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Voluntary Disclosure to Securities Commission Constitutes Waiver of PrivilegeVoluntary Disclosure to Securities Commission Constitutes Waiver of Privilege240BLG Blog PostGraham Splawskigsplawski@blg.com | Graham Splawski | 693A30232E777C626C6763616E6164615C6773706C6177736B69 i:0#.w|blgcanada\gsplawski British Columbia Supreme Court confirms that compelled disclosure does not constitute waiver of privilege<p>British Columbia Supreme Court confirms that compelled disclosure does not constitute waiver of privilege</p> The British Columbia Supreme Court, in Huang v. Silvercorp Metals Inc., has held that when Silvercorp voluntarily disclosed an otherwise privileged document to the British Columbia Securities Commission in response to a request, it waived litigation privilege over that document and could therefore be compelled to produce it in a civil proceeding. The Court reiterated that disclosing litigation privileged documents to a securities commission pursuant to compelled disclosure requirements does not constitute waiver of privilege, following the British Columbia Supreme Court decision in Thomson v. Berkshire Investment Group Inc.. However, in the case of Silvercorp, the securities commission merely asked Silvercorp to give it the document, and did not compel their disclosure. Silvercorp's evidence was that it thought that if it did not give the document to the commission in response to the request, the commission would compel production anyway. Silvercorp also saw value in cooperation with the commission. The Court did not find these arguments persuasive, holding that the relevant issue was whether or not the production was compelled. Since it was not, regardless of whether it could have been, Silvercorp had waived privilege over the document. This case is significant for defining the limits of waiver of privilege. It is also significant for reaffirming the Thomson decision, which has not been considered extensively but which is of broad application to regulated entities that can be the subject of regulatory investigations and related civil proceedings.<p>The British Columbia Supreme Court, in <a href="http://canlii.ca/t/h3s5p"><em>Huang v. Silvercorp Metals Inc</em></a><em>.</em>, has held that when Silvercorp voluntarily disclosed an otherwise privileged document to the British Columbia Securities Commission in response to a request, it waived litigation privilege over that document and could therefore be compelled to produce it in a civil proceeding. </p><p>The Court reiterated that disclosing litigation privileged documents to a securities commission pursuant to compelled disclosure requirements does not constitute waiver of privilege, following the British Columbia Supreme Court decision in <a href="http://canlii.ca/t/1q82c"><em>Thomson v. Berkshire Investment Group Inc.</em></a>. However, in the case of Silvercorp, the securities commission merely asked Silvercorp to give it the document, and did not compel their disclosure. Silvercorp's evidence was that it thought that if it did not give the document to the commission in response to the request, the commission would compel production anyway. Silvercorp also saw value in cooperation with the commission. The Court did not find these arguments persuasive, holding that the relevant issue was whether or not the production was compelled. Since it was not, regardless of whether it could have been, Silvercorp had waived privilege over the document.</p><p>This case is significant for defining the limits of waiver of privilege. It is also significant for reaffirming the <em>Thomson </em>decision, which has not been considered extensively but which is of broad application to regulated entities that can be the subject of regulatory investigations and related civil proceedings.</p>5/24/2017 4:00:00 AM2017-05-24T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#75eda1bb-5890-4b6b-aad7-b703245ec2e8;L0|#075eda1bb-5890-4b6b-aad7-b703245ec2e8|Securities: Litigation Regulatory and Compliance;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#83d31cc8-2281-46b1-bd03-ad81b15c38ff;L0|#083d31cc8-2281-46b1-bd03-ad81b15c38ff|Banking RegulatorySecurities: Litigation Regulatory and Compliance;Banking Regulatory
CASL’s Private Right of Action Becomes Effective July 1, 2017CASL’s Private Right of Action Becomes Effective July 1, 2017238BLG Blog PostAlannah Fotheringhamafotheringham@blg.com | Alannah Fotheringham | 693A30232E777C626C6763616E6164615C61666F74686572696E6768616D i:0#.w|blgcanada\afotheringham ​Canada's Anti-Spam Law ("CASL") came into effect on July 1, 2014. Of key importance for financial institutions is CASL's regime of rules and enforcement mechanisms intended to prohibit unsolicited or misleading commercial electronic messages ("CEMs"), violations of which will soon be enforceable by way of private litigation.<p>​Canada's Anti-Spam Law ("CASL") came into effect on July 1, 2014. Of key importance for financial institutions is CASL's regime of rules and enforcement mechanisms intended to prohibit unsolicited or misleading commercial electronic messages ("CEMs"), violations of which will soon be enforceable by way of private litigation.</p> ​Canada's Anti-Spam Law ("CASL") came into effect on July 1, 2014. Of key importance for financial institutions is CASL's regime of rules and enforcement mechanisms intended to prohibit unsolicited or misleading commercial electronic messages ("CEMs"), violations ofwhich will soon be enforceable by way of private litigation. A CEM is any kind of electronic message (for instance, an e-mail, text message or social media message) sent to an electronic address if one of the message's purposes is to encourage the recipient to participate in a commercial activity. While there are certain limited exceptions, the CEM rules apply to a CEM if the computer system sending or accessing the CEM is in Canada, regardless of where the sender or recipient is located. The CEM rules apply even if a CEM is sent to a single recipient. CASL creates an opt-in regime for CEMs which prohibits the sending of a CEM unless (1) the recipient has given their consent to receive the CEM; (2) the CEM complies with certain prescribed formalities (including an unsubscribe mechanism); and (3) the CEM is notmisleading in any respect. An organization is liable for the CASL violations of its employees and agents, and corporate directors and officers will also be liable for CASL contraventions if the director or officer directed, authorized, assented to, acquiesced in or participated in the commission of the contravention. However, a due diligence defence is available to individuals or organizations for CASL violations if they can establish they exercised due diligence to prevent the commission of the contravention. While the Canadian Radio-television and Telecommunications Commission ("CRTC") has regulatory and enforcement powers in respect of violations of CASL's CEM rules (pursuant to which it has already issued enforcement decisions and imposed administrative penalties up to $1.1 million dollars), effective July 1, 2017, private litigants affected by a CASL contravention (including the sending of a CEM without consent or in the absence of the proper formal requirements) may sue for compensatory and statutory damages. Statutory damages for a CASL violation are subject to a maximum of $200 for each contravention, not exceeding $1 million for each day on which the contravention occurred. While CASL's private right of action is in addition to the CRTC's regulatory enforcement powers, certain rules apply to limit overlap between these proceedings and claims for statutory damages. Financial institutions should be aware of the potential for private litigation for CASL violations, and given that CEMs are often distributed broadly, should also note that CASL's private right of action will likely be invoked in support of class actions. To mitigate their exposure, financial institutions should review and update their CASL compliance regime. They should also maintain detailed records of their CASL compliance efforts to assist in establishing a due diligence defence in the event of legal or regulatory proceedings. BLG's Cybersecurity Practice Group has published a client bulletin authored by Bradley J. Freeman that provides greater detail on what you can do to prepare for CASL's private right of action.<p>​Canada's Anti-Spam Law ("CASL") came into effect on July 1, 2014. Of key importance for financial institutions is CASL's regime of rules and enforcement mechanisms intended to prohibit unsolicited or misleading commercial electronic messages ("CEMs"), violations of<br>which will soon be enforceable by way of private litigation.</p><p>A CEM is any kind of electronic message (for instance, an e-mail, text message or social media message) sent to an electronic address if one of the message's purposes is to encourage the recipient to participate in a commercial activity. While there are certain limited exceptions, the CEM rules apply to a CEM if the computer system sending or accessing the CEM is in Canada, regardless of where the sender or recipient is located. The CEM rules apply even if a CEM is sent to a single recipient.</p><p>CASL creates an opt-in regime for CEMs which prohibits the sending of a CEM unless (1) the recipient has given their consent to receive the CEM; (2) the CEM complies with certain prescribed formalities (including an unsubscribe mechanism); and (3) the CEM is not<br>misleading in any respect.</p><p>An organization is liable for the CASL violations of its employees and agents, and corporate directors and officers will also be liable for CASL contraventions if the director or officer directed, authorized, assented to, acquiesced in or participated in the commission of the contravention. However, a due diligence defence is available to individuals or organizations for CASL violations if they can establish they exercised due diligence to prevent the commission of the contravention.