BenchPress - Vol 43-3 - LawNow Magazine

BenchPress – Vol 43-3

The Supreme Court of Canada has released a number of interesting cases over the last few months. This issue of BenchPress will look at four of them. Two are of national significance, and two reveal the profoundly personal situations that cause Canadians to access the justice system

  1. A Deal is a Deal

The provinces of Quebec and Newfoundland and Labrador have been fighting over the terms of the Churchill Falls hydroelectric plant since they first contracted to build and operate it in 1969. The deal allowed Hydro-Quebec to buy electricity at a fixed rate for the 65-year duration of the contract, in return for promising to buy the electricity whether it needed it or not. After the contract was completed, the market price of electricity dropped well below the price set in the contract. Hydro- Quebec now buys electricity from Churchill Falls and sells it for a substantial profit. Newfoundland and Labrador asked the Court for an order allowing it to renegotiate the contract and adjust the price of the electricity. The Supreme Court of Canada rejected the appeal. The majority ruled that Hydro-Quebec did not have a duty to renegotiate the contract once it was clear that it was receiving an unanticipated, substantial profit. The Court concluded that it could not change the contents of the contract, require the parties to renegotiate it, or to share its benefits. It stated that the doctrine of unforeseeability, which could allow for a contract to be renegotiated if its terms become excessively onerous for one party, did not apply in this case. The doctrine is not a part of the Quebec Civil Code, and, in any event, the circumstances of this case did not allow for its limited use. The Court also dismissed suggestion that Hydro-Quebec was under obligations of good faith and equity to renegotiate. The Court wrote:“ Hydro-Quebec is not breaching its duty of good faith in exercising its right to purchase electricity from Churchill Falls at fixed prices. Nor does its insistence on adhering to the contract despite the unforeseen change of circumstances constitute unreasonable conduct.”

Churchill Falls (Labrador) Corp . v. Hydro-Quebec, 2018 SCC 46

  1. Teenage Tragedy from Joyriding

Two teenaged boys, who had been drinking and smoking marijuana, went looking for cars to break into.  They found an unlocked car at a service garage and discovered the ignition key in the ashtray. One boy, who had never driven a car before, decided to steal the car and drive to the next town.  He crashed the car and his companion suffered catastrophic brain damage. At trial, a jury found the driver, the driver’s mother and the service garage liable in negligence.  The garage appealed, arguing that it did not owe a duty of care to the injured plaintiff.  The Court noted, perhaps wryly: “There is no clear guidance in Canadian case law on whether a business owns a duty of care to someone who is injured following the theft of a vehicle from its premises.”  It stated, however, that “…the notion that illegal or immoral conduct by a plaintiff precludes the existence of a duty of care has consistently been rejected by the Court. Whether the personal injury caused by unsafe driving of a stolen car is suffered by a thief or a third party makes no analytical difference to the duty of care analysis.”  The majority concluded that, upon analysis of the evidence, the plaintiff did not prove a duty of care on the part of the garage. While it was reasonably foreseeable for the garage to anticipate the theft of a car, the risk of theft in general did not automatically include the risk of theft by minors or the risk that negligent operation of the stolen vehicle would result in physical injury. It concluded: “A business will only owe a duty to someone who is injured following the theft of a vehicle when, in addition to theft, the unsafe operation of the stolen vehicle was reasonably foreseeable.” The Court ruled that the garage was not liable for the injuries to the plaintiff.Rankin (Rankin’s Garage and Sales) v. J.J. 2018 SCC 19

Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19 (CanLII)

  1. The Holy Grail of a National Securities Regime

Many a Canadian Attorney General and Minister of Finance has sought to establish a national framework for a capital markets regulatory system.  Canada is one of the few developed countries that does not have a national securities regulator. Currently, each province and territory has its own regime.  Some provinces, notably Quebec and Alberta, have resisted a national system, arguing that it would transgress on provincial powers.

The system currently being proposed consists of a “Model Provincial Act”, which covers the day-to-day aspects of the securities trade, a “Draft Federal Act”, aimed at preventing and managing risk within the system, and establishing criminal offences relating to financial markets, and a national securities regulator (the Authority”) to administer the regime.  The Authority and its Board of Directors will operate under the supervision of a Council of Ministers, which will be made up of the provincial ministers responsible for capital markets regulation for participating provinces and the federal Minister of Finance.

The proposal was referred to the Supreme Court of Canada, which released its opinion this fall.  It concluded:

  1. It is within the powers of the Constitution for the Government of Canada to establish a pan-Canadian securities regulation under the authority of a single regulator;
  2. The proposed Draft Federal Act falls within Parliament’s trade and commerce power pursuant to s. 91(2) of the Constitution Act.

The Court wrote: “With respect to the classification of the Draft Federal Act, the ultimate question in this case is whether the Act, viewed in its entirety, addresses a matter of genuine national importance and scope going to trade as a whole, in a way that is distinct and different from provincial concerns. …the Draft Federal Act does address a matter of genuine national importance and scope relating to trade as a whole, and it therefore falls within Parliament’s general trade and commerce power under s. 91(2) of the Constitution Act 1867.  The preservation of the integrity and stability of the Canadian economy quite clearly has a national dimension, and one which lies beyond provincial competence.”

The Court also set out the protections in the plan for provincial sovereignty. Neither model Acts have any force of law until they are properly enacted by provincial legislation. Any proposals to amend the Model Provincial Act are subject to a vote and must be approved by at least 50% of the members of the Council of Ministers.

Reference re Pan-Canadian Securities Regulation, 2018 SCC 48

  1. The “Ex” and the Widow

The Supreme Court of Canada had to decide recently who should receive the benefit of a life insurance policy: the deceased policy holder’s spouse or his ex-wife.  The deceased, Larry Moore, took out a life insurance policy while married to Michelle Moore.  They divorced in 2003 but Michelle continued to pay the policy premiums until Larry’s death in 2013.  She maintained that they had a verbal contract that she would remain the beneficiary of the policy and the proceeds would be used to help support their children. However, unbeknownst to her, shortly after Larry began to live with Risa Sweet, he named her the irrevocable beneficiary under the policy.  After Larry’s death a dispute arose between Ms Moore and Ms Sweet over who should receive the $250,000 insurance payment. Ms Sweet argued that she was the irrevocable beneficiary and should receive the money.  Ms. Moore argued that this would amount to an “unjust enrichment” for Ms Sweet.

The majority of the Supreme Court ruled in favour of Ms Moore. It stated that a plaintiff will establish unjust enrichment when:

  • the defendant was enriched;
  • the plaintiff suffered a corresponding loss; and
  • There was no legal reason to justify the defendant’s enrichment and the plaintiff’s loss.

The majority ruled that Ms Sweet was clearly enriched by receiving the insurance proceeds and that her enrichment came at Ms Moore’s expense. It further ruled that there was no reason in law to justify Ms Sweet’s enrichment.  The Insurance Act of Ontario does not prohibit a claim for unjust enrichment from succeeding against an irrevocably designated beneficiary. The majority decided that Ms Moore should receive the money. It ruled that it was Ms Moore’s payment of the premiums that kept the life insurance policy in effect and that Ms Sweet’s claim to the proceeds was only possible because of those payments.

Michelle Constance Moore v. Risa Lorraine Sweet, 2018 SCC 52

Moore v. Sweet, 2018 SCC 52 (CanLII)



Teresa Mitchell
Teresa Mitchell
Teresa Mitchell is the former Editor and Legal Writer for LawNow at the Centre for Public Legal Education Alberta.

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