Through a nomination process and consultation with Canada’s leading litigators, Lexpert has arrived at the ten most significant business decisions of 2021/2022.
To be considered, Lexpert required the litigation to be from a Canadian appellate court, Federal Court, superior court, or administrative tribunal. The decision must have been released between Oct. 1, 2021, and Sept. 30, 2022.
The ruling must have dealt with an aspect of the law affecting the business community and must not be under appeal. Two of the most-discussed cases in this year’s nomination process – Palmer v. Centerra Canada Ltd., 2022 ONSC 4690 and Cineplex v. Cineworld, 2021 ONSC 8016 – are under appeal and could not be included.
The following are Lexpert’s Top 10 business decisions of 2021/2022.
Fresco v. Canadian Imperial Bank of Commerce, 2022 ONCA 115
In 2007, a representative plaintiff began a class action against the Canadian Imperial Bank of Commerce (CIBC) on behalf of 31,000 customer service employees who worked for the bank between 1993 and 2009. The action alleged that two of the bank’s policies enabled it to have its employees work overtime hours without appropriate compensation in breach of the Canada Labour Code. The bank claimed that its policies aimed to stop unnecessary overtime.
In 2012, the Ontario Court of Appeal certified eight common issues. Both sides brought summary judgment motions on the merits, and the motion judge released three decisions. On liability, the court granted summary judgment to the representative plaintiff. On damages, it certified aggregate damages as a common issue and left the merits of the proposed methodology for deciding the class members’ individual damages entitlements for assessment at a later stage. On limitations, the court dismissed the bank’s summary judgment motion seeking a class-wide limitations order and left the bank’s limitation defences for determination at the individual hearing stage.
The Court of Appeal found the bank’s overtime policies breached s. 174 of the Labour Code, as the motion judge properly interpreted. Under s. 174, an employee who is “required or permitted” to work more than the standard hours must be paid time-and-a-half. Fresco v. CIBC addressed the meaning of “required or permitted” under the code, says Eugene Meehan of Supreme Advocacy LLP.
Eugene Meehan
As the motion judge had found, the Court of Appeal said “permitted” should mean “allowed to work or is not prevented from working in excess of the standard hours of work,” and that where that is the case, the employee is entitled to no less than time-and-a-half, says Meehan.
The court agreed with the motion judge that the bank’s system-wide overtime policies and record-keeping practices were institutional impediments that breached its duties under the code and its regulations. The court also found the judge made no errors in certifying the aggregate damages issue, and the test for certifying this issue was met.
The motion judge, in determining whether the bank had a class-wide limitations defence, correctly required the bank to prove that discoverability could be resolved on a class-wide basis, found the court. The court also found no errors in the refusal to address the purported extra-provincial reach of s. 28 of Ontario’s Class Proceedings Act.
The Court of Appeal for Ontario dismissed the bank’s appeals on liability, damages, and limitations.
With the rise of the gig economy, employment-related class litigation concerning overtime and misclassification of employees under the Employment Standards Act is emerging in multiple industries. Examples include Heller v. Uber Technologies Inc. and the class action brought against Skip the Dishes by couriers in Manitoba.
Employment overtime and misclassification cases “are an area that businesses really need to be cognizant of,” says Jonathan Lisus, a litigator at Lax O’Sullivan Lisus Gottlieb LLP. “Especially these businesses who operate with so-called dependent or independent contractors, who may very well be employees.”
Jonathan Lisus
“The interpretation of the Code affects businesses across Canada,” says Meehan, “making the court’s decision significant for Canadian employees and employers alike.”
CLIENTS > FIRMS > LAWYERS
CIBC > Torys LLP, Hicks Morley Hamilton Stewart Storie LLP > Linda Plumpton, Sarah Whitmore, Ryan Lax, Lara Guest, Henry Federer, John Field, Lauri Reesor, and Elisha Jamieson-Davies
Dara Fresco > Roy O’Connor LLP, Sotos LLP, Goldblatt Partners LLP > David F. O’Connor, J. Adam Dewar, Louis Sokolov, Jean-Marc Leclerc, Steven Barrett, Peter Engelmann, Louis Century, and Jody Brown
Li et al. v. Barber et al., 2022 ONSC 1176
Ottawa citizens filed a proposed class proceeding against organizers, supporters, and participants in the “Freedom Convoy” that blockaded downtown Ottawa for over three weeks. They brought a civil claim based on the torts of private and public nuisance seeking compensation for damages inflicted upon those who lived, carried on business, or worked in the downtown core.