</p><p>While the Canadian Radio-television and Telecommunications Commission ("CRTC") has regulatory and enforcement powers in respect of violations of CASL's CEM rules (pursuant to which it has already issued enforcement decisions and imposed administrative penalties up to $1.1 million dollars), effective July 1, 2017, private litigants affected by a CASL contravention (including the sending of a CEM without consent or in the absence of the proper formal requirements) may sue for compensatory and statutory damages. Statutory damages for a CASL violation are subject to a maximum of $200 for each contravention, not exceeding $1 million for each day on which the contravention occurred. While CASL's private right of action is in addition to the CRTC's regulatory enforcement powers, certain rules apply to limit overlap between these proceedings and claims for statutory damages.</p><p>Financial institutions should be aware of the potential for private litigation for CASL violations, and given that CEMs are often distributed broadly, should also note that CASL's private right of action will likely be invoked in support of class actions. To mitigate their exposure, financial institutions should review and update their CASL compliance regime. They should also maintain detailed records of their CASL compliance efforts to assist in establishing a due diligence defence in the event of legal or regulatory proceedings.<br><strong> </strong><br>BLG's Cybersecurity Practice Group has published a <a href="http://blg.com/en/News-And-Publications/Documents/Publication_4930.pdf">client bulletin </a>authored by Bradley J. Freeman that provides greater detail on what you can do to prepare for CASL's private right of action.</p>5/23/2017 4:00:00 AM2017-05-23T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#da989fe7-de9b-44ca-9a7c-ade6643bc163;L0|#0da989fe7-de9b-44ca-9a7c-ade6643bc163|Cybersecurity;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#d531403d-b705-440c-8be2-98e2a4c77989;L0|#0d531403d-b705-440c-8be2-98e2a4c77989|Class Actions;GP0|#83d31cc8-2281-46b1-bd03-ad81b15c38ff;L0|#083d31cc8-2281-46b1-bd03-ad81b15c38ff|Banking RegulatoryCybersecurity;Class Actions;Banking Regulatory
Third Party In Possession of Financed Truck Ordered To Pay Damages to BankThird Party In Possession of Financed Truck Ordered To Pay Damages to Bank236BLG Blog PostMarion Unraumunrau@blg.com | Marion Unrau | 693A30232E777C626C6763616E6164615C6D756E726175 i:0#.w|blgcanada\munrau ​In Royal Bank of Canada v. Modo, the co-defendant, Rejert Modo entered into a Fixed Rate Conditional Sales Contract with the plaintiff, Royal Bank of Canada (“RBC”), in respect of Mr. Modo’s purchase of a truck. Mr. Modo entered into an agreement with the co-defendant, a towing and repair business. The towing business claimed a lien on the truck for repair costs, storage fees and Bailiff's fees. However, the towing business did not sell the truck and instead retained possession and acquired legal ownership of the truck, without notice to RBC. RBC brought a successful motion for summary judgment, with the Ontarious Superior Court of Justice holding that the towing company's failure to give notice of its intention to retain the vehicle in lieu of sale and the transfer of registered ownership were wrongful, and that the company's continued possession and use of the truck were acts of wrongful conversion to its own use. This case illustrates that damages may be recoverable from a third party who has unlawfully taken possession of financed personal property.<p>​<span style="line-height:107%;font-family:calibri, sans-serif;font-size:11pt;">In <em>Royal Bank of Canada v. Modo</em>, the co-defendant, Rejert Modo entered into a Fixed Rate Conditional Sales Contract with the plaintiff, Royal Bank of Canada (“RBC”), in respect of Mr. Modo’s purchase of a truck.  Mr. Modo entered into an agreement with the co-defendant, a towing and repair business.  The towing business claimed a lien on the truck  for repair costs, storage fees and Bailiff's fees.  However, the towing business did not sell the truck and instead retained possession and acquired legal ownership of the truck, without notice to RBC.  RBC brought a successful motion for summary judgment, with the Ontarious Superior Court of Justice holding that the towing company's failure to give notice of its intention to retain the vehicle in lieu of sale and the transfer of registered ownership were wrongful, and that the company's continued possession and use of the truck were acts of wrongful conversion to its own use.  This case illustrates that damages may be recoverable from a third party who has unlawfully taken possession of financed personal property.</span></p> ​In Royal Bank of Canada v. Modo, the co-defendant, Rejert Modo entered into a Fixed Rate Conditional Sales Contract with the plaintiff, Royal Bank of Canada ("RBC"), in respect of Mr. Modo's purchase of a truck for $79,931.66. Pursuant to the terms of the contract, all right, title and interest in the vehicle was assigned to RBC. RBC registered its interest in the motor vehicle under Ontario's Personal Property Security Act. Profix Auto Collision Inc. ("Profix"), co-defendant, carried on a business of towing and repair of motor vehicles. Profix had accepted Mr. Modo's offer to take his vehicle in and have it used as part of Profix's fleet. Mr. Modo was to receive 10% of the cost of repairs to vehicles towed by his truck. He was to be responsible for the purchase of the vehicle and the cost to convert it to a truck capable of towing. Profix was to license, insure and maintain the vehicle. Profix subsequently sent RBC a Notice of Intention to Sell the vehicle pursuant to s. 15(1) of the Repair and Storage Liens Act ("Act"). Profix claimed a lien for repair costs, storage fees and Bailiff's fees. However, Profix did not sell the vehicle and remained in possession of it. The vehicle ownership was transferred to Profix. RBC brought a motion for summary judgment as against Profix for the sum of $79,931.66. The Ontario Superior Court of Justice stated that the issues before it were whether 1) Profix had a lien on the truck, 2) Profix's possession of the vehicle was an unlawful conversion or an unjust enrichment, and 3) RBC was entitled to damages from Profix in conversion or unjust enrichment. Profix's claim for a lien was composed in significant part by the sum of $15,622.25 alleged to have been paid to another company for the cost of converting the vehicle to a tow truck. The Court held that, in accordance with subsection 29(1) of the Act, a written assignment was required for Profix to claim a lien for the conversion work which had not been performed by Profix. As a result, the Court concluded that Profix had not established that it had a right to possession of and title to the vehicle, regardless of whether it paid for the conversion, and/or repaired or stored the vehicle. The Court held that Profix's failure to give notice of its intention to retain the vehicle in lieu of sale and the transfer of registered ownership were wrongful, and that its continued possession and use of the truck were acts of wrongful conversion to its own use. In addition, in the absence of a juridical reason, Profix's possession of the vehicle from shortly after its purchase financed by RBC was found to be an unjust enrichment. Finally, the Court concluded that Profix was only liable in damages for its possession and taking ownership of the truck, not the cost of the towing equipment and conversion since these did not result in unlawful conversion or unjust enrichment. Consequently, the Court ordered Profix to pay the sum of $49,425.00 to RBC. This case illustrates that damages may be recoverable from a third party who has unlawfully taken possession of financed personal property.<p>​In <em><a href="https://www.canlii.org/en/on/onsc/doc/2017/2017onsc1167/2017onsc1167.html?resultIndex=1">Royal Bank of Canada v. Modo</a></em>, the co-defendant, Rejert Modo entered into a Fixed Rate Conditional Sales Contract with the plaintiff, Royal Bank of Canada ("RBC"), in respect of Mr. Modo's purchase of a truck for $79,931.66. Pursuant to the terms of the contract, all right, title and interest in the vehicle was assigned to RBC. RBC registered its interest in the motor vehicle under Ontario's <a href="https://www.ontario.ca/laws/statute/90p10"><em>Personal Property Security Act</em></a>.</p><p>Profix Auto Collision Inc. ("Profix"), co-defendant, carried on a business of towing and repair of motor vehicles. Profix had accepted Mr. Modo's offer to take his vehicle in and have it used as part of Profix's fleet. Mr. Modo was to receive 10% of the cost of repairs to vehicles towed by his truck. He was to be responsible for the purchase of the vehicle and the cost to convert it to a truck capable of towing. Profix was to license, insure and maintain the vehicle. </p><p>Profix subsequently sent RBC a Notice of Intention to Sell the vehicle pursuant to s. 15(1) of the <a href="https://www.ontario.ca/laws/statute/90r25"><em>Repair and Storage Liens Act</em></a> ("Act"). Profix claimed a lien for repair costs, storage fees and Bailiff's fees. However, Profix did not sell the vehicle and remained in possession of it. The vehicle ownership was transferred to Profix.</p><p>RBC brought a motion for summary judgment as against Profix for the sum of $79,931.66. The Ontario Superior Court of Justice stated that the issues before it were whether: 1) Profix had a lien on the truck, 2) Profix's possession of the vehicle was an unlawful conversion or an unjust enrichment, and 3) RBC was entitled to damages from Profix in conversion or unjust enrichment.</p><p>Profix's claim for a lien was composed in significant part by the sum of $15,622.25 alleged to have been paid to another company for the cost of converting the vehicle to a tow truck. The Court held that, in accordance with subsection 29(1) of the Act, a written assignment was required for Profix to claim a lien for the conversion work which had not been performed by Profix. As a result, the Court concluded that Profix had not established that it had a right to possession of and title to the vehicle, regardless of whether it paid for the conversion, and/or repaired or stored the vehicle. </p><p>The Court held that Profix's failure to give notice of its intention to retain the vehicle in lieu of sale and the transfer of registered ownership were wrongful, and that its continued possession and use of the truck were acts of wrongful conversion to its own use. In addition, in the absence of a juridical reason, Profix's possession of the vehicle from shortly after its purchase financed by RBC was found to be an unjust enrichment. </p><p>Finally, the Court concluded that Profix was only liable in damages for its possession and taking ownership of the truck, not the cost of the towing equipment and conversion since these did not result in unlawful conversion or unjust enrichment. Consequently, the Court ordered Profix to pay the sum of $49,425.00 to RBC. </p><p>This case illustrates that damages may be recoverable from a third party who has unlawfully taken possession of financed personal property.</p>5/22/2017 4:00:00 AM2017-05-22T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#2df25a26-3353-4357-8797-8d21a2ea3aee;L0|#02df25a26-3353-4357-8797-8d21a2ea3aee|Banking and Bills of Exchange;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebBanking and Bills of Exchange
