Lexpert presents a list of the 10 most significant judicial rulings affecting the business community every year. The top 10 are determined through a nomination process and consultation with Canada’s leading litigators. The cases must have been released between October 1, 2022, and September 30, 2023. The ruling must also not have been under appeal. Several significant cases were kept off the list this year because they have been granted leave to the Supreme Court of Canada, including Pine Valley Enterprises Inc. v. Earthco Soil Mixtures Inc., 2022 ONCA 265 and Canada v. Dow Chemical Canada ULC, 2022 FCA 70.
In no particular order, here are the top 10:
McDonald v. Toronto-Dominion Bank, 2022 ONCA 788
This case originated in a fraud involving the Caribbean-based Stanford International Bank. The bank’s primary business was selling high-yield certificates of deposit to high-net-worth clients. The Toronto Dominion Bank had a relationship with Stanford International. TD was responsible for receiving and disbursing funds from and to purchasers of the certificates of deposit until Stanford International collapsed and was liquidated.
Stanford International’s joint liquidators sued TD, alleging it was liable for knowing assistance in breach of fiduciary duty and was negligent in providing services.
The trial judge dismissed the action, finding TD lacked knowledge of the fraud and was not reckless or wilfully blind. The judge ruled there was insufficient proximity for a novel duty of care. The liquidators challenged the negligence claim’s dismissal, and the Ontario Court of Appeal dismissed their appeal, agreeing that TD and Stanford International did not fall within an established or analogous proximity category.
According to Geoff Hall, a partner at McCarthy Tétrault LLP who acted on the case, the ruling raises two key issues.
One concerns the scope of the duty of care banks owe their customers.
“The Court of Appeal decision made clear that the mere existence of a banking relationship isn’t enough. You have to look at it at a more granular level,” he says.
Hall says it is the type of relationship that matters. He says that opening a chequing account with a bank does not give the bank a duty of care concerning all that customer’s investments, nor does having a safety deposit box with the bank obligate that bank to ensure that the customer is not the victim of fraud.
Secondly, Hall says the ruling clarifies that deep-pocketed defendants and banks are not the insurers, auditors, or regulators of their customers.
He adds that McDonald v. Toronto-Dominion Bank also stood out for the “sheer size of the claim.”
“The claim of US$5 billion put this case in a different category. It was clearly going to be a high-stakes case, no matter how it turned out.”
CLIENTS > FIRMS > LAWYERS
Mark McDonald of Grant Thornton (British Virgin Islands) Ltd. and Hugh Dickson of Grant Thornton Specialist Services (Cayman) Ltd., acting together herein in their capacities as Joint Liquidators of Stanford International Bank Ltd. > Bennett Jones LLP > Lincoln Caylor, Maureen M. Ward, Nathan J. Shaheen, Alexander C. Payne, Shaan P. Tolani, Thomas Feore
Toronto-Dominion Bank > McCarthy Tétrault LLP > Geoff R. Hall, Junior Sirivar, Christine Wadsworth, Alison Bond, Erin Chesney, Jacob Klugsberg
Canada (Commissioner of Competition) v. Rogers Communications Inc., 2023 FCA 16
In 2021, Rogers Communications agreed to purchase Shaw Communications for approximately $26 billion. Just over a year later, the Commissioner of Competition applied under the Competition Act to block the acquisition, arguing that the deal would substantially prevent or lessen competition in the telecoms industry. In response, Rogers and Shaw agreed to divest of Shaw’s subsidiary, Freedom Mobile, which would be sold to Videotron.
Last December, the Competition Tribunal dismissed the application to block the acquisition, finding that the combination of Rogers’ acquisition of Shaw and Videotron’s acquisition of Freedom Mobile would have pro-competitive effects. The commissioner brought the case to the Federal Court of Appeal, which dismissed it for lack of merit.
