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Du Comité des langues officielles / Official Languages Committee
Ontario Bar Association | Association du Barreau de l'Ontario
The Ontario branch of the Canadian Bar Association | La division ontarienne de l'Association du Barreau canadien
The articles that appear in this publication represent the opinions of the authors. They do not represent or embody any official position of, or statement by, the OBA except where this may be specifically indicated; nor do they attempt to set forth
definitive practice standards or to provide legal advice. Precedents and other material contained herein are intended to be used thoughtfully, as nothing in the work relieves readers of their responsibility to consider it in the light of their own professional
skill and judgment.
Du Comité des langues officielles / Official Languages Committee
A l'intention des juristes d'expression française / Attention
French-speaking lawyers
Le mandat du Comité des langues officielles est de promouvoir l'usage du français au sein de l'administration de la justice en Ontario et de représenter les intérêts des juristes d'expression française au sein de l'ABO. Le Comité sensibilise l'ensemble de la communauté juridique au bilinguisme juridique officiel, évalue et détermine les besoins des membres d'expression française de l'ABO et veille à ce que l'Association puisse répondre à ces besoins, notamment en matière de formation permanente, de création d'outils de travail et de prestation des services juridiques en français dans la province.
Le Comité des langues officielles invite les membres des sections et leurs exécutifs à proposer des séances de formation permanentes susceptibles d'être présentées soit en français soit dans un format bilingue. Le Comité sera prêt à travailler de concert avec la section concernée, dès l'étape de la planification d'une telle séance jusqu'à sa livraison et son évaluation. Pour explorer cette possibilité davantage, veuillez communiquer avec le président du Comité, Michelle Vaillancourt à mvaillancourt@heenan.ca ou par téléphone (416) 360-3558.
The Official Languages Committee's mandate is to promote the use of the French language within the administration of justice in Ontario and to advocate for French-speaking lawyers in the OBA. The Committee is responsible for increasing awareness within the legal community about official legal bilingualism in Ontario, identifying the needs of French-speaking members of OBA and ensuring that the Association meets these needs, including in the areas of legal education, the development of practice tools and the delivery of legal services in French throughout the province.
The Official Languages Committee invites Section members and Executives to consider presenting their continuing education seminars in French or in both French and English. The Committee would be pleased to help any Section plan, deliver and evaluate such a program. To discuss this idea further, please contact the Chair of the Committee, David Leitch, at dleitch@fsco.gov.on.ca or by telephone at (416) 590-8496.
The Search for Balance in Aboriginal Law John Rowinski*
Only two thirds of the way into the year, and already 2006 is shaping up to be one of the most eventful in recent memory on the Aboriginal Law front.
Perhaps the most prominent development this year has been the ongoing land dispute in Caledonia. There are a number of factors that have thrust this situation onto the front page of many newspapers, not the least of which are:
The financial stakes of a third party developer
The location of the dispute, near major urban centers in Southern Ontario
The occupation has taken place concurrently with the Ipperwash Inquiry
The unique political and cultural structure of the Six Nations of the Grand River
The increase in the number of occupations and protests as a result of First Nation frustration with both the courts and the government-structured negotiation process
The actions of the Provincial government in buying the subject lands in an effort to defuse the dispute
The interventions of a Superior Court Judge in the midst of a multi-party negotiation
This list is not exhaustive. But like Burnt Church, Oka, Ipperwash and others before, Caledonia is destined to become yet another symbol of the ongoing unresolved tension between Aboriginal rights and colonial interests.
In a sense, Caledonia exemplifies the nature and purpose of a group such as the Aboriginal Section. Our Section members come from all aspects of First Nations law: private practitioners, government lawyers, barristers, solicitors, mediators and academics. Caledonia, like most Treaty or land claims disputes, inextricably intertwines the legal and the political. It involves a multiplicity of interests: Aboriginals, all levels of government, commercial enterprises and private citizens.
While each member of our Section may have his or her own personal viewpoint, as a collective we get to hear from each perspective, and hopefully strike a balance between all too often competing views.
Isn’t this very process what the law is all about? Our system of justice is designed to recognize different opinions and experiences, and from among these strike the appropriate balance. The system is not intended to create ‘winners’ and ‘losers’, but rather to come to a fair and just result.
Caledonia is far from over, and the same can be said for the development of Aboriginal jurisprudence and best practices. As this and other challenges unfold, we must strive to learn from them by drawing out the positive progress made in the course of each. Even if we cannot meet the lofty goal of avoiding stark conflicts in the future, we will at least, as a collective, be better-positioned to deal with and resolve them. Through productive dialogue and analysis with a view to the future, it will be possible to look back on the events of 2006 as advancing the development of Aboriginal Law.
* John Rowinski, Torkin Manes Cohen Arbus LLP, (416) 643-8807, jrowinski@torkinmanes.com. John is the Chair of the Aboriginal Law Section.
Family Arbitration Practice is Changing Hilary Linton*
The Family Statute Law Amendment Act 2006, (Bill 27) and its accompanying regulations, was the government’s response to the use of religious law in family arbitrations in Ontario. It will significantly change family arbitration process in Ontario when its relevant sections come into force. (The bill has received royal assent but its operative provisions are not yet in force. The draft regulations have not yet been circulated to the profession.)
Many of the changes are generally positive, given the unique nature of family arbitration. However, we have not seen the regulations that will be passed under this Bill; and they are where the impact of the statute will really be felt.
I have summarized the impact of the Bill and anticipated regulations based on the stage at which they affect the process, be it arbitration, mediation-arbitration or parenting coordination.
Pre-arbitration
Parties must obtain independent legal advice before they sign the Agreement to Arbitrate; otherwise the arbitral award will not be enforceable. ILA (independent legal advice) certificates, likely in a prescribed form, should be appended to the Agreement to Arbitrate.
If the arbitration is taking place pursuant to a marriage contract, the resulting award will be unenforceable unless the parties enter into a new Agreement to Arbitrate.
Agreements entered into before the dispute has arisen are not enforceable, nor are the resulting awards, unless the process meets the statutory definition of “secondary arbitration”. This is arbitration that is anticipated in a pre-existing separation agreement, court order or award; such processes typically deal with making changes to ongoing but variable obligations such as child or spousal support.
If the process is a “secondary arbitration”, the subject matter of the arbitration must be clearly defined in the document that initially provided for arbitration (e.g. a separation agreement or court order).
If there is ambiguity in the agreement, order or award around the issues to be arbitrated, a new Agreement to Arbitrate should be entered into as though it were not a secondary arbitration, to ensure that the arbitrator will have the jurisdiction intended by the parties.
Unless it is a secondary arbitration, the parties should exchange financial disclosure before entering into the Agreement to Arbitrate. This is because family Agreements to Arbitrate are considered domestic contracts under the new regime and must comply with the provisions of s. 56(4)(a) of the FLA (Family Law Act). (One might argue that this may not be necessary if there are no financial aspects of the arbitration.) I recommend appending financial statements to the Agreement to Arbitrate.
Regulations yet to be introduced will require family arbitrators to have specified qualifications, including training and designations.
Regulations will also require each party to be separately screened, before commencing the arbitration, for “power imbalances and domestic violence.” Such screening will most likely be done by a third party, such as a family mediator, or by the lawyer providing ILA, and a prescribed form will likely need to be appended to the Agreement to Arbitrate. The person providing the screening must be appropriately trained, such as an accredited family mediator.
The Agreement to Arbitrate
Regulations will require specified clauses to be included in the Agreement to Arbitrate.
Very importantly, the Arbitration Act now requires family arbitrations to be conducted “exclusively
in accordance with the law of Ontario or of another Canadian jurisdiction”. S. 32(1) of the Arbitration Act, which permits parties to designate the rules of law to apply to their arbitration process, will not apply to family arbitrations.
Parties to family arbitration cannot contract out of the rights of appeal that are provided for in section 45 of the Act, namely a right of appeal on a question of law with leave, which will be granted only if the criteria set out in 45(1) (a) and (b) are met. Appeal rights on questions of fact, or questions of mixed fact and law, are still optional and should be an item of negotiation between counsel.
Confidentiality is a hallmark of arbitration. Regulations will likely require arbitrators to submit information relating to their decisions to a central body of some sort, on a non-identifying basis. Counsel may want to discuss with the arbitrator his or her records-retention and reporting systems, to ensure confidentiality of their client’s information.
Ensuring a Fair Arbitration Process
(a) Court intervention (other than appeals)
Arbitration is intended to be a self-contained process defined by the parties and respected by the courts. Section 6 of the Arbitration Act limits court intervention in arbitration processes to:
assist the conducting of arbitrations;
ensure that arbitrations are conducted in accordance with arbitration agreements;
prevent unequal or unfair treatment of parties; and
enforce awards.
The Act specifically empowers a court to set aside an arbitration award if any of the 9 “procedural justice” standards set out in s. 46 have not been met.
Courts have been reluctant to set aside family arbitration awards under s.46. However, as the recent case of Kainz v. Potter illustrates (May 9 2006, SCJ), where the “procedural and evidentiary flaws” are
so “flagrant and manifest” as to deny as to deny a party “equality and fairness”, the arbitral award will be set aside. With the new standards of family arbitration, and the clear distinction between family and other kinds of arbitration, courts may be willing to intervene in family arbitrations more readily in the future.
(b) Appeals
The standard of review on appeal requires a court to find that the arbitrator acted on the basis of a wrong principle, disregarded material evidence or misapprehended the evidence. In Hunter v. Hunter1
(an arbitration that included income determination issues) and Turgeon v. Turgeon2 (income determination and spousal support), the courts denied appeals of the arbitrators’ awards, finding that the arbitrators in both cases had not acted on the basis of a wrong principle, disregarded material evidence or misapprehended the evidence. The changes to family arbitration process are not likely to have any effect on the standard of review on appeal.
Enforcement of Arbitral Awards
Family arbitration awards will be enforceable through the use of new provisions of the FLA. They mirror the existing enforcement provisions of the Arbitration Act but are more cumbersome and provide courts more latitude for refusing to convert an arbitral award into a court order.
Conclusion
Most of these changes will make family arbitration better, if more expensive. Requiring independent legal advice and exchange of financial disclosure prior to signing the arbitration agreement is good process. Introducing the (mediation-based) concept of “screening” for imbalances of power between the parties, for the purpose of ensuring informed consent, and requiring arbitrators to have a solid understanding of the dynamics of family violence and abuse, both bring family arbitration standards into line with best practices in the family dispute resolution field.
The changes also set the bar higher for those practising family arbitration -- particularly for non-lawyers. Family arbitrators will have to meet specified training and certification standards and maintain arbitration insurance. Requiring family arbitration processes to allow at least a limited appeal right will serve, if nothing else, to enhance the standards of family arbitration processes and awards. For instance, the (rare) practice of conducting a family mediation-arbitration without distinguishing clearly between the two phases will no longer be acceptable.
And family lawyers using arbitrators will need to take more responsibility for negotiating the terms of the agreement and the process. Counsel will be responsible for ensuring that their clients’ agreements and the process are compliant with the legislation.
There remains the risk that the government will pass regulations that are unnecessarily onerous. Our Section has emphasized -- in the many submissions we have made to the Attorney General -- that arbitration is a viable option for many families. Government regulation should be kept to the absolute minimum necessary to achieve the goal of ensuring family arbitrations in Ontario are conducted on the basis of informed, voluntary participation and Canadian law.
* Hilary Linton, LL.B., LL.M. (ADR), practices family mediation and arbitration at her firm, Riverdale Mediation, (416) 466-6264 x224, hilary@riverdalemediation.com. Hilary is the Chair of the ADR Section.
1Hunter v. Hunter (2001) Carswell Ont 4167 (Ont. S.C.J.); Robinson v. Robinson (2000) Carswell Ont. 3264 2Turgeon v. Turgeon (1997) Carswell Ont. 5575 (Ont. Gen Div).
Business Law Reforms have Far-Reaching Consequences Paul J. Stoyan*
Updated from Past Chair, Howard Simmons' article in Briefly Speaking, June 2006.
Relevance of Business Law:
In a short period of time, business law in Canada has changed dramatically. It is no longer just business law, something only technical with lots of paper; one can say, without exaggeration, that business law is now dynamic and exciting. Growing economies in newly developing countries look to obtain expertise from Ontario. For example, experts from India who are modernizing their personal property financing system met in Toronto with our Personal Property Security Subcommittee for advice. They came to the right place.
