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Common Law - Statutory Variance

. Keulen v. Allstate Insurance Co.

In Keulen v. Allstate Insurance Co. (Div Court, 2024) the Divisional Court dismissed the novel argument that a recently-created administrative regime, which excludes previously court-available common law punitive damages jurisdiction, was unconstitutional for that reason:
Issue #2 – Elimination of Punitive Damages Is Not Unconstitutional

[21] The Appellant’s argument on this point is as follows:
(a) the Supreme Court of Canada has found that punitive damages are available at common law;

(b) the Supreme Court of Canada has found that the legislature must use clear language to remove traditional jurisdiction from the Superior Court of Justice to an administrative tribunal: Chrysler v. Competition Bureau, 1992 CanLII 68 (SCC), [1992] 2 SCR 394; Idziak v. Canada, 1992 CanLII 51 (SCC), [1992] 3 SCR 631;

(c) the legislature of Ontario has not used clear language to remove claims for punitive damages from the jurisdiction of the Superior Court of Justice, and therefore the laws of Ontario that have this effect are unconstitutional.
[22] With the greatest of respect, this argument obviously lacks merit. The first two propositions are unremarkable. The third argument is incorrect in its premise, and in error in its conclusion in any event.

[23] First, punitive damages are a remedy, not a right of action. Punitive damages are available at common law. The legislature may vary the common law – indeed, legislation governing rights, obligations and remedies is, by its nature, amendment to or enactment of the common law. The status of a legal principle as arising from common law does not, by that fact, insulate it from legislative amendment.

[24] Second, the legislature used clear language removing jurisdiction over claims arising in respect to statutory accident benefits from the Superior Court of Justice and placed that jurisdiction in the LAT: this is set out, in clear language, in s. 280 of the Insurance Act, cited above. Particular remedies available to the LAT – whether awards of benefits, interest, costs, or special awards, are aspects of the exclusive jurisdiction that the LAT has over these claims.

[25] Third, the LAT has the authority to adjudicate SABS claims in accordance with the SABS Schedule and the governing legislation and regulations. That regime does not include authority to award punitive damages. Prior to April 1, 2016, the Financial Services Commission of Ontario (“FSCO”) and the Ontario Superior Court had parallel, concurrent jurisdiction over statutory accident benefits claims. Thereafter, this jurisdiction was conferred exclusively upon the LAT as a result of amendments to the Insurance Act: Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, SO 2014, c. 9, Sch. 3, s. 14. Under the former regime, the Superior Court had jurisdiction to award punitive damages and the FSCO did not. The legislature opted not to authorize the LAT to award punitive damages in the same manner that FSCO did not have that authority: as found by the Court of Appeal in Stegenga, this was a policy choice made by the legislature.

[26] Fourth, if the legislature had failed to remove jurisdiction from the Superior Court of Justice over SABS claims, the remedy would not be a finding of unconstitutionality, but rather, that the Superior Court still retains jurisdiction.

[27] I decline to undertake a “deep[er] dive” into a constitutional question that is so obviously misconceived. The Appellant’s first two arguments are trite law. The third argument has no basis in law and no authority in support of it. For decades, governments have wrestled with balancing compensation for accident victims with the overall cost of insurance. The SABS Schedule limits compensation available to claimants. Punitive damages are a non-compensatory award: Whiten v. Pilot Insurance Company, 2002 SCC 18, para. 79. The legislature has not eliminated non-compensatory awards for claims arising under the SABS Schedule, but rather it has limited them. I see no basis for the Appellant’s arguments that such limitations are constitutionally infirm.
. R. v. Basque

In R. v. Basque (SCC, 2023) the Supreme Court of Canada considered the crediting of a pre-trial suspension release undertaking against a driving suspension sentence. In these quotes the court considers the relationship between the common law and the statute law, here in particular to criminal sentencing:
C. Analytical Framework: Coexistence of the Common Law and Legislation in Matters of Sentencing

[39] Both parties agree that sentencing judges have a discretion to grant credit for a pre‑sentence driving prohibition period. However, contrary to the appellant, the Crown argues that Parliament limited or displaced this common law discretion when it enacted the mandatory minimum set out in s. 259(1)(a) Cr. C. This appeal therefore raises the question of whether, as the appellant maintains, the common law rule can coexist in harmony with the mandatory minimum laid down by the Criminal Code.

