this newsletter in PDF
In this issue:
1. Firm and Industry News
2. La Loi sur les connaissements, une portée extraterritoriale?
3. An Ontario Case Law Update on Insurance Broker Liability
4. "Just Plants" -Insurance Coverage Regarding the Theft
of Medicinal Marijuana Plants
5. Ontario Court Clarifies the Extent of its Power to Decide Cases
Involving Foreign Defendants With No Connection to Ontario
6. Aviation Surprise: Will Durunna v. Air Canada Stand Up in Appeal?
7. Federal Court of Appeal Confirms Restrictive Test For Advance
Costs in No-fly Litigation
1. Firm and Industry News
- Fernandes Hearn LLP is pleased to announce
that the Firm has been listed for inclusion in Chambers and Partners
Global 2013 as one of the best "Shipping" Law Firms
- Gordon Hearn will be profiled as President
of the Transportation Lawyers Association in the April edition
of Lawyer Monthly magazine. The interview will focus on
the Association and developments in the area of Transportation
- Rui Fernandes will be presenting a paper
on "New Developments in Canadian Subrogation Law" at the Recovery Forum in New York on April 11th, 2013.
- Rui Fernandes will be presenting a webinar
for the Ontario Trucking Association on the Kruger Products Limited
v. First Choice Logistics Inc. decision and implications for the
trucking industry on April 25th, 2013.
- Rui Fernandes, Gordon Hearn and Kim
Stoll will be representing the firm at the Transportation
Lawyers Association Annual Conference and the Canadian Transport
Lawyers' Association Mid-Year Meeting in Napa California on April
30th to May 4th, 2013.
- Chris Afonso will be presenting a paper
on "Third Party Logistics Contracts: Avoiding Common Pitfalls"
at the 46th Annual Conference for Supply Chain Canada in Mississauga
on May 14th, 2013.
- Rui Fernandes and Kim Stoll will
be representing the firm at the Semi-Annual Meeting of the Canadian
Board of Marine Underwriters on May 22 and 23rd, 2013 at Manoire
- Rui Fernandes will be presenting on a panel
on "Law & Order: Police and Criminal Investigation in
the Boating and Small Vessel Sector" at the annual seminar
of the Canadian Maritime Law Association on June 7th, 2013 in
- LexisNexis Canada has released its Halsbury's
Laws of Canada - Maritime Law title. Rui Fernandes is the author of this new work. This completes Rui's trilogy of
works for LexisNexis' Halsbury's Laws of Canada. Last December
his Transportation - Carriage of Goods and Transportation - Railway
Law was published. The current work is described by LexisNexis
with the following introduction:
"The globalization of the economy has ballooned the international
shipping community in size, making the sea an integral means of
modern trade. This title is a complete source of admiralty law
across Canada. Covering both the general issues of maritime law,
such as its legislative and constitutional framework, and the
more specific issues, such as regulatory and safety requirements
and the operation of ships, this title is essential for practitioners
working in fields of trade, administrative and international law."
2. La Loi sur
les connaissements, une portée extraterritoriale?
In a recent decision, the Court of Quebec had the
opportunity to review the possible extraterritorial effect of the
Bills of Lading Act. The Court concluded that in the event of a
carriage of goods where the point of origin is in the USA and the
point of destination is also in the USA, the Bills of Lading Act
will not apply notwithstanding that the carrier is a Canadian company.
Dans une récente décision, Entreprise
Steve de Montbrun Inc. c. CVS Caremark Corporation (*1), la
Cour du Québec a eu l'opportunité d'étudier
la portée extraterritoriale de la Loi sur les connaissements.
Après analyse, la Cour conclut, que Loi sur les connaissements de n'applique pas aux transport de marchandises lorsque le point
d'origine et de destination sont tous les deux aux Etats-Unis et
ce même si le transporteur est canadien.
1. Les faits
Dans cette affaire, la demanderesse, une compagnie
de transport ayant domicile au Québec, alléguait que
ses services avaient été retenus par un tiers, Encore
Food Gourmet Corporation, pour effectuer le transport de marchandise
à partir de l'entrepôt de Encore Food Gourmet Corporation
vers différents entrepôts de la défenderesse
situés aux quatre coins des Etats-Unis. La demanderesse alléguait
que sa cliente, Encore Food Gourmet Corporation était en
défaut de paiement pour les frais de transport et qu'en vertu
d'une loi canadienne, la Loi sur les connaissement, la défenderesse
devenait instantanément responsable pour les frais de transport
impayé par l'expéditrice, Encore Food Gourmet Corporation,
à titre de consignataire en vertu des connaissements émis
par Encore Food Gourmet Corporation.
