Welcome to the latest edition of Cassels on Commercial Litigation where we share case comments, team wins, and other news that may be of interest to our readers. Find more of our insights here.
In This Edition: A clarification of the meaning of “residency” under class proceedings, recent arbitration and court successes, and more…
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ICYMI: The Latest from the Courts
Court of Appeal Clarifies Meaning of “Residency” Under Class Proceedings >
The British Columbia Court of Appeal has denied an Ontario-based mutual fund standing to initiate a class action in British Columbia, affirming that the proposed representative plaintiff did not meet the residency requirements specified in BC’s Class Proceedings Act. The case of MM Fund v. Excelsior Mining Corp. centered on whether MM Fund, a Toronto-based mutual fund constituted as a trust, could qualify as a resident of British Columbia such that it would be permitted to bring a putative class action in British Columbia on behalf of a geographically unlimited class.
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Cassels Wins
Arbitration Successes
Victory with Full Indemnity Costs
Raj Mittal successfully represented a firm client in arbitration in a consulting fee dispute against a public energy company in connection with an $8 million flow through financing.
The firm’s client claimed a consulting fee for a successful financing pursuant to a Consulting Fee Agreement. The adverse company refused to pay, arguing, among other things: our client did not play a sufficient role in the financing to earn the fee; the Consulting Fee Agreement was void for past consideration; and no fee was owed because our client failed to seek the approval of the Canadian Securities Exchange.
Our client succeeded on all issues and was awarded the full consulting fee along with full indemnity costs – a reminder of the availability of elevated costs in arbitrations. The arbitrator found the evidence of the adverse company’s CEO to be evasive, inconsistent, and largely unreliable on cross-examination.
Affirmation of Competence-Competence Principle: Vallance and others v. Penrose Bay Estates Limited
Logan Rogers and Luke Casburn successfully represented the petitioners in a recent decision that embodies the “competence competence” principle (i.e., an arbitrator is competent to rule on their own jurisdiction).
Cassels secured an interim arbitration order preventing the Respondent PBEL from taking any steps against the Petitioners while the arbitration proceedings were ongoing. The team then sought to make the arbitration order an Order of the Supreme Court, which the Respondent PBEL contested. The Court found no merit to the Respondent’s arguments opposing recognition of the interim arbitration order and recognized and enforced the interim arbitration order.
Wins in Court
Successful Resistance of Injunction: Actton Super-Save Gas Stations Ltd. v. Eneas
Jordana Cytrynbaum and Arend Hoekstra successfully resisted an interlocutory injunction that sought to restrain the Eneas Family from requiring Super-Save to vacate their property, pending determination of a dispute regarding the validity of a “buckshee lease” and certain related contractual and tort claims.
At issue was whether the Court had jurisdiction to grant any relief to a party seeking rights to occupy reserve land without authorization from the Federal Minister, pursuant to the Indian Act. The Court held that it had no jurisdiction to grant Super-Save (a non-band member) rights to occupy reserve land and found that any continued occupation is in trespass, contrary to s. 30 of the Indian Act.
Security for Costs Award in Favour of DIP Lender: In the Matter of BZAM Ltd. et al
Colin Pendrith and Joseph Bellissimo successfully obtained an order on behalf of Cortland Credit Lending Corporation, the DIP lender of CCAA protected BZAM Ltd. requiring Final Bell Holdings International Ltd., a notional Plaintiff, to post security for costs.
The motion considered two issues:
- when and in what circumstances are security for costs appropriate within an ongoing CCAA proceeding; and
- whether a party against whom no relief is directly sought can be entitled to security for costs.
After BZAM filed for and obtained CCAA protection, Final Bell brought a claim against BZAM for rescission of a pre-filing Share Exchange Agreement pursuant to which BZAM acquired the shares of Final Bell’s Canadian subsidiary. A few days before trial was set to begin, Final Bell requested an adjournment and amended its claim to seek a constructive trust over its former subsidiary. If granted, the requested trust could impact Cortland’s recovery as DIP lender. BZAM and Cortland both brought motions seeking an order requiring Final Bell to immediately post security for the costs of its claim.
Justice Osborne held that security for costs was available to Cortland and accepted its submission that: “equity and fairness militate in favour of it being entitled to security in the circumstances where the consideration that Final Bell received under the Share Exchange Agreement of shares and unsecured debt means that, at its highest, Final Bell is an unsecured creditor and an equity holder of BZAM.” Accordingly, it was “just and equitable that security for costs be available in appropriate circumstances to a party in the position of Cortland.”
Successful Summary Trial in Trademark Action: Louis Vuitton Malletier S.A. v. Torf
Karen MacDonald and Claire Stempien successfully represented the Plaintiffs, Louis Vuitton Malletier S.A. and Louis Vuitton Canada Inc., in a trademark and copyright infringement action against seven individual Defendants and two corporate Defendants involved in the sale of counterfeit goods bearing the Plaintiff’s trademarks and copyright design.
