The Supreme Court of Canada recently released two decisions which will have a major impact on defamation cases.
In Quan v. Cusson (Nov. 9, 2006)(32420) Dec. 22, 09 C was an Ontario police constable who, shortly after the events of September 11, 2001 and without permission from his employer, traveled to New York City to assist with the search and rescue effort at Ground Zero. A newspaper published articles alleging that C had misrepresented himself to the authorities in New York and possibly interfered with the rescue operation. C brought a libel action against the newspaper and the reporters.
In Grant v. Torstar Corp. (Nov. 28, 2008)(32932) Dec. 22, 09 G and his company brought a libel action against a newspaper and reporter after an article was published concerning a proposed private golf course development on G’s lakefront estate. The story aired the views of local residents who were critical of the development’s environmental impact and suspicious that G was exercising political influence behind the scenes to secure government approval for the new golf course. The article quoted a neighbour who said that “everyone thinks it’s a done deal” because of G’s influence. The reporter, an experienced journalist, attempted to verify the allegations in the article, including asking G for comment, which G chose not to provide
In both cases the SCC decided that there is a "responsible journalism" defence in Ontario, including for bloggers, and ordered that there be a new trial.
The "responsible journalism" defence has been adopted by the English courts and gives greater scope to freedom of expression. The defence allows publishers to escape liability if they can establish that they acted responsibly in attempting to verify information on a matter of public interest. The SCC found that this defence represents a reasonable and proportionate response to the need to protect reputation while sustaining the public exchange of information.
This change to the law creates a new defence and leaves the traditional defence of qualified privilege intact. To be protected by the defence of responsible communication the publication must be on a matter of public interest and the defendant must show that publication was responsible, in that he or she was diligent in trying to verify the allegation(s), having regard to all the relevant circumstances.
Where the defence is raised the trial judge first decides whether the publication is on a matter of public interest and if so, the jury then decides whether the standard of responsibility has been met.
In determining whether a publication is on a matter of public interest, the judge must consider the subject matter of the publication as a whole. To be of public interest, the subject matter must be shown to be one inviting public attention, or about which the public, or a segment of the public, has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached. Public interest is not confined to publications on government and political matters, nor is it necessary that the plaintiff be a “public figure”.
The following factors may aid the jury in determining whether a defamatory communication on a matter of public interest was responsibly made: (a) the seriousness of the allegation; (b) the public importance of the matter; (c) the urgency of the matter; (d) the status and reliability of the source; (e) whether the plaintiff’s side of the story was sought and accurately reported; (f) whether the inclusion of the defamatory statement was justifiable; (g) whether the defamatory statement’s public interest lay in the fact that it was made rather than its truth; and (h) any other relevant circumstances.
Here are the links to the decisions:
http://scc.lexum.umontreal.ca/en/2009/2009scc62/2009scc62.html
http://scc.lexum.umontreal.ca/en/2009/2009scc61/2009scc61.html
Regards,
Blair
Monday, January 4, 2010
Thursday, December 3, 2009
Wal-Mart beats the Union
Attention Wal-Mart shoppers:
In Plourde v. Wal‑Mart Canada Corp., 2009 SCC 54 the Supreme Court of Canada considered an application by an employee to be reinstated after a Walmart store had been closed ostensibly to defeat union certification.
The union certified to represent the employees of Wal‑Mart in Jonquière, Quebec. The Jonquière store was the first Wal‑Mart store to be unionized in North America. After several fruitless bargaining sessions, the union filed an application under the Quebec Labour Code to establish the provisions of a first collective agreement. On February 9, 2005, the Minister of Labour referred the dispute to arbitration and notified the parties of the referral. That same day, Wal‑Mart informed the employees of its decision to close the store. On April 29, 2005, approximately 190 employees were terminated. Many proceedings were initiated by the Wal‑Mart employees or their union arising out of the store’s closure, which was presented by the union merely as a step taken by Wal‑Mart in a larger employer strategy of hindrance, intimidation and union‑busting. P filed a complaint under ss. 15 to 17 of the Labour Code claiming to have lost his employment because of his union activities and sought an order that he be reinstated in his job.
The Commission des relations du travail (“CRT”) held that P could rely on the presumption under s. 17, since he had engaged in numerous significant union activities that were concomitant with the termination of his employment. However, the CRT found that Wal‑Mart had shown the store’s closure to be genuine and permanent and that in itself, according to a long line of cases from City Buick onwards, is “good and sufficient reason” within the meaning of s. 17 to justify the dismissal. The Superior Court dismissed P’s application for judicial review and held that the CRT was correct in not requiring Wal‑Mart to prove its reasons for closing the store. The Court of Appeal dismissed P’s motion for leave to appeal.
The Supreme Court of Canada dismissed the appeal but was careful in its reasons to limit the effect of the decision to the specific procedural issue presented by the Labour Code. Specifically the court found that the reinstatement remedy which was sought by the appellant was not available where the employer had closed the premises.