La demanderesse fondait sa prétention en se
fondant sur l'article 2 de la Loi sur les connaissements :
<< Tout consignataire de marchandises, nommé
dans un connaissement, et tout endossataire d'un connaissement
qui devient propriétaire de la marchandise y mentionnée
par suite ou en vertu de la consignation ou de l'endossement,
entrent en possession et sont saisis des mêmes droits d'action
et assujettis aux mêmes obligations à l'égard
de cette marchandise que si les conventions contenues dans les
connaissement avaient été arrêtées
avec ce consignataire ou cet endossataire. >>
En réponse à cette action, la défenderesse
déposa une requête en exception déclinatoire
et en irrecevabilité, évoquant, entre autre, que les
tribunaux québécois n'avaient pas juridiction pour
entendre et disposer du litige qui opposait la demanderesse et la
2. La question en litige
L'une des questions sur lesquelles la Cour devait
se pencher était la suivante:
Est-ce que la Loi sur les connaissements peut s'appliquer au transport de marchandises n'ayant uniquement
transité qu'aux États-Unis?
3. La décision
La réponse de l'Honorable juge Armando Aznar
à la question susmentionnée fut négative. Dans
les circonstances en l'espèce, il fut décidé
que la Loi sur les connaissements ne s'appliquait pas :
<< Or, en l'espèce, selon les fait allégués
à la requête introductive d'instance amendée
de la demanderesse, il appert que le transport de marchandise
a eu lieu exclusivement au État-Unis.
À la lecture de la requête introductive
d'instance amendée de la demanderesse, l'on constate que
son recours se fonde sur l'application de la Loi sur les connaissements
aux faits en litige.
À cet égard, au paragraphe 7 de la
requête introductive d'instance amendée, la demanderesse
allégue ce qui suit :
<< In accepting the freight, the défendant
has become, as consignée, liable for the payment of all
freight charges under Section 2 of the Bill of lading act. >>
La Cour rappela par la suite les enseignements de
P.A . Côté concernant la portée extraterritoriale
d'une loi :
<< 770. En l'absence de disposition contraire, expresse
ou implicite, on présumera que l'auteur d'un texte législatif
entend qu'il s'applique aux personnes, aux biens, aux actes ou
aux faits qui se situent à l'intérieur des limites
du territoire soumis à sa compétence.
Cela signifie d'abor qu'il faut présument
que le législateur ne veut pas donner à ses lois
une portée extraterritoriale : tout texte législatif
doit, si c'est possible, être interprété et
appliqué de manière à respecter cette intention
présumée du législateur. Ce principe général
a été souvent affirmé en droit canadien.
La Cour conclut donc ainsi sur la question de la portée
extraterritoriale de la Loi sur les connaissements :
<< En l'espèce, à la lecture de la
Loi sur les connaissements, l'on constate que le législateur
ne lui a pas conféré de portée extraterritoriale.
En conséquence, le Tribunal conclut que ladite
loi ne s'applique qu'au transport de marchandise au Canada. Cette
loi ne lie pas la défenderesse qui n'est pas partie au
contrat intervenu entre la demanderesse et Encore Gourmet Food
Corporation, d'autant plus que la marchandise n'a transité
que par les Etats-Unis et n'a été livrée
(1) Entreprises Steve de Montbrun c. CVS Caremark Corporation,
2013 QCCQ 1437(CanLII).
3. An Ontario Case Law Update on Insurance Broker
In a recent decision, the Ontario Court of Appeal
has weighed in decisively on the necessary elements of a successful
claim by an "uninsured" or an "underinsured"
client against an insurance broker.
The case of Zefferino v. Meloche Monnex Insurance (*1) involved a claim brought by a client against his insurance
broker. The client asserted that the broker had failed to offer
him optional income replacement benefits. The client did not purchase
this product, and later alleged losses on the basis that this coverage
was not there "when he needed it".
The broker defended the action. The client and the
broker agreed to refer the dispute to a court by way of a 'summary
judgment' application for adjudication. The court dismissed the
The trial judge found that the broker did owe the
client a 'duty of care'. There is a clear recognition that a duty
of care can be owed by insurance agents who are in the business
of providing insurance information and advice to customers. (*2)
The Supreme Court of Canada has determined that the sale of automobile
insurance (and, for that matter, the sale of any line of insurance)
is a business in the course of which information is routinely provided
to prospective customers with the expectation that they will rely
on it and they do in fact reasonably rely on it.
The trial judge also found that the broker had further
breached this duty of care by not offering optional income replacement
The trial judge, however, dismissed the client's claim,
finding that the client had failed on the essential element of showing
that the broker's 'failure' actually caused the loss in question.
