Canada: 10 Most Important Appeals Of 2013

In order to help lawyers argue about cases at holiday parties, the Appeals Monitor is happy to once again present our countdown of the most significant civil appeals of 2013 that are sure to impact Canadian businesses.  Watch out soon for a review of the upcoming appeal decisions that are likely to be big stories in 2014

Sable Offshore Energy: Is a settlement with one defendant really without prejudice?

Sable Offshore Energy Inc. v. Ameron International Corp., previously reported on here, is a significant development in the law of settlement privilege and will affect legal strategy of businesses involved in multi-party litigation.  At issue was what information a non-settling defendant is entitled to know about a settlement between the plaintiff and certain defendants.  The Supreme Court held that settlement privilege protects all communications made in the course of settlement negotiations, including the settlement amount, whether or not the negotiations are successful or marked "without prejudice".  The Court acknowledged that there are exceptions to settlement privilege when a competing public interest prevails, such as when a fraud allegation requires the disclosure of details around the settlement.  However, a non-settling defendant's request for the settlement quantum for the purposes of litigation strategy did not qualify as an exception.  The Court held that a "proper analysis of a claim for an exception to settlement privilege does not simply ask whether the non-settling defendants derive some tactical advantage from disclosure, but whether the reason for disclosure outweighs the policy in favour of promoting settlement."

This decision effectively nullifies jurisprudence from Alberta, Manitoba, Ontario, and Nova Scotia, which supported the principle of disclosing settlement quantums to non-settling defendants.  Although this case involved a specific type of settlement called a Pierringer agreement, its principles are arguably applicable to any multiparty litigation involving settlements with some but not all defendants.

Katz & "private label" Drugs

In Katz Group Canada Inc. v. Ontario (Health and Long-Term Care) (discussed in a previous post), the Supreme Court upheld the validity of drug regulations in Ontario which banned "private label" generic drugs.  "Private label" describes a corporate structure where a manufacturer, which is controlled by a pharmacy, buys drugs from other sources instead of fabricating them, and then sells them to the pharmacy for retail distribution.  The Court found that this structure creates incentives that keep drug prices high, since a pharmacy that buys drugs from a manufacturer it controls would be involved in setting prices.  The Court upheld the regulations on the basis that they were aimed at stopping this practice and were consistent with their enabling statute's goals (which were to stifle increasing drug prices in Ontario).  Companies in the pharmaceutical industry should be aware of this decision and ensure that they do not employ a private label structure for the purposes of selling drugs in Ontario.

Barclays: The intangible good faith

In Barclays Bank plc v. Devonshire Trust (discussed in a previous post), the Ontario Court of Appeal delivered a significant decision regarding good faith obligations in contractual relations.  Despite the current uncertainty over whether a standalone duty of good faith exists in the common law (Quebec's civil law is to the opposite), the Court recognized two forms of good faith obligation that arose in this case.  The first was a duty to negotiate in good faith because of an express contractual term dictating this– the Court suggested that this agreement was enforceable and not merely an "agreement to agree".  The Court also relied on a line of Ontario jurisprudence recognizing parties' implied duty of good faith in performing contractual obligations.  It held that this duty prohibits parties from acting in a way that defeats the purpose of the very contract they have entered into.  This holding was consistent with prior Ontario Court of Appeal decisions, such as Transamerica Life Canada Inc. v. ING Canada Inc.  Interestingly, other authorities, such as the Alberta Court of Appeal decision in Bhasin v. Hrynew, suggest that there is no duty to perform most contracts in good faith (the Supreme Court granted leave to appeal from the Court of Appeal's decision).  Barclays has filed an application seeking leave to appeal the decision to the Court of Appeal, [2013] S.C.C.A. No. 374, and if leave is granted, the Court will have an opportunity to further clarify the scope of good faith obligations in common law in the wake of its upcoming decision in Bhasin.  The Supreme Court's pronouncements could have a significant impact on the type of behaviour that is acceptable in the performance of contractual obligations, particularly in the context of long term business relationships.

