Canada: The Rise of Judgments with Suspended Effect

Faculty of Law, McGill University, 3644 Peel Street, Montréal, QC, H3A 1W9, Canada



In principle, all court orders in Canada have retroactive effect. However, the Supreme Court of Canada, proceeding pragmatically, has decided that it has the power to depart from this when it deems it appropriate to do so. Such occasions have arisen in relation to declarations of constitutional invalidity. Rarely, the Court has made orders that operate only prospectively. More commonly, indeed one might say quite routinely, it makes orders whose effect is suspended for a defined period. When the period expires, the order is retroactive, but the suspension allows the legislature to intervene and react to the court order with new legislation, before the order takes effect. The basis for such orders is contested by some.

Sir William C. Macdonald Professor of Law, Faculty of Law, McGill University; Professor of Private Law, Dickson Poon School of Law, King’s College London. I thank my colleague Robert Leckey for his helpful suggestions, and Natasha Perri for research assistance.

Precedent as a Source of Law in Canada

Canada is a federation, with legislative competence shared between the federal Parliament and the ten provincial legislatures.1 As a general matter, private law belongs to the provincial level.2 One province, Quebec, has a civilian system of private law, derived from the customary French law that was applied during the time that it was a colony of France.

In the common law provinces, the doctrine of stare decisis is operative.3 Canadian courts are bound by decisions of courts that are higher in the hierarchy of courts. This means that first instance courts are bound by decisions of the Court of Appeal in the same province, while the provincial Courts of Appeal are bound by decisions of the Supreme Court of Canada. Although private law can vary across the common law provinces as a result of differences in statute law, the Supreme Court of Canada has the role of unifying the common law of Canada across those provinces.

A recent decision of the Supreme Court of Canada could be read as pointing towards a more relaxed view of stare decisis. In Canada (Attorney General) v Bedford, 4 one question was whether the trial judge was bound by stare decisis to follow an earlier holding of the Supreme Court of Canada. The Court said:5

… a lower court is not entitled to ignore binding precedent, and the threshold for revisiting a matter is not an easy one to reach. In my view, as discussed above, this threshold is met when a new legal issue is raised, or if there is a significant change in the circumstances or evidence. This balances the need for finality and stability with the recognition that when an appropriate case arises for revisiting precedent, a lower court must be able to perform its full role.

The implication of this passage is not entirely clear. The reference to a “new legal issue” seems unnecessary, because stare decisis only operates in relation to the legal issues that were decided in the earlier decision; it never applies when the later decision is concerned with a different legal issue. In contrast, the reference to “a significant change in the circumstances or evidence” is potentially far-reaching, although it is not clear that the Court appreciated this. Such a test has sometimes been proposed for when a court can depart from its own previous decision, but not as one that permits a lower court to depart from a decision of the Supreme Court of Canada.

In Canada, courts do not generally consider themselves strictly bound by stare decisis to follow decisions made at the same level of court. However, such decisions are treated with a great deal of respect. Hence, a trial judge in (for example) the Manitoba Court of Queen’s Bench could choose not to follow a previous decision of the same court.6 Although the Ontario Court of Appeal used to consider itself bound by its own previous decisions, it no longer does so, and neither do other Courts of Appeal.7 However, where a previous decision is called directly into question, a Court of Appeal (which typically sits with a panel of three judges, chosen from among a much larger group) may choose to address the question with a larger panel of five judges. In this way, it is understood that the later court can not only differ from the previous decision, but can overrule it as far as that province’s law is concerned.

It is clear that the Supreme Court of Canada is not bound by its own decisions, although naturally they are treated with great respect. A later decision of that Court can overrule a previous one, and it is not necessary that the later panel be larger than the earlier one (since the court usually aims to sit as a nine-judge panel that includes all of the judges). The Court has suggested that it will depart from its own previous holding only in fairly rare circumstances. In Friedmann Equity Developments Inc. v Final Note Ltd., 8 the Court stated:

A change in the common law must be necessary to keep the common law in step with the evolution of society…, to clarify a legal principle…, or to resolve an inconsistency… In addition, the change should be incremental, and its consequences must be capable of assessment.

