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PAGE 14 CaseLawLaw SUPREME COURT OF CANADA Conflict of Laws FOREIGN JUDGMENTS In reviewing application for recognition of foreign judgment, Quebec court does not have to consider how court of another province should have exercised jurisdiction or declined to exercise jurisdiction Canada Post terminated its commitment to lifetime Internet Service only one year after marketing the service. Customer in Quebec filed mo- tion for authorization to insti- tute class action on behalf of every natural person residing in Quebec who had purchased it. Class proceeding certified in Ontario and led to settle- ment agreement. According to Ontario judgment settlement agreement binding on every resident of Canada who had purchased service except those in British Columbia. The next day Quebec Superior Court authorized Quebec class action. Canada Post sought to have Ontario judgment recognized under art. 3155 of Civil Code of Quebec. Application dismissed on basis that notice of certifi- cation of Ontario proceeding inadequate in Quebec and cre- ated confusion with Quebec class action. Quebec Court of Appeal affirmed judgment and held that Ontario court should have declined jurisdiction over Quebec residents by applying forum non conveniens. It also held that two class proceedings gave rise to situation of lis pen- dens since Quebec proceeding commenced first. Appeal dis- missed. Court of Appeal added irrelevant factor to its analysis of foreign court's jurisdiction in applying doctrine of forum non conveniens. In reviewing appli- cation for recognition of foreign judgment, Quebec court does not have to consider how court of another province should have exercised jurisdiction or declined to exercise jurisdic- tion. Enforcement by Quebec court depends on whether foreign court had jurisdiction, not on how that jurisdiction was exercised. Application of specific rules set out in arts. 3165 to 3168 of Code gener- ally sufficient to determine whether foreign court had ju- risdiction. Ontario Superior Court clearly had jurisdiction pursuant to art. 3168 of Code since Canada Post had its head office in Ontario. This con- necting factor alone justified finding that Ontario court had jurisdiction. Notices provided for in judgment of Ontario Superior Court of Justice, when considered in context in which they were published, contra- vened fundamental principles of procedure within meaning of art. 3155, para. 3 of Code. Clarity of notice particularly important given parallel pro- ceedings. Ontario notice likely to confuse intended recipients because it failed to properly explain impact of judgment certifying class proceeding on Quebec members of na- tional class. It could have led those who read it in Quebec to conclude it simply did not concern them. Quebec courts also precluded from recogniz- ing Ontario judgment on basis of lis pendens pursuant to art. 3155, para. 4 of Code. Class action does not exist only as of filing date. Three identities required for lis pendens present at date of authorization appli- cation. Basic facts in support of both proceedings same for Quebec residents, object was same and legal identity of par- ties established. Societe canadienne des postes v. Lepine (Apr. 2, 2009, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps, Fish, Charron and Rothstein JJ., File No. 32299) Appeal from 166 A.C.W.S. (3d) 632 dismissed. Order No. 009/092/134 (37 pp.). Financial Institutions CHEQUES Tracing was not precluded by clear- ing process or certification of cheque Issue raised was whether bank must pay damages to cus- tomers for debits made from their accounts when revers- ing credits entered in relation to forged cheque. H. and B., who owned interests in appel- lant BMP Global Distribution Inc., a company that distrib- uted non-stick bakeware, en- tered into agreement with rela- tive stranger, N.. N. agreed to purchase right to distribute bakeware in United States. H. deposited unendorsed cheque for $904,563 at Bank of Nova Scotia ("BNS"). Cheque drawn on account of corporation called First National at branch of Royal Bank of Canada ("RBC"). Neither drawer of cheque nor sender known to May 25, 2009 • Law TiMes COURT DECISIONS ainmaker_LT_June2_08.indd 1 CaseLaw is a weekly summary of notable unreported civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. Single or multiple copies of the full text of any case digested in this issue can be obtained by: 5/28/08 10:43:29 AM i) completing and mailing in the order form in this issue; or ii) calling CaseLaw's photocopy department at (905) 841-6472 in Toronto, (800) 263-3269 in Ontario and Quebec, or (800) 263-2037 in other provinces; or iii) faxing a copy of the completed order form to (905) 841-5085. H. or B. or apparently linked to his company. No attempts made to contact either First National or sender prior to depositing cheque. Given un- usual circumstances, BNS held funds until satisfied instrument authentic. BNS contacted RBC to ensure sufficient funds in First National's account and ultimately received funds in ordinary course of business. Funds released. BMP made numerous transactions de- scribed as dispersion of funds. Few weeks later RBC notified BNS that cheque counterfeit as drawer's signatures forged. BNS interrupted all transac- tions in BMP's account and all related accounts and asked for assistance in recovering proceeds of forged cheque. When BMP insisted on retain- ing amount it still held, BNS restrained amounts in accounts under its control that it linked to forged cheque. It also re- covered some