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Legal Guide

In addition to certain laws of general application, which have been discussed above, the Canadian federal and provincial governments and, in some cases, the governments at municipal levels, have enacted a number of regulatory laws directed at business practices within specific industries.

For example, the federal government, through the Canadian Transportation Agency, regulates the air transportation industry, by requiring companies in this industry to have licenses to operate. Similarly, the provinces directly regulate competition and trade practices in a variety of specific industries, such as trucking and travel agencies. In some cases, there are parallel federal and provincial regulatory laws affecting certain industries, such as insurance. The securities and financial services industries are subject to specific enactments, as is the mining industry. Depending on the type of industry, there may also be administrative agencies, boards or commissions which exercise control over its participants.

The North American trend to restructure the telecommunications and electricity industries, as well as other traditional monopolies, has been a focus of much recent government activity. Long distance and local telephony have been re-cast as a competitive business. This has resulted in the passage of a variety of industry-specific legislation and regulations. The provision of electricity, among others, continues to move towards a competitive market.

The introduction of market forces into traditionally public enterprises through public-private-partnerships in hospital, highway and other infrastructure projects, is also leading to new regulatory regimes. Participants in such endeavors can anticipate regulatory structures to be introduced by contract, and potentially by public regulatory instrument or agency.

It is not possible in this publication to outline the numerous considerations which might be relevant to a foreign business entity wishing to establish business operations in any specific industry in Canada. Any foreign business wishing to carry on activities in Canada should consult with its professional advisers to ensure that it is aware of the regulatory framework applicable to its particular industry, including the need for any licenses or other governmental approvals necessary to its operations.

Civil litigation in Canada

The Canadian court structure

Each province has a trial-level court, often called a superior court, and an appellate-level court. Most civil litigation in Canada begins in a provincial superior court. Appeals from superior courts are taken to the court of appeal of that province.

Canada also has specialized courts which are federal, rather than provincial, in scope. The Federal Court is a court of limited jurisdiction dealing primarily with intellectual property, immigration and maritime law. The Tax Court of Canada hears disputes concerning federal taxes. Appeals from both the Federal Court and the Tax Court of Canada are heard by the Federal Court of Appeal, which also hears appeals from certain federal tribunals such as the National Energy Board.

The Supreme Court of Canada is Canada’s final court of appeal. It hears appeals from the appellate courts of all provinces and territories, and the Federal Court of Appeal. Ordinarily, a party wishing to appeal to the Supreme Court of Canada must apply for “leave” or permission to appeal, except in certain criminal cases. Leave requires establishing that the appeal involves a matter of national importance.

There are also several administrative tribunals across Canada, some federal and some provincial. Federal tribunals address, among other topics, energy, immigration and refugee, communications and transportation. Provincial tribunals address, among other topics, securities, financial services and pensions, alcohol and gaming, and energy and environmental matters. Tribunals at both the provincial and federal level deal with labor and human rights matters.

All Canadian provinces except Quebec are common- law jurisdictions. Quebec’s has a Continental legal system; it is founded on the Civil Code of Quebec, which was originally inspired by the Napoleonic Code of 1804.

Jurisdiction of courts

A province’s superior court has jurisdiction to hear claims that have a “real and substantial connection” to that province or territory. A “real and substantial connection” will be presumed where the defendant lives or carries on business in the province or territory, the tort at issue was committed in the province or territory, or a contract connected with the dispute was made in the province or territory. However, other factors may establish a “real and substantial connection.”.

If a court has jurisdiction to hear a claim, it may nonetheless determine that a different forum is more appropriate.

Key considerations in civil litigation


A plaintiff formally begins litigation by serving an originating process, usually called a Statement of Claim. A Statement of Claim lists the parties to the litigation and sets out what relief the plaintiff wants, why they say they are entitled to that relief, and what supporting facts they claim are true. Usually, this originating process must be served personally. However, personal service on a corporation may be as simple as handing the originating process to a receptionist at the business.

A defendant has a limited amount of time to respond to a Statement of Claim, but extensions of time are routinely arranged with the plaintiff’s lawyer. A defendant will typically “tell their side of the story” in their responding pleading, usually called a Statement of Defence. A defendant has the opportunity to bring other parties into the litigation where the defendant asserts they are responsible in whole or in part for the plaintiff’s claim.

