Precedent

How BC law treats it

Canadian courts follow stare decisis: like cases should be decided alike. Decisions of the Supreme Court of Canada bind every court in the country. Decisions of the Court of Appeal for British Columbia bind the BC Supreme Court, the Provincial Court and BC tribunals. Decisions of courts in other provinces are persuasive but not binding in BC. A BC Supreme Court judge will generally follow another judge of the same court unless satisfied the earlier decision was wrong for reasons such as overlooking a binding authority or a relevant statute (Re Hansard Spruce Mills Ltd, [1954] 4 DLR 590 (BCSC)). The Court of Appeal can depart from its own earlier decisions only in limited circumstances, usually by a five-judge division. A lower court may revisit a Supreme Court of Canada precedent only if a new legal issue is raised or there is a change in circumstances or evidence that fundamentally shifts the parameters of the debate (Canada (Attorney General) v Bedford, 2013 SCC 72). Otherwise, only a higher court can overrule a precedent, and a legislature can change the law by statute. Only the reasons necessary to the decision (the ratio) bind later courts. Other comments (obiter) may be persuasive. In practice, "precedent" also means a model document, such as a precedent share purchase agreement, that lawyers adapt for a new deal.

What it means for your business

Precedent makes legal outcomes more predictable, which lets a business assess the strength of a claim or defence before spending on litigation. A case from Ontario or the US may sound helpful but may carry little weight in BC. Business owners should also be cautious with online templates and "precedent" agreements from other provinces or countries, which may rely on law that does not apply in BC. Example: A BC company sued over a restrictive covenant finds that the Supreme Court of Canada's decision in a BC employment case squarely governs the issue. Its lawyer advises that the BC Supreme Court must follow it, which drives an early settlement.

Risks and common mistakes

Relying on US cases as if they bind BC courts. Treating comments in a judgment as binding when they were not necessary to the decision. Assuming one trial decision settles the law for all BC cases. Using a precedent agreement from another jurisdiction without adapting it to BC law.