On June 20, 2022, the federal government registered regulations that, as the name implies, prohibit (or restrict, in some cases) the manufacture, import and sale of certain single-use plastics that pose a threat to the environment. The Regulations will come into force on December 20, 2022, with the exception of certain provisions taking effect in the following months.1 Manufacturing, importing and selling certain single-use plastic products made entirely or partially of plastic, such as foodservice ware, checkout bags and straws, will be soon be prohibited. This regulation is expected to affect more than 250,000 Canadian businesses that sell or provide single-use plastic products, primarily in the retail, food service, hospitality and healthcare industries. The following is a comprehensive list of items that will be prohibited: Single-use plastic ring carriers designed to hold and carry beverage containers together2; Single-use plastic stir sticks designed to stir or mix beverages or to prevent liquid from spilling from the lid of its container3; Single-use plastic foodservice ware (a) designed in the form of a clamshell container, lidded container, box, cup, plate or bowl, (b) designed to serve or transport ready-to-eat food or beverages without further preparation, and (c) made from certain materials4; Single-use plastic checkout bags designed to carry purchased goods from a business and (a) whose plastic is not a fabric, or (b) whose plastic is a fabric that will break or tear, as the case may be, (i) if it is used to carry 10 kg over a distance of 53 m 100 times; (ii) if it is washed in accordance with the washing procedures specified for a single domestic wash in the International Organization for Standardization standard ISO 6330, as amended from time to time5; Single-use plastic cutlery that is formed in the shape of a fork, knife, spoon, spork or chopstick that either (a) contains polystyrene or polyethylene, or (b) changes its physical properties after being run through an electrically operated household dishwasher 100 times6; Single-use plastic straws that either (a) contain polystyrene or polyethylene, or (b) change their physical properties after being run through an electrically operated household dishwasher 100 times7. The main exceptions Single-use flexible plastic straws Single-use flexible plastic straws, i.e. those with a corrugated section that allows the straw to bend and maintain its position at various angles,8 may be manufactured and imported9. These flexible straws may also be sold in any of the following circumstances: The sale does not take place in a commercial, industrial, or institutional setting10. This exception means that individuals can sell these flexible straws. The sale is between businesses in packages of at least 20 straws.11 The sale is made by a retail store of a package of 20 or more straws to a customer who requests it without the package being displayed in a manner that permits the customer to view the package without the help of a store employee12; The sale of straws is between a retail store and a customer, if the straw is packaged together with a beverage container and the packaging was done at a location other than the retail store13; The sale is between a care facility, such as a hospital or long-term care facility, and its patients or residents14. The export of single-use plastic items - All the manufactured single-use plastic items listed above may be manufactured, imported or sold for export15. That said, any person who manufactures or imports such items for export will be required to keep a record of certain information and documents as appropriate for each type of plastic manufactured item16. Records of the information and documents will have to be kept for at least five years in Canada17. Conclusion: an opportunity to rethink common practices In the short term, businesses will need to start thinking about how they will replace the plastic manufactured items they use. To help businesses select alternatives to single-use plastic items, the federal government has released its Guidance for selecting alternatives to the single-use plastics in the proposed Single-Use Plastics Prohibition Regulations.18 According to this document, the aim should be to reduce plastics. Businesses may begin by considering whether a single-use plastic should be replaced or no longer provided. Only products that perform essential functions should be replaced with non-plastic equivalents. Stir sticks and straws can be eliminated most of the time. Another way to reduce waste is to opt for reusable products and packaging. Businesses are invited to rethink their products and services to provide reusable options. Reusable container programs (i.e. offering customers the option of using their own reusable containers) are a reuse option that businesses may want to consider, in particular to reduce the amount of plastic food containers. Only where reusable products are not feasible should businesses substitute a single-use plastic product with a recyclable single-use alternative. Businesses in this situation are encouraged to contact local recycling facilities to ensure that they can successfully recycle products at their end of life. Ultimately, charging consumers for certain single-use substitutes (e.g. single-use wooden or moulded fibre cutlery) may also discourage their use. Ibid, s. 1 Ibid, s. 3 Ibid, s. 6 Polystyrene foam, polyvinyl chloride, plastic containing black pigment produced through the partial or incomplete combustion of hydrocarbons or oxo-degradable plastic; Ibid. This standard is entitled Textiles – Domestic washing and drying procedures for textile testing; Ibid. Ibid. Ibid, ss. 4 and 5. Ibid, s. 1. Ibid, s. 4. Ibid, para. 5(2). Ibid, para. 5(3). Ibid, para. 5(4); According to Guidance for selecting alternatives to the single-use plastics in the proposed Single-Use Plastics Prohibition Regulations, the goal is to ensure that people with disabilities who need flexible single-use plastic straws continue to have access to them at home and can carry them to restaurants and other premises. Ibid, para. 5(5). Ibid, para. 5(6). Ibid, para. 2(2). Ibid., s. 8 Ibid, para. 9(1). https://www.canada.ca/en/environment-climate-change/services/managing-reducing-waste/consultations/proposed-single-use-plastics-prohibition-regulations-consultation-document.html
Chloé Fauchon Partner, Lawyer
- Québec, 2014
Chloé Fauchon practises with the firm's Administrative Law Group, representing various businesses, municipalities and other public bodies before the courts in the areas of environmental law, land use planning and development, municipal affairs, penal law and administrative law. She also acts as a legal advisor in the same areas of the law, particularly for projects to set up or expand business establishments (industrial and commercial) and various other transactions.
