Ontario Court Stays Action to Enforce $17.2 Billion Ecuadorian Judgment against Chevron Corporation

From 1964 to 1992, Texaco Inc., its subsidiaries and various partners engaged in oil extraction activities in the Lago Agrio region of Ecuador's Amazon Basin. The next year, various plaintiffs filed suit in the Southern District of New York against Texaco alleging a variety of environmental, health and other tort claims related to Texaco's extraction activities. The District Court dismissed the plaintiffs' claims, in part because it believed that "the case had everything to do with Ecuador, and nothing to do with the United States".

The United States Court of Appeals, Second Circuit disagreed. It required Texaco to make a commitment to submit to the jurisdiction of the Ecuadorian Courts. After several more years of "legal wrangling", Texaco accepted the conditions established by the Appeal Court but reserved its right to contest the validity of a judgment rendered by a court in Ecuador.

While the litigation was ongoing in the Southern District of New York, Texaco entered into a settlement with the Ecuadorian Government and funded certain environmental remediation projects in exchange for a release from liability for environmental impact which fell outside the scope of the settlement. The settlement was finalized in 1998. Chevron Corporation acquired Texaco in 2001. Ecuador and Chevron continued to litigate the validity and effect of the settlement.

The individual plaintiffs started a lawsuit against Chevron in Ecuador despite the settlement. After seven years of litigation, on February 14, 2011, the trial court found Chevron liable for $8.6 billion in damages.  It ordered Chevron to pay another $8.6 billion in punitive damages unless Chevron apologized within 14 days of the judgment. Chevron did not apologize. Accordingly the pending judgment is for $17.2 billion.

In 2011 Chevron sought and obtained a global anti-enforcement injunction against the plaintiffs in the United States District Court for the Southern District of New York. The Court of Appeal, Second Circuit reversed the injunction initially granted, in part because enforcement proceedings in New York had not yet been sought by the plaintiffs. The Court of Appeal stated "the plaintiffs hold a judgment from an Ecuadorian Court. They may seek to enforce that judgment in any country in the world where Chevron has assets."

On May 30, 2012, the plaintiffs commenced an action in Ontario against Chevron, Chevron Canada Limited and Chevron Canada Finance Limited seeking to enforce the judgment. The plaintiffs pleaded that Chevron  had resiled from Texaco's promise to satisfy the judgment.  In fact, Chevron's general counsel stated, "We're going to fight this until Hell freezes over and then fight it out on the ice." 

On a motion heard by Justice D. M. Brown of the Ontario Superior Court of Justice,  Justice Brown dismissed the defendants' request to set aside the service of the statement of claim against them but granted the defendant's motions to stay the action to enforce the Ecuadorian judgment in Ontario.

The Judge was not prepared to set aside service of the statement of claim on Chevron and ruled that service had been effected pursuant to Ontario's rules of civil procedure.  Nor was he inclined to set aside service against Chevron Canada.  Among other things. that defendant operated a business establishment in Ontario. However, Justice Brown ruled that a stay of the action against the defendants was justified on the bases of mootness.

Justice Brown found that the evidence disclosed that Chevron had no presence, business activity or assets in Ontario or elsewhere in Canada. That had been the case for 86 years and there was no reasonable basis to believe that those circumstances would change.  In addition, the evidence disclosed that Chevron did not conduct any business in Ontario.

The judge held that Chevron Canada was a "seventh generation indirectly-owned subsidiary" of Chevron. The plaintiffs had argued that the assets owned by Chevron Canada are available for execution against Chevron as judgement debtor, because those assets were "beneficially" owned by Chevron. However, Justice Brown held that under Canadian law  a shareholder in a corporation does not posses a legal or equitable interest in the assets of the company. Accordingly the plaintiffs filed a pleading that Chevron beneficially owns the assets of Chevron Canada was inconsistent with the basic principles of Canadian corporate law. The plaintiffs had failed to "pierce the corporate veil" between the two entities.

