Published by the Litigation Group
McCarthy Tétrault FRANÇAIS VOL.4,
ISSUE 3
2011
May
20
Litigation Co-Counsel


In This Issue


Letter from the Editors

Letter from the Editors
by: Geoff R. Hall, Martin B. Halpern

Welcome to Volume 4, Issue 3 of McCarthy Tétrault Co-Counsel: Litigation. In this issue, as in all our publications, we aim to provide you with a deeper level of analysis to current legal developments.

We begin with the Supreme Court of Canada decision in Canada (A.G.) v. Telezone, with a look at how Telezone widens the net of federal government liability by providing litigants with a choice of procedure to challenge the decision making of federal boards, commissions and tribunals.

We analyze another Supreme Court of Canada case, the landmark insolvency decision, Century Services Inc. v. Canada (Attorney General). Not only did the Supreme Court overrule the Ontario Court of Appeal decision on the issue of Crown priorities but also, for the first time, it considered and explained the approach courts should employ when applying the Companies’ Creditors Arrangement Act (CCAA) and the interaction among Canada’s multiple insolvency related statutes.

This issue contains "need-to-know info" for our readers in all the courts across our country and internationally.

For example, must harm be "common" in order to justify the certification of a class action? The Québec Court of Appeal recently tackled this issue, and we cover it in these pages.

And, what should be done if the Competition Bureau, with its substantial investigative powers, comes knocking at the door with a search warrant? We offer 13 practical guidelines in this issue.

Our firm has a highly advanced litigation support services group. We highlight using litigation support in this edition as a way to control e-discovery costs.

Turning outward, this issue also reviews Kuwait Airways Corp. v. Iraq, the Supreme Court of Canada decision dealing with recognition and enforcement of a foreign judgment against a foreign state.

On pensions, the Alberta Court of Appeal decision in Halliburton Group Canada Inc. v. Alberta will be of interest to pension plan sponsors.

We round out our analysis of leading developments with an overview of the Ontario Securities Commission guidance on the use of rights plans in the Baffinland case.

And, we complete our investigations with our regular "Reflections" column by the Honourable James M. Farley, QC. In this one, he starts off like Charles Dickens with an unfortunate "tale of two decisions" about unclear and confusing conclusions regarding the tort of unlawful interference with economic relations, then adds a dash of Sgt. Joe Friday (of Dragnet fame), with that character’s "Just give me the facts" line that sums up what some wish was the higher courts’ approach to these issues.

We hope you enjoy "all the facts" in this issue, as well as our own authors’ "reality checks" on what these developments mean to you.

If you have any questions, please contact Geoff R. Hall (Editor-in-Chief) or Martin Halpern (Knowledge Management Lawyer).


Administrative

Widening The Net of Federal Government Liability: Canada (A.G.) v. TeleZone Inc.
by: Brandon Kain, Byron Shaw

Must a litigant who wishes to bring a civil damages claim arising from the unlawful decision of a "federal board, commission or other tribunal" (FBCT) under the Federal Courts Act (Canada) first bring an application for judicial review of the decision in the Federal Court? In Canada (A.G.) v. TeleZone, 2010 SCC 62, the Supreme Court of Canada said "No." TeleZone not only resolves an existing conflict in the jurisprudence, but widens the net of federal government liability by allowing litigants to choose between two different avenues of relief against the decision of an FBCT.

The issue in TeleZone arose because of the different grants of jurisdiction in Sections 17 and 18 of the Federal Courts Act. Section 17 provides that the Federal Court has concurrent jurisdiction with the provincial superior courts in all cases in which relief is claimed against the Crown, except as otherwise provided in the Act or another Act of Parliament. However, Section 18 provides that the Federal Court has exclusive jurisdiction to grant certain administrative law remedies against FBCTs (e.g., declarations, injunctions, and the prerogative writs of certiorari, prohibition, mandamus and quo warranto).

Prior to TeleZone, the Federal Court of Appeal decided that the exclusive grant of jurisdiction in Section 18 of the Federal Courts Act meant that the validity of a decision of an FBCT must always be challenged in the first instance by judicial review in the Federal Court. In Canada v. Grenier, [2006] 2 FCR 287 (CA), an inmate in a federal penitentiary brought an action against the Federal Crown seeking damages for an administrative segregation under the Corrections and Conditional Release Act (Canada). At trial, the segregation was found to be arbitrary and the inmate was awarded damages. The Federal Court of Appeal overturned the decision. The court held that "Parliament assigned the exercise of reviewing the lawfulness of the decisions of federal agencies to a single court, the Federal Court" and that "This review must be exercised under Section 18, and only by filing an application for judicial review." By bringing an action for damages, the inmate had engaged in an impermissible "collateral attack" of the decision of the prison authority.

Grenier was interpreted to stand for the proposition that neither the Federal Court nor a provincial superior court has jurisdiction to adjudicate a claim for damages arising from an unlawful decision of an FBCT, unless and until the claimant has challenged that decision through an application for judicial review under Section 18. Some courts faithfully adhered to Grenier. Others, including the Ontario Court of Appeal, distinguished or declined to follow it.

In TeleZone, decided along with five companion cases, the Supreme Court of Canada overruled the "Grenier principle" and resolved the conflict in the jurisprudence. The case involved an action against the Federal Crown by TeleZone. TeleZone had responded to a call for telecommunications licence applications by Industry Canada, and asserted that Industry Canada had breached the terms of the alleged tender contract when it failed to award a licence to TeleZone. Rather than bring a judicial review application in the Federal Court, TeleZone sued in the Ontario Superior Court, alleging breach of contract, negligence and unjust enrichment. The Crown moved to stay the action based on the Grenier principle, but was unsuccessful at both first instance and before the Ontario Court of Appeal.

The Supreme Court of Canada affirmed the rulings of the lower courts. Binnie J., writing for a unanimous panel, held that Section 18 of the Federal Courts Act did not grant the Federal Court exclusive jurisdiction over claims against FBCTs, even though the claim might implicate the lawfulness of an FBCT’s decision. Instead, provided that the claimant sought damages rather than a form of administrative law relief listed in Section 18 of the Federal Courts Act, the claim could be brought in the first instance as a civil action in either a provincial superior court or the Federal Court. The Grenier principle was rejected as mandating an unnecessary "detour" to the Federal Court that detracted from government accountability and access to justice. It was also found to be inconsistent with Section 17 of the Federal Courts Act (along with Section 8 of the Crown Liability and Proceedings Act (Canada)), particularly when the statute was interpreted contextually having regard to the broad jurisdiction of provincial superior courts.

