Editor’s Note: This post was written as a preview of an upcoming Supreme Court of Canada decision for the Fantasy Courts website and newsletter.
Hi, here’s what you need to know about the Supreme Court of Canada this week in 5 minutes.
- The SCC is releasing its decision in Sharp v. Autorité des marchés financiers on Friday, Nov. 17. At issue is the jurisdiction of a Quebec financial tribunal over a pump and dump scheme operated by B.C. residents.
- On Nov. 10, the SCC released R. v. Greater Sudbury (City), 2023 SCC 28 in which it dismissed the appeal as a result of a 4:4 tie due to Justice Brown’s retirement. The City was an employer for the purpose of duties under the Occupational Health and Safety Act, even though the accident in question was caused by a third-party constructor. (Note: We didn’t anticipate a tie when making the site, so prediction streaks will be broken, sorry!)
Head over to Fantasy Courts to lock in your predictions for this week’s decision or read more about the cases below.
Jurisdiction Over Out-of-Province Pump and Dump Scheme
The respondent Autorité des Marchés Financiers (AMF) brought an action before the Financial Markets Administrative Tribunal (FMAT) alleging that the appellants participated in a transnational pump and dump scheme by improperly influencing or manipulating the price of a stock in contravention of the Quebec Securities Act. According to the AMF, the appellants, who are residents of B.C., made financial transactions through offshore companies incorporated in several countries with bank accounts in Europe. They acted in concert to acquire the shares of a Nevada company (Solo), give it a legitimate face and promote its business for the purpose of fraudulently increasing the value of its shares and then selling them for a profit. The AMF alleged Solo was under the direction of a Québec resident and was a reporting issuer in Québec with a business address in Montreal. It also alleged that the misleading press releases and promotional materials, a portion of which originated in Montreal, were accessible to Québec residents and that approximately fifteen investors in Québec lost a total of $5,000 as a result of the activities. AMF’s action sought to have the FMAT order the appellants to cease any activity in respect of a transaction in securities; prohibit them from acting as directors or officers of an issuer, dealer, adviser or investment fund manager for five years; and impose administrative penalties on them pursuant to the Quebec Securities Act.
The appellants brought preliminary motions arguing that the FMAT was without jurisdiction. The FMAT denied the appellants’ motions and confirmed its jurisdiction to hear the action. The Quebec Superior Court dismissed the application for judicial review, and the Quebec Court of Appeal dismissed the appeal.
What Was Argued at the SCC?
Appellants: The appellant individuals argued that the approach of the courts below to jurisdiction will cause uncertainty and unpredictability. They asked the SCC to reaffirm its decision in Club Resort v. Van Breda, 2012 SCC 17 and argued that the courts below ignored the Civil Code‘s jurisdictional provisions. None of the appellants reside in Quebec and do not have a “real and substantial connection” to the province.
Respondent: The regulator argued that with new technologies, a flexible and contextual approach is required to interpret securities legislation in order to achieve its objectives. It says the appellants’ approach is too rigid and unduly restrictive in the assessment of jurisdiction. It would lead to the weakening of legislative protections for Canadian financial markets.
What Else Should You Know Before Making a Prediction?
The bench seemed concerned about whether this issue was already resolved in Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40 which sets out the “sufficient connection” test for legislative jurisdiction. At a minimum, we will likely see the Court provide some guidance on the difference between the “real and substantial” and “sufficient” connection tests. It’s not clear to me whether this will affect the result, so I’m tenatively leaning towards appeal dismissed.
On Nov. 10, the SCC released its decision in R. v. Greater Sudbury (City), 2023 SCC 28.
Held (4:4): Appeal dismissed. City can be liable as an employer for breaching obligations under the Occupational Health and Safety Act even where the party at fault for an accident was an employee of a third-party constructor.
- The Act allocates occupational health and safety duties among various classes of workplace actors, including constructors, employers and owners. These duties are often concurrent and overlapping, so one party can’t point to others’ failures as an excuse for their own.
- Where an owner who contracts for the services of a constructor on a construction project is prosecuted for a breach of the Act, a court must first consider whether the accused was an employer. An owner is an employer if it employed workers at a workplace where an alleged breach occurred or contracted for the services of a worker at that workplace (including for the services of a constructor).
- The Ministry is not required to prove that the owner had control over the workplace or the workers there.
Predictions: About 67% predicted the appeal would be dismissed. Unfortunately, the site can’t handle a tie, so it didn’t properly register it as dismissed until after the predictions were processed and saved. So, even if you got it right, your streak will be reset. It’s been a tough few weeks for predictions!
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