Chloé is passionate about communications and has authored a number of publications in different areas of the law. She is also regularly asked to give training courses and seminars. During the first years of her practice, she was invited to explain the legal significance to the public in various media of current issues in the news.
Also during her first years of practice, and while she was studying law, Chloé distinguished herself in various moot court competitions, which gave her the opportunity to plead before the Honourable William Ian Corneil Binnie, a former justice of the Supreme Court of Canada.
During one university semester, she did a legal internship with the Department of Legal Affairs of the Quebec Ministère de la Culture, des Communications et de la Condition féminine and the Ministère de l’Éducation, des Loisirs et des Sports.
- Advise commercial and industrial compagnies on applicable federal, provincial and municipal planning and environmental legislation and regulations for establishment projects (including a major port industrial project involving federal, provincial and municipal approvals)
- Advising a municipality on the constitutionality of a by-law
- Representation of companies (particularly in the areas of airports and mining) and municipalities in defence of criminal prosecutions (particularly in environmental matters) or administrative monetary penalties of the Ministry of the Environment
- Representation of municipalities in injunctions brought under the Environmental Quality Act or their planning regulations
- Representation of businesses, municipalities or individuals in judicial review appeals of ministerial or municipal decisions (application and defence)
- Participation in the representation of a Quebec Crown corporation in a judicial review of a decision of the Régie de l'énergie
- Participation in representation of academic defence institutions in judicial review proceedings
- Representation of municipalities before administrative organizations
- Representation of condominium unions in proceedings to enforce co-ownership declarations (including to stop illegal tourist accommodation)
- Assist Independent Counsel for the Canadian Judicial Council in the Public Inquiry on Justice Michel Girouard
- Assist the Chief Prosecutor for the Office of the Coroner in the Public Inquiry into the Fire at the Résidence du Havre in L'Isle-Verte
- participated in the conference of "Les modifications au Règlement sur les établissements d’hébergement touristique" (RDI Économie), 2019
- Participation in two interviews on the powers of syndicates of co-owners over the regulation of tourist accommodation (RDI Économie and the Radio-Canada Program, 15-18), 2017
- Participation in four interviews concerning the Act and Regulation respecting tourist accommodation establishments (Le Devoir, TVA-Salut Bonjour, 98,5-Paul Arcand and Radio-Canada - L’heure de pointe), 2016
- V. Belle-Isle, D. Bouchard, R. Daigneault et C. Fauchon, "The new Regulation on the supervision of activities according to their impact on the environment: reading proposal", Recent developments in environmental law, Édition Yvon Blais, 2020
- D. Bouchard et C. Fauchon, "La servitude d’écoulement naturel des eaux : où en sommes-nous ?", Recent developments in environmental Law, Éditions Yvon Blais, 2019
- D. Bouchard et C. Fauchon, "De nouvelles limitations de droit public pour la protection des milieux humides et hydriques", Notarial Development Course, 2019
- D. Bouchard et C. Fauchon, "Les milieux humides et hydriques au coeur de la récente réforme de la gouvernance de l’eau au Québec", Recent developments in environmental Law, Éditions Yvon Blais, 2018
- C. Fauchon, Commentaire sur la décision 9120-4883 Québec inc. c. Ville de Saint-Rémi – Le recours en expropriation déguisée dans un contexte de protection des milieux humides: le prix collectif à payer pour la protection de l’environnement (Comment on the decision in 9120-4883 Québec inc. c. Ville de Saint-Rémi – The action based on disguised expropriation in the context of wetlands protection: the collective price to be paid for environmental protection), Repères, Éditions Yvon Blais, Octobre 2018
- C. Fauchon and C. Fortin, Commentaire sur la décision Ville de Rivière-du-Loup c. Procureure générale du Québec – L’interprétation de la notion de "matière résiduelle" au sens de la Loi sur la qualité de l’environnement et ses règlements: une affaire ou l’innovation se bute à la loi, (Comment on the decision in Ville de Rivière-du-Loup c. Procureure générale du Québec – Interpretation of the concept of “residual matter” under the Environment Quality Act and its regulations: a case in which innovation is hampered by the law,) Éditions Yvon Blais, 2018
- C. Fauchon, Harcèlement criminel: les journalistes doivent-ils s’inquiéter? (Criminal harrassment: should journalists be worried?), L’Actualité, 2018
- C. Fauchon and M. Thiboutot, Mise à jour du Fascicule 19 "Le régime contractuel de l’État" (Update to Fascicule 19 “The contractual regime of the State”), LexisNexis Canada, 2018
- C. Fauchon and S. Pierrard, Commentaire sur la décision Cedrom SNI inc. c. La Dose pro inc. – L’exception permettant l’utilisation d’une œuvre protégée par droit d’auteur à des fins de communication de nouvelles, (Comment on the decision in Cedrom SNI inc. v. La Dose pro inc. – The exception allowing for the use of copyright-protected works for news reporting purposes), Éditions Yvon Blais, 2017
- C. Fauchon and C. Fortin, Commentaire sur la Loi modifiant la Loi sur la qualité de l’environnement afin de moderniser le régime d’autorisation environnementale et modifiant d’autres dispositions législatives notamment pour réformer la gouvernance du Fonds vert (projet de loi no 102), (Comment on the Act to amend the Environment Quality Act to modernize the environmental authorization scheme and to amend other legislative provisions, in particular to reform the governance of the Green Fund (Bill 102)), Éditions Yvon Blais, 2017
