• INSURANCE LAWS

United States Court of Appeals for the Second Circuit

10 Ellicott Square Court Corp. Vs. Mountain Valley Indemnity Co. No. 10-0799-CV (Decided on 31.01.2011)

Scope of Insurance coverage- Whether contract that had not been signed can be considered to have been "executed" within the meaning of the primary insurance policy in issue and New York law-Whether Defendant was bound to provide insurance coverage to the Plaintiffs under an umbrella policy-Whether Defendant was estopped from denying insurance coverage to the Plaintiffs by having issued a certificate of insurance identifying the Plaintiffs as additional insureds- Plaintiffs contracted with a third firm- Pre-condition for an agreement required insurance to cover legal liability arising out of the project-Two policies- Primary and other Umbrella-Before Insurance executed- Worker injured-Plaintiffs sought defense and indemnification from the Defendant insurance company-Declined as agreement not executed-Hence the appeal- Appellate Court partly reversed, affirmed and reserved the decision of District Court

Held, the Court disagreed with the District Court's view that under New York law, a contract has been "executed" despite the absence of either a signature by or on behalf of both parties or full performance. Therefore, under its terms, the primary insurance policy's additional insured coverage did not become effective prior to the accident in question. Hence reversed.

Held,the Plaintiffs nonetheless were covered under the terms of the umbrella policy because that policy did not require "execution" of an underlying written agreement to take effect. Hence affirmed in part.

With regard to third issue, the Appellate Court is of divided view. Therefore the question is certified to the New York Court of Appeals and reserve decision on this point pending that Court's action. Thus, the Court's decision is affirmed in part, reversed in part,and reserved in part.

Supreme Court of United Kingdom

Global Process Systems Inc and another Vs. Syarikat Takaful Malaysia Berhad (Decided on 01.02.2011)

Whether the proximate cause of the loss was an insured peril-Scope of the exclusion in a marine insurance policy for loss caused by "inherent vice" in the subject matter insured- Oil rig "Cendor MOPU" was purchased by the Respondents-Respondents obtained insurance from the Appellant-Policy covered all risks of loss or damage to the subject-matter insured except loss, damage or expense caused by inherent vice-Claim due to loss en voyage-Dismissed

Held, Supreme Court unanimously dismissed the appeal as the Court found that the cause of the loss was an insured peril rather than inherent vice. Supreme Court also emphasised that the question of the proximate cause is to be answered, as Bingham LJ noted in T M Noten BV v Harding [1990] Lloyd's Rep 283, "applying the common sense of a business or seafaring man" and on applying these principles, it is not possible to fit the current case into any normal conception of "deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage". The loss had many obvious characteristics particularly the breaking of the legs was neither expected nor contemplated. It only occurred under the influence of a wave of a direction and the fact that the legs were not capable of withstanding the normal incidents of the insured voyage, did not make inherent vice the proximate cause. If that were the case, the cover would only extend to loss or damage caused by perils of the sea that were exceptional, unforeseen or unforeseeable frustrating the purpose of all risks. Therefore the proximate cause of the loss was a peril of the sea, for which the insurers were liable, and not inherent vice.

• INTELLECTUAL PROPERTY LAWS

U.S. Court of Appeals for the Federal Circuit

Tokai Corp. Vs. Easton Enter. (Decided on 31.01. 2011)

Infringement of asserted patents- Whether an invention would have been obvious at the time it was made is a question of law -Plaintiffs owned asserted patents related to safety utility lighters- Competes with Easton in the market - Easton counterclaimed for invalidity-Parties agree that the asserted claims substantially overlap- Tokai moved for summary judgment on Easton's counterclaim of invalidity for obviousness-Court applied the four-factor analysis for obviousness under 35 U.S.C. § 103 -Tokai appealed from the District Court's exclusion of its expert declarations and from the grant of summary judgment of invalidity of the asserted claims-Argued that the District Court abused its discretion-Appellate Court affirmed the summary judgment

Held, on the basis of facts and reasonable inferences in the light most favorable to Tokai, any error in the District Court's analysis of the second factor, the differences between the prior art and the asserted claims is not discerned. The District Court correctly found no dispute that the asserted prior art discloses each element of claim 1 of the '775 patent, claim 1 of the '308 patent, and claims 1, 3, and 4 of the '017 patent. The court also correctly found that the only difference between the asserted prior art and claims 10 and 13 of the '308 patent is the intended position of the thumb and finger for operating the lighter. Moreoever Tokai's corporate representative not once referred to the automatic locking feature of the lighters-i.e., the feature that purportedly distinguishes the claimed inventions from prior art utility lighters. The District Court thus held that because Tokai failed to establish a nexus between the automatic safety feature and the alleged commercial success, Tokai's sales data were not pertinent to the court's obviousness determination. Accordingly, the undisputed facts in this case including the state of the prior art, the simplicity and availability of the components making up the claimed invention, and an explicit need in the prior art for safer utility lighters compel a conclusion of obviousness as to the subject matter of each of the asserted claims. Therefore the District Court did not abuse its discretion affirming the summary judgment with costs to Easton.

