The bar has been set very high for this year’s “Top 10 Cases,” as our span encompasses two years rather than one. And our first case — actually, the first three — were judged by the Supreme Court of Canada as its most important decision(s) of 2019.
That would be the administrative law “trilogy” of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65; Bell Canada v. Canada (Attorney General), 2019 SCC 66; and National Football League, et al. v. Canada (Attorney General).
In the insolvency sphere, the Supreme Court has ruled on three significant cases in a close span: Orphan Well Association v. Grant Thornton Ltd. in 2019, concerning environmental liabilities for bankrupt companies (the last such decision had been in Newfoundland and Labrador v. AbitibiBowater Inc. in 2012); 9354-9186 Québec inc. v. Callidus Capital Corp. in 2020; and October’s Chandos Construction Ltd. v. Deloitte Restructuring Inc., which concerned the anti-deprivation rule.
“We’re lucky in the insolvency world” to have had the Supreme Court of Canada rule on three significant cases in a close span of time,” says Joseph Reynaud, an insolvency practitioner in Stikeman Elliott LLP, in Montreal.
“The level of deference afforded to first-instance judges is very high. The decisions are often very fact-based, and the test to get to the court of appeal [is] on leave only,” he says, “as well as that most of these are urgent business cases that get litigated very quickly.” Accordingly, “cases in CCAA proceedings rarely make it all the way to the Supreme Court.”
A number of influential class action cases also made our list: Pioneer Corp. et al. v. Neil Godfrey, which found that so-called umbrella purchasers have a claim under the Competition Act; Uber Technologies Inc. v. Heller, which found an arbitration clause with contracted drivers unconscionable; and TELUS Communications Inc. v. Wellman, which set guidelines for cases in which consumer class actions and arbitration clauses intersect.
And two cases addressed the environment, directly or indirectly: British Columbia’s Reference re Environmental Management Act concerned the contested Trans Mountain Pipeline expansion and held that B.C.’s amendments to provisions in its environmental legislation lay beyond its provincial jurisdiction; and Nevsun Resources Ltd. v. Araya found that a Canadian mining company operating in Eritrea was liable for damages in Canada.
Canada (Minister of Citizenship and Immigration) v. Vavilov; Bell Canada v. Canada (A.G.) (SCC, FCA)
The so-called Administrative Law Trilogy was one of the most highly anticipated and publicized decisions of the past decade, dubbed #Adminlawpalooza on Twitter. The three appeals — one concerning immigration and the right to citizenship and a twin appeal by Bell Canada and the National Football League against a decision of the Canadian Radio-television and Telecommunications Commission — have garnered widespread attention from the media, academic commentators and the legal profession alike due to the impact the decisions would have on every type of administrative decision made in Canada.
“The judges hearing the case were clearly and fully aware of its import,” says Eugene Meehan of Supreme Advocacy LLP in Ottawa. “Rather than being written by one or two judges, the majority judgment in Vavilov was written by all seven judges that signed their name to it.”
It had been more than 10 years since the Supreme Court last considered administrative law, in its 2008 decision Dunsmuir v. New Brunswick, and there had been confusion in the intervening years over the standard of review to apply in administrative law cases.
In reaching its decisions in the trilogy in December 2019, the Supreme Court established a new framework for standard of review: the presumption of reasonableness, with two categories in which the presumption can be rebutted.
The Vavilov case concerned Alexander Vavilov's claim to Canadian citizenship. Vavilov was born in Canada to two Russian spies. Canada's Registrar of Citizenship did not grant him citizenship, citing an exception in the Citizenship Act. The Federal Court upheld the Registrar's decision on the standard of correctness, but both the Federal Court of Appeal and the Supreme Court sided with Vavilov on the standard of reasonableness. In unanimously dismissing the Minister of Citizenship and Immigration's appeal, the Supreme Court found that the decision to declare the respondent a non-citizen was unreasonable.
Relevant page: The Best Immigration Lawyers in Canada
At issue in the dual appeal by Bell Canada and the National Football League against a decision of the Canadian Radio-television and Telecommunications Commission was the simultaneous substitution regime that has been standard in Canada, by which U.S. commercials are exchanged for Canadian commercials on U.S. television broadcasts such as the Super Bowl that are aired on Canadian television stations. The simultaneous substitution regime gives Canadian broadcasters greater broadcasting revenues by virtue of being able to sell Canadian advertising on their channels to Canadian audiences.
The appeal of the CRTC’s prohibition order against simultaneous substitution for the Super Bowl was allowed in a 7/2 decision, with justices Rosalie Abella and Andromache Karakatsanis dissenting.
The court held that the CRTC did not have the authority to exempt the Super Bowl from long-standing regulations that apply to other programming, and in doing so, it departed from years of its own precedents by holding that administrative decisions subject to statutory appeal rights should be reviewed according to appellate rather than judicial review principles; so, the correctness standard applied to extricable legal issues such as the statutory interpretation in the Bell/NFL appeals.
“It’s a very important shift,” says Brandon Kain, a partner at McCarthy Tétrault LLP in Toronto who represented Bell Canada and the NFL before the appellate courts, and it “radically alters the Canadian administrative law framework in a number of different contexts involving many different boards and tribunals.”
“It’s the first year in which this decision has started to take shape,” says Kain’s partner Steven Mason, who likewise argued the Bell/NFL appeals before the appellate courts. “There has yet to be a case that makes its way up to the Supreme Court of Canada where [it] can clarify any of the issues that it set out in the Vavilov and Bell/NFL decisions. . . .It will be interesting to see how these decisions mature in the courts” and what the Supreme Court will eventually have to say about how the appellate judges or lower courts have applied their decision.
“This case wasn’t about putting a new saddle on an existing racehorse but about breeding a whole new mustang and breaking it in,” adds Meehan. “This new horse will be ridden by every judge as to the standard of review and by every administrative decision-maker on how to avoid being overturned or bucked off at the Supreme Court.”