Business law now impacts many other areas of law, such as family, real estate, wills and trusts, tax, criminal law, civil litigation, charity and not for profit, international, corporate counsel and insolvency law. In the past, business law and criminal law seldom intersected. Now, police or other government officials can arrive at a business with a search warrant. Senior business officers can now be charged with criminal and quasi-criminal offences. The expansive reach of business law opens many possibilities of joint programs with other Sections.
Business law is such a broad field that there are many generalists and many specialists and sub-specialists: a business lawyer deals with unsophisticated first-time start up business owners who will operate part time from the home and also with huge multi-national corporations. This broad diversity in business clients is reflected in the broad diversity in business law programs. For example, there have been programs on the Consumer Protection Act, outsourcing different corporation and partnership entities in structuring a business, cross-border problems, directors' liability, financing and Securities Act issues and programs on managing business law conflicts.
There is in recent years a new evolving and increasingly important part of business law, namely business law reform. For at least 20 years, beginning some time in the early 1980's, business law reform stopped and then slowly began to atrophy. This was bad policy and a bad result at the same time. In a period of rapid globalization and changes worldwide in business, this approach of neglect can be foolhardy. All other provinces did not have the same neglectful approach. Even worse, other jurisdictions outside of Canada did not either. Ontario does not just compete with other provinces but with other major industrial countries – if Ontario's laws are not modern and do not accommodate legitimate business needs on a reasonable basis, then businesses, both from Ontario and outside Canada, will gradually migrate to those jurisdictions that do.
Problems in Business Law:
In part, for this reason and because of increasing globalization, Ontario lawyers started to gain knowledge of the laws of other jurisdictions. If Ontario's corporate laws required the majority of directors to be resident in Canada, then Ontario lawyers would incorporate in other jurisdictions such as New Brunswick. If a U.S. corporation needed an unlimited liability corporation and Ontario did not provide for it, then they would go to Nova Scotia and now Alberta, whose corporate law regimes permit such unlimited liability vehicles. If dealing in financing where the Ontario corporation also has a U.S. subsidiary, then the Ontario lawyer would need some familiarity with the American Uniform Commercial Code (UCC), the relevant part being comparable to our Personal Property Security Act.
Business Law Reform:
We have moved from being a passive participant in a business law reform (which seldom happened) to an active participant initiating business law reform. The relevant government departments now seek out the Business Law Section and its subsections for advice. The two Ontario government departments with the greatest involvements in business law are the Ministry of the Attorney General and the Ministry of Government Service (formerly Ministry of Consumer and Business Affairs). We have had many meetings with senior officials in both departments. All are now interested in business law reform. The Ontario Ministry of Government Services has proposed a Business Modernization Bill to be introduced in the fall which will update many aspects of Ontario's Business Corporations Act and Personal Property Security Act and in doing so will place Ontario on an equal and in certain instances a superior footing with other Canadian and U.S. jurisdictions.
The Corporate Law Subcommittee has presented seriously researched briefs dealing with reform to the Ontario Business Corporations Act. The briefs deal with various topics such as unanimous shareholders agreement, residency of directors, unlimited liability corporations, dissolved corporations, liability powers and duties of directors, minority shareholders and professional corporations. The breadth of the topics, including the thought and expertise that have gone into them, is striking.
The Personal Property Security Subcommittee has proposed changes to the Personal Property Security Act dealing with conflict of law rules, priority between secured creditors and the description of collateral. These changes would avoid frequent delays in personal property transactions and also reduce the cost of secured transactions in Ontario, a cost which is paid by borrowers. Another key and thoughtful recommendation is for a permanent PPSA advisory committee to update the PPSA on a continuous basis and to keep it modern.
Both the Corporate Law Subcommittee and the Personal Property Subcommittee were involved in the successful introduction by the Ontario government of an entirely new statute, Bill 41, the Securities Transfer Act, 2005. This new Act has now passed Third Reading and received Royal Assent on May 18th. The purpose of the Securities Transfer Act is to bring uniformity to the holding, transfer and pledge of investment securities. The Securities Transfer Act is intended to be a complete code governing the holding and transfer of securities and its passage would place Ontario in the top tier jurisdictions globally in this important area and will provide the essential legal underpinning for a modern indirect securities holding system.
The Securities Law Subcommittee, including the leaders in securities law, meet regularly and make recommendations and comment on proposals coming from the Ontario Securities Commission and the TSX. Recently the Securities Law Subcommittee responded to the request for comments published by the Canadian Securities Administrators on proposed National Instrument 62-104 dealing with take-over bids and issuer bids.
The Consumer Law Subcommittee was deeply involved in commenting on the various drafts of the Consumer Protection Act. This new Act was passed on July 1, 2005.
In brief, business law reform seriously thought out, thoughtfully presented, and now eagerly awaited, is becoming the norm. Business lawyers and non-business lawyers alike can access current Business Law Section initiatives and many of the latest legislative developments by reviewing the Business Law Section's website at www.oba.org.
* Paul J. Stoyan, Gardiner Roberts LLP, (416) 865-6611, pstoyan@gardiner-roberts.com. Paul is the Chair of the Business Law Section.
Full Panel of Court of Appeal Revisits Production of Expert's Drafts James C. Morton*
Are the instructions to an expert, and the draft reports of the expert, producible as part of the discovery process or does litigation privilege protect such information, even though the expert is called to testify at trial?
The recent decision of Gillese J.A. (In Chambers) in Coceicao v. Zeneca (July 26, 2006) suggested that instructions and drafts are producible, and that decision In Chambers I noted at the time.
The full panel of the Court of Appeal overturned the decision of Gillese J.A. in Coceicao v. Zeneca (September 20, 2006). The full panel’s decision is based in large part on the timing of the request for disclosure (after the discovery process was complete). The Court of Appeal, in overturning the decision of Gillese J.A., went further however and noted the following:
[20] That is enough to dispose of the respondents' request for review. However, because counsel addressed it in argument, we offer this on one other issue: in our view, this case does not suggest a need to modify the rule of litigation privilege where experts are concerned. There is no doubt that litigation privilege attached to the March 14, 2000 memorandum. It was prepared by counsel as part of defending the lawsuit. That was its substantial if not its only purpose. Moreover as is made clear in the recently decided case of Blank v. Canada(Minister of Justice),[2006] S.C.C. 39, which counsel forwarded to us, there can be no doubt that this privilege continues because the litigation continues.
[21] Taking as a given that a document protected by litigation privilege and part of counsel's work product contains the foundation for an expert opinion, there is no need to remove the privilege for the document itself to do justice. The foundational information in the document is available under rule 31.06(3), if it is sought on discovery. Removing the privilege for the document itself is not necessary to obtain that information, but does run the risk of requiring disclosure of properly privileged information that is often intertwined with discoverable information in the lawyer's work product.
Many thanks to David Debenham and others for bringing this subsequent decision to our attention - the law is always changing!
My comment on the In Chambers decision of Gillespie J. A. in July can be found below:
Instructions to Expert Must be Produced -- Court of Appeal in Chambers
Are the instructions to an expert, and the draft reports of the expert, producible as part of the discovery process or does litigation privilege protect such information, even though the expert is called to testify
at trial? The recent decision of Gillese J.A. (IN CHAMBERS) in CONCEICAO FARMS INC. v. ZENECA CORP suggests that the instructions and drafts are producible. The most crucial parts of the decision are set out below:
[66] It is my tentative view that our system of civil litigation would function more fairly and effectively if parties were required to produce all communications which take place between counsel and an expert before the completion of a report of an expert whose opinion is going to be used at trial.
[67] I can appreciate that discussions between counsel and experts for educational purposes might generally best be ruled to be within the zone of privacy protected by litigation privilege. For instance, counsel might communicate with the expert to discuss what information the expert needed to prepare an opinion. Counsel might also want to communicate with the expert to discuss questions which might be put to the expert or to the opposing expert at trial.
[68] If the communications took place before the preparation of the report, then I am inclined to think it
would [be] best for our system of litigation if they were producible because they would influence the opinion and there would be no practical way of determining this without producing and examining the
communications and hearing submissions on the issue.
[69] Any experienced counsel who has dealt with experts would appreciate how important it would be to
know what the expert was instructed to do, what the expert was instructed not to do, what information was sent to the expert and the extent to which counsel instructed the expert as to what to say, include or omit in the report. McLeish and Smitiuch discuss in their article numerous cases which struggled with these issues.
I would guess that every experienced litigation counsel knows such influential factors are not rare but commonplace. A recent and alarming example was discussed in the recent case of Whiten v. Pilot Insurance
Co. (1999), 42 O.R. (3d) 641, 170 D.L.R. (4th) 280 (C.A.).
[70] In my view, the disclosure of this information would best enable an opposing counsel and the court to assess whether the instructions and information provided affected the objectivity and reliability of the
expert’s opinion. I also note there is much contrary opinion on this subject: e.g. Mahon v. Standard Life Assurance Co., [2000] O.J. No. 2042 (S.C.J.).
[71] This area of the case law cries out for appellate review.
[72] There is much cynicism among the bench and bar concerning the objectivity and reliability of experts'
opinions in today’s litigation. I believe requiring full production concerning the origins of the opinion would
deter inappropriate influence on an expert and help restore confidence in the process.
[37] Although Cheaney pre-dates Stone and Chrusz, it reflects a similar view of rule 31.06(3). In Cheaney, Master Clark ruled that preliminary findings, opinions and conclusions were to be disclosed saying, at p. 798, that “if a finding is expressed in a sufficiently coherent manner that it can be used by counsel, then it is a ‘finding’ that ought to be disclosed”. He adds that the same reasoning applies to “opinions” and
“conclusions”.
[38] Similarly, in Aviaco International Leasing Inc. v. Boeing Canada Inc., [2002] O.J. No. 3799 (Sup. Ct.), Nordheimer J. concluded that draft reports had to be produced because they represent the preliminary findings, opinions and conclusions of the expert and therefore fall within the scope of rule. 31.06(3). Justice Nordheimer expressly endorsed the reasons of Ferguson J. in Browne, saying at para. 16, that a party
ought to be able to explore with an expert whether the expert changed their views from draft to draft and, if so, why. As Nordheimer J. stated, it is all part of testing the expert’s conclusions.
[39] In my view, the reasoning and results in Browne, Cheaney and Aviaco are consistent with the
reasoning of the majority of this court in Chrusz and with the reasoning of the Supreme Court in Stone and are to be preferred to the cases relied on by the respondents.
[40] It will be apparent that I do not accept the respondents' submission that preliminary drafts do not fall within the scope of rule 31.06(3). I would add that I share Nordheimer J.’s view, as expressed in Aviaco at para. 16, that it is important that such material be produced in advance of the trial so that the trial is not
interrupted while the material is reviewed.
[41] Expert opinion tendered by a party is a unique type of evidence. Although generally retained by one
side to the litigation or the other, experts are expected to be neutral. Their testimony is meant to assist
the court and the trier of fact, not to bolster the theory of the case presented by one of the two sides. Their status as experts derives, in significant measure, from the assumption that they will offer the court
objective opinions on which the court is entitled to rely.
[42] Rule 31.06(3) is to be interpreted bearing in mind the role of the expert and the recent jurisprudence
of the Supreme Court of Canada and this court. As such, a broad approach is warranted, one that – in the words of the Supreme Court of Canada in Stone – would enable opposing counsel to have access to the “foundation” of the expert’s opinions. This approach would require disclosure of all foundational information for the expert’s report, whether or not the final findings, opinions or conclusions expressly reflect that information.
* James C. Morton, Steinberg Morton Hope & Israel LLP, (416) 225-2777, jmorton@smhilaw.com.
Expanding the Fora in which the Human Rights Code Is Applied David A. Wright*
In its decision in Seneca College of Applied Arts and Technology v. Bhadauria, [1981] 2 S.C.R. 181, the Supreme Court of Canada held that the courts could not enforce the Human Rights Code (the “Code”) and strongly suggested that the same reasoning would apply to other administrative tribunals. Recent developments, both in legislation and case law, will lead to a change in this law, and mean that both courts and other administrative tribunals will have an important role in directly applying and interpreting the Code.
The change to the role of the courts has been proposed in Bill 107, the provincial government’s legislation revamping the Code. While the bill, which has passed second reading, has received considerable publicity as a result of the fact that it provides for direct access to the Human Rights Tribunal of Ontario, it also brings about a significant change to the role of the courts as established in Bhadauria.
