Business Law in Canada

Twelfth Edition

Chapter 2
Introduction to the Legal
System

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Learning Objectives (1 of 2)
When you complete Chapter 2, you should be able
to:
1. Define “law” and identify the types of law that
exist in Canada
2. Distinguish between Canada’s civil law and
common law legal systems
3. Explain how powers are divided and exercised
under Canada’s Constitution

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Learning Objectives (2 of 2)
4. Outline the protection of Indigenous rights and
self-government
5. Describe the rights and freedoms protected by
the Charter of Rights and Freedoms
6. List the areas and grounds upon discrimination is
prohibited by human rights legislation

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What Is Law?
• Difficult to come up with a satisfactory, all-inclusive
definition for law
• Law is the body of rules made by government that
can be enforced by the courts or by other
government agencies
• Government agencies also enforce laws
• Law and morality are not synonymous

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Categories of Law (1 of 2)
• Substantive Law
– The rights and rules that govern behaviour and set
limits on conduct
• Procedural Law
– determines how substantive laws will be enforced

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Categories of Law (2 of 2)
• Public Law
– Includes Constitutional Law and determines how the
country is governed and regulates our relationship with
government
• Private Law
– Governs personal, social and business relationships

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Civil Law Legal System
• Quebec’s noncriminal legal system is based on
the French Civil Code
• French civil law is its central code
– a list of rules stated as broad principles of law that
judges apply to the cases that come before them
• Prior decisions do not constitute binding
precedents

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Common Law Legal System
• Common law system emerges in England
– Feudal system centralized power in hands of king
– During reigns of weak kings, power was decentralized
– Royal judges became fairer to attract more litigants and
broadened the authority of the state
• Function of the royal court was to be impartial and
enforce customs and traditions already in place

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Stare Decisis
• A system of justice where judges are required to
follow precedent
• Most significant feature of the common law
system: the decision of a judge is binding on all
judges in lower courts
• Allows the parties to predict the outcome of the
litigation and thus avoid going to court
• Following precedent can be inflexible and may not
acknowledge changing social attitudes
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Bijuralism
• Two legal traditions - civil law and common law
coexist in Canada
• Bijuralism does not exclude recognition of other
rules such as international law
• Courts demonstrate respect for other legal
cultures, including those of the Indigenous
peoples of Canada
• Territories have legislative jurisdiction in all
matters relating to property and civil rights through
federal legislation
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Equity
• Common law courts had limitations due to the
restrictions of stare decisis
• Court of Chancery (Equity) dealt with matters that
could not be handled adequately or fairly by the
common law courts
• Resulting principles known as the Law of Equity
– Did not hear appeals
– Allowed flexibility in decisions but also appeared
arbitrary

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Statutes
• Parliamentary supremacy dictates that where
case law and statute law conflict statutes prevail
• The courts cannot overrule Parliament’s
legislation and no Parliament can pass laws that
future Parliaments cannot change
• Statutes and legislation determine what we must
do to carry on business in Canada

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Confederation (1 of 2)
• British North America Act created Canada in 1867
– Now the Constitution Act, 1867
• Constitution similar in principle to that of the
United Kingdom
– Magna Carta
– English Bill of Rights
– Rule of law: citizens are protected from the arbitrary
actions of the government
• Statute of Westminster (1931)

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Confederation (2 of 2)
• Constitution Act, 1982
– the “rulebook” that government must follow
– Charter of Rights and Freedoms
• Canada’s Constitution has three elements:
1. Statutes
2. Case law (i.e. jurisdiction to create statutes)
3. Conventions: unwritten rules dictating how the
government is to operate and include the rule of law

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Constitution and Division of Powers
(1 of 3)

• Constitution Act, 1867 and the Charter of Rights

and Freedoms place some limitations on
supremacy of Parliament
• Sections 91 and 92 divide powers between federal
and provincial governments
• Each province has powers to establish rules in
those areas over which it has jurisdiction

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Constitution and Division of Powers
(2 of 3)

