no costs of the cross-appeal.

[13]

The
    respondent is entitled to its costs of the appeal fixed at $5,000 inclusive of
    disbursements and HST.

M.
    Rosenberg J.A.

J.C.
    MacPherson J.A.

H.S. LaForme J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Abdella
    v. Figura, 2013 ONCA 288

DATE: 20130430

DOCKET: C56035

Doherty, Cronk and Lauwers JJ.A.

Zeynab Abdella, Personally and as Litigation
    Guardian for Robale Eshete a minor and Machail Eshete

Plaintiffs
    (Appellants)

and

Corradina Figura AKA Cora Figura, Matteo Figura,
    1797292 Ontario Limited operating in business as Evangadi Restaurant &
    Lounge and Akwaba Restaurant and Lounge also known as Akwaba or Akwaba
    Specialities Africaines

Defendants
    (Respondent in Appeal)

Zeynab Abdella, appearing in person

D. Wallace, for the defendant (respondent) Figura

Heard:  April 30, 2013

On appeal from the orders entered by Justice James W.
    Sloan of the Superior Court of Justice, dated August 16, 2012 and September 11,
    2012.

APPEAL BOOK ENDORSEMENT

[1]

The appeal is dismissed.  We agree with Sloan J. that, on current law,
    the landlord is not an occupier.  No other basis for liability is pleaded.
    Nor does the record support the view that the appellant has a cause of action
    in negligence for the landlords alleged failure to enforce the tenants
    insurance covenant.

[2]

This is not a case for costs.


COURT OF APPEAL FOR ONTARIO

CITATION: Amyotrophic Lateral Sclerosis Society of Essex v. Windsor (City), 2013 ONCA 254

DATE: 20130425

DOCKET: C56337 and C56338

Winkler C.J.O., Weiler and Laskin JJ.A.

BETWEEN

Amyotrophic Lateral Sclerosis Society of Essex
    County

Plaintiff (Appellant)

and

The Corporation of the City of Windsor

Defendant (Respondent)

BETWEEN

Belle River District Minor Hockey Association Inc.,
    and Essex County Dancers Incorporated

Plaintiffs (Appellants)

and

The Corporation of the Town of Tecumseh

Defendant (Respondent)

Earl A. Cherniak, Q.C. and Peter W. Kryworuk, for the
    appellants

Scott C. Hutchison and Brendan Van Niejenhuis, for the
    respondents

Heard: April 3, 2013

On appeal from the order of the Divisional Court (Reilly,
    Aston and Ray JJ.), dated August 23, 2012.

Weiler J.A.:

[1]

The issue on these appeals is whether the Divisional Court erred in
    principle in refusing to award costs in two class action proceedings despite
    the appellants success on the substantive issue they appealed. Instead, the
    court ordered that the costs of the appeals and of the motions for leave to
    appeal were to be determined by the motion judge as part of the overall costs
    of the certification motions.

[2]

For the reasons that follow, I am of the opinion that the Divisional
    Court did err in principle and that its refusal to award costs was plainly
    wrong.

A.

Background

[3]

In the two class proceedings, the appellants are three charitable
    organizations that engage in fundraising activities such as lotteries and
    bingo. The appellants claim that the respondent municipalities charged licensing
    and administration fees that greatly exceeded their associated costs of
    regulation. They allege that the fees are in effect a tax imposed without
    legislative authority and thus are
ultra vires
the municipalities. They
    seek restitution.

[4]

The proposed class consists of all those persons who paid such fees to
    the municipalities from 1990 to the present. At the certification motion, the
    motion judge certified the proceedings as class actions but, based on his
    interpretation of the existing jurisprudence  namely, that the cause of action
    was complete at the moment the payments were made  held that time started to
    run from the date the licencing fees were paid. Accordingly, he limited the
    scope of the respective classes to those persons whose claims were not
prima
    facie
time-barred by the
Limitations Act, 2002
, S.O. 2002, c.24,
    Sched. B.

[5]

On appeal, the Divisional Court held that the motion judge erred in law
    in limiting the size of the respective classes for this reason. The statements
    of claim in the actions pleaded a discoverability/concealment issue that could extend
    the time frame for any claim. However, this issue would only be determined
    based on evidence. Because the determination of whether a class should be
    certified under s. 5(1)(a) of the
Class Proceedings Act, 1992,
S.O.
    1992 c. 6 (
CPA
), is made by reference only to the pleadings and any
    documents identified in the pleadings, the limitations issue ought not to have
    been decided on the motion for certification.

