Appellate Quarterly (October 2025) – Key Takeaways

On October 21, 2025, McCarthy Tétrault's National Appellate Litigation Group hosted its final Appellate Quarterly webinar of the year, featuring six recent appeal decisions of interest to the business community across Canada. Jordan Bierkos, Catherine Martin, Moya Graham, Lyndsey Delamont and Adam Goldenberg discussed these appellate developments and future trends to watch in each region.

The scope of expert evidence and the scale of restitutionary damages (Western Canada)

In Signalta Resources Limited v Canadian Natural Resources Limited, 2025 ABCA 306, the plaintiff Signalta Resources Limited ("Signalta") brought a claim for trespass, conversion and unjust enrichment against the defendant Canadian Natural Resources Limited ("CNRL") for the gas produced by CNRL on split title lands. Signalta held the rights to non-solution gas on the split title lands. CNRL held the rights to bitumen, including solution gas. Signalta argued that the shared reservoir contained its non-solution gas, and that CNRL produced its non-solution gas through "coning" and "wormholes". CNRL argued that there was an impermeable membrane separating the non-solution gas and bitumen, such that it could not have produced non-solution gas.

The trial judge found that CNRL produced Signalta's non-solution gas and was liable for trespass, conversion and unjust enrichment. The trial judge awarded moderate damages based on disgorgement of gross revenue minus deductions for expenses. CNRL appealed the finding of liability, arguing that the trial judge erred in its dealing with the expert evidence. Signalta cross-appealed the assessment of damages, arguing that harsh damages should be awarded. On appeal, the Court of Appeal of Alberta upheld the trial judge's handling of expert evidence and damages, emphasizing deference in such matters.

Takeaways:

Expert Evidence

• An expert can review and rely on documents not contained in an Affidavit of Records or admitted as evidence where documents are otherwise disclosed to the opposing party as part of the expert's working papers.
• An expert can proffer opinion evidence on matters outside of their formal education or credentials where the expert's relevant professional experience provides a sufficient foundation.
• An expert's evidence that "amounted to a personal attack" on another expert is not admissible.
• It is not the role of an appellate court to re-weigh expert evidence.
• Lay witnesses with specialized knowledge are limited to providing opinion evidence as a compendious statement of observed facts, where the opinion is one an ordinary person could form.

Restitutionary Damages

• Restitutionary damages exist to protect property rights cross sectors.
• Harsh damages are a deterrent tool (distinct from punitive damages).
• The degree of defendant misconduct is relevant to the scale of restitution.
• Defendants who "ought to have known" are at risk of harsh damages. Sophisticated actors and highly regulated environments are at greater risk.
• Financial consequences can be severe.

Good faith is analyzed at the relevant point in time and in the particular context, but does not include the duty to inform of the legal consequences of one's decisions (Québec)

In Ville de Montréal c. Services Ricova Inc., 2025 QCCA 901, the City of Montréal (the "City") published a call for tenders for the transportation and collection of recyclable materials with the wrong information regarding the estimated tonnage and number of trucks needed. Three days later, the City published an addendum to correct the error. Services Ricova Inc. ("Ricova") bid on the contract without considering the addendum in the calculation of its price and obtained the contract. In December 2017, Ricova started the transportation and collection, discovered its mistake and realized that it could not fulfill its obligations. In February 2018, Ricova unilaterally terminated the contract. In July 2018, the City informed Ricova that it would suspend the contract in August 2018 until it concluded a new contract with a third party company and would grant a temporary contract to another company in the meantime. The City retained approximately $1M that was owed to Ricova for other ongoing contracts it had with the City to compensate the difference between the price of the new contract awarded to the third party and the price in Ricova's bid.

The trial judge ordered the City to reimburse Ricova the $1M it retained. The trial judge found that Ricova could raise a fin de non-recevoir defence against the City because the City infringed its duty of good faith, specifically its duty to inform Ricova that it would be held responsible for the price difference between the two contracts. The City appealed.

The Court of Appeal of Québec allowed the appeal. The court held that Ricova's unilateral termination of the contract was unlawful and amounted to a breach of contract. As the City chose specific performance by equivalence as the remedy for Ricova's breach of contract, the court concluded that the City had the right to retain $1M in damages, to be compensated for its real losses caused by Ricova's breach of contract and to be placed back in the situation where it would have been without the wrongful termination of the contract. The court also held that the City did not violate its duty of good faith. The court explained that the extent of the duty to inform, as a component of the duty of good faith, depends on the particular context between the parties and is based on several factors. However, the court clarified that the duty to inform does not require a party to give the other party advice about the legal consequences of its decisions.

