Top 10 business decisions of 2020 part one: From pipelines to anti-SLAPP

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Thursday, February 25, 2021 @ 8:29 AM | By Julius Melnitzer

What follows is our second annual list of the Top 10 business decisions in Canada for the just-ended year. This is a two-part series, which begins below with numbers 6-10, in ascending order.

10. British Columbia (Attorney General) v. Canada (Attorney General) 2020 SCC 1

It’s rare that a decision delivered from the bench by the Supreme Court of Canada without written reasons will make a top 10 list. But although this unanimous ruling against British Columbia’s attempts to block the Trans Mountain expansion project ducks broader issues (perhaps because the Supreme Court intends to deal with them in the carbon tax case) by simply adopting the reasons of the B.C. Court of Appeal — Reference re Environmental Management Act (British Columbia) 2019 BCCA 181 — its significance lies in the certainty it creates in a politically delicate time for the pipeline and energy sectors.

“This decision is a practical one, based on the facts of the case and how far along the parties were in the process,” says Peter Gall of Vancouver’s Gall Legge Grant Zwack LLP, who represented the Attorney General of Alberta. “The court was careful not to impugn B.C.’s motives.”

However that may be, the Court of Appeal concluded that the pith and substance of the B.C. legislation, which would have given the province the ability to control the amount of heavy oil coming into the province, were clearly aimed at federal matters and therefore unconstitutional.

Michael Marion of Borden Ladner Gervais LLP, who represented the Canadian Energy Pipeline Association, told The Lawyer’s Daily after the Court of Appeal decision that the B.C. ruling “was a clear statement that confirmed the exclusive federal jurisdiction over interprovincial transportation undertakings, which was needed in order to get one step closer to having the Trans Mountain Pipeline constructed.”

9. Choueifaty v. Canada (Attorney General) 2020 FC 837

This case makes the list because it forced the Canadian Intellectual Property Office (CIPO) to stop ignoring 20 years of judicial direction in construing patent applications for computer-implemented inventions, medical diagnostic methods and medical uses.

“If you were a patent applicant in the last decade, you would have been subject to a really stringent but incorrect examination standard that affected the viability of potentially meritorious applications,” said Edward Fan in Torys LLP’s Toronto office. “Choueifaty is a clear rebuke of patent office practice in this regard.”

Despite overwhelming jurisprudence to the contrary, the patent office had in 2013 mandated a “problem-solution” approach to deciding whether claims were “inventions” — and therefore patentable — within the meaning of the Patent Act. This despite the fact that in 2011 the Federal Court of Appeal had affirmed in Amazon.com, Inc. v. Canada 2011 FCA 328 that the purely purposive approach enunciated by the Supreme Court of Canada some 11 years earlier was the correct one.

CIPO reacted to Choueifaty by issuing new guidance in November. The guidance directs examiners not to use the problem-solution approach. But the extent to which the new guidance remedies the situation is questionable.

“The current document introduces a new problem-solution analysis in requiring the identification of an ‘actual invention’ even after the essential elements of the claim have been purposively construed,” Fan said. “So, applicants may continue to face challenges in pursuing computer-implemented, medical diagnostic and medical use inventions.”

Still, there’s no doubt that Choueifaty has moved the dial.

“CIPO’s new guidance doesn’t go quite far enough, but it is a step in the right direction,” Fan said. “What the court has done is set the stage for every applicant to challenge the guidance and move it toward the standard that the courts envisioned.”

8. 9354-9186 Québec inc. v. Callidus Capital Corp. 2020 SCC 10

What’s significant about this Supreme Court of Canada decision, widely known as “Bluberi,” is that it represents the high court’s first stab at the growing phenomenon of third-party litigation funding — and does so in the context of insolvency proceedings.

