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Appeal Court Dicta

Injunctions - RJR - 'Serious Issue' (Merits)

. Power Workers' Union v. Canada (Attorney General)

In Power Workers' Union v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered a preliminary motion for interim and interlocutory injunctions [under Federal Rules R373] in the course of an appeal of an unsuccessful union JR against a "regulatory document issued by the Canadian Nuclear Safety Commission", here on constitutional grounds. The policy in the impugned document, which the injunction would suspend if granted, established policy regarding "pre-placement and random alcohol and drug testing of safety-critical workers employed by the respondent employers at Class I high-security nuclear power plants".

This motion is essentially a stay pending appeal (a similar lower court stay was already issued in the JR proceeding), and as such is heard under the RJR-MacDonald doctrine:
A. Serious Issue

[18] The threshold for determining whether there is a serious issue is low. (RJR-MacDonald at 335; Western Oilfield Equipment Rentals Ltd. v. M-I L.L.C., 2020 FCA 3 at para. 8 [Western Oilfield]). The Court must be satisfied that an issue to be determined is “not frivolous or vexatious” (RJR-Macdonald at 337; Toronto Real Estate Board v. Commissioner of Competition, 2016 FCA 204 at para. 11).

[19] Generally, a motions judge need not and should not engage in an extensive consideration of the merits to make this determination. Whether the Court might be of the view that the party seeking the stay will not succeed on its appeal is an irrelevant consideration (RJR-MacDonald at 338; Western Oilfield at para. 8).

[20] The Stay Judge concluded that there were serious issues to be determined in the judicial review application before the Federal Court (Stay Decision at para. 67). These included whether the impugned provisions of the RegDoc are contrary to sections 7, 8 or 15 of the Charter and the reasonableness of the Commission’s adoption of those provisions.

[21] The appellants submit and the respondents concede that the issues raised in the appeal are neither frivolous nor vexatious. I agree. They are issues that concern alleged violations of fundamental rights and freedoms protected under the Charter and the process and decision-making of the Commission, all within the context of the nuclear power industry.

[22] I agree with the appellants that the Merits Decision having been decided against them does not bear on the issue of interlocutory relief. This appeal involves allegations of Charter violations; the fact that a decision has been made on the merits does not result in an increased burden on the appellant in this motion (RJR-MacDonald at 336).

[23] I am satisfied that the appeal raises a serious issue for determination. The appellants have met the first branch of the test.
. Lithium Royalty Corporation v. Orion Resource Partners

In Lithium Royalty Corporation v. Orion Resource Partners (Ont CA, 2023) the Court of Appeal considers the 'serious issue to be tried' element of the RJR-MacDonald stay test:
[49] Since the serious issue to be tried consideration can compensate for deficiencies in the other factors, see Circuit World Corp. v. Lesperance (1997), 1997 CanLII 1385 (ON CA), 33 O.R. (3d) 674 (C.A.) at p. 677, I must go further and make a preliminary assessment of how strong the grounds of appeal are. I have concluded that with respect to the Orion Respondents generally, the grounds of appeal are not so strong that they offset or compensate for the deficiencies in the other RJR-Macdonald Inc. factors, which I describe below. However, in my view there could be real merit in the grounds of appeal relating to Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP, hence the partial stay being ordered relating to those entities.
. Sase Aggregate Ltd. v. Langdon,

In Sase Aggregate Ltd. v. Langdon, (Ont CA, 2023) the Court of Appeal considered the 'serious question' (merits) element of the RJR stay pending appeal test:
(a) Serious Question

[11] This factor is typically adjudicated by appellate courts with a low threshold, focussing less on an extensive review of the merits of the appeal and more on determining that the issues raised are not frivolous or vexatious: RJR-MacDonald Inc., at p. 334 and Hollinger Inc. (Re), 2011 ONCA 765, at para. 9.

[12] In the context of stays pending leave to appeal applications to the Supreme Court of Canada, however, a modified approach applies. In addition to determining whether there is a serious question at play, a judge must be mindful of s. 40(1) of the SCA which sets out that court’s stringent leave requirements. The Supreme Court of Canada typically grants leave to appeal only in cases of public importance. Acknowledging this, the threshold on both the merits and the public importance considerations remains relatively low: see Livent at para. 8; Circuit World Corp. v. Lesperance (1997), 1997 CanLII 1385 (ON CA), 33 O.R. (3d) 674 (C.A.), at p. 677; and Alectra Utilities Corp. v. Solar Power Network Inc., 2019 ONCA 332 at para 13.

[13] In BTR Global Opportunity, Laskin J.A. summarized the role an appellate judge is to play in reviewing a request to stay an order pending an application for leave to the Supreme Court of Canada, at paras. 18-19:
Ordinarily, the threshold for showing a serious issue to be adjudicated is low. However, the criteria for granting leave to appeal to the Supreme Court of Canada add another layer to this component of the test. Under s. 40(1) of the Supreme Court Act, R.S.C. 1985, c. S-26, the Supreme Court of Canada typically grants leave to appeal only in cases of public or national importance. Thus, a provincial appellate court judge hearing a motion for stay pending leave to appeal to the Supreme Court of Canada must take account of the stringent leave requirements in the Supreme Court Act: see Merck & Co. v. Nu-Pharm Inc. (2000), 2000 CanLII 15240 (FCA), 5 C.P.R. (4th) 417 (F.C.A.) and Ontario Public Service Employees Union v. Ontario (A.G.) (2002), 2002 CanLII 44918 (ON CA), 158 O.A.C. 113.