Ontario Court of Appeal: Two-Year Limitation Period for the Enforcement of Foreign JudgmentsOntario Court of Appeal: Two-Year Limitation Period for the Enforcement of Foreign Judgments237BLG Blog PostKristen Witherskwithers@blg.com | Kristen Withers | 693A30232E777C626C6763616E6164615C6B77697468657273 i:0#.w|blgcanada\kwithers ​In Independence Plaza 1 Associates, L.L.C. v. Figliolini, the Ontario Court of Appeal resolved the inconsistency in the law on the applicable limitation periods for the enforcement of foreign judgments in Ontario. The Court held that the basic two-year limitation period applies to claims to enforce foreign judgments and begins to run once the right to appeal the foreign judgment (in the foreign jurisdiction) has expired or is exhausted.<p>​In <a href="https://www.canlii.org/en/on/onca/doc/2017/2017onca44/2017onca44.html"><em>Independence Plaza 1 Associates, L.L.C. v. Figliolini</em></a>, the Ontario Court of Appeal resolved the inconsistency in the law on the applicable limitation periods for the enforcement of foreign judgments in Ontario.  The Court held that the basic two-year limitation period applies to claims to enforce foreign judgments and begins to run once the right to appeal the foreign judgment (in the foreign jurisdiction) has expired or is exhausted.</p> In Independence Plaza 1 Associates, L.L.C. v. Figliolini, the Ontario Court of Appeal resolved the inconsistency in the law on the applicable limitation periods for the enforcement of foreign judgments in Ontario. Prior to the Court of Appeal's judgment, there were two lines of authority from the Superior Court of Justice. In some cases, trial judges applied the basic two-year limitation period in Ontario's Limitations Act, 2002 to the enforcement of foreign judgments. In other cases, trial judges determined that such claims qualified as "a proceeding to enforce an order of a court" within the meaning s. 16 of the Act, and therefore were not subject to any limitation period. The Court of Appeal considered both lines of authority and concluded that a claim to enforce a foreign judgment did not qualify for the exemption in s. 16 of the Act, and thus the basic two-year limitation period applies to claims to enforce foreign judgments. That limitation period begins to run once the right to appeal the foreign judgment (in the foreign jurisdiction) has expired or is exhausted. This case means that foreign judgment creditors must act quickly to seek enforcement of judgments in Ontario. A "foreign judgment" is any judgment obtained outside of Ontario, although as a result of Ontario's reciprocal jurisdictions legislation, a six-year limitation period will continue to apply to the enforcement of judgments from provinces and territories outside of Ontario (other than Quebec) and to the enforcement of judgments from the United Kingdom.<p>In<a href="https://www.canlii.org/en/on/onca/doc/2017/2017onca44/2017onca44.html"> <em>Independence Plaza 1 Associates, L.L.C. v. Figliolini</em></a>, the Ontario Court of Appeal resolved the inconsistency in the law on the applicable limitation periods for the enforcement of foreign judgments in Ontario.</p><p>Prior to the Court of Appeal's judgment, there were two lines of authority from the Superior Court of Justice. In some cases, trial judges applied the basic two-year limitation period in Ontario's <a href="https://www.ontario.ca/laws/statute/02l24"><em>Limitations Act, 2002</em> </a>to the enforcement of foreign judgments. In other cases, trial judges determined that such claims qualified as "a proceeding to enforce an order of a court" within the meaning s. 16 of the <em>Act</em>, and therefore were not subject to any limitation period.</p><p>The Court of Appeal considered both lines of authority and concluded that a claim to enforce a foreign judgment did not qualify for the exemption in s. 16 of the <em>Act</em>, and thus the basic two-year limitation period applies to claims to enforce foreign judgments. That limitation period begins to run once the right to appeal the foreign judgment (in the foreign jurisdiction) has expired or is exhausted.</p><p>This case means that foreign judgment creditors must act quickly to seek enforcement of judgments in Ontario. A "foreign judgment" is any judgment obtained outside of Ontario, although as a result of Ontario's reciprocal jurisdictions legislation, a six-year limitation period will continue to apply to the enforcement of judgments from provinces and territories outside of Ontario (other than Quebec) and to the enforcement of judgments from the United Kingdom.</p>5/19/2017 4:00:00 AM2017-05-19T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#2df25a26-3353-4357-8797-8d21a2ea3aee;L0|#02df25a26-3353-4357-8797-8d21a2ea3aee|Banking and Bills of Exchange;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebBanking and Bills of Exchange
Quebec Court of Appeal Finds National Securities Regulator Scheme UnconstitutionalQuebec Court of Appeal Finds National Securities Regulator Scheme Unconstitutional235BLG Blog PostGraham Splawskigsplawski@blg.com | Graham Splawski | 693A30232E777C626C6763616E6164615C6773706C6177736B69 i:0#.w|blgcanada\gsplawski ​Scheme found to fetter parliamentary sovereignty. Ultimately, issue will likely be determined by the Supreme Court of Canada.<p>​<span style="line-height:115%;font-family:calibri, sans-serif;font-size:11pt;">Scheme found to fetter parliamentary sovereignty. Ultimately, issue will likely be determined by the Supreme Court of Canada.</span></p> The Quebec Court of Appeal has found the Canadian government's second attempt at creating a national capital markets regulator to be unconstitutional in its decision in Renvoi relatif à la réglementation pancanadienne des valeurs mobilières. The Supreme Court of Canada found the federal government's previous attempt at a national capital markets regulator to be unconstitutional in a 2011 decision, holding it was not a valid exercise of the federal government's power to regulate trade and commerce. The new proposal would create a Capital Markets Regulatory Authority ("CMRA"), and was developed cooperatively by the federal government, five provinces and one territory. The new scheme would allow provinces to opt-in to the CMRA, unlike the previous scheme, which the federal government attempted to impose on the provinces. Under the proposed legislation, each province that opted-in would enact the same legislation (the "Uniform Act"). The scheme provided that the Uniform Act could only be amended cooperatively, such that one government could not unilaterally amend their version of the Uniform Act, and if a threshold of other governments agreed to an amendment, all the governments that had opted-in would be required to adopt the same amendment. The scheme also delegated the administration of the CMRA to a council of ministers. The Quebec Court of Appeal found the scheme to be unconstitutional for two primary reasons. First, it found the amending scheme to be an impermissible delegation of provincial legislative power to the council of ministers, and it was also an impermissible fetter on parliamentary sovereignty. Second, the Court found the regulatory role given to the council of ministers would effectively give provinces a veto over the federal government's ability to address systemic risk. The Court held that on its own, the CMSA would be constitutional to address systemic risk, with some caveats. However, the Court's findings on the implementation and oversight mechanism make this holding somewhat hollow. Ultimately this issue will likely be determined by the Supreme Court of Canada, so the saga of the national securities regulator is far from over. It will be notable whether the federal government amends the proposed scheme in advance of that appeal. In any case, while the decision was not favourable for the proposed scheme, the Quebec Court of Appeal decision does signal a small victory for cooperative federalism, and confirms that courts will uphold at least some aspects of a national regulator following the Supreme Court's statements in its 2011 decision.<p>The Quebec Court of Appeal has found the Canadian government's second attempt at creating a national capital markets regulator to be unconstitutional in its decision in <a href="http://canlii.ca/t/h3p4m"><em>Renvoi relatif à la réglementation pancanadienne des valeurs mobilières</em></a>. The Supreme Court of Canada found the federal government's previous attempt at a national capital markets regulator to be unconstitutional in a <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7984/index.do">2011 decision</a>, holding it was not a valid exercise of the federal government's power to regulate trade and commerce.