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Case Law is a sample selection from the weekly summaries of notable unreported civil and criminal court decisions published in Law Times newspaper.

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Business Associations

Shareholders

Oppression claim was properly dismissed

R and M incorporated company but rarely complied with requirements of Canada Business Corporations Act. In May 2005, M resigned as officer and director of corporation. Corporation alleged M had also resigned as shareholder and accordingly transferred his shares to R. M applied for oppression remedy under s. 241 of Act, alleging he was still shareholder. Trial judge dismissed M’s claim, rejecting M’s version of events and finding that as of May 2005, M did not wish to be shareholder and asked to be removed. Court of Appeal dismissed M’s appeal. M appealed to Supreme Court of Canada. Appeal dismissed. Oppression claim was properly dismissed. Trial judge’s factual findings were not reviewable because no palpable and overriding error had been made. Fact that corporation fails to comply with requirements of Act does not, on its own, constitute oppression. M could have had no reasonable expectation of being treated as shareholder: he no longer was and expressly demanded not to be so treated. Corporation’s failure to observe corporate formalities in removing M as shareholder in accordance with his wishes could not be characterized as unfairly prejudicial to extent that omission deprived him of shareholder status.
Mennillo v. Intramodal inc (2016), 2016 CarswellQue 10615, 2016 CarswellQue 10616, 2016 SCC 51, 2016 CSC 51, McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J. (S.C.C.); affirmed (2014), 2014 CarswellQue 10625, 2014 QCCA 1515, Gagnon J.C.A., Vézina J.C.A., and St-Pierre J.C.A. (C.A. Que.).

Alternative Dispute Resolution

Question of law

Leave to appeal under arbitration legislation ought not to have been granted

Parties entered agreement by which petitioner, U Inc., leased fibre optic strands to BNS. By letter, BNS sought to exercise renewal option and requested that petitioner waive six months’ notice requirement. BNS did not include payment of $1.00 renewal fee. Petitioner later claimed that letter did not constitute valid exercise of option. Arbitrator found that BNS exercised option and that proposed modification of option was tendered only after making of new bilateral contract. Arbitrator found, in alternative, that if letter was not effective exercise of option, petitioner was estopped from relying on any defects in letter. Petitioner sought leave to appeal, and appealed. Leave was granted and appeal was allowed. Chambers judge found, in part, that arbitrator erred by failing to follow principle that qualified acceptance of offer constitutes counter-offer. Judge found, in part, that arbitrator erred by failing to accept parties’ agreement as to required consideration. Judge found, in part, that petitioner had no obligation to advise BNS that its purported exercise of option was defective. Judge ordered that award be amended to find that agreement required $1.00 as consideration for exercise of option; letter was qualified acceptance of option offer and was thus counter-offer extinguishing original offer; and, petitioner was not estopped from relying on defects in purported exercise of option. BNS appealed. Appeal was allowed, order was set aside, application for leave to appeal award was dismissed, and award was reinstated. Court of Appeal (C.A.) found that petitioner could not establish pure question of law arising from arbitrator’s interpretation of article of agreement and letter. C.A. found that threshold requirement for granting of leave to appeal under arbitration legislation was not met and leave to appeal ought not to have been granted. C.A. found that there was no consensus between parties on meaning of words in contractual documents. C.A. found that arbitrator had to determine true meaning of words in context and surrounding circumstances in which they were written. C.A. found that this engaged questions of mixed fact and law, which were not reviewable under statute provision. Petitioner appealed. Appeal dismissed. Court was of view that appeal should be dismissed substantially for reasons of C.A..
Urban Communications Inc v. BCNET Networking Society (2016), 2016 CarswellBC 3056, 2016 CarswellBC 3057, 2016 SCC 45, 2016 CSC 45, McLachlin C.J.C., Abella J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., Brown J., and Rowe J. (S.C.C.); affirmed (2015), 2015 CarswellBC 1785, 2015 BCCA 297, D. Smith J.A., Bennett J.A., and Willcock J.A. (B.C. C.A.).


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.).


