The Canadian Legal System

Canadian Business and the Law, EIGHTH EDITION

Objectives (1)

After studying this chapter, you should have an understanding of

• the impact of the Canadian legal system on business
• the role of constitutional law in protecting commercial rights and freedoms
• the government’s law-making powers under sections 91 and 92 of the Constitution Act, 1867
• the executive’s formal and political functions in regulating business

2
Objectives (2)

After studying this chapter, you should have an understanding of

• the judiciary’s role in assessing the constitutionality of legislation
• the classifications of law
• how administrative law affects business
• the importance of Indigenous legal traditions as well as Aboriginal and Treaty rights

3
The Canadian Legal System (1)
• The Canadian legal system is the machinery that comprises and regulates government.
• It is divided into three branches.
o Legislative branch: creates law in the form of statutes and regulations.
o Executive branch: formulates and implements government policy and law.
o Judicial branch: adjudicates on disputes.
• government policy: The central ideas or principles that guide government in its work,
including the kinds of laws it passes.

4
Constitutional Law
• constitutional law: The supreme law of Canada that constrains and controls how the branches
of government exercise power.
o Its underlying values are tied to the political philosophy known as liberalism.
o liberalism: A political philosophy that emphasizes individual freedom as its key
organizing value.

5
The Canadian Constitution (1)
• The Canadian Constitution is contained in several different documents and is both legislative
and political, written and unwritten.
• All Canadian laws must comply with the Canadian Constitution.
• The Constitution is difficult to change—a special amending formula must be met.
• It has deep British roots, but also important are Indigenous legal systems and French legal
practices.

6
The Canadian Constitution (2)
• The Canadian Constitution includes the following:
o Written documents of the Constitution, including:
 Constitution Act, 1867
 Charter of Rights and Freedoms
o Relevant decisions by judges concerning constitutional law.
o constitutional conventions: Important rules that are not enforceable by a court of law but
that practically determine how a given power is exercised by government.

7
The Canadian Constitution (3)
• The Canadian Constitution attends to many matters, including the following:
o the admission of new provinces and territories
o provisions for amending the Constitution
o autonomy from the United Kingdom Parliament
o provision for the three branches of government (legislative, executive, andjudicial)

8
The Legislative Branch (1)

9
The Legislative Branch (2)
• legislative branch: The branch of government that creates statute law (e.g., The Criminal Code).
• Three levels of government make legislation in Canada.
o Federal government: includes Parliament (House of Commons, Senate).
▪ Law-making jurisdiction is from s 91, Constitution Act, 1867.
▪ Controls territorial governments, which have limited self-government.
o Provincial government: legislature, which receives law-making jurisdiction from s 92,
Constitution Act, 1867.
o Municipal Government: law-making power is provided by the provincial legislature.

10
Statute Law and Jurisdiction (1)
• The Constitution Act, 1867, dictates whether or not each level of government can make a given
law.
• jurisdiction: The power that a given level of government has to enact laws.

11
Statute Law and Jurisdiction (2)
• exclusive jurisdiction: Jurisdiction that one level of government holds entirely on its own and
not on a shared basis with another level.
o For example, criminal law is a matter of exclusively federal jurisdiction. If Alberta were to
enact a criminal law, it would unconstitutional and would not be enforced by the courts.
• concurrent jurisdiction: Jurisdiction that is shared between levels of government.
o Public health and the environment are examples of concurrent jurisdiction.
o The provincial government cannot enact legislation that would create a conflict with federal
legislation.
o paramountcy: A doctrine that provides that federal laws prevail when there are conflicting
or inconsistent federal and provincial laws.

12
Business and Legislation 2.1: Constitution Act, 1867 (1)

Constitution Act, 1867

• Formerly known as the British North America Act or the BNA Act.
• Canada is a federal state, meaning power is split between levels of government.
• Contains sections 91 and 92 which divide law-making power between the federal and provincial
governments.
• Indigenous or First Nation band councils possess certain bylaw-making powers.

