Litigation 2019 Second Edition

Last Updated December 05, 2019

Canada

Law and Practice

Authors



Lax O'Sullivan Lisus Gottlieb LLP is Canada’s premier counsel firm, with 29 lawyers handling the most complex commercial disputes and public law cases. The firm has a robust trial, arbitration and appellate practice across the country and in the Supreme Court of Canada, and extensive experience in the most important litigation involving private and public businesses, financial institutions and regulatory bodies in Canada. The firm acts as counsel in major business disputes, administrative proceedings, infrastructure disputes, insolvency mandates, class actions and securities cases, as well as professional liability, public law issues, franchise and health law litigation. LOLG has unique experience in the intersection between public law and civil law matters, including a depth of knowledge and experience in judicial review proceedings. The firm is regularly engaged as trial and appellate counsel by peer law firms, and as court officers in large or sensitive litigation mandates.

Canada is a bi-jurisdictional legal system, with distinct legislative and regulatory authority conferred on the federal, provincial and territorial levels of government. Matters of private law are generally governed at the provincial level. The private law systems in all Canadian provinces have their foundations in English common law, with the exception of Quebec, where the private law system is grounded in the French civilian tradition with a civil code governing matters of contract, property and other private law relations. Both legal systems are subject to an overarching written constitution including the Canadian Charter of Rights and Freedoms, as well as unwritten constitutional conventions and principles derived from the English parliamentary tradition.

Canadian courts operate based on an adversarial system characterised by party-driven discovery and hearings. The adversarial hearings take the form of motions or applications and trials before a judge (both jury and non-jury). The legal process is conducted through both oral arguments and written submissions.

In general, the Canadian court system is divided into two classes of courts: the Superior Courts of general jurisdiction and courts of more limited jurisdiction. The latter are creatures of statute without original jurisdiction, and are therefore restricted in the subject matters they can hear.

Each province and territory in Canada has its own Superior Court, which is divided into two levels: a court of first instance that hears motions, applications and trials, and a Court of Appeal that hears appeals of judgments or rulings made at first instance. The Superior Courts are constituted under s. 96 of the Constitution Act, 1867, which grants the federal government exclusive authority to appoint the judges of these courts.

As courts of general jurisdiction, the provincial Superior Courts have jurisdiction over all matters of private or public law, unless a matter has been lawfully and specifically conferred to the jurisdiction of another court or administrative agency by statute. The Superior Courts hear civil and criminal matters (usually involving more serious criminal offences) in both jury and non-jury cases. They also hear judicial reviews of administrative actions involving administrative agencies within a province.

The inferior courts or courts of limited jurisdiction of each province are typically called “Provincial Courts”, and generally have jurisdiction over many criminal matters (except the most serious offences) and a narrow jurisdiction over civil matters, such as small claims and some family disputes. Judges of the Provincial Courts are appointed by the provincial governments.

At the federal level, there are several statutory courts with specific subject matter jurisdiction:

  • The Federal Court of Canada hears cases in several areas, including immigration, intellectual property, admiralty and maritime law, aboriginal law, and claims against the federal government. These areas of jurisdiction can be exclusive or concurrent with the Superior Courts, depending on the matter at issue. The Federal Court also has authority to hear judicial reviews of decisions made by federal boards, commissions and administrative tribunals.
  • The Tax Court of Canada deals with cases regarding federal tax issues involving both individuals and corporations.
  • Decisions of the Federal Court and Tax Court are appealable to the Federal Court of Appeal, which also hears appeals and judicial reviews from certain major tribunals, such as the Competition Tribunal, the Canadian Radio-television and Telecommunications Commission, and the National Energy Board.

The Supreme Court of Canada is the highest court in the country and the final court of appeals in the Canadian justice system. It is comprised of nine judges appointed by the federal government. The Supreme Court hears appeals from the provincial and territorial Courts of Appeal and the Federal Court of Appeal in cases involving issues of national importance.

Court proceedings in Canada, including filings and hearings, are generally open to the public.

In civil matters, parties can bring a motion or application to have filings made under seal, or can request protective orders prohibiting the dissemination of information relating to a proceeding. Sealing orders will typically be granted in cases where a party can demonstrate that the information contained in court documents is sensitive and confidential, and where the private interest in protecting the information also has a public component, such as upholding confidentiality agreements, ensuring the right to a fair hearing, or safeguarding the integrity of judicial proceedings.

In criminal cases, once a judicial authorisation such as a search warrant or production order is executed, the authorisation and the supporting documents must be made available to the public, unless a sealing order is obtained. A sealing order will be granted in situations where access to the information would subvert the ends of justice, or where the information would be put to an improper purpose.

Courts in Canada can also order publication bans prohibiting the public or media from disseminating certain details of a public proceeding, such as the names of individuals. These bans are often issued when the safety or reputation of a victim or witness may be compromised by having their identity published, or in the case of crimes involving minors or sexual offences.

Generally, parties to a legal proceeding in Canada are represented by lawyers licensed by the respective law societies of the province and territory in which they practise. Although the requirements differ from one province or territory to another, in order to be licensed a lawyer must have obtained a law degree from an accredited law school, passed the provincially/territorially-administered bar examination, and be formally admitted as a member of the provincial or territorial bar or law society.

The law societies of the various provinces and territories have entered into national mobility agreements that allow their members to practise on a temporary basis in a province/territory in which they are not a member of the bar, or to transfer with relative ease between jurisdictions. As a result, lawyers in one province or territory can appear in court in another province/territory to represent a client.

Lawyers from other countries that have not been admitted to the bar of a Canadian province/territory cannot represent a party in litigation. In some cases, a foreign-trained lawyer may apply for a permit to become a foreign legal consultant, which would allow him or her to give legal advice in relation to the law of a foreign jurisdiction.

Third party litigation funding (“TPLF”) is generally permitted in Canada, but the terms on which such funding is permissible vary from province to province or territory. TPLF is not yet regulated in Canada by statute. Therefore, provincial restrictions are a function of judicial treatment and, in particular, the principles governing the torts of champerty and maintenance. TPLF is not considered to be maintenance or champertous per se, but judges will carefully analyse the circumstances of the financial arrangement and its terms to determine whether the TPLF in question is impermissible. In Ontario, for example, it is impermissible for a third-party funder to “stir up” litigation, take control of the litigation, or seek an over-allocation of potential recovery.

Litigation funding in Canada has principally been used in class proceedings and personal injury cases. In the class action context, TPLF often takes the form of indemnity agreements (for example, to cover adverse costs awards), with modest or no money advanced by the funder. These agreements are typically structured as an investment, with a return calculated as a percentage of a settlement or judgment if obtained. In the personal injury context, TPLF is typically structured as a loan.

The most common types of lawsuits available for TPLF are class action litigation and personal injury cases. There are no provincial, territorial or federal restrictions as to the types of cases that are available for TPLF.

TPLF is available to both plaintiffs and defendants, although the majority of TPLF is provided to plaintiffs.

There is no set or required minimum or maximum amount that a third-party funder will fund.

A TPLF funder will consider funding the entire case, from the lawyer’s fees to disbursements, such as filing fees and expert witness fees.

In Canada, contingency fee arrangements were historically impermissible as being champertous. However, they are now permitted in every Canadian province/territory and are commonplace. A contingency fee arrangement allows a client to forgo paying legal fees upfront; instead, a client will pay fees if a settlement or favourable judgment is obtained. Counsel will typically be entitled to a percentage of the settlement or favourable judgment. Contingency fee arrangements are common in class proceedings, personal injury cases and tort claims, but are impermissible in criminal and family matters.

Canadian provinces/territories place different restrictions on contingency fees. In Manitoba, a client can request a fairness review of arrangement within the first six months of the agreement. In Nova Scotia, contingency fees must be “fair and reasonable”. In Ontario, a “fair and reasonable” test also applies, having regard to many factors. The appropriate percentage or other basis of the contingency fee will depend on the likelihood of success, the nature and complexity of the claim, the expense and risk of pursuing the claim, the amount of the expected recovery, who is to receive an award of costs, and the amount of costs awarded.

There are no time limits on when a party to the litigation should obtain TPLF. It is not uncommon for TPLF to come into play later in a case when funding is needed, or when the merits of the case are clearer. However, sophisticated funders may wish to be involved in a case from the outset.

Generally speaking, a potential plaintiff is not required to send a demand letter or a pre-suit notice letter prior to bringing an action. However, there are certain types of actions or defendants for which notice will be required. For instance, in various provinces, lawsuits against a city, municipality or provincial government for injuries suffered on a public road, highway or other public property are subject to short notice periods that can vary from ten to 30 days. Likewise, lawsuits for defamation (including libel and slander) typically require the party alleging the defamatory conduct to serve a notice of libel prior to the issuance of a formal statement of claim against the defendant. Depending on the statutes at issue, there may also be shortened timelines for the filing of legal proceedings. In certain situations, the failure to meet such timelines can constitute a bar to a claim. In other cases, courts will have discretion to relieve a defendant of strict compliance with the prescribed timelines.