Justice Brown ruled that Chevron Canada and Chevron Canada Finance were not the judgment debtors.  They were separate legal entities and had nothing to do with Chevron's operations.  He concluded that the plaintiffs had "no hope of success" that the corporate veil of Chevron Canada would be pierced and ignored so that  it assets would be available to satisfy the Ecuadorian judgment.  Accordingly any recognition of the Ecuadorian judgment by an Ontario court would have no practical effect.  As a result, he exercised his discretion to stay the action.

Regards,

Blair

Second Chance for Lawyer Ordered to Pay Costs Personally?

Rule 57.07 of Ontario's Rules of Civil Procedure gives the court (including a Master of the court) discretion to award costs of a proceeding against a lawyer and to require the lawyer to pay the costs personally. Specifically, the rule provides that where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order, (a) disallowing costs between the lawyer and the client or directing the lawyer to repay the client money paid in respect of costs; (b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to another party; and (c) requiring the lawyer personally to pay the costs of any party.   Such an order may be made by the court on its own initiative or on the motion of any party to the proceeding but the court has no discretion to make such an order unless the lawyer is given a reasonable opportunity to make representations to the court. 

In the case of Haider Humza Inc. v. Rafiq [2012] ONSC 6161, Master Dash of the Ontario Superior Court of Justice ordered the plaintiff's lawyer, Murray Teitel, to personally pay the defendant's lawyer costs in the sum of $3,000 for conduct which Master Dash defined as "sharp practice".  Master Dash held, among other findings, as follows: 

In my April 23rd endorsement I had contemplated costs personally against Mr. Teitel for the earlier motion, but elected not to do so. ... This time a line has been crossed.  Mr. Teitel has breached his duty to another lawyer not to take steps without fair warning and to take advantage of Mr. Datt's (the other lawyer) mistake.  He lulled Mr. Datt into believing the costs would be paid in accordance with the order and on time, while taking steps to frustrate that payment by informing the Ministry without any warning to Mohammed or Mr. Datt until after payment was made to the Ministry.  The decision not to warn was his decision alone.  Even if I am wrong and he acted on his client's instructions, a lawyer should not take instructions from a client that would cause him to breach his professional obligations to another lawyer.  It appears that no lesson had been learned from my criticism of the plaintiff's scorched earth policy set out in my earlier endorsement.  It has instead been taken to a new level.  Mr. Teitel has engaged in share practice and is no longer entitled to the benefit of the doubt.  A message must be sent that the court will not abide such behaviour.  This is an appropriate case for the costs award to be made personally against the plaintiff's lawyer. 

Mr. Teitel sought leave of a single judge of the Superior Court of Justice to appeal the Master's order to another judge of the Superior Court.  In granting leave, Justice Morgan held that the Master had exceeded his jurisdiction in what amounted to making a determination under the Rules of Professional Conduct that Mr. Teitel had engaged in sharp practice.  The judge held that it is one thing to use a phrase such as "sharp practice" in the way that it is commonly used - meaning an aggressive tactic that is disapproved of by the court.  It is another thing for a Master, sitting in motions court and writing an endorsement on a question of costs, to cite a specific provision of the Rules of Professional Conduct to analyze a lawyer's conduct in reference to the terms of that rule and to make a specific finding that the lawyer has breached the rule. 

Justice Morgan held that under the Law Society Act only a discipline panel of the Law Society has jurisdiction to make a determination that a lawyer has breached the Rules of Professional Conduct.  Such a determination was not one that the Master could make.  The judge held that in his view, Master Dash's venture into an area that was not in his jurisdiction needs to be revisited by an appellate court given its centrality to his assessment of costs against Mr. Teitel.  Accordingly, Justice Morgan granted Mr. Teitel leave to appeal from Master Dash's order. 

While I make no comment on Mr. Teitel's conduct or whether it constituted sharp practice, it seems surprising that although the rule empowers a Master to make findings of "negligence or other default" when awarding costs against a lawyer personally, Justice Morgan didn't appear to consider whether conduct that may amount to professional misconduct (regardless of whether a finding of professional misconduct was made) fell within the meaning of "other default".   