If the bill is passed, the new section 46.2 (1) of the Code will provide, “If, in a civil proceeding in a court, the court finds that a party to the proceeding has infringed a right under Part I of another party to the proceeding, the court may order the party who infringed the right to pay monetary compensation to the party whose right was infringed for injury to dignity, feelings and self-respect.” Section 46.2 (2) will provide, “Subsection (1) does not create a cause of action based solely on an infringement of a right under Part I.” Section 35 (5) bars an application to the Human Rights Tribunal if the matter has been decided by or is before a Court.
These sections give the courts jurisdiction to interpret and award damages under the Code where the human rights violation is linked to another cause of action. For example, in a wrongful dismissal action, a court will be able to award human rights damages if it is found that the dismissal involved discrimination. However, the courts cannot award damages for a human rights violation not part of another cause of action. The result should be a reduction in duplication of proceedings and greater ability of litigants to obtain compensation for human rights violations. Nevertheless, it is likely that there will be considerable litigation over what the legislation means when it says it does not create a cause of action based “solely” upon a violation of the Code.
The Supreme Court of Canada’s decision in Tranchemontagne dealt with a related issue – the jurisdiction of administrative tribunals to apply the Code in the course of exercising their statutory mandates. Appellants to the Ontario Social Benefits Tribunal (“SBT”) had argued that a restriction in the Ontario Disability Support Plan Act that affected alcoholics violated the Code and was therefore inapplicable. The SBT found that it did not have jurisdiction to consider this argument.
In a 4-3 decision, the Supreme Court found that the SBT had the jurisdiction and the obligation to consider the issue of the applicability of the provision under the Code, despite the fact that it was explicitly denied jurisdiction under its enabling statute to decide legislation’s constitutional validity. Noting the SBT’s implicit power to decide issues of law, the Court held that administrative bodies with such powers must consider all sources of law that bear upon the provision, including the Code. The Court also emphasized the quasi-constitutional nature of the Code and the legislature’s intention to give the Code primacy over other legislation. It noted that the legislature had removed a previous provision that it read as having given exclusive jurisdiction to a board of inquiry to determine contraventions of the Code.
The Court also held that since the SBT had no power to decline jurisdiction, it had the obligation to decide the issue and could not defer to the Human Rights Commission. It outlined what in its view were various advantages to having the matter determined at the SBT rather than through the Commission and Human Rights Tribunal of Ontario.
Perhaps the biggest impact of these changes is likely to be in wrongful dismissal litigation. When a dismissal is alleged to be a violation of the Code, and the employee does not want reinstatement, it will no longer be necessary to bring two separate proceedings. While potentially making some wrongful dismissal actions more complicated, this should reduce costs and lead to greater efficiency for employers and employees. More generally, litigation lawyers practicing before all administrative tribunals will have to consider the possible application of the Code to their cases.
* David A. Wright, Green & Chercover, (416) 969-3518, dwright@greenchercover.com. David is the Chair of the Constitutional, Civil Liberties, and Human Rights Section.
Payers Beware! Breach of Trust Liability Under the Construction Lien Act Gregory D. Hersen*
Construction Law practitioners do much more than just register liens and commence actions to enforce them. The practice of Construction Law can include advising clients about construction and develop financing, project delivery methods, contract security, negotiating and drafting contracts, and mediating, arbitrating and litigating all types of construction disputes, including professional liability issues, liens and breach of trust.
Even counsel who do not regularly practise Construction Law should be aware of the existence and effect of the Trust provisions set out in Part II of the Construction Lien Act (the “Act”). The Trust provisions of the Act establish a powerful remedy which can be utilized in conjunction with, or as an alternative to, the preservation and perfection of a lien.
The Trust provisions of the Act generally provide that, except in specific circumstances, owners, contractors and subcontractors are not entitled to use any monies which are deemed to be trust funds under the Act for their own use or to use inconsistent with the trust, until all beneficiaries of the various trusts have been paid in full. One effect of this is that the trust beneficiaries must be paid before the payer’s own office overheads and profits are paid.
The Act further provides that, in addition to the corporation itself, every director or officer of the corporation, and any person, including an employee or agent of the corporation, who has effective control of the corporation or its relevant activities, who is aware of, or participates in, conduct that they know or reasonably ought to know amounts to breach of trust by the corporation, is personally liable for the breach of trust.
Whether a person has effective control of a corporation or its relevant activities is a question of fact and the Court may disregard the form of any particular transaction and the separate corporate existence of any participant in determining the issue of effective control. This means that directors, officers, employees or related corporations can not hide behind a corporation which made improper payments.
The Court’s interpretation of the Trust provisions of the Construction Lien Act have highlighted that great care must be taken by owners, contractors and subcontractors and their officers, directors and employees, in making and accounting for payments in a construction setting. Any payment that is not made to a trust beneficiary runs the risk of being called into question, and may result in personal liability for those in positions of authority.
Knowledge of these issues can be invaluable for counsel who represent corporations or individuals involved in their own construction projects or any other party which makes payment on a construction project. Membership in the OBA’s Construction Law Section can assist in keeping counsel advised of the newest developments in areas such as this which impact on construction projects in Ontario.
* Gregory D. Hersen, Certified Specialist – Construction Law, Partner, Torkin Manes Cohen Arbus LLP, (416) 777-5400, ghersen@torkinmanes.com. Gregory is the Chair of the Construction Law Section.
Ontario Court of Appeal Overturns Superior Court Ruling on the Charter Rights of Autistic Children Robert W. Weir*
On July 7, 2006, the Ontario Court of Appeal overturned the 217 page decision of Justice Kiteley in Wynberg et al. v. Ontario and Deskin et al. v. Ontario (hereinafter “Wynberg Deskin”). Briefly, Justice Kiteley had ruled that the Ontario government’s decision to deny funding of IBI/ABA therapy to children over five years of age was, in fact, a violation of their right to equal treatment at law under section 15 of the Canadian Charter of Rights and Freedoms (the “Charter”). For educators, Justice Kiteley’s ruling was especially significant because it rested on her determination that autistic children could not profit from public education without access to IBI/ABA therapy. Perhaps more significant is the Court of Appeal’s determination that the nature of IBI/ABA makes it impossible to deliver in a school setting.
Background
Wynberg Deskin involves a constitutional challenge brought on behalf of 35 autistic children by 30 families. In 1999, the Ontario government announced the creation of the Intensive Early Intervention Program (“IEIP”) which provided funding for children with autism age two to five. The Wynberg Deskin plaintiffs allege that the fact that the IEIP was not available to them after age five and the fact that IBI/ABA is not available in schools amounted to a violation of their Charter rights.
Counsel for the government argued that, if the parents wanted IBI/ABA therapy, they should seek it directly from the school boards because the government simply establishes the framework for special education and does not actually provide the services. In Justice Kiteley’s view, however, the fact that the Education Act requires the Minister of Education to “ensure” that special needs students are receiving adequate programs made the government not only accountable for the provision of special education programs in school boards but also accountable for any Charter violations. In this regard, the Court found that the Ministry had failed in its statutory duty towards autistic children, including because it did not “develop policy and give direction to school boards to ensure that ABA/IBI services are available in schools.”
Madam Justice Kiteley also found that the Charter rights of the children were violated. In particular, Justice Kiteley found that the age limit within the IEIP violated the equality rights of the children. She held that the age limit discriminated against autistic children because it effectively, in her view, denied them access to education. She held that the benefit that the children sought (IBI/ABA) was analogous to the benefits that other special needs students receive in schools and under Ministry of Education policies. Justice Kiteley determined that, like children with severe learning disabilities or deaf and blind students, autistic children should have services that would allow them access to a range of educational services already provided by the school system. Denying them those services amounted to a violation of their right to be equal before the law.
The Ontario Court of Appeal
The Court of Appeal rejected Justice Kiteley’s fundamental conclusion that children with autism required ABA/IBI to access public education.
To found a claim under section 15 of the Charter, plaintiffs must first establish that the law imposes differential treatment between the plaintiff and others. In this case, Justice Kiteley had concluded that the failure of the government to ensure that school-age autistic children over the age of five had access to ABA/IBI therapy (and by extension the failure of school boards to provide such therapy in the classroom) effectively denied those children access to education. In reaching her conclusion, Justice Kiteley had been convinced that ABA/IBI therapy was the only effective therapy for autistic children, therefore, and the only appropriate special education program.
The Court of Appeal rejected Justice Kiteley’s conclusion in two ways. First, it found that core elements of ABA/IBI therapy could not be delivered within the public school context. In this respect, the Court of Appeal wrote:
“An important element of the IEIP is that the intervention begin as early as possible after early identification or diagnosis. The experts agree that this is essential. However, this would have to be changed to provide that intervention continues when the child reaches school age. Another (element) is that the effective range of hours per week would have to be substantially reduced from the twenty to forty in the IEIP since, as the trial judge found, the school week is only twenty-five hours long, and no more than that could be provided and then only if the child did nothing else. As well, the IEIP contemplates consistent delivery through the calendar year. The trial judge found that the research shows this as being necessary if the program is to be effective, yet the school year runs only for ten months.
The IEIP Guidelines also contemplate the involvement of parents or caregivers directly in the child’s treatment, yet the Minister has no power to ensure that this would happen if intervention consistent with the IEIP Guidelines was attempted within the public school system. The power to permit volunteers to take on duties rests with the school principal, not the Minister, and then only within the strict confines of what is permitted by the governing collective agreement. Finally, the presumption in the IEIP Guidelines is against integrated placements for the children until they have mastered particular skills. The presumption in the education is the reverse. Regulation 181/98 provides that, in placing each child requiring special education, the IPRC will first consider placement in a regular class.”
Second, the Court of Appeal rejected the conclusion that ABA/IBI therapy was the only effective therapy for autistic children and, therefore, the only appropriate special education program. Describing Justice Kiteley’s conclusion that ABA/IBI is the only appropriate special education program for autistic children as a “palpable and overriding error”, the Court of Appeal found that there was simply not enough evidence on the efficacy of other available programs and services for her to reach this conclusion. The Court of Appeal found that Justice Kiteley drew an inference against the government in this regard and did so without sufficient evidence. In doing so, she effectively reversed the onus that properly rested on the plaintiffs to establish that they had experienced differential treatment when compared to other special education communities, such as the deaf or the learning disabled.
Conclusion
Given the importance of the issue to the plaintiffs, it would seem likely that a further appeal to the Supreme Court of Canada will be sought from the decision of the Court of Appeal. Given that the decision, in part, turns upon the Ontario government’s obligations under the specific wording of the Ontario Education Act, it is questionable whether the decision contains the element of national importance necessary for the Supreme Court to grant leave. Additionally, at least on a policy level, the Court of Appeal’s approach is consistent with the judicial restraint demonstrated by the Supreme Court of Canada in Auton v. British Columbia, a decision released earlier this year in which the Supreme Court refused to declare the age cut off in British Columbia’s autism treatment program unconstitutional.
That being said, it is entirely possible that the entire issue of the provision of ABA/IBI treatment for school age children and the delivery of such treatment in schools will still be decided in our highest court. In the meantime, and notwithstanding the decision of the Court of Appeal, educators need to continue to recognize and fulfill their duty to educate and accommodate children with autism.
* Robert W. Weir, Borden Ladner Gervais LLP, (416) 367-6248, rweir@blgcanada.com. Robert is the Past Chair of the Education Law Section.
New Developments in Environmental Class Actions Marc McAree*
The spectre of unlimited liability for contaminated site civil claims is one of the most interesting and challenging issues in environmental law practice today.
Ontario recently finished rolling out mandatory Brownfields legislation. It requires property owners to clean up contaminated sites, and document the clean-up, in order to obtain a building permit where a change of property use is contemplated. Many municipalities now require this clean-up and documentation as a condition of planning approvals.
This legislation provides some limited protection for owners from Ministry of the Environment (MOE) clean-up orders. However, there is no protection from civil claims. Moreover, the Limitations Act,2002 provides that there is no ultimate limitation on undiscovered environmental claims.
There are many small contaminated site claims being negotiated or litigated at any time – for dry cleaners, gas stations and other local polluters.
However, in 2006 the environmental class action has emerged as a significant liability issue facing both industry and municipalities – any organization with operations that may have potentially resulted in widespread contamination.
The Ontario Court of Appeal in January 2006 allowed the certification of a large class action in Pearson v. INCO. The class includes all individuals within the geographical boundaries of Port Colborne whose property values were affected by the disclosure of wide ranging industrial contamination in the year 2000. This class action potentially includes thousands of property owners.
