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Category Archives: The Second Opinion

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The Second Opinion: “Use it or Lose it” — The BCCA Warns Parties to Act Quickly in Response to a Fundamental Breach (or Suffer the Consequences)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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A recent ruling of the British Columbia Court of Appeal, A & G Investments Inc. v. 0915630 B.C. Ltd., 2014 BCCA 425, provides a useful primer on the available mechanisms for bringing a contract to an end.  These include:

  1. the committing of a fundamental breach (leading to termination of the agreement if the breach is acted upon by the innocent party);
  2. the triggering of an express termination provision; and
  3. the acceptance by the innocent party of a repudiation (thereby causing the agreement to be rescinded).
  4. Continue Reading

The Second Opinion: “The Class Action…is Frequently Abused” — Judge Posner Provides Unvarnished Commentary on Class Proceedings

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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For the Canadian class actions defence bar — which must occasionally feel disheartened by the unwavering enthusiasm with which our courts have championed class proceedings — the recent ruling in Eubank v. Pella Corporation (7th Cir. June 2, 2014) represents a breath of fresh air from south of the border.

Judge Richard Posner, speaking for a unanimous panel of the Seventh Circuit Court of Appeal, uses blunt and forthright language — alien to a Canadian ear — in acknowledging the risks to justice created by such proceedings.  He places particular emphasis on the inherent conflicts faced by plaintiffs’ class counsel.… Continue Reading

The Second Opinion: “Stinky” but not “Fundamental” — The BCCA sets a High Hurdle for Repudiation of a Lease

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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The contractual doctrine of “fundamental breach” is both doctrinally complex and highly contextual.  In Stearman v. Powers, 2013 BCCA 206, the Court concluded that, on the facts before it, a commercial tenant had not been justified in repudiating her lease and walking away from the premises, despite the fact that the building’s HVAC system filled her store with a foul odour.

While the case ultimately turned on its unique facts, the Court in Stearman provides useful guidance regarding the threshold for categorizing a problem with rented premises as a “fundamental breach” of contract, as well as the scope … Continue Reading

Limits to Limitations: The Ontario Court of Appeal Addresses the Doctrines of “Fraudulent Concealment” and “Special Circumstances”

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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A recent decision involving solicitor’s negligence, Rajmohan v. Norman H. Solmon Family Trust, 2014 ONCA 352, required the Ontario Court of Appeal to consider two of the murkier issues relevant to limitations analysis — namely, (1) the doctrine of “fraudulent concealment” and (2) the doctrine of “special circumstances.”

It was alleged that a solicitor had been negligent in representing his client in a mortgage transaction.  Because of the client’s intervening death, the claim was brought by the client’s estate.  For that reason, the claim was subject to the absolute two-year limitation period under s-s. 38(3) of the Ontario … Continue Reading

The Second Opinion: Appellate Court Applies Brakes to “Rolling” Limitation Periods

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Some causes of action are “continuing” in nature.  Historically, torts such as trespass or nuisance have in some instances fallen into this category.  More recently, Canadian courts have recognized that breaches of contract can also be continuing in nature, particularly in cases where the agreement calls for periodic payments that are dishonored.  In essence, Canadian Courts have generally held that the failure to honor each of the scheduled periodic payments gives rise to a discrete, independent cause of action with its own limitation period.

The practical result of this approach has been that even if a claim for breach of … Continue Reading

The Second Opinion: A Defamation Claim without “Merit” — The BCCA Shields Directors from Liability for Statements made as part of Continuous Corporate Disclosure

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Public corporations are required by law to provide continuous disclosure of information likely to be relevant to existing or potential shareholders.  The directors of such corporations must be careful to ensure that such disclosure is timely and accurate, and that it cannot be characterized as misleading.  In recent years, corporate press releases, issued in order to comply with this continuous disclosure obligation, have been the subject of considerable litigation, most notably securities class actions.  In dismissing a claim alleging that such a press release was defamatory, a recent ruling of the British Columbia Court of Appeal — Merit Consultants Continue Reading

The Second Opinion: Appeal Court Confirms the Narrow Scope of the “Forum of Necessity” Doctrine

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Can a Court assume jurisdiction over a claim when there is no “real and substantial” connection between the claim, the defendant and the forum? The Ontario Court of Appeal recognized such a theoretical possibility, on the basis of the so-called “forum of necessity” doctrine, in its decision in Van Breda v. Village Resorts Ltd., 2010 ONCA 84. On further appeal, the Supreme Court of Canada did not directly address this doctrine but left room for its “possible application” in the future: 2012 SCC 17 at para. 100. The Ontario Court of Appeal recently revisited and defined the … Continue Reading

