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Common Law - Statutory Variance

. 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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