On Appeal to the Court of Appeal: A Claim that
an Insurance Broker was Negligent is a Tort Just Like any Tort
The client appealed the lower court's finding - asserting
that, as a matter of governing case law, it need not have to prove
that the acts or the omissions of the broker actually caused the loss. Rather, the affected insured need only show that the broker
advisor had a duty to inform the insured, that it breached its duty
of care and that there was a gap in coverage. The client cited the
special nature of insurance contracts and asserted that to place
a 'burden of proof' on an insured to prove that the broker's failures
actually caused the loss in question would place too much of a burden
on the client. In short, as went the argument, "I relied
on my broker, and we had a special relationship. He owed me a level
service that he did not provide, and now I am stuck without the
insurance that I needed. I should not have to prove anything beyond
this for me to win my case."
The Court of Appeal disagreed. It is still essential
that a disgruntled client prove in court each of the essential elements
of the tort of "negligence", involving proof of the following:
1) the defendant owed the plaintiff a duty of care;
2) the defendant breached the duty of care owed to the plaintiff,
3) the defendant's breach had a causal connection to the losses
complained of by the plaintiff.
Don't Forget the Element of "Causation"
The Court of Appeal provides a reminder in this case
that the issue of whether the negligence in question actually caused
a loss is a question of fact. The case law has not carved
out any exception concerning the insurance broker context - the
plaintiff still has this 'causation' burden of proof. This, however,
should not be seen to work an unfair 'hardship'. As the issue will
involve questions of fact, there remains in the plaintiff's 'arsenal'
the potential of showing 'causation' through a possible wide array
of factual elements or different "pieces of the puzzle".
As we lawyers put it, one has to 'build the wall' of proof on the
legal proposition that must be satisfied, but there may be different
"bricks" or a number of "bricks" in each case
in building the requisite wall of proof.
Dealing with the case of a gap in coverage, one such
manner of proof of causation in a case against the broker may concern
the client giving evidence that, had he been advised of the existence
of or the need for a particular insurance product, he would then
have purchased it. This might then lead to a debate on the credibility
of the evidence - the broker might assert one way or another that
the insured would not have exercised the election. Perhaps the client
had been offered the same or similar coverage on past occasions,
the same being rejected by the client. Perhaps the client had given
past instruction that the premium or the cost of insurance in no
circumstance should exceed that which would have been required to
cover the 'gap' for the case in question.
In turn, the client might show that he would in fact have purchased the coverage had it been offered to him.
He might point to a pattern of product purchases in the past from
the broker or other brokers. He might point to the general scope
of or nature of discussions with the broker. Perhaps the 'record'
shows a particular risk aversion on point on the part of the client.
It all goes to how the judge or jury at the end of the day assesses
the evidence: on the requisite "more likely than not"
standard of proof, was the client, in fact, led to his detriment
by the conduct complained of? Or is the analysis merely an academic
The particular analysis in this case at the Court
of Appeal simply concerned whether the plaintiff client has to prove
"causation": yes, it must. One should bear in mind that
there may be instances where a broker can be held liable even where,
in fact, the coverage 'gap' in question could not have been filled
or prevented by the purchase of a policy, or an endorsement, or
. It may be that there was simply no coverage
available. One should not lose sight of the fact that the leading
cases on insurance broker liability (*4) suggest that the broker
has a duty of care to its customer to identify reasonably foreseeable
risks in the customer's enterprise and that the duty of care does
not end simply because a risk might not be insurable. Maybe the
customer simply will not qualify for the insurance. Maybe the premium
will be overtly prohibitive. Or possibly there is simply no such
insurance product that exists - or maybe a standard exclusion will
clearly govern making the purchase of a product illusory. The point
here is that the broker must advise the client on the available
options and, where insurance protection is not available, to advise
the client such that the client has the opportunity to govern its
affairs accordingly. The client might alter the nature or course
of its business accordingly, so as to avoid or minimize the risk,
or the client might decide to "self insure".
Thus, the potential factual "mix" on a "causation"
debate at a trial may also encompass not only the question of whether
existing products would have been purchased, but also whether, in
the absence of available coverage, the broker caused the loss by
failing to alert the insured to the situation. If the insured would
credibly have taken steps to avoid the risk, this may suggest "causation".
If, however, the insured more likely than not would have forged
ahead with the enterprise in question, still bearing the risk and
in the knowledge that it was in effect "self-insuring",
then the broker would likely be vindicated.
