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Ontario Court of Appeal Upholds Landmark Karigar Corruption ConvictionOntario Court of Appeal Upholds Landmark Karigar Corruption Conviction263BLG Blog PostLoni da Costaldacosta@blg.com | Loni da Costa | 693A30232E777C626C6763616E6164615C6C6461636F737461 i:0#.w|blgcanada\ldacosta ​The first conviction of an individual entered pursuant to Canada's Corruption of Foreign Public Officials Act​ has been unanimously upheld by the Ontario Court of Appeal in R. v. Karigar​.<p>​The first conviction of an individual entered pursuant to Canada's <em>Corruption of Foreign Public Officials Act</em>​ has been unanimously upheld by the Ontario Court of Appeal in <em><a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0576.htm">R. v. Karigar</a></em>​.</p> ​The first conviction of an individual entered pursuant to Canada's Corruption of Foreign Public Officials Act​ has been unanimously upheld by the Ontario Court of Appeal in R. v. Karigar​. This decision marks a continuation of what was the first real test of Canada's Corruption of Foreign Public Officials Act ​as all convictions under the Act prior to Karigar's had resulted from guilty pleas by offending corporations. In dismissing Karigar's appeal, the Court gave effect to the broad language of s. 3 of the Act, which codifies the bribery offence, confirming that an offence crystallizes, among other ways, upon an agreement to give or offer a bribe to a foreign public official being made, even if the parties to that agreement do not include the official him or herself. Both the conviction and upholding of same are the most recent examples of Canada's intention to improve its historical international reputation of being somewhat light on corruption, and affirm that the broad nature of the legislation will be given effect by the courts. The Court of Appeal also considered whether jurisdiction over Karigar could be established given that several elements of the offence were committed outside of Canada. It was ultimately decided that territorial jurisdiction could be established. It is important to note, however, that Karigar was tried under the Corruption of Foreign Public Officials Act prior to important amendments coming into force in respect of jurisdiction in 2013. Canadian entities and individuals acting in foreign jurisdictions would be wise to note that after the 2013 amendments and currently, the Act is such that jurisdiction is determinined on a nationality and residency basis. This means that an act committed contrary to the Act by a Canadian national or permanent resident will be subject to the Act, regardless of where in the world the offence took place. That is, under the Act as currently in force, conduct by Canadian nationals and permanent residents will be deemed to have been committed in Canada in determining whether an offence has been committed. <p>​The first conviction of an individual entered pursuant to Canada's <em>Corruption of Foreign Public Officials Act</em>​ has been unanimously upheld by the Ontario Court of Appeal in <em><a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0576.htm">R. v. Karigar</a></em>​.</p><p>This decision marks a continuation of what was the first real test of Canada's <em><a href="http://laws-lois.justice.gc.ca/PDF/C-45.2.pdf">Corruption of Foreign Public Officials Act </a></em>​as all convictions under the <em>Act</em> prior to Karigar's had resulted from guilty pleas by offending corporations.   In dismissing Karigar's appeal, the Court gave effect to the broad language of  s. 3 of the Act, which codifies the bribery offence, confirming that an offence crystallizes, among other ways, upon an agreement to give or offer a bribe to a foreign public official being made, even if the parties to that agreement do not include the official him or herself.   Both the conviction and upholding of same are the most recent examples of Canada's intention to improve its historical international reputation of being somewhat light on corruption, and affirm that the broad nature of the legislation will be given effect by the courts.  </p><p>The Court of Appeal also considered whether jurisdiction over Karigar could be established given that several elements of the offence were committed outside of Canada.  It was ultimately decided that territorial jurisdiction could be established.  It is important to note, however, that Karigar was tried under the <em>Corruption of Foreign Public Officials Act</em> prior to important amendments coming into force in respect of jurisdiction in 2013.  Canadian entities and individuals acting in foreign jurisdictions would be wise to note that after the 2013 amendments and currently, the <em>Act</em> is such that jurisdiction is determinined on a nationality and residency basis.  This means that an act committed contrary to the <em>Act</em> by a Canadian national or permanent resident will be subject to the <em>Act</em>, regardless of where in the world the offence took place. That is, under the <em>Act </em>as currently in force, conduct by Canadian nationals and permanent residents will be deemed to have been committed in Canada in determining whether an offence has been committed.  </p>7/20/2017 4:00:00 AM2017-07-20T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#11984f46-19e7-4b16-acce-db2c31f12bae;L0|#011984f46-19e7-4b16-acce-db2c31f12bae|Fraud and White Collar Crime;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebFraud and White Collar Crime
No Easy Way Out: Motions for Consent CertificationsNo Easy Way Out: Motions for Consent Certifications262BLG Blog PostZiad Yehiazyehia@blg.com | Ziad Yehia | 693A30232E777C626C6763616E6164615C7A7965686961 i:0#.w|blgcanada\zyehia ​In Mancinelli v Royal Bank of Canada​, group of trustees, on behalf of the Labourers’ Pension Fund of Central and Eastern Canada, along with an individual plaintiff, reached a settlement with certain Defendants who had been sued in their proposed class action and sought consent certifications for settlement purposes. Perell J., in the Ontario Superior Court of Justice, approved the settlement, but noted that the fact that an action is certified on consent for settlement purposes does not dispense with the need to meet the certification criteria, although they may be less rigorously applied in a settlement context.<p>​In <em><a href="https://www.canlii.org/en/on/onsc/doc/2017/2017onsc4219/2017onsc4219.html?resultIndex=1">Mancinelli v Royal Bank of Canada​</a></em>, group of trustees, on behalf of the Labourers’ Pension Fund of Central and Eastern Canada, along with an individual plaintiff, reached a settlement with certain Defendants who had been sued in their proposed class action and sought consent certifications for settlement purposes.  Perell J., in the Ontario Superior Court of Justice, approved the settlement, but noted that the fact that an action is certified on consent for settlement purposes does not dispense with the need to meet the certification criteria, although they may be less rigorously applied in a settlement context.</p>In Mancinelli v Royal Bank of Canada​, a group of trustees, on behalf of the Labourers’ Pension Fund of Central and Eastern Canada, along with an individual plaintiff, reached a settlement with certain Defendants who had been sued in their proposed class action and sought consent certifications for settlement purposes. The settlements stem from a proposed class action commenced by the Plaintiffs whereby they had sued 16 groups of financial institutions for allegedly conspiring with each other to fix prices in the futures exchange market (“FX Market”). It is alleged that through the use of multiple chat rooms with names such as “The Cartel,” “The Bandits’ Club,” and “The Mafia,” the Defendants communicated directly with each other to coordinate their (i) fixing of spot prices; (ii) control and manipulation of FX benchmark rates; and (iii) exchange of key confidential customer information to trigger client stop loss orders and limit orders. The Plaintiffs allege that the Defendants’ conspiracy impacted all manner of FX instruments, including those trading both over-the-counter and on exchanges. The issue before Justice Perell in Mancinelli v Royal Bank was whether to grant a motion in writing for consent certifications for settlement purposes following the settlements that were reached between the Plaintiffs and two groups of Defendants. In granting the consent certifications, Justice Perell noted that “[t]he fact that an action is certified on consent for settlement purposes does not dispense with the need to meet the certification criteria but they may be less rigorously applied in a settlement context.” To that end, it was only after he reviewed the motion record and determined that he was satisfied that all of the criteria for certification had been satisfied that he granted the consent certifications. ​<div>In <em></em><em><a href="https://www.canlii.org/en/on/onsc/doc/2017/2017onsc4219/2017onsc4219.html?resultIndex=1">Mancinelli v Royal Bank of Canada​</a></em>, a group of trustees, on behalf of the Labourers’ Pension Fund of Central and Eastern Canada, along with an individual plaintiff, reached a settlement with certain Defendants who had been sued in their proposed class action and sought consent certifications for settlement purposes.  </div><div> </div><div>The settlements stem from a proposed class action commenced by the Plaintiffs whereby they had sued 16 groups of financial institutions for allegedly conspiring with each other to fix prices in the futures exchange market (“FX Market”).  It is alleged that through the use of multiple chat rooms with names such as “The Cartel,” “The Bandits’ Club,” and “The Mafia,” the Defendants communicated directly with each other to coordinate their: (i) fixing of spot prices; (ii) control and manipulation of FX benchmark rates; and (iii) exchange of key confidential customer information to trigger client stop loss orders and limit orders.  The Plaintiffs allege that the Defendants’ conspiracy impacted all manner of FX instruments, including those trading both over-the-counter and on exchanges.</div><div><br>The issue before Justice Perell in <em>Mancinelli v Royal Bank </em>was whether to grant a motion in writing for consent certifications for settlement purposes following the settlements that were reached between the Plaintiffs and two groups of Defendants.  In granting the consent certifications, Justice Perell noted that “[t]he fact that an action is certified on consent for settlement purposes does not dispense with the need to meet the certification criteria but they may be less rigorously applied in a settlement context.”  To that end, it was only after he reviewed the motion record and determined that he was satisfied that all of the criteria for certification had been satisfied that he granted the consent certifications. ​</div>7/20/2017 4:00:00 AM2017-07-20T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#d531403d-b705-440c-8be2-98e2a4c77989;L0|#0d531403d-b705-440c-8be2-98e2a4c77989|Class Actions;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebClass Actions
OSC Issues Annual Summary Report for Dealers, Advisers and Investment Fund ManagersOSC Issues Annual Summary Report for Dealers, Advisers and Investment Fund Managers261BLG Blog PostIvana Nenadicinenadic@blg.com | Ivana Nenadic | 693A30232E777C626C6763616E6164615C696E656E61646963 i:0#.w|blgcanada\inenadic ​On July 11, 2017, the OSC issued its Annual Summary Report for Dealers, Advisers and Investment Fund Managers (OSC Staff Notice 33-748). The Staff Notice addresses current trends in registration and in deficiencies identified through compliance reviews; types of regulatory action taken by the OSC when it finds serious non-compliance and misconduct; and new and proposed rules and policy initiatives.<p>​On July 11, 2017, the OSC issued its <a href="http://www.osc.gov.on.ca/documents/en/Securities-Category3/20170711_sn_33-748_annual-rpt-dealers-advisers.pdf">Annual Summary Report for Dealers, Advisers and Investment Fund Managers (OSC Staff Notice 33-748)</a>.  The Staff Notice addresses current trends in registration and in deficiencies identified through compliance reviews; types of regulatory action taken by the OSC when it finds serious non-compliance and misconduct; and new and proposed rules and policy initiatives.</p> ​​On July 11, 2017, the OSC issued its Annual Summary Report for Dealers, Advisers and Investment Fund Managers (OSC Staff Notice 33-748). The Staff Notice addresses current trends in registration and in deficiencies identified through compliance reviews; types of regulatory action taken by the OSC when it finds serious non-compliance and misconduct; and new and proposed rules and policy initiatives Section 2 - The OSC addresses the review of insurance requirements and confirms its jurisdiction for the registration of MFDA firms and individuals. Current trends in deficiencies relating to the registration of firms and individuals include incomplete registration filings and changes to firm registration filings; a lack of disclosure in the reactivation of registrant applications; use of misleading titles; and late or incorrect updates for notices of termination filings. Section 3 - All registrants are reminded to review the collection, documentation and updating of know-your-client information and client account statement information. They are also reminded of best practices surrounding excessive fees being charged to clients. The Staff Notice provides guidance on dealers distributing securities in reliance on the new prospectus exemptions, including the prescribed investment limits and the processing of trades for clients who are not family members, close personal friends or close business associates. Advisers are cautioned when dealing with vulnerable investors, and the OSC provides guidance for properly accessing clients' accounts. The Staff Notice also addresses deficiencies specific to online advisers. Investment fund managers are cautioned on the rules relating to the holding of client assets, as well as on sales practices which ensure that compensation or benefits provided to participating dealers are not excessive. The Staff Notice also addresses advisor discount fee arrangements, which are not in compliance with regulation. Section 4 - The OSC has acted on numerous instances of misconduct by registrants. Topics of interest in the latest decisions include novel dealer business models; disclosure of outside business activity and community involvement/positions of influence; registration of individuals with prior disciplinary history; false client documentation; and misleading staff or the sponsoring firm. Section 5 - New initiatives impacting registrants include a regulatory best interest standard; a review of compensation practices; proposed amendments to registration rules for dealers including client reporting requirements introduced under CRM2; as well as derivatives regulations.<p>​​On July 11, 2017, the OSC issued its <a href="http://www.osc.gov.on.ca/documents/en/Securities-Category3/20170711_sn_33-748_annual-rpt-dealers-advisers.pdf">Annual Summary Report for Dealers, Advisers and Investment Fund Managers (OSC Staff Notice 33-748)</a>.  </p><p>The Staff Notice addresses current trends in registration and in deficiencies identified through compliance reviews; types of regulatory action taken by the OSC when it finds serious non-compliance and misconduct; and new and proposed rules and policy initiatives:</p><ul><li><em>Section 2</em> - The OSC addresses the review of insurance requirements and confirms its jurisdiction for the registration of MFDA firms and individuals. Current trends in deficiencies relating to the registration of firms and individuals include incomplete registration filings and changes to firm registration filings; a lack of disclosure in the reactivation of registrant applications; use of misleading titles; and late or incorrect updates for notices of termination filings.</li></ul><ul><li><em>Section 3 </em>- All registrants are reminded to review the collection, documentation and updating of know-your-client information and client account statement information. They are also reminded of best practices surrounding excessive fees being charged to clients.</li></ul><ul><li>The Staff Notice provides guidance on dealers distributing securities in reliance on the new prospectus exemptions, including the prescribed investment limits and the processing of trades for clients who are not family members, close personal friends or close business associates.</li></ul><ul><li>Advisers are cautioned when dealing with vulnerable investors, and the OSC provides guidance for properly accessing clients' accounts. The Staff Notice also addresses deficiencies specific to online advisers.</li></ul><ul><li>Investment fund managers are cautioned on the rules relating to the holding of client assets, as well as on sales practices which ensure that compensation or benefits provided to participating dealers are not excessive. The Staff Notice also addresses advisor discount fee arrangements, which are not in compliance with regulation.</li></ul><ul><li><em>Section 4 </em>- The OSC has acted on numerous instances of misconduct by registrants. Topics of interest in the latest decisions include: novel dealer business models; disclosure of outside business activity and community involvement/positions of influence; registration of individuals with prior disciplinary history; false client documentation; and misleading staff or the sponsoring firm.</li></ul><ul><li><em>Section 5 </em>- New initiatives impacting registrants include: a regulatory best interest standard; a review of compensation practices; proposed amendments to registration rules for dealers including client reporting requirements introduced under CRM2; as well as derivatives regulations.</li></ul>7/17/2017 4:00:00 AM2017-07-17T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#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