The Second Opinion: Who needs Lawyers? When Laypeople draft Contracts that are Uncertain, Ambiguous and Incomplete, the Courts must strive for a “Sensible and Businesslike” Interpretation, says the ABCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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When complex commercial contracts have been drafted entirely by laypeople — without any input or advice from legal counsel — issues of interpretation can be a challenge.  This is particularly true in circumstances where, years later, the parties themselves disagree as to specific elements of their agreement.  In a recent ruling, Schmidt v. Wood, 2014 ABCA 80, the Alberta Court of Appeal demonstrates the efforts expected of a court in order to find a satisfactory construction of such agreements.… Continue Reading

The Second Opinion: When is a Little Knowledge a Dangerous Thing? When it is used to Disqualify In-House Counsel

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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A powerful tool in the litigation arsenal is the bringing of a motion to remove counsel from a file, either because she possesses disqualifying confidential information or faces a disqualifying conflict of duty.  A recent ruling of the Federal Court of Appeal, Valeant Canada LP v. Canada, 2014 FCA 50, confirms that even a party’s in-house counsel is potentially vulnerable to such an attack.… Continue Reading

The Second Opinion: Mandatory Audit Rights and the CBCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Can a private corporation decline to provide audited financial statements to its shareholders without their unanimous consent on the ground that it is too expensive for it to do so?  The British Columbia Court of Appeal recently addressed this question in Li v. Global Chinese Press Inc, 2014 BCCA 53, and held that the answer is no, at least for companies that are incorporated under the Canada Business Corporations Act (“CBCA“).  The decision in Li is an important appellate clarification of this point, and is one that private corporations should bear in mind in their dealings … Continue Reading

The Second Opinion: Production Orders and Electronic Information – Appeal Court Offers a List of Considerations

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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The Nova Scotia Court of Appeal recently grappled with questions of relevance, proportionality and privacy in the context of whether or not to order the production of electronic information.

The court in Laushway v. Messervey, 2014 NSCA 7 affirmed an order requiring a plaintiff to produce a hard drive for forensic review because it contained metadata (essentially data about data) which could show how much time the plaintiff spent at his computer, a point central to his lost income claim.… Continue Reading

The Second Opinion: Non-Parties May Be Bound by a Forum Selection Clause

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Can a party that has not signed an agreement containing a forum selection clause nevertheless be bound by it? The Ontario Court of Appeal addressed this question in Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725. The Court in Aldo contemplated the application of forum selection clauses to third parties in limited circumstances.

The salient facts of the decision in Aldo are as follows. MasterCard entered into a license agreement with a Bank, allowing the Bank to issue credit cards (the “License Agreement”). The License Agreement contained a forum selection clause identifying New York as the … Continue Reading

The Second Opinion: Limitation Periods and Unjust Enrichment — Clarity and Complexity from the ONCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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A recent ruling of the Ontario Court of Appeal, McConnell v. Huxtable, 2014 ONCA 86, provides useful clarification of two potentially complex questions — (1) The limitation period applicable to a claim for a constructive trust based on unjust enrichment, and (2) the sometimes confusing overlap between the Ontario Limitations Act, 2002 and the Ontario Real Property Limitations Act.

The appeal flowed from a family law dispute.  The male appellant had owned a number of properties (held in his own name) during the time the parties were a couple.   The female respondent argued that she had contributed … Continue Reading

The Second Opinion: The SCC Narrows the Scope of the Tort of Unlawful Interference With Economic Relations

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A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

The contours of the tort of unlawful interference with economic relations have, heretofore, been “unsettled”, “confusing” and “inconsistent”.  The tort essentially provides redress when party “A” intentionally inflicts economic injury on party “B”  by use of unlawful means against party “C”.  What is the nature of the “unlawful” activity that can ground the tort?  What degree of intentionality is required to give rise to the tort?  Is the tort available concurrently with other causes of action?  These are the central questions that the Supreme Court of … Continue Reading

The Second Opinion: BCCA Overturns Certification of Wakelam Class Action

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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The British Columbia Court of Appeal has released an important new judgment overturning the certification of a medical products class action: Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de Sante Inc., 2014 BCCA 36.  The decision in Wakelam holds that common law restitutionary remedies, including waiver of tort, are not available for breaches of either the Competition Act or the B.C. Business Practices and Consumer Protection Act (“BPA“), and confirms that proof of causation is required to obtain damages under each of these statutes.  At the same time, Wakelam rejects the argument that the BPA is constitutionally … Continue Reading

The Second Opinion: The BCCA Sheds Indirect Light on the “Public Importance” Test for Granting Leave to Appeal to the SCC

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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A recent ruling of the British Columbia Court of Appeal — Byatt International SA v. Canworld Shipping Company Limited, 2013 BCCA 558 — provides useful guidance regarding the unique test to be applied on a motion to stay an appeal court’s ruling, pending the conclusion of a leave-to-appeal application before the Supreme Court of Canada.  In so doing, the BCCA also shed indirect (but useful) light on the somewhat opaque test applied by the SCC in determining such applications for leave to appeal.

