Canadian Appeals Monitor

Information and Commentary on Upcoming and Recent Appeal Court Decisions

Second Opinion: Contracting Out of Prescription / Limitations – A Quebec Perspective

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Martin Boodman on Posted in The Second Opinion

Under the law of Quebec, article 2884 C.C.Q. prohibits the modification by contract of the prescriptive or limitations period provided by law. The prohibition applies to all contracts including commercial or business contracts. By contrast, Ontario law permits the  modification of limitation periods in business agreements.

In Construction Infrabec Inc. v. Paul Savard, Entrepreneur électricien Inc. 2012 QCCA 2304, the Quebec Court of Appeal has confirmed that a notice requirement with a specified delay as a pre-condition to a contractual claim is not, in principle, a modification to the prescriptive period under Quebec law.

In the instant case, the fixed-price construction agreements with the Quebec Minister of Transport permitted contractors to claim additional funds from the Minister by sending various notices of claim within specified delays. The contract terms stated that the absence of a proper notice constituted renunciation to the claim. It was clear that the contract provisions dealt with a non-judicial claims process. The litigation arose as a result of various claims made by a subcontractor against its contractor and by the contractor against the Quebec Government. A defence raised against these claims was non-compliance with the notice requirements. The counter argument to this defence was that the notice requirements constituted a prohibited modification to the prescriptive period established under the law of Quebec.

The Quebec Court of Appeal stated that the notice provisions could not be characterized as a modification to the prescriptive period because they did not impose a delay that caused forfeiture or extinction of the claim. Rather, the process for submitting a claim, including the notice provisions, permitted the parties to renegotiate the price which would not otherwise have been possible under a fixed-price agreement. The notice provisions constituted a formality and a pre-condition which, if fulfilled, crystalized the claim against the Minister of Transport which could then be pursued before the courts. In other words, prior to fulfilling the notice provisions, there was no claim and the prescriptive period had not yet begun. Accordingly, the notice requirements could not be viewed as a modification to the prescriptive period established by law.

The decision in Construction Infrabec is important for several reasons. First, it recognized the distinction between a formal notice requirement as a pre-condition for a claim or cause of action and a prescriptive period. Quebec case law has previously recognized that a prior notice requirement in bank account verification agreements, for example, is valid as a pre-condition to a claim against the bank.

The validity of a prior notice requirement was obliquely recognized in Doré v. Verdun (City) [1997] 2 S.C.R. 862, in the context of interpreting article 2930 C.C.Q., which states that a prior notice requirement or delay (shorter than the prescriptive period) for instituting a personal injury claim cannot frustrate or “hinder” the prescriptive period established by law. The Doré decision held that non-fulfilment of such a notice requirement in a municipal statute did not extinguish the claim because to do so would cause it to “hinder” prescription contrary to article 2930 C.C.Q. The court rejected an argument that the notice requirement was merely a pre-condition to the claim.  Nonetheless, the Supreme Court implied that a prior notice requirement would be valid for non-personal injury claims, without addressing the impact of article 2884 C.C.Q.

As a result of the Construction Infrabec decision, it appears that Quebec law permits the parties to a contract to agree that a timely notice must be given to create a claim or cause of action, in default of which the potential claim is abandoned and the debtor is released from liability. While a prior notice requirement might be useful in commercial agreements to attenuate the prohibition against modifying the prescriptive period in Quebec, caution is advised. The Infrabec decision arose in the context of a public call for tenders. The prior notice requirement was expressly held to benefit both parties to the contract. The potential claim was an exception to the rules governing a fixed price building contract by permitting a claim where it would otherwise not be available. The process involved a notice of intention to file a claim and notice of a non-judicial claim. The delay for the latter notice was linked to the ability of the claimant to calculate the claim. Further, the Court of Appeal did not consider the implications of the Doré decision.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

 

The Second Opinion: Ontario Court of Appeal Rejects Late-Breaking Request for Rectification

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Anthony Alexander on Posted in The Second Opinion

In its recent ruling in Stevens v. Stevens, 2013 ONCA 267, the Ontario Court of Appeal refused to grant a party’s request that a document (a domestic contract) be rectified in his favour.  While the Court’s decision may strike many as sensible in the circumstances, the precise doctrinal basis for the conclusion raises interesting questions.