</p><p>The new proposal would create a Capital Markets Regulatory Authority ("CMRA"), and was developed cooperatively by the federal government, five provinces and one territory. The new scheme would allow provinces to opt-in to the CMRA, unlike the previous scheme, which the federal government attempted to impose on the provinces. Under the proposed legislation, each province that opted-in would enact the same legislation (the "<em>Uniform Act</em>"). The scheme provided that the <em>Uniform Act</em> could only be amended cooperatively, such that one government could not unilaterally amend their version of the <em>Uniform Act</em>, and if a threshold of other governments agreed to an amendment, all the governments that had opted-in would be required to adopt the same amendment. The scheme also delegated the administration of the CMRA to a council of ministers.</p><p>The Quebec Court of Appeal found the scheme to be unconstitutional for two primary reasons. First, it found the amending scheme to be an impermissible delegation of provincial legislative power to the council of ministers, and it was also an impermissible fetter on parliamentary sovereignty. Second, the Court found the regulatory role given to the council of ministers would effectively give provinces a veto over the federal government's ability to address systemic risk.</p><p>The Court held that on its own, the CMSA would be constitutional to address systemic risk, with some caveats.  However, the Court's findings on the implementation and oversight mechanism make this holding somewhat hollow.</p><p>Ultimately this issue will likely be determined by the Supreme Court of Canada, so the saga of the national securities regulator is far from over. It will be notable whether the federal government amends the proposed scheme in advance of that appeal. In any case, while the decision was not favourable for the proposed scheme, the Quebec Court of Appeal decision does signal a small victory for cooperative federalism, and confirms that courts will uphold at least some aspects of a national regulator following the Supreme Court's statements in its 2011 decision.</p>5/16/2017 4:00:00 AM2017-05-16T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#75eda1bb-5890-4b6b-aad7-b703245ec2e8;L0|#075eda1bb-5890-4b6b-aad7-b703245ec2e8|Securities: Litigation Regulatory and Compliance;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebSecurities: Litigation Regulatory and Compliance
Would a Bank Crime Prevention and Investigation Office by any Other Name Smell as Sweet? Privacy Commissioner Guidance on Investigative DisclosuresWould a Bank Crime Prevention and Investigation Office by any Other Name Smell as Sweet? Privacy Commissioner Guidance on Investigative Disclosures234BLG Blog PostShelby Liesch;Robert Dawkinssliesch@blg.com | Shelby Liesch | 693A30232E777C626C6763616E6164615C736C6965736368 i:0#.w|blgcanada\sliesch;rdawkins@blg.com | Robert Dawkins | 693A30232E777C626C6763616E6164615C726461776B696E73 i:0#.w|blgcanada\rdawkinsIn 2015 the Personal Information Protection and Electronic Documents Act (the "Act") was amended to eliminate the regime that permitted the disclosure without consent of personal information to certain "designated investigative bodies". This regime was replaced by the general exceptions to consent in sections 7(3)(d.1) and (d.2). Those exceptions permit an organization to disclose information, without an individual's knowledge or consent, to another organization for the purposes of investigating a breach of agreement, a contravention of Canadian law or for the purposes of detecting, suppressing or preventing fraud.The Office of the Privacy Commissioner ("OPC") recently released guidance on how it will interpret these exceptions. With financial institutions under great pressure to ensure they do not facilitate money laundering, breach of economic sanctions, or other forms of financial crime, they are under substantial competing pressures; to maintain the integrity of their organizations and business processes, while protecting and respecting the privacy of their accountholders. This guidance provides direction as to the OPC's expectations in striking that balance.<p style="text-align:justify;">In 2015 the <a href="http://laws-lois.justice.gc.ca/eng/acts/P-8.6/page-1.html"><em>Personal Information Protection and Electronic Documents Act </em></a>(the<em> </em>"<strong>Act</strong>") was amended to eliminate the regime that permitted the disclosure without consent of personal information to certain "designated investigative bodies".  This regime was replaced by the general exceptions to consent in sections 7(3)(d.1) and (d.2).  Those exceptions permit an organization to disclose information, without an individual's knowledge or consent, to another organization for the purposes of investigating a breach of agreement, a contravention of Canadian law or for the purposes of detecting, suppressing or preventing fraud.</p><p style="text-align:justify;">The Office of the Privacy Commissioner ("<strong>OPC</strong>") recently released <a href="https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/pipeda-compliance-help/gd_d1-d2_201703/">guidance</a> on how it will interpret these exceptions.  With financial institutions under great pressure to ensure they do not facilitate money laundering, breach of economic sanctions, or other forms of financial crime, they are under substantial competing pressures; to maintain the integrity of their organizations and business processes, while protecting and respecting the privacy of their accountholders.  This guidance provides direction as to the OPC's expectations in striking that balance.</p>In 2015 the Personal Information Protection and Electronic Documents Act (the "Act") was amended to eliminate the regime that permitted the disclosure without consent of personal information to certain "designated investigative bodies". This regime was replaced by the general exceptions to consent in sections 7(3)(d.1) and (d.2). Those exceptions permit an organization to disclose information, without an individual's knowledge or consent, to another organization for the purposes of investigating a breach of agreement, a contravention of Canadian law or for the purposes of detecting, suppressing or preventing fraud.The Office of the Privacy Commissioner ("OPC") recently released guidance on how it will interpret these exceptions. With financial institutions under great pressure to ensure they do not facilitate money laundering, breach of economic sanctions, or other forms of financial crime, they are under substantial competing pressures; to maintain the integrity of their organizations and business processes, while protecting and respecting the privacy of their accountholders. This guidance provides direction as to the OPC's expectations in striking that balance.The exceptionsUnder the current framework, organizations no longer have the benefit of a public listing of designated investigative bodies. Rather, organizations must assess, on a case-by-case basis, whether the disclosure of information without an individual's knowledge or consent falls under one of the exceptions under the Act. The exceptions read in full as follows 7(3) …an organization may disclose personal information without the knowledge or consent of the individual only if the disclosure is(d.1) made to another organization and is reasonable for the purposes of investigating a breach of an agreement or a contravention of the laws of Canada or a province that has been, is being or is about to be committed and it is reasonable to expect that disclosure with the knowledge or consent of the individual would compromise the investigation;(d.2) made to another organization and is reasonable for the purposes of detecting or suppressing fraud or of preventing fraud that is likely to be committed and it is reasonable to expect that the disclosure with the knowledge or consent of the individual would compromise the ability to prevent, detect or suppress the fraud;OPC's interpretation of the exceptionsThe OPC has made clear that the exceptions should not be applied in an overly broad fashion and do not allow for widespread disclosures and casual sharing of information. Each stipulated requirement permitting the disclosure must be considered and met in each case. (a) Disclosure requires responsible consideration and accountabilityOrganizations should develop policies and procedures that outline how they will request and/or respond to disclosures under 7(3)(d.1) and (d.2). They should ensure when requesting information that they make clear the purpose and rationale for the request, how it is permitted under the Act, and when responding to requests organizations should ensure they have a basis to support and document the bona fide nature of the request.(b) Disclosures can only be made to "another organization" The exceptions under section 7(3)(d.1) and (d.2) limit disclosure to other organizations. The term "organization" will likely be interpreted narrowly. The OPC states that broad disclosure to "law enforcement" and family members of clients without consent would not be permitted under these sections. The guidance suggests that where specific exemptions address disclosure issues, such as to law enforcement (7(3)(d)) or to family members (7(3)(d.3)) these general investigative provisions may not be permitted to expand other specific exceptions.