CANADIAN BUSINESS LAW, 4TH EDITION 1

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Canadian Business Law,
4th Edition
Edited by Tamra Alexander
CHAPTER 2
Resolving Disputes and Navigating
Canada’s Court System

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 CANADIAN BUSINESS LAW, 4TH EDITION 4

Learning Objectives
After reading this chapter, you should be able to:
1. Identify circumstances when it may be advisable to obtain
legal advice or assistance.
2. Explain what distinguishes a paralegal and a lawyer in
Ontario with respect to what services each can offer.
3. Describe Canada’s hierarchy of courts.
4. List and describe five roles of Canadian courts.
5. Explain the litigation process in the Small Claims Court
and the Superior Court.

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 CANADIAN BUSINESS LAW, 4TH EDITION 5

Learning Objectives
6. Describe negotiation and suggest circumstances under
which various types of negotiation can assist in resolving
business disputes.
7. Describe various types of mediation and suggest how they
can assist business-people in resolving disputes.
8. Describe arbitration and its role in resolving commercial
disputes.
9. Distinguish between the roles of mediators and arbitrators.
10. Describe how administrative boards and tribunals operate
and how they are different from courts.

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 CANADIAN BUSINESS LAW, 4TH EDITION 6

Understanding When Legal

Assistance Is Required
Broadly speaking, legal issues for Business people fall
into two categories:
1. Legally Regulated processes that do not involve
disputes (e.g., buying or selling land or other
property, dealing with contracts and agreements,
complying with government regulations, creating
entities to run a Business, etc.).
2. Dealing with and resolving disputes.

This Chapter deals with how Legal Disputes are dealt

with by a Business.
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 CANADIAN BUSINESS LAW, 4TH EDITION 7

Providers of Legal Services:

Lawyers and Paralegals
• In Ontario, you have a choice of the type of Legal Service
provider you employ.
• You can use either a Licensed Lawyer or a Licensed
Paralegal, depending on your needs and the type of
Services to be provided.
• A Business-person should avoid becoming involved in
Legal Disputes, if possible.
• If you do become involved in a Dispute, you may need to
hire someone knowledgeable to give you advice about your
options for Dispute Resolution and to predict the likelihood
of success or failure if you proceed with litigation.
 CANADIAN BUSINESS LAW, 4TH EDITION 8

Providers of Legal Services:

Lawyers and Paralegals
Lawyers
• Lawyers are able to provide options to Business-
people for Dispute Resolution.
• Qualified Lawyers who are experienced in the subject
matter of your Dispute, may be able to assist you
because of their special training in identifying and
resolving Legal problems.
• Many Business Law Lawyers are quite capable of
advising you about the various issues that will arise in a
Business’s day-to-day operations.
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 CANADIAN BUSINESS LAW, 4TH EDITION 9

Providers of Legal Services:

Lawyers and Paralegals
Lawyers
• However, some Lawyers specialize in different areas of
law:
• Corporate Law
• Labour Relations Laws
• Bankruptcy Law
• When a Business’s Legal problem is complex and
specific, it may be wise for the Business to seek
specialized Legal advice.

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 CANADIAN BUSINESS LAW, 4TH EDITION 10

Providers of Legal Services:

Lawyers and Paralegals
Retaining and Lawyer’s Services
• If you wish to retain the services of a Lawyer to deal with a
specific issue or legal problem, you will usually do so by paying a
deposit against the cost of the work to be done by the Lawyer.
• This deposit, called a Retainer, is paid before the work actually
starts.
• The Lawyer will deposit your Retainer into a Trust Account to
your credit.
• As work is completed by the Lawyer it is billed to your Business
equal to the dollar amount for the work performed by the Lawyer.
• Amounts billed by the Lawyer are deducted from the Trust
Account to the Lawyer.
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 CANADIAN BUSINESS LAW, 4TH EDITION 11

Providers of Legal Services:

Lawyers and Paralegals
Retaining and Lawyer’s Services
• You will probably also be asked to sign a Contract for
Services from the Lawyer (also called a Retainer) in
which the Lawyer will set out the fees to be charged, using either
an hourly rate of pay for their service, or a fixed fee for a
particular service.
• Lawyers are prohibited by their professional rules of conduct
from disclosing confidential client information to third parties.
• All communications that a Business has with a Lawyer are
legally protected by what is known as Solicitor–Client
privilege.

