Canada: BLG Monthly Update - April 2012

Last Updated: April 24 2012
Article by Neil Guthrie

Most Read Contributor in Canada, September 2016

The BLG Monthly Update is a digest of recent developments in the law which Neil Guthrie, our National Director of Research, thinks you will find interesting or relevant – or both.


Art law/torts

  • be careful when you sell the family silver


  • bank not liable for honouring bill payable to non-existing or fictitious person


  • no losses suffered but UK regulator fines bank for erroneous statements to investors

Civil procedure

  • NY court OKs use of computer-assisted document review
  • reaching for the stars – a vexatious litigant
  • some things are just beyond the reach of an order for specific performance

Class actions/IP

  • lawyers' infringement class action certified

Conflict of laws/employment law

  • worker abroad may still be subject to jurisdiction of domestic employment tribunal

Consumer protection/damages

  • SCC suggests punitive damages may be available even if no compensatory damages awarded


  • love and affection are wonderful things, but insufficient for formation of contract
  • was 'loan' used as a verb or a noun? it made a difference, apparently


  • breach of confidentiality obligations doesn't need to relate to information you actually own

Corporate law

  • New York benefit corporations statute now in effect


  • Québec CA says non-compete must be signed at start of employment relationship


  • rectification isn't a magic-wand kind of remedy; it won't fix every error


  • business e-mails might not be business records – and therefore might be inadmissible as hearsay
  • e-mail sent to personal lawyer on company system might not be privileged (but then again might)

Evidence/administrative law

  • Ontario Energy Board rejects argument that proceeding before it is 'litigation' giving rise to litigation privilege

Evidence/securities law

  • contents of regulatory settlement not protected by settlement privilege, says NS court

Human rights/statutory interpretation

  • religion and commerce make strange bedfellows

Intellectual property

  • BlackBerry v CrackBerry
  • celeb wins in .xxx domain name fight
  • go ahead, play the guitar while dressed only in your underpants, a cowboy hat and boots – just don't trade on the name 'Naked Cowboy'


  • be careful in taking a security interest in client property in lieu of fees


  • breach of MFIPPA isn't a cause of action

Statutory interpretation

  • but was the playground a 'playground'?


  • and was the claim for inducing breach of contract really a defamation suit aimed at inducing libel chill?


  • scope of healthcare provider's duty to non-patients


  • extent of duty to safeguard economic interests of confidential informer

Trusts/unjust enrichment

  • rebutting presumptions about presumptions in the area of resulting trusts

Unjust enrichment

  • ex-wife makes tactical error in trying to get more money from her fraudster ex-husband

Wills and estates/conflict of laws

  • somewhat unseemly battle for the right to dispose of a dead body


Be careful when you sell the family silver

Lord Coleridge made the tough decision to sell off some family heirlooms in order to prevent the sale of his ancestral home. Among the pieces he proposed to put on the block was the Coleridge Collar, a gold chain of office dating from the reign of Henry VIII and believed to be the only such artefact to survive complete. Or that's what the family had always thought, until the appraiser at Sotheby's told them it was a late 17th-century copy. Lord Coleridge decided to sell it privately for ₤35,000 and was forced to sell the house as well. Imagine his Lordship's consternation when the collar sold two years later – as the genuine article – for ₤260,000 at Christie's.

He sued Sotheby's for negligent valuation, on the grounds that the appraiser failed to test the metal, which would have shown that it dated from the 1540s. Judge Mark Pelling QC held that the Sotheby's expert had met the standard of a reasonable and competent valuer in her position, but should also have given an estimate for private sale at ₤50,000: [2012] EWHC 370 (Ch). Lord C was entitled to ₤15,000 to account for the difference, rather short of the ₤415,000 claimed. Court costs on both sides are said to be over ₤1 million (the bulk of which the noble lord is on the hook for).

[Link available here].


Bank not liable for honouring bill payable to non-existing or fictitious person

The payee in this instance was SMR, a fake entity which billed Rouge Valley Health System for services that were never rendered. Rouge Valley's dishonest employee then let his buddy pay Rouge Valley's cheques into the account of SMR and Associates, which was the buddy's sole proprietorship. The fraud came to light ($700,000 later) and Rouge Valley sued the bank for having negotiated the instrument, albeit innocently.

The motion judge found that SMR was both a 'non-existing' and a 'fictitious' person for the purposes of the Bills of Exchange Act (BEA). The BEA provides that a bank may treat a bill payable to such a person as payable to the bearer of the bill (here, the buddy) and thereby avoid liability for conversion, which is strict – that is, innocence of the fraud of a third party is no defence. The Court of Appeal agreed that SMR was non-existing, so it wasn't necessary to consider whether it was also fictitious (not necessarily the same thing at law): Rouge Valley Health System v TD Canada Trust, 2012 ONCA 17.

Good for banks, not so good for parties in the position of Rouge Valley.

[Link available here].


No losses suffered but UK regulator fines bank for erroneous statements to investors

Santander UK plc advertised two structured products, stating in its promotional literature that investors' exposure would be protected under the UK's Financial Services Compensation Scheme (FCSC). Investors began to question the extent of FCSC coverage in 2008, but the bank did not revise its disclosure documents until 2010 to say that coverage was, in fact, limited. Santander then offered investors the option to surrender the products at no penalty.