On Feb. 17, the plaintiffs filed a motion for an ex parte Mareva injunction to secure the convoy’s assets, so they are available if the class action is successful. Courts serve Mareva injunctions without notice to the defendants when the plaintiffs have established a strong case that the defendants will move or dissipate the assets in question.
On Feb. 20, 2022, Superior Court Justice Calum MacLeod signed the injunction, freezing millions of dollars in assets linked to bank accounts, fundraisers, and crypto holdings, including Bitcoin, Cardano, Ethereum, Litecoin, and Monero in over 120 wallets raised for the protest. The court prohibited convoy organizers from selling, removing, dissipating, alienating, transferring, assigning, or encumbering any listed assets.
“It was the first actual freezing order dealing with cryptocurrency,” says Monique Jilesen, partner at Lenczner Slaght, who acted for Champ & Associates. Champ & Associates is the law firm representing Ottawa residents and businesses pursuing the class action.
Monique Jilesen
Mareva injunctions typically deal with cash, and some of those who use cryptocurrency may have believed that it was an asset outside the legal system’s reach, says Jilesen. “The court, ultimately, found that that wasn’t the case, and that cryptocurrency could be frozen like any other asset in the hands of the person holding it and in the hands of any institution which may come into contact with it.”
While the crypto community may be on both sides of the issue, Jilesen believes that it is good for the industry to have oversight and regulation because it means more security. “There are, of course, some people who deal with cryptocurrency who wish for it to be completely unregulated,” she says. “But that provides it with less security, less reliability.”
CLIENTS > FIRMS > LAWYERS
Zexi Li, Happy Goat Coffee Company Inc., 7983794 Canada Inc. (c.o.b. as UNION: LOCAL 613) and Geoffrey Devaney > Lenczner Slaght > Monique J. Jilesen, Madison Robins, Sarah Bittman, and Jessica Kras, as agents for Paul Champ, Counsel for the Plaintiff Chris Barber, Benjamin Dichter, Tamara Lich, Patrick King, Nicholas St. Louis, Chris Garrah, James Bauder, Brigitte Belton, Daniel Bulford, Dale Enns, Chad Eros, Miranda Gasior, Joe Jansen, Jason Laface, Tom Marazzo, Ryan Mihilewicz, Sean Tiessen, and Freedom 2022 Human Rights and Freedoms > Investigation Counsel PC > Norman Groot
Society of Composers, Authors and Music Publishers of Canada v. Entertainment Software Association, 2022 SCC 30
In this intellectual property decision, the Supreme Court of Canada dealt with the correct interpretation of s. 2.4(1.1) of the Copyright Act, finding that while copyright owners are owed a royalty when their works are uploaded onto the internet, they are not owed an additional royalty when those works are downloaded or streamed.
Canada signed the World Intellectual Property Organization (WIPO) Copyright Treaty in 1997. The agreement’s purpose was to align international copyright rules with new technologies emerging alongside the rise of the internet. Canada codified the treaty’s protections in 2012 with the Copyright Modernization Act, which added s. 2.4(1.1).
Under s. 3(1)(f), copyright owners have the sole right “to communicate the work to the public by telecommunication.” And s. 2.4(1.1) states: “For the purposes of this Act, communication of a work or other subject-matter to the public by telecommunication includes making it available to the public by telecommunication in a way that allows a member of the public to have access to it from a place and at a time individually chosen by that member of the public.”
The Copyright Board decided that s. 2.4(1.1) meant that “making works available” was a protected and compensable activity requiring a royalty payment. The result was that when a copyrighted work is distributed online, not only would a royalty be attached to the action of streaming or downloading, but a royalty would also be required when the work is made available for streaming or downloading.
The Federal Court of Appeal found that Parliament did not intend for two separate royalties and overturned the Copyright Board’s ruling. The SCC then dismissed the appeal brought by SOCAN and Music Canada.
The SCC found that the Copyright Board’s interpretation of the provision violated the principle of technological neutrality, that similar activities be treated equally even when involving different technologies.
While the court was unanimous on the issues under appeal, Justice Andromache Karakatsanis and Justice Sheilah Martin differed with their colleagues on the standard of review.
