BLG Monthly Update - March 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

Access to information/privacy

SCC sets out principles for government disclosure of third-party information Banking

attachment or garnishment order against NY branch doesn't restrain debtor's Canadian accounts Civil procedure/lawyers' conflicts of interest

inmate gets reprieve in 'mailroom of death' case Civil procedure

request for 95 million pages of documents unreasonable, says NJ court Class actions/securities

regulatory proceedings not the preferable procedure for claims of aggrieved investors Conflict of laws/family law

same-sex marriage and divorce, Canadian-style Consumer protection/constitutional law

provincial consumer protection legislation applies to federally-regulated undertaking, says BC court Contracts/bankruptcy and insolvency

if you aren't successful, can you still get the success fee? Contracts/construction law

implied terms – only where necessary, not simply because they're reasonable Employment law/fiduciary duties

corporate officer breached fiduciary duty but still entitled to bonus, says Ontario CA Employment/torts

employer can be vicariously liable for assault by junior employee on more senior one Evidence

presence of childhood friend at interview with lawyer does not amount to waiver of privilege Insurance/torts

was the accident caused by the box on the road or the car from which it fell? Intellectual property

do you find this 'scandalous'? Lawyers

conflict arising from non-traditional engagement as workplace mediator firm has no duty to keep revising previous advice, unless specifically retained to do so today only! deep discount on legal services! Privacy/police

installing a GPS tracker on the suspect's car was an intrusion on his privacy suspect in drug deal has reasonable expectation of privacy once inside adult video booth Securities/evidence

evidence of insider trading must be more than circumstantial, SEC told Telecommunications

ISPs aren't broadcasters, says SCC Torts/police

police duty of reasonable investigation only goes so far, according to Australian court Trusts/unjust enrichment

if B steals A's intangible property and sells it to C, can A recover from C? ACCESS TO INFORMATION/PRIVACY

SCC sets out principles for government disclosure of third-party information

The Supreme Court of Canada has set out a framework for the disclosure of third-party information in Merck Frosst Canada Ltd v Minister of Health, 2012 SCC 3 [Link available here]. Health Canada disclosed records of Merck's new drug submission either without notifying Merck or having said that it was not possible for Health Canada to determine whether non-disclosure was justified under the third-party exemption in access-to-information legislation. (That exemption allows a government institution (GI) to refuse to disclose a third party's trade secrets; its confidential financial, commercial, scientific or technical information; or competitive information that would result in financial prejudice to the third party if disclosed.)

Cromwell J (for the majority) set out some guiding principles for the application of the exemption. The duty to protect third-party information is generally as important as the principle of access to government records, and disclosure without notice is justified only in the clearest of cases. A GI should give notice even where there is doubt about the application of the exemption, and must make a serious attempt to apply the exemption (i.e., not just shift the burden to the affected third party). On judicial review of a decision to disclose, a third party must establish the application of the exemption only on a balance of probabilities. 'Trade secret' in this context has its general meaning at law, not something more restrictive. Confidential commercial information need not have inherent value, as long it is not otherwise available to a member of the public. Information that is collected by a GI through its own observation is not 'supplied' by the third party for the purposes of the exemption. The prospect of harm through the disclosure of competitive information has to be more than possible but need not be likely, much less clear or immediate. It will generally be difficult to show that harm will flow from the disclosure of information that is publicly available or from the misapprehension of disclosed material. It's OK to refuse to sever and produce non-exempt material where the severed material would, on its own, have little meaning or where a cost-benefit analysis weighs against disclosure.

In the end, the majority didn't think that Merck made out its case for exemption. The dissenters (Deschamps, Abella and Rothstein JJ) disagreed in the result but not with the articulation of the general framework for applying the exemption.

BANKING

Attachment or garnishment order against NY branch doesn't restrain debtor's Canadian account

The old 'separate entity' rule, which treats bank branches as distinct for purposes such as garnishment and attachment, is alive and well in New York. The traditional rationale for the rule was that it was too difficult for staff at individual branches to keep other branches posted about the status of accounts, especially where the branches are in different countries (which might not permit enforcement of foreign orders with respect to assets held in their jurisdiction).

In Global Technology Inc v Royal Bank of Canada, 2012 NY Slip Op 50023U, judgment creditor Global Technology claimed that the bank was in contempt of an order which restrained the bank accounts of judgment debtor Moto Diesel Mexicana. Global contended that the bank was in contempt of that order because it had allowed Moto Diesel to withdraw funds from its account in Canada.

Stallman J of the NY state supreme court applied the old rule (which is at least as old as the mid 1800s), in spite of the argument that technological advances have made it obsolete and the fact that some US federal cases have declined to follow it. Not to apply the old rule would also offend modern conceptions of due process in terms of service on an affected party.

CIVIL PROCEDURE/LAWYERS' CONFLICTS OF INTEREST

Inmate gets reprieve in 'mailroom of death' case

We reported back in December on the case of Cory Maples, whose ability to appeal his death sentence was denied because the necessary paperwork never reached his pro bono lawyers at Sullivan & Cromwell (S&C).

The US Supreme Court has, in a 7-2 decision, granted Maples's petition to have his procedural default excused. Ginsburg J, for the majority, found that Maples had essentially been abandoned by his counsel, noting that S&C's more diligent representation of him after the default was a clear conflict of interest given the firm's obvious desire to minimise damage to its own reputation. She held that 'no just system would lay the default at Maples' death-cell door'. Scalia and Thomas JJ took a different view: Maples had representation throughout, even if it was inept, and the state prosecutors were entitled to stick to the rules.

As for Maples, his appeal is punted back to the 11th Circuit and the district court in Alabama.

[Link available here].

CIVIL PROCEDURE

Request for 95 million pages of documents unreasonable, says NJ court

No fooling! I-Med Pharma and Biomatrix were in litigation about the distribution of a drug in Canada. Biomatrix, not liking the disclosure it had received in the course of discoveries, obtained an order requiring I-Med to submit to a forensic audit of its computer system. The audit involved a search of I-Med's servers for about 50 keywords. As it turned out, very broad keywords (e.g., 'profit', 'loss', 'revenue'): the search yielded over 64 million hits and, if printed, would have...