CLIENTS > FIRMS > LAWYERS
For Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65
Minister of Citizenship and Immigration > Attorney General of Canada > Michael H. Morris, Marianne Zorić and John Provart
Alexander Vavilov > Jackman Nazami & Associates > Hadayt Nazami, Barbara Jackman and Sujith Xavier
Attorney General of Ontario > Sara Blake and Judie Im
Attorney General of Quebec > Stéphane Rochette
Attorney General of British Columbia > J. Gareth Morley and Katie Hamilton
Attorney General of Saskatchewan > Kyle McCreary and Johnna Van Parys
Canadian Council for Refugees > Law Office of Jamie Liew > Jamie Liew
Advocacy Centre for Tenants Ontario - Tenant Duty Counsel Program > Karen Andrews
Ontario Securities Commission, British Columbia Securities Commission and Alberta Securities Commission > Matthew Britton and Jennifer M. Lynch
Ecojustice Canada Society > Laura Bowman and Bronwyn Roe
Workplace Safety and Insurance Appeals Tribunal (Ontario), Workers’ Compensation Appeals Tribunal (Northwest Territories and Nunavut), Workers’ Compensation Appeals Tribunal (Nova Scotia), Appeals Commission for Alberta Workers’ Compensation and Workers’ Compensation Appeals Tribunal (New Brunswick) > David Corbett and Michelle Alton
British Columbia International Commercial Arbitration Centre Foundation > Fasken Martineau DuMoulin LLP > Gavin R. Cameron and Tom Posyniak
Council of Canadian Administrative Tribunals > Lax O’Sullivan Lisus Gottlieb LLP > Terrence J. O’Sullivan and Paul Michell
National Academy of Arbitrators, Ontario Labour‑Management Arbitrators’ Association and Conférence des arbitres du Québec > Paliare Roland Rosenberg Rothstein LLP and Rae Christen Jeffries LLP > Susan L. Stewart, Linda R. Rothstein, Michael Fenrick, Angela E. Rae and Anne Marie Heenan
Canadian Labour Congress > Goldblatt Partners LLP > Steven Barrett
National Association of Pharmacy Regulatory Authorities > Shores Jardine LLP > William W. Shores, Q.C., and Kirk N. Lambrecht, Q.C.
Queen’s Prison Law Clinic > Stockwoods LLP > Brendan Van Niejenhuis and Andrea Gonsalves
Advocates for the Rule of Law > McCarthy Tétrault LLP > Adam Goldenberg, Jacob Klugsberg and Rachel Chan
Parkdale Community Legal Services > Toni Schweitzer
Cambridge Comparative Administrative Law Forum > White & Case LLP > Paul Warchuk and Francis Lévesque
Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic > Caza Saikaley > James Plotkin and Alyssa Tomkins
Canadian Bar Association > Gowling WLG (Canada) LLP > Guy Régimbald
Canadian Association of Refugee Lawyers > Audrey Macklin and Anthony Navaneelan
Community & Legal Aid Services Programme > David Cote and Subodh Bharati
Association québécoise des avocats et avocates en droit de l’immigration > Nguyen, Tutunjian & Cliche‑Rivard and Hadekel Shams LLP > Guillaume Cliche‑Rivard and Peter Shams
First Nations Child & Family Caring Society of Canada > Stikeman Elliott LLP > Nicholas McHaffie
For Bell Canada v. Canada (A.G.), 2019 SCC 66
Bell Canada and Bell Media Inc. > McCarthy Tétrault LLP > Steven G. Mason, Brandon Kain, Richard Lizius, Joanna Nairn, James S.S. Holtom, Grant Buchanan and Peter Grant
Attorney General of Canada > Michael H. Morris and Ian Demers
Attorney General of Ontario > Sara Blake and Judie Im
Attorney General of Quebec > Stéphane Rochette
Attorney General of British Columbia > J. Gareth Morley and Katie Hamilton
Attorney General of Saskatchewan > Kyle McCreary and Johnna Van Parys
Canadian Radio‑television and Telecommunications Commission
Telus Communications Inc. > Nelligan O’Brien Payne LLP > Christopher C. Rootham
Advocacy Centre for Tenants Ontario - Tenant Duty Counsel Program > Karen Andrews
Ontario Securities Commission, British Columbia Securities Commission and Alberta Securities Commission > Matthew Britton and Jennifer M. Lynch
Ecojustice Canada Society > Laura Bowman and Bronwyn Roe
Workplace Safety and Insurance Appeals Tribunal (Ontario), Workers’ Compensation Appeals Tribunal (Northwest Territories and Nunavut), Workers’ Compensation Appeals Tribunal (Nova Scotia), Appeals Commission for Alberta Workers’ Compensation and Workers’ Compensation Appeals Tribunal (New Brunswick) > David Corbett and Michelle Alton
British Columbia International Commercial Arbitration Centre Foundation > Fasken Martineau DuMoulin LLP > Gavin R. Cameron and Tom Posyniak
Council of Canadian Administrative Tribunals > Lax O’Sullivan Lisus Gottlieb LLP > Terrence J. O’Sullivan and Paul Michell
National Academy of Arbitrators, Ontario Labour‑Management Arbitrators’ Association and Conférence des arbitres du Québec > Paliare Roland Rosenberg Rothstein LLP and Rae Christen Jeffries LLP > Susan L. Stewart, Linda R. Rothstein, Michael Fenrick, Angela E. Rae and Anne Marie Heenan
Canadian Labour Congress > Goldblatt Partners LLP > Steven Barrett
National Association of Pharmacy Regulatory Authorities > Shores Jardine LLP > William W. Shores, Q.C., and Kirk N. Lambrecht, Q.C.