Only a few days after the certification of Pearson, a class action claim was launched in Cambridge, Ontario against Northstar Aerospace (Canada) Inc. and its U.S. parent. The certification hearing has not been held yet. The claim, against a manufacturing company, alleges a class of individuals within a three mile radius of the plant, whose property has been affected by contamination of soil and groundwater by the common industrial solvent trichloroethylene (TCE). A likely carcinogen, TCE is linked to liver, kidney and nerve damage.
While liability is in issue, the contamination has been identified, and the company is working with the MOE and local officials to assess and remediate. The plaintiffs are claiming $100 million in damages for negligence, nuisance, and “breach of duty,” alleging 25 years’ of soil and groundwater pollution. In addition, the plaintiffs claim $10 million in punitive damages for offending “the moral standards of the community.”
The plaintiffs claim that trichloroethylene (TCE) contamination of soil and groundwater has diminished their property values, and prevented them from obtaining mortgages and insurance.
In Alberta, on May 17, 2006, the Court of Queens Bench in Alberta certified the class action lawsuit against Canadian Pacific Railway for contaminating groundwater in Calgary with TCE. The plaintiffs in Windsor v. CPR allege that TCE contamination is causing reduction in property and rental values, on-going remediation costs, inconvenience, and exemplary and punitive damages. Some plaintiffs are bringing individual lawsuits for personal health issues. The Alberta decision is under appeal.
It is not clear how large the pool of potential defendants is in Canada. Nor is the quantum of damages predictable. The leading decision in Ontario on damages for diminution of property value is the Ontario Court of Appeal’s decision in Tridan v. Shell Canada (2002). That decision, while emphasizing the importance of appraisal evidence, does not provide clear guidelines for prospective plaintiffs or defendants in determining damages.
It will be informative to see how many more class actions are launched. Decisions on damages in these cases may also contribute to adding more certainty for those who own, or want to buy, redevelop or divest contaminated land.
The Environmental Law Section is following these developments closely, and intends to keep the profession fully informed so that we can all serve our clients, and ensure that we meet the standard of practice.
* Marc McAree, Willms & Shier Environmental Lawyers LLP, (416) 862-4820, mmcaree@willmsshier.com. Marc is the Chair of the Environmental Law Section.
Will Pension Reform Finally Arrive in Ontario? Wendela Napier*
This article originally appeared in Matrimonial Affairs, Vol. 17, No. 4, May 2006.
In November 2005, the Attorney General invited members of the Family Law Bar to join a working group to discuss a broad range of reforms to existing provincial family law. Progress was somewhat slow initially, but recently seems to have picked up some momentum. First and foremost on the list of needed reforms is the subject of how to treat pensions on marriage breakdown. The working group has been joined by representatives from the Ministry of Financial Institutions, which has consulted with pension plans, actuaries and pension lawyers.
Much time and attention is now being given to better understand the complexities of the problems associated with pension division and to review and analyze the legislation which exists in other Canadian jurisdictions, to get ideas as to what a reformed law might look like.
Nearly every other province and territory appears to have implemented some type of reform. The bad news is that none of these are the same, and while local members of the family law bar actively employ whatever schemes of pension division that their legislation affords, there is still some confusion and dissatisfaction and no unanimously agreed upon ideal method exists. Perhaps Ontario needs to invent it?
The good news is that pension administrators are now as eager for reform as are family law lawyers. The Ontario Court of Appeal decision in Stairs has left pension plans struggling to deal with orders and agreements creating pension interests for non member spouses.
The start of a reform process like this is challenging because the process of study and discussion tends to raise more questions than answers. Nevertheless, all of the stakeholders are unanimous in seeing the value of striving for consensus, even if that entails compromise.
Some of the questions that are being grappled with include:
Should the interest of a non member spouse be valued (in a capital sense) at separation, or when the member retires? If it is valued at separation, what method should be employed?
Should the interest of the non member be transferred out, or should they become members of the plan with different rights?
If the only interest a non member spouse has is not paid out until the member’s retirement, can the non member receive any payments at an earlier date?
What to do with unvested pensions, small pensions, multiple pensions, multiple spouses, retroactivity?
Should the pension division scheme be optional, mandatory, or subject to discretion in prescribed circumstances?
The Family Law Executive will continue to actively seek answers to the above questions which meet the needs of family law clients and lawyers and to promote the tabling of pension reform legislation as soon as possible (ideally by the fall).
Your written comments and suggestions are welcome. Please forward to Wendela Napier by email to wnapier@cawlsp.com, or fax to 416-491-1662.
* Wendela Napier, CAW Legal Services Plan, (416) 491-1211, wnapier@cawlsp.com. Wendela is a Newsletter Co-Editor of the Family Law Section.
“FLAC”: Friendly, Feisty and Feminist Jean Franklin Hancher*
The Feminist Legal Analysis Section - we refer to ourselves as “FLAC” – is a very unique group amongst the OBA Sections. Where most of the other sections focus on a single area of law, FLAC has a wide-ranging interest in all areas of law that touch upon women and children. We take note of procedures and decisions in Family Law, Criminal Law, Employment and Labour Law, Education Law, Civil Litigation, Administrative Law, and Refugee and Immigration Law just to name a few areas of law where women and children can be impacted by less than fair treatment. Accordingly, our Section members come from diverse areas of the practice of law: large and small law firms, sole practitioners, tribunals, the government, in-house counsel, and academia. Thus, we have an interesting cross section of OBA members in our Section.
Occasionally, we question ourselves about our self-chosen Section name which features the “F” word – “Feminist.” But invariably, after considering all other possibilities, we reaffirm our commitment to the term feminist as being the most accurate and honest description of our beliefs and ourselves as lawyers. We wear the label proudly and humbly.
At the risk of being didactic, feminist ideology acknowledges that historically women have been oppressed and disadvantaged as a group in a society where male privilege has been the norm. We believe inequities are rooted in social arrangements, and to the extent possible through law, feminist lawyers try to correct or eliminate the causes of inequality for women and their children. We believe that Canadian society should be changed according to feminist principles so that it is a just and fair society for all people regardless of sex, ability, race, colour, class, sexual orientation, or any other social characteristic. Our emphasis on gender is but one entry point in women’s equality.
Our tools for adjusting society are our lawyers’ skills. FLAC members analyze proposed legislation, court decisions, and scenarios from life – the unfairness of women’s situations that we learn about in our practices – and we speak out against inequities. FLAC has a commitment to hearing silenced voices. We propose amendments, we lobby the government through OBA for changes, and through our programs we put the spotlight on issues we need to think about. More than just highlighting problems, however, we like to be able to suggest remedies, and we go about it in a constructive blend of protest and persuasion.
As a typical example of our identification of problems affecting women in a very particular way, and then mobilizing to think about what we can do as lawyers, our first program this fall is focusing on employment trends and effects for women and work. Two practitioners and a leading feminist academic will discuss various issues around this complex topic at our first program dinner meeting on September 28th. As always, you the practitioner will be invited to ask questions and take part in discussion with speakers following their presentations.
Which brings me to point out – not only does FLAC present topical and thoughtful programming, we do it in a friendly feminist environment! We are respectful of diversity of opinion and we encourage discussion. We welcome all who have an interest in our issues to attend our programs and join our Section. At least three times a year, members receive our newsletter, Voices, and we present three or four excellent programs in a variety of areas of law. Attending a program is a great opportunity to network with like-minded lawyers and help promote diversity within our legal profession. The Feminist Legal Analysis Section welcomes you!
* Jean Franklin Hancher, (416) 231-6065, jeanfh@rogers.blackberry.net. Jean is the Chair of the Feminist Legal Analysis Section.
Health Law is an Expanding Field for Lawyers Jasmine Ghosn*
This is an exciting time to practice Health Law in Ontario. Just this year the Law Society of Upper Canada (LSUC) formally recognized Health Law as a new area in which lawyers can be certified as specialists. The OBA Health Law Section (HLS) was a major contributor to this initiative, assisting in the development of practice standards for certification.
During the 2005-2006 membership year the HLS had 312 members. Our members practice in diverse settings including government agencies, pharmaceutical companies, health care organizations, health professional colleges and associations, private practice, legal aid clinics and all levels of government.
The Health Law field is highly regulated with close to 100 provincial and federal statutes, along with numerous regulations. The field is quite broad, and continues to evolve as the health industry itself continues to become increasingly complex - not only in terms of technological advancements, but also in terms of health policy considerations that drive government action and legislative decisions. Many health policy issues are controversial, consume much public debate, and are often judicially considered, as highlighted in the recent Supreme Court of Canada case of Chaoulli v. Quebec (Attorney General),1 where the outcome may be the advent of private health care.
The Health Law field encompasses medical malpractice, health profession regulation, the delivery of health services through the public and private sectors (including issues related to private health care), health privacy, consent and capacity law, governance of hospitals and long-term care facilities, and regulatory compliance for drugs, medical devices, reproductive technologies, organ donation, public health, emergency preparedness, medical research involving humans, natural health products and health information.
The political and legislative dynamics are just part of the landscape in which health facilities, and health care providers must aim to provide optimal care while facing other challenges such as those imposed by cost constraints, limited resources and the diverse value systems of those who make choices – i.e. the health consumers. Furthermore, as the health professions continue to emerge into non-traditional, diversified and highly specialized fields, health care consumers themselves are becoming increasingly self-informed about health matters, as well as legal rights and responsibilities.
What these and other issues in health care add up to is simply this: the ever-changing health care industry creates a very complex context in which to practice law and to advise on regulatory compliance and risk management in health care. The HLS provides educational programs and a forum for the debate of these issues, and the development of best practices for those who practice in this area.
Health care issues are fundamental to the core values of Canadian society, and the legislative reform initiatives in this area are almost always on our governments’ agendas. For example, in the past year we saw the Ontario government pass the Local Health System Integration Act, 2005 – legislation which significantly devolves decision-making authority relating to the planning, funding and integration of the health system to local health integration networks (LHINs). These are similar in concept to regional health authorities in other jurisdictions.
The Accessibility for Ontarians with Disabilities Act, 2005 became law on June 13, 2005, and is expected to result in accessibility standards to be developed over the next five years for various industries, including the health sector. On November 3, 2005, the Adoption Information Disclosure Act, 2005 received royal assent, and this Act amends the Vital Statistics Act, having impact on birth records. On December 12, 2005 the Budget Measures Act, 2005 received royal assent, having legislative amendments that impact on health professional corporations established by physicians and dentists, permitting income splitting with family members. The Mandatory Gunshot Wounds Reporting Act, 2005 came into effect on September 1, 2005, requiring public hospitals to report to police when they treat a person for a gunshot wound.
Other health legislation has been recently proposed, including three separate private members’ bills and a government bill dealing with controversial issues around organ donation. There is also a strong possibility in the near future for legislative reform around the health professions, as recommended by the Health Professions Advisory Council (HPRAC) in its Report to the Minister of Health and Long-Term Care, released in April, 2006.
In addition to legislative initiatives in the Health Law field, we have seen some significant developments through health care litigation. Cottrelle v. Gerrard2 is a case which is not only considered one of the most important decisions on the causation of damages in medical negligence, but also emphasizes just how complex it can be to conduct a medical malpractice trial. In Young v. Bella,3 the Supreme Court of Canada considered at some length the liability issues around the obligation on health care providers to report to applicable authorities the reasonable belief of suspected risks to public safety. A final example of one of the most significant cases in health law is Chaoulli (supra) where the Supreme Court of Canada considered Charter and Constitutional rights in the context of obtaining insurance for private sector health services already available through the provincial health care plan. This case has stimulated much debate across Canada, and has implications for the insurance, pensions and benefits sectors, as well as for health professionals, businesses and facilities wishing to provide provincially funded health services through the private sector.
As the health care system and the Health Law field continue to evolve, there is much opportunity for practicing in this area. The HLS produces an extremely topical and informative newsletter called “Health Matters”, and is intended to keep Ontario lawyers up to date on new developments in the Health Law field. It is published approximately 4 times a year and is available electronically. We also hold approximately 6 continuing legal education programs each year.
The HLS welcomes you to join our Section, attend our programs and to speak with our members!
* Jasmine Ghosn, Barrister and Solicitor, (416) 985-0362, jghosn@healthlawyer.ca. Jasmine is the Chair of the Health Law Section.