An Oft-Employed Tool of the Trier of Fact: Drawing
an "Adverse Inference"
Clients and counsel alike are alerted to a standard
'Evidence textbook' warning with this case: another part of the
mix might concern whether the court can draw an 'adverse inference'
from the evidence. Just as a judge or jury may properly infer facts
that logically follow from facts proven in evidence, they can come
to question why certain evidence was "left out". In this
case, the Court of Appeal ratified the trial judge's drawing of
an adverse inference against the client because his wife, who had
dealt with the defendant's representatives, did not provide any
evidence about her dealings with those respondents. An adverse inference
was drawn that the wife's evidence would not support the client's
case, for her not being called as a witness: the reasonable assumption
being that, if her evidence would have helped the client's case,
she would have been called as a witness. Accordingly, the trial
judge had some difficulty, on this consideration alone, in finding
that, even given the chance, the client would have purchased the
income replacement benefits product.
Ultimately, the appeal was dismissed on the basis
that there was nothing credible on the record to show that the client
would have taken the additional insurance, given the chance. Against
the bald assertion that he "would have" purchased the
insurance, with nothing more, and on account of his failure to call
his wife as a witness on the point, the Court of Appeal agreed that
that the trial judge was reasonable in his finding that the requisite
element of 'causation' had not been proven. In the result, the plaintiff
client was unable to recover against the defendant insurance broker.
*1 2013 ONCA 127 (CanLII)
*2 See for example the recent decision of Godina v. Tripemco
Burlington Insurance Group Limited 2013 ONSC 979
*3 Fletcher v. Manitoba Public Insurance Company 1990 CanLII
*4 Fletcher, supra
4. "Just Plants" - Insurance Coverage
Regarding the Theft of Medicinal Marijuana Plants
Stewart v. TD General Insurance Company 2013
Insurance policies are drafted with a view to accommodating
our ever-changing world. Medicinal marijuana is an expensive and
legal commodity involving particular risks, but, as this case shows,
if such plants are growing outside, they will be treated as just
a "plant in the yard".
The plaintiff, Darren Stewart, had the appropriate
licences to possess and cultivate medicinal marijuana pursuant to
the Marihuana Medical Access Regulations. (*1) Mr. Stewart
and his wife were insured under an insurance policy (the "policy")
as issued by the defendant, TD General Insurance Company ("TD
Insurance"). The plaintiffs brought a motion for the determination
of a question of law before a trial on liability and agreed that
Ramsay J., the motions judge, could interpret the associated written
On September 22, 2009, Mr. Stewart's six marijuana
plants growing in his backyard were stolen by persons unknown. He
then made a claim under the policy. TD Insurance, on November 14,
2009, paid Mr. Stewart the sum of $6,000.00 or a total of $1,000
per "plant". A similar theft occurred yet again on September
29, 2011, Mr. Stewart made a claim and TD Insurance once again paid
$1,000 per "plant". The plaintiffs brought two actions
claiming a further $26,000 for the value of the original six marijuana
plants and a further $19,000 for the further 5 marijuana plants
plus another $180,000 in damages regarding each insurance claim
citing breach of contract and fiduciary duty, mental stress and
physical pain and for infliction of mental and physical suffering.
The TD Insurance policy stated as follows:
Coverage B - Personal Property (contents)
1. We insure the contents of your dwelling and other personal property you own, wear or use while on your
premises which is usual to the ownership or maintenance of
EXTENSIONS OF COVERAGE
15. Trees, shrubs and plants
Trees shrubs and plants being part of your landscaping on your premises. We will pay up to
5% of the limit of insurance applicable to your dwelling,
subject to a maximum of $1,000 for any one tree, shrub or plant
including debris removal. You are insured against loss cause (sic)
by fire, lightning, explosion, impact by aircraft or land vehicle,
riot, vandalism or malicious acts, theft or attempted theft.
We do not insure loss or damage:
arising directly or indirectly from the growing,
manufacturing processing or storing by anyone of any drug, narcotic
or illegal substances or items of any kind the possession of which
constitutes a criminal offence. This includes any alteration of
the premises to facilitate such activity whether you have
any knowledge of such activity.
(bold print is in the policy)
The policy defined "dwelling" as the insured
building, while "premises" meant the land upon which the
building sat. The policy also provided for coverage of the contents
of certain types of outbuildings.
TD Insurance took the position that only paragraph
15 applied, as above, and the maximum coverage was $1,000 per "plant",
which it paid. The plaintiffs argued that the plants were personal
property owned or used while on the premises and were usual to the
ownership and maintenance of a dwelling and were not covered by
the "plants" identified in paragraph 15 as they were not
part of "landscaping" and were not aesthetic in their
The Court applied the essential principles for policy
interpretation as found in Consolidated Bathurst v. Mutual Boiler
and Machinery Insurance Co., 1979 CanLII 10 (SCC),  1
SCR 888 and in Solway v. Lloyds Underwriters 2006 CanLII
17254 (ON CA), (2006), 80 OR (3d) 401 (CA).