Typically, potential defendants are not required to respond to a demand letter or a pre-suit notice letter. However, the failure to do so may be a factor in the court’s assessment of whether and to what extent a plaintiff is entitled to costs if the plaintiff is ultimately successful in the action.

Statutes of limitations in Canada differ from province to province or territory. As a general rule, they range from two years to six years for civil claims. Provinces and territories have enacted different rules on when a limitation period begins to run. In general, the limitation period commences from the day the plaintiff suffered the loss or injury giving rise to a claim, or the day the plaintiff became aware of material facts supporting the claim or should have become aware of such facts with the exercise of reasonable due diligence.

In certain contexts, the running of a limitation period may be suspended temporarily while the parties are engaged in settlement discussions. Parties can also enter into tolling agreements by which they agree to suspend the running of a limitation period.

The applicable limitation period may also depend on the identities of the parties or the nature of the claim. For example, where a plaintiff is a minor or under a disability, the limitation period may not begin to run until after that person reaches the age of majority or is represented by a litigation guardian. Likewise, claims in relation to real property (ie, claims relating to land or an interest in land) may be subject to different limitation periods than other civil claims.

Several provinces/territories have an “ultimate limitation period”, which has the effect of extinguishing claims a specified number of years after the act or omission that gave rise to the claim occurred (typically between ten and 30 years), regardless of whether the claim has been discovered or was discoverable by the plaintiff.

When a plaintiff wishes to file suit in Canada, the court must be satisfied that it has jurisdiction over the matter. Jurisdiction is generally determined using a “real and substantial connection” test, under which certain factors presumptively establish a real and substantial connection between the action and the province/territory, effectively allowing the court to exercise jurisdiction. These include the fact that the defendant is domiciled or resident in the province/territory, the defendant carries on business in the province/territory, a tort was committed in the province/territory, or a contract connected with the dispute was made in the province/territory. Other presumptive factors may also apply to a particular dispute, and the list of factors is non-exhaustive.

The presumption of jurisdiction may be rebutted by the defendant. For example, a defendant may establish that, although a contract between the parties was concluded in the province/territory, the contract does not in fact relate to the subject matter of the litigation.

Some provinces, such as British Columbia and Nova Scotia, have legislated rules on the jurisdictional competence of their courts. These statutes set out the circumstances in which defendants can be subject to suit in the province and, to a large extent, incorporate and codify the real and substantial connection concept.

Most proceedings in Canada are commenced by way of a statement of claim or notice of civil claim. The purpose of the claim is to set out the relief sought by the plaintiff and to provide a concise summary of the material facts and allegations relied upon in support of the plaintiff’s claim, as well as the specific relief sought. The Supreme Court of Canada has held that the allegations in the claim must state sufficient material facts that, if accepted as true, would support a cause of action at law. The failure to state a cause of action can result in a claim being dismissed.

The rules on amending claims differ across provinces/territories. The parties may consent to amendments, in which case the court will grant them as a matter of course. If the amendments are contested, a court will generally grant a plaintiff permission to amend a claim, unless prejudice would result for the defendant. The prejudice in question must be significant and of such a nature that it cannot be compensated for by the payment of costs or an adjournment.

Several provinces/territories also have other procedural vehicles to start a lawsuit, such as applications or petitions. These procedures generally allow for a more expedited approach to litigation but are only available in certain types of cases – for instance, where there are limited facts in dispute or where a dispute turns primarily on a legal interpretation of a statute or contract.

Service in Canadian jurisdictions is the responsibility of the plaintiff, with the specific rules varying from province to province/territory. In general, a statement of claim or notice of civil claim must be served personally on an individual defendant by physically handing him or her a copy of the claim. There are also instances where an alternative to personal service will be effective. For example, a plaintiff may leave a copy of the claim at the defendant’s place of residence with anyone who appears to be an adult member of the same household and then mail a copy to the same address.

In the case of a corporate defendant, the claim must typically be served by leaving a copy with an officer, director or another person authorised to act on behalf of the corporation, or with a person at a place of business of the corporation who appears to be in control or management of that place. Alternatives may also apply where personal service is not possible.

If a defendant is avoiding service or if there are other circumstances which justify it, courts may grant an order for substituted service that dispenses with the usual requirements. Provinces/territories may also have rules on how long a party can wait to effect service after a claim has been issued and filed with the court. If a party fails to comply with such time requirements, it will typically have to seek permission from the court to extend the period for service.

A party outside of Canada may be sued in Canada. In such cases, service must be effected in a manner permitted by the jurisdiction in which the defendant is located. Canada is a party to the Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil or Commercial Matters, which sets out the channels for the international transmission and service of documents for signatory countries. The Hague Convention and the applicable rules in a foreign country should be consulted in determining what the service requirements are for an international defendant.

The failure of a defendant to respond to a lawsuit will typically entitle the plaintiff to seek default judgment. The procedure for obtaining default judgment varies and will often depend on the type of claim at issue. In cases involving a claim for a liquidated sum (such as the collection of a debt), default judgment may be sought directly from the registrar or court clerk who acts in an administrative capacity at the court office rather than in a formal hearing before a judge. In other situations (for example, where damages must be assessed), the plaintiff may be required to bring a motion before a judge to obtain judgment and an assessment of damages. Such a motion can be heard orally or in writing. A plaintiff may also seek and obtain an order as to legal costs as part of a default judgment.

A defendant may bring a motion to set aside a default judgment. The factors that a court will consider in assessing whether to set aside a default judgment include: (i) whether the motion was made as soon as possible after the defendant became aware of the judgment; (ii) whether there is a plausible explanation for the defendant’s default; and (iii) whether the defendant has an arguable defence on the merits. Where a defendant has not been properly served, this will be a standalone basis for setting aside the default judgment.

Class actions are permitted in jurisdictions across Canada, although certain provinces (such as Ontario) will have a disproportionate share of such proceedings. The substantive and procedural rules governing class actions are determined at the provincial/territorial level, and are usually commenced in the provincial Superior Courts. Cases that involve a national class comprising residents from across Canada can be advanced in a single province or territory. However, it is also frequent for plaintiff’s counsel to advance parallel claims in different provinces and territories across the country. This will result in co-ordination issues that have to be dealt with on a case-by-case basis.

In order to proceed with a class action, a representative plaintiff must have the action certified by the court. The test on certification (called “authorisation” in Quebec) typically involves the following elements:

  • the pleadings must disclose a cause of action;
  • there must be an identifiable class of two or more persons who would be represented;
  • the claims of the class members must raise common issues;
  • a class proceeding must be the preferable procedure for resolving common issues; and
  • the court must be satisfied that the representative plaintiff will fairly and adequately represent the interests of the class, has a workable plan for the proceeding, and does not have interests that are in conflict with other class members.

The moving party bears the burden to prove the elements are met. However, the standard of proof at the certification stage is low. To successfully resist the first requirement, a defendant must argue that it is “plain and obvious” that the facts pleaded do not disclose a cause of action. For the remaining requirements, the plaintiff must show “some basis in fact” to establish that the requirements are met. This standard is lower than the usual balance of probabilities standard.

Because class actions are pleaded for all affected members of the class, an individual must opt out if they want to independently pursue their claim.

In general, lawyers in Canada are not required to provide potential clients with a cost estimate relating to the conduct of a litigation matter. However, lawyers have ethical obligations to ensure full and frank dialogue with the client regarding all matters concerning their retainer, including costs and the risks associated with a particular claim.

In Canada, parties can make various interim or interlocutory motions or applications in the course of a proceeding. Some motions or applications will allow a party to obtain substantive remedies. For example, the Superior Courts have broad jurisdiction to grant injunctive relief restraining a party from engaging in certain types of conduct or activities. Injunctions will be granted where a moving party can demonstrate a serious issue to be tried on the merits, the likelihood of irreparable harm if the injunction is not granted, and that the balance of convenience favours the moving party's position. Injunctive relief may include Mareva orders restraining parties from dealing with assets or Anton Piller orders allowing a party to execute a civil search warrant for the purpose of preserving documents at risk of destruction. Where a dispute involves an interest in real property, a party can seek to have a certificate of pending litigation registered against the property in order to protect his or her rights in advance of a determination on the merits.