Regards,

Blair

Ontario Court Awards Plaintiff Substantial Indemnity Costs Despite Late Offer

In Ontario, a successful litigant is usually entitled to have a portion of his legal costs paid by the losing party - a concept known as partial indemnification of legal costs.  Rule 49 of Ontario's Rules of Civil Procedure governs written offers to settle and provides for certain cost consequences that follow when a litigant refuses to accept a reasonable offer to settle litigation.  The general principle is that if a successful party serves a written offer to settle at least seven days before the commencement of a hearing, the losing party might be required to pay a higher scale of legal costs than it might otherwise have paid - substantial indemnification of legal costs.

 

The Ontario Court of Appeal has held that courts should depart from these prima facie cost consequences only if, after giving proper weight to the policy of the rule and the importance of reasonable predictability and the even application of the rule, "the interests of justice require departure".  As can be seen from the following case, the "interests of justice" is a vague standard.  Ontario courts appear willing to depart from the general principle of Rule, while giving it lip service.

 

In the recent case of Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc. 2013 ONSC 5213, Mr. Justice Newbould of the Ontario Superior Court of Justice, awarded a plaintiff substantial indemnity costs (substantially all of its reasonably incurred legal costs) of its successful action even though its offer to settle was served too late to be treated as a "Rule 49" offer - i.e. less than seven days before the hearing.

 

In the case, Justice Newbould had awarded the plaintiff more than $16 million in damages, plus interest and costs.  The plaintiff sought costs in excess of $2 million.  The defendants argued that the plaintiff's costs should be limited to $650,000.   

 

The plaintiff had served an offer to settle which was purported to be under rule 49 for $8 million.  The defendant had served its own offer to settle for $1 million.  Upon receipt of the plaintiff's offer, the defendant's counsel wrote to counsel for the plaintiff and said that while he had forwarded the offer to his client "he very much doubted that the offer would provide the basis for a meaningful discussion".

 

In awarding the plaintiff substantial indemnity costs, Justice Newbould held that it was clear to him that the defendant had plenty of time to consider the plaintiff's offer.  He further held that the defendant's objection was really quite technical given that its lawyer made it clear on the day after the offer was served that it was not going to be met with favour.   

 

Justice Newbould reasoned that the offer had been made by one sophisticated commercial party to another, who clearly had time to deal with it and choose not to act on it.   It was a serious offer to settle made in a reasonable attempt to settle the case.

 

 He further held that, in awarding substantial indemnity costs, he was entitled to exercise his discretion with respect to costs and accordingly could take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.  Whether his discretion was exercised under rule 57.01 (dealing with costs of a proceeding in general) or rule 49.13 (dealing with offers to settle) didn't matter.  In his view, the plaintiff was entitled to costs on a substantial indemnity basis from the date of its offer. 

 

Regards,

 

Blair

 

 

Supreme Court of Canada Deals a Blow to a Higher Rate of Pay for Amici Curiae

In three criminal cases in Ontario, the trial judges appointed amici curiae to assist the accused, who had fired their lawyers.  The judges did so in order to "maintain the orderly conduct of the trials" or to avoid delays in what they considered were complex, lengthy proceedings.  The cases were not decided under the Canadian Charter of Rights and Freedoms and did not proceed on the basis that the accused could not have had fair trials without the assistance of counsel.  An issue arose as to how much the province of Ontario should pay the amici.

 

The Attorney General of Ontario took the position that the three amici had played a role similar to that of defence counsel and should accept the legal aid rates that were paid to defence counsel.  The amici refused to accept those rates and the trial judges fixed rates that exceeded the legal aid tariff and ordered the Attorney General to pay.  The Attorney General appealed the decisions on the basis that the judges lacked the jurisdiction to fix the compensation for amici curiae.

 

The Ontario Court of Appeal dismissed the appeal, holding that, incidental to a superior or statutory court's power to appoint an amicus, is the power to set terms and conditions of that appointment, including a rate of compensation and monitoring of accounts. 

 

In a 5 - 4 decision, the Supreme Court of Canada allowed the Attorney General's appeal.  The majority (reasons written by Justice Karakatsanis) held that while it is true that courts of inherent or statutory jurisdiction have the power to appoint amici curiae, the doctrine of inherent jurisdiction does not operate without limits.  Such inherent and implicit powers are subject to any statutory provisions and must be responsive to the separation of powers that exist among the various players in the "Canadian Constitutional Order", in other words, the federal government and the provinces.  Justice Karakatsanis held that a court's inherent or implied powers must not trench on the provinces' role in the administration of justice.

