Alex D. Zavaglia

The Ontario Court of Appeal allowed an appeal concerning the enforcement of a Letter of Request (LoR) from a U.S. court.

The LoR sought confidential financial and valuation documents from Matvil Corp., a non-party, to assist Actava TV, Inc.'s damages expert in a U.S. action using a "yardstick" method.

The Court found that the application judge erred in her relevance and public policy analyses, and failed to adequately consider Canadian sovereignty.

The requested information was deemed overly broad, speculative, and not directly relevant to the material issues in the U.S. action, and its disclosure would be contrary to Canadian public policy given the sensitive nature of the data and the inadequacy of protective orders.

The appellants, Daniel Tiffin and Tiffin Financial Corporation (TFC), appealed convictions for provincial offences under the Securities Act, including trading in securities without registration, distributing securities without a prospectus, and trading while prohibited.

The central issue was whether promissory notes issued by Tiffin to clients, while he was subject to a cease trade order, constituted "securities" under the Act.

The trial judge had acquitted the appellants by applying the American "family resemblance test" to conclude the notes were not securities.

The Superior Court of Justice, on appeal, reversed this decision, declining to import the American test and finding the notes were indeed securities, thus substituting convictions.

The Court of Appeal upheld the convictions, agreeing that the "family resemblance test" should not be imported into Ontario securities law due to the distinct "catch and exclude" statutory scheme in Ontario.

However, the Court of Appeal allowed the sentence appeal, finding the six-month custodial term demonstrably unfit given mitigating factors such as the appellants' honesty in revealing their financial situation, their remorse, repayment efforts, and client support.

The probation and restitution orders were upheld.

The plaintiff, Jason Imola, brought a motion for leave to amend his statement of claim to add John Esteireiro as a defendant and assert claims for misrepresentation and intentional or unlawful interference with economic relations.

The proposed amendments arose from Mr. Esteireiro's alleged conduct during a transition period following an asset sale, including misrepresentations about the plaintiff's employment and directing him to conduct personal, unsupervised "grey market" trades.

The court granted leave to amend, finding the proposed claims legally tenable and arising from the same factual matrix, and that allowing the amendments would promote the convenient administration of justice without causing irremediable prejudice.

The court issued an addendum to its Reasons for Sentence to clarify that the probation order and restitution order applied to both the individual and corporate respondents, Daniel Tiffin and Tiffin Financial Corporation (TFC).

The original reasons had used the pronoun "you," leading to ambiguity.

The court confirmed its intention to apply the non-custodial aspects of the sentence to both parties, exercising its jurisdiction to correct an accidental slip or omission.

Tiffin and TFC were convicted of trading in securities without registration, distributing securities without a prospectus, and trading while prohibited by an OSC order.

Tiffin solicited $700,000 in loans from clients, issuing promissory notes deemed securities.

The court considered aggravating factors, including Tiffin's position of trust, use of funds for luxury items, repeat offender status, and prior unpaid penalties, against mitigating factors such as client support letters, partial repayment, and lack of intent to defraud.

A financial penalty alone was deemed insufficient due to Tiffin's history of non-payment.

The court imposed a six-month custodial sentence on Tiffin, a two-year probation order on both Tiffin and TFC, and a restitution order for the outstanding principal amount of the notes.

The plaintiffs moved to remove estate trustees and spousal trust trustees, and for a receiver over a holding company, alleging misconduct and oppression.

The defendants cross-moved to dismiss the action for delay and for security for costs.

The court dismissed the motions to remove trustees and appoint a receiver, finding sufficient assets secured the plaintiffs' interests and no corporate oppression.

The court also dismissed the defendants' motion to dismiss for delay against the remaining plaintiff, Leslie Barker, but ordered her to post security for costs as a non-resident.

The defendants were charged with three breaches of the Securities Act: trading in securities without registration, trading without filing a prospectus, and trading while prohibited by a cease trade order.

The sole issue was whether fourteen promissory notes totaling $700,000 issued to investment clients constituted securities under the Act.

The defendants admitted the factual elements but argued the notes were private loan agreements exempt from securities regulation.

The court applied the "Family Resemblance Test" from Reves v. Ernst & Young and found the notes were not securities, as they resembled notes secured by a lien on a small business's assets—a recognized category of non-security notes.

The charges were dismissed.