Parties may also bring motions or applications of a more procedural nature throughout the course of a litigation. These include motions or applications to strike pleadings that do not meet the necessary pleading requirements; to seek relief relating to disclosure of documents or other discovery-related matters; to seal documents or protect information from public disclosure; to deal with matters of privilege; to obtain directions from the court; to request case management; and many other matters that may arise relating to the conduct of the litigation.

Parties can move or apply for early judgment on the merits on some or all of the issues in dispute. This is typically done by way of a summary judgment motion or application.

The procedures vary across the country. In most provinces/territories, the evidentiary record on a summary judgment motion consists of affidavit evidence that is subject to out-of-court cross-examinations, expert reports (if necessary), and written arguments. The test for summary judgment calls on the court to assess and determine whether there is a genuine issue requiring trial. If such an issue does exist, then summary judgment should generally not be granted and the parties will have to proceed to trial.

The approach to summary judgment differs from province to province and territory to territory. For instance, in Ontario, judges have expanded powers to weigh evidence, draw inferences, and evaluate credibility on summary judgment motions. Judges may also order certain evidence to be heard viva voce if it is necessary for a just determination on the merits. By contrast, in British Columbia, the existence of a summary trial procedure has confined summary judgment motions to those cases where evidence need not be weighed, inferences need not be drawn, and there is no credibility dispute. Viva voce evidence is not permissible on a summary judgment application in British Columbia.

In most provinces, courts are reluctant to give partial summary judgment – ie, where the motion or application would not dispose of the entire claim but only part of it. Whether partial summary judgment is suitable will frequently turn on whether the issue can be cleanly severed from the rest of the dispute to avoid the risk of inconsistent findings of fact and whether partial judgment promotes the efficient and expeditious resolution of the litigation.

In addition to the availability of summary judgment, parties may seek to strike a pleading or claim on the basis that it is redundant, irrelevant, scandalous or vexatious, or does not disclose a reasonable cause of action. Unlike summary judgment motions, pleading motions proceed without any evidence and can apply to part or the whole of a claim. Where a party seeks dismissal on the basis that a claim does not disclose a cause of action, the court must accept the allegations pleaded as true and then determine if the pleading is sufficient. If a motion to strike a pleading is successful, it can sometimes result in a full dismissal of an action, effectively resulting in early judgment.

Defendants or respondents can bring the following dispositive motions before trial:

  • a motion for summary judgment (as described in 4.2 Early Judgment Applications);
  • a motion seeking dismissal of an action based on insufficient pleadings – eg, where the claim as pleaded does not disclose a reasonable cause of action (as described in 4.2 Early Judgment Applications);
  • a motion seeking dismissal of an action on the basis that the court does not have subject-matter jurisdiction over the claim;
  • a motion seeking dismissal of an action on the basis that the court does not have territorial jurisdiction over the claim; and
  • a motion seeking dismissal on the basis that the province where the claim was commenced is an improper venue (commonly known as a forum non conveniens).

A court can grant a motion to dismiss in full, dismissing the entire complaint, or to grant it in part, dismissing some but not all of the claims.

Provincial/territorial and federal statutes or regulations may provide for categories of interested persons that must be given notice of or joined to certain types of proceedings, most commonly in constitutional matters, estate matters or disputes regarding real property. These rules are principally designed to ensure that all parties affected by a judgment have participatory rights in the proceeding. The procedural rules in a province may also provide for joinder of separate actions with overlapping sets of parties where the claims at issue arise from the same transaction or series of events.

In addition, the rules of court in many provinces/territories allow for parties that are neither plaintiffs nor defendants to intervene in court proceedings. In order to intervene, a party must typically show that it has an interest in the outcome of the proceedings and that it will present a unique perspective to the court that differs from that of the other parties. The participatory rights of interveners will often be more limited than those of a plaintiff or defendant.

In certain cases, a defendant may ask for an order that the plaintiff gives security for costs of the proceeding. For example, the rules in Ontario set out several circumstances in which a defendant may bring a motion for security for costs, including where:

  • the plaintiff is ordinarily resident outside the province;
  • the plaintiff has another proceeding for the same relief pending in the province or elsewhere;
  • the defendant has an order against the plaintiff for costs in the same or another proceeding that remains unpaid in whole or in part;
  • the plaintiff is a corporation or a nominal plaintiff and there is good reason to believe that the plaintiff has insufficient assets to pay the costs of the defendant;
  • there is good reason to believe that the action is frivolous and vexatious, and that the plaintiff or applicant has insufficient assets in the province to pay the costs of the defendant; or
  • a statute entitles the defendant to security for costs.

If a defendant fits within one of the listed categories, the court must exercise its discretion to determine whether to grant security, having regard to the merits of the claim, the plaintiff’s financial circumstances and the possible effect of such an order on the litigation. Orders for security for costs are more commonly made against corporate rather than individual plaintiffs.

Many provinces/territories are reluctant to grant an order for security for costs against individual plaintiffs, unless there are special circumstances to justify such an order, such as a history of fraud or efforts to frustrate legitimate claims. A plaintiff will be able to resist a motion for security for costs if it is able to show that it has sufficient assets in the province, or that it is impecunious and that an injustice would result if it were not allowed to proceed with its claim.

The amount of security awarded will vary significantly between provinces. Some provincial/territorial cost regimes permit a significant percentage recovery of legal fees, whereas others allow for less recovery. Thus, the security can differ widely from claim to claim and from province to province or territory.

Costs regimes are quite different from one province/territory to another. In Ontario, costs for interim or interlocutory motions are generally payable forthwith to the successful party. However, judges retain a broad discretion to make various types of costs orders, depending on the outcome of a motion. For example, where success is divided on a motion, the court may make no order as to costs, nor order that each party bear their own costs. In some cases, a judge may order that costs are payable “in the cause”, meaning that the costs of the motion will be awarded to the party who is ultimately successful in the litigation or that the determination about costs will be reserved to the discretion of the trial judge.

In other provinces, by contrast (eg, in British Columbia), the costs for interim or interlocutory applications will usually follow the event. In other words, costs awarded on an application are not generally payable forthwith, but rather upon the conclusion of the proceeding. Several potential orders are available. The court may order the costs to be paid in the cause, that each party pays its own costs, or that costs be reserved to the trial judge.

The quantum of costs that a party will be able to recover also ranges widely across provinces and territories. In certain provinces, a party will be entitled to claim a substantial percentage of its fees (40-60% in the normal course and 70-100% in exceptional cases). In other provinces/territories, costs are awarded based on a “tariff” system that sets out a specific sum to be given for certain tasks. In provinces with tariff regimes, the costs payable to the successful party tend to be substantially lower than in provinces operating on a percentage-based system.

Timeframes for the hearing of applications or motions vary across provinces/territories. Timelines will also be affected by a number of factors, including the length of an application or motion, whether it is to be heard by a judge or master (ie, a junior judge with more limited powers), and the urgency of the matter.

Generally speaking, hearing dates for shorter motions or applications tend to be available in a shorter timeframe than for long motions (requiring a day or more of court time). In Ontario, for instance, short motions heard before either a judge or master are typically scheduled within one or two months, while a long motion brought in the normal course may take anywhere from three to six months to be heard. In British Columbia, hearing dates are typically available within two to three months of booking.

Every province/territory provides a procedure for urgent applications or motions. The procedures for booking an urgent hearing date are very different from one province/territory to another and, in many instances, from one region to another within a province or territory.

Discovery is generally available in civil cases across Canada. The specific rules and procedures differ from one province/territory to another, but the general outlines are the same.

The discovery process has two components: document exchange and oral discovery (referred to as “examinations for discovery”). In order to be subject to discovery, the information sought must be relevant to a material fact or issue in dispute. The scope of relevance will be determined by the pleadings.

In most provinces and territories, each party to a litigation has a duty to conduct a diligent search for and to produce all records or documents in their possession or control that are relevant to the issues in the action. Each party must normally swear an affidavit listing the relevant records or documents that have been collected. If a party believes that an opposing party has failed to make proper disclosure, he or she may bring a motion to seek and obtain further disclosure.

In terms of oral discovery, a party has the right to examine for discovery any opposing party. In the case of corporate defendants, a party may only examine one representative of the opposing party. A discovery representative has an obligation to make efforts to inform him or herself of the facts at issue in the litigation, including the knowledge and information of other individuals. Additional persons may be examined, but only with the permission of the court.

Examinations for discovery may be conducted in person or in writing (although written examinations tend to be rare). A witness on an examination may also be asked to give “undertakings” to provide, at a later date, answers to relevant questions asked during the examination, or copies of relevant records and documents that have not already been produced.

After oral discoveries, parties may seek to have the court determine disputes relating to the questions asked on an examination – for example, where questions have been improperly refused or undertakings have not been answered. This is generally called a “refusals motion or application”.