At the same time, the Supreme Court articulated three qualifications to the rule laid down in TeleZone. First, the doctrine of collateral attack, though not depriving courts of the jurisdiction to hear civil actions involving the lawfulness of FBCT decisions, may still be used as a defence in such actions by the FBCT. Second, the court noted that an FBCT could raise the doctrine of statutory authority by way of a defence to a damages action so as to preclude the claimant’s right to relief. Third, there is a residual discretion to stay a civil damages action where the claim, in its "essential character," is a claim for judicial review with only a "thin pretence" to a private wrong.

McCarthy Tétrault Notes

The TeleZone test will widen the net of federal government liability by providing litigants with a choice of procedure to challenge the decision-making of federal boards, commissions and tribunals. A party who is aggrieved by the decision of a federal public authority may now elect whether to seek relief by way of judicial review in the Federal Court (to set the decision aside), or by way of a civil action in a provincial superior court or the Federal Court (to obtain damages).

An application for judicial review in the Federal Court may be appropriate where the prime objective is to invalidate the decision of an FBCT quickly, through a summary procedure. Where the prime objective is to seek compensation for the effect of an unlawful decision, and the procedural safeguards of an action (such as pre-hearing discovery and viva voce evidence) are desired or required, a claim for damages in either the Federal Court or a provincial superior court may be advisable.

Litigants proceeding by way of an action should be aware that the courts possess a residual discretion to stay the claim if, in its essential character, it is one for judicial review. Further, if the civil action is allowed to proceed, the claimant should be prepared to face the defences of statutory authority and collateral attack.


Bankruptcy and Restructuring

Comments on the Supreme Court of Canada’s Landmark Insolvency Decision in Ted LeRoy Trucking
by: Kevin P. McElcheran, Heather L. Meredith

The Supreme Court of Canada decision in Century Services Inc. v. Canada (Attorney General), which arose from the restructuring proceedings of Ted LeRoy Trucking Ltd. and was released on December  6, 2010, is a landmark decision in Canadian insolvency law.

Not only did the Supreme Court overrule the Ontario Court of Appeal decision in Ottawa Senators on the issue of Crown priorities but also, for the first time, the Supreme Court considered and explained (i) the interpretative approach courts should employ when applying the Companies’ Creditors Arrangement Act (CCAA), the legislation of choice for large corporate restructurings; and (ii) the interaction among Canada’s multiple insolvency-related statutes, particularly when the debtor’s attempt to restructure fails.

In Ted LeRoy, the debtor had commenced proceedings under the CCAA. Among its outstanding debts was a debt for GST that had been collected by the company, but not remitted. The Excise Tax Act (ETA) creates a trust for unremitted GST, which, according to the ETA, ranks in priority over all security interests. The ETA states that it takes precedence over any other enactment of Canada or a province other than the Bankruptcy and Insolvency Act (BIA). While the ETA only provides an exception for the BIA, both the BIA and the CCAA contain provisions nullifying deemed trusts in favour of the Crown. Accordingly, the BIA and ETA accord with each other: the ETA explicitly respects the BIA provision nullifying the deemed trust for unremitted GST. However, the ETA and the CCAA were in apparent discord, with each purporting to nullify the other.

In a case arising out of the CCAA proceedings of the Ottawa Senators hockey club, the Ontario Court of Appeal had considered this issue and concluded that the ETA, which had been enacted later in time, "repealed" the prior-enacted CCAA provision nullifying the GST priority. This created an inconsistency of treatment of GST between a BIA proceeding (reorganization or liquidation), in which the ETA deemed trust would be nullified, and a CCAA reorganization, in which the trust would remain enforceable.

The issue arose again in Ted LeRoy. In that case, assets of the debtor’s business were sold in the CCAA proceedings, giving rise to proceeds. When reorganization under the CCAA failed, the debtor sought leave to make an assignment under the BIA. In response, the Crown sought to have a portion of the sale proceeds paid to it before any assignment under the BIA was made. The Crown argued that it would be prejudiced if the debtor became bankrupt before the amounts were paid because it would lose priority for its deemed trust under the BIA. The supervising judge dismissed the Crown’s motion and continued the CCAA stay preventing enforcement of the Crown’s claim pending the bankruptcy. The Crown appealed.

The Crown’s appeal was allowed by the British Columbia Court of Appeal, which found that since the ETA deemed trust had priority under the CCAA (following Ottawa Senators), the CCAA court should not stay enforcement of the Crown’s claim once restructuring was no longer a possibility. In essence, the court found that the only legitimate purpose of the CCAA stay was to facilitate reorganization, and once that was no longer possible, the Crown’s rights under the ETA should not be stayed.

The Supreme Court of Canada allowed the appeal. In dealing with the statutory interpretation issue, the Supreme Court explicitly overturned the Ottawa Senators case, holding that the Ontario Court of Appeal had misinterpreted the CCAA by misapplying the principle of "deemed repeal." The majority decision found that, when one properly considers the history of the CCAA and Canada’s insolvency regime as a whole, the ETA deemed trust for GST should be viewed as nullified under both the BIA and the CCAA.

In an insightful review of Canada’s multi-statute insolvency regime, the Supreme Court notes that the BIA provides a codified regime for both reorganization and liquidation while the CCAA (which provides a more flexible court-directed restructuring regime for larger companies) provides only for reorganization. However, while the CCAA does not have its own liquidation provisions, the court held that "the BIA scheme of liquidation and distribution necessarily supplies the backdrop for what will happen if a CCAA reorganization is ultimately unsuccessful."

In its review of the history of Canada’s insolvency regime, the Supreme Court notes the policy benefits and legislative wisdom of permitting the reorganization provisions of the BIA and CCAA to exist in parallel. The CCAA was enacted in 1933 to provide a creative, court-supervised process for companies to be reorganized to avoid the social and economic costs of mass liquidations. When the BIA was enacted in 1992 (replacing the former Bankruptcy Act), it included broader provisions for reorganizing insolvent debtors. Some commentators then speculated that the BIA’s new reorganization mechanism would supplant the CCAA. However, the court notes that such conjecture was "out of step with reality" and "overlooked the renewed vitality the CCAA enjoyed." In particular, the flexible CCAA process — in which life is given to the "skeletal" CCAA by the exercise of judicial discretion — was seen as a great benefit to complex reorganizations when compared to the more rigid, codified scheme in the BIA. Thus, even after the BIA was enacted in 1992, the CCAA continued to be used, particularly for complex corporate reorganizations.

