Problems in Canadian
Business Law
Pol/Soc Sci 3165 6.0A
Tuesdays, 2:30-5:30
pm
Simon Archer
sarcher@torys.com
Last class
Research papers – start now
 Contents of course
 Themes and approaches
 Vocabulary and some analytical
distinctions, common law system,
civil law system, public and private
law

Questions?
Questions about last class?
 Clippings?
 Talk more slowly?
 Procendendo: a writ ordering an
inferior court to re-hear a process
(used after certiori)

Today’s lecture

Setting up the system
Current constitutional arrangements
 The set up: court system in general
 Can we talk about process? Procedure
in general

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Administrative law and regulatory
state
Constitutional
arrangements

Federal, provincial and aboriginal
state
Canadian Charter of Rights and
Freedoms
 Amending Formula
 Constitution Act, 1867 (or British North
America Act, 1867)
 Canada Act, 1982

Constitutional cont’d


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constitution is prescription of powers of
organs of state (executive, judicial,
legislative); also “supreme law”, s. 52(1).
in federal system (Canada, U.S.,
Australia, versus “centralist” U.K., New
Zealand) main aspects of a constitution
are division of powers b/t central and
regional gov’ts; also civil rights, and
‘values of a nation.’
In Canada, Constitution Act 1867
becomes Canada Act 1867 in 1982, when
repatriated.
Constitutional cont’d
Constitution Act has 8 statutes; 3
create Mb, Alta, Sask; 5 are
amendments.
 3 ways to change the constitution:

notwithstanding clause (for sections 2
and 15 of Charter)
 amendments (5 routes)
 judicial interpretation of the
constitution.

Division of powers

Federal (s. 91)
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Provincial (s. 92)

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Criminal law, regulation of trade and
commerce, taxation, banking, transportation,
bankruptcy, patents, marriage, etc.
Property and civil rights, most resources,
most industries, municipalities, etc.
Courts


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Some have “inherent jurisdiction”
Some have jurisdiction by statute
S. 96-101 Constitution Act, 1867
Economic regulation

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Federal jurisdiction in relation to "trade
and commerce" (s.91(2))
Provincial: "property and civil rights"
(s.92(13)).


Conflict between s.91(2) and s.92(13) is thus
inevitable.
Citizens Insurance Co. v. Parsons 1881,
• the PC sought to limit the degree of overlap and
potential conflict between s.92(13) and s.91(2) by
resort to the technique of interpretation referred to
as "mutual modification". Read two section together
and decide limits my mutual recognition.
Economic reg’n cont’d


Principle: transaction vs scope of
operations of business: former the issue,
not the latter.
Found to be in provincial jurisdiction:

Insurance, labour relations, including
collective bargaining, employment standards
and occupational health & safety,
intraprovincial marketing, property rights and
usage, civil liability (contract & tort), workers'
compensation, succession (wills & estates),
securities, professions, consumer protection
Economic reg’n cont’d

Section 91(2): Extra-Provincial Trade

The First Branch of Parsons
• This branch of federal power enables Parliament to
regulate the import and export of goods and
services, and to impose or remove tariff barriers.
NAFTA, FTA
• Parliament could also use this power to eliminate
barriers to interprovincial trade, but uses concensus.
• When does this intrude on provincial jurisdiction,
since most goods flow across lots of borders.
Economic reg’n con’t

SCC has broadened the scope of the
first branch of s.91(2).

It has upheld federal statutes even if
they have an impact on local trade or
works so long as the pith and
substance of the federal law is the
regulation of extra-provincial trade
• The Queen v. Klassen, 1960 Man. C.A. (leave
to appeal to SCC denied) (upholding
Canadian Wheat Board Act's application to a
local transaction)
• Caloil Inc. v. A.G. Canada, 1971 SCC (federal
regulation of trade in imported oil).
Economic reg’n cont’d

The degree to which this change in
direction will extend to products
other than grain and oil is uncertain.
As Hogg says, "it is not yet clear to
what extent interprovincial elements
of a less obvious kind would provide
support for federal regulation."
Economic reg’n cont’d

Section 91(2): General Regulation of
Trade (the Second Branch of Parsons)
• The "general regulation of trade" dicta in Parsons
held out the potential of expansive federal power
that subsequent incarnations of the PC were anxious
to curtail.
• But used by SCC in later years, though not
extensively.
• MacDonald v. Vapor Canada, [1976] S.C.R. 373
• GM v. City National Leasing, 1989 SCC (cb105)
(upholding the Combines Investigation Act, now the
Competition Act, as a valid exercise of federal power
under s.91(2)).
Economic reg’n cont’d

