Torys’ litigators explore the past year of disputes in Canada and what it tells us about the changing nature of litigation for business in the year to come.
From important rulings affecting contract law to courts weighing in on new issues emerging from technology advances and other evolving governance and business practices, we examine the latest trends shaping litigation.
This year, regulators and courts in Canada have taken on a range of cases that have set the stage for commercial disputes, class actions and enforcement action in 2022.
More clarity around contracts.
It was a busy year in corporate and commercial litigation. The courts have released several precedent-setting decisions that will have implications for contract dynamics in the long term. For dealmakers, there is now important guidance on material adverse event (MAE) conditions and ordinary course covenants, giving purchasers a clearer picture in deciding whether to assert an MAE and walk away from a transaction. The law on the duty to exercise contractual discretion in good faith is also evolving, and parties negotiating discretionary rights in their contracts will want to be specific as to when, and the circumstances in which, discretion can be applied. And finally, the courts are moving away from a more literal interpretation of contractual releases, which may result in them capturing a broader scope of released claims than has traditionally been the case. Parties will want to consider this shift in the courts’ approach and draft their releases accordingly.
Know your procedure.
As Ontario becomes less class-action friendly, companies will want to be mindful of class actions arising in jurisdictions where there are lower bars to certification, such as in Western Canada, which may lead to new jurisdiction arguments for companies whose head office is in Ontario. Meanwhile, in Québec more class actions are going to trial, which may help develop the jurisprudence in Québec in a variety of areas, which could add some certainty to the law.
Courts are addressing data breach and other privacy related class actions with a theory of liability that depends on evidence of harm, rather than feared consequences of a breach. This may lead to a higher bar for plaintiffs bringing privacy-related class actions. Similarly, the combination of vaccine injury jurisprudence and a new government no-fault vaccine injury regime underscore that when it comes to product liability claims, proving causation is complex and also remains a high bar in Canada. Lastly, the law as it pertains to intellectual property protection is in a state of flux—and parties will need to prepare for the possibility that a court challenge may be necessary when it comes to attempting to secure CSP protection and on matters of pharmaceutical pricing in Canada.
On the horizon.
As cryptocurrency, meme stock short selling, client-focused reforms and other developments disrupt the landscape for securities market participants, increasing attention should be paid to responses from regulators which could have potential knock-on effects that heighten litigation risk. For companies with e-commerce platforms, the Competition Bureau is allocating more resources to investigations and enforcement as it shifts its focus to technology, data and digital commerce—signaling areas of potential enforcement action for businesses, including class action risks. Consumer-facing businesses in particular will want to keep watch on the growing area of consumer protection class actions, including in Québec, particularly as COVID-related consumer protection claims are being heard by courts. And as online commerce evolves, IP management may see the nascent area of “virtual trademarks” develop.
Can the design of a pension plan constitute employee discrimination? A new ruling from the Supreme Court may impact pension funds and employers in Canada more broadly in terms of adverse impact discrimination disputes going forward. As we see more employment litigation generally, including discrimination and harassment-related claims, organizations should be aware that more of these types of class actions may lie ahead.
And finally, with courts across Canada all over the map in interpreting the application of the Supreme Court’s 2019 ruling in Vavilov to commercial arbitration, we are likely to see further guidance to shed light on the degree of deference courts will give to the arbitration process in commercial arbitrations.
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