Canada: Looking Back – The 10 Most Important Appeals Of 2016

The Appeals Monitor is pleased to present our annual review of the most significant appellate decisions of the past year. From criminal law to contracts, 2016 was full of exciting developments and we hope that you, our reader, will enjoy these summaries.

Endean: Justice to Go

In Endean v British Columbia, 2016 SCC 42, the Supreme Court of Canada ("SCC") addressed whether superior court judges may sit outside their home provinces to hear and decide a motion about a pan-national class action settlement. Endean was at the top of our Appeals to Watch in 2016 list from last year. The lower court decisions were previously discussed here and the SCC decision discussed here.

The SCC held that superior court judges in Ontario and British Columbia have a discretionary statutory power under their respective class actions legislation to sit outside their home provinces. The approach "reflected the inherent authority of judges to control procedure", and served the underlying purposes of administering class proceedings in an efficient manner. The SCC also held that, barring a clear statutory limitation in other jurisdictions, these principles extend to superior courts of other provinces as well.

However, this was a case in which personal and subject matter jurisdiction were conceded, and in which the hearing would proceed on a paper record. The SCC left for another day the more difficult questions of whether courts may assume jurisdiction over a national class without attornment, and whether joint hearings can be appropriate in instances where the exercise of coercive powers might prove necessary, such as compelling the attendance of a witness.

On a separate issue, the SCC also ruled that a video link between the out-of-province courtroom where the hearing takes place and a courtroom in the judge's home province is not a condition for a judge to be able to sit outside his or her home province. A superior court judge will need a "good reason" for not using video link technology when requested; however, video link technology is not required and its absence does not violate the open court principle.

Rogers: Signal Received on Federal Powers

In Rogers Communications Inc v Châteauguay (City), 2016 SCC 23, the SCC held that a municipality cannot intervene in the siting of a radiocommunication antenna system. Rogers Communications was listed as one of our Appeals to Watch in 2016 and was previously discussed here.

In this case, the municipality had issued a "notice of reserve" that would have prevented construction on a site where Rogers wanted to build a cellphone antenna system. Writing for the eight-member majority, Wagner and Côté JJ held that the notice of reserve was ultra vires the municipality and therefore unconstitutional. The pith and substance of the notice was directed at the location of the cellphone tower, which was within the exclusive jurisdiction of the federal government over radiocommunications. The SCC disagreed with the municipality's argument that the notice of reserve was, in pith and substance, within the municipality's jurisdiction to protect the health and well-being of its residents. The doctrine of interjurisdictional immunity applied because (1) the sitting of a cellphone tower is part of the core of federal jurisdiction over radiocommunications, and (2) the notice seriously and significantly impaired the orderly development of radiocommunications. Justice Gascon, concurring in the result, agreed with the majority on interjurisdictional immunity, although he felt that the pith and substance of the notice was in fact directed the health and well-being of the municipality's residents.

This decision develops the legal doctrines of pith and substance and interjurisdictional immunity, and clarifies the scope of the federal government's jurisdiction over radiocommunications.

Edmonton East (Capilano): The Age of Unreasonableness

In Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd, 2016 SCC 47, the SCC majority departed from its prior jurisprudence and made it even more difficult for individuals and companies to obtain justice when subject to illegal government actions.

In a 5–4 split judgment, the SCC majority held that reviewing courts must defer to tribunals and other administrative decision-makers on questions of law, except where the question of law falls within one of the following categories:

  1. constitutional questions regarding the division of powers;
  2. an issue of law of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise;
  3. a true question of jurisdiction or vires; or
  4. an issue regarding the jurisdictional lines between two or more competing specialized tribunals.

It is only when a question of law falls within one of these four categories that the presumption of a reasonableness standard of review is rebutted.

The strongly-worded dissent authored by Côté and Brown JJ criticized the majority's categorical approach and stressed the need for a contextual standard of review analysis. The dissent correctly stated that the majority departed from the flexible Dunsmuir jurisprudence in favour of an approach that "risks introducing the vice of formalism into the law of judicial review."

