In Cycle Toronto v. Ontario (Attorney General), the Court allowed the appeal from the application judge’s finding that the Ford government’s efforts to remove bike lanes in Toronto was a violation of the Charter. There is no Charter right to bike lanes. The application judge’s decision was found to have violated the constitutional separation of powers between the legislature and judiciary, and was also an improper foray into policy formulation, which courts must avoid.

The Court allowed the appeal in Lower William Properties Ltd. v. Santaguida. The appeal concerned whether third party claims for contribution and indemnity are barred by the 15-year ultimate limitation period under s. 15 of the Limitations Act, 2002. The respondents were sued by their neighbours after a fire that began in their restaurant spread to neighbouring buildings. The respondents sued the appellant for allegedly deficient architectural services he had provided more than 15 years earlier that they claimed contributed to the spreading of the fire. The motion judge declared that the ultimate limitation period defence was not available to the appellant/defendant to the third party claim in this case. The Court set aside the declaration, holding that it was premature to adjudicate the appellant’s limitation period defence based on the pleadings alone. The analysis of whether the appellant had a limitation period defence may depend on whether the third party claims sought contribution and indemnity in respect of duties owed by the appellant to the plaintiffs or duties owed to the respondents/defendants, or both. The third party claims were allowed to proceed to trial and the appellant was permitted to continue to assert his limitation period defence.

In McCartney v. CDSPI Advisory Services Inc., the Court dismissed Aviva’s appeal from orders approving a partial class action settlement. The Court held that the partial settlement disclosure rule in Rule 49.14 and Welland (City) does not apply to class proceedings, given the Class Proceedings Act’s own settlement approval regime, which ensures non-settling parties receive notice and may participate in the approval hearing.

In Hill v. 1359768 Ontario Inc (B&B Towing), an appeal in a constructive dismissal case was allowed in part. While the Court agreed with the trial judge that the employee road boss/tow truck driver had been constructively dismissed and there was no contract frustration as a result of the employee’s disabilities, which should have been accommodated, the Court reduced the damages award by $125,000. Most of those damages related to the employee’s loss of personal use of the tow truck. However, the Court found that the tow truck was a work tool, not a fringe benefit, so the loss of use of the tow truck was not compensable. Neither was the lost work cellphone.

In P v. A, the Court dismissed an appeal from an order declaring the appellant a vexatious litigant under s. 140 of the Courts of Justice Act.

Wishing everyone an enjoyable weekend.

John Polyzogopoulos
Blaney McMurtry LLP
416.593.2953 Email

Table of Contents

Civil Decisions

Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 582

Keywords: Constitutional Law, Separation of Powers, Charter Rights, Life, Liberty, Security of the Person, Oakes Test, Reducing Gridlock, Saving You Time Act, 2024, S.O. 2024, c. 25, Highway Traffic Act, R.S.O. 1990, s. 195.6, c. H.8, s. 195.6, Canadian Charter of Rights and Freedoms, ss.1, 7, The Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c 11, s. 52, Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43, Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, R. v. Malmo-Levine; R. v. Caine, 2003 SCC 74, Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.), [1990] 1 S.C.R. 1123, Dorceus v. Ontario, 2026 ONCA 321, Drover v. Canada (Attorney General), 2025 ONCA 468, Lalonde v. Ontario (Commission derestructuration des services de santé) (2001), 56 O.R. (3d) 505 (C.A.), R. v. Sharma, 2022 SCC 39, Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, 2018 SCC 17, Reference re Securities Act, 2011 SCC 66, Toronto (City) v. Ontario (Attorney General), 2021 SCC 34, Baier v. Alberta, 2007 SCC 31, Canada (Attorney General) v. Bedford, 2013 SCC 72, Canadian Council for Refugees v. Canada (Citizenship and Immigration), 2023 SCC 17, Carter v. Canada (Attorney General), 2015 SCC 5, Chaoulli v. Quebec (Attorney General), 2005 SCC 35, Alberta v. Hutterian Brethren of Wilson Colony, 2009 SCC 37, R v. Oakes, 1986 CanLII 46 (SCC), R. v. Lucas, [1998] 1 S.C.R. 439, RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199, R. v. Kloubakov, 2025 SCC 25, Gosselin v. Québec (Attorney General), 2002 SCC 84, Fair Voting BC v. Canada (Attorney General), 2025 ONCA 581, R. v. Safarzadeh-Markhali, 2016 SCC 14, The Honourable Malcolm Rowe, Chris Puskas and Allyse Cruise, “The Separation of Powers in Canada” (2024) 1 S.C.L.R. (3d) 323

Lower William Properties Ltd. v. Santaguida , 2026 ONCA 581

Keywords: Torts, Negligence, Contribution and Indemnity, Joint and Several Liability, Joint and Concurrent Tortfeasors, Civil Procedure, Third Party Claims, Striking Pleadings, Determination of Question of Law, Limitation Periods, Discoverability, Ultimate Limitation Period, Statutory Interpretation, Limitations Act, 2002, S.O. 2002, c. 24, ss. 1, 4, 5, 15 & 18, Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 5 & 8, Rules of Civil Procedure, rr. 21.01(1), 29.01, Toussaint v. Canada (Attorney General), 2023 ONCA 117, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Placzek v. Green, 2009 ONCA 83, Kaynes v. BP p.l.c., 2021 ONCA 36, Das v. George Weston Limited, 2018 ONCA 1053, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Meady v. Greyhound Canada Transportation Corp., 2008 ONCA 468, Gordon Dunk Farms Limited v. HFH Inc., 2021 ONCA 681, Fennell v. Deol, 2016 ONCA 249, York Condominium Corporation No. 382 v. Jay-M Holdings Limited, 2007 ONCA 49, Murphy v. Hart, 2018 ONSC 1648, Wekerle v. Arbour, 2025 ONSC 1456, Hengeveld v. The Personal Insurance Company, 2019 ONCA 497, Dominion Chain Co. v. Eastern Construction Co. (1976), 12 O.R. (2d) 201 (C.A.), Canada Deposit Insurance Corp. v. Prisco (1996), 181 A.R. 161 (C.A.), R. v. Imperial Tobacco, 2011 SCC 42, Canada Colors & Chemicals Ltd. v. Tenneco Canada Inc. (1995), 21 O.R. (3d) 438 (Div. Ct.), HSBC Securities (Canada) Inc. v. Davies, Ward & Beck (2005), 74 O.R. (3d) 295 (C.A, Nuyork Investments Ltd. v. Toronto Hydro-Electric System Ltd., 2021 ONSC 3235, Mizen Holdings Corporation v. Toronto (City) et al., 2023 ONSC 1882, Waterloo Region District School Board v. CRD Construction Ltd., 2010 ONCA 838, Toronto Hydro v. Gonte and City of Toronto, 2018 ONSC 4315, Paramount Resources Ltd. v. Grey Owl Engineering Ltd., 2024 ABCA 60, Ryan v. Dew Enterprises Ltd., 2014 NLCA 11, Dean v. Kociniak, 2001 ABQB 412, Marsh v. Century Conundrum, 2014 ONSC 1154, Canaccord Capital Corporation v. Roscoe, 2013 ONCA 378

McCartney v. CDSPI Advisory Services Inc., 2026 ONCA 578

Keywords: Contracts, Insurance, Coverage, Pandemic, Civil Procedure, Class Proceedings, Settlements, Disclosure, Bar Orders, Costs, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 27.1, Rules of Civil Procedure, rr. 7.08, 49.14, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, R. v. Varennes, 2025 SCC 22, Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4, CHU de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467, Servus Credit Union Ltd. v. Miller, 2012 ABQB 765, Kaiman v. Graham, 2009 ONCA 77, Ghahsareh v. Ehsani, 2025 ONCA 795, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

