Written by Andrew Little, Ranjan Agarwal and Ethan Schiff
The Supreme Court this winter will hear (and in one case, has heard and determined) high-profile appeals involving federal and provincial government powers, corporate rights under the Charter of Rights and Freedoms, and two complex commercial appeals.
The Court is also expected to release several decisions on contract law in 2020 that will have significant implications for businesses.
Appeal Heard and Decided
- TransMountain: The Supreme Court heard arguments on January 16 about the constitutionality of British Columbia's amendments to its Environmental Management Act concerning transportation of oil through pipelines. The BC Court of Appeal concluded that the amendments were unconstitutional because they concerned the regulation of interprovincial matters, which fall within the exclusive jurisdiction of Parliament.
The Supreme Court unanimously agreed, dismissing the appeal after oral argument.
Four Appeals to be Argued
The Court will hear argument in several constitutional cases that impact businesses:
- Carbon Trading: In Reference re Greenhouse Gas Pollution Pricing Act, the courts of appeal in Saskatchewan and Ontario ruled, in split decisions, that this federal law is a valid exercise of federal constitutional authority. The Act imposes charges on greenhouse gas-producing fuels and waste and applies only in provinces in which greenhouse gases are not priced at the prescribed level. These appeals are scheduled for late March 2020.
- Corporate Charter rights are at issue in R v. 9147-0732 Québec Inc. The corporation was ordered to pay a fine on conviction under the Québec Building Act, which contains a mandatory minimum fine provision. Reversing the Québec Superior Court, the Québec Court of Appeal held that a corporation can rely upon the cruel and unusual punishment provision in section 12 of the Charter to argue that the minimum fine provision is unconstitutional. Under Charter case law, a punishment is "cruel and unusual" under section 12 if it is "grossly disproportionate" to the accused's conduct.
Other Appeals of Interest to the Business Community
- Penalties/Liquidated Damages and the Anti-deprivation Rule: The Court will consider the enforceability of clauses that impose financial payments for breach of contract in Capital Steel Inc. v. Chandos Construction Ltd. A construction subcontract provided for forfeiture of 10 percent of the price if the subcontractor committed an act of insolvency. Before completion of the work, the subcontractor became a bankrupt. In the bankruptcy, the general contractor sought to offset the amount it owed to the subcontractor against the 10 percent, which would have eliminated the contractor's debt at the time and provided the contractor with a provable claim. The Alberta Court of Appeal held that the contractor could not enforce the provision. Please see this blog and this blog for further details.
- CCAA and Plans of Arrangement: In 9354-9186 Québec Inc. v. Callidus Capital Corp., a company obtained creditor protection under the Companies' Creditors Arrangement Act (CCAA). The only remaining asset was a claim against its former lender. The debtor required litigation funding to pursue the claim. The former lender had purchased all of the debtor's assets and remained an unsecured creditor. The CCAA monitor asked the Québec Superior Court for an order enabling litigation funding, and the former lender responded by filing a motion to hold a creditors meeting to propose a plan of arrangement causing the debtor to settle the same litigation. The CCAA court approved the litigation funding and declined to send the former lender's plan of arrangement to a creditors meeting. In its view, the former lender could not vote for its own plan at a creditors' meeting and its proposal would inevitably fail. The Court of Appeal disagreed, holding that the former lender could vote at the meeting.
Key SCC Decisions Expected This Year
SCC Decisions under reserve of significance to the business community include:
- Araya v Nevsun Resources: The Court heard arguments in January 2019 in this appeal about whether a Canadian company can be sued in Canada for an alleged breach of public international law occurring outside Canada.
- Arbitration Clauses in Standard Form Agreements: In Uber v Heller, the Court of Appeal for Ontario held that Uber's arbitration clause was not enforceable. The Supreme Court heard arguments in November 2019 from the parties and 17 interveners. The appeal has implications for e-commerce and other businesses using standard form agreements.
- Good Faith in Contract Law: The Court heard three cases on good faith in contract law during its autumn 2019 hearings. The decisions are expected to provide guidance on how to apply the Court's groundbreaking 2014 decision in Bhasin v. Hrynew in three circumstances: good faith in employment law on termination of employment; the exercise of a "discretionary" power under a contract; and whether deliberate silence can constitute bad faith.
Please contact any of the authors for further information about any of the cases or issues discussed in this post.