In the recent case of Robinson,9 Lamer C.J., for a majority of the Court, relied on five factors to justify the reversal of an earlier decision of the Court in MacAskill v. The King, [1931] S.C.R. 330. These factors were the existence of previous dissenting opinions in this Court, a trend in the provincial appellate courts to depart from the principles adopted in the original decision, criticism of the case or the adoption of a contrary rule in other jurisdictions, doctrinal criticism of the case and its foundations, and inconsistency of the case with other decisions. While they are not prerequisites for a change in the common law, these factors help to identify compelling reasons for reform. On the other hand, courts will not intervene where the proposed change will have complex and far-reaching effects, setting the law on an unknown course whose ramifications cannot be accurately measured…

However, it is fair to say that although this seems to suggest that the Court will always strive carefully to ensure that its decisions are consistent with its prior holdings, unless compelling reasons are shown, the reality is sometimes the contrary. This may be because the Court relies to some extent on counsel to point out which previous decisions may be important, and many counsel are specialized in particular fields of law. To take an example, in a 2005 case in criminal law, the Court was again asked to overrule its previous holdings. It said, “The Court’s practice, of course, is against departing from its precedents unless there are compelling reasons to do so.”10 A number of Supreme Court of Canada cases were cited in support of this proposition, but somewhat strikingly, Friedmann Equity Developments Inc. v Final Note Ltd., a private law decision, was not mentioned.11

What follows from this is that decisions coming from other provinces can only ever be persuasive, and not binding. For example, a decision of the Ontario Court of Appeal is binding on lower courts in Ontario, but not on courts in other provinces. The decision can be persuasive, as can decisions from other countries. There are, of course, degrees of persuasiveness, and a decision of the Court of Appeal of another province would be considered highly persuasive if it were directly on point. The Supreme Court of Canada has also rejected the suggestion that obiter dicta in its judgments can be binding on lower courts; again, they may be very persuasive, but not technically binding.12

Although Quebec is a civilian jurisdiction in relation to private law, the hierarchical structure of the province’s courts is the same as in other provinces, and so is the system for the appointment of judges from among senior practitioners. The result is that there is some uncertainty about whether stare decisis formally applies in Quebec. In 2009, a majority of the Quebec Court of Appeal said:

Dans ces circonstances et puisqu’il n’y a pas vraiment de stare decisis en droit civil, la Cour doit reprendre l’analyse de plusieurs questions de droit, notamment les critères permettant de conclure en une faute dans l’expression d’une opinion, de même que le droit aux honoraires extrajudiciaires dans les litiges régis par la Charte.13

But in 2011, the same Court said in a unanimous judgment:

Source de stabilité et de structure pour le système juridique, l’autorité du précédent est l’un des fondements de la primauté du droit. Ce principe assure au justiciable non seulement une prévisibilité relative par rapport à la prise de décision judiciaire, mais également une protection contre l’arbitraire dans l’exercice de ce pouvoir.14

Whether or not precedent is classified formally as a source of law in Quebec is a matter of debate, but it is clear that at least informally, a version of the doctrine of stare decisis does operate.15

Declaratory Theory of Judicial Decisions; Courts as Legislators

One might say that the declaratory theory of judicial decisions is not accepted inasmuch as everyone agrees that judges have a role in the law’s evolution and development.16 In Canada, this role has been much more evident since 1982, with the coming into force of the Canadian Charter of Rights and Freedoms. The Charter limits the legislative competence of Canadian legislatures and frequently leads to decisions that legislation is without effect. The development of the legal principles flowing from the text of the Charter has been a process involving judicial creativity. But even apart from the Charter, the law-making role of judges is obvious.

At the same time, the declaratory theory of judicial decisions is implicitly accepted inasmuch as judicial decisions are generally retroactive in operation.17 This retroactivity must operate at least as far as the time when the facts occurred that gave rise to the dispute. On the orthodox view, the primary judicial function is the resolution of disputes by the application of the law; any law-making function is incidental to that primary function.18 The most natural way to understand the normal retroactive effect of judgments is that the judgment declares the law, not only as it is, but as it was at the time the facts occurred.

