Law in Quebec

News about Quebec legal developments


  • OECD report recommends giving tax authorities access to suspicious transaction reports

    An international think tank is calling for tax administrations to have the fullest possible access to suspicious transaction reports received by financial intelligence units to ensure tax compliance and to tackle serious crimes as tax evasion, bribery, corruption, money laundering and terrorism financing.

    The Paris-based Organisation for Economic Co-operation and Development (OECD) is calling on jurisdictions to provide the legislative framework to allow tax administrations to suspicious transaction reports (STRs) and to ensure that operational structures and procedures are put in place to facilitate the “maximum effectiveness” in the use of STRs.

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  • First Nations can now pursue claims prior to proving Aboriginal rights and title

    First Nations can now bring tort claims founded on Aboriginal rights and title before those rights are formally recognized by a court declaration or government agreement after the Supreme Court of Canada refused to end lawsuits by Aboriginal communities against natural resource companies.

    The SCC’s decision to dismiss the applications for leave to appeal paves the way for a $900 million class action filed by two Quebec Innu First Nations against Iron Ore Co. of Canada (IOC) and a separate suit by two north-central British Columbia First Nations against Rio Tinto Alcan Inc. over its diversion of water from the Nechako River since the 1950s.

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  • Controversial report calls for overhaul of Quebec insurance and mutual fund regulatory framework

    A controversial report by the Quebec Ministry of Finance that asserts that the current system governing the distribution of financial products and services in the province needs to be reviewed because it risks becoming inadequate and out-dated has been criticized as being unnecessarily alarmist by financial and legal experts.

    The long-awaited report recommends wholesale changes to the regulatory framework for insurance and mutual funds. Besides boosting consumer protection coverage in the event of fraud, the report proposes a flexible legal framework to enable insurers to offer products online. It also recommends establishing a legislative framework aimed at individuals who are not insurance professionals but who sell insurance products such as travel insurance and vehicle rental insurance. More contentiously, the report calls into question its “cumbersome” oversight system and the existence of two regulatory bodies.

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  • Quebec appeal court imposes duty to investigate on business seeking input tax credits

    Less than a year after the Federal Court of Appeal held that a supplier’s delinquent fiscal conduct is irrelevant to an input tax credit claim, the Quebec Court of Appeal has muddied the legal waters with a controversial decision that affirmed that Quebec business are expected as part of an effort to impede tax evasion to conduct due diligence on suppliers in order to be able to obtain input tax credits.

    In a highly-awaited ruling that startled tax professionals, the appeal court held that business are required to do more than simply confirm the validity of a supplier’s GST/HST registration number and confirm that invoices conform to the current legislation and regulations to qualify for input tax credit (ITC) claims. Business have the added duty to authenticate invoices used to claim ITCs originate from the person that actually performed the service, held the appeal court.

    “This is a very important ruling for the business and tax world because in a way it can change the way businesses operate in Quebec,” remarked Alexandre Dufresne, a tax lawyer and managing partner of Spiegel Sohmer in Montreal. “It’s unfortunate but you hear more and more people saying I am going to bring my operations in other jurisdictions because the administrative burden is just too heavy in Quebec. It’s reached that point.”

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  • More guidance needed over role of in-house legal counsel, say accountants and lawyers

    The accounting and legal community is calling on the Auditing and Assurance Standards Board and the Canadian Bar Association to provide more guidance over the role of in-house legal counsel in an exposure draft designed to assist auditors, law firms and management to communicate effectively with each other over audit inquiries.

    The exposure draft, two years in the making, updates the existing Joint Policy Statement (JPS) to reflect developments in accounting and auditing standards as well as in the legal environment since the original statement was issued in 1978. The JPS covers situations when auditors request management to prepare an inquiry letter to send to an entity’s law firm to confirm the fairness of management’s evaluation of the entity’s claims. It is intended to protect solicitor-client confidentiality and privilege while ensuring that auditors have access to sufficient appropriate information to fulfil their professional responsibility in conducting the audit of the entity’s financial statements.

