Canada updates

Arbitration & ADR

Attempting to consolidate arbitral and non-arbitrable disputes can compromise arbitration agreements
  • Canada
  • 28 March 2019

The Ontario Superior Court recently considered the application and operability of an arbitration clause in a subcontract in the context of a related claims proceeding under a related main contract. The case highlights the challenges involved in drafting pre-dispute arbitration clauses that will operate effectively when multiple claims arise between multiple parties under multiple contracts.

Court of appeal declares notice to arbitrate null due to its attempt to achieve consolidation without consent
  • Canada
  • 17 January 2019

The British Columbia Court of Appeal recently declared a notice to arbitrate a nullity because it sought to commence four separate arbitrations against three different parties under four separate arbitration agreements. Practitioners and parties entering into multiple contracts relating to the same subject matter or project should consider whether it is desirable to have all potential disputes which arise under the multiple contracts arbitrated in one proceeding.

Consolidation of arbitration proceedings without consent: cautionary tale
  • Canada
  • 06 December 2018

In a decision that is inconsistent with the weight of Canadian and international jurisprudence, the Court of Queen's Bench of Alberta recently ordered the consolidation of arbitration proceedings without the consent of all parties. For now, parties and practitioners should be aware that arbitrations seated in Alberta may be subject to consolidation without consent.

Court clarifies when international arbitral awards become binding
  • Canada
  • 27 September 2018

The Ontario Court of Appeal recently interpreted when an international commercial arbitration award becomes binding on the parties for the purposes of judicial recognition and enforcement of foreign arbitral awards. It held that the determination of whether an award is binding pursuant to Articles 35 and 36 of the United Nations Commission on International Trade Law Model Law rests with the court rather than the arbitral tribunal.

Quebec court consolidates law on third-party funding agreements: impact on commercial arbitration
  • Canada
  • 28 June 2018

Third-party funding in commercial arbitration in Canada has moved increasingly into the mainstream. Its implementation is largely influenced by the treatment of third-party funding in litigation, which is why it is important for arbitration practitioners in Canada to continue to follow jurisprudential trends regarding the treatment of third-party funding. A recent third-party litigation decision from Quebec provides valuable insight for arbitrators in this regard.


Aviation

Contributed by Bersenas Jacobsen Chouest Thomson Blackburn LLP
Court rules EU Flight Delay Compensation Regulation claim cannot be enforced as breach of contract
  • Canada
  • 11 September 2019

A recent decision from the Ontario Small Claims Court marks the first time that a Canadian court has considered whether EU air passenger rights legislation can be enforced outside Europe. This decision will be of interest to carriers operating flights between Canada and Europe, as it holds that a tariff that does not expressly incorporate the EU Flight Delay Compensation Regulation will not expose a carrier to breach of contract claims brought in Canada for declining to pay compensation under the regulation.

Canada's Air Passenger Protection Regulations coming into force
  • Canada
  • 19 June 2019

Following several rounds and many months of consultations, the government recently announced that the Air Passenger Protection Regulations (APPRs) developed by the Canadian Transportation Agency have been finalised. The APPRs apply to all flights within, from or to Canada, whether operated by a Canadian or foreign airline. Once in effect, the regulations will impose obligations on carriers in cases of tarmac delays, denied boarding and delayed and cancelled flights.

Proposed class action takes aim at airport fees paid by airline employees
  • Canada
  • 05 June 2019

Three dozen Canadian airports may be on the hook for fees charged to airline employees flying on employee travel passes. A proposed class action has been commenced in the Federal Court of Canada claiming compensation for airline employees who paid certain fees which the representative plaintiff claims should not have been paid pursuant to agreements signed by the defendant airports.

Quebec court rules 'one passenger one ticket' policy applies in class action
  • Canada
  • 15 May 2019

The Quebec Superior Court of Justice recently ruled against Air Canada in a class action brought by passengers with disabilities, their attendants and obese passengers who had been required to pay for additional seats on flights. This decision confirms that carriers that do not abide by a 'one passenger one ticket' policy may be liable for discriminating against passengers with disabilities and obese passengers who require more than one seat.

Superior Court rules on entitlement to lost luggage compensation
  • Canada
  • 03 April 2019

The Ontario Superior Court of Justice recently ruled that in order to claim damages for lost luggage under the Montreal Convention, a passenger need not have personally checked the luggage. This decision partially affirms a decision of the province's Small Claims Court, in which the deputy judge held that, despite only one passenger in a group having checked in all of the bags, each passenger had been entitled to claim damages for lost luggage.


Corporate Tax

Contributed by Thorsteinssons LLP
Budget 2019: intensifying fight against tax evasion and new risks for tax professionals
  • Canada
  • 19 April 2019

In Budget 2019 the federal government has continued to bolster its tools and resources to detect and prosecute tax evasion. As such, several measures have been proposed, including a C$150.8 million investment over the next five years to fund new initiatives. More so than ever, tax professionals should be well acquainted with various definitions to ensure that their client services and advice cannot be construed as the commission or facilitation of a criminal offence.

Federal government tables 2019 Budget: investing in middle class
  • Canada
  • 12 April 2019

The minister of finance recently tabled the 2019 Budget. As a pre-election budget, the government appears to have shied away from tax measures that could receive negative backlash from the business community. Among other things, the government is proposing to expand the foreign affiliate dumping rules to apply to Canada-resident corporations that are controlled by non-resident individuals or trusts.