AIC: Access to justice still the paramount factor in class actions

In AIC Limited v. Fischer, (previously reported here and here), the Supreme Court rendered its much-anticipated decision in the mutual fund "market timing" case, settling the issue of whether private class actions can co-exist with securities regulatory enforcement proceedings.  The Court upheld the certification of a class action against mutual fund managers by investors, confirming that settlement of a regulatory proceeding does not preclude certification of a class action on behalf of the same class of investors who received compensation through the regulatory process.  The Court concluded that a class action was the preferable procedure (under Ontario's Class Proceedings Act) because there was some basis in fact to believe that procedural and substantive access to justice concerns continued to remain after the settlements, which a class action could address.  In doing so, the Court substantially reformulated the second branch of the preferable procedure test, which asks whether a class action would be preferable to any other reasonably available means of resolving the class members' claims.  The Court also reaffirmed that certification is largely procedural and that the evidentiary threshold at the certification stage is low.  The revised preferability test is likely to be of importance to defendants in industries (e.g. pharmaceutical, banking, retail, mining) that are frequently targeted by class actions.

Theratechnologies and the settlement pressures associated with secondary market liability claims

In Theratechnologies inc. v. 121851 Canada inc. (previously reported on here), the Quebec Court of Appeal rendered its first decision on the province's statutory secondary market liability regime and upheld a lower court decision to authorize a claim in the context of a class action instituted by the shareholders of Theratechnologies ("Thera").  The decision is significant in two respects.  First, it held that a judgment authorizing a claim under the statutory regime can be appealed with leave of the Court of Appeal (the court declined to apply article 1010 of the Quebec Code of Civil Procedure ("CCP"), which states that a judgment authorizing a class action cannot be appealed).  Interestingly, the Court of Appeal based its analysis in this regard on the rationale specified in the Quebec and other provincial  legislative debates for requiring authorization to pursue a QSA claim, i.e. to shield defendants from the costs and other negative economic effects of unmeritorious and opportunistic litigation, and from the pressure to settle even unmeritorious claims.  Second, the Court attempted to clarify the test applicable to authorization of claims under the statutory regime by contrasting it to the less stringent test applicable to authorization of class actions.  Despite a lengthy discussion, the test remains somewhat unclear and further clarification will be needed, particularly as to the role of evidence where the authorization process under the statutory regime coincides with that applicable to class actions.  Thera has filed an application seeking leave to appeal the Court of Appeal's decision, [2013] S.C.C.A. No. 35550, and if leave is granted, the Supreme Court will have an opportunity to bring clarity in a field of significant importance to public issuers.

Irving Pulp & Paper: Guidance for random drug and alcohol testing of employee

In Irving Pulp & Paper,the majority of the Supreme Court tipped the scales of employee privacy interests vs. management rights in favour of privacy interests.  The Court upheld a decision of the arbitration board, which found that the management's decision to unilaterally impose random drug or alcohol testing on unionized employees holding safety sensitive positions was unreasonable.  The Court agreed that imposing random drug and alcohol testing, which are highly intrusive in nature, is unreasonable absent a demonstrated "significant" workplace problem and even though the employees held highly dangerous positions.  Following this decision, employers may continue to test individual employees for cause in dangerous work environments and may randomly test employees if they establish the existence of a substance abuse problem.  McLachlin C.J., Rothstein, and Moldaver J.J. disagreed with the majority, holding that the preponderance of arbitral jurisprudence requires the employer to provide some evidence justifying their policy choice and not prove that there was a "significant" alcohol or drug problem at the Irving mill.

Beyond the employment law context, this case is significant in that the Court affirms the importance of arbitral jurisprudence, requiring arbitral boards to provide reasons for explicitly deviating from the jurisprudence.  Here, the majority and minority disagreed on whether the board's decision was against the grain of arbitral jurisprudence, with the majority interpreting the decision as consistent with the jurisprudence and the minority finding that the decision was not.  The Irving decision as well as the decision in Alberta (Information and Privacy Commissioner) v. United Food and Commercial Workers, Local 401, previously reported on here, suggest that the Supreme Court is showing an increasing willingness to uphold union rights.