 

The majority of the court reasoned that while the courts have the jurisdiction to set terms to give effect to their authority to appoint amici curiae, the ability to fix rates of compensation for an amicus is not essential to the power to appoint them and its absence does not imperil the judiciary's ability to administer justice according to law in a regular, orderly and effective manner.  

 

Justice Karakatsansis held that to the extent that the terms of an amicus' appointment mirrors the responsibilities of defence counsel, they blur the lines between those two roles.  A lawyer appointed as amicus who takes on the role of defence counsel is no longer a friend of the court.  An order requiring the Attorney General to compensate an amicus at a particular rate is an order directing the Attorney General to pay specific monies of public funds.  She held that the allocation of resources between competing priorities remains a public and economic question.  It is a political decision and the legislature and the executive are accountable to the public for it.  

 

The Supreme Court held that in cases that do not involve a constitutional challenge, making a payment order does not respect the institutional roles and capacities of the legislature, the executive and the judiciary or the principle that the legislature and executive are accountable to the public for the spending of public funds.  Accordingly,the inherent or applied jurisdiction of superior or statutory courts to appoint amici does not extend to setting rates of compensation for amici.  

 

As a result of this decision, the Ontario Criminal Lawyers Association, has indicated that it will seek to meet with the Attorney General to come to an agreement about a compensation protocol for amici.  

 
See - Ontario v. Criminal Lawyers Association of Ontario 2013 SCC 43

 

Regards,

 

Blair

Provincial Workers' Compensation Scheme Bars Federal Statutory Cause of Action

Two brothers, Joseph and David Ryan, were Newfoundlanders who, like many others in that province earned their living by fishing the North Atlantic.  On September 19, 2004, the Ryan brothers died when their ship, The Ryan's Commander capsized while returning from a fishing trip off the coast of Newfoundland.  Joseph and David's widows and children (the "Ryan Estates") applied for and received compensation under Newfoundland and Labrador's  Workplace Health, Safety and Compensation Act ("WHSCA").

 

Then, proceeding under the federal Maritime Liability Act ("MLA") the Ryan Estates commenced an action against the builders of The Ryan's Commander, Universal Marine Limited, Marine Services International Limited ("Marine Services") and an employee of Marine Services, alleging negligence in the design and construction of the boat.  The Ryan Estates also sued the Attorney General of Canada alleging negligence in the inspection of the boat by Transport Canada. 

 

Marine Services and its employee applied to the Workplace Health, Safety and Compensation Commission ("Commission") of Newfoundland and Labrador for a determination of whether the action was prohibited by virtue of section 44 of the WHSCA.  That section provides: "the right to compensation under the Act is instead of the rights of action, statutory or otherwise, to which a worker or his dependents are entitled against an employer because of a injury in which compensation is payable or which arises in the course of the worker's employment".   The Commission held that the action was statute barred by section 44.  

 

The Ryan Estates applied to the Newfoundland and Labrador's Supreme Court to judicially review the Commission's findings.  On review, the court overturned the decision of the Commission holding that the doctrines of "interjurisdictional immunity" and "federal paramountcy" applied and therefore the action should be allowed to proceed.  The majority of the Newfoundland and Labrador Court of Appeal upheld the trial court's decision.  

 

Marine Services further appealed to the Supreme Court of Canada.  The SCC allowed the appeal and held that section 44 of the WHSCA was constitutionally applicable and operative and therefore the action started by the Ryan Estates was statute barred.  The Supreme Court held that the statutory bar of section 44 applied on the facts of this case.  The WHSCA did not only benefit an "employer" in a direct employment relationship with an injured worker.  Any employer that contributed to the compensation scheme and any worker of such an employer benefited from the statutory bar as long as the worker was injured in the course of his employment and the injury occurred in the conduct of operations usual in or incidental to the industry carried on by the employer. 