In Solway, above, Moldaver J.A. said at paragraph
I begin my analysis with the observation that an
insurance contract, like any other contract, should be construed
in a manner that attempts to harmonize and make sense out of the
various provisions contained in it, and does not strain them.
Ambiguities are to be resolved in favour of the insured. But ambiguity
does not exist whenever the policy contains wording that could
be open to two or more reasonable interpretations. Before resorting
to the contra proferentem principle, an effort should be made
to interpret the policy in a commercially reasonable fashion and
in a way that gives effect to the reasonable expectations of the
First and foremost, Ramsay J. was not convinced that
the marijuana plants whether medicinal or not, would be covered
as personal property as they were not located in the plaintiffs'
"dwelling". His Honour stated at paragraph 9 of the judgment,
'it strikes me as a stretch to say that this provision, which falls
under the heading "Contents," and which by its terms seems
to be principally concerned with contents, by itself covers items
that are not contained in the dwelling.'
His Honour went on to review the policy as a whole.
He noted that personal property in general was covered under a one
heading and then, under "Extensions of Coverage", the
policy provided specifically for items not contained in that general
provision. The "Extensions of Coverage" section included
provision for items such as a reward for information leading to
the conviction of a person for arson, compensation for fraud and
forgery, mortgage rate protection, moving expenses, and trees, shrubs
and plants. This section (which included relating to trees, shrubs
and plants) specifically included coverage for those items that
were not contents of the "dwelling". "Plants"
not in the dwelling were simply not covered regardless of their
nature or purpose (i.e. whether they were owned or used while on
the insured's premises usual to the ownership and maintenance of
a dwelling) whereas paragraph 15 spoke directly to coverage for
their loss and specifically covered "plants". The Court
would not ignore a provision dealing directly with the very items
at the heart of the loss in favour of following a general provision
of "doubtful application" which "would strain the
meaning of the policy". (*2)
The plaintiffs argued that their "plants"
were not, in fact, covered by paragraph 15 as such plants were not
part of the premises' "landscaping" as identified therein;
however, Ramsay J. did not accept the plaintiff's restrictive definition
of "landscaping." He applied a dictionary definition of
"landscaping" (*3) stating that such definition did not
necessarily exclude plants that were laid out for non-aesthetic
reasons. His Honour went on to say that it was not reasonable to
infer that the parties' intentions regarding the purpose of any
planting would have to be considered every time a claim was made
in that regard. The intention was clearly that coverage was extended
to the noted maximum provided that the claim related to a tree,
shrub or plant in the yard, even though it was not in a dwelling.
The Court went on to conclude that such plants would
not be covered anywhere else in the policy, if not under the extended
cover of paragraph 15.
On the other side of the equation, TD Insurance had
argued that paragraph 8 "Grow Op" of "Excluded perils"
limited recovery as the policy did not cover "loss or damage
directly or indirectly from the growing, manufacturing, processing
or storing by anyone of any drug
" The Court dismissed
this argument stating that paragraph 8 dealt with damage caused
by the growing or production of drugs, and not with the loss of
the drugs themselves.
The Court held that the maximum recovery under the
policy was $1,000 per plant pursuant to the extension of coverage
provided by paragraph 15. TD Insurance had paid that amount and
any additional claims automatically failed given that there was
no requirement under the policy to pay more than was already paid.
The motion by TD Insurance to dismiss the action was granted and
the actions were dismissed.
Given the number of persons with licences to grow
medicinal marijuana, no doubt coverage will be sought by endorsement
to cover same if not stored inside the dwelling. There may be a
need for some minimum security provisions. On the other hand, insurers
may want to specifically include the actual drugs themselves (whether
legal or illegal) in the associated exclusion, if there is no intent
to cover such items.
Kim E. Stoll
(*1) SOR 2001-227
(*2) at paragraph 11
(*3) The court's reasons do not provide which definition of "landscaping"
was actually used. A quick look at the Oxford Paperback Dictionary
1983 does not exclude non-aesthetic plants but indicates: "1. n. the scenery of a land area, 2.v. to lay out an
area attractively, with natural features". Plants without an
aesthetic purpose would not appear to fit the definition. With a
different definition, as the plants were not in the dwelling, the
plaintiffs might have been shut out completely though they had already
been paid by the insurer.
5. Ontario Court Clarifies the Extent of its Power
to Decide Cases Involving Foreign Defendants With No Connection
We live in an increasingly interconnected world. When
it becomes necessary to commence a lawsuit, the party that starts
it must pick a particular place or court system to hear it. This
can be straightforward when all parties involved are within a single
province; however, once multiple provinces or even multiple countries
are involved, the question becomes murkier.