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  • Court rules there are limits to reverse or correct unintended tax consequences

    Taxpayers do not have a general license to “travel back to through time” with the benefit of hindsight to reverse or correct unintended tax consequences of commercial dealings, held the Quebec Court of Appeal in two separate but related rulings.

    The rulings effectively limit the scope of the so-called rectification remedy in a tax context under civil law, according to tax experts. A powerful legal instrument, rectification essentially allows taxpayers, under certain conditions, to correct errors in legal documents or instruments that do not reflect the true intention of the parties, and which lead to unintended consequences. Rectification allows the parties to “fix” the terms of the transaction so that the intended tax consequences are achieved. Its effect is retroactive.

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  • Quebec tax authorities target construction sector

    A targeted program launched by Revenue Quebec to recover monies from employers and employees in the construction industry recouped nearly $1.2 billion in the past three fiscal years but critics say that the tax authority could recover more monies and curb black market activities more efficiently by introducing a series of easy-to-implement measures.

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  • Another blow for Mr. Big operations

    A Quebec man convicted of the first degree murder of his pregnant wife following a Mr. Big operation police sting operation is now a free man after the Quebec Court of Appeal found that his confession was obtained under duress, the second time this year that the appeal court has taken a dim view of the elaborate police strategy.

    “Thousands and thousands of dollars are invested by the state in these Mr. Big operations to try to elicit a confession,” remarked Montreal criminal lawyer Jean-Philippe Marcoux. “And after all that, for it to reach the Court who ordered a stay of proceedings, it is a dismal failure.”

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  • Former Quebec law society president settling scores

    Barely a couple of weeks after the former president of the Quebec legal society reluctantly resigned after a bitter and protracted fracas with the board of directors of the Barreau du Québec, Lu Chan Khuong is fighting back while raising the possibility that she may yet come back to seek another term if her electoral platform is not fulfilled by the new president.

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  • Quebec Charter imposes duty to accommodate, rules appeal court

    A precedent-setting ruling by the Quebec Court of Appeal that amended the provincial law governing an employers’ duty to accommodate employees with workplace injuries will compel employers, unions, workers, and the Quebec worker’s compensation board to review the way they manage employment injury cases, according to employment and labour lawyers.

    In light of Supreme Court of Canada rulings regarding reasonable accommodation of people with disabilities, the Quebec Court of Appeal held that the rehabilitative process contemplated by the Quebec Act respecting industrial accidents and occupational injuries (ARIAOD) does not relieve employers of their duty to accommodate under the Quebec Charter of Human Rights and Freedoms.

    “This ruling helps to ensure the progress of labour rights,” remarked Sophie Cloutier, a Quebec City labour lawyer with Poudrier Bradet Avocats LLP. “The ruling is very important because it marks a shift by the Quebec Court of Appeal on its own case law and ensures that the Charter and the duty to accommodate is applied in cases involving workplace injuries.”

    In October 2004, Alain Caron developed tennis elbow while working as an educator at a Montreal institution for people with intellectual disabilities. His workplace injury lead to functional limitations that prevented him from continuing to work as an educator. His employer terminated his employment because it deemed that there was no other suitable position that was compatible with his functional limitations. After review, the Commission de la santé et de la securité du travail (Quebec workers compensation board) confirmed the employer’s decision. The Commission des lésions professionnelles, an administrative tribunal that hears appeals by employers or workers challenging decisions by CSST, dismissed Caron’s application to impose a duty to accommodate on the employer.

    Under ARIAOD, victims of an employment injury have the right to return to work for their employer and a right to rehabilitation with a view to reinstatement in their employment, equivalent employment, or suitable employment. The provincial statute however does not impose on the employer to find suitable employment to an employee who has sustained a work-related injury nor a duty to accommodate. Well-established case law has also maintained that the ARIAOD does not grant the CSST or the CLP the power to impose, recommend, or suggest any kind of accommodation.

