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Supreme Court 13 to 18 June

25 June 2020

Decisions, proceedings and news from the highest courts in some common law jurisdictions in the last week are as follows:

Supreme Court of New Zealand

Dunn v R [2020] NZSC 58 (22 June 2020)

Manslaughter, forensic pathologist

Unsuccessful leave application – D convicted by a jury of manslaughter and sentenced to seven years and six months’ imprisonment – CA dismissed appeal against conviction – Sought leave to appeal to SC - At trial, the forensic pathologists agreed that if not for D’s attack, victim would still be alive - Views differed only as to how the attack caused victim’s death - For the appeal to CA, defence obtained a third opinion - Another forensic pathologist raised possibility acute alcohol intoxication caused death – CA rejected theory – D advanced multiple arguments in favour of granting leave – SC rejected all.

High Court of Australia

No decisions released during this period.

Supreme Court of Canada

Hypothec, enforcement of

Toronto-Dominion Bank v Young [2020] SCC 15 (19 June 2020)

Unsuccessful appeal from Quebec CA (reasons translated into English) - In 2009, M received a loan for $306,000 from Toronto-Dominion (“Bank”) – Hypothec on her house secured loan - Hypothec in Quebec’s civil-law system like a mortgage in common-law provinces and territories - She also got a loan of about $94,000 from the Youngs (“Y”) - Second hypothec secured that loan - Y knew about the first hypothec with the bank - M stopped paying her loans. If a hypothec does not get paid, the person owed money can force the property to be sold or can take it themselves – Y asked Quebec court to force M to give up the house in order to pay the debt she owed them - In 2011, the court declared Y owners. But the bank still had its hypothec on the house - Bank asked the court to be allowed to take the house from M because its hypothec not paid – But Y now owned house - Paid bank what M owed in missed payments, even though they did not agree they had to -Bank asked court to force Y to give up the house in order to pay M’s debt - Trial judge agreed with the bank, and said it was the owner- CA disagreed - Said bank only took action against Y who owned the house at the time - Bank did not take action against M who personally owed it the money - CA said hypothec did not exist anymore - Had expired even before the trial judge made his decision - Bank should have taken action against M to stop hypothec from expiring – Now too late for it to do this and try to get its money back from Y – Bank appealed to SC – SC majority agreed with CA and dismissed appeal.

Bail, breach of conditions, mens rea

R v Zora [2020] SCC 14 (18 June 2020)

Successful appeal from British Columbia CA – Z charged with drug crimes and was out on bail - One of his bail conditions was that he had a curfew – Another was that he had to come to the door within five minutes if someone came to check that he was home – Z twice did not come to the door when police checked - Charged with breaching bail conditions – Z said he was home both times but did not hear the door - The trial judge found him guilty of not coming to the door - Summary conviction appeal judge and the Court of Appeal agreed – Z appealed to SC - Courts across Canada had disagreed about mens rea for breaching a bail condition and whether test was subjective or objective – SC unanimous - Said mens rea test for breaching a bail condition was subjective – SC also said how bail conditions should be set - Normally there should not be any bail conditions - If there were conditions, there should be as few as possible – Conditions had be clear, necessary, and match the risk of the situation - Courts should be careful not to set bail conditions that a person could not meet - In Z’s case, SC said there should be a new trial - New trial would decide if he knew he was breaching his bail conditions, or creating a serious risk he would breach them - This was the first time SCC looked at the mens rea for breach of bail conditions.

Hong Kong Court of Final Appeal

No decisions released during this period.

Judicial Committee of the Privy Council

DPP v Seeburrun and anor [2020] UKPC 16 (15 June 2020)

Partially successful appeal from Mauritius SC - S purchased a Mercedes Benz that was imported from the UK - Was a returning citizen and could therefore benefit from a concessionary rate of excise duty – L financed the purchase and used the car, but it was registered in the name S – L, S and another person were charged with conspiracy to do an unlawful act, namely to evade excise duty - L also charged with wilfully and unlawfully having in his possession goods on which excise duty had not been paid - S also charged with swearing a false affidavit in civil proceedings - At trial, the Magistrate dismissed all the charges – Said there was an agreement between L and S, but that what they had agreed to do did not constitute an unlawful act - SC granted the prosecution’s appeal of that dismissal and ordered a retrial – L and S appealed to PC – Question was whether SC was wrong to overturn the dismissal of the charges against them and to order a retrial, or whether the hearing at which it did so was unfair – PC could not see unfairness, allowed appeal to extent that one count was removed - Other counts remained for retrial.

