Canada: The SCC Monitor (07/07/2015)

A Commentary On Recent Legal Developments By The Canadian Appeals Monitor
Last Updated: July 9 2015
Article by Ryan MacIsaac

Most Read Contributor in Canada, September 2018

It has been a busy couple of weeks since our last post. The SCC has released two judgments and six leave decisions of interest. In addition, a pending judgment of interest will be released this week. One of the released judgments and four of the leave decisions will be of interest to those involved in real estate development, management and sales. The other judgment involves government liability and how to apportion damages where the plaintiff has reached settlements with non-parties relating to the same injury. The remaining leave decisions involve an order to a foreign whistleblower to produce documents in a prosecution for foreign corrupt practices, and the finality of tribunal decisions. Finally, the SCC will release a decision this Thursday that will address when a legal action should move forward in Federal Court versus in a provincial superior court.

First, the SCC released its judgment in Société en commandite Place Mullins v Services immobiliers Diane Bisson inc, 2015 SCC 36 (35461), mentioned briefly in this prior blog post. The SCC held that a real estate brokerage enterprise was not entitled to a commission when a sale did not close. The brokerage contract entitled the brokerage to commission if: (a) an agreement "to sell" the immovable was completed; or (b) the seller voluntarily prevented the free performance of the brokerage contract. A promisor-buyer agreed to purchase the immovable, contingent on due diligence, which ultimately revealed environmental contamination. The promisor-buyer made a second offer to purchase the immovable if the promisor-seller remediated the contamination; the promisor-seller rejected the offer. The sale was not completed. The brokerage demanded its commission from the promisor-seller. Justice Wagner for a unanimous SCC wrote that:

A real estate broker's compensation is uncertain in many respects. ...[A] brokerage contract is like a hunting licence in the sense that, "as in hunting, the broker may spend much time and effort but fail to achieve his goal"....

The SCC held that no agreement "to sell" had been completed because both offers were conditional, and the conditions were not satisfied. The promisor-seller did not voluntarily prevent the free performance of the brokerage contract by refusing to remediate the contamination because: (a) it was under no obligation to do so; and (b) the promisor-seller did not know about the contamination when the brokerage contract was entered. The brokerage was not entitled to its fee.

Second, the SCC released its judgment in Hinse v Canada (Attorney General), 2015 SCC 35 (35613). This decision will be the subject of its own post on this blog (make sure to watch for it) but, briefly, it involves issues of Crown liability and how to properly consider causation and damages in such cases. The appellant was sentenced to 15 years' imprisonment for armed robbery. He submitted three applications for mercy to the federal Minister of Justice, all of which were denied. He was subsequently found to be wrongfully convicted. The Quebec Superior Court ordered the Attorney General of Canada to pay the appellant nearly $5.8 million, which was reversed on appeal. The SCC held that there could be no liability because there was no evidence that the Minister had acted in bad faith or with serious recklessness. There was, moreover, no evidence that the Minister would have uncovered the exculpatory evidence 20 years earlier, so the alleged causation was too remote. Finally, the SCC held that any damages award should have accounted for compensation that the appellant had already received from other government bodies, although it is at least arguable that this holding may only have applicability in Quebec due to its reliance on the Civil Code of Québec.

Third, the SCC granted leave to appeal two rulings of interest:

  • Fraser Health Authority v Workers' Compensation Appeal Tribunal, 2014 BCCA 499 (36300). This case is a judicial review of a decision of the Workers' Compensation Appeal Tribunal, wherein the Tribunal upheld its own previous decision to award benefits to hospital lab technicians who contracted cancer. The case raises thorny questions about what constitutes a "jurisdictional error". The SCC's ultimate judgment may provide some clarity to the line of cases on jurisdictional error that has perplexed Canadian lawyers for at least the past three decades.[1] The case also involves issues of functus officio and the ability of a tribunal to review its own previous decisions – in other words, when is a tribunal's decision truly "final"? Finally, the SCC's judgment may address how a regulatory tribunal considers highly technical evidence: can the tribunal adopt a "common sense" approach? The SCC's decision will be of interest to those who practice in the regulatory sphere.
  • World Bank Group v Kevin Wallace, Zulfiquar Bhuiyan, Ramesh Shah, Mohammad Ismail and Her Majesty the Queen in Right of Canada, 2014 ONSC 7449 (36315). This case arises out of the ongoing prosecution of SNC-Lavelin under the Corruption of Foreign Public Officials Act ("CFPOA"). World Bank Group ("WBG") is not party to the prosecution. Prior to the prosecution, WBG received tips about SNC-Lavelin's activities and brought this information to the RCMP. During the prosecution, individual accused (former employees of SNC-Lavelin) demanded that WBG produce all documents relating to the case. WBG refused. The ONSC ordered WBG to produce the documents. WBG appealed to the SCC. The SCC's decision will add to the growing body of case law under the CFPOA and will also address the power of a court to order an international third party to produce records in a criminal proceeding.