In keeping with the similar purpose, but different methods, of the BIA and CCAA restructuring mechanisms, the Supreme Court overruled Ottawa Senators and the "strange asymmetry" it had created in the treatment of GST deemed trusts. The court was critical that such asymmetry could give creditors incentive to favour the BIA and "deprive companies of the option to restructure under the more flexible and responsive CCAA regime, which has been the statute of choice for complex reorganizations."

The profound implications of the Supreme Court’s approach to interpreting the CCAA are illuminated in the balance of its judgment. As liquidation under the BIA is the backdrop of both CCAA and BIA restructuring proceedings, the Supreme Court agreed with the trial judge that no "gap" should exist between the end of a failed CCAA reorganization and the start of liquidation under the BIA that would allow enforcement of interests at the conclusion of the CCAA that would be lost in bankruptcy. Rather, the Supreme Court explained that the two statutes form part of "an integrated body of insolvency law" and, while the CCAA does not explicitly provide for an automatic transition to the liquidation provisions of the BIA, "the breadth of the court’s discretion under the Act is sufficient to construct a bridge [from a failed CCAA reorganization] to liquidation under the BIA."

While this decision arose in the context of a specific priority dispute between secured creditors and the Crown with respect to the Crown’s claim for GST, the Supreme Court took this opportunity to correct deeply held but erroneous views about the relationship among Canada’s insolvency statutes and how they should be interpreted. The Supreme Court rejected the notion that the BIA and CCAA are distinct regimes, and instead held that the two are part of an integrated whole. As a result, the Supreme Court empowered CCAA Courts to facilitate a smooth transition from a failed CCAA restructuring to liquidation proceedings under the BIA. This approach promotes restructuring under the regime most appropriate for each debtor company, and puts to rest technical arguments suggesting parties could obtain some advantage at the end of a failed CCAA restructuring that would not be available had the debtor employed the BIA restructuring regime.

Additional contact: Sean F. Collins


Class Action

An Uncommon Prejudice: Goyette v. GlaxoSmithKline inc. and the need to demonstrate the existence of a common prejudice at the authorization stage of a class action
by: Shaun E. Finn

Must all class members have suffered an identical "prejudice" or harm in order to justify the authorization of a proposed class action? According to a recent decision of the Québec Court of Appeal, this question must be answered with a Yes. In Goyette v. GlaxoSmithKline inc.1 (as well as in the Supreme Court of Canada’s recent decision in Bou Malhab c. Diffusion Métromédia CMR inc.2), the Court of Appeal reaffirms the principle that the harm alleged by members of a proposed class must be common to all members. The injuries cannot be susceptible of infinite variation.

Facts

This decision arises in the context of a motion to authorize the bringin of a class action. Ms. Goyette alleged that the pharmaceutical manufacturer, GlaxoSmithKline (GSK) was liable for the harm she suffered as a result of false representations concerning the risks of addiction and withdrawal associated with a medication called Paxil®. She filed a class action for the following class:

All persons, (…) who reside or who resided in Canada (…) and to whom (…) the medication PAROXETINE, marketed under the name PAXIL, was prescribed since April 30, 1999 and who experienced addiction and withdrawal problems as a result of the use of this medication, as well as their heirs and assigns.[Our translation]

Refusal to Authorize the Class Action

Article 1003 of the Code of Civil Procedure (C.C.P.) defines the criteria which must be fulfilled before a class action can be authorized. In this particular case, the motion was dismissed because two of the criteria of article 1003 C.C.P. were not met.

The Court first examines different aspects of the claim to see if it raises identical, similar or related questions of law or fact (art. 1003 a) C.C.P.).

In determining whether this first condition is respected, the Court mainly considers whether there is an ascertainable harm that was suffered equally by all class members. This issue was first addressed in Voisins du train de banlieu de Blainville inc. c. Agence métropolitaine de transport, 2007 QCCA 236 (C.A.), a decision in which the Court dismissed a motion to authorize the institution of a class action because the prejudice alleged was susceptible of infinite variation. In Goyette v. GlaxoSmithKline inc., the Court concludes that no "common prejudice" was suffered by class members. As in the Voisins du train de banlieu de Blainville inc., the Court states that the damages suffered by class members are susceptible to limitless permutation for the following reasons: a) there are eight different Compendiums of Pharmaceuticals and Specialties (C.P.S.) for the years 2000-2008, a reference tool used by doctors when identifying the symptoms related to medication. This means that eight sub-classes would have to be created to take into account the textual differences present in each of these publications; b) this is not a case of products liability where a specific number of difficulties experienced by users can be identified; c) the specific risks experienced must be determined individually for each member, as these risks vary according to different factors; and d) in Ms. Goyette’s case alone, there are six other possible causes which could explain the symptoms she experienced. Therefore, it cannot be said with certainty that Paxil® is the direct cause of each class member’s symptoms.

As such, it is clear in the present case that the questions of fault, prejudice and causation would need to be examined separately for each class member to determine if GSK is indeed liable. The first criterion of 1003 C.C.P. is therefore not met.

Second, the condition requiring that the facts alleged seem to justify the conclusions sought (art. 1003 b) C.C.P.) is also unfulfilled since the Court considers that the C.P.S. included the necessary information concerning the risks of addiction and withdrawal.

The Court of Appeal confirmed Justice Peacock’s decision, stating that his judgment contained no error which would allow the Court to intervene.

McCarthy Tétrault’s Commentary

Although Goyette v. GlaxoSmithKline inc. is not innovative, it highlights the burden which rests upon every class action petitioner, particularly with regard to the requirement that a claim raise identical, similar or related questions of law or fact. It is not enough for a potential class representative to allege a fault, prejudice and causation. This prejudice or harm must also be shared by all class members. Although the quantum of damages may vary, the harm itself — which is the very basis of the alleged cause of action — cannot vary from one class member to another. Otherwise, the class action, a vehicle for assuring proportionality, judicial economy and access to justice, would be distorted, unleashing a tide of individual questions and considerations.

Additional contacts: Donald Bisson, John Brown.


1 2009 QCCA 3745, 2010 QCCA 2054.