Internet Agreements and the New Consumer Protection Act, 2002: Do your online agreements comply? Lisa R. Lifshitz*
Our clients are increasingly using the Internet to conduct business, both as consumers and as sellers. Accordingly, lawyers should be aware of recent legislative changes in Ontario's consumer protection legislation that were introduced to regulate certain e-commerce transactions. On July 30, 2005 amendments to the Consumer Protection Act, 20021 came into force that significantly enhanced consumer rights and created a new category of consumer agreement known as “internet agreements”. This article will briefly discuss internet agreements and other major amendments brought in by the Act.
Application of the CPA
An internet agreement is an agreement for goods or services that is formed by text-based internet communications. It does not include non-text based agreements, i.e. agreements made through Voice Over Internet Protocol (VOIP) internet communications, which would be categorized as “remote agreements”. The CPA applies when the consumer’s internet agreement’s value exceeds $50.
By way of background, the CPA applies to consumer transactions of both goods and services if either the consumer or the seller is in Ontario. It does not apply in the areas of federal jurisdiction such as banking, certain financial products or services or to consumer transactions regulated by the Securities Act or the Tenant Protection Act. Professional services, the purchase, sale or lease of real property and time-share arrangements are also excluded. Under the CPA, a consumer is an individual acting for personal, family or household purposes and does not include a person acting for business purposes.
Disclosure Obligations
Sellers now have detailed disclosure obligations before the consumer can enter into an internet agreement. These obligations include providing the prospective buyer with: (i) the name, telephone number of the seller, the address from which the seller conducts business and information respecting other ways, if any, in which the seller can be contacted by the consumer (such as fax and email); (ii) a “fair and accurate description” of the goods and services proposed to be supplied to the consumer, including the technical requirements, if any, related to use of the goods or services; (iii) an itemized list of the prices at which the goods and services are proposed to be supplied to the consumer, including taxes and shipping charges; (iv) the total amount that the seller knows would be payable by the consumer under the agreement, including any additional charges, or if the goods and services are proposed to be supplied during an indefinite period, the amount and frequency of periodic payments; (v) terms and methods of payment; and (vii) as applicable, the date or dates on which delivery, commencement of performance or ongoing performance would occur.
If the seller will be performing services, the internet agreement will also have to state: (i) the place where they would be performed, the person for whom they would be performed, the seller’s method of performing them and, if the contract holds out that a specific person other than the seller would perform any of the services on the seller’s behalf, the name of that person; and (ii) the rights, if any, that the seller agrees the consumer will have in addition to the rights under the CPA and the obligations, if any, by which the seller agrees to be bound in addition to the obligations under the CPA, in relation to cancellations, returns, exchanges and refunds.
All sellers have to provide consumers with an “express opportunity” to accept or decline the internet agreement and to correct errors immediately before entering into it. Disclosure has to be accessible and available in a manner that ensures that the consumer has accessed the information and is able to retain and print the information. Consumers must also receive a written copy of the internet agreement within 15 days after the consumer enters into the agreement and the copy must include all of the information described above, the name of the consumer, the date on which the agreement is entered into, etc.
A seller is considered to have delivered a copy of the internet agreement to the consumer if the copy is transmitted in a way that ensures that the consumer is able to retain, print and access it for future reference (such as sending it by email to an email address that the consumer has given the seller for providing information related to the agreement).
Mandatory Provisions
The new CPA has certain mandatory provisions that may prove burdensome to sellers. These include the following:
(i) Application. The “substantial and procedural rights” given to consumers under the CPA apply “despite any agreement or waiver to the contrary”. In other words, neither sellers nor customers can contract out of their rights and obligations under the CPA.
(ii) Arbitration. Any term or acknowledgment in a consumer agreement or related agreement that requires consumers to resolve disputes by arbitration or that otherwise prohibit or limit the right of a consumer to resolve disputes by starting an action in the Superior Court of Justice is invalid. The CPA does allow consumers and sellers and other persons involved in the dispute to resolve a dispute “using any procedure that is available in law” (including arbitration) and such settlement or decision will be binding.
(iv) Quality of Services. Sellers are deemed to warrant that all services supplied under consumer agreements are of a “reasonably acceptable quality”.
(v) Quality of Goods. Implied conditions and warranties applying to the sale of goods under the Sale of Goods Act are deemed to apply “with necessary modifications” to goods that are leased or traded or otherwise supplied under a consumer agreement. Therefore any term or acknowledgement in a consumer agreement that tries to negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under the CPA is void. As often internet agreements try to supply goods/services on an “as is, as available condition”, such clauses will no longer be valid.
(vi) Ambiguities. Any ambiguity that allows for more than one “reasonable interpretation” of a consumer agreement provided by the seller to the consumer (or of any information that must be disclosed under the CPA) will be interpreted in favour of the consumer and provisions in any internet agreement that are not consistent with this requirement will not be enforceable.
Unsolicited Goods
The CPA now contains new provisions that explicitly provide that sellers cannot demand payment if they send consumers unsolicited goods and services, even if the consumer has used, received, misused, lost, damaged or stolen the goods/services. “Unsolicited goods or services” are goods or services supplied to a consumer that were not requested. It also includes changes to periodically supplied goods or services, if the change in goods/services is a material change and goods/services supplied under a written future performance agreement that provides for the periodic supply of goods to the recipient without further solicitation.
If the consumer is receiving goods or services on an ongoing or periodic basis and there is material change in the goods or services, the goods or services will be deemed to be unsolicited from the time of material change forward unless the seller is able to establish that the consumer consented to the material change. Under the CPA, a change or a series of changes is a “material change” if it is “of such nature and quality that it could reasonably be expected to influence a reasonable person’s decision” as to whether or not to enter into the agreement. A request for goods/services cannot be inferred by a seller solely on the basis of a payment made by a consumer, consumer inaction or the passing of time. A consumer can consent to a material change that is made orally, in writing or by any other “affirmative action”, but it is the seller who has the onus to prove the consumer’s consent. Consumers who inadvertently paid for unsolicited goods can demand a refund within one year after making the payment and the seller has to refund the payment within 15 days or face a possible lawsuit from the consumer.
Refunds and Cancellations
Consumers can cancel internet agreements at any time from the date the agreement is entered into until 7 days after the consumer receives a copy of it if the seller failed to disclose any required information or did not provide to the consumer an express opportunity to accept or decline the agreement or to correct errors immediately before entering into it. Consumers can also cancel internet agreements within 30 days after the date the agreement is entered into if the seller failed to send the consumer a copy within 15 days of entering into it; if the copy does not contain the minimum information requirements described above; or it was not delivered in a prescribed manner.
Consumers will now find it easier to cancel an agreement and demand a refund. Notice can be given to any address of the seller known to the consumer (including retail outlets) if the address of the seller was not set out in the consumer agreement or the consumer did not receive a copy of the consumer agreement. Sellers have to make the refund within 15 days of the consumer’s demand/notice to the seller. If a consumer agreement is cancelled, the seller must refund to the consumer any payment made under the agreement or any related agreement. If seller charged a fee or an amount in contravention of the CPA or received a payment in contravention of the CPA, the consumer who paid the charge or made the payment can demand a refund by giving notice within 1 year after making the charge or the payment.
Amendments, Renewals and Extensions
The new CPA severely limits right of a seller to arbitrarily change consumer agreements, including internet agreements. Under the new regime, a seller must: (i) make a proposal for amendment, renewal or extension; (ii) provide to the consumer an update of all the information that was required to be set out in the agreement when it was first entered into and the update reflects the effect of the proposal to amend, renew or extend; and (iii) seek explicit agreement from the party receiving the proposal (merely acknowledging the proposal was received does not equal agreement to the proposal). If the above steps are followed, the amendment, renewal or extension is effective on the date specified in the proposal. The seller must provide a written copy of an undated version of the agreement to the consumer within 45 days after the consumer agrees to the proposal.
The new CPA now limits the way internet agreements can be unilaterally amended. The internet agreement itself must contain a provision that expressly allows this and state which elements of the agreement the seller may propose to amend, renew or extend and at what intervals the sellers may propose such amendment, renewal or extensions. The consumer must be given the following options as alternatives to accepting the seller’s proposal to amend, renew or extend: (a) terminating the agreement; or (b) retaining the existing agreement unchanged. Sellers are also required to give consumers advance notice of a proposal to amend, renew or extend the agreement. Any change will take effect on the later of the date specified in the notice or the date that is 30 days after the day on which the consumer receives the notice. There is no retroactive effect to the consumer’s existing contract before the effective date of the amendment, renewal or extension.
The seller’s notice of proposal must provide a detailed update of all the information required under the CPA to be set out in the agreement when it was first entered into and ensure that the update reflects the effect of the proposal. All changes that are proposed to be made to the amendment must be disclosed, including for each provision that is to be changed, the text of the provision as it would read after the change. The notice must also specify the date on which the amendment, renewal or extension would become effective, specify how a consumer must respond to the notice (at no cost to the consumer and in a way that is easy for the customer to use), state what happens if the consumer does not respond to the notice and must be provided to the consumer in a way that is likely to come to his or her attention. The consumer must receive the proposal at least 30 days but not more than 90 days before the date on which the proposed amendment, renewal or extension will take effect. Unfortunately for sellers, any proposed amendment, renewal or extension to an internet agreement that does not comply with the above requirements is not effective.
Penalties
Sellers who breach the CPA will face certain penalties. The Ministry of Consumer and Business Services can receive complaints concerning conduct in contravention of the CPA, can make inquiries, gather information and attempt to mediate complaints as appropriate. Sellers who fail to comply with any order, direction or other requirement under the CPA or any regulation are guilty of an offence under the CPA. Officers or directors of corporations are guilty of an offence if she or he fails to take reasonable care to prevent the corporation from committing an offence. An individual who is convicted of an offence under the CPA is liable to a fine of $50,000 or up to 2 years’ less one day imprisonment or both. Also, a corporation that is convicted of an offence under the CPA is liable to a fine of not more than $250,000 dollars.2 If a person is convicted of an offence under the CPA, the court can also order the person to pay compensation or make restitution.
Conclusion
The new CPA has clearly enhanced consumer protection, creating many obligations and limits on sellers that are not necessarily required in other Canadian provinces. Penalties (both fines and imprisonment) are much greater than those set out in the earlier Consumer Protection Act, 1990 and failure to comply with the CPA has many negative consequences. Any sellers located in Ontario or that otherwise do business with Ontario consumers should carefully review their existing online contracts and practices to ensure that they comply with the new law to avoid being subject to such remedies or penalties.
* Lisa R. Lifshitz, B.A., M.A., B.C.L., LL.B., Partner, Gowling Lafleur Henderson LLP, Toronto, specializing inn Technology and Business Law. She can be reached atlisa.lifshitz@gowlings.com. Lisa is the Chair of Information Technology and E-Commerce Section.
1 S.O. 2002, c. 30, Schedule A, which replaced the Consumer Protection Act, 1990 (hereinafter, the “CPA”). For an online copy of this Act, please see: http://www.e-laws.gov.on.ca/DBLaws/Statutes/English/02c30_e.htm. 2 Under the old Consumer Protection Act, R.S.O. 1990, C.31, the penalties for individuals were fines of $25,000 or imprisonment for a term of not more than one year, or to both and for corporations, the maximum penalty was $100,000.
Decisions in Insolvency Law affect most Areas of Legal Practice Robin B. Schwill*
I have always believed that insolvency law is a critically integral component of any capitalist or market based economy. It is the necessary flipside to the capital raising and allocation process. In a market based economy, risk capital is allocated to certain enterprises in the hopes that they succeed. Inherently, some (if not many) of these endeavours fail – otherwise it wouldn’t be risk capital in the first place. Accordingly, for a system of risk capital allocation to work efficiently, a supporting system to efficiently reallocate the capital from failed enterprise is a necessarily critical component. This is the purview of insolvency law.
As such, issues of insolvency law have a way of permeating across many other legal areas. The relatively recent and high profile cases of Air Canada and Stelco have highlighted the awkward interplay between insolvency law, labour law and pension law especially in connection with successor employer, director liability, and priority of claims issues. This awkward integration was very recently encapsulated by the Supreme Court of Canada decision in T.C.T. Logistics dealing with successor employer liability issues, and a key topic addressed by the recent amendments to insolvency legislation encompassed by Bill C-55, which was enacted just before the dissolution of the Liberal government as R.S.C., c.47 but has yet to be proclaimed in force (and may not be). Successor employer issues raised in T.C.T. Logistics also heighten concern over environmental law liability issues for the court appointed officer seeking to efficiently reallocate the resources of a failed enterprise.