    Up until the Caron case, “the courts have refused to impose a duty of accommodation within the ARIAOD framework, holding that the CSST and the CLP did not have the jurisdiction to order such a measure or that the ARIAOD legislative scheme constituted an autonomous set of standards that incorporates its own legal accommodation process,” explained Anne-Marie Laflamme, a law professor at the Université Laval who has written about the subject.

    Caron fought back and took the matter before Quebec Superior Court for judicial review and won. The court held that the CLP should have taken into account the Charter, annulled CLP’s decision, and sent the case back for reconsideration. The CSST appealed the lower court decision before the Quebec Court of Appeal, and lost.

    The appeal court held that an employee living with the after-effects of a work-related accident could be considered handicapped, and should therefore be protected by the Charter. Otherwise that would lead to the odd situation where workers disabled by an employment injury would be “disadvantaged when compared with workers whose disabilities result from a personal condition,” noted Justice Dominique Bélanger in a unanimous decision in Commission de la santé et de la sécurité au travail v. Caron 2015 QCCA 1048. Though the ARIAOD does not impose an obligation on the employer to offer suitable employment to an employee who has suffered a work-related injury, the appeal court held that because of the supra-legislative nature of the Charter employers will now have to find an acceptable solution to accommodate workers whose work-related injuries have caused functional limitations. The appeal court also held that the CSST now has the obligation to determine whether an employer diligently performed that exercise.

    “It will more or less change things in unionized workplaces because in practice many employers, particularly governmental and para-governmental organizations, already have collective agreements that puts that exercise into practice,” noted Raymond Gouge, a Quebec City lawyer whose practice focuses on workers’ compensation and occupational health and safety in the health sector. “But in some sectors, like pulp and paper or transportation, the duty to accommodate will not be easy because of the physical nature of the jobs and so employers will not necessarily be able to accommodate them.”

    Employees who work in non-unionized workplaces will notably benefit from the ruling, said Laflamme. “The ruling by the appeal court will allow all workers who suffered a work-related accident the right to benefit from the right of reasonable accommodation, regardless of whether or not they are unionized,” said Laflamme. “Up until now, only unionized employees benefitted from these rights under their collective agreement.”

    Besides employers, workers and unions too will have to change the manner they handle work-related injury cases. While employers will now have to demonstrate that they actively sought a reasonable accommodation before asserting that they have no suitable position for an injured worker with functional limitations, the appeal court highlighted that unions and workers too have to cooperate in the process. In fact, workers have a corollary obligation to accept the proposed accommodation, so long as it is reasonable, said Justice Bélanger.

    The CSST, which is considering appealing the ruling, will likely have their hands full to ensure that public and private sector employers are fulfilling their duty to accommodate employees who have functional limitations due to a work accident, noted Gouge. That will likely drive up costs. After all, the CSST is for all intents and purposes an insurance company, pointed out Jean-François Martin, a labour and health and safety lawyer with Dufresne Hébert Martin in Montreal. “Besides seeking to protect the provisions of the law that they defend, they saw the issue as an economic one,” noted Martin. “Like other provincial workers’ compensation boards, the financial responsibility (of handling work-related injury cases) ceases after a while for the employer, and it is the CSST that takes over the case. So it is a big issue for them.”

    The financial burden will likely be heightened because the appeal court held that the time limit provided for in the ARIAOD for a worker to exercise his right to return to work – depending on the circumstances it could be a year or two – is merely one of the factors that employers and the CSST has to take into consideration. It no longer is a determinative factor.

    The issue is far from settled. The Quebec Court of Appeal will decide shortly whether arbitrators have the jurisdiction to determine whether employers are fulfilling their duty to accommodate in such matters.

  • Tobacco companies do not have to pay initial $1.13 billion in tobacco class action suit

    Three Canadian tobacco companies will not have to make an immediate $1.13 billion payment to Quebec smokers who won a landmark class action suit after the Quebec Court of Appeal held that the justification for the provisional execution is weak, the prejudice to the firms serious, and that the balance of convenience weighs in their favour.