(c) Disclosure must be "reasonable for the purposes"Disclosure must also be reasonably related to and proportionate to its specified purpose under the Act. With respect to 7(3)(d.1), the disclosure must relate to an investigation with respect to a specific breach of an agreement or contravention of law that has already occurred, is ongoing, or will likely occur in the future. In this regard, the OPC provides specific guidance as to the meaning of each of these purposesAn "investigation" is as a formal or systematic inquiry to discover and examine the facts of an incident, such as an investigation by a bank into a fraudulent transaction;A "breach of an agreement" relates to the failure to meet the terms of a binding agreement, such as a breach of an employment contract;A "contravention of a law of Canada or a province" means that a breach of Canadian law; foreign laws do not apply. With respect to 7(3)(d.2), an organization should determine whether the disclosure is reasonable for the purposes of detecting or suppressing fraud, or preventing fraud that is likely to be committed. The risk of fraud should be probable, and not merely possible. Lastly, prior to disclosure, organizations should evaluate and form a reasonable expectation that disclosure with the knowledge or consent of an individual would compromise the activity in question. Take awayClearly, the amendments to the voluntary disclosure exceptions under the Act will not allow for indiscriminate disclosure of personal information between organizations. The OPC's guidance should serve as a clear warning to organizations that regulators will interpret these exceptions narrowly, with the expectation that initiators and receivers of personal information will have clear policies and procedures in place to properly document this process. <p style="text-align:justify;">In 2015 the <a href="http://laws-lois.justice.gc.ca/eng/acts/P-8.6/page-1.html"><em>Personal Information Protection and Electronic Documents Act </em></a>(the<em> </em>"<strong>Act</strong>") was amended to eliminate the regime that permitted the disclosure without consent of personal information to certain "designated investigative bodies".  This regime was replaced by the general exceptions to consent in sections 7(3)(d.1) and (d.2).  Those exceptions permit an organization to disclose information, without an individual's knowledge or consent, to another organization for the purposes of investigating a breach of agreement, a contravention of Canadian law or for the purposes of detecting, suppressing or preventing fraud.</p><p style="text-align:justify;">The Office of the Privacy Commissioner ("<strong>OPC</strong>") recently released <a href="https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/pipeda-compliance-help/gd_d1-d2_201703/">guidance</a> on how it will interpret these exceptions.  With financial institutions under great pressure to ensure they do not facilitate money laundering, breach of economic sanctions, or other forms of financial crime, they are under substantial competing pressures; to maintain the integrity of their organizations and business processes, while protecting and respecting the privacy of their accountholders.  This guidance provides direction as to the OPC's expectations in striking that balance.</p><p style="text-align:justify;"><strong>The exceptions</strong></p><p style="text-align:justify;">Under the current framework, organizations no longer have the benefit of a public listing of designated investigative bodies. Rather, organizations must assess, on a case-by-case basis, whether the disclosure of information without an individual's knowledge or consent falls under one of the exceptions under the Act. The exceptions read in full as follows:  </p><blockquote dir="ltr" style="margin-right:0px;"><p style="text-align:justify;">7(3) …an organization may disclose personal information without the knowledge or consent of the individual only if the disclosure is</p><p style="text-align:justify;">(<em>d.1</em>) made to another organization and is reasonable for the purposes of investigating a breach of an agreement or a contravention of the laws of Canada or a province that has been, is being or is about to be committed and it is reasonable to expect that disclosure with the knowledge or consent of the individual would compromise the investigation;</p><p style="text-align:justify;">(<em>d.2</em>) made to another organization and is reasonable for the purposes of detecting or suppressing fraud or of preventing fraud that is likely to be committed and it is reasonable to expect that the disclosure with the knowledge or consent of the individual would compromise the ability to prevent, detect or suppress the fraud;</p></blockquote><p style="text-align:justify;"><strong>OPC's interpretation of the exceptions</strong></p><p style="text-align:justify;">The OPC has made clear that the exceptions should not be applied in an overly broad fashion and do not allow for widespread disclosures and casual sharing of information.  Each stipulated requirement permitting the disclosure must be considered and met in each case. </p><p style="text-align:justify;"><strong>(a)</strong>   <strong>Disclosure requires responsible consideration and accountability</strong></p><p style="text-align:justify;">Organizations should develop policies and procedures that outline how they will request and/or respond to disclosures under 7(3)(d.1) and (d.2).  They should ensure when requesting information that they make clear the purpose and rationale for the request, how it is permitted under the Act, and when responding to requests organizations should ensure they have a basis to support and document the bona fide nature of the request.</p><p style="text-align:justify;"><strong>(b)</strong>   <strong>Disclosures can only be made to "another organization" </strong></p><p style="text-align:justify;">The exceptions under section 7(3)(d.1) and (d.2) limit disclosure to other organizations. The term "organization" will likely be interpreted narrowly.  The OPC states that broad disclosure to "law enforcement" and family members of clients without consent would not be permitted under these sections.  The guidance suggests that where specific exemptions address disclosure issues, such as to law enforcement (7(3)(d)) or to family members (7(3)(d.3)) these general investigative provisions may not be permitted to expand other specific exceptions.</p><p style="text-align:justify;"><strong>(c)</strong>    <strong>Disclosure must be "reasonable for the purposes"</strong></p><p style="text-align:justify;">Disclosure must also be reasonably related to and proportionate to its specified purpose under the Act. </p><p style="text-align:justify;">With respect to 7(3)(d.1), the disclosure must relate to an investigation with respect to a specific breach of an agreement or contravention of law that has already occurred, is ongoing, or will likely occur in the future. In this regard, the OPC provides specific guidance as to the meaning of each of these purposes:</p><ol><li>An "investigation" is as a formal or systematic inquiry to discover and examine the facts of an incident, such as an investigation by a bank into a fraudulent transaction;</li><li>A "breach of an agreement" relates to the failure to meet the terms of a binding agreement, such as a breach of an employment contract;</li><li>A "contravention of a law of Canada or a province" means that a breach of Canadian law; foreign laws do not apply. </li></ol><p style="text-align:justify;">With respect to 7(3)(d.2), an organization should determine whether the disclosure is reasonable for the purposes of detecting or suppressing fraud, or preventing fraud that is likely to be committed. The risk of fraud should be probable, and not merely possible. </p><p style="text-align:justify;">Lastly, prior to disclosure, organizations should evaluate and form a reasonable expectation that disclosure with the knowledge or consent of an individual would compromise the activity in question. </p><p style="text-align:justify;"><span lang="EN-CA" style="text-decoration:underline;"><strong>Take away</strong></span></p><p style="text-align:justify;">Clearly, the amendments to the voluntary disclosure exceptions under the Act will not allow for indiscriminate disclosure of personal information between organizations. The OPC's guidance should serve as a clear warning to organizations that regulators will interpret these exceptions narrowly, with the expectation that initiators and receivers of personal information will have clear policies and procedures in place to properly document this process.  </p>5/12/2017 4:00:00 AM2017-05-12T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#83d31cc8-2281-46b1-bd03-ad81b15c38ff;L0|#083d31cc8-2281-46b1-bd03-ad81b15c38ff|Banking Regulatory;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#da989fe7-de9b-44ca-9a7c-ade6643bc163;L0|#0da989fe7-de9b-44ca-9a7c-ade6643bc163|CybersecurityBanking Regulatory;Cybersecurity
Limitations Act: Time Begins to Run When 'Legally Appropriate' Proceeding Has Run Its CourseLimitations Act: Time Begins to Run When 'Legally Appropriate' Proceeding Has Run Its Course233BLG Blog PostIvana Nenadicinenadic@blg.com | Ivana Nenadic | 693A30232E777C626C6763616E6164615C696E656E61646963 i:0#.w|blgcanada\inenadic In Presidential MSH Corporation v. Marr Foster & Co. LLP, the Ontario Court of Appeal found that the Corporation's claim against its accountants, who had filed corporate tax returns after their due date, was discoverable when the Canada Revenue Agency responded to the Notice of Objection and confirmed its initial assessment, not when the Corporation initially received the CRA's Notice of Assessment disallowing its tax credits. In applying s.5(1)(a)(iv) of the Limitations Act, the Court of Appeal held that time begins to run when the alternative resolution process has run its course or is exhausted, which must be reasonably certain or ascertainable by a court.<p>In <a href="https://www.canlii.org/en/on/onca/doc/2017/2017onca325/2017onca325.html?searchUrlHash=AAAAAQAccHJlc2lkZW50aWFsIE1TSCBDb3Jwb3JhdGlvbgAAAAAB&resultIndex=2"><em>Presidential MSH Corporation v. Marr Foster & Co. LLP</em></a><em>, </em>the Ontario Court of Appeal found that the Corporation's claim against its accountants, who had filed corporate tax returns after their due date, was discoverable when the Canada Revenue Agency responded to the Notice of Objection and confirmed its initial assessment, not when the Corporation initially received the CRA's Notice of Assessment disallowing its tax credits. In applying s.5(1)(a)(iv) of the <a href="https://www.ontario.ca/laws/statute/02l24"><em>Limitations Act</em></a>, the Court of Appeal held that time begins to run when the alternative resolution process has run its course or is exhausted, which must be reasonably certain or ascertainable by a court.