Investor's claim for lackluster performance of his pref share strategy failsInvestor's claim for lackluster performance of his pref share strategy fails260BLG Blog PostAlexander L. De Zordoadezordo@blg.com | Alexander L. De Zordo | 693A30232E777C626C6763616E6164615C6164657A6F72646F i:0#.w|blgcanada\adezordo ​​In Shinoff vs BMO Nesbitt Burns Inc. and Barbara Schwartz-Zukor, Justice France Dulude dismissed an investor's claim for $5.3M in alleged losses due to the defendants' alleged failure to properly manage and monitor the investments, and particularly a significant preffered share portfolio of investments. After a lengthy review of the evidence, the Court concluded that the investment advisor fulfilled her obligation to know her client, and to provide adequate information and advice. This case is important as it serves as an excellent review of an investment advisor's duty to inform and to respect suitability requirements, and that these are highly dependent on the investor's level of knowledge and sophistication and own duty to inquire and inform him or herself.<p>​​In <em>Shinoff vs BMO Nesbitt Burns Inc. and Barbara Schwartz-Zukor, </em>Justice France Dulude dismissed an investor's claim for $5.3M in alleged losses due to the defendants' alleged failure to properly manage and monitor the investments, and particularly a significant preffered share portfolio of investments.  After a lengthy review of the evidence, the Court concluded that the investment advisor fulfilled her obligation to know her client, and to provide adequate information and advice.  This case is important as it serves as an excellent review of an investment advisor's duty to inform and to respect suitability requirements, and that these are highly dependent on the investor's level of knowledge and sophistication and own duty to inquire and inform him or herself.</p> ​In Shinoff vs BMO Nesbitt Burns Inc. and Barbara Schwartz-Zukor, Justice France Dulude dismissed an investor's claim for $5.3M in alleged losses due to the defendants' alleged failure to properly manage and monitor the investments, and particularly a significant preffered share portfolio of investments. After a lengthy review of the evidence, the Court concluded that the investment advisor fulfilled her obligation to know her client, and to provide adequate information and advice [253] In fact, it does not appear that, in the summer of 2006, BSZ provided him all the information needed on the advantages and disadvantages of holding Preferreds in comparison to other types of instruments, or that she explained in detail the strategy she intended to develop. As well, she did not quantify the risks associated with the recommended trades. [254] However, the evidence shows that, prior to purchasing any Preferreds, BSZ described the product and explained to him the concept of Preferreds, including their particularities and advantages. She informed him that they could fluctuate with interest rates and explained the other risks associated with them, including market risk, credit risk, and reinvestment risk. [259] Thus, the Court is satisfied that the Defendants provided sufficient information and advice to him, given his circumstances, and that they adequately explained the risks involved with the recommended trades, thereby fulfilling their duty to Mr. Shinoff in that regard. The Court also accepted expert opinion to the effect that a high quality pref share strategy can be suitable for a low risk investment objective [396] Mr. Perreault also explained that when securities are of a high quality, such as those in Mr. Shinoff's portfolio, Preferreds and common shares are not automatically by nature unsuitable to a Iow risk client. Finally, although the risk objectives may have been slightly off, the Court found that the Defendants did not breach suitability requirements (based mostly on the investor's degree of knowledge and investment sophistication) [410] lt is true that the evidence shows that the portfolio may have been a bit riskier than need be at times. For example, the fact that Preferreds represented some 33% of the total value of the portfolio on occasion does not seem to totally correspond to Mr. Shinoff's objectives. Nevertheless, there is no evidence that the Defendants breached their duty to provide suitable recommendations. [434] In 2006, BSZ might not, strictly speaking, have quantified the risks related to Preferreds but, as opposed to the facts in the case law submitted by the Plaintiffs, in 2007 and 2008, when he decided to keep his Preferreds, Mr. Shinoff was clearly aware of the risks. Hence, any Ioss he might have suffered was not caused by anything BSZ might have done or not done but, rather, by his choice to assume the risk related to holding such securities. As regards the quantification of any damages resulting from losses in the account, the court referred to the traditional loss of opportunity exercise of comparing performance with a benchmark portfolio consistent with stated suitability, but given the lack of any credible evidence in this regard, applied a profit and loss analysis. [436] Financial losses are often assessed by comparing the portfolio held by a plaintiff with the market value of a benchmark portfolio that is consistent with his investor profile and objectives. The plaintiff has the burden of identifying such a reference portfolio and showing that it would have generated a better outcome than the one he held. His damages would be the difference between the two results. [439] Neither his report nor the one submitted by Mr. Hymas is reliable and the Court has rejected them. Consequently, the Plaintiffs failed to prove that it was possible to comply with Mr. Shinoff's profile and objectives and not incur the Ioss he alleges to have suffered, or even the one calculated by Defendants' expert, which we will discuss below. [440] For his part, Mr. Horgan conducted a profit and loss analysis of Mr. Shinoff's complete portfolio at BMONB for two different periods, namely as at August 1, 2007, and as at the end dates of his different accounts with BMONB. For the first period, he concluded that the accounts had suffered no loss but, rather, a gain of $167,607. For the second period, he opined that at the end date of the accounts, the Plaintiffs had suffered a loss attributable to factors other than commissions and fees, of $1,358,303. [441] Since Mr. Horgan's expert report is credible, had the Plaintiffs proven a causal fault on the part of the Defendants [which they did not], the Court would have adopted his conclusions. This case is important as it serves as an excellent review of an investment advisor's duty to inform and to respect suitability requirements, and that these are highly dependent on the investor's level of knowledge and sophistication and own duty to inquire and inform him or herself.<p>​In <em>Shinoff vs BMO Nesbitt Burns Inc. and Barbara Schwartz-Zukor, </em>Justice France Dulude dismissed an investor's claim for $5.3M in alleged losses due to the defendants' alleged failure to properly manage and monitor the investments, and particularly a significant preffered share portfolio of investments.  After a lengthy review of the evidence, the Court concluded that the investment advisor fulfilled her obligation to know her client, and to provide adequate information and advice:</p><blockquote dir="ltr" style="margin-right:0px;"><p><em>[253] In fact, it does not appear that, in the summer of 2006, BSZ provided him all the information needed on the advantages and disadvantages of holding Preferreds in comparison to other types of instruments, or that she explained in detail the strategy she intended to develop. As well, she did not quantify the risks associated with the recommended trades.</em></p><p style="text-align:justify;"><em> [254] However, the evidence shows that, prior to purchasing any Preferreds, BSZ described the product and explained to him the concept of Preferreds, including their particularities and advantages. She informed him that they could fluctuate with interest rates and explained the other risks associated with them, including market risk, credit risk, and reinvestment risk.</em></p><p style="text-align:justify;"><em> [259] Thus, the Court is satisfied that the Defendants provided sufficient information and advice to him, given his circumstances, and that they adequately explained the risks involved with the recommended trades, thereby fulfilling their duty to Mr. Shinoff in that regard.</em></p></blockquote><p>The Court also accepted expert opinion to the effect that a high quality pref share strategy can be suitable for a low risk investment objective:</p><blockquote dir="ltr" style="margin-right:0px;"><p><em>[396] Mr. Perreault also explained that when securities are of a high quality, such as those in Mr. Shinoff's portfolio, Preferreds and common shares are not automatically by nature unsuitable to a Iow risk client.</em></p></blockquote><p>Finally, although the risk objectives may have been slightly off, the Court found that the Defendants did not breach suitability requirements (based mostly on the investor's degree of knowledge and investment sophistication):</p><blockquote dir="ltr" style="margin-right:0px;"><p><em>[410] lt is true that the evidence shows that the portfolio may have been a bit riskier than need be at times. For example, the fact that Preferreds represented some 33% of the total value of the portfolio on occasion does not seem to totally correspond to Mr. Shinoff's objectives. Nevertheless, there is no evidence that the Defendants breached their duty to provide suitable recommendations.