The statutory shareholder oppression remedy in Canada has been considered "the broadest, most comprehensive and most open-ended shareholder remedy in the common law world". But if a shareholder dispute is caught by an arbitration agreement, will the aggrieved shareholder be able to obtain from the arbitrator whatever relief that is appropriate under the statutory oppression remedy provisions? The answer to this question is unclear.
I invite you to read my paper on this issue, which was recently published in the Advocates' Quarterly, Vol. 36, No. 4 (March 2010). And feel free to drop me a note if you have any thoughts.
Friday, March 12, 2010
Saturday, March 6, 2010
Arbitration and Demand for Particulars in Litigation Proceedings
On January 18, 2010, the Court of Appeal for British Columbia (Canada) released its decision in Larc Developments Ltd. v. Levelton Engineering Ltd., 2010 BCCA 18. In this decision, the Court dealt with the issue of when a demand for particulars in a court proceeding would disentitle a party from subsequently seeking or obtaining a stay of the proceeding in favour of arbitration. The answer depends on the language of the request, instead of the stated intent of the party making the request.
If the demand is for information required to prepare a statement of defence, it would constitute a demand for particulars under the rules of court and a step in the litigation proceeding thereby precluding a subsequent stay application in favour of arbitration. However, by making a request for information solely to determine whether a claim is subject to arbitration, the party may still bring a stay application for arbitration because such request does not amount to an acceptance of the litigation process.
In this case, the demand letter was drafted to request information for the preparation of the statement of defence, followed by the party's intent to seek arbitration. The Court held that since the demand constituted a step in the litigation proceeding, the defendant was no longer entitled to seek to refer the matter to arbitration even though such intent was stated in the demand letter: "It cannot undo what has been done".
If the demand is for information required to prepare a statement of defence, it would constitute a demand for particulars under the rules of court and a step in the litigation proceeding thereby precluding a subsequent stay application in favour of arbitration. However, by making a request for information solely to determine whether a claim is subject to arbitration, the party may still bring a stay application for arbitration because such request does not amount to an acceptance of the litigation process.
In this case, the demand letter was drafted to request information for the preparation of the statement of defence, followed by the party's intent to seek arbitration. The Court held that since the demand constituted a step in the litigation proceeding, the defendant was no longer entitled to seek to refer the matter to arbitration even though such intent was stated in the demand letter: "It cannot undo what has been done".
Sunday, February 21, 2010
Case Alert: An Arbitrator's Powers to Issue a Corrected Award
On January 25, 2010, the Court of Appeal for British Columbia (Canada) released its decision in Westnav Container Services Ltd. V. Freeport on the jurisdiction of an arbitrator to issue a corrected award. In that case, the arbitrator issued an award and then a corrected award offering clarification in relation to a reference in his original reasoning. The Court set the arbitral award aside on the basis that the arbitrator exceeded his powers in issuing a correction ruling that appeared to offer “an alternate explanation for the result rather than clarification of the original reasoning”. The Court acknowledged that section 27 of the British Columbia Commercial Arbitration Act allows an arbitrator to correct a clerical or accidental error in an arbitral award. The Court also acknowledged that an arbitrator may issue a post-award alteration to provide parties with “more precise expression of the thought”. However, the Court held that an arbitrator does not have powers to issue an alteration that appears to change either the arbitrator’s thought process or the basis of the award.
For a copy of this decision, please follow the link here: http://www.canlii.com/en/bc/bcca/doc/2010/2010bcca33/2010bcca33.html
For a copy of this decision, please follow the link here: http://www.canlii.com/en/bc/bcca/doc/2010/2010bcca33/2010bcca33.html
Monday, February 15, 2010
Arbitration Clauses in Consumer Contracts Will Not Stop Class Actions in Ontario
Many businesses use standard-form sales agreements in offering products or services to the public. With the increased frequency of class litigation across Canada, vendors often insert an arbitration clause in the standard-form contract as part of their risk management strategy against consumer class actions. This strategy may work in some other Canadian provinces, but not in Ontario, which was confirmed in a very recent decision released by the Ontario Court of Appeal in Griffin v. Dell Canada Inc.