[6]

In addition to the limitations issue, the respondents raised a number of
    alternative arguments concerning certification both before the motion judge and
    the Divisional Court. In view of his decision with respect to the limitations
    issue, the motion judge was not required to deal with these arguments. The appellants
    asked the Divisional Court to do so and to render a decision on the
    certification motion. The Divisional Court decided that the preferable course
    was to refer the other arguments back to the motion judge for reconsideration.

[7]

When approaching the issue of costs, the Divisional Court appears to
    have been of the opinion that success on appeal was divided. It stated, at
    para. 2: The plaintiffs were successful in having the decision of the Motion
    Judge set aside but unsuccessful in obtaining an order certifying the class
    proceeding. That issue was remitted to the Motions Judge and the outcome on the
    original certification motion remains uncertain.

[8]

The Divisional Court then gave five inter-related reasons for its
    decision to remit the costs back to the motion judge. As set out in para. 4 of
    the courts endorsement on costs, they are as follows:

(i)      This
    procedure almost certainly forecloses the possibility that the costs issue
    might follow a different appeal route from the certification motion itself;

(ii)      The
    Motions Judge is in a better position to understand the reasonableness of the
    very substantial costs that are claimed because of his close familiarity with
    the case from case managing the matter;

(iii)     If, at
    the end of the day, the only impact of this appeal is that the original order
    is not changed in any substantial way, or simply granted for different reason,
    or the certification motion fails altogether, it may be that neither side
    should be awarded costs, or that the plaintiffs ought to pay costs;

(iv)     In these
    circumstances, the appeal and motion to leave for appeal, are a component of
    the costs of the certification motion and not capable of being fairly resolved
    in a discrete or isolated fashion;

(v)     Patterson
    J. originally decided that the costs of certification ought to be reserved to
    trial.  He gave no reasons for that conclusion but it ought to be left open to
    him to make the same order on the reconsideration.  A separate order for costs
    by this panel would undermine his discretion.

B.

Analysis

[9]

Before turning to the law, I must first resolve the question of whether
    success on the appeal was divided. In my opinion, it was not. The appellants
    were entirely successful on the issue they appealed. It was the appellants
    success on the limitations issue that opened up the necessity to deal with the
    additional issues raised by the respondents. Although the Divisional Court
    could have decided these issues, it exercised its discretion to refer them back
    to the motion judge. Having exercised its discretion as it did, the Divisional
    Court refused to give the appellants the ultimate remedy of certification. In
    these circumstances, the fact that the appellants did not obtain the remedy
    they sought did not detract from their significant success on the appeal. The respondents
    are not entitled to rely on the general rule that where success on appeal is
    substantially dividedan award of costs of the appeal will not be made:
Lowndes
    v. Summit Ford Sales Ltd.,
[2006] O.J. No. 1438 (C.A.), at para. 3.

(1)

The General Rule When a New Trial is Ordered

[10]

The
    mischaracterization of the appellants success on appeal led the Divisional
    Court to consider only two possible dispositions: that the costs should be
    conditional on the plaintiffs success at the re-hearing or that costs should
    be remitted to the motion judge to be considered as a component of the overall
    costs of the certification motion. It failed to consider the general rule and
    the rationale underlying it, that where an appeal is allowed and results in a
    re-hearing, the costs of the appeal should be awarded to the successful
    appellant and should not depend on the outcome of the re-hearing: see Donald J.
    M. Brown,
Civil Appeals
, vol. 2, looseleaf (Toronto: Canvasback publishing,
    2008), at para. 6:3250.

[11]

Decisions
    in which this general rule has been applied include:
Mak v. TD Waterhouse
    Canada
(2005), 198 O.A.C. 92 (Div. Ct.), at para 25;
Kings Bay
    Development Corp. v. Cornerstone Custom Homes Ltd.,
2009 ONCA 611, 82 C.L.R.
    (3d) 1, at paras. 2 and 37;
Rowlands v. Wright,
2009 ONCA 492, at
    paras. 29-31;
Oz Optics Ltd. v. Timbercon, Inc.,
2011 ONCA 714, 343
    D.L.R. (4th) 443, at paras. 75-78;
Consulate Ventures Inc. v. Amico
    Contracting & Engineering (1992) Inc.,
2007 ONCA 499, at paras. 1-2;
Tucker
    v. Cadillac Fairview Corp.
(2005), 200 O.A.C. 140, at paras. 16 and 25-30;
    and
Sagl v. Cosburn, Griffiths & Brandham Insurance Brokers Ltd.,
2009 ONCA 638, at paras. 6-8.

[12]

Applying
    this jurisprudence to these class proceedings, it is important to separate the
    appeal from the forthcoming certification motion. The appeal from the motion
    judge was a discrete procedural step; its costs should not be treated as merely
    a component of the costs of the certification motion. The outstanding issues to
    be determined on the certification motion were not determined on the
    appellants appeal to the Divisional Court. The costs of the appeal and the
    related motion for leave to appeal are stand-alone costs incurred by a group of
    litigants who want their day in court.