[40] This question requires the Court to consider the sometimes complex interactions that characterize the relationship between the common law and legislation. While legislation may prevail over the common law, the latter remains applicable insofar as it has not been displaced expressly or by necessary implication, a principle often justified by the importance of “stability in the law” (R. v. D.L.W., 2016 SCC 22, [2016] 1 S.C.R. 402, at para. 21, per Cromwell J.). In Lizotte, Gascon J., writing for a unanimous Court, reiterated the general principle that applies to legislative departures from common law rules: “This Court has held that it must be presumed that a legislature does not intend to change existing common law rules in the absence of a clear provision to that effect . . .” (para. 56). Professor Ruth Sullivan has written that this presumption “permits courts to insist on precise and explicit direction from the legislature before accepting any change. The common law is thus shielded from unclear or inadvertent legislative encroachment” (The Construction of Statutes (7th ed. 2022), at § 17.01.Pt1[2]; see also P.‑A. Côté and M. Devinat, Interprétation des lois (5th ed. 2021), at Nos. 180‑92).

[41] Canadian criminal law is made up of both statute law and common law principles (M. Vauclair and T. Desjardins, in collaboration with P. Lachance, Traité général de preuve et de procédure pénales 2022 (29th ed. 2022), at Nos. 1.17‑1.24, citing, among others, D.L.W., at paras. 3, 15 and 57‑59). The enactment of a criminal code in this country in 1892 did not have the effect of systematically displacing the common law as a source of law (D. H. Brown, The Genesis of the Canadian Criminal Code of 1892 (1989), at p. 126; G. H. Crouse, “A Critique of Canadian Criminal Legislation: Part One” (1934), 12 Can. Bar Rev. 545, at p. 565: “One fundamental principle of the Canadian Codification is that the common law is not superseded.”). Today, the Criminal Code provides that, as a general rule, the common law is no longer a source of offences in Canada (s. 9(a)). It states, however, that common law defences continue in force except insofar as they are altered by statute (s. 8(3); R. v. Tim, 2022 SCC 12, at para. 27; see also J. Fortin and L. Viau, Traité de droit pénal général (1982), at p. 18). As Vauclair and Desjardins explain, reference may be made to the common law to interpret a criminal provision codifying a common law offence (No. 3.20, citing R. v. Jobidon, 1991 CanLII 77 (SCC), [1991] 2 S.C.R. 714).

[42] This coexistence of statute and common law is a feature of the law of sentencing (see Canadian Sentencing Commission, Sentencing Structure in Canada: Historical Perspectives (1988), at p. 35). While Part XXIII of the Criminal Code codifies “the fundamental . . . principles of sentencing” (R. v. Gladue, 1999 CanLII 679 (SCC), [1999] 1 S.C.R. 688, at para. 1), courts can also take account of “other principles and factors arising from the common law” (D. Rose, Quigley’s Criminal Procedure in Canada (loose‑leaf), at § 23:6). Legislation also prevails over the common law in this area if Parliament displaces it expressly or by necessary implication (see, e.g., R. v. Skolnick, 1982 CanLII 54 (SCC), [1982] 2 S.C.R. 47, at p. 58).

[43] In Lacasse, this Court reiterated that courts must take account of a pre‑sentence driving prohibition period in exercising their discretion to give credit (paras. 111‑14, per Wagner J.; see also paras. 176‑78, per Gascon J., dissenting, but not on this point). It is true that Lacasse did not concern a mandatory minimum and that, under s. 259(2)(a.1) Cr. C., the sentence had begun at the end of the offender’s incarceration. However, the judgment can guide us in this case, with the necessary modifications.