 

In this case, the Commission found that the injury that led to the death of the Ryan brothers occurred "in the conduct of the operations usual in or incidental to" the industry carried on by Marine Services.  Such a finding was entitled to deference.  It was a question of mixed fact and law that the Commission answered by assessing the evidence and interpreting its home statute.  Moreover, the WHSCA contains a privative clause. In light of these factors, the standard of reasonableness applied.  

 

In respect of the constitutional issues involving the division of powers between the federal government and the province of Newfoundland and Labrador raised by the Courts of Newfoundland, the Supreme Court held a two prong test must be met to trigger the application of interjurisdictional immunity.  The first step is to determine whether the impugned legislation trenches on the core head of power listed in sections 91 or 92 of the Constitution Act, 1867.  Then, if the impugned legislation trenches on the core head of such a power, the second step is to determine whether the encroachment is sufficiently serious. 

 

The Supreme Court held that interjurisdictional immunity did not apply in this case.  The first prong of the test was met but not the second.  A provincial statute of general application such as the WHSCA, cannot have the effect of indirectly regulating an issue of maritime negligence law which is at the core of the federal power over navigation and shipping.  

 

Section 6(2) of the MLA provided that:  if a person dies by the fault or neglect of another under circumstances that would have entitled the person, if not deceased, to recover damages, the dependents of the deceased person may maintain an action in a court of competent jurisdiction for their loss resulting from the death against the person from whom the deceased person would have been entitled to recover. 

 

Section 44 of the WHSCA alters the range of claimants who may make use of the statutory maritime negligence action provided by section 6(2) of the MLA and therefore trenches on the core of the federal power over navigation and shipping.  However, section 44 of the WHSCA does not impair the exercise of the federal power over navigation and shipping.  The intrusion of section 44 is not significant or serious when one considers the breadth of the federal power over navigation and shipping, the absence of impact on the uniformity of Canadian Maritime law, and the historical application of worker's compensation schemes in the Maritime context.

 

Secondly, the Supreme Court held that the doctrine of federal paramountcy did not apply in this case under a proper interpretation of the MLA.  Accordingly to this doctrine, when the operational effects of provincial legislation are incompatible with the federal legislation, the federal legislation must prevail and the provincial legislation is rendered inoperative to the extent of the incompatibility.  Federal paramountcy applies where there is an inconsistency between a valid federal legislative enactment (section 6(2) of the MLA) and a valid provincial legislative enactment (section 44 of the WHSCA) but not between a common law rule and a valid provincial law.  The inconsistency can arise from two different forms of conflict - the operational conflict, when compliance with one statute means a violation of the other statute, and the frustration of the federal purpose.  The standard for invalidating provincial legislation on the basis of frustration of federal purpose is high.  

 

The Supreme Court held that section 6(2) of the MLA which provides a cause of action to the Ryan Estates makes room for the operation of provincial workers compensation schemes.  The WHSCA and the MLA can operate side by side without conflict.  The language of section 6(2) of the MLA which provides that a dependent may bring a claim "under circumstances that would have entitled the person, if not deceased, to recover damages", suggests that there are situations where a dependent is not allowed to bring an action pursuant to that section.  Such a situation occurs where a statutory provision such as section 44 of the WHSCA prohibits litigation because compensation has already been awarded under a workers' compensation scheme.  The statutory bar in section 44 of the WHSCA removes compensation for workplace injury from the tort system, of which the MLA is a part.

 

The WHSCA which establishes a no-fault regime to compensate for workplace related injury does not frustrate the purpose of section 6(2) of the MLA which was enacted to expand the range of claimants who could start an action in Maritime negligence law.  The WHSCA simply provides for a different regime for compensation that is distinct and separate from tort. 

 

Regards,

 

Blair

Standard Form Bank Guarantees May Trump Common Law Protections

Cheryl Cusack and Jason Brasseur are married.  In 2005, Ms. Cusack signed a "continuing" guarantee for the indebtedness of Mr. Brasseur's company to the Royal Bank of Canada ("RBC") for $150,000.  The guarantee covered present and future liabilities of the company and were not tied to any specific loan between RBC and the company.  Ms. Cusack received independent legal advice before signing the guarantee. 