Queen’s Prison Law Clinic > Stockwoods LLP > Brendan Van Niejenhuis and Andrea Gonsalves
Advocates for the Rule of Law > McCarthy Tétrault LLP > Adam Goldenberg, Jacob Klugsberg and Rachel Chan
Cambridge Comparative Administrative Law Forum > White & Case LLP > Paul Warchuk and Francis Lévesque
Association of Canadian Advertisers and Alliance of Canadian Cinema, Television and Radio Artists > Lenczner Slaght Royce Smith Griffin LLP > J. Thomas Curry and Sam Johansen
Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic > Caza Saikaley > James Plotkin and Alyssa Tomkins
Canadian Bar Association > Gowling WLG (Canada) LLP > Guy Régimbald
Blue Ant Media Inc., Canadian Broadcasting Corporation, DHX Media Ltd., Groupe V Média inc., Independent Broadcast Group, Aboriginal Peoples Television Network, Allarco Entertainment Inc., BBC Kids, Channel Zero, Ethnic Channels Group Ltd., Hollywood Suite, OUTtv Network Inc., Stingray Digital Group Inc., TV5 Québec Canada, ZoomerMedia Ltd. and Pelmorex Weather Networks (Television) Inc. (37896) > Fasken Martineau DuMoulin LLP > Christian Leblanc and Michael Shortt
First Nations Child & Family Caring Society of Canada > Stikeman Elliott LLP > Nicholas McHaffie
9354-9186 Québec inc. v. Callidus Capital Corp. (SCC, QCCA)
This decision in 9354-9186 Québec inc. v. Callidus Capital Corp. marked the first time Canada’s top court had dealt with third-party litigation funding, in a January 2020 decision from the bench that approved litigation funding allowing an insolvent company to sue one of its creditors.
The dispute in the case concerned Quebec-based gaming company Bluberi and the debt it owed creditors, including secured creditor Callidus Capital. Under the Companies’ Creditors Arrangement Act regime, Callidus put forward a plan of arrangement in which Bluberi relinquished the right to sue Callidus.
But Callidus’s plan fell short of the CCAA requirement of approval of a majority of creditors representing two-thirds of the value owed. Callidus declined to vote.
Bluberi then undertook a third-party litigation funding agreement to sue Callidus and asked the supervising judge to approve the agreement as interim financing. Callidus objected, saying the funding constituted a plan of arrangement and required a vote from creditors.
Callidus put forward a new plan, but the supervising judge found the company was acting with “improper purpose” as it had relinquished its voting opportunity initially and was now attempting to override that result.
The Quebec Court of Appeal overturned that decision, finding the funding at issue was a type of equity investment, an agreement requiring a vote, and that the funder was seeking to cut in front of creditors to take a slice of the company.
In May, the Supreme Court released its reasons, which focused on the broad discretion enjoyed by a supervising judge presiding over a Companies’ Creditors Arrangement Act process and on the degree of deference appellate courts should demonstrate on appeal from a judgment of the CCAA court. It established a precedent on novel insolvency-related issues, notably by confirming that a creditor acting for an improper purpose may be barred from voting on a CCAA plan of arrangement, and that a third-party litigation funding agreement may be approved as interim financing pursuant to the CCAA.
The case is “a very interesting mix between insolvency law and litigation financing,” says Joseph Reynaud of Stikeman Elliott LLP in Montreal, who represented the court-appointed monitor, Ernst & Young, in the case.
The two key takeaways from the decision, he says, are the level of discretion and deference that appellate courts must give to CCAA judges and the aspect of litigation funding, which was formerly outlawed in many jurisdictions.
“What [the Supreme Court] did here is it left the door open for litigation funding to be a plan of arrangement, depending on the circumstances of the case,” says Reynaud. The court then said, in this particular case and given the assessments undertaken by the first instance judge, that “it was not a plan of arrangement, and therefore did not need to be voted upon by creditors and could therefore be approved for financing.”
CLIENTS > FIRMS > LAWYERS
9354‑9186 Québec inc. and 9354‑9178 Québec inc. > Davies Ward Phillips & Vineberg LLP > Christian Lachance, Jean-Philippe Groleau, Gabriel Lavery Lepage and Hannah Toledano
IMF Bentham Limited (now known as Omni Bridgeway Limited) and Bentham IMF Capital Limited (now known as Omni Bridgeway Capital (Canada) Limited) > Woods LLP > Neil A. Peden
Callidus Capital Corporation > Gowling WLG (Canada) LLP > Geneviève Cloutier and Clifton P. Prophet
International Game Technology, Deloitte LLP, Luc Carignan, François Vigneault, Philippe Millette, Francis Proulx and François Pelletier > McCarthy Tétrault LLP > Jocelyn Perreault, François Alexandre Toupin, Noah Zucker, Guillaume Mercier, Dominique Paiement, Laurence Landry-Plouffe, Thierry Noiseux, Justine Blair and Gabriel Faure
Ernst & Young Inc. > Stikeman Elliott LLP > Joseph Reynaud, Nathalie Nouvet and Claire Zikovsky
Insolvency Institute of Canada and Canadian Association of Insolvency and Restructuring Professionals > Norton Rose Fulbright Canada LLP > Sylvain Rigaud, Arad Mojtahedi and Saam Pousht-Mashhad
Pioneer Corp. et al. v. Neil Godfrey (SCC, BCCA)
This case was significant for class actions and for limitation periods.
In Pioneer — which concerned an optical disk drive price-fixing class action in Ontario, British Columbia, Quebec, Manitoba and Saskatchewan — the Supreme Court found that so-called umbrella purchasers may have a claim under the Competition Act. In this case and its companion, Toshiba Corporation, et al. v. Neil Godfrey, the majority of the court also provided clarification on limitation periods for the discoverability rule and the doctrine of fraudulent concealment and on certification of loss as a common issue.
Neil Godfrey, a B.C. businessman and representative plaintiff, commenced a proposed class action alleging that Pioneer, Toshiba and other electronics manufacturers had participated in a global, criminal price-fixing cartel that overcharged British Columbians for optical disc drives — including CD, DVD and Blu-Ray drives — and related products. He alleged a breach of the Competition Act, the tort of civil conspiracy, the unlawful means tort, unjust enrichment and waiver of tort.
Relevant page: The Best Class Action Lawyers in Ontario
The proposed class was a hybrid class consisting of “direct purchasers” who had purchased the products directly from the manufacturers, “indirect purchasers” who had bought the products from suppliers and “umbrella purchasers” who had purchased products that were manufactured and supplied by a nondefendant but which prices may have been risen as a result of the price fixing.
Finding that the class certification could proceed for all three classes, the Supreme Court also found that the two-year limitation period for filing suit could be extended by the discoverability rule and by that of fraudulent concealment.
Competition class actions have become common, says Neil Campbell of McMillan LLP in Toronto, who acted with partner Joan Young in Vancouver for a group of defendants in the case: Koninklijke Philips Electronics N.V., Lite-On Technology Corporation and Philips & Lite-On Digital Solutions Corporation. These actions “are seen in . . . domestic, alleged conspiracy conduct and as a Canadian piece of virtually every international case” where there could be effects on the Canadian market and consumers, even if it’s not a Canada-based case.