13
Business and Legislation 2.1: Constitution Act, 1867 (2)

Section 91 Federal Powers Section 92 Provincial Powers

• international and interprovincial trade • hospitals
• postal service • property and civil rights (such as
• criminal law regulation of contracts)
• navigation and shipping • administration of justice (the court
• currency system)
• national defence • local matters (such as highway
• banking regulation)
• seacoast and inland fisheries • incorporation of provincial companies
• all areas not given to the provinces • municipalities (which are delegated
powers such as zoning, local tax)
14
Environmental Perspective 2.1 (1)

Concurrent Jurisdiction Over the Environment

• Regulation and protection of the environment is complex because the environment is regulated
by federal, provincial, and municipal laws (if delegated by the province).
• This makes it particularly important for businesses to know what legislation applies to the
situation.
• Federal jurisdiction over the environment centres on
o protection of oceans and inland waterways
o fisheries protection
o the import and export of hazardous products
o the interprovincial/international transportation of dangerous goods

15
Environmental Perspective 2.1 (2)

Concurrent Jurisdiction Over the Environment

• Federal government has introduced Bill S-5, Strengthening Environmental Protection for a
Healthier Canada Act in order to strengthen CEPA.
• bill: Proposed legislation going through the process of becoming law.
• Each province and territory has extensive environmental protection legislative regimes.
o Directors and officers face personal liability for noncompliance with environmental
protection legislation.
• Canada’s constitutional framework for the environment includes a duty on the federal and
provincial Crowns to consult and accommodate Aboriginal peoples in certain instances.

16
Regulation of Business
• Business is affected by all levels of government, but it is most impacted by the provincial and
municipal governments.
• The regulation of business is generally a provincial matter because the provinces have
jurisdiction over property and civil rights.
• Municipalities have jurisdiction to legislate in a variety of matters, from levying taxes, to
regulating local zoning, parking, and subdivision, to requiring the licensing of businesses and
dogs.
• International/interprovincial transport and communication are areas of federal jurisdiction.
o Businesses in these areas are subject to federal law concerning licensing, labour, and
occupational health and safety.

17
The Executive Branch of Government
• formal executive: The branch of government responsible for the ceremonial features of
government.
o This includes the King (head of state) and representatives, the governor general, and
lieutenant governors.
• political executive: The branch of government responsible for day-to-day operations, including
formulating and executing government policy, as well as administering all departments of
government.
o Chief executive is the prime minister, and includes cabinet, civil servants, agencies,
commissions, and tribunals that perform government functions.
o The level of government is typically lobbied by business.
• cabinet: A body composed of all ministers heading government departments,
as well as the prime minister or premier. It passes regulations.
18
Business and Legislation 2.2

Tobacco Regulation by the Federal Government

• Regulations are a form of legislation known as subordinate legislation and can be passed only if
that power is accorded by a statute.
• In 2019, cabinet enacted regulations pursuant to the Tobacco and Vaping Products Act to
standardize the look of tobacco products, including requiring packaging background to be in a
colour called Pantone 448, regarded by some to be the world’s ugliest colour.

19
The Judicial Branch
• The judiciary is a branch of government, but which is independent from the legislative and
executive branches of government.
• judiciary: A collective reference to judges.
• judges: Those appointed by federal or provincial governments to adjudicate on a variety of
disputes, as well as to preside over criminal proceedings.

20
The System of Courts (1)

21
The System of Courts (2)
Inferior Courts Superior Courts
• judges appointed by the provincial • judges appointed by the federal
government government
• limited financial jurisdiction • unlimited financial jurisdiction
• organized by type of case • entry level for more serious criminal
• parties often appear without a lawyer matters
• includes a small claims court for disputes • more formal and technical, usually with
involving small amounts of money legal representation

2-22
The System of Courts (3)
• Provincial courts of appeal hear appeals from inferior and superior courts.
• The Supreme Court of Canada hears appeals from provincial courts of appeal, but “leave” or
permission is required and must be of national concern or significance.
• Supreme Court of Canada: The final court for appeals in the country.
• Federal Court of Canada: The court that deals with some types of litigation involving the
federal government.