Hill v. 1359768 Ontario Inc. (B&B Towing), 2026 ONCA 577

Keywords: Contracts, Employment, Termination, Wrongful Dismissal, Constructive Dismissal, Defences, Frustration, Disability, Duty to Accommodate, Undue Hardship, Damages, Fringe Benefits, Income Tax Act, R.S.C. 1985, c.1, Irvine v. Gauthier (Jim) Chevrolet Oldsmobile Cadillac Ltd., 2013 MBCA 93, Fraser v. UBS, 2011 ONSC 5448 Nason v. Thunder Bay Orthopaedic Inc., 2015 ONSC 8097, Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, Nagpal v. IBM Canada Ltd., 2021 ONCA 274, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Aldergrove Duty Free Shop Ltd. v. MacCallum, 2024 BCCA 28, Dartmouth Ferry Commission v. Marks (1904), 34 S.C.R. 366, Lemesani v. Lowerys Inc., 2017 ONSC 1808, De Palma v. Canadian Federation of Independent Business, 2019 ONSC 7602, McAlpine v. Econotech Services Ltd., 2004 BCCA 111, McLean v. City of Miramichi, 2011 NBCA 80, Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424, Croke v. VuPoint System Ltd., 2024 ONCA 354, Canada Forgings Inc v. Atomic Energy of Canada Limited., 2024 ONCA 677,Ciszkowski v. Canac Kitchens, 2015 ONSC 73, Davidson v. Allelix Inc. (1991), 7 O.R. (3d) 581 (C.A.), Paquette v. TeraGo Networks Inc., 2016 ONCA 618, Red Deer College v. Michaels, [1976] 2 S.C.R. 324, Peck v. Levesque Plywood Ltd. (1979), 27 O.R. (2d) 108 (C.A.), Lawson v. Dominion Securities Corp., [1977] O.J. No. 1609 (C.A.), Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965, Donovan v. Quincaillerie Richelieu LTD., 2021 NBQB 189, Ellerbeck v. KVI Reconnect Ventures Inc., 2013 BCSC 1253, Gazier v. Ciena Canada, ULC, 2024 ONSC 865, Sanghvi v. Norvic Shipping North America, 2021 ONSC 1211, Jardine v. Phoenix Petroleum Ltd., 2021 NBQB 213, Silvester v. Lloyd’s Register North America Inc., 2004 NSCA 17, Rowley v. High Strength Plates & Profiles Inc., 2011 ONSC 6221, Quesnelle v. Camus Hydronics Ltd., 2022 ONSC 6156, Underwood v. Western World Communications Corp., 9 C.C.E.L. (2d) 129 (B.C.S.C.), Martell v. Ewos Canada Ltd. and Statkorn Holdings ASA, 2005 BCCA 554, Dennis v. Barr et al., 2010 ONSC 4057, Hare v. Pender Distributors Ltd., [1982] S.J. 649 (Q.B.)

P v. A, 2026 ONCA 574

Keywords: Civil Procedure, Vexatious Litigation, Appeals, Fresh Evidence, Abuse of Process, Procedural Fairness, Charter Rights, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 140, Canadian Charter of Rights and Freedoms, ss. 2(b), 7, and 15, Lang Michener et al. v. Fabian et al. (1987), 59 O.R. (2d) 353 (H.C.), The University of Western Ontario v. Simpson, 2020 ONCA 416, UM Financial Inc. v. Central 1 Credit Union, 2026 ONCA 475, Aurora (Town) v. Lepp, 2020 ONCA 528, McLean v. Connell, 2025 ONCA 495, R. v. Palmer, [1980] S.C.R. 759

CIVIL DECISIONS

Cycle Toronto v. Ontario (Attorney General), 2026 ONCA 582

[Fairburn A.C.J.O., Huscroft and Zarnett JJ.A.]

Counsel:

J. Hunter, C. Zwibel and E. Guilbault, for the appellants
A. Lewis, G. Hoaken, B. Murphy, C. Dunne, L. Beck and B. Roe, for the respondents
G. Avraam, J. Bernardo and R. Carroll, for the intervener Canadian Constitution Foundation
N. De Stefano, for the intervener Canadian Public Health Association
L. Century, A. Chen and U. Nageswaran, for the intervener Greenpeace Canada
V. Zbogar, M. Daniel and V. Sharma, for the intervener For Our Kids – Toronto
M. Savard and C. Milne, for the intervener D.A Centre for Constitutional Rights

Keywords: Constitutional Law, Separation of Powers, Charter Rights, Life, Liberty, Security of the Person, Oakes Test, Reducing Gridlock, Saving You Time Act, 2024, S.O. 2024, c. 25, Highway Traffic Act, R.S.O. 1990, s. 195.6, c. H.8, s. 195.6, Canadian Charter of Rights and Freedoms, ss.1, 7, The Constitution Act, 1982, Schedule B to the Canada Act 1982 (UK), 1982, c 11, s. 52, Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43, Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, R. v. Malmo-Levine; R. v. Caine, 2003 SCC 74, Reference re ss. 193 and 195.1(1)(c) of the Criminal Code (Man.), [1990] 1 S.C.R. 1123, Dorceus v. Ontario, 2026 ONCA 321, Drover v. Canada (Attorney General), 2025 ONCA 468, Lalonde v. Ontario (Commission derestructuration des services de santé) (2001), 56 O.R. (3d) 505 (C.A.), R. v. Sharma, 2022 SCC 39, Quebec (Attorney General) v. Alliance du personnel professionnel et technique de la santé et des services sociaux, 2018 SCC 17, Reference re Securities Act, 2011 SCC 66, Toronto (City) v. Ontario (Attorney General), 2021 SCC 34, Baier v. Alberta, 2007 SCC 31, Canada (Attorney General) v. Bedford, 2013 SCC 72, Canadian Council for Refugees v. Canada (Citizenship and Immigration), 2023 SCC 17, Carter v. Canada (Attorney General), 2015 SCC 5, Chaoulli v. Quebec (Attorney General), 2005 SCC 35, Alberta v. Hutterian Brethren of Wilson Colony, 2009 SCC 37, R v. Oakes, 1986 CanLII 46 (SCC), R. v. Lucas, [1998] 1 S.C.R. 439, RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199, R. v. Kloubakov, 2025 SCC 25, Gosselin v. Québec (Attorney General), 2002 SCC 84, Fair Voting BC v. Canada (Attorney General), 2025 ONCA 581, R. v. Safarzadeh-Markhali, 2016 SCC 14, The Honourable Malcolm Rowe, Chris Puskas and Allyse Cruise, “The Separation of Powers in Canada” (2024) 1 S.C.L.R. (3d) 323

facts:

On November 25, 2024, the Ontario legislature passed the Reducing Gridlock, Saving You Time Act. Among other things, the Act added s. 195.6 to the Highway Traffic Act (“HTA”), requiring the Minister to remove bicycle lanes from three major streets in Toronto: Bloor Street, University Avenue and Yonge Street.

In January 2025, the respondents, Cycle Toronto and two individual users of the bicycle lanes, E.S-R and N.K, brought an application for a declaration that s. 195.6 of the HTA violates s. 7 of the Charter.

Shortly after the application was filed, the legislature repealed and replaced s. 195.6 of the HTA. The new s. 195.6 directs the Minister to “reconfigure” the target bicycle lanes rather than “remove” them. The HTA was also amended to grant the Lieutenant Governor in Council the power to make regulations concerning the removal of bicycle lanes pursuant to s. 195.6. The application judge found that the change from “remove” to “reconfigure” was a “distinction without a difference”. He also noted that any reconfiguration would inevitably require removal of at least some of the physical separation of bicycle lanes from vehicular traffic and that a live controversy continued between the parties concerning the application of s. 7.

