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Civil Practice and Procedure

Class and representative proceedings

Motion for class proceeding certification was dismissed

Plaintiffs were chief and First Nations group, who were subject of treaties made between 1871 and 1921. Members of group received $5 yearly payment, from rate set in 1875. Plaintiffs claimed that lack of adjustment to yearly rate rendered payments meaningless. Plaintiffs moved to have action certified, to include other First Nations under treaties. Motion was dismissed, as Federal Court found there was no common issue. Plaintiffs appealed from dismissal of motion. Appeal dismissed. Federal Court identified proper issues and authorities. Court’s finding that plaintiffs sought relief beyond what was established in caselaw was proper. Different treaties were in place for proposed class members, so that common question was not established. Had scope of action been limited to one treaty, problem would have been avoided.
R. v. Horseman (2016), 2016 CarswellNat 4975, 2016 FCA 238, Johanne Gauthier J.A., David Stratas J.A., and Mary J.L. Gleason J.A. (F.C.A.); affirmed (2015), 2015 CarswellNat 5461, 2015 CarswellNat 9094, 2015 FC 1149, 2015 CF 1149, Russel W. Zinn J. (F.C.).


Judges and courts

Justices, magistrates and provincial courts

Independent review of initial remuneration of judges appointed to new judicial office is necessary

In 2004, government of Quebec reformed its regime of justices of peace by creating two categories of justices of peace. Government set starting remuneration of new category well below the previous levels. In 2008, association of justices of peace and its individual members made application in Superior Court arguing that provisions relating to setting and review of remuneration violated financial security guarantee of judicial independence. Application judge dismissed application, holding that the government’s decision had been validated by a special committee and that candidates applied for the office with full knowledge of the situation. Court of Appeal dismissed appeal brought by association and its members . Court of Appeal considered level of remuneration that was fixed to be high enough to guarantee independence of new justices of the peace. Association and its members appealed. Appeal allowed in part. In order to adequately protect judicial independence, whenever new judicial office is created, independent review of initial remuneration of judges appointed to new office is always necessary. Review by remuneration committee should take place within reasonable time after appointment of the new judges. In present case, reform breached financial security guarantee of judicial independence because remuneration for 2004 to 2007 was not reviewed within reasonable time after new appointments. Indeed, the remuneration for that period has never been reviewed. Since Act created new judicial office, initial remuneration of all judges appointed to this office needed to be reviewed retroactively, within reasonable time after their appointment. As ss. 27, 30 and 32 of Act did not provide for retroactive committee review within reasonable time, these sections infringed institutional financial security guarantee of judicial independence, and were thus contrary to s. 11(d) of Canadian Charter of Rights and Freedoms and preamble to Constitution Act, 1867.
Conférence des juges de paix magistrats du Québec v. Quebec (Attorney General) (2016), 2016 CarswellQue 9318, 2016 CarswellQue 9319, 2016 SCC 39, 2016 CSC 39, McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J. (S.C.C.); reversed (2014), 2014 CarswellQue 14611, 2014 CarswellQue 9133, 2014 QCCA 1654, Bouchard J.C.A., Vauclair J.C.A., and Dalphond J.C.A. (C.A. Que.).


