Recent Developments in Canada’s Legal Landscape
Introduction and summary
In Canada, commercial litigators and courts are returning to in-person proceedings and business as usual. At the same time, many of the practices implemented during the COVID-19 pandemic, such as increased electronic filing, remain in place and will likely be permanent. This article will outline some of these initiatives and changes, which are expected to become more widespread and permanent.
The discussion will also cover the hotly debated topic of whether employers can require employees to be vaccinated and/or provide proof of immunisation against COVID-19. Although the various government-implemented vaccine mandate programmes in Canada have now ended (not without some controversy), the validity of mandatory employer vaccination policies continues to be raised in labour arbitrations and has recently been considered by the British Columbia (BC) Supreme Court.
This article will also highlight two recent decisions of Canada's highest court, the Supreme Court of Canada (the SCC), in which the SCC reiterated that retroactive tax planning is not permitted in the country. In another case involving professional misconduct, the SCC clarified that there is no established length of time at which delay in administrative proceedings amounts to an abuse of process, and the reasoning in this case is likely to be applied in civil proceedings.
Finally, some of the recommendations from the final report of the Commission of Inquiry into Money Laundering in British Columbia will be set out, alongside a summary of an upcoming case to be heard by the SCC that is anticipated to provide new insights into legislation that is meant to mitigate the harmful effects of so-called Strategic Lawsuit Against Public Participation (SLAPP) lawsuits.
Access to justice initiatives and practice changes
The pandemic highlighted the need to improve access to justice for persons who represent themselves in court, and the courts in some provinces have taken steps to address this issue. For example, BC has enacted a new Court of Appeal Act (the Act) and new Court of Appeal Rules (the Rules), effective 18 July 2022, which are intended to help modernise the court system and improve access to justice. Among other things, the new Act and Rules clarify the requirements for applying for leave (permission) to appeal and update the requirements for filing and serving documents related to an appeal. The new Rules also outline the process for referring an appeal to case management, as well as the types of orders that a judge conducting case management can order. The new Rules include new court forms with plain-language instructions and that are considered more readable than the previous court forms.
The Canada Trends & Developments chapter in last year's litigation guide noted the introduction of Ontario’s Justice Accelerated Strategy, a multi-year plan to accelerate access to the justice system. In December 2021, as part of the Justice Accelerated Strategy, Tribunals Ontario implemented a new case management system that streamlines the dispute resolution process by allowing applications to be filed, processed, and scheduled online. The Landlord and Tenant Board is the first tribunal to implement the new system, which will eventually be expanded to include more tribunals, boards and commissions.
The Canada Trends & Developments chapter in the 2019 litigation guide also covered the BC Civil Resolution Tribunal (CRT), an online tribunal with statutory jurisdiction to resolve certain categories of civil disputes. In 2019, through a package of amendments to the Civil Resolution Tribunal Act (CRTA), the BC government expanded the CRT’s jurisdiction to include claims for injuries sustained in motor vehicle accidents up to CAD50,000. The BC government had suggested that the existing system of compensating for minor personal injuries in tort was threatening both the viability of the public insurer and the actual compensation recovered by victims of minor injuries. The CRTA amendments granted the CRT jurisdiction to determine the following issues:
As a result of these changes, the CRT was granted presumptive, but not exclusive, jurisdiction to adjudicate the liability and monetary damages when the presumption that the damages would be below CAD50,000 was not rebutted.
In March 2021, the Trial Lawyers Association of BC (and several plaintiffs in motor vehicle claims) successfully challenged the expansion of the CRT’s jurisdiction through these CRTA amendments on the basis that the expansion of jurisdiction was unconstitutional because it improperly granted the CRT (a provincial statutory tribunal) jurisdiction over matters belonging to the superior courts. The reasons of the BC Supreme Court Chief Justice upholding the constitutional challenge are reported as Trial Lawyers Association of British Columbia v British Columbia (Attorney General). However, in May 2022, the BC Court of Appeal overturned this decision, finding the amended sections of the CRTA were constitutional. Among other things, the Court of Appeal agreed that the CRT was meeting an important societal objective and the innovative scheme created under the CRTA represented a new form of access to civil justice for victims of minor injuries suffered in motor vehicle accidents in BC, reflecting an integrated comprehensive effort at reform directed at a social mischief identified by other branches of government.
