Canadian Appeals Monitor

Information and Commentary on Upcoming and Recent Appeal Court Decisions

Under the influence: R v Carson broadly defines criminal offence of influence peddling

Posted in Case Comments, Criminal
Awanish SinhaRyan MacIsaac

Lots of people will boast about their connections with government officials. Some people even get paid to lobby the government. But when does conduct cross the line into criminal influence peddling? In R. v. Carson, 2018 SCC 12 (“Carson”), the Supreme Court of Canada (“SCC”) interpreted the offence of influence peddling broadly—it prohibits not only agreeing to influence the government regarding current business matters, but also business matters that the government could be involved with in the future.

Carson is a significant decision and has generated much commentary. For a lengthier discussion of the practical consequences for lobbyists, please see the post by our colleagues Adam Goldenberg and Jessica Firestone here.

Background

Bruce Carson (“Mr. Carson”) was a former Senior Advisor in the Office of the Prime Minister. He agreed to use his government contacts to help sell point-of-use water treatment systems marketed and sold by H2O Professionals (“H2O”) to First Nations. H2O, in turn, would pay Mr. Carson’s girlfriend a commission on each treatment system sold to First Nations. Mr. Carson organized a number of meetings and communications with federal government officials, including at Indian and Northern Affairs Canada (“INAC”), promoting H2O’s products.

Mr. Carson was charged with influence peddling contrary to s. 121(1)(d) of the Criminal Code. At trial, Mr. Carson admitted that he had influence with the government, and that he had demanded a benefit for another person as consideration for using his government contacts to help H2O. However, he denied that his influence was actually connected to a matter of business relating to the government.

The trial judge agreed and acquitted Mr. Carson (2015 ONSC 7127). The trial judge found that INAC had given point-of-use water treatment funding to First Nations with no strings attached. In other words, the First Nations Bands made purchasing decisions, not INAC. Because Mr. Carson’s lobbying was effectively pointless (he was under the mistaken impression that INAC made the purchasing decisions), the trial judge held that he did not commit influence peddling.

A majority of the Ontario Court of Appeal reversed the acquittal and entered a conviction (2017 ONCA 142). The majority took a very broad interpretation of influence peddling, holding that the offence was effectively made out when Mr. Carson promised to help H2O by making some calls to help sell its products.

SCC Majority

The SCC held that Mr. Carson was guilty of influence peddling. Justice Karakatsanis, writing for the eight-member SCC majority, mapped out an interpretation of s. 121(1)(d) that was broader than the trial judge, but slightly narrower than the Court of Appeal.

First, the SCC majority listed the constituent elements of the offence in s. 121(1)(d) as:

  1. having or pretending to have influence with the government, a minister, or an official;
  2. directly or indirectly demanding, accepting, or offering or agreeing to accept a reward, advantage or benefit of any kind for oneself or another person;
  3. as consideration for the cooperation, assistance, exercise of influence, or an act or omission;
  4. in connection with a transaction of business with or any matter of business relating to the government. [para 23, emphasis added]

Second, the promised influence must actually be connected to a matter of business relating to the government (here, the majority and dissent were in agreement). In other words, the influence must in fact relate to the government.

Third, the phrase “any matter of business relating to the government” must be given a broad meaning.  This is consistent with the fact that s. 121(1)(d) creates a “conduct offence”—i.e., it is a crime to sell influence even if the seller does not take any further steps. The majority wrote:

[A]ny matter of business relating to the government” is not limited to matters in which government plays a direct approval role. … A matter of business relates to the government if it depends on government action or could be facilitated by the government, given its mandate. [para 24, emphasis added]

In Mr. Carson’s case, although INAC had given spending discretion to the First Nations, it was possible that INAC could modify its funding conditions in the future and require First Nations to purchase H2O’s products.  Moreover, INAC could have funded a pilot project involving H2O’s products. In short, INAC had broad spending powers and it was possible that INAC could spend money on H2O’s products, even if it was not considering that at the moment.

Fourth, the SCC majority noted that the law of attempt can capture a promise of influence that is not actually connected to government business. In other words, the act of offering or agreeing to sell influence can qualify as “attempted influence peddling” even if the promised influence does not in fact relate to business within the government’s powers.