The parties were husband and wife.  The wife was considerably wealthier than the husband.  During an effort to save the marriage, they had entered into a domestic contract.  It appears that the contract was intended to provide that, upon marriage breakdown, the husband would receive 50% of the value of the matrimonial home.  Unfortunately, owing to an apparent drafting error, the contract instead stated that the husband would receive 100% of the value of the home.

When the marriage broke down, the husband attempted — at trial–  to enforce the contract as drafted.  Instead, the trial judge ordered that the entire matrimonial contract was void because it was unconsionable, did not represent a true meeting of the minds, and should be set aside under the provincial Family Law Act.

On appeal, the  husband changed course entirely.  Concluding that “half a loaf” was better than none, he took the position that the marriage contract should be saved by being re-written to reflect what he now claimed was the parties’ true agreement — i.e., that he should received 50% of the value of the home.

More specifically, the husband asked the Court of Appeal to grant the extraordinary equitable remedy of rectification (i.e., the judicially ordered, retroactively effective rewriting of a document so that it reflects the parties’ true bargain).

Perhaps not surprisingly, the Court of Appeal dismissed the husband’s request out-of-hand.

One might have expected the Court to explain that, as a discretionary equitable remedy designed to achieve fairness and justice, rectification was simply unavailable to a party who had knowingly sought to take advantage of the drafting error.  Interestingly, while that may have been a factor in the Court’s thinking, that was not the focus of the Court’s conclusion:

[8]          In our view, on this record and in the light of the position he took at trial, the remedy of rectification is not open to the appellant on appeal. If accepted, it would permit the appellant to take a fundamentally different position on appeal, one that is completely inconsistent with the position he took and the evidence he led at trial. To do so would be fundamentally unfair to the respondent.

[9]          ….The trial judge found as fact that the appellant was aware of the drafting error and that he knew that it needed to be clarified. The appellant refused to take steps to make the clarification and continued to insist that the agreement should be enforced as written. Simply put, he cannot ask this court to rectify an agreement to reflect terms he swore he did not agree to.

Thus, in addition to providing an interesting (albeit implicit) example of the maxim that a party who seeks equitable relief must come to court with “clean hands,” the case may also be seen as representing an example of the estoppel doctrine sometimes called “the principle of approbation and reprobation” (i.e., a party with two inconsistent legal options, who clearly elects to pursue one, will generally be precluded from later resiling from that position, and seeking to pursue the second, inconsistent alternative in a proceeding).

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

This Week at the SCC (10/05/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Kirsten Thompson on Posted in This Week at the SCC

The Supreme Court of Canada issued one decision of interest to Canadian businesses and professions this week.

In Behn v. Moulton Contracting Ltd., 2013 SCC 26, the Court affirmed the B.C. Court of Appeal’s finding that the Behns, as individual members of an Aboriginal community, did not have standing to assert collective rights in their defence, as only the community could raise such rights.

The Crown granted logging licences to a forest company to harvest timber in two areas on the territory of the Fort Nelson First Nation in British Columbia. The licences were opposed by George Behn and individual family members, who set up a blockade camp on the road leading to the area allocated for harvest.

The company brought a tort action against the individuals, who argued in their defences that the timber licences were void because they had been issued in breach of the constitutional duty to consult and because they violated their rights under Treaty 8.  The logging company filed a motion to strike these defences.

The court below held that the individual members of the Aboriginal community did not have standing to assert collective rights in their defence; only the community could invoke such rights.  The appeal court also concluded that such a challenge to the validity of the licences amounted to a collateral attack or an abuse of process, as the members of the community had failed to challenge the validity of the licences when they were issued. For further discussion of the decision of the Court  of Appeal, see the previous blog entry here.

The Supreme Court dismissed the appeal, holding that the duty to consult exists to protect the collective rights of Aboriginal peoples and is owed to the Aboriginal group that holds them.  The Court acknowledged that an Aboriginal group could authorize an individual or an organization to represent it for the purpose of asserting its Aboriginal or treaty rights, but that that was not the case here.

