1

Résidences de Longueuil, s.e.n.c. v. Chabot.

Résidences de Longueuil, s.e.n.c. ("Résidences") has granted to Services Techniques PAC Inc. ("PAC") a contract of approximately $1M to build an addition to its building used as a residence for elderly people. Pierre A. Chabot ("Chabot") is the sole director and shareholder of PAC.

Chabot and PAC are facing financial difficulties for completing the work. Résidences gave Chabot various cheques totaling $65,116.99. Each cheque is made to the order of Pierre Chabot and the slip indicates "personal advance to Pierre Chabot" and indicates the date upon which reimbursement is due. It is not contested that these advances were deposited to PAC’s account and were used to pursue the work.

Before the work was completed, Résidences terminated its contract with PAC and claimed reimbursement of the advances from Chabot personally. Chabot alleges that this debt must be compensated from the amounts that he claims are due to PAC.

The Court concludes that the debt owed to PAC is not established. It remains litigious and uncertain. The grounds of Chabot’s defense are those that PAC, who is not a party to the present case, could raise against Résidences. These means are personal to PAC and do not belong to Chabot personally. Chabot is not in one of the situations where the corporate veil may be lifted.

The action is granted.

Résidences de Longueuil, s.e.n.c. v. Chabot. Superior Court. 505-17-000875-007. 5 December 2002. Honourable Justice Durocher.

2

Jean St-Jacques et Marguerite St-Jacques v. Zbiegniew Hauderrowicz and 4000986 Canada Inc. and 3884490 Canada Inc. et als.

Jean and Marguerite St-Jacques are minority shareholders of 3884490 Canada Inc. ("3884490"). They filed a motion for oppression under Section 241 of the Canada Business Corporations Act against Zbiegniew Hauderrowicz ("Hauderrowicz), majority shareholder and against the mises en cause. The request, among other things, that the sale of real estate by 3884490 to 4000986 Canada Inc. ("4000986") be annulled. The real estate transaction was signed by Hauderrowicz.

4000986 filed a motion for dismissal alleging that, as a third party acting in good faith, it benefits from the provisions of Section s 15(3), 16(3) and 18 of the Canada Business Corporations Act and that, consequently, the fact that the majority shareholder acted without authority cannot be used against it.

The Court highlights the fact that there is no allegation of bad faith, fraud or collusion from 4000986 in the original motion. Therefore, the latter can benefit from the abovementioned provisions as well as from the provisions of Article 328 C.c.Q. that enacts that the acts of the directors cannot be annulled on the sole ground that they were disqualified or that their designation was irregular.

The motion for dismissal is granted and the conclusions of the principal motion against 4000986 are denied.

Jean St-Jacques et Marguerite St-Jacques v. Zbiegniew Hauderrowicz and 4000986 Canada Inc. and 3884490 Canada Inc. et als. Superior Court. 550-05-012320-027. 11 December 2002. Honourable Justice Bédard.

3

Éric Laurent v. 3104-0769 Québec Inc., France Morin and Novexcel Inc.

Eric Laurent ("Laurent") is suing the defendants and claims amounts that he considers due and unpaid regarding his employment contract with Novexcel Inc. ("Novexcel"), amounts consisting of a share in the profits of the company.

Laurent resigned from his position with Novexcel on January 31, 1999. Novexcel was voluntarily dissolved on April 9, 2001. On May 30, 2002, Laurent filed his action against Novexcel, France Morin, sole director and shareholder of Novexcel and 3104-0769 Québec Inc. ("3104"), a holding company whose sole shareholder and director is France Morin.

Defendants filed a motion for dismissal on the grounds that the action against France Morin and Novexcel is prescribed according to Section 119(2) of the Canada Business Corporations Act, and for lack of privity towards 3104. They allege that Laurent should have filed his action against Novexcel within 6 months from the date the debt became due, at the latest on December 31, 1999. With respect to the action against France Morin, defendants submit that she cannot be sued as director since Laurent did not previously sue the corporation.

The Court held that Laurent’s action pertains to contractual damages and inconvenience relating thereto. It states that the prescription is the prescription of Article 2925 C.c.Q., i.e. 3 years, and determines that the starting date is in July 1999, when Laurent received payment of his share of benefits and discovered that the amount paid did not correspond to the amount due.

Moreover, Section 226(2)b) of the Canada Business Corporations Act indicates that civil proceedings may be brought against a legal person within 2 years following its dissolution.

The Court held that Section 119 of the Canada Business Corporations Act establishes conditions precedent to obtaining a judgment against the directors of a corporation personally but does not create a prescription delay to bring action against the corporation. The action against Novexcel is not prescribed.

With respect to the personal liability of France Morin, the Court analyses in detail the provisions of Section 119 and concludes that the director’s liability provided for in this section applies when the corporation is insolvent but does not regulate the civil liability of the directors arising from their fault in a civil action.