Takeaways:

• Good faith must be analyzed at the relevant point in time.
• The obligation to inform does not include the obligation to inform the counterparty of the legal consequences of its decisions.
• The use of a hypothetical setting to evaluate damages cannot overshadow the general principles of damages evaluation.

Concerns and challenges to arbitrators for bias should be timely, objective and substantial (Ontario/Atlantic)

In Dhaliwal v Richter International Ltd., 2025 ONCA 522, the parties entered into an arbitration agreement with an arbitrator in October 2020. The arbitrator's terms of appointment included a clause that required the arbitrator to disclose potential conflicts or matters that could give rise to a reasonable apprehension of bias. Concurrently, the arbitrator was arbitrating another unrelated matter, involving counsel for the respondents (the "Concurrent Arbitration").

The appellant initiated a challenge for bias against the arbitrator for non-disclosure of his involvement in the Concurrent Arbitration. The lower court dismissed the application. The court found that the challenge was not timely under the Arbitration Act, 1991, S.O. 1991, c. 17, s. 13(1). The court held that the test for reasonable apprehension of bias is an objective test and found there was no meaningful overlap between the two arbitrations beyond the involvement of counsel. The court rejected the argument that repeat appointments of an arbitrator by the same counsel will inherently create bias. Further, the court found that there was no actual bias. On appeal, the Court of Appeal for Ontario dismissed the appeal and affirmed the lower court decision.

Takeaways:

• If parties or counsel have concerns about an arbitrator accepting other mandates during an arbitration, those concerns should be identified and clearly disclosed prior to the engagement.
• The timeliness of the challenge matters.
• There is a strong presumption of impartiality and the grounds for bias must be substantial.
• An arbitrator's involvement in a separate arbitration with one party's counsel is not, on its own, a circumstance that could give rise to a reasonable apprehension of bias.
• It is not uncommon for counsel to select arbitrators for the very reason that they have worked with those arbitrators before.
• Multiple mandates may create a reasonable apprehension of bias if they create the caption of a financial dependency of the arbitrator—the test is objective and the subjective views of the parties and counsel are irrelevant.
• If parties want to ensure their arbitrator has not worked with the parties or counsel before, or require the arbitrator to disclose previous or concurrent mandates with the parties or counsel, that needs to be express in the terms of appointment.
• Since Aroma,^[1] most arbitrators disclose all appointments with the same counsel or the same party as part of their ordinary disclosure process for the sake of full transparency: the "Aroma letter".

Reasonableness review applies to discretionary policy decisions and stays remain exceptional remedies (Federal)

In Universal Ostrich Farms Inc. v. Canada (Food Inspection Agency), 2025 FCA 147 ("Universal Ostrich Farms #1") and Universal Ostrich Farms Inc. v. Canada (Food Inspection Agency), 2025 FCA 164 ("Universal Ostrich Farms #2"), the Canadian Food Inspection Agency ("CFIA") issued a Notice to Dispose of all ostriches to the appellant Universal Ostrich Farms Inc. ("Universal") pursuant to s. 48 of the Health of Animals Act and the CFIA's Stamping Out Policy, following laboratory testing that confirmed two dead ostriches on Universal's farm were infected with H5-subtype highly pathogenic avian influenza.

Universal brought an application to exempt some of its ostrich flock from destruction. On January 10, 2025, the CFIA denied Universal's application for exemption. Thereafter, Universal sought judicial review of the CFIA's Notice to Dispose and the denial of the application for exemption. On May 13, 2025, the Federal Court dismissed both applications for judicial review. Universal appealed and brought a motion to adduce fresh evidence.