funds by revers- ing bill payments made from BMP's account. RBS and BNS entered into agreement where- by RBC warranted that cheque was counterfeited and pro- ceeds were fraud. BNS agreed to transfer restrained funds to RBC and RBC agreed to in- demnify BNS for losses related to restraint and transfer. BNS transferred $777,336.04 to RBC. BMP's account governed by standard-form financial ser- vices agreement. BMP, H., B. and holding company wholly controlled by H claimed dam- ages equivalent to restrained amounts, aggravated and puni- tive damages. B. also claimed damages regarding BNS's fail- ure to honour certain payment instructions while his account was restrained. Trial judge or- dered BNS to pay $777,336 in pecuniary damages as well as damages for wrongful disclo- sure of information and defa- mation. He held that BNS vio- lated service agreement and law applicable to banker-customer relations. Court of Appeal al- lowed BNS's appeal against BMP by reducing latter's dam- ages and found that BMP's transfers were proper. BMP appealed Court of Appeal's re- versal on damages and asked for punitive damages. BNS cross-appealed on issue of tracing. Appeal dismissed and cross-appeal allowed. Case can be resolved by applying com- mon law rules on mistake of fact. Bank has prima facie right to recover from recipient pay- ment made under mistake of www.lawtimesnews.com fact unless: (a) payor intends that payee shall have money at all events; (b) payment made for good consideration; or (c) payee changed his position in good faith. First, RBC did not intend and is not deemed in law to have intended that BMP receive funds. No ques- tion RBC had prima facie right to recover funds. RBC paid funds without authority and liable to customer who has not signed as drawer. As such, RBC cannot be said to have intended BMP to keep money in any event. Assessment of RBC's rights requires more nuanced enquiry than apply- ing principle of finality which would require RBC, as drawee, to bear loss where drawer's signature forged, irrespective of detrimental reliance. Since BMP did not take instrument for value, it was not holder in due course and could not ben- efit from s. 128(a) of Bills and Exchange Act (Can.) ("BEA"). Payee stands as third party with respect to protection and can- not use bank's shield as sword against it. Payee may not ben- efit from protection afforded to bank by s. 165(3) of BEA. Trial judge erred in limiting doctrine of mistake of fact to provisional credits or situations where col- lecting bank has not received funds. Service contract does not preclude application of com- mon law where payment made under mistake of fact. Clearing rules of Canadian Payments Association similarly not ob- stacle to recovery. Second, as trial judge found that BMP gave no value for instrument, BMP gave no consideration. Third, neither BNS as holder of funds nor BMP changed its position. Since BNS entitled to give effect to RBC's claim for restitution of moneys paid under mistake of fact, jus tertii argument trial judge relied on fails. Trial judge's conclusion that BMP lost right to demand payment of debt owed by BNS erroneous because credit entry in account made by mistake. Possible at common law to trace funds into bank accounts if possible to identify funds. Identification process in this case was simple. Tracing not precluded by clearing process or certification of cheque. B.M.P. Global Distribution Inc. v. Bank of Nova Scotia (Apr. 2, 2009, S.C.C., McLachlin C.J.C., Binnie, LeBel, Deschamps and Rothstein JJ., File No. 31930) Appeal from 155 A.C.W.S. (3d) 199, 278 D.L.R. (4th) 501 was allowed in part. Order No. 009/092/133 (56 pp.). FEDERAL COURT OF APPEAL Administrative Law JUDICIAL REVIEW Performance penalties not to be included in calculation of revenue cap Application for judicial review of respondent agency's decision to include amounts received by applicant as performance penalties in revenue cap cal- culation. In connection with railway operations applicant imposed performance penal- ties on shippers who failed to unload grain shipped in multi- car blocks ("MCBs") within 24 hours. In calculating revenue cap of applicant for 2006/2007 crop year agency decided to in- clude amounts paid as perfor- mance penalties in applicant's revenues. Agency took posi- tion that $180 per car penalty cannot be performance penalty because 24-hour requirement was in excess of "industry stan- dard" of 60 hours for unloading cars. Agency also reasoned that recognizing amounts as pen- alties involved contradictory treatment resulting in unwar- ranted double benefit. Double benefit consisted of inclusion in revenue of amount less than that actually received by appli- cant coupled with withdrawal of amount received as penalty from revenue on ground that it was performance penalty. Application allowed. Decision of agency cannot stand re- gardless of standard of review. There was nothing in record to support conclusion that industry norm for unloading MCBs was 60 hours. On con- trary, evidence showed 99% of shippers met 24-hour unload- ing standard. There was also single benefit only. Legislation gave applicant right to exclude amount of performance pen- alty from revenue. Matter re- mitted to agency for re-deter- mination on basis that no part of performance penalties was to be included in calculation of applicant's revenue cap. Canadian Pacific Railway Co. v. Canada (Transportation Agency) (Feb. 18, 2009, F.C.A., Noel, Nadon and Pelletier JJ.A., File No. A-335-08) Order No. 009/084/041 (13 pp.).

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