Year in review: developments in Canadian law in 2008.

I INTRODUCTION Purpose and Organization of the Year in Review Trends in 2008 II. TORT LAW Duty of Care i. Duty of Care and Foreseeability ii. Pure Economic Loss iii. Duty of Care to Newly Born Children iv. Duty of Care in a Claim for Negligent Investigation v. Duties of Care Owed by the Crown Standard of Care i. The Effect of Road Signs Causation Damages Specific Torts i. Defamation III PROPERTY IV CONTRACTS Exclusion Clauses Contracts of Employment Tendering Restraint of Trade V LABOUR The Right to Bargain Collectively Remedies Under a Collective Agreement i. The Union's Remedies Against Employees ii. An Employee's Remedies Against Employers iii. Rules Governing Arbitrators Contracts of Employment VI BUSINESS LAW The Stakeholders Debate i. Derivative Actions ii. The Oppression Remedy iii. Corporate Existence and the Liability of Directors Mergers i. Competition Law ii. Pension Law Arbitration VII FAMILY LAW Spouses i. Division of Assets on Divorce ii. Federal Spousal Support Guidelines iii. Imputation of Income Children i. Section 9 of the Child Support Guidelines Enforcement of Orders VIII TAX Taxation Administration of the Tax Act i. Powers of the Minister ii. Duties of the Tax Court Judge IX CIVIL PROCEEDINGS Conflict of Laws Jurisdictional Concerns Res Judicata and Estoppel Abuse of Process Limitations Rules of Evidence Burden of proof in civil cases Pleadings Costs X ADMINISTRATIVE LAW Standard of Review Procedural Fairness XI CRIMINAL LAW Criminal Procedure Disclosure Offences Decisions i. Trial Judge's Reasons ii. Jury Instructions iii. Directed Verdicts Credibility Evidence i. Out-of-Court Statements ii. Searches iii. Child Witnesses iv. Exclusion under Section 24(2) Defences Sentencing i. Remedies for Unconstitutional Mandatory Minimum Sentences ii. The Principle of Parity iii. Pre-sentence Custody and Bail Youth XII PROVINCIAL OFFENCES Provincial Offences Act (Ontario) XIII CONSTITUTIONAL LAW Canadian Charter of Rights and Freedoms i. Extraterritorial Application ii. Section 7: Principles of Fundamental Justice iii. Section 2: Freedom of Speech iv. Section 15: Equality Rights v. Section 20: Language Rights vi. Section 14: Translation Services in Legal Proceedings Taxation Division of powers i. Section 91(2A) ii. Section 92(12) I INTRODUCTION

Purpose and Organization of the Year in Review

The law in Canada is in a state of ongoing upheaval. Statutes are introduced, amended, and repealed. Administrative tribunals develop policies and processes to meet changing conditions. And every day in their decision% courts interpret, re-interpret, reject, and reconcile these and other sources of law. Those court decisions are the focus of this review. In particular, the review focuses on the noteworthy decisions of provincial and federal appellate courts released in 2008.

Decisions may be noteworthy for a variety of reasons. They may change the law, (1) apply the law in an unexpected way, (2) have striking facts or interesting theoretical implications, (3) represent a new application of statutory rules, (4) or be of significant political or practical importance outside the law. (5) Noteworthy decisions provide insight into the current state of the law, prominent topics of legal conversation, and the nature of the work done by appellate courts in Canada. This review aims to identify noteworthy decisions from among the more than 6000 released by appellate courts in 2008 and to discuss their individual and collective significance.

The review will be useful in a variety of ways. Students may gain from it an understanding of the dynamism of Canadian law, a perspective that is often not the focus of their classes at law school. Practitioners can use it to stay up-to-date in areas in which they do not normally practice and to gain new perspectives on the work of appellate courts in Canada. Anyone conducting case research may find it useful as a way to quickly appreciate the significance of a case, and anyone doing general research into an area of the law could use it as one of many resources to update secondary sources. It is also hoped that anyone interested in the nature of legal change and legal decision-making may find in it data that are useful in their investigations.

Trends in 2008

The subtitle to this feature, "Developments in Canadian Law in 2008", is perhaps misleading. Even when our attention is restricted to appellate courts in Canada there is no single "Canadian Law". Rather, what we have is an aggregation of the work of dozens of judges working in variety of statutory and historical contexts and often responding to the unique submissions of the parties before them. It is therefore not surprising that no single, coherent, and comprehensive picture emerges from a consideration of all the developments in Canadian law in 2008. Nevertheless, it is possible to identify and track a few trends.