The Court has set out five criteria valid
exercise of the GRT power:
1. the legislation must be part of a general regulatory
scheme;
2. it must be monitored by the continuing oversight of a
regulatory agency;
3. it must be concerned with trade as a whole rather
than with a particular industry;
4. the provinces jointly or severally are constitutionally
incapable of enacting the legislation; and
5. the failure to include one or more provinces or
localities would jeopardize the successful operation of
the scheme in other parts of the country.
Economic reg’n cont’d
• It has been suggested that the grt power could form
the basis for the establishment of a national
securities commission by the federal government
(see, e.g., Monahan)
• Federal securities regulation would involve a
regulatory scheme and a regulatory agency, and
also would be concerned with the need of corporate
enterprises to raise capital regardless of the trade in
which they are engaged. However, the last two
criteria raise difficulties, as the provinces currently
have the power to regulate the trade in securities,
and it is not apparent that they are not capable of
continuing to do so effectively.
Charter

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
Supreme law of the land
Discuss in detail re: business associations
Key provisions

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2(b) - freedom of expression
3-5, democratic rights
6 - mobility
7 - life, liberty and freedom from security of
person
8-14 certain legal rights (search and seizure,
etc.)
15 equality rights
Charter, con’t

Does Charter apply? (s. 32, interp’d by
Dolphin Delivery, Dagenais)
• Is legislation valid? = Charter only applies to intra
vires legislation.
• Applies: Statute, government actor, government
actor based on common law, court ruling for reasons
of public policy
• Not: Private actors in common law dispute, court
ruling in private dispute for private dispute, not
public policy.
• Indirectly: Common law must be interpreted by
court to be consistent with Charter values.
Charter cont’d

Section 1 - restrictions consistent with
POFJ

Oakes test to save legislation
• Pressing and substantial objective?
• Rational connection?
• Lest restrictive means? (Most fail)
• Greater the scope of the right, more leeway gov. has
to prove adequate balance.
• Where no “balancing of rights”, but pure gov’t action,
threshold higher
• Proportionality between objective and effects of
means?
• Do means and objective have proportional effects
(or is it overkill?)
Who runs the courts?
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Federal, Supreme, Tax and Superior Courts are
federally-appointed judges
Provincial court judges are provincial
appointments
Complaints re: patronage and stupid judges, led
to 1985 federal process
Current provincial government dismantling the
quasi-transparent process set up in late 1980s
by Bill Davis
US system elects DAs and some judges (other
appointed by executive branch)

A better idea? Pros? Cons?
Who runs the lawyers?

All licensed lawyers members of
provincial “bar” or law society

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Law societies created by statute, lawyers
permitted to self-govern in “public
interest”
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(e.g., Law Society of Upper Canada)
Leader is the Treasurer of law society
De jure monopoly on trade in legal services
Current issue: multi-disciplinary partnerships
Why a monopoly on provision of services?
Pros? Cons? Alternatives?
Willes’ on function of courts

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Forum for settlement of private disputes
(e.g., Smith vs. Jones).
Disputes between citizens and the state


What is the difference between private
dispute? What about Smith vs. Evilcorp?
Interpreter of constitution

“Dialogue” -- Hogg & Bushnell
Hierarchy of the courts

Courts of Original Jurisdiction
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Courts of Appeal
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Trial courts, motions courts
Leave to appeal, right of appeal
Affirm/Vary/Reverse
New Trial
In some circumstances, appeals to supranational bodies


Usually non-binding, only embarrassing
A rapidly developing area, well-developed for much
business law (cf. globalization) but now especially for
people seeking redress against businesses (cf. antiglobalization)
The federal court system

Federal Courts
Supreme Court of Canada
 Federal Court of Appeal
 Federal Court Trial Division
 Tax Court

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Hear federal jurisdiction
administrative law cases, e.g, tax,
immigration, competition, etc.
Criminal court system

Criminal Code is federal, but administered jointly
with provinces

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Main provisions for business law are fraud, conspiracy,
related search and seizure powers
Not generally thought that important for regulation of
business in Canada
Parallel system of regulation (administrative law of
securities regulators) set up: query why criminal law
not used? (Hint: hot paper topic).
Criminal Appeals

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Supreme Court of Canada
Provincial/Territorial Court of Appeal
Prov/Terr Supreme/Superior Court
Magistrate’s/Provincial/Youth Courts
Criminal appeals
SUPREME COURT
OF CANADA
Provincial/Territorial
Supreme/Superior
Courts of Appeal
Provincial/Territorial
Supreme/Superior Courts
Magistrate’s/Provincial/Youth
Courts (Court of Sessions of
the Peace in Quebec)
Criminal procedure

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Summary Conviction vs. Indictment
Preliminary Hearing
Information, Pleadings
Evidence
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Examination in Chief/ Cross Examination
If jury, charge to jury
Judgment
Sentencing
See Anatomy of a Murder for example of
dos and don’ts
A criminal lawyer?
Civil procedure system
Important court for business law
issues
 Covers wide variety of issues
 Civil Courts

Supreme Court of Canada
 Provincial/Territorial Court of Appeal
 Prov/Terr Supreme/Superior Court
 Small Claims Court

Civil appeals
SUPREME COURT
OF CANADA
Provincial/Territorial
Courts of Appeal
Divisional
Court 
Federal Court of Appeal
Provincial/Territorial
Supreme/Superior Courts
Federal Court,
Trial Division
.
Small Claims/Magistrate’s †
Provincial Courts
(limited right of appeal)
Surrogate/Probate
Courts, etc.