</em></p><p><em>[434] In 2006, BSZ might not, strictly speaking, have quantified the risks related to Preferreds but, as opposed to the facts in the case law submitted by the Plaintiffs, in 2007 and 2008, when he decided to keep his Preferreds, Mr. Shinoff was clearly aware of the risks. Hence, any Ioss he might have suffered was not caused by anything BSZ might have done or not done but, rather, by his choice to assume the risk related to holding such securities.</em></p></blockquote><p>As regards the quantification of any damages resulting from losses in the account, the court referred to the traditional loss of opportunity exercise of comparing performance with a benchmark portfolio consistent with stated suitability, but given the lack of any credible evidence in this regard, applied a profit and loss analysis.</p><blockquote dir="ltr" style="margin-right:0px;"><p><em>[436] Financial losses are often assessed by comparing the portfolio held by a plaintiff with the market value of a benchmark portfolio that is consistent with his investor profile and objectives. The plaintiff has the burden of identifying such a reference portfolio and showing that it would have generated a better outcome than the one he held. His damages would be the difference between the two results.</em></p><p><em>[439] Neither his report nor the one submitted by Mr. Hymas is reliable and the Court has rejected them. Consequently, the Plaintiffs failed to prove that it was possible to comply with Mr. Shinoff's profile and objectives and not incur the Ioss he alleges to have suffered, or even the one calculated by Defendants' expert, which we will discuss below.</em></p><p><em>[440] For his part, Mr. Horgan conducted a profit and loss analysis of Mr. Shinoff's complete portfolio at BMONB for two different periods, namely as at August 1, 2007, and as at the end dates of his different accounts with BMONB. For the first period, he concluded that the accounts had suffered no loss but, rather, a gain of $167,607. For the second period, he opined that at the end date of the accounts, the Plaintiffs had suffered a loss attributable to factors other than commissions and fees, of $1,358,303.</em></p><p><em>[441] Since Mr. Horgan's expert report is credible, had the Plaintiffs proven a causal fault on the part of the Defendants </em>[which they did not]<em>, the Court would have adopted his conclusions.</em> </p></blockquote><p>This case is important as it serves as an excellent review of an investment advisor's duty to inform and to respect suitability requirements, and that these are highly dependent on the investor's level of knowledge and sophistication and own duty to inquire and inform him or herself.</p>7/13/2017 4:00:00 AM2017-07-13T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#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
International Court of Arbitration Task Force on Financial Institutions and International Arbitration ReportInternational Court of Arbitration Task Force on Financial Institutions and International Arbitration Report259BLG Blog PostMichelle Maniagommaniago@blg.com | Michelle Maniago | 693A30232E777C626C6763616E6164615C6D6D616E6961676F i:0#.w|blgcanada\mmaniago ​For those looking for some summer reading and who did not get the chance to do so when it was released, check out the report issued by the ICC International Court of Arbitration, Task Force on Financial Institutions and International Arbitration, which examines a wide range of banking and financial activities and the use of international commercial and investment arbitration. In addition to its general discussion of arbitration in the financial sector, this report will be of particular interest to those curious about arbitration involving derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance disputes, advisory matters, and asset management, as the report includes specialized discussion of each of these topics.<p>​For those looking for some summer reading and who did not get the chance to do so when it was released, check out <a href="https://iccwbo.org/publication/financial-institutions-international-arbitration-icc-arbitration-adr-commission-report/">the report </a>issued by the ICC International Court of Arbitration, Task Force on Financial Institutions and International Arbitration, which examines a wide range of banking and financial activities and the use of international commercial and investment arbitration. In addition to its general discussion of arbitration in the financial sector, this report will be of particular interest to those curious about arbitration involving derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance disputes, advisory matters, and asset management, as the report includes specialized discussion of each of these topics.</p> ​​For those looking for some summer reading and who did not get the chance to do so when it was released, check out the report issued by the ICC International Court of Arbitration, Task Force on Financial Institutions and International Arbitration, which examines a wide range of banking and financial activities and the use of international commercial and investment arbitration. In addition to its general discussion of arbitration in the financial sector, this report will be of particular interest to those curious about arbitration involving derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance disputes, advisory matters, and asset management, as the report includes specialized discussion of each of these topics.<p>​​For those looking for some summer reading and who did not get the chance to do so when it was released, check out <a href="https://iccwbo.org/publication/financial-institutions-international-arbitration-icc-arbitration-adr-commission-report/">the report </a>issued by the ICC International Court of Arbitration, Task Force on Financial Institutions and International Arbitration, which examines a wide range of banking and financial activities and the use of international commercial and investment arbitration. In addition to its general discussion of arbitration in the financial sector, this report will be of particular interest to those curious about arbitration involving derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance disputes, advisory matters, and asset management, as the report includes specialized discussion of each of these topics.</p>7/8/2017 4:00:00 AM2017-07-08T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#2df25a26-3353-4357-8797-8d21a2ea3aee;L0|#02df25a26-3353-4357-8797-8d21a2ea3aee|Banking and Bills of Exchange;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#83d31cc8-2281-46b1-bd03-ad81b15c38ff;L0|#083d31cc8-2281-46b1-bd03-ad81b15c38ff|Banking RegulatoryBanking and Bills of Exchange;Banking Regulatory
Estates Litigation Update: The Superior Court has Broad Jurisdiction and Inherent Jurisdiction to Appoint an Estate Trustee During Litigation Even where there is no Will ChallengeEstates Litigation Update: The Superior Court has Broad Jurisdiction and Inherent Jurisdiction to Appoint an Estate Trustee During Litigation Even where there is no Will Challenge258BLG Blog PostEwa Krajewskaekrajewska@blg.com | Ewa Krajewska | 693A30232E777C626C6763616E6164615C656B72616A6577736B61 i:0#.w|blgcanada\ekrajewska ​In Meyers v. Rubin, 2017 ONSC 3498 Justice Meyers of the Superior Court for Ontario held that the Court's jurisdiction to appoint an administrator over property of a deceased person is not limited to circumstances which the will or grant of probate or administration is in issue.<p>​In <a href="http://canlii.ca/t/h4734" target="_blank"><em>Meyers v. Rubin</em>, 2017 ONSC 3498</a> Justice Meyers of the <a href="http://www.ontariocourts.ca/scj/" target="_blank">Superior Court for Ontario</a> held that the Court's jurisdiction to appoint an administrator over property of a deceased person is not limited to circumstances which the will or grant of probate or administration is in issue.</p> ​In Meyers v. Rubin, 2017 ONSC 3498 Justice Meyers of the Superior Court for Ontario held that the Court's jurisdiction to appoint an administrator over property of a deceased person is not limited to circumstances which the will or grant of probate or administration is in issue. Instead, Justice Meyers held that the court has broad and inherent powers to supervise the management of estates and to control its own processes. The Court may draw upon its inherent jurisdiction where appropriate to protect parties before the court so that justice can done in the proceeding. The purpose of the estate trustee during litigation is to ensure that the playing field is kept level. In so doing, Justice Meyers rejected the assertion that the court's jurisdiction is limited by section 28 of the Estates Act which authorizes the court to appoint an administrator over property of a deceased person in a will challenge. Justice Meyers also rejected the submission that section 37 of the Trustee Act that governs the removal of trustees is a complete code. When considering whether to appoint an estate trustee during litigation, the Court held that the following should be considered The balance of convenience; The interests of the beneficiaries that the assets of the estate be immunized from tactics employed by litigating parties; The protection of a level playing field – in other words, neither side should be able to use their control over the estate to benefit themselves or to prejudice the other; Whether appointing an estate trustee will protect the estate from the trustees' animosity; The appointment of an estate trustee is not extraordinary; The court should favour appointment of an estate trustee during litigation unless the administration of the estate involved in particularly straightforward or simple.