2 2011 SCC 9 (Can LII) at paras. 53-55


Competition

Guidelines on Responding to a Competition Bureau Search
by: Donald B. Houston, Randal T. Hughes, Emily Rix, Michele F. Siu

The Competition Bureau has substantial investigative powers, the most intrusive of those being the power to conduct searches of premises. If it has reason to believe that the Competition Act has been contravened, the Bureau can obtain and execute search warrants to enter and search premises and seize all relevant documents and records without any prior warning.

Search warrants must be court-ordered, but the target of the searches does not receive notice. The target’s first knowledge of the warrant comes with the arrival of the Bureau officers to conduct the search.

A search can cause considerable disruption to the business activities of a company. This article sets out guidelines on how to respond if Competition Bureau officers arrive at your offices with a search warrant.

  1. When the Bureau officers arrive at the premises and present the warrant, call legal counsel immediately. Advise the officer in charge that he or she may secure the premises, but request a delay in the start of the search until legal counsel arrives. The Bureau officers will normally provide a short period of time for legal counsel to attend at the premises before commencing the search.
  2. Examine the warrant carefully to ensure that it accurately identifies the premises to be searched and that other information contained in it is correct. Also, verify that the individuals who propose to conduct the search are named in the warrant.
  3. Discuss with the Bureau officers the arrangements for the search, i.e., hours of the day, estimated length of search, and number of officers to be present on the premises.
  4. In addition to documents, the search warrant may also authorize computer searches and the seizure of the relevant electronic information. Searching officers are therefore entitled to use all or part of a computer to review and seize the data described in the search warrant. Arrangements should be made with respect to the operation of the company’s computer system if specified in the warrant.1
  5. A conference room or other isolated area should be made available where the Bureau officers can meet to review documents.
  6. Advise employees that they are not obliged to engage in conversations with the Bureau officers about the alleged activities or the existence or location of relevant documents, and that they are entitled to seek the advice of counsel in response to such requests. Employees should inform counsel of any questions asked or comments made by the Bureau officers during the search. Employees must not hinder the search, but they do not have to volunteer information or assistance. Employees should be advised that they must not remove, destroy or delete any materials, documents or records. The penalties for obstructing an investigation can be severe. This may be communicated to employees by disseminating a memorandum or e-mail to all employees from in-house counsel.
  7. Legal counsel should supervise the search to ensure that documents to be reviewed by Bureau officers are within the scope of the warrant in time and subject, and to raise any issue as to solicitor/client or other form of legal privilege. Such issues can normally be resolved at the time, but sometimes resort must be made to the formal procedures in the Competition Act.
  8. Request from the Bureau officer responsible for the search or the Public Prosecution Service of Canada (PPSC), a copy of the sworn Information used to obtain the warrant. This may be provided while the search is ongoing — or, if disclosure of the Information might prejudice the search — afterwards. The Information should be reviewed not only to obtain factual information, but to determine if there are challenges available to the issuance of the warrant.
  9. Attempt to make arrangements with the Bureau officers for copying of the documents to be seized before the officers leave the premises. The officers are not required to permit this but if you are reasonable with them, and there are not too many documents, they may be cooperative.
  10. Identify documents reviewed by Bureau officers but not seized. Some could be helpful in a defence to possible proceedings under the Competition Act.
  11. Keep a written record describing the search, including:
    1. a list of the name and position of each Bureau officer involved in the search;
    2. a list of the areas searched, and a note of the order in which these areas were searched;
    3. the time the search began and ended for each area;
    4. a list of the names and titles of employees approached or questioned by the officers;
    5. a summary of requests to the officers (as discussed above);
    6. a summary of questions the officers asked, and of their statements during the search;
    7. a detailed description of any activity you consider to be outside of the scope of the search warrant, and a list of the name and position of each officer involved in any such activity; and
    8. an inventory of all documents, materials or property seized by the officers.
  12. Mark all notes regarding the search (including the written record described in #11) as "Privileged and Confidential — for the Advice of Legal Counsel."
  13. Meet with legal counsel to review any matters that may have arisen during the course of the search, and begin the process of obtaining information to be used in dealings with the Bureau and the PPSC or ultimately in defending proceedings that may be commenced under the Competition Act.

1Where authorized by the warrant, the Bureau may search the computer system and either make a copy of or print the data described in the warrant on the premises or produce an image of, or seize, the computer system on the premises and later examine and extract data described in the warrant off-site. Recently, it has become the Bureau’s practice to conduct the off-site examination of the image of the computer system and extraction of electronic data. When this off-site examination occurs, the Electronic Evidence Unit of the Bureau will select the data it believes is within the scope of the warrant from the image made on the premises and provide that selection to the Bureau’s investigative team, subject to a review by the company’s counsel to ensure that privileged documents are not transmitted. This process can take several months or more where there are a number parties and a significant volume of electronic records to be reviewed. The legality of this process has not yet been determined by the courts.


Constitutional

Litigation as a commercial activity?
by: Kristian Brabander

In October 2010, the Supreme Court of Canada released a decision dealing with recognition and enforcement of a foreign judgment against a foreign state. The decision will have particularly interesting ramifications in matters involving claims of state immunity and alleged commercial activity by foreign states but it also clarifies certain evidentiary rules governing recognition and enforcement proceedings.

Background

In 1990, following the invasion of Kuwait, the Iraqi government ordered its state-owned airline, Iraqi Airways Company (IAC) to appropriate the aircraft and equipment belonging to Kuwait Airways Corporation (KAC). When the war was over, KAC was only able to recover some of its aircraft from IAC. KAC brought an action against IAC before the United Kingdom’s High Court of Justice in 2008. The Republic of Iraq was added as a second defendant. In the UK proceedings, Iraq was found to have controlled, funded and supervised IAC’s defence throughout the proceedings and to have intentionally deceived the English Courts (through forgery, concealing evidence and lies). While IAC was ordered to pay KAC the equivalent of over $1 Billion CAD, Iraq itself was ordered to pay KAC the equivalent of approximately $84 Million CAD. The High Court of Justice held that the state immunity did not excuse Iraq because its control of IAC’s defence was not a sovereign act but, rather, fell into the commercial activity exception to the state immunity doctrine.