Business law and corporate counsel are affected by insolvency law in many ways. Notably, in connection with a variety of priority claims issues pre and post insolvency events (which can have an impact on construction lien and other rights), and director and officer liability in light of another recent Supreme Court of Canada decision in Peoples Department Stores. The Stelco restructuring also highlighted director and officer liability and governance issues (another item which would be affected by Bill C-55) and served to augment the very definition of “insolvency”. Whether or not a corporation is legally “insolvent” affects numerous corporate and commercial transactions and it behoves advisors to corporations and their directors to be keenly aware of these issues. Insurance law is also affected by decisions dealing with director and officer liability insurance in restructuring contexts and insurance premium financing. An insurer’s liability is a key issue in the recent MuscleTech restructuring. Of course, in any restructuring involving the sale of all or parts of the business, privacy law issues need to be addressed, together with a host of other areas including real property law (often affected by what entitlements can or cannot be vested out by a bankruptcy court) and tax law. Any large restructuring cannot be completed without sophisticated tax issues being addressed. The rights of licensors and licensees and other intellectual property issues are also often affected by the law in restructuring cases.
Issues of privilege and other rules of evidence matters often arise in connection with litigation against bankruptcy trustees, and other court appointed officers like receivers and monitors. These types of decisions often have a broader affect on general litigation practice.
As the Air Canada case highlighted with the court ordered mediation of labour disputes, alternative dispute resolution practices can be affected by insolvency law proceedings. In addition, many restructurings have court appointed “claims officers” to adjudicate claims. Clearly, a formalized ADR process. As many more large restructurings involve cross-border proceedings, international law issues are becoming frequently the topic of insolvency law decisions as principles of comity, among others, are addressed.
Of course, matters in personal bankruptcies often have a direct impact on many family law issues, and criminal law matters may even arise from time to time, given fraud issues that are sometimes an element of the small or mid-market enterprise.
As can be seen, insolvency law and its related jurisprudence has a pervasive effect on many other areas of the law. For any practitioner specializing in another area of law, insolvency law is an area that’s worth keeping an eye on.
* Robin B. Schwill, Osler, Hoskin & Harcourt LLP, (416) 862-4208, rschwill@osler.com. Robin is the Chair of the Insolvency Law Section.
Key Lessons from Three Recent Insurance Law Decisions Claudia Scherman* Edited by M. A. Chochla.
Bridgewood Building Corp. (Riverfield) v. Lombard General Insurance Co. of Canada1 - April 2006
In Bridgewood, the Ontario Court of Appeal revisits the general principles of the interpretation of insurance contracts and clarifies their limited application to commercial general liability policies.
The case involved two general contractors, Bridgewood Building Corp. (“Bridgewood”) and Beige Valley Developments Limited (“Beige Valley”), who built new residential homes but soon discovered structural defects due to defective concrete supplied by one of their subcontractors. When called upon to indemnify Bridgewood and Beige Valley for the costs of the repairs, Lombard General Insurance Company (“Lombard”) maintained that the insureds’ respective commercial general liability policies (“CGL”) did not provide coverage for this type of loss.
The CGL provides coverage for “property damage” but excludes losses incurred as a result of the insureds’ “own work”. The CGL also specifies that the exclusion does not apply if the damaged work or the work out of which the damage arises was performed by a subcontractor on behalf of the insured.2
Based on the general principles of policy interpretation, Lombard argued that the exception to the exclusion does not restore coverage because coverage did not exist in the first place. As such, the insurer argued that regardless of whether the insureds or their subcontractors caused the defects, the exclusion applies.3 Lombard also invoked public policy considerations, arguing that extending coverage would encourage poor workmanship and manufacturing, and effectively convert CGLs into performance bonds.4 The court, however, disagreed.
Echoing Justice Iacobucci’s interpretative aid approach in Scalera,5 the Court of Appeal in Bridgewood insisted that, standing alone, neither the general nature of policies nor the general principles of insurance contract interpretation could preclude coverage of an insured’s own defective work or product. The key rather is in the exact terms of the policies themselves.6
With regard to Lombard’s policy arguments, the court responded as follows: first, subrogation ensures that ultimate responsibility for poor workmanship lies with the one who performed it; second, practical business realities ensure that the marketplace gradually weeds out unscrupulous general contractors; and third, insurance companies need only to make it clear in their policies if they do not wish to indemnify general contractors on account of their subcontractors’ shortcomings.7
Lombard has filed an application for leave to appeal to the Supreme Court of Canada but in the meantime, insurers should pay particular attention to two points: first, there is no general principle that excludes coverage for an insured’s defective work under CGLs; and second, absent clear and unambiguous language, an insurer is obliged to indemnify a general contractor for losses incurred as a result of a subcontractor’s faulty work.8
Conceicao Farms Inc. et. al. v. Zeneca Corp.9 - July 2006
In Conceicao, a single judge of the Ontario Court of Appeal examines the tension between litigation privilege and the production of documents under rule 31.06(3) of the Rules of Civil Procedure.
The case involved four farmers in Holland Marsh, Ontario (“appellants”) who used a pesticide, Dyfonate, to protect their onion crops. When the Dyfonate failed to properly protect the crops, the appellants brought an action against the pesticide manufacturer, Zeneca Corp. (“Zeneca”).
At trial, Zeneca called an expert witness, Dr. Grafius, to provide key testimony. When Dr. Grafius was asked on cross-examination whether he had been retained by Zeneca’s prior counsel, he responded that he could not recall. When the appellants then requested production of his notes and records, counsel for Zeneca allegedly responded in open court that there were no notes. The appellants did not pursue their request for production and the trial judge, basing his decision largely on factual findings and Dr. Grafius’ opinion, dismissed the appellants’ claims. Several months later the appellants discovered that Zeneca’s prior counsel, Ms. Fox, did in fact retain Dr. Grafius; that they had a long telephone conversation (“phone conversation”); and that Ms. Fox recorded, transcribed and revised the conversation, yielding a lengthy document (“Memorandum”).
When Zeneca invoked litigation privilege to refuse production of the Memorandum, the appellants brought a motion seeking production. Though the trial judge dismissed the motion, the appellants were successful on appeal.
The Ontario Court of Appeal affirms in Conceicao that, pursuant to rule 31.06(3), if an expert testifies at trial as an expert, no privilege attaches to his or her findings, opinions and conclusions. Unexpected, however, is the court’s conclusion that the opposing party must be given access to the foundation of such findings, opinions and conclusions in order to adequately test them.10 In this case, Zeneca was therefore obliged to produce the content of the phone conversation - i.e. the Memorandum itself.11
According to the court, the current demands of discoverability require narrowing the scope of litigation privilege,12 and full production of the origins of an opinion will also deter inappropriate influence on experts and help to restore confidence in the process.13
What this means in practice is that what was once thought to be unequivocally privileged is no longer. Indeed, Conceicao serves as a warning that the court now takes a broad approach to rule 31.06(3) particularly in the context of expert evidence. Several lessons in particular can be taken from the decision: first, if the communications in question take place sometime before the preparation of an expert’s report, they are likely producible;14 second, all foundational information for an expert’s report is subject to disclosure, including preliminary drafts, oral discussions and counsel’s instructions, and regardless of whether the final findings, opinions or conclusions expressly reflect that information;15 and third, even where counsel has prepared a document in anticipation of litigation, if it contains “foundational information” it is producible.
Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada16
In Jesuit Fathers, the Supreme Court of Canada considered whether an insurer, Guardian Insurance Company of Canada (“Guardian”), had a duty to defend an action brought against the Jesuit Fathers of Upper Canada (“Jesuits”) given that claimants failed to communicate their intentions to claim damages against the Jesuits within the policy period.
The dispute arose shortly after a former resident of a Jesuit-operated aboriginal residential school made a claim in January 1994 against the Jesuits alleging sexual, physical and cultural abuse (“Cooper claim”).
Prior to the Cooper claim, there had been several years of ongoing investigations into allegations of sexual abuse against the Jesuits. The Jesuits themselves hired a private investigator who produced a preliminary report in October 1993 in which ten possible victims (including Cooper) were identified based on information gathered from a volunteer named Ms. Mundy.
In March 1994, the Jesuits wrote a letter informing Guardian, the insurer, of the Cooper claim and among other details, provided the names of the nine other possible victims and advised of the potential for similar claims to arise in the near future (“letter”). Upon receipt of the letter, Guardian declined to renew the Jesuits’ comprehensive general liability policy (“Policy”). The Policy thus expired in September 1994 and, thereafter, the Jesuits faced allegations from approximately 100 more claimants.
Though Guardian recognized its duty to defend the Jesuits against the Cooper claim, the insurer denied a duty to defend against the other claims as the latter were not claims first made during the policy period. The court agreed with Guardian: it is a claims-based policy, specifically limiting coverage for professional services “as long as the claims were first made during the policy period”.17 Given that the Cooper claim was the only actual claim made within the temporal limits of the Policy, it was the only one to engage Guardian’s duty to defend.
In coming to this determination, the court also considered what constitutes a “claim”, pointing to three key factors: first, “claims first made” suggests that a claim must be actively made and not merely discovered;18 second, though the policy requires reporting both “occurrences” and “claims” this does not in itself expand the scope of coverage, especially since the “claims” require “demand, notice, summons or process received” and not merely a general description;19 and third, the exclusion clause distinguishes between a “claim” and the “circumstances or occurrences giving rise to the claim”.20 Thus, while a policy may contain some occurrence-based elements, these do not necessarily expand the scope of coverage.21
Finally, the court considered the common law doctrine requiring a claimant to expressly communicate an intention to hold the insured responsible for the damages in question.22 The common law also indicates that where a claim is made by a third party representing a claimant, it must be made with the claimant’s full knowledge and consent.23 Only then will the court consider a claim properly made. Accordingly, while in this case Ms. Mundy identified ten possible victims to the Jesuits’ private investigator, she did not make a claim within the meaning of the Policy, as nothing in the record suggested she had their permission to do so.24
Though the context in which claims are made is essential, and though in Jesuit Fathers the failure to claim within the policy period was largely due to the nature of the claims themselves, this factor in itself did not deter the court from applying a principled approach to contractual interpretation. Indeed, the court was mindful of the rules and principles governing insurance law and paid close attention to the structure and actual wording of the policy read as a whole.25
Canada-China Investment — Catching the Dragon by its Tail Ian A. Laird and Rajeev Sharma*
This article originally appeared in The Globetrotter, Vol. 10, No. 2, November 2005.
Canada’s economic relationship with China has become a hot item on the government’s international agenda. Canada’s International Policy Statement, issued April 19, 2005, says that the federal government wants to double the level of Canada’s trade and investment with China by 2010. The heated debate over China Minmetal Corp.’s potential purchase of Noranda Inc. in the fall of 2004 has sparked renewed anti-globalization fervour on the foreign investment issue. Canada and China have announced that they are now in negotiations over a new international investment treaty.
By reading the tea leaves, it would seem that Canada may be finally committing to the idea that it must fully support international investment.
But despite some encouraging signs, contradictory signals have been coming out of Ottawa for a number of years about the Canadian government’s position on international investment. For example, in the lead-up to the Free Trade Area of the Americas (“FTAA”) meetings in Quebec City in April 2001, then Trade Minister Pierre Pettigrew made statements in favour of weak investment protections. Last year, International Trade Canada released a new model investment treaty (also called a “FIPA”) that some critics suggest is a less investor friendly version of the often derided NAFTA Chapter 11.
Minmetals, a large Chinese state-owned mining concern, has been on an international acquisition hunt for natural resource based companies. While the Noranda-Falconbridge marriage ends the possibility of Minmetals investing in Canada for the time being, the concerns about China’s human rights record that were raised by federal Industry Minister David Emerson remain relevant for other investors looking to invest in Canada. For example, should China National Petroleum Corp.’s recent $4.18 billion bid to purchase PetroKazakhstan be consummated, the Minister may (depending on when the proposed amendments come into force) have an opportunity to examine the proposed investment in light of the “national security” amendment.
On June 20, 2005, the federal government announced – with remarkably little consultation – amendments to the Investment Canada Act. The proposed amendments, if passed by Parliament, would permit the Industry Minister to block investments if he determines that such investments are “injurious to national security”. While the proposed amendments appear to be consistent with legislation in other G8 countries the trouble lies in the undefined discretion of the Minister to determine what constitutes “injurious to national security”. As recent events in the US relating to China’s CNOOC Ltd.’s proposed $18.5 billion bid to purchase Unocal Inc. indicate, the use of the national security trump card is prone to political abuse if such discretion is left unchecked. A more positive sign of Canada’s support for international investment came with Prime Minister Paul Martin’s announcement in January that Canada is negotiating new investment treaties with China and India. Similarly, in remarks following the introduction of the International Policy Statement, Trade Minister Jim Peterson encouragingly noted the importance of both Canadian investment outside Canada and inward investment into Canada.