- D. Bouchard and C. Fauchon, Regard sur la jurisprudence 2014-2016 en matière de protection de l’environnement, Développements récents en droit de l'environnement 2017, (Review of the environmental protection case law from 2014-2016), Volume 433, Éditions Yvon Blais
- D. Bouchard, C. Fauchon, V. Belle-Isle, K. Opalka, L'adaptation aux changements climatiques, une préoccupation plus qu'environnementale, (Adapting to climate change, an issue that transcends the environment) Développements récents en droit de l'environnement 2014, vol. 385, Éditions Yvon Blais
- D. Bouchard and C. Fauchon, L’occupation du domaine public non autorisée: une source potentielle de vices de titres, (Unauthorized occupation of the public domain: a potential source of title defects), Cours de perfectionnement du notariat, Éditions Yvon Blais, 2013
- Instructor for COMBEQ: “The new regulations implementing the Environmental Quality Act: a maze requiring an Ariane thread”, fall 2020
- Instructor for ADMQ: “Municipal Contracts in the Wake of the Passage of Bills 122, 155 and 108”, Fall 2018
- Instructor for COMBEQ: "Les milieux humides et hydriques: quels rôles pour les municipalités" (Wetlands and bodies of water: what roles will municipalities play?), spring 2018
- Instructor for the FQM: "Rôles et responsabilités des élus" (Roles and responsibilities of elected officials), winter 2018
- Instructor for Éditions Yvon Blais: "La nouvelle Autorité des marchés publics: ses pouvoirs et ses effets sur les municipalités et les contrats municipaux" (The new Autorité des marchés publics: its powers and effects on municipalities and municipal contracts), winter 2018
Professional and community activities
- Participation in the “ Ensemble vers la parité : Regards croisés d’administratrices ” panel organized by the YWCA Québec, 2019
- Member of the Environment Committee of the Jeune Barreau de Québec (Young Bar of Quebec City), 2019
- Moderator of a panel discussion on the environment before the screening of the documentary, Demain, at the Festival de cinéma de la Ville de Québec, 2018
- Host of the show Projection Libre, aired on MATv, 2016 to 2017
- Participant in the Défi 100 jours de l’Effet A, 2016
- Member of the luncheons committee of the Chambre de commerce de Québec, 2014 to 2017
- Ones to Watch, The Best Lawyers in Canada in the field of Municipal Law, 2022
- First prize (Rabat d’Or), for best pleader of the Jeune Barreau de Québec, 2018
- Scholarship from the Pierre-Cimon Fund for distinguishing herself in her performance in the Laskin moot court competition, 2012
- First prize (Jeremy Oliver) at the Laskin Pan-Canadian Moot Court Competition, 2012
- Scholarship in municipal law from the UMQ, ADGMQ and COMAQ for her article on a topic of interest in municipal affairs and for her overall academic record, 2011
- Administratrice de sociétés certifiée (ASC), Collège des administrateurs de sociétés
- LL.B., Université Laval, 2012, (Dean's Honour Roll)
Boards and Professional Affiliations
- Vice-President of the Jeune Barreau de Québec, 2021
- Member of the Board of Directors of the Barreau de Québec, 2021
- Treasurer of the Jeune Barreau de Québec, 2020
- Chair of the administrative law section of the Canadian Bar Association, Quebec Branch, 2015 to 2018, and member of the executive committee, 2013 to 2019
- Secretary and member of the board of directors of the Table de concertation de l’industrie du cinéma et de la télévision de la Capitale-Nationale, since 2016
- Co-Chair, Vice-President and member of the board directors of SPIRA, 2015 to 2019
In a decision handed down on January 31, 2019, the Supreme Court ordered that a bankrupt oil and gas company fulfil its obligation to reclaim abandoned oil wells before paying any creditors. This decision has since sparked conflicting reactions across the country: first, because it gives clear precedence to environmental protection in the event of bankruptcy, and second, because of the influence it will likely have over business decisions in industries where environmental risks are involved. Moreover, the concrete impact this decision will have in Quebec, where environmental laws have recently undergone major reforms, remains to be seen. Background Redwater Energy Corp. is a publicly traded Alberta oil and gas company that obtained financing for part of its operations from Alberta Treasury Branches (“ATB”) in 2013. The latter held a security interest over Redwater’s assets. In 2014, Redwater experienced financial difficulties which resulted in its inability to fulfil its obligations to ATB, its primary secured creditor. In 2015, Redwater was placed under receivership. At that time, Redwater’s assets consisted of 127 oil and gas properties—wells, pipelines and facilities—and their corresponding licences obtained in 2009. Said licences were granted by the Alberta Energy Regulator (“AER”), subject to an obligation to reclaim wells and facilities as prescribed to make them environmentally safe. However, at the time Grant Thornton was appointed as its receiver, 72 of Redwater’s licensed wells and facilities were depleted and burdened with environmental liabilities in terms of abandonment and land reclamation, such that Redwater’s liabilities exceeded the value of the wells and facilities that were still producing. Upon being advised that Redwater was placed under receivership, the AER notified Grant Thornton that despite the receivership, it was under the legal obligation to fulfil abandonment and reclamation obligations for all licensed assets prior to distributing funds or finalizing any proposal to creditors. Grant Thornton replied that it was not taking possession and control of Redwater’s valueless facilities and that it therefore had no obligation to fulfil the environmental obligations associated with these renounced assets (the “Environmental Obligations”). In the summer of 2015, in response to Grant Thornton's reply, the AER issued abandonment orders under two Alberta laws directing Redwater to suspend the operation of the renounced assets, abandon them in accordance with the AER's rules and regulations, and obtain the reclamation certificates required by law. In the fall of 2015, a bankruptcy order was issued for Redwater and Grant Thornton was appointed as trustee. The AER filed an application to order Grant Thornton to comply with its Environmental Obligations before making any distribution to Redwater’s creditors, but the application judge and the majority of the Alberta Court of Appeal agreed with Grant Thornton and refused to issue the orders sought. In their view, agreeing with the AER would be tantamount to ignoring the orderly and equitable distribution scheme set out in the Bankruptcy and Insolvency Act (“BIA”). The AER appealed the judgment to the Supreme Court. On January 31, 2019, in a 5-2 majority decision, the Supreme Court allowed the AER’s appeal. 