Costs of the discovery process are restrained by the applicable rules and the overriding principle of proportionality. For instance, examinations for discovery are usually time-limited by the rules in each province/territory. If a party wishes to examine for longer than the rules allow, leave of the court must be sought. Courts may also refuse to order the disclosure or production of relevant records or documents if the request is determined to be disproportionate.

In order to examine or seek documentary disclosure from a non-party in Canada, litigants must obtain permission from the court by way of a motion or application. In particular, the party must demonstrate that a non-party’s evidence is sufficiently relevant to a material issue in the action, that information cannot be obtained from elsewhere, that it would be unfair to require the party to go to trial without the information, and that the non-party discovery will not result in undue delay or unreasonable expense.

See 5.1 Discovery and Civil Cases.

This section is not applicable in Canada.

All jurisdictions in Canada recognise the concepts of solicitor-client privilege and litigation (or work product) privilege.

Solicitor-client privilege attaches to communications between a lawyer and client which entail the giving or receiving of legal advice and which are intended to be confidential between the parties. Communications relating to the provision of legal advice by in-house counsel qualify for the privilege as well. However, where in-house counsel has both legal and non-legal responsibilities, each situation must be assessed on a case-by-case basis to determine whether the privilege applies. Only legal advice is covered, not business advice. If a lawyer is acting as a business counsellor or in some other non-legal capacity, the communications will not be privileged.

The Supreme Court of Canada has held that solicitor-client privilege is a principle of fundamental justice and a civil right of supreme importance. As such, it is protected and must remain as absolute as possible. The circumstances in which the privilege can be abrogated are thus very limited – for example, where the innocence of a criminal defendant can only be proven by way of privileged information.

Litigation privilege is a narrower concept than solicitor-client privilege. Its purpose is to create a “zone of privacy” in relation to pending or contemplated litigation so that litigants can develop their contending positions in private without interference or premature disclosure. It applies to communications or documents where (i) current litigation or a reasonable contemplation of litigation existed at the time of the communication or creation of the document; (ii) the dominant purpose for the communication or creation of the document must have been its intended use in actual or reasonably contemplated litigation; (iii) the communication or document must be confidential; and (iv) there must not be any waiver of confidentiality.

Litigation privilege does not require the involvement of a lawyer; a communication or document created for the dominant purpose of preparing for litigation will attract the privilege, regardless of whether or not a lawyer was involved. Therefore, the work product of external lawyers, in-house counsel and even non-lawyers can be protected. The privilege may be lost, however, if a document is shared with parties not involved in its creation. Unlike solicitor-client privilege, which is permanent, litigation privilege is time-limited: it ends when the litigation is complete, including all closely related proceedings. In certain contexts, litigation privilege can be limited by statute, but only with clear, explicit and unequivocal language.

Other than non-disclosure for legal privilege, the circumstances in which parties can avoid the disclosure of documents or redacted information in a document are fairly limited. For example, certain statutes may require the redaction of personal information, such as private medical or health information. There are also situations in which a party may request a protective order to prevent the disclosure of confidential or sensitive business information.

Certain types of communications may also be subject to a case-by-case privilege, depending on the context and the nature of the relationship. This may include communications between spouses or between medical professionals and their patients.

Canada’s provincial courts and its federal court may grant injunctions to preserve or restore rights pending trial. However, injunctive relief is available only when it is truly necessary to ensure that a party is not deprived of his or her legal rights.

Courts can grant injunctions on an interlocutory basis pending trial, or on a permanent basis. Canadian courts can also grant quia timet injunctions, which are sought prior to the occurrence of harm. Quia timet injunctions are rare and will only be granted if the applicant demonstrates a high probability of imminent harm.

The test for obtaining an interlocutory injunctive relief differs slightly if the injunction is prohibitive or mandatory. A prohibitive injunction prevents conduct, whereas a mandatory injunction compels positive action.

To obtain an interlocutory prohibitive injunction, the applicant or moving party must first show that its underlying proceeding either shows a strong prima facie case – meaning that it is likely to succeed at trial – or else raises a serious issue for trial. The level of scrutiny at this stage varies with the type of injunction; the strong prima facie case test is typically reserved for injunctions seeking a freezing of assets, injunctions that would effectively determine the case (ie, restraining protesters), and injunctions that would result in a restraint of trade. The strong prima facie standard also applies to mandatory injunctions. In any case, the applicant must also show that it would suffer irreparable harm without the injunction, and that the balance of convenience favours granting the injunction.

To obtain final or permanent injunctive relief, an applicant is required to establish the following:

  • its legal rights;
  • that damages are an inadequate remedy; and
  • that there is no impediment to the court's discretion to grant an injunction.

The applicant must also satisfy the court that a permanent injunction is an appropriate remedy. Irreparable harm and balance of convenience are not, per se, relevant to the granting of a final injunction, though a court may consider some of the evidence that it would use to evaluate those issues on an interlocutory injunction application in evaluating whether it ought to exercise its discretion to grant final injunctive relief.

Common injunctions include those prohibiting conduct contrary to a contract; those prohibiting trespass or occupation of land; those prohibiting use of confidential information; those reinstating employment; and those freezing assets, known as a Mareva injunction. Though brought at the interlocutory stage or earlier, a Mareva injunction generally requires the applicant to establish a strong prima facie case rather than a triable issue, and to show a real risk that the defendant will remove or dissipate assets to avoid judgment.

In urgent circumstances, courts will grant interim injunctions that preserve the status quo until the court can hear the interlocutory or permanent injunction. Each jurisdiction has practice directions and guidelines regarding procedures for obtaining urgent relief. However, in general, an interim injunction still requires a court attendance, which counsel can usually schedule on very short notice, and preliminary satisfaction of the criteria set out under 6.1 Circumstances of Injunctive Relief. The moving party must also demonstrate that an interim order is the only avenue available to prevent the harm from occurring.

In general, a court will only grant an ex parte injunction where there is good reason to believe that, if given notice, the defendant will frustrate the process of justice before the motion can be determined, or where the matter is so urgent that there is insufficient time to provide notice.

On a motion brought without notice, the applicant must make full and fair disclosure of all material facts, including those that are unfavourable to the applicant. Failure to make fulsome disclosure is itself a ground for vacating an ex parte injunction. A party who obtains an ex parte injunction may also face significant costs consequences for failing to make full disclosure, or where the claimed urgency is later shown to be lacking.

Ex parte injunctions are time limited. The applicant is required to bring the injunction order to the attention of affected parties, who are entitled to present their case for setting aside the ex parte order. Some provincial rules require the applicant to renew an injunction granted ex parte within a specified period (between ten and 14 days depending on the court/province) and to bring the renewal motion on notice, unless there are exceptional circumstances, or where it appears the responding party is evading service.

An applicant who obtains an injunction that is later vacated is liable for damages the respondent suffered because of the injunction. An applicant seeking an injunction must provide an undertaking for damages as a condition of the court granting the injunction, subject to a contrary order of the court.

Canadian courts can grant injunctions against a respondent’s worldwide assets and will do so, depending on the subject matter. Courts are sometimes reluctant to grant a worldwide injunction on account of comity and enforceability concerns.

Courts will grant injunctions against non-parties where necessary – for example, to prevent those who have come into possession of confidential information from sharing it. Knowledge of an injunction is sufficient to raise an obligation to comply with it.

A court can make a contempt finding against a party that fails to comply with the terms of an injunction, as it can with any court order. Penalties for contempt can include the payment of fines, or imprisonment for a specified time or until the contempt is purged.

Trials in Canada are conducted through live oral evidence from lay and expert witnesses. In some circumstances (often in the interest of efficiency), courts will order a party’s own evidence (evidence in chief) to be tendered by way of affidavit, followed by live cross-examination.

The progress of a typical action will involve multiple motions related to the production of documents, the scope of oral discovery, the exclusion of evidence, evidence of non-parties and the summary disposition of some or all of a dispute. In fact, despite the increasing reluctance of courts to grant summary dismissal of civil actions, only a small percentage (less than 10%) of civil cases make it to trial. Most civil actions are resolved early, either through settlement or through a summary dismissal motion.

The availability of jury trials in civil matters varies by province and territory. For example, Quebec does not permit civil jury trials and some jurisdictions allow them only for specific claims, such as defamation and false imprisonment.

Where civil jury trials are permitted, a jury notice issued by one party can still be struck if the subject matter is found to be too complex for lay persons, but courts are loathe to deprive litigants of their right to a trial by jury. Practically speaking, jury trials are rare in civil cases, apart from personal injury claims.

The admissibility of evidence is subject to provincial and federal evidence legislation, as well as the common law in Canada’s provinces and territories (other than Quebec).

