In 2020, the Supreme Court of Canada tested the boundaries between public and private law, releasing several decisions in which the Court grappled with the role the courts should play in compelling parties to uphold public standards of justice. justice and equity in their private transactions. The following is a case commentary on these key decisions.
2020 has been an unprecedented year for private law cases at the Supreme Court of Canada. The Court began the year with an unprecedented decision in Nevsun Resources Ltd v Araya, where a divided court debated the role of public international law norms in defining private civil remedies. He ended the year with another groundbreaking decision in CM Callow Inc vs. Zollinger, regarding the scope of the duty of honest performance, where the Court, while reaching a clear result, once again showed deep disagreement over how public standards of fairness and justice should inform how whose private obligations the Court considers.
Along the way, the Court made sweeping changes, abolishing the doctrine of waiver of tort (in Atlantic Lottery Corp Inc v. Babstock) and expanding the doctrine of iniquity (by Uber Technologies Inc vs. Heller) new ways that might invite a more in-depth examination of standard contracts.
“2020 has been an unprecedented year for private law cases at the Supreme Court of Canada. The Court started and ended the year with unprecedented decisions.
The issues debated in these cases – in many cases opening deep fault lines in the Court – are more than mere philosophical disagreements. In terms of principles and results, this year has shown (although not universally) a marked trend. A growing consensus is forming within the Court, showing a growing willingness to resolve private disputes by applying more universal “public” standards in a way that undermines the traditionally strong common law preference for individual autonomy and private order as the main source of civil obligations.
Nevsun Resources Ltd v Araya
The Court kicked off this public-private debate and started 2020 on a high note, delivering a ruling that opened the door to a whole new private law cause of action rooted in the violation of public international law norms taking place in a other country.
In Nevsun, three Eritrean conscripts alleged that they were forced to work in a mine in which a Canadian company, Nevsun, had an indirect controlling stake. In addition to forced labor, they alleged that they had been subjected to violent, cruel, inhuman and degrading treatment. They claimed damages against Nevsun for violations of customary international law standards prohibiting such treatment. They also claimed damages for domestic torts based on the same behavior, including conversion, bodily harm, “unlawful confinement” (false imprisonment), conspiracy and negligence. The defendant, Nevsun, requested that the claims be struck out, alleging that the claims disclosed no reasonable cause of action for violation of customary international law and that the state act doctrine precluded Canadian courts from assessing the legality of sovereign acts of the Eritrean State committed in Eritrea. Nevsun’s motion to strike the claims was dismissed in the British Columbia Supreme Court and the British Columbia Court of Appeal.
In a final decision, a majority of a deeply divided Supreme Court of Canada dismissed the appeal, allowing prosecutions based on customary international law. Abella J. for the majority and Brown J. for the dissenting judges took very different approaches to private law, with Abella J. finding no reason why Canadian courts could not apply customary international standards in recognizing a civil action between private parties for violating these standards. Justice Brown strongly disagreed, noting the absence of any principled basis for the majority’s use of public international law norms to create a private civil action in Canada based on conduct occurring in one country. foreigner. As Justice Brown noted, there is no consensus capable of creating a customary international law standard granting private parties causes of action to defend those standards, noting the irony that the majority would allow such claims. private even though Canadian courts would not recognize a similar private right. claims for violation of national laws such as the penal code.
“In a radical decision in Nevsun Resources Ltd v Araya, a majority of a deeply divided Supreme Court of Canada dismissed the appeal, allowing prosecution under customary international law. “
Because it was born out of a plea motion, Nevsun did not create a cause of action. But the fact that the majority was ready to consider the issue opened up a wider debate that continued throughout the year about how “public” standards of justice and fairness should influence questions of justice. private right.
Calludes and Capital steel: A coherent approach to insolvency
Tellingly, the disagreement between members of the Court was less acute in the two major insolvency decisions issued this year,
9354-9186 Quebec inc c Callidus Capital Corp (“Callide“) and Chandos Construction Ltd c Restructuring Deloitte Inc (“Capital steel“).
Callide was a unanimous decision, and Capital steel included a single dissent from Côté J.
Callide was a CCAA case concerning the scope of a supervising judge’s discretion to prohibit a creditor from voting on a plan when its vote is tainted with an improper purpose. He also considered whether a supervisory judge can approve a litigation financing agreement as interim financing when the litigation involved a claim against the secured creditor whose vote was rejected. Callide was remarkable mainly because of what he didn’t decide. Whether and on what grounds it was appropriate for Callidus to relinquish his security and vote on his own plan of arrangement could have led the Court into a canyon that would have caused it to grapple with the principles of subordination. fair. By avoiding fixed rules, both as to the vote of creditors and as to the appropriateness of financing litigation as interim financing, the Court preserved the broad discretion of supervisory judges under the CCAA to monitor effectively pragmatic the good faith of stakeholders in major insolvencies.
Likewise, in Capital steel, the other major insolvency decision of 2020, a strong majority of eight judges reaffirmed the continued relevance of the anti-deprivation rule, a principle of public order that invalidates the provisions of private agreements that remove value from heritage of a debtor in the event of insolvency. Capital steel concerned a provision of a private agreement between a contractor and a subcontractor in which the subcontractor undertook to pay the contractor compensation for disruption corresponding to 10% of the price of the subcontract in the event of bankruptcy of the subcontractor.
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