Appellate Quarterly 04/10/25 – Key Takeaways

On April 10, 2025, McCarthy Tétrault’s National Appellate Litigation Group hosted its second Appellate Quarterly webinar of the year, featuring five appeals of importance to the business community and the law around the country. Laura Gill, Jean-Philippe Mathieu, Kevan Hanowski, Michael (Ruofan) Cui, and Connor Bildfell discussed these recent appellate developments, as well as upcoming cases and future developments in their respective jurisdictions.

1. The role of negotiation evidence in interpreting contracts [Alberta]

In IFP Technologies (Canada) Inc. v. EnCana Midstream and Marketing (“IFP”), the Court of Appeal of Alberta concluded that evidence of negotiations is not itself admissible, unless such evidence demonstrates the factual matrix.[1] The Court recently reaffirmed this principle in Chemtrade Electrochem Inc. v. Superior Plus Corporation.[2] In that case, Superior Plus Corporation (“Superior”) and Canexus Corporation (“Canexus”) entered into an agreement where Superior agreed to acquire Canexus by way of a plan of arrangement, pending regulatory approval in Canada and the United States. The deal collapsed and Chemtrade Electrochem Inc. (“Chemtrade”) acquired Canexus. Both Chemtrade and Superior claimed that they were entitled to the “Reverse Termination Fee” in the agreement. The Court of Appeal applied the principles from IFP, emphasizing that evidence showing the parties’ understanding of the purpose of the Reverse Termination Fee amounted to evidence of subjective intent, rather than the factual matrix. Any subjective intent evidenced by the negotiations did not amount to the intent reflected in the written agreement. Indeed, even if subjective intent is mutually understood, it cannot override the written terms of an agreement.

While IFP remains the leading case on contractual interpretation in Alberta, Chemtrade demonstrates the continuing need to distinguish between the proper use of objective and subjective evidence in discerning a contract’s purpose and meaning. To minimize risks, contracts should include clear and precise wording. Any negotiation evidence should reflect objective facts, as background facts such as market norms or contractual relationships may carry more weight.  

2. The relationship between the duty to negotiate in good faith and specific performance [Québec]

Even where specific performance is the default remedy under the Civil Code of Québec, it can be difficult to enforce the duty to negotiate in good faith by way of specific performance. In 2177 23rd Avenue Holdings v. Pival International inc.,[3] a tenant’s commercial lease contained a clause for the renewal of the lease, contingent on the successful negotiation of a new rental price based on market rates. The landlord sent the tenant a renewal proposal, which was conditional on approval by the landlord’s “authorized person(s)” and which specified that there would be no binding effect until both parties executed a full lease. The tenant accepted the proposal but was informed that the proposal had not been accepted by the “authorized person(s),” which was ultimately a prospective buyer who would become the new landlord.

The Québec Court of Appeal found that the renewal clause contained in the lease only afforded the tenant the first refusal and was not binding; the clause did not establish a sufficiently determinable rent price under the Civil Code, and the language nullifying the lease if the parties failed to negotiate a new rental price was also evidence of its non-binding nature. The Court emphasized that, while the landlord had a duty to negotiate in good faith, there was no obligation to achieve a specific outcome. While the Court did not find that any of the parties failed to act in good faith during the negotiations, it made a comment in obiter that specific performance—i.e., ordering the parties to a lease contract to renegotiate in good faith—would likely not be the solution to an instance of bad faith. The Court noted that ordering parties to negotiate in good faith who had previously failed to do so could be counterproductive, and underscored that awarding damages is a more appropriate solution to the failure to abide by Québec’s good faith requirements. In short, the Court’s decision underscores the need for clear and precise wording in important clauses to confine the scope of the duty of good faith, especially where specific performance may not be ordered.

3. Determining the governing jurisdiction for non-pecuniary damages [Atlantic Canada]

The question that arose in Hillyer v. Tilley[4] was whether the availability of non-pecuniary damages is a matter of substantive or procedural law. In that case, residents from Newfoundland and Labrador claimed damages for injuries they sustained in a bus accident near Nova Scotia. The parties agreed that Nova Scotia law should govern the substantive issues in the case, while Newfoundland and Labrador law should govern procedural issues. However, the parties disagreed on which jurisdiction should govern non-pecuniary damages; unlike Newfoundland and Labrador, there is a legislative cap of $2,500 for minor injuries in Nova Scotia. The Court of Appeal of Newfoundland and Labrador held that the availability of non-pecuniary damages was a matter of substantive law, as it concerns a plaintiff’s entitlement to damages, rather than the process or method of assessment. Thus, the Court concluded that non-pecuniary damages were governed by Nova Scotia law, including the monetary cap for minor injuries. The Court also emphasized that, where there is any doubt of whether a law is substance or procedural, it should be characterized as substantive.

