LEXPERT MAGAZINE
|
JANUARY/FEBRUARY 2017 39
| TOP DECISIONS |
D'Silva of Stikeman Elliott LLP in Toronto
argues that a hearing with a merits compo-
nent comports with the legislative intent.
"When the Canadian Securities Admin-
istrators invoked the need for a leave test,
they were definitely thinking of a hearing
on the merits," he says. "But that doesn't
mean each leave hearing will involve a full-
out, extensive evidentiary record, because
each case will be different."
What is certainly clear is that leave hear-
ings must now involve a weighing of what-
ever evidence is brought forward. Herein,
however, lies an unanswered question.
"e Supreme Court has spoken on the
level of proof necessary for the plaintiff to
meet the leave test but has not at all ad-
dressed the level of proof necessary for a de-
fendant raising a defence to the plaintiff 's
allegations," says commercial litigator John
Campion in Toronto.
Nonetheless, there's little doubt that
litigation strategy will change dramatically.
"When courts were treating leave applica-
tions like rubber stamps, there was always
a real discussion as to whether the defence
should consent to leave instead of subjecting
clients to invasive cross-examinations," Laing
said. "But now that the test has teeth, there's
more upside to fighting leave vigorously."
2
Ledcor Construction v.
Northbridge Indemnity
Insurance (SCC, ABCA)
e SCC's 2014 decision in Sattva v. Cres-
ton was the second case on Lexpert's Top 10
business decisions list for that year. Reject-
ing the traditional view that contractual in-
terpretation involves pure questions of law,
the court ruled that the exercise engaged
questions of mixed fact and law, meaning
that rulings on contractual interpretation
could only be successfully appealed if they
met a very deferential standard of "reason-
ableness," which required identification of
a palpable and overriding error by the trial
or motions judge.
e business community lauded the
SCC's approach, noting that it promoted
certainty in commercial dealings and was
in accord with both commercial reality and
the way courts had been approaching con-
tractual interpretation in recent years.
But following the decision, Mary Pater-
son of Osler, Hoskin & Harcourt LLP in
Toronto predicted that the landmark rul-
ing would take a while to flesh out. "It's rare
to see the court turn the common law on its
head," she said. "So many things depend on
whether an issue is a question of law or of
mixed fact and law, including the availabil-
ity of civil appeals and reviews of arbitra-
tors' decisions, that it will be a while before
we see the full scope of this judgment."
As it turns out, it didn't take that long.
Just about two years later, the SCC got a
chance to reconsider Sattva in the context
of standard-form contracts. At issue in
Ledcor was the interpretation of an exclu-
sion clause in a standard-form construction
insurance contract.
MARY PATERSON
OSLER, HOSKIN & HARCOURT LLP
It's rare to see the court turn
the common law on its head.
So many things depend on
whether an issue is a question
of law or of mixed fact and
law, including the availability
of civil appeals and reviews of
arbitrators' decisions, that it will
be a while before we see the full
scope of this judgment."
"
e Alberta Court of Appeal distin-
guished Sattva and applied a much less
onerous "correctness" standard of appellate
review. e SCC agreed. e court held
that "reasonableness" was not the appropri-
ate standard of review for standard-form
contracts where the interpretation at issue
had precedential value and lacked a mean-
ingful factual matrix specific to the parties.
When these conditions arose, the interpre-
tation of the contract was better character-
ized as a question of law, subject to the cor-
rectness standard.
"e decision is important because so
many commercial contracts — everything
from buying a plane to dropping shoes off
at a cobbler to buying construction mate-
rials to securities agreements to insurance
policies — are standard-form contracts,"
says Eugene Meehan of Ottawa's Supreme
Advocacy LLP, who with in-house coun-
sel Stacy Boothman, represented Ledcor.
"Who among us hasn't filed an insurance
claim or isn't likely to do so at some point
in the future? at's how universally im-
portant this area of the law is."
e decision, Meehan adds, significantly
changes the way commercial lawyers will
be looking at standard-form contracts.
"When you combine the contra preferen-
tem rule with Ledcor, it's apparent that ex-
ternal lawyers and in-house counsel have to
dra very clear contract clauses to avoid the
higher vulnerability to which their clients
are now exposed."
3
Canada v. Chambre
des notaires du Québec;
Canada v. Thompson
(SCC, ABCA)
e Income Tax Act recognizes solicitor-
client privilege, but excludes "an account-
ing record of a lawyer" from that privilege.
ese cases, which involved Canada Rev-
enue Agency demands for information
from lawyers and notaries, challenged the
constitutionality of that exclusion, and
both succeeded.
According to Michael Feder, who with
colleague Emily MacKinnon of McCar-
thy Tétrault LLP in Vancouver represented
Duncan ompson, the taxpayers not only
succeeded, but succeeded in spades. "e
SCC blew a hole in the ITA provisions
that apply to the investigation of lawyers
and notaries," he says. "Previously, there
was ambiguity in the law as to whether
legislators could deem something to be not
privileged, but this case makes it clear that
solicitor-client privilege can't just be legis-
lated away — that it's not just a presump-
tion that applies to lawyers and notaries but
a true constitutional principle."