Usually, a defendant who files any response other than a motion to challenge jurisdiction will be taken to have accepted, or “attorned to”, the jurisdiction of the court.

Limitation periods

All provinces and territories have statutes of limitation requiring that claims be brought within a certain time. The purpose  of limitation periods is to define reasonable time limits within which a potential litigant must commence a civil proceeding. In general, if an action is not commenced within the proscribed time period, the right to bring the claim will be extinguished.

Most of the common law provinces have implemented a two-year basic limitation period for claims in contract and tort, subject to discoverability of the claim. Ultimate limitation periods (not subject to discoverability of the claim) vary across jurisdictions and certain claims are not subject to any such limitation period. Limitation periods may also apply to the enforcement of arbitral awards. Great care must be taken in this area.


Each party is required to produce a list of documents relevant to the litigation without being asked. Typically a party will produce copies of the documents themselves, along with the list. In Ontario, parties must agree to a written discovery plan setting out several items such as the intended scope of documentary and oral discovery, and dates for the delivery of documents. In preparing a discovery plan, parties must consult and have regard to The Sedona Canada Principles Addressing Electronic Discovery developed by The Sedona Conference. The parties should also consider whether the scope of production is proportional to the issues being litigated.

In addition to the disclosure of documents, parties may also be entitled to conduct oral questioning under oath of the other party and relevant employees and former employees. Many provinces have limits on the amount of oral discovery that can be conducted. For example, in Ontario, oral discovery is capped at seven hours absent consent or leave of the court. Objections during oral discovery are noted on the record and typically resolved through a motion to the court.

Discovery from non-parties is usually only available with permission of the court.

Alternative dispute resolution (ADR)

Most jurisdictions require certain ADR procedures as part of the civil litigation process. The most common ADR procedures are negotiation, mediation and arbitration. Negotiation and mediation are often more informal and confidential processes where the information exchanged between the parties is not subsequently producible at trial. In some provinces, actions are subject to mandatory mediation within certain time frames or before being able to schedule a matter for trial.

Arbitration is often used by agreement as an alternative to court litigation. It is generally more structured and typically follows rules that are similar to those of the courts or the rules of a respected arbitration body. The parties agree in advance how evidence will be tendered. In the absence of an agreement, the arbitral tribunal determines the procedures to be followed. The courts defer to the parties’ contractual decisions with respect to arbitration except in limited circumstances.

There are several Canadian arbitration bodies that handle complex commercial arbitrations. Parties also commonly use the processes of international institutional arbitration bodies such as the International Chamber of Commerce.

Summary judgment

The rules of court in most provinces provide for summary judgment procedures under which a claim may be resolved without a full trial.

The Supreme Court of Canada recently established the following approach to summary judgment:

1. Without employing his or her fact-finding powers or exercising his or her discretion to hear oral evidence, the judge must first determine if there is a genuine issue requiring a trial. No genuine issue exists if the summary judgment process provides the judge with the evidence necessary to fairly and justly determine the dispute and if summary judgment is a timely, affordable and proportionate procedure.

2. If there appears to be a genuine issue requiring a trial, the judge must determine if the need for a trial can be avoided by hearing oral evidence or using his or her fact-finding powers. These powers are presumptively available to be exercised unless their use is contrary to the interests of justice.

3. Summary judgment is mandatory where there is no genuine issue requiring a trial.

The Supreme Court held that there will be no genuine issue requiring a trial when “the judge is able to reach a fair and just determination on the merits on a motion for summary judgment.” A fair and just determination is only possible when the process:

(a) Allows the judge to make findings of fact,

(b) Allows the judge to apply the law to the factual scenario, and

(c) Is a proportionate, expeditious, and less expensive process to achieve a just determination of the matter.

The summary judgment procedure is now considered to be a “significant alternative model of adjudication” which is no longer limited to a straightforward and document-driven case.


Almost all civil cases are tried by a judge without a jury. Jury notices may be served but are routinely struck.