• ENVIRONMENTAL LAW

United States Court of Appeals For the First Circuit

Chico Service Station, Inc. Vs. Sol Puerto Rico Ltd. (Decided on 26.01.2011)

Contamination of the site- Pendency of parallel state administrative proceedings led the District Court to abstain from hearing the Appellant's federal citizen suit-Application of the Burford abstention doctrine to Resource Conservation & Recovery Act( RCRA) citizen suits-Puerto Rico, the filling station and associated underground storage tanks(USTs) was operating in the site which is situated on a major road and abuts a small stream-Contained five USTs- Evidence of gasoline associated contaminant led to several environmental studies  - Respondent contended that no soil remediation would be necessary-Suit for declaratory relief and damages-Court stayed the action pending final EQB action-Present suit in the US District Court under RCRA's citizen suit provision, 42 U.S.C. Section6972-Abstained- On appeal held to have been erred and therefore vacated

Held, Abstention occupies an uneasy position in the jurisprudence of federal court jurisdiction. As the common refrain goes,Federal Courts have a 'virtually unflagging obligation to exercise the jurisdiction given them. The circumstances under which a Federal Court's abstention can be sustained are rare. This is particularly true for citizen suits brought under RCRA. In light of the important federal interests at stake and the care with which Congress delineated the situations in which RCRA citizen suits will be barred, only exceptional circumstances could justify abstention. Because such circumstances are not present here, the district court erred in abstaining. Moreover, we conclude that neither the diligent prosecution bar nor mootness can independently support the District Court's dismissal of Chico's suit. We must therefore vacate the judgment of the district court. Costs shall be awarded to the appellants.

• EMPLOYMENT LAW

United States Court of Appeal For the First Circuit

Julio Del Toro Pacheco Vs. Miguel A. Pereira, Secretary of Correction and Rehabilitation Administration (Decided on 31.01.2011)

Political Discrimination- Dismissal from work whether justifiable-Appellant was fired from his job because his superiors disagreed with his political beliefs- District Court granted summary judgment for the Defendants- Appellant could not establish a prima facie case of political discrimination-Hence this appeal-Defendant's gave better work to the SAU employees who were members of the PDP than to those who were members of the NPP-Plaintiff accused of violating articles 142(c) and 289 of the Puerto Rico Penal Code, as well as article 5.15 of the Weapons Law

Held,on reviewing the summary judgment order de novo the grant of summary judgment is affirmed where there are no genuine disputes of material fact and the moving party is entitled to judgment as a matter of law. In pursuing the First Amendment claim, the plaintiff's prima facie case is established by introducing evidence that "(1) the plaintiff and the defendant have opposing political affiliations; (2) the defendant has knowledge of the plaintiff's affiliation; (3) a challenged employment action occurred; and (4) political affiliation was a substantial or motivating factor behind it. The defendants do not contest that they are members of the PDP and Plaintiff is a member of the NPP, nor do they contest him being fired. Thus, Plaintiff has established the first and third elements of his prima facie case. But there is no indication in the record that the affiliation to NPP was a substantial or motivating factor behind his termination nor is there admissible evidence in the record that Defendant knew of Plaintiff's political affiliation. Therefore, the termination decision is affirmed.

• TAX LAW

United States Court of Appeals, Fourth Circuit

United States Vs. Thorson (Decided on 28.01.2011)

Conspiration defrauding tax revenue- Aiding and assisting in the preparation and presentation of false income tax returns- District Court erred in enhancing his sentence-Violation of 18 U.S.C. § 371 and 26 U.S.C. § 7206(2) - District Court applied four enhancements: (1) a two-level enhancement under U.S.S.G. § 2T1.4(b)(1)(A), finding that Thorson had derived a "substantial portion of his income" from the scheme; (2) a two-level enhancement under U.S.S.G. § 2T1.4(b)(2), finding that Thorson had engaged in sophisticated concealment; (3) a four-level enhancement under U.S.S.G. § 3B1.1, finding that Thorson was "an organizer or leader"; and (4) a two-level enhancement under U.S.S.G. § 3C1.1, finding that Thorson "willfully obstructed justice"-108 month's imprisonment-Hence the appeal- Judgment of District Court affirmed

Held, on considering the facts it was held that District Court's findings on the Respondent's contentions that the it erred in (1) enhancing his sentence under U.S.S.G. § 3B1.1, as an "organizer or leader" of the tax fraud scheme; (2) enhancing his sentence under U.S.S.G. § 3C1.1, for obstruction of justice in providing falsified documents to the grand jury; and (3) imposing a sentence that did not serve the need "to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct," 18 U.S.C. § 3553(a)(6) it is found that the Respondent was the member of the conspiracy responsible for keeping the investors "inside the bird's nest" as he was the "closer"; that he was able to persuade people to invest in the partnerships; and that "these transactions could never have gone down" without him are amply supported by the evidence. Because the Court addressed the relevant Guidelines factors it cannotbe said that its findings are clearly erroneous.