<p>​In <a href="http://canlii.ca/t/h4734" target="_blank"> <em>Meyers v. Rubin</em>, 2017 ONSC 3498</a> Justice Meyers of the <a href="http://www.ontariocourts.ca/scj/" target="_blank">Superior Court for Ontario</a> held that the Court's jurisdiction to appoint an administrator over property of a deceased person is not limited to circumstances which the will or grant of probate or administration is in issue.</p><p>Instead, Justice Meyers held that the court has broad and inherent powers to supervise the management of estates and to control its own processes. The Court may draw upon its inherent jurisdiction where appropriate to protect parties before the court so that justice can done in the proceeding. The purpose of the estate trustee during litigation is to ensure that the playing field is kept level. </p><p>In so doing, Justice Meyers rejected the assertion that the court's jurisdiction is limited by section 28 of the <em><a href="https://www.ontario.ca/laws/statute/90e21" target="_blank">Estates Act</a></em> which authorizes the court to appoint an administrator over property of a deceased person in a will challenge. Justice Meyers also rejected the submission that section 37 of the <a href="https://www.ontario.ca/laws/statute/90t23" target="_blank"><em>Trustee Act</em></a> that governs the removal of trustees is a complete code.</p><p>When considering whether to appoint an estate trustee during litigation, the Court held that the following should be considered:</p><ul><li>The balance of convenience; </li><li>The interests of the beneficiaries that the assets of the estate be immunized from tactics employed by litigating parties; </li><li>The protection of a level playing field – in other words, neither side should be able to use their control over the estate to benefit themselves or to prejudice the other; </li><li>Whether appointing an estate trustee will protect the estate from the trustees' animosity; </li><li>The appointment of an estate trustee is not extraordinary; </li> <li>The court should favour appointment of an estate trustee during litigation unless the administration of the estate involved in particularly straightforward or simple.</li></ul>7/5/2017 4:00:00 AM2017-07-05T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#fbfdfcb9-adbc-49cd-a509-671cc2c30fac;L0|#0fbfdfcb9-adbc-49cd-a509-671cc2c30fac|Estates and Trusts;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebEstates and Trusts
Wind-Downs, Retainers and Releases: The Ontario Court of Appeal Decision in Trillium Motor WorldWind-Downs, Retainers and Releases: The Ontario Court of Appeal Decision in Trillium Motor World257BLG Blog PostBevan Brooksbankbbrooksbank@blg.com | Bevan Brooksbank | 693A30232E777C626C6763616E6164615C6262726F6F6B7362616E6B i:0#.w|blgcanada\bbrooksbank On July 4, 2017 the Ontario Court of Appeal released its much anticipated decision on the appeals taken from the trial decision of Justice McEwen in Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP et al. In two sets of comprehensive reasons, the Court dismissed the appeal from the liability finding against Cassels Brock ("Cassels"), allowed in part the appeal on the calculation of damages, and upheld the trial judge's decision to dismiss the action against General Motors Canada. The decisions provide significant appellate guidance on the questions of (i) management of conflicts of interest by law firms, (ii) "loss of chance" and aggregate damages in the class action context, and (iii) the enforceability of settlement releases in light of the statutory safeguards in franchise legislation. <p>On July 4, 2017 the Ontario Court of Appeal released its much anticipated decision on the appeals taken from the trial decision of Justice McEwen in <em>Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP et al.</em>  In two sets of comprehensive reasons, the Court <a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0544.pdf">dismissed the appeal from the liability finding against Cassels Brock </a>("Cassels"), allowed in part the appeal on the calculation of damages, and <a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0545.pdf">upheld the trial judge's decision to dismiss the action against General Motors Canada</a>.  The decisions provide significant appellate guidance on the questions of (i) management of conflicts of interest by law firms, (ii) "loss of chance" and aggregate damages in the class action context, and (iii) the enforceability of settlement releases in light of the statutory safeguards in franchise legislation. </p>On July 4, 2017 the Ontario Court of Appeal released its much anticipated decision on the appeals taken from the trial decision of Justice McEwen in Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP et al. In two sets of comprehensive reasons, the Court dismissed the appeal from the liability finding against Cassels Brock ("Cassels"), allowed in part the appeal on the calculation of damages, and upheld the trial judge's decision to dismiss the action against General Motors Canada. The decisions provide significant appellate guidance on the questions of (i) management of conflicts of interest by law firms, (ii) "loss of chance" and aggregate damages in the class action context, and (iii) the enforceability of settlement releases in light of the statutory safeguards in franchise legislation. In particular, the Court of Appeal upheld the largely factual determinations made by the trial judge with respect to the formation, scope, and ultimate breach of a retainer by Cassels. The Court also upheld the trial judge on the more limited appeal brought forward with respect to the action against General Motors Canada, confirming the distinction to be drawn between those releases entered into by way of settlement, and otherwise unenforceable waivers and releases of statutory protections under franchise legislation. Unfortunately, as a result of the release determination, it was not necessary for the Court to address the other interesting points raised by the trial decision, such as the interaction of governing law provisions and provincial franchise legislation, and the application of the statutory duty of good faith.A brief overview of the background to the matter will be provided, followed by a description of the salient points that emerge from the Court's reasons.Background the GM Wind-Down Agreements As succinctly summarized by Justice Cronk, writing for the Court, in response to the economic downturn of early 2009 General Motors Canada Ltd. ("GMCL") entered into Wind-Down Agreements ("WDA") with certain dealers to drastically reduce the size of its dealer network, and discontinue the Saturn brand altogether. The WDA were necessary to implement a restructuring with the assistance of the Canadian and American governments. In this context, Cassels was retained by a group of Saturn dealers, and subsequently also retained by Industry Canada ("Canada") and a group of GMCL dealers to address a possible GMCL insolvency. Ultimately, 202 GMCL dealers, including 42 Saturn dealers, executed a WDA which contained, among other things, a release in favour of GMCL.Cassels disclosed the Saturn and GMCL retainers to Canada, and advised that it would drop the GMCL mandate if a conflict arose. However, Cassels did not disclose the Canada retainer to the two dealer groups, and was of the view that any conflict was merely prospective, and manageable. In 2009 Trillium Motor World ("Trillium"), a GMCL dealer that signed a WDA, commenced a class proceeding against Cassels and GMCL, alleging breach of fiduciary duties against the former for failure to disclose the law firm's conflict, and alleging breach of duties at common law and statute against the latter regarding the manner in which the WDAs were imposed. Certification was obtained, and after numerous preliminary motions a common issues trial was held over 41 days in 2014.Cassels is Held Liable for its Conflict of InterestIn extensive reasons, the trial judge Justice McEwen had held Cassels liable on the basis of a finding that a retainer had arisen between the GMCL dealers and Cassels, the retainer gave rise to a bright line conflict or risk of such, and at a minimum Cassels breached its duties by failing to disclose the Canada retainer. Had the dealers been properly represented and advised, they would have negotiated successfully with GMCL. Damages were assessed at $45 million, representing the loss of a 55% chance of obtaining an advantageous negotiation with GMCL, later amended by a supplementary ruling to hold the process of calculation of damages in abeyance pending appeal.On appeal, Cassels attacked the trial decision on several grounds largely stemming from an alleged failure to properly assess and weigh the evidence. As such, the stringent and deferential standard of review of palpable and overriding error was applied. Trillium in turn cross-appealed , contending that the damages of the dealers in fact totalled $77.3 million rather than the sum found at trial. Justice Cronk dismissed the Cassels appeal on the basis that the trial judge ( i) adequately characterized the scope of the GMCL dealer retainer, and was correct in finding the "legal services memorandum" retainer to possess an ambiguity to be construed against Cassels, (ii) took into account the surrounding factual circumstances of the retainer formation, (iii) properly applied the law applicable to "limited retainers", and (iv) assigned adequate weight to the evidence of certain witnesses. Importantly, the application by Justice McEwen of a "bright line conflict rule" was upheld on appeal. It was established that the interests of the dealers and Canada were adverse during the relevant period with respect to a GMCL insolvency, rather than merely "potentially adverse." Cassels accepted the GMCL retainer with the intention of abandoning the dealers in favour of Canada if the need arose, yet did not inform the dealers of this posture. A breach of the duty of loyalty consequently arose. With respect to the appeals concerning the damages findings at trial, Justice Cronk held that no errors arose at trial with respect to the application of the "loss of chance" law to the assessment of damages, or a holding of aggregate damages for the class. However, the Cassels appeal on the calculation of aggregate damages was allowed due to confusion over the composition of the class, and a further motion to correct the damages calculation was endorsed. Lastly, the Trillium cross-appeal on the basis that the trial judge failed to address certain contingencies in the loss of chance analysis, and thus failed to reach a higher damages figure, was rejected.The GM Dismissal is UpheldAt trial, it was held that GMCL had acted fairly and in good faith with respect to the WDAs, and had not contravened the dealers' rights under the Arthur Wishart Act (Franchise Disclosure), 2000 (the "AWA"). Alternatively, Justice McEwen held that the WDA releases barred the proceeding in any event.In reasons of Pardu J.A., the Court of Appeal endorsed the trial decision and the dismissal of the action against GM. In particular, the enforceability of the comprehensive releases turned on whether the WDAs were settlement agreements, and thus brought within the limited exception to the prohibition in section 11 of the AWA on franchisee waivers or releases of statutory obligations. It was affirmed that a voluntarily negotiated settlement of existing claims, entered into with the benefit of legal advice and in settlement of a dispute over existing and known breaches of the AWA is not caught by section 11. The trial judge's conclusion that the WDAs fell within this exception was reasonable and not affected by any palpable and overriding error.As the enforceability of the WDA releases was a "threshold question", it was unnecessary for the Court to address the other grounds of appeal advanced, such as whether GMCL breached its duty of good faith and fair dealing in the restructuring of its dealer network and execution of WDAs.Lastly, a cross-appeal by GM relying upon certain indemnification rights in the WDAs was dismissed. In particular, a covenant in the WDAs to not pursue a class proceeding, and to otherwise indemnify GMCL for defence costs, was held unenforceable on the basis of the AWA right to associate, and public policy.<p style="text-align:justify;">On July 4, 2017 the Ontario Court of Appeal released its much anticipated decision on the appeals taken from the trial decision of Justice McEwen in <em>Trillium Motor World Ltd. v. Cassels Brock & Blackwell LLP et al.</em>  In two sets of comprehensive reasons, the Court <a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0544.pdf">dismissed the appeal from the liability finding against Cassels Brock </a>("Cassels"), allowed in part the appeal on the calculation of damages, and <a href="http://www.ontariocourts.ca/decisions/2017/2017ONCA0545.pdf">upheld the trial judge's decision to dismiss the action against General Motors Canada</a>.  The decisions provide significant appellate guidance on the questions of (i) management of conflicts of interest by law firms, (ii) "loss of chance" and aggregate damages in the class action context, and (iii) the enforceability of settlement releases in light of the statutory safeguards in franchise legislation. </p><p style="text-align:justify;">In particular, the Court of Appeal upheld the largely factual determinations made by the trial judge with respect to the formation, scope, and ultimate breach of a retainer by Cassels. The Court also upheld the trial judge on the more limited appeal brought forward with respect to the action against General Motors Canada, confirming the distinction to be drawn between those releases entered into by way of settlement, and otherwise unenforceable waivers and releases of statutory protections under franchise legislation. Unfortunately, as a result of the release determination, it was not necessary for the Court to address the other interesting points raised by the trial decision, such as the interaction of governing law provisions and provincial franchise legislation, and the application of the statutory duty of good faith.</p><p style="text-align:justify;">A brief overview of the background to the matter will be provided, followed by a description of the salient points that emerge from the Court's reasons.</p><p style="text-align:justify;"><strong>Background:</strong><strong>  </strong><strong>the GM Wind-Down Agreements </strong></p><p style="text-align:justify;">As succinctly summarized by Justice Cronk, writing for the Court, in response to the economic downturn of early 2009 General Motors Canada Ltd. ("GMCL") entered into Wind-Down Agreements ("WDA") with certain dealers to drastically reduce the size of its dealer network, and discontinue the Saturn brand altogether. The WDA were necessary to implement a restructuring with the assistance of the Canadian and American governments. In this context, Cassels was retained by a group of Saturn dealers, and subsequently also retained by Industry Canada ("Canada") and a group of GMCL dealers to address a possible GMCL insolvency. </p><p style="text-align:justify;">Ultimately, 202 GMCL dealers, including 42 Saturn dealers, executed a WDA which contained, among other things, a release in favour of GMCL.</p><p style="text-align:justify;">Cassels disclosed the Saturn and GMCL retainers to Canada, and advised that it would drop the GMCL mandate if a conflict arose. However, Cassels did not disclose the Canada retainer to the two dealer groups, and was of the view that any conflict was merely prospective, and manageable. </p><p style="text-align:justify;">In 2009 Trillium Motor World ("Trillium"), a GMCL dealer that signed a WDA, commenced a class proceeding against Cassels and GMCL, alleging breach of fiduciary duties against the former for failure to disclose the law firm's conflict, and alleging breach of duties at common law and statute against the latter regarding the manner in which the WDAs were imposed. Certification was obtained, and after numerous preliminary motions a common issues trial was held over 41 days in 2014.</p><p style="text-align:justify;"><strong>Cassels is Held Liable for its Conflict of Interest</strong></p><p style="text-align:justify;">In extensive reasons, the trial judge Justice McEwen had held Cassels liable on the basis of a finding that a retainer had arisen between the GMCL dealers and Cassels, the retainer gave rise to a bright line conflict or risk of such, and at a minimum Cassels breached its duties by failing to disclose the Canada retainer. Had the dealers been properly represented and advised, they would have negotiated successfully with GMCL.  Damages were assessed at $45 million, representing the loss of a 55% chance of obtaining an advantageous negotiation with GMCL, later amended by a supplementary ruling to hold the process of calculation of damages in abeyance pending appeal.</p><p style="text-align:justify;">On appeal, Cassels attacked the trial decision on several grounds largely stemming from an alleged failure to properly assess and weigh the evidence.  As such, the stringent and deferential standard of review of palpable and overriding error was applied. Trillium in turn cross-appealed , contending that the damages of the dealers in fact totalled $77.3 million rather than the sum found at trial. </p><p style="text-align:justify;">Justice Cronk dismissed the Cassels appeal on the basis that the trial judge ( i) adequately characterized the scope of the GMCL dealer retainer, and was correct in finding the "legal services memorandum" retainer to possess an ambiguity to be construed against Cassels, (ii) took into account the surrounding factual circumstances of the retainer formation, (iii) properly applied the law applicable to "limited retainers", and (iv) assigned adequate weight to the evidence of certain witnesses. Importantly, the application by Justice McEwen of a "bright line conflict rule" was upheld on appeal. It was established that the interests of the dealers and Canada were adverse during the relevant period with respect to a GMCL insolvency, rather than merely "potentially adverse." Cassels accepted the GMCL retainer with the intention of abandoning the dealers in favour of Canada if the need arose, yet did not inform the dealers of this posture. A breach of the duty of loyalty consequently arose. </p><p style="text-align:justify;">With respect to the appeals concerning the damages findings at trial, Justice Cronk held that no errors arose at trial with respect to the application of the "loss of chance" law to the assessment of damages, or a holding of aggregate damages for the class.  