Supreme Court of Ireland

No decisions released during this period.

Singapore Court of Appeal

No decisions released during this period.

Supreme Court of the United Kingdom

Competition law, European Union

Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC and ors [2020] UKSC 24 (17 June 2020)

Unsuccessful appeal from CA - MasterCard and Visa operated payment card schemes - Schemes imposed a number of rules that apply between, on the one hand, banks that issue debit or credit payment cards to their customers and, on the other, banks that contract with merchants - Rules included rules that specify the terms on which transactions must be settled as between the banks of the customer and merchant in the absence of any different agreement between them - One rule was the default multilateral interchange fee ("MIF") - Under both the Visa and MasterCard schemes, MIF payable on debit and credit card payments - When a cardholder pays in a store by card, their bank deducts the transaction value from their account and transfers it to the merchant’s bank minus the MIF - Merchant’s bank then transfers to the merchant the value of the transaction minus a merchant service charge ("MSC") negotiated between the merchant and its bank - Merchants’ banks pass on all of the MIF to merchants through the MSC, with negotiation between merchants and their banks in respect of the MSC being limited to the amount charged by the bank in excess of the MIF - Merchants were therefore not able to negotiate with the banks on the level of the MIF, which typically accounted for some 90% of the MSC for most of the claim period - Various retailers commenced proceedings in different courts, claiming that the schemes’ MIFs infringed Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and equivalent national legislation – Result was three judgments at first instance, each of which had a different outcome, and which were consolidated for appeals to the CA – CA said MIFs restricted competition contrary to Article 101(1) and the equivalent national provisions and that all the cases under appeal should be remitted to the Competition Appeal Tribunal to determine whether the MIF is exempted under Article 101(3) from the prohibition in Article 101(1) on agreements restrictive of competition – Three parties appealed the CA judgment to the SC – SC unanimously upheld CA conclusion that MIFs infringed article 101(1) and its legal rulings on article 101(3), dismissing the appeal.

Supreme Court of the United States

Deferred Action for Childhood Arrivals (DACA), Judicial review, amenity to review

Department of Homeland Security et al v Regents of the University of California et al 18-587 (18 June 2020)