Mandatory vaccination policies (MVPs) in the workplace
Workplaces have changed rapidly since the emergence of COVID-19. After the World Health Organization declared a worldwide pandemic in March 2020, there was a whirlwind of workplace health and safety protocols introduced to help combat its spread. Following the development and release of various COVID-19 vaccines, which have been proved to be safe and effective in preventing the spread and harmful health consequences of COVID-19, many Canadian employers in the private sector adopted MVPs that aligned with government directives requiring proof of vaccination for public service employees.
In Canada, MVPs are currently being tested in courts and in labour arbitrations, with the overarching question being an employer’s right to mandate vaccination. While many arbitrators have upheld MVPs, finding that they strike the right balance between an employer’s health and safety interests and the interests of employees who are unvaccinated, other arbitrators have found certain terms of the MVPs to be unreasonable, such as provisions that allow for discipline, up to and including discharge, of employees who remain unvaccinated, or provisions that apply to unvaccinated employees who work exclusively from home or exclusively outside.
In a recent Ontario arbitration brought pursuant to the Ontario Labour Relations Act, 1995, the arbitrator held that a vaccine mandate that required two doses (of a two-dose vaccine) was no longer reasonable based on evidence indicating that there is negligible difference in the risk of transmission in respect of the Omicron variant as between a two-dose vaccine regimen and remaining unvaccinated.
The arbitrations in which MVPs have been successfully contested should not be taken as support for remaining unvaccinated against COVID-19, in the absence of a legitimate exemption. Importantly, each case was decided on its own particular facts and the state of knowledge at the time the policy was implemented. As a consequence, “what constitutes a reasonable mandatory vaccination policy in the course of a pandemic is contextual and highly dynamic”.
In September 2022, the BC Supreme Court weighed in on the delicate balancing exercise of an employee’s personal beliefs against an employer’s interest in ensuring the protection of the health and safety of all other employees in the workplace. Parmar v Tribe Management is the first judgment in Canada involving a civil claim brought by an employee who was placed on an unpaid leave of absence for non-compliance with an MVP.
The plaintiff, who was unvaccinated out of concern for negative side effects, claimed that she had been constructively dismissed (meaning that her employment was effectively ended) after she refused to comply with the MVP that her employer (Tribe) had implemented in October 2021. At that point in time, along with the establishment of various government vaccine mandates, employers in the private sector were strongly encouraged to adopt and implement policies that aligned with the government directives.
The Court explained that the plaintiff’s suspension without pay would constitute constructive dismissal if a reasonable person in her place would have felt that the essential terms of her employment contract were being substantially changed. In making this determination, the Court considered various factors, such as the duration of the suspension, whether someone was appointed to replace the plaintiff, whether she continued to be paid and receive benefits, and whether Tribe suspended her in good faith, for example, for bona fide business reasons.
Because the plaintiff had not been terminated or replaced and had continued to receive certain employee benefits, the Court focused principally on whether Tribe had bona fide business reasons, including safety reasons, for the MVP and for placing the plaintiff on unpaid leave. The question considered by the Court was not whether the MVP was a perfect policy, but rather whether it was a reasonable approach when implemented, given the uncertainties then presented by the pandemic.
After considering the circumstances facing Canada, and the rest of the world, in dealing with the COVID-19 during the time period that Tribe implemented its MVP, the Court concluded that the MVP struck an appropriate balance. Tribe had been consistent in its position that the plaintiff could return to her employment upon becoming vaccinated. It was the plaintiff’s choice to remain unvaccinated. Tribe had ensured that employees like the plaintiff could maintain a principled stance against vaccination without losing their employment by being put on a leave of absence. She had voluntarily opted to resign in January 2022.