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 CANADIAN BUSINESS LAW, 4TH EDITION 12

Providers of Legal Services:

Lawyers and Paralegals
Paralegals in Ontario
• Paralegals are generally less expensive than Lawyers.
• Paralegals are Regulated by the Law Society of
Ontario (LSO).
• Paralegals are restricted to practising in certain areas
only, most notably in Small Claims Court, Lower
Criminal Courts, and before Administrative Tribunals.
• It’s important to note that the definition of “Paralegal”
varies; role of Paralegals in Ontario is different from
other provinces.
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 CANADIAN BUSINESS LAW, 4TH EDITION 13

Providers of Legal Services:

Lawyers and Paralegals
Paralegals in Ontario
• The Ontario Small Claims Court, hears matters
involving claims of $35,000.00 or less.
• Many Businesses deal from time to time with issues in
Small Claims Court such as:
• Bill Collections
• Minor Contract Disputes with Suppliers
• Wrongful dismissal Claim made by fired employees

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 CANADIAN BUSINESS LAW, 4TH EDITION 14

Providers of Legal Services:

Lawyers and Paralegals
Paralegals in Ontario
• The following Administrative Tribunals relate to
various Businesses:
• License Appeal Tribunal • Landlord and Tenant Tribunal
• Ontario Labour Relations Board • Capital Markets Tribunal
• Environmental Review Tribunal • Workplace Safety and
• Ontario Human Rights Tribunal Insurance Board
• Ontario Land Tribunal • Financial Services Tribunal

• Hiring a Paralegal with experience and expertise to

advocate before one of these Tribunals may be a cost-
effective Business alternative to hiring a Lawyer.

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 CANADIAN BUSINESS LAW, 4TH EDITION 15

How Are Business Disputes Resolved?

• As a Business-person in Canada, you are entitled to
have any Legal Dispute resolved in accordance with
the Law in a final and binding manner.
• People with little experience of the Law tend to think
that most disputes in Canada are resolved by the
Courts.
• Courts do settle many matters between opposing
parties through the process of Litigation.
• Litigation: is the process of resolving disputes through a
formal Court process.

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 CANADIAN BUSINESS LAW, 4TH EDITION 16

How Are Business Disputes Resolved?

• Litigation is not the only process for resolving Disputes,
and Courts are not the only forums to seek resolution.
• The parties themselves can gather their facts, present
their points of view, and negotiate a solution to their
dispute either on their own, or with the assistance of a
Neutral-Individual.
• Neutral individual: is a person who has no personal
interest in a dispute between the parties, such as a
Mediator or Arbitrator.
• Negotiation, Mediation, and Arbitration are the three most
widely used forms of what is known as Alternative Dispute
Resolution (ADR).
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 CANADIAN BUSINESS LAW, 4TH EDITION 17

How Are Business Disputes Resolved?

• Alternative Dispute Resolution (ADR): is the
settlement of conflict through a process other
than the Court System.
• Mediation, Arbitration, and Alternative Dispute
Resolution are methods of settling a Dispute that are
becoming increasingly popular among members of the
Business Community.
• These approaches are also being incorporated into the
Court System:
• In Toronto, Ottawa, and Windsor, Mediation is mandatory in
most Civil Litigation cases in the Supreme Court.
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 CANADIAN BUSINESS LAW, 4TH EDITION 18

Canada’s Court System

While the Court Systems differ

slightly from Province to
Province, they are similar in
most respects:
1. All Systems arrange Courts
in a Hierarchy.
2. A Courts position in the
Hierarchy depends on how
much authority it has to
decide Legal Issues.

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 CANADIAN BUSINESS LAW, 4TH EDITION 19

Canada’s Court System

The Ontario Court of Justice
• The Ontario Court of Justice is often referred to as an inferior or
Lower Court because of its power and limited status.
• This Court consists of several different Courts that are defined
by the type of Law they deal with:
• The Criminal Court – deals with young offenders and with offences under
the Criminal Code (Law) that are reserved for hearing by the Superior
Court.
• The Family Court – deals with adoptions, child custody, and family
support, but not divorce, which is reserved for the Superior Court.
• The Provincial Offences Court – staffed largely by Justices of the Peace
who exercise Judicial Functions but are not Lawyers. They deal with
Provincial Offences such as traffic offences, which are relatively minor, but
also with Provincial Offences such as breaches of Environmental or
Workplace Safety Legislation, which can carry very harsh penalties.
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 CANADIAN BUSINESS LAW, 4TH EDITION 20

Canada’s Court System

The Ontario Superior Court of Justice
• The Ontario Superior Court of Justice consists of three divisions
of interest to Business-persons:
1. Trial Division – this is the highest Trial Court in Ontario.
Judges of this Court are Federally Appointed to hear Criminal
and Civil Cases.
➢ Businesses can sue for any amount in this Court and ask the Court for any
Civil remedy recognized by Law.
2. Divisional Court – this Court hears applications for Judicial
Review of decisions made by government agencies, such as
the Ontario Human Rights Tribunal, the Ontario Labour
Relations Board, and the License Appeal Tribunal.
➢ The Divisional Court identifies and agency’s procedural error and sends the
matter back to the agency to make an appropriate decision.
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 CANADIAN BUSINESS LAW, 4TH EDITION 21

Canada’s Court System

The Ontario Superior Court of Justice
• The Ontario Superior Court of Justice consists of three
divisions of interest to Business-persons :
3. Small Claims Court – this Court has authority to hear Cases
where claim is for $35,000.00 or less.
➢ Small Claims Court is staffed primarily by Deputy Judges (Lawyers who
work part-time as Judges).
➢ The goal of this Court is to create a quick and inexpensive process to try
small claims so that the cost of trying the Case does not exceed the worth
of the claim itself.