He further found that the respondents were not asserting a positive right to bicycle lanes; they were, instead, asking the court to strike down legislation that would remove a safety feature on roads. He rejected the argument that the government was being held to a constitutional “baseline” established by prior legislation. He stated that although the legislature is entitled to remove a benefit once established, in doing so it cannot violate the Charter.

The application judge found that removal of the bicycle lanes would make roads less safe for cyclists and for other users of the road, resulting in an increased likelihood of collisions, injuries and death. On this basis, he concluded that s. 195.6 engaged both the right to life and security of the person in s. 7 of the Charter. The application judge rejected the argument that the risk to life and security of the person was caused by the cyclists’ choices rather than s. 195.6, finding the choice to cycle was not unconstrained and that, for many, there were no suitable alternatives to riding their bicycles on the relevant streets. He also noted that cycling is a lawful activity and that the real question is whether the law makes that lawful activity more dangerous.

Furthermore, the application judge found that removal of the bicycle lanes would not achieve the stated objective of the legislation – the alleviation of traffic congestion – but would in fact worsen it. This finding was based on expert evidence as well as advice the government had received prior to proposing s. 195.6. The application judge concluded that there was therefore no connection between the purpose of the impugned provision and its true effects, and as a result the law was arbitrary. The application judge also concluded that the impact of the removal of the bicycle lanes was grossly disproportionate to the asserted benefit of “saving some drivers of cars a few minutes of travel time.” Thus, s. 7 was violated.

The application judge concluded that this violation could not be saved under s. 1. He accepted that the objective of reducing traffic congestion was pressing and substantial, but found that the law was not rationally connected to its objective because restoring lanes for cars would not reduce congestion or further the objective of the legislation. The application judge also found that the law did not minimally impair the rights of cyclists; it caused people to ride in more dangerous traffic, putting them in “harm’s way”. Finally, he found that the benefits of the law did not outweigh its negative impacts.

Ultimately, the application judge declared the original version of s. 195.6 to be unconstitutional. He also declared that any steps taken to “reconfigure” the target bicycle lanes to install a lane for motor vehicles in order to reduce congestion would violate s. 7 of the Charter and would not be saved under s. 1.

issues:

1. Did the application judge violate the separation of powers?

2. Did the application judge err in failing to recognize that s.7 is only concerned with deprivations of life and security of the person cause by the coercive power of the state?

3. Did the application judge err in failing to recognize that s.7 does not create a positive right to state-provided harm reduction measures?

4. Did the trial judge err in finding s.195.6 to be arbitrary and grossly disproportionate?

holding:

Appeal allowed.

reasoning:

1. Did the application judge violate the separation of powers?

Yes.

Judicial review under the Charter is not an occasion for courts to comment on or critique policy or political decisions. The decisions whether to legislate and how to do so belong to the legislature. Courts play no role in the policy development process, no role in the choices made by the government in proposing legislation, and no role in the legislature’s decision to pass a law. The role of the courts is to adjudicate disputes arising under the law once it is enacted. It is illegitimate for courts to involve themselves in matters of legislative policy. The Court held that while judges may be tempted to comment on matters of policy, that temptation must be resisted. Whether courts think legislation is wise or unwise, is irrelevant so far as its constitutionality is concerned, and constitutionality is the only question with which courts are legitimately concerned.

Accordingly, the Court found that the application judge lost sight of this principle when, in the course of outlining the background to the application, he weighed in on policy and political considerations. He commented extensively on the political background to the legislation, recounting remarks by the Premier and Minister of Transportation, contested data concerning road use and exchanges at legislative committee proceedings. He also quoted at length from members of the public and organizations opposed to passage of the legislation, as well as the Mayor of Toronto and the City Manager – all prior to addressing the Charter issues. The Court found that none of these remarks were relevant to the task at hand, and that consequently, the separation of powers was not respected.

2. Did the application judge err in failing to recognize that s.7 is only concerned with deprivations of life and security of the person caused by the coercive power of the state?

No.

In Drover v. Canada (Attorney General), a majority of the Court held that s. 7 applies beyond individuals’ interactions with the administration of justice, at least in the context of the liberty interest. While the appellants sought to confine this holding to the liberty right in s.7, the Court held that it is not clear that it is possible to interpret Drover in that manner, and that the proper scope of s. 7 will ultimately have to be decided by the Supreme Court.

The Court thus proceeded on the assumption that s. 7 may be engaged beyond the administration of justice context. However, even assuming that s. 7 may be engaged in the wider context that Drover suggested, the Court did not find it to be engaged in this case. The Court disagreed with the application judge and found that the impugned legislation does not effect a deprivation of life, liberty or security of the person. Even if it did, the Court held that any such deprivation would be consistent with the principles of fundamental justice and would therefore be saved by s. 1 of the Charter.

3. Did the application judge err in failing to recognize that s.7 does not create a positive right to state-provided harm reduction measures?

Yes.

Legislatures cannot bind their successors. The Court agreed with the appellant’s position that just as s. 7 does not mandate that the state take action to reduce the risk of harm caused by third parties or to safeguard citizens from the hazards of life, it does not require the state to continue measures it has previously taken to achieve those ends. Further, as long as the prior legislation was not mandated by the Charter, undoing it by amendment or repealing it altogether is necessarily Charter compliant, regardless of how beneficial or important the prior legislation may be thought to have been. This is so “even where those measures accord with or enhance Charter values”: Lalonde v. Ontario (Commission derestructuration des services de santé).

Amendment or repeal of legislation may breach the Charter only if the breach can be established independent of the prior state of the law. The Court likened legislation to an experiment, which may not work as intended or at all or forever, at times requiring significant reform to remain relevant. Thus, there was no question that it may be amended or repealed by a future legislature. Accordingly, rights, obligations, interests and privileges can be created by ordinary legislation and altered or removed by the same means. The Court found this to be a bedrock principle of parliamentary sovereignty, a principle that was not altered by the passage of the Charter. Whether legislation is consistent with the Charter is not determined having regard to the state of the law prior to passage of that legislation. The prior legislation is irrelevant to the constitutionality of the amending or repealing legislation.

The Court disagreed with the application judge’s finding that this was not a positive rights claim, but a request to strike down legislation that put people at risk by removing a safety feature on roads. Rather, the Court found that an order under the Charter prohibiting removal of bicycle lanes can only be understood as establishing a Charter right to those bicycle lanes. An order prohibiting removal of the bicycle lanes would ensconce the prior legislation, denying the authority of the legislature to change policy course – the very approach that has long been rejected by the Supreme Court in cases like Toronto (City) v. Ontario (Attorney General) and Baier v. Alberta. The Court also held that the constitutionality of legislation regulating traffic does not depend on whether the legislation is made in accordance with expert advice.

Due to the foregoing, the Court held that there is no Charter right to bicycle lanes and their existence depends on legislation alone. Accordingly, their removal does not effect a deprivation within the meaning of s.7 of the Charter.

4. Did the trial judge err in finding s.195.6 to be arbitrary and grossly disproportionate?

Yes.

(a) Arbitrariness

The rule against arbitrariness has been described as a principle of “instrumental rationality”, a concept that is concerned not with the normative desirability of the legislation’s purpose but with the means chosen to achieve that purpose. At its worst, arbitrariness connotes autocratic, capricious rule divorced from reason – in short, a wholesale departure from the most basic requirements of the rule of law. Instrumental rationality entails a “means-ends assessment”; Canadian Council for Refugees v. Canada (Citizenship and Immigration), at para 124. The Court also quoted Carter v. Canada (Attorney General) at paragraph 83:

The principle of fundamental justice that forbids arbitrariness targets the situation where there is no rational connection between the object of the law and the limit it imposes on life, liberty or security of the person: Canada v. Bedford, at para. 111. An arbitrary law is one that is not capable of fulfilling its objectives. It exacts a constitutional price in terms of rights, without furthering the public good that is said to be the object of the law.

