BLG Monthly Update: November 2012

ABORIGINAL/CONSTITUTIONAL/CIVIL PROCEDURE

River gains legal personality in New Zealand

In a framework agreement signed in August by the Crown and the Whanganui Iwi, a local Maori people, the Whanganui River has been recognised as 'an integrated, living whole from the mountains to the sea' and a legal entity with the rights and capacity of a natural person. Portions of the riverbed which are owned by the Crown will vest in the entity, known as Te Awa Tupua, and will be under the guardianship of two persons, one appointed by the Crown and the other by the Whanganui Iwi. A 'set of Te Awa Tupua values' to guide decision-makers will be developed, and will form part of a comprehensive strategy for the development and conservation of the river. New Zealand is not the first country to do this sort of thing: articles 71-74 of the 2008 constitution of Ecuador grant rights to the natural environment, which may be enforced by (human) individuals or groups.

[Link available here, here, here and here].

ADMINISTRATIVE

Municipality's sale of surplus property quashed

Halifax Regional Council decided to sell a surplus school property, but initially did not allow local community non-profit groups to make submissions before selling it to a developer – and for a price that was significantly below the market value of the property. Community groups were later able to make proposals, but as part of the RFP for private developers. Four community groups challenged the decision to sell the property to JONO Developments. The council rescinded that decision pending review of the sale process, but subsequently upheld the award to JONO. The community groups then sought judicial review: North End Community Health Association v Halifax (Regional Municipality), 2012 NSSC 330.

MacAdam J held that the municipality owed a duty of fairness to the community groups; this required the municipality to follow its own process and afford local community groups the right to make submissions before other parties were asked to submit bids. Failure to follow an established procedure was a violation of procedural fairness and the legitimate expectations of the community groups. It wasn't necessary to show that the latter had actually relied on the fact that the procedure would be followed; as long as there is a procedure, it must be followed. The community groups were also successful in demonstrating that the municipality had breached its governing legislation in approving a sale at a price that was significantly below market value. The standard of review of the council's decision was correctness, the judge concluded, although he thought the determination of price was to be reviewed on a standard of reasonableness. The sale price was clearly unreasonable, given that it was $1 million less than market value and evidence that JONO was prepared to pay market value if need be. On a correctness standard, the sale could not be upheld because the governing legislation provides that a sale of surplus property at less than market value may be made only to a non-profit organisation.

[Link available here].

ARBITRATION/CLASS ACTIONS/CONSUMER PROTECTION/PERSONAL PROPERTY

Arbitration clause upheld in virtual pets case

Slide Inc., subsequently acquired by Google, offered consumers the ability to adopt, care for and interact with virtual pets on an online platform. Basic access was free, but consumers had the option to spend real money on their virtual pets through the purchase of 'gold', which could then be used to buy 'virtual items in order to customize a pet's environment', as well as VIP subscriptions with exclusive content not available to ordinary users.

(PT Barnum had a line about this sort of thing, didn't he?) When Google bought Slide, it announced some changes to the scheme: after a certain date, no more gold would be available for purchase, any credit in gold accounts would be forfeited to Google and VIP subscriptions would cease to be sold. A few months later, the whole scheme was terminated.Christalee Abreu brought class proceedings against Google, arguing that the decision to suspend gold purchases and VIP memberships caused basic users to sign up for VIP access while they could and to stockpile virtual items purchased with gold for future sale to other users. The decision to terminate the game deprived users of their property rights in the virtual pets and the items bought for them, rendering them essentially worthless. Google countered by pointing to the arbitration clause in the user agreement, which pre-empted litigation.

The California district court upheld the arbitration clause, in spite of the plaintiffs' argument that it was unconscionable: Abreu v Slide Inc, 2012 US Dist LEXIS 96932 (ND Cal, 12 July 2012). Alsup J concluded that the clause was not 'so one-sided as to shock the conscience' of the court, even though it permitted Google to seek injunctive relief but precluded a consumer from seeking the same remedy, required a $125 filing fee by a consumer with a claim under $10,000 and mandated a 30-day informal negotiation process before arbitration or any court proceeding could be initiated. Google's motion to compel arbitration was granted. Maybe on appeal, if there is one, there will be more discussion of the legal nature of virtual property.