As a key takeaway, this decision indicates that courts will assess the reasonableness of MVPs based on the state of knowledge about COVID-19 at the time they were implemented. Where an MVP reflects the prevailing approach at the time and strikes an appropriate balance between an employer’s business interests and the rights of its employees to a safe work environment, it will likely be found to be reasonable by the court.
No set time where delay becomes abuse of process
The Canadian Charter of Rights and Freedoms, among other things, protects the right of a person charged with a criminal offence to be tried within a reasonable time. In 2016, in R. v Jordan, 2016 SCC 27 (Jordan), the SCC established timelines for addressing institutional delays in criminal proceedings (generally, from the date the accused is charged with a criminal offence, the trial must be complete within 18 or 30 months, depending on the level of court in which the trial is being held).
In July 2022, the SCC released Law Society of Saskatchewan v Abrametz, a professional disciplinary case where the main issue was whether the delay in the proceedings amounted to an abuse of process. The lawyer who was the subject of the proceedings, Mr Abrametz, asked the SCC to recognise inordinate delay in administrative proceedings as prejudicial in and of itself, relying in part on the SCC’s decision in Jordan. However, the SCC refused to extend Jordan to administrative proceedings, reiterating that the test for whether delay that does not affect hearing fairness nonetheless amounts to an abuse of process is contextual. Delay will amount to an abuse of process if it is manifestly unfair to a party or in some other way brings the administration of justice into disrepute.
Retroactive tax planning barred by SCC
In June 2022, the SCC ruled on a case involving tax planning gone wrong, sending a clear message that taxpayers cannot avoid unanticipated adverse tax consequences by relying on the equitable jurisdiction of the courts to relieve them from the effect of their mistakes. According to the majority of the SCC, taxpayers should be taxed based on what they actually agreed to do and what they did, and not on what they could have done or later wished they had done.
Canada (Attorney General) v Collins Family Trust concerned a tax planning approach that had been devised for the purported purpose of protecting the assets of an operating company from creditors while at the same allowing dividend income from the operating company to avoid being subject to tax. The planning approach was meant to take advantage of certain sets of rules under the Income Tax Act.
However, after the plan was implemented, the Federal Tax Court (issues of income tax are federal in nature and not provincial) adopted a narrower interpretation of the law, and the Canada Revenue Agency issued notices of reassessment imposing tax liability. To avoid having to pay the assessed amounts, the family trusts sought to rescind the series of transactions leading to the dividend payments. They filed their petitions in BC because the companies at issue were incorporated there.
The BC Supreme Court granted rescission, following an earlier appellate decision that upheld an order rescinding the same types of transactions on the basis of a mistake about their tax consequences. The Court of Appeal affirmed the lower Court’s decision. It reconciled two prior SCC decisions that disallowed taxpayers from retroactively altering a transaction to achieve an intended tax objective by reasoning that those cases dealt with different equitable remedies than rescission.
The majority of the SCC ruled that the courts below had erred. The majority emphasised that equity was developed for situations that demand relief as a matter of “conscience” and “greater fairness.” While a court may exercise its equitable jurisdiction to grant relief against mistakes in appropriate cases, it cannot do so to achieve the objective of avoiding an unintended tax liability. The majority took the view that there is nothing unconscionable or otherwise unfair about the operation of a tax statute on transactions freely undertaken. The prohibition against retroactive tax planning should be understood broadly, precluding any equitable remedy by which it might be achieved, including rescission.