This is a key issue for transportation companies,
companies within the supply chain and their insurers as their operations
can expose them to claims across provincial and national borders
or can require them to start proceedings in courts far from their
The Supreme Court of Canada recently clarified the
rules in a case called Van Breda (*1). The Court determined
the general principle that Canadian courts will not allow a suit
to be heard in a location that is unfair to the defendants. The
lawsuit can only be heard in a particular province if that province
satisfies at least one of the following four criteria:
(a) The defendant is domiciled or resident in the
(b) The defendant carries on business in the province;
(c) The tort was committed in the province; and or
(d) A contract connected with the dispute was made in the province.
The question for an Ontario judge in a recent case, Cesario v. Gondek (*2), was what happens in a case with two
defendants where one satisfies the test and one does not? Is the
court required to split the lawsuit and force the parties to fight
a "multi-front" battle?
In this case, the foreign defendant - who had a basis
to dispute the Ontario forum - argued that the Ontario court should
have strictly applied the Supreme Court's test, which would have
released it from the Ontario action. The plaintiffs would have been
forced to start a foreign lawsuit while continuing a lawsuit against
the other domestic defendant locally.
The plaintiffs argued that if the Supreme Court's
test was about fairness, then the test was not meant to be applied
in a way that would lead to this kind of unfairness.
The facts of this case were important to the plaintiffs'
argument. The plaintiffs were a married couple who were first injured
in a car accident on the US side of Niagara Falls. A few weeks later,
they were involved in a second accident in Canada. They started
an Ontario action against the Canadian driver who hit them in Canada,
the American driver who hit them in the US and their own insurance
The plaintiffs argued that splitting their case would
lead to an impossible process because any trial would require a
judge to determine which of the two accidents caused their injuries.
If both accidents caused some injuries, then a court would have
to determine which accident caused which injuries.
Splitting the actions would, they argued, not only
lead to increased costs, but would lead to a process that might
result in different judges in different courts providing different
answers to the same legal questions.
The Court sided with the plaintiffs and pointed out
that the Supreme Court never intended for its rules to be applied
without considering this kind of unfairness:
[S]tability and predictability in this branch of
law of conflicts should turn primarily on the identification of
objective factors that might link a legal situation or the subject
matter of litigation to the court that is seized of it. At the
same time, the need for fairness and justice to all parties engaged
in litigation must be borne in mind in selecting these presumptive
The Court reasoned that the foreign defendants' position
was opportunistic - if the suit was started in New York, the other
plaintiff could have brought the same motion asking for the opposite
relief. The fact is that there is no perfect jurisdiction for this
set of parties, so the Court needed to make the most of an imperfect
During the course of argument, I posed to counsel
a hypothetical situation which highlights the potential absurdity
of who the moving party might be seeking to fall within the language
of a connecting factor being "the defendant". If the
facts before this court had involved a motor vehicle accident
occurring in the State of New York involving a plaintiff resident
in Ontario, a defendant resident in Ontario and a defendant resident
in New York State, and if the moving party was the New York resident
defendant, then that party could argue that he or she not being
domiciled or resident in the province clearly was not a connecting
factor and Ontario should not assume jurisdiction. If on the other
hand the moving party was the Ontario defendant, then that defendant
could argue that he or she was domiciled or resident in the province
and there would be a connecting factor to Ontario.
In the situation where the moving party was the
New York defendant, there would be no presumptive connecting factor
established and this would result in the inevitable splitting
of the case, which is precisely what the Supreme Court of Canada
intended to avoid with a multiplicity of proceedings.
In fact, the Court pointed out that the Supreme Court
in Van Breda did not intend lawsuits to be split up into unmanageable
segments fought in different places:
Supreme Court of Canada determined that splitting
the case into parts would breach the principles of fairness and
efficiency upon which the assumption of jurisdiction is based.
The Court in this case set out the rule that, as long
as one defendant is "properly caught in the plaintiff's choice
of the jurisdiction in accordance with the Van Breda test,
then the other defendants cannot argue that the court is incapable
of hearing their segment of the same lawsuit:
The principle of fairness and justice referenced
by LeBel J. in Van Breda causes this court to conclude that where
there are multiple defendants, at least one of whom is resident
in the Province of Ontario, or domiciled in the Province of Ontario
(as is the case on the facts before this court, i.e., the defendant
Domenic Cesario, the defendant Elizabeth Ruth Stoutz and the defendant
Security National Insurance Company), then there is a sufficient
real and substantial connection existing such that the court should
assume jurisdiction over all aspects of the case, including that
aspect of the case involving the New York defendants.  The
New York defendants did not address the doctrine of forum non-conveniens
and the exercise of the court's jurisdiction.
The lesson for the transportation industry, insurers
and anyone contemplating a lawsuit, is that the Ontario courts may
be prepared to extend their reach even farther than may be apparent
on a simple reading of the Van Breda decision.