1- The trustee’s personal liability The first question the Court reviewed was whether section 14.06(4) of the BIA allows a trustee to escape the obligations imposed by Alberta law with respect to the reclamation of oil and gas facilities. Essentially, this question raises the fundamental issue of whether the BIA is in operational conflict with provincial laws. Section 14.06(4) of the BIA provides that the trustee is not personally liable for any failure to comply with any order to remedy any environmental condition or damage affecting a bankrupt property if the trustee abandons or renounces any right to the property in question. The majority of the Court interpreted this provision in a restrictive manner and concluded that, even if the trustee is not held personally liable, the bankrupt estate's assets remain subject to the order to remedy any environmental damage. Thus, the value of the bankrupt's assets must be used to fulfil its Environmental Obligations. 2- The notion of “provable claim” Grant Thornton further argued that, even if the bankrupt’s assets were to be used to fulfil Environmental Obligations, these should be paid as “provable claims” of an ordinary creditor, in other words, neither a secured nor a preferred creditor. Thus, the question of whether the AER could demand that Redwater’s Environmental Obligations be fulfilled before the value of the assets could be distributed to its creditors involves the concept of “claims provable in the bankruptcy” as defined by the BIA. One of the objectives of the BIA is to ensure the equitable distribution of the bankrupt’s property among creditors who have a “provable claim.” Said distribution is done according to a very precise order, established by law. However, if a claim is not “provable” within the meaning of the BIA, it nonetheless continues to be binding on the bankrupt and must be paid regardless of the distribution scheme provided for under the BIA. According to the Supreme Court in the 2012 AbitibiBowater1decision, a “provable claim” exists if three requirements are met: There must be a debt, liability or an obligation to a “creditor”; The debt, liability or obligation must be incurred before the debtor becomes bankrupt; and It must be possible to attach a monetary value to the debt, liability or obligation. If any one of these requirements is not met, there is no “provable claim.” Applying this analytical framework to the situation at hand, the majority of the Court determined that the AER is not a “creditor” within the meaning of the first requirement. According to the Court, the people of Alberta would ultimately benefit if Redwater and other companies like it met their Environmental Obligations: the province itself would not be gaining a financial advantage. Thus, the AER, when seeking to enforce Redwater’s public duties, is not a creditor within the meaning of the law. This was sufficient to conclude that its claim was not a “provable claim” subject to the distribution scheme provided for under the BIA2. The result, according to the Supreme Court, is that compliance with Environmental Obligations prevails over the payment of any provable claims of secured, preferred and unsecured creditors in the form of a first charge3. This conclusion does not conflict with the priority scheme under the BIA, nor does it contradict the goal of maximizing the realizable value of the assets, because all of Redwater’s valuable assets were subject to Environmental Obligations in any case. Such a decision raises several questions. First, as Justice Côté points out in her dissenting reasons, it may sometimes be difficult to know when the regulator is not acting in the public interest, suggesting that such a regulator can never be a creditor within the meaning of the law. Second, the adopted interpretation is likely to have consequences, in particular on the financing industry for companies exploiting natural resources. Faced with the existence of first charges that could remain unknown for a long time, lenders that finance the activities of such companies may have to reconsider the conditions under which they agree to finance them because of the increased risk of having the value of their investment or guarantees reduced. 3- What about the effects of this judgment in Quebec? It is particularly difficult to say with certainty what the effects of this decision will be in Quebec given the current legislative context in the areas of activity in question. Quebec legislation has undergone major reforms recently (in mid-2017 for the environment and at the end of 2018 for petroleum ressources) both in terms of environmental protection and the management of natural resources. The structure of the law, the conditions for obtaining operating licences and drilling authorizations and the powers of public authorities (in particular those of the ministers) have been changed to such an extent that we believe caution should be exercised before drawing hasty conclusions. In the case analyzed by the Supreme Court, the legislation in question, which made site remediation an obligation under the licenses issued, defined remediation to include decontamination. While this conclusion can apparently be drawn from the legislative structure applicable to mining operations, it is less obvious to do so with respect to petroleum resources development in Quebec. Moreover, although Quebec has legislative provisions to ensure that soil decontamination work is carried out in certain situations under division IV of