A decision of the Ontario Superior Court of Justice in the case of Siegel et al. v. Hibbert et al., released on May 7, 2012, contains some interesting observations on the role of investors in Ponzi schemes.

It does not lie in the mouth of one who makes a statement on which another relies to say that the other was careless in believing him.

The judge began his Reasons with the following comment:

“Greed is a vice that makes normally rational people act irrationally.  It plays exceedingly well into the old maxim ‘if it looks too good to be true, it usually is’.  This case proves that both theories are alive and well.”

In this case, a series of Plaintiffs invested various sums of money with one Marlon Gary Hibbert and his companies from about late 2006 through 2008.  All of them had heard of Hibbert generally by word of mouth, and all had approached him to ask that he invest their funds.

Hibbert traded in the currency exchange market without any training, experience or formally education in investments.  He was never registered with any regulatory body or government agency. 

He would explain to each Plaintiff that he traded in that market and that he guaranteed a 5% return per month or 8.5% per month if the funds were locked in for one year.  He also personally guaranteed all principal and interest payments.  Continue reading →

In the decision of the Ontario Superior Court of Justice (Commercial List) in Corona Packaging Inc. v. Singh et al., released on May 7, 2012, the Court was faced with the balancing of competing interests between companies battling an injunction motion.  The unusual difficulty in this case was the very real possibility that the party losing the injunction motion might well go right out of business.

In almost every case, the Court must make this extremely important decision (and one that has a good chance of ending the litigation one way or another) on something less than the complete factual record.

An injunction can be an extremely effective way of bringing a dispute to a rapid conclusion.  While interlocutory injunctions are typically sought at a very early stage in litigation, a significant number of disputes conclude by settlement or otherwise shortly after an injunction motion has been either won or lost.  Because such motions are typically argued without the full benefit of the exchange of all of the documents and evidence in the possession of each party, and the taking of evidence from witnesses as our trial procedures are designed to do, injunction motions are sometimes decided based on a cursory review of evidence and a great deal of gut feeling on the part of the motions court judge.  This can result in both significant risk and uncertainly where the stakes are high.

In this case, the Defendants were former employees of the Plaintiff, Corona Packaging Inc. Corona’s major customer was a New Jersey-based company, Guest Supply Inc., which provided 44% of Corona’s business.

The individual Defendants left their employment with Corona after five or six years.  Their employment contracts with Corona had included terms requiring them to maintain confidentiality of proprietary corporate information and an obligation not to compete with Corona after leaving its employ. 

Following their resignation from their employment with Corona, it appears that a newly-formed company named Aura Packaging Inc. managed to acquire the business of Guest.  Evidence was led as to the individual Defendants having removed confidential information from the electronic records of Corona, and also demonstrating that Aura appeared to be in possession of that information.  Continue reading →

The federal government recently announced the closing of Kingston Penitentiary, one of a number of prisons in the Kingston, Ontario area and likely Canada’s best known maximum security penitentiary. 

The news brought back memories of my one and only visit to that institution.  It took place about 20 years ago, but I will never forget some of its features. 

At that time, we were retained by the Ministry of Correctional Services to act in the defence of an action brought by an inmate at the penitentiary who was complaining of a variety of human rights violations. 

I went to Kingston for the examination for discovery of one of the assistant wardens.  When I met with him to prepare, he offered me a tour of the facility and a viewing of a prison cell similar to the one occupied by the Plaintiff, so that I could better understand his complaints.  Continue reading →

The recent Superior Court decision in Amyotte v. Wawanesa Mutual Insurance Company is a helpful reminder to lawyers and their accident victim clients, and litigants generally of the importance of being meticulous in making and responding to settlement offers.

In this case, Wawanesa brought a motion to enforce a settlement which it claimed to have entered into with the Plaintiff, Mrs. Amyotte.  Mrs. Amyotte had been involved in a car accident which gave rise to an entitlement to damages and statutory accident benefits. 

Shortly before trial, Wawanesa’s lawyer made an offer of settlement of a specific amount of money inclusive of interest “in full and final settlement of all accident claims and all claims against Wawanesa in the within action” and costs.  Mrs. Amyotte’s lawyer responded with the words “we accept the offer and the action is settled”. 

When Wawanesa’s lawyer asked Mrs. Amyotte’s lawyer about what costs were being claimed, Mrs. Amyotte’s lawyer e-mailed “$15k all in”.  The next day, Wawanesa’s lawyer e-mailed with the question “How would you like the settlement broken down for release purposes?  $10,000 past and future rehab and $5,000 for costs and disbursements?”  The reply was affirmative.  Continue reading →

Many years ago, I acted for a client whose business involved running junkets to various gambling destinations in the United States and the Caribbean.  In fact, he enjoyed gambling himself.  Unfortunately, he was not very good at it.  At one point, he managed to leave behind an unpaid debt of several hundreds of thousands of dollars at an offshore casino.

The casino sued him in Ontario, and I spent quite some time trying to figure out some public policy, jurisdictional, or other such argument to help him avoid the claim.  Ultimately, the claim settled before ever seeing the inside of a courtroom so I was never able to test my arguments.

The recent case of Wynn Las Vegas LLC v. Teng puts to rest any question as to whether or not an Ontario resident has any basis for a defence against a claim by a casino for an unpaid gambling debt.

In this case, Teng obtained a line of credit from the Plaintiff casino of $300,000.  The credit agreement which he signed included a provision for interest at the annual rate of 18%.  Funds were to be drawn in exchange for post-dated cheques written on Teng’s Ontario bank account.

Teng drew on the line of credit to the total amount available and checked out of the hotel leaving the entire amount outstanding.  After the casino found no success in attempting to negotiate repayment terms with Teng, it started this action in Ontario.  Continue reading →