Appeals to Watch in 2016: The Appeals Monitor’s Top Ten
With each new year comes a new slate of interesting appeals for Canadian businesses and professions. Without further ado, the Appeals Monitor is pleased to present our annual forecast of the top ten appeals to watch in 2016.
Last July, the Supreme Court of Canada granted leave from the Ontario Court of Appeal’s decision in Royal Bank of Canada v. Trang, 2014 ONCA 883, and has now tentatively set it down for a hearing date of April 27, 2016. The appeal concerns the extent to which a judgment creditor who seeks personal financial information about a debtor from a mortgagee must first obtain a court order permitting it to examine representatives of the mortgagee, along with the circumstances in which the debtor’s consent to such disclosure can be implied.
The case will require the Supreme Court to examine the intersection between the federal Personal Information Protection and Electronic Documents Act and provincial rules of civil procedure. It raises important issues about the conflict between access to justice and privacy rights in the debtor-creditor context, which provoked a 3-2 split in the Court of Appeal below. The Supreme Court’s judgment is likely to clarify how these interests should be weighed, and will be of significance to a broad array of participants in the financial services industry.
Can a municipality prevent a company, who has authorization from the federal government, from constructing a cell-phone tower on municipal land? That is the question the Supreme Court of Canada considered on October 9, 2015, when it heard this appeal from the decision of the Quebec Court of Appeal in White c. Châteauguay (Ville de), 2014 QCCA 1121, in which judgment remains on reserve.
The facts giving rise to this appeal are the following: Rogers surveyed land in the Châteauguay area and located a site on which to build a cell-phone tower and fill gaps in the company’s network coverage. The City initially opposed the project but eventually granted a construction permit. However, construction was stalled when City residents mobilized and the public consultation process required by Industry Canada resumed. The City then proposed an alternate site for the tower within Rogers’ original search area. However, the City did not own the land. It issued a notice of expropriation to the owner, who opposed the expropriation. After months of discussion, Rogers asked Industry Canada to break the stalemate and Rogers was given permission to proceed with installation at the original site. The City then served Rogers with a notice of land reserve that prevented construction of the tower. The Quebec Court of Appeal upheld the validity of both the expropriation notice and the notice of land reserve, finding that the City was acting for a legitimate municipal purpose.
The appeal raises important constitutional division of powers issues regarding the scope of the federal government’s jurisdiction over radiocommunications. It will be interesting to see how the Supreme Court defines the scope of federal jurisdiction in the context of the wireless era, in which wireless services (and the national networks and infrastructure required to support them) have become increasingly central to the lives of Canadian individuals and businesses. The appeal also provides an important opportunity for the Supreme Court to provide guidance on the application of the doctrine of cooperative federalism.
On December 9, 2015, CP’s attempt to appeal from the Regulations Amending the Railway Interswitching Regulations was heard by the Supreme Court of Canada, whose decision remains under reserve and is scheduled to be delivered this Friday, January 15. In this appeal, the Supreme Court will tackle an important (and politically-charged) constitutional question: To what degree must administrative bodies be free from interference by the executive branch of government when exercising legislative functions that have been delegated to them?
CP sought leave to appeal regulations enacted by the Canadian Transportation Agency (the “CTA”) in August 2014. Interswitching is a service in which one railway company collects a shipper’s rail traffic and transports it to an interchange point with a second railway company. The existing Railway Interswitching Regulations require federally regulated companies such as CP to perform interswitching services for all shippers’ facilities (e.g., grain elevators) that are located within 30 km of an interchange, at the rate prescribed in the regulation. Interswitching outside the prescribed 30 km distance is performed on commercially negotiated terms. In 2014, various Federal Ministers expressed an intention to extend the prescribed interswitching distance from 30 km to 160 km in Alberta, Manitoba and Saskatchewan. In May 2014, Bill C-31 was passed, permitting the CTA to make regulations extending interswitching distances in different regions of the country. However, Bill C-31 did not prescribe any new distances specifically. The new regulation enacted by the CTA in August 2014 amended the existing legislation to extend the interswitching distance to 160 km as identified by the Federal Ministers.
CP sought leave to appeal the new regulation, asserting that it was enacted based on improper interference and direction from the federal government, and without any independent assessment of the need for or value of extending the interswitching distance. The Federal Court of Appeal dismissed CP’s motion for leave to appeal, without reasons.
