Contractual Interpretation Attracts Deference: Heritage Capital Corp v Equitable Trust Co, 2016 SCC 19

The Supreme Court of Canada recently confirmed that considerable deference is due to trial judges in the context of contractual interpretation.

This case centres on the Lougheed Building, a downtown landmark familiar to many Calgarians. In 2004, it was designated a “Municipal Historic Resource” under the Historical Resources Act, R.S.A. 2000, c. H-9 (“HRA”). The owner at the time agreed to refurbish the building in exchange for 15 annual incentive payments from the City of Calgary. The agreement was registered by caveat on title to the land pursuant to the HRA. The building was subsequently sold in a judicial sale.

A dispute arose between the present owner of the building and a creditor of the former owner regarding questions of both statutory and contractual interpretation, as follows:

  • whether the incentive payments constituted a positive covenant running with the land by virtue of the HRA;
  • whether they were sold in the judicial sale of the building; and
  • the present-day effect of a number of agreements assigning an interest in the incentive payments.

The Supreme Court agreed with the master in chambers that the incentive payments did not run with the land and were not sold as an asset in the judicial sale of the property.

In reaching this decision, the Supreme Court explicitly confirmed that its earlier statement on contractual interpretation in Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 [Sattva] applies to all appellate review, not just review of arbitral decisions. Sattva established that contractual interpretation involves a finding of mixed law and fact, and the proper standard of review on appeal is therefore one of palpable and overriding error. The only exception is when there is an “extricable question of law”, such as “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor” – the standard is then correctness. The policy reasons behind this deferential standard reflect the recent emphasis on judicial efficiency seen in cases such as Hyrniak v Mauldin, 2014 SCC 7: “deference to fact-finders furthers the goals of limiting the number, length and cost of appeals, and of promoting the autonomy and integrity of trial proceedings.”

This case is also notable for the unanimous Court’s clear statement that statutory exceptions to common law rules should be narrowly construed. The Court found that the provisions of the HRA did not entirely displace the common law rule that positive covenants cannot run with land. In so finding, the Court stated that “the legislature is assumed not to have intended to change the common law unless it has done so clearly and unambiguously.”

Putting Your Best Foot Forward in Summary Judgment Applications

In P. Burns Resources Limited v. Honourable Patrick Burns Memorial Trust, 2015 ABCA 390, the Court of Appeal of Alberta confirmed that there is no “default position” that document production and questioning procedures should be put on hold pending an application for summary judgment or summary dismissal.

The Respondent trustee brought an action for oppression against the Appellants and sought document production. The Appellants then applied for summary dismissal of a part of the action, and the Respondent sought to cross-examine on the Appellants’ affidavit of records and to conduct questioning in accordance with Part 5 of the Alberta Rules of Court, AR 124/2010. The Master set aside the appointments for questioning and cross examination, and in so doing, stated that:

… one might as well remove the summary judgment provisions of the Rules of Court if a respondent is entitled, as of right, to insist on the usual production of documents and questioning (discoveries) prior to the hearing of a summary judgment application. [3]

Subsequently, the Respondent trustee issued appointments for questioning on the Appellants’ corporate representative related to the balance of the claim which was not part of the summary dismissal application. In response the Appellants expanded their application for summary judgment to the entire claim and refused to attend the appointments. The Respondents then sought an order compelling attendance before the same Master. Again, the Master declined to grant the order, stating that there should not be document production or discoveries when a summary judgment hearing is pending.

The Court of Queen’s Bench disagreed, and after hearing the appeal, overturned both of the Master’s orders. In overturning the Master, the chambers judge noted that the Master made:

… no inquiry into the nature of the action, or the nature of the application, but proceeded on the basis that, in the face of a summary dismissal application or an application for summary judgment, the rules related to questioning and document production should be put on hold. [5]

The Court explained that while parties are required to “put one’s best foot forward in summary applications”, and cannot oppose an application for summary dismissal by arguing that some evidence supporting its claim may arise through discovery or document production, there are instances where “the Defendants have all of the knowledge and all of the documents related to the Plaintiff’s claim [and] the situation cries out for an analysis of what disclosure is necessary or reasonable before the summary judgment application goes ahead”.

The Court of Appeal upheld the decision of the Queen’s Bench judge, and noted that the decision to allow document production and questioning prior to summary judgment applications is discretionary. In all circumstances, the discretion to allow discovery must be in compliance with the purpose of Part 5 of the Rules, and in particular, Rule 5.1(1), which discourages “conduct that unnecessarily or improperly delays proceedings or unnecessarily increases their costs”. In situations where a great deal of the supporting evidence is in the possession of the opposing party, then it is more likely that an applicant will require disclosure of documents and discoveries to be able to put their best foot forward in a summary judgment application.

Feuding Neighbours: Facebook Defamation

A defendant’s liability for posting defamatory content on social media forms the subject of a number of recent court decisions, and encompasses potential vicarious liability for responding comments or replies posted by others.

In the recent case of Pritchard v. Van Nes, 2016 BCSC 686, the Supreme Court of British Columbia awarded the Plaintiff, a teacher, significant damages against his next door neighbour for posting defamatory comments on the Facebook social media network.

