eLaw

eLaw - Litigation Update | December 2017 - No. 83

The Law Society of Manitoba
Professional Education and Competence

eLaw Litigation Update

December 2017

In This Issue

Framework for Imposing Liability in Negligent Misrepresentation Cases: SCC
Courts Play a Critical Role in Safeguarding Treaty Rights: SCC
Expert Evidence Required to Establish Standard of Care: MBCA
Rules of Court Apply to All Litigants: MBCA
Liberal Approach to Rectification No Longer the Law: MBCA
Transfer Rules Clarified: MBCA
Appeal Court to Consider Whether LAA Applies to MSC Proceedings
“Unnecessary and Unexplained Delays Will Not Be Tolerated”: MBCA
Multiplicity of Proceedings An Unacceptable Mischief: MBQB
Other Recent Cases
Amendments to QB Rules
Recommended Reading
Winter Replays: LSM
2018 Mid-Winter Conference: MBA

Framework for Imposing Liability in Negligent Misrepresentation Cases: SCC

The Supreme Court issued its decision in Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63 today, affirming “the analytical framework by which liability may be imposed in cases of negligent misrepresentation or performance of a service by an auditor.” (para. 1) Deloitte was only partially successful in its appeal of a trial judgment awarding Livent damages for breach of duty of care/contract when Deloitte failed to discover and act on a fraud (manipulation of financial records) by Livent directors or when it later signed off on the financial statements. The majority agreed with the lower courts that Deloitte owed a duty of care to Livent and was liable in relation to the negligently prepared statutory audit, but found Deloitte not liable for Livent’s increase in liquidation deficit which followed Deloitte’s provision of negligent services in relation to the solicitation of investment. The court reduced the amount of the trial award from $84,750,000 to $40,425,000. The minority, while agreeing with the analytical framework set out by the majority, concluded that Deloitte was not liable for the losses claimed.

Courts Play a Critical Role in Safeguarding Treaty Rights: SCC

The Supreme Court provides guidance on the law applying to treaty interpretation and the role of courts in resolving disputes concerning treaty implementation in First Nation of Nacho Nyak Dun v. Yukon, 2017 SCC 58. The court set aside Yukon’s final plan for development of a largely untouched wilderness area with an intact ecosystem supporting the traditional activities of the First Nations, finding that Yukon’s conduct in breaching the planning process by making extensive changes to the Final Recommended Plan was “not becoming of the honour of the Crown.” The court discusses the appropriate judicial role in resolving this type of dispute at paras. 32 to 34 of the decision, concluding that “under s. 35 of the Constitution Act, 1982, modern treaties are constitutional documents, and courts play a critical role in safeguarding the rights they enshrine. Therefore, judicial forbearance should not come at the expense of adequate scrutiny of Crown conduct to ensure constitutional compliance.” These articles discuss the decision:

Supreme Court of Canada Sets Aside Regional Land Use Plan in Yukon – MLT Aikins

Judicial Intervention In Modern Treaty Processes Should Promote Negotiation And Reconciliation – Torys LLP

Expert Evidence Required to Establish Standard of Care: MBCA

According to the Court of Appeal in Firman Sales & Service Ltd et al v Winnipeg, 2017 MBCA 120, the trial judge committed no reversible error in finding that a contractor hired to repair the roof of a fire damaged building was not negligent in failing to remove drywall and inspect the walls before removing the roof, when neither the repair specifications nor the engineering reports made any reference to structural concerns. Given the lack of expert evidence on standard of care of a roofing contractor, the uncontradicted evidence that the plaintiffs’ building was structurally unsound before any involvement by the contractor, and the technical nature of the claim, the court found that it was open to the trial judge to decide that an expert was required to establish standard of care before concluding that the contractor had breached its duty of care.

Rules of Court Apply to All Litigants: MBCA

The court dismissed a self-represented litigant’s appeal of the dismissal of his motion to extend time to appeal a 2015 trial judgment in Wong v Grant Mitchell Law Corporation et al, 2017 MBCA 118, finding that he had not demonstrated an error in principle or that the decision was unjust. The applicant’s choice to pursue a r 59.06 motion rather than appeal the judgment demonstrated that he did not have a continuous intention to appeal, said the court, and did not provide a reasonable explanation for the delay. The court concluded by addressing the applicant’s argument that the rules should not apply to him in the same way because he is a self-represented litigant as follows:

The rules of court apply to all litigants. Certainly fairness calls for some accommodation for self-represented litigants, but that accommodation cannot prejudice the rights of the other litigants… Here, the right to a final judgment, and the resulting certainty that goes with that, would be lost if this Court does not apply the rules of the court, and the related jurisprudence, to the applicant. (para. 9)

Liberal Approach to Rectification No Longer the Law: MBCA

The appeal in Elias et al v Western Financial Group Inc, 2017 MBCA 110, “raises issues involving contractual interpretation and the application of the doctrine of rectification in the context of a commercial transaction between sophisticated parties with equal bargaining power, both represented by experienced counsel.” The issue, said the court, “is whether the defendant should bear legal responsibility for the plaintiffs having repeatedly agreed to a formula that the plaintiffs themselves proposed but which they now say undervalued their shares.” The court found that the trial judge erred in interpreting the USA and the share purchase agreements (particularly as regards the correct test to determine legal ambiguity and in allowing parol evidence as to the parties’ intent) and in taking too expansive an approach to the doctrine of rectification. In a final comment, the court stressed the importance of certainty in commercial relations, noting that “the protection of the reasonable expectations of parties to commercial contracts cannot be overemphasized.” In this case, said the court, where the defendant had done everything possible to ensure that it knew what its rights and obligations were under the documents signed, the approach taken to interpret the contracts “had the potential to send the practice of commercial law sideways.” (para. 142)