Since a trilogy of competition class action decisions was released by the Supreme Court in 2013, the time was ripe for the court to take a fresh look at broader claims, such as those by umbrella purchasers, says Campbell.
There are two key conclusions from the decision that will have broader significance, he says. The first is that using the principle of discoverability as a way to interpret the limitation period, unless it’s clear from the statute that the legislature intended that not to apply, the two-year limitation period will start when a plaintiff knew or should have known of price fixing or bid rigging. And second, fraudulent concealment could now be a basis for which a plaintiff to argue for pushing ahead the start of the limitation period.
CLIENTS > FIRMS > LAWYERS
Pioneer Corporation, Pioneer North America, Inc., Pioneer Electronics (USA) Inc., Pioneer High Fidelity Taiwan Co., Ltd. and Pioneer Electronics of Canada Inc. > Cassels Brock & Blackwell LLP > W. Michael G. Osborne, Brigeeta Richdale and Jessica Lewis
Toshiba Corporation, Toshiba Samsung Storage Technology Corp., Toshiba Samsung Storage Technology Corp. Korea, Toshiba of Canada Ltd. and Toshiba America Information Systems, Inc. > Fasken Martineau DuMoulin LLP > Laura Cooper, Zohaib Maladwala and Vera Toppings
Samsung Electronics Co., Ltd., Samsung Electronics Canada Inc. and Samsung Electronics America, Inc. > Blake Cassels & Graydon LLP > Robert E. Kwinter and Evangelia (Litsa) Kriaris
Koninklijke Philips Electronics N.V., Lite‑On IT Corporation of Taiwan, Philips & Lite‑On Digital Solutions Corporation, Philips & Lite‑On Digital Solutions USA, Inc. and Philips Electronics Ltd. > McMillan LLP > Neil Campbell, Joan Young and Samantha Gordon
Panasonic Corporation, Panasonic Corporation of North America and Panasonic Canada Inc. > Bennett Jones LLP > John F. Rook, Christiaan A. Jordaan and Emrys Davis
BENQ Corporation, BENQ America Corporation and BENQ Canada Corp. > Shapray Cramer Fitterman Lamer LLP > Stephen Fitterman
Neil Godfrey > Camp Fiorante Matthews Mogerman LLP and Siskinds Law Firm > Reidar M. Mogerman, Linda J. Visser, David G.A. Jones, Charles M. Wright, Katie I. Duke and Bridget M. R. Moran
Option consommateurs > Belleau Lapointe > Maxime Nasr and Violette Leblanc
Consumers Council of Canada > Harrison Pensa LLP > Jonathan J. Foreman, Jean‑Marc Metrailler and Michael Sobkin
Canadian Chamber of Commerce > Davies Ward Phillips & Vineberg LLP > Sandra A. Forbes and Adam Fanaki
Consumers’ Association of Canada > Sotos LLP > Jean‑Marc Leclerc and Mohsen Seddigh
In the Matter of The Catalyst Capital Group Inc. et al. (OSC)
For several weeks in late 2019, news of the contested privatization of the Hudson’s Bay Company dominated the business pages of newspapers. In October, HBC and the Baker Group, led by Richard Baker, governor and executive chairman of HBC, had announced they had reached an agreement to take the company private at $10.30 per share. A minority shareholder, the Catalyst Capital Group Inc., opposed privatization at the price proposed and commenced a securities hearing to cease-trade the privatization or get further disclosure from HBC and the Baker Group.
A full hearing before the Ontario Securities Commission was held in December 2019, and, in February, the OSC ruled that the transaction could proceed if HBC was to make additional disclosure.
The matter also resulted in the OSC issuing new guidance regarding the role and responsibilities of a special committee in a conflicted going-private transaction and reconfirmed long-held principles regarding the disclosure obligations of issuers.
The significance of the OSC’s decision, saysStikeman Elliott LLP’s Eliot Kolers, who acted for the Baker Group, was that Catalyst was able to use a commission to bring a private complaint regarding disclosure that HBC had made, obtained standing from the OSC, and although its application to cease-trade the privatization failed, Catalyst did obtain an order that further disclosure was required.
“The OSC’s decision is one that is fairly carefully drafted in terms of how it articulated the disclosure standard, [and] any time an insider group seeks to privatize a public company, this is going to be a decision that they need to pay attention to.”
The Baker Group’s proposal for privatization had been reviewed by an HBC special committee of directors, which concluded that the price offered was too low and did not recommend the offer to its shareholders. Baker Group increased its offer, as recommended by special committee, which went to shareholders and was the subject of the OSC hearing. The OSC ruled that additional disclosure was required, and Catalyst was in the marketplace as well, purportedly offering a higher price, says Kolers. The Baker Group raised its offer as well, Catalyst supported the raised offer and HBC was privatized in February 2020.
The OSC decision focuses on the role of the special committee in a contested transaction, says Paul Davis, head of the national Capital Markets Group for McMillan LLP and the principal counsel for Catalyst.
“It had a significant impact on future going private transactions,” says Davis, “and reminded issuers about the importance of adopting a proper process and considering and approving material transactions that are conflicted, i.e., governed by multilateral instrument 61-101, which is a primary security law framework for conflicted transactions in Canada.
“It certainly made people more cautious about the process being followed in conflicted transaction.”
The venue of the OSC was also notable, says Adam Chisholm, the principal litigator for Catalyst in front of the OSC.
“Regulators tend to be rather hands off about contested transactions, because they're happy to leave it to the parties to resolve their disputes,” says Chisholm. “But in this case, the disclosure and the mechanisms used [in the offer] were of concern enough to the regulator that they thought it was appropriate to take jurisdiction.”
Takeaways from the case are that when a special committee is put in place in a significant conflicted transaction, what's required of the issuer is clear disclosure regarding the mandate, timing and the decisions made by or related to the special committee, says Davis.
“I think that’s made an impact in terms of the level of disclosure you're now seeing circulars for conflicted transactions.”