It will be interesting to see how the Supreme Court articulates the requirements of independence and impartiality of administrative bodies in the context of legislative decision-making; these concepts have typically been addressed in the context of delegated judicial (not legislative) powers. From a political perspective, the appeal will also be of interest to observers of the interplay between the judiciary, parliament and the executive branch after a contentious 2015 between the Supreme Court and the federal government.
On December 10, 2015, the Supreme Court of Canada heard two appeals from the decisions of the Quebec Court of Appeal in Financière agricole du Québec c. Ferme Vi-ber inc., 2014 QCCA 1886 and Lafortune c. Financière agricole du Québec, 2014 QCCA 1891, in which judgment remains on reserve. The issue in both appeals is one that has attracted a great deal of attention in recent years: to what degree should financial programs administered by statutory authorities be governed by public administrative law principles, as opposed to the private rules of contract law?
The appellants in Ferme Vi-ber and Lafortune are farm businesses and livestock producers that participated in the Farm Income Stabilization Insurance Program administered by the respondent, the Financière agricole du Québec, under its enabling statute. The program provides participants with a positive annual income regardless of market fluctuations, and requires the Financière to pay participants compensation when their market cost is lower than production costs. The appellants sought millions of dollars in compensation from the Financière, and argued that the program was in essence an insurance contract under the Civil Code of Québec that is governed by the rules applicable thereto. The Court of Appeal disagreed, finding the program is not an insurance contract but is governed by public law principles.
The most significant aspect of the case is likely to be the Supreme Court’s treatment of whether the program should be characterized as a matter of contract law or public law. This issue has preoccupied the Court in several decisions, e.g., Dunsmuir v. New Brunswick, 2008 SCC 9 and Canada (A.G.) v. Mavi, 2011 SCC 30. A clear articulation of the proper approach could have important consequences beyond Quebec, and affect how parties challenge government actions on the borderlines between private law and judicial review. As an added bonus, the Ferme Vi-ber appeal also asks whether the Financière abused its contractual rights, which could allow the Supreme Court to elaborate upon the duty of good faith in Quebec contract law.
In two cases proceeding in 2016, the Supreme Court of Canada will reconsider its blockbuster decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 on the issue of the standard of review applicable in contractual interpretation cases. In what circumstances does contractual interpretation involve a question of law alone, rather than a mixed question of fact and law that attracts deference on appellate review?
Teal is an appeal from a decision of the British Columbia Court of Appeal in British Columbia (Ministry of Forests) v. Teal Cedar Products Ltd., 2015 BCCA 263, and arises from an arbitral award in a dispute between Teal and the Province of British Columbia. In that case, the arbitrator awarded interest on the award notwithstanding a clause in the arbitration agreement that the Province submitted precluded interest. On appeal by the Province, the Chambers judge held that the arbitrator’s interpretation of the contract was based upon a consideration of the surrounding circumstances, and was therefore a question of mixed fact and law that could not be appealed under the BC Arbitration Act. The Court of Appeal disagreed, holding that the arbitrator’s decision raised a question of pure law, and set aside the arbitrator’s decision as inconsistent with the plain meaning of the contract. The Supreme Court sent Teal back to the British Columbia Court of Appeal for reconsideration in light of its decision in Sattva. On reconsideration, the Court of Appeal held that nothing in Sattva required it to change its decision, and that the interpretation of the interest clause raised a discrete question of law that it was entitled to review on a standard of correctness.
Heritage is an appeal from a split decision of the Alberta Court of Appeal in Equitable Trust Company v 604 1st Street S.W. Inc., 2014 ABCA 427. In Heritage, the City of Calgary contracted with the owner of a historic building to carry out rehabilitation work and provided that the owner would be compensated by the City by way of yearly payments over 15 years. The owner later sold the building to a third party, prompting the owner to apply for a declaration that the sale did not affect its right to receive the payments from the City. The Master in Chambers granted the declaration, and the Chambers Judge upheld it on appeal, citing the parties’ intention that the compensation be payable to the specific owner, and not to whomever happened to be the owner of the building at the time. A majority of the Court of Appeal for Alberta allowed the appeal, finding that the legal status of the contract, and whether it created an interest which ran with the land, was a question of law that was reviewable on a standard of correctness. The majority held that the positive covenants in the contract did run with the land, and the purchaser was therefore entitled to the payments due under the contract after the date of the sale. Slatter J.A., dissenting, disagreed that the covenants ran with the land and held that, in any event, even if they could do so in theory, they did not in this case because it was contrary to the contracting parties’ intention.
