The future ain't what it used to be
-Yogi Berra (1925-)
Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.
-Peter Drucker (1909-2005)
For the second year in a row, the Canadian Appeals Monitor is arming our readers with our take on the most anticipated Supreme Court of Canada appeal decisions of the coming year. 2014 promises new guidance on key issues of public and private law affecting businesses across the country, and we have set out a Top Ten below of key cases to watch. Not only do we hope this information is useful professionally, but if you need to escape an awkward conversation with a loved one over the holidays, bringing up the subject of pending appeals may provide a handy exit.
In January, the Supreme Court will hear the appeal of the unanimous Federal Court of Appeal judgment of Dawson J.A. in Canadian National Railway, which deals with the proper standard of review for decisions of cabinet when exercising a statutory power to "vary or rescind" administrative decisions. At issue was a decision by the Governor-in-Council to over-rule the Canadian Transportation Agency in a dispute between Canadian National Railway Company (CN) and Peace River Coal Inc. (Peace River) about freight rates for coal shipping. The freight rates had been agreed in a contract between CN and Peace River and the Agency agreed with a preliminary motion by CN that it had no jurisdiction to effectively amend the terms of that contract despite its statutory jurisdiction over the reasonableness of freight tariffs in certain circumstances. The Federal Court, applying a standard of correctness on judicial review, set aside the order-in-council.
The Court of Appeal, relying on its judgment in Globalive Wireless Management Corp. v. Public Mobile, 2011 FCA 194, found that the appropriate standard of review was reasonableness because the question was one of mixed fact, policy and law. Applying this standard, it then found that cabinet acted reasonably and reached a conclusion supported by the evidence, and that the Federal Court judge had erred in over-ruling it. The Supreme Court's decision in CNR will be interesting given that it denied leave to appeal the much-discussed Globalive decision in 2012 and that it has traditionally taken a very deferential approach towards cabinet decisions (most famously in Inuit Tapirisat and Thorne's Hardware ).
In a case that will affect all kinds of professional services firms, the Supreme Court heard the appeal this month in McCormick v. Fasken Martineau Dumoulin LLP. At issue is the question of whether a limited liability partnership can be treated as an employer of a partner for the purposes of human rights legislation. The British Columbia Court of Appeal held that although the Human Rights Code deserves a broad, liberal and purposive interpretation, this cannot extend to an interpretation that a partner is in an employment relationship with the partnership. It therefore found that the Human Rights Tribunal did not have the jurisdiction to deal with a complaint from a partner in a law firm regarding age discrimination. Should the Supreme Court overturn the Court of Appeal, its decision has the potential of being extended to similar contexts where human rights legislation – and possibly other forms of regulation – can arguably be applied to partnerships. Notably, interveners in the appeal include human rights bodies but also six of Canada's leading accounting firms.
In late March 2014, the Court will hear argument in Tervita Corporation, et al. v. Commissioner of Competition, an appeal from a divestiture order of the Competition Tribunal under section 92 of the Competition Act.
Tervita involved the acquisition of a waste disposal site in Northeastern British Columbia. Prior to closing, the Commissioner of Competition opposed the merger on the basis that it was likely to substantially prevent competition in secure landfill services in Northeastern BC. After a contested hearing, the Competition Tribunal ordered Tervita to divest itself of the newly acquired site. Tervita's appeals from the Tribunal's order were dismissed by the Federal Court of Appeal in 2013; the Supreme Court granted leave and will hear oral argument in March 2014.
Tervita is important to companies and their counsel because it develops a framework for "prevention" merger reviews under s. 92 of the Act. The Supreme Court will be asked to consider the Tribunal's ability to rely on possible future events when reviewing a merger and is expected to rule on what constitutes a "reasonable period of time" for "poised entry" in a prevention case. Moreover, Tervita will be important to the extent the Court addresses the efficiencies defence under s. 96 and the objectivity of the offset analysis when balancing gains in efficiency with the anti-competitive effects of a merger.
7 – The Marcotte Trilogy
In a trilogy of related appeals (Fédération des caisses Desjardins du Québec c. Marcotte, Bank of Montreal, et al. v. Réal Marcotte, et al., and Amex Bank of Canada v. Adams, et al.), in February the Court will consider whether provincial consumer protection legislation can extend to areas that would seem to be the subject of federal jurisdiction. These appeals raise often complex issues of interjurisdictional immunity and paramountcy. In the Marcotte trilogy, the Quebec Court of Appeal considered appeals from the Superior Court judgments which had allowed class actions against certain banks for invoicing credit card customers with foreign currency conversion charges allegedly in breach of the Quebec consumer protection legislation. Interestingly, the Court of Appeal rejected the Appellants' argument that the provincial consumer protection legislation was inapplicable because the conduct at issue was within exclusive federal jurisdiction. This trilogy will have implications for all companies, but particularly for those involved in areas of business within federal jurisdiction who might have expected to be immune from provincial regulation.
6 – Imperial Oil v. Simon Jacques, et al. and Couche-Tard Inc., Alimentation Couche-Tard Inc., Dépan-Escompte Couche-Tard Inc., et al. v. Simon Jacques, et al.
In Imperial Oil v. Simon Jacques and Couche-Tard Inc v. Simon Jacques, the Court will hear a pair of appeals in April 2014 on the extent to which evidence obtained in a regulatory or criminal proceeding can be produced in a concurrent or related civil proceeding. In these cases, the Quebec Court of Appeal refused to grant leave to appeal from an order requiring production in a civil case (in a class action) of wiretap evidence from a Competition Bureau investigation of an alleged gas price-fixing scheme. Though a criminal prosecution is ongoing for some of the appellants, the Superior Court held that disclosure of the evidence was essential for the resolution of the civil proceeding. It limited the scope of the disclosure to experts and lawyers, also ordering the Competition Bureau to "filter" the wiretaps so as to redact portions implicating third parties. The Supreme Court's pronouncement will be important in its possible application to the civil disclosure of white collar crime evidence more generally. In addition to its impact on competition disputes – which may often include criminal, regulatory, and civil proceedings – ripples can be expected in areas such as environmental law, securities and corporate fraud.