[44] The granting of such credit is anchored in the common law; it is one example, in the context of a driving prohibition, of what Arbour J. called the “well‑established practice of sentencing judges [giving] credit for time served” (Wust, at para. 31). In the words of Paciocco J., as he then was, this rule is part of the “central principles of sentencing not statutorily expressed but still vibrant as ‘general principles of sentencing’” (R. v. Pham, 2013 ONCJ 635, 296 C.R.R. (2d) 178, at para. 18). As Wagner J. later noted in Lacasse, this principle has not been codified. Although s. 719(3) Cr. C. does codify the principle that credit can be granted in the case of pre‑sentence custody, that provision has no statutory equivalent relating to pre‑sentence driving prohibitions. The respondent takes the position here that the principle to which the Court referred in Lacasse was displaced by Parliament’s enactment of the mandatory minimum, a consideration that did not arise on the facts of that case.

[45] The interaction between legislation and the common law in matters of sentencing and punishment is therefore at the heart of this appeal. The two‑step framework used to analyze this interaction is well settled. The first step is “analysing, identifying and setting out the applicable common law”; and then, at the second step, “the statute law’s effect on the common law must be specified” (2747‑3174 Québec Inc. v. Quebec (Régie des permis d’alcool), 1996 CanLII 153 (SCC), [1996] 3 S.C.R. 919, at para. 97, per L’Heureux‑Dubé J., citing Zaidan Group Ltd. v. London (City), 1991 CanLII 53 (SCC), [1991] 3 S.C.R. 593, and Frame v. Smith, 1987 CanLII 74 (SCC), [1987] 2 S.C.R. 99; see also Urban Mechanical Contracting Ltd. v. Zurich Insurance Co., 2022 ONCA 589, 163 O.R. (3d) 652, at para. 45). ...
. Toronto (City) v. Craft Kingsmen Rail Corp.

In Toronto (City) v. Craft Kingsmen Rail Corp. (Div Court, 2023) the Divisional Court considers the role of common law in statutory interpretation (presumption of consistency):
[42] Another principle of statutory interpretation that is relevant to the analysis in this case is the presumption against changing the common law unless three is a clear expression of legislative intent to the contrary. This principle was confirmed by the Supreme Court of Canada in Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, 450 D.L.R. (4th) 105, at para. 39:
The common law forms part of the context in which a legislature enacts statutes, and the legislature is presumed not to have intended to alter or extinguish common law rules in doing so ... In addition, when the legislature uses a term that has an established legal meaning, it is presumed to have given the term that meaning in the statute in question. [Citations omitted.]
. Canada (Attorney General) v. Thouin

In this Quebec civil procedure case, Canada (Attorney General) v. Thouin (SCC, 2017), the Supreme Court of Canada, in dealing with the development of common law crown immunity by statute, comments as follows:
[19] That being said, there is a presumption that the common law remains unchanged absent a clear and unequivocal expression of legislative intent. In Lizotte v. Aviva Insurance Company of Canada, 2016 SCC 52 (CanLII), [2016] 2 S.C.R. 521, this Court summarized the case law on this point and noted “that it must be presumed that a legislature does not intend to change existing common law rules in the absence of a clear provision to that effect” (para. 56; see also Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, 2003 SCC 42 (CanLII), [2003] 2 S.C.R. 157, at para. 39; Slaight Communications Inc. v. Davidson, 1989 CanLII 92 (SCC), [1989] 1 S.C.R. 1038, at p. 1077; and R. Sullivan, Sullivan on the Construction of Statutes (6th ed. 2014), at pp. 504‑5).

[20] In this regard, s. 17 of the Interpretation Act now serves as a starting point in each case in which the Crown might have immunity. It reads as follows: “No enactment is binding on Her Majesty or affects Her Majesty or Her Majesty’s rights or prerogatives in any manner, except as mentioned or referred to in the enactment.” In short, unless the immunity is clearly lifted, the Crown continues to have it. In Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC), [1992] 1 S.C.R. 3, the Court recognized that s. 17 is indeed the starting point for the analysis regarding immunity and that, as a result, where there are no express words in an Act to the effect that the Act applies to the Crown, “it . . . remains to be decided whether the Crown is bound by necessary implication” (p. 50).