The Supreme Court of Canada itself decides when leave should be granted and does not give reasons for doing so. As Rothstein J.A. noted in Merck, this puts provincial appellate court judges in a "somewhat awkward position." Nonetheless, the stay test requires that I make some preliminary assessment of the merit of the leave motion.

[15] To support its case, the moving party highlights two leading cases: Soulos v. Korkontzilas, 1997 CanLII 346 (SCC), [1997] 2 S.C.R. 217 and B.M.P Global Distribution Inc. v. Bank of Nova Scotia, 2007 BCCA 52, rev’d on other grounds 2009 SCC 15.

[16] In Soulos, a real estate broker negotiating the purchase of a commercial building failed to bring an offer to his client and instead arranged for his wife to purchase the property. It was subsequently transferred to the broker and his wife as joint tenants. The broker’s client brought an action against the broker to have the property conveyed to him, alleging breach of fiduciary duty giving rise to a constructive trust. Because the market value of the property had dropped from the time of purchase to the time of trial, the trial judge found unjust enrichment could not be made out and therefore a constructive trust could not be applied as a remedy. The Court of Appeal for Ontario reversed the judgment and ordered that the property be conveyed to the client subject to appropriate adjustments. The Supreme Court affirmed the Court of Appeal and dismissed the appeal.

[17] In Soulos, McLachlin J. wrote what can be described as a seminal judgment on constructive trusts in Canada. She first surveyed the purpose and evolution of constructive trusts in Canada, at para. 17:
The history of the law of constructive trust … suggests that the constructive trust is an ancient and eclectic institution imposed by law not only to remedy unjust enrichment, but to hold persons in different situations to high standards of trust and probity and prevent them from retaining property which in “good conscience” they should not be permitted to retain. This served the end, not only of doing justice in the case before the court, but of protecting relationships of trust and the institutions that depend on these relationships. These goals were accomplished by treating the person holding the property as a trustee of it for the wronged person’s benefit, even though there was no true trust created by intention….In the United States and recently in Canada, jurisprudence speaks of the availability of the constructive trust as a remedy; hence the remedial constructive trust. [Emphasis added.]
[18] Ultimately, McLachlin J. held that constructive trusts can arise in Canada under the broad umbrella of good conscience, at para. 43:
I conclude that in Canada, under the broad umbrella of good conscience, constructive trusts are recognized both for wrongful acts like fraud and breach of duty of loyalty, as well as to remedy unjust enrichment and corresponding deprivation. While cases often involve both a wrongful act and unjust enrichment, constructive trusts may be imposed on either ground: where there is a wrongful act but no unjust enrichment and corresponding deprivation; or where there is an unconscionable unjust enrichment in the absence of a wrongful act, as in Pettkus v. Becker, supra. Within these two broad categories, there is room for the law of constructive trust to develop and for greater precision to be attained, as time and experience may dictate. [Emphasis added.]
[19] McLachlin J. recognized this as a common unifying concept, one that can extend beyond the two categories of unjust enrichment and wrongful act. Getting to the heart of the matter at paras. 34-35, she seems to recognize the implications of such a broad interpretation:
It thus emerges that a constructive trust may be imposed where good conscience so requires. The inquiry into good conscience is informed by the situations where constructive trusts have been recognized in the past. It is also informed by the dual reasons for which constructive trusts have traditionally been imposed: to do justice between the parties and to maintain the integrity of institutions dependent on trust-like relationships. Finally, it is informed by the absence of an indication that a constructive trust would have an unfair or unjust effect on the defendant or third parties, matters which equity has always taken into account. Equitable remedies are flexible; their award is based on what is just in all the circumstances of the case.

Good conscience as a common concept unifying the various instances in which a constructive trust may be found has the disadvantage of being very general. But any concept capable of embracing the diverse circumstances in which a constructive trust may be imposed must, of necessity, be general. Particularity is found in the situations in which judges in the past have found constructive trusts. A judge faced with a claim for a constructive trust will have regard not merely to what might seem “fair” in a general sense, but to other situations where courts have found a constructive trust. The goal is but a reasoned, incremental development of the law on a case-by-case basis. [Emphasis added.]
[20] The moving party contends that British Columbia courts have implemented this broader interpretation of the law while the Ontario courts have not. As an example of this contention, it cites B.M.P. Global Distribution Inc. as decided by the British Columbia Court of Appeal, where a third party sought to keep gains it accrued innocently from a fraud. In that decision, the Court extensively referenced Soulos and found McLachlin J.’s approach to the principle of good conscience was previously adopted by that court in an earlier decision, ICBO v. Lo, 2006 BCCA 584, and should also be applied in B.M.P.


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