A special committee should be formed as soon as practicable when conflicts of interest arise for a significant transaction, he adds, “and here, the commission was pretty clear that they had significant concerns about when the committee was formed; [it] should have been formed far earlier.”
Finally, notwithstanding that the process in this case was flawed, says Davis, “it's clear now that the commission is unlikely to cease-trade a transaction and thereby take the decision to complete the transaction out of the hands of the minority shareholders.
“However, in such circumstances, in order to ensure that the minority shareholders are making an informed decision, significant disclosure regarding any flaws in the process will be required. So, the more flawed the process, the more disclosure is required, and it will take significant flaws . . . for the commission to actually cease-trade a transaction.”
CLIENTS > FIRMS > LAWYERS
The Catalyst Capital Group Inc. > McMillan LLP > Paul Davis, Brett Harrison, Adam D. H. Chisholm, Sandra Zhao, Samantha Gordon and Kelly Kan
Hudson’s Bay Company > Blake Cassels & Graydon LLP > R. Seumas M. Woods, Jeffrey R. Lloyd, Michael I. Gans and Ryan A. Morris
“Baker Group”, composed of individuals and entities related to, or affiliated with, Richard A. Baker, governor and executive chairman of HBC; Rhône Capital L.L.C.; WeWork Property Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital Management, L.P. > Stikeman Elliott LLP > Eliot N. Kolers, Alexander D. Rose, Elizabeth (Libby) Nixon, Jonah Mann, Brian Pukier and Sean Vanderpol
Staff of the Ontario Securities Commission > Rikin Morzaria, Charlie Pettypiece, Naizam Kanji and Jason Koskela
Canada v. Bank of Montreal (FCA)This was a significant tax case under the general anti-avoidance rule.
Certain U.S. affiliates of BMO required US$1.4 billion in financing between 2005 and 2010 to grow business organically and by acquisition. BMO implemented the financing using a cross-border financing structure that Canadian and U.S. tax authorities accepted at the time.
Among other things, the financing structure included a natural hedge of foreign exchange risk. The financing structure was established in 2005 and unwound in 2010. At the unwinding, offsetting foreign exchange gains and losses were realized. On the facts of the case, the gains were realized on debt repayment, and the losses were realized on disposing of shares of a certain Canadian corporation.
Relevant page: The Best Corporate Tax Lawyers in Canada
The Minister of National Revenue relied on the GAAR to reassess BMO’s 2010 taxation year, reducing BMO’s foreign exchange loss while taxing BMO on the offsetting foreign exchange gain. The minister’s view was that the foreign exchange loss would have been reduced by past dividend payments from the same corporation if a specific stop-loss rule had applied. The minister’s position was that BMO had circumvented the stop-loss rule by causing the corporation to have two classes of shares. The minister illustrated the alleged tax benefit by comparing BMO’s actual transactions to hypothetical comparative transactions where the corporation had only one class of shares.
A “tax benefit” is generally defined as a reduction, avoidance or deferral of tax. The test is a low threshold for the government, and taxpayers often concede or lose the issue.
The courts concluded that BMO had not circumvented the relevant stop-loss rule, because that rule was inapplicable to foreign exchange losses realized on share dispositions. The tax consequences to BMO were the same regardless of whether the corporation had one or two classes of shares. On that basis, the courts concluded that BMO enjoyed no tax benefit for purposes of the GAAR.
The case is a rare win for a taxpayer on the “tax benefit” issue, the first case to treat the “tax benefit” issue as a question of law and the first case where a taxpayer has prevailed on the tax benefit issue by showing that the tax consequences of the taxpayer’s actual transactions and comparative transactions relied upon by the government are the same.
“I think it's the only case to say, ‘I'm going to take head on the government's comparison transaction and show you that the tax consequences of that comparison are the same as the tax consequences [of] what I actually did,’” says Martha MacDonald of Torys LLP in Toronto, who represented the Bank of Montreal before the Tax Court and the Federal Court of Appeal.
CLIENTS > FIRMS > LAWYERS
Canada > Deputy Attorney General of Canada Nathalie G. Drouin, Natalie Goulard, Sara Jahanbakhsh and Marie-France Camiré
Bank of Montreal > Torys LLP > Martha MacDonald, Jerald Wortsman and Patrick Reynaud
Bank of Montreal > EY Law LLP > Angelo Nikolakakis
4352238 Canada Inc. v. SNC-Lavalin Group Inc., et al. (ONSC)The case involved a dispute over the right to exercise a right of first refusal in the context of a $3-billion transaction. A focus of the dispute was with respect to the nature of a significant Ontario pension fund.
In April 2019, SNC-Lavalin Group Inc. entered into an agreement to sell a 10-per-cent stake in 407 International Inc. to the Ontario Municipal Employees Retirement System for $3 billion. Pursuant to a unanimous shareholders agreement, SNC offered a right of first refusal to an indirect subsidiary of the Canada Pension Plan Investment Board but did not offer the ROFR to a subsidiary of Cintra Global S.E., a Spanish infrastructure company, because of an earlier waiver of the ROFR given to SNC in 2002 by Cintra. The Cintra waiver negated Cintra’s ROFR rights unless the proposed share sale transaction was made to a “competitor” of Cintra.
Cintra commenced an application on the Commercial List in Toronto for a declaration that OMERS was a competitor based on the definition in the Cintra Waiver. Cintra relied on OMERS’ alleged change from a passive to active investment strategy that included seeking board seats and other governance rights, along with OMERS’ controlling or active investment in large-scale infrastructure projects in competition with Cintra. SNC and CPPIB opposed the application on the basis that OMERS is a pension fund and not a competitor of Cintra.
Relevant page: The Best Competittion Law Lawyers in Canada
The court held that OMERS was a passive investor and was, therefore, not a “competitor” of Cintra such that Cintra had waived its ROFR with respect to OMERS’ proposed purchase of SNC’s shares in the Cintra Waiver. Cintra was, therefore, not entitled to acquire any of the 407 International shares in the transaction, and only CPPIB was.
Cintra filed a notice of appeal in the Court of Appeal for Ontario soon after the decision was released, but it abandoned the appeal in 2020.