The Court also acknowledged that certain Aboriginal and treaty rights may have both collective and individual aspects, and it may well be that in appropriate circumstances, individual members could assert such rights.  It was suggested that where there was a connection between the rights at issue and a specific geographic location within the First Nation’s territory, individual community members could have a greater interest in the protection of the rights on their traditional family territory than do other members of the First Nation, and that this connection may give them a certain standing to raise the violation of their particular rights as a defence to a tort claim.  However, the Court declined to issue a definitive pronouncement in this regard and left the door open for a future case.

Regarding the allegation of abuse of process, the Court found that neither the First Nation nor the community members had made any attempt to legally challenge the licences when the Crown granted them. In the Court’s view, to now allow the members to raise their defence based on treaty rights and on a breach of the duty to consult at this point would be tantamount to condoning self-help remedies and would bring the administration into disrepute.  It would also amount to a repudiation of the duty of mutual good faith that animates the discharge of the Crown’s constitutional duty to consult First Nations.

The facta of the parties may be found here, and a webcast of the oral argument is available here.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

The Second Opinion: Contracting Out of the Limitations Act — The Ontario Court of Appeal Provides Guidance

By Hovsep Afarian on Posted in The Second Opinion

When will a contractual provision purporting to shorten a statutory limitation period be effective?  The Ontario Court of Appeal addressed this issue in its recent decision in Boyce v. The Co-Operators Insurance Company, 2013 ONCA 298.

The facts of the Boyce are straightforward.  The owners of a fashion boutique suffered loss as a result of a foul odour in their business premises on October 20, 2010.  They sued their insurer in February 2012 – more than a year after suffering the underlying loss – seeking indemnification for the loss.

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The Second Opinion: Legal Causation and the Duty to Warn

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Brandon Kain on Posted in Uncategorized

Can a defendant be liable for failing to warn about a risk which does not materialize, where this leads the plaintiff to be injured by a second undisclosed risk that, unlike the first, would not have influenced the plaintiff if disclosed?  In Wallace v. Kam, [2013] HCA 19, released today, the High Court of Australia answered no.  The decision in Wallace could prove to be an important one for Canadian defendants who are frequently targeted with failure to warn claims, particularly in the context of product liability class actions and medical negligence disputes.

Background

The Wallace litigation involved a claim by the plaintiff, Mr. Wallace, against a neurosurgeon, Dr. Kam.  As a result of a surgical procedure performed by Dr. Kam, Mr. Wallace suffered a condition known as “bilateral femoral neurapraxia”, which consisted of temporary local damage to nerves on his thighs.

Mr. Wallace’s claim was originally dismissed at trial.  Harrison J. found that although Dr. Kam negligently failed to warn Mr. Wallace of the risk of neurapraxia, he would have chosen to undergo the surgery even if the risk was disclosed.  In response, Mr. Wallace argued that Dr. Kam also negligently failed to disclose the risk of paralysis, and that even though he did not suffer paralysis, he would have decided against the surgery had he known about it.

This argument was rejected by both Harrison J. and the majority of the New South Wales Court of Appeal.  They found that Dr. Kam’s failure to warn of the risk of paralysis could not be the legal cause of Mr. Wallace’s neurapraxia.

The Wallace Decision

The judgments below were unanimously affirmed by the High Court of Australia.  It concluded that although Dr. Kam’s failure to warn Mr. Wallace of the risk of paralysis was the factual (or “but for”) cause of his neurapraxia, it should not be regarded as the legal cause based on considerations of policy:

… The duty of a medical practitioner to warn the patient of material risks inherent in a proposed treatment is imposed by reference to the underlying common law right of the patient to choose whether or not to undergo a proposed treatment. However, the policy that underlies requiring the exercise of reasonable care and skill in the giving of that warning is neither to protect that right to choose nor to protect the patient from exposure to all unacceptable risks. The underlying policy is rather to protect the patient from the occurrence of physical injury the risk of which is unacceptable to the patient. It is appropriate that the scope of liability for breach of the duty reflect that underlying policy. (para. 36)

Based on these considerations, the High Court concluded:

… The normative judgment that is appropriate to be made is that the liability of a medical practitioner who has failed to warn the patient of material risks inherent in a proposed treatment “should not extend to harm from risks that the patient was willing to hazard, whether through an express choice or as found had their disclosure been made.” (para. 37)

Significance

The Wallace decision suggests that the scope of liability for failure to warn of a particular risk does not extend to a different risk which the plaintiff either accepted, or would have accepted had it been revealed.  Although the High Court’s decision was based upon the distinction between factual and legal causation in the New South Wales Civil Liability Act, the same distinction has been drawn at common law by the Supreme Court of Canada (see, e.g., Mustapha v. Culligan of Canada Ltd., [2008] 2 SCR 114).

Assuming Wallace were to be adopted in Canada, it could have an important limiting effect in failure to warn claims against medical professionals.  In addition, it could prove significant in product liability class actions alleging failure to warn, since it underscores the complexity and individual issues that can be involved in decision and injury causation inquiries.  It will therefore be interesting to see how Wallace is received by Canadian courts.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

Australian Fraudsters: Definition of Concurrent Wrongdoer Tied to Loss

By Kate Findlay on Posted in Contracts, Criminal

When is a fraudulent and negligent tortfeasor a “concurrent wrongdoer”? In Hunt & Hunt Lawyers v. Mitchell Morgan Nominees, the High Court of Australia has clarified the definition of a concurrent wrongdoer finding that liability can be apportioned under Part 4 of the Civil Liability Act where the damage caused by one or more concurrent wrongdoers is the same. The reasoning behind the apportionment of loss made by the court is instructive on the meaning of concurrent wrongdoing with potential application to other common law regimes.

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This Week at the SCC (06/05/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Martin Boodman on Posted in This Week at the SCC

This week the Supreme Court of Canada granted a leave application in the following case of interest to Canadian businesses and professions.

In Confédération des syndicats nationaux v. Canada (Procureur général) 2012 QCCA 1822, the Confédération challenged the most recent treatment of employment insurance premiums and surpluses by the federal government pursuant to legislation passed in 2010. The effect of the retroactive 2010 legislation was to close the Employment Insurance Account as of January 1, 2009 and create the Employment Insurance Operating Account. A balance in excess of $57 billion in the Employment Insurance Account was not transferred to the Employment Insurance Operating Account as a result of the 2010 legislation. Rather, the surplus funds became part of the general funds available to the federal government. In response to the challenge, the Attorney General of Canada filed an exception to dismiss arguing that the decision in Confédération des syndicats nationaux v. Canada (Attorney General) 2008 SCC 68 had determined the issues supporting the validity of the  2010 legislation. The Quebec Court of Appeal rejected the motion to dismiss because the instant case was based upon facts, including the legislation and  accounting treatment of the surplus, that arose after the 2008 Supreme Court of Canada decision. In this context, new and undetermined issues of law arose.

The decision to be rendered by the Supreme Court of Canada in the instant case will consider the extent to which its 2008 decision determined the powers of the federal government to allocate funds collected under taxation and regulatory regimes.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

A Fair Fight: Issue Estoppel and Parallel Proceedings

By Timothy D. Chapman-Smith on Posted in Administrative, Case Comments

Litigation has to be fair to both sides of a dispute. Finality is an important aspect of that fairness. Where parallel proceedings have differences in process, procedure, or purpose, is it fair to allow the same parties to litigate the same issues? Or does the fairness of finality take precedence over considerations of process and purpose?

In Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, the Supreme Court of Canada considered when a civil court should bar claims on the basis that the issues in dispute were finally disposed of in a prior administrative proceeding. A 4-3 majority of the Court affirmed the flexible test for issue estoppel, set out in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, and its requirement that the judge exercise discretion not to apply the doctrine if it would result in unfairness or an unjust result.

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The Second Opinion: Anything to declare? The Alberta Court of Appeal addresses Limitation Periods and Declaratory Relief

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Anthony Alexander on Posted in The Second Opinion

Many Canadian limitations statutes explicitly state that no limitation period is applicable to a proceeding in which the relief sought is a declaratory judgment.  In an attempt to bring themselves within this special rule, counsel facing an expired limitation period have been known to frame their claims as ones seeking declaratory relief.