 

RBC also held a first ranking security interest in the company's assets and a personal guarantee from Mr. Brasseur.

 

In 2006, RBC agreed to increase the company's operating line of credit to $250,000.  Ms. Cusack and Mr. Brasseur each gave fresh personal guarantees for $250,000 to RBC that covered the company's present and future liabilities.

These guarantees were also continuing guarantees and were not tied to any specific loan between RBC and the company. 

 

Ms. Cusack acknowledged that she received independent legal advice before signing the fresh guarantee. 

 

In 2008, the amount of the loan covered by the loan agreement between RBC and the company was increased to $500,000.  RBC did not request a new guarantee from Ms. Cusack but did obtain a new personal guarantee from Mr. Brasseur in the amount of $500,000.  The 2008 loan agreement stated that the new loan agreement "supersedes and cancels" the 2006 agreement.  It also stated that among the security for the loan and all other obligations of the company to the bank was Ms. Cusack's 2006 guarantee in the amount of $250,000. 

 

In 2009 the loan agreement between RBC and the company was again increased to $750,000.  Mr. Brasseur signed a new personal guarantee for that amount.  RBC did not request a new guarantee from Ms. Cusack and left in place her 2006 guarantee for $250,000.  

 

RBC did not have any contact with Ms. Cusack at any time.  She never saw any of the loan agreements between RBC and the company.  RBC provided the guarantee forms to Mr. Brasseur who gave them to Ms. Cusack, along with the form for independent legal advice.

 

The company's business failed in 2011.  RBC made demands on Mr. Brasseur and Ms. Cusack under their guarantees.  His 2009 guarantee and her 2006 guarantee.  

 

The Ontario Court of Appeal (Justices MacPherson, Cronk and Lauwers) held that the single issue in the case was whether Ms. Cusack had contracted out of the of protection provided to a guarantor by common law and equity.  

 

The court held that it has long been the law that a guarantor will be released from liability on a guarantee in circumstances where the creditor and the principal debtor agree to a material alteration of the terms of the loan agreement without the consent of the guarantor.  The issue as to whether a guarantor remains liable will be determined by the interpretation of the contract between the parties and determining the intention of the parties as demonstrated by the wording of the contract and the events and circumstances surrounding the transaction as a whole.

 

It was common ground that RBC and the company made loan arrangements over time which increased the risk to which Ms. Cusack was exposed by her guarantee even though her financial exposure was capped at $250,000.  At common law, these alterations in the loan arrangements would have resulted in Ms. Cusack's discharge from liability on the guarantee in the absence either of her consent or clear language in the guarantee permitting RBC and the company to make the alternations without her consent. 

 

The Court of Appeal however found that the standard form bank guarantee contained such clear language and that the bank did not need to and had no duty to inform the guarantor about future credit facilities and that the guarantor had the onus of inquiring about the state of the accounts between the bank and the principal debtor. 

 

The Court of Appeal held that the language of the guarantee was very broad and was plainly designed to ensure that a guarantor does not contract out of the ordinary protections of the common law.  It held that the first paragraph on the first page of the guarantee was critical.  Such paragraph provided that Ms. Cusack would pay on demand to RBC "all debts and liabilities, present or future, direct or indirect, absolute or contingent, mature or not, at any time owing by" the company to RBC.  The clause made it clear that RBC could increase the amount of its loan to the company and Ms. Cusack would remain liable under the guarantee. 

 

The guarantee was what is known as a "continuing" or "all accounts" guarantee.  The difference between a specific guarantee and a continuing or all accounts guarantee is that the second form of guarantee is for the debts of the company already incurred or which would be incurred subsequently.  In addition, such a guarantee provides that all monies borrowed from the bank shall be deemed to form part of the liabilities despite circumstances that include irregularities, defects or informality in the borrowing.  

 

With respect to whether there was a "material alternation" in the terms of the guarantee that would relieve Ms. Cusack from liability, the Court of Appeal held that analytically, a court was required to consider two distinct steps in this regard.  The first step was to consider whether the challenged alternation to the underlying loan arrangement was material as a matter of law.  The second step was to consider whether the language of the guarantee permitted the material alteration.

