fbpx
  • Latest News
  • Trending News
  • All
  • Latest News
  • Featured
  • Industry News
  • Legal Governance
  • Constitutional Law
  • Op-Ed
  • News Archives
  • Alternative Dispute Resolution
  • Analysis
  • Bankruptcy Law
  • Consumer Protection Law
  • Cyber Security Law
  • Family Law
  • Disability Law
  • Employment Law
  • Environmental Law
  • Estate Law
  • Housing Law
  • Human Rights Code
  • Immigration Law
  • Insurance Law
  • Intellectual Property Law
  • Privacy Law
  • Tax Law
  • Workers Compensation Board
Trade Secret and Breach of Confidence Monetary Claim Stayed by Bankruptcy

Trade Secret and Breach of Confidence Monetary Claim Stayed by Bankruptcy

January 26, 2022
More than 10,000 Canadians received a medically-assisted death in 2021: report

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
FBI took 11 sets of classified material from Trump’s Mar-a-Lago home while investigating possible Espionage Act violations (US)

FBI took 11 sets of classified material from Trump’s Mar-a-Lago home while investigating possible Espionage Act violations (US)

August 12, 2022
Ontario class action settlement reclassifies volunteers as employees, setting new precedent

Ontario class action settlement reclassifies volunteers as employees, setting new precedent

August 11, 2022
Availability of Judicial Review in SABS Disputes

Availability of Judicial Review in SABS Disputes

August 10, 2022
Are masking policies still valid?

Are masking policies still valid?

August 10, 2022
Justice Canada releases commission report on impact of lack of legal aid in family law disputes

Justice Canada releases commission report on impact of lack of legal aid in family law disputes

August 9, 2022
Harmonized sales tax part of maximum amount of attendant care benefits owed by insurer: court

Harmonized sales tax part of maximum amount of attendant care benefits owed by insurer: court

August 8, 2022
New rules coming next month to help Canadians with cancelled and delayed flights

New rules coming next month to help Canadians with cancelled and delayed flights

August 3, 2022
Stephen King set to testify for govt in books merger trial (US)

Stephen King set to testify for govt in books merger trial (US)

August 2, 2022
New law program in Quebec to begin next fall, a first in 50 years

New law program in Quebec to begin next fall, a first in 50 years

August 2, 2022

Defence lawyers threaten job action over Legal Aid Alberta funding

August 1, 2022
The Impact of the Lack of Legal Aid in Family Law Cases

The Impact of the Lack of Legal Aid in Family Law Cases

July 29, 2022
SCC rules that when someone is required by their partner to wear a condom but do not, they could be guilty of sexual assault.

SCC rules that when someone is required by their partner to wear a condom but do not, they could be guilty of sexual assault.

July 29, 2022
Big Plastic suing feds over single-use ban — again

Big Plastic suing feds over single-use ban — again

July 29, 2022
Tim Hortons offers coffee and doughnut as proposed settlement in class action lawsuit

Tim Hortons offers coffee and doughnut as proposed settlement in class action lawsuit

July 29, 2022

NBA investigating Philadelphia 76ers for possible tampering

July 29, 2022

#MeToo didn’t end sexual harassment in the workplace and vigilance remains a must

July 29, 2022
The SCC has refused to hear the appeal to declare the renewal of the state of health emergency by the Quebec government invalid

The SCC has refused to hear the appeal to declare the renewal of the state of health emergency by the Quebec government invalid

July 28, 2022
Federal privacy commissioner investigating controversial ArriveCAN app

Federal privacy commissioner investigating controversial ArriveCAN app

July 28, 2022
Kraken, a U.S. Crypto Exchange, Is Suspected of Violating Sanctions (US)

Kraken, a U.S. Crypto Exchange, Is Suspected of Violating Sanctions (US)

July 26, 2022
Ontario court certifies class action on former patients’ anxiety from notice of risk of infection

Ontario court certifies class action on former patients’ anxiety from notice of risk of infection

July 26, 2022
The stakes couldn’t be higher as Canada’s top court decides whether to hear climate class action lawsuit

The stakes couldn’t be higher as Canada’s top court decides whether to hear climate class action lawsuit

July 26, 2022
Professor Barnali Choudhury selected by EU as trade and sustainable development expert