In Joarcam, LLC v. Plains Midstream Canada ULC, 2013 ABCA 118, the Alberta Court of Appeal has confirmed the difficulty of attempting to rely on this strategy.

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McCarthy Tétrault Launches Ontario Employment Blog

By McCarthy Tétrault LLP on Posted in Uncategorized

For those who may be interested, McCarthy Tétrault has just launched our sixth blog, the Ontario Employer Advisor. This blog offers the firm’s perspectives on the latest legal developments applicable to the workplace and of interest to our clients, particularly in Ontario. It provides our insights on legislative and regulatory developments, as well as new case law, with practical tips for employers and their human resources professionals when managing the workforce. We welcome you to visit the blog.

The Second Opinion: Absolute Privilege for Lawyers Not So Absolute

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Kirsten Thompson on Posted in The Second Opinion

Amato v. Welsh, 2013 ONCA 258 marks an interesting development in the law – it suggests the previously inviolable doctrine of absolute privilege which protects lawyers from suit may admit an exception. The Court of Appeal upheld the decision of the lower court, saying that it is possible that a court could find that the duty of loyalty trumps the doctrine of absolute immunity.

The centuries old doctrine of absolute privilege permits lawyers, judges and other players in legal proceedings to shield themselves from suit for words spoken during such proceeding, provided the words were uttered for the purposes of the proceeding and by someone under  duty to make such statements.

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This Week at the SCC (26/04/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Hovsep Afarian on Posted in This Week at the SCC

The Supreme Court of Canada heard arguments in one case of interest to Canadian businesses. In Vivendi Canada Inc. c. Michel Dell’Aniello, the Supreme Court of Canada is revisiting the issue of what constitutes a “common issue” in the context of a class proceeding.

The Supreme Court of Canada also denied leave to appeal in a host of cases of interest to Canadian businesses.

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Compliance Not Optional: Crown Not Immune from Copyright Act

By Helen Burnett on Posted in Case Comments, Intellectual Property, Media

Is the Crown immune from paying tariffs under the Copyright Act? On March 31, 2004 and March 31, 2009, the Canadian Copyright Licensing Agency, operating as Access Copyright, filed proposed tariffs claiming royalties for the reproduction of published works by employees of the provincial and territorial governments other than Quebec. The provinces and territories objected to the tariffs and, as a preliminary matter, challenged the ability of the Copyright Board of Canada to consider the proposed tariffs claiming they were immune from the Copyright Act. The Board dismissed this challenge on January 5, 2012, and some of the Applicants sought judicial review of the Board’s decision.

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The Second Opinion: U.S. Supreme Court Limits Extraterritorial Reach of Alien Tort Claims

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Brandon Kain on Posted in Uncategorized

In Kiobel v. Royal Dutch Petroleum Co., released last Wednesday, the U.S. Supreme Court significantly restricted the claims that may be brought against foreign actors under the Alien Tort Statute (“ATS“).  The ATS is a one-sentence statute enacted in 1789 which provides that “[t]he district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States”.  Since being “rediscovered” in the 1970s, the ATS has been used to launch numerous class actions against non-U.S. corporations for alleged human rights abuses carried out abroad.  The Kiobel decision is therefore an important one for Canadian businesses that engage in significant operations in developing countries.

Background

The Kiobel litigation involved a proposed class action by Nigerian nationals who were resident in the United States.  They alleged that the defendant Dutch, British and Nigerian corporations aided and abetted the Nigerian Government in committing violations of the law of nations in Nigeria while they were engaged in oil exploration and production activities there.

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The Second Opinion: A Municipality Invokes an Illegal Clause in its Call for Tenders to Justify the Contract Award

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Martin Boodman on Posted in The Second Opinion

The decision in Entreprise P.S. Roy inc. v. Magog (Ville de) 2013 QCCA 617 considers the legality of conditions imposed by a municipality in a call for tenders and whether a municipality can invoke an illegal clause in its call for tenders to justify its award of the contract to the lowest “compliant” bidder.

