Litigation Brief

Suing John Doe’s: What to do when you want to sue someone, but you don’t know his or her identity.

There are often times when an individual or business seeks to start a lawsuit against a party whose identity is unknown.  Defamation claims against individuals who post online anonymously are one example of such claims; hit-and-run cases against unidentified drivers are another example.  There are a number of ways to address this problem.

One way to address this problem is to start the lawsuit by referring to the unidentified defendants as “John Does.”  Then, either through some early applications requiring third parties to disclose information or through the discovery process involving other defendants, the identity of the defendants may be discovered.  Once the identity of the party becomes known, the Notice of Claim can be amended to include those names.

Another way to address this problem is to bring an application for what is called an “equitable bill of discovery.”  It is a much older and rarely used mechanism in today’s courts, but was recently discussed by the Supreme Court of British Columbia in Dhindsa (Re), 2012 BCSC 217.

Court of Appeal affirms trial judge's decision to imply terms into contract

The interpretation of contracts is one of the most frequent disputes between litigants.  In Roberts v. Heavy Metal Marine Ltd., a decision dated October 27, 2011, the Court of Appeal was asked to review the trial judge’s decision interpreting the following handwritten agreement:

Lender agree’s [sic] to loan Borrower the sum of Eighty Nine Thousand Dollars (Cdn) at zero percent interest to be paid back from monies received from Vactions [sic] West Marina & Resort. It is also agreed if legal action is required to recover funds Lender is named in the actions.

A second loan was advanced on the same terms.

At issue was whether or not the loans had to be repaid if Vacations West Marina & Resort never provided any monies.  In the litigation, the parties agreed that at the time they made their agreement, it was not in their contemplation that Vacations West would not pay.  In attempting to determine the terms of the agreement between these parties, the trial judge and the Court of Appeal focused on whether the agreement should be analyzed by looking at the factual matrix at the time of the making of the agreement and/or based on the business efficacy/officious bystander test (i.e., what would an objective and reasonable observer find the intent of the parties to be).

Court denies leave to bring a claim for statutory civil liability for secondary market disclosure

The BC Supreme Court has dismissed a claim made under new legislation making it easier for investors to sue if they purchase shares in the stock market and then suffer a loss because of a publicly-traded company’s misrepresentations or failure to disclose important information.

In Round v. MacDonald, Dettwiler and Associates Ltd., 2011 BCSC 1416, the Court for the first time considered Part 16.1 of the Securities Act, which in securities law parlance provides for civil liability for secondary market disclosure: the “secondary market” is the market for a company’s shares after they have been issued by the company and are trading publicly, while “disclosure” refers to the obligations on publicly-traded companies to report facts that could have an impact on their share-price.  The new provisions make it easier for an investor to sue, because they no longer need to show that they actually relied on, among other things, a company's misrepresentation or failure to disclose.

A party seeking an injunction to enforce a restrictive covenant faces a higher burden than if seeking other forms of injunctive relief

The Supreme Court of B.C. has dissolved an interim injunction, originally granted to protect the business interests of a plaintiff seeking to enforce a non-competition and non-solicitation agreement against a former employee who has joined a competitor.

Phoenix Restorations Ltd., an insurance restoration company, commenced proceedings against its former employee Paul Brownlee and his new employer, Belfor Property Services on November 1, 2010.  That day Phoenix obtained an interim injunction, prohibiting Brownlee from directly or indirectly soliciting business from two clients of Phoenix, pending the hearing of an application for an interlocutory injunction.

The injunction hearing proceeded before Mr. Justice Goepel on November 12, 2010, and he continued the interim injunction until releasing his reasons, indexed as Phoenix Restorations Ltd. v. Brownlee, 2010 BCSC 1749, which set the injunction aside.

Court of Appeal decides against BC plaintiff unable to show that its claim against non-resident defendant has a "real and substantial connection" to BC

The Court of Appeal today emphasized that a BC court, when faced with a claim brought against a non-resident, should “concern itself with whether on the whole, the [BC] plaintiff has shown a real and substantial connection between [BC] and the facts on which the proceedings are based.”  Giving reasons in North America Steamships Ltd. v. HBC Hamburg Bulk Carriers GmbH & Co. KG., 2010 BCCA 501, the Court of Appeal reversed a lower-court’s decision, which had held that a claim could proceed in BC and that BC had territorial competence under the Court Jurisdiction and Proceedings Transfer Act, SBC 2003, c. 28 (the “CJPT Act”), the statute that governs the determination of jurisdictional issues in the province.

