Litigation Brief

CRTC helps assemble International Do Not Call Network

The federal Canadian Radio-television and Telecommunications Commission (CRTC) announced today that, together with the Australian Communications and Media Authority (ACMA), it has assembled 12 international enforcement agencies to form an International Do Not Call Network.

The members of this newly created Do Not Call Network are: Australia, Canada, France, Hong Kong, Ireland, Israel, Korea, Mexico, New Zealand, Spain, the UK and the United States.

Under the new international Do Not Call Network, the CRTC and ACMA will act as the Network’s inaugural co-chairs, with the U.S. Federal Trade Commission hosting the secretariat.

To read the CRTC's announcement, click here.  To learn more about the Intenational Do Not Call Network and the regulation of telemarketing in Canada, read Steve Szentesi's comprehensive post on the subject at the Canadian Competition & Antitrust Law blog.

Are you breaching the new anti-spam law?

On December 15, 2010, Bill C-28 a.k.a. the Fighting Internet and Wireless Spam Act, received Royal Assent and could soon come into force. Learn more about how Canada’s new anti-spam legislation will affect you by reading Steve Szentesi's comprehensive post on the subject at the Canadian Competition & Antitrust Law blog.

BC Supreme Court rules against Liquor Control and Licensing Branch in Cactus Club New Year's Eve Party Case

In the recent decision of Cactus Cafe Turner Road ltd. v. British Columbia (Liquor Control and Licensing Branch), 2010 BCSC 1691, Mr. Justice Cullen of the BC Supreme Court overturned and remitted back for hearing a decision of an Adjudicator designated under the Liquor Control and Licensing Act, that found that the Cactus Club Cafe in Nanaimo had violated its food primary license by exceeding the person capacity of the restaurant on December 31, 2008.

Cactus Club had received a temporary endorsement for its liquor license that allowed it to act as a cabaret type venue until 12:00 a.m. on January 1, 2009.  Cactus printed 220 tickets for the event.  The night of the event, patrons were given wristbands in exchange for their ticket and the tickets were shredded.  Notwithstanding this, it was alleged that there was ticket fraud and more than 250 persons were present in the restaurant at one point during the evening.

RCMP officers attended at the restaurant on a routine check and they were informed of the crowding issue and potential ticket fraud by the manager.  The RCMP issued a Police Licensed Premises Check alleging a contravention of the Liquor Control and Licensing Regulation due to overcrowding.  Later, the Liquor Inspector issued a Contravention Notice and then a Notice of Enforcement Action and the matter proceeded to a hearing in front of an Adjudicator.  The Adjudicator found that the overcrowding was a violation of Cactus’ license. 

In Court, Cactus raised a number of grounds that it alleged justified the reversal of the Adjudicator’s decision.  Mr. Justice Cullen’s decision focused on the definitions of capacity found in the relevant legislation along with how the violation was variously described in the enforcement notices.

Alberta Securities Commission imposes highest-ever penalty

The Alberta Securities Commission has assessed $4 million in penalties against David Greene and John Jenkins, two insiders of Nevada-based Gold-Quest International Corp. (“Gold-Quest”). The penalty, reported as Gold-Quest International Corp., Re, 2010 ABASC 278, is the highest ever imposed by the Alberta Securities Commission.

Between 2006 and 2008, Gold-Quest raised US$29 million from investors, using both a Ponzi scheme and pyramid scheme, promising investors annual returns of 87%. It also illegally traded in and distributed its shares in Alberta in contravention of the Albert Securities Act, R.S.A. 2000, c. S-4.

The Alberta Securities Commission found that Greene was the guiding mind of Gold-Quest and Jenkins played a significant role in administering the scam and luring in investors. Millions of dollars from investors in Gold-Quest was transferred to Greene’s and Jenkins’s personal accounts to pay for personal items including cars, golf clubs, hotels and restaurants.

As a result of the central roles played by Greene and Jenkins and the egregious nature of their misconduct, the harm done to Alberta investors and to the integrity of the capital markets in Alberta, a penalty of $2 million each was assessed against Greene and Jenkins. Greene, Jenkins and Gold-Quest are also the subject of several SEC enforcement actions with respect to investments by American investors.

To read the full penalty decision of the Alberta Securities Commission, click here.

To read Hakemi & Company's summary of the first part of the hearing, click here.

Misrepresentation of investment guarantees and interest rates will lead to penalty

In 1205676 Alberta Ltd., Re, 2010 ABASC 237, several Alberta companies and individuals (“Respondents”) were associated with a company operating as Front Row Tickets (“Front Row”) that bought and re-sold large blocks of concert tickets. Front Row, through the Respondents, solicited $40 million in loans from investors. The Alberta Securities Commission found that some of the Respondents illegally traded and distributed securities of Front Row, misrepresented investment guarantees and interest rates to investors, and engaged in conduct contrary to the public interest. A penalty hearing is schedule next month.

To read the full decision text click here.

Alberta Securities Commission clarifies definition of illegal "advising" and dismisses some allegations

The Alberta Securities Commission has clarified the definition of illegal “advising”, and found that the Respondents made misleading statements to Alberta investors.

In Hav-Loc Private Wealth Partners Inc., Re, 2010 ABASC 43, Commission Staff commenced proceedings against Hav-Loc Private Wealth Partners Inc. (“Hav-Loc”), an Alberta company, and Thierry Gevaert (“Gevaert”), a resident of Ontario, who had served as Hav Loc’s president and chief executive officer.  Neither Hav-Loc nor Gevaert had ever been registered under the Securities Act, R.S.A. 2000, c. S-4 (“the Act”) in any capacity.  Instead, Hav-Loc was at one time registered as a “limited market dealer” and Gevaert to sell mutual fund securities, but neither registration was active during the time period relevant to this proceeding. Gevaert reported Hav-Loc had become a shell of a company, indebted but without income or assets. Both Hav-Loc and Gevaert were alleged to have (1) performed illegal “advising” and (2) made misleading statements to Alberta investors.

BC Securities Commission holds that it does not have power to award cost to successful applicant in review of TSX decision

The BC Securities Commission (the “BCSC”) has denied Geosam Investments Limited's (“Geosam”) application for costs.  Geosam had previously asked for a BCSC review of the TSX Venture Exchange's (the “TSX”) decision to approve a private placement by Cordy Oilfield Services Inc. (“Cordy”).  As Geosam had been successful in that application under section 27 of the Securities Act, RSBC 1996, c. 418 (the “Act”), it next sought an order requiring the TSX and Cordy to pay the legal costs Geosam had incurred. 

Section 27 of the Act gives the BCSC public interest-based powers to make a decision concerning, among other things, a decision made under a by-law, rule, regulatory instrument or policy of an exchange, the procedures of an exchange, or the manner in which an exchange conducts business. Section 27 does not contain an explicit reference to costs.  The BCSC noted that as an administrative tribunal it possesses only the powers conferred on it by the Act. In a decision reported as Geosam Investments Limited and TSX Venture Exchange Inc., 2009 BCSECCOM 749, it considered the legislative framework as a whole, held that the power to order costs was not expressly or impliedly granted in section 27, and denied the application.

To read the full BCSC decision, click here.

Clearly Contacts given 6 months to develop new business model

The College of Opticians has successfully obtained an injunction that could close Clearly Contacts, a popular online vendor of contact lenses, if it does not change the way it sells prescription products with the next six months.