The Supreme Court’s decision will provide welcome guidance on how its watershed decision in Sattva is to be applied by appellate courts, and how consideration of the factual matrix by lower courts impacts upon the characterisation of matters of contractual interpretation as questions of law or mixed fact and law.
Do provisions in the Income Tax Act that require lawyers and notaries to disclose information and documents that assist in the enforcement or administration of the ITA, subject to a defined exception for “solicitor-client privilege” that excludes lawyers’ and notaries’ accounting records, abrogate solicitor-client privilege and, if so, is that attempt constitutional?
That is the question the Supreme Court of Canada will tackle when it releases its decision in the appeal, heard on November 3, 2015, from the decision of the Quebec Court of Appeal in Canada (Procureur général) c. Chambre des notaires du Québec, 2014 QCCA 552. In the decisions below, both Quebec courts held that the impugned sections of the Income Tax Act offended s. 8 of the Charter and were of no force and effect. The case has provoked great interest amongst law societies and lawyers’ associations across the country. The Advocates’ Society, the Canadian Bar Association, the Federation of Law Societies of Canada and the Criminal Lawyers’ Association were all granted intervener status in the appeal to the Supreme Court.
Together with the Supreme Court’s forthcoming decision in Minister of National Revenue v. Duncan Thompson (also under reserve), Chambre will decide whether the ITA attempts to limits solicitor-client privilege and, if so, the constitutionality of any such limits, and presents an opportunity for the Supreme Court to discuss the interplay between solicitor-client privilege and sections 7 and 8 of the Charter.
When may courts rectify a transaction that is intended to achieve a particular tax result, but fails to do so based on an honest mistake by the parties? That is the question the Supreme Court of Canada will consider on May 18, 2016 when it hears the appeals from Canada (A.G.) c. Groupe Jean Coutu (PJC) inc., 2015 QCCA 838 and Fairmont Hotels Inc. v. Canada (A.G.), 2015 ONCA 441.
The facts in both cases are complex, but revolved around a series of corporate transactions which the taxpayers intended to carry out on a tax neutral basis. Owing to certain mistakes, the transactions produced unexpected tax results, and the taxpayers sought rectification (or its Quebec equivalent) from the courts, which was opposed by the Crown. The Ontario Court of Appeal granted rectification, consistent with its previous decision in Canada (A.G.) v. Juliar, 2000 CanLII 16883, but the Quebec Court of Appeal refused such relief on the basis that the parties’ intention to produce a tax neutral transaction is not sufficiently determinate to serve as the basis for the retroactive modification of an agreement.
The Supreme Court’s decision will be an important one for corporations and other taxpayers that engage in complex transactions designed to achieve particular tax results. In the years since Juliar and Quebec (Agence du revenu) v. Services Environnementaux AES inc., 2013 SCC 65, rectification has emerged as a significant remedy for taxpayers in cases where a common and continuing intention was frustrated by mistake.
Those following jurisprudence on the topic of national class actions in Canada will be keenly interested in the Supreme Court of Canada’s ruling on the appeal from the Ontario Court of Appeal decision in Trillium Motor World Ltd. v. General Motors of Canada Limited, 2014 ONCA 497. In this appeal, which was heard on December 3, 2015 and is currently under reserve, the Supreme Court will consider the circumstances in which a contract is connected with a dispute for the purpose of the fourth presumptive connecting factor identified in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, thereby permitting a provincial court to assume jurisdiction over a multi-jurisdictional class.
