The Supreme Court of Canada released two judgments, granted leave to appeal in one case and denied leave to appeal in one case of interest to Canadian business this week.
In Payette v. Guay Inc., 2013 SCC 45, the Supreme Court of Canada confirmed that the rules applicable to restrictive covenants apply with greater rigour when such covenants are found in a contract for the sale of a business as opposed to a contract of employment. The rationale for this difference, the Court stated, is the imbalance of power which is inherent in employer-employee relationships, but which is presumed to be absent in vendor-purchaser relationships. The Supreme Court of Canada reiterated that in order for a non-competition clause to be reasonable and valid, its term, its geographical scope and the nature of activities which it prohibits must be limited to protecting the legitimate interests of the party in whose favour it was granted. Significantly, the Court held that a failure to include a territorial limitation in a non-solicitation clause will generally not render such a clause unenforceable. Although decided in the context of Quebec’s Civil Code, the decision in Payette has relevance to the common law provinces as well.
In Régie des rentes du Québec v. Canada Bread Company Ltd., 2013 SCC 46, the Supreme Court of Canada ruled that the legislature has the power to enact declaratory legislation which sets out the meaning of its statutes. Such declaratory legislation will apply immediately to all pending cases and can, in essence, reverse an earlier interpretation given to a statute by a court.
The Supreme Court of Canada also granted leave to appeal the British Columbia Court of Appeal’s decision inTrial Lawyers Association of British Columbia v. Attorney General of British Columbia, which raises issues regarding the constitutionality of hearing fees charged to litigants, based on access to justice concerns.
Leave to appeal was denied by the Supreme Court of Canada in Stubicar v. Deputy Prime Minister, Minister of Public Safety and Emergency. In Stubicar, the Federal Court of Canada had ruled that a judge’s reasons for judgment, which incorporated significant portions from an earlier judgment by the same judge, did not give rise to a reasonable apprehension of bias.