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  • Quebec Court of Appeal overturns discrimination case

    In a ruling that took human rights lawyers by surprise the Quebec Court of Appeal overturned a discrimination case against aeronautics multinational Bombardier Inc. after holding that there was no evidence that a Canadian pilot of Pakistani origin was a victim of ethnic discrimination.

    The Quebec Human Rights Tribunal, in a precedent-setting ruling that held that Quebec human rights laws prevail over American anti-terrorism efforts in Canada, ordered the Montreal-based firm three years ago to pay Javed Latif $319,000 in damages after it found that the pilot’s human rights were violated when Bombardier barred him from flight training at a Montreal facility because U.S. authorities had designated him a security threat. The Tribunal also ordered Bombardier to cease respecting U.S. national security decisions when pilots are seeking flight training under Canadian licences.

    But in a unanimous 40-page facts-specific decision that reviewed the evidence of the case, the Quebec Court of Appeal took issue with the fact that the Tribunal based its decision almost entirely on an expert report and testimony of University of Windsor law professor Reem Anne Bahdi. The report concluded that U.S. post 9/11 security measures are generally riddled with stereotypes about Muslims and persons of Arab origin, and therefore the decision to deny Latif must have also been discriminatory. The appeal court found the report was not scientifically objective and had numerous flaws and shortcomings.

    “I find it difficult to see how we can allow ourselves to make a judgment that an anti-Arab or Islamaphobic sentiment in the U.S., following the events of September 11, 2001, would be sufficient to create the necessary causal link between the refusal of American authorities to issue a security certificate and (Latif’s) Pakistani nationality,” wrote Justice Marie St-Pierre in Bombardier inc. (Bombardier Aerospace Training Center) v. Commission des droits de la personne et des droits de la jeunesse, 2013 QCCA 1650. “In the relevant period (2003-2008), Bombardier trained a number of pilots of Arab, Muslim or Middle-Eastern descent who underwent the same security verifications and who received positive responses.”

    But human rights experts are concerned that the Quebec Court of Appeal has as of late far too easily accepted motions for leave to appeal decisions issued by the Quebec Human Rights Tribunal, shown little deference to Tribunal rulings, and adopted rules of the Civil Code of Quebec to human rights matters.

    “I have the impression that this case was treated as an ordinary commercial law matter that applied civil law rules,” observed Christian Brunelle, a law professor at the Université de Laval. “It ignored the quasi-constitutional status of the Quebec Charter of Human Rights and Freedoms, its distinct nature compared to civil law, and the importance of interpreting human rights violations generously and liberally. It worries me.”

    Brunelle, who is conducting a study examining how decisions by the Tribunal fare before the Quebec Court of Appeal, is all the more concerned because there are clear signs that the appeal court “seems to have great interest” in hearing cases stemming from the Quebec Human Rights Tribunal — and does not hesitate to overturn them. The appeal court normally shows much deference over the appreciation of evidence made by judges of first instance, but “for reasons I cannot explain entirely” it seems to be far less reserved when it comes to reviewing evidence from Quebec Human Rights Tribunal decisions, said Brunelle.

    Its penchant to apply a “civil law analysis grid” to decide human rights issues is equally disconcerting, with the result that they are more demanding in terms of causality, added Brunelle. The Bombardier decision is a case in point. While the Tribunal held that Latif’s ethnic origins played a role, “perhaps minimal but nevertheless a real one,” in the U.S. decision to blacklist him, the appeal court found that there was no such evidence. “The question then is what evidence is required to invoke discrimination or does one have to demonstrate causality,” asked rhetorically Brunelle. “Depending on what approach one takes, there are different consequences.”

    That is an issue that the Court of Appeal of Ontario grappled with over the course of the summer in Peel Law Association v. Pieters, 2013 ONCA 396. In a 45-page ruling, the Ontario appeal court held that all that is required is that there be a “connection” between the adverse treatment and the ground of discrimination. In short, the ground of discrimination must somehow be a “factor” in the adverse treatment. “The Divisional Court’s requirement of a “causal nexus” or a “causal link” between the adverse treatment and a prohibited ground seems counter to the evolution of human rights jurisprudence, which focuses on the discriminatory effects of conduct, rather than on intention and direct cause,” said Justice R.G. Juriansz.

