Appealing Thoughts

APPEALING THOUGHTS

STANDARD OF REVIEW

A key element of many appeals is the standard of review of the lower court’s judgment. This article outlines some highlights of the current jurisprudence regarding standard of review, with some emphasis on the Supreme Court decision in Sattva regarding review in contractual interpretation matters. This article does not address judicial review or statutory appeals from administrative tribunal decisions.

The Three Basic Standards of Review

At the risk of oversimplification, the standards of review of a judge’s decision are:

·  on questions of law: correctness;

·  on questions of fact: deference (whether the judge made a palpable and overriding error), and

·  on questions of mixed fact and law: the more deferential standard of "palpable and overriding error" applies unless an appellate court can “extricate a question of law” from the trial judge's conclusion.

Determining the Nature of the Issue

Before one can determine the standard of review, the nature of the issue(s) must be ascertained. The distinction between questions of law and questions of mixed fact and law is often difficult. Sometimes, what appears at first blush to be a question of mixed fact and law turns out to be a question of law. The opposite is also true.[1]

It has been succinctly stated that questions of law are about what the correct legal test is, while questions of fact are questions about what actually took place between the parties. Questions of mixed fact and law are questions about whether the facts satisfy the legal tests.[2] However, questions of mixed fact and law lie along a spectrum, with some questions being more akin to questions of fact and others being more akin to questions of law.[3]

The Determination of the Standard(s) of Review

While the standards of review may be succinctly stated as above, their determination in particular cases is anything but a simple exercise.

For questions of law, the standard, correctness, is relatively straightforward. The appellate court is free to replace the opinion of the judge with its own. Questions of law may include, for example (and this is not by any means an exhaustive list) the application of an incorrect standard, a failure to consider a required element of a legal test, failure to articulate or apply legal principles correctly, or other similar errors in principle.[4] The interpretation of a statute is, of course, purely a question of law.[5]

For questions of fact, or inferences of fact, the standard of review is deference: whether the judge made a palpable and overriding error, or the “functional equivalents” of “clearly wrong”, “unreasonable” or “not reasonably supported by the evidence”.[6] This would include, for example, a judge’s disregard of uncontradicted and unchallenged evidence.[7]

Generally speaking, appellate courts seldom overturn findings of fact.

For matters involving mixed fact and law, things are much more complicated. The standard of review may be either correctness or palpable and overriding error. To decide which of those standards applies, the appellate court must determine whether the trial judge made an “extricable” error in legal principle in arriving at his or her conclusion. Where the legal principle is not readily extricable, then the matter is one of “mixed law and fact” and is subject to a more stringent standard (ie deference). If an error of law can be identified (i.e. extricated), the trial judge’s interpretation is subject to review on a standard of correctness.[8]

It has been said that issues of mixed fact and law fall on a “spectrum of particularity”. Where the proposition is one of general application, it tends towards the correctness end; where it concerns a set of circumstances that are particular and, thus, not likely to have much application beyond the case at hand, it tends towards to the other end, that of palpable and overriding error. [9]

Contractual Interpretation

The issue of standard of review for contractual interpretation, long thought by many courts to be a question of law, was addressed recently by the Supreme Court of Canada. In Creston Moly Corp. v. Sattva Capital Corp. [“Sattva”][10] the Court ruled that contractual interpretation is a question of mixed fact and law, as it involves an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.

In limited circumstances, it may be possible to extract a discrete question of law upon which the interpretation depends. Such legal questions (errors) may include the application of an incorrect principle, the failure to consider a required element of a legal test, the failure to consider a relevant factor, or substantive law errors regarding contract formation, etc. However, the Court opined that such circumstances will be rare.

In short, for contractual interpretation matters, an appellate court will generally defer to the lower court judge, except in cases of a palpable and overriding error or where it is possible to identify an extricable error of law.[11]

So, for example, where a judge examined the wording of an agreement in the light of the surrounding circumstances, including the objective intentions of the parties and the commercial arrangements between them, the question will be one of mixed fact and law, and will only be overturned where there has been a palpable and overriding error.[12]

On the other hand, where the judge failed to provide analysis of certain relevant contractual provisions, read a provision of a contract in isolation rather than construing the contract as a whole, or failed to take a contextual approach and weigh all the relevant factors, there could be a question of law that would be extricable from a finding of mixed fact and law, such that the standard of review would be correctness as opposed to deference.[13]

While at first blush Sattva would seem to have placed almost insurmountable restrictions on appellate review of matters involving contractual interpretation, a number of post-Sattva appellate decisions have found errors which have been subjected to a correctness standard. Review might not be so rare as initially thought.