With regard to obstruction of justice, it is clear that while the fabricated documents might have been part of the conspiracy's concealment efforts, they were also employed "to subvert the administration of justice during the investigation. In this case, Respondent did more than simply respond to a grand jury subpoena by producing previously falsified documents. Rather, during the civil IRS investigation of his offense, he created documents to thwart the investigation and provide documentation to support the tax deduction.

Coming to the challenge of 108-month sentence, after considering the § 3553(a) factors and addressing each one, the District Court exercised its discretion to impose a sentence within the Sentencing Guidelines range it was accomplishing the Guidelines system's goal of uniformity. Therefore we find no error or abuse of discretion in the sentence imposed. A sentence within the properly calculated Guidelines range is presumptively reasonable and for for these reasons the judgment of the District Court is affirmed.

Federal Court of Australia

Phillip Same Accountants Pty Ltd Vs. Tax Practitioners Board (Decided on 01.02.2011)

Section 44 of the Administrative Appeals Tribunal Act 1975 - An error of law in applying the provisions of Section 251JC(1)(c) and Section 251BC(1) of the Income Tax Assessment Act 1936 - Applicant to be re-registered, the original nominee must satisfy the Board that he is a fit person to prepare income tax returns and transact business on behalf of taxpayers in income tax matters pursuant to s 251JC(1)(c) of the Act-Refused-On appeal four questions raised-Dismissed

Held, with regard to the questions, the Applicant argued that the Tribunal found, in error, that a trust relationship had arisen between the applicant, as trustee, and acquirers of the applicant's services, as beneficiaries, or between the applicant, as trustee, and the Commissioner of Taxation, as beneficiary. The applicant further argues that the Tribunal went on to find that it was a breach of trust for money paid to the applicant for remission to the ATO as GST to be diverted for other purposes. Further argued that the Tribunal misdirected itself as to the matters it was entitled to take into account in determining whether it was satisfied that the nominee was a proper person. The applicant contends that the above errors of law contributed materially to the Tribunal's decision which should, as such, be set aside, and the matter remitted to a differently constituted Tribunal. The Court dismissed the appeal as no error of law was found. Moreover the real dispute between the parties in this matter is a dispute as to the characterisation of the passages of the Tribunal's reasons which are relied upon by the applicant. Although the Tribunal used the expression "breach of trust" in the context of the applicant's, and its nominee, failure to remit GST paid by clients, the Tribunal did not base its decision on a finding that the applicant had breached a trustee's obligations in relation to a trust established at law or equity. Rather, the Tribunal found that a failure by a tax agent to meet the requirement to file his/her own returns in a timely way constitutes "a failure to uphold the confidence and trust attaching to the status of the agent" and the applicant's failure to file Business Activity Statements permitted the nominee, the use of moneys which ought to have been, and which clients would have expected to be, remitted to the ATO.

The correct interpretation of the Tribunal's reasons, when it refers to a "breach of trust" is the dishonouring or violation of the trust and confidence, in the non legal sense of both words, held in the applicant as a registered tax agent by its clients or the public at large. The effect of such a violation being that the public, the applicant's clients or potential clients, can no longer repose confidence in the applicant the Tribunal, on this characterisation of its reasoning, made no errors of law

In determining the 'ultimate question' of whether the applicant's nominee was a person of good fame, integrity and character the Tribunal must take into account all the material concerning the ultimate issue, and place that material in the context of the matters relied up by the appellant. Had the Applicant showed that the Tribunal did not properly consider the nominee's past conduct and likelihood of future conduct, including a proper evaluation of his character and reputation, then the Tribunal would have made an error of law and the matter should be remitted to a differently constituted Tribunal for redetermination. Some factual errors may have been made by the Tribunal as to the timing of remedial measures taken but these had no impact on the overall factual assessment made by the Tribunal. The Tribunal 'balanced' each of the matters in giving the ultimate decision. Therefore appeal dismissed.

• IMMIGRATION LAWS

Supreme Court of United Kingdom

ZH (Tanzania) (FC) Vs. Secretary of State for the Home Department (Decided on 01.02.2011)

Deportation of parents- In what circumstances is it permissible to remove or deport a non-citizen parent where the effect will also be on the child who is a citizen of the United Kingdom-mother's immigration history appalling-Human rights application, claiming that her removal would be in breach of article 8 of the European Convention on Human Rights-Dismissed- Appeal unanimously allowed

Held, Court of Appeal fell into error in two respects firstly concluding that the children's British citizenship did not dispose of the issues arising under article 8 and secondly they endorsed the view of the tribunal that the question whether it was reasonable to expect the children to go with their mother , was to be judged in the light of the fact that both children were conceived in the knowledge that the mother's immigration status was precarious. Although nationality is not a "trump card" it is of particular importance in assessing the best interests of any child. The UNCRC recognises the right of every child to be registered and acquire a nationality (Article 7) and to preserve her identity, including her nationality(Article 8). The immigration authorities must be prepared at least to consider hearing directly from a child who wishes to express a view and is old enough to do so. While their interests may be the same as their parents' this should not be taken for granted in every case. Hence appeal allowed.