Unsuccessful appeal from 9th Circuit CA consolidated with No. 18–588, Trump, President of the United States, et al. v. National Association for the Advancement of Colored People et al., District of Columbia Circuit, and No. 18–589, Wolf, Acting Secretary of Homeland Security, et al. v. Batalla Vidal et al., 2nd Circuit - In 2012, the Department of Homeland Security (DHS) issued a memorandum announcing an immigration relief program known as Deferred Action for Childhood Arrivals (DACA), which allowed certain unauthorized aliens who arrived in the United States as children to apply for a two-year forbearance of removal. -Those granted relief become eligible for work authorization and various federal benefits - Some 700,000 aliens availed themselves of this opportunity - Two years later, DHS expanded DACA eligibility and created a related program known as Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) - If implemented, that program would have made 4.3 million parents of U. S. citizens or lawful permanent residents eligible for the same forbearance from removal, work eligibility, and other benefits as DACA recipients - Texas, joined by 25 other States, secured a nationwide preliminary injunction barring implementation of both the DACA expansion and DAPA – 5th Circuit upheld the injunction, concluding that the program violated the Immigration and Nationality Act (INA), which carefully defined eligibility for benefits – SC affirmed by an equally divided vote, and the litigation then continued in the District Court - In June 2017, following a change in Presidential administrations, DHS rescinded the DAPA Memorandum, citing, among other reasons, the ongoing suit by Texas and new policy priorities. -That September, the Attorney General advised Acting Secretary of Homeland Security Elaine C. Duke that DACA shared DAPA’s legal flaws and should also be rescinded - The next day, Duke acted on that advice. Taking into consideration the 5th Circuit and Supreme Court rulings and the Attorney General’s letter, Duke decided to terminate the program - She explained that DHS would no longer accept new applications, but that existing DACA recipients whose benefits were set to expire within six months could apply for a two-year renewal - For all other DACA recipients, previously issued grants of relief would expire on their own terms, with no prospect for renewal - Several groups of plaintiffs challenged Duke’s decision to rescind DACA, claiming that it was arbitrary and capricious in violation of the Administrative Procedure Act (APA) and infringed the equal protection guarantee of the Fifth Amendment’s Due Process Clause - District Courts in California (Regents, No. 18–587), New York (Batalla Vidal, No. 18–589), and the District of Columbia (NAACP, No. 18–588) all ruled for the plaintiffs - Each court rejected the Government’s arguments that the claims were unreviewable under the APA and that the INA deprived the courts of jurisdiction - In Regents and Batalla Vidal, the District Courts further held that the equal protection claims were adequately alleged, and they entered coextensive nationwide preliminary injunctions based on the conclusion that the plaintiffs were likely to succeed on their APA claims - District Court in NAACP took a different approach. It deferred ruling on the equal protection challenge but granted partial summary judgment to the plaintiffs on their APA claim, finding that the rescission was inadequately explained - Court then stayed its order for 90 days to permit DHS to reissue a memorandum rescinding DACA, this time with a fuller explanation of the conclusion that DACA was unlawful - Two months later, Duke’s successor, Secretary Kirstjen M. Nielsen, responded to the court’s order - She declined to disturb or replace Duke’s rescission decision and instead explained why she thought her predecessor’s decision was sound - In addition to reiterating the illegality conclusion, she offered several new justifications for the rescission - The Government moved for the District Court to reconsider in light of this additional explanation, but the court concluded that the new reasoning failed to elaborate meaningfully on the illegality rationale - The Government appealed the various District Court decisions to the 2nd , 9th , and D. C. Circuits, respectively -

THE CHIEF JUSTICE delivered the opinion of the Court, except as to Part IV, concluding: 1 (a) DHS’s rescission decision is reviewable under the APA and is within this Court’s jurisdiction - The APA’s “basic presumption of judicial review” of agency action, can be rebutted by showing that the “agency action is committed to agency discretion by law” (b) The two jurisdictional provisions of the INA invoked by the Government do not apply - Title 8 U. S. C. §1252(b)(9), which bars review of claims arising from “action[s]” or “proceeding[s] brought to remove an alien,” is inapplicable where, as here, the parties do not challenge any removal proceedings - And the rescission is not a decision “to commence proceedings, adjudicate cases, or execute removal orders” within the meaning of §1252(g). 2. DHS’s decision to rescind DACA was arbitrary and capricious under the APA - (a) In assessing the rescission, the Government urges the Court to consider not just the contemporaneous explanation offered by Acting Secretary Duke but also the additional reasons supplied by Secretary Nielsen nine months later - Judicial review of agency action, however, is limited to “the grounds that the agency invoked when it took the action.” - If those grounds are inadequate, a court may remand for the agency to offer “a fuller explanation of the agency’s reasoning at the time of the agency action,” or to “deal with the problem afresh” by taking new agency action, - Because Secretary Nielsen chose not to take new action, she was limited to elaborating on the agency’s original reasons - But her reasoning bears little relationship to that of her predecessor and consists primarily of impermissible “post hoc rationalization” - The rule requiring a new decision before considering new reasons is not merely a formality - It serves important administrative law values by promoting agency accountability to the public, instilling confidence that the reasons given are not simply convenient litigating positions, and facilitating orderly review - Each of these values would be markedly undermined if this Court allowed DHS to rely on reasons offered nine months after the rescission and after three different courts had identified flaws in the original explanation - (b) Acting Secretary Duke’s rescission memorandum failed to consider important aspects of the problem before the agency - Although Duke was bound by the Attorney General’s determination that DACA was illegal, see 8 U. S. C. §1103(a)(1), deciding how best to address that determination involved important policy choices reserved for DHS - Acting Secretary Duke plainly exercised such discretionary authority in winding down the program, but she did not appreciate the full scope of her discretion - The Attorney General concluded that the legal defects in DACA mirrored those that the courts had recognized in DAPA - The 5th Circuit, the highest court to offer a reasoned opinion on DAPA’s legality, found that DAPA violated the INA because it extended eligibility for benefits to a class of unauthorized aliens - But the defining feature of DAPA (and DACA) is DHS’s decision to defer removal, and the 5th Circuit carefully distinguished that forbearance component from the associated benefits eligibility - Eliminating benefits eligibility while continuing forbearance thus remained squarely within Duke’s discretion - Yet, rather than addressing forbearance in her decision, Duke treated the Attorney General’s conclusion regarding the illegality of benefits as sufficient to rescind both benefits and forbearance, without explanation - That reasoning repeated the error, treating a rationale that applied to only part of a policy as sufficient to rescind the entire policy - While DHS was not required to “consider all policy alternatives,” deferred action was “within the ambit of the existing” policy, indeed, it was the centerpiece of the policy - In failing to consider the option to retain deferred action, Duke “failed to supply the requisite ‘reasoned analysis’ ” - That omission alone renders Duke’s decision arbitrary and capricious, but it was not the only defect - Duke also failed to address whether there was “legitimate reliance” on the DACA Memorandum - Certain features of the DACA policy may affect the strength of any reliance interests, but those features are for the agency to consider in the first instance - DHS has flexibility in addressing any reliance interests and could have considered various accommodations - While the agency was not required to pursue these accommodations, it was required to assess the existence and strength of any reliance interests, and weigh them against competing policy concerns - Its failure to do so was arbitrary and capricious - THE CHIEF JUSTICE, joined by JUSTICE GINSBURG, JUSTICE BREYER, and JUSTICE KAGAN, concluded in Part IV that respondents’ claims fail to establish a plausible inference that the rescission was motivated by animus in violation of the equal protection guarantee of the Fifth Amendment.

