Summaries Sunday: Supreme Advocacy
One Sunday each month we bring you a summary from Supreme Advocacy LLP of recent decisions at the Supreme Court of Canada. Supreme Advocacy LLP offers a weekly electronic newsletter, Supreme Advocacy Letter, to which you may subscribe. It’s a summary of all Appeals, Oral Judgments and Leaves to Appeal granted from November 18 – December 31, 2021 inclusive.
Appeals
Bankruptcy & Insolvency: Compensation/Set-off Between CCAA Debts
Montréal (City) v. Deloitte Restructuring Inc., 2020 QCCA 438, 2021 SCC 53 (39186)
This appeal raises an issue relating to compensation, or set off in a common law setting, between two debts in the context of proceedings under the CCAA. The question is whether compensation is permitted for debts between the same parties: on the one hand, a debt resulting from the Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts (“Bill 26”), that predates an initial order made under the CCAA and, on the other hand, a debt between the same parties that postdates that order. To answer the question with respect to compensation in the context of this appeal, the Court must first determine whether a claim arising from an agreement entered into under the Voluntary Reimbursement Program (“VRP”) is necessarily a “claim that relates to” a “debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation” pursuant to s. 19(2)(d) of the CCAA. This question is answered in the negative. It cannot be presumed that a claim arising from the VRP falls within that provision where no evidence to this effect has been tendered. The S.C.C. concluded that a court should generally exercise its discretion to stay pre/post compensation, although it may, in rare cases, refuse such a stay. As well, the court may later lift the stay of the right to pre/post compensation in appropriate cases. In the case at bar, however, the S.C.C. concluded that the initial order stayed the right of the appellant Ville de Montréal to pre/post compensation and that it would not be appropriate to lift the stay in relation to the claims in issue.
Constitutional Law: Invalidity Declarations
R. v. Albashir, 2020 BCCA 160; 2021 SCC 48 (39277)(39278)
The former s. 212(1)(j) was replaced with a new provision that prohibits obtaining a material benefit from sexual services but exempts legitimate, non-exploitative conduct. The new legislation did not include any transitional or retroactive provisions. The purpose animating the suspension in Bedford was to avoid the deregulation of sex work (thus maintaining the protection of vulnerable sex workers) while Parliament crafted replacement legislation. In light of that purpose, the declaration of invalidity was purely prospective, effective at the end of the period of suspension. Thus, the appellants were liable under s. 212(1)(j) for their conduct during the suspension period, and could be charged and convicted under this provision even after the suspension expired. As the Bedford declaration applied purely prospectively, the appellants could be charged and convicted after the suspension expired and the declaration took effect for committing the offence of living on the avails during the suspension period. Because the trial judge found them to be abusive and exploitative, it cannot be said that they were prejudiced by the constitutional infirmity identified in Bedford.
Family Law: Mediation; Confidentiality
Association de médiation familiale du Québec v. Bouvier, 2020 QCCA 115; 2021 SCC 54 (39155)
The interpretation of the standard mediation contract widely used in Québec, and of the contract signed by the spouses in this case, supports the conclusion that parties to such a process do not exclude from the outset the settlement exception from Union Carbide. Therefore, where spouses enter into a settlement at the end of a mediation process governed by the standard contract, the settlement exception can apply and allow them to file in evidence the communications that are necessary to establish the existence or terms of their agreement. Even though the settlement exception applies in family mediation governed by the standard contract scheme, proof that the parties actually entered into an agreement must still be made in accordance with the rules of the law of evidence. The summary of mediated agreements provided to the parties by the mediator at the end of the family mediation process is not a contract that can serve to prove such an agreement, but simply a working tool for the spouses. Prepared by the mediator on the basis of the spouses’ discussions during mediation, the summary cannot satisfy the requirement that there be an agreement of wills for the formation of a valid contract, because, at the time it is given to the parties, it does not reflect firm offers to contract or firm acceptances by the spouses. That being said, nothing prevents the parties from entering into a contract whose terms are identical to those recorded by the mediator in the summary of mediated agreements. They can do so by signing the summary or by consenting expressly or tacitly after it has been given to them. Because the parties are encouraged to obtain independent legal advice after receiving that document, they may also decide to bind themselves contractually on different terms, or not to bind themselves at all.