Magog issued a call for tenders in which it imposed – apparently by error – the condition that the bidder not have had a contract terminated by a municipality for breach within the previous 5 years. The condition applied to judicial and non-judicial termination. The call for tenders stated that Magog’s goal was to select the lowest compliant bid.

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This Week at the SCC (19/04/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Anthony Alexander on Posted in This Week at the SCC

The Supreme Court heard two appeals this week in cases of interest to Canadian business and professions.

An appeal was heard from AIC Limited et al. v. Dennis Fischer et al., 2012 ONCA 47, a ruling in which the Ontario Court of Appeal overturned the motion judge’s initial refusal to certify a class action.  The proceeding had been commenced against mutual fund managers who were alleged to have permitted “market timing” activities, to the detriment of long-term investors.  An investigation had been conducted by the Ontario Securities Commission, which led to settlement agreements between the managers and the Commission.  The motions judge had ruled that the existence of these settlement agreements precluded a class proceeding from being the preferable procedure.   The Court of Appeal disagreed.

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The Second Opinion: UK Supreme Court decides it’s okay to look

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Kirsten Thompson on Posted in The Second Opinion

Is there a difference between having a collection of headlines assembled in a report and sent to you by email versus viewing that same report on a website? The UK Supreme Court recently decided there is, overturning the decisions of the courts below and holding that the latter activity is covered by the ‘temporary copies’ exception in UK copyright law.  The case concerns the activities of Meltwater, a news aggregator which has been a global thorn in the side of rights holders, including here in Canada where in June 2011, a group of Canada’s biggest news publishers including Postmedia Network Inc., Sun Media Corp., Le Devoir Inc. and others initiated a similar lawsuit against Meltwater, alleging copyright infringement and seeking an injunction and damages.

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The Second Opinion: Appellate Court Applies Provincial Consumer Protection Laws in a Class Proceeding Against a Federally-Regulated Company

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Hovsep Afarian on Posted in Class Actions, The Second Opinion

In a recent decision of great importance to federally-regulated entities such as banks, airlines and navigation and shipping companies, the B.C. Court of Appeal ruled that a provincial consumer protection statute applies to airlines:  Unlu v. Lufthansa et al, 2013 BCCA 112.

The Unlu case involves a putative class action against various airlines alleging deceptive practices under B.C.’s Business Practices and Consumer Protection Act (the “Act”).  More specifically, the intended representative plaintiff asserts that the airlines improperly identified as taxes the fuel surcharge on airline tickets, in breach of the provincial Act.  The airlines, in defence, argued that the provincial consumer legislation is constitutionally inapplicable to them by virtue of the doctrines of paramountcy and interjurisdictional immunity.  The summary trial judge rejected these defences.  The B.C. Court of Appeal affirmed the lower court judgment and permitted the intended class action against the airlines to proceed.

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This Week at the SCC (12/04/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Brandon Kain on Posted in This Week at the SCC

The Supreme Court of Canada granted leave to appeal this week in three cases of interest to Canadian businesses and professions.

The first involves a series of related appeals from Banque de Montréal c. Marcotte, 2012 QCCA 1396, Fédération des caisses Desjardins du Québec c. Marcotte, 2012 QCCA 1395  and Amex Bank of Canada c. Adams, 2012 QCCA 1394.  The appeals arise in the context of class actions alleging that the defendant banks failed to disclose foreign exchange conversion charges on credit cards in the way required by the Quebec Consumer Protection Act.  They raise the questions of whether the Consumer Protection Act is constitutionally inapplicable or inoperative to regulate bank-issued credit cards based on the doctrines of interjurisdictional immunity or paramountcy.  The Supreme Court’s decision in these appeals could be important for any businesses that are subject to provincial consumer protection legislation if they are also involved in federal works and undertakings, or are governed by an overlapping federal statutory regime.

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The Second Opinion: New Nuances for Injunctions to Prevent Interference with Contract

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Martin Boodman on Posted in The Second Opinion

In Rouge Resto-bar Inc. v. Zoom Media Inc., 2013 QCCA 443, the issue before the Quebec Court of Appeal was whether a permanent injunction could be granted  to stop “knowing participation in a contractual breach” where, as a result, the defendant’s co-contractant would be deprived of the benefit of its contract with the defendant without being a party to the case. The contract between the defendant and its co-contractant allegedly constituted a breach of the contract between the latter and the claimant.