The court held that the question raised by the appeal was not whether employees have a remedy against an employer who closes a workplace for anti‑union motives (they do have such a remedy under ss. 12 to 14 of the Code) but whether employees of a closed business can bring their claim within ss. 15 to 17 so as to obtain the advantage of a statutory presumption that they lost their jobs because they exercised their collective bargaining rights. Under ss. 15 to 17, the question before the tribunal relates to the reasons for the employees’ loss of jobs whereas the question that can be put in play under ss. 12 to 14 is the broader issue of why the plant was closed at all, and specifically was it closed as part of an anti‑union strategy.
A finding of an unfair labour practice under ss. 12 to 14 opens up broader redress under the general remedial provisions provided by ss. 118 and 119 of the Code for the benefit of all employees who suffered as a result of the wrongful store closure, including those who where not involved in union activity, and even for those who opposed the union.
In the earlier Place des Arts decision the SCC held that no legislation in Quebec obliged an employer to remain in business and that an employer can close a plant for “socially reprehensible considerations”. In this case the SCC held that the effect of Place des Arts was to exclude in a workplace closure situation the application of s. 17 but not to immunize an employer from any financial consequences for associated unfair labour practices. Nor did it preclude a finding that the closure itself constitutes an unfair labour practice aimed at hindering the union or the employees from exercising rights under the Code. It is open to a union or employees to bring evidence of anti‑union conduct to establish an unfair labour practice under ss. 12 to 14 of the Code.
Therefore the procedural vehicle offered by ss. 15 to 17 of the Labour Code is not available to an employee in circumstances where a workplace no longer exists. The s. 15 reinstatement remedy presupposes the existence of a place to which reinstatement is possible.
Regards,
Blair
In Plourde v. Wal‑Mart Canada Corp., 2009 SCC 54 the Supreme Court of Canada considered an application by an employee to be reinstated after a Walmart store had been closed ostensibly to defeat union certification.
The union certified to represent the employees of Wal‑Mart in Jonquière, Quebec. The Jonquière store was the first Wal‑Mart store to be unionized in North America. After several fruitless bargaining sessions, the union filed an application under the Quebec Labour Code to establish the provisions of a first collective agreement. On February 9, 2005, the Minister of Labour referred the dispute to arbitration and notified the parties of the referral. That same day, Wal‑Mart informed the employees of its decision to close the store. On April 29, 2005, approximately 190 employees were terminated. Many proceedings were initiated by the Wal‑Mart employees or their union arising out of the store’s closure, which was presented by the union merely as a step taken by Wal‑Mart in a larger employer strategy of hindrance, intimidation and union‑busting. P filed a complaint under ss. 15 to 17 of the Labour Code claiming to have lost his employment because of his union activities and sought an order that he be reinstated in his job.
The Commission des relations du travail (“CRT”) held that P could rely on the presumption under s. 17, since he had engaged in numerous significant union activities that were concomitant with the termination of his employment. However, the CRT found that Wal‑Mart had shown the store’s closure to be genuine and permanent and that in itself, according to a long line of cases from City Buick onwards, is “good and sufficient reason” within the meaning of s. 17 to justify the dismissal. The Superior Court dismissed P’s application for judicial review and held that the CRT was correct in not requiring Wal‑Mart to prove its reasons for closing the store. The Court of Appeal dismissed P’s motion for leave to appeal.
The Supreme Court of Canada dismissed the appeal but was careful in its reasons to limit the effect of the decision to the specific procedural issue presented by the Labour Code. Specifically the court found that the reinstatement remedy which was sought by the appellant was not available where the employer had closed the premises.
The court held that the question raised by the appeal was not whether employees have a remedy against an employer who closes a workplace for anti‑union motives (they do have such a remedy under ss. 12 to 14 of the Code) but whether employees of a closed business can bring their claim within ss. 15 to 17 so as to obtain the advantage of a statutory presumption that they lost their jobs because they exercised their collective bargaining rights. Under ss. 15 to 17, the question before the tribunal relates to the reasons for the employees’ loss of jobs whereas the question that can be put in play under ss. 12 to 14 is the broader issue of why the plant was closed at all, and specifically was it closed as part of an anti‑union strategy.
A finding of an unfair labour practice under ss. 12 to 14 opens up broader redress under the general remedial provisions provided by ss. 118 and 119 of the Code for the benefit of all employees who suffered as a result of the wrongful store closure, including those who where not involved in union activity, and even for those who opposed the union.
In the earlier Place des Arts decision the SCC held that no legislation in Quebec obliged an employer to remain in business and that an employer can close a plant for “socially reprehensible considerations”. In this case the SCC held that the effect of Place des Arts was to exclude in a workplace closure situation the application of s. 17 but not to immunize an employer from any financial consequences for associated unfair labour practices. Nor did it preclude a finding that the closure itself constitutes an unfair labour practice aimed at hindering the union or the employees from exercising rights under the Code. It is open to a union or employees to bring evidence of anti‑union conduct to establish an unfair labour practice under ss. 12 to 14 of the Code.
Therefore the procedural vehicle offered by ss. 15 to 17 of the Labour Code is not available to an employee in circumstances where a workplace no longer exists. The s. 15 reinstatement remedy presupposes the existence of a place to which reinstatement is possible.
