CLIENT UPDATE NEWSLETTER
The Supreme Court of Canada recently denied leave to appeal the Federal Court of Appeal’s
(“FCA”) decision in Commissioner of Competition v. Toronto Real Estate Board. The FCA’s
decision marks a significant clarification of the Competition Act’s abuse of dominance
The decision confirms that a person can control a market in which it does not itself compete.
This interpretation of the abuse of dominance provisions means that trade associations, as
well as large customers or suppliers with significant market power, must ensure their practices
do not exclude competitors or otherwise hinder competition.
The Commissioner’s Allegations
The Commissioner of Competition (“Commissioner”) applied pursuant to section 79 of
the Competition Act—the abuse of dominant position provision—for orders prohibiting the
Toronto Real Estate Board (the “Board”) from engaging in what the Commissioner alleged
were anti-competitive acts.
The Board, a trade association with realtor members concentrated in the Greater Toronto
Area, had adopted a rule prohibiting members from posting historic residential property listing
data from the Board’s Multiple Listing Service online. The Commissioner alleged that the
restrictions on Board members’ permitted use of Multiple Listing Service listings and related
data on the internet prevented or lessened competition substantially in the market for the
supply of residential real estate brokerage services to vendors and purchasers in the Greater
Toronto Area. The Commissioner also alleged these restrictions primarily harm Board members
who conduct their business online.
» continued on page 2
Competition Puts Trade Associations
under the Microscope
Bronwyn Roe » full bio
Competition Puts Trade
Associations under the
July 1st Recap
No Hiding Behind Business
Judgment Rule for Executive
Notice Provisions in Real
Volunteering to Pay Taxes?
It Could Save You Money!
Enhancements to CRA’s
Access to Information
Inside this Issue:
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Welcome to the Fall 2014 edition of our Client Update Newsletter. Here we provide you with
articles on recent developments in business law from a WeirFoulds perspective, and always
with your interests in mind. Whether you are a new or existing client, we’re certain you’ll find
information of interest and value.
We hope you enjoy these insights and invite you to share the newsletter with your clients,
colleagues and friends (provided you have their consent—see p. 2).
» continued from cover
Importantly, the Board does not compete with its realtor
members. The Commissioner’s case asserted that the Board
was abusing its position as a dominant trade association to
harm competition by its members.
The Competition Tribunal
The Tribunal interpreted the leading case on abuse of
dominance, Commissioner of Competition v. Canada Pipe Co.,
to stand for the rule that, for an act to be an “anti-competitive
act” for the purposes of section 79, the dominant firm must
compete with the firm harmed by the dominant firm’s practice
of anti-competitive acts. Since the Board does not compete
with its members, the Tribunal found that the abuse of
dominant position provision could not apply to the Board.
The Federal Court of Appeal
On appeal, the FCA overturned the Tribunal’s decision and
sent the case back to the Tribunal to be decided on its
merits. The FCA’s key finding was that the Tribunal erred in its
interpretation of Canada Pipe: a person does not need to be
a “competitor” to engage in anti-competitive acts within the
meaning of section 79.
The FCA’s decision in Commissioner of Competition v. Toronto
Real Estate Board has clarified that the Commissioner may
seek an order under section 79 against a firm that is not
a competitor in the relevant market. In particular, trade
associations and large customers and suppliers may be
targets of complaints for abuse of dominant position, even
where they do not compete in a relevant market.
PA G E | 2 FA L L 2 0 1 4 W E I R F O U L D S C L I E N T UPDAT E
Canada’s Anti-Spam Legislation—Post July 1st Recap
Ralph Kroman » full bio
Canada’s anti-spam law (CASL) came into effect on July 1st, and
is one of the most stringent anti-spam regimes in the world.
An electronic communication (such as an e-mail or text
message) that promotes commercial activities (such as
marketing a business to its customers) is a “commercial
electronic message” (CEM) that is subject to CASL.
CEMs may be sent only with the express or implied consent
of the recipient, and they must contain certain identification
information and an easy-to-use unsubscribe mechanism.
Consent is implied under a few circumstances specified in
CASL, and the onus is on the business to prove express or
On the other hand, the U.S. does not have a consent
requirement in its federal anti-spam legislation, and the focus
is merely upon an unsubscribe mechanism.