In this year's Dunsmuir decision, Binnie J. observed that "[t]here is afoot in the legal profession a desire for clearer guidance than is provided by lists of principles, factors and spectrums." (6) In 2008, judges have arguably responded to this demand. Their reforms have often been sensible, eliminating some of the mystery in which legal disputes can become shrouded and allowing citizens to better understand the nature and source of the rules that govern their conduct and relations. (7) It should not be thought, however, that the creation of bright-line rules always produces desirable results. On the contrary, it can result in formalism and artificiality that work unfairness, it can unduly elevate predictability over the real interests of the parties, (8) or it can lead us to sacrifice more rigourous analysis and theoretical clarity. (9)

A related, but distinct, trend has also emerged in response to the following problem, also identified by Binnie J. in Dunsmuir:

[Litigants] may find the court's attention focussed not on their [case] but on lengthy and arcane discussions ... Every hour of a lawyer's preparation and court time devoted to unproductive 'lawyer's talk' poses a significant cost ... [the law] should be pruned of some of its unduly subtle, unproductive, or esoteric features. (10) The response to this problem involves courts changing the rules to reorient the evidence and arguments away from broad legal questions and toward the specific issues in dispute in any particular action. (11)

These two trends will usually cut the same way: bright-line rules will often allow the parties and the court to focus on the issues specific to the case at bar. But this will not always be the case. (12) Where previously established tests do not adequately capture what is at stake, courts are forced to make a choice between a rule that misses the point or an unfocussed debate. In these cases courts will presumably decide which value--predictability or responsiveness--is more important in the circumstances.

II TORT LAW

Duty of Care

i Duty of Care and Foreseeability

Tort law offers a reminder that even a factor as fundamental as duty of care requires frequent judicial action. Mustapha v. Culligan (13) is an example. In that case, the Supreme Court of Canada (SCC) clarified that the proper place to consider the difference between psychological and physical harm was in the remoteness and not the duty of care analysis.

Mustapha was a man of "less than ordinary fortitude" (14), elevating his risk of mental injury. While changing the bottle in his family's water cooler he noticed two dead flies in the replacement supplied by Culligan. This caused him great mental suffering: he could hardly sleep and had nightmares about flies; he was afraid to shower or drink water; his sense of humour disappeared; and he became unable to perform sexually. The trial judge accepted that Mustapha's reaction was "objectively bizarre" but found that the fly materially contributed to these problems and that Culligan had been negligent. The judge awarded damages of more than $300,000. (15)

The Ontario Court of Appeal (OCA) overturned the decision, finding that there was no duty of cared owed by Culligan to Mustapha in respect of psychological injury. The test was "whether it is reasonably foreseeable that a person of normal fortitude or sensibility is likely to suffer some type of psychiatric harm" (16) as a result of the allegedly negligent action, and if so whether there are policy considerations that limit liability. (17) Because it was not reasonably foreseeable that allowing flies to contaminate the water would cause psychiatric harm, the OCA found no duty of care and dismissed the action. (18)

Unlike the Court of Appeal, a unanimous SCC easily found that there was a duty of care. (19) In McLachlin C.J.C.'s view, the full Anns test (20) found no application in the case. The proper approach was first to determine whether an established category of duty was engaged. Here, the long-established duty that a "manufacturer of a consumable good owes...to the ultimate consumer" (21) clearly applied. Unlike the OCA, which treated the distinction between mental and physical injury as essential, the SCC regarded these categories as irrelevant to the duty analysis (and generally "elusive and arguably artificial"). (22) They had no trouble finding a breach of the standard of care and that the breach in fact caused Mustapha's suffering. They held, however, that it was not in law the cause of his suffering because it did not meet the threshold test of reasonable foreseeability: a person of ordinary fortitude could not reasonably be expected to suffer mental injury from seeing flies in his water bottle. Put differently, the kind of injury suffered by Mustapha was too remote to the breach of the duty to attract compensation.

The effect of the SCC's departure from the OCA is to shift much of the action from the duty analysis to the remoteness analysis. This has the potential benefit of focusing the litigation on the actual injury suffered in the particular...