Professor Barnali Choudhury selected by EU as trade and sustainable development expert

July 25, 2022

Abuse and harassment survivors ‘silenced’ by non-disclosure agreements fight for change to B.C. law

July 23, 2022
The Supreme Court decision on the ‘Ghomeshi’ amendments will help sexual assault victims access justice

The Supreme Court decision on the ‘Ghomeshi’ amendments will help sexual assault victims access justice

July 5, 2022
AFN Reaches $20 B Final Settlement Agreement to Compensate First Nations Children and Families

AFN Reaches $20 B Final Settlement Agreement to Compensate First Nations Children and Families

July 4, 2022

Why your options may be limited if your employer wants you back in the workplace

July 4, 2022

City directs contractors to reinstate Sikh security guards who lost work due to clean-shaven rule

July 4, 2022
  • ABOUT LITN
  • SUPPORT LITN
  • LEGAL, PRIVACY & POLICY
  • PUBLIC EDUCATION & RESOURCE LINKS
Friday, January 27, 2023
  • Login
  • Register for a FREE LITN account
⚖ Law in the News .com (LITN) Media 📃
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Anti-Corruption Law
      • Antitrust Law
      • Arbitration Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Entertainment Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact Us
    • Support LITN
      • Contribute to LITN Operations
      • Place YOUR Custom Ad on LITN
      • Engage with LITN Sponsored Ads
      • Create a FREE LITN Account
      • Subscribe to the LITN Newsletter
      • Connect, Follow, Like, Retweet and Repost LITN
    • Legal, Privacy and Policy
      • Cookie Policy (CA)
      • Privacy Policy
      • Terms and Conditions
  • Public Education and Resource Links
No Result
View All Result
⚖ Law in the News .com (LITN) Media 📃
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Anti-Corruption Law
      • Antitrust Law
      • Arbitration Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Entertainment Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact Us
    • Support LITN
      • Contribute to LITN Operations
      • Place YOUR Custom Ad on LITN
      • Engage with LITN Sponsored Ads
      • Create a FREE LITN Account
      • Subscribe to the LITN Newsletter
      • Connect, Follow, Like, Retweet and Repost LITN
    • Legal, Privacy and Policy
      • Cookie Policy (CA)
      • Privacy Policy
      • Terms and Conditions
  • Public Education and Resource Links
No Result
View All Result
⚖ Law in the News .com (LITN) Media 📃
No Result
View All Result
Home Bankruptcy Law

Trade Secret and Breach of Confidence Monetary Claim Stayed by Bankruptcy

The purpose of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (BIA) is to relieve an honest and unfortunate debtor of their debts and liabilities. A discharge from bankruptcy releases the insolvent debtor from pre-bankruptcy debts or liabilities provable in bankruptcy subject to certain exceptions.

January 26, 2022
Reading Time: 6 mins read
1
A A
0
Trade Secret and Breach of Confidence Monetary Claim Stayed by Bankruptcy
Share on FacebookShare on TwitterShare on LinkedInShare by Email

PHOTO: Stock Photo

  •   Martin Kratz, SLAW
  • January 26, 2022

The purpose of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (BIA) is to relieve an honest and unfortunate debtor of their debts and liabilities. A discharge from bankruptcy releases the insolvent debtor from pre-bankruptcy debts or liabilities provable in bankruptcy subject to certain exceptions.[1]

An exception to this rule is s. 178(1)(e) relating to “any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation”.[2] Where the exception applies then such debt or liability is not released, and continues to remain enforceable against the debtor after bankruptcy.[3]

A successful claim for misappropriation of trade secrets and breach of confidence was brought against the defendant.[4] The quantum of the damages and the granting of other relief was to be determined at a subsequent hearing. Before that could occur, the defendant made a proposal to its creditors under the BIA, the result of which was an automatic stay of those the proceedings. The proposal to creditors was rejected by a majority of those creditors so that the defendant was, as a result, deemed to have made an assignment into bankruptcy, continuing the stay on proceedings.[5]

The plaintiff went to Court and the motion judge ruled that claim for misappropriation of trade secrets and breach of confidence against the defendant came within the exception.

