Canadian Lawyer

not yet been heard by the court. Schrager also made it clear that even if the U.S. judgments were final and enforceable, established Canadian public policy and courts do not recognize awards for non-pecuniary damages like emotional distress that are above a $100,000 ceil- ing. For instance, one of the California judgments awarded a former employee $17.5 million for shame, mortification, or hurt feelings and $15 million for future mental suffering and physical pain. Jean-Yves Fortin, the Davis LLP insolvency law veteran representing Marciano, said the "huge precedent which we have not seen in Canadian law is obtaining an ex parte order the way it was obtained, obtaining recognition of an interim receiver to seize all of the assets, not only Georges' assets, but third-party assets" held through the Marciano family trust. Mortimer Freiheit, the Stikeman Elliott LLP lawyer acting for CKSM, the trust that holds the Old Montreal real estate, called the Schrager ruling "an important decision reminding lawyers of their obligations on ex parte awards — to make full and fair disclosure of all of the issues and a very important decision with respect to cross-border bankruptcies, that trustees just can't come into Canada and seize." Marciano's legal battle is far from over even though by late December all of the seized assets were returned with petitioners legally obliged to foot the estimated $1-million cost to do so. Blake Cassels & Graydon LLP — whose Montreal insolvency practice head Bernard Boucher is the lead lawyer on the file for the California litigants — is not taking the Schrager judgment lying down, accusing the judge of making a "palpable and overriding error" about what it says was "full, frank, and proper information duly conveyed." In court filings before the Quebec Court of Appeal in early January, Blakes counters that Schrager's assessment of lack of full and frank disclosure and improper court procedure is "manifestly ill-founded," given that its lawyers not only mentioned Marciano was appealing the U.S. deci- sions in three main motions before Corriveau, but also entered actual copies of Marciano's notices of appeals in exhibits, and referred to them in the hearing before Corriveau. It was also "obvious" that a late-breaking U.S. bankruptcy court decision, mentioned on the day of the Montreal ex parte hearing, like any other decision, was not final and subject to appeal. "It is obvious that Justice Schrager blatantly misappreciated the facts in conclud- ing that his colleague [Corriveau] had neither reviewed the allegations of proceed- ings nor the exhibits," Blakes states in a motion seeking to suspend Schrager's order that the seized assets be returned even pending an appeal. Furthermore, Schrager's decision to use the disclosure issue as a "cornerstone" to rescind other Corriveau orders, including the recognition of the foreign bank- ruptcy proceeding and of PwC as interim receiver, does not take into account "complex and novel issues at stake" and that he overstepped jurisdiction belonging to an appeal court by ruling on them. It argues foreign representatives and foreign hearings can be recognized in Canada notwithstanding any appeal, that any debate about the finality of civil judgments in the U.S. does not bar recognition of a U.S. bankruptcy decision, and that PwC should be able to oversee the holding of some of Marciano's assets — notably the diamond and the Rolex watches — as security for interests of the California litigants' pending appeals. Marciano has transferred personal assets to third parties, including the family trust, since the California judgments, and the litigants require some Canadian court protection or will suffer "irreparable harm." PwC, meanwhile, has hired new counsel, Osler Hoskin & Harcourt LLP insol- vency lawyer Martin Desrosiers, to represent its interests in the Quebec appeals. —KATHRYN LEGER, kathryn.leger@videotron.ca www.CANADIAN Lawyermag.com FEBRUA R Y 2012 9 Timmins lawyer jailed over kiddie porn possession of child pornography and distribution of child pornography. Judge Gregory Ellies noted Brad Sloan's "enthusiastic participation" in a child pornography distribution network, at the sen- tencing Jan. 11 According to the Timmins Daily Press, between A February 2007 and October 2009, Sloan, a crimi- nal defence lawyer himself, shared more than 500 images of young girls in various sexual poses with people as far away as the United Kingdom and Australia. In total, more than 4,000 pictures were found on memory sticks in his possession. The Law Society of Upper Canada says Sloan signed an undertaking to restrict his practice in March 2010 while he awaited trial. Now that he has been sentenced, LSUC spokeswoman Susan Tonkin says it will review the undertaking and decide what further action it may take. Sloan's case has stuttered through the sys- tem, delayed from the very beginning because of his use of law office equipment to store and send the images. Police in Timmins were tipped off by a person carrying out service on the law office computer, and invited a representative from the LSUC to observe their execution of search warrants on the 63-year-old's home and office in November 2009. Then the computers and hard drives seized were immediately sealed and stored while the LSUC and the Ministry of the Attorney General hammered out a protocol for the search to occur. The LSUC was worried solicitor-client privilege of Sloan's clients could be compromised if police were allowed to conduct the search because of the client files stored on his computer, and even objected to police holding the seized computers for fear of an accidental breach of privilege. In April 2010, it obtained a court order from Superior Court Justice Patricia Hennessy appointing Deloitte & Touche LLP to act as an independent examiner in the case. He was tasked with separating privileged material and isolating any potentially offensive materials, searching Timmins, Ont., lawyer was sentenced to two years less a day in prison after pleading guilty to possession C ontinued on pa g e 11

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