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Copyright Ellen Bessner Slide 2 2 PART I: Employment Law Recent Cases Preparing Investment Plans Dos and Donts PART II: Look Communications When a company sues its former directors and officers, court approval is required under the CBCA for advance payment of legal fees Slide 3 1. EMPLOYMENT LAW RECENT CASES Saturley v. CIBC World Markets (2013) NSSC 300 20 + years IA Much of the case described investment strategy Strategy coordinated selling of put and call options on the same security Third party miscalculated margin and failed to report accurately when Saturley realized this reported to CIBC and margin calls made on every client Copyright Ellen Bessner 3 Slide 4 SATURLEY (contd) Saturley called clients encouraging them to issue claim against CIBC CIBC investigated matter and concerns re: discretionary trading because of need to make huge volumes of calls over short period impossible Judge accepted the evidence of CIBC re: impossible to make calls and shifted onus onto Saturley to prove he called Copyright Ellen Bessner 4 Slide 5 SATURLEY (contd) Saturley did not call as witness his assistant or others re: evidence how he was able to get instructions negative inference drawn Helpful to CIBC: both 2004 and 2007 suspicious of Saturley engaging in discretionary trading and warned him (2004 penalty and 2007 discretionary trading is serious offence) WAS WARNED! Copyright Ellen Bessner 5 Slide 6 SATURLEY (contd) Unusual to find cause judge concerned about investing public interesting decision for employers in the investment industry Copyright Ellen Bessner 6 Slide 7 OGDEN v. CIBC (2014) BCSC 285 Test: did employee (FA) conduct strike to the heart of the employment relationship? Decision: FAs conduct fell far below that standard and termination was so high handed justified aggravated damages Copyright Ellen Bessner 7 Slide 8 OGDEN v. CIBC (2014) BCSC 285 (contd) Comingled client funds Two wire transfers from China with her own funds No personal gain to Ogden CIBC relied on conflict of interest policy NOT specific to infraction NO EXPRESS PROHIBITION no training on conflicts Copyright Ellen Bessner 8 Slide 9 OGDEN v. CIBC (2014) BCSC 285 (contd) CIBC relied on cumulative cause but must include a warning before final incident that provides opportunity for improvement Key aspect whether employees conduct was honest mistake, error in judgment or lack of training Copyright Ellen Bessner 9 Slide 10 OGDEN v. CIBC (2014) BCSC 285 (contd) Proportionality termination is the capital punishment of employment law CIBC should have issued warning only cause NOT warranted Copyright Ellen Bessner 10 Slide 11 2. PLANNING DOS & DONTS Copyright Ellen Bessner 11 Slide 12 GIESBRECHT v. CANADA LIFE [2013] M.J. NO. 160 (MAN. C.A.) In their 50s needed $35k/annum to retire until 90 Insurance/MF advisors 2 page letter and illustrations Some suggestions regarding retirement Copyright Ellen Bessner 12 Slide 13 Copyright Ellen Bessner 13 Investment growth (added from several sources) Income continuation Sale of Calgary home Rental income at reasonable rate Gather together savings to invest in plan Illustrations and Assumptions Slide 14 GIESBRECHT (contd) Gs put plan in drawer Several years later panic run out of money got jobs paying less and sued advisors Gs won at trial/overturned on appeal Choice of language on Plan key assumptions NOT promises/ opinions cannot succeed in claim for negligent misrepresentation Copyright Ellen Bessner 14 Slide 15 PART II: Cytrynbaum et al v. Look Communications When a company sues its former directors and officers, court approval is required under the CBCA for advance payment of legal fees under indemnity by laws or agreements Copyright Ellen Bessner 15 Slide 16 CYTRYNBAUM V. LOOK COMMUNICATIONS (contd) This case deals with claims by former directors and officers of Look Communications for advance funding of their legal costs to defend an action brought against them by Look Copyright Ellen Bessner 16 Slide 17 CYTRYNBAUM V. LOOK COMMUNICATIONS (contd) The appellants asserted the right to advance funding based on Looks by- laws and various indemnification agreements The claims for advance funding were fought by Look under s. 124(4) of the CBCA, on the grounds that advance funding should be refused if the appellants did not act honestly and in good faith Copyright Ellen Bessner 17 Slide 18 CYTRYNBAUM V. LOOK COMMUNICATIONS (contd) The application judge and the Court of Appeal agreed with Look and found that as Look had established a strong prima facie case of bad faith, advance funding should be refused Copyright Ellen Bessner 18 Slide 19 CYTRYNBAUM V. LOOK COMMUNICATIONS (contd) The legal costs of the application to the parties were in the hundreds of thousands of dollars, all spent to determine if advance payment of legal fees could be made. Look filed over 4000 documents in support of its position and several affidavits. There were multiple cross examinations The appellants argued that to allow Look to raise the issue of bad faith at this preliminary stage of the proceedings would effectively eviscerate the right to advance funding Copyright Ellen Bessner 19 Slide 20 CYTRYNBAUM V. LOOK COMMUNICATIONS (contd) Bad facts make bad law? Will prospective directors run for the hills? IMPLICATIONS Copyright Ellen Bessner 20 Slide 21 Ellen Bessner, Partner ebessner@babinbessnerspry.com ebessner@babinbessnerspry.com Tel: 647-725-2606 Ed Babin, Partner ebabin@babinbessnerspry.com Tel: 416-637-3294 www.babinbessnerspry.com ebabin@babinbessnerspry.com www.babinbessnerspry.com Copyright Ellen Bessner 21