Fourth, the SCC denied leave to appeal four rulings of interest:

  • Matthew Brady Self Storage Corporation v InStorage Limited Partnership, 2014 ONCA 858 (36224). This case involved remedies for contractual breach and determination of costs awards. Matthew Brady Self Storage Corporation exercised a "Put" option to force InStorage to purchase a storage facility that the parties had agreed to develop and own together, with the goal that InStorage would eventually wholly own the facility. InStorage resisted the Put option and refused to buy the facility. Pursuant to the parties' agreement about how to resolve a disagreement about price, a third party consultant determined the fair market value of the facility to be $7.3 million. InStorage argued that the property was worth less than $5 million. The ONSC awarded specific performance of the contract, relying, in part, on the facility's unique characteristics. The ONSC also awarded costs of $415,000 on a partial indemnity basis. The ONCA affirmed the ONSC's discretionary decisions on remedy and costs.
  • 1298417 Ontario Ltd v Lakeshore (Town), 2014 ONCA 802 (36288). The Town of Lakeshore (the "Town") and 1298417 Ontario Ltd. (the "Developer") entered an agreement (the "Agreement") whereby the Town would reserve enhanced sewage capacity for the Developer's proposed development (the "Development") and not grant the capacity to anyone else. The Town granted the enhanced sewage capacity to another developer prior to the Development's completion. The Developer sued for breach of contract. The ONSC awarded damages to the Developer of $2.4 million based on the profits that the other developer purportedly realized. The ONCA applied the SCC's guidance in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 and gave deference to the ONSC's contractual interpretation. Feldman JA (MacFarland JA concurring) held that: (a) the ONSC had failed to properly apply principles of contractual interpretation; (b) under the proper interpretation of the Supplementary Agreement there was no breach; and (c) in any event the damages awarded at trial were too remote.
  • 1465152 Ontario Limited v Amexon Development Inc, 2015 ONCA 86 (36343). This case involved the interpretation of an exclusion clause in the context of a lease termination, and the appropriateness of injunctive relief for interference with property rights. Amexon Development Inc. (the "Landlord") served a Notice to Vacate on 1465152 Ontario Limited (the "Tenant") so that the Landlord could demolish and redevelop the property. The Tenant applied for: (a) an order declaring the Notice to Vacate as void; and (b) an injunction restraining the Landlord from terminating the lease and trespassing on the leased premises. The lease contained an exclusion clause that limited the Tenant's remedies to monetary damages. The ONSC noted that the Landlord was "walking away from its fundamental promise" and listed policy reasons why landlords should not be able to evict tenants just because a better opportunity comes along. The ONSC used the approach from Tercon Contractors Ltd v British Columbia (Minister of Transportation & Highways), 2010 SCC 4 and held that the exclusion clause did not apply to these circumstances. The Landlord was acting arbitrarily and without lawful authority, and it would be commercially unreasonable if the exclusion clause could limit available remedies in circumstances such as these. Injunctive relief against the Landlord was appropriate. "Injunctions remain a powerful arrow to preserve property rights and to restrain tortious misconduct." The ONCA upheld the ONSC's findings throughout and dismissed the appeal.
  • 9080-9211 Québec inc (Propriétés Victoria) v Athena Energy Marketing Inc (Services de gaz naturel RBC inc), 2014 QCCA 2255 (36279). 9080 9211 Québec Inc. ("Victoria") entered into a natural gas supply contract with Athena Energy Marketing Inc. ("Athena") for four income properties in Montreal. The contract obligated Victoria to use and pay for a fixed quantity of natural gas for five years. Victoria sold the income properties and stopped paying the gas bills. Athena sued to recover its loss. The Quebec Superior Court awarded damages to Athena, and the Court of Appeal affirmed the Superior Court's decision.

Finally, the SCC will release its judgment on Thursday, July 9, 2015 in the appeal of Strickland v Canada (Attorney General), 2014 FCA 33 (35808). This case is a judicial review challenge of the Federal Child Support Guidelines on the grounds that they are ultra vires the Divorce Act and overcompensate former spouses in joint custody arrangements. The Federal Court declined to exercise jurisdiction, holding that the application should be brought in a provincial superior court, which has much greater expertise in family law matters than the federal courts. The Federal Court of Appeal upheld the Federal Court's judgment. The SCC's decision will help to understand the relationship of concurrent jurisdiction between the federal courts and provincial superior courts, and how to determine which court is the most appropriate forum for a given lawsuit.

Footnote

[1] For example, in recent years, see generally Pushpanathan v Canada (Minister of Citizenship and Immigration), [1998] 1 SCR 982, in which the SCC virtually eliminated questions of "jurisdictional error", stating that this was just another description for questions upon which the pragmatic and functional approach demanded a correctness standard of review. But then, Dunsmuir v New Brunswick, 2008 SCC 9 and other decisions revived the notion of questions of "true jurisdiction". Last year, in Canadian National Railway Co v Canada (Attorney General), 2014 SCC 40, the SCC appeared to substantially narrow the scope of what constitutes a question of "true jurisdiction". The SCC held that a question originally framed as involving vires actually involved whether a particular type of issue can fall within the parameters of the tribunal's enabling statute, thus warranting deference to the tribunal in interpreting its home statute (see blog post).

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