At common law, all evidence relevant to an issue in a proceeding is admissible unless it is the subject of an exclusionary rule (such as those pertaining to privilege) or is hearsay (an out-of-court statement tendered for the truth of its contents). Courts may still admit hearsay evidence if it falls into one of the recognised exceptions to hearsay or is otherwise sufficiently necessary and reliable. At the same time, courts can exclude relevant and material evidence if its prejudicial effect would outweigh its probative value.

An important consideration in commercial cases is the provisions of provincial and federal evidence statutes dealing with business records. Under the “business records exception” to the law of hearsay, any writing or record of any act of transaction is admissible as evidence of that act or transaction if it is made in the ordinary course of business.

Opinion evidence is generally inadmissible unless it is tendered by a person recognised by the court as having sufficient expertise to give that opinion. Expert opinion evidence is discussed under 7.5 Expert Testimony.

Expert evidence is permitted at trial and is often necessary to prove a claim. Expert evidence is tendered by the parties and is not sought by the court of its own volition.

Pursuant to the Supreme Court of Canada decision in R. v Mohan [1992] 2 S.C.R. 9, the admission of expert evidence depends on the application of the following criteria:

  • relevance;
  • necessity in assisting the trier of fact;
  • the absence of any exclusionary rule; and
  • a properly qualified expert.

The trial judge performs a gatekeeper function regarding the admissibility of expert evidence. In practice, many courts in non-jury trials lean towards admitting expert evidence and letting any frailties in that evidence go to how heavily the court later weighs it in rendering judgment.

Canadian courts favour the “open courts” principle – that confidence in the justice system requires court proceedings to be accessible to the public. Hearings are therefore presumptively open to the public, and orders excluding the public or sealing records are rare.

Pursuant to the Supreme Court of Canada’s decision in Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, courts must ensure that they exercise their discretion to grant a confidentiality order in accordance with the principles of the Charter of Rights and Freedoms, and specifically the Charter right to freedom of expression. Courts should only make a confidentiality order when:

  • such an order is necessary to prevent a serious risk to an important interest, including a commercial interest, because reasonably alternative measures will not prevent the risk; and
  • the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

The level of judicial intervention varies by jurisdiction and judge. By convention, judges typically reserve questions for a witness to the end of the witness’ testimony, following which the judge will give counsel leave to ask questions flowing from the judge’s question. However, some judges are less constrained and will interrupt witness testimony to ask questions of their own.

In jury trials, judges are more circumspect and are less likely to engage at all with witnesses.

In jury trials, judges discuss legal issues and objections regarding evidence with counsel in the absence of witnesses and the jury. In trials decided by a judge alone, the judge will discuss legal issues and objections regarding evidence with counsel in the absence of witnesses.

The time from commencement of a civil proceeding to its trial judgment varies by jurisdiction. However, it is rare for a commercial dispute to proceed through trial in less than two years. Depending on the volume of pre-trial motions, the expected length of the trial and court availability, a period of five years from the commencement of a proceeding to a trial decision is not uncommon.

Court approval of a settlement is generally not required in civil matters. In most cases, the parties who have resolved a matter will file a consent order dismissing the action.

Court approval is required for the settlement of class proceedings and where a party to a settlement is a minor or is otherwise considered to be under a disability.

Settlements can be confidential, except in specified circumstances like class proceedings. Often, it is the defendant that requests the settlement remains confidential. However, plaintiffs sometime also want to ensure confidentiality for fear of disclosure of a settlement amount that might be perceived as being too low.

A settlement agreement is a contract and can be enforced in the same manner as other contracts. In order for a settlement agreement to be enforceable, the court must find that the parties had a mutual intention to create a legally binding contract, and reached agreement on all of the essential terms of the settlement.

Note that settlement privilege and its consequent confidentiality requirement attach to settlement discussions, but the need to enforce a settlement agreement is an exception to the privilege.

As a settlement agreement is a contract, it can be set aside on bases similar to those invalidating contracts, including duress, illegality or mistake.

Perhaps the most common basis for seeking to set aside a settlement agreement is a material misrepresentation during settlement discussions. When one party has induced another party to enter into a settlement agreement by making a material misrepresentation, the innocent party can seek rescission of the settlement agreement. To be material, a misrepresentation must relate to a matter that a reasonable person would consider relevant to the decision to enter into the agreement. If a misrepresentation is material, it does not need to be the sole reason the innocent party entered into the settlement agreement; it is sufficient that the material misrepresentation was one of several factors guiding the innocent party’s decision.

Superior provincial courts and Canada’s federal court have jurisdiction to grant both legal and equitable relief. Equitable relief can include declarations of trust or interest in property. Courts can also grant a monetary award, known as damages.

Damages can include general damages, aggravated damages and punitive damages. General damages are intended to compensate a party for quantified economic loss and/or non-economic damages that flow from physical injuries. The purpose of aggravated damages is to account for intangible injuries like humiliation, wounded pride or damaged self-confidence.

Punitive damages are not compensatory, but punitive in nature. Courts only award punitive damages in circumstances of a marked departure from ordinary standards of decent behaviour or malicious, oppressive, arbitrary and high-handed conduct that offends the court’s sense of decency.

Punitive damages are rare in Canada and are often small in relation to the overall damages award. The high water mark for punitive damages in Canada is CAD1 million, awarded in 2002.

There is a Canada-wide “cap” on damages for pain and suffering established through a trilogy of 1978 Supreme Court of Canada decisions. Indexed to inflation, that cap is now approximately CAD365,000. Courts have lifted the “cap” in specific circumstances, such as defamation cases.

The availability of pre- and post-judgment interest is governed by the procedural rules of the different provincial courts and the Federal Court of Canada. The provinces publish schedules of applicable interest rates each quarter. For federal court matters, if the cause of action arises within a province, the prevailing interest rate in the province governs, while the rate for matters arising outside a specific province or in more than one province is in the court’s discretion.

Pre-judgment interest runs from the date the cause of action arose, whereas post-judgment interest runs from the date of judgment.

Enforcement mechanisms vary by province, but monetary judgments can generally be enforced through the garnishment of wages and bank accounts, a writ of seizure and the sale of property or the appointment of a receiver.

Canadian provinces and territories, except Quebec, are reciprocating jurisdictions of one another. As such, a judgment issued in one province or territory can be registered via court application in another territory or province, except Quebec.

Enforcing an extra-provincial judgment in Quebec requires the commencement of an originating application in a Quebec court.

To enforce a foreign judgment in Canada, a party can start a fresh proceeding in Canada or follow the procedures under reciprocal enforcement legislation, where applicable. For example, legislation in Canada’s provinces and territories, except Quebec, incorporates the Convention Between Canada and the United Kingdom of Great Britain and Northern Ireland for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters. Enforcing a foreign judgment in Quebec requires the commencement of an originating application in that province.

In general, reciprocal enforcement legislation supplements, but does not override, common law. Irrespective of the applicable reciprocal enforcement legislation, courts in Canada’s common law provinces will recognise a foreign judgment that is:

  • issued by a court of competent jurisdiction according to Canadian conflict of law rules;
  • final in the original jurisdiction; and
  • for a debt or definite sum of money, or else of a substance and sufficient specificity that comity requires a Canadian court to enforce it.

A party subject to a foreign judgment can challenge its recognition and enforcement on the basis that the issuing court lacked jurisdiction, or on the basis of the denial of natural justice, fraud or public policy.

Once a foreign judgment is recognised in Canada, it can be enforced in the same way as a domestic judgment. Foreign judgments are treated as contract debts in Canada, and the recognition and enforcement applications are subject to the limitation period in the province in which the judgment is sought to be enforced.

Canada’s review and appeal process involves multiple levels of appellate courts. Each province and territory has its own court of appeal, which will hear both criminal and civil litigation decisions rendered by the superior court of that province or territory. Depending on the nature of the decision rendered (including whether the decision is interlocutory or final), a party may be required to obtain leave to appeal. Leave applications are generally granted in circumstances where there is a reasonable prospect of success on appeal, and the issue on appeal is of importance to the public. Canada also has a federal court of appeal, which will hear appeals from decisions made by the lower federal courts. The federal courts are reserved for cases involving federal laws, including constitutional challenges to federal law or actions. They also review decisions of federal boards, commissions and tribunals. Canada’s highest and final court of appeal is the Supreme Court of Canada, which hears appeals from all provincial, territorial and federal courts of appeal. With the exception of limited circumstances for some criminal cases, parties wanting to appeal to the Supreme Court of Canada must first obtain leave to do so. Leave to appeal will be granted by the Supreme Court of Canada where the issues on appeal are of national importance and/or arise from conflicts in the jurisprudence and unsettled areas of law.