[21] In the past, language similar to the words “except as mentioned or referred to” in s. 17 had been used in s. 16 of the Interpretation Act, R.S.C. 1970, c. I‑23, which provided that no enactment could bind the Crown, “except only as therein mentioned or referred to”. In Oldman River and in Alberta Government Telephones v. Canada (Canadian Radio‑television and Telecommunications Commission), 1989 CanLII 78 (SCC), [1989] 2 S.C.R. 225, the Court interpreted this wording and concluded that a legislature must use express language to lift Crown immunity unless it can be inferred that the purpose of the Act would be wholly frustrated if the Crown were not bound (see also H. Brun, G. Tremblay and E. Brouillet, Droit constitutionnel (6th ed. 2014), at para. IX. 90).

[22] With these principles in mind, it must therefore be determined whether, in the instant case, Parliament has lifted the common law Crown immunity from discovery and, if so, to what extent.

B. Limits on the Crown’s Immunity From Discovery

[23] In about 1950, Parliament, drawing on the Crown Proceedings Act, 1947 (U.K.), 10 & 11 Geo. 6, c. 44, that had been enacted in the United Kingdom, began to impose limits on the scope of the common law Crown immunity. In 1953, it passed the Crown Liability Act, S.C. 1952‑53, c. 30 (Morley, at p. 1‑41; Hogg, Monahan and Wright, at p. 9), which had the effect of expanding Crown liability and thus bringing the Crown’s legal position closer to that of ordinary litigants. That Crown Liability Act was the predecessor of the CLPA that is at issue in this appeal. Today, Crown immunity still exists at the federal level in the context of civil proceedings, but only within the limits set in the CLPA and the Federal Courts Act, R.S.C. 1985, c. F‑7, the scope of which Parliament remains free to change (Brun, Tremblay and Brouillet, at paras. IX. 72 to IX. 73). It follows that the Crown is not in exactly the same legal position as ordinary litigants, since it still retains certain residual privileges and immunities under the current legislation.
. Chandos Construction Ltd. v. Deloitte Restructuring Inc.

In Chandos Construction Ltd. v. Deloitte Restructuring Inc. (SCC, 2020) the Supreme Court of Canada considered the 'common law-statute relationship', in the context of the bankruptcy 'anti-deprivation' rule, which voids any effort to diminish the value of an insolvent's estate available to the creditors:
[29] Moreover, as the intervenor Attorney General of Canada submitted, Parliament’s actions are better understood as gradually codifying limited parts of the common law rather than seeking to oust all related common law. As this Court has repeatedly observed, Parliament is presumed to intend not to change the existing common law unless it does so clearly and unambiguously (Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157, at para. 39; Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, [2016] 1 S.C.R. 306, at paras. 29-30).
. Urban Mechanical Contracting Ltd. v. Zurich

In Urban Mechanical Contracting Ltd. v. Zurich (Ont CA, 2022) the Court of Appeal considered rescission where it may prejudice the rights of third parties. One issue was whether the bond issuer could rescind the bond contract under the common law while sub-contractors had relied upon it to perform the work under a statute, the Construction Lien Act:
Can Rescission Co-Exist with the Construction Lien Act?

[40] The appellant Trades argue that s. 69 of the Construction Lien Act, R.S.O. 1990, c. C.30,[2] prevents Zurich from rescinding the Payment Bond as they have valid claims against Zurich pursuant to the Bond. They claim that equitable remedies such as rescission cannot undermine their statutory right and that, if Zurich’s rescission action is sustained, their right to claim on the Payment Bond pursuant to s. 69, would be improperly extinguished.


[43] Legislation supersedes a common law remedy, including equity where it has done so clearly and unambiguously: Ruth Sullivan, The Construction of Statutes, 7th ed. (Markham: LexisNexis Canada Inc., 2022), at pp. 530-32.