[13]

The
    delayed recovery of costs until the outcome of the certification motion and
    potentially of the case itself does not promote access to justice, a goal of
    the
CPA
. This court has held that this principle should be taken into
    account in making awards in class actions: see
Sharma v. Timminco Ltd.,
2012
    ONCA 322, 19 C.P.C. (7th) 271, at para. 5. The respondents were entitled to
    advance their argument concerning the limitation period on the certification
    motion. However, it is not generally appropriate that the appellants carry the
    financial burden of their successful appeal from the motion judges decision until
    the conclusion of the certification motion and potentially until the trial
    itself.

(2)

Remitting Costs back to the Motion Judge

[14]

The
    Divisional Court further erred in principle in remitting the costs of the
    appeal to the motion judge whose error necessitated the appeal. The parties
    could reasonably have expected the court to make an order as to costs, even if
    it was only an order for costs that depended on the result at the certification
    hearing or the trial. If the court was going to depart from that expectation
    and remit the costs of the appeal back to the motion judge, it ought to have
    given the parties an opportunity to make submissions on this proposed procedure.
    The appellants assert it did not do so.

[15]

In
    addition, the authority of the Divisional Court to remit the costs of the
appeal
back to the motion judge is not immediately apparent to me. Section 131(1) of
    the
Courts of Justice Act,
R.S.O. 1990, c. C.43 provides:

Subject to the provisions of an Act or rules of
    court, the costs of and incidental to a proceeding or a step in a proceeding
    are in the discretion of the court, and the court may determine by whom and to
    what extent the costs shall be paid.

[16]

The
    implication of s. 131(1) is that the court hearing a proceeding or a step in a
    proceeding will fix those costs. The use of the definite article the before
    the word court as opposed to the indefinite article a reinforces that
    implication. This implies that the court hearing the appeal should decide the
    costs of the appeal. Nothing in the
CPA
suggests the contrary.

[17]

Even
    assuming that the Divisional Court had the authority to make the order it did,
    it should not have done so in this case. The Divisional Court was in the best
    position to make an award as to costs; it had a full appreciation of the
    factors to be considered in making an award as to costs.  Further, as I noted
    above, the appellants enjoyed significant success on their appeal to the
    Divisional Court and should have received their costs on the appeal.

(3)

This Courts Decision in
Sharma

[18]

During
    argument of the appeal, the Courts attention was drawn to its decision in
Sharma
where, as in this case, the sole issue on the appeal was a limitation issue on
    a certification motion for a class proceeding. The Court of Appeal reversed the
    motion judge on the limitation issue. The balance of the issues respecting
    certification was remitted to the motion judge for determination.

[19]

With
    respect to the costs of the appeal, the court commented that access to justice
    and the appellants success on the appeal were important considerations.
    However, considering the novel issue of law raised in the pleadings, the court ordered
    costs in the cause. It held, at para. 5, that, [s]uccess in the ultimate
    proceedings should in this circumstance serve as the ultimate determining
    factor for the payment of costs.

[20]

The
    decision of this court respecting costs illustrates that the general rule  that
    the costs of an appeal are a separate discrete step and should not be treated
    as merely a component of the costs of the certification motion  is not an
    inflexible one. Costs remain in the discretion of the court. However, the court
    must correctly characterize the success of the parties on an appeal and weigh
    the importance of the various factors, including access to justice, in the
    balance. In addition, it is generally not appropriate for the appellate court
    to ask the motion judge to determine the costs of an appeal from an order made
    by that same judge. In
Sharma
, the Court of Appeal fixed the costs of
    the appeal.

C.

Conclusion

[21]

For
    the reasons given, I would allow the appeal as to costs and order that the
    costs of the appeals and of the motions for leave to appeal to the Divisional
    Court be awarded to the appellants on a partial indemnity basis.

[22]

Bearing
    in mind the submissions of the respondents counsel that fees for three senior
    counsel was excessive and that there was some overlap in the costs due to
    different senior counsel within the same firm dealing with this file, I would reduce
    the costs sought and award costs inclusive of any applicable taxes and
    disbursements as follows:

(i)      Windsor action - $65,000

(ii)      Tecumseh action - $67,000

[23]

Costs
    of the leave motion for the appeal to this court and of the appeal are to the
    appellants and are fixed in the amount of $16,500 inclusive of any applicable
    taxes and disbursements.

Released: Apr 25, 2013                                Karen
    M. Weiler J.A.

WKW                                                      I
    agree Warren K. Winkler C.J.O.

I
    agree John Laskin J.A.