According to the majority, when an administrative body shares concurrent first-instance jurisdiction with the courts – as is the case with the Copyright Board – questions of law are reviewed under the standard of correctness. Canada (Minister of Citizenship and Immigration) v. Vavilov had established a presumption of reasonableness only displaceable in five situations, and concurrent jurisdiction was not among them. But “in rare and exceptional circumstances,” the court can create new “correctness categories” when using reasonableness would undermine legislative intent or the rule of law, which the majority said applied to concurrent first-instance jurisdiction.
“Only three years after the Supreme Court’s decision in Vavilov was intended to provide certainty and predictability in terms of the standard of review of administrative decisions, the majority of the Court has created a new sixth category of correctness review,” says Laura Wagner, a litigator at Borden Ladner Gervais LLP.
The majority reasoned that “concurrent first instance jurisdiction indicates the legislature intends the court to be involved in the administrative scheme such that correctness review is consistent with legislative intent” and that “it will ensure consistency regardless of whether the issue originated with the Board or in the courts, consistent with the rule of law,” says Wagner.
But according to Justices Karakatsanis and Martin, while Vavilov left open the possibility of recognizing additional categories, their establishment was reserved for “possible circumstances which could not be realistically foreseen.” And the court had foreseen the circumstance in Vavilov because it had cited Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, a 2012 SCC ruling which had considered the issue of concurrent first-instance jurisdiction.
CLIENTS > FIRMS > LAWYERS
Society of Composers, Authors and Music Publishers of Canada > Gowling WLG (Canada) LLP, Cassels Brock & Blackwell LLP > D. Lynne Watt, Matthew Estabrooks, Casey M. Chisick, Eric Mayzel
Music Canada > McCarthy Tétrault LLP > Barry B. Sookman, Daniel G.C. Glover, Connor Bildfell Entertainment Software Association, Bell Canada, Quebecor Media Inc., Rogers Communications, Shaw Communications > Fasken Martineau DuMoulin LLP > Gerald L. (Jay) Kerr-Wilson > Stacey Smydo > Michael Shortt
Apple Inc. > Goodmans LLP > Michael Koch, Julie Rosenthal
Pandora Media Inc. > McMillan LLP > David W. Kent, Jonathan O’Hara
Ariel Katz > Lenczner Slaght LLP > Sana Halwani, Andrew Moeser, Alexis Vaughan
Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic > Université d’Ottawa > David Fewer
Canadian Music Publishers Association carrying on business as “Music Publishers Canada” and Professional Music Publishers Association > Cassels Brock & Blackwell LLP > Jessica Zagar
Canadian Association of Law Libraries, Library Futures Institute > JFK Law Corporation > Robert Janes, Kim P. Nayyer
Rogers v. Rogers Communications Inc., 2021 BCSC 2184
Rogers (RCI), the massive public telecommunications and media company, is primarily controlled by the Rogers family. Last year, an inter-familial power struggle over the composition of the board of directors ended up in court.
Edward Rogers led one faction. The other faction included RCI and Edward’s mother and sisters.
During RCI’s purchase of Shaw Communications, Edward had concerns with RCI’s CEO Joe Natale’s performance and sought to replace him with Tony Stafferi, RCI’s CFO. The board of directors approved Natale’s resignation, but a new resolution initiated by the other faction sought to rescind it.
The conflict between the two factions continued. After the board removed him as chairman, Edward used a consent resolution and his voting power as chairman of RCI’s controlling shareholder to unilaterally remove and replace five independent directors of the board.
On Oct. 26, 2021, Edward sought to have the consent resolution declared valid. RCI opposed the petition and asserted that the board members were not validly removed and that the previously instituted board remained in place. A British Columbia Supreme Court granted Edward’s petition.
The court found that the definition of a consent resolution meant a resolution consented to in writing by shareholders holding at least two-thirds of voting shares in general meetings. Contrary to RCI’s assertion, there was nothing in the Business Corporations Act, SBC 2002, c 57 that mandated an “actual” meeting was necessary, said the court.
Rogers has a dual-class share structure, with voting and non-voting shares. Edward Rogers controls 97.5 percent of the voting shares.
The court also found that not inviting a class of non-voting shareholders did not constitute a failure to convene a meeting. The act states that the submission needs only those shareholders with the right to vote, and not inviting non-voting shareholders was merely Rogers’ past practice.
“It was pretty clear that Edward was going to win. There really wasn’t any legal doubt,” says Michael Osborne, chairman of the Canadian competition practice at Cozen O’Connor.