This March, the minister of innovation, science and industry approved the transfer of Shaw’s spectrum licences to Videotron, clearing the final regulatory hurdle. Rogers announced the completion of the arrangement in April.
Canada v. Rogers will have “significant implications for competition law and parties considering future transactions,” says Eugene Meehan, a partner and appellate lawyer at Supreme Advocacy LLP.
“The decision is indicative of the difficulty that the Competition Bureau has in Canada to demonstrate anti-competitive effects, which is required in order to block a transaction,” he says. “The decision may prompt legislative reforms in competition law. The Tribunal is bound to apply the law in adjudicating matters before it, and its role is different from the Commissioner who is tasked with enhancing competition in Canada.”
The nominator noted that Canada v. Rogers was the largest contested merger in Canadian history and will have a lasting impact on the Canadian telecommunications industry by establishing important precedents for merger review and litigation. In the interlocutory process, the parties exchanged more than one million documents in two weeks of discovery, and there were 16 contested pre-trial motions. During the four-week trial, parties cross-examined 40 lay and expert witnesses on almost 2,000 documentary exhibits and witness statements, some of which eclipsed 1,000 pages, they said.
CLIENTS > FIRMS > LAWYERS
Commissioner of Competition > Competition Bureau Legal Services > Alexander Gay, Jonathan Hood, Irene Cybulsky, Michael Packer
Rogers Communications Inc. > Lax O’Sullivan Lisus Gottlieb LLP > Jonathan C. Lisus, Crawford G. Smith, John Carlo Mastrangelo, Matthew R. Law
Shaw Communications Inc. > Davies Ward Phillips & Vineberg LLP > Kent E. Thomson, Derek D. Ricci, Steven G. Frankel, Chanakya A. Sethi
Videotron Ltd. > Bennett Jones LLP > John F. Rook, K.C., Emrys Davis, Alysha Pannu
Michael Obodo v. Trans Union of Canada, Inc., 2023 SCC 62026
This privacy class action resulted from the breach of Trans Union’s database by third-party hackers. Trans Union is a credit reporting agency whose database stores millions of people’s personal information.
According to the nominator, the case set an important precedent for privacy class actions: the tort of intrusion on seclusion should not apply to organizations hacked by third parties.
At certification, the plaintiff claimed damages for negligence and intrusion upon seclusion. The Ontario Superior Court certified the negligence claims and some claims based on various provisions of provincial privacy legislation but to certify the claims of intrusion upon seclusion. Trans Union successfully argued on appeal that the intrusion upon seclusion claim should fail because the plaintiff did not plead that the defendant invaded or intruded upon the plaintiff’s privacy. On July 13, the Supreme Court of Canada dismissed the plaintiff’s leave application.
The ruling leaves the door open for plaintiffs’ lawyers to bring privacy class actions arguing negligence, says Joan Young, partner at McMillan LLP and head of the firm’s litigation and dispute resolution group in British Columbia. This applies when a company hasn’t put in sufficient safeguards to protect private information. But, she says, when an outside hacker takes that information, the company will not be vicariously liable for the hacker’s actions.
“Those privacy [class actions] still continue to have some legs, but courts have really been reluctant to push them ahead – or only push them ahead in limited ways.”
Young adds that courts have been reluctant to certify privacy class actions where there is no evidence that the class suffered harm from the breach. “The courts are looking for a higher level of evidence,” she says.
Obodo was part of a trio of proposed class actions dealing with similar breaches for which the plaintiffs unsuccessfully argued the defendants were liable for intrusion upon seclusion. The other cases were Owsianik v. Equifax Canada Co., 2022 ONCA 813 and Winder v. Marriott International, Inc., 2022 ONCA 815. The Court of Appeal dismissed all three.
