Top 10 business decisions of 2019: From bankruptcy to beer

Wednesday, February 05, 2020

To kick off the new year right, here is a listing of the Top 10 business decisions in Canada for 2019. The listing will be in the form of a two-part series, which begins below with numbers 6-10, in ascending order.

10. Volkswagen Group Canada Inc. v. Association québécoise de lutte contre la pollution atmosphèrique 2019 SCC 53

This 5-4 ruling from the Supreme Court of Canada, which affirmed a Quebec Court of Appeal judge’s refusal to grant leave from a Superior Court certification of a class action seeking purely punitive damages on behalf of some eight million people who resided in Quebec from 2009 to 2015, could open the floodgates for environmental litigation.

The case arises from the “dieselgate” scandal that saw Volkswagen and Audi equip vehicles with devices that falsified emissions test results. There was no evidence that Quebec residents had suffered harm as a result of the ensuing emissions, nor did the class intend to put forward such evidence at trial. The motions judge took the view that the issue of whether a purely punitive claim could succeed should be determined only on a full factual record after trial.

“These violations, which continued for seven years and involved tens of thousands of vehicles, is to my knowledge the largest collective action in Canadian history,” said Stéphane Pagé of Bouchard + Avocats in Quebec City, who represents the class.

9.  Steam Whistle Brewing Inc. v. Alberta Gaming & Liquor Commission 2019 ABCA 468

This unanimous decision of the Alberta Court of Appeal found that provincial markup on the retail price of beer that favoured brewers in Alberta, British Columbia and Saskatchewan, was unconstitutional as offending s. 121 of the Constitution Act, 1867, which requires that goods from any province “be admitted free into each of the other Provinces.”

The ruling builds on the SCC’s pronouncements in R. v. Comeau 2018 SCC 15, which made it clear that any legislative measures — not just direct tariff barriers — that impeded interprovincial trade as their primary purpose, offended s. 121.

“As the first case where s. 121 has been successfully invoked, the decision gives the provision some teeth and will definitely have an impact on interprovincial trade in Canada,” said Preet Saini, who with colleague Andrew Stead in McMillan LLP’s Calgary office, represented Steam Whistle.

The Canadian Chamber of Commerce, among others, has claimed that a myriad interprovincial trade barriers cost Canadians billions annually.

8. TELUS Communications Inc. v. Wellman 2019 SCC 19

Following this 5-4 ruling from the SCC, aggrieved business customers no longer have the ability to tag onto  consumer class actions simply because provincial consumer protection legislation invalidates arbitration clauses on consumers’ behalf.

The case arose when a class consisting of two million consumer and business customers of TELUS sued the telecommunications company for engaging in an undisclosed practice of charging customers based on time calculated by rounding up calls to the next minute.

“The Supreme Court confirmed that businesspeople have the right to arbitrate by shutting down the back door to class actions that the Ontario courts had consistently left open for the past 20 years,” said Geoff Cowper in Fasken LLP’s Vancouver office, who with colleague Andrew Borrell led the team representing TELUS.

In the result, Borrell points out, the decision eliminated some 200,000 business customers “who had agreed to arbitrate” from the class suing TELUS.

7. The Guarantee Company of North America v. Royal Bank of Canada 2019 ONCA 9

The federal Bankruptcy and Insolvency Act (BIA) specifically preserves trust assets from distribution to secured and unsecured creditors in bankruptcy proceedings. Conventional wisdom had held that this provision applied only to common law trusts. The decision by the Ontario Court of Appeal in Guarantee Company, however, turns this wisdom on its head by deciding that statutorily created trusts can also qualify as trusts under the BIA.

“This case is very important in the bankruptcy context because it puts trust claimants ahead of secured lenders,” said Matthew Lerner of Lenczner Slaght Royce Smith Griffin LLP in Toronto, who with colleague Scott Rollwagen represented Guarantee. “So, there’s probably a whole host of litigation brewing that will force secured lenders to take a very close look at their general security agreements.”

And although the decision deals specifically with the provisions of Ontario’s Construction Lien Act, it cuts a much wider swath.

“There are other contexts in which the issue arises, such as provincial sales tax trusts in favour of provincial governments,” Lerner said.

6.  Bell Media Inc. v. GoldTV.Biz 2019 FC 1432

This decision from the Federal Court represents the first Canadian order compelling the country’s Internet service providers to block access to services that distribute infringing television and motion picture content.

“These services are generally developed, maintained and promoted by software developers who go to great lengths to conceal their identity on the Internet, making it particularly difficult for copyright owners to take action in order to efficiently protect their rights,” write François Guay, Guillaume Lavoie Ste. Marie and Olivier Jean-Lévesque — the lawyers from Smart & Biggar’s Montreal office who represented Bell Media in the Federal Court — in an IP Update from the firm.

The upshot, the lawyers add, is that the decision is “an important victory for copyright owners” because “Canadian courts had never granted such a remedy, which is not explicitly provided in Canadian law, but similar orders had previously been issued in other jurisdictions such as the United Kingdom, France and Australia.”

The case is currently under appeal to the Federal Court of Appeal.

The Top 5 cases will follow in our next article.

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