“The decision relates to a significant ownership stake of a large infrastructure project in Ontario, Highway 407,” says Kolers, whose team represented the Canada Pension Plan Investment Board respondents. “The ruling concludes that, as a pension plan, OMERS was not a competitor, the nature of its investments is not the same and it does not trigger the carveout of the waiver.
“It’s a significant decision because of the parties who were involved and the assets at stake and the nature of the relationship between them,” he says. “It does speak to the more supervisory as opposed to active investment by pension plans in Canada, in very general terms.”
CLIENTS > FIRMS > LAWYERS
4352238 Canada Inc. > Osler Hoskin & Harcourt LLP > Mark A. Gelowitz, Allan D. Coleman and Lia Bruschetta
SNC-Lavalin Group Inc., SNC-Lavalin Inc., and SNC-Lavalin Highway Holdings Inc. > Norton Rose Fulbright Canada LLP > Linda Fuerst and Fahad Siddiqui
7577702 Canada Inc. and MICI Inc. (Canada Pension Plan Investment Board respondents) > Stikeman Elliott LLP > Eliot N. Kolers, Alexander D. Rose and Mark Walli
Uber Technologies Inc. v. Heller (SCC, ONCA)In ruling that a clause in the agreement between ride-hailing service Uber and its contracted drivers was impossible to arbitrate, the Supreme Court of Canada found Uber’s clause unconscionable.
In Uber, the Supreme Court found that a court may depart from the general rule of deferring to an arbitrator if the dispute resolution clause is deemed to be invalid. In this case it was, meaning that Heller v. Uber Technologies Inc., a proposed $400-million class action, must be heard in Ontario rather than through international arbitration in the Netherlands.
The suit claimed that Uber’s drivers are employees rather than independent contractors, and they should, therefore, be entitled to benefits under the Employment Standards Act in Ontario.
The arbitration filing fee is US$14,500, which represented most of the annual income of the plaintiff, Uber driver David Heller, making it prohibitively expensive for him to bring the case to arbitration as required by the dispute resolution clause in Uber’s agreements with its Ontario drivers.
Justices Rosalie Abella and Malcolm Rowe, writing for the majority of the court in the June 2020 decision, referred to the case as “a classic case of unconscionability.”
“When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all,” they wrote.
The main aspect of the decision is the Supreme Court’s refinement of the doctrine of unconscionability and how that applies to widespread online agreements, which are even more common since the novel coronavirus pandemic erupted earlier this year, says Michael Wright of Wright Henry LLP in Toronto, who represented the respondent in the case.
“Click here now; you’re agreeing to a wide range of conditions that you may or may not have read or understand.” These contracts of adhesion are non-negotiable but lawful contracts, and they are widespread particularly in the consumer context, such as for car rental agreements. In the Uber case, Wright says, the court was concerned that the terms of the contract were particularly one-sided and egregious.
“I think the key thing is that these kinds of contracts are still permitted, but their more egregious use has been curtailed. It’s a very high threshold to demonstrate unconscionability, and the court spent a lot of time giving greater credence to that concept.”
CLIENTS > FIRMS > LAWYERS
Uber Technologies Inc., Uber Canada, Inc., Uber B.V. and Rasier Operations B.V. > Torys LLP > Linda M. Plumpton, Lisa Talbot and Sarah Whitmore
David Heller > Wright Henry LLP and Samfiru Tumarkin LLP > Michael Wright, Lior Samfiru and Danielle Stampley
Attorney General of Ontario > Christopher P. Thompson and Paul Sheridan
Young Canadian Arbitration Practitioners > Perley-Robertson, Hill & McDougall LLP > John Siwiec
Arbitration Place > Borden Ladner Gervais LLP > Robert Deane and Craig Chiasson
Don Valley Community Legal Services > Monkhouse Law > Alexandra Monkhouse and Andrew Monkhouse
Canadian Federation of Independent Business > Anthony Daimsis
Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic > Marina Pavlovic and Johann Kwan
Income Security Advocacy Centre and Parkdale Community Legal Services > Nabila F. Qureshi and Karin Baqi
United Food and Commercial Workers Canada > Goldblatt Partners LLP > Steven Barrett and Joshua Mandryk
Workers’ Health and Safety Legal Clinic > Kevin Simms and John Bartolomeo
Montreal Economic Institute > Osler, Hoskin & Harcourt LLP > Robert Carson and Lauren Harper
Canadian American Bar Association > Caza Saikaley > Alyssa Tomkins and James Plotkin
Chartered Institute of Arbitrators (Canada) Inc. and Toronto Commercial Arbitration Society > Blake, Cassels & Graydon LLP > Joseph C. McArthur and Rahat Godil
Canadian Chamber of Commerce > Davies Ward Phillips & Vineberg LLP > Matthew Milne-Smith and Chantelle Cseh
International Chamber of Commerce > Norton Rose Fulbright Canada LLP > Andres C. Garin and Alison FitzGerald
Consumers Council of Canada > Sotos LLP > Mohsen Seddigh and David Sterns
Community Legal Assistance Society > Allen/McMillan Litigation Counsel > Wes McMillan and Greg J. Allen
ADR Chambers Inc. > Bennett Jones LLP > Andrew D. Little and Ranjan K. Agarwal
Nevsun Resources Ltd. v. Araya (SCC, BCCA)
The Supreme Court’s ruling that corporations can be held liable in civil law for breaches of international law — and that the act of state doctrine is not a bar to the claim — has significant implications for Canadian companies with operations abroad, notably in the resources, technology and armaments sectors.
In Nevsun, the majority of the court found that the norms of customary international law raised by Eritrean workers who sued Nevsun Resources Ltd. for alleged human rights abuses form part of Canadian law. As a Canadian company, Nevsun is bound by Canadian law, and customary international law becomes part of Canadian law automatically, the majority found.
Three Eritrean refugees brought a claim against the Nevsun Resources Ltd., a publicly held British Columbia corporation. They alleged that, through a chain of subsidiaries, Nevsun entered into a commercial venture with Eritrea for the development of a gold, copper and zinc mine in Eritrea, and that they were conscripted to work at the mine under Eritrea’s National Service Program, which all Eritreans must enter at the age of 18 for a period of 18 months, but which may be extended indefinitely.
