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Statutes and Regulations - Relation to Common Law

. Peace River Hydro Partners v. Petrowest Corp.

In Peace River Hydro Partners v. Petrowest Corp. (SCC, 2022) the Supreme Court of Canada cites a principle of statutory interpretation, here that the common law may be had regard to where uncertainty arises:
[112] The first principle is that where legislation does not fully address a matter relating to its subject, courts may look to the common law to interpret the statutory language (R. Sullivan, The Construction of Statutes (7th ed. 2022), at §17.02). In such a scenario, the common law is presumed to apply, absent persuasive evidence that the legislature intended to change or displace it by enacting the statute at issue (Sullivan, at §17.02).
. 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.
. Canadian Broadcasting Corporation v. Association of Professionals and Supervisors

In Canadian Broadcasting Corporation v. Association of Professionals and Supervisors (Div Ct, 2020) the Divisional Court considers an interpretive provision of the federal Interpretation Act that allows reference to applicable provincial common law and equity:
[43] The Employer argues that, in these circumstances, s. 8.1 of the Interpretation Act of Canada, R.S.C. 1985, c. I-21 required the Arbitrator to refer to Ontario law in determining the damages to which the Grievor was entitled. Section 8.1 reads as follows:
Both the common law and the civil law are equally authoritative and recognized sources of law of property and civil rights in Canada and, unless provided by law, if in interpreting an enactment it is necessary to refer to a province’s rules, principles or concepts forming part of the law of property or civil rights, reference must be made to the rules, principles and concepts in force in the province at the time the enactment is being applied.
[44] In Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC 60, at para. 27, the Supreme Court summarized the effect of s. 8.1: “if in interpreting a federal provision it is necessary to refer to private law concepts, reference must be made to the law of the province in which the provision is to be applied”.
. Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp.

In Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. (SCC, 2020) the Supreme Court of Canada comments on the relation between statutes and the common law:
[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: 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. 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: R. v. D.L.W., 2016 SCC 22, [2016] 1 S.C.R. 402, at para. 20. ...

[40] These presumptions can be rebutted only by establishing a clear expression of legislative intent to the contrary: Heritage Capital, at paras. 30-31; D.L.W., at paras. 18-20. ...


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