Customs and Excise

Duty

Classification decision of Canadian International Trade Tribunal should be restored

Respondent importer sought to import hockey gloves. Canada Border Services Agency classified these items as “(g)loves, mittens (or) mitts” under tariff item No. 62.16 and not item No. 39.26, which applies to various types of sporting equipment. Canadian International Trade Tribunal (CITT) upheld determination. CITT found goods met terms of heading No. 62.16 and that presence of plastic components did not deprive them of their character as gloves of textile fabric. CITT found dual classification was not applicable. Importer brought application for judicial review. Federal court of appeal held that determination did not meet standard of reasonableness. It held that goods had dual nature and CITT had not properly applied relevant rule. Court of appeal referred matter back to CITT. Crown appealed. Appeal allowed. Court of appeal misapprehended structure of General Rules of Customs Tariff (Can.). It did not appreciate conjunctive nature of application of R. 1 and R. 2 to determination of headings under which good is prima facie classifiable. Rules 1 and 2 are not mutually exclusive classification rules. Rule 1 simply provides that classification must be done according to headings and relevant section and chapter notes. Rule 2 deems that certain references in headings include unfinished goods or goods composed of different materials. Where R. 2 applies, it informs content of headings by which R. 1 directs that appropriate classification is to be determined. CITT’s decision is reasonable if its reasons “allow reviewing court to understand why tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes”. Further, court of appeal erred in supposing that R. 2(b) can be applied to extend scope of heading to include particular good where no part of that good falls within heading. Good must be described in whole or in part by heading, even if it may ultimately not be classified under that heading because of its unfinished or composite nature, before R. 2 can be applied. This is consistent with process of reasoning applied by CITT to this case, and reasonableness of its decision is unassailable on this basis. CITT’s decision classifying gloves under heading 62.16 was reasonable. CITT neither misapplied General Rules, nor interpreted heading 39.26 and its Explanatory Note in unreasonable manner. Classification decision of CITT should be restored.
Canada (Attorney General) v. Igloo Vikski Inc. (Sep. 29, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J., 36258) Decision at 246 A.C.W.S. (3d) 594 was reversed. 270 A.C.W.S. (3d) 306.


Appeal

Procedure

Standard of review for interpretation of standard form contracts was correctness

Window cleaners improperly cleaning building windows, causing scratches and necessitating replacement of windows. Building owner and general contract entitled to claim cost of replacing windows against builders’ risk insurance policy. Trial judge finding insurers liable, determining that exclusion clause for “cost of making good faulty workmanship” applied against insurers. Court of Appeal reversing trial judge’s decision. Standard of review applicable to interpretation of standard form contracts was correctness.
Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. (Sep. 15, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Moldaver J., Karakatsanis J., Wagner J., Gascon J., Côté J., and Brown J., 36452) Decision at 251 A.C.W.S. (3d) 490 was reversed. 269 A.C.W.S. (3d) 753.


Agriculture

Assistance programmes

Quebec farm producers were not entitled to additional compensation 

Quebec farm producers contested decisions made by public body that administered program designed to protect them from income fluctuations. Producers particularly challenged calculation method chosen by public body. Producers argued program was contract of insurance and had to be interpreted on basis of their reasonable expectations as insured persons. Trial judge allowed their action, characterizing program as contract of insurance and ordering public body to pay them substantial additional compensation. Court of Appeal set aside that judgment, finding that program was not contract of insurance and that impugned decisions were reasonable. Producers appealed to Supreme Court of Canada. Appeal dismissed. Program in question could not be considered simply government program that was governed by public law. It had several features that justified considering it to be contract. However, program was not contract of insurance but simply innominate contract under the civil law. It could not be subject to rule of interpretation based on reasonable expectations of insured that applied to contract of insurance as defined in Civil Code of Québec. For purpose of determining compensation payable to its participants, program gave public body discretion to determine how to calculate any other income they have received from government sources. Public body exercised that discretion in accordance with requirements of good faith and contractual fairness. Therefore, producers were not entitled to amounts they claim. 

Ferme Vi-Ber inc. c. Financière agricole du Québec (July 29, 2016, S.C.C., McLachlin C.J.C., Abella J., Cromwell J., Karakatsanis J., Wagner J., Gascon J., and Côté J., 36205) Decision at 251 A.C.W.S. (3d) 370 was affirmed. 268 A.C.W.S. (3d) 9. 


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