Michael Osborne
He says the ruling emphasizes the important substantive difference between BC’s corporate statute and others, including Ontario’s. While most corporate statutes require a consent resolution of shareholders be unanimous, in BC, a two-thirds majority of voting shareholders is sufficient. Justice Shelley Fitzpatrick gave a “black-letter-law decision” and said that the company’s arguments did not displace the fundamental question of whether Rogers’ incorporation articles required a shareholders’ meeting to remove and replace directors.
“Effectively, in my view, Rogers – the company – was asking the court to erase the difference between voting and non-voting shares,” says Osborne. “And Justice Fitzpatrick refused to do that.” It’s an important decision on how we interpret corporate statutes and corporate articles and whether policy-based arguments around concepts like shareholder democracy should overwhelm the words of the statute, he says. “And the answer, from Justice Fitzpatrick at least, is that they don’t.”
CLIENTS > FIRMS > LAWYERS
Rogers Communications Inc. > Goodmans LLP, Nathanson Schachter & Thompson LLP > David Conklin, Chris Sunstrum, Bob Vaux, Brenda Gosselin, David Lederman, Monica Creery, Kirby Cohen, Caitlin Woodford, Stephen Schachter, Julia Lockhart, and Caitlin Ohama-Darcus
Edward Rogers > McEwan Cooper Dennis LLP, Lax O’Sullivan Lisus Gottlieb LLP > Ken McEwan, Emily Kirkpatrick, William Stransky, Jonathan Lisus, Crawford Smith, Matthew Law
Re Bison Acquisition Corp., 2021 ABASC 188
“In a lot of ways, this case was like a law school exam,” says David Tupper, a corporate/commercial litigator and partner at Blake, Cassels & Graydon LLP. “It had all kinds of different elements – all of which are fundamental in the hostile takeover context – all bundled together in a package, which made it fascinating and energizing, and important as well.”
The case dealt with Brookfield Infrastructure Corporation’s hostile takeover bid of Inter Pipeline Ltd. (IPL). Brookfield owned close to 10 percent of IPL shares in its name. But it also had an economic interest in another nearly 10 percent of IPL using an instrument called a total return swap, which is a contract between parties to exchange cash flows in the future. In this case, Brookfield paid an upfront fee to the bank to hold IPL shares. At the end of the swap’s term, if the shares had gone up in value, Brookfield would get the gain. If their value had fallen, Brookfield would pay the bank the difference.
“Use of the total return swaps essentially gave a 20 percent economic interest to Brookfield,” says Tupper. “It was novel, and it was clever, and it was something that had been contemplated as a possibility across North America. There was a lot of academic commentary about the use of total return swaps and the effect on corporate governance. But it had never been done in a hostile situation.”
Tupper acted for Pembina Pipeline Corporation, which, as part of a white knight bid, negotiated a $350-million break fee with IPL. IPL also had a shareholder rights plan, which it amended so that the total return swaps would be defined as a share accumulation and trigger the rights plan if share-ownership crossed 20 percent, he says.
“You’ve got three interesting issues,” says Tupper. “Is the use of a total return swap in a hostile bid proper according to securities laws? Is the break fee proper or an improper defensive tactic? And is the amendment to the rights plan to target the swap instrument proper, or is it an improper defensive tactic?”
The Alberta Securities Commission (ASC) ultimately determined that using the total return swaps was abusive to the capital markets and the IPL shareholders.
Parties had raised three issues with the swaps, says Tupper. The first was that they subvert the “early warning system.” In securities law, once a party acquires 10 percent of shares, they must publish a press release. This act can signal to the public that the company is “in play” and might be subject to a future bid. Hostile bidders tend to want to avoid triggering early warning systems so the share price does not rise, which would make the acquisition more expensive. Because Brookfield owned less than 10 percent in stock outright, the company argued it had not triggered the early warning system.
The second concern was influence, says Tupper. Counterparties to swaps often purchase the equivalent value of shares to the swap so that if the share price rises, they have shares available to cover the increase, and they are not out of pocket for the difference in value at the end of the swap term. That can raise the concern that the counterparty will be influenced to vote those shares to benefit its swap partner.
“Empty voting” was the third issue, says Tupper. When the swap counterparty, such as a bank or other financial institution, accumulates shares in the market, that party often has a policy that it will be neutral and will not vote those shares at all. When those shares are taken out of the pool, the clout of the remaining voting shares is magnified.
Know the best banking lawyers in Canada as ranked by Lexpert here.