In the International Policy Statement, Canada has committed to negotiating a “high-quality” investment agreement with China. Hopefully that means the treaty would provide Canadian and Chinese investors protection under international law with direct recourse to an independent, international tribunal. This treaty could be one of the most important international economic agreements Canada will ever sign. It is clearly a stepping stone to a closer economic relationship and a potential free trade agreement with one of the world’s fastest growing economies.
However, some have noted that the Chinese have a record of negotiating investment treaties that are less comprehensive than others. Many of these treaties do not give investors access to international arbitration, and when they do, China conditions such access on first bringing disputes before the Chinese courts.
Canadian business groups, such as the Canadian Chamber of Commerce, and environmental and civil society NGOs have also recognized the importance of such a treaty. Although they may disagree on why it is important, all groups have been seeking direct input into the treaty negotiations. As with the negotiations of the FTAA Agreement, there is a desire for substantive consultation on the Canada-China FIPA so that Canadian negotiators are fully informed about these interests. One hopes that the Canadian government – in the interest of transparency and ensuring essential input - will work to ensure this.
The treaty that results from the Canada-China FIPA negotiations will be important for future trade relations with China. It will provide a solid basis for the regulation of investment between our two countries in a manner rooted in the international rule of law. China recently signed an investment treaty with the Netherlands that permits a private investor to directly make a claim against China in an international arbitration, albeit subject to an initial, expedited domestic review procedure. China is to be applauded for such progress and it is expected that Canada will obtain, at a minimum, similar guarantees for its investors in its current negotiations with China.
On the investment review front, it remains to be seen how Canada will use the “national security” discretion in relation to proposed investments from Chinese state-owned firms but the lack of parameters on the Minister’s discretion to invoke the proposed provision should be cause for concern within the business community.
* Ian A. Laird, Fulbright & Jaworski LLP, and Rajeev Sharma, Heenan Blaikie LLP, are international trade lawyers. Ian is the Chair and Rajeev is a Member-At-Large of the International Law Section.
Labour Relations Challenges in a Pandemic Erin R. Kuzz*
As the threat of a global pandemic receives increasing attention around the world, organizations are considering how best to prepare for the potential crisis. It will undoubtedly be human capital that will be most affected in the event of a pandemic and discussed below are just a few of the pieces of legislation which may have a direct or indirect impact on an employers’ ability to continue its operations in the event of a pandemic.
a)Bill 56
Bill 56, An Act to amend the Emergency Management Act, the Employment Standards Act, 2000, and the Workplace Safety and Insurance Act, 1997, received Royal Assent on June 20, 2006. It gives Ontario’s Premier and/or Cabinet the statutory authority to declare an “emergency”, defined as “a situation or an impending situation that constitutes a danger of major proportions that could result in serious harm to persons or substantial damage to property and that is caused by the forces of nature, a disease or other health risk, an accident or an act whether intentional or otherwise”.1
Of particular significance to employers are the amendments that Bill 56 makes to the Employment Standards Act, 2000 providing that an employee, in certain situations, will be entitled to a job protected leave of absence without pay (“personal emergency leave”) in circumstances where the employee will not be performing the duties of his or her position because of a declared emergency.
b) Workplace Safety Legislation
During a pandemic, employees may refuse to attend at or perform work, due to a real or perceived risk of exposure to diseases. Although the standards differ, both the Ontario Occupational Health and Safety Act and the Canada Labour Code provide that a worker may refuse to work, pending an investigation, if he or she has reason to be concerned about his or her health and safety on the job. If the investigation determines that the conditions complained of are unlikely to be a source of danger, the worker will be required to return to work.
The work refusal provisions in the Canada Labour Code were relied on, unsuccessfully, by federal government employees who worked with the public during the SARS outbreak in 2003.2 The cases cited below demonstrate that, in the event of a pandemic, employers should be proactive in conducting workplace risk assessments and maintain an open channel of communication with employees with regard to their concerns. This will ensure the safety of workers and prevent potential disruptions due to work refusals.
c) Health Protection and Promotion Act
The Ontario Health Protection and Promotion Act confers on medical officers and public health inspectors the authority to issue orders that are “necessary in order to decrease the effect of or to eliminate the health hazard”. Such orders may require an employer to vacate, close or close part of the premises, do certain work and remove health hazards. This may also impact on an employer’s ability to continue operations in the face of a pandemic.
Prudent workplace parties are turning their minds to how they will deal with a possible pandemic in light of this legislative regime. Unions, employers and employees need to work together to minimize the impact of a pandemic on the workplace during what will undoubtedly be a very difficult time. This, of course, is to ensure not only the viability of the commercial enterprise itself, but also continued employment for employees.
* Erin R. Kuzz is a lawyer with the law firm Sherrard Kuzz LLP in Toronto. The firm specializes in advising and representing management in all matters of employment and labour law. Erin can be reached at 416.603.0700 (Main), 416.420.0738 (24 Hour) or by visitingwww.sherrardkuzz.com. Erin is the Chair of the Labour Relations Section.
1 Bill 56, An Act to amend the Emergency Management Act, the Employment Standards Act, 2000, and the Workplace Safety and Insurance Act, 1997, 2d Sess., 38th Leg., 2006 cl. 1(2) (assented to 20 June 2006). 2 See e.g., Re Chapman and Canada (Customs and Revenue Agency), [2003] C.L.C.A.O.D. No. 17 (QL), Re Caverly and Canada (Human Resources Development), [2005] C.L.C.A.O.D. No. 10 (QL).
Conflict Protocols and Vicarious Liability — Painful Lessons David Debenham*
Our Section is pursuing some exciting new initiatives this year, such as a listserve so managing partners can consult each other by e-mail to get advice on problems that other firms may have faced in the past. We are also producing a basic “How to Manage a Law Firm” binder so that those new to the job have a resource to answer questions associated with the finance and administration of their law firm. The Section will continue to produce a newsletter that carries articles from my law firm consultants and others on the various issues of the day, and it will also continue to run law firm management seminars periodically, either in the traditional format, or by way of teleconference or videoconference formats. The newsletter also updates members of case law that is of interest to managing partners, such as the Strother1 case that was recently released by the British Columbia Court of Appeal.
Managing Partners and the “Darc” side of Sentinel Hill
In Strother, one of the tax partners of the law firm represented a company, Monarch, that had enjoyed certain tax benefits as a result of his advice and guidance. When the tax laws changed, the company closed down operations based on his advice, although continuing to be a client of the firm. Later, one of the ex-managers of the ex-client Monarch, a Mr. Darc, retained the same tax partner to devise a way around the new tax law and obtain the same tax benefit for a new company that he owned, Sentinel Hill, and to obtain an advance tax ruling to confirm that the new scheme to achieve that tax benefit had indeed been achieved by the tax planner’s new tax plan. When initial indications from Revenue Canada were positive, the tax partner entered into a contingency agreement with the new corporate client which would share the tax benefits achieved by the plan with Mr. Darc’s company. The tax partner later asked the permission of his firm’s managing partner for ratifying his purchase of shares in Sentinel Hill. This request was refused, although the managing partner did not twig to the possible conflict with Monarch, a continuing client of the firm. Despite the ruling, the tax partner continued his part ownership of Mr. Darc’s company. Sentinel Hill then continued the former business of Monarch, took advantage of the tax benefit in question under the tax partner’s new tax scheme, and made several millions of dollars. Monarch sued the firm for the millions it would have made had it been advised on how to retain its tax benefit if it wanted to continue its business.
On these facts, the Court of Appeal held that because Monarch had suffered no monetary loss, the case fell to be decided on fiduciary principles. The tax partner clearly profited personally from his service to Monarch, and breached his fiduciary duty by participating in the diversion of its corporate opportunity to one’s of ex-employee’s companies without the proper disclosure and waiver. As a matter of principle, other partners, or the law firm as a whole, will be implicated directly in the breach of fiduciary duty and the resulting accounting of profits where there was either direct participation in the breach (either through joint participation or knowing assistance in the transaction), or knowingly receiving the proceeds of the breach. On the facts, there was no such participation. As an alternative form of liability, the law firm was found not to be vicariously liable for the tax partner’s actions under the British Columbia’s Partnership legislation because his continued ownership in Sentinel Hill after being forbidden to do so meant that the tax partner was not acting in the ordinary course of their firm’s practice. However the firm was obliged to return to Monarch all fees paid to it after it was retained by Sentinel Hill. At that juncture, the firm was in a conflict of interest whose disclosure would have resulted in independent counsel for Monarch, as well as disclosure of the fact that the tax partner’s earlier advice that the tax benefit was no longer available to Monarch was no longer necessarily correct.
The results of this case may well have been different under s. 11 and 13 of Ontario’s Partnership Act, re-confirming the need for every firm to have immaculate and unimpeachable conflict protocols, including not only initial conflict checks but a conflicts procedure and committee in place, to prevent a sizeable vicarious liability for the firm where principals of companies retain the same firm to carry on the business opportunities of existing clients.
* David Debenham, Lang Michener LLP, (613) 232-7171,ddebenham@langmichener.ca. David is the Chair of the Law Practice Management Section.
1 3464920 Canada Inc. v. Strother [2005] B.C.J. 1655 (C.A.)
Recent Decisions affect Pension Plan Benefits Mark Rowbotham*
Over the last few years, the Courts have taken a significant role in resolving complex pension and benefit disputes. If the early part of 2006 is any indication, this trend appears determined to continue. Two cases of particular note, which were released this year, are the Ontario Divisional Court decision in Nolan v. Superintendent of Financial Services (better known as Kerry) and the Supreme Court of Canada decision in Buschau v. Rogers Communications Inc. Both cases deal with trusts in the context of pension plans and are important in that they attempt to clarify issues related to the administration and management of pension plans.
Kerry
The Kerry case focuses attention on pension plan sponsor’s ability to pay pension administrative expenses from their plan funds when such funds are subject to a trust. The case reaffirms that historical plan language is critical and unless the original documentation provides for the payment of expenses from the fund or the plan sponsor has reserved the power to revoke the trust and has made subsequent amendments to allow for payment of expenses, the sponsor will likely not be permitted to pay administrative expenses from the plan fund. In this case, the plan sponsor was required to reimburse the fund for all expenses that had been improperly paid out of the fund. Similar reasoning was also used to restrict the plan sponsor's ability to use plan surplus to fund defined contribution benefits following a conversion of the plan from a defined benefit format to one that provides for both defined benefits and defined contributions.
Leave to appeal has been granted.
Buschau
Buschau, among other things, addresses the issue of whether pension plan members can invoke trust law to terminate a pension plan. Relying on the common law trust doctrine in Saunders v. Vautier, the Respondent plan members pursued an application to terminate the plan, which had been closed to new members, and have the surplus in that plan distributed.
The Supreme Court of Canada disallowed the plan members' attempt to acquire the surplus, holding that in the heavily regulated pension environment, the common law rule in Saunders v. Vautier was not appropriate and did not accord "with the spirit of the social scheme, the purpose of which is to provide periodic payments during members' lifetimes". The Buschau decision is significant, since it moves away from the "classic" trust interpretation and recognizes the "special" nature of pension trusts and the unique environment in which pensions are created.
OBA Pensions and Benefits Section
The Pensions and Benefits Section Executive, which this year is 25 strong, brings together employee and employer side practitioners, in-house lawyers as well as those from human resource consulting firms. If the above cases are of interest, the Executive provides a periodic newsletter entitled "What's New in Pensions and Benefits" which provides regular case law and regulatory updates. The Executive also maintains an active CLE schedule which would appeal to practitioners with a specialty in, among other disciplines, corporate, employment, tax, family, or trust law.
* Mark Rowbotham, General Counsel (Canada), Hewitt Associates, (416) 590-8870, mark.rowbotham@hewitt.com. Mark is the Chair of the Pensions and Benefits Section.
Representing the Interests of the Public Sector Bar Deanna M. Exner*
This article originally appeared in the Public Sector Lawyers' Section Newsletter,
Vol. 5, No. 1, September 2006.