SCC Dissent

Justice Côté was the lone dissenting voice. The dissent is only significant because it endorses a narrow interpretation of  “any matter of business relating to the government” that was directly rejected by the SCC majority. The dissent stated:

Where the government has intentionally placed certain matters of business outside of its operational reach, they cannot be said to be matters of government business simply because the government could, at a future date, reclaim control over them. [para 76, emphasis in original]

Justice Côté felt that the majority’s interpretation was “speculative and overly broad” since INAC had given the First Nations complete autonomy over the relevant spending decisions. She would have acquitted Mr. Carson.

Commentary

The SCC brought important clarity to the crime of influence peddling, but individuals with government-related business dealings will need to be careful not to run afoul of the SCC’s broad interpretation.

Significantly, the SCC majority relied upon INAC’s constitutional and statutory authority when determining whether INAC had the power to potentially purchase H2O’s products. But in the modern welfare state, the spending powers of municipal, provincial and federal governments—and their departments—are expansive and manifold. Key questions to ask under s. 121(1)(d) will thus be: What business could this government entity have the authority to conduct? And am I offering/agreeing to influence the exercise of this authority?

The SCC’s broad reading of “any matter of business relating to the government” will also expand the scope of the bribery offences in Criminal Code ss. 121(1)(a) and 121(1)(e), because those sections use the same language.

The Court of Appeal majority included a helpful discussion on the intersection of influence peddling prohibited by the Criminal Code, and lobbying activities regulated by the Lobbying Act. The Court of Appeal noted that the evils targeted by the Criminal Code may be mitigated by the transparency under the Lobbying Act’s registration and reporting regime. There is a line between communicating with government officials (permitted by the Lobbying Act) versus selling influence with government officials (prohibited by the Criminal Code). However, the Court of Appeal’s comments were obiter and written in the abstract, because Mr. Carson did not register his activities under the Lobbying Act at all.

The SCC’s majority’s obiter comments about attempted influence peddling are similarly important. If a person accused of attempted influence peddling subjectively believed that she or he was selling influence over government business, that is sufficient. It will be no defence to argue that the government entity in fact did not have the authority to conduct that business.

Carson is responsive to an era when citizens are losing faith in government and there is a pervasive perception that the system is rigged in favour of well–connected elites. At the same time, Carson continues a long line of cases holding the offences in Criminal Code s. 121 (“frauds on the government”) as concerned with preserving not only actual government integrity, but also the appearance of government integrity.

Case Information

R. v. Carson, 2018 SCC 12

Docket: 37506

Date of Decision: March 23, 2018

The Federal Court of Appeal restores transactional common interest privilege

Posted in Case Comments
Patrick Williams

In 2016, the Federal Court broke with its own precedents and other Canadian courts and held that parties to a commercial transaction who shared a privileged document waived privilege over that document. In IGGillis Holdings Inc. v. Canada (National Revenue), 2018 FCA 51, the Federal Court of Appeal overturned that decision and restored the longstanding rule that parties with a common interest in a commercial transaction who share privileged information do not waive privilege when they do so.

The case arose from a series of transactions where Abacus Capital Corporations Mergers and Acquisitions (“Abacus”) acquired shares owned by IGGillis Holdings Inc. and Ian Gillis (collectively, “Gillis”). Counsel for Abacus, with input from counsel for Gillis, drafted a memorandum (the “Memo”) that opined on the most tax-efficient way for Abacus to acquire the shares. The Memo was sent to Abacus and Gillis by their respective counsel. The Minister of National Revenue sought production of the Memo from Gillis. Abacus and Gillis argued that it was privileged despite the disclosure to both parties.

Confidential communications between a lawyer and a client that are made for the purpose of seeking or giving legal advice are protected by solicitor-client privilege. Intentionally disclosing a privileged document to another person typically waives privilege over the document. But parties with a common legal interest can share privileged documents without waiving privilege under the doctrine of common interest privilege.

Before the Federal Court’s 2016 decision, Canadian courts accepted that transactional counterparties could have a common interest in the completion of a transaction and could thus share privileged documents without losing privilege. The Federal Court judge acknowledged that transactional common interest privilege was well-established in Canada, but held that transactional common interest privilege was inconsistent with solicitor-client privilege and should not be recognized. As a result, the Federal Court judge ordered Gillis to disclose the Memo.