The ASC said that total return swaps should not be used in hostile bids and used its public interest power to issue a novel remedy, says Tupper. The ASC increased the minimum take-up condition and said Brookfield could not proceed to make an offer for the balance of shares if there was less than 55 percent tendered to address the potential risk of empty voting.
Another novel issue was that the ASC found the $350-million break fee acceptable and that the use of the shareholder rights plan when faced with the use of total return swaps in a hostile bid was also acceptable and proper, he says.
“This is the first decision in all of North America to actually address what had been, to that point, an issue that had been commented on in certain US cases but not in the hostile takeover context, and that had been the subject of academic commentary and alarm.”
CLIENTS > FIRMS > LAWYERS
Special Committee of the Board of Inter Pipeline Ltd. > Dentons Canada LLP > Gordon Tarnowsky, Rachel Howie, Bill Jenkins, and Jessica Myers
Inter Pipeline Ltd. > Burnet, Duckworth & Palmer LLP > Jeff Sharpe, Paul Chiswell, Andrew Sunter, Joanne Luu, Bill Maslechko, James Kidd, Alicia Quesnel, and Bronwyn Inkster
Bison Acquisition Corp. and Brookfield Infrastructure Corporation Exchange Limited Partnership > McCarthy Tétrault LLP > Shane D’Souza, Robert Richardson, Jonathan See, John Osler, Kara Smyth, William Main, Jonathan Nehmetallah, and Simon Lusztig
Pembina Pipeline Corporation > Blake Cassels & Graydon LLP > David Tupper, Alyssa Duke, Chad Schneider, Jeff Bakker, Ryan Morris, Liam Kelley, Vanessa Williams, and Jenna Green
Air India, Ltd. v. C. CC/DEVAS (MAURITIUS) LTD., 2022 QCCA 1264
The Air India case addressed whether the assets of a state-owned company can be seized ex parte before judgment to pay off that state’s debt.
India owns Air India and Antrix Corporation, and the latter executed several transactions with Devas Multimedia Services, giving rise to a significant commercial dispute. An arbitrator rendered two awards against Antrix.
India was unsuccessful in having the awards set aside, and Devas was unsuccessful in enforcing them.
On Nov. 24, 2021, Devas sought recognition of the arbitral awards before the Superior Court in Montreal and a first writ of seizure before judgment against all the sums owed by India or the Airport Authority of India (AAI) to the International Air Transport Association (IATA). The writ was issued.
Air India and AAI sought to dismiss the application and stay the seizure, alleging insufficient facts.
In January 2022, the judge ruled that AAI and Air India were alter-egos of India, which was enough to allow the seizure of their assets. However, the judge permitted AAI’s application for dismissal and quashed the seizure due to failure of notification. As for Air India, the judge allowed only in part, reducing the sum seized by half.
Air India and AAI appealed the decision, which the appellate court allowed.
But the Court of Appeal found Devas’ position irreconcilable with Quebec law. Devas wanted the court to lift the corporate veil. Under the Quebec Civil Code, s. 317 sets out the factors required, says Louis Sévéno, partner at Woods LLP in Montreal. Section 317 reads: “The juridical personality of a legal person may not be invoked against a person in good faith so as to dissemble fraud, abuse of right or contravention of a rule of public order.”
Louis Sévéno
“They said we have no evidence that indicates Air India – which was created, presumably, some 30–40 years ago, maybe more – was created for the purposes of perpetrating fraud,” says Sévéno. “It was created as an airline and functions as an airline. Unless you can show us why this corporate veil should be lifted, you can’t confound the patrimonies of Air India with that of India.”
The court also rejected Devas’ assertion that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards allowed the seizure of property to satisfy a debt of a condemned state. The principal objective of the convention is to prevent discrimination between foreign and non-national awards, said the court. Apart from that, the convention does not require that arbitral awards be subject to different and more favourable rules than those of national awards.
The Air India case should be read together with Chevron Corporation v. Yaiguaje et al., says Lisus.
The Supreme Court of Canada denied leave in Chevron in 2019. The case originated from a 2011 Ecuadorian judgment, which awarded US$9.5 billion to the plaintiffs for environmental damages. But Chevron had no assets in Ecuador, and the plaintiffs sought payment in lawsuits in the US and Canada. In Ontario, they sought to enforce the judgment against Chevron Canada, a Chevron subsidiary. Chevron was successful on summary judgment, confirmed at the Court of Appeal, arguing that the corporate entities are legally separate.