KAC sought to have the UK decision recognized by the Superior Court of Québec, and Iraq brought a motion to dismiss the application by KAC and invoked Canada’s State Immunity Act (SIA), which is similar to the law applied in the UK and which also contains an exception for "commercial activities". The Superior Court granted the motion and dismissed the application for recognition and enforcement, on the grounds that Iraq’s participation in the proceedings brought in England did not fall within the commercial activity exception to state immunity established in the SIA. That decision was upheld by the Court of Appeal of Québec and KAC appealed to the Supreme Court of Canada.

Decision and discussion

The Supreme Court of Canada allowed the appeal by KAC and sent the application for recognition and enforcement back to the Superior Court of Québec. The Court reiterated the principle that a Court hearing an application for recognition of a foreign judgment must not review the merits of the original decision itself but confirmed that it remains an adversarial "proceeding" such that the SIA applies. It was, however, open to KAC to establish that the commercial activity exception in the SIA also applied. The English Court’s decision on this issue was not determinative — but in order to reach its own conclusion on whether the commercial activity in the SIA applied, the local Court would rely on the findings of fact made by the English Court with respect to Iraq’s actions.

Finally, in overruling the lower Courts, the Supreme Court of Canada held that although the initial decision to appropriate KAC’s aircraft and equipment may have been a sovereign act, the issue before the English Court involved not the appropriation but the retention of the aircraft and Iraq’s involvement in that litigation therefore qualified as a commercial activity. The nature of Iraq’s actions that were the object of the English decision (forgery, concealing evidence and lies in the context of litigation about the retention of the aircraft) was such that it fell within the definition of commercial activity rather than that of sovereign acts. In other words, seizure of property by a state is not a commercial activity — but engaging in litigation to retain it later may be.

This case is a clear confirmation that, in the event of an application to recognize and enforce a foreign judgment, even if the local Courts do not review the merits of the original decision and rely on findings of fact made by the foreign Court, there is still a serious adversarial process here in which those original findings of fact will be considered in light of local law. The decision will be of particular interest, however, in cases involving foreign governments. The immunity normally granted to foreign states under the SIA will not always apply where the state’s actions can be tied to a commercial interest.


E-Discovery

Using Litigation Support to Control e-Discovery Costs Dera J. Nevin

In 2007 (the last year for which such statistics are available), North America’s largest corporations reported that approximately 40 per cent of their total litigation budget was spent on e-discovery issues. Anecdotal evidence suggests that, for some organizations, litigation is becoming so expensive that organizations opt not to go to court and instead to just settle.

Most organizations, whether public or private, large or small, have no viable strategy for e-discovery. This reactive approach makes litigation cost-prohibitive, even for well-funded litigants. In order to reduce litigation costs, parties and their counsel must develop and execute a litigation plan that includes a measured, principled and constructive approach to e-discovery. Viewed this way, the use of litigation support professionals and techniques is essential to a comprehensive project management approach to litigation.

All organizations should take the following two steps now — before litigation arises — to prevent the costs of litigation and e-discovery from crippling or bankrupting them in the future:

  1. Be proactive, not reactive, about information management. Although the first step in the Electronic Discovery Reference Model (at EDRM.net) is "information management," most organizations do not have an information management or information governance plan. Rather, most organizations start organizing their information only after they receive an e-discovery request, and then are forced to start with some step in the middle of the process, usually collection. However, starting in the middle of a process means that e-discovery occurs in a chaotic environment, which increases costs.
  2. Prepare for when document reviews are structured, not linear, and performed as much by computers as persons. Organizations should prepare themselves for the time, in the near future, where it will be normal to randomly sample electronically stored information. Organizations that prepare to use and defend advanced methods of e-discovery in court are most likely to keep costs from spiralling out of control.

Currently, most reviews of electronic documents occur one-by-one, or in small batches, such as in e-mail strings. However, people now receive and send an average of 30,000 e-mails per year per person. With this kind of volume, linear review is not feasible. Throwing additional lawyers at a privilege and relevance review becomes too expensive, and outsourcing to low-cost document review lawyers only shifts, not solves, the cost problem. Most tools that are used permit 50 to 100 document decisions per hour per person. At that rate, one person, in a 40-hour week, makes decisions on 3,000 documents. In your average 1.5-million document case, the time and costs required to do this review can be very prohibitive.

Products that offer only keyword searches, no matter how robust, are insufficient to truly tackle an e-Discovery case. Technologies that can speed results include: text clustering (groups documents with common content), latent semantic indexing (interprets the meaning of what people have written), and sophisticated Bayesian statistical analysis (uses feedback from the human review to improve grouping results).

An e-Discovery professional, with a properly crafted project plan, can assist your organization in choosing an advanced structured review technique and the proper technology. Advanced e-Discovery techniques, such as sampling, become vital when manually reviewing every document is impossible. With sampling, e-discovery becomes as much about information retrieval as about law. Sophisticated statistical techniques, such as reviewing only representative samples of documents, can significantly reduce the work load. A sample size can be relatively small as long as it is properly randomized. However, the selector (and user) needs to understand the math involved.

Proper technology selection is also vital because some software can crack under the strain of large e-discovery cases. For example, database indexes can become corrupt, tags identifying documents can suddenly disappear, or, at best, the application might be slow to index.

However, expensive applications and statistical solutions are not the only choice. Sometimes, simple decisions can result in lower costs. For example, data format conversion can be expensive, so keeping the data in native format will almost always keep costs lower. This is particularly true where native file formats can be exchanged with the other side; producing natively, rather than in TIFF or PDF, can often reduce production costs by a factor of two- to five-fold.

An experienced litigation support professional, armed with a workable project plan, can provide organizations and their attorneys with effective options to manage an e-Discovery project, and can articulate strategies that dovetail with the litigation strategy while keeping costs under control. By proactively managing large data sets for an efficient e-discovery process, you will save yourself countless hours of law firm billing. And proper project execution may also increase your litigation lawyer’s ability to prosecute your case to advantage.

 Additional contact: Thomas N.T. Sutton


Pensions

Case Summary: Halliburton Group Canada Inc. v. Alberta
by: Mark Firman, Kim Ozubko

The Alberta Court of Appeal recently rendered a decision that will be of interest to pension plan sponsors who are considering converting their registered pension plans from defined benefit to defined contribution. In Halliburton Group Canada Inc. v. Alberta, the Alberta Court of Appeal considered whether the plan sponsor could freeze earnings at the date of plan conversion for the purposes of calculating a defined benefit amount at retirement.