An appeal to the provincial, territorial or federal courts of appeal is available after a final judgment is rendered by the lower courts following a trial or application hearing. The standard of appellate review is generally found in the jurisprudence. The appellant must demonstrate that the lower court’s interpretation of the law was incorrect or that its factual determinations are the result of palpable and overriding errors that go to the heart of its decision. Jury verdicts are also subject to appeal in the following circumstances:

  • where the jury was discharged arbitrarily, capriciously or on the basis of erroneous or inapplicable principles;
  • where the jury charge or instructions contained material errors resulting in a miscarriage of justice; or
  • where the jury’s findings contain unreasonable and unjust errors.

At the provincial, territorial and federal level, appeals are commenced by way of a notice of appeal or, if leave to appeal is required, by way of a leave application. The procedures and timelines for commencing appeals are set out in each province and territory’s rules of court. However, generally, appeals must be commenced within 30 days after the entry of a judgment or order in respect of which an appeal is sought. Thereafter, the appellant and the responding party must exchange written submissions in accordance with the applicable rules of court. A panel of three court of appeal judges will hear appeals, but the panel may increase in size if the chief justice is of the opinion that the case requires the consideration of more judges. If the decision is interlocutory, then the time for appeal is shorter and, depending on the nature of the decision, leave to appeal may be required. At the Supreme Court of Canada, parties wanting to appeal a decision from one of the appellate courts must file a leave application with the Supreme Court of Canada, unless the appeal concerns specific criminal offences that allow for an appeal as of right. Leave applications are usually decided within three months. Decisions on leave applications are final and binding, and will not be reheard. If leave is granted, then the appellant and respondent must file their respective appeal materials in accordance with the Supreme Court of Canada’s rules of procedure. Appeals are generally heard within six months after the appellant has filed its materials.

Canada’s appellate courts will review whether the lower court made the correct legal decision in applying the law to the facts, made appropriate factual determinations (reviewable on the standard of palpable and overriding error) and followed a reasonable decision-making process having regard to the principles of fairness and natural justice. Appellate courts do not hear or retry cases, and do not hear witnesses testify. An appellate court will typically only review matters originally brought up at the lower court level, and will not consider an appellant’s argument if it is based on a theory that is first raised on appeal. However, appellate courts will admit and consider fresh/new evidence on appeal in circumstances where the evidence could not, by due diligence, have been adduced at trial, if the evidence is relevant in that it bears upon a decisive or potentially decisive issue on appeal, and if the evidence is credible and, if believed, could reasonably be expected to have affected the outcome.

Canada’s appellate courts may impose certain conditions in connection with hearing an appeal, including limiting the issues to be considered, refusing to hear oral argument, or requiring a party to pay money into a court before the appeal may proceed.

Canada’s appellate court may affirm, modify, vacate, set aside or reverse a lower court’s judgment or order. It may also direct the case back to the lower court for further review and consideration.

In most jurisdictions in Canada, the losing party faces the possibility of being ordered to pay some or all of the winning party’s legal costs and disbursements, including lawyer fees, expert fees, travel costs, printing and office costs, and other similar expenses. The quantum of costs payable by the losing party is determined by the court, unless the parties otherwise agree on quantum. In most cases, the courts will award partial indemnity costs, which usually amount to no less than 50% of a lawyers’ fees. Substantial indemnity costs are approximately two or three times higher than partial indemnity costs and will be awarded where the winning party made an offer to settle prior to trial and obtains a more favourable judgment than the offer at trial, and/or where there has been reprehensible, scandalous or outrageous conduct by the losing party. However, even substantial indemnity costs will not result in the successful party recovering all of their costs of litigation. Disbursements are, however, reimbursed at 100%, as long as they are not unreasonable. Generally, costs awarded at the federal court level and at the Supreme Court of Canada are very low.

Canadian courts will determine the quantum of costs to be awarded by considering a number of factors, including the complexity and importance of the case, the amount claimed and ordered in similar cases, the conduct of the party claiming costs during litigation, what an unsuccessful party could reasonably expect to pay in the circumstances, and the winning lawyers’ experience, hourly rates and time spent on the case. The courts will also consider whether any step in the proceeding was unnecessary or whether a party was behaving unreasonably, and whether that resulted in the legal action taking longer than it should have.

Interest on costs is generally not available, unless provided for in applicable legislation or by agreement of the parties.

Alternative dispute resolution is viewed favourably in Canada because it allows parties to pursue a more cost-effective and time-efficient procedure to resolve their disputes as compared to litigation through the courts. However, some judges have expressed concerns that ADR is having a negative impact on the development of the law, because most decisions rendered in such processes are confidential. A number of different forms of ADR are available in Canada, including mediation, arbitration and early binding expert evaluation. In addition, Canadians are now engaging in what is known as med-arb procedures, whereby the mediator in a failed mediation becomes the decision-maker (or arbitrator) of the disputes between the parties. This new procedure has received mixed reviews among the Canadian bar. Some believe that it brings discipline to the parties in the mediation process by ensuring that reasonable settlement positions are advanced by each side. Others believe that it compromises the decision-maker’s independence and objectivity, thereby undermining the principles of fairness in the arbitration process. Statistically, in Canada, more than 90% of litigated matters are settled through some form of mediation prior to trial.

Canadian courts cannot generally force the parties to engage in ADR, but actively encourage parties to mediate their dispute by requiring them to attend mandatory mediations and pre-trial conferences through which settlement opportunities are reviewed and thoroughly canvassed with the parties before proceeding to a hearing. There are no real sanctions in Canada for parties who are unreasonably unwilling to engage in good faith mediation efforts and negotiations to resolve disputes prior to a hearing. Depending on the jurisdiction, some rules of court impose mandatory mediation on parties prior to trial, including in Alberta, Ontario and Quebec. By contrast, in British Columbia for example, the rules of court require the parties to attend a settlement conference, but only if requested by the parties or ordered by the presiding judge.

Canadian institutions offering ADR include the Canadian Arbitration Association, the ADR Institute of Canada and the Arbitration Committee of the Canadian Chamber of Commerce, which operates at the international level. These institutions are extremely well organised and provide a wide range of mediators and arbitrators capable of dealing with all types of disputes. ADR programmes and conferences are frequently offered to the Canadian bar through in-person conferences, online webinars and face-to-face consultations.

Arbitration in Canada is regulated primarily by provincial rather than federal legislation. Each of Canada’s provinces and territories has enacted legislation to regulate domestic arbitration. Although the laws vary from province to province, particularly on issues such as appeal rights and contracting-out of procedural provisions, most arbitration legislation provides power to the courts to stay court proceedings in favour of arbitration where the parties have contractually agreed to arbitration. Canadian courts will enforce arbitral awards rendered in Canada, unless certain specific grounds (as provided for in applicable legislation) exist that prevent enforcement. Domestic arbitral awards are enforceable once they are entered as orders of the superior courts of the provinces, through a procedure that is intended to be summary in nature. Once an award is converted into an order or judgment of the court, all the usual remedies for enforcement are available to the party seeking enforcement. At the international level, Canadian courts will enforce arbitral awards under the New York Convention and the UNCITRAL Model Law.

Non-arbitral subject matters vary by jurisdiction. However, criminal and regulatory matters are not arbitrable, nor are disputes involving public policy requiring consideration by the courts. In addition, most provincial arbitration legislation provides that family law disputes are not arbitrable, with certain limited exceptions.

Parties can challenge an arbitral award where the arbitrator(s) failed to allow a party to present its case, the award was obtained by fraud, the arbitrator(s) breached standards of procedural fairness, the arbitrator(s) exceeded the scope of the arbitration, the enforcement of the arbitral award would breach Canadian public policy, the arbitration is invalid because the arbitration agreement is of no force and effect or does not apply to the dispute in question, or the subject matter of the dispute is not capable of being the subject of arbitration under applicable law. In such circumstances, a party may move before the courts to set aside the arbitral award under provincial legislation. In addition, parties to an arbitration agreement may prescribe appeal rights, and in most provinces and territories, arbitration legislation provides for appeals on issues of law where the arbitration agreement is otherwise silent on appeal rights.

Subject to the defences to recognition and enforcement, Canadian courts will recognise and enforce arbitral awards under the common law. The enforcement of domestic arbitral awards varies by province and territory, and will depend on the jurisdiction and the type of award being enforced. Typically, a party must file an application in the provincial superior court to confirm the award along with a copy of the arbitration agreement and a copy of the award. For foreign arbitral awards, the New York Convention requires an original or certified copy of the award and the original arbitration agreement, including a sworn translation into English if needed. Each of Canada’s provinces and territories has enacted legislation governing international commercial arbitrations and providing for the recognition and enforcement of foreign commercial arbitral awards. Canadian courts will generally not recognise arbitration awards where the party was not given notice of the proceedings or was denied the chance to present its case.