5 – Sattva Capital Corporation (formerly Sattva Capital Inc.) v. Creston Moly Corporation (formerly Georgia Ventures Inc.)
In an appeal heard earlier this month, the Court considered the issue of whether an arbitrator's interpretation of a contract was an appealable question of law. In Creston Moly Corp. v. Sattva Capital Corp., 2010 BCCA 239, the BC Court of Appeal held that the construction of the provision in question – one which dealt with the calculation of a finder's fee – was a question of law that could be appealed to the courts. Practitioners across the country eagerly await the Supreme Court's decision which is expected to shed some additional light on the issue of the level of deference owed to arbitrators in commercial disputes.
One year ago, we looked forward to the Supreme Court's guidance on class action certification in the appeal of Dell'Aniello v. Vivendi Canada Inc.. Although the Court was very active on the class action front in 2013, this appeal has been under reserve since it was heard in April. The case pertains to the interpretation of the authorization requirement in article 1003(a) of the Quebec Code of Civil Procedure of "identical, similar, or related questions of law or fact" where the underlying analysis and answers to questions are likely different from one subgroup to another.
The "identical, similar or related questions of law or fact" requirement is analogous to the "common issues" branch of the class action certification test in common law provinces. Thus, the Court's decision has at least the potential to influence the interpretation of the certification test across Canada. See our earlier discussion.
Having heard argument in May, the Supreme Court is set to release its decision in A.I. Enterprises Ltd., et al. v. Bram Enterprises Ltd., et al. in 2014. The Court's decision will provide long awaited clarity in the law of economic torts and is expected to engage appellate jurisprudence in an area of law the House of Lords has aptly referred to as a "terrible mess". The central issue in Bram is the scope of the "unlawful means" element in economic torts (such as intentional interference with economic relations and intentional interference with contractual relations).
Bram arose out of a property dispute. Majority investors in an apartment building decided to sell the property; the minority investor and its president resisted the sale. As a result, the majority investors were unable to realize on favourable offers and, eventually, the building was sold to the minority investor for a lower price. The majority investors sued for the difference in price and the trial judge awarded damages after finding the minority investor and its president liable for intentional interference with economic relations. The New Brunswick Court of Appeal upheld the result, adopted a narrow definition of the "unlawful means" element, and determined liability based on an exception to that definition. (For more information on the Court of Appeal's decision, please see our previous post here.)
The Supreme Court's decision in Bram is eagerly anticipated by contracting parties and their counsel in Canada. The Court has an array of jurisprudence to consider in deciding Bram, including the Ontario Court of Appeal's conflicting decisions in Valcom and Barber, and the 2007 OBG trilogy from the House of Lords. Notably, the Court's recent reference to Bram in the context of conspiracy may be a signal that it intends to use Bram to develop a framework for all of the "unlawful means" economic torts. The Court's pronouncements in Bram will therefore attract considerable interest.
The duty of contractual good faith will be squarely before the Court in February 2014 when it hears oral argument in Bhasin v. Hrynew.
Bhasin involved a claim by a retail dealer (Mr. Bhasin) against a company that marketed RESPs (CAFC). The dealership contract provided for automatic renewals every three years unless either party notified the other in accordance with certain terms. The decision of whether to exercise the right of non-renewal was discretionary. CAFC exercised its right of non-renewal and Bhasin sued. The trial judge held that CAFC breached an implied duty of good faith when it exercised its right to not renew because it did so for improper reasons. The Court of Appeal reversed the trial decision, rejecting the finding that the non-renewal right under the contract was subject to an implied duty of good faith.
The Supreme Court's decision in Bhasin will be significant for the interpretation of contracts across the country. It will be interesting to see whether Canada's top court defines the contractual duty of good faith narrowly and adopts the Alberta Court of Appeal's apparent conclusion that a discretionary contractual right itself does not provide a sufficient reason for an implied duty of good faith. For more information on the Court of Appeal's decision in Bhasin, please see our previous post here.
1 – The Summary Judgment Appeals
Our most anticipated cases for 2014 come in a pair that, like Vivendi, were already eagerly awaited back in December 2012. We are referring, of course, to the Supreme Court's ruling on the Ontario appeals of Bruno Appliance and Furniture, Inc. v. Robert Hryniak and Robert Hryniak v. Fred Mauldin et al.
The cases are important for different reasons. Bruno Appliance can be expected to deal with the summary judgment test itself and, more specifically, whether or not a five-member panel of the Court of Appeal for Ontario got it right when they set out the "full appreciation" test. That test requires courts to ask themselves when faced with a summary judgment motion whether a "full appreciation" of the evidence and issues is possible in the absence of a full trial. If it is, summary judgment may be appropriate. The Court will also be asked to consider the appropriate standard of review on appeals of questions of mixed fact and law where the facts dominate, as well as the elements and standard of proof for the tort of civil fraud.
The Fred Mauldin appeal is interesting because it raises the issue of prospective overruling. The Court is being asked to consider whether the Court of Appeal was right to issue its landmark Combined Air test and apply it to cases retrospectively, rather than only prospectively to future cases.
Given the importance of summary judgment motions to day-to-day litigation practice, and the importance of prospective overruling to the judicial function more generally, the Supreme Court's guidance on these cases can be expected to shape the law well beyond Ontario.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.