</p>​ In Presidential MSH Corporation v. Marr Foster & Co. LLP, the Ontario Court of Appeal found that the Corporation's claim against its accountants, who had filed corporate tax returns after their due date, was discoverable when the Canada Revenue Agency responded to the Notice of Objection and confirmed its initial assessment, not when the Corporation initially received the CRA's Notice of Assessment disallowing its tax credits. In applying s.5(1)(a)(iv) of the Limitations Act, the Court of Appeal held that time begins to run when the alternative resolution process has run its course or is exhausted, which must be reasonably certain or ascertainable by a court. In this case, the accountants' late filing resulted in damages of approximately $550,000 in unpaid taxes, interests and penalties. The Court went through the case law on limitations which stands for the proposition that a legal proceeding against an expert professional may not be appropriate if the claim arose out of the professional's alleged wrongdoing but may be resolved by the professional himself without recourse to the courts, rendering the proceeding unnecessary. The Court then examined the case law which states that it is premature for a party to bring a court proceeding to seek a remedy if a statutory dispute resolution process offers an adequate alternative remedy and that process has not fully run its course. There, the concept of a proceeding being "legally appropriate" was interpreted to mean that it must be reasonably certain or ascertainable when this process has run its course. The Court found that the professionals in this case attempted to eliminate the Corporation's loss. Had they been successful, it would have been unnecessary to resort to the court proceeding to remedy it. The CRA's process was "legally appropriate" in the sense that its end date was clear. Therefore, time started to run from the moment the CRA issued its final decision​<p>In <a href="https://www.canlii.org/en/on/onca/doc/2017/2017onca325/2017onca325.html?searchUrlHash=AAAAAQAccHJlc2lkZW50aWFsIE1TSCBDb3Jwb3JhdGlvbgAAAAAB&resultIndex=2"><em>Presidential MSH Corporation v. Marr Foster & Co. LLP</em></a><em>, </em>the Ontario Court of Appeal found that the Corporation's claim against its accountants, who had filed corporate tax returns after their due date, was discoverable when the Canada Revenue Agency responded to the Notice of Objection and confirmed its initial assessment, not when the Corporation initially received the CRA's Notice of Assessment disallowing its tax credits. In applying s.5(1)(a)(iv) of the <a href="https://www.ontario.ca/laws/statute/02l24"><em>Limitations Act</em></a>, the Court of Appeal held that time begins to run when the alternative resolution process has run its course or is exhausted, which must be reasonably certain or ascertainable by a court.</p><p>In this case, the accountants' late filing resulted in damages of approximately $550,000 in unpaid taxes, interests and penalties. The Court went through the case law on limitations which stands for the proposition that a legal proceeding against an expert professional may not be appropriate if the claim arose out of the professional's alleged wrongdoing but may be resolved by the professional himself without recourse to the courts, rendering the proceeding unnecessary. The Court then examined the case law which states that it is premature for a party to bring a court proceeding to seek a remedy if a statutory dispute resolution process offers an adequate alternative remedy and that process has not fully run its course. There, the concept of a proceeding being "legally appropriate" was interpreted to mean that it must be reasonably certain or ascertainable when this process has run its course.</p><p>The Court found that the professionals in this case attempted to eliminate the Corporation's loss. Had they been successful, it would have been unnecessary to resort to the court proceeding to remedy it. The CRA's process was "legally appropriate" in the sense that its end date was clear. Therefore, time started to run from the moment the CRA issued its final decision</p>5/10/2017 4:00:00 AM2017-05-10T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#2df25a26-3353-4357-8797-8d21a2ea3aee;L0|#02df25a26-3353-4357-8797-8d21a2ea3aee|Banking and Bills of Exchange;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebBanking and Bills of Exchange
Ontario Court of Appeal Provides Guidance on Composition of OSC PanelsOntario Court of Appeal Provides Guidance on Composition of OSC Panels232BLG Blog PostBevan Brooksbankbbrooksbank@blg.com | Bevan Brooksbank | 693A30232E777C626C6763616E6164615C6262726F6F6B7362616E6B i:0#.w|blgcanada\bbrooksbank ​In Ontario Securities Commission v. MRS Sciences Inc. et al, the Ontario Court of Appeal dismissed an appeal from the decision of the Divisional Court and maintained that, with respect to the two phases of an Ontario Securities Commission ("OSC") proceeding, namely merits and sanction hearings, both hearings need not be presided over by the same decision-makers.<p>​<span style="text-align:justify;">I</span><span style="text-align:justify;">n </span><a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0279.pdf"><span style="text-align:justify;"><em>Ontario Securities Commission v. MRS Sciences Inc. et al, </em></span></a><span style="text-align:justify;">the Ontario Court of Appeal dismissed an appeal from the decision of the Divisional Court and maintained that, with respect to the two phases of an Ontario Securities Commission ("OSC") proceeding, namely merits and sanction hearings, both hearings need not be presided over by the same decision-makers.</span></p> ​In Ontario Securities Commission v. MRS Sciences Inc. et al., the Ontario Court of Appeal dismissed an appeal from the decision of the Divisional Court and maintained that, with respect to the two phases of an Ontario Securities Commission ("OSC") proceeding, namely merits and sanction hearings, both hearings need not be presided over by the same decision-makers.In 2007, the OSC issued a notice of hearing against MRS Sciences and certain individuals ("MRS") alleging various breaches of the Securities Act arising from the selling of shares in a venture fund. A merits hearing took place in 2009, with a decision released in February 2011 by the panel to the effect that MRS had sold securities without being registered as a dealer and traded without a prospectus. Following the merits decision, the terms of the panel members expired. The OSC accordingly gave notice of the composition of a new panel for the sanctions hearing. Following MRS objections and an application for judicial review that was quashed, a sanction hearing was ultimately held and the sanctions panel released a decision in June, 2014 levying certain penalties on MRS. MRS appealed from the sanctions decision to the Divisional Court, where the panel was unanimous that the OSC decision should be reviewed on a reasonableness standard, yet split on the outcome. The majority held that the OSC's interpretation of the conduct of its proceedings was reasonable, and accordingly dismissed the appeal.On appeal to the Ontario Court of Appeal, the Court agreed with the proposition that each hearing is a distinct quasi-judicial proceeding that may presided over by different decision-makers where warranted by the circumstances. In addition, the Court maintained that the standard of review of the administrative body's decision was that of reasonableness, with deference to the OSC regarding its allocation of adjudicative resources.Lastly, the submission that constituting a different sanctions panel was procedurally unfair or a breach of natural justice was rejected. The referral of a matter to a different tribunal panel for a decision on penalty is not an uncommon practice for quasi-judicial statutory bodies.<p>​<span style="text-align:justify;">I</span><span style="text-align:justify;">n </span><a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0279.pdf"><span style="text-align:justify;"><em>Ontario Securities Commission v. MRS Sciences Inc. et al., </em></span></a><span style="text-align:justify;">the Ontario Court of Appeal dismissed an appeal from the decision of the Divisional Court and maintained that, with respect to the two phases of an Ontario Securities Commission ("OSC") proceeding, namely merits and sanction hearings, both hearings need not be presided over by the same decision-makers.</span></p><p style="text-align:justify;">In 2007, the OSC issued a notice of hearing against MRS Sciences and certain individuals ("MRS") alleging various breaches of the <em>Securities Act</em> arising from the selling of shares in a venture fund. A merits hearing took place in 2009, with a decision released in February 2011 by the panel to the effect that MRS had sold securities without being registered as a dealer and traded without a prospectus. Following the merits decision, the terms of the panel members expired.  The OSC accordingly gave notice of the composition of a new panel for the sanctions hearing. Following MRS objections and an application for judicial review that was quashed, a sanction hearing was ultimately held and the sanctions panel released a decision in June, 2014 levying certain penalties on MRS. </p><p style="text-align:justify;">MRS appealed from the sanctions decision to the Divisional Court, where the panel was unanimous that the OSC decision should be reviewed on a reasonableness standard, yet split on the outcome. The majority held that the OSC's interpretation of the conduct of its proceedings was reasonable, and accordingly dismissed the appeal.</p><p style="text-align:justify;">On appeal to the Ontario Court of Appeal, the Court agreed with the proposition that each hearing is a distinct quasi-judicial proceeding that may presided over by different decision-makers where warranted by the circumstances.  In addition, the Court maintained that the standard of review of the administrative body's decision was that of reasonableness, with deference to the OSC regarding its allocation of adjudicative resources.</p><p style="text-align:justify;">Lastly, the submission that constituting a different sanctions panel was procedurally unfair or a breach of natural justice was rejected. The referral of a matter to a different tribunal panel for a decision on penalty is not an uncommon practice for quasi-judicial statutory bodies.</p>5/5/2017 4:00:00 AM2017-05-05T04:00:00ZTrue1float;#5.00000000000000float;#2017.00000000000string;#Mayfloat;#201705.000000000GP0|#75eda1bb-5890-4b6b-aad7-b703245ec2e8;L0|#075eda1bb-5890-4b6b-aad7-b703245ec2e8|Securities: Litigation Regulatory and Compliance;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebSecurities: Litigation Regulatory and Compliance
