Firm negotiations

The Supreme Court released two decisions last week — a rare occurrence for an institution recently accused of turning passive. Let’s get right into it.

— Dylan Gibbs

• The duty to reasonably negotiate renewal terms

• Canadian provinces vs. the opioid crisis

• Impact Assessment Part II - return of Premier Smith

• Quebec docs could face big fines for leaving

• Throwing water at lawyers instead of shade

• Secret romances

DECISION SPOTLIGHT 🔦

The risks of driving a hard bargain

Quebec v. Pekuakamiulnuatsh Takuhikan, 2024 SCC 39

It’s been a blockbuster year for Indigenous law at the Supreme Court. The first half of last week’s doubleheader marks 2024’s fifth major decision in the area.

But this one isn’t just about Indigenous law. The Court’s comments on good faith are worth a read for civil litigators everywhere (especially those in Quebec).

A bit of context: Canada, Quebec, and a band council representing the Pekuakamiulnuatsh First Nation contracted to give the First Nation its own culturally sensitive police force. The agreement isn’t a treaty, just a regular old contract. And the terms are pretty favourable to Canada and Quebec.

• Canada and Quebec pay a fixed amount each year.

• If the police force doesn’t end up needing all of the funding, Canada and Quebec get to apply the excess to future years. But if the police force needs more money, the band council has to pay the deficit itself.

• And the funding depends on budget approvals. Canada and Quebec can simply walk away from the agreement if legislators don’t authorize each year’s spend.

That setup made for an underfunded police force. Officers weren’t even trained to use radar guns or breathalyzers.

But Canada and Quebec met the band council’s repeated requests for more funding with a consistent refrain: “Sorry, we don’t have the budget.” The parties renewed the agreement several times, but (for the most part) the funding stayed the same.

• The way Canada and Quebec saw it, if the agreement wasn’t giving the band council the quality of service it wanted, it could go back to provincial policing instead.

The Court of Appeal said the governments should have done more — by digging in their heels, they breached both their private law duty to perform the agreement in good faith and their public law duty to act honourably when dealing with Indigenous peoples.

At the SCC: For the first time, the Court said the Crown may be held to a higher standard when it contracts with Indigenous parties (even if the contract isn’t a treaty). The honour of the Crown doesn’t apply to every contract with an Indigenous counterparty — but it may apply to contracts premised on the special relationship between the Crown and Indigenous peoples.

Contracts that recognize an Indigenous right to self-government (like the policing agreement in this case) definitely fit the bill. But others might too.

Hardline renewal negotiations won’t cut it

The majority (led by Justice Kasirer) also agreed with the band council that the governments’ conduct fell short of what the law requires. Like the Court of Appeal, the Supreme Court found a breach of good faith. And since the honour of the Crown is a more onerous standard than good faith — there was a breach there too.

The whole purpose of the agreement was to establish a viable police service. It was a long-term commitment. So when Canada and Quebec realized it was underfunded, they had a duty to meaningfully negotiate. It wasn’t acceptable to take a firm “take it or leave it” position without considering the band council’s interests.

The Court’s good faith analysis was based on the concepts in Quebec’s Civil Code, but with the Supreme Court using civil law concepts as “inspiration” for common law good faith, it’s worth keeping this decision in mind whether you practice in Quebec or not.

What did the Court do about the breach? No one knows what would have happened if the governments had sat down to negotiate. But the majority didn’t let that stand in the way of awarding damages. Justice Kasirer fashioned a remedy based on “reconciliatory justice” — which effectively lets the Court award whatever it thinks is necessary to restore the Crown’s honour.

And that left Canada and Quebec on the hook for all of the funding deficits incurred by the band council between 2013 and 2017. The band council might not have done that well in negotiations, but covering the entire shortfall served to patch up the Crown’s dishonourable approach to the agreement.

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HEARSAY ROUNDUP 🗞️

🌳 Alberta wants to strike down the Impact Assessment Act (again). The federal government amended the statute after Alberta’s successful constitutional challenge last year. But the province says the amended legislation still lets the feds intrude into provincial jurisdiction by putting local projects through a lengthy environmental approval process.

🦾 They’re a bit late to the party, but Canadian publishers don’t plan on getting left behind. A group of media outlets including CBC, Postmedia, and the Globe and Mail sued ChatGPT creator OpenAI. What happens when you train generative AI on copyrighted content? Unjust enrichment, according to the publishers.

🤳 Quebec enacted a new law targeting the unlawful sharing of intimate images. Victims now have a quicker procedure to stop images from spreading (similar to the BC legislation that took effect earlier this year).

🧑‍⚕️ Quebec also tabled its legislation forcing doctors to stay in the province after graduating from a local med school. The proposed rule would fine new doctors up to $200,000 per day if they don’t work in the province’s public healthcare system for at least five years.

💬 The federal government has now agreed to split up its controversial online harms legislation. The parts dealing with hate speech (which have attracted the most criticism) will be debated separately so that the parts geared towards keeping kids safe online have an easier time making it through the House of Commons.

🏳️‍⚧️ Alberta’s trio of laws regulating transgender issues passed through the provincial legislature, setting the stage for 2SLGBTQ+ advocacy groups to challenge them in court.

DECISION SPOTLIGHT 🔦

Sky’s the limit for the provincial litigation gang

Sanis Health v. BC, 2024 SCC 40

The second of the SCC’s two latest decisions involves the opioid crisis. The Court had to decide whether BC can advance a class action lawsuit on behalf of other provinces. The defendants — companies connected to opioid marketing and potentially on the hook for damages — sure hoped the answer was no. But eight of nine judges went the other way. 

A bit of context: With the Opioid Damages and Health Care Costs Recovery Act, BC gave itself the power to recover healthcare costs flowing from the opioid epidemic. It’s similar to the statues used to get a settlement out of Big Tobacco. But the opioid legislation goes even further. Instead of each province filing separate lawsuits at home, BC gave itself the power to bring a class action lawsuit where the class consists of other provinces.

So what? The defendants argued the provinces don’t have the authority to drag other provinces into a lawsuit. Their strongest argument relied on the opt-out mechanism that backs class action proceedings. 

• Typically, the outcome of a class action binds anyone who meets the class definition. Class members can’t bring their own lawsuit unless they first opt out of the class.

• It’s no different for BC’s new multi-Crown class action. Other provinces can’t launch their own lawsuit unless they opt out of BC’s. And according to the opioid companies, that means BC is (unconstitutionally) forcing other provinces to act.

At the SCC: Justice Karakatsanis wrote the majority judgment. She characterized BC’s legislation as a straightforward procedural mechanism dealing strictly with the administration of justice in BC. She said it doesn’t affect the substantive rights of other provinces, since they’re free to opt out.

Room for disagreement: According to Justice Côté, there’s a big difference between opting in and opting out — while opting in might be a choice, requiring provinces to opt out forces them to act.

• This was one of the core arguments raised by the appellants, so it’s a bit surprising to see the majority pen a 109-paragraph judgment without addressing the distinction at all.

THINGS NOT TO DO 😤

• Don’t throw water in court. 

• Don’t hide potential conflicts

During a sexual assault trial in BC, the prosecuting Crown Attorney dated a paralegal working for the defence. And it’s not like the paralegal was just one of several working for a large firm — she attended the trial, took notes, and actively participated in the accused’s defence.

The defence lawyer knew about the relationship, but the accused didn’t find out until after a jury convicted him. The revelation led to a mistrial.

How am I doing with Hearsay?

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Hit reply and say hello — I’d love to hear from you!

— Dylan