CASL was subject to some controversy and debate prior
to July 1st although it was not “top of mind” for many
businesses. Several people expressed the opinion that
the consent requirement was too onerous for Canadian
businesses who conduct reasonable marketing activities,
and that CASL would not in fact change the amount of spam
Canadians receive from foreign jurisdictions. Views were
also expressed that CASL was too complex, and that it was
too costly for Canadian businesses to comply with it. Others
thought that CASL was progressive and reasonably necessary
to respect the privacy of individuals. In any event, CASL is now
here, and appears to be here to stay.
A key situation where consent is implied is where the sender
and the recipient have a “business relationship”. A business
relationship is deemed to exist if the recipient purchased
products or services from the business within a two-year
period prior to the date of the CEM. In other words, consent is
implied regarding fairly recent customers.
A three-year grace period exists. For the first three years after
July 1st, the two-year period will not apply, provided that the
customer does not withdraw consent and the relationship
included the exchange of CEMs.
CASL is enforced by the Canadian Radio-television and
Telecommunications Commission (CRTC). Complaints may be
filed by the public with the CRTC. According to several press
reports, Manon Bombardier, the CRTC’s Chief Compliance and
Enforcement Officer, said that over 1,000 complaints were
filed with the CRTC in the first few days after July 1st.
Overall, it is too early to tell whether CASL will make a
material difference to the number of annoying e-mails and
other electronic communications that Canadians receive.
photo credit: Biscarotte via photopin cc
W E I R F O U L D S C L I E N T UPDAT E FA L L 2 0 1 4 PA G E | 3
No Hiding Behind Business Judgment Rule for
Executive Compensation Matters
Wayne Egan » full bio | Kim Lawton » full bio
A recent Ontario Court of Appeal decision serves as an
important reminder that when the board of directors
makes decisions on executive compensation matters,
their conclusions must be evidence-based and properly
documented in order to discharge their fiduciary duties.
In Unique Broadband Systems, Inc. (Re), 2014 ONCA
538, the Court of Appeal affirmed the nature of
directors’ and officers’ fiduciary duties and clarified
the application of the business judgment rule in the
context of a dispute regarding executive compensation.
The case is significant from a corporate governance
perspective for several reasons, including because of
the following findings:
1. Expert evidence and market data can support a
board’s decision. The Court of Appeal specifically
noted that “The UBS Board did not seek or receive any
expert advice on an appropriate bonus structure. Nor
did they have any comparable or other data regarding
executive compensation in the marketplace.”
2. The ‘Business Judgment Rule’ is only a rebuttable
presumption. The courts will defer to the business
judgment rule only where there is evidence that a
decision was made on an informed basis, in good
faith, and in the best interests of the corporation.
When making executive compensation decisions,
directors and officers would be well-advised to ensure
their process, evidence and underlying rationale are
well-documented in order to create a contemporaneous
record that they’ve fulfilled their fiduciary duties.
Notice Provisions in Real Estate Agreements
Brad McLellan » full bio
Most commercial real estate agreements contain a clause
detailing how the parties are to give notice to one another if a
notice needs to be sent under the agreement. Events triggering
the need to send a notice might include waiver of a condition,
extension of time periods, exercise of an option, or termination
of the agreement. Notice clauses can become an issue if
one party asserts that it was sent a notice that was not done
properly or was not received in time. This risk underlines the
importance of clear and unambiguous notice clauses.
The following are some technological and other “glitches” that
may affect whether a notice was sent properly and received
1. Notices sent by fax
• recipient’s machine is out of paper
• recipient’s machine is out of ink
• power outage
• fax machine not turned on
• date/time recording is incorrect
• paper jam
2. Notices sent by e-mail
• problem with server
• recipient’s e-mail address incorrect
• e-mail blocked by junk mail program
• e-mail stuck in “cyberspace” due to length of
• recipient does not read notice because it was from an
unknown sender (e.g. the sender’s assistant sent the
e-mail and his or her name appeared as the sender)
• date/time recording is incorrect
• “out of the office reply” arrives from the recipient,
raising uncertainty over whether the notice is
considered to have been received (e.g. do you need to
try another form of communication?)
