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 →

The decision of the Ontario Court of Appeal in GasTOPS Ltd. v. Forsyth, et al., released on March 1, 2012, is a useful reminder of the extent to which the court will express serious disapproval of breaches of fiduciary duty by departing employees.

This particular case involves facts which appear to reflect unusually egregious conduct. 

GasTOPS Ltd. was in the business of developing computer software products that assessed machinery conditions for maintenance purposes for operators of gas turbine engines.  It was an industry leader in the area.  Its primary market was that of military aviation, particularly for the Canadian Armed Forces, but its business grew to include the commercial industrial market as well.  Its industry was a highly specialized niche one with a small number of customers each generating substantial revenues.  At the time of the events in question, it was pursuing an important opportunity with the US Navy.

If a former employer can demonstrate that it took a substantial period of time for it to get back on its feet, departing fiduciaries may well be held to account for their former employer’s lost profits for that entire period of time.

The four individual Defendants had been employees of GasTOPS for periods ranging from three to nine years as of October, 1996.  They were effectively the designers of the core programs within the family of GasTOPS’ products.  They knew of GasTOPS’ business opportunities, and they were completely familiar with its products.  They were aware of GasTOPS’ strategic plan to acquire the US Navy as a customer as well as GasTOPS’ business plan generally.  The trial judge found that they were privy to GasTOPS’ customers’ and potential customers’ requirements and had thorough knowledge of its sensitive technological information. 

The trial judge found that about five months before resigning from GasTOPS, two of them had attended a seminar on starting a software company.  In October, 1996, they gave two weeks’ notice of their resignation.  The other two resigned three days later with the same length of notice.  Within hours, they were meeting with GasTOPS’ employees and describing their plans to set up their own business focused on aviation maintenance software.  Shortly afterwards, a number of other GasTOPS employees left to join them in their new company. 

They set up a new company, MxI Technologies Ltd., and immediately pursued every existing and potential GasTOPS’ customer including the Canadian Armed Forces and the US Navy.  Using the confidential business information obtained while at GasTOPS to develop their marketing strategy and their technology, they offered GasTOPS’ customers a virtually seamless transition to MxI and its products.  They actually portrayed themselves as a “spin off” of GasTOPS and indicated that their product was the next iteration of the product that they had developed at GasTOPS.  Continue reading →

Judges have difficult jobs and criminal judges, dealing with issues of personal liberty, may have even more pressure on them than others.

When I was in law school, we were taught that the purpose behind incarcerating wrongdoers had to do with rehabilitation and not revenge.  For at least that reason, in our society, decisions as to sentences are made by an impartial judge without formal input from the victim or the victim’s family.  This basic principle, with which many people seem rather unfamiliar, gives rise to outrage when sentences are passed that appear shocking. 

Still, there is a limit to everything.  The recent sentencing of Graham James, convicted pedophile, to incarceration for two years (with parole possible within a matter of months) is truly difficult to understand.

As anyone following this story will know, James sexually assaulted teenage hockey players including several who subsequently overcame the trauma to the extent that they became NHL players.

Notwithstanding the fact that he was a repeat offender, on March 20^th, he was sentenced to two years in prison after having pleaded guilty to two such assaults.  The Crown had asked for a sentence of six years, and the Defence had asked for a conditional discharge.

Unfortunately, a brief review of other rather high profile cases of this nature indicates that a sentence in the vicinity of two years is not terribly unusual.  A number of years ago, when a former Maple Leaf Gardens employee was convicted of the same events, he received a sentence of almost 2 years, which the Court of Appeal subsequently increased to 5 years. 

The fact of the matter is that as a general rule, convictions for the sexual abuse of minors lead to sentences which most people of conscience would regard as entirely inadequate. 

Granted, in cases that inspire emotional outrage, it is hard to separate the public’s desire for revenge from the general principle of rehabilitation as the motive for incarceration but surely the lifelong debilitating impact of such horrendous conduct on victims and their families should be taken into account in a more serious manner – as well as the need to keep such offenders away from the rest of society for as long as reasonably possible. 

On a different point, the Court of Appeal issued a decision on March 13^th in a case called R. v. Siciliano, rectifying another criminal judge’s decision which is difficult to understand. 

In that case, the accused plead guilty to charges that included possession of stolen property and uttering a threat. 

The trial judge adjourned sentencing to another day.

In the morning of that day, the judge took a 20-minute morning break, before hearing the matter.  When the judge returned, the Crown Prosecutor was not present.  The judge advised the clerk to notify the Prosecutor that if he did not appear in court within one minute, all remaining provincial criminal matters on the list for that day would be dismissed for want of prosecution.

The Prosecutor could not be found and true to his word, the judge dismissed all of the matters on the list including that of Mr. Siciliano – even though he had already pleaded guilty and was merely there to be sentenced.

The Crown returned to the courtroom eight minutes later, apologized and indicated that he had been in his office reading a pre-sentence report that he had only just received.  The judge was not inclined to accept the apology or do anything about it.

The Crown was forced to appeal to the Court of Appeal.  The Court of Appeal found that the trial judge did not have the power to make the Order that he did and called it “illegal and an abuse of judicial authority”.  The appeal court judges characterized the judge’s actions as “high handed and … a real disservice to the proper administration of justice”.  The Order was quashed in each case and convictions were substituted based on the guilty pleas and findings of guilt.  The case of Mr. Siciliano was scheduled for sentencing once again.

The good news is that trial judges who make glaring errors in criminal matters can, from time to time, have their wrists slapped.  The bad news is that this is unlikely to happen in the case of convicted pedophile Graham James.

On February 28, 2012, the Supreme Court of Canada rendered its decision on an appeal from the Court of Appeal of Quebec in the case of Richard v. Time Inc. 

In this case, Jean-Marc Richard sued Time Inc. and Time Consumer Marketing Inc. over their failure to provide him with a large cash prize which he believed that he had won. 

More significant is the fact that Time was held liable even though no false statement was actually made in the letter. The Court focused on the general impression created by the way the messages were conveyed, through the use of bold type and capital letters.

Richard had received a letter in the mail entitled “Official Sweepstakes Notification”.  The letter included boxes referring to Time Magazine and suggested that he had won a cash prize of US $833,337.  Some of the type in the letter contained exclamatory sentences in bold capital letters.  Other sentenced appeared in smaller print and contained the words “if you have and return the Grand Prize winning entry in time”.  The letter also suggested that there was a $100,000 bonus for which he would qualify if he returned his entry within five days.  The letter included a reply coupon and a return envelope.  The coupon contained an offer to subscribe to Time magazine.  The coupon set out the rules of the sweepstakes which indicated that a winning number had already been selected by computer and that the holder of that number would receive the prize only if the coupon was returned by a deadline date. 

Richard was convinced that he would receive the prize merely by immediately returning the reply coupon in the envelope.  He did so immediately (and also subscribed to Time magazine).  According to the Court, he began regularly receiving issues of the magazine a short time later “but the cheque he was expecting was a long time coming”.  In fact, and not surprisingly, it never arrived at all. 

He contacted Time and was told that he would not be receiving a cheque because his number was not the winning entry and the letter had merely constituted an invitation to participate in the contest.  Continue reading →