CLIENTS > FIRMS > LAWYERS
Michael Obodo > Du Vernet, Stewart > Christopher Du Vernet, Carlin McGoogan
Trans Union of Canada, Inc. > Osler, Hoskin & Harcourt LLP> Craig T. Lockwood, Lauren Harper, Jessica Habib
Workman Optometry Professional Corporation v. Certas Home and Auto Insurance Company, 2023 ONSC 3356
The proposed class action against several large Canadian insurance companies dealt with the novel issue of business interruption insurance coverage for losses resulting from COVID-19-related business closures. The class comprised all non-Quebec-based businesses in Canada that purchased business interruption insurance and claimed for pandemic-related losses under the policies.
The certified questions that proceeded to trial were whether the presence of the virus or its variants caused physical loss or damage to property within the meaning of the relevant insurance agreements, whether pandemic-related government orders caused physical loss or damage to property under the insurance agreements, and, if there was coverage, whether any exclusions in the policies precluded it.
Last June, at the common issues trial, the Ontario Superior Court of Justice ruled that neither COVID-19’s presence nor a related government order could cause physical loss or damage to property under the relevant insurance agreements. The ruling confirmed that loss of use of property was not the same as physical loss of property and provided certainty to numerous business interruption claims filed in Canada because of the pandemic.
CLIENTS > FIRMS > LAWYERS
Plaintiffs > Koskie Minsky LLP, Merchant Law Group, Klein Lawyers LLP > Kirk Baert, Vlad Calina, Aryan Ziaie, Nathalie Gondek, Evatt Merchant, Christopher Simoes, Doug Lennox
Defendants > Blake, Cassels & Graydon LLP, Branch MacMaster LLP, Davies Ward Phillips & Vineberg LLP, Dutton Brock LLP, Fasken Martineau DuMoulin LLP, Lerners LLP, Osler, Hoskin & Harcourt LLP, Stikeman Elliott LLP, Bennett Jones LLP, Borden Ladner Gervais, LLP Thomas Gold Pettingill LLP > Nicole Henderson, Glenn Zakaib, Edona Vila, Christopher Rhone, Ruby Egit, Avichay Sharon, Jacqueline Palef, Kent Thomson, Chantelle Cseh, Chenyang Li, Alisa McMaster, Stephen Libin, Eric Adams, Sarah Armstrong, David Rosenbaum, Jesse Harper, Daanish Samadmoten, Kirk Boggs, Jason Squire, Laura Fric, Mark Sheeley, Clare Barrowman, Glenn Zacher, Lesley Mercer, Cheryl Woodin, Gannon Beaulne, Thomas Donnelly, Joyce Tam, Alexander Pettingill
Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36
Throughout the second half of the 20th century, the Annapolis Group acquired 965 acres of land to develop and resell. In 2006, Halifax Regional Municipality adopted a planning strategy to guide land development over 25 years. The strategy reserved some of the Annapolis land for possible future inclusion in a regional park and zoned the Annapolis land as an urban settlement and reserve. Halifax had to adopt an authorizing resolution for the service development to proceed on the Annapolis land.
Starting in 2007, Annapolis tried several times to develop its land. In a 2016 resolution, Halifax refused to initiate the planning process, so Annapolis filed a claim for de facto expropriation or constructive taking. The Nova Scotia Court of Appeal dismissed the claim, but the Supreme Court of Canada reversed the ruling.
Annapolis Group Inc. v. Halifax Regional Municipality clarified the test for constructive taking and held that a court’s assessment of the issue must accord with justice and fairness, says Rebecca Jones, a partner at Lenczner Slaght LLP.
“What that means in the context of these claims is that the facts must be at the centre of the test,” she says. “The court should focus on the effect of the public authority’s actions on the landowner, the advantages gained by the public authority, and not on form.
“It’s a substance-over-form analysis, which the court has found that lower courts should be advancing in assessing these cases.”
Jones adds that the SCC also clarified that the intention or purposes of the public authority could be relevant in the constructive-taking assessment.