 

In this case, the court held that while the subsequent advances by RBC to the company were material alterations to the principal loan contract, they were contemplated by the parties, permitted by the clear language of the guarantee and inherent in a continuing all accounts guarantee that contemplated increases in the size of the underlying indebtedness.

 

Regards,

 

Blair

Documents for use in British Columbia courts must be written in English

In 1731 the English Parliament passed a statute that required proceedings in the courts of England to be conducted in English. The act was entitled: An Act that all Proceedings in Courts of Justice within that part of Great Britain called England, and in the Court of Exchequer in Scotland, shall be in the English Language, 1731, 4 Geo. II, c.26 (the "1731 Act"). Over 100 years later, on November 19, 1858,  the 1731 Act was received into the law of the province of British Columbia and has not been modified since.  It remains in force in British Columbia pursuant to the requirements of the British Columbia Law and Equity Act (1996).

In 2011, a BC French Language School Board and a Federation of Francophone parents, brought an interlocutory application to the British Columbia Supreme Court to have exhibits to affidavits written in French introduced into evidence. The applicants intended to rely on the content of the exhibits, which were prepared before the litigation was contemplated, to further their roles in the "protection and promotion of French-language education in the province". The province of British Columbia objected to the admission of the exhibits without accompanying English translations on the basis that the 1731 Act and Rule 22-3 of the BC Supreme Court Civil Rules (the "Rules") both required "court proceedings" and any "document prepared for use in the court" to be in English. The Chamber's judge denied the application. The British Columbia Court of Appeal dismissed the applicants' appeal.

In a split (4-3) decision, the Supreme Court of Canada dismissed the applicants' appeal to that court, but allowed them to recover their costs from the province throughout all proceedings.

The court's majority decision was written by Mr. Justice Wagner:

Justice Wagner held that the BC legislature had properly used its powers to regulate the language to be used in court proceedings by adopting provisions that required civil proceedings, which included exhibits to affidavits, to be in English. In doing so, the legislature ousted the inherent jurisdiction of the courts and therefore there was no residual discretion left to admit documents in other languages without an English translation.

In addition, the BC legislature had not repealed or modified the 1731 Act, nor had it implicitly modified it by "occupying the field" with subsequent legislation. To the contrary, the BC courts have repeatedly endorsed the 1731 Act and the legislature has declined to change the law on language in court proceedings.

Even if the 1731 Act did not apply, Rule 22-3 of the Rules required that exhibits attached to affidavits and filed in court be in English. The Rule therefore limits the courts inherent jurisdiction to admit documents in languages other than English.

Finally, it was not inconsistent with the Canadian Charter of Rights and Freedoms for the BC legislature to restrict the language of court proceedings to English. The Charter does not require any province other than New Brunswick to provide for court proceedings in both official language.

The dissenting judgment was written by Justice Karakatsanis:

Justice Karakatsanis found that neither the 1731 Act nor the Rules addressed the language of exhibits in court proceedings. In light of the silence of the BC legislature on the issue and pursuant to the court's inherent jurisdiction, judges could allow French language documents not prepared for use in court to be filed in evidence as exhibits where this will ensure the administration of justice according to law in a regular, orderly and effective manner. In a somewhat technical distinction, Justice Karakatsanis found that under the 1731 Act, the prohibition on foreign languages in "proceedings" no matter how broadly proceedings is defined - does not address the language of exhibits filed as evidence or prevent the tendering or acceptance of a document in a language other than English.

Similarly, the Rules do not define "evidence" or "exhibit" and do not directly address the language of the proceedings other than Rule 22-3 which refers to documents "prepared for use in the court". The exhibits at issue in the appeal were created in French long before litigation was contemplated and therefore were not prepared for use in the court.

In the absence of clear and precise statutory language addressing the language in which documents not prepared for use in court must be filed, the BC legislature had not ousted the court's inherent jurisdiction. Therefore the Supreme Court could exercise that jurisdiction to admit French documents if doing so would uphold, protect and fulfil the judicial function of administering justice.

Regards,

Blair