This standard is “not easily met”; Canada v. Bedford, at para 119. A law is not arbitrary if there is a rational connection between the purpose of the law and the means chosen to achieve that purpose. A failure of rationality goes far beyond mere disagreement as to the efficacy of the law.

Instrumental rationality does not establish a constitutional means to challenge the wisdom or efficacy of legislation. In most cases, instrumental rationality can be established without difficulty. Common sense connections and inferences will normally suffice. The test for arbitrariness under s. 7 is in this way similar to the test for rationality under s. 1 of the Charter: “the government must show that it is reasonable to suppose that the limit may further the goal, not that it will do so”; Alberta v. Hutterian Brethren of Wilson Colony at para 48.

Expert evidence may well call into doubt the efficacy of legislation, but it will rarely establish that legislation is irrational. Law is not arbitrary simply because it is not designed to the satisfaction of expert critics.

Section 7 analysis proceeds from identification of the purpose of the impugned provisions. In this case, the parties did not contest that the purpose of the law was the reduction of traffic congestion. Increasing the number of lanes available for motor vehicles must, at least to some extent and for some period of time, be capable of contributing to reducing traffic congestion. The legislation is therefore rational. Assumptions grounded in everyday experience and common sense need not be established empirically. Academic expert evidence – social science research in particular – must be approached by courts with considerable caution. It is often geared towards supporting preferred policy outcomes rather than discovering the objective truth of a matter under investigation.

The Court found that the application judge erred by focusing on concerns about the efficacy of the legislation, rather than the rational connection between the purpose of the legislation and the means chosen by the legislature. The Charter does not require the legislature to act in a manner the court considers optimal. It does not require the legislature to legislate in accordance with predictions, expert or otherwise. Legislative policy is not arbitrary just because some or even many advisors, experts and citizens predict that it will not work. If a rational connection exists between the legislature’s purpose and means, that is the end of the court’s inquiry. The wisdom and effectiveness of the legislature’s decision – the efficacy of the legislation – is for the political process. The government is free to accept some, all or none of the advice it receives.

Ultimately it was held that the application judge conflated instrumental rationality and efficacy and erred in concluding that the legislation was arbitrary. The question for the court was whether there was a rational connection between the legislature’s purpose of reducing traffic congestion and the decision to increase the number of lanes for motor vehicles. The Court found that this was established and the application judge erred in concluding otherwise.

b) Gross Disproportionality

Gross disproportionality arises only in “extreme” cases – cases in which “the seriousness of the deprivation is totally out of sync with the objective of the measure”: Canada v. Bedford, at para 120. The Court found that this standard was not met in the case at hand. Further, it did not agree with the application judge’s reasoning in this regard, finding that it minimized the purpose of the legislation, in effect trivializing it by characterizing it as saving some drivers a few minutes rather than reducing traffic congestion and inflating the negative effects of removing the bicycle lanes. The assertion that the impact of removing bicycle lanes “will disproportionately fall on low-income and disabled individuals, increasing health inequities already experienced by these groups” may, if true, be relevant to the policy argument that the legislation is unwise or ill-conceived, but was found to be insufficient to establish that the deprivation the law is supposed to effect is grossly disproportionate to its purpose. The same was found to be true of the assertion that removal of the bicycle lanes has a disproportionate effect on children. The rule against gross disproportionality only applies in extreme cases where the seriousness of the deprivation is totally out of sync with the objective of the measure.

Lower William Properties Ltd. v. Santaguida, 2026 ONCA 581

[van Rensburg, Dawe, Madsen]

Counsel:

P. Ghosh and J. Zeppieri, for the appellant
J. T. MacQuarrie, for the respondents

Keywords: Torts, Negligence, Contribution and Indemnity, Joint and Several Liability, Joint and Concurrent Tortfeasors, Civil Procedure, Third Party Claims, Striking Pleadings, Determination of Question of Law, Limitation Periods, Discoverability, Ultimate Limitation Period, Statutory Interpretation, Limitations Act, 2002, S.O. 2002, c. 24, ss. 1, 4, 5, 15 & 18, Negligence Act, R.S.O. 1990, c. N.1, ss. 1, 5 & 8, Rules of Civil Procedure, rr. 21.01(1), 29.01, Toussaint v. Canada (Attorney General), 2023 ONCA 117, Beaudoin Estate v. Campbellford Memorial Hospital, 2021 ONCA 57, Placzek v. Green, 2009 ONCA 83, Kaynes v. BP p.l.c., 2021 ONCA 36, Das v. George Weston Limited, 2018 ONCA 1053, Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, Meady v. Greyhound Canada Transportation Corp., 2008 ONCA 468, Gordon Dunk Farms Limited v. HFH Inc., 2021 ONCA 681, Fennell v. Deol, 2016 ONCA 249, York Condominium Corporation No. 382 v. Jay-M Holdings Limited, 2007 ONCA 49, Murphy v. Hart, 2018 ONSC 1648, Wekerle v. Arbour, 2025 ONSC 1456, Hengeveld v. The Personal Insurance Company, 2019 ONCA 497, Dominion Chain Co. v. Eastern Construction Co. (1976), 12 O.R. (2d) 201 (C.A.), Canada Deposit Insurance Corp. v. Prisco (1996), 181 A.R. 161 (C.A.), R. v. Imperial Tobacco, 2011 SCC 42, Canada Colors & Chemicals Ltd. v. Tenneco Canada Inc. (1995), 21 O.R. (3d) 438 (Div. Ct.), HSBC Securities (Canada) Inc. v. Davies, Ward & Beck (2005), 74 O.R. (3d) 295, C.A, Nuyork Investments Ltd. v. Toronto Hydro-Electric System Ltd., 2021 ONSC 3235, Mizen Holdings Corporation v. Toronto (City) et al., 2023 ONSC 1882, Waterloo Region District School Board v. CRD Construction Ltd., 2010 ONCA 838, Toronto Hydro v. Gonte and City of Toronto, 2018 ONSC 4315, Paramount Resources Ltd. v. Grey Owl Engineering Ltd., 2024 ABCA 60, Ryan v. Dew Enterprises Ltd., 2014 NLCA 11, Dean v. Kociniak, 2001 ABQB 412, Marsh v. Century Conundrum, 2014 ONSC 1154, Canaccord Capital Corporation v. Roscoe, 2013 ONCA 378

facts:

The respondents were sued after a fire at their restaurant spread to neighbouring buildings. They commenced third party proceedings against the appellant, claiming contribution and indemnity based on alleged deficiencies in the architectural services they had provided during a 2001 renovation to the restaurant. The appellant moved for an order declaring that the third party claims were barred by the expiry of the 15-year ultimate limitation period pursuant to s. 15 of the Limitations Act, 2002, and dismissing the third party claims. The motion was based solely on the pleadings.

The motion judge dismissed the motion and declared that the third party claims were not statute-barred. She interpreted ss. 15 and 18 of the Limitations Act, 2002, when read together, as providing for a 15-year ultimate limitation period in respect of the respondents’ claims for contribution and indemnity as running from the date they were served with the plaintiffs’ statements of claim. She declared that the third party claims were not statute-barred. The appellant appealed.

issues:

Was the motion judge correct in her determination that it was plain and obvious that the third party claims were not barred by the expiry of the ultimate limitation period?

holding:

Appeal allowed.

reasoning:

No.