The regulator recognised that no investors had suffered losses and that the risk of default on the part of the bank was very low, but nevertheless imposed a stiff penalty (₤1.5 million). The regulator seems to be putting into practice the suggestion last year by its chair, Lord Turner, that investor redress might not need to be predicated on proof of loss.

[Links available here, here and here].


NY court OKs use of computer-assisted document review

If you were looking for a case endorsing the use of predictive coding technology for the purposes of document review, this is it. A magistrate judge in Manhattan has recognised that computer-assisted review is an acceptable way to get through the reams of documents produced in the context of litigation: Da Silva Moore v Publicis Groupe, 11 Civ 1279 (SDNY, 24 February 2012).

While coding technology isn't perfect, it's pretty good and will not (for the time being, anyway) replace human review entirely. It's also not appropriate in all cases – but was certainly a good solution in this case, which involved more than 3 million e-mails which could usefully be subjected to keyword-searching.

Compare Kleen Products LLC v Packaging Corp of America, 775 FSupp 2d 1071 (ND Ill 2011), where the plaintiff has sought to require the other side to use a particular type of computer-assisted review (content-based advanced analytics), which it contends is preferable to mere keyword-searching.

[Link available here].

Reaching for the stars: a vexatious litigant

Sylvio Langevin sought to amend his claim to proprietary rights in the Earth, Mercury, Venus, Jupiter and its four biggest moons, Saturn and Uranus, in order to encompass Neptune and Pluto, as well as the space between all the planets to the limits of the galaxy, apparently because he feared a plan by China to colonise space: Re Langevin, 2012 QCCS 613.

Problem was, he had a bit of a history of being declared a vexatious litigant. Was it time to invoke the provision of the Code of Civil Procedure which would simply shut down the current proceedings and forbid further claims without the permission of the chief justice of the Superior Court?

In a word, yes.

[Link available here].

Some things are just beyond the reach of an order for specific performance

Henry Washington, a self-represented inmate, advanced 'prolix and confusing' claims against 150 defendants, alleging that he had been mistreated in a variety of ways while incarcerated – some trivial, some serious, some bizarre. He sought money damages, replacement of damaged property, injunctive relief and specific performance.

The last remedy related to one of the 'central recurring assertions' in his pleadings: that the conduct of prison staff had resulted in his 'genital dysmorphism', specifically shrinkage, which he wanted to have reversed through surgery. The Pennsylvania district court, while dealing principally with Washington's request for additional time to amend his already voluminous pleadings, noted in passing that to restore the plaintiff 'to his former stature' was 'something that is plainly beyond the power of any court to achieve'. The court also denied leave for further, um, extensions of time.

Washington v Grace (D Penn, 7 February 2012)


Lawyers' infringement class action certified

Waldman, a prominent litigator, objected to the inclusion of his factum in Bouzari v Islamic Republic of Iran in the collection of court documents available to subscribers to the Litigator database on WestlawCanada, published by Thomson Reuters Canada (TRC). The database contains over 100,000 publicly available court documents, which TRC uploads without the permission of their authors. There are documents in Litigator with about 13,000 lawyers' names on them, and those of 6,500 firms.

TRC will remove documents from the database if the originating lawyer or firm objects, which Waldman did. He also sought certification of a class action on the part of lawyers, paralegals and other authors of documents in the database, on the grounds that TRC infringes their copyright in the material.

TRC opposed this, arguing that the authorship and ownership of legal documents is not straightforward, given that many hands may hold the pen and may rely on precedents (not necessarily their own). TRC pointed out that it is not settled whether legal documents are protected by copyright at all. It also suggested that Waldman's claim offended public policy by attempting to limit the principle of open access to the courts.

Justice Perell observed that certification wasn't the place to deal with the merits of TRC's argument (although he provides a typically Perellian overview of the law on many points), holding that Waldman met the low procedural threshold for certification: Waldman v Thomson Reuters Canada Corp, 2012 ONSC 1138. The judge did narrow the scope of the class to exclude clients(who may also have a hand in the drafting), in-house and public-sector lawyers, and self-represented litigants.

For similar proceedings, see White v West Publishing Corp, filed in the Southern District of New York on 12 February 2012.

[Link available here]


Worker abroad may still be subject to jurisdiction of domestic employment tribunal

The UK Supreme Court's decision in Ravat v Halliburton Manufacturing and Services Ltd, [2012] UKSC 1, is of interest to anyone advising a multinational enterprise or working at one.

Ismail Ravat worked for Halliburton, a UK company based in Aberdeen, from 1990 until his termination in 2006. At the time of his dismissal, he was performing services for a German affiliate of Halliburton, alternating between 28 days on the job in Libya and 28 days off back home in England. The court described him as essentially a commuter. Ravat claimed that he had been wrongfully dismissed, but the threshold issue was whether the Scottish employment tribunal had jurisdiction to hear his case. The tribunal thought so, but the appeal tribunal disagreed, and the case wended its way up to the Supremes.