On August 21, 2025, the Federal Court of Appeal in Universal Ostrich Farms #1 dismissed the appeal and the motion to adduce fresh evidence. The court confirmed that Vavilov^[2] is the starting point for undertaking judicial review, including discretionary policy decisions. The court reiterated that reasonableness is a single standard and the bar to establish unreasonableness is high. The court held that the Stamping Out Policy was reasonable. By extension, the Notice to Dispose and the denial of the application for exemption were reasonable. The court also held that on a judicial review application of an administrative decision, the general rule is that only the evidence that was before an administrative decision-maker is relevant and admissible. As a result, post-decision evidence is normally irrelevant and inadmissible. The court concluded that the only potentially relevant exception—where fresh evidence may be admitted for the exercise of remedial discretion by courts where "no practical purpose would be served by quashing and sending the matter back"—did not apply. The court explained that if Universal wished to have the Notice to Dispose re-examined in light of the fresh evidence, its recourse was to ask the CFIA or the Minister to do so.

Universal then sought a stay of proceedings pursuant to s. 65.1(2) of the Supreme Court Act, R.S.C. 1985, c. S-26 and s. 50(1)(b) of the Federal Courts Act, R.S.C. 1985, c. F-7.On September 12, 2025, the Federal Court of Appeal in Universal Ostrich Farms #2 dismissed Universal's motion to stay the proceedings. The court confirmed that there is a five-part test for granting a stay, and a stay will not be issued where a prong of the test is not met. The court held that the third prong—whether there was a serious issue to be determined—was not met. The Supreme Court of Canada issued an interim-interim stay, but ultimately dismissed Universal's application for leave to appeal without reasons.

Takeaways:

• Vavilov applies to a reasonableness review of discretionary policy decisions.
• On a judicial review application of an administrative decision, only the evidence that was before an administrative decision-maker is relevant (subject to limited exceptions).
• If new evidence arises following an administrative decision, the avenue for potential relief is likely the administrative body that made the decision, not the Federal Court.
• Appellants should not split their case.
• Stays remain exceptional remedies.

Relying on a contract made in the province to establish jurisdiction simpliciter requires a party to plead facts to make out the essential elements of a contract and an individual assessment (Supreme Court of Canada)

In Sinclair v. Venezia Turismo, 2025 SCC 27, Mr. Sinclair held a premium credit card with Amex Canada that gave him access to a concierge and travel agent service. He booked a trip to Europe for himself and his family using the concierge service associated with his credit card. While in Italy, Mr. Sinclair called the concierge service to book transportation from the airport in Venice to their hotel, including a water taxi ride. While Mr. Sinclair and his family were aboard the water taxi, the water taxi crashed, causing serious injuries to Mr. Sinclair. Mr. Sinclair and his wife (the "Appellants") commenced an action in Ontario seeking damages arising out of the accident against a number of defendants, including three Italian companies (the "Italian Respondents"), Amex Canada, the third‑party travel service provider and the driver of the water taxi. The Appellants relied on the fourth presumptive connecting factor listed in Club Resorts Ltd. v. Van Breda, 2012 SCC 17 to establish Ontario's jurisdiction over the Italian Respondents. That is, a contract connected with the dispute was made in the province.

On appeal to the Supreme Court of Canada, the majority held that while the cardmember agreement between Mr. Sinclair and Amex Canada is an Ontario contract that could ground Ontario's jurisdiction over the dispute, the presumption of jurisdiction was rebutted because there was no real and substantial connection between the circumstances giving rise to the claim and Ontario.

With respect to the fourth presumptive connecting factor, the Court explained it is incumbent on parties seeking to rely on this factor to plead the facts necessary to make out the essential elements of a contract, such that a failure to plead with sufficient particularity the existence of a contract will foreclose a finding of a real and substantial connection on the basis of that contract. Further, in cases where there are multiple defendants, the Court confirmed that jurisdiction is examined from the perspective of each defendant. If a contract bears only a remote connection to any particular defendant, the contract cannot be said to support the legitimate exercise of judicial authority over that defendant.

Takeaways:

• Pleadings matter. A failure to plead with sufficient particularity the existence of a contract will necessarily foreclose a finding of a real and substantial connection on the basis of that contract.
• Every relevant contract will be assessed individually. Courts should analyze each contract, as opposed to relying merely on a vague "constellation of contracts".
• A presumptive factor must attach to each defendant. There is no bootstrapping, where the legitimate establishment of jurisdiction over one defendant is taken uncritically to imply jurisdiction over all defendants.
• Predictability and fairness are key. In the context of global commerce and travel, the courts will avoid assuming jurisdiction where the presumptive connection is weak.

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Footnotes

1. Aroma Franchise Company, Inc. v. Aroma Espresso Bar Canada Inc., 2024 ONCA 839.

2. Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.

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