Regards,
Blair
Monday, November 23, 2009
Law firm accused of "naked cash grab"
A Report from the Law Times by Tim Shufelt Publication Date: Monday, 23 November 2009
A Toronto litigation boutique possibly will be on the hook for legal costs after its conduct sparked a harsh rebuke by a Superior Court judge in a long-running trusts-and-estates saga. Polten & Hodder, along with lawyer Eric Polten, was the subject of strongly worded condemnation from Justice David Brown, who said the firm ran up “scandalous” legal costs and “attempted to perpetrate a naked cash grab” on two elderly clients. Polten, whose experience includes domestic and international family and estate law matters, also misrepresented himself to the court and was in breach of his professional duties as an officer of the court, Brown said in a judgment in Miksche Estate v. Miksche released this month. According to Sandra Schnurr, counsel for the estate trustee, the legal gossip mill is churning with news of the ruling.“It already seems to be well known. I’ve had numerous lawyers comment to me on it,” she says. On the ruling itself, Schnurr says the judge’s decision speaks for itself. “I’m satisfied but I’m not jubilant. Whenever I see a colleague at the bar being harshly criticized, it makes me uncomfortable,” she says.
In representing Johanna Miksche, a Scarborough woman who died two years ago, and her sister Ursula Lill, Polten racked up more than $1 million in legal fees that he first tried to recover from the Miksche estate and then from the older sister, who was the primary beneficiary, the ruling said.“Having been rebuffed in his effort to have the assets of one vulnerable person satisfy the scandalous costs he ran up, Mr. Polten came before me on this application attempting to poach upon the assets of another vulnerable person. From such conduct, I conclude that Mr. Polten was prepared to use any means to place his financial interests in this proceeding ahead of those of his former clients,” Brown wrote. “Such conduct merits the strongest condemnation by this court.”When reached for comment, Polten would only say that he would be appealing the decision. “The matter will be dealt with in the notice of appeal,” he says in response to questions about specific criticisms in the ruling. “I presently have no other comment.”
Miksche was 78 when she passed away in a long-term care facility in Scarborough. Her husband had died many years prior, and her only living sibling was her sister, who was then 87 and living in Germany.Miksche had previously granted powers of attorney to two friends who were also included as beneficiaries in her will.Then in 2005, Miksche’s three nephews travelled from Germany to visit their aunt in the care facility, accompanied by a member of Polten & Hodder.At that time, Miksche also granted powers of attorney to one of her nephews as well as her sister and signed a retainer for Polten & Hodder. The two groups — Miksche’s two friends on the one hand and her relatives on the other — then filed competing applications for guardianship.Before a decision could be rendered, Miksche died, prompting the parties to submit claims for costs.“The Polten and Hodder firm sought the staggering amount of $1,038,297 . . . against Johanna’s estate,” Brown wrote. Not only did the amount include a success premium but it also exceeded the value of the estate, according to the judgment.
In a separate 2007 ruling on the same matter, Superior Court Justice Nancy Spies called the arguments raised by the law firm “preposterous” and “alarming” and said the legal approach advocated by the firm exploited the elderly woman. The firm had also alleged on behalf of the nephews that Miksche’s two friends had held her as a “prisoner” in the care facility. “I do not understand how Mr. Polten even has the audacity to make this submission,” Spies wrote, adding that the submission demonstrated a “complete detachment from reality and lack of judgment.” The judge awarded the nephews costs of $35,500 but ordered them to first cover $28,000 in legal fees to Miksche’s two friends. Polten & Hodder appealed the ruling on behalf of Lill and the nephews but a few days later made an offer to settle by proposing to drop the matter in return for an agreement on how to distribute the estate to its beneficiaries. The offer, however, “radically changed the flow of estate funds to Ursula Lill,” Brown wrote, noting that all of the residual assets of the estate would be payable to the law firm in trust under the new arrangement.“And it was quite clear from the written and oral submissions made by Mr. Polten what would happen to those funds once in his trust account — there they would stay until he was able to extract from Lill payment of his ‘scandalous’ costs claim.”
Regards,
Blair
A Toronto litigation boutique possibly will be on the hook for legal costs after its conduct sparked a harsh rebuke by a Superior Court judge in a long-running trusts-and-estates saga. Polten & Hodder, along with lawyer Eric Polten, was the subject of strongly worded condemnation from Justice David Brown, who said the firm ran up “scandalous” legal costs and “attempted to perpetrate a naked cash grab” on two elderly clients. Polten, whose experience includes domestic and international family and estate law matters, also misrepresented himself to the court and was in breach of his professional duties as an officer of the court, Brown said in a judgment in Miksche Estate v. Miksche released this month. According to Sandra Schnurr, counsel for the estate trustee, the legal gossip mill is churning with news of the ruling.“It already seems to be well known. I’ve had numerous lawyers comment to me on it,” she says. On the ruling itself, Schnurr says the judge’s decision speaks for itself. “I’m satisfied but I’m not jubilant. Whenever I see a colleague at the bar being harshly criticized, it makes me uncomfortable,” she says.
