Law Times

Page 12 May 15, 2017 • Law TiMes www.lawtimesnews.com FOCUS TECHNOLOGY LAW SPRING FORUM CHAIRED BY Kirsten Thompson, McCarthy Tétrault LLP Ian Thorburn, Solicitor, City of Toronto St. Andrew's Club & Conference Centre 150 King Street West 16th Floor, Toronto ON, M5H 1J9 MAY 18, 2017 | WWW.IT-CONFERENCE.CA 2017 JOIN US FOR THE Powered by Untitled-3 1 2017-05-09 8:52 AM is very important," he says. The judge also placed a great deal of credence in the periodic status, or "stoplight" reports that are a common feature of major IT projects. "They are going to prove in- valuable to the judge to figure out what happened when," Ruby says. "They are looked at as a re- liable contemporaneous account of the project's progress, so peo- ple who work on them should be told to try to make sure they are as fulsome and accurate as possible, because you don't want to have to explain later in court why the paperwork doesn't re- f lect the reality." When it came to damages, the judge awarded Siemens just less than $6.3 million for Sapient's wrongful termination, includ- ing $3.6 million for lost profits. That was offset by a $750,000 award to Sapient for Siemens' own breaches of the agreement. Sapient argued that the lost profits should have been ex- cluded by a limitation-of-liability clause in the subcontract, which stated that each party would be "liable to the other . . . only for di- rect damages." Neither party, the agreement continued, "will be li- able to the other for indirect, spe- cial, consequential or punitive damages, or for loss of profits." However, Pattillo found that Siemens' claimed lost profits constituted expectation dam- ages, which are direct damages and, therefore, not excluded by the clause. The grouping of "loss of prof- its" with "indirect, special and consequential damages" sug- gested to Pattillo that the agree- ment only meant to exclude "consequential or indirect lost profits" from other work outside the subcontract forgone as a re- sult of a breach. "Consequential lost profits do not include profits under the Subcontract but rather are indi- rect losses which are only recov- erable when they are foreseeable or communicated to the defen- dant," Pattillo concluded. Barry Sookman, a partner at McCarthy Tétrault LLP, says the distinction between direct and indirect damages is often found in contracts governed by U.S. law. "What a lot of Ontario and Canadian lawyers don't realize is that terms related to damages used in the Canadian context are interpreted differently from the same terms in the U.S.," he says. "This is a good reminder to Ca- nadianize your loss of profit ex- clusions. If a U.S. vendor uses its U.S.-vetted limitation of liability, it may not actually have the con- sequences they intended here." Farrah Rahman, a lawyer with Toronto firm Cobalt Law- yers, says limitation of liabil- ity clauses are among the most fiercely negotiated in technology services agreements. "Law yers need to make sure they draft tighter to ensure that ever y thing they intended is caught by the clause," she says. LT make missteps you could be ex- posed to significant penalties." But John Lawford, the execu- tive director and general counsel of the Public Interest Advocacy Centre, has little sympathy for CASL violators. "If you're still sending emails with no unsubscribe function, you need to catch up because this is old stuff now. And if you're blasting out emails to a list of people you have no relation- ship to at all, then you deserve to get a fine," he says. "It's hard to prove a negative, but I think the law has resulted in a lot less spam." Lawford also believes the out- cry over the launch of the private right of action has been over- blown. "Everyone is freaking out, but I think it's more likely to be used against the hard- core spammers, where there's a fraudulent aspect to it," he says. Friedman says predictions of an avalanche of class action activ- ity after July 1 may also prove un- founded, since the private right of action provisions bar claims for the lucrative statutory damages in cases where the CRTC has al- ready taken regulatory action. Any action must then show actual damages suffered by in- dividuals as a result of receiving spam. "Class action lawyers are really creative, as I know from my experience acting for defendants responding to their claims," she says. "I have no doubt we will see some actions, but I can't imagine the financial damage a person can suffer to make these lawsuits worthwhile for class counsel to take on. It will be interesting to see how it plays out." Jonathan Bitran, a lawyer with McCarthy Tétrault LLP, says the private right of action also interferes with the tradi- tional framework of the Com- petition Act by allowing private citizens to sue for non-criminal breaches of the law. "Previously, it had to be the commissioner of competition who took action in civil matters," he says. In addition, Bitran says, the lack of a mens rea provision or materiality requirement in sec- tions dealing with false or mis- leading representations could put companies at risk of lawsuits for innocent or minor misrepre- sentations in emails. "The concern is that a lot of legitimate businesses could get caught up in actions that will not result in any benefit to society," he says. LT Continued from page 10 Limitation of liability clauses fiercely negotiated Outcry overblown? Continued from page 11 Barry Sookman says the distinction between direct and indirect damages is often found in contracts governed by U.S. law.

• Cover