Potentially, this lesson can be turned to the advantage
of Ontario litigants, particularly if lawsuits against foreign parties
are necessary. In some cases, it will be possible to include locally
based defendants to ground the lawsuit in a preferred location.
(1) Club Resorts Ltd.
v. Van Breda, 2012 SCC 17
(2) Cesario v. Gondek, 2012 ONSC 4563
6. Aviation Surprise: Will Durunna v. Air Canada Stand Up on Appeal?
In the very recent decision of Durunna v. Air Canada 2013 ABPC (Alberta Provincial Court) the Court ruled that a carrier
under the Montreal Convention may not be able to limit liability
if airline staff fail to bring the rules of the Convention to the attention of non-commercial shippers.
The decision involved a plaintiff claimant who shipped
ten laptops worth $4600 to Nigeria. He had visited Air Canada's
freight offices and an air waybill was issued but it made no reference
to the value of the goods. It also contained a square box with a
warning in capital letters stating that the shipper's attention
was being drawn to the notice concerning the carrier's limitation
of liability under the Montreal Convention. The plaintiff
paid the shipping fee and was given a copy of the waybill, which
he had neither signed nor read. The plaintiff was never offered
additional insurance in excess of the standard Montreal Convention coverage. The goods disappeared en route to Nigeria. Air Canada
sought to rely on the Montreal Convention to limit the compensation
payable to the plaintiff.
In the opinion of the Court, a simple verbal declaration
of a shipment value that exceeds the Montreal Convention coverage may now be enough to circumvent previously unbreakable
limits. The Court ruled that the Convention does not dispense
with the notice requirements applicable in common law. Judge Skitsko
rejected the airline's argument that the Montreal Convention intended to dispense with any requirement on carriers to provide
notice of the limitations of liability. The Court concluded that
enforcing the Montreal Convention liability limits would be unconscionable
in the circumstances. As a result, it awarded damages of US$4,000,
equal to the value of the lost goods as verbally declared by the
It is expected that this decision will be appealed.
The case flies in the face of numerous decisions worldwide that
hold the Montreal Convention limits to cargo as unbreakable and
not subject to common law.
7. Federal Court of Appeal Confirms Restrictive Test For Advance
Costs in No-fly Litigation
Canada (Procureur général) v. Al
Telbani 2012 FCA 188
On June 4, 2008, Hani Al Telbani became the first
person to be refused embarkation on a commercial flight out of or
into Canada by virtue of being on the country's "no fly list".
Mr. Al Telbani, a Canadian permanent resident of Palestinian origins,
was the subject of an Emergency Direction of the Minister of Transport,
Infrastructure and Communities ("Minister") which prescribed
that he posed an immediate threat to aviation security, and, as
such, was prevented from traveling to Saudi Arabia via an Air Canada
flight from Montreal to London Heathrow. The Minister later refused
Mr. Al Telbani's request to be removed from the list.
Mr. Al Telbani has since proceeded with litigation
seeking judicial review of the decision to issue the Emergency Direction
preventing his travel as well as the refusal upon his request to
remove his name from the list. Proceedings, however, continue to
be delayed at preliminary stages. The application on its merits
currently remains suspended pursuant to a Federal Court decision
of Frenette D.J. on November 27, 2008. This decision denied Mr.
Al Telbani's motion for full disclosure by the Minister of his files
pertaining to his case, the Minister resisting provision of such
documentation by invoking s. 38.01(1) of the Canada Evidence
Act. This dismissal was on procedural rather than substantive
grounds, since there is a discrete procedure for disputes arising
over disclosure of information under the Evidence Act, s.
38.04(1). The judicial review application was frozen pending the
hearing and determination of the application regarding disclosure.
Mr. Al Telbani brought an interlocutory motion seeking
advance costs within this discrete proceeding brought by the Attorney
General to resist disclosure. On July 27, 2011, De Montigny J. denied
the application for an advance costs order, which would require
that the Attorney General to cover Mr. Al Telbani's legal costs
in all proceedings before Federal Court. De Montigny J. quickly
reduced the scope of the application to the hearing on disclosure,
noting that the Attorney General was not even party to the suspended
judicial review applications, which are directed against the Minister.
In dismissing the application, De Montigny J. stated
that advance costs represented an exception from the ordinary process
which would see costs allocated only after a decision is rendered
on the merits of a case. De Montigny J. acknowledged the social
justice vocation of accelerated costs orders that promote access
to the legal system.