In representing Johanna Miksche, a Scarborough woman who died two years ago, and her sister Ursula Lill, Polten racked up more than $1 million in legal fees that he first tried to recover from the Miksche estate and then from the older sister, who was the primary beneficiary, the ruling said.“Having been rebuffed in his effort to have the assets of one vulnerable person satisfy the scandalous costs he ran up, Mr. Polten came before me on this application attempting to poach upon the assets of another vulnerable person. From such conduct, I conclude that Mr. Polten was prepared to use any means to place his financial interests in this proceeding ahead of those of his former clients,” Brown wrote. “Such conduct merits the strongest condemnation by this court.”When reached for comment, Polten would only say that he would be appealing the decision. “The matter will be dealt with in the notice of appeal,” he says in response to questions about specific criticisms in the ruling. “I presently have no other comment.”
Miksche was 78 when she passed away in a long-term care facility in Scarborough. Her husband had died many years prior, and her only living sibling was her sister, who was then 87 and living in Germany.Miksche had previously granted powers of attorney to two friends who were also included as beneficiaries in her will.Then in 2005, Miksche’s three nephews travelled from Germany to visit their aunt in the care facility, accompanied by a member of Polten & Hodder.At that time, Miksche also granted powers of attorney to one of her nephews as well as her sister and signed a retainer for Polten & Hodder. The two groups — Miksche’s two friends on the one hand and her relatives on the other — then filed competing applications for guardianship.Before a decision could be rendered, Miksche died, prompting the parties to submit claims for costs.“The Polten and Hodder firm sought the staggering amount of $1,038,297 . . . against Johanna’s estate,” Brown wrote. Not only did the amount include a success premium but it also exceeded the value of the estate, according to the judgment.
In a separate 2007 ruling on the same matter, Superior Court Justice Nancy Spies called the arguments raised by the law firm “preposterous” and “alarming” and said the legal approach advocated by the firm exploited the elderly woman. The firm had also alleged on behalf of the nephews that Miksche’s two friends had held her as a “prisoner” in the care facility. “I do not understand how Mr. Polten even has the audacity to make this submission,” Spies wrote, adding that the submission demonstrated a “complete detachment from reality and lack of judgment.” The judge awarded the nephews costs of $35,500 but ordered them to first cover $28,000 in legal fees to Miksche’s two friends. Polten & Hodder appealed the ruling on behalf of Lill and the nephews but a few days later made an offer to settle by proposing to drop the matter in return for an agreement on how to distribute the estate to its beneficiaries. The offer, however, “radically changed the flow of estate funds to Ursula Lill,” Brown wrote, noting that all of the residual assets of the estate would be payable to the law firm in trust under the new arrangement.“And it was quite clear from the written and oral submissions made by Mr. Polten what would happen to those funds once in his trust account — there they would stay until he was able to extract from Lill payment of his ‘scandalous’ costs claim.”
Regards,
Blair
Monday, November 16, 2009
Supreme Court clarifies ad hoc fiduciary relationships
In the recent case of Galambos v. Perez, P made voluntary sizeable advances of cash — some $200,000 in total — to her employer, a law firm founded by G, often without informing G beforehand. Although P was hired as the firm’s part‑time bookkeeper she effectively became the office manager, overseeing the firm’s income, expenses and accounting and had unlimited signing authority on the firm’s non‑trust bank accounts. Initially, to resolve a cash flow problem, P obtained a personal loan and deposited $40,000 into the firm’s bank account. G did not ask her to advance this money and he did not even know about the advance until several days later. G instructed P to reimburse herself with interest, instructions she did not follow other than by repaying herself $15,000. As the firm’s financial situation deteriorated, P made several more deposits of her own funds into the firm’s account and covered some firm expenses with her personal credit card. The firm, during the time she worked for it, handled the preparation and execution of new wills for P and her husband as well as two mortgage transactions. The firm did not expect to be and was not paid for these services. When the firm went into receivership and G went bankrupt P found herself an unsecured creditor and recovered nothing. P then sued G and the defunct firm for negligence, breach of contract and breach of fiduciary duty.
The trial judge dismissed P’s claims, finding that her rights were those of a creditor and nothing more. The Court of Appeal set aside that decision and granted P judgment for $200,000. The Court of Appeal concluded that there were ad hoc fiduciary duties owed to P by G and his law firm in relation to the cash advances. It held that: there was a power‑dependency relationship between P and G; it is not necessary that there be any mutual understanding that G had relinquished his self‑interest in favour of P’s for the duty to arise; P was vulnerable; and, the evidence overwhelmingly supported the conclusion that G took advantage of her trust.
The Supreme Court of Canada restored the decision of the trial judge and held that the Court of Appeal had exceeded the limits of appellate review and unduly extended the scope of fiduciary obligations. Absent an error of law or a palpable or overriding error of fact the SCC held that the trial judge’s findings of fact and conclusion that a fiduciary duty did not exist must be upheld on appeal. In this case, the Court of Appeal retried the case on the basis of the written record and substituted its view of the facts and their significance for that of the trial judge.
