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Category Archives: Financial Services

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The UK Supreme Court clarifies: no marshalling without an underlying debt, and maybe no marshalling in any event

Posted in Bankruptcy and Debt, Contracts, Corporate Law, Financial Services

The doctrine of marshaling has existed for centuries and was developed to address inequitable circumstances in which secured parties were unable to realize on their security. The UK Supreme Court has recently considered the doctrine in a case, Szepietowski (nee Seery) (Appellant) v The National Crime Agency (formerly the Serious Organised Crime Agency) (Respondent), which provides helpful guidance concerning the limits of the doctrine.

Although it arises infrequently, the doctrine does apply in Canada. For that reason, Szepiotwski will be of interest to holders of secured debt (and their lawyers) both for the particular holdings and the court’s general … Continue Reading

Interlocutory Injunctions in the Public Interest: The UK Supreme Court Considers When an Undertaking In Damages Is Required

Posted in Case Comments, Financial Services, Procedure

In a recent decision, the UK Supreme Court considered whether public authorities, acting in fulfillment of their statutory mandate, have to give an undertaking in damages when they seek an interlocutory injunction. The case arose in the context of a share sale scheme that the Financial Services Authority (“FSA”) alleged to be a fraud, involving the sale of shares to third party investors, without an approved prospectus, in Sinaloa Gold plc (“Sinaloa”). In December 2010, the FSA initiated proceedings against Sinaloa and two other defendants. Shortly before doing so, the FSA had obtained without notice an interlocutory injunction freezing

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Give This Post Superpriority – Supreme Court Decides Sun Indalex Finance, LLC v. United Steelworkers

Posted in Bankruptcy and Debt, Case Comments, Financial Services, Labour and Employment, Procedure

Introduction

The Supreme Court has issued its much-anticipated decision in Sun Indalex Finance, LLC v. United Steelworkers.

The Supreme Court has issued its much-anticipated decision in Sun Indalex Finance, LLC v. United Steelworkers (“Indalex”). The decision has significant implications for lenders, employers and pension plan administrators of Ontario-registered defined benefit (“DB”) pension plans. First, it clarifies the scope of the deemed trust obligation arising out of subsection 57(4) of the Pension Benefits Act (Ontario) (“PBA”). Second, it confirms the priority of debtor-in-possession (“DIP”) lenders’ security interests under the Companies’ Creditors Arrangement Act (“CCAA”) over claims by pension … Continue Reading

The Penalty Doctrine: Focus on Substance Not Form Says The High Court of Australia

Posted in Case Comments, Class Actions, Contracts, Corporate Law, Financial Services

When is a contractual term a penalty? Traditionally, a penalty has been characterized as a provision that results in unconscionable and disproportionate compensation for breach of contract. The recent decision of Australia’s High Court in Andrews v. Australia and New Zealand Banking Group Ltd (“Andrews”) has widened the scope of the common law penalty doctrine to include a fee payable regardless of whether the event triggering its enforcement constitutes a breach of contract. This is a case to watch for its potential impact on contract drafting and interpretation.

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What to expect when you’re expecting… An answer from a regulator: SCC to discuss the reasonable diligence defense in cases or strict liability offenses

Posted in Case Previews, Criminal, Financial Services, Insurance

Rachel LaferrièreThe Supreme Court of Canada recently granted leave to appeal in a case involving the Autorités des marchés financiers (“AMF”), the Quebec regulator regarding financial products and services. The most important issue discussed by the Court of Appeal concerns the possibility or not for Sovereign, General Insurance Company (“Sovereign”) to use the reasonable diligence defense because it made a mixed error of law and fact.

