Welcome to the Blake Sound Business Podcast. I'm Metzur Humphrey. And I'm Nathan Kantter. Today, we're taking a look at several game changing decisions to come out of Canadian courts in twenty twenty three. 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 Blake's lawyers,
In August, the
Kareen, can you give us a bit of background on this proposed class action? 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 contained an agreement to arbitrate all disputes relating to the agreement The plaintiff then commenced a proposed class action in the
After that state was granted, there was a separate proposed class action started in the petty case against
These appeals were heard the same week and by the same panel of the B court of appeal. The court of appeal observed that by virtue of VC's arbitration legislation, and in the absence of other applicable slate of limits on the enforceability of arbitration agreements in the province. The court must make an order of 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 favor of enforcing arbitration agreement. Unlike in some other provinces, where legislation voids mandatory arbitration provisions and standard form consumer contracts. Court of appeal determined that the Chambers judges' decisions, which involve questions of mixed, fact, and law, were entitled to deference. The plaintiffs had unsuccessfully argued that the findings in the twenty twenty supreme
The court disagreed. The court looked to the fact and in considering the specific facts and evidence in each of these cases on appeal, including the tailored arbitration process that's provided for in each case, the nature of the contracts that 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 state 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.
Francis, in October, the
So the case is about
Ponce and
The
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.
This matter clearly dealt with the constant struggle to find in a corporation, the right balance between the interests of the shareholders and the director's duties to shareholders.
What impact do you expect this decision to have on other companies?
Well, I I think the impact or rather the takeaway will be that shareholders, if they wanna attract talent to a company in order to manage the affairs of a company. And by attracting this talent, are prepared to enter into agreements to motivate these talents to bring value to the company, we'll have to make sure that the agreements, are drafted in such a way as to not either imposed greater obligations on these officers or directors of the companies. Otherwise, the
Sophie, you were part of the Blake's team that worked on a unique case before the
This arrangement was quite unique because even though all parties to the arrangement were in favor of it, the court still refused to approve it. And in finding that the arrangement was not fair or reasonable.
Another concern for the court was that between the time that the first interim order was granted and the ultimate approval, there was quite 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. So what does all of this mean for businesses looking to participate in an arrangement? 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's 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.
So let's go to our
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 focus 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 a 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. What impact might these disputes have on the industry?
The analysis in these cases is usually very fact specific and depends on the particular leases. But big picture, the industry will be in listed 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. Another related dispute area of interest in
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 dead ore from further operating it. The reason the
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
Listeners for more insights related to litigation and sput resolution, please visit blakes dot com. Until next time, stay well.
To view the full article click here
For permission to reprint articles, please contact the Blakes Marketing Department.
© 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Suite 4000,
M5L 1A9
Tel: 4168632400
Fax: 4168632653
E-mail: bulletin@blakes.com
URL: www.blakes.com
© Mondaq Ltd, 2024 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source