Problems in Canadian Business Law

Pol/Soc Sci 3165 6.0A

Tuesdays, 2:30-5:30 pm

Simon Archersarcher@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 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 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)

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

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.

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 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

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? 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 (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?

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

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)

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.

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

Criminal appealsSUPREME COURT

OF CANADA

Provincial/TerritorialSupreme/SuperiorCourts of Appeal

Provincial/TerritorialSupreme/Superior Courts

Magistrate’s/Provincial/YouthCourts (Court of Sessions of

the Peace in Quebec)

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

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/TerritorialCourts of Appeal

Federal Court of Appeal

Federal Court, Trial Division

Tax Court

Provincial/TerritorialSupreme/Superior Courts

Divisional Court

Surrogate/Probate

Courts, etc.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.

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

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

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

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

Alternative Dispute Resolution Historically, “invented” by

businesses seeking to avoid lawyers Arbitration Mediation International arbitration Is this consistent with the

professional monopoly?

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

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

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

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 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

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?

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

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