CLIENTS > FIRMS > LAWYERS
Annapolis Group Inc. > Lenczner Slaght LLP > Peter H. Griffin, Scott Rollwagen, Rebecca Jones, Amy Sherrard
Halifax Regional Municipality > Michelle Awad, KC > Martin C. Ward, KC > Jeremy G. Ryant
Nova Chemicals Corp. v. Dow Chemical Co., 2022 SCC 43
Nova Chemicals Corporation produced products falling under Dow Chemical Company’s patent for thin-but-strong plastics known as metallocene linear low‑density polyethylenes. The Federal Court and Federal Court of Appeal ordered Nova to pay Dow approximately $645 million for its infringement of Dow’s patent.
The judge’s award equalled what Nova made from selling the patented plastics minus the total production costs. Nova could subtract only the cost of ethylene production. Ethylene is the primary ingredient in the patented plastics. Nova was not permitted to subtract ethylene’s higher market price. The judge also found that Dow was entitled to “springboard profits,” which arise after the patent expires but are connected to the infringement that occurred when the patent was protected.
A majority of the Supreme Court of Canada dismissed Nova’s appeal and affirmed the patent infringement award. The majority decision addressed the principles that should govern the calculation of a plaintiff’s recovery under the accounting of profits remedy. It described the remedy as flexible, equitable, and designed to protect the “patent bargain.” It covered various aspects of the remedy, including the “differential profits” calculation approach.
According to the 8–1 decision, the court should deduct profits only from the patent infringer’s comparable, non-infringing products. A deduction for a hypothetical “non-infringing option” would provide an unfair advantage to larger businesses with the luxury of alternative product lines and adversely affect “the weak,” said the SCC’s majority.
The $645 million patent infringement award is the largest in Canadian history. The nominator notes that the case is significant for dealing with numerous issues related to the appropriate methodology for quantifying the profits arising from infringement that are disgorged to the plaintiff.
CLIENTS > FIRMS > LAWYERS
Nova Chemicals Corporation > Torys LLP > Andrew Bernstein, Sheila Block, Nicole Mantini, Jonathan Silver
The Dow Chemical Company, Dow Global Technologies Inc., Dow Chemical Canada ULC > Smart & Biggar LLP > Steve Garland, Jeremy Want, Daniel Davies, Matthew Burt
Bell Canada, Rogers Communications Canada Inc., TELUS Communications Inc., Vidéotron ltée > Audrey Boctor, Danielle Marcovitz
Canadian Generic Pharmaceutical Association > Goodmans LLP > Andrew Brodkin, Harry Radomski, Jordan Scopa
Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41
When Peace River Hydro Partners subcontracted work to Petrowest to construct part of a northeastern BC dam, the two parties executed several arbitration clauses. When Petrowest faced financial problems, a court appointed a receiver to manage its assets and property. The receiver brought a claim against Peace River, seeking the funds allegedly owed for the subcontracted work.
Peace River applied under s. 15 of BC’s Arbitration Act for a stay of proceedings, arguing the arbitration agreements governed the dispute. After a judge dismissed the stay application, the BC Court of Appeal dismissed Peace River’s appeal.
However, the Supreme Court of Canada allowed the receiver’s civil claim to proceed. The court held that s. 15 of the Arbitration Act did not always require courts to stay a court‑appointed receiver’s civil claim where the claim was subject to a valid arbitration agreement. The SCC said that courts may refuse to grant a stay where the agreement is void, inoperative, or incapable of being performed under s. 15(2), and an otherwise valid arbitration agreement can be inoperative or incapable of performance if its enforcement compromises the integrity of the receivership proceedings.
Peace River is important for two reasons, says Jones at Lenczner Slaght. The SCC provides guidance on when a non-signatory to an arbitration agreement is bound by it. “That’s guidance that’s helpful in the insolvency context, which was before the court, but it’s also helpful in the broader legal community,” she says.
The court also signalled that it prefers a single proceeding model in insolvency to keep the matter under its guidance without hiving off certain aspects for arbitration, says Jones. She says that the SCC avoided finding that the insolvency must always take precedence over an arbitration provision and that the issue must be decided on a case-by-case basis.