ASC Dismisses Appeal from Investors Seeking Production of ASC Staff ReportASC Dismisses Appeal from Investors Seeking Production of ASC Staff Report231BLG Blog PostAndrew Pozzobonapozzobon@blg.com | Andrew Pozzobon | 693A30232E777C626C6763616E6164615C61706F7A7A6F626F6E i:0#.w|blgcanada\apozzobon ​Recently, the Alberta Securities Commission ("ASC") released its decision in Re CMS Financial Management Services Ltd. The ASC panel (the "Panel") considered an appeal from certain investors (the "Appellants") of a decision of the Executive Director of the ASC to hold certain material, namely a report by the ASC staff, in confidence under section 221(4)(b) of the Securities Act (Alberta). The Panel concluded that the Executive Director had the authority to hold materials in confidence if it would not be prejudicial to the public interest to do so. The Panel also concluded that reports obtained by the Executive Director should not be used in private litigation or private disputes. <p>​Recently, the Alberta Securities Commission ("ASC") released its decision in Re <a href="https://www.canlii.org/en/ab/absec/doc/2017/2017abasc61/2017abasc61.pdf"><em>CMS Financial Management Services Ltd</em>.</a> The ASC panel (the "Panel") considered an appeal from certain investors (the "Appellants") of a decision of the Executive Director of the ASC to hold certain material, namely a report by the ASC staff, in confidence under section 221(4)(b) of the <em>Securities Act</em> (Alberta). The Panel concluded that the Executive Director had the authority to hold materials in confidence if it would not be prejudicial to the public interest to do so.  The Panel also concluded that reports obtained by the Executive Director should not be used in private litigation or private disputes. </p> ​Recently, the Alberta Securities Commission ("ASC") released its decision in Re CMS Financial Management Services Ltd. The ASC panel (the "Panel") considered an appeal from certain investors (the "Appellants") of a decision of the Executive Director of the ASC to hold certain material, namely a report by the ASC staff, in confidence under section 221(4)(b) of the Securities Act (Alberta). The Panel concluded that the Executive Director had the authority to hold materials in confidence if it would not be prejudicial to the public interest to do so. The Panel also concluded that reports obtained by the Executive Director should not be used in private litigation or private disputes. As background, the Appellants filed a complaint with the ASC in respect of the business of CMS Financial Management Services Ltd. ("CMS"), a registered investment fund manager, restricted portfolio manager and exempt market dealer. The Executive Director had appointed the ASC staff to examine the financial affairs, books, records and other documents of CMS and to prepare a report ("Report"). As a result of the examination and the Report, staff demanded that CMS's activities be restricted to certain securities, clients and services, and that CMS be subject to "special supervision" in respect of its activities in the capital market. The Appellants, who had filed a complaint with the ASC about CMS, subsequently learned about the terms and conditions placed on CMS referenced in the Report and requested an opportunity to review the Report based on "the ASC's Access to Information provisions". The Executive Director decided not to release the Report and explained that the disclosure of confidential materials or reports obtained by the Executive Director for use as evidence in private litigation or private disputes was ulterior to the purpose of the Securities Act and disclosing such materials would hinder the efficacy of compliance reviews. The Appellants did not dispute the Executive Director's authority under s. 221(4)(b) to hold material in confidence, but were of the view that the Executive Director's two stated justifications were "insufficient to justify the decision". The Appellants argued that they had not threatened, and had no interest in, civil litigation against CMS, and that there was no evidence that they had initiated, or intended to commence, any such litigation. However, while there was no evidence of civil litigation, the Appellants had initiated the complaint procedures against CMS through the Ombudsman for Banking Services and Investments ("OBSI"). The Panel first considered the authority of the Executive Director under the Securities Act and noted that section 221(4) of the Act which provided that "with respect to any material provided to or obtained by the Executive Director, the Executive Director may hold the material in confidence if the Executive Director considers that it would not be prejudicial to the public interest to do so". The Panel concluded that the Executive Director did have the authority to determine whether holding the Report in confidence would not be prejudicial to the public interest. The Panel dismissed the Appellants appeal and noted that while there was no evidence that the Appellants had initiated civil litigation against CMS, the record was clear that the OBSI proceeding was underway. The Panel concluded that the Executive Director's public interest assessment under s. 221(4)(b) did not need to include assisting the prosecution of a private dispute resolution process, whether through civil litigation or alternative means, such as through the OBSI. Accordingly, it was reasonable for the Executive Director – in exercising his discretion to hold the Report in confidence – to disregard the Report's potential utility to advance the Appellants' private litigation or dispute interests, including the OBSI proceeding.The Panel also noted that future examinations in this matter could be adversely affected if the Report were to be publicly disclosed and the public interest should be interpreted "to enable the Commission to conduct fair and effective investigations and to give those investigated assurance that investigations will be conducted with due safeguards to those investigated, thus encouraging their cooperation in the process". <p>​</p><p style="text-align:justify;">Recently, the Alberta Securities Commission ("ASC") released its decision in Re <a href="https://www.canlii.org/en/ab/absec/doc/2017/2017abasc61/2017abasc61.pdf"><em>CMS Financial Management Services Ltd</em>.</a> The ASC panel (the "Panel") considered an appeal from certain investors (the "Appellants") of a decision of the Executive Director of the ASC to hold certain material, namely a report by the ASC staff, in confidence under section 221(4)(b) of the <em>Securities Act</em> (Alberta). The Panel concluded that the Executive Director had the authority to hold materials in confidence if it would not be prejudicial to the public interest to do so.  The Panel also concluded that reports obtained by the Executive Director should not be used in private litigation or private disputes. </p><p style="text-align:justify;">As background, the Appellants filed a complaint with the ASC in respect of the business of CMS Financial Management Services Ltd. ("CMS"), a registered investment fund manager, restricted portfolio manager and exempt market dealer. The Executive Director had appointed the ASC staff to examine the financial affairs, books, records and other documents of CMS and to prepare a report ("Report"). As a result of the examination and the Report, staff demanded that CMS's activities be restricted to certain securities, clients and services, and that CMS be subject to "special supervision" in respect of its activities in the capital market. The Appellants, who had filed a complaint with the ASC about CMS, subsequently learned about the terms and conditions placed on CMS referenced in the Report and requested an opportunity to review the Report based on "the ASC's Access to Information provisions". The Executive Director decided not to release the Report and explained that the disclosure of confidential materials or reports obtained by the Executive Director for use as evidence in private litigation or private disputes was ulterior to the purpose of the <em>Securities Act</em> and disclosing such materials would hinder the efficacy of compliance reviews. </p><p style="text-align:justify;">The Appellants did not dispute the Executive Director's authority under s. 221(4)(b) to hold material in confidence, but were of the view that the Executive Director's two stated justifications were "insufficient to justify the decision". The Appellants argued that they had not threatened, and had no interest in, civil litigation against CMS, and that there was no evidence that they had initiated, or intended to commence, any such litigation. However, while there was no evidence of civil litigation, the Appellants had initiated the complaint procedures against CMS through the Ombudsman for Banking Services and Investments ("OBSI"). </p><p style="text-align:justify;">The Panel first considered the authority of the Executive Director under the <em>Securities Act</em> and noted that section 221(4) of the Act which provided that "with respect to any material provided to or obtained by the Executive Director, the Executive Director may hold the material in confidence if the Executive Director considers that it would not be prejudicial to the public interest to do so". The Panel concluded that the Executive Director did have the authority to determine whether holding the Report in confidence would not be prejudicial to the public interest. </p><p style="text-align:justify;">The Panel dismissed the Appellants appeal and noted that while there was no evidence that the Appellants had initiated civil litigation against CMS, the record was clear that the OBSI proceeding was underway. The Panel concluded that the Executive Director's public interest assessment under s. 221(4)(b) did not need to include assisting the prosecution of a private dispute resolution process, whether through civil litigation or alternative means, such as through the OBSI. Accordingly, it was reasonable for the Executive Director – in exercising his discretion to hold the Report in confidence – to disregard the Report's potential utility to advance the Appellants' private litigation or dispute interests, including the OBSI proceeding.