As this was an appeal from a determination of a question of law under r. 21.01(1), the standard of review was correctness: Kaynes v. BP p.l.c., at para. 34; Das v. George Weston Limited, at para. 65.

The appellant submitted that the motion judge erred by not interpreting the relevant statutory provisions, and that it was absurd that the plaintiffs in the various actions would be barred by the ultimate limitation period from bringing a claim with respect to his work in 2001, but that the respondents would not be barred from making the same claim in a third party proceeding. The respondents submitted that the motion judge did not err in her interpretation of unambiguous provisions of the Limitations Act, 2002, and in the motion judges conclusion that, on a plain reading of ss. 15 and 18, the ultimate limitation period in respect of their third party claims began to run on the dates they were served with the underlying statements of claim.

The appellant’s motion to determine the limitation period issue was brought under r. 21 of the Rules of Civil Procedure, without evidence and based on the facts alleged in the pleadings. Limitation period issues are fact-dependent and do not lend themselves to determination at the pleadings stage. The r. 21 motion was brought on the assumption that there were no facts in dispute relevant to the appellant’s limitations defence: the parties accepted that the ultimate limitation period had expired in respect of any claim the plaintiffs or the respondents might have asserted directly against the appellant, and the operation of s. 15 was not subject to discoverability, which would involve determinations of fact. The parties and the motion judge proceeded on the basis that the issue was one of statutory interpretation that could be determined on the pleadings.

The Court concluded that the motion judge erred in making her declaration that the appellant did not have a limitation period defence based on the ultimate limitation period. It was premature to adjudicate the appellant’s limitation period defence to the third party claim based on the pleadings alone, and without the benefit of focused arguments on the issues of statutory interpretation that arose in this case. The analysis and the determination of whether the ultimate limitation period would apply to bar the third party claims should be informed by, and may well depend on, how the claims for contribution and indemnity were characterized. In particular, a distinction that may be relevant to the analysis is whether the third party claims seek contribution and indemnity in respect of duties the appellant is alleged to have owed to the plaintiffs, or whether they assert claims in respect of duties alleged to have been owed by the appellant to the respondents, or both. The proper characterization of the third party claims was not obvious on the pleadings, and determining the true character of the third party claims may well require evidence.

The Court outlined the issues and arguments that remained to be determined on a full evidentiary record.

1. Is the legislative purpose of s. 15 reconcilable with a “plain reading” of ss. 15 and 18?

The Court did not find that a plain reading of s. 15 was reconcilable with s. 15’s purpose. Citing York Condominium Corporation No. 382, the purpose of the ultimate limitation period is to balance the concern for plaintiffs with undiscovered causes of action with the need to prevent the indefinite postponement of a limitation period and the associated costs relating to record-keeping and insurance resulting from continuous exposure to liability.

The motion judge expressed the view that it would be unfair to bar a person’s right to claim contribution and indemnity before they have a reasonable opportunity to bring the claim, and that this was the unfairness that s. 18 guarded against. The Court agreed that this was the case in respect of the operation of the basic limitation period, but stated that it was unfair for a party who has received the benefit of s. 15 in respect of an act or omission that took place more than 15 years earlier to face ongoing potential liability in respect of the same act or omission when asserted as a claim for contribution and indemnity.

The Court found it difficult to discern any rationale for effectively extending the ultimate limitation period where the claim seeks contribution and indemnity. Arguably, the effect would be to override s. 15 in such circumstances, subverting the purpose behind an ultimate limitation period. In determining whether the third party claims are statute-barred, any interpretation of ss. 15 and 18 of the Limitations Act, 2002, must be informed, to the extent possible, by the purpose of s. 15, which is to avoid the indefinite postponement of a limitation period and continuous exposure of a potential defendant to liability.

2. Does s. 18 apply to all claims for contribution and indemnity or only to those between joint or concurrent wrongdoers?

The Court was of the view that there are arguments on both sides. In support of the application of s. 18 to all claims for contribution and indemnity are broad statements in some of the case law. In Canaccord Capital Corporation v. Roscoe, the judge concluded that “the legal theory grounding the contribution and indemnity claim is not relevant for deciding whether s. 18 is triggered; the provision applies when there is a claim for contribution and indemnity, no matter what legal theory underlies the claim.”

The Court also acknowledged reasons for interpreting s. 18 as not applying to all claims for contribution and indemnity, but only to claims as between parties who would each be potentially liable to the plaintiff because they owed duties to the plaintiff. s. 18 uses the term “wrongdoer” to describe the person asserting a claim for contribution and indemnity as well as the person against whom the claim is made. The legislative history of s. 18 suggests that this section was intended to address the issue that was formerly covered by s. 8 of the Negligence Act (which was repealed), while expanding its application to claims as between wrongdoers beyond those made in tort.

Accordingly, Canaccord dealt with a claim “by one wrongdoer against another”, where both were alleged to be liable to the plaintiff. The Court made clear that even though wording employed in Canaccord is broad, the case was not necessarily authority that s. 18 applies to all claims for contribution and indemnity, irrespective of whether they are between joint or concurrent wrongdoers or based on a separate duty alleged to have been owed by the third party to the defendant/plaintiff by third party claim.

3. If s. 18 does not apply, when does the “act or omission” in respect of a claim for contribution and indemnity occur?

Again, the Court was of the view that there were arguments on both sides. In a case where the claim for contribution and indemnity is based on a breach of duty owed by the third party to the defendant, the act or omission is arguably what the third party did or did not do in respect of that duty. This was more consistent with the policy underlying s. 15 and would ensure that the same result followed, whether the claim was asserted by the respondents in respect of their own losses or whether as a third-party claim for contribution and indemnity.

4. If s. 18 does apply, does the expiry of the ultimate limitation period in relation to the plaintiffs’ claims against the appellant afford a defence?

As a result of the deeming effect of s. 18, the Court was of the view that the third party claims may well be timely. That is, as between the respondents and the appellant, the ability to assert the claims would not be barred by s. 15. The claim of the respondents would be derivative of the plaintiffs’ claims. Arguably, if there was no possibility of a claim by the plaintiffs against the appellant, then the claim for contribution and indemnity under the Negligence Act would be defeated. A claim for contribution and indemnity can succeed under the Negligence Act only if the plaintiff had a potential claim against the third party at the time it sustained its damages: HSBC Securities.

In this case, at the time the fire took place, no action could lie against the appellant. The claim was not lost; the right to sue had already been extinguished before the fire took place. Arguably, the expiry of the ultimate limitation period in respect of the plaintiffs’ claims against the appellant before any loss occurred would mean that the respondents could not succeed in a third party claim against the appellant.

The purpose of these reasons was not to suggest that the appellant will have a successful defence if the third party claims are for contribution and indemnity under the Negligence Act, based on the expiry of the ultimate limitation period in relation to any claim by the plaintiffs, but to raise this as an issue that may fall to be determined.

In the result, the motion judge’s declaration was set aside. The third party claims were permitted to proceed while permitting the appellant to continue to assert his limitation period defence to be addressed at a later date, whether at trial or otherwise.