The SCC held that the Court of Appeal erred in three respects.
1. The conclusion that G was in a position of power and influence relative to P was at odds with the findings of fact at trial that P was not vulnerable in terms of her relationship with G. There was no evidence of any express requests for loans, which makes it illogical to conclude that P was unable to refuse requests when there were in fact none.
2. Not all power‑dependency relationships are fiduciary in nature and identifying a power‑dependency relationship does not, on its own, materially assist in deciding whether the relationship is fiduciary or not. There are no special rules for recognition of fiduciary duties in the case of power‑dependency relationships. The Court of Appeal erred when it held that, in the case of a power‑dependency relationship, a fiduciary duty may arise even in the absence of a mutual understanding that one party would act only in the interests of the other. In both per se and ad hoc fiduciary relationships, there will be some undertaking on the part of the fiduciary to act with loyalty. The Court of Appeal’s analysis went wrong when it found a fiduciary duty without finding an undertaking, express or implied, on the part of G that he would act in relation to the loans only in P’s interests, and based its conclusion that a fiduciary duty existed on P’s expectations alone.
3. The Court of Appeal appears to have accepted the proposition that a fiduciary duty may arise even though the fiduciary has no discretionary power to affect the other party’s legal or important practical interests. The nature of this discretionary power to affect the beneficiary’s legal or practical interests may, depending on the circumstances, be quite broadly defined. It may arise from power conferred by statute, agreement, from a unilateral undertaking or, in particular situations by the beneficiary’s entrusting the fiduciary with information or seeking advice in circumstances that confer a source of power. The presence of this sort of power will not necessarily on its own support the existence of an ad hoc fiduciary duty; its absence, however, negates the existence of such a duty. The findings of the trial judge that the evidence did not establish that P relinquished her decision‑making power with respect to the loans to G, and that G had no discretionary power over P’s interests that he was able to exercise unilaterally or otherwise, were fatal to P’s claim that there was an ad hoc fiduciary duty on G’s part to act solely in her interests in relation to these cash advances.
Finally, the SCC held there had been no conflict of interest. Given the limited nature of the retainers and the unusual nature of the advances G and the law firm did not breach their duty of care arising from the solicitor‑client relationship between them and P. There was no actual conflict of interest between the firm’s duties to her in connection with the limited retainers and its interest in receiving the advances and there was not any reasonable apprehension of conflict. Given the very limited nature of the retainers and the manner in which the advances were made — unsolicited and frequently without advance notice — there was no duty on the firm under negligence principles to give P advice about those advances or to insist that she obtain independent legal advice about them.
Regards,
Blair
The trial judge dismissed P’s claims, finding that her rights were those of a creditor and nothing more. The Court of Appeal set aside that decision and granted P judgment for $200,000. The Court of Appeal concluded that there were ad hoc fiduciary duties owed to P by G and his law firm in relation to the cash advances. It held that: there was a power‑dependency relationship between P and G; it is not necessary that there be any mutual understanding that G had relinquished his self‑interest in favour of P’s for the duty to arise; P was vulnerable; and, the evidence overwhelmingly supported the conclusion that G took advantage of her trust.
The Supreme Court of Canada restored the decision of the trial judge and held that the Court of Appeal had exceeded the limits of appellate review and unduly extended the scope of fiduciary obligations. Absent an error of law or a palpable or overriding error of fact the SCC held that the trial judge’s findings of fact and conclusion that a fiduciary duty did not exist must be upheld on appeal. In this case, the Court of Appeal retried the case on the basis of the written record and substituted its view of the facts and their significance for that of the trial judge.
The SCC held that the Court of Appeal erred in three respects.
1. The conclusion that G was in a position of power and influence relative to P was at odds with the findings of fact at trial that P was not vulnerable in terms of her relationship with G. There was no evidence of any express requests for loans, which makes it illogical to conclude that P was unable to refuse requests when there were in fact none.
2. Not all power‑dependency relationships are fiduciary in nature and identifying a power‑dependency relationship does not, on its own, materially assist in deciding whether the relationship is fiduciary or not. There are no special rules for recognition of fiduciary duties in the case of power‑dependency relationships. The Court of Appeal erred when it held that, in the case of a power‑dependency relationship, a fiduciary duty may arise even in the absence of a mutual understanding that one party would act only in the interests of the other. In both per se and ad hoc fiduciary relationships, there will be some undertaking on the part of the fiduciary to act with loyalty. The Court of Appeal’s analysis went wrong when it found a fiduciary duty without finding an undertaking, express or implied, on the part of G that he would act in relation to the loans only in P’s interests, and based its conclusion that a fiduciary duty existed on P’s expectations alone.