In 2008, Dell brought a motion before the Ontario Superior Court of Justice to stay the putative class action invoking the arbitration clause in the Terms and Conditions. It should be noted that prior to this Ontario class action, Dell Computer Corporation ("Dell Computer") was the defendant in a separate class action commenced in 2003 in Quebec under the Code of Civil Procedure: Union des consommateurs c. Dell Computer Corp. ("Dell Computer"). There, Dell Computer also relied on the standard arbitration clause contained in the terms and conditions of the sale for a stay of the class action. Although its stay request was refused by the Quebec Superior Court and Court of Appeal, it was granted by the majority of the Supreme Court of Canada. Deschamps J. held that the class action is a civil procedure that does not create new rights, and "cannot serve as a basis for legal proceedings if the various claims it covers, taken individually would not do so." Therefore, a class action is unavailable if there is a valid arbitration clause applicable to the disputes. It is the arbitrator, not a court, who must rule, in the first instance, on the validity or applicability of an arbitration agreement.
In this Ontario class action, Justice Lax dismissed Dell's motion for stay. She noted Dell Computer in her decisions but distinguished it on the basis that the applicable statutes in Ontario were different from those in Quebec, and that the Supreme Court's holding in Dell Computer was specific to Quebec and not applicable in Ontario. In her view, the law in Ontario was that a motion for stay in favour of arbitration should be considered within the context of the preferable procedure analysis of a certification motion of that action. In the preferrability analysis, Justice Lax then compared the class action with arbitration of the class members' claims on an individual basis. Because of the costs of proof inherent in this complex product liability case, Justice Lax thought it was unlikely that class members would realistically commence individual and separate arbitration proceedings before NAF to assert their rights. As a result, she concluded that a class proceeding, not arbitration, was the preferred procedure. Accordingly, the class action against Dell was certified on February 3, 2009. In April 2009, Dell brought a motion asking Justice Lax to reconsider her decision. Justice Lax dismissed the motion and confirmed her prior decision.
The appeal from Justice Lax's decisions was dismissed on January 10, 2010. The Court of Appeal considered the Ontario Consumer Protection Act ("CPA") determinative of Dell's stay request. Unlike the consumer protection statutes in other common law provinces in Canada, Ontario's CPA expressly invalidates mandatory arbitration clauses in consumer contracts and , at the same time, specifically preserves a consumer's right to commence, or participate in, a class proceeding despite any class action waiver in the consumer agreement. Accordingly, Dell could not rely on the arbitration clause in the Terms and Conditions to stay the class action.
In 2008, Dell brought a motion before the Ontario Superior Court of Justice to stay the putative class action invoking the arbitration clause in the Terms and Conditions. It should be noted that prior to this Ontario class action, Dell Computer Corporation ("Dell Computer") was the defendant in a separate class action commenced in 2003 in Quebec under the Code of Civil Procedure: Union des consommateurs c. Dell Computer Corp. ("Dell Computer"). There, Dell Computer also relied on the standard arbitration clause contained in the terms and conditions of the sale for a stay of the class action. Although its stay request was refused by the Quebec Superior Court and Court of Appeal, it was granted by the majority of the Supreme Court of Canada. Deschamps J. held that the class action is a civil procedure that does not create new rights, and "cannot serve as a basis for legal proceedings if the various claims it covers, taken individually would not do so." Therefore, a class action is unavailable if there is a valid arbitration clause applicable to the disputes. It is the arbitrator, not a court, who must rule, in the first instance, on the validity or applicability of an arbitration agreement.
In this Ontario class action, Justice Lax dismissed Dell's motion for stay. She noted Dell Computer in her decisions but distinguished it on the basis that the applicable statutes in Ontario were different from those in Quebec, and that the Supreme Court's holding in Dell Computer was specific to Quebec and not applicable in Ontario. In her view, the law in Ontario was that a motion for stay in favour of arbitration should be considered within the context of the preferable procedure analysis of a certification motion of that action. In the preferrability analysis, Justice Lax then compared the class action with arbitration of the class members' claims on an individual basis. Because of the costs of proof inherent in this complex product liability case, Justice Lax thought it was unlikely that class members would realistically commence individual and separate arbitration proceedings before NAF to assert their rights. As a result, she concluded that a class proceeding, not arbitration, was the preferred procedure. Accordingly, the class action against Dell was certified on February 3, 2009. In April 2009, Dell brought a motion asking Justice Lax to reconsider her decision. Justice Lax dismissed the motion and confirmed her prior decision.