Civil Practice and Procedure

Class and representative proceedings

Class proceedings acts gave judges power to sit outside of province

Three separate class actions took place on behalf of individuals infected with hepatitis C, as result of tainted blood supply between 1986 and 1990. B.C. and Quebec courts oversaw actions involving those provinces’ residents, while Ontario action involved Ontario residents and those from all other provinces. Settlement agreement was made in 1999, authorizing three provincial courts to supervise claims and requiring agreement among courts for settlement to take effect. In 2012, class counsel made motions relating to settlement agreement, proposing that judges from all 3 provinces hear motion sitting in one location. Provincial governments opposed motion, stating that judges lacked jurisdiction to sit outside own province. On motions for directions, motions judges in all 3 provinces rules that they could sit outside province for purpose of settlement agreement motions. Ontario and B.C. appealed from judgment. Court of Appeal in both provinces found that it was permissible for provincial judges to conduct hearing, with use of video or telephone link. Representative plaintiffs appealed to Supreme Court, stating that link was not necessary for judges to hear matter outside of province. Ontario cross-appealed from judgment, claiming that there was no power for judges to hear matter outside of province. Parties agreed before Supreme Court hearing that judges had discretion to hear matter. Source of discretionary power and conditions of its use were still live issues. Appeal allowed; cross-appeal dismissed. Judge had discretion in national class action, to hold hearing in conjunction with other judges in related class actions. Discretion could be used as long as court’s coercive powers were not necessary, and hearing was not contrary to law of governing jurisdiction. Class proceedings acts in both Ontario and B.C. gave judges power to sit outside of province. Relevant law gave judges inherent jurisdiction to control own processes. Video link was not requirement. Court was to be guided by principles, including whether sitting outside province would impinge on sovereignty of another province. Court was to take into accounts benefits and costs of out-of-province proceeding. Court was to determine whether terms such as video link or extraordinary costs were necessary.
Endean v. British Columbia (2016), 2016 CarswellBC 2891, 2016 CarswellBC 2892, 2016 SCC 42, 2016 CSC 42, McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J. (S.C.C.); reversed (2014), 2014 CarswellBC 363, 2014 BCCA 61, Saunders J.A., Tysoe J.A., and Goepel J.A. (B.C. C.A.). (S.C.C.); reversed (2015), 2015 CarswellOnt 3336, 2015 ONCA 158, R.G. Juriansz J.A., H.S. LaForme J.A., and P. Lauwers J.A. (Ont. C.A.).


Appeal

Summary conviction appeals

Appeal had no apparent merit

Accused was found in driver’s seat of vehicle from which steam or smoke was emanating, with her head down. Responding police officer detected strong odour of alcohol coming from accused as she walked away, as well as slurred speech and red and bloodshot eyes. Accused was convicted of impaired driving. Her appeal from conviction was dismissed. Accused applied for leave to appeal. Application dismissed. Leave should be granted sparingly in such circumstances. Appeal had no apparent merit. Trial judge’s factual finding that accused’s conduct created realistic risk of danger to persons or property was amply supported by evidence. Accused admitted that she entered her vehicle with intention of driving it. She drank alcohol while in driver’s seat, with keys in ignition and car turned on. Passer-by found her at wheel and unresponsive. Accused had not identified any error of law by summary conviction appeal judge.
R. v. Stacey (Jul. 6, 2016, Ont. C.A., Paul Rouleau J.A., C.W. Hourigan J.A., and G. Pardu J.A., C61653) Leave to appeal decision at 127 W.C.B. (2d) 536 was refused. 132 W.C.B. (2d) 580.

Debtor and Creditor

Fraudulent transactions

Claim to set aside transfer of land as fraudulent conveyance was dismissed

Plaintiffs obtained judgment against defendants. SM made payments subsequent to judgment. One of plaintiffs signed release with regard to debt owed. Plaintiffs asserted defendants represented that plaintiffs would be paid notwithstanding bankruptcy. Plaintiffs brought claim seeking to set aside transfer of land as fraudulent conveyance based on allegation that SM at time of transfer was indebted to plaintiff pursuant to unpaid judgment debt. Defendants asserted SM was released from any liability by assignment in bankruptcy and subsequent discharge from bankruptcy. Defendants asserted that SM acquired his interest in land after date of his discharge and transfer of land was made more than 10 years after his discharge from bankruptcy. Defendants brought motion for summary judgment to dismiss plaintiffs’ action. Motion granted. There was no genuine issue requiring trial. Defendants made out prima facie case . Claim was based on SM being indebted to plaintiffs at time of transfer in 2010, but at time of transfer SM was released from his obligation under judgment as result of discharge from bankruptcy. There was no basis on which to set aside transfer of lands made by SM 10 years after his discharge from bankruptcy and where he acquired lands three years after discharge from bankruptcy. Release and confirmation of financial settlement, and payment were sufficient to release SM from all further payments traceable to judgment, or any alleged agreement to pay judgment notwithstanding SM’s discharge from bankruptcy. Evidence failed to establish that plaintiff who did not sign release was aware of agreement to withhold filing proof of bankruptcy in exchange for promise by defendants to pay judgment. Failure of SM to list plaintiff as creditor when making assignment in bankruptcy had no effect on validity of SM’s discharge from bankruptcy. Pleadings could not be interpreted as basis of claim in contract or detrimental reliance arising out of alleged representations by defendants at time of SM’s assignment in bankruptcy.
Youssef v. Meddaoui (Aug. 31, 2016, Ont. S.C.J., Victor Mitrow J., 5261/11) 270 A.C.W.S. (3d) 770.