2-23
The Canadian Charter of Rights and Freedoms (1)
• It was created in 1982, as part of the Constitution Act, 1982.
• It is a judicially enforceable guarantee that the government will act with the values associated
with a liberal democratic state.
• The Charter includes the following:
o right to freedom of expression and religion
o right to a fair and speedy trial
o equality rights
o right to vote
o fundamental freedoms (fundamental to business)
o equality rights (fundamental to business)

24
The Canadian Charter of Rights and Freedoms (2)
• The Charter includes the fundamental freedoms (s 2):
o Everyone has the following fundamental freedoms:
▪ freedom of conscience and religion
▪ freedom of thought, belief, opinion and expression, including freedom of the press and
other media of communication
▪ freedom of peaceful assembly
▪ freedom of association

25
The Canadian Charter of Rights and Freedoms (3)
• The Charter includes equality rights (s 15 (1)):
o Every individual is equal before and under the law and has the right to the equal protection
and equal benefit of the law without discrimination and, in particular, without
discrimination based on race, national or ethnic origin, colour, religion, sex, age, or mental
or physical disability.

26
The Canadian Charter of Rights and Freedoms (4)
• The Charter provides protection from improper or oppressive government conduct.
• Section 32 prohibits the government from violating the Charter.
• A violation of the Charter does not automatically render legislation unconstitutional.
o Charter rights are not absolute.
o Section 1 allows the government to restrict Charter rights but only if it can justify why it is
infringing the right and is doing so in a reasonable way.
o If the government cannot justify the infringement, the law will be struck down by the courts,
using powers granted to the courts in sections 24 and 52.
• Section 33 allows the government to enact legislation that breaches many, but not all, Charter
rights.
o This power is rarely used due to political consequences.

27
Business and Legislation 2.3

Store Owner Challenges Nova Scotia’s Vape Restriction Law

• Nova Scotia enacted vape restriction laws in 2020, including banning the sale of flavoured vape
juices, and also raised taxes.
• At this writing, a vape shop has filed a court notice to have the legislation struck down, arguing
it violates section 7 of the Canadian Charter of Rights and Freedoms, which protects “life, liberty,
and security of the person.”
o This claim argues such restrictions hurt the efforts of adults who want to quit cigarette
smoking by vaping but find unflavoured product less attractive and more expensive.

28
Sources of Law (1)
• There are two main sources of law in Canada:
o statute law (discussed previously)
o judge-made law or the “common law”: The body or collection of judge-made law as
recorded in judgments.
• judgment: A formal ruling in the matter as well as reasons for that outcome.
• Judges rely on decisions made by other judges in similar cases (precedents) to explain and
justify their decisions.
• precedent: An earlier case used to resolve a current case because of its similarity.
o Lower courts must follow decisions of higher courts within the same jurisdiction.
o The higher the court, the higher the precedent’s weight.
o Supreme Court of Canada can make decisions without being bound by precedent.

29
Sources of Law (2)
• The main goal of precedent is to advance certainty and predictably in the law, although it is
often difficult to fully predict an outcome with certainty because reasonable people may come
to different conclusions.
• Judges may apply two types of law: common law rules or the rules of equity.
• equity: Rules that focus on what would be fair given the specific circumstances of the case, as
opposed to what the strict rules of common law might dictate.
• Equity provides unique remedies—rectification, quantum meruit, rescission, specific
performance, and injunction.
• Unique principles apply to equity, such as the “clean hands” rule—the idea that the court should
not assist a plaintiff who has themselves behaved improperly.