Table 2.1 Division of Legislative Powers

Federal—Section 91
Trade and commerce
Employment insurance
Raising monies by any mode of taxation
Criminal law (although not its
enforcement)
Banking, currency, postal service
Indians, and Lands reserved for the
Indians.
Residual power under the “POGG” clause
Provincial—Section 92
Municipal institutions
Hospitals (and health care)
Direct taxation within the province
Administration of justice within the
province
Property and civil rights
Management and sale of public
lands
Generally, matters of a local or
private nature

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Constitution and Division of Powers
(3 of 3)

• “Peace, Order and Good Government” (POGG)

clause
– Federal government has residual power to make law
on things not included in Constitution Act
• Divides law making power among three branches
of government:
1. legislative branch which creates legislation or statute
law
2. judicial branch which interprets legislation and makes
case law
3. Executive branch which implements the law
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Sources of Law in Canada
Table 2.2 Sources of Law in Canada
Branch of Government Legislative Executive Judicial

Who fills these Federally: Prime minister and Judges appointed by

positions? Parliament cabinet ministers the various
together with each provinces
department’s civil and federally
servants/ bureaucrats appointed justices

Provincially: Premier and the cabinet

Legislative together with each
Assemblies department’s civil
ervants/bureaucrats
Type of law Statute law Subordinate legislation Case law
made (legislation) • regulations made by
order-in-council or as
authorized by legislation
• bylaws made by
municipal governments

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Indigenous Rights and Self-
Government (1 of 3)
• First Nation, Inuit, and Métis peoples see their
right to self-determination and self-government as
an inherent right
– pre-existing right rooted in occupation and government
before European settlement
• Royal Proclamation of 1763
– established the relationship between the Crown and
First Nation communities as nation-to-nation
• UN Declaration on Rights of Indigenous Peoples
(UNDRIP)
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Indigenous Rights and Self-
Government (2 of 3)
• Cree-Naskapi (of Québec) Act
– First piece of Indigenous self-government legislation in
Canada
• Numerous agreements have created self-
government across Canada
• 22 self-government agreements that recognize a
wide range of Indigenous jurisdictions that involve
36 Indigenous communities across Canada

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Indigenous Rights and Self-
Government (3 of 3)
• Businesses must respect Indigenous rights and
title
– Failure to consult Indigenous peoples may be costly
• Section 35 of the Constitution Act, 1982
recognizes and affirms existing Indigenous and
treaty rights

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Constitutional Challenges before the
Courts
• Pith and substance
– What is the main purpose of the law
– whether the government that enacted the law had the
constitutional jurisdiction to regulate that concern
• Colourable legislation

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Paramountcy
• Powers of the federal and provincial governments
can overlap considerably
– If overlap is incidental, both laws are valid and
operative
• Where laws truly conflict paramountcy may
require that the federal legislation be operative
and the provincial legislation no longer apply

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Delegation of Powers
• Direct delegation of power is prohibited
– To move power between federal and provincial
jurisdictions requires constitutional amendment
• Indirect delegation of power is permitted
– Federal and provincial government can delegate
powers to inferior bodies

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Agreement to Share Powers
• Shared powers between federal and provincial
governments circumvents constitutional rigidity
– Transfer-payment schemes
– Conditional grants
• Federal government may set national standards to
which funding is tied and ensure equal access to
services

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Exercising Legislative Power
• Canada’s Constitution requires legislation to
proceed through first (introduction), second
(debate), and third (modifications) readings and
has status of statute
• Gains status of law after royal assent
• Federal and provincial statutes are compiled and
published
– Accessible online

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Question for Discussion (1 of 3)
• Canada’s constitutional structure is essentially
different from Britain’s because it consists of the
federal government and ten provincial
governments, each with power to act in their own
jurisdiction. What impact does this have on
businesses operating within, and among,
provinces?