the Environment Quality Act, the obligations to produce a characterization study, prepare a rehabilitation plan and carry out decontamination work do not apply in all cases. Although solely the production of a characterization study and a rehabilitation plan are required in some cases (cessation of activities), decontamination is only mandatory for the resumption of other activities, unless ordered by the Minister. Therefore, in cases where land decontamination is not a mandatory condition under the law, we must consider whether or not decontamination work otherwise performed may or may not qualify as “provable claims” within the meaning of the Bankruptcy and Insolvency Act. Thus, we should be careful before affirming that the Supreme Court’s decision in this case will automatically apply to Quebec in all situations. Analyzing situations on a case-by-case basis (as the Supreme Court said, incidentally) is the way forward, and understanding the Supreme Court's decision in the Redwater case properly will certainly be key. 4- Conclusion The Redwater decision raises diametrically opposed reactions depending on the audience. Some welcome the Supreme Court's effort to support provincial authorities responsible for overseeing environmental matters by adopting an interpretation of federal and provincial legislation that is broad, flexible and imbued with cooperative federalism. The Court's message that bankruptcy is not a licence to ignore environmental rules and that trustees are bound by valid provincial laws is also appreciated. Others, however, object to the business consequences that could result from this decision for companies operating in areas of activity that involve environmental risks, because access to financing may be more difficult. Where the full value of the assets is likely to be used to ensure compliance with environmental obligations, insolvency professionals who rely on the value of the assets to cover their own professional feess may be discouraged from accepting mandates when environmental issues are involved. Some are also concerned that companies in difficulty will abandon their assets to governments rather than attempting to restructure, thereby increasing the social burden of these problematic assets - a result that the majority decision seemed to want to avoid. In Quebec, as we pointed out above, the powers exercised and orders issued will require careful review to determine their immediate or potential regulatory or monetary nature. In the first case, Redwater suggests that a trustee would be forced to comply in accordance with the value of the assets, while, in the second case, the provincial authority's claim would be considered subordinate to the rights of secured and preferred creditors in the distribution scheme provided for in the BIA. Newfoundland and Labrador v. AbitibiBowater Inc.  3 SCR 443, 2012 SCC 67 (CanLII) However, the Court analyzed the third requirement set out in Abitibi and concluded that it is not possible to attach a monetary value to the debt in question, as it was not sufficiently certain that the organization would perform the work or claim its reimbursement. The dissenting judges concluded the contrary on this point. Which the Court equates with the one under section 14.06(7) of the BIA that the organization could not avail itself of in this case.
In Cedrom-SNi inc. v. Dose Pro inc. (“Cedrom-SNi”), the Superior Court of Québec rendered a decision which, although issued at the interlocutory stage, is of interest to Canada’s media and entertainment industry since it is one of the rare decisions which analyses the criteria for applying the exception allowing the use of a work for the purpose of news reporting1. In Québec, the Court of Québec (small claims division) has discussed this issue a few times, although without going into an in-depth analysis of the applicable criteria.2 Cedrom-SNi is the first case in which the Superior Court conducts such an analysis. The facts La Presse, Le Devoir and Le Soleil publish articles by their journalists online, making them available to the public. These three print media companies authorized Cedrom-SNi, under an exclusive licence, to reproduce and distribute their publications electronically for media monitoring purposes. Without being authorized to do so and without paying the plaintiffs, La Dose Pro began offering its customers, for a fee, press reviews reproducing the full titles and beginning lines of articles published by La Presse, Le Devoir and Le Soleil. La Dose Pro’s media review named the newspaper which had published the article as well as the date and time of publication, and provided a link allowing readers to access the complete article on the newspaper’s website. However, according to the evidence, La Dose Pro’s customers almost never visited the newspapers’ websites. The names of the journalists were generally not indicated and La Dose Pro did not create any content. Claiming that their copyright was being infringed, La Presse, Le Devoir, Le Soleil and Cedrom-SNi Inc. applied for an injunction to prevent La Dose Pro from reproducing and posting any article found on their respective websites. The law On July 24, 2017, Justice François P. Duprat issued a judgment regarding the application for an interlocutory injunction.3 In it, he analysed two main issues of interest respecting copyright. The first was whether the title and beginning lines of the articles published by La Presse, Le Devoir and Le Soleil were protected by copyright. The protection of a work under the Copyright Act (the “Act”) gives the author the sole right to produce or reproduce the entire work or any substantial part of it.4 Conversely, the author cannot claim the exclusive right to reproduce part of his work that is not substantial, which is what La Dose Pro argued in this case, claiming that the title and beginning lines of an article (which only include one to four sentences) do not constitute a substantial part of the work, which is the complete article. Referring to the leading case of Cinar Corporation v. Robinson5 (“Cinar”), the Court followed the teachings of the Supreme