Relevant page: The Best Intertnational Trade Regulation Lawyers in British Columbia
The court held that the act of state doctrine, which states that every sovereign state is bound to respect the independence of every other sovereign state, could not be invoked in the case and that the doctrine ought not be recognized as part of Canadian law, says Joe Fiorante of CFM Lawyers in Vancouver, who acted for the respondent plaintiffs in the case.
“That’s significant,” he says. “It had not been dealt with before, to our knowledge, in Canada, but it had been the subject of judgments in the highest courts in Australia and the United Kingdom. So, it was significant that Canada decided this doctrine does not form any part of our law.”
That corporations can be held potentially liable for breaching these norms of customary international law, which are adopted into Canadian law and form part of our common law, “from the plaintiffs’ side, it’s a very significant step forward toward corporate accountability for overseas conduct,” says Fiorante.
CLIENTS > FIRMS > LAWYERSNevsun Resources Ltd. > Fasken Martineau DuMoulin LLP > Mark D. Andrews, Andrew I. Nathanson, Gavin R. Cameron and Caroline L. Senini
Gize Yebeyo Araya, Kesete Tekle Fshazion and Mihretab Yemane Tekle > Camp Fiorante Matthews Mogerman LLP > Joe Fiorante, Reider M. Mogerman, Jen Winstanley, James Yap and Nicholas C. Baker
TELUS Communications Inc. v. Wellman (SCC, ONCA)
Business customers with claims against TELUS Communications must pursue their cases through arbitration rather than as part of a class action, the Supreme Court of Canada ruled in April 2019 in a decision that set guidelines for cases in which consumer class actions and arbitration clauses intersect.
In a 5/4 decision in TELUS Communications Inc. v. Avraham Wellman, the majority of the Supreme Court found that TELUS’s business customers could not proceed with a class action but must proceed with arbitration as stipulated in their contracts. The court ruled that s. 7(5) of the Arbitration Act, 1991 (Ontario) does not grant a court discretion to refuse to stay claims that are dealt with in an arbitration agreement.
However, the arbitration clause was determined to be invalid regarding personal customers by virtue of Ontario’s Consumer Protection Act.
Relevant page: The Best Commercial Arbitration Lawyers in Ontario
“This is an important decision that protects the process of arbitration but gives guidance concerning a very specific area of consumer protection,” Brian Casey, an arbitrator and principal of Bay Street Chambers in Toronto, told Canadian Lawyer after the decision was released. “The Arbitration Act provides that parties to an arbitration agreement are going to have to arbitrate, period.”
The class action arose from claims that TELUS had rounded up lengths of mobile phone calls to the next minute without disclosing this to its customers, so that customers were overcharged for calls and not entitled to the number of minutes they should have had under their contracts.
Under s. 7(5) of the Arbitration Act, a court may “stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that . . . (b) it is reasonable to separate the matters dealt with in the agreement from the other matters.”
The motion judge dismissed TELUS’s motion to stay the proceeding, finding that it was not reasonable to separate matters, i.e., between personal and business customers. She found the issues to be the same, that separating the claims would lead to inefficiency and inconsistent results and to a multiplicity of proceedings. The Court of Appeal for Ontario dismissed TELUS’s request for a stay application.
“The key takeaway is that the Ontario court does not have any jurisdiction to enter a stay in respect of matters covered by an arbitration clause,” says Geoffrey Cowper of Fasken Martineau DuMoulin LLP in Vancouver, who acted for TELUS.
“Courts found that the Ontario act allowed them to refuse to stay when there was, in their view, a mixture of claims, and so it concerns the interpretation of s. 8 of the Ontario Arbitration Act,” says Cowper. “The Supreme Court has found in a case like Dell that arbitration clauses are enforceable even in consumer contracts; in TELUS, it concerned business contracts [and] the court found that the business customers contract claims could not be sued on because they're covered by an arbitration clause and that the act does not allow the court to exercise any discretion to stay.”
CLIENTS > FIRMS > LAWYERS
TELUS Communications Inc. > Fasken Martineau DuMoulin LLP > D. Geoffrey G. Cowper, Andrew D. Borrell, Alexandra Mitretodis, Gerry Ranking, Paul Martin and Alan Dabb
Avraham Wellman > Rochon Genova LLP and Karp Litigation Professional Corporation > Joel P. Rochon, Peter R. Jervis and Golnaz Nayerahmadi, and Eli Karp
Attorney General of British Columbia > Jonathan Eades and James L. Maxwell
ADR Chambers Inc. > Bennett Jones LLP > Michael Eizenga, Andrew Little, Ranjan Agarwal and Charlotte Harman
Canadian Chamber of Commerce > McCarthy Tétrault LLP > Brandon Kain, Adam Goldenberg and Ljiljana Stanic
Public Interest Advocacy Centre and the Consumers Council of Canada > Sotos LLP > Mohsen Seddigh and Daniel Hamson
Canadian Federation of Independent Business > Anthony Daimsis
Samuelson‑Glushko Canadian Internet Policy and Public Interest Clinic > Marina Pavlović and Cynthia Khoo
Consumers’ Association of Canada > Siskinds Law Firm > Daniel E. H. Bach and Tyler J. Planeta
Consumers’ Association of Canada > Michael Sobkin
Reference re Environmental Management Act (SCC, BCCA)
In 2018, a brouhaha erupted between Alberta and British Columbia, as the Trans Mountain project became a source of considerable tension between the two provinces and their respective provincial governments. B.C. opposed the project; Alberta retaliated by boycotting B.C. wines. Prime Minister Justin Trudeau met with the premiers of the two provinces to broker a détente, and tensions were eased a little when B.C. agreed to refer the constitutionality of its proposed legislation to its Court of Appeal.
Relevant page: The Best Environmental Lawyers in British Columbia
The case concerned heads of power. B.C. acknowledged that the pipeline is an interprovincial — and, therefore, federal — undertaking, but it said that provincial environmental legislation had long affected aspects of federal undertakings without serious challenge, that the heads of power set out in ss. 91 and 92 of the Constitution Act, 1867, are not “watertight compartments” and that the jurisprudence has recognized on occasion that certain functions are best carried out by the level of government closest to those affected.
