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Issue 68 | March 2021

LIANSWERS

This newsletter includes information to help lawyers reduce the likelihood of being sued for malpractice. The material presented is not intended to establish, report, or create the standard of care for lawyers. The articles do not represent a complete analysis of the topics presented, and readers should conduct their own appropriate legal research.
Make it So: Recent Decisions of Interest

Though this newsletter typically focuses on risk, practice management and loss prevention, we are regularly asked to write on substantive topics. Like we did last year at this time, we thought we would provide a list of some, in our opinion, impactful decisions from the past 12 months. We acknowledge that those from other provinces, such as the case on employment law, though interesting, may have limited applicability here:

Contracts and the Duty of Good Faith (Ontario)
C.M. Callow Inc. v. Zollinger2020 SCC 45 – The duty of honest performance in contract requires that parties to contracts not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. Though the duty of honest performance is not to be equated with a positive obligation of disclosure, in circumstances where a contracting party lies to or knowingly misleads another, a lack of a positive obligation of disclosure does not preclude an obligation to correct a false impression created by that party’s own actions.

Employment Law (Ontario) – Termination Clauses (Ontario)
Waksdale v. Swegon North America Inc., 2020 ONCA 391 – employment agreements are to be interpreted as a whole. As to termination provisions, the correct analytical approach is to determine whether the termination provisions read as a whole violate the Employment Standards Act. Though courts will permit employers to enforce rights-restricting contracts, courts will not enforce termination provisions that are in whole or in part illegal.

Arbitration Clauses (Ontario)
Uber Technologies Inc. v. Heller2020 SCC 16 – The claim that the arbitration clause is unconscionable requires considering two elements - an inequality of bargaining power and a resulting improvident bargain. There was inequality of bargaining power here because the arbitration clause was part of an unnegotiated standard form contract, there was a significant gulf in sophistication between the parties, and the person considering the standard form contract could not be expected to appreciate the financial and legal implications of the arbitration clause. The arbitration clause here was also improvident because it required US$14,500 in up-front administrative fees making the result that it is unconscionable and therefore invalid.

Bankruptcy (Alberta)
Chandos Construction Ltd. v. Deloitte Restructuring Inc., 2020 SCC 25 – The Court upheld the anti‑deprivation rule in bankruptcy and insolvency matters.

Duty of Care and Pure Economic Loss (Ontario)
1688782 Ontario Inc. v. Maple Leaf Foods Inc., 2020 SCC 35 – a manufacturer’s undertaking as to the safety of its goods is made to the end user and not to intermediaries such as franchisees who sell that product to the end user. The manufacturer here did not owe a duty of care to the franchisees and thus was not liable for their pure economic losses.

Contract Enforceability (Ontario)
MacQuarrie Equipment Finance Ltd. v. 2326695 Ontario Ltd., 2020 ONCA 139 – the Court reaffirmed the principle that in standard form contracts, reasonable measures must be taken to draw harsh and oppressive terms in a contract to the attention of the other party

Disgorgement (NL)
Atlantic Lottery Corporation Inc. v. Babstock2020 SCC 19 – Plaintiffs cannot rely on the doctrine of waiver of tort as an independent cause of action for disgorgement and moreover, the term “waiver of tort” should be abandoned. To make out a claim for disgorgement, actionable misconduct must be established. In this case, disgorgement was pled as an independent cause of action and the court concluded that the plaintiffs were thus seeking to establish an entirely new category of wrongful conduct that does not require proof of damage. Although disgorgement is available for some forms of wrongdoing without proof of damage, it was a far leap to find that disgorgement without proof of damage is available as a general proposition in response to alleged negligent conduct.

Twitter, Defamation and Jurisdiction (BC)
Giustra v. Twitter, Inc., 2021 BCSC 54 – The Court followed governing authority in Canada regarding jurisdiction over internet defamation cases (Haaretz.com v. Goldhar2018 SCC 28) noting that the tort of internet defamation takes place where the defamatory statements are read, accessed or downloaded by a third party. As the statements at issue were read by persons in BC, that was sufficient to establish jurisdiction. It was then up to Twitter to rebut the presumption and the Court concluded it did not.