The appeal from Justice Lax's decisions was dismissed on January 10, 2010. The Court of Appeal considered the Ontario Consumer Protection Act ("CPA") determinative of Dell's stay request. Unlike the consumer protection statutes in other common law provinces in Canada, Ontario's CPA expressly invalidates mandatory arbitration clauses in consumer contracts and , at the same time, specifically preserves a consumer's right to commence, or participate in, a class proceeding despite any class action waiver in the consumer agreement. Accordingly, Dell could not rely on the arbitration clause in the Terms and Conditions to stay the class action.
Monday, January 4, 2010
A Corporation's Action Against Its Former Directors: When Is It Statute-Barred?
It is well established in corporate law that directors of a corporation - who have been given broad powers to oversee and direct the business of the corporation - owe a fiduciary duty to the corporation they serve, and must discharge such duty by acting in the company's best interests. If a director breaches his or her fiduciary duty, and the corporation wishes to commence a legal proceeding against the culpable director, when will the limitation period start to run for that action?
The answer to this question is not straightforward, in spite of Ontario's basic two-year limitation period. This issue is discussed in my recent paper, "A Corporation's Action Against Its Former Directors: When Is It Statute-Barred," (2009), Volume XIV, No. 4, Corporate Liability 878-883.
Feel free to contact me if you would like to receive a copy of this paper.
The answer to this question is not straightforward, in spite of Ontario's basic two-year limitation period. This issue is discussed in my recent paper, "A Corporation's Action Against Its Former Directors: When Is It Statute-Barred," (2009), Volume XIV, No. 4, Corporate Liability 878-883.
Feel free to contact me if you would like to receive a copy of this paper.
Thursday, October 23, 2008
Communications in Furtherance of Unlawful Conduct – An Exception to Solicitor-Client Privilege
As a general rule solicitor-client privilege is considered sacrosanct in Canada. However, it has been subject to an established principle that where the communications with the lawyer are criminal or made with the purpose of obtaining legal advice to facilitate the commission of a crime or a fraud, privilege is lost. This has been called the "future crime and fraud" exception. Over the past 20 years, lower courts in Canada have been divided on the issue of whether this exception should be expanded to include other unlawful conduct.
I authored an article with my colleague, Robyn Ryan Bell, to consider the different lines of authority and discuss the implications for counsel in light of the unsettled state of the law in this area. Please feel free to contact me if you would like a copy of this paper.
I authored an article with my colleague, Robyn Ryan Bell, to consider the different lines of authority and discuss the implications for counsel in light of the unsettled state of the law in this area. Please feel free to contact me if you would like a copy of this paper.
Wednesday, October 1, 2008
Commercial Lease Dispute: Intersection of Time Being of the Essence and Anticipatory Late Performance
There was a three-year lease agreement between Spirent Communications as the landlord and Quake Technologies as the tenant. It was anticipated that the leased office space would not be available until at least six weeks after the date specified in the lease agreement. In light of this anticipated delay, the tenant terminated the lease agreement. The tenant sued the landlord for damages. The question is who should be compensated for damages.
See my publication, "Spirent Communications v. Quake Technologies: A look at intersection of time being of the essence and anticipatory late performance", The Advocates Quarterly, Vol. 34, No. 4.
Follow this link for a copy of the article: http://www.bennettjones.com/Images/Guides/update3752.pdf
See my publication, "Spirent Communications v. Quake Technologies: A look at intersection of time being of the essence and anticipatory late performance", The Advocates Quarterly, Vol. 34, No. 4.
Follow this link for a copy of the article: http://www.bennettjones.com/Images/Guides/update3752.pdf
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