The general rule is that the place of employment will be decisive in determining the applicable law, but Lord Hope (for the court) held that this is not an absolute rule. Where the employee's connection to Great Britain is stronger than to the foreign country, he or she will be able to invoke the protections of domestic employment law. Ravat was a British subject, resident in Britain, paid in sterling, eligible for British employment benefits. He had been assured that his employment relationship would continue to be governed by UK law while he was in Libya. On the facts, Ravat's connection with the UK was stronger than that with Libya, so his wrongful dismissal claim was remitted to the employment tribunal for hearing on the merits.

[Link available here].


SCC suggests punitive damages may be available even if no compensatory damages awarded

Jean-Marc Richard received an 'official sweepstakes notification' in the mail which suggested he had won a prize of $833,337 and was eligible for a bonus prize of $100,000; the fine print went on to say, however, that the prize was his only if he actually had the winning entry and returned it within a certain time. Richard sent in the form, which also had the effect of signing him up for a subscription to Time magazine. When his prize failed to arrive, Richard called up the magazine and was told he had had merely received an invitation to enter the sweepstakes, which he hadn't won. The manager who had purportedly signed the letter in the envelope was, they admitted, a fiction. Richard sought a declaration in the Superior Court that he was the legitimate prize winner, which he didn't get, but the trial judge found that the magazine had engaged in prohibited business practices under the Consumer Protection Act (CPA), awarding $1,000 for moral injuries and punitive damages of $100,000. The Québec Court of Appeal reversed, finding that the magazine's representations were not actually false or misleading (to a person of average intelligence) and that use of a fictitious name did not mislead anyone about the merchant's identity.

The Supreme Court of Canada thought the trial judge got it right: the 'general impression' of the advertisement was misleading, the precise terms of the contest were buried and the whole thing was taking advantage of the kind of vulnerable – nay, credulous – person the Consumer Protection Act is designed to protect. The trial judge's award of $100,000 in punitives was, however, cut back to $15,000: Richard v Time Inc, 2012 SCC 8.

On the subject of punitive damages, the LeBel and Cromwell JJ (for their colleagues) suggested that these could be awarded under the CPA even where there is no award of compensatory damages, based on the wording of the legislation, which has a crucial 'also' in the relevant provision (s 272), suggesting that the two kinds of damages are not linked. The court also observes that punitive damages are appropriate where a wrongdoer treats a potential award of compensatory just the cost of earning greater profits from wrongdoing and, perhaps, that punitive damages could be awarded under Québec civil law even where there is no legislative provision authorising them (not the 'current' rule (at para 179), but the court seems to be leaving the door open). As Barry Glaspell of the Toronto office suggests, common-law courts may also be persuaded to decouple punitive from compensatory damages, which can't be a good thing.

[Link available here].


Love and affection: wonderful things but insufficient for formation of contract

Nice little case from the great state of Ohio: Williams v Ormsby, Slip Op no 2012-OHIO-690 (Supr Ct Ohio 23 February 2012). Amber Williams and Frederick Ormsby moved in together, intending to marry. The house was Amber's, but after Frederick paid off the mortgage, she conveyed title to him. Shortly afterwards, things became strained between the couple.

She moved out and in March 2005 they signed an agreement to sell the house and allocate the proceeds. A reconciliation ensued, and in June 2005 the couple signed a new agreement which made them 'equal partners' in the house and provided for disposition of the proceeds in the event of another break-up. The reunion was short-lived: by 2007 they were living in separate areas of the house, and Frederick left in April 2008. Litigation followed, in which Amber sought to enforce the June 2005 agreement.

The trial court found that the March 2005 agreement was enforceable but the June 2005 agreement was not: the first was supported by consideration (the mortgage payments), the second lacked it. Amber's claims for contribution and unjust enrichment did succeed, but the judge thought that Frederick was entitled to damages for breach of the March 2005 agreement. Amber appealed and managed to persuade the court that 'moving into a home with another and resuming a relationship can constitute consideration sufficient to support a contract' and that, although the parties had not married as planned, the consideration for the June 2005 agreement had not failed. Frederick appealed on the sole issue of consideration. He won. The majority of the Ohio supreme court noted that while courts will not inquire into the adequacy of consideration (a peppercorn will suffice), they will ask whether there was consideration at all. Here, there was none. Love and affection (even if more durable than that between Amber and Frederick) will not be enough; the court below went astray in its reliance on the fact that a romantic relationship will involve 'some sacrifice by each partner' and on Amber's statement that Frederick 'had my love'.

Pfeifer J, concurring in part and dissenting in part, thought that the majority had, in focusing on love and affection (while correctly stating the law on it) 'chased a red herring ... all the way upstream until it reached a dry creek bed'. There was consideration for the June 2005 agreement, even if it was not explicitly stated: the voiding of the March 2005 agreement. But, given that the case was 'so fact specific and so riven with bizarre, if irrelevant details', he thought that it provided 'no meaningful guidance to the bench and bar' and was to be dismissed 'as having been improvidently accepted'.

Justice Pfeifer can't be right about the value of the case: this one is certain to end up in first-year contracts courses.