Jordan: Don't Delay, Get Your Trial Today

In a decision of real importance to any person or organization charged with a criminal or quasi-criminal regulatory offence, R v Jordan, 2016 SCC 27 radically revamped the Charter s. 11(b) right to trial within a reasonable time. We previously discussed Jordan here, and discussed how the decision is being applied by lower courts here.

The SCC majority, in a 5–4 split judgment, set firm time limits by which a trial must be completed. For criminal cases in provincial courts, there is a presumptive ceiling of 18 months. For criminal cases in superior courts, or cases in provincial courts after a preliminary inquiry, there is a presumptive ceiling of 30 months. Delay attributable to the defence does not count toward the presumptive ceiling, but institutional delay that is not the fault of the Crown prosecutor does count.

Where the presumptive ceilings are exceeded, there is a rebuttable presumption that the delay is unreasonable and thus the accused's constitutional rights have been violated. The Crown can rebut the presumption by establishing that (a) delay is due to an unforeseen and unavoidable discrete event, or (b) the case is particularly complex.

If the presumptive ceiling is not rebutted, the charges against the accused will be stayed. And even if the presumptive ceiling is not yet reached, the accused can still show that the delay was unreasonable in the circumstances by showing that it (a) made a sustained effort to expedite the process, and (b) the case took markedly longer than it reasonably should have.

The majority decision in Jordan marks a significantly different approach to the unreasonable delays that many accused face in today's complex and underfunded justice system. Prior to Jordan, the courts applied a contextual analysis without concrete numerical ceilings; the four-member dissent authored by Cromwell J would have kept and refined that existing framework.

Ferme Vi Ber and Lafortune: a Plain Crop of Contracts

The SCC clarified the distinction between innominate contracts and administrative contracts under Québec civil law in the companion decisions Ferme Vi Ber inc v Financière agricole du Québec, 2016 SCC 34 and Lafortune v Financière agricole du Québec, 2016 SCC 35. These were flagged in our Appeals to Watch in 2016 and were previously discussed here.

Farmers in Québec paid into a voluntary assurance program (the "Program"), administered by the provincial government (La Financière), that protected participants from having their income fall below a certain level for certain agricultural products designated as "insurable". The farmers objected to how La Financière calculated the amounts paid out between 2006–2008, including because La Financière took into account federal farm assistance.

The SCC majority held that, although the Program is administered by a provincial authority, it is not an administrative contract, but is in fact an innominate contract between private parties governed by general contract law principles in the Civil Code of Québec. But the Program is not an insurance contract governed by insurance law sections of the Code because it does not contain the three main characteristics set out in the Code.

The SCC also stated that the "reasonable expectations rule"—which requires an insurer to consider the reasonable expectations of the insured—only applies in cases of contractual ambiguity, but not where contractual provisions are unambiguous. La Financière acted in accordance with the requirements of good faith and contractual fairness in administering the program; thus, even if the reasonable expectations rule applied, there was no violation of it.

Mennillo: Sloppy Paperwork Doesn't Impress, But Didn't Oppress

In Mennillo v Intramodal inc, 2016 SCC 51, the SCC confirmed that a failure by a corporation to comply with the Canada Business Corporations Act ("CBCA") does not, on its own, constitute oppression. The oppression remedy is concerned with "fairness and business realities, rather than narrow legalities." This decision was flagged as one of the Appeals to Watch in 2016 because oppression cases at the SCC are rare, and the decision was previously discussed here.

In Mennillo, the issue was whether a failure by the corporation to observe the legal formalities in removing Mr. Mennillo as a shareholder constituted oppression. The majority found that although the corporation had engaged in sloppy paperwork, it had not oppressed Mr. Mennillo. In reaching its conclusion, the majority put great weight on a finding by the trial judge that Mr. Menillo decided he no longer wanted to be a shareholder. Therefore, in accordance with the principles articulated in BCE Inc v 1976 Debentureholders, 2008 SCC 69, Mr. Mennillo had no reasonable expectation of being treated as a shareholder and his oppression claim was groundless. In a concurring judgment, McLachlin CJ wrote that the appeal could be disposed of on the basis that Mr. Menillo failed to show a reasonable expectation that he would not be removed as a shareholder. Justice Côté dissented, stating that a corporation's failure to comply with the strict requirements of the CBCA may justify granting the oppression remedy.

