BLG Monthly Update - April 2012

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

IN THIS MONTH'S EDITION

Art law/torts

be careful when you sell the family silver Banking

bank not liable for honouring bill payable to non-existing or fictitious person Banking/derivatives

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

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

lawyers' infringement class action certified Conflict of laws/employment law

worker abroad may still be subject to jurisdiction of domestic employment tribunal Consumer protection/damages

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

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

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

New York benefit corporations statute now in effect Employment

Québec CA says non-compete must be signed at start of employment relationship Equity/contracts/tax

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

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

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

contents of regulatory settlement not protected by settlement privilege, says NS court Human rights/statutory interpretation

religion and commerce make strange bedfellows Intellectual property

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

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

breach of MFIPPA isn't a cause of action Statutory interpretation

but was the playground a 'playground'? Torts

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

scope of healthcare provider's duty to non-patients Torts/police

extent of duty to safeguard economic interests of confidential informer Trusts/unjust enrichment

rebutting presumptions about presumptions in the area of resulting trusts Unjust enrichment

ex-wife makes tactical error in trying to get more money from her fraudster ex-husband Wills and estates/conflict of laws

somewhat unseemly battle for the right to dispose of a dead body ART LAW/TORTS

Be careful when you sell the family silver

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

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

[Link available here].

BANKING

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

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

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

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

[Link available here].

BANKING/DERIVATIVES

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

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

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

[Links available here, here and here].

CIVIL PROCEDURE

NY court OKs use of computer-assisted document review

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

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

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

[Link available here].

Reaching for the stars: a vexatious litigant

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

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

In a word, yes.

[Link available here].

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

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

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

Washington v Grace (D Penn, 7 February 2012)

CLASS ACTIONS/IP

Lawyers' infringement class action certified

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

TRC will remove documents from the database if the originating lawyer or firm...