With respect to the liability of 3104, The Court concludes that the pleadings do not contain any allegation of a contract between this company and Laurent, nor any allegation of fault of 3104. The fact that France Morin is the sole director and shareholder of both corporations does not create any privity between Laurent and 3104.

The Court partially grants the motion for dismissal and dismisses the action against 3104.

Éric Laurent v. 3104-0769 Québec Inc., France Morin and Novexcel Inc. Superior Court. 540-17-000858-026. 12 December 2002. Honourable Justice Côté.

4

2548-8297 Québec Inc. c. La Compagnie d’assurance Missisquoi

2548-8297 Québec Inc. ("2548") is suing La Compagnie d’assurance Missisquoi ("Missisquoi") for an amount of $145,919.83 following a fire that caused damages to the sports store of 2548 in 1991. Refusal from Missisquoi to pay the indemnity gave rise to the present case.

Missisquoi alleges that the principal officer of 2548 intentionally caused the fire and acted in bad faith, in order to collect an indemnity that was not due.

2548 has only one shareholder and director, Sandra Langlois. The Court must determine if, when the fire happened, Guy Choinière, Ms. Langlois’ common law husband, was the directing mind of 2548 and if he intentionally started the fire.

A detailed review of the facts and the evidence submitted convinces the Court that the fire was intentionally started by Mr. Choinière and that his wife was aware of his intentions. Article 2563 C.c.B.C. stipulates that the insurance company is not liable for damages resulting from the intentional fault of the insured. 2548 being a legal person, the insured property must have been set on fire by its directing mind or upon his instructions.

The action is dismissed and Missisquoi’s defense is granted.

2548-8297 Québec Inc. c. La Compagnie d’assurance Missisquoi. Superior Court. 455-05-000034-939. 16 December 2002. Honourable Justice Mireault.

5

Air Canada v. Attorney General of Canada and the Commissioner of Competition

Since its acquisition of Canadian Air Lines Ltd. during the summer of 2000, Air Canada controls 90% of the market for domestic services. In order to control this quasi-monopoly, the Canadian government adopted section 104.1 of the Competition Act. This section, which came into force on July 5, 2000, was amended in June 2002.

Pursuant to section 104.1 of the Competition Act, the Commissioner may make temporary orders against Air Canada. He may thus prohibit Air Canada from doing an act or a thing that could, in his opinion, constitute an anti-competitive act. He may also require Air Canada the take the steps that he considers necessary to prevent injury to competition or harm to another person. These orders, issued for an initial period of 20 days, may be renewed up to 80 days. They are issued without prior notice and without receiving representations from any person.

Air Canada applied to the Superior Court for a declaration that section 104.1 is invalid, on the grounds, among others, that it contravenes section 2(e) of the Canadian Bill of Rights. The motion was denied and Air Canada is appealing the decision.

The Court of Appeal, in a detailed decision, examines the provisions of the Competition Act and of the Canadian Bill of Rights as well as the case law pertaining thereto. The Court concludes that section 104.1 of the Competition Act deprives Air Canada of its right to a fair hearing in accordance with the principles of fundamental justice, contrary to section 2(e) of the Canadian Bill of Rights.

The Court of Appeal grants the motion for declaratory judgment and declares section 104.1 of the Competition Act inoperative by reason of its incompatibility with section 2(e) of the Canadian Bill of Rights.

Air Canada v. Attorney General of Canada and the Commissioner of Competition. Court of Appeal. 500-09-011298-015. 16 January 2003. Honourable Justices Rothman, Delisle, Rochon.

6

ProMetic Sciences de la Vie Inc. and ProMetic Bioscience Inc. v. Monogel AB

Appellant ProMetic Sciences de la Vie Inc. ("ProMetic") is a holding corporation. Appellant ProMetic Bioscience Inc. ("Bioscience") is a subsidiary of ProMetic.

Respondent Monogel AB ("Monogel") has entered into a contract for the transfer of technology with ProMetic Pharma Inc. ("Pharma"), another subsidiary of ProMetic. Pharma has filed for bankruptcy under the Bankruptcy and Insolvency Act.

ProMetic and Bioscience filed proceedings against Monogel claiming respectively $752,066 and $7,775,345 in damages. Monogel filed a motion for dismissal on the grounds that there is no privity between itself and the appellants.

The trial judge granted the motion for dismissal indicating that a simple reading of the declaration indicates that ProMetic and Bioscience are pleading in the name of Pharma.

The Court of Appeal reverses the decision of the trial judge. The Court reminds that, when judging a motion for dismissal pursuant to Article 165(4) C.C.P., allegations must be taken for granted. It is true that the appellants allege breach of contractual obligations from Monogel towards Pharma, but that is not the essence of their claim. They allege misrepresentations made by Monogel during negotiations that led to the conclusion of the contract that caused them damages.