Court of Canada, which had ruled that what constitutes a substantial part of a work must be analysed according to a “qualitative” approach (based on originality) as opposed to a “quantitative” approach. As a general rule, a substantial part of a work is a part which represents a significant part of the author’s skill and judgment as expressed in the work. The Court held that the concept of “skill” includes relying on personal knowledge or an acquired aptitude or practice ability while the concept of “judgment” involves a capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work, as described by the Supreme Court in CCH.6 The combination of skill and judgment thus implies some intellectual effort. Based on these principles, the Court ruled that the thought and work required to write the title and beginning lines of an article constitute creative work designed to catch the reader’s attention and nothing is left to chance. In this sense, La Dose Pro reproduced a significant part of the work. The fact that La Dose Pro’s clients almost never visit the La Presse, Le Devoir and Le Soleil websites confirms the importance of the title and beginning lines of the article, as they are generally enough to let the reader know what the article is about. The second issue analysed by the Court was whether La Dose Pro’s use of the title and beginning lines of the articles constituted fair dealing permitted under the Act. The Act sets out many exceptions allowing the use of a work protected by copyright which would otherwise constitute infringement. These exceptions may apply where a significant part of a work is used for the purpose of research, private study, education, parody or satire, criticism, review or news reporting.7 To take advantage of an exception, the user must be able to demonstrate that the work is used for one of the exceptions under the Act, which are interpreted broadly, and that the use is fair. For the exception of fair dealing for the purpose of criticism or news reporting to apply, the person reproducing the work must also mention its source and author. In this case, La Dose Pro argued that its actions constituted fair dealing of the works of La Presse, Le Devoir and Le Soleil for the purpose of news reporting under section 29.2 of the Act. After analysing the facts, the Court held that La Dose Pro reproduced the titles and beginning lines of articles other than in a news reporting context. In doing so, La Dose Pro did not provide any comments or discussion for the purpose of making the facts described in the articles known. According to the Court, this did not constitute news reporting. The Court also noted that La Dose Pro only rarely named the authors of the articles which it reproduced and distributed electronically, although they were available on the newspapers’ websites. As to fair dealing, the Superior Court referred to the six factors applied by the Supreme Court in CCH 8 as a foundation for its analysis of the facts: the purpose of the dealing, the character of the dealing, the amount of the dealing, the nature of the work, available alternatives to the dealing, and the effect of the dealing on the work. Regarding the first factor, the Superior Court held that La Dose Pro’s true goal was to generate a profit, not to inform the public since the excerpts were only available to its customers and did not generate traffic to the La Presse, Le Devoir or Le Soleil articles. As to the character of the dealing, multiple excerpts from the articles were broadly disseminated since many employees of the same customer could receive the media review. According to the Court, this constituted unfair dealing. With respect to the third factor, the amount of the dealing, the Court noted that La Dose Pro reproduced only a minimal part of the works, i.e. the title and beginning lines. However, the Court reiterated its conclusion regarding the first part of the test that the title and beginning lines represent a substantial part of the works. Regarding the fourth factor, the Court was of the view that there was an available alternative to the dealing since La Dose Pro could have created original content itself. The fifth factor involves the nature of the work. According to this criterion, the Court must determine whether the use of the work helps to pursue the copyright purpose and aims. On this point, the Court was of the view that, although it is in the interest of the newspapers that the articles be widely distributed to the public, the distribution in question did not increase traffic to their websites. Regarding the last criterion, the effect of the dealing on the work, the Court held that since the use did not generate additional traffic to the websites, it did not generate any revenues for the newspapers. After analysing all the factors, the Court held that the use of the titles and beginning lines in this case was unfair dealing. In its opinion, La Dose Pro’s main motivation was to make a profit through the use of the newspapers’ business model of allowing free access to the works and their reproduction. Conclusion Many decisions discuss the issue of what constitutes the reproduction of a significant part of a work. Although the Cedrom-SNi inc. decision was rendered at the interlocutory stage and does not change the state of the law, it represents a relevant example of how this issue applies in the context of new technology. Cedrom-SNI inc. v. Dose Pro inc., 2017 QCCS 3383. Saad v. Le Journal de Montréal, 2017 QCCQ 122, para. 29 à 31; Clinique de lecture et d’écriture de La Mauricie inc. v. Groupe TVA inc., 2008 QCCQ 4097 (CanLII), paras. 14 and 15. An interlocutory judgment only settles the dispute pending a final judgment. It is based on the colour of right rather than the demonstration of a clear right, which will be made at the trial on the merits in this case. R.S.C., 1985, c. C-42, s. 3. Cinar Corporation c. Robinson,  3 SCR 1168, 2013 SCC 73. CCH Canadian Ltd. v. Law Society of Upper Canada,  1 SCR 339, 2004 SCC 13. Copyright Act, supra, footnote 4, s. 29 to 29.2. CCH Canadian Ltd. v. Law Society of Upper Canada, supra footnote 6.