The parties’ acrimonious relationship began in 2011, when the Defendant installed a fish pond along the property line. In June 2014, the Defendant made several Facebook postings about the Plaintiff, accusing him of setting up a 24-hour surveillance system to monitor her backyard and children. The postings could be viewed by all Facebook users, including her 2,000 Facebook “friends”. Her remarks, along with her friends’ replies, implied that that the Plaintiff was a pedophile.

One of the Defendant’s friends forwarded the Defendant’s initial post to the principal of the school where the Plaintiff taught. This caused the Plaintiff to suffer serious professional and personal consequences.

The Defendant did not defend the action, and the Plaintiff obtained default judgment for damages and costs to be assessed.

The court found the Defendant liable for defamation. Her Facebook posts and subsequent replies to her friends’ comments, together and by innuendo, implied that the Plaintiff was a pedophile unfit to teach, and were therefore defamatory in nature. The postings were completely false, unjustified, and resulted in serious damage to the Plaintiff’s reputation. Though the Defendant deleted the posts from her own Facebook page after a day, the Defendant did not offer a retraction or apology, and did nothing to counteract the effect of her posts having “gone viral” through her friends.

The Defendant was found liable for her friends’ republication of her defamatory postings, as republication was the natural and probable result of her posts.

The Court also found the Defendant liable for her friends’ defamatory replies to her postings. It was apparent that her Facebook page was being constantly viewed but she did not actively monitor and control the comments. She failed to delete them within a reasonable time given the gravity of the remarks and the ease with which deletion could be accomplished – i.e. immediately.

The Defendant’s liability also accounted for the actions of her friend who sent the defamatory post to the Plaintiff’s school principal. Her friend had previously advised on Facebook that he would “let the world know” about the Plaintiff, and the Court found that the Defendant’s silence effectively served as authorization for republication. She failed to warn him to not take measures on his own.

The court found that the Defendant’s thoughtless and reckless actions effectively destroyed the Plaintiff’s reputation as a teacher. He was entitled to significant general ($50,000) and punitive ($15,000) damages.

While the outcome of each case is ultimately fact specific, Pritchard showcases the heightened responsibility borne by users of social media, whose comments may be widely circulated by others and prompt dialogue that is itself defamatory and likely to attract liability on the part of the author of a defamatory ‘thread’ or remark.   The result is, in effect, to impose a positive duty on the part of social media users – to exercise care in published statements but also to monitor and curtail the responding comments of others having access to online comments, including one’s so-called “friends” to whom defamatory posts may be accessible.

Pedestrian Liability

If a pedestrian is injured by a motor vehicle, one would assume that the driver will be held liable, right?

In fact, depending on the circumstances, a pedestrian may be found partially or even completely responsible for the accident. The Alberta Traffic Safety Act sets out the legal standard in this respect.

Pursuant to section 186 of the Act, the driver bears the onus to establish that the pedestrian’s injury did not entirely or solely arise through the driver’s negligence or improper conduct. As the Alberta Court of Queen’s Bench found in Yurchi v Johnston, 2006 ABQB 25, this section creates a rebuttable presumption of driver liability. The driver can rebut the presumption if the evidence demonstrates that the pedestrian contributed in a material way to the accident, and that the driver could not have avoided it by exercise of reasonable care.

In Murhula v Yetman, 2010 ABQB 655, the Alberta Court of Queen’s Bench held that a driver must anticipate reasonably apparent risks and exercise reasonable care in the circumstances. A pedestrian not following the rules of the road is not enough on its own to absolve the driver of this responsibility. However, the standard is not one of perfection.

There are several examples in Alberta case law where a pedestrian has been held partially or fully responsible for an accident.

The accident in Yurchi occurred at an intersection during heavy rush hour traffic. The pedestrian was wearing dark clothing, and neither he nor the driver saw each other before impact. He was rushing across the street to catch a bus and walked into the side of the driver’s vehicle. The court found the driver 2/3 liable and the pedestrian 1/3 liable. The pedestrian was in an unmarked crosswalk at the time of the collision, and the driver was preoccupied by navigating around a bus. He did not pay adequate attention to the potential of a pedestrian crossing. The pedestrian, by walking quickly in dark conditions without adequate attention to his surroundings, materially contributed to the accident.

Murhula involved a pedestrian who hit the side of a vehicle after alighting from a bus and rushing across the middle of a street without looking. The collision took place at night, and the passenger was wearing dark clothing. The court dismissed the action, finding that the driver discharged the onus under the Act. She was driving with care, it was impossible for her to see the pedestrian, and there was nothing she could have done to prevent the collision. Even if she had seen the pedestrian and stopped, he still would have struck her vehicle. Had the pedestrian looked for oncoming traffic before rushing across the street, he would have seen the driver.

The pedestrian in Bouchard (Estate of) v Chalifoux, 2004 ABQB 877, tried to run across a busy highway without looking. He was hit by the driver at high speed, sadly killing him. The court found that due to the volume and speed of the traffic, it was a vital responsibility for the pedestrian to carefully assess the traffic flow before crossing. The driver exercised reasonable care in the circumstances. When he saw the pedestrian’s car parked on the shoulder, he slowed down but did not see the pedestrian until the last possible moment. Consequently, the Court concluded that the driver was not even partially responsible for the accident.

Judgment links

Yurchi v. Johnston
Murhula v Yetman:
Bouchard (Estate of) v Chalifoux