Was 'loan' used as a verb or a noun? it made a difference, apparently

A 'subtle grammatical difference' in interpretation was enough to establish contractual ambiguity in the mind of Master Schlosser of the Alberta Court of Queen's Bench in Rohit Capital Inc v Aqua Terra Developments Corp, 2011 ABQB 716.

The parties signed a loan commitment letter but the deal fell through. At issue was whether Rohit Capital, the lender, was entitled to its commitment fee ('$182,000 or 2.0% of Loan Amount') in any event. Aqua Terra took the position that the fee was payable only if the loan was advanced; Rohit thought it was the price of buying its commitment to a future loan. According to the learned Master, Rohit Capital interpreted 'loan' as a verb describing a future action, while Aqua Terra saw it as a noun (no loan until funds actually advanced, no fee payable either).

As a grammatical matter, the clause at issue does not use 'loan' as a verb, and Rohit Capital is surely correct about the nature of a commitment fee, but it was sufficiently doubtful for the Master that he couldn't decide the matter by way of summary judgment.

[Link available here].


Breach of confidentiality obligations doesn't need to relate to information you actually own

So the English Chancery court reminds us in Jones v Ricoh (UK) Ltd, [2012] EWHC 348. Jones's company, CMP Group Ltd, was (before its voluntary liquidation) in the business of helping other companies achieve efficiencies in their photocopying, scanning and printing through multi-functional devices (MFDs). It also acted as a sales agent for Ricoh (also in the document-handling business). CMP and Ricoh formalised their arrangements in an agreement with confidentiality provisions. Both parties then responded separately to a Bombardier RFP for document services; CMP was successful. Ricoh was the winning bidder for a second Bombardier tender a few years later. CMP claimed that Ricoh had breached its confidentiality obligations under the agreement and in equity when it responded to the bids and later undertook to provide MFDs to Bombardier. Ricoh argued that the information at the heart of the alleged breaches wasn't CMP's but related to its role as Ricoh's agent, and was therefore not something that CMP could complain about.

Judge Hodge disagreed. As long as a plaintiff has a 'sufficient interest' in the information and this gives rise to an expectation that it was provided and will be treated in confidence, then whose 'property' it may be is irrelevant. Having found that Ricoh breached the agreement, it was not necessary to consider the equitable claim for breach of confidence; the existence of a contractual confidentiality clause displaces any general duty of care with respect to the information that would otherwise arise in equity. The judge was prepared to award damages for CMP's loss of a chance in failing to win the second Bombardier tender (the price the plaintiff could reasonably have extracted from the defendant in the form of a licence to use the confidential information), but found that the breach in question involved a spreadsheet that was not used to win the contract and that nominal damages were appropriate.

[Link available here].


New York benefit corporations statute now in effect

New York has joined the still relatively small roster of states (Maryland, New Jersey, Vermont, Virginia, Hawaii and California) to pass legislation permitting the formation of business corporations that also pursue some general public benefit, as assessed against a third-party standard. The benefit can be environmental, cultural, related to public health, aimed at 'under-served' communities and the like. Greyston Bakery of Yonkers, NY, which has long had a commitment to social development, became the first benefit corporation in the state on 16 February 2012. Is this something Canadian legislatures will pick up on?

[Links available here, here and here].


Québec CA: non-compete must be signed at the start of the employment relationship

Just before Patrick Jean joined OmegaChem, he was asked by e-mail if he would sign a non-competition agreement. He agreed but the details were not provided. Almost three years later, OmegaChem proposed a wide-ranging non-compete, which Jean refused to sign if the company did not make financial concessions. OmegaChem said no and fired him.

This led to a complaint to the labour relations board, which held that Jean's original employment contract contemplated a non-compete clause, such that the clause ultimately proposed was not a modification to the terms of his employment. Jean had breached that contract by refusing to sign the non-compete and the company was justified in terminating his employment. The Québec Superior Court declined to intervene, which took Jean's appeal up a notch. The Court of Appeal sided with Jean: Jean c OmegaChem inc, 2012 QCCA 232. The company should have proposed the non-compete at the start of Jean's employment in clear, written terms. The case was remitted to the commission for determination of the appropriate remedy for unfair dismissal.

[Link available here].


Rectification isn't a magic-wand kind of remedy; it won't fix every error

Orman and Freed were the victims of a Ponzi scheme perpetrated by their investment adviser. They reported moneys received through the scheme (there were some) as interest income but, once the fraud was revealed, wanted to reclassify it as a return of principal or capital, which would result in savings of $551K and $654K for them respectively. They also sought to have bonuses paid to them by the adviser's holding company reclassified as the repayment of corporate loans: Orman v Marnat Inc, 2012 ONSC 549.

No dice, said the Canada Revenue Agency (CRA) and subsequently Perell J of the Ontario Superior Court. Justice Perell pointed out that the equitable remedy of rectification – typically applied to contracts but also applicable to other records like tax filings – will fix errors in how the parties implement their intentions, but not errors about the intentions themselves. When Orman and Freed filed their taxes, their intention was to record interest income and bonus payments; the fact that they later came to realise that they had been mistaken as to the underlying realities was not something equity could help them with, leaving it up to CRA (somewhat bizarrely referred to as 'the Taxman' throughout the judgment) to determine the tax treatment of the payments.