The Federal Court of Appeal (“FCA”) allowed the appeal and confirmed that transactional common interest privilege exists in Canada.

First, the FCA held that it did not matter that the Memo was prepared by counsel for Abacus with input from counsel for Gillis. The FCA noted that if the parties had written and then exchanged separate memos, the issue would remain whether the loss of confidentiality waived privilege. The FCA held that a more efficient collaborative approach should not be discouraged.

Second, the FCA dismissed the Federal Court judge’s concern that transactional common interest privilege reduces the evidence available for courts to consider (at least in this case). The FCA held that the Memo would not be admissible even if was not privileged because it contained, almost exclusively, opinions on the legal effect of the transactions.

Third, the FCA held that the Federal Court judge erred by relying on American authorities rejecting the existence of transactional common interest privilege. The FCA confirmed that transactional common interest privilege was well-established in Canada, particularly in Alberta and British Columbia (where Abacus and Gillis were located). The FCA concluded:

Based on the decisions of the courts in Alberta and British Columbia, solicitor-client privilege is not waived when an opinion provided by a lawyer to one party is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions. This principle applies whether the opinion is first disclosed to the client of the particular lawyer and then to the other parties or simultaneously to the client and the other parties. In each case, the solicitor-client privilege that applies to the communication by the lawyer to his or her client of a legal opinion is not waived when that opinion is disclosed, on a confidential basis, to other parties with sufficient common interest in the same transactions.

McCarthy Tétrault LLP represented The Federation of Law Societies of Canada, an intervener, in this appeal.

Date: December 7, 2016
File number: T-126-15
Citation: Iggillis Holdings Inc. v. Canada (National Revenue), 2016 FC 1352 (CanLII)

The Supreme Court’s Decision in Livent: a Framework for Deciding Auditor’s Negligence Cases

Posted in Case Comments, Professions
Mira NovekWilliam D. Black

In its much anticipated decision in Deloitte & Touche v. Livent Inc. (Receiver of),[1] the Supreme Court of Canada has considerably reduced the damage award payable by an auditor after it failed to detect a colossal fraud perpetrated by the directors of Livent.  While the amount of the award remains significant at $40,425,000, this is less than half of the $84,750,000 initially awarded by the lower courts.  In reaching this result, the Court provided clearer guidance on when an auditor may be liable to its corporate client in cases of negligent misrepresentation or performance of a service.  Significantly, where a duty of care arises in respect of an auditor’s representation or services, it will be limited to the purpose for which the auditor undertook to provide the representation or services.  It follows that an auditor will not be liable where a corporate client detrimentally relies on the auditor’s representation or services for any purpose other than that for which the auditor undertook to act.  Here, the auditor was not liable to Livent for negligent misrepresentations contained in a comfort letter and press release prepared for the purpose of assisting Livent to solicit investment.  As the representations were intended to provide comfort to investors rather than to inform Livent of its own financial position, any reliance Livent placed on them for the purpose of overseeing its operations fell outside the scope of the auditor’s duty of care.  In contrast, Livent was able to recoup its losses which followed the issuance of a negligently prepared clean audit opinion, as the Court found that Livent had relied on the statutory audit for one of its intended purposes, which was to enable shareholder oversight of management. Continue Reading

When Victims Attack Other Victims of the Same Fraudulent Scheme: The Doctrines of Corporate Identification and Knowing Assistance in DBDC Spadina Ltd. v. Walton

Posted in Case Comments, Corporate Law, Real Property
Meghan S. Bridges

The recent decision of the Ontario Court of Appeal in DBDC Spadina Ltd. v. Walton, 2018 ONCA 60 is significant for being one of the first to cite the Supreme Court of Canada’s decision in Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63. Blair J.A., writing for the majority of the Court of Appeal, cites Livent for the proposition that the doctrine of corporate identification may be applied less stringently in the civil context where a massive, complex fraud is involved in order to affix a corporation with the fault of its directing mind. The case is also significant for its debate about the requirements of the doctrine of knowing assistance. Blair J.A. ultimately concludes knowing assistance does not require the plaintiff to trace specific funds to the defendant in order to be successful in a claim for damages, unlike its colleague in equity, the doctrine of knowing receipt. van Rensburg J.A., dissenting, disagrees. Continue Reading