The motion for dismissal is denied.

ProMetic Sciences de la Vie Inc. and ProMetic Bioscience Inc. v. Monogel AB. Court of Appeal. 500-09-010592-012. 7 January 2003. Honourable Justices Rothman, Dussault, Delisle.

7

La Société immobilière 1234 de la Montagne Ltée v. James A. Ioanidis

La Société immobilière 1234 de la Montagne Ltée ("1234") was incorporated in 1979. It owns and manages commercial real estate. On June 1, 1997, 1234 has 3 shareholders, each holding 1/3 of the shares, and a sole director. Ioanidis is one of the shareholders.

At a meeting of the shareholders held on June 2, 1997, Ioanidis is the only shareholder to vote against the proposition of the sole director to liquidate the assets of 1234. As per section 190 of the Canada Business Corporations Act, Ioanidis claims from 1234 reimbursement of the fair value of his shares. When the parties cannot agree upon the price and the conditions of the transaction, one or the other may request the Superior Court to determine the fair value of the shares. That is what 1234 did after its offer for $530,644 was refused by Ioanidis.

Section 190 of the Canada Business Corporations Act grants the court the power to determine a fair value for the shares. During this process, which is not really controversial, the court is not bound by the rule of preponderance of evidence. It is not limited by a particular mathematical formula in assessing the fair value of the shares. A court of appeal cannot substitute a fair value by another unless it has very serious reasons to do so.

The Court of Appeal highlights the privileged situation of the trial judge with respect to testimonies, from ordinary witnesses as well as from expert witnesses. It is not the duty of a court of appeal to reconsider these testimonies and to come to a different conclusion, unless it is demonstrated that the evidence could not reasonably justify the conclusions of the trial judge.

In this case, the Court of Appeal reduces the value of the shares in proportion with a commission to be paid upon the sale of real estate and the provisions for taxes and costs of sale. The Court also reduces the amount awarded for costs as an amount is directly caused by the fact that an expert is residing in Toronto. Thus, the value of the shares is reduced from $1,020,650 to $943, 841 and the costs of experts are reduced from $165,618.44 to $78,997.84

La Société immobilière 1234 de la Montagne Ltée v. James A. Ioanidis. Court of Appeal. 500-09-009324-005. 19 December 2002. Honourable Justices Beauregard, Mailhot, Rayle.

8

Banque Laurentienne du Canada v. Ghislain Lafontaine

The Banque Laurentienne du Canada (the "Bank") is claiming from Ghislain Lafontaine ("Lafontaine") the balance of the loan made in January 1991 to Ghiron Malartic Ltée, which loan was personally guaranteed by Lafontaine jointly and severally.

Lafontaine alleges that, when he sold his shares in Ghiron Malartic Ltée in 1996 to his co-shareholder Donald Luneau, the Bank and the notary made him believe that he was relieved from his personal suretyship. He claims that there was a substitution of debt and that the Bank was negligent and committed a fault by not informing him adequately and without delay about his obligations.

In light of the evidence, the Court is of the opinion that Lafontaine was not relieved from his personal suretyship towards the Bank and that he was aware of this situation when he left the company and sold his shares. There was no substitution of debt either.

The Court is also of the opinion that the Bank was under no obligation to contact Lafontaine on a regular basis. It is only when events that may affect the suretyship arise that there is an obligation to inform.

The action is granted.

Banque Laurentienne du Canada v. Ghislain Lafontaine. Superior Court. 615-17-000091-008. 16 December 2002. Honourable Justice Viens.

1

Harvard College v. Canada (Commissioner of Patents)

Harvard College applied for a patent on an invention entitled “transgenic animals”.  The process described in the patent application indicates that an “oncogene”, i.e. a cancer promoting gene, is injected into fertilized mouse eggs as close as possible to the one-cell state.  The eggs are then implanted into a female host mouse and develop to term.  The offspring of the host mouse are tested and those that contain the oncogene, called “founder” mice, are mated with unaltered mice.  Half of their offspring will have their cells affected by the oncogene and will be suitable for animal carcinogenic studies.

The process claims of the application were allowed, i.e. the process by which the eggs are injected, but the claims pertaining to the end product, i.e. the founder mice and their offspring, were rejected.

In a 5/4 decision, the Supreme Court held that higher life form is not patentable because it is not a “manufacture” or “composition of matter” within the meaning of “invention” in section 2 of the Patent Act.

Harvard College v. Canada (Commissioner of Patents). Supreme Court of Canada. 2002 SCC 76. File no. 28155. December 5, 2002. Honourable Justices McLachlin, L’Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel.

2

Farside Clothing Ltd. and Farside Skateboards & Snowboards Ltd. v. Caricline Ventures Ltd.