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Trends and Developments


Overview

In the past year in Canada, and in British Columbia specifically, recent legal developments have further altered the status quo, in an effort to address reconciliation with indigenous peoples over the use of the country’s natural resources, and to increase access to justice outside the traditional courtroom setting. In the recent federal election, the incumbent Liberal government under Prime Minister Justin Trudeau retained a minority, which may affect its ability to bring about legislative changes to further its mandate.

The provinces and territories in Canada (other than Québec) are common law jurisdictions, with a hierarchical court system, made up of both provincially and federally constituted courts. The federal parliament appoints judges to the provinces’ superior courts, for example, the British Columbia Supreme Court (BCSC) and Court of Appeal (BCCA), as well as to the federal courts (both trial and appellate levels). 

The Canadian constitution dictates the subject-matter jurisdiction of the country’s courts (as well as of provincial and federal regulatory tribunals). The jurisdiction of the federal courts is restricted to those matters governed by federal statutes, which expressly confer jurisdiction on these courts. 

Focusing on British Columbia (BC), the BCSC is a superior court of inherent jurisdiction. The majority of commercial litigation cases in the province are determined in the BCSC and, if appealed, by the BCCA. The decisions of the provinces’ appellate courts and the Federal Court of Appeal (FCA) are ultimately subject to review by the Supreme Court of Canada (SCC), which sits in the national capital, Ottawa. As part of its continued commitment to increasing access to justice, in late September 2019, for the first time in its history, the SCC sat in Winnipeg, Manitoba to hear two appeals and meet with members of the public. 

The BC Provincial Court, whose judges are appointed by the provincial government, hears civil claims valued between CAD5,001 and CAD35,000 (as well as criminal, family and youth, and traffic matters). In BC, the Civil Resolution Tribunal (CRT), Canada’s first online administrative tribunal, has jurisdiction to resolve civil disputes up to CAD5,000 (among other things). 

Canada is a country rich in natural resources. In the 21st century, the Canadian government has made efforts to attempt to address reconciliation with the country’s indigenous peoples. Tensions have long existed between the commercial interest in utilising the country’s natural resources, and environmental concerns about doing so. Indigenous rights and claims over lands where the resources are located also form part of this delicate balance. In 2019, the Canadian government overhauled the federal environmental assessment regime for major projects. Among the stated objectives underlying this overhaul is reconciliation with indigenous peoples. A number of recent prominent court cases involving the expansion of the highly publicised Trans Mountain oil pipeline illustrate the complexity of resolving disputes in this area of law.

In 2014, the SCC confirmed the existence of an “overarching organizing principle of good faith” in contract law, namely, that parties to a contract must perform their contractual obligations honestly and reasonably and not capriciously or arbitrarily. In July 2019, the SCC granted leave to appeal in two cases to be heard together, one from the BCCA, the other from the Ontario Court of Appeal, in which the appellate courts considered how far the principle of good faith in contract performance could be extended. Later in this article, we discuss the BCCA’s decision in Greater Vancouver Sewerage and Drainage District v Wastech Services Ltd, 2019 BCCA 66 (Wastech). 

Canada has a robust regulatory culture and disputes are resolved by provincial and federal administrative tribunals. The BC government established the CRT in 2012 as a way to increase access to justice, and it came into operation in 2016. Parties using the CRT are generally required to represent themselves. The CRT was initially given jurisdiction over civil claims to a value of CAD5,000 (with the value expected to increase in future), as well as strata-related disputes (ie, condominiums) of any value. In 2019, the BC government expanded the CRT’s jurisdiction to include the resolution of motor vehicle injury claims up to CAD50,000, as well as disputes involving societies and co-operative associations of any value. 

In this article we highlight some notable cases and developments in Canada over the past year in the fields of environmental, regulatory, aboriginal and contract law.

Overhaul of the Federal Environmental Assessment Process

In Canada, projects such as the creation or expansion of oil pipelines are subject to federal regulation. In August 2019, the new federal Impact Assessment Act (IAA), came into force, replacing the former Canadian Environmental Assessment Act, 2012. In the preamble to the IAA, the government of Canada recognised the “importance of public participation in the impact assessment process” and committed, in the course of exercising its powers and performing its duties in relation to assessing regional and strategic impacts, to “ensuring respect for the rights of the Indigenous peoples of Canada” and to “fostering reconciliation and working in partnership with them”.

At the same time as the IAA came into force, the Canadian Energy Regulator Act (CERA) replaced the National Energy Board Act, and the existing federal regulator, the National Energy Board (NEB), transitioned to become the Canadian Energy Regulator (CER).

One of the most significant changes in the overhaul of environmental assessment of resource projects is the inclusion of the concept of indigenous consent into the impact review process. The stated goal of the Canadian government is to secure free, prior and informed consent from indigenous groups through a process based on mutual respect and dialogue. In addition, under the new IAA process, the CER will be required to treat Indigenous Traditional Knowledge with equal weight as it affords to scientific evidence and other information in assessing the potential impacts of a project.

Litigation Contesting the Expansion of the Trans Mountain Oil Pipeline

An example supporting the Canadian government’s rationale for overhauling the federal environmental assessment process can be seen in the litigation involving the expansion of the Trans Mountain pipeline (TMX). The TMX is a proposed twinning of an existing oil pipeline system, which will add approximately 987 km of new pipeline segments from the province of Alberta to BC, to provide additional capacity to transport crude oil to Asian markets. This will also result in an increase in the number of oil tankers in the coastal waters near the pipeline’s terminus in Burnaby, BC (near Vancouver), on the Pacific.

Trans Mountain applied to the NEB in December 2013 for permission to construct and operate the TMX. As part of its approval of the proposed route of the TMX, the NEB required Trans Mountain to conduct field studies on Burnaby Mountain, which involved clearing vegetation and cutting down trees, in violation of several of Burnaby’s municipal by-laws. Burnaby is opposed to the TMX. Trans Mountain obtained a ruling from the NEB in 2014 authorising it to go onto Burnaby’s land without the municipality’s consent. Burnaby sought injunctions in the BC courts to prevent Trans Mountain from violating its by-laws, arguing that the federal NEB did not have jurisdiction to limit Burnaby’s ability to enforce its by-laws. The litigation proceeded through the BC courts for several years. The BCCA dismissed Burnaby’s appeal in 2017 (Burnaby (City) v Trans Mountain Pipeline ULC, 2017 BCCA 132) and upheld the lower court’s determination that the NEB had the jurisdiction to resolve the conflict. 

In May 2016, following the process under the previous environmental assessment regime, the CER (formerly the NEB) issued its report to the federal cabinet recommending approval of the TMX. On 29 November 2016, the federal cabinet accepted the CER’s recommendation and issued an Order in Council approving the TMX and directing the CER to issue a certificate approving the construction and operation of the TMX.

A number of First Nations (indigenous peoples), in particular the Tsleil-Waututh Nation whose traditional territory includes the Burnaby terminus of the TMX, environmental groups, and two municipalities (including the City of Burnaby) challenged the approval of the TMX. They filed several petitions in the federal courts, which were heard together. 

In August 2018, in Tsleil-Waututh Nation v Canada (Attorney General), 2018 FCA 153 (Tsleil-Waututh), the FCA quashed the approval of the TMX, identifying a deficiency in the CER’s determination that the TMX was not likely to cause significant environmental effects, and criticising the adequacy of Canada’s consultation process with indigenous groups. The effect of the Tsleil-Waututh decision was that the CER had to reconsider its approval of the TMX, specifically taking into account the effect of project-related shipping on the southern resident killer whale (orca) population. At the same time, the FCA ordered Canada to re-do its consultation with affected First Nations. 

The CER issued its Reconsideration Report on 22 February 2019, again recommending approval of the TMX. Subsequently, for the second time, the federal cabinet approved the TMX in an Order in Council issued 18 June 2019. Since then, the FCA has received 12 requests for permission to challenge the second approval of the TMX. On 4 September 2019, the FCA granted six of those requests, but limited the challenges to the narrow issue of the adequacy of Canada’s further consultation with indigenous peoples and First Nations between 30 August 2018 (the date of the FCA’s Tsleil-Waututh decision) and 18 June 2019 (the federal cabinet’s approval), and related issues. These parties may now start legal challenges to the approval of the project in the federal court.

In tandem with the federal environmental assessment process, British Columbia is obliged under its provincial environmental legislation to review projects like the TMX.  As a result of the federal cabinet’s approval of the TMX in 2016, the BC Ministers of Environment and Natural Gas Development had issued environmental assessment certificates for the TMX, with conditions imposed by the NEB. After the FCA’s decision in Tsleil-Waututh in 2018, the Squamish First Nation and its chief challenged the BC ministers’ decisions issuing the BC certificates in the BC courts. In September 2019 in Squamish Nation v British Columbia (Environment), 2019 BCCA 321, the BCCA allowed the Squamish Nation’s appeal in part and remitted the conditions in the BC certificates back to the ministers for reconsideration in light of the changes to the original report of the NEB, now the CER, set out in its 2019 reconsideration report.