Ontario Court of Appeal Clarifies the Scope of a Lawyer’s Duty to Advise on Damages

Posted in Case Comments, Civil Litigation
Geoff R. HallAnu Koshal

On February 20, 2018 the Ontario Court of Appeal released its decision in Oravital v. Aird & Berlis LLP, 2018 ONCA 164, a brief decision with important implications on the scope of a lawyer’s duty to advise. The Court of Appeal held that a lawyer’s duty to advise clients of the risks and benefits of pursuing litigation, including the quantum of recoverable damages, is not negated just because the client is commercially sophisticated. The decision serves as a useful reminder that litigators must advise clients (even sophisticated clients) of the costs and benefits of pursuing an action both at the outset of litigation and as circumstances change and the litigation evolves. Continue Reading

R. v. G.T.D.: The Supreme Court of Canada decides a Charter case from the bench — again

Posted in Case Comments, Charter of Rights
Adam Goldenberg

A detained person’s right to counsel is guaranteed by s. 10(b) of the Charter. It imposes on police a duty to “hold off” on trying to elicit incriminating evidence from the detainee “until he or she has had a reasonable opportunity to reach counsel”: R. v. Prosper, [1994] 3 S.C.R. 236, at p. 269. Continue Reading

Insider Trading and Tipping: the Ontario Court Of Appeal Confirms the Test for Establishing Tippee Liability

Posted in Case Comments, Securities
Kate MacdonaldSarah Blanco

The Ontario Court of Appeal recently released a significant decision on the insider trading provisions of provincial securities legislation.  In Finkelstein v. Ontario Securities Commission, 2018 ONCA 61, the Court considered for the first time the insider trading and tipping scheme in the Securities Act, R.S.O. 1990, c. S. 5 (the “Act”), and particularly, the definition of a “person in a special relationship with an issuer” as it applies to successive tippees who share insider information. Continue Reading

Proprietary Estoppel: Some questions answered, others left for another day

Posted in Case Comments, Supreme Court of Canada
Patrick Williams

The doctrine of proprietary estoppel can enforce a promise to transfer real property to a person who acts to his or her detriment based on the promise. In Cowper‑Smith v. Morgan, 2017 SCC 61, the court confirmed that proprietary estoppel can enforce a promise to transfer a property interest that the promisor does not have at the time of the promise. The decision raises other questions—such as whether proprietary estoppel can enforce a promise to transfer personal property—but leaves them unanswered. Continue Reading

Federal Court of Appeal Eliminates Commissioner of Competition’s ‘Public Interest’ Class Privilege

Posted in Case Comments, Privilege
James S.S. Holtom

For nearly thirty years, the Commissioner of Competition has been able to assert ‘public interest’ privilege – on a class basis – to prevent the disclosure of documents obtained from informants in the course of its investigations.[1] Not anymore.

Access by litigants to the Commissioner’s investigation file is an important and developing issue.[2] In Vancouver Airport Authority v. Commissioner of Competition, 2018 FCA 24, Justice Stratas, writing for a unanimous panel with Justices Boivin and Laskin, held that the Commissioner can no longer invoke ‘public interest’ privilege on a class-wide basis to prevent access.[3] While the Commissioner can still invoke public interest privilege, it can now only do so document-by-document.[4] Continue Reading

When a Tribunal’s Reasons Won’t Fly: SCC in Lukács addresses supplemental reasons and public interest standing

Posted in Administrative, Case Comments
Ryan MacIsaac

In Delta Air Lines Inc. v. Lukács, 2018 SCC 2 (“Lukács”), the Supreme Court of Canada addressed two important issues in administrative law. First, the Court addressed the role that a Tribunal’s reasons play in judicial review for substantive error. Second, the Court addressed principles relating to public interest standing, including standing before regulatory tribunals. Continue Reading

Short-Circuited Shortcut: The Ontario Court of Appeal Removes Alternative Method For Determining Jurisdiction Over Appeals

Posted in Case Comments, Procedure
Trevor Courtis

For a party wishing to appeal the decision of an Ontario judge or master, determining the appropriate Court to appeal to is occasionally not a straightforward matter. In some previous cases where there has been uncertainty between the parties as to the appropriate appeal route, single judges of appellate courts have been willing to provide direction to the parties on this question following a short chambers appearance.