Factual witnesses generally provide oral evidence at trial and are subject to direct examination, cross-examination and re-examination. In certain proceedings, witnesses of fact are allowed to give evidence in the form of a witness statement, subject to a right of cross-examination. Opinion evidence may only be tendered by qualified experts. The rules of court prescribe timelines and procedures for the advance disclosure of expert opinions that are proposed to be tendered at trial. As with fact witnesses, expert witnesses typically provide oral evidence at trial (along with their written opinion), and are subject to direct examination, cross-examination and re-examination.


Canadian courts are “cost-sharing” jurisdictions. Generally speaking, the rule is that the successful party is entitled to some or all of their costs from the unsuccessful party. The measure of costs is usually determined by reference to a tariff of costs set forth in the rules of court. Rules with respect to offers to settle can modify this general rule. For example, if a plaintiff obtains a judgment that is at least as favorable as an offer to settle made prior to trial that was not accepted by the defendant, then the defendant may be required to pay an increased costs award to the plaintiff.

As a general principle, costs are typically awarded on a partial indemnity basis which may cover between 25 percent and 66 percent of the costs of a lawyer’s billable time plus disbursement. Substantial indemnity and full indemnity costs are exceptional awards reserved only for unique circumstances involving reprehensible conduct or the failure to accept a reasonable settlement offer. In practice, substantial indemnity costs may range from 66 percent to 90 percent of a successful party’s actual legal fees. Full indemnity costs are, of course, the dollar-for-dollar indemnity for a lawyer’s billable time.

Acquiring evidence from Canada

Canada is not a party to the Hague Evidence Convention of October 7, 1972. Therefore, a foreign request to take evidence from a witness in Canada should take the form of a written request from the foreign court, or letters rogatory. The federal and provincial evidence acts provide a procedure by which foreign requests for judicial assistance can be enforced.

Before an order to acquire evidence from a witness in Canada is granted, the evidence must establish that:

1. The evidence sought is relevant

2. The evidence sought is necessary either for the purposes of discovery or trial

3. The evidence is not otherwise attainable

4. The order sought is not contrary to public policy

5. Documents sought are identified with reasonable specificity

6. The order sought is not unduly burdensome, bearing in mind what the relevant witnesses would be required to do and produce were the action to be tried there.

Enforcement of foreign judgments

Generally, Canadian courts will enforce foreign judgments without requiring the merits of the case to be re-litigated, unless to do so would offend Canadian public policy. To be enforceable, the foreign court must have had jurisdiction based on a “real and substantial connection” to the jurisdiction in which it was rendered, the decision must be final, and the legal procedure followed must be just and fair.

Enforcement of a foreign judgment often involves starting a lawsuit in Canada to obtain an enforcement order, but certain provinces allow for a simpler “registration” process if the foreign judgment comes from a specified foreign jurisdiction.

Enforcement of foreign arbitral awards

Canada is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Commission on International Trade Law on June 21, 1958 (the New York Convention).

While obtaining the recognition and enforcement of foreign arbitral awards is a relatively straightforward process, due to the federal nature of Canada, consideration must be given to which province(s) enforcement will be sought in as separate proceedings are necessary. Typically, the commencement process requires the filing an Originating Application supported by an affidavit including the materials required under the New York Convention.

While the grounds for refusal are very limited, care must be taken to ensure any applicable provincial limitation periods are adhered to.

Class proceedings

All of the provinces, except for PEI, have explicit class-action legislation. Class actions require initial approval, or “certification”, by the court. 

In general, there are five criteria that must be satisfied to certify a class proceeding:

1. The pleadings disclose a cause of action

2. There is an identifiable class of two or more persons

3. The claims of the class members raise common issues

4. A class action is the preferable procedure for resolution of the dispute

5. There is a valid representative plaintiff

The Supreme Court of Canada has recently confirmed that the evidentiary burden on plaintiffs at the certification stage remains relatively low.

Ontario and Quebec have established funds to assist with the financing of class proceedings. In Ontario, the fund offers financial support for claimants’ disbursements and indemnifies the claimants against an adverse cost award but does not pay ongoing lawyers’ fees. In Quebec, the fund can assist with the payment of legal fees in addition to disbursements.

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