Canada asked the B.C. Court of Appeal to find B.C.’s proposed legislative amendments ultra vires or inoperative, with the view to eliminating the uncertainty surrounding the pipeline project. The Court of Appeal found the amendments to lie beyond provincial jurisdiction.
On the same day that it heard the appeal — on January 16, 2020 — the Supreme Court of Canada unanimously dismissed the appeal from the bench. Following the court’s decision, B.C. Premier John Horgan acknowledged that the legal battle against Trans Mountain (at least for the province) was over.
“The greater story coming out of the case is the confirmation and the clarity around the federal role in relation to interprovincial projects,” says Keith Bergner of Lawson Lundell LLP in Vancouver, who was on the legal team for the intervener Canadian Association of Petroleum Producers.
“The constitutional provision refers to interprovincial works and undertakings more generally — and that was pretty clearly affirmed at both levels of court: five judges of the Court of Appeal and a unanimous Supreme Court of Canada endorsement.” This means there is no ambiguity that jurisdiction lies with the federal government for these projects, he says.
The decision provides “a pretty clear statement on the division of powers analysis, ss. 91 and 92 of the Constitution,” he adds. “That analysis is alive and well, and I think it’s useful that five court of appeal and nine Supreme Court of Canada judges all signed on, effectively, to the same set of reasons, which make it a pretty clear statement of the law.”
CLIENTS > FIRMS > LAWYERS
Attorney General of British Columbia > Joseph J. Arvay, Catherine Boies Parker, and Derek Ball
Attorney General of Canada > Jan Brongers and B.J. Wray
Attorney General of Ontario > Josh Hunter and Aud Ranalli
Attorney General of Québec > Frédéric Perreault and Jean-François Beaupré
Attorney General of Saskatchewan > Thomson Irvine, Q.C., and Noah Wernikowski
Attorney General of Alberta > Peter A. Gall, Q.C., Margaret Unsworth, Q.C., and Andrea L. Zwack
Ecojustice Canada Society > Harry Wruck, Q.C., and Kegan Pepper-Smith
Canadian Energy Pipeline Association > Michael A. Marion, Alan L. Ross and Brett R. Carlson
Assembly of First Nations > Julie McGregor and Stuart Wuttke
Heiltsuk Tribal Council > Lisa C. Fong, Q.C.
City of Burnaby > Michelle L. Bradley
Trans Mountain Pipeline ULC > Maureen E. Killoran, Q.C., and Olivia Dixon
Enbridge Inc > Maureen E. Killoran, Q.C., Sean Sutherland and Robert Rooney, Q.C.
Railway Association of Canada > Nicholas R. Hughes and Kevan Hanowski
Explorers and Producers Association of Canada > Paul Chiswell, Robert Martz and Brendan Downey
Canadian Fuels Association > Geoffrey G. Cowper, Q.C., and Daniel Byma
Council of The Haida Nation > G.L. Terri-Lynn Williams-Davidson, David Paterson and Elizabeth Bulbrook
Little Shuswap Lake Indian Band > Arthur M. Grant and Roderick B. McLennan
City of Vancouver > Susan Horne and Kevin Nakanishi
Suncor Energy Inc., Imperial Oil Limited, Husky Oil Operations Limited, Cenovus Energy Inc. and Canadian Natural Resources Limited > Catherine Beagan Flood and Laura Cundari
Beecher Bay First Nation, Songhees Nation and T’Sou-ke Nation > Robert Janes, Q.C., and Aria Laskin
Canadian Association of Petroleum Producers > Lawson Lundell LLP > Brad Armstrong, Q.C., Keith B. Bergner and Toby Kruger
Honourable Mentions
Coldwater First Nation v. Canada (Attorney General), 2020 FCA 34, Application for Leave to appeal to the SCC denied, 2020 CanLII 43130 (SCC): The Trans Mountain Pipeline expansion was opposed by a number of First Nations. In Tsleil-Waututh Nation v. Canada (Attorney General), 2018 FCA 153, the Federal Court of Appeal found two fundamental defects with the Governor in Council’s 2016 decision to approve the project. Following that court’s remittance of the matter back to the Governor in Council for these flaws to be addressed and for re-decision, a reconsideration hearing took place and the Governor in Council approved the project. Four Indigenous groups sought to challenge the second approval on environmental grounds and for the Crown’s alleged continued failure to fulfil its duty to consult. The Court of Appeal concluded that “there is no basis for interfering with the Governor in Council’s second authorization of the Project,” and on July 2, 2020, the Supreme Court of Canada dismissed an application for leave, effectively bringing an end to legal challenges to the Trans Mountain Pipeline project.
Dow Chemical Canada ULC v. NOVA Chemicals Corporation, 2020 ABCA 320. NOVA Chemicals successfully appealed a judgment of more than $1.4 billion arising out of the operation of an ethylene plant in Alberta, which is jointly owned by NOVA and the respondent, Dow Canada, but operated exclusively by NOVA under an agreement. The appeal related to the interpretation of several long-term commercial contracts that govern the ownership and operation of the plant.
Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25; the Supreme Court recognized the anti-deprivation rule in bankruptcy and insolvency proceedings for the first time and established an effects-based test for when it applies.
The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354: VimpelCom Ltd., an Amsterdam-based global telecommunications company, successfully defended a $1.3-billion claim and appeal brought against VimpelCom and several hedge fund entities by Catalyst Capital Group. Catalyst claimed it suffered damages when its transaction with VimpelCom for an interest in WIND Mobile was not completed by the end of an exclusivity period. The appellate decision provided clarification on the issue of abuse of process and its application, highlighting the difference between an attempt to re-litigate and an argument that could not and had not been previously raised.
Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5 (CanLII), [2019] 1 SCR 150 (the Redwater decision): Trustees must comply with end-of-life environmental obligations for abandoned and bankrupt oil wells prior to any distribution to the creditors.
Churchill Falls (Labrador) Corporation Limited v. Hydro-Québec, 2019 QCCA 1072: Hydro-Québec sought a judicial interpretation of the terms and conditions of the renewal of the 1969 power contract entered into between HQ and CF(L)Co, for the period of 2016 to 2041, the financial implications of which were significant. The Quebec Court of Appeal’s decision in favour of Churchill Falls ruled that the corporation has the right to sell energy produced above a certain threshold.