30
Classifications of Law (1)

Domestic Law International Law

• internal law of a given country • governs relations between states and
• includes both statute and common law other entities with international legal
• deals primarily with individuals and status such as
corporations and, to a lesser extent, the o the United Nations
state o the World Trade Organization
• includes treaty law
• deals mostly with states and international
organizations

31
Classifications of Law (2)

Substantive Law Procedural Law

• law that defines rights, duties, and • the law governing the procedure to
liabilities enforce rights, duties, and liabilities
• Example: freedom of expression • Example: the right to appeal to a higher
court

32
Classifications of Law (3)

Public Law Private Law

• Relate to or regulate the relationship • Relate to or regulate the relationship
between persons and government at all between persons and government at all
levels. levels.
• Constrains governmental power • Includes:
according to rules of fairness o Contract law
• Includes: o Tort law
o Criminal law o Property law
o Tax law o Company law
o Constitutional law
o Administrative law
33
Classifications of Law (4)

Common Law Civil Law

• It is also known as judge-made law. • Québec’s system of private law is
• It is used in all provinces and territories government by a civil code.
except Québec. • It is a system of law in which judges look
• It bases private law on judicial decisions to the Civil Code for general principles to
that must be applied. be applied to the case at hand.
• They are not bound by how other judges
have interpreted the Code.

34
Divisions/Classifications of Law

35
Administrative Law and Business
• This is the primary area in which government and business interact.
• Administrative law: Rules created by boards, agencies, commissions, tribunals, and individuals
who exercise a government function.
• Functions of administrative bodies and officials are varied, and can be
o administrative only, such as processing claims for benefits
o judicial, such as settling employer–employee disputes
o legislative, such as CRTC regulations on radio and television

36
Indigenous Peoples and Constitutional Law (1)
• Indigenous Peoples had longstanding legal traditions prior to the arrival of Europeans in what is
now Canada.
• Canada was already “occupied and governed” by Indigenous Peoples, and, as a direct result,
these rights exist in a free-standing and independent way regardless of British and French
assertions of sovereignty or control over Canada.
• The rights of Indigenous Peoples are protected by section 35 of the Constitution Act, 1982, which
provides as follows:
(1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby
recognized and affirmed.
(2) In this Act, “aboriginal peoples of Canada” includes the Indian, Inuit and Métis peoples of
Canada.

37
Indigenous Peoples and Constitutional Law (2)
• Treaty rights: Rights arising in relation to official agreements between the Crown and
Indigenous Peoples.
o Treaty rights include rights derived from treaties dating back to the early 18th century as
well as 11 numbered Treaties following Canadian Confederation in 1867, as well as 26
modern-day treaties.
• Aboriginal rights: Rights that exist when treaties have not been negotiated and include rights
relating to the occupation of land as well as rights which arise “from a distinctive practice,
custom or tradition that may or may not be connected” to land.
o Example: In R v Sparrow, the court held that the Musqueam of British Columbia have always
possessed an Aboriginal right to fish for food, social, and ceremonial purposes along an
area of the Fraser River.

38
Indigenous Peoples and Constitutional Law (3)
• The Indian Act recognizes First Nations band councils as having the power to pass bylaws
governing the reserve community in such areas as health, law and order, and the residence of
band members.
• Modern treaties assert broader legislative power, including in relation to taxation, resource use,
and education, for example, the recent creation by the Mohawk Council of Akwesasne of its own
Indigenous legal system.

39
Indigenous Peoples and Constitutional Law (4)
• Because of its historic relationship with Indigenous Peoples and the requirements of section 35,
the Crown owes legally binding obligations to Indigenous Peoples:
o Example: The duty to consult and accommodate Indigenous Peoples in a number of
circumstances including when projects relating to extractive and infrastructure industries
are proposed for lands used by Indigenous peoples for hunting, fishing, and cultural
purposes and will potentially adversely affect their rights.

• Crown: The state or government.

40
Indigenous Peoples and Constitutional Law (5)
• In 2021, federal government enacted legislation adopting the United Nations Declaration on the
Rights of Indigenous Peoples [UNDRIP], which “affirms the rights of Indigenous peoples to self-
determination and self-government.”

41