Top Cases Update

Presented by: Ryan Dalziel

Today’s Subjects

• • • • • • Government Liability – Tort and Fiduciary Duty Disclosure Statements Consumer Protection Class Actions Defamation and the Internet CCAA Admin Law – Deference and the Duty of Fairness

Government Liability

• R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42 • “Light” cigarettes: federal government alleged by tobacco industry to have made negligent misrepresentations, negligent design, failure to warn • Can the federal government be liable to the industry?

Imperial Tobacco (cont’d)

• • • 9-0, per the Chief Justice: NO Court repeated basic proximity / policy analysis of whether duty of care arose At policy stage, revisited framework for immunity of “policy” decisions by government • “policy/operational approach… does not work very well as a legal test” – false dichotomy between policy and operational

Imperial Tobacco (cont’d)

• New test: immunity for “core policy” decisions – “decisions as to a course or principle of action that are based on economic, social or political factors” • Crucially, the immunity extends to actions that are “part and parcel” of the policy – in this case, encouraging smokers to switch to low-tar cigarettes

Government Liability

• Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24 • Certification hearing for class action about whether allegedly inflated “accommodation charges” of elders in nursing homes and auxiliary hospitals gave rise to government liability • Main issue was breach of fiduciary duty • 9-0, per the Chief Justice, NO DUTY

Elder Advocates (cont’d)

• Governments will owe fiduciary duties only in limited and special circumstances: • Must be a specific private law interest to which the claimant has a pre-existing distinct and complete legal entitlement • Degree of control exerted by government over the interest must be equivalent to direct administration of that interest

Elder Advocates (cont’d)

• Claimants fell well short of that standard: > they were vulnerable, but not because of government; > nothing in the statute or regulations created a duty of undivided loyalty; > Province owed conflicting duties to public at large when it comes to health funding

Disclosure Statements / Fiduciary Duties

• Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23 • VAC was developer and manager of two hotels by Richmond airport, first Marriott then Hilton • VAC received management fee of 5% of gross and 25% of return over 8% at Marriott, and only 3% at Hilton • Disclosure statement for Hilton said VAC was developer of Marriott under “similar” arrangement, and that VAC not aware of any potential conflict

Sharbern Holding (cont’d)

• Two main issues: • Was failure to disclose difference in management fees “material” for purposes of Real Estate Act?

• Was VAC in breach of fiduciary duty for failing to disclose or otherwise?

• 9-0, per Rothstein J., NO and NO

Sharbern Holding (cont’d)

• Materiality: • Court adopted test from US law: info is material if “there is a substantial likelihood that it would have been considered important by a reasonable investor in making his or her decision to invest” • In other words, “would a reasonable investor have regarded the info as having significantly altered the total mix of information?” • Predominant focus is on comparison of disclosed and omitted information, but investors’ behavior evidence, common knowledge, and knowledge specific to investors all admissible

Sharbern Holding (cont’d)

• Failure to disclose here not material because: • expert evidence said investors would not care, • some degree of disclosure took place, • terms of contracts preventing VAC from preferring one development over the other, and • evidence of behaviour of fully-informed investors

Sharbern Holding (cont’d)

• Fiduciary duty: • Court held that as manager/agent for investors, VAC owed fiduciary duty to disclose material facts that would give rise to substantial risk that VAC’s relationship with investors would be adversely affected • For similar reasons as under Real Estate Act, Court held that plaintiffs failed to prove there was undisclosed material information

Consumer Protection Class Actions

• Siedel v. TELUS Communications Inc., 2011 SCC 15 • Section 172 of Business Practices and Consumer Protection Act confers right to bring action in Supreme Court for breach of the Act • Arbitration clause in cell phone contract provided for arbitration as exclusive forum • BUT s. 3 of BPCPA provides that any agreement that would waive or release a BPCPA “right” is void

Siedel (cont’d)

• 5-4, per Binnie J., arbitration clause held to be void insofar as it would stop the s. 172 claim • 172 of BPCPA confers a “right” of action in Supreme Court that cannot be waived

Defamation and the Internet

• Crookes v. Newton, 2011 SCC 47 • Can a hyperlink amount to “publication” for purposes of the law of defamation?