Menillo shows that, in determining whether to grant the oppression remedy, courts will take a contextual analysis that centres around the reasonable expectation of the parties and business realities of the case at hand.

Trang: Opening the Chamber of Secrets

The privacy law case Royal Bank of Canada v Trang, 2016 SCC 50 was flagged as one of our Appeals to Watch in 2016 and was previously discussed here and here. The SCC's decision will help guide organizations as to what constitutes a reasonable expectation of privacy, and the circumstances in which individuals provide implied consent for disclosure of personal information.

RBC was a judgment creditor of two debtors and needed the debtors' mortgage discharge statement—which contained personal mortgage information about the debtors—in order to obtain a sheriff's sale of the debtors' property. The debtors refused to provide the discharge statement, so RBC asked Scotiabank for a copy. At issue was whether the Personal Information Protection and Electronic Documents Act ("PIPEDA") prevented Scotiabank from disclosing the discharge statement to RBC without the debtors' consent.

The SCC unanimously held that the PIPEDA did not prevent Scotiabank from disclosing the mortgage statement to RBC. Firstly, a lower court had jurisdiction to order the debtors to produce the mortgage statement. This would be sufficient to bring the mortgage statement within the exception in the PIPEDA for disclosure of information pursuant to a court order.

Secondly, the mortgage information was not particularly sensitive information. Legislation already requires public disclosure of a large amount of mortgage information. The mortgage information affected the rights of RBC and other creditors. RBC could obtain the mortgage information through a court order anyway. The debtors could not have a reasonable expectation that the mortgage statement would be kept private from RBC. There was thus implied consent to disclosure of the mortgage statement.

Jean Coutu and Fairmont: Came in like a Rectifying Ball

When parties to a contract realize that the contract contains an error, they may apply to the court to fix—or "rectify"—the error after the contract has been signed. The SCC set out the legal test for correcting contractual errors in the companion decisions of Jean Coutu Group (PJC) Inc v Canada (Attorney General), 2016 SCC 55 (under Québec civil law) and Canada (Attorney General) v Fairmont Hotels Inc, 2016 SCC 56 (for the common law provinces and territories). These cases were included in our Appeals to Watch in 2016.

A majority of the SCC set out the requirements for correcting a contractual error under Québec civil law pursuant to art 1425 of the Civil Code of Québec. A party seeking to correct the error must prove that there are:

  1. persons between whom the obligation exists;
  2. a prestation, which forms the obligation's object, and the prestation is possible and determinate or determinable and not forbidden by law or contrary to public order; and
  3. in the case of an obligation arising out of a juridical act, a cause which justifies its existence.

It is insufficient for the parties to have a general intention of a consequence. Rather, the parties need to have agreed upon a precise juridical operation.

Similarly, in the common law provinces and territories, equitable rectification is available if the applicant can prove the following elements on a balance of probabilities with evidence "exhibiting a high degree of clarity, persuasiveness and cogency":

  1. In cases where both parties made the mistake, that:

    1. the parties had reached a prior agreement whose terms are definite and ascertainable;
    2. the agreement was still effective when the instrument was executed;
    3. the instrument fails to record accurately that prior agreement; and
  2. if rectified as proposed, the instrument would carry out the agreement; OR
  3. In cases where only one party made the mistake, that:

    1. the other party knew or ought to have known about the mistake; and
    2. permitting the defendant to take advantage of the erroneously drafted agreement would amount to fraud or the equivalent of fraud.

The SCC majority narrowed the availability of rectification from the test previously applied by, in particular, the Ontario courts. Courts can only correct errors in the legal instrument (such as typos), but not errors in the actual agreement. Justices Abella and Côté dissented in both decisions and would have given rectification a broader scope.

