The class action arose from an infectious disease outbreak amongst patients receiving epidural injections administered by the defendant anesthesiologist, Dr. James, at the Rothbart Centre for Pain Care between January 1, 2010 and November 30, 2012. The outbreak was subsequently investigated by Toronto Public Health.

Justice Morgan held that there was no evidentiary basis to make a finding that any nurse fell below the standard of care in respect of their infection control practices or the manner in which they assisted Dr. James. Further, with respect to the allegation of a failure to report, Justice Morgan held that Dr. James could not offload his own professional responsibilities by accusing nurses, who assisted him in accordance with standard procedures and with whose performance and IPAC he consistently expressed satisfied, of failing to notice that he himself did not meet the standards expected of a doctor.

Overall, Justice Morgan found that the evidence against the nurses was “remarkably thin” and which amounted to “next to nothing”. As such, there was no sustainable legal claim against any of the nurses.

Justice Morgan however did find a breach of the standard of care by Dr. James for failing to use aseptic technique for each epidural procedure and also for failing to report, investigate and remediate all known infections to his patients.

Of particular note is the discussion on causation, which involved a “novel” approach in the context of collective claims. Plaintiff’s counsel took the position that in fulfilling the burden of proof there was no need for the plaintiff to present scientific evidence of the precise way in which the negligence of Dr. James contributed to those injuries. Instead, the question was more of a practical one in which inferences may be drawn, including from circumstantial evidence. In this case, Justice Morgan held that an inference could be drawn because the evidence of causation, while circumstantial, was overwhelming. The evidence demonstrated that the risk ratio of Dr. James’ epidural injections was increased substantially, thus presumptively proving causation for Class Members (subject, of course, to any evidence which might emerge in an individual trial rebutting this presumption).

Lastly, Justice Morgan found this case to be one which required the imposition of punitive damages. Dr. James had an obligation to report, investigate, and remediate these infections. His failure to do so amounted to a marked departure of a person in his position. While the exact quantification of damages will be determined during individual trials, a clear message of deterrence was vocalized for the medical profession as a whole.

The post FCL’s Voula Kotoulas Successfully Defends Medical Malpractice Claim at Trial appeared first on FCL LLP.

The Court of Appeal establishes a common law duty of care between investment fund managers and investors

The Ontario Court of Appeal’s decision in Wright v. Horizons ETFS Management (Canada) Inc., 2020 ONCA 337 may generate a significant impact in the investment fund community, after establishing a novel common law duty of care between investment fund managers and investors, for negligence under pure economic loss.

The defendant, Horizons ETFS Management (Canada) Inc. (“Horizons”) created and managed a complex derivatives-based exchange traded fund (“ETF”), which was purchased through stock exchanges and was available to retail investors, one of whom was the plaintiff, Wright. The Fund was meant to provide inverse exposure to stock market volatility. The Fund was described in the prospectus as “highly speculative” and “involv[ing] a high degree of risk”. After two years of growth, the value of the Fund dropped suddenly and dramatically; the Fund lost almost 90% of its value overnight. Investors lost nearly $40 million and the Fund never recovered. Wright commenced a proposed class action alleging that Horizons was negligent and liable for:

1. Designing, developing, offering, and promoting a financial product that was not adequately tested before launching, excessively risky, complex and doomed to fail, and;
2. Making misrepresentations in its prospectus within the meaning of s. 130 of the Securities Act.

The certification judge denied Wright’s motion, holding that the statement of claim did not disclose a reasonable cause of action, because it was plain and obvious that Horizons did not owe the class a duty of care. Wright appealed.

The Court of Appeal granted the appeal in part, holding that the certification judge erred in concluding that the claim disclosed no reasonable cause of action. Wright had a reasonable prospect of demonstrating that the claim fell within a recognized duty of care under the category of negligent performance of service as Horizons had undertaken to create and sell an ETF that was suitable for some investors and, on pleading as drafted, it was not.