[44] As such, a statutory scheme may oust equitable rights that would otherwise be available but only where the legislature expressed its intention to do so with “irresistible clearness”: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 70; KBA Canada, Inc. v. Supreme Graphics Limited, 2014 BCCA 117, 59 B.C.L.R. (5th) 273; Zaidan Group Ltd. v. London (City) (1990), 1990 CanLII 2624 (ON CA), 71 O.R. (2d) 65 (C.A.), at para. 11, aff’d 1991 CanLII 53 (SCC), [1991] 3 S.C.R. 593; and Neles Controls Ltd. v. Canada, 2002 FCA 107, 222 F.T.R. 319, at para. 15.

[45] In order to decide whether legislation ousts a common law remedy, the court must begin by “analysing, identifying and setting out the applicable common law, after which the statute law's effect on the common law must be specified by determining what common law rule the statute law codifies, replaces or repeals, whether the statute law leaves gaps that the common law must fill and whether the statute law is a complete code that excludes or supplants all of the common law in the specific area of law involved”: 2747-3174 Québec Inc. v. Québec (Régie des permis d’alcool), 1996 CanLII 153 (SCC), [1996] 3 S.C.R. 919, at para. 97, per L’Heureux-Dubé J.

[46] The Construction Lien Act clearly ousts certain equitable rights. For instance, it precludes a subcontractor who was entitled to, but did not register a construction lien for unpaid work as provided by the Construction Lien Act, from claiming the amount of the lien in unjust enrichment. This is the “precise sort of situation that the Construction Lien Act was designed to address and augmenting the scope of claims available would undercut the balance established by the Act”: Tremblar Building Supplies Ltd. v. 1839563 Ontario Limited, 2020 ONSC 6302, 454 D.L.R. (4th) 546, at para. 18.

[47] In deciding whether the legislative scheme in s. 69 ousts rescission, it is necessary to look at the situation s. 69 was designed to address.[3] At common law, tradespeople could not sue upon a payment bond because they were not parties to the bond, and had no privity of contract with the surety. To avoid this problem, modern payment bonds used trust language: Valard ConstructionLtd. v. Bird Construction Co. 2018 SCC 8, [2018] 1 S.C.R. 224, at para. 53, per Karakatsanis J. Additionally, at common law, a bond was “effective” when it was signed, sealed and delivered: Paul D’Aoust Construction Ltd. v. Markel Insurance Co. of Canada (1999), 1999 CanLII 1732 (ON CA), 120 O.A.C. 243 (C.A.), aff’d 2001 SCC 84, [2001] 3 S.C.R. 744.

[48] Section 69 was designed to replace the common law actions based on trust bonds with a direct statutory action between the surety and the trades. This served to resolve any potential problem arising from the lack of privity of contract between them. As explained in a report prepared by the Advisory Committee on the draft Construction Lien Act, in 1982:
While the purpose of the bond is to protect the suppliers of services or materials, those suppliers cannot sue upon it, at common law, because they have no contractual relationship with the bonding company. To remedy this problem a trust form of bond has recently become common. There may still be some doubt as to the effectiveness of this bond form. Section [69] removes all doubt and permits suppliers of services or materials to sue upon a labour and materials bond. [Emphasis added.]
[49] More recently, at Chapter 10 of their report to the Ministry of Attorney General of Ontario, Striking the Balance: Expert Review of Ontario's Construction Lien Act (delivered April 30, 2016), Bruce Reynolds and Sharon Vogel note that:
Surety bonds guarantee, among other things, payment of either fifty percent or one hundred percent of the amounts owed by general contractors to the suppliers of labour and materials, and guarantee the owner that, in the event of the insolvency of the general contractor, construction will be completed. [Emphasis added.]
[50] However, the Construction Lien Act does not explicitly address the trades’ right of action on the payment bond when the bond agreement was founded on fraud. Nor is there anything in the legislative record to show whether the legislature specifically intended s. 69 to sustain the bond even in the face of fraud. And finally, the parties have adduced no cases that specifically address the issue of fraud in the issuance of the bond. As such, it is not appropriate to foreclose this argument at this stage of the proceeding without hearing full submissions on this issue.


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Last modified: 10-04-24
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