3. The Court of Appeal appears to have accepted the proposition that a fiduciary duty may arise even though the fiduciary has no discretionary power to affect the other party’s legal or important practical interests. The nature of this discretionary power to affect the beneficiary’s legal or practical interests may, depending on the circumstances, be quite broadly defined. It may arise from power conferred by statute, agreement, from a unilateral undertaking or, in particular situations by the beneficiary’s entrusting the fiduciary with information or seeking advice in circumstances that confer a source of power. The presence of this sort of power will not necessarily on its own support the existence of an ad hoc fiduciary duty; its absence, however, negates the existence of such a duty. The findings of the trial judge that the evidence did not establish that P relinquished her decision‑making power with respect to the loans to G, and that G had no discretionary power over P’s interests that he was able to exercise unilaterally or otherwise, were fatal to P’s claim that there was an ad hoc fiduciary duty on G’s part to act solely in her interests in relation to these cash advances.
Finally, the SCC held there had been no conflict of interest. Given the limited nature of the retainers and the unusual nature of the advances G and the law firm did not breach their duty of care arising from the solicitor‑client relationship between them and P. There was no actual conflict of interest between the firm’s duties to her in connection with the limited retainers and its interest in receiving the advances and there was not any reasonable apprehension of conflict. Given the very limited nature of the retainers and the manner in which the advances were made — unsolicited and frequently without advance notice — there was no duty on the firm under negligence principles to give P advice about those advances or to insist that she obtain independent legal advice about them.
Regards,
Blair
Thursday, November 12, 2009
Letters of Credit and the Bank's Duty of Good Faith
In the case of Nareerux Import Co. Ltd. v. Canadian Imperial Bank of Commerce, 2009 ONCA 764 the Court of Appeal held that a Bank owes a duty of good faith to the holders of letters of credit so that the bank cannot act in a manner which would defeat the purpose of the letter of credit.
Robertson was a customer of CIBC, and financed the purchase of shrimp from Thailand Fisheries through a credit facility arranged with the Bank. Upon arrival in the United States, the shrimp were stored in large warehouses where they awaited purchase from various Sam’s Club outlets. Payment was to be made under letters of credit upon presentation to CIBC of purchase orders and receipts showing that the shrimp had been taken down by Sam’s Club.
Although Thai Fisheries had not been paid for all of the shrimp it supplied under the letters of credit, the proceeds of sale from the shrimp were used by Robertson and the Bank to reduce the Robertson line of credit that had been arranged to finance the trade transaction.
Thai Fisheries argued that CIBC and Robertson colluded to reduce Robertson’s line of credit – and therefore CIBC’s exposure – by arranging for shrimp to be sold without documentation from Sam’s Club and then relying on non-compliance with the letters of credit to refuse payments, while at the same time directing the monies received to reduce Robertson’s overdraft instead of ensuring that the monies were used to pay Thai Fisheries under the letters of credit.
CIBC argued that it did nothing improper, that it complied with the provisions of the letters of credit, which were not honoured because the requisite documentation was not presented, and that Thai Fisheries knowingly ran the risk of this eventuality when it accepted the letters of credit.
The trial judge ruled in favour of Thai Fisheries and granted judgment in its favour in the amount of $10,381,035 together with pre-judgment interest and costs. The court of Appeal dismissed the appeal.
CIBC raised one defence only: Thai Fisheries failed to comply with its obligation imposed by the special conditions in the Letters of Credit because receipts from Sam’s Club, through Robertson, were never delivered to CIBC. Since letters of credit must be strictly construed the delivery of the receipts from Sam’s Club was a pre-condition to payment. No receipts were provided for the shrimp in question, and therefore CIBC was not liable to pay.
The Court of Appeal held that CIBC was not entitled to rely upon the defence of non-compliance because:
(a) CIBC knowingly contributed to, or acquiesced in, the circumstances that undermined the prospect of strict compliance with the Letter of Credit, then used that non-compliance to justify the refusal of payment. It did so in collaboration with its customer, Robertson, in order to ensure that the proceeds of sale of the shrimp sold under the Letters of Credit were used to reduce the Bank’s exposure on the Robertson line of credit without corresponding payments being made to Thai Fisheries under the Letters of Credit. This conduct was either a direct breach of the principle of autonomy underlying letter of credit transactions or a breach of CIBC’s implied duty of good faith not to act in a manner meant to defeat or eviscerate the purpose of the Letters of Credit, On either scenario CIBC, as issuer of the Letters of Credit, was precluded from raising the defence of non-compliance.
(b) CIBC failed in its obligation to give timely notice of dishonour to Thai Fisheries when it held back on notifying the seller for more than a year that no receipts would be forthcoming and that the Letters of Credit would be cancelled. In doing so, CIBC placed Thai Fisheries in a position where it reasonably believed that the Letters of Credit would be honoured when the problems with the receipts had been resolved. Consequently, Thai Fisheries took no steps to protect itself by seeking return of the shrimp until it was too late and the shrimp had all been sold.
Regards,
Blair
Robertson was a customer of CIBC, and financed the purchase of shrimp from Thailand Fisheries through a credit facility arranged with the Bank. Upon arrival in the United States, the shrimp were stored in large warehouses where they awaited purchase from various Sam’s Club outlets. Payment was to be made under letters of credit upon presentation to CIBC of purchase orders and receipts showing that the shrimp had been taken down by Sam’s Club.