Lizotte, University of Calgary, and Chambres des notaires du Quebec: Check Your Privilege

The second-place spot on our list goes to a trilogy of decisions on the law of privilege: Lizotte v Aviva Insurance Company of Canada, 2016 SCC 52, Alberta (Information and Privacy Commissioner) v University of Calgary, 2016 SCC 53, and Canada (AG) v Chambres des notaires du Quebec, 2016 SCC 20. As previously discussed here, here, and here, these decisions reinforce the protection of privilege, which rests at the core of Canada's legal system.

The issue in Lizotte was whether litigation privilege trumped a legislative provision that required an insurer to hand over "any document" concerning the activities of a representative whose professional conduct was being investigated. The SCC confirmed that litigation privilege cannot be abrogated by legislation absent a "clear, explicit and unequivocal provision" to that effect. The statutory provision at issue did not satisfy that high-threshold.

In University of Calgary, the SCC needed to decide whether a legislative provision that required a public body to produce records "[d]espite ... any privilege of the law of evidence" abrogated solicitor-client privilege. The SCC majority held that while "privilege of the law of evidence" could encompass spousal communication privilege or settlement privilege in the context of court proceedings, it did not encompass solicitor-client privilege which is a substantive rule and not merely an evidentiary one. Therefore, the provision at issue was not "sufficiently clear, explicit and unequivocal" to show that the legislature intended to set aside solicitor-client privilege.

Lastly, in Chambres des notaries du Quebec (identified as one of our Appeals to Watch in 2016) the SCC held that provisions in the Income Tax Act requiring notaries and lawyers to produce certain documents to the Canada Revenue Agency constituted an unreasonable search and seizure in contravention of s. 8 of the Charter. The impugned provisions did not require that the client be informed of the production order, and they also placed the entire burden of protecting the privilege on the notary or lawyer. Moreover, it was not established that it was absolutely necessary in this context to impair privilege. The impugned provisions did not minimally impair the right to privilege and, therefore, could not be saved under s. 1 of the Charter.

Taken together, Lizotte, University of Calgary, and Chambres des notaries du Quebec indicate that courts will continue to zealously protect privilege from government encroachment. This renewed and formidable defence of privilege makes these three cases some of the most important decisions of 2016.

Ledcor: Standard Form Operating Procedure

The top decision of 2016 goes to Ledcor Construction Ltd v Northbridge Indemnity Insurance Co, 2016 SCC 37, previously discussed here. In Ledcor, the SCC majority held that standard form contracts are reviewable on a standard of correctness when the interpretation at issue is of precedential value and there is no meaningful factual matrix that is specific to the particular parties to assist in the interpretive process. Ledcor created a key exception to the SCC's landmark ruling in Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, which recognized that contractual interpretation is a question of mixed fact and law since contracts are interpreted in light of their factual matrix and therefore an appellate court should apply the "palpable and overriding error" standard of review (Sattva was previously discussed here).

The issue in Ledcor was whether an insurer could deny coverage of a claim for windows that had been damaged in a construction project on the basis of an exclusion contained in a standard form builder's risk policy. Writing for the eight–member majority, Wagner J held that while contractual interpretation is generally a question of mixed fact and law, in situations involving standard form contracts, it is more appropriately classified as a question of law. That is because the parties to a standard form contracts typically do not negotiate terms and the contract is put to the receiving party as a 'take it or leave it' proposition. Furthermore, the interpretation of a standard form contract could affect many people, and permitting appellate courts to review standard form contracts for correctness is consistent with the mandate of appellate courts "ensuring consistency of the law".

Justice Cromwell, in dissent, wrote that standard form contracts involve questions of mixed fact and law. While Cromwell J acknowledged that standard form contracts do not involve much negotiation, standard form contracts are still interpreted in light of their purpose, the nature of the particular relationship between the parties, and the market or industry within which they operate.

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.

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