New development in SLAPP lawsuits
The Canada Trends & Developments chapter in the 2021 litigation guide covered legislation in British Columbia, Ontario, and Québec that was enacted to mitigate the harmful effects of lawsuits intended to dissuade persons from speaking out or taking positions on issues of public interest. This type of lawsuit, which has proliferated in recent years, is known as a SLAPP; that is, a “strategic lawsuit against public participation”. The anti-SLAPP legislation in those provinces allows a party named in a SLAPP to apply to the court to dismiss the SLAPP on an expedited basis if that party can satisfy the court that the proceeding against it arose from an expression it made, which relates to a “matter of public interest”. The burden of proof then shifts to the party who brought the proceeding, who must satisfy the court of the following three things:
The same chapter also discussed two decisions released by the SCC in September 2020 that applied the framework created under Ontario’s anti-SLAPP legislation. Both of these cases shed light on the requirements for bringing and defending anti-SLAPP motions. More recently, the opportunity has once again arisen to clarify provincial anti-SLAPP laws, as the SCC has granted leave to appeal from a judgment of the BC Court of Appeal on an action in defamation that was dismissed before trial under BC’s anti-SLAPP statute, the Protection of Public Participation Act (the PPPA).
Neufeld v Hansman involved a public school trustee, Mr Neufield, who made negative comments in a Facebook post about the way a programme designed to teach children about sexual orientation and gender identity was being implemented in schools. The respondent, Mr Hansman, who was the then-president of the BC Teachers’ Federation, was highly critical of Neufeld’s statements when interviewed by the media. Mr Neufeld commenced an action in defamation against Mr Hansman, but it was dismissed before trial under the PPPA.
The outcome of the appeal turned on whether the BC Supreme Court had erred in interpreting and applying the PPPA, in particular with respect to whether the moving party (Mr Hansman) had “no valid defence” in the underlying proceeding, and whether the harm to Mr Neufeld was serious enough that the public interest in continuing the proceeding outweighed the public interest in protecting Mr Hansman’s expression.
The Court of Appeal concluded that, firstly, contrary to the findings of the BC Supreme Court, there were grounds to believe that Mr Hansman’s defence of fair comment was not valid for at least some of the expressions at issue in the action. The test for the defence of fair comment requires (among other things) the comment to explicitly or implicitly indicate, at least in general terms, the facts on which the comment is based. The facts must also be sufficiently stated or otherwise known to listeners so that they are able to make up their own minds on the merit of the comment. The Court of Appeal took the view that Mr Hansman would not necessarily be able to establish that the facts relied on to support some of his comments about Mr Neufeld were either stated in the impugned publications or so notorious as to be known to readers and listeners. The BC Supreme Court was also found to have erred in deciding that the reasoning in existing case law would preclude a trier of fact from finding a defence of fair comment in the present case, and for certain of its conclusions in respect of whether Mr Hansman was motivated by malice.
The Court of Appeal concluded, lastly, that the BC Supreme Court had erred when considering the final step of the test under the PPPA: weighing the competing public interests. Among other things, the Court of Appeal opined that the lower court had failed to consider the other side of the equation – that is, the public interest in protecting the actual expression that was the subject matter of the lawsuit. If Mr Neufeld’s claim was summarily screened out at this early stage, the risk arose that people might decline to engage in public debate for fear of being inveighed with negative labels and accusations of hate speech, like Mr Neufield was, with no opportunity to protect their reputation.
It remains to be seen whether the SCC will affirm the Court of Appeal’s reasoning that it is necessary to consider, as part of the anti-SLAPP analysis, the collateral effect that preventing someone from defending themselves from serious accusations could have on other people’s willingness to express themselves on issues of public interest in the future.
On 15 June 2022, after over 130 days of hearing evidence, the Commission of Inquiry into Money Laundering in British Columbia (the “Cullen Commission”), established in May 2019, released its final report. The Cullen Commission concluded that money laundering is a significant problem in BC across multiple sectors, and that the federal and provincial governments had been largely ineffective in addressing money laundering across the country. Among other things, the Cullen Commission recommended accelerating the implementation of a publicly accessible Canadian corporate beneficial ownership registry before the end of 2023. The Cullen Commission also recommended that law enforcement entities vigorously pursue civil asset forfeiture.
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