McCartney v. CDSPI Advisory Services Inc., 2026 ONCA 578

[Roberts, Coroza, and Pomerance JJ.A]

Counsel:

D. Murdoch and S. Dukesz, for the appellants, Aviva Insurance Company of Canada, Aviva General Insurance Company and Aviva Canada Inc.
J.J. Adair, D. Ionis, M.A. Currie and N.J. Kelly, for the respondents, Dr. J.M. and Dr. J.M. Dentistry Professional Corporation
W.E. Pepall and R. Shoom, agents to Lax O’Sullivan Lisus Gottlieb LLP and Adair Goldblatt Bieber LLP, counsel for the respondents, Dr. J.M. and Dr. J.M. Dentistry Professional Corporation
E. Bowker and A. Sharabi, for the respondent, CDSPI Advisory Services Inc.
T. Gleason and M. Phyper, for the respondents, Dr. A.O. et al., Dr. P.H.O. and O Dentistry Professional Corporation, Dr. B.S.T et al., and K.M. and Dr. K.M. Dentistry Professional Corporation

Keywords: Contracts, Insurance, Coverage, Pandemic, Civil Procedure, Class Proceedings, Settlements, Disclosure, Bar Orders, Costs, Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 27.1, Rules of Civil Procedure, rr. 7.08, 49.14, Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City), 2026 ONCA 352, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, R. v. Varennes, 2025 SCC 22, Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4, CHU de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467, Servus Credit Union Ltd. v. Miller, 2012 ABQB 765, Kaiman v. Graham, 2009 ONCA 77, Ghahsareh v. Ehsani, 2025 ONCA 795, Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)

facts:

The Appellants offered business interruption insurance to dentists and dental corporations as part of “Triple Guard” insurance policies, which were marketed by one of the Respondents, CDSPI Advisory Services Inc. (“CDSPI”). This Triple Guard policy could, by paying an additional premium, increase their pandemic outbreak coverage. However, it was alleged that in March 2020, the right to increase pandemic coverage was cancelled and all requests by policyholders to exercise that right were refused. This spawned individual actions and a class action against CDSPI and the Appellant insurers. The Appellant sought a stay of proceedings of the class proceedings against it primarily on the basis of its assertion that it did not receive timely disclosure of the proposed class action settlement, to which, it argued, it was entitled. The Appellant also sought stays of each of the individual actions on the same grounds.

The motion judge approved the settlement in the class action and denied the Appellant’s motions for a stay. On the latter point, the motion judge ruled: 1) the partial settlement rule (then reflected in Handley Estate v. DTE Industries Limited) did not apply to class proceedings, given the CPA’s settlement approval regime and the statutory requirement for court approval of any settlement; and 2) that the Appellant did not have a right to disclosure of the settlement of the individual actions, because the Appellant was not a party to those proceedings. The motion judge also approved the class action settlement that contained a term precluding the Appellant from claiming over against CDSPI, irrespective of the potential for claims bought by class members who opted out of the class action settlement or by the individual plaintiffs who elected not to participate in the settlement (“the bar order”).

issues:

1. Did the motion judge err in finding that the Handley Estate rule did not apply to class proceedings?

2. Did the motion judge err in finding that the Appellant was not entitled to disclosure of the individual actions between CDSPI and the plaintiffs?

3. Did the motion judge err in granting the approval motion?

4. Did the motion judge err in the costs order?

holding:

Appeal dismissed.

reasoning:

1. No.

The recent case of 1086289 Ontario Inc. (Urban Electrical Contractors) v. Welland (City) overturned the rule in Handley Estate, however, the motion judge did not have the benefit of the Welland (City) decision. Even though Handley Estate has been overturned, the motion judge’s reasons continued to carry persuasive force. Neither Handley Estate, nor r. 49.14 of the Rules of Civil Procedure (the “Rules”) apply to class actions, given the specific provisions in the Class Proceedings Act (the “CPA”).

The concern addressed in Rule 49.14 and Welland (City) is that a non-settling party may be unaware of an agreement that adversely affects its position in the litigation. The disclosure requirement ensures that the non-settling party is aware of any binding settlements reached by other parties to the litigation. The CPA contains its own mechanism for ensuring that a party to the class proceeding is not kept in the dark about a settlement to which it is not a party, but which affects its interests. Under the CPA, there is no binding settlement unless and until it has been approved by the court. Significantly, on a motion for approval of a settlement, the non-settling party will not only receive disclosure of the proposed settlement but may have the right to participate in the approval hearing.

In this case, the Appellant was given full opportunity to contest the proposed settlement in the hearing before the motion judge. It received notice of the proposed settlement and, by virtue of the motion judge’s decision, it had disclosure of the fact that the settlement had been approved.

2. No.

The Appellant was not entitled to notice of the settlement in the individual actions because it was not a party to those actions. The fact that the individual settlement was conditional on approval of the class action settlement did not merge the agreements or create a single joint settlement. The Appellant both received disclosure of the proposed class settlement and was given a full opportunity to oppose that settlement through its participation in the settlement approval hearing. The disclosure to the Appellant went beyond the protections of the CPA.

The Court also found that the individual and class plaintiffs did not engage in acts of deceit or concealment.

3. No.

The Court saw no error in the motion judge’s decision to approve the settlement on terms including the bar order. The motion judge applied well-settled principles in concluding that the terms of the class action settlement fell within the zone of reasonableness. For the bar order, the motion judge found that the settlement resulted in no real practical economic prejudice to the Appellant. Whether or not the class action settlement was approved, the entire $10 million in CDSPI’s insurance coverage will be paid out to the individual plaintiffs and there will be no more money available for the class action settlement. CDSPI’s “financial well will have already run dry” when the class action is partially settled against them.

As for potential claims by the class action members and individual plaintiffs who opt out, the bar order does not change the Appellant’s economic exposure.

4. No.

The Appellant also argued that the motion judge erred in principle by failing to discount the costs awarded to reflect that: 1) the respondents were required under the CPA to bring the settlement approval motion regardless of the Appellant’s opposition; and 2) the Appellant was substantially successful in its motion to compel answers and documentary production from the respondents.

The Court was not persuaded that there was any basis to disturb the motion judge’s discretionary costs order. There is a high threshold, as stated in Ghahsareh v Ehsani, that the Appellant had to meet to permit appellate interference. “The test is stringent. There must be strong grounds upon which the appellate court could find that the judge erred in exercising her discretion. Discretionary costs decisions should only be set aside on appeal if there is an error in principle or if the award is ‘plainly wrong’.” The Appellant did not satisfy these criteria. First, while the respondents were required under the CPA to bring the settlement approval motion, there was no question that, absent the Appellant’s very strong opposition, the respondents’ costs would not have been as elevated. Second, the motion judge did not err in not reducing the costs award to reflect the Appellant’s success on its undertakings and production motion.

Hill v. 1359768 Ontario Inc. (B&B Towing), 2026 ONCA 577

[Roberts, Favreau, and Rahman JJ.A.]

Counsel:

H. C. Cohen and A. Persad-Ford, for the appellant
S. Fainzilberg and T Celentano, for the respondent

Keywords: Contracts, Employment, Termination, Wrongful Dismissal, Constructive Dismissal, Defences, Frustration, Disability, Duty to Accommodate, Undue Hardship, Damages, Fringe Benefits, Income Tax Act, R.S.C. 1985, c.1, Irvine v. Gauthier (Jim) Chevrolet Oldsmobile Cadillac Ltd., 2013 MBCA 93, Fraser v. UBS, 2011 ONSC 5448, Nason v. Thunder Bay Orthopaedic Inc., 2015 ONSC 8097, Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, Nagpal v. IBM Canada Ltd., 2021 ONCA 274, Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, Aldergrove Duty Free Shop Ltd. v. MacCallum, 2024 BCCA 28, Dartmouth Ferry Commission v. Marks (1904), 34 S.C.R. 366, Lemesani v. Lowerys Inc., 2017 ONSC 1808, De Palma v. Canadian Federation of Independent Business, 2019 ONSC 7602, McAlpine v. Econotech Services Ltd., 2004 BCCA 111, McLean v. City of Miramichi, 2011 NBCA 80, Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424, Croke v. VuPoint System Ltd., 2024 ONCA 354, Canada Forgings Inc v. Atomic Energy of Canada Limited., 2024 ONCA 677, Ciszkowski v. Canac Kitchens, 2015 ONSC 73, Davidson v. Allelix Inc. (1991), 7 O.R. (3d) 581 (C.A.), Paquette v. TeraGo Networks Inc., 2016 ONCA 618, Red Deer College v. Michaels, [1976] 2 S.C.R. 324, Peck v. Levesque Plywood Ltd. (1979), 27 O.R. (2d) 108 (C.A.), Lawson v. Dominion Securities Corp., [1977] O.J. No. 1609 (C.A.), Cormier v. 1772887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965, Donovan v. Quincaillerie Richelieu LTD., 2021 NBQB 189, Ellerbeck v. KVI Reconnect Ventures Inc., 2013 BCSC 1253, Gazier v. Ciena Canada, ULC, 2024 ONSC 865, Sanghvi v. Norvic Shipping North America, 2021 ONSC 1211, Jardine v. Phoenix Petroleum Ltd., 2021 NBQB 213, Silvester v. Lloyd’s Register North America Inc., 2004 NSCA 17, Rowley v. High Strength Plates & Profiles Inc., 2011 ONSC 6221, Quesnelle v. Camus Hydronics Ltd., 2022 ONSC 6156, Underwood v. Western World Communications Corp., 9 C.C.E.L. (2d) 129 (B.C.S.C.), Martell v. Ewos Canada Ltd. and Statkorn Holdings ASA, 2005 BCCA 554, Dennis v. Barr et al., 2010 ONSC 4057, Hare v. Pender Distributors Ltd., [1982] S.J. 649 (Q.B.)

facts:

The respondent had worked for the appellant, a towing services company, for 17 years when he went on long-term disability leave following emergency surgery. In 2021, his doctors suggested that he could return to work on a trial basis, if accommodations could be made with a preference for administrative work. During his absence, the respondent’s road boss responsibilities were assumed by the appellant’s principals. In 2021, the appellant advised the respondent that his road boss position had been eliminated because of financial constraints and that, when he returned, he would work as a tow truck driver at a lower rate of pay. The respondent returned to work as a tow truck driver in January 2022 and subsequently injured his back the next month. The respondent advised that he was taking the position that he had been constructively dismissed. The respondent never returned to work with the appellant.

The trial judge concluded that the respondent had been constructively dismissed by the appellant and rejected that the employment contract had been frustrated. However, she did not accept the respondent’s argument that the defendants were common employers. She awarded damages in the amount of $236,163.77 based on a 22-month notice period, including for the loss of the use of the company tow truck and cell phone.

issues:

1) Did the trial judge err in finding that the employment contract was not frustrated?

2) Did the trial judge err in awarding damages in relation to the loss of the use of the company tow truck and cellphone during the notice period?

holding:

Appeal allowed in part.

reasoning:

1. No. The trial judge did not err in finding that the employment contract was not frustrated.

Governing principles: frustration doctrine

The doctrine of frustration was correctly described by the trial judge. A contract is frustrated where a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract: Nagpal v. IBM Canada Ltd. Frustration will be established only when, at the time of frustration, there is no reasonable likelihood of the employee being able to return to work within a reasonable time: Fraser. The employer is under a duty to accommodate the employee’s disability up to the point of undue hardship: Lemesani v. Lowerys Inc. A contract may be frustrated, by a serious, lengthy and ongoing condition that cannot be accommodated by the employer without imposing hardship and that prevents the employee from carrying out the position’s essential duties within a reasonable time. A temporary sickness does not amount to frustration nor does an employee’s inability to perform minor parts of their position: Nagpal.

The necessary analysis required the trial judge to: (i) Assess the nature of the respondent’s duties as road boss and whether he was incapable of performing the material aspects of his position at the time of the termination of his employment; (ii) Consider whether the respondent could have returned to the road boss position or comparable position within a reasonable time and with reasonable accommodation by the appellant save for undue financial hardship, as the appellant alleged; and (iii) Determine whether the respondent’s injury was temporary or constituted a frustrating event at the time of the termination of his employment: Nagpal.

(i) Essential duties of the road boss position

While the trial judge did not expressly set out a list of the essential duties of the road boss position, this did not constitute analytical error because there was little controversy about what those duties were. The only real point of dispute was whether the physical parts of those duties were essential. The respondent testified that they comprised “probably 10 percent” of the position’s duties. The trial judge did not accept that the physical parts that engaged and exceeded the respondent’s limitations were essential duties that could not be accommodated and that the accommodated performance would render the position radically different from that contemplated by the employment contract.

(ii) Reasonable accommodation was possible

The Court agreed with the trial judge’s conclusion that the respondent’s limitations could have been accommodated. The appellant had accommodated them in the past, and there was no evidence that they could not be accommodated again. On the respondent’s return to work, the appellant accommodated physical aspects of the tow truck position which were included in the road boss position by installing a special winch. The appellant did not show that it would suffer undue hardship in making that accommodation. The only evidence about financial hardship was that the appellant could not afford to return the respondent to the road boss position. However, this argument was undercut by the appellant’s assertion in disputing the respondent’s claim of constructive dismissal that the respondent’s remuneration as a tow truck driver would have been essentially the same as a road boss.

(iii) The respondent’s limitations were found to be temporary at the termination of his employment

The Court agreed with the trial judge’s conclusion that the respondent’s limitations were temporary. The respondent’s performance in January and February 2022 of the tow truck driver position, which demanded more physical exertion than the road boss position, demonstrated that there was no ongoing physical limitation that disabled the respondent from returning to work. The respondent’s injury on February 17, 2022, was because the special winch installed for his accommodation malfunctioned. The appellant did not establish that the respondent’s physical limitations caused the malfunctioning of the winch. The medical evidence at trial did not support the appellant’s allegation that the respondent was unable to return to his road boss duties within a reasonable time. His doctors suggested that a trial return to work could be considered. There was no indication in the medical documentation that the respondent could never return to work or could not perform the essential duties of his road boss position within a reasonable time.

The appellant argued that the trial judge should have considered the post-termination evidence of the respondent’s ongoing limitations. The appellant said that the respondent received long-term disability benefits that did not end until 2022. The appellant submitted that the respondent’s receipt of long-term disability benefits cast light on the nature and extent of the respondent’s ongoing issues in that the policy stipulated that he was only entitled to these benefits if he was disabled “under [his] own job or occupation”. The post-termination evidence highlighted by the appellant did not affect the trial judge’s finding that the respondent’s limitations were temporary and could be accommodated on his return to work. This evidence did not conclusively indicate that the respondent would be unable to return to work within a reasonable time and perform the essential duties of the road boss position.

2. Did the trial judge err in awarding damages in relation to the loss of the use of the company tow truck and cellphone during the notice period?

Yes.

The appellant took issue with the trial judge’s damages award for the value of the tow truck and the cellphone belonging to the appellant that the respondent was permitted to use during his employment. This portion of the $236,163.77 damages award for the notice period amounted to $125,640, which was more than 50% of the damages award: $123,000 for the tow truck and $2,640 for the cellphone.

The Court accepted the appellant’s submissions that the trial judge erred in awarding damages to the respondent in relation to the company tow truck and cellphone. The trial judge failed to provide any analysis as to why she awarded the value of the use of the company tow truck and cellphone, even though she was required to do so. She simply included those amounts. This was a reversible error.