Conclusions

This article, general as it is, has only scratched the surface of the jurisprudence regarding this important element of appellate law. There are many specific matters such as summary judgment, appeals from Master decisions, discretionary decisions, etc which have their own particular governing jurisprudence regarding standard of review.

When necessary, counsel should conduct research on the applicable standard of review for each issue on appeal. A good starting point may be to search for similar cases. For example, if one is appealing a decision which interpreted an insurance policy, one should review recent appellate jurisprudence involving insurance policies, as the standard of review may be already be articulated by the court. However, it must be remembered that this is a nuanced, case-specific exercise. Counsel’s initial theory as to the standard of review ought to be critically reviewed in light of the governing jurisprudence. This is not a “one size fits all” situation. Each issue must be considered unique and researched accordingly.

In closing, I note that the Manitoba Court of Appeal has stated, referring to standard of review, that “we have been cautioned that this is difficult territory”. It is difficult territory indeed.[14]

In my next article, I will address drafting facta.

Ken Peacocke

www.appeal-law.ca

[1] Creston Moly Corp. v. Sattva Capital Corp. (August 1, 2014 (S.C.C.), at para. 42; Canada (Director of Investigation & Research) v. Southam Inc. , [1997] 1 S.C.R. 748, at pp. 766-767.

[2] Southam Inc at pp. 766-767

[3] Plan Group v. Bell Canada (July 7, 2009 (Ont. C.A.)), at para. 129

[4] Plan Group v. Bell Canada, supra.; Remedy Drug Store Co. v. Farnham (August 19, 2015 (Ont. C.A.)), at para. 61; Blais v. Belanger (April 24, 2007 (Ont. C.A.); Neely v. MacDonald (December 8, 2014 (Ont. C.A.))

[5] Mazur v. Elias Estate (April 12, 2005 (Ont. C.A.))

[6] Plan Group v. Bell Canada

[7] Rossignol v. Rossignol (October 12, 1995 (N.B.C.A.)), para.9, Dang v. Nguyen (December 10, 2014 (Ont. Div. Ct.)). Shibish v. Scher (April 14, 2015 Brown J. (Ont. S.C.J.)), at para 17, 18.

[8] Plan Group v. Bell Canada, supra; Taylor-Made Enterprises Inc. v. Reffell (July 21, 2015 (Ont. Div. Ct)), at para. 6-8; Vist v. Best Theratronics Ltd. (April 20, 2015 (Ont. S.C.J.)), at par. 8; B.W.K. Construction Co. v. Bradhill Masonry Inc. (March 3, 2015 (Ont. Div. Ct.)), at par. 10 -14.

[9] RSG Mechanical Inc. v. 1398796 Ontario Inc. (May 22, 2015 (Ont. Div. Ct.)), at para. 23.

[10] Creston Moly Corp. v. Sattva Capital Corp [2014] 2 S.C.R. 633 (S.C.C.)

[11] Hybridyne Power Generation Corp. v. SAS Co. Global Investments Inc. (July 6, 2015 (Ont. C.A.)), at par. 18, 19; 2176693 Ontario Ltd. v. Cora Franchise Group Inc. (March 12, 2015 (Ont. C.A.)), at para. 21

[12] Metrolinx v. Enbridge Gas Distribution Inc. (June 15, 2015 (Ont. C.A.)), at para. 33.

[13] PDM Entertainment Inc. v. Three Pines Creations Inc. (June 29, 2015 (Ont. C.A.)), at para. 43; 1298417 Ontario Ltd. v. Lakeshore (Town) (November 17, 2014 (Ont. C.A.)); Klaczkowski v. Blackmont Capital Inc. (March 13, 2015 Wilson J. (Ont. Div. Ct.))

[14] M.A.H.C.P. v. Nor-Man Regional Health Authority Inc. (May 18, 2010 (Man.C.A.))