Caricline Ventures Ltd. (« Caricline ») is the owner of the trade-mark PHARSIDE, registered in Canada for use in association with a variety of clothing, footwear and accessories, which are sold through the PHARSYDE store in Vancouver.

Caricline is alleging infringement of its trade-mark by Farside Clothing Ltd. (“Clothing”) and Farside Skateboards & Snowboards Ltd (“Skateboards”), both operating retail stores in Edmonton selling clothing and sports goods under the mark FARSIDE.  Each of the defendant companies is owned by a member of the Devji family.

Defendants alleged that Caricline’s trade-mark is invalid and counterclaimed for its expungement.  Their counterclaim was dismissed by the Trial Judge.  Their theory is that their use of the FARSIDE mark between June 1995 and September 1997 in connection with wares similar to those associated with the PHARSYDE mark caused the latter to loose its distinctiveness.  They allege that the Trial Judge erred in law by treating their prior use as irrelevant because it was an infringing use.

The Court of Appeal is of the opinion that this allegation is not the correct interpretation of the Trial Judge’s decision.  The Court also indicates that an application under section 17 of the Trade-Mark Act for the expungement of a trade-mark can only be made by the applicant of that other mark or a successor in title to it.  When the application for the mark FARSIDE was made in 1998, the applicant was neither of the defendants but a numbered company owned by Mr. Hafis Devji.  There has been no evidence submitted to show that the FARSIDE trade-mark was transferred to the appellants.

The appeal is dismissed.

Farside Clothing Ltd. and Farside Skateboards & Snowboards Ltd. v. Caricline Ventures Ltd. Federal Court of Appeal. 2002 FCA 446. Docket A-2-02. 12 November 2002. Honourable Justices Evans, Strayer, Nadon.

3

Roberta Chiappetta dba Discount Hydroponics v. C.J. Morales

On March 13, 2002, Complainant filed an application with the United States Patents and Trademarks Office for the trade mark DISCOUNT HYDROPONICS.  The application indicates that the mark has been in continuous use since October 1, 1999. 

The disputed domain name, “discounthydroponics.com” was originally registered on March 27, 2001 by a third party involved in retailing hydroponic equipment in California.  Litigation between Complainant and the third party led to a settlement whereby the third party agreed to transfer the domain name to Complainant.  The appropriate transfer document was notarized on April 5, 2002 but somehow, the domain name became available to the public and Respondent registered the disputed domain name on August 14, 2002.

Respondent asserts that the words “discount” and “hydroponics” are descriptive and not specific to a unique product or service and that therefore good reason exists to believe that the trademark application will face serious objections from within the hydroponics business community when published for opposition.  Respondent also asserts that he used a readily available and legal tool, www.snapnames.com, to acquire the domain name.  Complainant’s failure to insure the transfer of the domain name in accordance with the settlement with the third party cannot be opposed to him.

The Panel indicates that the trade mark must predate the domain name, although registration is not necessary as, in some situations, common law rights may exist.  However, in this case, no evidence has been provided and the descriptive nature of the words in the mark suggests that it would be difficult to prove.  The Panel is of the opinion that Complainant has failed to prove that the disputed domain name has been registered and used in bad faith.  The complaint is denied.

Roberta Chiappetta dba Discount Hydroponics v. C.J. Morales. WIPO Arbitration and Mediation Center. Administrative Panel Decision. Case no. D2002-1103. 20 January 2003.

4

Canadian Tire Corporation Ltd. v. Mike Rollo

The disputed domain names are “canadiantiredealer.com” and “canadiantiredealers.com”.  Complainant is the owner of numerous trade mark registrations in Canada that incorporate the words “Canadian Tire”, the first of which was used as early as 1927 in association with automotive parts.  The mark has been used for so long and so extensively in Canada that it has become distinctive of the Complainant.  Complainant is also Canada’s largest seller of tires.  Canadian Tire stores are independently owned and operated by Canadian Tire associate dealers.

The disputed domain names are active and are linked to www.yourtiredealer.com, a web site owned by the Respondent.  The site states “Search for a tire dealers and automotive service centers in the U.S. and Canada”.  When conducting a search for tire dealers on the web site, the search does not disclose any associated dealers of the Complainant but only dealers and service center operations who subscribe to the Respondent’s service.

The Panel is of the opinion that the purpose for registering and using the domain names is to divert consumers looking for services of the Complainant to a web site where they can find similar products offered by its competitors and that, because of the widely known reputation of the Complainant and the familiarity of its trade mark with the consumers, the maximum amount of traffic may be attracted to Respondent’s web site.

The Panel orders that the domain names be transferred to Complainant.

Canadian Tire Corporation Ltd. v. Mike Rollo. WIPO Arbitration and Mediation Center. Administrative Panel Decision. Case no. D2002-1069. 14 January 2003.