Law Times

May 28, 2018

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Page 2 May 28, 2018 • Law TiMes remainder of a former manager's five-year contract after he was terminated less than two years in. The appeal court found Per- ell erred in his finding on the vagueness of the termination clause, but it came up with the same result because of the good faith breach. Nadia Halum, a lawyer with Toronto employment law bou- tique MacLeod Law Firm, says the decision reinforces the riski- ness of fixed-term contracts for employers. "Unless you've got an iron- clad termination clause, you could be on the hook for dam- ages for the balance of the con- tract," she says. "If you absolutely need to have fixed-term contracts, our advice to employers is that they have them reviewed closely by a lawyer, so they can make sure the termination rights are spelled out and clear." ISA's lawyer James LeNoury did not respond to a request for comment before Law Times went to press. LT "This decision shows a real and important extension of the good faith doctrine," adds To- ronto employment lawyer An- drew Monkhouse, who was not involved in the case. However, ISA's existing agreement with Canadian Tire provided that it would not send any consultants to perform work with criminal records without first obtaining the hardware firm's consent. And when Mohamed's secu- rity check turned up his assault conviction, Canadian Tire asked ISA to replace him, prompting the consultants to let Mohamed go under a clause in the inde- pendent contractor agreement that provided for termination when ISA determines replace- ment would be in its own best interest "for any reason." Mohamed sued, claiming for remuneration amounting to the remainder of the six-month term, and after both sides moved for summary judgment, Perell ruled in his favour, awarding him $82,500 plus $25,000 in costs. As well as finding that ISA breached its duty of good faith, the motion judge found also that the termination clause was void for vagueness. In addition, he ruled that Mohamed did not need to miti- gate his losses because the con- tract was for a fixed term, rely- ing on the appeal court's 2016 judgment in Howard v. Benson Group Inc., when an automotive service centre had to pay out the when the underlying litigation is still proceeding in the foreign jurisdiction," Sidlofsky says. According to a statement of claim filed with the court in Ontario, Grayson alleges that he was the victim of a Ponzi scheme in which Lloyd played a key role. None of the allegations in the claim has been proved, and Lloyd's statement of defence strongly denies Grayson's claims. Grayson's company alleges it lost millions engaging in what it thought were stock loans from a company named Derivium Cap- ital, only to find out later that its collateral, publicly traded securi- ties, had been secretly sold off to fund loans to other borrowers. The congressman's company alleges in its claim that Lloyd was a founder of Derivium and that he received $5.5 million when he departed in 2000, though Lloyd explicitly denies both claims. His defence says he was hired by a Canadian subsidiary of First Security Capital LLC, the com- pany that later changed its name to Derivium, to perform legal consulting services. Occasional- ly, the defence says, this involved advising Derivium-related com- panies, but Lloyd insists he was never employed or paid directly by the firm. In fact, he says, he only ever visited Derivium's South Caro- lina office once before he was fired in 2000 and collected just US$190,000 during his three- year involvement with the Cana- dian subsidiary for his services and to cover expenses. By the time Derivium en- tered bankruptcy protection in 2005, the company had lent out more than US$1 billion, accord- ing to Forbes magazine. In 2007, Lloyd discovered he had been named as one of more than 50 defendants in a U.S. ac- tion brought by trustees for De- rivium, and his statement of de- fence says he hired a New York lawyer with a narrow brief to resist the complaint by objecting to the jurisdiction of the court in South Carolina and raising the issue of a limitations defence. Without the money to hire a lawyer or travel to South Caro- lina when the case proceeded, and not wanting to attorn or submit to the jurisdiction of the court, Lloyd's defence explains that he declined to participate in the U.S. action, resulting in the August 2014 default judg- ment against him and a number of other defendants who failed to appear. Lloyd's portion of the damages was assessed by the South Carolina judge as US$150 million, or US$450 million after treble damages were applied. Grayson Consulting, which took an assignment of Derivi- um's claim in 2012, appealed the U.S. judge's decision in relation to two