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Hot Off the Press – World Class Actions: A Guide to Group and Representative Actions Around the Globe

Posted in Aboriginal, Class Actions, Communications, Construction and Real Estate, Energy, Financial Services, Franchise and Distribution, Health, Insurance, Media, Municipal, Procedure, Professions, Securities, Transportation

In the newly published World Class Actions: A Guide to Group and Representative Actions Around the Globe, McCarthy Tétrault litigators David Hamer and Shane D’Souza co-authored the “Multijurisdictional and Transnational Class Litigation: Lawsuits Heard ‘Round the World” chapter. The chapter offers guidance to international lawyers who represent clients involved in cross-border, multinational and international class actions.

World Class Actions is a practical guide for lawyers, clients, legal support professionals, academics, policymakers and judges on the procedures available for class, group and representative actions internationally. Each chapter is written by a local attorney familiar with the laws, best practices, legal … Continue Reading

The ISDA Master Agreement and Implied Terms: Text Over Context in the English Court of Appeal

Posted in Bankruptcy and Debt, Case Comments, Contracts, Financial Services

Should a commercial contract be interpreted literally, or should a court adopt a non-literal interpretation if necessary to achieve a result that makes commercial sense given the context (the factual matrix) of the agreement? This issue is an enduring one in contractual interpretation, and was recently put to the test in Lomas & Ors v. JFB Firth Rixson Inc. & Ors, a decision of the English Court of Appeal arising from the failure of Lehman Brothers. At issue was whether to imply terms into the Master Agreement of the International Swaps and Derivatives Association Inc. (the “ISDA Master Agreement”),

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BCCA May Consider the Test for Leave to Commence an Action Pursuant to the New Secondary Market Liability Provisions

Posted in Case Comments, Financial Services, Procedure, Torts

The British Columbia Court of Appeal may soon consider the test for a purchaser or vendor in the “secondary market” to obtain leave to commence an action for misrepresentation under Part 16.1 the BC Securities Act.  Leave to appeal has been filed by the plaintiff in Round v. MacDonald, Dettwiler and Associates Ltd.  This will be the first time any court of appeal in Canada will have the opportunity to consider the issue.

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Will Your Companies’ Creditors Arrangement Act Superpriority Still Be that Super once the Scheme of Collocation is Drawn Up?

Posted in Bankruptcy and Debt, Case Comments, Construction and Real Estate, Financial Services

Rachel LaferrièreIn the context of an arrangement plan pursuant to the Companies’ Creditors Arrangement Act, a financial institution was granted a superpriority on all moveable and immoveable debtors’ assets following an additional $2,150,000 loan to the debtor, in order to allow it to complete some construction projects it had already started and for which it already owed $720,000 to construction subcontractors and providers.

The same financial institution was already a creditor for more than $4,000,000 guaranteed by hypothecs on various immoveable properties belonging to the debtor.… Continue Reading

SCC to Consider the Residence of Trust for Tax Purposes

Posted in Case Previews, Corporate Law, Financial Services, Tax

The residence of trusts and other business entities for income tax purposes has long been a source of confusion.  The Supreme Court of Canada will attempt to resolve that confusion in the St. Michael Trust cases, from which it recently granted leave to appeal.

Decisions Below

The cases arise as conjoined appeals from the decision of the Federal Court of Appeal in St. Michael Trust Corp. v. Canada (sub nom. Garron (Trustee of) v. Canada). In both cases, the applicant was a Barbados-resident corporation that was the trustee of a trust with Canadian beneficiaries, which was settled by … Continue Reading

Should Redeemable-Upon-Demand Shares Be Included in Paid-Up Capital or Long-Term Debt?

Posted in Case Comments, Financial Services, Tax

Rachel LaferrièreOn January 29, 2010, the Appeal division of the Court of Quebec determined that Credit Ford Canada Ltd. did not have to include the $1,170,000,000 worth of retractable shares issued in its paid-up capital (and thus be taxed on it) and could, instead, consider it as a long-term debt. This decision alone made a $2,416,767 difference in the tax payable by Credit Ford Canada Ltd. to the Quebec government for the 2001 year only (other contestations had been filed for the 2002 and 2003 years as well).

The appeal was mainly decided on the fact that the Quebec Taxation

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