Problems in Canadian Business Law

1. Problems in Canadian Business Law Pol/Soc Sci 3165 6.0A Tuesdays, 2:30-5:30 pm Simon Archer sarcher@torys.com

2. 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

3. Questions? • Questions about last class? • Clippings? • Talk more slowly? • Procendendo: a writ ordering an inferior court to re-hear a process (used after certiori)

4. 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 • Administrative law and regulatory state

5. 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

6. Constitutional cont’d • 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.

7. 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.

8. Division of powers • Federal (s. 91) • Criminal law, regulation of trade and commerce, taxation, banking, transportation, bankruptcy, patents, marriage, etc. • Provincial (s. 92) • Property and civil rights, most resources, most industries, municipalities, etc. • Courts • Some have “inherent jurisdiction” • Some have jurisdiction by statute • S. 96-101 Constitution Act, 1867

9. Economic regulation • 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.

10. 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

11. 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.

12. 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).

13. 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."

14. 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)).

15. Economic reg’n cont’d • The Court has set out five criteria valid exercise of the GRT power: • the legislation must be part of a general regulatory scheme; • it must be monitored by the continuing oversight of a regulatory agency; • it must be concerned with trade as a whole rather than with a particular industry; • the provinces jointly or severally are constitutionally incapable of enacting the legislation; and • the failure to include one or more provinces or localities would jeopardize the successful operation of the scheme in other parts of the country.

16. 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.

17. Charter • Supreme law of the land • Discuss in detail re: business associations • Key provisions • 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

18. Charter, con’t • Does Charter apply? (s. 32, interp’d byDolphinDelivery, 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.

19. 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?)

20. Who runs the courts? • 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?

21. Who runs the lawyers? • All licensed lawyers members of provincial “bar” or law society • (e.g., Law Society of Upper Canada) • Law societies created by statute, lawyers permitted to self-govern in “public interest” • 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?

22. Willes’ on function of courts • 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

23. Hierarchy of the courts • Courts of Original Jurisdiction • Trial courts, motions courts • Courts of Appeal • Leave to appeal, right of appeal • Affirm/Vary/Reverse • New Trial • In some circumstances, appeals to supra-national 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. anti-globalization)

24. The federal court system • Federal Courts • Supreme Court of Canada • Federal Court of Appeal • Federal Court Trial Division • Tax Court • Hear federal jurisdiction administrative law cases, e.g, tax, immigration, competition, etc.

25. Criminal court system • Criminal Code is federal, but administered jointly with provinces • 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 • Supreme Court of Canada • Provincial/Territorial Court of Appeal • Prov/Terr Supreme/Superior Court • Magistrate’s/Provincial/Youth Courts

26. 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)

27. Criminal procedure • Summary Conviction vs. Indictment • Preliminary Hearing • Information, Pleadings • Evidence • Examination in Chief/ Cross Examination • If jury, charge to jury • Judgment • Sentencing • See Anatomy of a Murder for example of dos and don’ts

28. A criminal lawyer?

29. 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

30. Civil appeals SUPREME COURT OF CANADA Provincial/Territorial Courts of Appeal Federal Court of Appeal Divisional Court  Provincial/Territorial Supreme/Superior Courts Federal Court, Trial Division . Surrogate/Probate ¯ Courts, etc. Tax Court Small Claims/Magistrate’s † Provincial Courts (limited right of appeal) * 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.

31. Civil procedure • Writ of Summons / Statement of Claim / Application to court • Statement of Defence (and Counter-claim) • Reply (and Defence to Counter-claim) • Demand for Particulars • Close of Pleadings • Notice of Trial / Jury Notice

32. Civil Procedure - continued • Mediation • Why mediate before discovery? • Examinations for 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

33. Civil Procedure – continued • Witnesses – Ordinary (“lay”) vs. Expert • Judgment • Usually reasons issues separately, months later • Appeal(s) • Affirm/Vary/Reverse/New Trial • Court Costs • Used to try and discourage frivolous litigation, and provide some relief to meritous litigants • Rule 49: making offers

34. Administrative Tribunals • Established by and under legislation • Boards / Commissions of experts • Regulatory matters • Less formal – sometimes • Labour tribunals • Recourse to courts • Appeal or judicial review • Permanent vs. Ad hoc

35. Alternative Dispute Resolution • Historically, “invented” by businesses seeking to avoid lawyers • Arbitration • Mediation • International arbitration • Is this consistent with the professional monopoly?

36. Administrative law • 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 • Ontario Municipal Board, Ontario Labour Relations Board, Immigration and Refugee Board, Ontario Securities Commission, Financial Services Commission of Ontario, etc. • Created by statute • Power defined in particular statute, and also in general statutes pertaining to tribunals • More than “law”?: issue rules, decisions, directives

37. Administrative law • Theory of tribunals • Certain areas that need regulation require expertise beyond competence of courts • Historical evidence judges not impartial (labour relations) • Members generally appointed by government and/or stakeholders • E.g., Labour Board has both union and management nominees • Sources of power • Enabling legislation (e.g., Securities Act) • Statutory Powers of Procedure Act • Permits general powers for tribunal to decide own procedure

38. Substantive law issues • 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

39. 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

40. 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

41. Procedure cont’d • Unfair or process? • But relative to decision made: some decisions do not require process • Decision is either • 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

42. Procedure cont’d • Scope of jurisdiction • To fight off courts, legislatures introduce exclusions clauses • Question becomes, what can a court review through “inherent jurisdiction”? • Scope of jurisdiction II: • Can tribunals interpret laws that are not part of their own expertise?

43. Some current trends • 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

44. 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?

45. Snowball 1 or Snowball 2?

46. Next class • Law of obligations part one: • Tort law • Tortious acts, tortfeasors, intentional and unintentional torts, elements of torts