While the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”) is silent on the circumstances that will result in a director’s personal liability for oppression, and the Canadian courts have failed to agree on the application of the principles considered in the case law in this regard, in the recent decision in Wilson v. Alharayeri 1 (hereinafter “Wilson”), the Supreme Court has now clarified the essential criteria that apply. Background This case originated in 2007 at a time when Wi2Wi Corporation, a technology company incorporated under the CBCA, was facing recurring cash flow issues. Prior to the events that led to the dispute, Mr. Alharayeri held 2 million common shares of the Corporation and was the sole holder of class A preferred shares (1 million) and class B preferred shares (1.5 million) (hereinafter the “A shares” and “B shares” respectively). The A shares were convertible into common shares if the Corporation met certain financial targets in the 2006 fiscal year, while the conversion of the B shares was also subject to certain targets to be met in the 2007 fiscal year. On the other hand, Mr. Wilson, the President, CEO and member of the audit committee of Wi2Wi, beneficially owned or controlled 100,000 class C preferred shares (“C shares”) through another company. The C shares were also convertible into common shares if the Corporation achieved a financial target, set out in its articles of incorporation. In order to resolve the Corporation’s persistent financial difficulties, Wi2Wi’s board of directors decided to offer a private placement of convertible secured notes to its common shareholders (the “Private Placement”), giving each shareholder the right to subscribe for $1 in notes for every two common shares the shareholder held in the Corporation. The notes were convertible into common shares at the rate of 50,000 common shares per principal amount of $1,000 in notes. This Private Placement enabled Mr. Wilson, provided that he first converted his 100,000 C shares into common shares, to subscribe for 50,000 notes of $1, for a value of $50,000 in notes. He would then be able to convert every $1,000 tranche of this $50,000 in notes into 50,000 common shares, giving him a total of 2,500,000 common shares. Thus, the Private Placement would have the effect of considerably reducing the proportion of common shares held by Mr. Alharayeri, if he did not participate in this transaction. Before implementing the Private Placement, the board of directors decided to “accelerate” the conversion into common shares of the 100,000 class C shares beneficially owned by Mr. Wilson through another corporation. This so-called “accelerated” conversion was completed despite the doubts expressed by the auditors as to whether the test for the conversion of these shares had been met. The other C shareholders did not benefit from this conversion. Furthermore, despite the fact that the audited financial statements for 2006 contained a note stating that, based on the financial test laid out in the articles of incorporation, the A shares, held by Mr. Alharayeri, could, at the holder’s option, be converted into 1 million common shares, and despite the fact that he had made requests at meetings of the board of directors and by email for those shares to be converted, this was never done. Similarly, Mr. Alharayeri’s B shares were also not converted, notwithstanding that, based on the approved 2007 financial statements, they could be converted into 223,227 common shares. Mr. Wilson and the audit committee justified the failure to convert Mr. Alharayeri’s shares by pointing to the fact that he had placed himself in a conflict of interest in the past when he was previously the president of Wi2Wi. Dispute As a result of this failure, the value of Mr. Alharayeri’s A and B shares — convertible as they were into common shares — greatly decreased. Faced with what he alleged to be oppressive conduct by the Corporation, Mr. Alharayeri filed an application for oppression in the Superior Court of Québec under s. 241(3) of the CBCA against some of the corporation’s directors, including Mr. Wilson. The issue before the Court was not the right to relief itself, but rather, whether or not Mr. Wilson was personally liable. Indeed, while section 241 CBCA gives the trial judge broad discretionary powers to “make any interim or final order [he or she] thinks fit” against a director personally, it does not specify the circumstances in which a director is justified in being held personally liable under this provision. Applicable principles To date, in the leading decision on the issue of whether or not a director can be held personally liable, rendered by the Ontario Court of Appeal in 1998 in Budd v. Gentra Inc.2, the Court had adopted a two-pronged test. Thus, according to this test, (1) the oppressive conduct must be properly attributable to the director because he or she is implicated in the oppression, and (2) the imposition of personal liability must be fit in all the circumstances. Regarding this second prong of the test, in Wilson, the Supreme Court of Canada states that a minimum of four general principles must be considered for this part of the analysis: The oppression remedy must in itself be a fair way of dealing with the situation. For example, it may be fair to hold a director personally liable where he or she has derived a personal benefit — whether in the form of an immediate financial advantage or increased control of the corporation — breached a personal duty or misused a corporate power, or where a remedy against the corporation would unduly prejudice other security holders; The order rendered should go no further than necessary to rectify the oppression; The order rendered may serve only to vindicate the reasonable expectations of security holders, creditors, directors or officers in their capacity as corporate stakeholders; The court should consider the general corporate law context in exercising its remedial discretion After identifying these principles, the Supreme Court upheld the trial judge’s analysis to the effect that Mr. Wilson should be held personally liable for oppression, and also upheld the conclusion ordering him to pay compensation in the amount of $648,310 to Mr. Alharayeri. On the first prong of the test, the Supreme Court affirmed that Mr. Wilson was implicated in the Corporation’s oppressive conduct, since he played a lead role in the board of director’s discussions resulting in the non-conversion of Mr. Alharayeri’s A and B shares. On the second prong of the test, it noted firstly that the oppression remedy was a fair way of dealing with the situation. Mr. Wilson accrued a personal benefit from the oppressive conduct, namely he increased his control over Wi2Wi through the conversion of his C shares into common shares (while the C shares of others were not converted), which enabled him to participate in the Private Placement, despite the existence of doubts as to whether the test for conversion had been met. This was all done to the detriment of Mr. Alharayeri, whose own interests in the company were diluted due to his inability to participate in the Private Placement. The Court then noted that since the compensation ordered corresponded to the value of the common shares prior to the Private Placement, the remedy went no further than necessary to rectify Mr. Alharayeri’s loss. Finally, the remedy was appropriately fashioned to vindicate Mr. Alharayeri’s reasonable expectations that : 1) his A and B shares would be converted if the Corporation met the applicable financial tests set out in the Corporation’s articles, and 2) the board would take into account his rights in any transaction having an impact on the A and B shares. Conclusion Thus, this decision clarifies the framework for analyzing the personal liability of directors and is a new and important ruling which should be taken into account by any board of directors that is concerned about providing good governance. 2017 SCC 39. 1998 CanLII 5811 (ON CA), 43 B.L.R. (2d) 27 (C.A. Ont.).