Although Thai Fisheries had not been paid for all of the shrimp it supplied under the letters of credit, the proceeds of sale from the shrimp were used by Robertson and the Bank to reduce the Robertson line of credit that had been arranged to finance the trade transaction.
Thai Fisheries argued that CIBC and Robertson colluded to reduce Robertson’s line of credit – and therefore CIBC’s exposure – by arranging for shrimp to be sold without documentation from Sam’s Club and then relying on non-compliance with the letters of credit to refuse payments, while at the same time directing the monies received to reduce Robertson’s overdraft instead of ensuring that the monies were used to pay Thai Fisheries under the letters of credit.
CIBC argued that it did nothing improper, that it complied with the provisions of the letters of credit, which were not honoured because the requisite documentation was not presented, and that Thai Fisheries knowingly ran the risk of this eventuality when it accepted the letters of credit.
The trial judge ruled in favour of Thai Fisheries and granted judgment in its favour in the amount of $10,381,035 together with pre-judgment interest and costs. The court of Appeal dismissed the appeal.
CIBC raised one defence only: Thai Fisheries failed to comply with its obligation imposed by the special conditions in the Letters of Credit because receipts from Sam’s Club, through Robertson, were never delivered to CIBC. Since letters of credit must be strictly construed the delivery of the receipts from Sam’s Club was a pre-condition to payment. No receipts were provided for the shrimp in question, and therefore CIBC was not liable to pay.
The Court of Appeal held that CIBC was not entitled to rely upon the defence of non-compliance because:
(a) CIBC knowingly contributed to, or acquiesced in, the circumstances that undermined the prospect of strict compliance with the Letter of Credit, then used that non-compliance to justify the refusal of payment. It did so in collaboration with its customer, Robertson, in order to ensure that the proceeds of sale of the shrimp sold under the Letters of Credit were used to reduce the Bank’s exposure on the Robertson line of credit without corresponding payments being made to Thai Fisheries under the Letters of Credit. This conduct was either a direct breach of the principle of autonomy underlying letter of credit transactions or a breach of CIBC’s implied duty of good faith not to act in a manner meant to defeat or eviscerate the purpose of the Letters of Credit, On either scenario CIBC, as issuer of the Letters of Credit, was precluded from raising the defence of non-compliance.
(b) CIBC failed in its obligation to give timely notice of dishonour to Thai Fisheries when it held back on notifying the seller for more than a year that no receipts would be forthcoming and that the Letters of Credit would be cancelled. In doing so, CIBC placed Thai Fisheries in a position where it reasonably believed that the Letters of Credit would be honoured when the problems with the receipts had been resolved. Consequently, Thai Fisheries took no steps to protect itself by seeking return of the shrimp until it was too late and the shrimp had all been sold.
Regards,
Blair
Monday, September 21, 2009
Bell, Telus ordered to give subscribers credits
The Supreme Court of Canada released a recent judgment that provided a much needed boost to many Canadians. The Court upheld a decision of the CRTC that required carriers such as Bell Canada to give their subscribers credits or reduce their rates.
In May of 2002, the CRTC, in the exercise of its rate-setting authority, established a formula to regulate the maximum prices to be charged for certain services offered by carriers such as Bell Canada (the "Price Caps Decision"). Under the formula established by the Price Caps Decision, any increase in the price charged for services in a given year was limited to an inflationary cap, less a productivity offset to reflect the low degree of competition in the marketplace. The CRTC ordered carriers to establish deferral accounts as separate accounting entries in their ledgers to record amounts representing the difference between the rates actually charged and those otherwise determined by the formula.
In December of 2003, Bell Canada sought approval from the CRTC to use the balance in its deferral account to expand high-speed broadband internet services in remote and rural communities. After public consultation, the CRTC decided that the deferral account should be used to improve accessibility for individuals with disabilities and for broadband expansion. Any surplus amounts were to be distributed to residential subscribers either through a one time credit or through rate reductions. This was known as the "Deferral Accounts Decision".
Bell Canada appealed the order of giving one time credits. The Consumer Association of Canada and the National Anti-Poverty Organization appealed the decision that funds be used for broadband expansion. The Federal Court of Appeal dismissed the appeals finding that the Price Caps Decision always contemplated that the use of the deferral accounts would be subject to the CRTC's directions and that the CRTC was acting within its mandate. Telus Communications Inc. joined Bell Canada in appealing this decision to the Supreme Court of Canada.
The Supreme Court unanimously dismissed the appeal. It held that the CRTC's decisions were reasonable based on Canadian telecommunications policy objectives. The CRTC did exactly what it was mandated to do under the Telecommunications Act. It had the statutory authority to set just and reasonable rates, to establish deferral accounts, and to direct the disposition of the funds in those accounts. It was obliged to do so in accordance with the telecommunications policy objectives set out in the legislation and to balance and consider a wide variety of objectives and interests. The Supreme Court held that the CRTC did so in a reasonable way, both in ordering subscriber credits and in approving the use of the funds for broadband expansion.