For a case where a rectification application succeeded, see McPeake v Canada (AG), 2012 BCSC 132.

[Links available here and here].


Business e-mails might not be business records – and therefore might be

inadmissible as hearsay

Don't be put off by the fact that the case is from Louisiana; it's decided under the US federal rules of evidence, so it isn't just bayou law: In re Oil Spill by the Oil Rig 'Deepwater Horizon' in the Gulf of Mexico, on April 20, 2010, 2012 US Dist LEXIS 3406 (ED La 11 January 2012).

Barbier J (good Cajun name) rejected the contention that all e-mails exchanged in the course of business are necessarily 'business records' (and thus exempt from the rule against the admission of hearsay evidence). E-mail will qualify as a business record when it is (a) created at or near the time of the event recorded by someone with personal knowledge of the event and (b) sent or received in the course of regularly conducted business activity.

A lot of e-mail won't qualify, and the analysis must be e-mail by e-mail. Branch (b) requires evidence that the company had a policy requiring the reporting or recording of the information in the e-mail, and that the activity recorded occurs regularly. Otherwise, many e-mail messages are the equivalent of casual business phone calls, which are clearly not business records. Other exceptions to the hearsay rule may apply, but don't assume the one for business records does.

E-mail sent to personal lawyer on company system might not be privileged (but then again might)

Michael Fazio became embroiled in a whole world of trouble while an employee of Temporary Excellence (TE; a temp agency, we hope – otherwise the name is unfortunate): a messy real estate dispute with the daughter and son-in-law of his employer's principal shareholders, allegations of threats and other harassment on the part of the shareholders themselves, an unsuccessful bid to buy TE, being fired. He sued for wrongful dismissal and tortious interference with economic relations, with partial success.

One of the issues in the litigation was access to privileged documents on the TE server, including e-mails Fazio had sent to his lawyer over the TE system and an expert's report. The New Jersey superior court held that Fazio had, in using the corporate server, waived privilege. The appeal division agreed, contrasting Fazio's case with Stengart v Loving Care Agency Inc, 990 A.2d 650 (NJ Super 2010). In that case, an employee also communicated with a lawyer on a personal matter using her employer's computer, but she took reasonable steps to shield the communications: she may have used a work laptop but she logged on from it to her personal, password-protected e-mail account and therefore had an objectively reasonable expectation of privacy. This protected her privilege. Fazio had taken no such precautions and was out of luck.

Fazio v Temporary Excellence of NY Inc, 2012 NJ Super Unpub LEXIS 216


Ontario Energy Board rejects argument that proceeding before it is 'litigation' giving rise to litigation privilege

Litigation privilege was claimed by Toronto Hydro-Electric System Ltd (THESL) over documents prepared by it in connection with proceedings over access to THESL's electricity poles by wireless providers: In the matter of an application by Canadian Distributed Antenna Systems Coalition (OEB, 22 February 2012). There isn't much authority on whether litigation privilege arises in the context of administrative proceedings. The Board concluded that while administrative proceedings will give rise to litigation privilege where they are adversarial in nature or potentially involve a penalty, these particular proceedings did not (even though relations between THESL and the wireless providers were 'unhappy'). There was nevertheless a reasonable prospect of civil litigation between THESL and the wireless providers, even if it was suspended until the outcome of the Board hearings, so litigation privilege arose on that score. Solicitor-client privilege protected some of the documents. THESL had not, in producing expert reports, waived privilege over what appeared to be earlier drafts because it could establish that the latter were prepared for a purpose other than the current proceedings and were thus not really earlier drafts.


Contents of regulatory settlement not protected by settlement privilege, says NS court

Up to now a Canadian trial judge has not ruled whether settlement privilege extends to regulatory settlements; previous Canadian decisions have been interlocutory, procedural and a bit inconclusive: National Bank Financial Ltd v Potter, 2012 NSSC 76.

Warner J of the Nova Scotia trial court noted that settlement privilege is a class privilege as it relates to private litigation – it does not need to be established case by case – and that it would apply to regulatory settlements as a matter of principle. But he went on to say that the regulatory context is different, and gives rise to express or implied waiver of the privilege by the settling party. The point of regulatory proceedings is to protect the public and there is an expectation (often a statutory requirement) that resulting settlements will be made public. The result is that concluded regulatory settlements will be admissible in subsequent civil proceedings, if relevant, in order to protect public confidence in the regulatory scheme.

[Link available here].


Religion and commerce make strange bedfellows

'Bedfellows' being the operative word in Preddy v Bull, [2012] EWCA Civ 83. Peter and Hazelmary Bull had strong religious beliefs, which guided them in the operation of their hotel: unmarried couples were denied rooms with double beds.

This long-standing policy had resulted in many unmarried heterosexual couples being allocated twin beds and was disclosed on the hotel's website. Peter Preddy and Martin Hall, a gay couple in a civil partnership, didn't see that notice, made a booking under Preddy's name and were denied a double bed when they attempted to check in. Preddy and Hall protested and went elsewhere. They also brought a claim under the Equality Act (Sexual Orientation) Regulations 2007, which prohibit discrimination on the basis of sexual orientation.

