Written By Michael Theroux, Kelsey Meyer, Jaspreet Singh and Chelsea Tolppanen
Canadian courts rendered a number of notable decisions in the commercial litigation sphere in 2022 that made headlines for the impacts they will have on the landscape of businesses facing a dispute. Now that we are well into the start of 2023, we have compiled our top 10 commercial litigation cases that will affect businesses and the practice of commercial litigation in Canada.
Coming in at number one is the Supreme Court of Canada's (SCC) ruling on the operation of arbitration agreements in the context of a court-ordered receivership. Our "Top Ten" list also includes decisions from influential Canadian Courts providing direction on the proper interpretation of common contractual terms in the commercial context, as well as decisions highlighting a culture shift towards increased use of summary procedures, such as summary judgment and summary trial, as an alternative to trial. Other themes from the decisions include the evidentiary thresholds required to obtain extraordinary remedies for fraud, the appropriateness of ricochet judgments in the enforcement context, and issues arising from the document production phase of litigation.
Peace River Hydro Partners v Petrowest Corp, 2022 SCC 41
The SCC clarified if and how a contractual agreement between two parties to arbitrate disputes should give way to the public interest in the orderly and efficient resolution of a court‑ordered receivership. The Receiver for Petrowest initiated a lawsuit against Peace River Hydro Partners for amounts owing to Petrowest. Peace River attempted to stay the lawsuit because of arbitration clauses in its contractual agreements with Petrowest. The SCC agreed with the Receiver that it had the statutory jurisdiction under the Bankruptcy and Insolvency Act to find that the parties' arbitration agreements were inoperative because multiple arbitral processes would compromise the orderly and efficient resolution of the receivership.
Greta Energy Inc v Pembina Pipeline Corporation, 2022 ONCA 783
The ONCA contemplated the scope of good faith in the context of a competitive bidding process. Greta Energy Inc. argued that Veresen and BluEarth Renewables Inc. breached their duty of good faith and honest performance. Greta claimed they wrongly manipulated the price of assets subject to ROFRs. The Court dismissed Greta's action. Fair market value was not determinative of whether the respondent acted in good faith, and further, this was a competitive bidding process that entailed upward pressure on prices.
Coffee Time Donuts Incorporated v 2197938 Ontario Inc, 2022 ONCA 435
The Ontario Court of Appeal (ONCA) confirmed the conclusion that conduct can continue a contract beyond the term of expiry. The parties' written franchise agreement had expired; however, the ONCA upheld the motion judge's finding that the terms of the expired agreement remained effective because the parties followed the entirety of the agreement after its expiry. Summary judgment was an appropriate mechanism for the motions judge to make the required findings of fact. The motions judge properly concluded that the expired agreement was continued by conduct and that royalties under the written franchise agreement remained payable after expiration.
10443204 Canada Inc v 2701835 Ontario Inc, 2022 ONCA 745
The ONCA considered the interaction between an allegation of fraudulent misrepresentation and an entire agreement clause contained within the purchase and sale agreement. The purchasers of a coin laundry business alleged that the vendors misrepresented the income of the business. The Court held the motion judge erred in treating the entire agreement clause contained in the purchase agreement as having the effect of precluding the claim of fraudulent misrepresentation. An entire agreement clause will not bar an argument of fraudulent misrepresentation.
Henenghaixin Corp v Deng, 2022 ABCA 271
Parties moving ex parte and seeking extraordinary, injunctive-type relief are held to a high evidentiary standard. The plaintiff commenced an action alleging fraud and obtained an ex parte attachment order and Mareva injunction (which froze the defendants' assets) based largely on third party, hearsay, evidence. The Court of Appeal of Alberta set aside the order and warned that courts should proceed cautiously with hearsay evidence, especially without an explanation as to why first-hand, direct evidence has not been provided. Parties should put forward the best possible evidence available on applications for extraordinary remedies such as Mareva injunctions and attachment orders, or else risk that it will be rejected or overturned on appeal.
Benke v Loblaw Companies Limited, 2022 ABKB 461
An example of the culture-shift in commercial litigation towards encouraging the increased use of summary procedures as a useful and available tool in disputes. The Court commented that the perception of summary trial as a risky procedure has caused it to be underutilized. Summary trials are an important part of timely and affordable civil justice, even when contested fact findings, or findings related to credibility, must be made. The Court deemed the matter appropriate for summary trial, as the cost to the parties of litigating the dispute would not be proportional to the estimated damages, if a full trial were required.
HMB Holdings Limited v Antigua and Barbuda, 2022 ONCA 630
The concept of a "ricochet judgment" was assessed by the ONCA for whether it is appropriate within the Canadian system on law on enforcing judgment from a foreign jurisdiction in Canada. Generally, "a court in one jurisdiction will recognize and enforce the judgments of another jurisdiction, as long as the original jurisdiction had a real and substantial connection with the claim or the defendant…" An example of a ricochet judgment is a recognition and enforcement judgment that is then itself recognized and enforced in another province. The Court of Appeal for Ontario did not recognize and enforce a ricochet judgment from the Supreme Court of British Columbia, as ricochet judgments do not fit within the rationale for recognizing and enforcing an original foreign judgment.
Questor Technology Inc v Stagg, 2022 ABKB 578
The Alberta Court of the King's Bench (ABKB) considered the issue of fulsome document production in the litigation process where there are concerns that disclosure of certain records will create a business risk. Questor Technology Inc. applied for the production of records from its direct competitor. The Court ordered the respondents to produce a further and better Affidavit of Records, with some of the production subject to a Counsel’s Eyes Only Order to avoid a significant business risk. Parties to civil litigation bear an ongoing obligation to disclose relevant and material records which have not been previously disclosed.
Signalta Resources Limited v Canadian Natural Resources Limited, 2022 ABKB 89
The ABKB ruled on an attempt to introduce documents into evidence at trial that had not been disclosed in Affidavits of Records in the usual course of document production in the litigation process. The Court accorded no weight to four of the five documents that Signalta Resources Limited attempted to admit into evidence, and which were not disclosed in either party’s Affidavit of Records. The Court clarified the interplay between rule 5.16 of the Alberta Rules of Court and the common-law documents in possession rule, namely that the documents in possession rule does not override the requirement of a party to disclose its records in accordance with the Rules of Court.
Porter Airlines Inc v Nieuport Aviation Infrastructure Partners GP, 2022 ONSC 5922
The ONSC held that the effects of the COVID-19 pandemic did not engage the force majeure clause in a license agreement between Porter Airlines Inc. and Nieuport Aviation Infrastructure Partners GP. Whether a force majeure clause is triggered depends on a proper interpretation of the particular clause.
If you or your business require assistance in respect of issues relating to disputes, or related matters, please contact a member of the Bennett Jones Commercial Litigation group.