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Protection of Rights and Freedoms
• Human rights and individual freedoms protected
through unwritten conventions as supported by
common law
• Concerns about entrusting the protection of
personal rights and freedoms to common law led
to development of two streams of legislation:
– dealing with protecting human rights against abuses by
the government
– second aimed at protecting individuals against
discrimination and intolerance by society at large

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Canadian Bill of Rights
• Provincial and federal governments were free to
interfere with civil rights through legislation (i.e.
Japanese internment)
• Canadian Bill of Rights, 1960 attempted to limit
authority of federal government to violate human
rights
• Not entrenched in Constitution
• Effectiveness limited

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Charter of Rights and Freedoms (1 of 2)
• Charter was added as Constitutional guarantee of
basic rights and freedoms in 1982
– Eliminates power to interfere with human rights except
by Constitutional amendment
– Rights are protected by judges rather than
governments

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Charter of Rights and Freedoms (2 of 2)
• Limitations on Charter rights
1. Section 1: allows interference with rights and
freedoms as may be justifiable in a free and
democratic society
2. Section 33: legislatures can pass acts that infringe on
rights “notwithstanding” the Charter, but legislation
must be reviewed every 5 years (sunset clause)
3. Section 32(1): restricts operation of the Charter to
government and government-related activities

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Fundamental Freedoms
• Fundamental freedoms for everyone in Canada as
a result of the Charter:
– freedom of conscience and religion
– freedom of thought, belief, opinion and expression
– freedom of peaceful assembly and association

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Democratic Rights
• Include right to vote and to qualify to be elected
• Reasonable limitations include restrictions to
those who are underage or mentally incompetent
• Section 4 ensures there will be an election at least
every five years

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Mobility Rights
• Section 6 of the Charter ensures that Canadians
can travel and live anywhere within the
geographic limitations of Canada as well as enter
and leave the country at will
• Canadians have the right to earn a livelihood in
any part of Canada
– provincial licensing and educational requirements may
create exceptions
• Allows for programs that are designed to better
conditions of those who are disadvantaged
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Legal Rights
• Intended to protect individuals from unreasonable
interference from the government or its agent
• Section 7 states that we have the right to life,
liberty, and the security of person
• Fundamental justice: everyone is entitled to
procedural fairness and the rule of law
• Sections 8 and 9 prohibit such activities as
unreasonable search and seizure and arbitrary
imprisonment
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Equality Rights
• Section 15 prohibits discrimination in the
application of the law and a general prohibition
against discrimination
• Federal and provincial laws must be applied
equally to all
• Provides for affirmative action programs
• Equality provisions are important for business
people
– Human rights legislation
– Government-funded projects
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Language Rights
• French and English have equal status
• All federal government activities must be available
in both official languages
• Minority-language educational rights
– guaranteed for the citizens of Canada
• Language rights and minority-language
educational rights cannot be overridden by section
33 of the Charter

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Question for Discussion (2 of 3)
• Do you believe there should be limits on rights
and freedoms or should rights and freedoms be
inalienable and guaranteed?

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The Importance of the Changes to the
Constitution
• Charter provisions are generalizations, and courts
interpret broad statements and create new law
• Canada Act and repatriation
• Quebec dissent and Referendum
– Meech Lake Accord
– Charlottetown Accord
– Reference re: unilateral secession of Quebec

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Human Rights Legislation (1 of 3)
• Broad federal and provincial legislation protect
individuals against human rights violations by the
public at large in a variety of settings
• The Canadian Human Rights Act (CHRA) applies
to abuses in sectors regulated by federal
legislation
– Ensure individuals have access to employment without
barriers
– Access to facilities, services, and accommodations also
addressed

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Human Rights Legislation (2 of 3)
• Human rights acts prohibit discrimination based
on various protected grounds, including gender,
religion, ethnic origin, race, age, and disabilities
• Evolution of human rights protection
– Three decades ago discrimination based on sexual
orientation was not specifically prohibited
– Reference re Same-Sex Marriage case

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Human Rights Legislation (3 of 3)
• Tribunal hearings
– After complaint and investigation
– Can impose significant sanctions and remedies
• For businesspeople, knowledge of the human
rights codes applicable to their industry is
essential
• Duty to accommodate unless causing undue
hardship

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Indigenous Peoples and Human Rights
• Exemption from the CHRA was removed in 2008
and gender equality stipulations were expressly
protected
– Previously, those exposed to discriminatory treatment
were not able to seek remedies under the CHRA
• Section 67 disproportionately impacted First
Nation people that were registered, members of
bands, or living or working on a reserve
– did not have full access to human rights protection

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Question for Discussion (3 of 3)
• There are only certain protected areas and certain
prohibited grounds in human rights legislation.
Can you think of reasons for an area or ground to
be considered for addition to the legislation?

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