Justice Suzanne Côté, who wrote for the majority, said insolvency and arbitration law did not need to exist at “polar extremes,” as both emphasize efficiency, expediency, procedural flexibility, and expert decision-making. She said that courts should generally hold parties to their arbitration agreements, even if one has become insolvent.
CLIENTS > FIRMS > LAWYERS
Peace River Hydro Partners et al. > Burnet, Duckworth & Palmer LLP > David de Groot, Rob Martz, Joanne Luu, Alison Scott
Petrowest Corporation et al. > Bennett Jones LLP > Kelsey Meyer, Ciara Mackey, Stephanie Clark, Paul Romaniuk
Deans Knight Income Corp. v. Canada, 2023 SCC 16
In this tax case, the Supreme Court of Canada found that a company used a complex series of transactions to evade Income Tax Act restrictions, which were aimed at preventing companies from making acquisitions solely to use the target’s business losses to reduce its tax burden.
Forbes Medi-Tech had $90 million in non-capital losses, scientific R&D tax expenditures, and investment tax credits. The venture capital firm Matco agreed with Forbes to shift its assets and liabilities into a new parent company called Newco. Matco bought debentures that would convert into voting shares and all of Newco’s non-voting shares in Forbes, and Newco promised to sell Matco a certain number of shares. Matco founded Deans Knight Capital Management, which used Forbes to raise money in an IPO, and Forbes changed its name to Deans Knight, which used Forbes’ non-capital losses to reduce its tax liability in the 2009 and 2012 tax years.
The case dealt with the general anti-avoidance rule and s. 111(1)(a) of the Income Tax Act. The provision allows taxpayers to offset income with non-capital losses to lower their tax rate in another tax year. Under s. 111(1)(a), to capitalize on an acquired company’s non-capital losses, the acquiror must carry on the same or similar business as the company that incurred the losses.
After the minister of national revenue reassessed Deans Knight and denied deductions from non-capital losses, the company appealed to the Tax Court. The minister had found that the transactions by which Deans Knight acquired $90 million in non-capital losses amounted to abusive tax avoidance. While the Tax Court agreed they were tax-avoidance transactions, it found they were not abusive.
The Federal Court of Appeal set aside the Tax Court’s judgment and ruled that the transactions were abusive and the general anti-avoidance rule, under s. 245 of the Act, applied to deny the tax benefits. The SCC dismissed the appeal and clarified the application of the general anti-avoidance rule.
“In making this determination, the court provided guidance on how to determine what the object, spirit, and purpose of an Income Tax Act provision are, which may be of assistance to tax professionals in structuring their business affairs,” says Meehan.
CLIENTS > FIRMS > LAWYERS
Deans Knight Income Corporation > Burnet, Duckworth & Palmer LLP > Barry R. Crump, Heather DiGregorio, Robert Martz
His Majesty the King > Attorney General of Canada Department of Justice > Michael Taylor, Perry Derksen
1115830 B.C. Ltd. v. Treasure Bay HK Limited, 2022 BCCA 380
This is a precedent-setting ruling on common law derivative actions, which are lawsuits brought over failed management decisions by corporate shareholders against corporate directors or other shareholders. The Hong Kong-based Treasure Bay brought common law derivative actions against three BC companies and one BC resident alleging fraud on the minority. This is an improper exercise of voting power by a majority of shareholders that is detrimental to the company.
“It’s the first case in Canada to clearly establish that no leave is required to bring a common law derivative action in the courts,” says Young at McMillan LLP.
The BC companies applied to strike the action, arguing Treasure Bay lacked leave to pursue a derivative action on the company’s behalf. A BC Supreme Court judge dismissed the application to strike, finding it was not plain and obvious that the province’s common law imposed a leave requirement. The Court of Appeal agreed, finding it was up to the legislature to impose such a requirement as it has done for statutory derivative actions. The SCC dismissed leave to appeal.