Lavery is pleased to announce that 67 of its lawyers have been recognized as leaders in their respective fields of expertise by The Best Lawyers in Canada 2023. The following lawyers also received the Lawyer of the Year award in the 2023 edition of The Best Lawyers in Canada: René Branchaud : Natural Resources Law Chantal Desjardins : Intellectual Property Law Bernard Larocque : Legal Malpractice Law Patrick A. Molinari : Health Care Law Consult the complete list of Lavery's lawyers and their fields of expertise: Josianne Beaudry : Mergers and Acquisitions Law / Mining Law Laurence Bich-Carrière : Class Action Litigation / Corporate and Commercial Litigation / Product Liability Law Dominic Boivert : Insurance Law (Ones To Watch) Luc R. Borduas : Corporate Law / Mergers and Acquisitions Law Daniel Bouchard : Environmental Law Laurence Bourgeois-Hatto : Workers' Compensation Law René Branchaud : Mining Law / Natural Resources Law / Securities Law Étienne Brassard : Equipment Finance Law / Mergers and Acquisitions Law / Real Estate Law Jules Brière : Aboriginal Law / Indigenous Practice / Administrative and Public Law / Health Care Law Myriam Brixi : Class Action Litigation Benoit Brouillette : Labour and Employment Law Richard Burgos : Mergers and Acquisitions Law / Corporate Law Marie-Claude Cantin : Insurance Law / Construction Law Brittany Carson : Labour and Employment Law Eugene Czolij : Corporate and Commercial Litigation France Camille De Mers : Mergers and Acquisitions Law (Ones To Watch) Chantal Desjardins : Intellectual Property Law Jean-Sébastien Desroches : Corporate Law / Mergers and Acquisitions Law Raymond Doray : Privacy and Data Security Law / Administrative and Public Law / Defamation and Media Law Christian Dumoulin : Mergers and Acquisitions Law Alain Y. Dussault : Intellectual Property Law Isabelle Duval : Family Law Chloé Fauchon : Municipal Law (Ones To Watch) Philippe Frère : Administrative and Public Law Simon Gagné : Labour and Employment Law Nicolas Gagnon : Construction Law Richard Gaudreault : Labour and Employment Law Danielle Gauthier : Labour and Employment Law Julie Gauvreau : Intellectual Property Law Michel Gélinas : Labour and Employment Law Caroline Harnois : Family Law / Family Law Mediation / Trusts and Estates Marie-Josée Hétu : Labour and Employment Law Alain Heyne : Banking and Finance Law Édith Jacques : Energy Law / Corporate Law Pierre Marc Johnson, Ad. E. : International Arbitration Marie-Hélène Jolicoeur : Labour and Employment Law Isabelle Jomphe : Intellectual Property Law Guillaume Laberge : Administrative and Public Law Jonathan Lacoste-Jobin : Insurance Law Awatif Lakhdar : Family Law Bernard Larocque : Professional Malpractice Law / Class Action Litigation / Insurance Law / Legal Malpractice Law Myriam Lavallée : Labour and Employment Law Guy Lavoie : Labour and Employment Law / Workers' Compensation Law Jean Legault : Banking and Finance Law / Insolvency and Financial Restructuring Law Carl Lessard : Workers' Compensation Law / Labour and Employment Law Josiane L'Heureux : Labour and Employment Law Despina Mandilaras : Construction Law / Corporate and Commercial Litigation (Ones To Watch) Hugh Mansfield : Intellectual Property Law Zeïneb Mellouli : Labour and Employment Law Patrick A. Molinari : Health Care Law André Paquette : Mergers and Acquisitions Law Luc Pariseau : Tax Law Ariane Pasquier : Labour and Employment Law Jacques Paul-Hus : Mergers and Acquisitions Law Hubert Pepin : Labour and Employment Law Martin Pichette : Insurance Law / Professional Malpractice Law Élisabeth Pinard : Family Law François Renaud : Banking and Finance Law / Structured Finance Law Judith Rochette : Insurance Law / Professional Malpractice Law Ian Rose FCIArb : Director and Officer Liability Practice / Insurance Law Chantal Saint-Onge : Corporate and Commercial Litigation (Ones To Watch) Éric Thibaudeau : Workers' Compensation Law André Vautour : Corporate Governance Practice / Corporate Law / Information Technology Law / Intellectual Property Law / Technology Law Bruno Verdon : Corporate and Commercial Litigation Sébastien Vézina : Mergers and Acquisitions Law Yanick Vlasak : Corporate and Commercial Litigation Jonathan Warin : Insolvency and Financial Restructuring Law These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery’s professionals.
On August 25, 2022, Best Lawyers in Canada released the results of a new initiative to recognize the rising stars in the Canadian legal profession. The results of the Ones to Watch survey that was held among the Canadian legal community identified four Lavery lawyers as rising stars in their respective fields of expertise: Dominic Boisvert : Insurance Law France Camille De Mers : Mergers and Acquisitions Law Chloé Fauchon : Municipal Law Despina Mandilaras : Construction Law / Corporate and Commercial Litigation Chantal Saint Onge : Corporate and Commercial Litigation These recognitions are further demonstration of the expertise and quality of legal services that characterize Lavery's professionals.
Lavery is pleased to welcome the following professionals as partners in the firm: Dominic Boisvert France Camille De Mers Catherine Deslauriers Chloé Fauchon Pier-Olivier Fradette Marie-Eve Pomerleau These talented lawyers who are rising to the rank of partner have shown a strong commitment to the firm and the profession in recent years, and they brilliantly embody Lavery’s values: Excellence, Collaboration, Audacity and Entrepreneurship. “We offer them our congratulations on this significant achievement in their legal careers. The diversity in background of our new partners is a testament to the depth of our 360° service offering and our desire to be a growth partner for companies doing business in Quebec”, said Anik Trudel, Lavery’s Chief Executive Officer.