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 CANADIAN BUSINESS LAW, 4TH EDITION 22

Canada’s Court System

The Ontario Court of Appeal
• Immediately above the Superior Court of Justice
is the Ontario Court of Appeal.
• This Court has the responsibility of reviewing decisions
of Lower Courts (e.g. Ontario Superior Court of Justice)
for errors, not to try or re-try Cases.
• As a Business-person, you might find yourself in the
Ontario Court of Appeal if you are not satisfied with the
result you obtain from the Ontario Superior Court of
Justice).

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 CANADIAN BUSINESS LAW, 4TH EDITION 23

Canada’s Court System

The Supreme Court of Canada
• The Supreme Court of Canada is at the highest level in
Canada.
• This Court is the most powerful Court in the entire Country
of Canada, and it is the Court of last resort (final chance).
• This Court hears appeals from all Provincial Courts of
Appeal in Canada and from the highest Federal Courts.
➢The Supreme Court of Canada does not hear every appeal that is
filed with it.
➢If you want this Court to hear your Case, you must persuade this
Court that your Case raises issues of general public significance or
reflects opposing decisions by Provincial Courts of Appeal.
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 CANADIAN BUSINESS LAW, 4TH EDITION 24

The Role of Canadian Courts

Courts have five essential roles in Canada’s
judicial‒political system:
1. Dispute Resolution

2. Interpretation of Legislation

3. Constitutional Interpretation

4. Protection of Rights and Freedoms

5. Review of Government Agencies

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 CANADIAN BUSINESS LAW, 4TH EDITION 25

The Role of Canadian Courts

Five essential roles in Canada’s judicial‒political
system:
1. Dispute Resolution
• The principal role of Courts is to settle disputes
between parties who have been unable to settle their
differences themselves.
• Courts provide a forum for resolving conflicts
peacefully.
• The parties have no need to resort to remedies that
involve force or fraud.

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 CANADIAN BUSINESS LAW, 4TH EDITION 26

The Role of Canadian Courts

Five essential roles in Canada’s judicial‒political
system:
2. Interpretation of Legislation
• In the course of deciding a dispute, a Court may be called
upon to determine the meaning of a Statute or a
Regulation made under a Statute.
➢ When a Statute is drafted, the drafters cannot consider
every possible situation to which the Statute might
apply.
➢ In some cases, it is unclear how a Statute is to be applied.
The parties will ask a Court to interpret the Statute to
decide what it means in relation to a particular set of facts.
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 CANADIAN BUSINESS LAW, 4TH EDITION 27

The Role of Canadian Courts

Five essential roles in Canada’s judicial‒political
system:
3. Constitutional Interpretation
• The Constitution, like many other Legislation, must be applied to
many different situations.
• It is the role of the Courts to determine how to interpret it and apply
it. This can be a particularly weighty responsibility.
• Unlike ordinary Legislation, which can always be changed and
clarified if the government is dissatisfied with how the Courts are
interpreting and applying it, the Constitution is not so easily
amended (changed).
• Constitutional decisions by Courts, usually involve resolutions of
disputes about the powers of the Federal and Provincial
Governments.
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 CANADIAN BUSINESS LAW, 4TH EDITION 28

The Role of Canadian Courts

Five essential roles in Canada’s judicial‒political
system:
4. Protection of Rights and Freedoms
• Constitutional decisions by Courts, usually involve resolutions of disputes
about the powers of the Federal and Provincial Governments and
interpretations of the Canadian Charter of Rights and Freedoms.
• As we discussed in Chapter 1, the creation of the Charter of Rights and
Freedoms greatly expanded the role of Canadian Courts by giving them
the power to strike down laws that violate rights and freedoms, such as
equality, freedom of expression, and freedom of religion.
❖Section 33 of the Charter of Rights and Freedoms, known as the
Notwithstanding Clause, permits the Federal or Provincial Governments to
enact (declare) legislation “Notwithstanding” a violation of certain Charter
Rights (Notwithstanding Clause can be renewed every 5 years)
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 29

The Role of Canadian Courts

Go to Case in Point on Page #41

Must a Business Close on Sunday?

Go to Case in Point on Page #41

Does the Right to Free Expression
Permit a Business to Advertise as it Sees Fit?

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 CANADIAN BUSINESS LAW, 4TH EDITION 30

The Role of Canadian Courts

Five essential roles in Canada’s judicial‒political
system:
5. Review of Government Agencies
• As we discussed in Chapter 1, Administrative Boards and Tribunals now
resolve many disputes that arise while doing Business.
• The Statutes that establish these Adjudicative Agencies of Government
often have provisions that exclude interference from Courts.
• However, the Courts have maintained their power to review the
decisions of these agencies to ensure that they act fairly and do not
make major Legal errors in deciding Cases.
• Courts generally defer to the expertise of specialized government
agencies and do not interfere unless the agency makes a clear and
obvious error.
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 CANADIAN BUSINESS LAW, 4TH EDITION 31