However, the Cassels appeal on the calculation of aggregate damages was allowed due to confusion over the composition of the class, and a further motion to correct the damages calculation was endorsed. Lastly, the Trillium cross-appeal on the basis that the trial judge failed to address certain contingencies in the loss of chance analysis, and thus failed to reach a higher damages figure, was rejected.</p><p style="text-align:justify;"><strong>The GM Dismissal is Upheld</strong></p><p style="text-align:justify;">At trial, it was held that GMCL had acted fairly and in good faith with respect to the WDAs, and had not contravened the dealers' rights under the <em>Arthur Wishart Act (Franchise Disclosure), 2000</em> (the "AWA"). Alternatively, Justice McEwen held that the WDA releases barred the proceeding in any event.</p><p style="text-align:justify;">In reasons of Pardu J.A., the Court of Appeal endorsed the trial decision and the dismissal of the action against GM. In particular, the enforceability of the comprehensive releases turned on whether the WDAs were settlement agreements, and thus brought within the limited exception to the prohibition in section 11 of the AWA on franchisee waivers or releases of statutory obligations. It was affirmed that a voluntarily negotiated settlement of existing claims, entered into with the benefit of legal advice and in settlement of a dispute over existing and known breaches of the AWA is not caught by section 11. The trial judge's conclusion that the WDAs fell within this exception was reasonable and not affected by any palpable and overriding error.</p><p style="text-align:justify;">As the enforceability of the WDA releases was a "threshold question", it was unnecessary for the Court to address the other grounds of appeal advanced, such as whether GMCL breached its duty of good faith and fair dealing in the restructuring of its dealer network and execution of WDAs.</p><p style="text-align:justify;">Lastly, a cross-appeal by GM relying upon certain indemnification rights in the WDAs was dismissed. In particular, a covenant in the WDAs to not pursue a class proceeding, and to otherwise indemnify GMCL for defence costs, was held unenforceable on the basis of the AWA right to associate, and public policy.</p>7/4/2017 4:00:00 AM2017-07-04T04:00:00ZTrue1float;#7.00000000000000float;#2017.00000000000string;#Julyfloat;#201707.000000000GP0|#d531403d-b705-440c-8be2-98e2a4c77989;L0|#0d531403d-b705-440c-8be2-98e2a4c77989|Class Actions;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0ebClass Actions
The Uncertain Enforceability of Forum Selection Clauses in the Consumer Electronic Context: Douez v. FacebookThe Uncertain Enforceability of Forum Selection Clauses in the Consumer Electronic Context: Douez v. Facebook256BLG Blog PostEwa Krajewskaekrajewska@blg.com | Ewa Krajewska | 693A30232E777C626C6763616E6164615C656B72616A6577736B61 i:0#.w|blgcanada\ekrajewska ​​The Supreme Court has held that the test for whether a forum selection clause is enforceable is different in the consumer contract context than in the commercial contract context. In particular, the decision of the Court will arguably make it more difficult to enforce forum selection clauses in consumer electronic or social media contracts.<p>​​The Supreme Court has held that the test for whether a forum selection clause is enforceable is different in the consumer contract context than in the commercial contract context. In particular, the decision of the Court will arguably make it more difficult to enforce forum selection clauses in consumer electronic or social media contracts.</p> ​​The Supreme Court has held in Douez v. Facebook that the test for whether a forum selection clause is enforceable is different in the consumer contract context than in the commercial contract context. In particular, the decision of the Court will arguably make it more difficult to enforce forum selection clauses in consumer electronic or social media contracts. The decision arises from an action brought in British Columbia against Facebook Inc. by one of its users, Deborah Douez. Ms. Douez claimed that Facebook infringed her private rights and those of more than 1.8 million British Columbians, contrary to the Privacy Act, when Facebook allegedly used her name and likeness without her consent for the purposes of advertising. Facebook brought a motion to stay the proceedings commenced in British Columbia on the basis that when Ms. Douez became a Facebook user she agreed to have any claims or causes of actions resolved exclusively in a court located in Santa Clara County, California.[1] The Supreme Court of Canada split on the issue of whether Facebook's forum selection clause is enforceable three judges held that it was not enforceable, one judge wrote concurring reasons, and three judges dissented. The enforceability of a forum selection clause is determined by applying a two stage test At the first stage, the party seeking a stay based on the forum selection clause must establish that the clause is "valid, clear and enforceable and that it applies to the cause of action before the court". This first stage requires the court to apply the principles of contract law to determine the validity of the clause. The plaintiff may resist the enforceability of the contract by raising defences such as unconscionability, undue influence or fraud. At the second stage, the plaintiff must show strong reasons why the court should not enforce the forum selection clause. Here, the Court may consider "all circumstances", including "convenience of the parties, fairness between the parties and the interests of justice". The majority of the Court modified how liberally the concept of "strong reasons" can be interpreted at the second stage of the analysis. The majority acknowledged that the strong cause factors have been interpreted restrictively in the commercial context. However, in the consumer context, there may be strong reasons not to enforce forum selection clauses including policy considerations relating to the gross inequality of bargaining power between the parties and the nature of the rights at stake. The burden will remain on the party wishing to avoid the clause to establish a strong cause. In applying this analysis, the majority found strong cause not to enforce the clause on the basis that the claim involved a consumer contract of adhesion and a statutory cause of action implicating the quasi-constitutional privacy rights of British Columbians. In concurring reasons, Justice Abella found that the clause was unenforceable based on the first stage of the analysis on the basis of the inequality of bargaining power between Facebook and Ms. Douez in an online contract of adhesion. The dissent noted its "profound disagreement" with the suggestion by the majority that forum selection clauses are inherently contrary to public policy. To the contrary, the dissent highlighted the public policy considerations of certainty and predictability as necessary considerations in the enforcement of forum selection clauses. In particular, the dissent noted that by offering services across borders, online companies risk uncertainty and unpredictability as to the possible jurisdiction in which they may face a claim. For example, the dissent was concerned that online companies do not know in advance where their customers are located when the customer agrees to the terms and conditions of an agreement. As such, online companies may be subject to laws of various jurisdictions. Moreover, forum selection clauses reduce litigation risk and so generate savings that can be passed on to consumers. For further analysis of the privacy aspects of the decision, see the client advisory drafted by Éloïse Gratton and Joe Abdul-Massih here. [1] The British Columbia Supreme Court dismissed Facebook's motion. The British Columbia Court of Appeal allowed Facebook's appeal and stayed the proceedings. <p>​​The Supreme Court has held in <a href="https://www.canlii.org/en/ca/scc/doc/2017/2017scc33/2017scc33.html?resultIndex=3"><em>Douez v. Facebook </em></a>that the test for whether a forum selection clause is enforceable is different in the consumer contract context than in the commercial contract context. In particular, the decision of the Court will arguably make it more difficult to enforce forum selection clauses in consumer electronic or social media contracts.