In 2023 the Plaintiffs brought an action and filed a motion ex parte seeking a Mareva Order and an Anton Piller Order (the Order). Based on the affidavits presented, Justice Pallotta granted the execution of the Order, an extraordinary remedy, which required the Defendants to permit entry to the relevant premises to those authorized to identify and remove merchandise bearing any “LOUIS VUITTON Trademarks.”
Despite execution of the Order, which included an injunction not to import or sell products that infringed the Plaintiff’s trademarks, the Defendants continued to advertise counterfeit Louis Vuitton products.
The Court found that the credibility of several of the Defendants was undermined by admissions given on cross-examination. The Court ultimately granted the Plaintiff’s motion for a summary trial against certain of the Defendants, awarding both damages and punitive damages.
Successful Representations Against Fraud: 0928234 B.C. Ltd. v. Starmark Properties Corp.
Logan Rogers and Shermaine Chua successfully set-aside a default judgment and damages assessment of $225,000 for the Defendant.
In this hotly contested Application, the Plaintiffs alleged that they served the Notice of Civil Claim and Default Judgment materials on the Applicant, an individual Defendant. The Plaintiff used his alleged “service” of these materials to secure a significant award against the Applicant, all without her actual knowledge. The Applicant, after learning about these proceedings, brought an application to set aside the damages order made against her.
It is a high bar to set-aside a damages assessment award; however, the Cassels team convinced the Court that, based on the evidence, a reasonable and well-informed member of the public would find it “shocking and unconscionable” to allow the damages assessment to stand. The Court agreed with Cassels that the Applicant was not served with either the Notice of Civil Claim or the Default Judgment materials and granted the set-aside Application.
Successful Summary Judgment – Discoveries not Always Required: 0928234 B.C. Ltd. v. Starmark Properties Corp.
Logan Rogers and Luke Casburn successfully argued a summary judgment dismissing the Plaintiffs’ claim against two Defendants.
In this decision, the Court held that the Notice of Civil Claim failed to plead a viable cause of action against either of the Applicants. The Court relied on the voluminous evidence already filed by the Plaintiff itself to show that he had no arguable case, including the crucial fact that the Applicants were not party to the alleged “agreement” that the Plaintiff claimed they breached. In this case, the Court found that additional discoveries were not necessary to determine the matter sought in the Application and granted summary judgment dismissing the claim as against the Applicants, with costs payable to same.
Successful Resistance of Commercial Tenant’s Injunction: Lighting Originals Inc. v. 109 Cartwright Avenue Ltd.
Chris Selby successfully resisted an injunction sought by an overholding commercial tenant to stop the commercial landlord from locking out the tenant.
The landlord had long-planned to demolish the commercial building and served the tenant with a notice of termination under the Commercial Tenancies Act more than 90 days before the date that the landlord confirmed that it would lock-out the tenant.
Despite the extended notice period, at the eleventh hour, the tenant alleged technical deficiencies with the landlord’s notice of termination in order to delay the end of the tenancy. The tenant did so because it had failed to take any meaningful steps to remove its allegedly valuable inventory during the notice period.
In declining to order the injunction, Justice Stevenson determined that, even if there was a triable issue in respect of the validly of the landlord’s notice (which the landlord denied), any harm suffered by the tenant from the loss its inventory caused by the demolition was quantifiable, and that the tenant’s evidence of irreparable harm was speculative. The Court also determined that the tenant had failed to establish that the “balance of convenience” favoured it rather than the landlord, due to the landlord’s plans to imminently and safely demolish the building.
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What We’re Up To
In The News
- Jamie Arabi’s article “Up in Smoke: Courts’ Narrow Role in Reviewing Set-Aside Applications” has been published by Law360 Canada. In his article, Jamie looks at the Courts’ role in reviewing set-aside applications and writes:“Where an arbitration agreement provides no appeal rights, the Court should not examine whether the arbitrator’s decision was reasonable or correct. Rather, the Court must consider whether the arbitrator acted within the bounds of the authority granted under the arbitration agreement. The decision in Aquanta Group serves as a reminder that set-aside applications under subsection 46(1) of the Arbitration Act are not appeals.” Find the full article here.
- Ted Frankel, Colin Pendrith, and Robert Sniderman have authored the Canada Chapter of The Guide to M&A Arbitration – Fifth Edition, published by the Global Arbitration Review (GAR).The Global Arbitration Review is a leading resource on international arbitration news and community intelligence. GAR’s Guide series provides in-depth expert analysis on key areas with arbitration, offering insight into specialist topics and key jurisdictions, as well as predictions on the direction of travel ahead. Read the full chapter here.
- Carey Veinotte, John T.C. Christian, Raj Mittal, Logan Rogers, and Luke Casburn authored the Securities Litigation Update chapter of Annual Review of Law & Practice – 2024, published by Continuing Legal Education British Columbia.