In Ontario (Provincial Police) v. Assessment Direct Inc., 2017 ONCA 986 (“Assessment Direct”), Juriansz J.A. held that this practice is improper and a motion to a full three-member panel of the Court of Appeal is required in order to obtain a decision on the Court’s jurisdiction over a given appeal. It appears that parties will no longer be able to rely on the motion for directions shortcut to obtain an answer to the jurisdiction question. Continue Reading

Supreme Court: Conditional sentences not necessarily “serious criminality” under Immigration Act

Posted in Case Comments, Criminal, Immigration
Paulina BogdanovaCarole Piovesan

In order to be admissible to Canada, permanent residents and foreign nationals must avoid “serious criminality” as set out in s. 36(1)(a) of Canada’s Immigration and Refugee Protection Act[1]. That section provides that “serious criminality” is evidenced by being sentenced in Canada to a term of imprisonment of more than six months, or by being convicted of an offence punishable by a maximum term of imprisonment of at least 10 years.

Continue Reading

Supreme Court Dismisses Aboriginal Spiritual Rights Charter Claim

Posted in Aboriginal, Supreme Court of Canada
Brandon KainBryn GrayStephanie Axmann

The Supreme Court of Canada (SCC) released a decision on November 2, 2017 dismissing a novel Aboriginal freedom of religion Charter claim that was raised in opposition to a ski resort development in British Columbia: Ktunaxa Nation v. British Columbia (Forests, Lands and Natural Resource Operations), 2017 SCC 54 (Ktunaxa).  This is a significant case as it is the first time the SCC has been asked to consider an Aboriginal spiritual rights claim and the protections that may be afforded to it under s. 2(a) of the Charter in addition to s. 35 of the Constitution Act, 1982. McCarthy Tétrault LLP (Neil Finkelstein, Brandon Kain, and Bryn Gray) intervened in this case on behalf of the Canadian Chamber of Commerce. Continue Reading

BCCA Rules Civil Jury Fees Are Constitutional

Posted in Case Comments
Byron Shaw

 

On September 15, 2017, the B.C. Court of Appeal rejected a challenge by the Trial Lawyers Association of British Columbia (“TLA”) to the constitutionality of legislation requiring civil litigants opting for a jury trial to pay the fees and expenses of the jury and jury process. TLA 2017[1] holds that provinces may impose such fees without interfering with the core jurisdiction of the superior courts protected by s. 96 of the Constitution Act, 1867.[2]
Continue Reading

The duty to disclose Mary Carter agreements immediately: new guidance from the BC Court of Appeal

Posted in Case Comments
Connor Bildfell

Mary Carter agreements are settlement agreements between a plaintiff and defendant in multiparty litigation wherein the defendant ostensibly remains an active party to the litigation while the plaintiff’s claim in fact targets the other parties. On September 5, 2017, the B.C. Court of Appeal (the “Court“) released its decision in Northwest Waste Solutions Inc. v. Super Save Disposal Inc., 2017 BCCA 312 affirming that Mary Carter agreements must be disclosed immediately and outlining potential remedies for a failure to make such disclosure. Parties and their counsel will need to keep this in mind when considering the merits of entering into a Mary Carter agreement. In the event that such agreements are entered into, parties must act quickly to discharge their now-clear duty of disclosure.

Continue Reading

Does the Duty to Inform Apply Solely to the Contracting Parties?

Posted in Case Comments, Contracts
Gabrielle BaracatPaul Blanchard

In Camions Daimler Canada ltée v. Camions Sterling de Lévis inc., 2017 QCCA 798, the Quebec Court of Appeal confirmed that the duty to inform that exists between contracting parties, which has been recognized as a general principle of Quebec contractual law since the early 1980s, may also apply to third parties, insofar as they might be impacted by the contractual relationship.