Treaty 8 Boundary Dispute

In most of Canada between 1871 and 1921, the indigenous peoples entered into several treaties with the federal government, which were numbered from one to 11, from east to west. Entered into in 1899, Treaty 8 surrendered to the federal government, the “Crown”, 840,000 square km of what is now northern Alberta, north-eastern British Columbia, north-western Saskatchewan and the southern portion of the Northwest Territories. In exchange, the Crown promised in the treaty to award First Nations land reserves and other benefits, including traditional rights of hunting, trapping and fishing. 

Treaty 8’s western boundary has been debated for over 100 years. The West Moberly First Nation, together with four other First Nations, whose ancestors adhered to Treaty 8, dispute the western boundary, arguing it runs along the Arctic-Pacific Divide. The federal government agreed with the West Moberly group about the location of the boundary. Thus, the signatories to Treaty 8 agreed on its boundary. The provincial government of BC argued that the western boundary runs along the Rocky Mountains and several First Nations (who are not signatories to Treaty 8) agreed.

In 2017, in West Moberly First Nations v British Columbia, 2017 BCSC 1700, the BCSC ruled that the location of the western boundary of Treaty 8 runs along the Arctic-Pacific Divide. The BCSC extensively canvassed the state of geographical understanding in the late 19th century, reviewing maps, government documents, correspondence and reports made before and soon after Treaty 8’s formation. The court also considered the language of other treaties, and took into account the historical evidence of members of various indigenous groups. 

Ultimately, the BCSC’s decision about the location of the western boundary of Treaty 8 resulted in an overlap between Treaty 8 lands and the traditional title lands of First Nations who were not signatories to Treaty 8.

In October 2017, the province of BC appealed the decision to the BCCA. The BCCA granted intervener status to four First Nations whose traditional title lands have been affected by the decision. The BCCA heard the appeal in March 2019, but its decision has not yet been released. 

The West Moberly First Nation's reserve covers 2,000 ha; however, the West Moberly First Nation asserts its traditional territory encompasses over 12 million ha in which it exercises its treaty rights. The West Moberly First Nation has opposed industrial projects proposed within what it claims is its traditional territory, including the Site C hydroelectric dam and associated infrastructure currently under construction along the Peace River in British Columbia. In 2018, the BCSC refused West Moberly’s application for an injunction to halt further construction of the Site C Dam.

The Duty of Good Faith Performance in Contract

In the area of contract law, in the case of Bhasin v Hrynew, 2014 SCC 71, the Supreme Court of Canada confirmed the existence of an “overarching organizing principle” at law, namely, that parties must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily. Unfortunately, Canadian courts have since struggled to clarify what this “good faith obligation” requires of contracting parties.

The scope of the duty of good faith performance recently came under scrutiny in a case involving a dispute over a 20-year contract to provide waste disposal services: Greater Vancouver Sewerage and Drainage District v Wastech Services Ltd, 2018 BCSC 605 (Wastech). A contractor hired to remove and haul solid wastes (Wastech) alleged that the Vancouver Sewerage and Drainage District (Metro) had re-allocated wastes between long-haul and short-haul destinations in bad faith (2011 Reallocation) and thus increased Wastech’s costs by millions of dollars. Specifically, Wastech could no longer meet its Target Operating Ratio (OR) as per their contractual terms. The agreement provided for adjustments to the OR, but only with a deviation of 3%. The 2011 Reallocation went beyond this. Wastech took its claim to arbitration, arguing that an implied term or a duty of good faith should apply to compensate it for the “lost opportunity” to meet the OR and to receive operating profits.

The arbitrator declined to imply a term, given the parties’ deliberate choice not to include such an adjustment, but decided that although Metro’s conduct had been honest and reasonable from its own point of view, Metro failed to give “appropriate regard” to Wastech’s interests or expectations. According to the arbitrator, this constituted “dishonesty” for the purposes of the duty of good faith performance. Metro appealed to the BCSC, which allowed the appeal, ruling that the arbitrator had erred in finding that Metro’s conduct was “dishonest” and thus in breach of the duty of good faith performance simply by being “at odds” with Wastech’s expectations.

In 2019, the BCCA dismissed Wastech’s appeal (2019 BCCA 66), agreeing with the BCSC that the arbitrator erred in his extension of the contractual duty of good faith performance in the circumstances of the case. In particular, the BCCA declared that the Supreme Court of Canada in Bhasin v Hrynew never intended to suggest that the duty of good faith performance would be breached whenever a party exercising a contractual discretion failed to have “appropriate regard” for the other party’s (contractual) interests. In other words, there is no standalone civil wrong of “disregard of contractual interests”.

On the question of “bad faith”, the arbitrator had decided that no additional form of dishonesty was required to be shown, just that it was wholly at odds with the legitimate contractual expectations of the other party. According to the BCCA, this was incorrect as, in articulating the duty of good faith performance, the Supreme Court of Canada in Bhasin v Hrynew was concerned substantially with conduct having a subjective element of improper motive or dishonesty. Bad faith connotes malice, untruthfulness, ulterior motive, or even intentional conduct equivalent to fraud. This includes reckless conduct where “absence of good faith can be deduced and bad faith presumed”.

In July 2019, the Supreme Court of Canada granted leave to Wastech to further appeal the decision, and the case will be heard together with a decision of the Ontario Court of Appeal similarly exploring the limits of the good faith performance principle: CM Callow Inc v Zollinger, 2018 ONCA 896. In this case, a party to a contract for winter maintenance services for condominium corporations knew it would be terminating the contract, but waited to advise the counterparty until the performance of the parties’ contract for summer maintenance had ended. The Ontario Court of Appeal found that the duty of honest performance requires parties to be honest with each other concerning matters directly linked to the performance of the contract, but does not limit the parties’ freedom concerning future contracts not yet negotiated or entered into.

Expansion of the Jurisdiction of the BC Civil Resolution Tribunal

A trend in Canadian law is access to justice for self-represented litigants. The BC Civil Resolution Tribunal is an online tribunal with statutory jurisdiction to resolve certain categories of civil disputes. When it was established, the CRT dealt solely with strata property (ie condominium) disputes of any value, as well as civil disputes up to CAD5,000 in value. The BC provincial government recently amended the CRT’s governing statute, expanding the CRT’s jurisdiction to include claims for injuries sustained in motor vehicle accidents up to CAD50,000 in value, as well as disputes involving societies and housing and community service co-operatives. The stated goal of the amendments is to significantly reduce “the costs, complexity and delay associated with the resolution of vehicle accident cases”.

The general rule remains that parties will represent themselves in most cases, but lawyers will be allowed to represent parties in accident claims. In respect of motor vehicle accidents, the CRT is now able to determine the following: whether an injury is a “minor injury” (with the consequence that non-pecuniary compensation is capped at CAD5,500 under the legislation); and whether a claimant is entitled to benefits paid or payable under the Insurance (Vehicle) Act.

Some concerns have been raised over the expansion of the CRT’s jurisdiction, including whether the CRT has the necessary resources or expertise, and whether an unfair onus is being placed on claimants to establish the nature of their injuries. Further, lawyers in BC have also expressed concern that the changes will “unduly restrict access to the courts”.

At the same time as it expanded the CRT’s jurisdiction to include motor vehicle accidents below CAD50,000, the BC government amended the rules of civil procedure of the BCSC (Rules) in an effort to limit the number of expert witness reports allowed to be submitted in evidence at motor vehicle claim trials before the BCSC. The BC Trial Lawyers’ Association challenged the amended Rules on the grounds that they interfered with the court’s ability to hear and determine the cases before it. In late October 2019, the chief justice of the BCSC declared that the amended Rules were of no force or effect and set them aside in Crowder v British Columbia (Attorney General), 2019 BCSC 1824. Among other things, Chief Justice Hinkson determined that the amended Rule, “instead of leaving it to the litigants to meet their burden of proof by adducing the necessary evidence”, placed a duty on the court to ensure that the court has sufficient expert evidence before it determines a proceeding on its merits, which “compromises and dilutes the role of the court, and encroaches upon a core area of the court’s jurisdiction to control its process”.

Conclusion

As illustrated in this article, the areas of environmental law, resource development and aboriginal law dominate the legal landscape in Canada as courts address the tensions and competing interests in these fields. In addition, efforts to increase access to justice continue, but not without growing pains.

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