The Bulls argued that they their policy was dictated by their belief that sex outside marriage is sinful, irrespective of the sex or sexual orientation of the parties. The English Court of Appeal agreed with the judge who first heard the case, holding that the Bulls' policy was discriminatory on the basis of sexual orientation; a heterosexual couple could marry and get a double bed at the hotel, but that option was closed to gay couples, who are unable to marry in England. The restriction was absolute with respect to homosexual couples but not heterosexual ones, and thus directly discriminatory. And while applicable human rights legislation protects freedom of religion, this did not mean that the Bulls were free to apply their religious beliefs 'in the commercial context they have chosen'.

[Link available here].


BlackBerry v CrackBerry

Axel Ltd claimed that its use of the name CRACKBERRY for its online retail store (where it sells mobile devices) was just a fair-use parody of Research in Motion's registered trade-mark BLACKBERRY.

The US Trademark Trial And Appeal Board didn't buy it. Axel was not merely making humorous commentary on RIM's mark; it was using the name to sell competing products. Use of the name CRACKBERRY was likely to cause confusion with BLACKBERRY (really? OK...) and to dilute RIM's mark, even though this was through use of a popular nickname.

Research in Motion Ltd v Defining Presence Marketing Group Inc, Opposition No 91181076 (TTAB, 27 February 2012)

Celeb wins in .xxx domain name fight

You knew this would happen sooner or later with the new .xxx domain names. Sir Richard Branson, the attention-loving founder of the Virgin Group, brought proceedings to shut down the website www .richard, a 'parking page with links to adult entertainment related websites': Branson v Truman (National Arbitration Forum, 14 February 2012). The respondent presumably got paid every time someone was referred by his site to one of the adult ones. Branson's complaint: (a) the domain name infringed his rights in the trade-mark RICHARD BRANSON (b) the respondent lacked a legitimate interest in the name, (c) the .xxx domain name had been registered and used in bad faith.

The National Arbitration Forum (which hears these disputes) didn't buy the argument that while Branson was well known, his name was not unique and not used as 'the essence of his brand' (i.e. Virgin). The respondent had clearly acted in bad faith in registering and using the domain name. The Forum didn't deign to deal with the arguments that Branson could have registered a .xxx domain name for himself but did not, or the contention that it was a bit rich for Branson to object to someone else applying a 'sex sells' marketing strategy.

[Link available here].

Go ahead, play the guitar while dressed only in your underpants, a cowboy hat and boots – just don't trade on the name 'Naked Cowboy'

Among the colourful characters in New York's Times Square is a busker who calls himself the Naked Cowboy. This appears to be his legal, as well as his business, name – and it's also a registered trade-mark. Said cowboy took issue with the portrayal of a similarly dressed character in a CBS soap opera called The Bold and the Beautiful (which may have been scraping the nether regions of the barrel for plot ideas). CBS did not use the name 'Naked Cowboy' in the episode, but did describe the character as such in a clip posted on YouTube.

The district court in Manhattan found that the episode did not infringe Naked Cowboy's trade-mark because it did not use the actual name 'Naked Cowboy'. No monopoly in the underpants/guitar/boots/hat combo. While the broadcaster did use the name to describe the YouTube clip and had paid for ads on the site, its use of the name was descriptive and not meant to identify CBS's own product. Fair use. The Naked Cowboy costume, a recognisable and protectable mark, had not been infringed or diluted, as CBS's character did not display all the distinctive features of the real-life busker – notably the word 'tips' and a dollar sign on the boots. Naked Cowboy's claims under state deceptive practices legislation and for fraud at common law also failed.

Naked Cowboy v CBS and Bell-Philip Television (SDNY, 22 February 2012)


Be careful in taking a security interest in client property in lieu of fees

The client in Hillsburgh Stables Inc v Gardiner Roberts LLP, 2012 ONCA 95, couldn't pay its legal bill and offered a guarantee and a collateral mortgage over farm property instead. The firm agreed and later issued a notice of sale with respect to the property. The client sought to invalidate the firm's security interest on the grounds that the firm had not advised it to seek independent legal advice (ILA) about the merits of the transaction.

The Court of Appeal agreed with the judge below that the firm had violated Law Society rule 2.06(2.1) in not recommending ILA. But it also agreed that the client benefited from the transaction, there was no legal requirement for it to have had ILA and the transaction was not unfair. The guarantee and the collateral mortgage were enforceable.

[Link available here].


Breach of MFIPPA isn't a cause of action

No surprise in Sampogna v Smithies, 2012 ONSC 610. Smithies, a manager in the municipal planning department, released information to a city councillor about the Sampognas' proposed purchase of a laneway, which included personal information. Smithies thought it was OK to do this. The Sampognas did not.

McEwen J applied well-established principles (Canada v Saskatchewan Wheat Pool [1983] 1 SCR 205, et seq.) in finding that an action for breach of the Municipal Freedom of Information and Protection of Privacy Act could not succeed. Even if it could, Smithies had acted in good faith and was thus protected by the immunity provisions for municipal employees under the City of Toronto Act, 2006.

