Canada: The SCC Monitor (09/10/2015)

A Commentary on Recent Legal Developments by the Canadian Appeals Monitor

Since our last post, the Supreme Court has released a number of judgments and granted leave to appeal in a number of cases of interest.

In September, the Court released two of the Canadian Appeal Monitor's "Top Ten" Appeals to Watch in 2015; the much anticipated Chevron Corporation et al. v. Yaiguaje et al. and Ontario (Energy Board) v. Ontario Power Generation Inc. et al..

The Court's decision in Chevron Corp., described in more detail in our September 9, 2015 blog post, speaks to the circumstances in which plaintiffs may enforce foreign judgments against Canadian affiliates of foreign judgment debtors. The Court's decision has increased litigation risk for companies with assets in Canada as enforcement can now be pursued against foreign companies and their Canadian affiliates even if neither party to the original dispute has a "real and substantial connection" to Canada.

In Ontario (Energy Board), the Court reviewed the Ontario Energy Board's decision to disallow certain payment amounts sought to be incorporated into the utility rates of Ontario Power Generation. In its decision the Court established that where a statute requires only that the regulator set "just and reasonable" payments, as the Ontario Energy Board Act, 1998 does in Ontario, the regulator may make use of a "variety of analytical tools" in assessing the justness and reasonableness of a utility's proposed payment amounts. While a "prudence" test may be applied to operating costs, the Court concluded there was no requirement as a matter of law that the Board apply such a test to the compensation costs being considered. In rendering its decision, the Court confirmed that the Board had flexibility in its approach to assessing costs incurred and that, in large part, the approach that will be adopted by the Board in any given case will be driven by the nature of the cost itself (i.e., whether it is a committed cost or forecast cost).

The appeal in Ontario (Energy Board) was heard in conjunction with ATCO Gas and Pipelines Ltd. v. Alberta (Utilities Commission), in which the Court reviewed the Alberta Utilities Commission's denial of a request by ATCO to recover, in approved rates, certain pension costs. In rendering its decision, the Court echoed its decision in Ontario (Energy Board), noting that the Commission was not statutorily bound to apply a particular methodology to the costs at issue and that use of the word "prudent" in the relevant statutes could not by itself be read to impose upon the Commission a specific no-hindsight methodology. The Court concluded that the Commission was free to apply its expertise to determine whether costs are prudent (in the ordinary sense of whether they are reasonable), and had the discretion to consider a variety of analytical tools and evidence in making that determination so long as the ultimate rates that it sets are just and reasonable to both consumers and the utility.

The Court's decision in Ontario (Energy Board) may be of additional interest as it also clarified the circumstances in which it is appropriate for a tribunal to participate in an appeal of one of its own decisions, as well as the scope of such participation.

The Court also released two other judgments of interest:

  • Guindon v. Canada, in which the Court determined that proceedings under s. 163.2 of the Income Tax Act are of an administrative nature rather than criminal and do not lead to the imposition of true penal consequences. The Court concluded, therefore, that the individual assessed for penalties under the Income Tax Act was not a person "charged with an offence" such that the protections under s. 11 of the Charter do not apply. Notably, the Court also clarified when it would exercise its discretion to consider constitutional issues even when notice of a constitutional question was not provided in the lower courts.
  • Stuart Olson Dominion Construction Ltd. v. Structural, in which the Court clarified the nature of the statutory trust and lien provisions in the Manitoba Builders' Liens Act as two separate remedies that exist independently and may be pursued concurrently.

Finally, the Court also granted leave in a number of cases which raise important issues:

  • Lizotte v. Aviva Insurance Company of Canada et al. (36373) will provide an opportunity for the Court to address whether insurers can raise litigation privilege against a syndic of the Chambre de l'assurance de Dommages' request for disclosure of information and documents for the purposes of inquiring into a claims adjuster's conduct.
  • City of Edmonton v. Edmonton East (Capilano) Shopping Centres Ltd. et al. (36403) will provide an opportunity for the Court to address the standard of review applicable where a statutory appeal clause is present and to clarify how assessment legislation should be interpreted with respect to prohibiting a municipality from requesting a review or correction of a tax assessment.
  • Ledcor Construction Limited. v. Northbridge Indemnity Insurance Company et al. (36452) the Court will be able to address the interpretation of Builders' Risk Policies and exclusion provisions in the context of multiple contractors, particularly provisions respecting exclusions for "faulty workmanship" and the companion exception for "resulting damage." The Court will have an opportunity to elaborate on the appropriate standard of review when interpreting builders' risk insurance policies.
  • Corporation of the City of Windsor v. Canadian Transit Company (36465) provides the Court with an opportunity to clarify the jurisdiction of the Federal Court including, among other things, whether the Federal Court's jurisdiction should be expanded to include any and all matters involving doctrines of interjurisdictional immunity and paramountcy and whether constitutional principles of Canadian federalism and subsidiarity permit the Feral Court to assert jurisdiction over matters of an inherently local nature, such as application of municipal by-laws.

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