BLG Monthly Update - June 2012

ADMINISTRATIVE LAW

Steady diet of appalling prison food could be cruel and unusual punishment

Terrence Prude alleged that staff of the Milwaukee County Jail had subjected him to cruel and unusual punishment because they fed him nothing but nutriloaf, which Judge Posner of the 7th Circuit described as 'a bad-tasting food given to prisoners as a form of punishment', for periods of seven to ten days at a time. Prude alleged that this steady diet caused vomiting, stomach pains, constipation, 'alarming' weight loss and possibly an anal fissure ('which is no fun at all', in the words of the learned judge).

Summary judgment was initially granted in favour of the defendants, but Judge Posner thought this was wrong: their response to the suit was 'contumacious' in that they ignored the self-represented Prude's discovery demands and the court's order to comply with them.

The defendants' evidence on summary judgment was a 'preposterous' hearsay assertion that nutriloaf 'has been determined to be a nutritious substance for regular meals'. The fact that Prude had sued prison staff who had not actually been indifferent to his health was not fatal to his appeal; at least some of them were aware of the dire effects of nutriloaf and did nothing to help. The court below was correct, however, to strike Prude's claim that it was cruel to offer him a sandwich ('and not of nutriloaf, either') as a bribe to spy on other prisoners; Prude had rejected the offer, but not getting the sandwich made him no worse off than he would have been otherwise.

The defendants were ordered to show cause why they should not be sanctioned for their flouting of the lower court's orders; if they ignored this order, 'they will find themselves in deep trouble'.

Prude v Clarke (7th Cir, 27 March 2012)

ADMINISTRATIVE LAW/SECURITIES

Penalties imposed by securities commission found constitutional; stiff in this instance, but still not penal in nature

Rowan, president and CEO of Watt Carmichael Inc. (WCI) was found by the Ontario Securities Commission to have breached Ontario securities law in trading in, and failing to report trades in, shares of Biovail Corp. Eugene Melnyk, the chair of Biovail, had set up a number of offshore trusts which held shares of Biovail and which maintained accounts at WCI. Rowan had trading authority over the accounts and was also a director of Biovail. Rowan traded millions of Biovail shares but did not file insider reports. The OSC concluded he had not engaged in insider trading but had breached the insider reporting requirements and had engaged in conduct that was abusive of the integrity of the capital markets. Rowan was ordered to pay an administrative monetary penalty (AMP) of $520,000; his firm, $420,000 for failing to supervise him. Rowan and WCI were also ordered to pay costs of $140,000.

Their appeal was dismissed by the Divisional Court; the Commission's reasons were careful, thorough and correct in law. Rowan and WCI appealed again, arguing the Commission's ability to impose AMPs of up to $1 million per infraction violated s 11(d) of the Charter because the magnitude of potential AMPs made them penal rather than administrative in nature, triggering Charter protection. The Ontario Court of Appeal rejected this contention: the level of possible AMPs was 'entirely in keeping' with the Commission's regulatory mandate, and necessary to serve as an adequate deterrent to misconduct. Rowan also argued that the Commission may impose an AMP only where there has been an actual breach of the Securities Act, not for conduct that has merely been found to be contrary to the public interest. This, too, was rejected: acting contrary to the public interest was 'inextricably linked' to his actual breach of the insider reporting obligations. AMPs for WCI's failure to supervise were also upheld.

Rowan v OSC, 2012 ONCA 208

[Link available here].

CIVIL PROCEDURE

Useful summary of principles on letters rogatory

The summary is found in McFadden Lyon Rouse LLC v Lookkin, 2012 ONSC 2243, where JS O'Neill J was asked to enforce letters of request (letters rogatory) issued by a court in Alabama for the examination of two parties in Ontario for the purposes of an action in Alabama. The facts of the case don't much matter, but the judge does provide a nice outline of the general principles for the enforcement of letters rogatory, with citations: (a) obtaining the evidence must have been duly authorised by the foreign court, (b) the witness whose evidence is sought must be within the jurisdiction of the enforcing court, (c) the evidence sought must be in relation to a proceeding in the foreign court and (d) the foreign court must be one of competent jurisdiction. The Ontario court will consider whether (i) the evidence is relevant, (ii) the evidence is necessary for discovery or trial in the foreign jurisdiction, (iii) the evidence is otherwise unobtainable, (iv) the documents sought are identified with reasonable specificity, (v) enforcement would be contrary to public policy in Canada and (vi) enforcement would be unduly burdensome. There is a predisposition to accommodate the requests of foreign courts.

[Link available here].

CIVIL PROCEDURE /EMPLOYMENT LAW

Useful review of factors for deciding whether a party can plead an offer to settle

Money Express POS Solutions Inc. made an offer to settle in its termination letter to Raheel Jiwan, which Jiwan then referred to in his pleadings in a wrongful dismissal suit. The employer moved to have references to the letter expunged, on the grounds they were protected by settlement privilege: Jiwan v Money Express POS Solutions Inc, 2012 ONSC 909.

Master Short of the Ontario Superior Court gives a useful review of the case law and the factors that will be considered in cases of this kind: (1) was the communication from the defendant? (yes, in this case); (2) was the plaintiff contemplating litigation? (yes, even though the offer to settle was in the same letter as the termination; neither came 'out of the blue' from the employee's perspective); (3) was the defendant offering a real compromise? (yes); (4) was the communication 'without prejudice'? (yes, it said so specifically); and (5) was the genuine purpose of the communication a settlement? (again, yes). The paragraph in the pleadings was therefore struck.

[Link available here].

CONFLICT OF LAWS

Further proof that the house always wins?

Or, that what happens in Vegas doesn't necessarily stay in Vegas: Wynn Las Vegas LLC v Teng, 2012 ONSC 1927. Tenny Teng went to Las Vegas to gamble, having obtained a $300,000 line of credit from the Wynn casino (and, it appears, from Caesar's Palace and the Bellagio as well). Teng drew on the Wynn line of credit and left Vegas owing a debt of $290,000 (he had paid $10,000 on arrival as front money). The two cheques he had provided as security were dishonoured. The casino was, not surprisingly, in contact with Teng about his indebtedness and was not satisfied by his tales of financial difficulty and promises to repay.

The casino sued in Ontario, seeking summary judgment for the outstanding principal and interest. Teng argued first of all that Nevada was the more appropriate forum, given the location of witnesses and the fact the debt arose there.

He also denied having applied for the line of credit and claimed even if he had signed the application, he was was under the influence of all the free drinks that the casino had plied him with and couldn't remember a thing. Teng contended these were genuine issues for trial.

Yeah, right! The fact that the casino could have sued in Nevada was not dispositive; the credit application provided it could pursue remedies there or elsewhere; and Ontario was, furthermore, where Teng resided, where his assets were and where the cheques bounced. Teng also attorned to the jurisdiction of the Ontario court by filing a defence. As to the 'genuine' issues requiring trial, they were belied by a clear trail of e-mails which established that Teng had sent the credit application by fax from home, and that any claim not to be able to remember signing the documentation arose after Wynn sued him.

Wynn obtained judgment for the full amount of the debt plus pre-judgment interest at the rate of 18% as stipulated in the credit agreement, post-judgment interest of 18% and costs on a partial indemnity scale.

[Link available...