Legal Fundamentals

for Canadian Business

Fourth Edition

Chapter 1
The
Canadian
Legal System
Copyright © 2016 Pearson Canada Inc. 1-1
 Learning Objectives
• Define what law is
• Identify the sources of Canadian laws and
distinguish their components
• Describe the structure of the courts in Canada and
illustrate the litigation process
• Outline the processes of trial and judgement

(Continued)

Copyright © 2016 Pearson Canada Inc. 1-2

 Learning Objectives
(Continued)

• Explain the function and use of alternative

methods for resolving disputes
• Define administrative law and explain when and
how it is used
• Describe the aspects of criminal law that should be
of concern to a business person

Copyright © 2016 Pearson Canada Inc. 1-3

 Definition of Law
• Law is the body of rules that can be enforced by
the courts or by other government agencies
• Law does not define ethical behaviour

Copyright © 2016 Pearson Canada Inc. 1-4

 Categories of Law
• Substantive law
– Rules governing behaviour
• Procedural law
– How the legal process works

(Continued)

Copyright © 2016 Pearson Canada Inc. 1-5

 Categories of Law
(Continued)

• Public law
– Regulates our relationship with government
• Private or Civil law
– Regulates personal, social, and business relationships

Copyright © 2016 Pearson Canada Inc. 1-6

 Civil Code Legal System
• Codified body of rules
• Originated with the Romans; later modified by
Napoleon
• Used in most countries
• Quebec’s legal system is based on the French
Civil Code

Copyright © 2016 Pearson Canada Inc. 1-7

 Common Law Legal System
• Common law used in Great Britain and the
Commonwealth
• System adopted by Canada’s English-speaking
provinces and the territories
• Judge-made law
– Developed in the courts
– Based on precedent or stare decisis

Copyright © 2016 Pearson Canada Inc. 1-8

 Common Law - Sources of Law
• Common law
– Following precedent or stare decisis
• Bound to follow precedent case if:
– Decision made by higher court
– In the same jurisdiction
– Based on similar facts
– May distinguish cases on the facts

(Continued)

Copyright © 2016 Pearson Canada Inc. 1-9

 Common Law - Sources of Law
(Continued)

• Law of equity
– Decisions made by Courts of Chancery
– Based originally on fairness
– Developed to counter rigid common law
– Courts later merged, but bodies of law remained
separate

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 10

 Common Law - Sources of Law
(Continued)

• Statutes
– Laws created by legislative bodies
– “Parliamentary supremacy” (i.e., legislation overrides
common law and law of equity)
– Often summarize or modify common law
– Includes government regulations

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 11

 Common Law - Sources of Law
(Continued)

[replace with Fig 1.1

from 4e, p. 8]

Copyright © 2016 Pearson Canada Inc. 1 - 12

 The Law in Canada
• Canada created by British North America Act,
1867
• Canada inherited certain conventions or traditions
from Britain
– Rule of law
– Principles established in the Magna Carta
– Parliamentary supremacy

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 13

 The Law in Canada
(Continued)

• BNA Act now called Constitution Act (1867)

– Sections 91 and 92 divide powers between federal and
provincial governments
– Principle of paramountcy applies in cases of conflict
between federal and provincial laws

Copyright © 2016 Pearson Canada Inc. 1 - 14

 Constitution Act (1982)
• Ended ties with British Government
• Listed government enactments having
constitutional status
• Established amending formula for constitutional
change
• Includes Charter of Rights and Freedoms

Copyright © 2016 Pearson Canada Inc. 1 - 15

 Charter of Rights and Freedoms
• Protects individuals from infringement on their
rights by governments or their agents
• Includes limitations on Charter rights:
– Section 1 – reasonable exceptions to Charter rights and
freedoms allowed
– Section 33 – legislatures can pass acts that infringe on
rights “notwithstanding” the Charter
– Section 32 – Charter applies only to government

Copyright © 2016 Pearson Canada Inc. 1 - 16

 The Courts: Court Structure

Copyright © 2016 Pearson Canada Inc. 1 - 17

 Process of Civil Litigation
• Civil trial - action for compensation
• Pleadings - See chart
• Discovery Plaintiff Defendant
• Examination of documents
Notice of Response to
• Examination of witnesses Civil Claim Civil Claim
• Payment into court
Counterclaim
• Innovations
• Class action lawsuits

Copyright © 2016 Pearson Canada Inc. 1 - 18

 Trial
• Plaintiff presents case
– Burden of proof rests with Plaintiff
– Balance of probabilities
– Direct examination of witnesses
– Cross-examination by defense lawyer

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 19

 Trial(2)
Trial
(Continued)