Tax Court
* Some provinces do not have all of the courts shown on this chart.
† Appeal routes vary from province to province with respect to Small Claims Courts.
 Special courts, such as Probate or Surrogate, usually have disputes litigated in the Supreme Court of the province.
 Ontario only. The Divisional Court is a unique court in that it can conduct both trials and certain types of appeals.
Civil procedure
Writ of Summons / Statement of Claim
/ Application to court
 Statement of Defence (and Counterclaim)
 Reply (and Defence to Counter-claim)
 Demand for Particulars
 Close of Pleadings
 Notice of Trial / Jury Notice
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Civil Procedure - continued
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Mediation
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Examinations for Discovery
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Why mediate before discovery?
Easily the most expensive element of
litigation, perusing thousands of documents,
sub-specialty in firms that process this
material alone.
Who should pay for this process?
Pretrial Hearing
Opening Statements
Evidence
Civil Procedure – continued

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Witnesses – Ordinary (“lay”) vs. Expert
Judgment
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Usually reasons issues separately, months
later
Appeal(s)
Affirm/Vary/Reverse/New Trial
Court Costs

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Used to try and discourage frivolous litigation,
and provide some relief to meritous litigants
Rule 49: making offers
Administrative Tribunals
Established by and under legislation
 Boards / Commissions of experts
 Regulatory matters
 Less formal – sometimes

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Recourse to courts
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Labour tribunals
Appeal or judicial review
Permanent vs. Ad hoc
Alternative Dispute
Resolution
Historically, “invented” by
businesses seeking to avoid lawyers
 Arbitration
 Mediation
 International arbitration
 Is this consistent with the
professional monopoly?

Administrative law

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A huge area of law and policy for business
Theories of regulation

“Failures” in market economy
• Implement public policy priorities
• Fix problems or gaps in the common law
• E.g., securities regulation, tenant protection, family law etc.

Regulatory bodies for special functions

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Created by statute

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Ontario Municipal Board, Ontario Labour Relations Board,
Immigration and Refugee Board, Ontario Securities
Commission, Financial Services Commission of Ontario, etc.
Power defined in particular statute, and also in general
statutes pertaining to tribunals
More than “law”?: issue rules, decisions, directives
Administrative law

Theory of tribunals

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Members generally appointed by government
and/or stakeholders

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Certain areas that need regulation require expertise
beyond competence of courts
Historical evidence judges not impartial (labour
relations)
E.g., Labour Board has both union and management
nominees
Sources of power

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Enabling legislation (e.g., Securities Act)
Statutory Powers of Procedure Act
• Permits general powers for tribunal to decide own
procedure
Substantive law issues
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Many different frameworks or schemes
Usually a benefit or right granted or protected, or set of
rules implemented
E.g., pension benefits are regulated by the Superintendent
of Financial Services (an arms-length body of the
provincial government), which implements the Pension
Benefits Act, whose purpose is to safeguard employees
pensions and provide certain minimum standards in the
provision of those benefits
Those standards are in effect rights of pension plan
members
Key issue is protection of rights versus expectation of
benefits, or when does a benefit become a right?

Gosselin case
Procedural issues
Tribunals make own procedure
 Varies with nature of right, benefit
or obligation
 Often less than full “natural justice”
or “fairness” (notice, hearing,
representation, appeals, etc.)
 Minimum requirements generally
include notice, reasons for decision

Procedure cont’d
Courts far more willing to intervene
where procedural rights not upheld
than substantive rights not granted
 Can apply to court to have it “take
jurisdiction” to review the decision
or process (or lack of) of a tribunal
 Two or three thresholds for a court
to take jurisdiction

Procedure cont’d
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Unfair or process?

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But relative to decision made: some decisions
do not require process
Decision is either
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Incorrect – if the tribunal is deciding a matter
within the “competence of the courts”
“Patently unreasonable” – if the tribunal is
deciding a matter within its own competence
(as set out in the statute)
“Reasonableness simpliciter” – weasel words
from Bastarache, J.A. showing off his facility
in dead languages
Procedure cont’d

Scope of jurisdiction
To fight off courts, legislatures
introduce exclusions clauses
 Question becomes, what can a court
review through “inherent jurisdiction”?

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Scope of jurisdiction II:

Can tribunals interpret laws that are
not part of their own expertise?
Some current trends

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In context of globalization and “weak
state”, regulatory apparatus is dismantled
or effectively underfunded
Who is left to run the shop? Contracts still
need enforcing, business still needs law…
Can people take complaints to other
tribunals? To courts?

E.g., labour arbitration and human rights
codes
Questions

Any questions?

Should voluntary codes be protected by
free speech provisions?
• Current US case - Nike - sweatshops

Willis p. 13, “floodgates”
• Who has access? Are there really floods of
litigants?
Snowball 1 or Snowball 2?
Next class

Law of obligations part one:
Tort law
 Tortious acts, tortfeasors, intentional
and unintentional torts, elements of
torts