    Thanks to the different tack taken by Quebec appeal court, Quebec human rights jurisprudence is developing “differently” compared to the rest of Canada, asserts Brunelle. “It gives the impression that the Quebec Charter, which is a quasi-constitutional law, is taken less seriously in Quebec regarding issues of discrimination than is the case elsewhere,” remarked Brunelle.

    The Bombardier case raises yet more troubling issues, says Montreal lawyer Alain Lecours of Lecours & Hébert. Following the appeal court decision, it now seems that another nation can impose conditions on Canadian companies operating on Canadian soil, says Lecours. A Bombardier executive testified before the Tribunal that American authorities told him not to train Latif, and that if it did, there would be “serious consequences” for Bombardier. Justice Michele Rivet of the Tribunal criticized in her ruling Bombardier for taking the U.S. designation in faith and not trying to find out whether Latif was a security risk for Canadians. “Following this decision by the Quebec Court of Appeal, we now find ourselves in a situation where a foreign state can put pressure and impose conditions on Canadian enterprises here” in Canada, remarked Lecours.

    That point of view is echoed by Catherine McKenzie, who represented Latif. “The way that Bombardier acted in this case by applying an American decision, without doing any independent verification on its own as to its validity – and knowing that Latif would have no ability to know the evidence against him or appeal the decision – is permissible,” said McKenzie, a Montreal litigator with Irving Mitchell Kalichman. “That is the impact of this decision.”

    A spokesperson for the Quebec Human Rights Commission declined to comment on the case while a Bombardier spokesperson would only say they are pleased by the ruling.

  • Mandatory retirement age for municipal judges not discriminatory

    Two municipal judges who sought to stay on the bench beyond the retirement age of 70 lost their legal battle after Quebec Superior Court held that a mandatory retirement age for provincially-nominated magistrates is not discriminatory and is necessary to preserve judicial independence.

    But the ruling has not settled the issue of mandatory retirement age for provincially-nominated judges, according to Gérald Tremblay, former batonnier of the Quebec law society. Seven years ago, an Ontario Superior Court judge ruled that a law forcing justices of the peace in the province to retire at the age of 70 was a violation of equality rights guaranteed under the Canadian Charter of Rights and Freedoms. Justice Strathy, now Chief Justice of the Ontario Court of Appeal, substituted – or “read in” – new provisions that allow justices of the peace to keep working until age 75, subject to the annual approval of the Chief Justice of the Ontario Court of Justice, even though the official retirement age is 65.

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  • Accountants with a conscience

    When Denis Sylvestre began teaching a business strategy course to students at the Université des Grands Lacs in Burundi, he began by citing the example of McDonald’s Corporation – and drew blank stares. He then rattled off the names of four other well-known multinational firms that he had used in the past while teaching at Quebec universities, and still there was no signs of recognition. Just as he had to set aside his PowerPoint presentations and use the chalkboard because of a lack of stable electricity, the Montreal CPA quickly realized his teaching material was out-of-step with the realities faced by students living in one of the five poorest countries in the world.

    “I had to adapt my course on the go,” said Sylvestre with a chuckle. “Over here we use examples of very large corporations to teach but the students in Burundi had no idea of who they were so we had to use local examples.”

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  • Quebec intends to introduce new sign regulations following appeal court decision

    In a major victory for international retailers such as Best Buy, Costco, Gap, and Wal-Mart, the Quebec Court of Appeal confirmed that the Charter of the French Language allows for the use of non-French trademarks on storefront or public signs and advertising in the province, so long as no equivalent French trademark has been registered.

    A five-judge Court of Appeal panel held, without even hearing arguments from retailers or interveners, that the Charter and its regulations clearly allow the use of a trademark in a language other than French, even if the trademark name is being used as a business name.

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Law in Quebec
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