Governing principles: fringe benefits

The trial judge correctly referenced the principle that a wrongfully dismissed employee is entitled to claim as damages the pecuniary value of all the compensation and benefits that would have been received during the period of reasonable notice: Davidson v. Allelix Inc. The onus is on the employee to establish the fact of damages and their amount on the evidence: Red Deer College v. Michaels. To establish damages therefore includes proving an entitlement to and the value of fringe benefits.

A company car or cellphone may constitute a fringe benefit if proven by an employee to confer a personal benefit as part of their contractual compensation: Peck v. Levesque Plywood Ltd. The question is whether the company car or cellphone provides a perquisite or personal benefit for which a wrongfully dismissed employee is entitled to be compensated or whether the company car and cellphone are employment tools, like any other tool supplied to an employee to do their job. If they are employment tools, there is no entitlement to compensation for use of a tool that is no longer being used for the benefit of the employer during the period of reasonable notice: Gazier v. Ciena Canada.

Principles applied

i) Tow truck

The Court found the company tow truck was a work tool and that the respondent’s negligible personal use tolerated by the appellant did not support any award of damages. The tow truck was clearly a work vehicle and not the kind of company car that provided an employment benefit. The respondent was required to use the tow truck in the exercise of his employment duties. The fact that the appellant tolerated the respondent’s use of the tow truck to go to and from work and run small errands at lunchtime from the office did not convert the tow truck into a company car or an employment benefit.

The Court considered the value of the annual tow truck lease of $67,200, and concluded it was a disproportionate benefit when compared to the respondent’s annual base salary of $93,280. It defied belief that the tow truck was intended as a personal benefit. The following indicia demonstrated the parties did not consider the company tow truck as providing a fringe benefit to the respondent:

(i) In his statement of claim, the respondent particularized his claim for other employment benefits, including the loss of the use of the cellphone. In contrast, the respondent did not plead that the tow truck was used for personal purposes, nor did he claim the loss of the use of the tow truck as an employment benefit; (ii) the T4 slips that the appellant issued and the respondent produced did not list the use of the tow truck as a personal employment benefit; (iii) there was no evidence that the respondent disclosed to the Canada Revenue Agency that he was using the tow truck for any personal use. If he were, he was to make yearly disclosure of what would have been a taxable benefit; (iv) there was no evidence that the respondent was using the tow truck as his primary personal car; (v) there was no evidence that he had leased a tow truck or any other car during the notice period as a replacement vehicle for the claimed lost benefit.

ii) Cellphone

The evidence did not support the claim for the loss of use of the cellphone. The respondent stated that the “work phone” was part of his compensation package. However, he did not provide evidence establishing that his personal use of the company cellphone amounted to an employment benefit.

The appellant’s evidence was that the cellphone was to be used for business purposes. When the respondent returned to work in 2022 as a tow truck driver, the cellphone was replaced by a two-way radio phone. Loss of employment benefits must be proven on the facts of each case. Any personal benefit is not automatically compensable: Cormier. The respondent did not meet his onus to prove the loss of an employment benefit with respect to the cellphone.

P v. A, 2026 ONCA 574

[van Rensburg, Miller, and Coroza JJ.A.]

Counsel:

A.U.A., acting in person
P. Leigh, for the respondents

Keywords: Civil Procedure, Vexatious Litigation, Appeals, Fresh Evidence, Abuse of Process, Procedural Fairness, Charter Rights, Courts of Justice Act, R.S.O. 1990, c. C.43, s. 140, Canadian Charter of Rights and Freedoms, ss. 2(b), 7, and 15, Lang Michener et al. v. Fabian et al. (1987), 59 O.R. (2d) 353 (H.C.), The University of Western Ontario v. Simpson, 2020 ONCA 416, UM Financial Inc. v. Central 1 Credit Union, 2026 ONCA 475, Aurora (Town) v. Lepp, 2020 ONCA 528, McLean v. Connell, 2025 ONCA 495, R. v. Palmer, [1980] S.C.R. 759

facts:

The appellant and the respondents own neighbouring units in a commercial complex. The dispute began when one of the respondents refused to accept the appellant’s wife as a patient in her medical practice. This led to several legal proceedings between the parties. The underlying proceeding was a defamation action brought by the respondents against the appellant. In that action, the respondents brought a motion to declare the appellant a vexatious litigant and to bar him and his corporations from instituting or continuing legal proceedings without leave of the court. The appellant was granted leave to represent both himself and his corporations on the motion.

The motion judge declared the appellant a vexatious litigant under s. 140 of the Courts of Justice Act (CJA). The appellant’s responding materials on the vexatious litigant motion alone exceeded 2,500 pages. The motion judge found that the appellant’s litigation history showed a disproportionate use of the civil justice system and created a barrier to access to justice for parties with legitimate claims.
At the appellant’s request, the appeal was heard in writing. The appellant also brought a motion to adduce fresh evidence on appeal.

issues:

1. Did the motion judge err by failing to abide by the statutory scheme in s. 140 of the CJA?

2. Did the motion judge err by misapprehending the evidence?

3. Was the motion hearing procedurally unfair?

4. Did the motion judge err by characterizing defensive litigation conduct as abusive?

5. Did the impugned process and order violate the appellant’s rights under ss. 2(b), 7 and 15 of the Charter?

6. Should the proposed fresh evidence be admitted on appeal?

holding:

Appeal and motion dismissed.

reasoning:

1. No.

The Court held that there was no basis to interfere with the motion judge’s order. A vexatious litigant order is discretionary and fact-specific. The motion judge recognized that declaring a person a vexatious litigant is significant and that the power to do so must be exercised sparingly and with great care. She applied the correct test under s. 140 of the CJA, namely whether the appellant had persistently and without reasonable grounds instituted vexatious proceedings in any court or conducted a proceeding in any court in a vexatious manner.

2. No.

The Court rejected the appellant’s argument that the motion judge misapprehended the evidence. The motion judge thoroughly reviewed the appellant’s 2,500-page record; she also made appropriate findings about his litigation history and complaints against counsel, parties, the judiciary and regulatory bodies. The motion judge noted that the appellant had filed 21 other court proceedings, none of which had proceeded to a hearing on the merits, and that all his regulatory complaints had been dismissed. The Court held that the motion judge had ample evidence, including the appellant’s dismissed complaints and hundreds of emails to counsel and court staff using foul, derogatory and dehumanising language.

3. No.

The Court held that there was no merit to the appellant’s procedural fairness argument. Courts have broad discretion to control their own processes and prevent vexatious litigation. The fact that the appellant himself had specifically requested that the motion proceed in writing also undermined his argument.

4. No.

The Court rejected the appellant’s submission that the motion judge wrongly characterized defensive litigation conduct as abusive. The motion judge had proceeded cautiously and understood that a vexatious litigant order should only be made in the clearest of cases. After reviewing the appellant’s litigation history and conduct, the motion judge found that the appellant was clearly a vexatious litigant. The Court saw no error in her conclusion that the appellant’s conduct had turned a discrete dispute over a doctor’s decision not to roster his wife as a patient into multiple unsuccessful claims and complaints against numerous individuals and bodies.

5. No.

The Court held that the motion judge’s vexatious litigant order did not violate the appellant’s rights under ss. 2(b), 7, and 15 of the Charter. Despite the appellant’s claim that the order had forced him to sell his matrimonial home, that he was a disabled litigant, and that the order had denied him the ability to seek redress, the Court ultimately found that the appellant mischaracterized the order’s purpose and effect. The order did not deprive the appellant of access to justice. Rather, it ensured that disorderly conduct in litigation would not prejudice any parties.

6. No.

The Court dismissed the fresh evidence motion because it failed to meet the Palmer test. Specifically, the appellant’s settlement documentation and a prior proceeding’s transcript would not have altered the outcome after the motion judge’s exhaustive examination of the appellant’s litigation history.

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