• Defendant presents case

– Brings forward witnesses and evidence
– Plaintiff’s lawyer gets to cross-examine
– Tries to put enough doubt into the Plaintiff’s case so
Plaintiff cannot prove his/her case

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 20

 Trial(3)
Trial
(Continued)

• Judge determines the law and instructs the jury

• Jury decides on the facts
• If judge alone, he/she determines both facts and
law

Copyright © 2016 Pearson Canada Inc. 1 - 21

 Remedies
• Damages (monetary compensation)
– General – non-quantifiable losses
– Special – quantifiable losses
– Punitive – to punish the wrongdoer

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 22

 Remedies(2)
Remedies
(Continued)

• Equitable remedies where damages are not

appropriate
– Injunction – stop order
– Specific performance – fulfill the terms of an agreement
– Accounting – pay over profits

Copyright © 2016 Pearson Canada Inc. 1 - 23

 Enforcement
• Plaintiff must enforce judgment
• Post-trial hearing to identify assets
• Seizure of property
• Garnishment of wages
• Contempt of court (related to order of specific
conduct)

Copyright © 2016 Pearson Canada Inc. 1 - 24

 Alternative Dispute Resolution
• Process for resolving disputes outside of the courts
• Main methods
– Negotiation
– Mediation
– Arbitration

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 25

 Alternative Dispute Resolution
(Continued)

• Negotiation
– Parties discuss the problem with each other in order
to find a solution
– Process requires cooperation and compromise
– May be conducted through representatives
– Process may enhance relationship
– Agreement may not be legally binding

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 26

 Alternative Dispute Resolution
(Continued)

• Mediation
– Neutral outsider helps parties settle the dispute
– Communication facilitated by mediator
• Finds common ground
• Encourages concessions
– Mediator does not make decision
– Sometimes required before court will hear case
– Court may affirm mediated resolution

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 27

 Alternative Dispute Resolution
(Continued)

• Arbitration
– Parties agree on an independent third party (or panel
of three) to make a decision that will be binding
– Often required in contract; mandated in collective
bargaining
– Arbitrators are usually specialists in the matter
under dispute
– Decision cannot be appealed although procedure
may be reviewed by the court
(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 28

 Alternative Dispute Resolution
(Continued)

• Advantages
– Parties maintain control of the solution
– Disputants determine and schedule process
– Lower costs associated with process
– Matters remain private
– Preserves good will
– Can achieve a win-win resolution

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 29

 Alternative Dispute Resolution
(Continued)

• Disadvantages
– Courts have more power to extract information
– Decisions do not follow precedent
– Agreements may not be enforceable
– Inappropriate when power imbalance exists
– No public record of dispute or decision

Copyright © 2016 Pearson Canada Inc. 1 - 30

 Administrative Law
• Regulatory bodies make decisions with respect to
statutes or regulations
• Administrative decisions must be within
jurisdiction and comply with the Constitution Act
(1867), the Charter and principles of procedural
fairness
• Court may review decision process and decision to
determine if appropriate
(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 31

 Administrative Law
(Continued)

• Privitive clauses may protect tribunal decisions

from judicial review
• Advantages of tribunals (compared to courts):
– More efficient
– Usually involve experts in field under dispute
– Faster, more cost-effective decision-making

Copyright © 2016 Pearson Canada Inc. 1 - 32

 Criminal Law
• Civil law – individual sues another for
compensation (or other remedy)
• Criminal law – state prosecutes accused to punish
• Only the federal government has the power to
make criminal law
• Provincial governments have the power to create
and enforce statutes (similar to criminal law in
terms of penalties)

Copyright © 2016 Pearson Canada Inc. 1 - 33

 Criminal Process
• Burden of proof on prosecutor
– Must prove beyond a reasonable doubt
– Must show wrongful conduct took place
– Must show intention to commit the act
• Strict liability offences
– May only need to show offence took place
– Only defence is due diligence

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 34

 Criminal Process
(Continued)

• Power to arrest held by police and private citizens

• Judicial officials issue search warrants, arrest
warrants, and summons to appear
• Categories of crimes
– Summary conviction - minor offence
– Indictable offence - more serious offence

(Continued)

Copyright © 2016 Pearson Canada Inc. 1 - 35

 Criminal Process
(Continued)

• Judicial process
– Summary – exchange of information and negotiation
– Indictable offence – more involved and lengthy
• Plea bargaining – pleading to lesser offence
• When a matter proceeds to trial:
– Prosecutor presents witnesses and evidence
– Defense then presents witnesses and evidence
– Decision made by judge or jury
– Sentence – fine/imprisonment

Copyright © 2016 Pearson Canada Inc. 1 - 36