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From "multi-Crown" class actions to the corporate attribution doctrine, Davies litigators explore the judicial shifts from 2024-2025 that business leaders need to know
Although 2025 is now in the rearview mirror, the legal ripples from a series of landmark decisions handed down by Canadian courts over the past year will be felt for years to come.
Davies served as counsel in four of the "Top 10 Business Decisions of 2024–2025" as identified by Lexpert in its annual ranking of Canada's most significant judicial rulings. Davies was the only firm to be involved in so many of these high-stakes cases, reflecting our commitment to represent clients in their most critical business disputes.
A Pragmatic Approach To Corporate Attribution
For years, the Canadian legal community has called for clarity on the "corporate attribution doctrine" – the rules that determine when the actions or knowledge of an officer are legally considered the actions of the company itself. The Supreme Court of Canada heard that call and released two landmark decisions that replace a rigid, one-size-fits-all test for corporate attribution with a more functional, common-sense approach.
"The Court rightly rejected a mechanistic approach in favor of one grounded in the specific legal context of each case," says Chanakya Sethi, a partner in Davies' litigation group, who was part of the team that represented the Insolvency Institute of Canada (IIC) in both Aquino v. Bondfield Construction Co., 2024 SCC 31, and Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32.
Both cases involved corporate officers who orchestrated frauds that eventually led their companies into insolvency. When court-appointed officers tried to recover funds for the cheated creditors, they faced a legal hurdle: could the fraudster's own knowledge be "attributed" to the company to block the recovery claims?
While the Supreme Court ruled in favor of creditors in both cases, it reached that result using two different paths.
In Aquino, the Court applied corporate attribution. It ruled that since the particular bankruptcy provision at issue was intended by Parliament to protect creditors from debtors who siphon off assets, attributing the officer's intent to the company was necessary to claw back those funds.
In Golden Oaks, by contrast, the Court refused to apply attribution. Doing so would have triggered a statutory deadline (or "limitations period") that would have barred the lawsuit on behalf of creditors before a bankruptcy trustee was even appointed. The Court ruled that such a result would be an injustice to creditors, even if the recipients of the fraudulent payments in Golden Oaks did not know of the Ponzi scheme that they benefited from.
"What we see in these cases is the classic tension between predictability and flexibility," Sethi adds. "While different legal contexts may now yield different answers on attribution, businesses now have a clear set of principles to follow."
The impact of the cases, however, is particularly significant for the restructuring and insolvency sector.
Natasha MacParland, a partner in Davies' Financial Restructuring & Insolvency Group who was also on the Davies team and presented oral arguments for the IIC, notes the broader implications: "The Supreme Court has sent a clear signal: it will not allow the beneficiaries of fraudulent payments – even those who may be 'innocent' recipients – to be shielded from creditor claims once a fraud is discovered. So from the creditor perspective, these were major wins."
A Novel "Multi-Crown" Class Action
In a landmark 6-1 ruling, the Supreme Court of Canada upheld a powerful new legal tool that allows one province to lead a national class action on behalf of all other Canadian governments. The decision in Sanis Health Inc. v. British Columbia, 2024 SCC 40, clears the path for British Columbia to act as the representative plaintiff in a massive, multi-billion-dollar healthcare cost-recovery claim against opioid manufacturers and distributors.
The case centered on a novel question: Can a government form a class action composed of other governments? Specifically, the court looked at whether BC's Opioid Damages and Health Care Costs Recovery Act could constitutionally allow BC to sue on behalf of federal, provincial and territorial governments on an "opt-out" basis.
Pharmaceutical manufacturers and distributors challenged the law, arguing it overstepped the Constitution's boundaries on provincial power. But the Supreme Court disagreed, ruling that the law is a valid exercise of BC's authority over the "administration of justice." Essentially, the Court found that as long as other governments have the choice to opt out, the mechanism is a constitutionally sound way to manage complex, national-scale litigation.
This ruling effectively creates a blueprint for governments to pursue big-ticket cost-recovery claims related to public health and environmental harms.
"The Supreme Court approved what I expect will be a template for governments in similar litigation going forward," says Sandra Forbes, a partner in Davies' Litigation group who leads the defense of McKesson Corporation and McKesson Canada Corp. in opioid litigation across Canada. "We are already seeing legislators discuss similar frameworks for claims involving 'forever chemicals' and social media companies, and British Columbia has already introduced comparable legislation for vaping products."
For businesses in these sectors, the province-by-province legal battles of the past may soon be replaced by coordinated attempts to consolidate various governments' litigation firepower in a single forum.
Still, unanswered questions remain.
While the decision provides a path forward, it does not settle questions about the workability of such massive class actions and it leaves unanswered lingering questions about the limits of multi-jurisdictional litigation.
"Sanis answered one critical question about multi-Crown class actions, but left several others unanswered," notes Sethi, who also served as counsel to McKesson in the appeal. "I expect parties will need to return to the Supreme Court to seek guidance on those important questions, including if such class actions can actually work in practice."
Québec Greenlights Ex Parte Seizures Against Sovereign States and their Agencies
Traditionally, state immunity has served as a formidable shield, protecting foreign sovereigns and their agencies from the jurisdiction of Canadian courts. But in Republic of India v. CCDM Holdings, 2024 QCCA 1620, the Québec Court of Appeal permitted a plaintiff to obtain ex parte pretrial remedies – such as seizures or freezing orders – against a foreign state or its agency even while the question of state immunity remains open.
"For foreign states and their agencies, the ruling means that assets held in Canada – specifically in Québec – are now more vulnerable to interim legal maneuvers, before the issue of immunity is adjudicated," says Corey Omer, a partner in Davies' Litigation Group who was one of the lead counsel for the Airports Authority of India in the case. In light of the decision, Omer said he expects more ex parte applications for pre-trial seizures against sovereign and sovereign-affiliated entities, and for potentially immune parties to insist on a prompt adjudication of their immunity claims.
While the decision opens the door to pretrial remedies, it does not resolve questions about the substantive scope of state immunity for foreign state agencies in Canada, including the test for when an entity qualifies as an "agency" that may assert its own state immunity, distinct from that of the foreign state. In August 2024, the Superior Court of Québec set aside the plaintiffs' seizure of the Airports Authority of India's assets on the basis of its state immunity, endorsing arguments that clarify the test for "agency" under Canada's State Immunity Act. That decision is currently under appeal.
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