Continue Reading

Ivic. v. Lakovic: vicarious liability is no short-cut to compensation

Posted in Case Comments, Criminal, Employment Law
Kosta Kalogiros

On June 2, 2017, the Ontario Court of Appeal decided, in what it described as a case of first impression, that a taxi company was not vicariously liable for a sexual assault allegedly committed by one of its employees, absent any evidence of fault on its part.

Following the Court’s review and affirmation of the leading jurisprudence on vicarious liability, it is doubtful that any car passenger service company could be found liable for the independent and wrongful criminal conduct of its drivers. Continue Reading

The SCC versus the “culture of complacency”: R. v. Cody

Posted in Case Comments, Criminal
Emily MacKinnonAdriana Forest

In R v. Cody, 2017 SCC 31, the Supreme Court of Canada reiterated its earlier call for reform to the criminal justice system, criticizing a “culture of complacency” toward delays. The Court’s insistence on reform may be good news for participants in the civil justice system, too, who have seen many civil actions delayed as courts devote their limited resources to clearing their criminal dockets. Continue Reading

The Supreme Court concludes there is no need to prove psychiatric illness to establish mental injury: Saadati v. Moorhead

Posted in Case Comments, Personal Injury
Sam Rogers

Is a Plaintiff required to prove that they suffer from a recognized psychiatric illness in order to recover for mental injury? The Supreme Court has definitively said the answer is “no” in their recent decision in Saadati v Moorhead, a case that will be critically important to anyone who regularly prosecutes or defends personal injury claims. Continue Reading

The Final Word? The Ontario Court of Appeal denies nunc pro tunc relief in Pennyfeather v. Timminco

Posted in Case Comments, Class Actions, Securities
Jessica Laham

In Pennyfeather v. Timminco (“Pennyfeather”), the Ontario Court of Appeal delivered yet another ruling concerning the interaction between the limitation period for obtaining leave to commence an action for misrepresentation in the secondary securities market under s. 138.14 of the Ontario Securities Act (the “OSA”), and s. 28  of the Class Proceedings Act (the “CPA”), which suspends a limitation period in favour of class members for a cause of action asserted in a class proceeding upon commencement of the class proceeding. Continue Reading

3rd Edition of E-Discovery in Canada is now available

Posted in Class Actions

E-Discovery_in_Canada_Cover_JAN2017

Susan Wortzman, partner and Director of E-Discovery, and a team of experienced authors the third edition of E-Discovery in Canada. The book covers everything lawyers, in-house counsel and law clerks need to know about conducting e-Discovery, from preservation to proportionality to costs.

Learn from the professionals in Canada and find out how to leverage their know-how for better outcomes for your clients’ in this revised and updated edition. The third edition can be purchased here.

This article was original posted on the Canadian Class Actions Monitor blog on June 2, 2017

Can a Party get Special Costs based on Pre-Litigation Conduct?

Posted in Case Comments, Procedure, Real Property
Kate MacdonaldErin O'Callaghan

In Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177, the BC Court of Appeal considered whether special costs can be awarded based on pre-litigation conduct.  The Court reviewed the conflicting jurisprudence and unanimously concluded that a bright line should be drawn: pre-litigation conduct should not be considered in determining whether to award special costs. Continue Reading

Accounting for Preference: BCCA Reaffirms the Wide Discretion of Class Action Certification Judges

Posted in Case Comments, Class Actions
Sara D.N. Babich

The BC Court of Appeal recently reaffirmed the principles of preferability in class action certification proceedings in the case of Vaugeois v Budget Rent-A-Car, wherein the certification judge had determined that a class proceeding was not the preferable forum to decide the disputes between vehicle renters who had allegedly been improperly  charged for vehicle repairs. Continue Reading

In Which Ontario Court Do I Bring My Constitutional Challenge?

Posted in Constitutional, Procedure
Byron Shaw

“Can a litigant challenge the constitutional validity of subordinate legislation such as a provincial regulation by bringing an application under Rule 14.05 in Superior Court or is she required to proceed by way of an application for judicial review in the Divisional Court?” Justice Belobaba says “Yes” in Di Cienzo v. Attorney General of Ontario.[1] Continue Reading