Background

Halliburton sponsors several pension plans registered in Alberta under the Employment Pension Plans Act (Alberta) (EPPA). Effective January 1, 2002, Halliburton amended its final average-earnings defined benefit (DB) plan to convert it to a defined contribution (DC) plan. As part of the amendment, the benefits accrued under the DB component were preserved, but salary and service were frozen as of the date of the conversion amendment for the purposes of calculating a final DB amount.

The Alberta Superintendent of Pensions rejected the freeze on the grounds that it interfered with members’ vested rights under the plan and constituted a retroactive reduction of members’ benefits in violation of the EPPA. The Superintendent ordered Halliburton to rescind the amendment, file revised valuation certificates, and make any necessary additional contributions to the plan fund with interest. The Alberta Court of Queen’s Bench found that Superintendent’s decision was reasonable and, in September 2010, the Alberta Court of Appeal agreed.

In its decision, the Court of Appeal considered whether the formula for calculating the DB pension under the plan created a vested right or was a provision that could be reduced by amendment. The Superintendent argued that because the pension plan did not include a provision for tying a determination date (i.e., the date of an amendment) to the formula, the formula must be taken as a vested right. Halliburton argued that a benefit is vested only if the member would be entitled to it if he or she retired today.

The Court of Appeal rejected Halliburton’s argument and agreed with the Superintendent. It found that at the point any employee became a member of the DB component of the plan, he or she was entitled to have his or her DB benefits calculated in accordance with the DB formula. The DB formula required that the compensation number used be the one that is the highest for five of the member’s last 10 years of employment "prior to [the employee’s] normal retirement date."

As a result, the court held that affected members had a vested right to benefits based on their projected five years of employment preceding their normal retirement date. According to the court, to freeze earnings at an earlier date (i.e., the date of the conversion amendment) would be to retroactively reduce members’ benefits in violation of the EPPA.

Halliburton did not appeal the decision of the Alberta Court of Appeal.

Implications for Plan Sponsors

As a result of this decision, an employer who sponsors an Alberta-registered DB plan or who has employees employed in Alberta may now be prevented from freezing earnings of Alberta plan members on conversion. Whether a plan sponsor may do so or not depends on the terms of the current and historical plan documents. If, as in Halliburton, the plan documents do not include a provision for tying a determination date to the defined benefit formula, the plan sponsor is likely prohibited from freezing earnings on plan conversion. If the plan documents include a provision for tying a determination date to the defined benefit formula, the plan sponsor may still be permitted to freeze earnings (subject to any other restrictions in the plan documents).

An Alberta employer considering a plan conversion should carefully review the terms of its current and historical plan documents in order to determine whether it could fall into the Halliburton trap and be prohibited from freezing earnings on plan conversion. Although the decision is binding only in Alberta, sponsors in other provinces should also be on the lookout for similar challenges in their home provinces and regulatory pronouncements on the case.

Additional Contact:

Randy Bauslaugh


Securities

OSC Provides Guidance on Use of Rights Plans: Baffinland
by: Graham P.C. Gow, Robert O. Hansen

Recent decisions of the Ontario Securities Commission and the British Columbia Securities Commission have led to some debate about the ability of a target board of directors to effectively use a shareholder rights plan to fend off a bidder in a hostile takeover bid.

The OSC appeared to open the door to a "just say no" defence in its decision in late 2009 in Neo Material Technologies by allowing a shareholder rights plan to stop a hostile partial bid indefinitely. In its decision, the OSC referenced the Supreme Court of Canada’s decision in BCE and stated that rights plans "… may be adopted for the broader purpose of protecting the long-term interests of the shareholders, where, in the directors’ reasonable business judgment, the implementation of a rights plan would be in the best interests of the corporation."

However, a majority panel of the BCSC slammed the door shut on a "just say no" defence in its mid-2010 decision in Lions Gate. That decision expresses the view that the only reason a Canadian securities regulator will tolerate a rights plan is to give the target’s board of directors time to discharge its fiduciary duty and that the focus of that duty is to improve the existing bid or to seek out alternative transactions. The OSC took the opportunity to respond to Lions Gate and clarify its decision in Neo in the recently released reasons for its decision in the Baffinland case.

Baffinland Iron Mines Corporation is a publicly traded junior mining company engaged in the exploration of one mineral property located on Baffin Island in the Nunavut Territory. Nunavut Iron Ore Acquisition Inc., a subsidiary of a US-based private equity group, commenced an unsolicited takeover bid to acquire all of the outstanding common shares of Baffinland for $0.80 in cash per share on September 22, 2010. Following a series of extensions, Nunavut’s offer was scheduled to expire on November 22, 2010.

On November 8, 2010, Baffinland announced that it had entered into a support agreement with ArcelorMittal S.A., one of the world’s leading steel companies, pursuant to which Arcelor had agreed to make an offer to acquire all of the outstanding common shares of Baffinland for $1.10 in cash per share and certain outstanding common share purchase warrants for $0.10 in cash per warrant. Arcelor commenced its friendly takeover bid on November 12, 2010. The earliest date that Arcelor could take up and pay for deposited Baffinland common shares was the December 20, 2010 expiry of its offer (nearly one month after the scheduled expiry of Nunavut’s offer). Holders of approximately 26 per cent of the outstanding Baffinland common shares entered into lock-up agreements with Arcelor.

Baffinland had adopted an amended and restated shareholder rights plan agreement on January 27, 2009 that was approved by Baffinland shareholders on March 24, 2009 (approximately 18 months prior to the commencement of Nunavut’s offer). The support agreement with Arcelor prohibited Baffinland from waiving the rights plan until immediately prior to the expiry of the Arcelor offer (which would prevent Nunavut from taking up shares under its offer until then).

Nunavut applied to the OSC for an order cease trading the shareholder rights plan. The OSC granted the order and cease traded the Baffinland rights plan. Consistent with the principles outlined in National Policy 62-202 and those enunciated by the British Columbia Securities Commission in Lions Gate, the OSC concluded that the Baffinland shareholders should determine the outcome of the two competing bids.

The OSC devoted a significant portion of its decision in Baffinland to an elaboration of its Neo decision. The OSC stated that its decision to cease trade the shareholder rights plan in the Neo case was based on the fact that shareholders had overwhelmingly approved the rights plan in the face of a specific bid that had been put to shareholders at the time of the vote. The OSC concluded that it should defer to the wishes of shareholders as expressed by that vote. The OSC then goes on to explain why it examined the board’s fiduciary duties in the Neo case:

Having concluded that it should [defer to the wishes of the Neo shareholders and not cease trade the shareholder rights plan], the Commission then asked whether there were any circumstances that would lead it to a different conclusion. One such consideration was whether or not the board of directors of Neo was acting in accordance with its fiduciary duties in having decided not to solicit competing bids. If the board was not complying with its fiduciary duties that might have led the Commission to cease trade the Neo rights plan regardless of the shareholder vote (although whether the Commission would have done so is an open question).