Regards,
Blair
In May of 2002, the CRTC, in the exercise of its rate-setting authority, established a formula to regulate the maximum prices to be charged for certain services offered by carriers such as Bell Canada (the "Price Caps Decision"). Under the formula established by the Price Caps Decision, any increase in the price charged for services in a given year was limited to an inflationary cap, less a productivity offset to reflect the low degree of competition in the marketplace. The CRTC ordered carriers to establish deferral accounts as separate accounting entries in their ledgers to record amounts representing the difference between the rates actually charged and those otherwise determined by the formula.
In December of 2003, Bell Canada sought approval from the CRTC to use the balance in its deferral account to expand high-speed broadband internet services in remote and rural communities. After public consultation, the CRTC decided that the deferral account should be used to improve accessibility for individuals with disabilities and for broadband expansion. Any surplus amounts were to be distributed to residential subscribers either through a one time credit or through rate reductions. This was known as the "Deferral Accounts Decision".
Bell Canada appealed the order of giving one time credits. The Consumer Association of Canada and the National Anti-Poverty Organization appealed the decision that funds be used for broadband expansion. The Federal Court of Appeal dismissed the appeals finding that the Price Caps Decision always contemplated that the use of the deferral accounts would be subject to the CRTC's directions and that the CRTC was acting within its mandate. Telus Communications Inc. joined Bell Canada in appealing this decision to the Supreme Court of Canada.
The Supreme Court unanimously dismissed the appeal. It held that the CRTC's decisions were reasonable based on Canadian telecommunications policy objectives. The CRTC did exactly what it was mandated to do under the Telecommunications Act. It had the statutory authority to set just and reasonable rates, to establish deferral accounts, and to direct the disposition of the funds in those accounts. It was obliged to do so in accordance with the telecommunications policy objectives set out in the legislation and to balance and consider a wide variety of objectives and interests. The Supreme Court held that the CRTC did so in a reasonable way, both in ordering subscriber credits and in approving the use of the funds for broadband expansion.
Regards,
Blair
Friday, September 4, 2009
Supreme Court of Canada to hear Khadr Appeal
Omar Khadr, a Canadian citizen, was taken prisoner in Afghanistan when he was 15 years old and has been detained by U.S. Forces since 2002 at Guantanamo Bay, Cuba, where he is currently facing murder and other terrorism-related charges. During his detention, Mr. Khadr was given no special status as a minor. He was not allowed to communicate with anyone outside Guantanamo Bay until November 2004, when he met with legal counsel for the first time. The Canadian Government has asked, through diplomatic channels, for consular access and other assurances, but it is its policy not to request repatriation until the conclusion of the prosecution.
In 2003, Canadian officials questioned Mr. Khadr, still a minor, at Guantanamo Bay, with respect to matters connected to the charges he is now facing, and shared the product of these interviews with U.S. authorities. In 2006, after formal charges were laid against him, Mr. Khadr sought disclosure in Canada of, notably, the records of the interviews conducted at Guantanamo Bay. The S.C.C. ordered disclosure. After the information was disclosed, it became clear that when the officials interviewed Mr. Khadr, they were aware he had been subjected to a form of sleep-deprivation to make him more amenable and willing to talk.
Mr. Khadr asked the Canadian Government to repatriate him. He sought judicial review of the policy and decision of the Canadian Government not to seek his repatriation. The Federal Court granted the application for judicial review. The C.A. dismissed the appeal.Prime Minister of Canada, Minister of Foreign Affairs, the Director of the Canadian Security Intelligence Service and Commissioner of the Royal Canadian Mounted Police v. Omar Ahmed Khadr (F.C.A., August 14, 2009) (33289) "Granted Without Costs. The application for leave to appeal and the motion to stay the order of the Federal Court of Appeal and to expedite the hearing of the appeal are granted without costs. The appeal is to be heard on November 13, 2009, and the schedule for serving and filing the material and any application for leave to intervene shall be set by the Registrar.
Regards,
Blair
In 2003, Canadian officials questioned Mr. Khadr, still a minor, at Guantanamo Bay, with respect to matters connected to the charges he is now facing, and shared the product of these interviews with U.S. authorities. In 2006, after formal charges were laid against him, Mr. Khadr sought disclosure in Canada of, notably, the records of the interviews conducted at Guantanamo Bay. The S.C.C. ordered disclosure. After the information was disclosed, it became clear that when the officials interviewed Mr. Khadr, they were aware he had been subjected to a form of sleep-deprivation to make him more amenable and willing to talk.
Mr. Khadr asked the Canadian Government to repatriate him. He sought judicial review of the policy and decision of the Canadian Government not to seek his repatriation. The Federal Court granted the application for judicial review. The C.A. dismissed the appeal.Prime Minister of Canada, Minister of Foreign Affairs, the Director of the Canadian Security Intelligence Service and Commissioner of the Royal Canadian Mounted Police v. Omar Ahmed Khadr (F.C.A., August 14, 2009) (33289) "Granted Without Costs. The application for leave to appeal and the motion to stay the order of the Federal Court of Appeal and to expedite the hearing of the appeal are granted without costs. The appeal is to be heard on November 13, 2009, and the schedule for serving and filing the material and any application for leave to intervene shall be set by the Registrar.
Regards,
Blair
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