</p><p style="text-align:justify;">The Panel also noted that future examinations in this matter could be adversely affected if the Report were to be publicly disclosed and the public interest should be interpreted "to enable the Commission to conduct fair and effective investigations and to give those investigated assurance that investigations will be conducted with due safeguards to those investigated, thus encouraging their cooperation in the process". </p>4/25/2017 4:00:00 AM2017-04-25T04:00:00ZTrue1float;#4.00000000000000float;#2017.00000000000string;#Aprilfloat;#201704.000000000GP0|#75eda1bb-5890-4b6b-aad7-b703245ec2e8;L0|#075eda1bb-5890-4b6b-aad7-b703245ec2e8|Securities: Litigation Regulatory and Compliance;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebSecurities: Litigation Regulatory and Compliance
Personal Guarantee Contested On The Basis of Negligent Misrepresentation Is Deemed Enforceable Personal Guarantee Contested On The Basis of Negligent Misrepresentation Is Deemed Enforceable 230BLG Blog PostMarion Unraumunrau@blg.com | Marion Unrau | 693A30232E777C626C6763616E6164615C6D756E726175 i:0#.w|blgcanada\munrau ​ Royal Bank of Canada v. Surje & Company Inc. is a recent decision of the Ontario Superior Court of Justice. The personal defendant, Sunny Bhasin ("Mr. Bhasin") held most of the common shares in Surge & Company Inc. ("Surje"), the corporate defendant. Mr. Bhasin took steps to obtain additional financing for Surge from Royal Bank of Canada ("RBC"). ​<p>​</p><p><em>Royal Bank of Canada v. Surje & Company Inc.</em> is a recent decision of the Ontario Superior Court of Justice. The personal defendant, Sunny Bhasin ("Mr. Bhasin") held most of the common shares in Surge & Company Inc. ("Surje"), the corporate defendant. Mr. Bhasin took steps to obtain additional financing for Surge from Royal Bank of Canada ("RBC"). ​</p> Royal Bank of Canada v. Surje & Company Inc. is a recent decision of the Ontario Superior Court of Justice. The personal defendant, Sunny Bhasin ("Mr. Bhasin") held most of the common shares in Surge & Company Inc. ("Surje"), the corporate defendant. Mr. Bhasin took steps to obtain additional financing for Surge from Royal Bank of Canada ("RBC"). He was put in touch with Alex Garabedian ("Mr. Garabedian"). A credit facility of $150,000 was approved. In May 2008, Mr. Bhasin signed a standard two-page loan agreement. It contained a personal guarantee. Mr. Bhasin testified that he told Mr. Garabedian he did not want to give a personal guarantee for this loan, and that Mr. Garabedian said there was no personal guarantee. He also stated that he did not read the loan agreement before signing it. Mr. Garabedian testified that his standard procedure was to review and discuss loan agreements before they are signed, and to explain to owners that they are signing for both personal and business liability. He did not recall Mr. Bhasin indicating that he did not want to give a personal guarantee. In December 2010, Surje was transferred to a different section at RBC, and assigned to Praveen Ravindranath ("Mr. Ravindranath"). A new loan agreement was signed. It contained a personal guarantee. Mr. Bhasin testified that the new loan agreement was not reviewed with him, and that he signed it without reading it first. He added that Mr. Ravindranath wrongly told him the agreements were the same as the original loan. Mr. Ravindranath testified that he told Mr. Bhasin that no changes were being made; the company was still being provided with an operating line of $150,000, secured in part by Mr. Bhasin's personal guarantee. He further stated that they discussed the reasons for the personal guarantee at Mr. Bhasin's request. According to Mr. Bhasin, he first discovered that he had a personal guarantee in June or July 2011. He only disputed the personal guarantee in February 2012. The main issue before the Court was whether the second personal guarantee signed by Mr. Bhasin was enforceable. The basic requirements to enforce the loan were established the loan agreement had been signed, the operating line was provided and was drawn on. Mr. Bhasin pleaded misrepresentation on the basis that Mr. Garabedian and Mr. Ravindranath both told him that there was no personal guarantee. The Court preferred the evidence of Mr. Garabedian and Mr. Ravindranath to the evidence of Mr. Bhasin. It also found that Mr. Bhasin's "discovery" of the personal guarantee in mid-2011 was completely inconsistent with his own actions – after his "shock", he did nothing until February 2012. Justice Matheson further noted that Mr. Bhasin's testimony was unresponsive and inconsistent on a number of subjects. Therefore, the Court concluded that neither Mr. Garabedian nor Mr. Ravindranath misrepresented the 2008 and 2010 loans, respectively, as excluding a personal guarantee. The second personal guarantee was deemed enforceable. This case turned on witness credibility. It is a reminder of the importance of having and implementing a standard procedure with respect to thoroughly reviewing loan documentation with clients.<p><em><a href="https://www.canlii.org/en/on/onsc/doc/2017/2017onsc1237/2017onsc1237.html?resultIndex=1">Royal Bank of Canada v. Surje & Company Inc.</a></em> is a recent decision of the Ontario Superior Court of Justice. The personal defendant, Sunny Bhasin ("Mr. Bhasin") held most of the common shares in Surge & Company Inc. ("Surje"), the corporate defendant. </p><p>Mr. Bhasin took steps to obtain additional financing for Surge from Royal Bank of Canada ("RBC"). He was put in touch with Alex Garabedian ("Mr. Garabedian"). A credit facility of $150,000 was approved. In May 2008, Mr. Bhasin signed a standard two-page loan agreement. It contained a personal guarantee. Mr. Bhasin testified that he told Mr. Garabedian he did not want to give a personal guarantee for this loan, and that Mr. Garabedian said there was no personal guarantee. He also stated that he did not read the loan agreement before signing it. Mr. Garabedian testified that his standard procedure was to review and discuss loan agreements before they are signed, and to explain to owners that they are signing for both personal and business liability. He did not recall Mr. Bhasin indicating that he did not want to give a personal guarantee. </p><p>In December 2010, Surje was transferred to a different section at RBC, and assigned to Praveen Ravindranath ("Mr. Ravindranath"). A new loan agreement was signed. It contained a personal guarantee. Mr. Bhasin testified that the new loan agreement was not reviewed with him, and that he signed it without reading it first. He added that Mr. Ravindranath wrongly told him the agreements were the same as the original loan. Mr. Ravindranath testified that he told Mr. Bhasin that no changes were being made; the company was still being provided with an operating line of $150,000, secured in part by Mr. Bhasin's personal guarantee. He further stated that they discussed the reasons for the personal guarantee at Mr. Bhasin's request. </p><p>According to Mr. Bhasin, he first discovered that he had a personal guarantee in June or July 2011. He only disputed the personal guarantee in February 2012. </p><p>The main issue before the Court was whether the second personal guarantee signed by Mr. Bhasin was enforceable. The basic requirements to enforce the loan were established: the loan agreement had been signed, the operating line was provided and was drawn on. </p><p>Mr. Bhasin pleaded misrepresentation on the basis that Mr. Garabedian and Mr. Ravindranath both told him that there was no personal guarantee. </p><p>The Court preferred the evidence of Mr. Garabedian and Mr. Ravindranath to the evidence of Mr. Bhasin. It also found that Mr. Bhasin's "discovery" of the personal guarantee in mid-2011 was completely inconsistent with his own actions – after his "shock", he did nothing until February 2012. Justice Matheson further noted that Mr. Bhasin's testimony was unresponsive and inconsistent on a number of subjects. Therefore, the Court concluded that neither Mr. Garabedian nor Mr. Ravindranath misrepresented the 2008 and 2010 loans, respectively, as excluding a personal guarantee. The second personal guarantee was deemed enforceable.</p><p>This case turned on witness credibility. It is a reminder of the importance of having and implementing a standard procedure with respect to thoroughly reviewing loan documentation with clients.</p>4/21/2017 4:00:00 AM2017-04-21T04:00:00ZTrue1float;#4.00000000000000float;#2017.00000000000string;#Aprilfloat;#201704.000000000GP0|#75eda1bb-5890-4b6b-aad7-b703245ec2e8;L0|#075eda1bb-5890-4b6b-aad7-b703245ec2e8|Securities: Litigation Regulatory and Compliance;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebSecurities: Litigation Regulatory and Compliance

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