• per Abella J. for 6-judge majority, NO • Court held that a hyperlink, by itself, should never be seen as publication • It is necessary that the hyperlinker presents content in a way that “actually repeats” the allegedly defamatory content in order for there to be publication

Crookes (cont’d)

• Justification was that hyperlinks are essential to the Internet, and hyperlinkers do not have control over content • Departure from traditional common law test, which only requires an act that has the effect of communicating the defamatory words to a third party

CCAA

• Century Services Inc. v. Canada (Attorney General), 2010 SCC 60 • First time the SCC considered CCAA legislation • Concerned deemed trust for GST • Excise Tax Act says deemed trust prevails over any other enactment other than BIA • CCAA says deemed trust provisions are of no application to CCAA processes • Which provision prevails?

Century Services (cont’d)

• Deschamps J., speaking for 7, held that CCAA prevails • Emphasized importance of flexibility and judicial discretion when reorganization needed • Moreover, 2005 amendments “refreshed” CCAA and made it the more recent, and thus superior, provision • Further issue was whether, after reorg failed, it was open to CCAA judge to partially lift the stay of proceedings to permit an assignment in bankruptcy under the BIA

Century Services (cont’d)

• Crown complained that this frustrated the purpose of the Excise Tax Act: once reorg had failed, Crown said immediate payment should follow • Majority emphasized expansive language of CCAA, and held the only question is whether an order will usefully further efforts to avoid the social and economic losses resulting from liquidation • Here it was legitimate to use the CCAA process to create a “bridge” to bankruptcy

The Duty of Procedural Fairness

• Canada (Attorney General) v. Mavi, 2011 SCC 30 • Issue was process by which government may recover “sponsorship debt” – i.e., the cost of providing social assistance to immigrants who have been “sponsored” by a relative who has given an undertaking • IRPA provides that government monies spent on immigrants are a debt that “may be recovered” by Crown • 9-0, per Binnie J., duty of fairness was owed but met by Crown

Mavi (cont’d)

• Court interpreted statute to permit deferral but not forgiveness of debt • Despite this, court held further that undertakings are valid contracts, but the debts created thereby are also statutory, with the result that enforcement is not governed only by the law of contract • Application of Baker factors required to determine content of duty of fairness • Importantly, rule in Dunsmuir confined to employment cases

Mavi (cont’d)

• However, undertakings shaped content of duty of fairness, which was “fairly minimal”: • Notice of potential enforcement; • Opportunity to explain relevant financial circumstances; • Consideration of explanation; • Notice of decision; and • NO duty to give reasons

Standard of Review Round-up

• Eight new cases on standard of review: • Celgene Corp (patent board’s interpretation of sale “in any market in Canada” under Patent Act) • Smith v. Alliance Pipeline (arbitration committee under NEB Act interpreting power to award “costs”) • Canada v. Canada (interpretation of “government institution” under federal Access to Information Act)

Standard of Review (cont’d)

• Figliola (power of human rights tribunal to dismiss complaint pre-hearing) • Canada v. Canada (federal human rights tribunal’s interpretation of power to award “expenses”) • PSAC (finding of “wage gap” for purposes of CHRA pay equity provisions) • Nor-Man Regional (application of estoppel principles by labour arbitrator)

Standard of Review (cont’d)

• The results so far? • Deference owed in all but one case • Access to Information case different because statute was not the enabling legislation of the decision-maker under review • Culmination: Alberta Teachers’ Association (Dec 14) > Rothstein J., for six judges, says that absent “exceptional” circumstances, interpretation by a tribunal of its home statute or statutes closely connected to its function will be the subject of deference on judicial review

Standard of Review (cont’d)

• But what, really, does deference mean?

• Insane findings upheld in PSAC; • Discretionary decision found patently unreasonable in Figliola; and • Interpretation of “expenses” in Canada v. Canada seems to be unreasonable because the court interpreted the statute differently