Common law derivative claims are an “unusual beast,” says Young. She says that statutes across Canada have mostly replaced the claims, but they can still be relevant to foreign-incorporated companies and can arise in the context of partnerships.
Hong Kong courts lacked jurisdiction over the parties in this dispute, and the parties had a contract that said they were governed by BC law, which is why it ended up in the BC courts, says Young. She says the case will give the green light to foreign corporations to bring common law claims in Canada without pre-approval from the court if they come from a jurisdiction that has no leave requirement and there is sufficient connection to the Canadian jurisdiction.
CLIENTS > FIRMS > LAWYERS
1115830 B.C. Ltd., 1104227 B.C. Ltd., Kenny Zou, Harlow Holdings Ltd. > McCarthy Tétrault LLP > Michael Feder, Patrick Williams
Treasure Bay HK Limited > McMillan LLP > Robert Wisner, Daniel Shouldice
Dans l'affaire de la Loi sur les arrangements avec les créanciers des compagnies de Groupe Sélection Inc.
Groupe Sélection inc. applied for restructuring under the Companies’ Creditors Arrangement Act. As agent for the banking syndicate composed of Groupe Sélection’s lenders, the National Bank of Canada filed a competing application proposing its own restructuring process with PwC as monitor. The syndicate said Groupe Sélection owed it $272 million and had breached contracts associated with the loans it had taken from various lenders. The syndicate withdrew financial support, forcing Groupe Sélection into insolvency.
Groupe Sélection had a complex structure consisting of 137 entities sharing a debt-load of $1.5 billion. Its debt was secured with interests in a massive number of assets mostly held in partnership. The company said COVID-19, rising interest rates, and inflation had hammered its business. The syndicate and Groupe Sélection’s primary creditors and business partners said they had lost confidence in the debtor’s management team and supported the syndicate’s application.
The Superior Court granted the syndicate application and the syndicate’s interim financing proposal and named PwC as monitor. The court cited mismanagement, inadequate financial reporting, lack of transparency by the debtors, and that the chief restructuring officer lacked qualification and independence. The Court of Appeal dismissed Groupe Sélection’s appeal.
The nominator said that the case sets an important precedent for competing CCAA applications. While the case represented “a unique and exceptional context,” the rulings confirmed that a court can grant a creditor’s CCAA application and interim financing proposal in the face of a competing application for a CCAA initial order brought by the debtor. The decision demonstrates the broad discretion held by the court in CCAA restructuring matters, said the nominator.
CLIENTS > FIRMS > LAWYERS
National Bank of Canada > Norton Rose Fulbright Canada LLP > Luc Morin, Guillaume Michaud, Noah Zucker, Arad Mojtahedi, David Lemieux
Groupe Sélection > Stikeman Elliott LLP > Guy Martel, Joseph Reynaud, Danny Duy Vu, Nathalie Nouvet, Alexa Teofilovic, William Rodier-Dumais
PwC > Fasken Martineau DuMoulin LLP > Alain Riendeau, Brandon Farber, Luc Béliveau, Éliane Dupéré-Tremblay, Nicolas Mancini, Alexander Bayus
Revera Inc., Desjardins, Fonds FTQ > Davies Ward Phillips & Vineberg LLP > Denis Ferland, Louis-Martin O’Neill, Gabriel Lavery Lepage, Christian Lachance
Montoni > Osler Hoskin & Harcourt LLP > Sandra Abitan, Anabel Semerdzhieva
Investissement Québec > Blake Cassels & Graydon LLP > Bernard Boucher, Sébastien Guy, Eric Stachecki
Laurentian Bank > Dentons > Ari Sorek, Roger Simard
Various companies involved > Astell Caza De Sua > Charles Caza
Various companies involved > Doyon Izzi Nivoix Avocats > Michel Doyon