[Link available here].


But was the playground a 'playground'?

The question mattered to Willie West, who was convicted of selling marijuana to a confidential informant at West's apartment, which was located within 1,000 feet of Holcom Park in Lawrence, Kansas. It mattered because under the drug prohibitions of the US Code, it's an offence to sell drugs within 1,000 feet of a playground, which the legislation defines as 'containing three or more separate apparatus [an unusual plural, that, but correct] intended for the recreation of children including, but not limited to, sliding boards, swingsets, and teeterboards'. Holcom Park had two connected jungle gyms and a swingset, fields for baseball and soccer, and courts for tennis, volleyball and handball. West argued that the jungle gyms were a single apparatus, not two, and that the rest didn't count as apparatus at all.

The 10th Circuit thought West's argument 'too cute for words', even if the jungle gyms counted as a single apparatus; other circuit courts from around the US have had no trouble in finding that a 'playground' doesn't have to have sliding boards, swingsets and teeterboards, as long as there are recreational facilities with some kind of physical structure (the backstop for the baseball diamond qualified) where children were likely to gather: USA v West (10th Cir, 14 February 2012).

[Link available here].


And was the claim for inducing breach of contract really a defamation suit aimed at inducing libel chill?

Unclear, said the Manitoba Court of Appeal in Nygård International Partnership v CBC, 2012 MBCA 8, and not capable of resolution on a motion to strike the claim as frivolous and vexatious.

Nygård, a fashion design firm, alleged that a CBC exposé concerning its business practices was tortious interference with its contractual relations with employees and with its economic interests. CBC reporters allegedly caused Nygård employees to provide confidential information, in breach of their employment agreements. The CBC argued that this was essentially an attempt to bring a defamation action in another guise but to avoid the application of the new defence of responsible communication on matters of public interest. The CBC argued that they were unaware of any duties of employee confidentiality and that Nygård pleaded no facts to support its economic tort claim.

Both the motions court judge and the Court of Appeal thought the pleadings were adequate, there was no evidence of ulterior purpose and only a trial on the merits could decide whether the CBC knew about the extent of the contractual obligations and had induced breach of them. The CBC was correct that it has the right to investigate and gather information, but the extent of this right was not an issue to be determined on a motion to strike.

It will be interesting to see how this one shakes down.

[Link available here].


Scope of healthcare provider's duty to non-patient

OK, it's from Utah, but Jeffs v West, 2012 UT 11 (SC), raises some interesting questions. Trina West, a nurse practitioner, prescribed a cocktail of drugs to David Ragsdale. With the drugs in his system, Ragsdale shot and killed his wife. Their young children sued the nurse, her consulting physician and the medical clinic for negligence in having prescribed medications that caused Ragsdale's violent outburst and his wife's death.

The trial court found for the defendants, holding that they owed no duty of care in the absence of a doctor/nurse-patient relationship; the plaintiffs could not step into Ragsdale's shoes to pursue a medical malpractice case. The state supreme court reversed. A healthcare provider is not required to control its patient's independent conduct – e.g. a mental patient who is released and then hurts someone through no affirmative act of the doctor. Liability will arise, however, where the healthcare provider 'negligently prescribe[s] medication that affirmatively causes a patient to injure nonpatients' and the risk of that harm was a reasonably foreseeable consequence of the medication. The court declined to create a new rule granting immunity from liability to non-patients; healthcare providers are in a position to exercise reasonable care in ensuring that injury does not occur and to bear the risk of loss when it does.

Compare Ahmed v Stefaniu (2006) 275 DLR (4th) 101 (Ont CA), where a psychiatrist was found liable in negligence for having changed the status of one of her involuntary patients to voluntary; once released, the patient murdered his sister, and her widower brought a successful action on his own and his children's behalf.

[Links available here and here].


Extent of police duty to safeguard economic interests of confidential informer

The English Court of Appeal has rejected a claim that an informant was owed a duty by the police to exercise reasonable care in conducting their investigation so as to safeguard his economic interests: An Informer v A Chief Constable, [2012] EWCA Civ 197.

C had financial dealings with X but began to suspect that the latter was involved in criminal activity. C went to the police and agreed to provide information about X (under 'non-binding' instructions which C signed), which led to X's arrest on serious charges. C was himself charged with money-laundering, something his police handlers knew was going to happen but did not prevent. The police also obtained restraint orders over the assets of both C and X, and in doing so misled the court by not mentioning that C was a confidential informer. The order against C was later varied to allow him to deal with certain assets, subject to conditions. C claimed this caused him economic loss and mental distress, so he sued the police for breach of a contract or tort duty to safeguard his economic interests in the conduct of their investigation.

The trial judge rejected the claim; there was no implied contractual term or tort duty under which the police were required to protect C's economic interests. The Court of Appeal agreed with the result, but provided much more detailed analysis. While the police do have a duty to protect the security and welfare of confidential informers (which could extend to their financial welfare), this cannot override the duty owed by the police to the public where the informant's own activity is criminal. The failures of the police in this case were serious but not fatal. Any psychiatric injury to C was not a reasonably foreseeable consequence of the police's actions.