The tripartite test for an advance costs order as
established by the Supreme Court of Canada in British Columbia
(Minister of Forests) v. Okanagan Indian Band ("Okanagan") was then laid out in the judgment, with the specificity being underlined
that meeting the elements of this test gives rise only to the discretion
of the judge to issue an order, and does not ipso facto entitle
the applicant to relief by way of advance costs. The conditions
for the possibility of an order are, per LeBel J. of the Supreme
Court in Okanagan:
1. Genuine financial need with no realistic alternative
2. The claim must be prima facie meritorious;
3. The legal issues must transcend the interests of the particular
case of the applicant.
The Supreme Court has further underlined in Little
Sisters Book & Art Emporium v. Canada (Commissioner of Customs
& Revenue Agency), that even overcoming this initial obstacle
to reach the stage of judicial discretion to make an award is to
be interpreted particularly restrictively and applied in "rare
and exceptional" circumstances. The Supreme Court guards against
the judiciary developing "their own
extensive legal aid system".
De Monitgny J. found that the application fell down
at the first hurdle, given that Mr. Al Telbani failed to prove his
impecuniosity. Given that Mr. Al Telbani had personal gross income
of $56,004 and declared $900 of living costs declared beyond his
rent, student loan reimbursement, transportation and utilities expenses,
his situation did not correspond with the rare and exceptional cases
in which the Supreme Court had envisaged allocating advance costs.
However, De Montigny went further by stating that Mr. Al Telbani
had failed to petition local community groups for financial assistance
with his proceedings and to explain why his parents, who had supported
his studies, were not in a position to assist him in his legal proceedings.
Although this failure to meet the first part of a
conjunctive test was sufficient cause to dismiss the application,
De Montigny J. further noted that the case did not meet the latter
two cumulative requirements established by the Supreme Court. With
respect to the merits of Mr. Al Telbani's legal position, the judge
highlighted that the application was formally brought by the Attorney
General seeking to restrict access to information. Mr. Al Telbani
was not even formally a respondent to this proceeding, and the judge
may elect to rule on the basis of the submissions of the Attorney
General with no obligation to consult Mr. Al Telbani. Moreover,
the Federal Court had already appointed two senior counsel as amici
curiae in the Evidence Act application at the expense
of the Attorney General, thus Mr. Al Telbani's interest would be
represented in the process.
Finally, the Court concluded that the interests of
the case were restricted to Mr. Al Telbani's own circumstances.
In balancing the interests of Mr. Al Telbani in disclosure against
the public interest there against, the outcome would per De Montigny
J. affect only the applicant. Although constitutional questions
over the validity of ex parte hearings under s. 38 of the Canada Evidence Act were raised by the applicant, these same
arguments had already been debated and decided previously by courts
thus there was no pressing public interest in hearing Mr. Al Telbani's
submissions for these issues to be ruled upon.
Resiliently, Mr. Al Telbani proceeded to contest the
first instance ruling before the Federal Court of Appeal. The basis
of the appeal was that De Montigny J. had erred in basing his decision
solely upon the context of the application under s. 38.04(1) application
of the Attorney General, dissociated from the context of the judicial
review application. Mr. Al Telbani appealed not the substance of
the law but the application of it to his case.
Trudel J.A. for the court reaffirmed the denial of
an order, approving the analysis of De Montigny J. The court reiterated
the conjunctive nature of the three part test set out in British
Columbia (Minister of Forests) v. Okanagan Indian Band and approved
De Montigny J.'s reasoning that the first part of the test to reach
discretion, being impecuniosity, was not met. Trudel J.A. noted
that the determination that Mr. Al Telbani was not impecunious was,
"at best a finding of mixed fact and law" thus restricting
the scope of intervention by the appeal court to instances of patent
error. In finding no so such plain error in the reasoning of the
judge of first instance, the Federal Court of Appeal was bound to
dismiss the appeal. Trudel J.A., however, proceeded to note that
she, on behalf of the bench, agreed with obiter reasoning
with respect to the latter two requirements under the Okanagan
test, being the lacking merits of Mr. Al Telbani's case in the
Attorney General's application as well as the absence of general
interest in the resolution of the point of law at issue which would
warrant the exceptional assistance of an advance costs order.
It is to be hoped that the Attorney General's application
will be resolved promptly such that Mr. Al Telbani's application
for judicial review may proceed on its merits. The case will ultimately
establish a precedent with respect to the standard of review and
the application of that standard to cases of persons placed on the
no fly list. However before reaching that stage, Mr. Al Telbani's
case has allowed the Federal Court to clarify the nature of the
process to be followed in case of a dispute over refusal to disclose
by the Attorney General under the Canada Evidence Act; and
the Federal Court and the Federal Court of Appeal have reaffirmed
the extremely strict test established by the Supreme Court of Canada
in Okanagan for advance costs orders. The decision on the
merits of the Attorney General's application will be equally instructive
on the balancing of the interest of a litigant in full disclosure
and that of the public interest in national security.
Mark Andrew Glynn
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