Contracts

Franchise agreements

Franchisor was not excused from statutory mandatory disclosure obligations

Franchisor provided franchisee with Franchise Disclosure Document (FDD) that indicated franchisor had “no reasonable means of estimating or predicting” costs of converting existing premises in lieu of building new premises. Franchisee and guarantors executed franchise agreement at time when location for franchise had not been determined, and franchisee later signed sublease before seeing head lease. Conversion costs ended up being in range of costs for building new premises, and franchisee and guarantors ultimately served notice of rescission. Franchisee and guarantors commenced action against franchisor and related companies for, among other things, declaration that franchise agreement was validly rescinded by them. Franchisee and guarantors brought motion for partial summary judgment relating to entitlement to rescind franchise agreement. Franchisor and related companies brought cross-motion for summary judgment dismissing claim of franchisee and guarantors in its entirety. Motion granted; cross-motion granted in part. Franchisor and related companies were not excused from their statutory mandatory disclosure obligations in s. 5 of Arthur Wishart Act (Franchise Disclosure), 2000 (Ont.) simply because location of proposed franchise was not identified before franchise agreement was signed. Form of lease included in FDD was materially incomplete, and FDD expressed uncertainty about costs. It was insufficient for franchisor to simply say that required material information was not known at time of disclosure, and plain words of Act did not allow for introduction of concepts of waiver or contracting out of disclosure obligations. It was premature to purport to deliver FDD under Act and enter into franchise agreement, and notice of rescission under s. 6(2) of Act was timely and effective since lack of disclosure was egregious. Peripheral claims were dismissed since franchisee and guarantors did not provide any focussed argument seeking to demonstrate that either of those claims had been proved or required trial.
Raibex Canada Ltd. v. ASWR Franchising Corp. (Sep. 7, 2016, Ont. S.C.J., W. Matheson J., CV-14-518145) 270 A.C.W.S. (3d) 752.


Taxation

Goods and Services Tax

Alternative method of valuation was not warranted in circumstances

Registrant operated restaurant with 60 seats in dining room and 66 seats on terrace, with liquor licence. Registrant’s accounting books submitted to Minister were incomplete and imprecise according to Minister, and Minister had to reconstitute total amount of supplies made by registrant using several indirect methods of verification for period in question. Analysis of various elements from registrant or its suppliers, such as bank deposits, purchases confirmed and reported, hours worker, placemats used, revealed significant deviation from sales reported in registrant’s accounting books. Minister considered sales of 3,228 meal receipts, from 50 randomly targeted days over period of 166 days. Total sales accounted from receipts amounted to $32,655.79. 1,676 of targeted foods from meal receipts generated a ratio of $19.48. Difference between declared sales and reconstructed sales was $488,631.67 for years 2007 to 2009. Minister therefore increased total amounts of targeted foods acquired by registrants by attributing $19.48 ratio for each of 2007, 2008, and 2009 fiscal years in determining reconstituted amount of taxable supplies. Registrant appealed. Appeal allowed. Alternative method of valuation was not warranted in circumstances, and was highly questionable. Despite alternative verification method, assessed amounts were reduced by 40 per cent demonstrating that glaring error were committed when checking. Penalties for gross negligence were also cancelled and no contribution for misappropriate of funds was issues by CRA against registrant. Both experts came to conclusion that valuation method led to bias and instability as assumptions that underlie ration estimation were not met. Valuation method was wrong given over-representation of Mondays and Tuesdays when only two meals rather than three meals were served on those particular days. Instead of resorting to indirect method of valuation, tax authorities should have first concluded, on reasonable grounds, that books, records, and supporting documents provided by registrant were not reliable or contained inaccuracies or significant deficiencies.
2741-2568 Québec Inc. c. R. (Sep. 22, 2016, T.C.C. [General Procedure], Réal Favreau J., 2011-3640(GST)G) 270 A.C.W.S. (3d) 891.