Insurance: Imputed & Constructive Knowledge
Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2019 ONCA 800; 2021 SCC 47 (38949)
Where an insurer is shown to be in possession of facts demonstrating a breach, an inference may be drawn that the insurer, by its conduct, intended to alter its legal relationship with the insured — not withstanding the fact that the insurer did not realize the legal significance of the facts or otherwise failed to appreciate the terms of its policy with the insured. Here, it is undisputed that, when RSA defended, it did not know of the fact of consumption of alcohol prior to the accident, which fact, if known, would have demonstrated policy breach. The argument that RSA constructively knew of the breach, and is thus taken to know what it ought to or should have known is premised on RSA’s alleged breach of a duty to diligently investigate the claim against its insured is rejected, and with it the possibility of recognizing constructive knowledge arising from a breach of a duty to investigate as grounding promissory estoppel, for two reasons. First, this argument entails a significant — and unwise and unnecessary — modification of the obligation an insurer owes to the insured in the context of a liability claim. This duty exists because insurers have strong economic incentives to deny coverage, which the S.C.C. has sought to moderate in the public interest. Secondly, there is no basis in law for a third‑party claimant to be able to ground an estoppel argument in any alleged breaches of an insurer’s duty to its insured. In other words, the duty to investigate fairly, in a balanced and reasonable manner, is owed only to the insured, not third parties.
Tax: Foreign Accrual Property
Canada v. Loblaw Financial Holdings Inc., 2020 FCA 79; 2021 SCC 51 (39220)
Does a parent corporation conduct business with its controlled foreign affiliate when it provides capital and exercises corporate oversight? The answer is a straightforward no. Re interpreting the precise words of the arm’s length requirement — “the business (other than any business conducted principally with persons with whom the affiliate does not deal at arm’s length)” — found in the financial institution exception, in accordance with the ordinary rules of statutory interpretation, when these words are read in their grammatical and ordinary sense, in harmony with their context and the ITA’s objects, it becomes clear that they do not encompass an assessment of capital contributions or corporate oversight. The necessary inference to be drawn from the express language of s. 95(2.4)(b) is that Parliament chose not to include a competition element in the financial institution exception. As for the Crown’s allegation that the purpose of the arm’s length requirement is anti-avoidance, this similarly amounts to an attempt to create a specific anti-avoidance rule absent any expressed legislative intent. To permit this argument to succeed would require us to rewrite the legislation. If taxpayers are to act with any degree of certainty, then full effect should be given to Parliament’s precise and unequivocal words. The grammatical and ordinary meaning of the words “business conducted”, read in the context and in light of the purpose of the foreign accrual property income regime, clearly shows that Parliament did not intend capital injections to be considered.
Tax: Treaties; GAAR
Canada v. Alta Energy Luxembourg S.A.R.L., 2020 FCA 43; 2021 SCC 49 (39113)
The principles of predictability, certainty, and fairness and respect for the right of taxpayers to legitimate tax minimization are the bedrock of tax law. In the context of international tax treaties, respect for negotiated bargains between contracting states is fundamental to ensure tax certainty and predictability and to uphold the principle of pacta sunt servanda, pursuant to which parties to a treaty must keep their sides of the bargain. Section 245 of the Income Tax Act, known as the general anti-avoidance rule (“GAAR”), acts as a legislative limit on tax certainty by barring abusive tax avoidance transactions, including those in which taxpayers seek to obtain treaty benefits that were never intended by the contracting states. C.R.A. is asking the S.C.C. to use GAAR to change the result, not by interpreting the provisions of the Treaty through a unified textual, contextual, and purposive analysis, but by fundamentally altering the criteria under which a person is entitled to the benefits of the Treaty, thus frustrating the certainty and predictability sought by the drafters. In raising GAAR, C.R.A. is now seeking to revisit its bargain in order to secure both foreign investments and tax revenues. But if GAAR is to remain a robust tool, it cannot be used to judicially amend or renegotiate a treaty. C.R.A. has not discharged the burden of proving abusive tax avoidance here. Tax avoidance is not tax evasion, and there is no suggestion by either party that the transaction in this case was evasive. In addition, tax avoidance should not be conflated with abuse. Even if a transaction was designed for a tax avoidance purpose and not for a bona fide non-tax purpose, such as an economic or commercial purpose, it does not mean that it is necessarily abusive within the meaning of GAAR. The courts’ role is limited to determining whether a transaction abuses the object, spirit, and purpose of the specific provisions relied on by the taxpayer. It is not to rewrite tax statutes and tax treaties to prevent treaty shopping when these instruments do not clearly do so.