</p><p>The decision arises from an action brought in British Columbia against Facebook Inc. by one of its users, Deborah Douez. Ms. Douez claimed that Facebook infringed her private rights and those of more than 1.8 million British Columbians, contrary to the <a href="https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-373/latest/rsbc-1996-c-373.html"><em>Privacy Act</em></a>, when Facebook allegedly used her name and likeness without her consent for the purposes of advertising. </p><p>Facebook brought a motion to stay the proceedings commenced in British Columbia on the basis that when Ms. Douez became a Facebook user she agreed to have any claims or causes of actions resolved exclusively in a court located in Santa Clara County, California.<a href="file:///C:/Users/mkremer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/LM79OMKZ/TOR01%20-#6916422-v2-ek%20Bulletin%20Facebook%20v%20Douez.DOCX">[1]</a> </p><p>The Supreme Court of Canada split on the issue of whether Facebook's forum selection clause is enforceable: three judges held that it was not enforceable, one judge wrote concurring reasons, and three judges dissented. </p><p>The enforceability of a forum selection clause is determined by applying a two stage test:</p><ol><li>At the first stage, the party seeking a stay based on the forum selection clause must establish that the clause is "valid, clear and enforceable and that it applies to the cause of action before the court". This first stage requires the court to apply the principles of contract law to determine the validity of the clause. The plaintiff may resist the enforceability of the contract by raising defences such as unconscionability, undue influence or fraud.</li><li>At the second stage, the plaintiff must show strong reasons why the court should not enforce the forum selection clause. Here, the Court may consider "all circumstances", including "convenience of the parties, fairness between the parties and the interests of justice". </li></ol><p>The majority of the Court modified how liberally the concept of "strong reasons" can be interpreted at the second stage of the analysis. The majority acknowledged that the strong cause factors have been interpreted restrictively in the commercial context. However, in the consumer context, there may be strong reasons <span lang="EN-CA" style="text-decoration:underline;">not</span> to enforce forum selection clauses including policy considerations relating to the gross inequality of bargaining power between the parties and the nature of the rights at stake. </p><p>The burden will remain on the party wishing to avoid the clause to establish a strong cause. </p><p>In applying this analysis, the majority found strong cause not to enforce the clause on the basis that the claim involved a consumer contract of adhesion and a statutory cause of action implicating the quasi-constitutional privacy rights of British Columbians. </p><p>In concurring reasons, Justice Abella found that the clause was unenforceable based on the first stage of the analysis on the basis of the inequality of bargaining power between Facebook and Ms. Douez in an online contract of adhesion. </p><p>The dissent noted its "profound disagreement" with the suggestion by the majority that forum selection clauses are inherently contrary to public policy. To the contrary, the dissent highlighted the public policy considerations of certainty and predictability as necessary considerations in the enforcement of forum selection clauses. In particular, the dissent noted that by offering services across borders, online companies risk uncertainty and unpredictability as to the possible jurisdiction in which they may face a claim. For example, the dissent was concerned that online companies do not know in advance where their customers are located when the customer agrees to the terms and conditions of an agreement. As such, online companies may be subject to laws of various jurisdictions. Moreover, forum selection clauses reduce litigation risk and so generate savings that can be passed on to consumers. </p><p>For further analysis of the privacy aspects of the decision, see the client advisory drafted by <a href="http://blg.com/en/Our-People/Pages/Gratton-Eloise.aspx"><span class="ms-rteThemeForeColor-2-0">Éloïse Gratton </span></a>and Joe Abdul-Massih <a href="http://blg.com/en/News-And-Publications/Publication_4988">here.</a><br><br></p><p><a href="file:///C:/Users/mkremer/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/LM79OMKZ/TOR01%20-#6916422-v2-ek%20Bulletin%20Facebook%20v%20Douez.DOCX">[1]</a> The British Columbia Supreme Court <a href="https://www.canlii.org/en/bc/bcsc/doc/2014/2014bcsc953/2014bcsc953.html">dismissed</a> Facebook's motion. The British Columbia Court of Appeal <a href="https://www.canlii.org/en/bc/bcca/doc/2015/2015bcca279/2015bcca279.html">allowed </a>Facebook's appeal and stayed the proceedings. </p>6/28/2017 4:00:00 AM2017-06-28T04:00:00ZTrue1float;#6.00000000000000float;#2017.00000000000string;#Junefloat;#201706.000000000GP0|#d531403d-b705-440c-8be2-98e2a4c77989;L0|#0d531403d-b705-440c-8be2-98e2a4c77989|Class Actions;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#da989fe7-de9b-44ca-9a7c-ade6643bc163;L0|#0da989fe7-de9b-44ca-9a7c-ade6643bc163|Cybersecurity;GP0|#2df25a26-3353-4357-8797-8d21a2ea3aee;L0|#02df25a26-3353-4357-8797-8d21a2ea3aee|Banking and Bills of ExchangeClass Actions;Cybersecurity;Banking and Bills of Exchange
MFDA 2016 Annual Enforcement Report: Focus on Signature Falsification (Pre-Signed Forms)MFDA 2016 Annual Enforcement Report: Focus on Signature Falsification (Pre-Signed Forms)254BLG Blog PostGraham Splawskigsplawski@blg.com | Graham Splawski | 693A30232E777C626C6763616E6164615C6773706C6177736B69 i:0#.w|blgcanada\gsplawski ​The MFDA released its 2016 enforcement report.<p>​<span style="line-height:115%;font-family:calibri, sans-serif;font-size:11pt;">The MFDA released its <a href="http://mfda.ca/news-release/enfar2016/">2016 enforcement report</a>.</span></p> The Mutual Fund Dealers Association of Canada (MFDA) released its 2016 enforcement report (see our reports on the Canadian Securities Administrators (CSA) report here, and the Investment Industry Regulatory Organization (IIROC) report here). Highlights of the report include 111 proceedings commenced against Members and Approved Persons in 2016 which is the highest number of proceedings commenced by the MFDA in any year to date. 85 hearings concluded in 2016, resulting in total fines of $21,104,750 and $496,000 in costs against Members and Approved Persons, and 22 permanent prohibitions and 26 suspensions against Approved Persons. A continued focus on Member supervision and complaint handling with 11 proceedings issued against Members for breaches of these requirements. A continued focus on signature falsification (pre-signed forms) cases with 60 of 111 commenced disciplinary proceedings involving this allegation.<p>The Mutual Fund Dealers Association of Canada (MFDA) released its <a href="http://mfda.ca/news-release/enfar2016/">2016 enforcement report</a> (see our reports on the Canadian Securities Administrators (CSA) report <a href="/theexchange/Pages/Post.aspx?PID=221">here</a>, and the Investment Industry Regulatory Organization (IIROC) report <a href="/theexchange/Pages/Post.aspx?PID=228">here</a>).</p><p>Highlights of the report include:</p><ul style="list-style-type:disc;"><li>111 proceedings commenced against Members and Approved Persons in 2016 which is the highest number of proceedings commenced by the MFDA in any year to date.</li><li>85 hearings concluded in 2016, resulting in total fines of $21,104,750 and $496,000 in costs against Members and Approved Persons, and 22 permanent prohibitions and 26 suspensions against Approved Persons.</li><li>A continued focus on Member supervision and complaint handling with 11 proceedings issued against Members for breaches of these requirements.</li><li>A continued focus on signature falsification (pre-signed forms) cases with 60 of 111 commenced disciplinary proceedings involving this allegation.</li></ul>6/23/2017 4:00:00 AM2017-06-23T04:00:00ZTrue1float;#6.00000000000000float;#2017.00000000000string;#Junefloat;#201706.000000000GP0|#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
FINTRAC Update — Methods to Ascertain the Identity of Individual Clients FINTRAC Update — Methods to Ascertain the Identity of Individual Clients 255BLG Blog PostRobert Dawkinsrdawkins@blg.com | Robert Dawkins | 693A30232E777C626C6763616E6164615C726461776B696E73 i:0#.w|blgcanada\rdawkins ​FINTRAC issued a notification on June 16, 2017 confirming that the transition period for mandatory adoption of new methods to ascertain the identity of individual clients has been extended until January 23, 2018. For more information, read Robert Dawkins' client advisory here.<p>​FINTRAC issued a notification on June 16, 2017 confirming that the transition period for mandatory adoption of new methods to ascertain the identity of individual clients has been extended until January 23, 2018.   For more information, read Robert Dawkins' client advisory <a href="http://blg.com/en/News-And-Publications/Publication_4979">here</a>.</p>6/22/2017 4:00:00 AM2017-06-22T04:00:00ZTrue1float;#6.00000000000000float;#2017.00000000000string;#Junefloat;#201706.000000000GP0|#da989fe7-de9b-44ca-9a7c-ade6643bc163;L0|#0da989fe7-de9b-44ca-9a7c-ade6643bc163|Cybersecurity;GTSet|#efd3ce69-ee46-4bca-b6af-3daf96f6b0eb;GP0|#83d31cc8-2281-46b1-bd03-ad81b15c38ff;L0|#083d31cc8-2281-46b1-bd03-ad81b15c38ff|Banking RegulatoryCybersecurity;Banking Regulatory