Litigation
• Litigation in a Superior Court is costly and time-
consuming, particularly if the Case is complex and the
parties are entrenched in their positions and not disposed to
settle at an early stage.
• A lawsuit can easily take two years or more from start to
finish.
• The costs can run from several thousand dollars to well
over $100,000, depending on the complexity of the Case.
❖In addition to paying your own Legal Costs, you may have to pay between
one-third and two-thirds of your opponent’s Legal Costs if you lose.
❖The idea behind this rule is to make you think twice before launching
or defending a weak or dubious Case, and to encourage you to
settle your differences rather than litigate.
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 CANADIAN BUSINESS LAW, 4TH EDITION 32

Litigation - The Pre-Litigation Process

The Pre-Litigation Process involves the following three steps:
1. Lawyer Consultations
❑ The client will meet with the Lawyer to give them the factual details of the case
and provide documents, such as Business Invoices, Memos, and Emails.
❑ On the basis of this information, the Lawyer will advise the client about the
pros and cons of proceeding with a Lawsuit.
❑ Based on the Lawyer’s advice, the Lawyer will ask the client for instructions to
proceed.
• When you consult a Lawyer about a problem, negotiations will often take
place to try to settle the dispute without going to Court.
• The parties, through their Lawyers and on their Lawyer’s advice, may
exchange written or oral communications where they state their views and
make offers to settle that might imply admissions of liability or
acknowledgement of damage.
• Without Prejudice – is a stipulation indicating that statements made
either orally or in writing may not be disclosed to the Court if attempts at
settlement are unsuccessful.
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 CANADIAN BUSINESS LAW, 4TH EDITION 33

Litigation - The Pre-Litigation Process

The Pre-Litigation Process involves the following three steps:
2. Limitation Period
Limitation Period – is a time period in which a Lawsuit must be
commenced, after which the right to sue is lost.
❑ Procedural Rules establish that Lawsuits must be brought within a
certain period of time.
❑ To establish whether a Limitation Period has expired, the client and the
client’s Lawyer must determine when the client’s right to sue the
Defendant first arose.
❑ If the client is suing in Ontario, the Limitations Act 2002, gives the
client two (2) years from the time it first had a reason for suing the
Defendant to start its Lawsuit.
❑ If a Lawsuit is not commenced before the expiration of the Limitation
Period, the right to sue can be lost.
❑ Limitation Periods also have some relevance for Arbitration.
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 CANADIAN BUSINESS LAW, 4TH EDITION 34

Litigation - The Pre-Litigation Process

The Pre-Litigation Process involves the following three steps:
3. Selecting Court Jurisdiction for Lawsuits
❑ The Superior Trial Court (Trial Division) has
monetary jurisdiction for any amount.
❑ This Court has the power to award compensation in
the form of money and also to make a variety of
other orders as a decision.
➢ If an individual is suing for less than $35,000.00 but is
also seeking remedies other than monetary
compensation (e.g. because a Business wishes to
obtain an injunction to stop the defendant from doing
something).
 CANADIAN BUSINESS LAW, 4TH EDITION 35

Litigation - The Pre-Litigation Process

The Pre-Litigation Process involves the following three steps:
3. Selecting Court Jurisdiction for Lawsuits
❑ Small Claims Court – this Court has authority to
hear less complicated Cases where claim is for
$35,000.00 or less and but is not seeking remedies
other than monetary compensation.
❑ Superior Court – this Court has authority to hear
complicated Cases where claim is for an amount
between $35,000.00 and $200,000.00.
➢ There is a simplified procedure that limits some of the time-consuming
and expensive Pre-Trial steps; OR,
➢ If and individual is suing for over $200,000.00 then it is necessary to
sue in the Superior Court using the ordinary Civil Process.
 CANADIAN BUSINESS LAW, 4TH EDITION 36

Litigation
Litigation Process in Superior Court (Trial Division)
• If the client is suing in the Superior Court (Trial
Division), the client must follow the multi-step process
set out in the must follow the Ontario Rules of Civil
Procedure:
1. Exchange of pleadings:
➢ Statement of claim
➢ Statement of defence

2. Discovery
3. Preparation for trial
4. Trial
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 CANADIAN BUSINESS LAW, 4TH EDITION 37

Litigation
Litigation Process in Superior Court (Trial Division)
1. Exchange of pleadings (Plaintiff):
• Once the Plaintiff’s Lawyer has reviewed the facts and
researched the Law, the Lawyer prepares a Statement of
Claim which is brought to a Court Office and filed
electronically.
• The Lawyer pays a fee, and the Court officially starts the
process.
➢ Statement of Claim – is a Court document notifying a
defendant of a lawsuit against them and the reasons for the
proceedings.