The facts of this case are likely well known, and involve a class action commenced in Ontario by a group of General Motors dealers from across Canada against Cassels Brock and General Motors. The class members are dealers who signed a termination agreement with General Motors. As against Cassels Brock, the trial judge found that, while it was acting as counsel for the class member dealers, Cassels Brock was negligent and breached its contractual duties to them by acting in the face of an undisclosed conflict of interest. Cassels Brock has commenced third party claims against the lawyers and law firms across the country that provided legal advice to the class member dealers before they accepted and signed the termination agreement with General Motors. Lawyers from Quebec appealed from the decision of the Ontario Court of Appeal agreeing that the Ontario courts had presumptive jurisdiction over the third parties because there existed a contract (the termination agreement) made in Ontario and connected with the dispute.
As Van Breda did not explain in detail when the fourth presumptive factor will apply, the Supreme Court’s decision in this appeal will provide important guidance on the issue. It is anticipated that the decision will address questions including: What is the appropriate “contract” for the purpose of analysing whether it is connected with the dispute, and can there be more than one? What rule ought to be applied to determine the jurisdiction in which the contract was entered into? What are the parameters for rebutting presumptive jurisdiction if one of the factors in Van Breda is established? In deciding these questions, the Supreme Court will also have an opportunity to shed light on how the principles of fairness, efficiency and the avoidance of inconsistent results ought to be applied in national class actions.
Oppression remedy cases are rare at the Supreme Court of Canada. The Court’s last foray into this area, BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, produced a blockbuster judgment that is a cornerstone of modern Canadian corporate law. It is therefore of no small interest that the Supreme Court heard another oppression case on December 8, 2015, when it considered an appeal from the Quebec Court of Appeal’s ruling in Mennillo c. Intramodal inc., 2014 QCCA 1515, judgment in which remains on reserve.
The Mennillo appeal concerns a claim by the appellant, a former shareholder in Intramodal, that the company and its other shareholder unduly and illegitimately deprived him of his shareholder status. The appellant had initially joined Intramodal as its director, officer and shareholder on the premise that he would offer it financial support. Approximately one year later, he resigned from his position and director and officer, though he continued to make cash advances to keep the company running. When the last of the advances was repaid, the appellant discovered that he was no longer a shareholder and commenced the oppression claim. His action was dismissed by the Court of Appeal, which concluded that the parties had agreed to retroactively cancel his share issuance after engaging in detailed review of the evidence.
The Supreme Court’s decision has the potential to be an important one for the business community. Intramodal is incorporated under the Canada Business Corporations Act, so the Court’s ruling will have implications that extend throughout the country. Further, the decision will allow the Court to examine how the oppression remedy should operate in the case of closely-held corporations, which it suggested in BCE may involve different considerations than cases against large public corporations. A final indication of the importance of the appeal: the Court chose to sit as a nine-member panel when it heard the case in December.
Our final choice for 2016 concerns the murky but perennially important topic of multi-jurisdictional class actions. Last November, the Supreme Court of Canada granted leave to appeal from Endean v. British Columbia, 2014 BCCA 61 and Parsons v. Ontario, 2015 ONCA 158, in which the British Columbia and Ontario Courts of Appeal divided over the jurisdiction of superior court judges to sit outside their provinces for the purpose of hearing applications under multi-jurisdictional class action settlements. The appeals are currently scheduled to be heard by the Supreme Court on May 17, 2016.
The settlement agreement in Endean and Parsons arose out of class actions seeking damages for individuals infected with Hepatitis C through the Canadian blood supply, which were certified separately in British Columbia, Ontario and Quebec. The agreement effected a national settlement of the class actions, and assigned a supervisory role to the courts of the three provinces, providing that any order by one of the courts would only take effect once there were materially identical orders by the other two courts. In order to reduce costs and the risk of inconsistent findings in a pending complex motion, class counsel brought separate applications in each of the three provinces for a declaration that judges of their superior courts could sit together outside their provinces to hear joint motions under the settlement agreement.
The Ontario Court of Appeal held that there was no constitutional, common law or statutory impediment to this, provided that a video link was provided from the out-of-province proceeding to Ontario in order to respect the open court principle. On the other hand, the B.C. Court of Appeal held that superior court judges have no jurisdiction to hold a hearing outside their province, but accepted that a judge may conduct a hearing in their province’s courtroom via a telephone or other communications link from another province.
The appeals will give the Supreme Court an important opportunity to clarify the scope of superior court jurisdiction in the multi-jurisdictional class actions context. Whatever the Court decides, its ruling is likely to spur much-needed law reform in this area.