McLean and clock ticking for provincial securities commissions

In McLean v. British Columbia (Securities Commission) (previously reported on here), the Supreme Court affirmed that the standard of review for an administrative tribunal in interpreting its own statute was reasonableness.  This decision is significant because it allows for further variance amongst securities law in various provinces, while also suggesting that the Court will be supportive of efforts to coordinate regulation inter-provincially.  Patricia McLean entered into a settlement agreement with the Ontario Securities Commission ("OSC") in 2008 for misconduct occurring in 2001 and earlier.  The British Columbia Securities Commission ("BCSC") brought public interest proceedings against Ms. McLean in 2010, within the 6 year limitations period to institute proceedings if the clock started running from the moment Ms. Mclean entered into the settlement agreement with the OSC, but not within the limitations period if the clock started running from the time of the misconduct.  The SCC found that the BCSC's interpretation was reasonable and it accorded their decision deference notwithstanding that limitations period are generally of central importance to the fair administration of justice and that other provincial securities commissions may arrive at different interpretations of similar provisions.  One of the repercussions of the McLeandecision is that future Securities Commission decisions are going to be difficult to overturn.

Payette and the enforceability of restrictive covenants associated with the sale of a business

In Payette v. Guay inc. (previously reported on here), the Supreme Court clarified the test for the validity of restrictive covenants when they accompany the sale of a business.  In unanimously upholding an injunction issued against the seller of a crane rental business, the Supreme Court held that restrictive covenants primarily linked to the sale of a business ("the reason why" they were "entered into"), rather than to a contract of employment, must not obey to the restrictive rules governing covenants in the employment context.  Under these less demanding rules, reasonableness is to be assessed "on the basis of the criteria applicable in commercial law".  Non-competition covenants will be reasonable and lawful if they are limited as to their terms, territories and activities, to whatever is necessary for the protection of the legitimate interests of the party in whose favour they was granted.  Importantly, even within the commercial context, the Court noted that there could be different degrees of rigour in applying this test, depending upon the comparative bargaining power of the parties.  The Court also noted that a provision acknowledging the reasonableness of a covenant was an important albeit non-determinative factor.  Although the non-solicitation covenant did not contain any territorial limitation at all, the Court found it was still reasonable on the theory that territorial limitations are generally unnecessary for non-solicitation covenants in the commercial context.  The approach taken in Payette should be largely applicable in provinces outside Quebec.

McKercher: Can your lawyer act against you?

In Canadian National Railway Co. v. McKercher LLP (previously reported on here) the Supreme Court of Canada upheld the bright line test from Neil which provides that a lawyer may not act against an existing client, even in unrelated matters.  However, the Supreme Court watered down the bright-line rule by limiting its application to certain circumstances –i.e. where the immediatelegalinterests of the new client is directly adverse to those of the current client, where the existing client is not exploiting the bright-line rule for tactical reasons, and where the existing client can reasonably expect that their law firm will not act against it in unrelated matters.  This reasonable expectation branch is the Court's attempt to appreciate the realities of the Canadian legal market—one where many professional litigants rely on multiple large firms with high lawyer turnover rates.

While the decision is framed as a guide for counsel in determining whether they can act simultaneously for an existing and new client, the decision can be read to provide guidelines to clients as well.  If a client does not want their law firm of choice to act against them in unrelated matters, a client should take steps to ensure that the position is reasonable.  For example, clearly articulating expectations with counsel as well as strategically considering the number of law firms retained for various matters, will be important steps impacting a client's ability to bring a motion to disqualify on the basis of a conflict of interest.

Pro-Sys,  Sun-Rype & Infineon: The much anticipated trilogy

In a trilogy of cases that may be the biggest occurrence of the past year (Pro-Sys Consultants Ltd. v. Microsoft Corporation, Sun-Rype Products Limited v. Archer Daniels Midland Company, and Infineon Technologies AG v. Option consommateurs, previously reported here and here), the Supreme Court recognized the right of indirect purchasers to assert actions based on alleged anti-competitive conduct while confirming its rejection of the "passing on" defence in this context.  Pro-Sys involved allegations that Microsoft overcharged for their PC operating systems and applications software. In Sun-Rype, the allegations involved a price-fixing conspiracy for high fructose corn syrup (HFCS). In Infineon, a conspiracy was alleged with respect to the sale of dynamic random-access memory chips (DRAM).  In Sun-Rype and Infineon, the Court decided that the existence of a mixed class (brought on behalf of both direct and indirect purchasers) was not prohibitive to certification.  Together, the decisions set out the framework for indirect purchaser actions in Canada.  They also provide some important guidance on other elements of certification, including the evidentiary burden and the role of aggregate damages provisions.  The trilogy is also significant on the issue of the proper grounds for jurisdictions in circumstances when Canadian consumers purchase products offered for sale on websites.

To view original article, please click here.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.