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 CANADIAN BUSINESS LAW, 4TH EDITION 38

Litigation
Litigation Process in Superior Court (Trial Division)
1. Exchange of pleadings (Defendant):
• The Statement of Claim tells the Defendant that they are
being sued and gives the reasons for the Lawsuit.
• The Defendant then has a short period of time to file a
Statement of Defence.
• If the Defendant fails to act in time, the Plaintiff is entitled to
judgement by default., which brings an early end to the
Lawsuit.
• However, Defendants usually file Statements of Defence.
• Statement of Defence – is a Court document notifying the
plaintiff in a lawsuit that the defendant is denying the claim and
identifying the defendant’s arguments.
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 CANADIAN BUSINESS LAW, 4TH EDITION 39

Litigation
Litigation Process in Superior Court (Trial Division)
2. Discovery:
• Once the Plaintiff and Defendant have exchanged pleadings, they
each have an outline of the facts and legal rules or principles on
which the other relies.
• Each side is now entitled to find out more details against them
through a process called Discovery.
• Discovery – is a procedure after exchange of pleadings where both
parties disclose all information, including producing documents
relevant to the Case.
• Both parties must appear at an examination for Discovery to answer
questions about the Case posed by the opposing Lawyer.
• Discovery can be very time-consuming and complicated.
• The parties run the Discovery Process themselves, following the
Ontario Rules of Civil Procedure.
 CANADIAN BUSINESS LAW, 4TH EDITION 40

Litigation
Litigation Process in Superior Court (Trial Division)
3. Preparation for Trial:
• At the conclusion of the Discovery Process, the
parties will usually attend a Pre-Trial Conference
where a Judge reviews the Case, explores options for
settlement with the parties, and tries to narrow the
issues and facts in dispute to shorten the Trial.
• Many parties settle their dispute at this stage.
• If they do not settle, they summon witnesses, prepare
their evidence, and get ready for Trial.
 CANADIAN BUSINESS LAW, 4TH EDITION 41

Litigation
Litigation Process in Superior Court (Trial Division)
4. Trial:
• Most Trials take a day or two, but a complex one with
many witnesses may take months.
• Because of the challenges in scheduling Lawyers,
parties, witnesses, and Judges, a Trial lasting several
days may be spread over many months.
➢Burden of Proof – is a requirement that a certain
party prove a particular fact at Trial.
• In a Civil (non-criminal) Case, the Plaintiff bears the
Burden of Proof. (The Plaintiff must prove their
Case).
 CANADIAN BUSINESS LAW, 4TH EDITION 42

Litigation
Litigation Process in Superior Court (Trial Division)
4. Trial:
➢Balance of Probabilities – is a “Standard of Proof” in Civil (as
opposed to criminal) Law indicating that one version of events
is more probable than another.
• The Plaintiff’s Lawyer must convince the Judge on a Balance of
Probabilities that the Plaintiff’s version of facts and Law has more
merit than the Defendant’s version.
• After hearing all the evidence and arguments of the parties’
Lawyers, the Judge – (if sitting without a Jury), gives Judgement.
Jury Trials are rare in Canada (in a Civil (non-criminal) Case).
• If there is a Jury, however, it is the Jury’s job to sit through the
evidence to draw factual conclusions. The Judge instructs the Jury
on how to apply the Law to its factual conclusions. After deliberating
in secret, the Jury renders its verdict.
 CANADIAN BUSINESS LAW, 4TH EDITION 43

Litigation
Litigation Process in the Small Claims Court
• Small Claims Court is a forum where small claims—
under $35,000 in Ontario—can be heard quickly,
efficiently, and inexpensively.
❖Plaintiffs and Defendants can conduct their cases
themselves.
• Paralegal Agents are also permitted to represent
parties in Court, providing a presumably less expensive
alternative to Lawyers.

Go to “Case in Point” on Page #46

 CANADIAN BUSINESS LAW, 4TH EDITION 44

Litigation – Civil Court Remedies: Damages

• Once a Plaintiff has proven that a Defendant is liable
(responsible) to rectify the harm done to the Plaintiff, the goal of
the Law is to provide a suitable remedy (solution).
• By fashioning a remedy, a Court seeks, as far as is practicable,
to put the Plaintiff back into the position in which they were
before the Defendant caused the harm the Law recognizes.
• Remedies can take a variety of forms:
1. Damages
2. Pecuniary and Non-Pecuniary
3. Punitive

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 CANADIAN BUSINESS LAW, 4TH EDITION 45

Litigation – Civil Court Remedies: Damages

• Damages: are losses suffered as a result of the
commission of a Tort or the Breach of a Contract, or
monetary compensation awarded for these losses.
• Damage Awards have two main purposes:
1. The primary purpose is to compensate the Victim/Plaintiff for past and
future losses caused by the Defendant.
2. Damages may also be used to punish the Defendant for inappropriate
behaviour. This is done only in cases where the Defendant’s conduct
has been exceptionally outrageous.
• The Compensatory elements of a Damage Award are
divided into three categories of damages:
1. Special Damages
2. General Damages
3. Aggravated Damages
 CANADIAN BUSINESS LAW, 4TH EDITION 46

Litigation – Civil Court Remedies: Damages

1. Special Damages – are pecuniary damages
(monetary losses), that have already been incurred
and that can be precisely measured (out-of-pocket
losses).
2. General Damages – are pecuniary damages
(monetary losses), for pain, suffering, and future
economic loss, including future loss of life expectancy
or quality of life.
3. Aggravated Damages – are a subcategory of non-
pecuniary damages (monetary losses), awarded for
intangible harm, such as harm to reputation or
humiliation.
 CANADIAN BUSINESS LAW, 4TH EDITION 47

Litigation – Civil Court Remedies: Damages

• Pecuniary Damages: are Damages that are actual
monetary losses.
➢ For example – determining how a Court determines awarding Damages for
a loss of a limb, lingering debilitating pain, or damage to a Business’s
reputation.
➢ Since it is impossible to return a severed limb or to erase pain and
suffering, a Court must determine a fair dollar figure to award instead.