• recipient declines to have a “read-receipt” sent back to you
In terms of the wording of notice clauses, the parties should
consider the following types of issues:
• Notices received after 5:00 p.m. on a business day—are
they deemed to be received that day or the next business day?
• Notices received on non-business days—are they
deemed to be received on the next business day?
• Notices sent to a particular person’s attention when
sent to a business—what if the agreement is intended to
be in force for a long period of time (e.g. 10–20 years) and
the addressee no longer works at the business? Is it better
to write “Attention: President [or some other officer]”?
• Notice clauses cc’ing solicitors for the parties—should
a recipient’s lawyer also receive a copy of the notice?
Notice clauses are critical in real estate agreements. Parties to
the agreement need to be sure that the notice clause clearly
sets out how they expect notices to be sent and received.
PA G E | 4 FA L L 2 0 1 4 W E I R F O U L D S C L I E N T UPDAT E
Through the Canada Revenue Agency’s (CRA) voluntary
disclosure program (VDP), taxpayers can avoid penalties
and prosecution and may also be entitled to partial interest
relief in respect of past non-compliance with tax obligations.
While the VDP is not new, a number of recent developments
may increase the chances of the CRA detecting the noncompliance
or taking other actions that could foreclose the
possibility of making a valid voluntary disclosure.
These developments include:
1. A new initiative to share information about border
crossings. On June 30, 2014, Canada and the U.S.
commenced a new joint initiative to share information
about when individuals cross the Canada-U.S. border.
Amongst other things, the CRA could use the information
to target (a) non-resident employees and service
providers who do not comply with their Canadian tax filing
obligations, and (b) persons who do not comply with their
obligations to withhold and remit tax on payments to such
employees and services providers.
2. The Offshore Tax Information Program (“OTIP”).
Launched in January 2014, OTIP allows the CRA to make
financial awards to individuals who provide information
related to international tax non-compliance that leads to
the collection of at least $100,000 of federal taxes.
3. The continued negotiation with foreign countries
of Tax Information Exchange Agreements and Tax
Treaties with exchange-of-information provisions.
These agreements permit, and in some cases require,
the sharing of information between Canada and foreign
jurisdictions for purposes of verifying tax compliance. In
this connection, the Canada-United States Enhanced Tax
Information Exchange Agreement was brought into law in
Canada as of June 27, 2014 and, among other things,
requires the U.S. to provide the CRA with information on
Canadian residents who hold accounts at U.S. financial
institutions. With the OECD (of which Canada is a
member) developing a global standard for the automatic
exchange of financial account information, these sorts of
agreements are expected to become more common.
4. Reporting requirements for electronic transfers
of funds. Starting in 2015, certain entities (generally
financial intermediaries) will be required to report to the
Minister of National Revenue certain electronic transfers
of funds of $10,000 or more into or out of Canada.
5. Changes to information requirement rules. With judicial
authorization, the CRA is permitted to require third parties
to provide information or documents for the purposes of
verifying tax compliance of unnamed persons. With the
intention of obtaining the information and documents more
quickly, these rules were changed in 2013 to require the
CRA to provide notice to the third parties of the judicial
application and eliminate the ability of the third parties to
seek a subsequent review of the authorization.
These developments add to, and do not replace, existing
mechanisms at the CRA’s disposal to uncover non-compliance,
such as audits. The CRA also continues to encourage
“whistleblowing” through its Informant Leads Program.
These developments are relevant in considering whether and
when to make a voluntary disclosure because in order to be
accepted under the VDP, the disclosure must be voluntary.
Where the CRA uncovers the non-compliance or undertakes
an enforcement action that might lead to uncovering the noncompliance,
the opportunity to access the voluntary disclosure
program is generally foreclosed because the CRA would likely
not view the disclosure as voluntary.
Part II of this article will appear in the next Client Update
Newsletter and will discuss other conditions for making a valid
disclosure and how to participate in the VDP.
Volunteering to Pay Taxes? It Could Save You Money!
Part I—Recent Enhancements to CRA’s Access to Information
Ryan Morris » full bio
ABOUT THIS NEWSLETTER
For over 150 years, the lawyers of WeirFoulds have been proud
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© WeirFoulds LLP 2014