Industrial and Intellectual Property

Trademarks

Opposition Board rejected opposition to trademark application

Applicant opposed respondent’s trademark application. Trademarks Opposition Board rejected applicant’s opposition to trademark application by respondent. Board rejected assertion that respondent’s proposed mark was not distinctive. Applicant asserted that Board’s decision was unreasonable because evidence of multiple restaurants using marché or market as part of their name meant that mark could not reasonably be seen as distinctive. Applicant appealed. Application dismissed. Decision was justifiable, transparent, and intelligible, and fell within range of possible, acceptable outcomes that were defensible in respect of facts and law. Board’s decision was principally focused on whether applicant met its initial evidentiary burden to adduce sufficient admissible evidence from which it could reasonably be concluded that facts alleged to support each ground of opposition existed. It was open to and reasonable for Board to conclude that evidence offered by applicant was not sufficient to show that mark lacked distinctiveness such that it was incapable of functioning as source identifier for respondent’s services. Although Board interspersed its distinctiveness analysis with certain aspects of its descriptiveness analysis, it did not render its decision unreasonable when viewed as whole.
Richtree Market Restaurants Inc. v. Mövenpick Holding AG (Sep. 15, 2016, F.C., Keith M. Boswell J., T-1889-15) 270 A.C.W.S. (3d) 838.


Industrial and Intellectual Property

Patents

Owner was entitled to declaration that claims of patent were not invalid

Plaintiff patent owner BPA and licensee B Inc. owned patent for micronized, uncoated, and rapidly dissolving oral contraceptive pill with low hormone dose. Defendant generic drug companies C Co. and A Inc. sold oral contraceptive pills with similar characteristics. Owner brought action for declaration of infringement by C Co. and A Inc. and related relief. C Co. and A Inc. brought counterclaims for declarations that claims were invalid. Action allowed; counterclaims dismissed. Claims were valid and infringed by C Co. and A Inc.. Owner was entitled to declaration that three claims of patent were not invalid based on grounds of obviousness, anticipation, overbreadth, insufficiency or ambiguity of specification, or inutility. Owner was entitled to declaration that three claims of patent had been infringed, either directly or by inducing infringement, by A Inc. and C Co.’s sale, importation, offering for sale and manufacture of their oral contraceptive pills. Owner was entitled to order enjoining A Inc. and C Co. from manufacturing, using, and selling oral contraceptive tablets that infringed claims. Owner was entitled to order directing A Inc. and C Co. to deliver up or destroy under oath, all articles that would offend injunction. Issue of damages or accounting of profits was to be heard in second phase of trial.
Bayer Inc. v. Cobalt Pharmaceuticals Co. (Sep. 7, 2016, F.C., Simon Fothergill J., T-1379-13, T-1468-13, T-1368-14) 270 A.C.W.S. (3d) 837.


Contracts

Performance and breach

Appellant breached its level of service obligations

Respondent operated grain elevator facilities. Prior to construction of facilities parties entered into confidential contract. For several weeks respondent did not receive all of railcars that it ordered, and no car were delivered for six weeks to any of respondent’s facilities. Canadian Transportation Agency found appellant breached its level of service obligations to respondent for several weeks. Appellant appealed. Appeal dismissed. Agency did not err in its application of s. 113 to s. 116 of Canada Transportation Act. Agency did not err in concluding that appellant could not now complain that respondent’s orders were unreasonable because it agreed to supply number of cars ordered by respondent. Appellant was bound by agreement reached with respondent. Whether confidential contract was confidential contract for purposes of s. 113(4) of Act was not matter that could be appealed under Act. Agency’s interpretation of “Service Unit” as used in confidential contract was not extricable question of law and no appeal lay under Act from the Agency’s interpretation of term. There was no merit to respondent’s argument that it was denied procedural fairness.
Canadian National Railway v. Louis Dreyfus Commodities Canada Ltd. (Sep. 16, 2016, F.C.A., J.D. Denis Pelletier J.A., Wyman W. Webb J.A., and Yves de Montigny J.A., A-140-15) 270 A.C.W.S. (3d) 681.


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