As is well known, most appeals to the Supreme Court of Canada can only be commenced … Continue Reading

Air-Borne Dust, Nuisance and Lost Productivity Damages: The Ontario Court of Appeal finds its answer “Blowin’ in the Wind”

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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The facts underlying a recent ruling, TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, read like a law school exam question — i.e., when the business carried on by a manufacturer of delicate lighting fixtures is disrupted by air-borne dust caused by the activities of its neighbour, a trucking company, is the lighting company permitted to sue in either nuisance or trespass?  Is the lighting company’s particular sensitivity to dust relevant in assessing whether or not there has been “unreasonable interference” with its use of its lands?  What is the proper scope of damages recoverable … Continue Reading

The Second Opinion: Examination on Discovery of Computers- No Fishing Allowed

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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In Desmarteau v. Ontario Lottery and Gaming Corporation 2013 QCCA 2090, the Quebec Court of Appeal established restrictive guidelines for the examination on discovery of personal computers, applying by analogy the rules governing Anton Piller orders.

In Desmarteau, the defendant sought and obtained in first instance, an order to permit its expert to examine the personal computer of the plaintiff to identify information relevant to the litigation. The first instance order instructed the expert to exclude matters covered by solicitor-client privilege. The Québec Court of Appeal reversed the first instance judgement and rejected the defendant’s request to examine … Continue Reading

The Second Opinion: Canadian Subsidiaries Beware? The Ontario Court of Appeal Addresses the Enforcement of Foreign Judgments Against Related Entities

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The Ontario Court of Appeal’s decision Yaiguaje v. Chevron Corporation, 2013 ONCA 758, has important implications for both foreign corporations and their Canadian subsidiaries.  The decision clarifies the test by which Ontario courts will enforce foreign judgments, and allows enforcement actions to proceed in Ontario where the only hope of recovery is from the Canadian subsidiary of the foreign corporation.… Continue Reading

The Second Opinion: What the heck did the Ontario Court of Appeal mean when it spoke of an “Implied Statutory Duty of Care”?

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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In the past decade, the staid law of negligence has undergone a number of interesting developments in Canada, focusing particularly on the threshold question of whether a duty of care is or is not owed by a particular plaintiff to a particular defendant in novel circumstances.

A recent ruling of the Ontario Court of Appeal, Rausch v. The Corporation of the City of Pickering, 2013 ONCA 740, has highlighted an interesting and relatively obscure aspect of this question.… Continue Reading

The Second Opinion: Appeal Court Addresses Thorny Limitation Period Issues Regarding Anticipatory Breaches of Contract

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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When does the limitation period begin to run for an anticipatory breach of contract?  Does the limitation period commence as soon as the guilty party indicates that it will breach a future obligation?  Or can the innocent party safely assume that that the limitation period does not run until the time comes for the performance of the contract and the guilty party then in fact fails to perform its obligation?  A recent decision by the Ontario of Court of Appeal brings much needed clarity to this important issue.… Continue Reading

The Second Opinion: For Repudiating a Salon’s Lease, the BCCA gives the Landlord a Haircut

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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Interesting issues of contractual repudiation and landlord-tenant law were recently addressed by the British Columbia Court of Appeal in Abraham v. Coblenz Holdings Ltd., 2013 BCCA 512.

The tenant utilized the rented premises as a hair salon specializing in “African hairstyling.”  The lease contained no express restriction on the business that could be conducted, and the tenant decided to begin offering additional (non-African) hair styling services, as well as nail, massage and tanning services.… Continue Reading

The Second Opinion: U.S. Supreme Court to Reconsider Fraud-on-the-Market Theory

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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On November 15, 2013, the U.S. Supreme Court agreed to hear an appeal in which it will reconsider the ”fraud-on-the-market” theory that has been one of the cornerstones of private securities litigation in the United States for the past 25 years.  The questions presented to the Court in Halliburton Co. v. Erica P. John Fund, Inc. are as follows:

1. Whether this Court should overrule or substantially modify the holding of Basic Inc. v. Levinson, 485 U.S. 224 (1988), to the extent that it recognizes a presumption of classwide reliance derived from the fraud-on-the-market theory.

2. Whether, in a

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The Second Opinion: A Computer is Not a Cupboard: The SCC Grapples With Computer Searches

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

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The Supreme Court of Canada recently formulated new rules for computer searches by police, acknowledging that the traditional legal framework was inadequate to protect the privacy rights of individuals in their digital life. In R. v. Vu, 2013 SCC 60, the Court said that a police search of a computer now requires prior authorization in the form of a specific warrant.

Facts

The police had been tipped about electricity theft at a residence suspected of being used to cultivate marijuana. They obtained a warrant to search the residence for evidence of such theft, including information identifying the owners and/or … Continue Reading