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Business Disputes: Key Canadian Rulings of 2023

December 20, 2023
It’s been an eventful year in business disputes, with important decisions coming from courts across Canada. In this episode of our podcast, Blakes litigators Francis Rouleau, Karine Russell and Sophie Mansfield discuss some of the most influential decisions of 2023, and Max Shapiro highlights a trend to watch in 2024.


Mathieu: Welcome to the Blakes Sound Business podcast. I’m Mathieu Rompré.

Nathan: And I’m Nathan Kanter. Today, we’re taking a look at several game-changing decisions to come out of Canadian courts in 2023.

Mathieu: From commercial litigation to class actions, the evolving case law is creating new considerations for businesses. Joining us to talk about the decisions that have been top of mind for them are Blakes lawyers Karine Russell, Francis Rouleau and Sophie Mansfield.

Nathan: And looking forward at what 2024 has in store for us, Max Shapiro tells us about one area of litigation to watch.


Nathan: In August, the British Columbia Court of Appeal released Williams v. Amazon Inc., perhaps the most significant decision dealing with arbitration agreements in contracts since the Supreme Court of Canada’s 2020 ruling in Uber Technologies v. Heller. Karine, can you give us a bit of background on this proposed class action?

Karine: Absolutely. In the Williams case, the plaintiff created an online account to make purchases from Amazon’s online marketplace. In doing so, he accepted Amazon’s electronic conditions of use, which contain an agreement to arbitrate all disputes relating to the agreement.

The plaintiff then commenced a proposed class action in the B.C. Supreme Court alleging that the defendant’s business practices breached consumer protection legislation and the Competition Act, among other things.
The defendant successfully applied to the B.C. Supreme Court for a stay of the action on the basis of the arbitration agreement, except for certain consumer protection claims that the Supreme Court of Canada had previously ruled are not arbitrable.

After that stay was granted, there was a separate proposed class action started in the Petty case against Niantic, Inc. and other defendants regarding loot boxes and purchases in mobile video games. A stay was similarly granted on all but the consumer protection claims because there was also an arbitration agreement in the electronic terms of service that the plaintiffs agreed to before playing the games in issue.

Nathan: So, on appeal, the B.C. Court of Appeal upheld the stays of these actions. How did the court interpret British Columbia’s arbitration laws, and what can businesses take away from the decision?

Karine: These appeals were heard the same week and by the same panel of the B.C. Court of Appeal. The Court of Appeal observed that by virtue of B.C.’s arbitration legislation, and in the absence of other applicable legislative limits on the enforceability of arbitration agreements in the province, the court must make an order staying legal proceedings commenced outside of arbitration unless it finds that the arbitration agreement is void, inoperative or incapable of being performed. This establishes a presumption in favour of enforcing arbitration agreements, unlike in some other provinces where legislation voids mandatory arbitration provisions in standard form consumer contracts.

The Court of Appeal determined that the chambers judge’s decisions, which involved questions of mixed fact and law, were entitled to deference. The plaintiffs had unsuccessfully argued that the findings in the 2020 Supreme Court of Canada decision in Uber Technologies Inc. v. Heller — where the majority found that an arbitration agreement in a contract with a delivery driver was unconscionable and therefore not enforceable — meant that these arbitration agreements were also unenforceable. The court disagreed. The court looked at the facts, and in considering the specific facts and evidence in each of these cases on appeal — including the tailored arbitration processes provided for in each case, the nature of the contracts at issue and the positions of the plaintiffs in relation to the defendants — found that these cases were profoundly different than the situation in the Uber case.

While an inequality of bargaining power existed between the plaintiffs and the defendants in these cases, it did not result in an improvident bargain and therefore did not give rise to a finding of unconscionability. Neither case involved contracts of necessity, and in each case the arbitration processes provided for were low or no cost to the consumers. Although the plaintiffs wanted to pursue their disputes through class actions rather than arbitration, this is not a relevant factor on a stay application.

These decisions confirm that post-Uber, in the absence of clear legislative intention to limit arbitration of consumer claims, arbitration agreements remain generally enforceable. This is so even in standard form consumer contracts of adhesion if the arbitration process provided for is accessible and offers a viable means for resolving the dispute. These recent decisions underscore that Canadian courts accept arbitration as a viable method of dispute resolution.

Mathieu: Francis, in October, the Supreme Court of Canada ruled on a notable commercial case originating in Quebec. Ponce v. Société d’investissements Rhéaume focuses on the legal and good faith obligations that a corporation’s officers owe to its majority shareholders. Can you summarize this case for us?