[Link available here].


Rebutting presumptions about presumptions in the area of resulting trusts

Edelman J of the Supreme Court of Western Australia has an awesome vocabulary: it's not often that one sees 'epexegetical' in a judgment (or anywhere else, for that matter). He's also unafraid to embark on the 'procellous [i.e., turbulent] waters of resulting trusts', mindful of the warning of our own Cromwell J in Kerr v Baranow, 2011 SCC 10, that 'there is not much one can say about resulting trusts without a well-grounded fear of contradiction'.

The facts of Anderson v McPherson (No 2 ), [2012] WASC 19, were relatively straightforward. Bruce and Carolyn Anderson contributed most of the purchase price of a house for their son and daughter-in-law, Troy Anderson and Stephannie McPherson. Troy and Stephannie were to make mortgage payments and finance the construction of a small house on the property in which Bob and Carolyn would live. Troy and Stephannie separated. Bob and Carolyn claimed that Troy and Stephannie held the property for their benefit on a resulting trust, in proportion to the contributions Bob and Carolyn had made towards its purchase. As a factual matter, Judge Edelman found that Stephannie had established that title to the property had been transferred to her and Troy for their own benefit, thus rebutting the 'presumption' of resulting trust.

'Presumption' because it isn't really a presumption that a resulting trust arises in cases where the settlor of a trust has impliedly transferred the property subject to a trust for another (or for the settlor, as here). The presumption is that a trust has been declared, not that the trust is legally instituted or the property actually conveyed. The judge also dealt with another so-called presumption in the law of trusts, that with respect to advancement – the principle that where persons are in a certain category of relationship with another (e.g. parent and child, but not parents- in-law and daughter-in-law), a resulting trust will not arise from a transfer of property from one to the other. The 'presumption of advancement' is not really a presumption either: 'It is simply a description of facts where the presumption of resulting trust (or, more accurately, the presumption of a declaration of trust) does not arise.' Links below to the case and a recent paper by Edelman J on unjust enrichment in Australia, if you need some week-end reading.

[Links available here and here].


Ex-wife makes tactical error in trying to get more money from her fraudster ex-husband

'Don't get greedy' may be the underlying message of Independent Trustee Services Ltd v GP Noble Trustees Ltd, [2012] EWCA Civ 195. Anthony Morris defrauded various occupational pension schemes, diverting ₤52 million to offshore companies and receiving ₤4.89 million directly. Four years before the fraud was detected, Morris and his wife Susan divorced. Susan received about ₤1.5 million under the settlement but she later discovered that her ex-husband had lied to the court about the extent of his assets, obtaining the rescission of the original settlement. Independent Trustee Services (ITS), the victim of the fraud, objected on the grounds that Mrs Morris ought not to be able to profit from the turpitude of her former spouse. The judge found in her favour: she was a bona fide purchaser for value (BFPV), innocent of the fraud, and thus entitled to the ₤1.5 million at any rate.

The Court of Appeal reversed. The effect of rescinding the settlement was to make it void ab initio – it is as though it never existed. The corollary of this is the kicker: Mrs Morris could no longer say she was a BFPV because she had taken steps to set aside the settlement and thus knew about the fraud. The title of ITS to the funds continued to subsist and was no longer capable of being defeated by the BFPV defence asserted by Mrs Morris. Ouch!

[Link available here].


Somewhat unseemly battle for the right to dispose of a dead body

This is the stuff of a telenovela. Ignacio Arroyo, a Philippine congressman, came to London for treatment of a chronic liver disease, accompanied by his girlfriend, Grace Ibuna. He died, apparently after Grace gave the instruction to pull the life-support plug. Grace and Arroyo's daughter from his first marriage, Bernardina Arroyo Tantoco, arranged to have the corpse embalmed and applied to the Philippine embassy for the paperwork necessary to have it shipped to an undertaker back home. They were then informed by embassy staff that they had received instructions to send the body to a different firm, but refused to explain why. Enter Alicia Rita Morales Arroyo, the deceased's estranged second wife. Mrs Arroyo claimed the remains as wife and next-of-kin.

Peter Smith J of the Chancery division sorted things out: Ibuna v Arroyo, [2012] EWHC 428 (Ch). Arroyo had executed an apparently valid California will, which had some 'unusual' features (including a weird sort of trust). The will named Bernardina as executrix. There was also a California 'healthcare directive' which gave Grace the authority to make decisions, authorise an autopsy, make organ donations and dispose of his body. Expert testimony indicated that the law of the Philippines would recognise the California instruments, require burial to be conducted in accordance with the wishes of the deceased and give family members a say in the funeral arrangements where the deceased hasn't been clear. Under English law, there is no property in a dead body, but there is a duty to arrange for its proper disposal. The duty falls on the executor or administrator of the estate; if none, it's up to the local government of the place where the body is found. An executor is entitled to have regard to the wishes of the deceased but is not bound by them. Although disposal of the body would normally fall on Bernardina, the judge thought that in light of the healthcare directive it was appropriate to give Bernardina and Grace joint responsibility for the task. Mrs A presumably returned home in high dudgeon.

[Link available here].

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