The OSC stated that Neo does not stand for the proposition that the OSC will defer to the business judgment of a board of directors in considering whether to cease trade a shareholder rights plan, or that a board in the exercise of its fiduciary duties may "just say no" to a takeover bid. The OSC goes on to state:

Neo suggests only that whether or not the board of directors of a target issuer is acting in the best interests of that issuer and its shareholders, and is complying with its fiduciary duties, is a relevant, although secondary, consideration for the Commission in deciding whether to cease trade a rights plan. Whether a board of directors is complying with its fiduciary duties does not determine the outcome of a poison pill hearing.

Other facts and circumstances that the OSC considered in deciding that granting the cease trade order was in the public interest included that (i) the rights plan had accomplished the objective of stimulating an auction (i.e., there were two competing offers on the table), (ii) the rights plan should not be permitted to be used for the purpose only of eliminating a timing advantage available to Nunavut as the first bidder, (iii) immediately cease trading the rights plan could potentially result in a higher offer from Nunavut, (iv) the Nunavut offer was not inherently coercive as a result of a minimum tender condition, (v) it was unlikely that Nunavut could acquire sufficient common shares to frustrate the auction, and (vi) the terms of the support agreement cannot restrict the OSC’s ability to act in the public interest.

Although the OSC has now somewhat clarified the relevance of compliance by a target board with its fiduciary duties in the determination of whether to cease trade a shareholder rights plan, it remains difficult to fully reconcile the views of the OSC with those of the majority panel of the BCSC in Lions Gate. The OSC decision in Neo provides that the securities commissions should defer to the will of the shareholders where the shareholders have overwhelmingly supported the adoption of a rights plan in the face of a takeover bid. However, the decision of the majority panel of the BCSC in Lions Gate states that shareholder approval is not relevant where a target board is not actively seeking alternatives to the bid. What is not clear then is whether the securities commissions will defer to the wishes of shareholders who have fully supported the adoption of a rights plan in the face of a hostile bid and allow the rights plan to remain in place to enable the target board to pursue its existing business plan and not put the company into play.

It would be very interesting to see if a Canadian court would step into the fray and how it would reconcile the conflicting views of the securities commissions and the corporate law duties of directors in rendering a decision in these circumstances.

We note that the Delaware Court of Chancery held in its February 15, 2010 Airgas decision that a board of directors of a Delaware corporation is entitled to use a right plan to "just say no" to a hostile takeover bid where the board has acted in good faith and in accordance with its fiduciary duties.

Additional contacts: Paul Steep, Andrew Matheson


Farley's Reflections

Does the Left Hand Know what the Right Hand is Doing?
by: James Farley

This is the unfortunate tale of two decisions concerning the tort of unlawful interference with economic relations: Barber v. Molson Sport & Entertainment Inc., 2010 ONCA 70 (CanLII) released September 3, 2010, just 10 days after Alleslev-Krofchak v. Valcom Limited, 2010 ONCA 557 (CanLII) was released on August 24. The puzzling problem is that the two panels (which shared a common member) have left up in the air the proper meaning of "by unlawful means," a key element in the test as to this intentional tort. Both these cases were heard in March 2010.

As Sgt. Joe Friday of Dragnet fame said: "The facts, Ma’am — just give me the facts." The appellate courts are not there to retry the case under appeal, but rather to correct for errors of law and misapprehension of material facts. In Barber, the Court of Appeal made a preliminary comment in its analysis:

[43] The trial judge gave lengthy, detailed reasons in which he made a great many factual findings. Having said that, we acknowledge that the trial judge’s legal analysis is thin and, in some areas, incorrect. Nevertheless, because of the care he took in making his factual findings and because he made all the requisite findings, we have been able to make the necessary determinations to decide these appeals without the necessity of a new trial.

The tort of unlawful interference with economic relations requires that the plaintiff prove that: (a) the defendant intended to injure the plaintiff; (b) the defendant interfered with the plaintiff’s economic interest by illegal or unlawful means; and (c) as a result thereof, the plaintiff suffered economic loss. Judge Cumming, in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 1998 CanLII 14850 (ON SC) gave a more focused breakdown of these requirements:

[61] In my view, and I so find, there is a tort in the Canadian common law which I shall call the "tort of unlawful interference with economic relations." The elements of the tort of "unlawful interference with economic relations" are: (i) the existence of a valid business relationship or business expectancy between the plaintiff and another party; (ii) knowledge by the defendant of that business relationship or expectancy; (iii) intentional interference which induces or causes a termination of that relationship or expectancy; (iv) the interference is by way of unlawful means; (v) the interference by the defendant must be the proximate cause of the termination of the business relationship or expectancy; and (vi) there is a resulting loss to the plaintiff.

I would suggest that Judge Cumming’s breakdown of the elements is helpful but needs to be refined in respect of the aspect that it is still tortious if the business relationship or expectancy is diminished, even though not completely destroyed. Given that it is an intentional tort, negligent interference with such interest does not amount to intentional interference: see Lineal Group Inc. v. Atlantis Canadian Distributors Inc., 1998 CanLII 4248 (ON C.A.).

The Alleslev-Krofchak panel decision states in paragraph 48 (the clarity referred to therein is with respect to the elements of the tort of unlawful interference with economic relations together with a detailed analysis of this tort and the tort of inducing breach of contract, these two intentional torts often being confused with each other) and in paragraphs 51 and 52 that:

[48] I think recent jurisprudence has provided much clarity. The most important case is OBG v. Allen, [2008] 1 AC, [2007] UKHL 21 …

[51] The debate in OBG was about the scope of "unlawful means." That is also central to the appellant’s argument in this case. The protagonists were Lord Hoffmann, with whom the majority of the House of Lords agreed, and Lord Nicholls.