• Non-Pecuniary Damages: are Damages that cannot

be readily quantified in financial terms.
➢ Awards for Non-Pecuniary losses are intended to promote consistency in
the administration of justice.
➢ Courts will refer to the awards that other Courts have made in cases
involving similar suffering.
 CANADIAN BUSINESS LAW, 4TH EDITION 48

Litigation – Civil Court Remedies: Damages

• Punitive Damages: is the sum added to a Damage
Award that is intended to punish a Defendant and
discourage similar behaviour by others where the
behaviour is particularly outrageous.
Go to “Case in Point” on Page #49

Mitigation of Damages:
• Plaintiffs are expected to mitigate—(or minimize)—
their Damages.
• For example:
➢ Where a Plaintiff fails to make reasonable efforts to minimize their losses,
and the result is a more serious loss, such as long-term spinal-cord
damage caused by a failure to properly treat a back injury, their
compensation may be limited.
 CANADIAN BUSINESS LAW, 4TH EDITION 49

Litigation – Other Remedies

• Injunction – is a Court Order requiring a party to
discontinue an action or prohibiting a party from taking
a proposed action.
➢Injunctions are a remedy designed to prevent future harm or
the escalation/worsening of present harm, by prohibiting a
party from engaging in certain conduct, or by ordering the
party to cease conduct already begun.
• Specific Performance – is a requirement by a Court
that a party complete its obligations under a Contract.
➢ Specific Performance may be made where the Plaintiff alleges that the
Defendant breached a Contract and caused damage, and where the
breach is a consequence not readily compensated for by the payment of
money.
➢ Parties in a Civil Suit ask for Legal Costs as part of their pleadings.
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 CANADIAN BUSINESS LAW, 4TH EDITION 50

Litigation – Other Remedies

Post-trial Enforcement
• Generally, a winning Plaintiff is entitled to pre-judgment
interest on the total amount of monetary damages awarded,
from the time the right to sue arose until judgment, and then
post-judgment interest from judgment until payment.
• If the Defendant refuses to pay the judgment award
voluntarily, the Plaintiff must bring further proceedings to
enforce its judgment using one of these options:
1. Judgment debtor examination
2. Writ of seizure and sale
3. Garnishment
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 CANADIAN BUSINESS LAW, 4TH EDITION 51

Litigation – Other Remedies

Post-trial Enforcement
1. Judgment debtor examination
➢ The Plaintiff can require a Defendant (if an individual) or a representative of the
Defendant (if it is a company), to appear before a Court or at a Court Report’s Office
to answer questions about its assets, debts, and ability to pay.
2. Writ of seizure and sale
➢ The Plaintiff can also obtain a document from the Court (also called a write of
execution) and file it with the sheriff.
➢ This Writ enables the Sheriff to seize personal property or real estate belonging to
the Defendant and sell it at Public Auction.
➢ The proceeds of the sale (minus the costs of conducting the sale) are then available
to the Plaintiff to pay the judgment.
3. Garnishment
➢ If a Third Party (such as a Customer of the Defendant), owes money to the
Defendant, the Plaintiff can obtain a Garnishment Order, which requires the Third
Party to pay the money it owes the Defendant into Court, so it is available to the
Plaintiff.
 CANADIAN BUSINESS LAW, 4TH EDITION 52

Alternatives to Litigation
• While Courts and Tribunals provide structures to resolve
Legal conflicts and settle issues, there are alternatives to
going to Court.
• Business-people have sought out Dispute Resolution
techniques that are cheaper, quicker, simpler, less formal,
and less adversarial than those provided in Canada’s Court
System.
• Contemporary methods of Dispute Resolution fall within
three main approaches:
1. Negotiation
2. Mediation
3. Arbitration
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 CANADIAN BUSINESS LAW, 4TH EDITION 53

Alternatives to Litigation
• For the following Dispute Resolution options, we
discuss what is meant by Interests and Rights.
• Interests – are short- and long-term Business Goals as
well as Business concerns, priorities, and aspirations.
➢ Interests tend to be subjective – that is particular to individual Businesses
and individual people.
➢ Interests are flexible = they change over time and evolve as a Business
evolves.
• Rights – are entitlements. Although subject to change –
they are much less flexible than Interests.
➢ Rights are objective, rather than subjective - that is, they are identified
through rational analysis or by reference to some authority.
➢ Rights include privileges enjoyed by Businesses and individuals as a result
of Laws, agreements, policies, and practices.
 CANADIAN BUSINESS LAW, 4TH EDITION 54