Oral Judgments
Criminal Law: Homicide; Foster Children
R. v. G., 2021 SKCA 20; 2021 SCC (39568)
The Chief Justice: “We are all of the view to allow the appeal, restore the convictions and order the case to be remitted to the Court of Appeal for consideration of the sentencing appeal. Reasons to follow.”
Family Law: Children’s Primary Residence
Barendregt v. Grebliunas, 2021 BCCA 11; 2021 SCC (39533)
The Chief Justice: “A majority of this Court would allow the appeal, set aside the decision of the Court of Appeal, and restore paras. 1 to 6 of Justice Saunders’ order regarding the primary residence of the children, with costs in this Court and the courts below. Reasons to follow. Justice Côté dissents.”
Family Law: Custody
B.J.T. v. J.D., 2020 PECA 14; 2021 SCC (39558)
The Chief Justice: “We are all of the view to allow the appeal and set aside the decision of the Prince Edward Island Court of Appeal. We would affirm the decision of Justice Key to award custody to the appellant, subject to the following: the child is to remain with the respondent until March 21, 2022, unless otherwise agreed by the parties, at which time the child is to be returned to the appellant at the expense of the Director of Child Protection for the Province of Prince Edward Island. Paragraphs 3 to 7 of the order of November 27, 2020, of the Prince Edward Island Court of Appeal will be given effect. This order is made without prejudice to any rights that either party may have to make an application to the Supreme Court of Prince Edward Island relating to custody and access. Costs throughout to the appellant. Reasons to follow.”
Family Law: Custody; Spousal Maintenance; Family Property
Kreke v. Alansari, 2020 SKCA 122; 2021 SCC 50 (39567)
The Chief Justice: “Even if the fresh evidence were admitted, a majority of this Court is of the view that there was no reviewable error made by the trial judge. Therefore, the appeal is allowed and the trial judge’s orders dated July 4, 2019, and July 17, 2019, are restored with costs throughout. Justice Côté, dissenting, would have dismissed the appeal on the ground that it is moot since she would have admitted the fresh evidence, and in light of this, would remand the matter to the Court of Queen’s Bench.”
Leaves to Appeal Granted
Criminal Law: Refusal to Blow
R. v. Breault, 2021 QCCA 505 (39680)
Refusal to blow when nothing to blow into.
Criminal Law: Homicide; Conspiracy
R. v. J., et al., 2021 BCCA 34 (39635)
There is a publication ban in this case, as well as a sealing order; certain information is not available to the public, in the context of first degree murder and conspiracy.
Family Law: Hague Convention
R. v. N, 2021 ONCA 688 (39875)
There is a publication ban in this case, in the context of Hague Convention issues.
Civil Litigation: Workplace Safety; Due Diligence Defence
Sudbury (City) v. Ontario (Labour), 2021 ONCA 252 (39754)
Re workplace fatality, can municipality use due diligence defence.
Immigration and Refugees: Safe Third Country Agreement
Canadian Council for Refugees v. Canada (Minister of Citizenship and Immigration) et al., 2021 CAF 72 (39749)
Interpretation and application of Safe Third Country Agreement.
Criminal Law: Entrapment; Delay; Kienapple
Haniffa v. R., 2021 ONCA 326 (39803)
Issues include entrapment, delay, Kienapple.
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