SCC: Unperfected PPSA security interest trumps subsequent Bank Act security

In two judgments that will be of significant interest to lenders, the Supreme Court of Canada has held that an unperfected security interest taken pursuant to a provincial personal property security statute may take priority over a security interest taken subsequently under federal banking legislation.  Although the companion decisions, Royal Bank of Canada v. Radius Credit Union Ltd., 2010 SCC 48 and Bank of Montreal v. Innovation Credit Union, 2010 SCC 47 (“Innovation”), both specifically deal with the interaction between the Bank Act, S.C. 1991, c. 46 and the Saskatchewan Personal Property Security Act, 1993, S.S. 1993, c. P-6.2 (the “PPSA”), the Court’s reasons will apply to similar PPSAs in other provinces. 

In the Innovation decision, a farmer had granted the credit union a security interest over much of his property back in 1991.  For reasons not disclosed by the judgment, the credit union did not register its interest in the provincial PPSA database until June of 2004.  In 1998, the farmer gave the Bank of Montreal (“BMO”) a security interest in much of the same property, without disclosing the credit union’s interest in the property.  The Court held that the operation of the Bank Act lead it to conclude that the credit union, notwithstanding that it had not perfected its security interest by registering it for some 13 years, had priority over BMO, as the farmer could not grant a greater interest in the property than he had to give.

Court of Appeal decides against Appellant that failed to fulfill its purported obligations within a "reasonable period of time"

Indotan Inc. (“Indotan”), appealed a lower court's summary decision dismissing its action against Invincible Resources Corp. (“Invincible”) for payment of 1.8 million shares of Invincible. In 2005, Invincible invested in the exploration of certain mineral properties in Indonesia held by Indotan (the “Property”). The parties executed a poorly drafted letter agreement after Invincible had invested in the Property. The letter agreement was subject to the execution of a final agreement between the parties. Pursuant to that letter agreement, Invincible was required to issue 1.8 million shares. The letter agreement did not specify to whom the shares were to be issued, or when, or under what circumstances. The lower court held that there was no definitive agreement between the parties in existence and dismissed Indotan’s claim for payment of 1.8 million shares of Invincible.

In Indotan Inc. v. Invincible Resources Corp., 2010 BCCA 318, the Court of Appeal dismissed the appeal on the basis that, even if the letter agreement was binding on the parties, Indotan failed to fulfill its obligation under that purported agreement to deliver a title opinion to Invincible within a "reasonable period of time" and was therefore not entitled to the payment of shares.

To read full decision of the Court of Appeal, click here.

Real estate developer's appeal dismissed for insufficient disclosure to condo purchasers

The Court of Appeal has dismissed an appeal by a real estate developer found to be non-compliant with the Real Estate Development Marketing Act, S.B.C. 2004, c. 41 (“REDMA”).  In Chameleon Talent Inc. v. Sandcastle Holdings Ltd., 2010 BCCA 300, it affirmed a lower court decision holding that the dates of construction and completion of a condominium project were material facts required to be disclosed in a real estate disclosure statement, a failure of which rendered an agreement for the purchase of a condominium project unenforceable.

Appeal by almost 400 Taylor Ventures Ltd. investors dismissed

The Court of Appeal has dismissed an appeal by several hundred plaintiffs, holding that their claims were properly dismissed on the basis of res judicata as the claims of ten other plaintiffs in the action had already failed both at trial and on appeal.  

The case arose out of a multi-party action brought by several hundred plaintiffs who lost money in an investment scheme. A similar action involving the claims of ten of the plaintiffs against the same defendants had earlier failed at trial and on appeal. In the first proceeding involving ten of the plaintiffs, the claim proceeded on the understanding by all the plaintiffs that the result would not be binding on the remaining plaintiffs, and that the doctrine of res judicata would not apply to subsequent claims. The Supreme Court of British Columbia dismissed the remaining claims from the second set of plaintiffs because they were barred by res judicata and, with respect to costs, found each plaintiff severally liable for costs on a per capita basis.  In Giles v. Westminster Savings and Credit Union, 2010 BCCA 282, plaintiffs appealed the dismissal of their claims and the cost order. The defendants cross-appealed the cost order on the ground that costs should have been assessed on the basis of joint and several liability, and that double costs should have been awarded because the plaintiffs rejected their settlement offer.

Court rules completion and construction dates in condominium projects are material

The Court of Appeal for British Columbia released a key decision today addressing the materiality of disclosures for condominium projects. In Chameleon Talent Inc. v. Sandcastle Holdings Ltd., the Court of Appeal considered the issue of whether the lower court erred in law by holding that the dates of construction and completion of a condominium project were material facts required be disclosed in a real estate disclosure statement, a failure of which rendered an agreement for the purchase of a condominium project unenforceable.