Francis: Sure, Mathieu. So the case is about Mr. Ponce and Mr. Riopel, the appellants before the Supreme Court, who were both presidents and directors of a group of three companies where the majority shareholders were the respondents named in the Supreme Court of Canada decision.

The issue really turned on whether the appellants had a duty to inform the shareholders about the interest that was expressed by a major insurance company in acquiring the companies for which the investment companies were named as respondents and who were the shareholders that were suing Mr. Ponce and Mr. Riopel, alleging that they had breached a duty. And really, the Supreme Court wanted to consider and refine the basis and parameters of the duty owed by these two presidents as officers and directors of the companies.

The Supreme Court first held that the presidents did not have a fiduciary-type obligation of loyalty or of good faith that was owed to the shareholders as it was confirmed in the BCE decision, which was previously rendered by the Supreme Court. However, the specific fact, which is interesting in this case, is that the presidents had entered into a compensation and incentive agreement with the shareholders to bring value to the companies, and on the basis of this agreement, the Supreme Court held that the presidents did indeed have not only an obligation of good faith in informing the shareholders about this opportunity of the purchase of the companies by this major insurance carrier, but also had an implicit obligation to inform them that arose out of this agreement that was entered between the parties based on the incentives and value that the presidents had to bring to the companies.

So the novel issue that arose in this case and in the lower courts was really a confirmation that an obligation of good faith in the context of corporate relationships between officers and companies does exist as a result of a parallel contractual agreement.

Mathieu: This matter clearly dealt with the constant struggle to find, in a corporation, the right balance between the interests of the shareholders and the directors’ duties to shareholders. What impact do you expect this decision to have on other companies?

Francis: Well, I think the impact or rather the takeaway will be that shareholders, if they want to attract talent to a company in order to manage the affairs of the company, and by attracting this talent are prepared to enter into agreements to motivate these talents to bring value to the company, will have to make sure that the agreements are drafted in such a way as to not either impose greater obligations on these officers or directors of the companies. Otherwise, the Supreme Court did confirm here that irrespective of the fact that the officers or presidents in this case did not owe a fiduciary duty to the shareholders, they did, however, owe an important obligation of good faith and an obligation to inform the shareholders as a result of this parallel contractual agreement.

Nathan: Sophie, you were part of the Blakes team that worked on a unique case before the Alberta Court of King’s Bench last July. In the matter of HEAL Global Holdings Corp, a group of shareholders successfully opposed a proposed plan of arrangement, which was denied on all grounds. Can you highlight some of the findings that the court relied on to conclude that the arrangement was neither fair nor reasonable?

Sophie: Yes. This arrangement was quite unique because, even though all parties to the arrangement were in favour of it, the court still refused to approve it. And in finding that the arrangement was not fair or reasonable, the Alberta Court of King’s Bench noted that there was quite a bit of shareholder opposition to the arrangement, and part of that was because the majority of the shares that actually voted for the arrangement were voted by parties that had already approved or agreed to the arrangement.

The court also found that the arrangement was quite problematic because it would have resulted in different classes of one of the party’s shareholders that were going to be treated differently and have different rights and privileges.

Another concern for the court was that, between the time that the first interim order was granted and the ultimate approval, there was quite a significant deterioration of one of the corporation’s financial circumstances, and what was most concerning was that that was not communicated to any of the shareholders.

And finally, one of the main points that the court took issue with was that the shareholders were given very limited information overall about how the share price for the arrangement was actually going to be determined, and this lack of information was compounded by the fact that there was no fairness opinion obtained by any of the parties to the arrangement and no special committee was formed. And so it wasn’t only the shareholders that didn’t have the necessary information, but also the court was left without a foundation to be able to properly consider the arrangement.

Nathan: So what does all of this mean for businesses looking to participate in an arrangement?

Sophie: This decision is interesting because it helps to highlight that even when all parties to an arrangement agree to proceed and all voting shareholders support the arrangement, sufficient evidence is still needed to be able to show the court that the arrangement is fair and reasonable for all relevant stakeholders, and it provides some helpful points for businesses to keep in mind when considering whether to participate in an arrangement and how that would look.