On appeal from that decision, the Ontario Court of Appeal found that a successful claim[6] against a company for misappropriating trade secrets and confidential information that subsequently made a proposal in bankruptcy was not the kind of claim that fell within the exception.[7]

The Ontario Curt of Appeal noted that to qualify for the s. 178(1)(e) exception under the BIA that the key element of the concept of false pretences was “the making of a deceitful statement – that is, a statement that is false to the knowledge of its maker (including through wilful blindness or recklessness). For s. 178(1)(e) to apply, the debt or liability to the creditor must have resulted from the bankrupt having obtained property or services by making such a statement”.[8]

The Ontario Court of Appeal noted that nature and substance of the liability of the defendant is not one that arose from such a statement. The Court noted that “[a]lthough the liability arose from morally unacceptable conduct of the appellant, that is insufficient to fit it within the exception in s. 178(1)(e) of the BIA”.[9]

The motion judge had not applied the Criminal Code definition of false pretenses[10] finding that the BIA exception was focused on “wrongful and morally unacceptable conduct” and implied deceit in the defendant’s conduct in the litigation.

The Ontario Court of Appeal applied a “textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole”[11] to the exception to the BIA and found the Criminal Code definition to be helpful in that effort.[12]

The Ontario Court of Appeal found that the s. 178(1)(e) exception does not apply to ”all morally objectionable behaviour”[13] but rather requires “a deceitful statement by which the debtor obtained property or services, causing the debt or liability of the creditor to arise”.[14] That was not what had occurred in the instant case.

Having found that the exception was not applicable the Ontario Court of Appeal reviewed its discretionary power to declare that a stay was no longer operative[15] and lifted the stay to permit the action to proceed “for the purpose of quantifying any damages or accounting of profits owing” by the defendant, “establishing the identity of any property still in the possession” of the defendant “that incorporates the trade secrets, and for any forward-looking injunctive relief against” him. “Any monetary judgment shall only be a claim in bankruptcy against the bankrupt estate” of the defendant and may not be otherwise enforced against him. “Any order for the return of any equipment in the possession” of the defendant “that was made using the trade secrets, and any injunctive relief that is granted” against the defendant “restraining any future use by him of the trade secrets may be enforced against him”.

The Court of Appeal noted that “questions of whether the stay should be lifted to permit the respondent to seek any documentary or oral discovery” from the defendant, “or to enforce any future costs awards that arise from his continued participation in defending claims against him, are dependent on circumstances in the continuing action as they evolve” finding those issues would be left to a future Court to assess.[16]

In the result, the plaintiff saw important non-monetary relief such as on going injunctive relief prohibiting future use of the trade secrets and recover of property incorporating the trade secrets survived the stay of proceedings. The plaintiff, however, had to accept that the monetary claims were stayed by the BIA.

_______________

[1] See section 178(2), Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[2] See section 178(1)(e), Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[3] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 1.

[4] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2018 ONSC 5206.

[5] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 2.

[6] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2018 ONSC 5206 where the defendant was found liable for misappropriating trade secrets and breach of confidence. Costs of $83,493 for a summary judgment motion and $307,028 for the trial were awarded.

[7] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925.

[8] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 5.

[9] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 5.

[10] See section 361(1), Criminal Code, R.S.C. 1985, c. C-46 which states “A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it“.

[11] See Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601, at para. 10; Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 25.

[12] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 36.

[13] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 42.

[14] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 44.

[15] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 51; applying Fiorito v. Wiggins, 2017 ONCA 765, 415 D.L.R. (4th) 562, at para. 35, leave to appeal refused, [2017] S.C.C.A. No. 466.

[16] See Shaver-Kudell Manufacturing Inc. v. Knight Manufacturing Inc., 2021 ONCA 925 at para. 53.

GOOGLE ADVERTISEMENT

Want direct access to the latest LITN content?

Stay in the loop ➞ Subscribe to LITN instant notifications.
Receive the latest content delivered directly to your device.
Unsubscribe at anytime.

Unsubscribe from LITN instant notifications
Previous Post

Canada planning technological fixes to make crossing the border faster

Next Post

Migrants, asylum seekers face uphill battle to legally enter Canada and U.S., experts say

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to LITN's Terms & Conditions.

