On July 17, 2024, McCarthy Tétrault's National Appellate Litigation Group hosted our Appellate Quarterly webinar, featuring five recent appeals of interest to the business community. Partners Christine Wadsworth, Isabelle Vendette, Patrick Williams, Jocelyn Turnbull Wallace, and Adam Goldenberg discussed these recent decisions, as well as future developments to watch across the country.
Here are some key takeaways:
1. Availability of stays in favour of arbitration [Ontario]
In RH20 North America Inc. v. Bergmann,1 the Court of Appeal for Ontario provided guidance on when actions will be stayed in favour of arbitration. At the trial level, the defendants, including Click + Clean ("Click"), brought a motion to strike out some of the plaintiffs' claims as disclosing no reasonable cause of action. Click separately moved to stay the action against it on the grounds that its licensing agreement mandated all disputes should be arbitrated in London, England. The motion judge denied Click's motion to stay. Click cross-appealed on the basis that the motion judge failed to give effect to the arbitration clause. The Court of Appeal dismissed Click's cross-appeal. The Court ruled that, as per the framework laid out in Peace River Hydro Partners v Petrowest Corp.2, if the party applying for a stay in favour of arbitration has taken any "step" in court proceedings, a stay will be unavailable. Because Click had participated in the defendants' motion to strike, it had taken a "step" in the proceedings and waived its right to arbitration.
2. Contesting securities class action authorization [Quebec]
In Graaf c. SNC-Lavalin Group Inc.,3 the Court of Appeal of Quebec dismissed an application for authorization to file a class action asserting secondary market claims based on the Securities Act and the Civil Code of Québec. In doing so, the Court provided three key pieces of direction. First, the Court held that, when determining whether to grant authorization under section 225.4 of the Securities Act, motion judges must assess the probative value of expert evidence filed by the parties. Second, under sections 225.8 and 225.11 of the Securities Act, class actions will not be authorized if plaintiff investors have not acquired or disposed of the issuer's security between the time when the issuer released the impugned document or failed to make the timely disclosure of a material change and the time when the misrepresentation was publicly corrected or the change disclosed. Finally, the Court emphasized that a class action asserting secondary market claims based on Quebec's general rules of civil liability will not be certified unless the plaintiff pleads reliance on the alleged misrepresentation.
3. Guidance on domestic arbitrations [British Columbia]
Three recent decisions of the Court of Appeal for British Columbia provide guidance for domestic arbitrations regarding the ability to contract out of appeal rights and the timing of appeals.
In Bollhorn v. Lakehouse Custom Homes Ltd.,4 the Court held that parties can agree to abandon the right to appeal. The parties conducted an arbitration under the Vancouver International Arbitration Centre ("VanIAC")'s Expedited Procedures. The unsuccessful party sought leave to appeal to the Court of Appeal. While the (domestic) Arbitration Act permits appeals of arbitral awards with leave on questions of law, VanIAC's Expedited Procedures provide that there shall be no appeals without consent. The Court held that the applicant had identified a question of law, and subject to VanIAC's Expedited Procedures, the Court would have granted leave to appeal. However, in agreeing to VanIAC's Expedited Procedures, the parties had agreed to abandon the right to appeal. The Court confirmed parties can contract out of the appeal right.
In Desert Properties Inc. v. G&T Martini Holdings Ltd.,5 and Brown v. Smithwick,6 the Court addressed the 30-day time limit to seek leave to appeal domestic arbitration awards. In Desert Properties, the Court held that in cases where an award is corrected, the 30-day time limit starts from the day the corrected award is issued. In Brown, the applicant sought leave to appeal an interim award. The Court adjourned the application until the conclusion of the arbitration. However, the Court noted that the applicant had preserved their right to bring a leave application by filing within 30 days of the interim award. These two cases suggest that leave to appeal should be sought within 30 days of an award as there is no guarantee of corrections, nor is there a guarantee that waiting for the final award is permissible.
4. Irreparable harm in stay applications [Federal]
In Salt River First Nation #195 v. Heron,7 the Federal Court of Appeal provided clarification surrounding the test for granting stays pending appeal. Salt River First Nation ("SRFN") sought a stay of the Federal Court's order that SRFN pay Chief Heron the salary she lost while suspended from her position as Chief. The Federal Court of Appeal refused to grant a stay, reasoning that SRFN had not met the high threshold for proving the irreparable harm branch of the RJR-MacDonald test. The Court emphasized that irreparable harm must be proven with clear, compelling, and non-speculative evidence. The applicant must show that harm will occur and cannot be repaired if the stay is refused. On this basis, SRFN's arguments around reputational damage, possible loss of critical funding, harm to membership, and inability to recover funds from Chief Heron in future due to her impecuniosity all failed to meet the irreparable harm threshold. In addition to clarifying the test for irreparable harm, this case emphasizes the high bar for obtaining a stay in the federal courts.
5. Earthco and exclusion clauses [Supreme Court of Canada]
Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc.8 centres on the interpretation of exclusion clauses in sale of goods contracts. Pine Valley contracted with Earthco to supply topsoil for flooding remediation. The parties' agreement had an exclusion clause that provided that Pine Valley had the right to inspect the topsoil, and that, if Pine Valley waived this right, Earthco would not be liable for the topsoil's quality after delivery. Pine Valley waived its right to inspect, and the topsoil was later discovered to have a clay content that rendered it ineffective for its intended purpose. Pine Valley sued Earthco for damages, alleging breach of section 14 of Ontario's Sales of Goods Act. The Court of Appeal found that the exclusion clause was not sufficiently explicit, clear, and direct to exempt Earthco from liability.The Supreme Court of Canada disagreed. It held that the exclusion clause did indeed exempt Earthco from liability. Notably, the Court held that there are no "magic words" required to exclude risk of liability or implied terms under the Sales and Goods Act. Rather, the parties' objective intentions are paramount. To determine these objective intentions, courts must consider both the words and the factual matrix, in accordance with Sattva Capital Corp. v. Creston Molly Corp.9. Though this decision might result in less certainty in drafting, it may yield greater certainty in giving effect to the parties' intentions.
Footnotes
1. RH20 North America Inc. v. Bergmann, 2024 ONCA 445.
2. Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41.
3. Graaf c. SNC-Lavalin Group Inc., 2024 QCCA 303.
4. Bollhorn v. Lakehouse Custom Homes Ltd., 2024 BCCA 192.
5. Desert Properties Inc. v. G&T Martini Holdings Ltd., 2024 BCCA 24 ["Desert"].
6. Brown v. Smithwick, 2024 BCCA 83 ["Brown"].
7. Salt River First Nation #195 v. Heron, 2024 FCA 87.
8. Earthco Soil Mixtures Inc v Pine Valley Enterprises Inc, 2024 SCC 20.
9. Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53
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