“It’s quite rare for the SCC to step into an insolvency cases, if for no other reason that rarely do the parties have time for an SCC ruling to play out,” said Joseph Reynaud in Stikeman Elliott LLP’s Montreal office, who was lead counsel for Ernst & Young Inc., the court-appointed monitor in Bluberi.

The Supreme Court ruled that such funding is not intrinsically illegally, and that courts can approve it as “interim financing” in insolvency proceedings.

Although Canadian trial and appellate courts have widely endorsed litigation funding for some years now, its primary application has been in class actions and increasingly, in investor-state arbitrations.

In Bluberi, the issue arose because the Quebec Court of Appeal overturned a supervising judge’s approval of a creditor’s litigation funding agreement (LFA), which he characterized as an “interim financing.” But the Court of Appeal reasoned that the LFA was akin to a plan of arrangement and should have been put to a creditors’ vote.

The Supreme Court upheld the supervising judge’s order, concluding that interim financing was a flexible tool that could take on a range of forms, including third-party litigation funding in appropriate circumstances.

“The SCC’s ruling gives creditors who may not have the means to support litigation an opportunity to realize on their claims,” Reynaud said. “Litigation funding now becomes a powerful tool in maximizing recovery for insolvent companies’ stakeholders.”

7. 1704604 Ontario Ltd. v. Pointes Protection Association 2020 SCC 22; Bent v. Platnick 2020 SCC 23

These companion cases are the Supreme Court’s first consideration of Ontario’s anti-SLAPP (strategic lawsuits against public participation) legislation, enacted in 2015 to discourage defendants from using litigation as a tool to unduly limit expression on matters of public interest.

The decisions’ impact will likely go beyond Ontario, as both Quebec and B.C. have passed similar legislation.

The Supreme Court was unanimous in enunciating the appropriate framework for interpreting the legislation. It was also unanimous in allowing the anti-SLAPP motion in Pointes, and dismissing the original action, which alleged breach of a settlement agreement.

Platnick, however, demonstrates that unanimity — and perhaps even jurisprudential consistency — on the application of the framework may be difficult to achieve going forward: a bare 5-4 majority dismissed the anti-SLAPP motion and allowed the original defamation action to proceed.

Terry O’Sullivan of Lax O’Sullivan Lisus Gottlieb LLP in Toronto, who represented Lerners LLP, a defendant in the original defamation action, said that the majority misapprehended the priorities behind the anti-SLAPP legislation.

“The policy intent favoured free speech over access to the courts, but the majority seems to have been reluctant to give up courts’ jurisdiction to deal with redress in libel cases,” he said. “The decision will have a chilling effect on people speaking out, will make it more difficult for alleged libellers to escape using anti-SLAPP motions, and will encourage businesses to be a little more aggressive about suing when they think they’ve been defamed.”

6. Atlantic Lottery Corp. Inc. v. Babstock 2020 SCC 19

“Waiver of tort” has long been a thorn in the side of companies defending class actions. That’s no longer the case since the Supreme Court put the doctrine out to pasture in Atlantic Lottery.

“The decision clears up a tremendous amount of uncertainty for defendants,” said Julie Rosenthal of Goodmans LLP in Toronto, lead counsel for Atlantic.

The waiver of tort doctrine is essentially an assertion that “disgorgement for wrongdoing” based in negligence is an independent cause of action. It’s a time bomb for defendants, because it eliminates the need for plaintiffs to prove that they have suffered actual loss or injury: in other words, the doctrine asserts that mere proof of negligence mandates judgments requiring defendants to give up all profit resulting from their wrongful conduct.

“What we’ve seen over the last 15 years is a proliferation of actions where waiver of tort was thrown in with other claims, largely product liability claims, where the class couldn’t show any proof of loss,” Rosenthal said. “Because the scope of the theory was unclear, judges would certify, and then settlement would become very difficult because nobody knew what the appropriate parameters were for damages.”

This is the first of a two-part series.

Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at julius@legalwriter.net or https://legalwriter.net/contact.

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