Latest News

More than 10,000 Canadians received a medically-assisted death in 2021: report
Medical Law

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
7
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined
Constitutional Law

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
7
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence
Disability Law

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
7

Subscribe

Join the LITN Newsletter ➞ the latest news delivered to your inbox. Unsubscribe at any time.


GOOGLE ADVERTISEMENT

Instagram Feed

  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://lawinthenews.com/
  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://lawinthenews.com/
  • #LegalTechWoes #legaltech #legaltechpainpoints #legalinnovation  #legalops #legaloperations #legal
#legalgeek #legaltechs #legaltechnology | https://instagram.com/lawinthenews
Courtesy Mat Jakubowski ...silvertownlegal.com | @matjakubowski ... https://www.linkedin.com/in/mat-jakubowski | https://instagram.com/lawinthenews

Facebook Feed

Facebook Feed

Twitter Feed

Join the Conversation

Personal selections from a Canadian perspective. #Law in the #News #LITN @Law_In_The_News

News Categories

Latest Headlines

More than 10,000 Canadians received a medically-assisted death in 2021: report

More than 10,000 Canadians received a medically-assisted death in 2021: report

August 13, 2022
7
Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

Quebec Superior Court suspends Bill 96’s translation requirement until constitutionality determined

August 12, 2022
7
The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

The Ontario government has given Maggie an ultimatum: the disabled teen can lose her funding or her independence

August 12, 2022
7

Subscribe to the LITN Newsletter

Join the LITN Newsletter ➞ the latest news delivered to your inbox. Unsubscribe at any time.

Website Powered By

DJT Design Studios logo

© 2022 Law in the News Media (LITN)

  • About LITN
  • Contact LITN
  • Support LITN
  • Legal, Privacy and Policy
  • Public Education & Resource Links
No Result
View All Result
  • Login
  • Sign Up
  • Latest News
  • Industry News
  • Categories
    • A to C
      • Aboriginal Law
      • Access to Justice (A2J)
      • Administrative Law
      • Alternative Dispute Resolution
      • Analysis
      • Animal Law
      • Arbitration Law
      • Anti-Corruption Law
      • Antitrust Law
      • Banking and Securities Law
      • Bankruptcy Law
      • Cannibis Law
      • Criminal Law
      • Civil Litigation
      • Class Action
      • Commercial Law
      • Constitutional Law
      • Construction Law
      • Consumer Protection Law
      • Contract Law
      • Criminal Law
      • Cyber Security Law
    • D to H
      • Disability Law
      • Editor’s Choice
      • Elder Law
      • Employment Law
      • Environmental Law
      • Estate Law
      • Family Law
      • Highway Traffic Law
      • Housing Law
      • Human Rights Code
    • I to L
      • Immigration Law
      • Industry News
      • Insurance Law
      • Intellectual Property Law
      • International Law
      • Labour Law
      • Latest News
      • Legal Governance
    • M to Z
      • Medical Law
      • Municipal Law
      • Op-Ed
      • Personal Injury Law
      • Privacy Law
      • Real Estate Law
      • Regulatory Law
      • Tax Law
      • Telecommunications Law
      • Transportation Law
      • Workers Compensation Board
  • News Archives
    • 2022
      • July 2022
      • June 2022
      • May 2022
      • April 2022
      • March 2022
      • February 2022
      • January 2022
    • 2021
      • December 2021
      • November 2021
      • October 2021
      • September 2021
      • August 2021
  • Public Education & Resource Links
  • About LITN
    • Who We Are
    • What We Do
    • Our Mission
    • Our Goal
    • Contact LITN
    • Support LITN
    • Legal, Privacy and Policy
      • Home
      • Cookie Policy
      • Privacy Policy
      • Terms of Use Policy

© 2022 Law in the News Media (LITN)

Welcome Back to LITN!

Sign In with Facebook
Sign In with Google
Sign In with Linked In
OR

Login to your LITN account below.

Forgot your password? Sign Up

Create a FREE LITN Account!

Sign Up with Facebook
Sign Up with Google
Sign Up with Linked In
OR

Please complete your registration below.

*By registering into the website, you agree to LITN's Terms & Conditions.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
⚖ Law in the News .com (LITN) Media 📃
Manage Cookie Consent
LITN uses technologies like cookies to store and/or access device information to provide the best user experience. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}
Go to mobile version