Notably, Hillyer conflicts with the Court of Appeal for Ontario’s decision in Somers v. Fournier,[5] where the Court held that non-pecuniary damages were a matter of procedural law. Despite this divergence of opinion from two appellate courts, Hillyer was not appealed to the Supreme Court of Canada, so further clarity on this issue will await another case.[6]

4. Bringing a judicial review where a privative clause limits review to a statutory right of appeal [Federal]

In Best Buy Canada Ltd. v. Canada (Border Services Agency),[7] Best Buy asked the Federal Court of Appeal to set aside the Canadian International Trade Tribunal’s classification of wine coolers for tariff purposes. Best Buy did so by way of an appeal under s. 68 of the Customs Act, which limits appeals from the Tribunal’s decisions to questions of law. However, having regard to the Federal Court of Appeal’s decision in Canada (Attorney General) v. Best Buy Canada Ltd. (“Best Buy”), where the Court concluded that a privative clause cannot oust the court’s reasonableness review of factual errors,[8] Best Buy also brought an application for judicial review for issues falling beyond the scope of s. 68.

Justice Stratas found that Best Buy’s application for judicial review was needless, as it merely adopted the submissions made in the appeal under s. 68 of the Customs Act. In other words, there was no extricable question of fact to be addressed by judicial review. Writing for a unanimous Court in reasons from the Bench, Justice Stratas invited the Supreme Court of Canada to review the availability of judicial review when there is a privative clause, in light of the Supreme Court’s recent note in Yatar v. TD Insurance Meloche Monnex that the jurisprudence from Best Buy “as to the availability of judicial review where there is a privative clause … is not the question at issue in this case.”[9] Justice Stratas noted that “just because Best Buy says parties can bring a separate application for judicial review doesn’t mean they should … Just about anything that can be raised in a separate application for judicial review can be raised in a statutory appeal where only ‘questions of law’ can be raised.”[10] In the rare circumstances that a separate judicial review is truly needed, it must be consolidated with the statutory appeal under rule 105 of the Federal Court Rules.

While both a statutory appeal and an application for judicial review remain available in the face of a privative clause and limited statutory appeal provision, parties should consider how to frame their issues on appeal to be better placed in the federal courts, in light of Justice Stratas’ decision. Issues that may instinctively seem to be questions of fact, may be considered a question of law.

5. When multiplicity of proceedings will amount to an abuse of process [Supreme Court of Canada]

In Saskatchewan (Environment) v. Métis Nation – Saskatchewan,[11] the Supreme Court of Canada recently opined on the question of when a multiplicity of proceedings will amount to an abuse of process. In 2021, Saskatchewan issued uranium exploration permits to a company within territory over which the Métis Nation – Saskatchewan (“MNS”) asserts Aboriginal title and rights. MNS applied for judicial review of the permits based on an alleged breach of the duty to consult, and Saskatchewan moved to strike portions of the application on the basis that they amounted to an abuse of process given prior actions brought by MNS in 1994 and 2020.

The Supreme Court reviewed the abuse of process doctrine, which is concerned with the administration of justice and fairness, and is a broad concept characterized by its flexibility when applied across various contexts. A multiplicity of proceedings raising the same issues can amount to an abuse of process (e.g., where two parallel class actions involve the same parties and seek the same relief). However, a multiplicity of proceedings involving the same or similar parties or legal issues does not, in itself, amount to abuse of process. The analysis is instead guided by whether allowing the litigation to proceed would contradict the principles underlying the doctrine, such as judicial economy, consistency, finality, and the integrity of the administration of justice. Indeed, the Court’s guidance in this decision reflects an approach that leaves it to first-instance courts to determine, in light of all the circumstances, whether an abuse of process has occurred.

Although there was some overlap between the three proceedings brought by MNS, the Court concluded that this judicial review application was a specific instance of a general question raised in a prior action, and case management could address any risk of inconsistent outcomes. The Court emphasized that the “unique context of litigation to vindicate Aboriginal rights must always be borne in mind” and that “[c]ourt procedures should facilitate, not impede, the just resolution of Aboriginal claims.”[12] The doctrine therefore ought to be sensitive to the context of the litigation.

[1] IFP Technologies (Canada) Inc. v. EnCana Midstream and Marketing, 2017 ABCA 157.

[2] Chemtrade Electrochem Inc. v. Superior Plus Corporation, 2025 ABCA 31.

[3] 2177 23rd Avenue Holdings v. Pival International inc., 2025 QCCA 19.

[4] Hillyer v. Tilley, 2024 NLCA 35.

[5] Somers v. Fournier, [2002] O.J. No. 2543 (C.A.).

[6] For reference, the Supreme Court of Canada’s most recent comparison between procedural and substantive law can be found in Sanis Health Inc. v. British Columbia, 2024 SCC 40.

[7] Best Buy Canada Ltd. v. Canada (Border Services Agency), 2025 FCA 45.

[8] Canada (Attorney General) v. Best Buy Canada Ltd., 2021 FCA 161.

[9] Yatar v. TD Insurance Meloche Monnex, 2024 SCC 8, at para. 50.

[10] Best Buy Canada Ltd. v. Canada (Border Services Agency), 2025 FCA 45, at para. 11.

[11] Saskatchewan (Environment) v. Métis Nation – Saskatchewan, 2025 SCC 4.

[12] Ibid at para. 62.