Alternatives to Litigation
• We will examine Negotiation, Mediation, and Arbitration as
vehicles for settling both Interest– and Rights–based
conflicts.
1. Negotiation – is a process in which parties interact in an
attempt to reach an agreement about their respective
rights or interests.
➢ Negotiation can be extremely informal (a conversation while having a cup
of coffee).
➢ Negotiation can be formal, involving professional negotiators – often
Lawyers – with a written agenda, formal exchange of written proposals, and
a formal discussion of the respective positions of the parties.
➢ The key feature that distinguishes Negotiation from other forms of Dispute
Resolution is that the parties control the process themselves. There is no
third-party intervenor with the authority to influence or settle the dispute, to
referee the discussion, or to set rules for holding it.
 CANADIAN BUSINESS LAW, 4TH EDITION 55

When and When not to choose Negotiation:

Negotiation is a useful tool in the following circumstances:
1. You are establishing rules for resolving potential conflicts, but no actual
conflict exists.
➢ Assume that you are Negotiating a Contract with a Supplier for your Computer-Servicing
Business. Both you and the parts Supplier see the potential for an enjoyable and profitable
long-term Business relationship.
➢ It is wise to consider matters that could cause conflict between you while you still have a good
relationship. Negotiating during a good relationship can be easier for both parties to avoid
future conflict.
2. You and the other party are interested in advancing each other’s
Business interests and are willing to seek win–win solutions.
➢ Your Computer-Servicing Business might experience a temporary cash-flow problem because
of an overdue Customer account. As a result, your Business might be unable to pay its bills on
time, including payment owed to the parts Supplier. It is not likely in the parts Supplier’s
interest to exercise its Legal Rights by repossessing parts or petitioning your Business into
Bankruptcy.
➢ The parts Supplier’s interests are more likely to be served when your Business is operating
successfully. By Negotiating with you to allow additional time for you to pay your bill, the
parts Supplier can support this shared goal.
 CANADIAN BUSINESS LAW, 4TH EDITION 56

When and When not to choose Negotiation:

Negotiation should be avoided in the following circumstances:
1. The “power balance” is tipped unevenly, and YOU are the weaker party.
There can be any number of reasons one party has less bargaining power
than the other.
➢ In a Vendor–Purchaser relationship, the Vendor may have only a few purchasers for its goods,
while the vendor may have many Vendors to choose from. This makes the Vendor dependant
on the Purchaser and places the Purchaser in a superior bargaining position.
➢ Whatever the reason for power imbalance, the weaker party is likely to suffer in the
Negotiation Process, particularly in a positional Negotiation where the stronger party is
prepared to take advantage of their power position.
2. Your concern about maintaining a Business relationship with the other party
greatly exceeds the other party’s concern about maintaining a Business
relationship with you.
➢ Where one party is concerned with maintaining a relationship and the other is less concerned,
Negotiation is often not very useful.
➢ In these cases, the party that values the Business relationship more is likely to make too many
concessions at the Negotiating table. The result is an agreement that favours one party at
the expense of the other, not something that will be good for the relationship in the long run.
 CANADIAN BUSINESS LAW, 4TH EDITION 57

When and When not to choose Negotiation:

Go to “Minimizing Your Risk” on Page #54

• A Negotiated settlement is a Contract and may be

enforced in Court like any other Contract.
• Failure to comply with the terms of the Negotiated
settlement is a Breach of Contract.
 CANADIAN BUSINESS LAW, 4TH EDITION 58

Alternatives to Litigation
• We will examine Negotiation, Mediation, and Arbitration as
vehicles for settling both Interest– and Rights–based
conflicts.
2. Mediation – is a Dispute Resolution process in which
parties to the dispute invite a neutral individual – a
Mediator – to supervise or oversee their Negotiations.
➢ Mediators often set rules about how the parties are to interact with each
other, schedule meetings, and set the agenda for meetings. They may try to
persuade the parties to move from a win–lose process toward a win–win
process.
➢ The types and styles of Mediation vary widely, and you should do some
research before choosing a Mediator to meet your needs.
➢ While Mediation is usually used where the parties agree to it, the
Mediation Process has been introduced into the Courts in several
Provinces as a mandatory procedure for certain Civil Cases.
 CANADIAN BUSINESS LAW, 4TH EDITION 59

Types of Mediation:
• Facilitative Mediation – is appropriate when the parties to
the dispute already have a strong and trusting relationship.
➢ A Facilitative Mediator relies on the parties' mutual desire to maintain or improve
their relationship while assisting them in solving whatever problem has caused the
Dispute.
• Rights-Based Mediation – assesses which of the parties
has the stronger position by determining which party’s
rights are strongly supported by Law.
➢ Rights-Based Mediation does not require a cooperative attitude between the
parties. It is best suited to situations where the parties do not have a close
relationship and are not interested in fostering a long-term relationship.
• Transformative Mediation – encourages the parties to
understand the positive aspects of their relationship and to
appreciate the wisdom of each other’s point of view.
➢ Transformative Mediation might be used to resolve a Dispute between an
expanding Business and the community.
 CANADIAN BUSINESS LAW, 4TH EDITION 60

When and When not to choose Mediation:

Mediation is a useful tool in the following circumstances:
1. You and the other party are prepared to make serious efforts to resolve
your Dispute.
➢ You and your Supplier agree on most of the terms of a Contract for the supply of material you
need to make an innovative communication device.
➢ The profit potential for both of you is great but you are unable to agree on how to determine
the price of the material, and you cannot achieve an agreement.
2. You and the other party approach your Dispute with a view to exploring
your mutual interests and maintaining your Business Relationship.
➢ You have a serious Dispute about the level of service you require from a service provider for
your manufacturing equipment. The service provider thinks the level of service is adequate for
the price you pay, but you want a quicker response time.
3. You and the other party want to settle a Rights issue, and your mutual
desire to set your own rules exceeds your desire to have a mutual
individual settle them for you.
➢ You and your Customer are entering into an agreement to cooperate on the joint production of
a new product. You are having some problems working out contract details, but both parties
realize that the cooperative venture will work best if you both participate in making the rules.
 CANADIAN BUSINESS LAW, 4TH EDITION 61

When and When not to choose Mediation:

Mediation will not work in the following circumstances:
1. You and the other party is focused on power or control.
➢ If power or control of a Business Relationship or a Dispute is the chief concern of one or both
parties, Mediation will probably fail. There will be nothing for the Mediator to discuss with either
of you.
2. One or both parties require a public decision that resolves the Dispute and
sets a precedent by which future Disputes are resolved.
➢ Because Mediation is a private process, it will not create a precedent for similar future
Disputes. Arbitration or litigation may be required.
3. The Legal Rights clearly favour one party, and that party sees no reason to
compromise.
➢ Consider, for example, a term of a contract that unambiguously gives one party the Right to
terminate the agreement for any reason on giving the other party 30 days’ notice. Mediation
will be a fruitless exercise if that party gives the required notice and has no interest in
rethinking its position.

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 CANADIAN BUSINESS LAW, 4TH EDITION 62

Alternatives to Litigation
• We will examine Negotiation, Mediation, and Arbitration as
vehicles for settling both Interest– and Rights–based
conflicts.
3. Commercial (Business) Arbitration – is a more formal
process than Negotiation or Mediation. Arbitration also
requires a neutral individual – to supervise or oversee
the process.
➢ Unlike a Mediator, however, an Arbitrator determines the result of the
process by making a binding decision at the end of the Arbitration. In this
way, an Arbitrator’s role resembles a Judge’s role in a trial.
➢ The Arbitration Process, in many respects, also mirrors the Court process.
There is a formal procedure for presenting a Case and rules of evidence to
govern the material that is acceptable for presentation to the Arbitrator.
 CANADIAN BUSINESS LAW, 4TH EDITION 63

When and When not to choose Mediation:

Arbitration is a useful tool in the following circumstances:
1. You and the other party agree on an Arbitration System before
a conflict develops.
➢ You and your Supplier agree on most of the terms of a Contract for the supply of
material you need to make an innovative communication device.
➢ The profit potential for both of you is great but you are unable to agree on how to
determine the price of the material, and you cannot achieve an agreement.
2. You and the other party are concerned about each other’s
Business interests and about maintaining a good Business
Relationship.
➢ Arbitration may be less destructive to an ongoing relationship than a Lawsuit would
be.
3. The balance of power between you and the other party is
tipped against you.
➢ Arbitration can prevent a more powerful party from using its power to get its way,
despite the merits of the case.
 CANADIAN BUSINESS LAW, 4TH EDITION 64

When and When not to choose Arbitration:

Arbitration may be unhelpful in the following circumstances:
1. The relationship is damaged beyond repair.
➢ The more formal process of litigation might be more useful because there is less direct contact
between the parties.
2. The credibility of the parties or witnesses is an issue.
➢ The Court system may be a better place to decide the Dispute since the Courts have formal
rules for controlling witnesses and presenting evidence.
3. A party may be seeking a remedy or remedies that cannot be granted by
Arbitrators.
➢ A remedy may be unavailable because of limitations in an Arbitration clause or because only
Courts can grant the remedy being sought.

Go to “Minimizing Your Risk” on Page #61

 CANADIAN BUSINESS LAW, 4TH EDITION 65

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 CANADIAN BUSINESS LAW, 4TH EDITION 66

What You Just Learned

After reading this chapter, you should be able to:
1. Identify circumstances when it may be advisable to obtain
legal advice or assistance.
2. Explain what distinguishes a paralegal and a lawyer in
Ontario with respect to what services each can offer.
3. Describe Canada’s hierarchy of courts.
4. List and describe five roles of Canadian courts.
5. Explain the litigation process in the Small Claims Court
and the Superior Court.

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 CANADIAN BUSINESS LAW, 4TH EDITION 67

What You Just Learned

6. Describe negotiation and suggest circumstances under
which various types of negotiation can assist in resolving
business disputes.
7. Describe various types of mediation and suggest how they
can assist business-people in resolving disputes.
8. Describe arbitration and its role in resolving commercial
disputes.
9. Distinguish between the roles of mediators and arbitrators.
10. Describe how administrative boards and tribunals operate
and how they are different from courts.

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