Continued erosion of taxpayer privacy
  • Canada
  • 22 February 2019

The Canadian Broadcasting Corporation recently reported that the Canada Revenue Agency has transferred more than 1.6 million Canadian banking records to the US Internal Revenue Service since the intergovernmental agreement for the enhanced exchange of tax information under the Canada-US Tax Convention was entered into in 2014. The agreement provides lengthy and detailed rules with respect to the information that the Canadian government must transfer to the United States.

TFSA advantage tax: heads CRA wins, tails you lose
  • Canada
  • 14 December 2018

Earnings within tax-free savings accounts (TFSAs) and other tax-deferred plans are, in principle, supposed to grow tax free. However, some taxes still apply, including the advantage tax which applies at the rate of 100% of any 'advantage' (as defined in the Income Tax Act). This tax has become one of the Canada Revenue Agency's favourite tools to effectively expropriate what it views as improperly boosted returns within a TFSA.

Federal Court refuses to authorise abusive fishing expedition by CRA
  • Canada
  • 14 September 2018

The Federal Court has made a strong statement against an interpretation of the Canada Revenue Agency's (CRA's) powers that would allow almost unlimited invasions of taxpayer privacy. The force with which the court rejected the self-serving interpretation advanced by the CRA should be encouraging for taxpayers. The case serves as an important reminder that the CRA cannot act outside the bounds of law and that it is the courts, and not the CRA, that interpret the law.


Employment & Benefits

Contributed by Fasken
Constructively dismissed? Maybe, but get back to work
  • Canada
  • 18 September 2019

A recent decision reaffirms that employees must return to work following a constructive dismissal to mitigate the damages that they caused where doing so would not be embarrassing, humiliating or degrading. In such cases, employers should consider whether it is appropriate to re-offer an employee the opportunity to return to work following an allegation of constructive dismissal, as this could greatly limit the damages and their potential liability in litigation.

Please hold the line: what to do when receiving calls from employment insurance officers
  • Canada
  • 11 September 2019

An adjudicator considering allegations of unjust dismissal under the Canada Labour Code recently ruled that an employer was prohibited from asserting dismissal for misconduct since the issue had already been decided by an employment insurance officer. The decision reminds employers to proceed with caution when communicating with employment insurance officers after a termination. They should also consider the potential ramifications of not appealing an officer's decision.

Unintentional discrimination is still discrimination
  • Canada
  • 04 September 2019

The Human Rights Tribunal of Ontario recently held that a law firm discriminated against an applicant because of his age and race, and by failing to investigate his discrimination complaint. This decision is an important reminder for employers to be careful in how they assess and treat candidates during the recruitment process. Among other things, employers should be courteous in their communications with all candidates and avoid engaging in arguments with them.

Is sex addiction a disability?
  • Canada
  • 28 August 2019

Can a unionised employee be fired for masturbating at work or is there a duty for employers to accommodate this conduct as a sex addiction? These were the novel questions considered in a recent case. The decision does not end the dispute about whether a sex addiction is a recognised medical condition that could be a disability, but it does reinforce the importance of progressive discipline in upholding a cause termination.

Does desire to work prevent employers from terminating employees who can't work?
  • Canada
  • 21 August 2019

Many employees struggle to manage disability leave. This is particularly difficult when an employee wants to work but their doctor says that they cannot do so for the foreseeable future. A recent decision provides guidance to employers dealing with this situation. For example, they should proactively manage disability leave by, among other things, staying up to date on an employee's potential to return to work.


Franchising

Contributed by Lapointe Rosenstein Marchand Melançon LLP
Franchisee or employee in disguise?
  • Canada
  • 18 June 2019

Franchising communities in Quebec and elsewhere in Canada have been eagerly awaiting a Supreme Court of Canada decision on whether an unincorporated franchisee operating a two-person cleaning services business in Quebec as part of a cleaning services franchise network qualified as an employee. While the court's ruling may be worrisome to franchisors in certain industries, there are several mitigating factors to consider.

Limits of good faith and relational nature of franchise agreements in Quebec
  • Canada
  • 26 March 2019

The Supreme Court of Canada recently reiterated the fact that franchise agreements are relational contracts and are therefore subject to a heightened duty of good faith pursuant to Quebec civil law. This decision is in line with a series of recent Quebec civil law decisions that have broadly interpreted, and arguably extended, the duty of good faith owed by a franchisor to its franchisees.

Will a franchisee's rescission claim stay or will it go? Mandatory mediation may result in stay of proceedings
  • Canada
  • 18 December 2018

It has become common practice to include alternative dispute resolution (ADR) provisions in franchise agreements. A recent decision by the Ontario Court of Appeal serves as a stark reminder to franchisors to ensure that ADR provisions contained in a franchise agreement are properly drafted so that the commencement of disputes thereunder triggers the running of the applicable limitation period.

To be an employee or not to be – that is once again the question
  • Canada
  • 13 November 2018

The issue of whether a franchisee is an employee or an independent contractor has been debated on numerous occasions and was once again raised in a recent Quebec Court of Appeal decision. In its decision, the court emphasised that when analysing whether a franchisee qualifies as an employee or an independent contractor, the courts should look beyond the terms of the agreement between the parties. While this decision may worry certain franchisors, there are a number of mitigating factors to consider.

Franchisor caught between rock and hard place: importance of clear exclusivity clauses
  • Canada
  • 21 August 2018

Franchise arrangements often involve a three-way relationship whereby franchisors enter into commercial leases with landlords and then sublease the rented premises to franchisees. Such leases often contain an exclusivity clause limiting the landlord's ability to lease nearby commercial space to competitors of the franchise network. The Superior Court of Quebec recently confirmed that exclusivity clauses must be interpreted and applied restrictively so as not to unduly interfere with the parties' freedom of contract.