And that includes ensuring that all shareholders are properly advised and have all of the up-to-date information, and ensuring that there’s information available to the shareholders and to the court about how the share value for an arrangement was determined. So corporations must ensure that shareholders have all of the accurate information about the share price, whether that’s through a fairness opinion or a special committee. The situation might decide whether that’s appropriate. It’s not always a requirement. But the ultimate decision needs to be that the shareholders have enough information to be able to see that the share value was determined with a reasonable basis and not just sort of randomly decided by the corporations.

And a very interesting point for corporations to keep in mind is that, just because there is the potential for insolvency with one of the corporations if the arrangement was not to be approved, that doesn’t mean it’s a rubber stamp for the court to approve it. While the benefit of a corporation’s continued existence from an arrangement is a positive outcome, the court does not see that as a sufficient reason alone to approve an arrangement, and the ultimate decision is that it must be fair and reasonable.

Mathieu: So, let’s go to our Toronto office now to hear about one area of litigation to watch in 2024. The impact of the COVID-19 pandemic on the aviation industry has received a lot of coverage, but when it comes to disputes, many of the headlines have been about proposed class actions rather than commercial disputes.
So, Max Shapiro, what developments in business-to-business litigation will the aviation industry be watching closely over the next year?

Max: It’s a great question. The aviation sector is now on a positive rebound from the COVID pandemic, which impacted, as most people know, demand, staffing and supply chains. Coming out of that, we’re seeing a return of classic commercial disputes that in many cases had been paused while industry participants focused on survival. These business-to-business disputes arise when significant new investments are pumped into new aircraft fleets and related infrastructure. During the pandemic, we saw a number of Canadian carriers focused on modernizing their fleets as well as growth from a number of startup airlines whose launch plans had been delayed because of the pandemic.

While there are many types of commercial aviation disputes, including over such things as facilities being built, delays in aircraft delivery or the purchasing of critical parts, I think the industry will be especially interested in monitoring disputes about aircraft leasing arrangements. There have been several high-profile such disputes in the last few years between lessors which have leased aircraft that they own to airlines. And these disputes typically focus on, first, whether there are events of default under an aircraft lease, which will typically give the lessor certain rights and remedies; second, what damages can be recovered if a lease is terminated; and third, whether the aircraft meets the required maintenance conditions, both at the start of the lease and on the aircraft’s return at the end of the lease.

Mathieu: What impact might these disputes have on the industry?

Max: The analysis in these cases is usually very fact-specific and depends on the particular leases, but big-picture, the industry will be interested in whether there is an overall uptick in these types of disputes. This kind of uptick could suggest difficulties in the market where lessees are running into challenges meeting their contractual commitments to lessors.

Mathieu: Another related dispute area of interest in Canada is the application of lessor rights and remedies under the Cape Town Convention and Aircraft Protocol. Can you tell us a bit about this treaty and why it’s topical now?

Max: Sure. This is an international treaty ratified by Canada, governing the registration and enforcement of security interests in aircraft. Where it applies, the treaty provides that lessors can exercise certain enforcement remedies where there has been an event of default, without the need for a court order. One such remedy is the ability to de-register an aircraft in the country where it is registered, which effectively prevents the debtor from further operating it.

The reason the Cape Town Convention is topical is because the issue came up in a 2022 Alberta case called Avmax Aircraft Leasing v. Air X Charter, where that province’s court of appeal made two important findings. First, it confirmed that the Convention was ratified by Canada and adopted into domestic law. That overturned a lower court decision that the Convention had no legal effect. And the second important finding was that it provided clear appellate-level guidance on the proper interpretation of what the court called “extrajudicial,” or what you sometimes hear described as “self-help” remedies available under the Convention.

Importantly, the court acknowledged that the Convention provides a mechanism for creditors to control and to preserve the value of aircraft while disputes between debtors and creditors over events of default are resolved. This confirmation about the availability of Cape Town remedies in Canada was an important result for the aircraft financing community. It now remains to be seen when, and not if, aircraft lessors will exercise self-help remedies when leasing disputes arise in Canada in addition to any other remedies they may pursue, and all of us will be closely watching.


Nathan: Thank you, Karine, Francis, Sophie and Max, for unpacking these disputes for us.

Mathieu: Listeners, for more insights related to litigation and dispute resolution, please visit

Nathan: Until next time, stay well.


About the Blakes Sound Business Podcast

Our Blakes Sound Business podcast examines how changes in the Canadian legal landscape can impact businesses. Lawyers across our offices discuss the unique challenges, risks, legal developments, opportunities and government policies that you need to be aware of. We also cover diversity and inclusion and other social responsibility topics that matter to you.

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