“Ultimately, the court found that you can’t lift the veil to enforce the debts of a parent, absent demonstrating fraud or the traditional ‘alter ego’ requirements,” says Lisus. “The decisions also laid to rest this group enterprise theory of liability.”
In a group enterprise theory of liability, closely related organizations are viewed as part of a single enterprise.
“There’s no group enterprise theory of liability to lift the corporate veil,” he says.
CLIENTS > FIRMS > LAWYERS
Air India > Woods LLP > Patrick Ouellet, Ioana Jurca, Marc-Antoine Côté
The Republic of India > Stikeman Elliott LLP > Éric Mongeau, Patrick Girard, Vincent Lanctôt-Fortier, Marianne Bastille-Parent, and Benjamin Herrera
Airport Authority of India > Davies Ward Phillips & Vineberg > Willam Brock, Corey Omer, Amélie Lehouiller, Éloise Noiseux
International Air Transport Association > Dentons Canada LLP > Claude Morency, Anthony Rudman, Alexander Little, Charlotte Dion, Martin Poulin
Plaintiffs > Borden Ladner Gervais LLP (BLG) > Mathieu Piché-Messier, Karine Fahmy, Amanda Afeich, Philippe Boisvert, Dayeon Min, Ira Nishisato
R. C. SNC-Lavalin inc., 2022 QCCS 1967
SNC-Lavalin is the first case interpreting the new Criminal Code provisions allowing for remediation agreements.
While SNC-Lavalin is the first case using a remediation agreement, it will not be the last, says Jilesen.
“That will definitely be a model for the future. No doubt about that.”
In September 2021, Normand Morin, SNC-Lavalin Inc. (SNCL), and SNC-Lavalin International Inc. (SNCLI) were charged with various Criminal Code offences, including fraud, forgery, and conspiracy in connection with the award of Montreal’s Jacques Cartier Bridge refurbishment contract.
The prosecutor submitted a draft remediation agreement that it signed with SNCL and SNCLI. The goals of the remediation agreement regime are to hold an organization accountable, to correct corporate culture, and to remedy the harm caused by the offences while avoiding negative consequences to innocent third parties. This was the first draft remediation agreement submitted for court approval in Canada.
Upon examining the agreement, the Quebec Superior Court found that the parties had provided all the mandatory elements of s. 715.34(1) of the Criminal Code. In addition, the agreement also provided for several discretionary elements. The court said that the cooperation of the two organizations involved, specifically to identify the participants in the offences despite the incriminating nature of the evidence disclosed, was a significant consideration in its analysis. The court was satisfied that the organizations had made serious efforts to prevent the reoccurrence of the alleged conduct and that there was a fundamental change in the corporate culture.
The Quebec Superior Court ultimately approved the amended remediation agreement, applying “new tools for fighting corporate crime,” which the federal government had introduced after “extensive public consultation,” says Meehan.
The court found that the agreement’s framework included measures to maintain and improve compliance measures and the appointment of an independent monitor – the organizations had already been monitored for 10 years. The court also found that the agreement, taken as a whole, was fair, reasonable, and proportionate to the gravity of the offences and implemented measures necessary to prevent the offensive behaviour from recurring.
The court found that the financial provisions in the agreement were substantial enough to denounce wrongdoing and hold the organizations accountable. The court also found that the victim’s harm was adequately addressed.
CLIENTS > FIRMS > LAWYERS
SNC-Lavalin > Norton Rose Fulbright Canada LLP > François Fontaine, Charles-Antoine Péladeau, and Emily Deraîche-Grossberg
Independent Compliance Monitor selected in the Remediation Agreement and appointed by the Superior Court of Québec > Blake Cassels and Graydon LLP > Mark Morrison, Simon Seida, Michael Dixon, John Fast, Gina Murray, Robel Sahlu
The Jacques Cartier and Champlain Bridges Incorporated > Osler, Hoskin & Harcourt LLP > Stéphane Eljarrat, Frédéric Plamondon, and Josy-Ann Therrien
R. C. SNC-Lavalin inc., 2022 QCCS 1967
SNC-Lavalin is the first case interpreting the new Criminal Code provisions allowing for remediation agreements.
While SNC-Lavalin is the first case using a remediation agreement, it will not be the last, says Jilesen.
“That will definitely be a model for the future. No doubt about that.”
