Canadian Appeals Monitor Information and Commentary on Upcoming and Recent Appeal Court Decisions

This Week at the SCC (25/01/2013)

Posted in This Week at the SCC
Brandon Kain

Cases Heard

The Supreme Court of Canada heard arguments this week in two cases of interest to Canadian businesses and professions, and reserved judgment in each.

The first is an appeal from Guay Inc. c. Payette, 2011 QCCA 2282, in which the Quebec Court of Appeal held that restrictive covenants which precluded the appellant from competing with or soliciting customers of the respondent for five years after termination of his employment were valid, notwithstanding the trial judge’s findings below that the appellant had been wrongfully dismissed by the respondent and that the covenants were too broad to be enforced. The appellant initially agreed to the restrictive covenants when he sold the assets of various companies he controlled to the respondent, and the Court of Appeal held that they were enforceable because they formed part of that contract of sale rather than part of the appellant’s subsequent employment contract with the respondent. Traditionally, courts have applied a stricter test in upholding restrictive covenants in employment contracts than those within contracts for the sale of a business. This appeal will give the Supreme Court an opportunity to clarify how these tests should operate where there is both the sale of a business and an employment relationship. We discussed Guay in a previous post. The oral arguments before the Court may be viewed here, and the written arguments may be viewed here.

The second case is an appeal from Wallace v. Canadian Pacific Railway, 2011 SKCA 108, and involves the conflict of interest rules applicable to lawyers. In particular, the case involves the scope of the “bright line” rule that prohibits a lawyer from acting for a client “whose interests are directly adverse to the immediate interests of another current client – even if the two mandates are unrelated – unless both clients consent after receiving full disclosure (and preferably independent legal advice), and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other”. Among other things, the appeal will require the Court to consider whether this rule is subject to an exception where the lawyer is able to demonstrate that there is no substantial risk that the lawyer’s representation of the current client would be materially and adversely affected by the new unrelated matter. The appeal also asks whether the consent of the current client can be inferred in circumstances where it is a “professional litigant” but it makes a subsequent express objection to the lawyer’s representation of the other client, and raises other important issues concerning the meaning of “confidential information” and the appropriate remedies in the conflict of interest context. We discussed McKercher in a previous post. The oral arguments before the Court may be viewed here, and the written arguments may be viewed here.

Leave Applications Decided

The Court also granted leave to appeal in two cases of interest this week.

The first is from the decision in William v. British Columbia, 2012 BCCA 285, and involves the manner in which courts must identify “definite tracts of land” to which Aboriginal title applies. In particular, the appeal asks whether Aboriginal title can be granted only for specific sites for which pre-sovereignty occupation has been established, or whether title can be granted to larger tracts of land that a First Nation exclusively controlled at sovereignty and systematically exploited, season after season, according to its traditional pattern of land use.

The second case involves an appeal from Peracomo Inc. v. Société Telus Communications, 2012 FCA 199. It asks whether a company and its directing mind, who deliberately severed an underwater telecommunications cable after snagging it during the course of his crab-fishing operations and believing it to be abandoned, can rely on the limitation of liability provision in s. 29 of the federal Maritime Liability Act, or whether they are precluded from doing so by the intentional or reckless conduct exception in Article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976, reproduced in Schedule I to the Maritime Liability Act. In addition, the appeal asks whether the appellants are entitled to insurance coverage in respect of their liability to the owners and user of the cable, or whether their insurer was correct to deny such coverage under s. 53(2) of the federal Marine Insurance Act (which provides that an “insurer is not liable for any loss attributable to the wilful misconduct of the insured”).