Securities fraud, disgorgement, equitable principles

Liu et al v Securities and Exchange Commission 18-501 (22 June 2020)

Partly successful appeal from 9th Circuit - To punish securities fraud, Securities and Exchange Commission (“SEC”) authorized to seek “equitable relief” in civil proceedings, 15 U. S. C. §78u(d)(5). – SC has previously held that a disgorgement order in SEC enforcement action constitutes a “penalty” for purposes of the applicable statute of limitations – SC did not address whether disgorgement could qualify as “equitable relief” under §78u(d)(5), given that equity historically excludes punitive sanction - Petitioners Charles Liu and Xin Wang solicited foreign nationals to invest in the construction of a cancer-treatment center - SEC investigation revealed they misappropriated much of the funds in violation of the terms of a private offering memorandum - SEC brought a civil action against them seeking disgorgement equal to the full amount they had raised from investors – they argued that the disgorgement remedy failed to account for their legitimate business expenses - DC disagreed and ordered them jointly and severally liable for the full amount – 9th Circuit agreed – they appealed to SC - It said disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible under §78u(d)(5) - When interpreting statutes that provide for “equitable relief,”SC analyzes whether a particular remedy falls into “those categories of relief that were typically available in equity” - Relevant here are two principles of equity jurisprudence. Equity practice has long authorized courts to strip wrongdoers of their ill-gotten gains - To avoid transforming that remedy into a punitive sanction, courts restricted it to an individual wrongdoer’s net profits to be awarded for victims - Whether it is called restitution, an accounting, or disgorgement, the equitable remedy that deprives wrongdoers of their net profits from unlawful activity reflects both the foundational principle that “it would be inequitable that [a wrongdoer] should make a profit out of his own wrong” and the countervailing equitable principle that the wrongdoer should not be punished by “pay[ing] more than a fair compensation to the person wronged” - Remedy has been a mainstay of equity courts, and is not limited to cases involving a breach of trust or fiduciary duty - Petitioners briefly claimed that their disgorgement award crosses the bounds of traditional equity practice by failing to return funds to victims, imposing joint-and-several liability, and declining to deduct business expenses from the award - Because the parties did not fully brief these narrower questions, the Court did not decide them here – Case remitted to 9th Circuit for proceedings consistent with SC view

Last updated on the 25th June 2020