Transfer Rules Clarified: MBCA

The appeal in Rechik v Michie, 2017 MBCA 109, concerns the proper interpretation of the seldom discussed r 14 of the QB Rules in the context of an application to transfer an action (which had been transferred to Brandon by requisition) back to the original court in Winnipeg. In particular, the court discusses r 14.08(1), allowing for transfer by requisition by the defendant in certain circumstances, and r 14.08(6), which permits any party to move the court for an order that an action be transferred to any judicial centre which “better serves the convenience of the parties”. In this case, the court found that the action should not have been transferred by requisition, given the proper interpretation of r 14.08(1) (that subrules (a), (b) and (c) are to be read disjunctively) and the fact that the action was commenced in the judicial centre nearest where the cause of action arose. In making a decision under r 14.08(6), the court must determine whether there is a judicial centre which better serves the convenience of the parties than that where the proceedings are located, focusing on the practical considerations of access to justice outlined at para. 37.

Appeal Court to Consider Whether LAA Applies to MSC Proceedings

In Neufeld et al v The Manitoba Securities Commission, 2017 MBCA 107, the court granted leave to appeal a decision of the Manitoba Securities Commission concerning whether limitation periods found in The Limitation of Actions Act apply to proceedings commenced under The Securities Act and whether ss. 74.1 and 148.1(1) of The Securities Act can be applied retroactively. According to the court at para. 19, “there would appear to be a credible argument that proceedings seeking payment of financial compensation pursuant to section 148.2 are similar to civil proceedings which are subject to the limitation periods in the LAA and that proceedings taken pursuant to section 148.1(1) contemplate payment of a penalty and cannot be applied retroactively.”

“Unnecessary and Unexplained Delays Will Not Be Tolerated”: MBCA

Striking out the plaintiff’s statement of claim in its entirety (under rule 20A(52)) for unexplained and repeated non-compliance with several directions and orders setting specific time limits for disclosure and discoveries was not a disproportionate sanction, according to the Court of Appeal in Hanson v Hildi Warkentin Tax Ltd et al, 2017 MBCA 99. The court disagreed with the plaintiff’s argument that, in accordance with the jurisprudence under r 20A, the defendants had to show that their case had been prejudiced by the delay in order for the claim to be struck. In the court’s view, it would not be appropriate to either require case conference judges to give a warning before striking a pleading or to set a range of circumstances that would result in a pleading being struck. The rules do not require a warning, and it would be inappropriate to attempt to set a range of non-compliant behaviour that will lead to a pleading being struck due to the complexity of the issues.

Multiplicity of Proceedings An Unacceptable Mischief: MBQB

In Dragonfly Games Division Inc. et al v. Biomedical Commercialization Canada Inc. et al, 2017 MBQB 183, the court dismissed the motion of one defendant (of four) to stay the claim against it in favour of the dispute resolution process contemplated in their agreement with one of the three plaintiffs. The claim involved four plaintiffs, three of whom were not signatories to the arbitration agreement, against three defendants, only one of whom was a signatory. Although the defendant BCC on its face would be entitled to arbitration to some extent, said the court, permitting one part of the interrelated and complex claim to be sent to arbitration would be “an invitation to duplication, additional expense, and discordant findings.” (para. 21)

Other Recent Cases

Winnipeg Airports Authority Inc v Allianz Global Risks US Insurance Company, 2017 MBCA 101 – the Court of Appeal upheld a motion judge’s decision to deny the plaintiff in a construction dispute leave to amend the statement of claim to add a party beyond a limitation period. The court found that the plaintiff gave no explanation for failing to name one of two subscribing insurers under the builder’s risk insurance policy and had not demonstrated special circumstances to warrant exercise of the discretion to grant leave.

Manitoba Agricultural Services Corporation v. Kachurowski, 2017 MBQB 186 – the court dismissed a crop insurance corporation’s motion for summary judgment for an overpayment made to a farmer who was alleged to have underreported the amount of canola that he harvested and sold. The court found that a trial would be necessary to determine the accuracy of the grain measurements made by both the insurer and the farmer.

Glenwood Label & Box Mfg. Ltd. v. Brunswick Label Systems Inc. et al., 2017 MBQB 177 - a defendant was successful in having a 20-year-old action against him dismissed for delay. Trial of the action had been adjourned in 2010 with the consent of the defendants, and the plaintiff argued that the defendant had not been prejudiced by the subsequent delay, some of which was attributable to him. The court disagreed, however, finding that the plaintiff had not seriously pursued the relief sought and ultimately abandoned the motion.

Amendments to QB Rules

As discussed in this notice from the court, comprehensive amendments to the Queen’s Bench Rules (Civil) will come into effect January 1, 2018. The new rules and practices introduce four major changes, with the overall objectives of addressing timely and affordable access to justice and the principle of proportionality. This Court of Queen’s Bench practice direction provides further details on the changes.