In September 2021, Normand Morin, SNC-Lavalin Inc. (SNCL), and SNC-Lavalin International Inc. (SNCLI) were charged with various Criminal Code offences, including fraud, forgery, and conspiracy in connection with the award of Montreal’s Jacques Cartier Bridge refurbishment contract.
The prosecutor submitted a draft remediation agreement that it signed with SNCL and SNCLI. The goals of the remediation agreement regime are to hold an organization accountable, to correct corporate culture, and to remedy the harm caused by the offences while avoiding negative consequences to innocent third parties. This was the first draft remediation agreement submitted for court approval in Canada.
Upon examining the agreement, the Quebec Superior Court found that the parties had provided all the mandatory elements of s. 715.34(1) of the Criminal Code. In addition, the agreement also provided for several discretionary elements. The court said that the cooperation of the two organizations involved, specifically to identify the participants in the offences despite the incriminating nature of the evidence disclosed, was a significant consideration in its analysis. The court was satisfied that the organizations had made serious efforts to prevent the reoccurrence of the alleged conduct and that there was a fundamental change in the corporate culture.
The Quebec Superior Court ultimately approved the amended remediation agreement, applying “new tools for fighting corporate crime,” which the federal government had introduced after “extensive public consultation,” says Meehan.
The court found that the agreement’s framework included measures to maintain and improve compliance measures and the appointment of an independent monitor – the organizations had already been monitored for 10 years. The court also found that the agreement, taken as a whole, was fair, reasonable, and proportionate to the gravity of the offences and implemented measures necessary to prevent the offensive behaviour from recurring.
The court found that the financial provisions in the agreement were substantial enough to denounce wrongdoing and hold the organizations accountable. The court also found that the victim’s harm was adequately addressed.
CLIENTS > FIRMS > LAWYERS
SNC-Lavalin > Norton Rose Fulbright Canada LLP > François Fontaine, Charles-Antoine Péladeau, and Emily Deraîche-Grossberg
Independent Compliance Monitor selected in the Remediation Agreement and appointed by the Superior Court of Québec > Blake Cassels and Graydon LLP > Mark Morrison, Simon Seida, Michael Dixon, John Fast, Gina Murray, Robel Sahlu
The Jacques Cartier and Champlain Bridges Incorporated > Osler, Hoskin & Harcourt LLP > Stéphane Eljarrat, Frédéric Plamondon, and
Josy-Ann Therrien
Angelcare Development Inc. et al. v. Munchkin, Inc. et al., 2022 FC 507
Angelcare Development, Edgewell Personal Care Canada, Playtex Products, and Angelcare Canada filed an action for patent infringement against baby-care-product competitor Munchkin and Munchkin Baby Canada.
In Angelcare Development, “the Federal Court outlined a range of infringement and invalidity principles which provides clarity for patent owners and IP lawyers,” says Meehan.
Angelcare owned six valid and subsisting patents, all relating to either diaper pail cassettes or assemblies between cassettes and the diaper pails with which they are used. Diaper pails are effectively garbage pails for the disposal of soiled diapers, while diaper pail cassettes are used to store plastic garbage bags for dirty diapers. Angelcare claimed that Munchkin directly infringed each of its six patents by manufacturing and selling four generations of cassettes and two types of diaper pails.
Angelcare also said that Munchkin had induced infringement by encouraging users to assemble the infringing cassettes with both the diaper pails of Munchkin and Angelcare.
Munchkin denied any infringement. Instead, it filed a counterclaim against Angelcare, saying that all of its patents were invalid on the grounds of anticipation, obviousness, overbreadth, insufficiency, lack of utility, and, in the alternative, double-patenting.
The Federal Court found that the claims, allegedly infringed, did not suffer from any invalidity grounds advanced by Munchkin. Four of the claims Angelcare did not assert but Munchkin challenged them nonetheless for invalidity. The court found that these claims were not invalid for anticipation because the dispensing gap of the 128 Patent was in a different location than the gap in the Captiva/Diaper Genie cassette, which was claimed to disclose the invention of a claim of the 128 Patent. In addition, the court found four claims of the 384 Patent were invalid for anticipation, and Munchkin products had infringed several claims included in the six patents-in-suit.