The Court of Appeal decided that an injunction to prevent one party from performing a contract without impleading its co-contractant would contravene the fundamental principle audi alteram partem in that it would deprive the latter of rights without giving it an opportunity to be heard. An exception may arise, however, where the defendant’s co-contractant commits a “flagrant violation” of its distinct contractual obligations towards the claimant by contracting with the defendant such that the latter knowingly participates in the breach.

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The Second Opinion: International Uranium Dispute Undermined by the Hague Convention

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Anthony Alexander on Posted in The Second Opinion

A very recent ruling of the Ontario Court of Appeal, Khan Resources Inc. v. Atomredmetzoloto JSC, 2013 ONCA 189, is significant for two reasons:  first, it provides appellate authority addressing the interaction between domestic civil procedure rules and international conventions; and, secondly, it highlights a potential pitfall facing Canadian companies doing business with foreign entities (and particularly state-controlled foreign entities).

In order to develop a uranium mine in Mongolia, a Canadian mining company and two of its affiliates had entered into a joint venture with two Russian companies, both of which were controlled by the Russian State Atomic Energy Corporation.  A dispute arose between the parties.  The Canadian entity (and its affiliates) commenced an action in Ontario, and attempted to serve the two Russian companies in Russia with notice of the commencement of the proceeding.  Continue Reading

This Week at the SCC (05/04/2013)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Kirsten Thompson on Posted in This Week at the SCC

This week, the Supreme Court issued two judgments of interest to Canadian businesses and professions. In Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, the Court reaffirmed the test for the exercise of discretion in applying issue estoppel. In Ediger v. Johnston, 2013 SCC 18 , a medical malpractice case, the Court discussed the standard of care and causation.

In Penner, Mr. Penner was arrested during a courtroom disturbance, which resulted in proceedings under the police disciplinary process. A hearing officer ultimately dismissed Mr. Penner’s complaint. Mr. Penner then commenced a civil action against the same parties. The respondents moved to strike Mr. Penner’s Statement of Claim by way of issue estoppel. Despite the test of issue estoppel having been a met, a court nonetheless retains discretion to not apply the doctrine if to do so would result in unfairness or injustice.

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Full Disclosure: Share Price Is Not Enough

By Helen Burnett on Posted in Case Comments, Class Actions, Corporate Law, Securities

If disclosure of information has no effect on a company’s share price, was that information really material to investors? A recent Ontario Divisional Court ruling suggests that the answer may be “Yes” if the information is of the kind that a reasonable investor would want to rely on in making an investment decision. In Cornish, the Court considers the test for when a “material change” has occurred and concludes that the market impact test for materiality can be satisfied even if the share price is not impacted following disclosure of the information. The case is an important one about what constitutes “materiality”; when external events may trigger disclosure obligations; and the breadth of the “public interest” power of the Ontario Securities Commission (OSC).

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The Second Opinion: Can a Non-Contracting Party Sue for Breach of Contract? The Ontario Court of Appeal Addresses the Doctrine of Privity

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

By Hovsep Afarian on Posted in The Second Opinion

When can a person who is not a formal party to a contract sue for its breach? The Ontario Court of Appeal grappled with this and related privity issues in its recent decision in Brown v. Belleville (City), 2013 ONCA 148.

The facts of the decision in Brown are, briefly, as follows. The Township of Thurlow, which subsequently amalgamated with the City of Belleville (the “City”), entered into an agreement with a farmer, undertaking to perpetually maintain and repair a storm sewer drainage system on the farmer’s land (the “Agreement”). The land in question was sold to third parties called the Pleizers. The Pleizers subsequently sold the land to the Browns. The Agreement was never expressly assigned to either the Pleizers nor to the Browns. However, the Agreement did contain a clause stating that it “[s]hall [e]nure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, successors and assigns.” The City disavowed its obligations under the Agreement. The Browns ultimately sued the City, seeking specific performance of the Agreement or damages for its breach. In defence, the City argued, among other things, that the Browns did not have standing to sue it for breach of the Agreement.

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