CIVIL PROCEDURE

Costs order can take parties' financial situation into account, Ontario judge reminds

Both parties in Thompson v Gilchrist, 2012 ONSC 5154, 'behaved reasonably throughout' the proceedings (a custody and access case). Minnema J noted, however, that he was, in considering 'any other relevant matter' under Ontario's costs rule, entitled to consider the relative financial positions of the parties. In this case, Gilchrist had no ability to absorb her own costs, and while Thompson's means were limited, this did not 'afford him immunity to a costs order'. Thompson was ordered to pay $12,000 in costs, inclusive of disbursements and GST, enforceable as support. See also Murray v Murray (2005) 79 OR (3d) 147 (CA).

[Link available here and here].

'For wine, timing is critical. The same is true for causes of action'

So said Koeltl J of the 2d Circuit in dismissing claims brought by William Koch against Christie's, the auction house, for its alleged part in a scheme to sell wine that was fraudulently described as having come from the private stock of Thomas Jefferson (new wine in old bottles, essentially): Koch v Christie's International plc (2d Cir, 4 October 2011). Hardy Rodenstock claimed to have discovered the wine in a bricked-up cellar in Paris in the 1980s. Doubts were expressed about the authenticity of the wine pretty much from the get-go, including in a report commissioned by the curator at Monticello, Jefferson's house in Virginia, in 1985. Koch alleged that Rodenstock had a 'longstanding and symbiotic relationship' with Michael Broadbent, the in-house wine expert at Christie's, which initially offered the wine for sale at auction. Koch's purchases of some of the 'Jefferson' wine in 1987 and 1988 were from Rodenstock or other wine dealers, but allegedly in reliance on representations made by Broadbent in Christie's materials. In the face of mounting doubts about the provenance of the wine, Koch considered legal action in 1993 and 1995, but did nothing; scientific tests he commissioned in 2000 proved in his view inconclusive. In 2006, Koch obtained a copy of the 1985 Monticello report and sued Rodenstock 18 months later. Rodenstock, a German resident, did not appear and default judgment was entered against him. In 2010, Koch went after Christie's.

The district court dismissed Koch's claim as time-barred: he was sufficiently on notice of a potential claim when he submitted his bottles for testing in 2000, and limitation periods under both the Racketeer-Influenced and Corrupt Practices Act and New York common law had passed. On appeal, the 2d Circuit agreed. Koch's claim accrued on discovery of his injury, and this had clearly occurred in 2000 (if not earlier). Both the statutory and common-law limitation periods are triggered when a plaintiff has reasonable notice that there may be a claim but fails to investigate it. In 2000, Koch clearly had sufficient 'storm warnings' to put him under a duty of inquiry, and sufficient knowledge of facts that would suggest to a reasonable person that there had been injury. The 2000 tests had indicated, in fact, that there was a more than 90% probability that the wine was fake. Koch's lack of reasonable diligence in investigating a potential claim also deprived him of the argument that alleged fraudulent concealment on the part of Christie's suspended the limitation period.

Ontario judge criticises 'motions culture' as waste of scarce judicial resources

Justice David Brown of the Ontario Superior Court of Justice isn't shy about criticising what he sees as problems with the civil justice system. In Kaptyn v Kaptyn, 2011 ONSC 542, he lambasted the parties' waste of court time in a four-day trial that involved 14 pre-trial motions and racked up $4.4 million in costs; then in Romspen Investment Corp v 617666 Canada Ltée, 2012 ONSC 1727, he characterised 'the systemic failures and delay' of the court's document-management and case-scheduling systems as 'a scandal'. In George Weston Ltd v Domtar Inc, 2012 ONSC 5001, Brown J decries a 'motions culture' which prefers to consume chronically scarce judicial resources with process-related skirmishes instead of proceeding to an actual trial on the merits. Hearing two matters together in George Weston, Justice Brown declined to schedule summary judgment motions for either of them, imposing timetables to get things 'moving ... along to final adjudication'.Chris Bredt, Markus Kremer and Matthew Furrow of the Toronto office of BLG represented George Weston Ltd.

[Link available here , here and here].

Towards a taxonomy of vexatious litigants

In a judgment that is exhaustive and amusing (when it isn't faintly...

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