In British Columbia v Imperial Tobacco Canada Ltd., 19 the Supreme Court of Canada stated:

The primary role of the judiciary is to interpret and apply the law, whether procedural or substantive, to the cases brought before it. It is to hear and weigh, in accordance with the law, evidence that is relevant to the legal issues confronted by it, and to award to the parties before it the available remedies.

The judiciary has some part in the development of the law that its role requires it to apply. … But the judiciary’s role in developing the law is a relatively limited one.

… developments in the common law have always had retroactive and retrospective effect.

As elsewhere, the declaratory theory has sometimes been denounced as fictional, on the basis that it is inconsistent with the reality that judges can change or develop the law.20 But if we accept that the law which judges declare is itself partly determined by matters that change over time, such as social conditions, then it is possible to reconcile the declaratory theory with changing law.21

In Canada (Attorney General) v Hislop,22 a majority of the Supreme Court of Canada said:

… the declaratory approach is derived from Blackstone’s famous aphorism that judges do not create law but merely discover it: W. Blackstone, Commentaries on the Laws of England (1765), vol. 1, at pp. 69–70. It reflects a traditional and widespread understanding of the role of the judiciary in a democratic state governed by strong principles of separation of powers between courts, legislatures and executives. In this perspective, courts grant retroactive relief applying existing law or rediscovered rules which are deemed to have always existed. On the other hand, legislators fashion new laws for the future.

Blackstone’s declaratory approach has not remained unchallenged in modern law. Commentators and courts have pointed out that judges fulfill a legitimate law-making function. Judges do not merely declare law; they also make law.

However, this acknowledgement does not require abandoning Blackstone’s declaratory approach altogether. The critique of the Blackstonian approach applies only to situations in which judges are fashioning new legal rules or principles and not when they are applying the existing law. In instances where courts apply pre-existing legal doctrine to a new set of facts, Blackstone’s declaratory approach remains appropriate and remedies are necessarily retroactive. Because courts are adjudicative bodies that, in the usual course of things, are called upon to decide the legal consequences of past happenings, they generally grant remedies that are retroactive to the extent necessary to ensure that successful litigants will have the benefit of the ruling…

As we will see below, however, the Court stated that although court orders are generally retroactive, they are not necessarily always fully retroactive.

Some cases, particularly under the Charter, have raised questions about whether courts sometimes act as legislators. This is particularly so where courts adopt the practise of “reading in”. If a court concludes that a particular legislative provision is inconsistent with Charter, or with some other part of the Constitution, it is likely to declare that the provision is without legal effect. This may attract a concern that the judges have stepped outside their adjudicative role. Sometimes, however, Canadian courts do not merely “strike out” legislation; they instead “read in”. This means that they conclude that the legislation must be read as if it contained words that the legislator did not include. Striking out rests on a conclusion that the relevant provision is unconstitutional, and indeed that it always has been so. Reading in is more controversial and more likely to attract concerns that judges are acting legislatively. This is because, speaking generally, there is more than one way in which the constitutional problem could have been solved. The court chooses words to read into the legislation, but the legislature might have chosen different words, or might have enacted no law at all.

A prominent example was Vriend v. Alberta. 23 Vriend was dismissed from his employment at a private religious college because of his sexual orientation. The Alberta Individual’s Rights Protection Act 24 prohibited discrimination in relation to employment on various grounds, namely race, religious beliefs, colour, gender, physical disability, mental disability, marital status, age, ancestry or place of origin. It did not forbid discrimination on the basis of sexual orientation. Vriend successfully claimed that the omission of this ground of discrimination was inconsistent with the Charter. The Court’s conclusion was not that the Act was invalid, or that the provisions on discrimination in relation to employment were invalid; rather, those provisions had to be read as if they listed sexual orientation as a prohibited ground of discrimination.25