In deciding whether there was a reasonable cause of action in negligence, the Court first assessed whether the claim could fit within an existing duty of care. Wright proposed that this claim was analogous to cases for negligent performance of service. The Court agreed, and relied on a previous case that established a reasonable cause of action against the creditors of a tax avoidance program, when the participants alleged that the program was negligently designed and did not operate as advertised. The Court found a relationship of proximity between Horizons and the proposed class because as a funds manager, it had a duty to investors to act honestly, in good faith and in the best interest of the Fund. Horizons failed to disclose the nature and extent of the risks to the investors; and therefore, the risk of injury was reasonably foreseeable.

The Court has now remanded this case to the lower Court to determine whether other certification criteria are met, before the merits of the case are assessed. Nevertheless, this case serves as a prudent reminder to fund managers to reassess the appropriate market for their products, and to make the requisite disclosures to identify potential risk exposure for investors. The legal and investor community will wait to see whether this case catalyzes other unhappy investors to come forward to try and recoup their losses from adverse investments.

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FCL LLP Partner, Kim Duong successfully argued a summary judgment motion involving issues of limitation and solicitor-client privilege.

In CFO Capital et al. ats Paul Dass et al., the plaintiffs sought damages for fraud, professional negligence and reputational injury alleged to have been caused by the defendants. In addition to the denial of any and all allegations of wrongdoing, the defendants asserted that the plaintiffs’ claim had breached the two year limitation period.

While the plaintiffs became aware of the material facts required to advance a claim, they waited over two and a half years before commencing the action. The plaintiffs argued that the evidence they had available at that time was insufficient to be successful in an action.  However, the Court in agreeing with the defendants, held that the absolute success of a claim, or the exact amount of damages claimed is not required to trigger the limitation period.

In doing so, the Court referred to the recent Court of Appeal decision, Sosnowski v. MacEwan, which set out three main principles in interpreting when it is “appropriate” to commence an action:

1. To determine if an action is the appropriate means to seek to remedy
   a loss or damage depends on the specific factual and/or statutory
   setting of each case;
2. Two circumstances have been accepted as delaying the date on
   which a claim is discovered under this subsection: when the plaintiff
   relies on the superior knowledge and expertise of the defendant, or
   where an alternative dispute resolution process offers an adequate
   remedy, and it is not complete; and
3. The word “appropriate” means “legally appropriate”. In other words,
   “appropriate” does not include an evaluation of whether a civil
   proceeding will succeed.

Ultimately, the Court was satisfied that there was no genuine issue requiring a trial and granted summary judgment in favor of the defendants.

The plaintiffs have indicated they intend to appeal this decision. Stay tuned for the decision of the Court of Appeal on this matter.

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Every five years, an appointed Panel reviews the operation of the Mortgage Brokerages, Lenders and Administrators Act and its Regulations to make any necessary recommendations for change.

The Ministry of Finance has now released the Panel’s Report which is entitled Protecting and Modernizing Ontario’s Mortgage Broker Industry. The recommendations (set out below) are meant to create greater accessibility to the housing market for current and aspiring homeowners, streamline the framework for brokers and lenders, and increase consumer protection and anti-money laundering oversight.

PART 1: Reducing Burden and Increasing Access for Homeowners, Lenders, and Investors

1. Reducing Red Tape for Commercial Mortgage Transactions
2. Reducing Regulatory Burden by Establishing New Classes of Licensing
3. Reducing Regulatory Burden in Guidance, Bulletins and Forms
4. Maintaining Current Licensing Exemptions

PART 2: Strengthening Consumer Protection and Anti-Money Laundering Oversight

5. Raising and Streamlining Educational and Professional Standards for Agents and Brokers
6. Incentivising Registration for Private Lenders
7. Strengthening the Administrative Monetary Penalty Framework

If accepted, the newly created Financial Services Regulatory Authority of Ontario, which governs mortgage brokers, insurance, credit unions, loan and trust companies and pensions will play a key role in executing any accepted recommendations in the Report.

The impact of such changes will substantially alter the mortgage brokering/lending regime and incite new duties for legal professionals who work in this area. Stay tuned to see how Ontario chooses to implement these recommendations.

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