defendants but not Lloyd, and an appeal court confirmed the original judgment in March 2016. According to Diamond's de- cision, the company argued that the limitation period for the On- tario action should run from the March 2016 date because this was the earliest point at which the South Carolina action had run its course. Grayson also claimed that it only found out about Lloyd's Canadian assets in late 2017. "Once the SC judgment be- came final (i.e. 30 days after Au- gust 22, 2014), Grayson was un- der an obligation to conduct itself with due diligence with respect to seeking enforcement oppor- tunities against Lloyd," he wrote in the April 3 judgment. "While this does not mean that Grayson had an obligation to conduct a worldwide search of possible as- sets, it was already in possession of enough information about Lloyd's real and substantial con- nection to Ontario that it ought to have taken investigatory steps when the SC judgment became final, or shortly thereafter." Gil Zvulony, a Toronto law- yer whose practice covers en- forcement of foreign judgments in Ontario, says the reference to "due diligence" is a "little scary" for practitioners like him. "It's not entirely clear what will count as due diligence. The acceptable level is not spelled out in the decision, and it can be tricky establishing what some- one's assets are," he says. However, he says, Diamond's decision lines up with the Court of Appeal's recent decision in Independence Plaza 1 Associ- ates, L.L.C. v. Figliolini, which involved a New Jersey judgment. "It's good to see the court re- affirming that decision, because it adds more clarity to the law," Zvulony adds. The decision is just the lat- est in a series of recent blows for Grayson, who, according to U.S. website Politico, was a Harvard- educated lawyer before accumu- lating substantial wealth in the telecommunications industry during the 1990s. Grayson was first elected to Congress in 2008, but after al- most a decade in the lower house, he set his sights on one of two Florida Senate seats for the 2016 elections. But he suffered a heavy defeat in the Democratic prima- ry following a campaign dogged by political infighting and con- troversies involving his financial investments and personal life. However, Grayson recently announced his intention to challenge for his old seat in the House of Representatives, which is up for grabs again later in 2018. And the comeback will ex- tend away from the political to the the courts, too, if Sidlofsky has his way. "We're disappointed with the decision, but we're pursuing the matter, and we will see if the ap- pellate court comes down with a different interpretation," he says. LT NEWS Decision lines up with recent COA ruling Continued from page 1 Continued from page 1 Worker fired for historic criminal conviction © 2018 Thomson Reuters Canada Limited 00251US-92825-NP Available risk-free for 30 days Online: Call Toll-Free: 1-800-387-5164 | In Toronto: 416-609-3800 Order # L7798-7922-65203 $175 Softcover approx. 1950 pages December 2017 978-0-7798-7922-9 Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes. For 26 years, The Annotated Canada Labour Code has been the authoritative resource that labour relations professionals rely on to help them interpret and apply the Canada Labour Code. New in this edition • Digests of more than 100 new decisions from the CIRB, OSH Appeal Board, adjudicators, referees, and the courts since the publication of last year's edition. • New commentary on the repeal of the Employees' Voting Rights Act, which required the holding of a mandatory secret ballot in respect of certification applications, and the return to the predecessor legislation that permits automatic certification in the absence of any vote taken. • Case law and commentary under Part I includes clarifications of the "substantial interference test" under s. 8; whether a union owes a duty of procedural fairness to its members when determining whether to refer grievances to arbitration; and the scope of powers bestowed on arbitrators. • Part II includes insight into the interpretation and application of the s. 122 definition of "danger" and of the employer's obligations under ss. 124 and 125. • Part III canvasses decisions including the Federal Court's consideration of the impact on the s. 240 process resulting from a complainant's unilateral withdrawal of a complaint. The notion of "economic justification" under s. 242(3.1(a) is discussed, and a comparison of powers is undertaken in respect of referees acting under s. 251.11(1) and s. 251.101(7) of the Code. New Edition The 2018 Annotated Canada Labour Code Ronald M. Snyder Also available as an eBook on Thomson Reuters ProView® Untitled-1 1 2018-05-18 12:44 PM

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