CLIENTS > FIRMS > LAWYERS
Angelcare Development Inc. > Smart & Biggar > François Guay, Guillaume Lavoie Ste-Marie, Jeremy Want, Matthew Burt, Denise Felsztyna
Munchkin Inc. > Osler, Hoskin & Harcourt LLP > J. Bradley White, Vincent M. de Grandpré, Faylene A. Lunn
Thales DIS Canada Inc. v. Ontario, 2022 ONSC 3166
In Thales, the Ontario Superior Court determined that the domestic production requirement in Ontario’s bid-request process was counter to the Canada-European Union Comprehensive Economic Trade Agreement (CETA).
The Ontario Ministry of Transportation requested bids for “Card Production and Photo Comparison Technology” to make government identity cards. Ontario also dismissed Thales DIS Canada’s appeal under the provincial government’s bid dispute mechanism, which had challenged various aspects of the RFB.
Thales applied for judicial review of these two decisions, arguing that dismissal was biased, the process was procedurally unfair, and the RFB’s domestic production requirement violated the non-discrimination provisions of CETA and the Canadian Free Trade Agreement.
On judicial review, Thales argued that Ontario’s position – that the domestic production requirement, under art. 19.3(2) of CETA, was necessary – was unreasonable.
The appellate court assumed a public safety interest in reducing the risk of loss, theft, and fraud associated with identity documents that could potentially be the subject of the public safety exception, given the significant issues this case addressed. And the evidence could justify a finding of a potential risk of loss, theft, and fraud associated with “Card Stock” production and transportation to Canada but could not justify a finding of a material practical risk.
The court also found that because the director of program and policy enablement did not address the issue of a material contribution to the reduction of risk using realistic assumptions, her determination that the imposition of a domestic production requirement would materially contribute to the risk of loss and theft associated with the foreign production and transportation to Canada of Card Stock was not logically sound and was unsupported by the evidence. Ontario’s Divisional Court quashed the RFB and the decision to dismiss Thales’ challenge.
CLIENTS > FIRMS > LAWYERS
Thales DIS Canada Inc. > Fasken > Peter N. Mantas, Nabila Abdul Malik, Novera Khan, Marcia Mills, Alexandra Logvin
Ontario (Ministry of Transportation) > Ministry of the Attorney General > Will MacLarkey, Andi Jin, and Alex Redinger
H.M.B. HOLDINGS LTD. V. ANTIGUA AND BARBUDA, 2021 SCC 44
The Supreme Court of Canada ruling clarified what “carrying on business” means in the context of foreign judgments and private international law.
The court found that s. 3(b) of Ontario’s Reciprocal Enforcement of Judgments Act prohibited the appellant, Antigua, from registering a BC judgment in Ontario because it was not carrying on business in BC. Section 3(b) allows a ruling from another province or territory to be registered for enforcement in Ontario. The provision requires the entity to conduct business in the jurisdiction where the judgment was rendered.
The decision will apply to other legislation in Canada that deals with reciprocal enforcement.
After the Caribbean country Antigua and Barbuda expropriated waterfront property owned by HMB Holdings, a court in that country ordered Antigua to compensate the company. In 2016, HMB tried to enforce the ruling in BC since it could not bring the action in Ontario because the two-year limitation period had expired. The BC court granted default judgment because Antigua did not defend the action.
Under the Reciprocal Enforcement of Judgments Act, the company then applied in Ontario to recognize the BC judgment. Ontario’s Superior Court and Court of Appeal dismissed the action because Antigua was not doing business in BC. A five-judge SCC panel agreed – the BC judgement cannot be enforced in Ontario because Antigua’s activities in BC did not meet the requirements of s. 3(b) of the Reciprocal Enforcement of Judgments Act.
Antigua had four representatives in BC in its Citizenship by Investment program, but the court said their involvement amounted to little more than providing potential investors with information.
“Section 3(b) places two burdens on a judgment debtor seeking to raise this defence” to the registration of a judgment, Chief Justice Richard Wagner wrote in the decision.
“First, the judgment debtor must establish that they were not carrying on business or ordinarily resident in the jurisdiction of the original court. Second, the judgment debtor must also show that they did not voluntarily appear or otherwise submit to the original court’s jurisdiction during the proceedings the judgment creditor brought in that court. If the judgment debtor shows the Ontario court that these two conditions are met, then s. 3(b) bars the registration of the judgment.”
CLIENTS > FIRMS > LAWYERS
HMB Holdings Limited > Bennett Jones LLP > Lincoln Caylor, Ranjan Agarwal, Nina Butz
Attorney General of Antigua and Barbuda > Aird & Berlis LLP > Steve J. Tenai, Sanj Sood