Candidates must fill in correctly the heading on the front of each booklet and envelope provided. Failure to do so may result in the answers not being read.

The news was bad, very bad. Since that fateful day last year, when Tom sold his Canada Savings Bonds and bought shares in Gre-X* , a mining stock on the North York Exchange, Tom’s luck had gone sour. Gre-X was the majority owner of an undeveloped gold mine in Downsorneo. Its stock was traded both on the Houston (Texas) and North York Stock Exchanges. Reports in The Tipster, a Los Angeles-based website devoted to up-and-coming stocks had sent the stock skyrocketing. Tom had barely received the report of his investment in Gre-X when rumours began to circulate that the gold find was bogus. Investors in Houston became nervous, the price of the Houston stock tumbled and it was soon followed by the North York stock. A week later the stock was de-listed in both places and investors lost millions.

Just when all seemed lost, Tom’s friend, Henry Hossberg, of the Toronto firm Hossberg and Associates approached him with a plan. Hossberg is eager to commence a class action in Ontario on behalf of investors to recover damages from anyone and everyone involved in the promotion and distribution of the stock. In particular, Hossberg wants to sue in Ontario because he hopes to effect judgment against the assets of Mildred Mews, a shadowy Spanish figure of uncertain residence and enormous wealth. Mews produces The Tipster and is known to be about to receive 200 million dollars worth of stock in Ontario.

1. a) Would the Ontario court be able to hear the matter? On what basis?
(6 minutes - 3 marks)

b) What factors would the Ontario court consider if asked to stay the matter on the basis that it was an inappropriate forum? How should it decide? (10 minutes - 6 marks)

c) Suppose that Mews was about to receive stock only in Québec. Could the Québec court hear the matter? Suppose that she was about to receive stock only in England. Could the English courts hear the matter? (12 minutes - 6 marks )

Suppose that Mews has decided not to litigate the issues mentioned in Question 1 and Hossberg has moved to have the matter certified as a class proceeding. Hossberg wishes to rely on a presumption found in the U.S. Securities Exchange Act known as the "fraud on the market theory". (By using this theory, Hossberg can argue that the statements made in The Tipster inflated the price of the Gre-X shares on the market and harmed all the investors who bought the shares at the inflated price, not just those who actually relied on the statements in the The Tipster in buying the shares.) The presumption known as the "fraud on the market theory" is part of the U.S. legislative regime C it is not part of the law of Ontario.

2. a) What steps would Hossberg take to seek to have U.S. law applied?
(6 minutes - 3 marks)

b) What objections might Mews raise to the application of this U.S. law? Would she be likely to succeed in preventing its application?
(12 minutes - 7 marks)

Suppose that the venerable Houston legal firm, Cramden and Norton (C&N) has negotiated a settlement with Mews to resolve all outstanding claims against her worldwide in respect of the Gre-X stock and wants to seek approval of this settlement in a Texas court. This settlement agreement is contingent upon terminating the action in Ontario.

3. What steps could C&N take to try to put an end to the Ontario action? Are these steps likely to be effective? (12 minutes - 7 marks)

Suppose that Mews does not defend the Ontario proceedings and she does not receive stock in Ontario but Hossberg’s process server managed to scramble aboard her private jet and serve her with the Statement of Claim as she refueled at Toronto Island Airport en route from Spain to Mexico. A judgment is rendered in favour of the plaintiffs in Ontario and it is then discovered that Mews has assets in Québec and Spain.

4. Could the default judgment against her in this case be enforced in

(a) Québec? (8 minutes - 4 marks)

(b) Spain? (8 minutes - 5 marks)

Suppose that the Ontario court refuses to certify the action as a class action and it proceeds as a regular action between Tom and Mews. Suppose further that Tom is able to prove that he relied on the false statements in The Tipster when he purchased the stock – in fact, that he purchased the stock by clicking on the "Want in?" button on The Tipster’s website. Which, if any, of the following factors might prove to be impediments to Tom’s claim:

5. (a) the expiry of the relevant California limitation period (which we shall assume is classified as procedural under California law) (8 minutes - 4 marks)

(b) the exclusive jurisdiction clause in favour of California found in the fine print on the screen titled "Click yes if you’re ready to make big money" (8 minutes - 5 marks)

Candidates must fill in correctly the heading on the front of each booklet and envelope provided. Failure to do so may result in the answers not being read.

PLEASE NOTE: THIS EXAMINATION PAPER MUST BE HANDED IN TO THE INVIGILATORS AT THE END OF THE EXAMINATION.

1. It has been suggested that renvoi should be replaced with a simple rule that our courts should not apply the foreign law indicated by our conflict of laws rules if the courts of that place would not apply their own law to the case. Explain why you agree or disagree with this suggestion. Illustrate your answer with examples from at least two different areas of private law.

2. It has been suggested that, in deciding choice of law issues in family law matters, the courts have frequently

a) avoided the obvious outcome that would result from the application of the ordinary rules conflict of laws rules and,

b) in so doing, they have preferred to engage in result-oriented reasoning rather than invoke public policy.

Explain why you approve or disapprove of the practice of avoiding the obvious outcome and which is the better (or worse) method of doing so. Illustrate your answer with examples from the cases.

1. Suppose that the Babcock v Jackson case was about to be decided in New York by a panel of three judges selected from the Privy Council, the Supreme Court of Canada, and the Ontario Court of Appeal. If each of these judges bases his or her choice of governing law on the recent jurisprudence emanating from their courts, what differences would you expect to find in the reasoning and the results in each of their opinions? Which approach would you recommend?