[52] Lord Hoffmann began his discussion at paragraph 46, by adopting Lord Lindley’s rationale for the tort as being, in Lord Nicholls phrase describing his position, the defendant seeking to harm the plaintiff’s business "through the instrumentality of a third party":

The rationale of the tort was described by Lord Lindley in Quinn v. Leathem [1901] AC 495, 534-535:

A person’s liberty or right to deal with others is nugatory, unless they are at liberty to deal with him if they choose to do so. Any interference with their liberty to deal with him affects him. If such interference is wrongful, the only person who can sue in respect of it is, as a rule, the person immediately affected by it; another who suffers by it has usually no regress; the damage to him is too remote, and it would be obviously practically impossible and highly inconvenient to give legal redress to all who suffer such wrongs. But if the interference is wrongful and is intended to damage a third person, and he is damaged in fact — in other words, if he is wrongfully and intentionally struck at through others, and is thereby damnified — the whole aspect of the case is changed: the wrong done to others reaches him, his rights are infringed through although indirectly, and damage to him is not remote or unforeseen, but is the direct consequence of what has been done. [Emphasis added in the Alleslev-Kofchak panel decision]

The key to the Alleslev-Kofchak panel view of the tort of unlawful interference with economic relations was set out at paragraphs 53 to 55:

[53] He [Lord Hoffmann] set out his view of the essence of the tort at paragraph 47:

The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest; and (b) an intention thereby to cause loss to the claimant.

[54] Then, critically for the appellant’s argument, Lord Hoffmann specified, at paragraph 49, that the tort must be actionable by the third party subject to one exception:

In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. In the case of intimidation, for example, the threat will usually give rise to no cause of action by the third party because he will have suffered no loss. If he submits to the threat, then, as the defendant intended, the claimant will have suffered loss instead. It is nevertheless unlawful means. But the threat must be to do something which would have been actionable if the third party had suffered loss.

[55] Finally, he offered this helpful summary definition of the tort at paragraph 51:

Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant.

In contrast, the broader view of "by unlawful means" accepted by the Barber panel was set out in Lord Nicholls’ reasons as encompassing any conduct by the defendant that intentionally harmed the plaintiff and was in violation of an obligation under either civil or criminal law, without any prerequisite that that conduct of the defendant be actionable by the third party. It would also seem that Lord Nicholls was not concerned about the unlawful means being directed at the third party; rather, it appears that he would have been satisfied if the unlawful means were directed at the plaintiff.

The Alleslev-Krofchak panel decision is definite as to what it takes to qualify as "by unlawful means," namely that the defendant’s actions (a) cannot be actionable directly by the plaintiff; and (b) must be directed towards a third party (which then is the instrument through which the harm befalls the plaintiff).

The Alleslev-Krofchak panel decision states that the Ontario Court of Appeal had opted for the narrower definition of "by unlawful means" in both Correia v. Canac Kitchens, 2008 ONCA 506 (CanLII) and Ontario Racing Commission v. O’Dwyer, 2008 ONCA 446 (CanLII). This panel also noted that the trial judge had wondered if this jurisprudence had modified or replaced the tort’s essential elements as set out in Lineal, supra, Reach M.D. Inc. v. Pharmaceutical Manufactures Association of Canada, 2003 CanLII 27828 (ON CA) and Drouillard v. Cogeco Cable Inc., 2007 ONCA 322 (CanLII), noting that Correia had suggested that Drouillard had tried to rein in the breadth of "by unlawful means." However she proceeded on the basis that OBG’s acceptance in Correia had not narrowed the definition of the element of "by unlawful means." She discussed this at paragraphs 322 to 328 of 2009 CanLII 30446 (ON S.C.) and, after mentioning Correia, Droulliard and OBG, said at paragraph 328 that the pleading was insufficient as well as "… uncertainty in the law regarding the scope of the concept of ‘unlawful means’ has made my task particularly difficult."

Ten days later, the world (well, at least the Ontario legal community) was shaken by the Barber case, which reverted to the pre-OBG definition of "by unlawful means." The Barber panel decision stated:

[58] We begin by noting that in Reach M.D., the scope of activities that a defendant is "not at liberty to commit" is interpreted broadly: see paragraphs 48 to 52.

Only the Reach M.D. case was referred to in the Barber decision; OBG, Correira, O’Dwyer, Drouillard and Alleslev-Krofchak were ignored.

So, because of the opposing tests of these two cases, we know what the facts are, but do not know what the law is. The Ontario Court of Appeal had another case involving the tort of unlawful interference with economic relations: Heydary Hamilton Professional Corporation v. Hanuka, 2010 ONCA 881, which was released December 21st (just before I wrote this reflection). However this pleading matter was dismissed without the necessity of wading into the dispute as to the narrow verses broad definition of "by unlawful means." However, I understand that leave to appeal to the Supreme Court of Canada is being sought as to this dispute. That should prove helpful in clearing the air.

However, I think it fair to point out that the tort of intentional interference with economic relations has had a thorny and confusing history in the courts of Canada (and of the United Kingdom; see the comments of Lord Hoffmann distinguishing between the subject tort and that of inducing breach of contract in OBG, and going back to some fine historical cases starting in 1620 to do so). Likely the subject tort will continue to evolve and be refined in the golden smelter of the Common Law. See also Ultracuts Franchises Inc. v. Magicuts Inc. et al., 2010 MBCA 34 (CanLII) at paragraph 6.

I would be remiss if I did not note the work load of the Ontario Court of Appeal and its generally excellent track record. It seems that everyone has the occasional bad day. Covering a recent case, Globe & Mail columnist Christie Blatchford wrote in her December 16, 2010 column:

Now the appeal court is possibly the most cerebral, and certainly the most removed from the oft-grim facts of a case, in any province.

The lawyers regularly appearing here can parse a single sentence uttered by a trial judge in 1,000 slices and split any given hair any number of ways: It’s the nature of the job. They, and the judges hearing them out, can go ‘round and round for hours’ — by training, they all love to argue and not a few to hear themselves talk — on a single legal point or nuance. Judges so relish this cut-and-thrust that it sometimes seems they indulge the lawyers only for the sport of it.

But there was none of that this day …

Just as Shakespeare described it, mercy dropped as the gentle rain from heaven at the Ontario Court of Appeal, blessing both giver and taker.

The quality of mercy is not strained, Shakespeare wrote. And the place where it falls like gentle rain is blessed.

So in that case the Court of Appeal came to a decision that recognized the facts and applied the correct (and common sense) law. Hopefully the Supreme Court of Canada will sort out the intentional tort of unlawful interference with economic relations so that: "All’s well that ends well."