Colleagues;
Almost six years have passed since our Section was inaugurated under the leadership of public sector lawyer and CBAO President, Thomas C. Marshall, Q.C. In his 2001 letter welcoming members to the Section, he reminded us that, “(t)hose who practice law in the public sector are often unrecognized for the critical roles they play in the due and proper administration of justice and public affairs. The practice of public law – practice of government at all levels – is a discrete area. I strongly believe that public sector lawyers need a voice in their own interest and have much to offer the profession in return.” He also noted that public sector lawyers “comprise 13% of the practising Bar in Ontario.”
As the Section evolved and began to further define itself, it became obvious that issues facing lawyers employed in traditional levels of government were also encountered by lawyers employed in the broader public sector; such as those giving advice to school boards, hospitals, universities, professionally regulated bodies and other organizations that govern in the public interest. We are essentially united by a common thread that requires our legal advice to reflect the consideration of the public interest, as opposed to more narrow private interests. Recent estimates suggest that lawyers practicing in the broader public sector are perhaps close to 30% of the Ontario Bar membership. Our 2006-2007 Section Executive now includes members from the private sector and broader public sector. We continue to encourage lawyers in the more traditional public service and lawyers engaged in the broader public service to join the Section. We also welcome the membership of private sector counsel who engage in work in the public sector. The more that we meet and work together, the more we find that we encounter similar issues.
As Chair of this Section, I look forward to continuing to lead the Section in advancing our unique perspective in OBA initiatives. Our Section has and continues to play an important role in the work of the OBA’s Task Force on Bill 107 (Human Rights Code Amendment Act, 2006). Our input and submissions have reflected a unique perspective on this proposed dramatic change to Ontario’s current human rights system. I have been told that our Section raised issues that other Sections did not raise and that our perspective has been helpful in assisting the chairs of the task force define their position. We also look forward to and are pleased to have already organized the following upcoming events that reflect public sector lawyers’ interests:
September 26, 2006 an evening reception for students articling in the broader public sector, featuring an address by the Honourable Justice Peter Cory, Q.C;
November 9, 2006, significant participation in the First Annual Privacy Law Summit jointly with the Health Law, Business Law and Municipal Law Sections; and
February 2007, a half day session during the OBA Institute, discussing a range of issues that arise for lawyers who act for public bodies and the essence of the duties that are owed.
The year ahead presents us with extensive opportunities to identify and explore more similar issues faced by lawyers practicing in the broader public service; and to share what we learn from each other more broadly.
* Deanna M. Exner, Association of Law Officers of the Crown, (416) 340-0081, mail@aloc.ca. Deanna is the Chair of the Public Sector Lawyers' Section.
The Future of Real Estate Lawyers – It is Ours to Lose Raymond G. Leclair*
Today’s real estate lawyers are being challenged everyday. Luckily the real estate industry is vibrant and lawyers are busy. So busy with the files on their desks they are not looking at the long range global challenges facing our industry and practices. Our services are being turned into a commodity. Real estate lawyers have been on
a 20 year race to the bottom. Lawyers are quick to blame real estate agents, banks, technology and recently title insurance. Unfortunately, the truth is, lawyers have
our selves to blame for our problems. Like every other business, our industry is changing and we have failed to see it and act on it. Our traditional relationships have faded away and we have not replaced them with anything.
Real estate lawyers have always been the trusted advisor in the real estate transaction. We have improved real estate titles and properties over the last 200 years by our
constant scrutiny in successive transactions. Unfortunately, we are abandoning these qualities for
which the public kept us in the transaction. Technology has created many opportunities; however we need to assess how to use technology to permit efficiencies while retaining the core values we add to the real estate transaction. Because real estate is so much about handling paper and record keeping, we have, under pressure, concentrated on these elements of the transaction. Reality has shown us
that others using technology can be much more efficient doing the same and at lesser costs because they do not have our constraints of education, ethics and insurance, amongst others. As the pressures on our real estate practices grew, our relationships waned, fees lowered, we concentrated on playing the other parties’ game and competing by lowering our prices, standards and involvement with our clients. In fact, we should have and now must refocus our practices, remind ourselves of our value in
the transaction, increase our time spent with clients and concentrate on giving advice and assisting our clients through a traumatic time in their lives; dealing with what is usually their most significant financial asset, not to mention the emotional capital invested.
Unfortunately we are so busy trying to make a living on a daily basis that most of us do not have the time to evaluate what is happening to our industry and lack the time, money or energy to act to preserve it. Our independence generally hinders us to rally together to a cause which would benefit us. We are great advocates for our clients, however, poor at advocating for ourselves. The industry has changed and continues to do so. We must either adapt or perish. The demise of the real estate lawyer will actually be a great loss for the public, for it is the sole practitioner or small firm which generally serves the individual members of the public. Corporation and institutions are well represented and their access to legal representation is not threatened. The Law Society of Upper Canada’s Final Report of the Sole Practitioner and Small Firm Task Force concluded that sole practitioners and small firms represent 52% of lawyers in private practice and 94% of all firms in Ontario. 46% of these indicate that real estate is their main area of practice. Eliminate this population and many areas in Ontario will see their local lawyer disappear. Real estate lawyers are the canary in the mine we call access to justice for the average public.
What can be done to improve the sort of the real estate lawyer? We need to remind ourselves and our clients of the role and value we have in the real estate transaction. We need to return to our traditional values while seizing technology and new products to improve our service to our clients. As an individual real estate lawyer we need to rally behind our cause and support the organizations which are truly trying to assist lawyers. The OBA has been delving into the issues, tempting to re-establish ties with lenders, trying to seek how technology can assist us better and more efficiently deliver our services and understand which products better serve our clients. Individual lawyers need to support these efforts for our common good and that of the public. Join the Real Property Section of the OBA and get insights on coming changes and trends, participate in refocusing our practices and ensuring the successful survival of the real estate lawyer. There is generally a desire and optimism to continue practicing real estate, but we need to rejuvenate our Bar. Be part of the solution to a revitalized and rewarding practice.
* Raymond G. Leclair, Kanata Research Park Corp., (613) 591-0594 x2758, ray.leclair@krpc.net. Raymond
is the Chair of the Real Property Section.
Making the Most of Section Membership - The Sole, Small Firm and General Practice Perspective Bonnie Patrick*
We can now have it all! Practice in a small general practice or solo; live and work in our community; and, avoid smoggy commutes, external billable hour expectations, hierarchical practice structures and high overheads. But don’t let the big firms know. They thrive on:
The resource of having a friend down the hall to bounce questions off;
The resources of the specialty law departments in their firm;
The in-house librarian and in-house educational programs; and
A large firm’s bank of precedent documents.
How can we have all those - and more? The Sole, Small Firm and General Practice Section is on track to be the largest firm of “associates” in Ontario, sharing practice knowledge and advice in real time between “associates” in a collegial fashion. Our membership extends throughout the Province. Our Section can link us to like practitioners, specialists, agents, educational programs, meetings, and resources without leaving our offices, wherever we are. This is how:
1. The Section List Serve
The Section recently instituted its list serve. Already “associates” have provided experience, materials and advice on buying a practice, coping solo with the unexpected loss of a valued staff member, finding agents in other jurisdictions, helped with selecting accounting systems, equipment choices and shared precedents.
Use the list serve, and its value will grow exponentially. Don’t merely call a friend with a question; post it to the list serve as well. You will be amazed by the responses from your “associates”. Those Sections with an active list serve have an essential practice tool.
Worried about too many emails? Establish an email “rule” so that your list serve mail is directed immediately into a specific folder. You can then access them later, at your leisure.
2. OBA website and Section web page
The OBA website contains valuable material such as suggested retainer agreements, precedents required to secure your costs in a matter, and the case law pertaining to seeking costs from such parties as the Children’s Aid Society and the Family Responsibility Office.
3. Newsletters
Regular emailed newsletters provide tips on making your office a more productive work place and on matters of professional and legal concern. Section members are invited to share ideas, articles, information, and tips so as to work less and take home more. We also share timely information received from various sources that you need to know in your practice.
4. Education
Our Section is committed to delivering programs that are accessible to our members throughout the Province. Programs originating from Toronto are available outside the GTA through webcasting and teleconferencing. You can participate in real time or later if it is more convenient. Check out the OBA website for information including free content. Live programs are now held outside the GTA in conjunction with County and District Law Associations. Working jointly with other Sections, we are planning programs delivered by telephone on timely topics of immediate concern. The recent “GST Transition” program presented jointly with the Taxation Law Section was well attended; the majority from outside the GTA, and it received the highest satisfaction rating.
5. Networking
In person meetings provide opportunities to meet “associates” already known through the listserve, telephone conferences and phone meetings. You will find instant connection when you see other members at local meetings (joint local dinner programs with other Sections, live regional CLE programs and Section meetings at the Annual Institute).
6. Joining the Executive
The Section Executive of the Sole, Small Firm and General Practice Section always welcomes new volunteers. Meeting once a month at lunchtime by telephone only, we have focused meetings that usually conclude within one hour. Between meetings emails are exchanged, but if there is an opportunity to congregate, such as the Annual Institute or Council, the Executive looks for opportunities to share a meal together.
We believe every sole, small firm, and general practice lawyer in Ontario should join our Section, regardless of where they practice or in what area of law. The Law Society of Upper Canada is spending tens of thousands of dollars studying the secrets of our success. At OBA we know success when we see it. We are spending our efforts to leverage the successes to the mutual advantage of us all. Welcome to our large practice network of “associates”. Come on board!
* Bonnie Patrick, Goulin & Patrick, (519) 258-8073, goulinpa@wincom.net. Bonnie is the Chair of the Sole, Small Firm and General Practice Section.
Wilful Blindness as the Mens Rea for Tax Evasion Tony Schweitzer*
To be convicted of tax evasion, the actus reus and mens rea of tax evasion must both be proved beyond reasonable doubt. Paragraph 239(1)(d) of the Income Tax Act sets out mens rea of the offence in the word “wilfully”. It has been held that there are two components to the mens rea of tax evasion. First, the taxpayer must know that taxes are payable and second, the taxpayer must intend to avoid the payment of taxes. The Court has stated that “wilfully”:
stresses intention in relation to the achievement of a purpose. It can be contrasted with lesser forms of guilty knowledge such as “negligently” or even “recklessly”. In short the word “wilfully” denotes a legislative concern for a relatively high level of mens rea…1
An interesting consideration of the mens rea of tax evasion recently emerged from the Ontario Court of Justice in The Queen v. Tempelman.2 In deciding whether the accused had the required mens rea, the Court considered whether the accused had been wilfully blind with regards to the classification of personal expenses as business expenses for the purposes of income tax deductions and the incorrect calculation of GST.
The Court asked whether the taxpayer had been wilfully blind in the preparation of his taxes by not inquiring into the classification of his expenses by his secretary when he knew he should have inquired further.
The taxation years in question were the first years in which the taxpayer had to deal with the deduction of business expenses and the calculation of GST. He asked his secretary, who was familiar with his business, to collect his receipts and to classify them into business and personal expenses. There was no indication that he directed her to falsely classify the receipts.
While it was admitted that some of the receipts may well have been improperly classified, the Crown was unable to prove that this was done under the taxpayer’s instructions.
As a result, the Crown tried to argue that the taxpayer was wilfully blind and knew that he should have made further inquiry into his secretary’s classifications but failed to do so.
The Court acknowledged that in other cases, taxpayers have been found guilty based on claims of ignorance and carelessness, but distinguished them pointing to the importance of the specific factual circumstances. It concluded that the taxpayer was not unreasonable in his reliance on his assistant’s classification based on the fact that she had been in the business and working for him for a number of years, and these were his first years as an independent contractor.
This outcome highlights the mens rea that must be proved for a conviction for tax evasion. The Court acknowledged that “the suggestion that the inclusion of personal expenses was accidental, inadvertent, careless or negligent is quite plausible.”3 Yet it did not conclude that the taxpayer was wilfully blind not to verify the classifications based on the taxpayer’s inexperience, his assistant’s familiarity with his business and her best efforts.
* Tony Schweitzer, Fraser Milner Casgrain LLP, (416) 863-4511, tony.schweitzer@fmc-law.com. Tony is the Chair of the Taxation Law Section.
1R. v. Docherty, (1989), 51 CCC (3d) 1 (S.C.C.). 2R. v. Tempelman, 2006 DTC 6374 (Ont. Ct. J.). 3Ibid. at para. 40.
Recent Cases in Estates Practice demonstrate Challenges in Drafting Wills and Trusts Corina S. Weigl*
Summer’s end means that parents start thinking about “Back to School” planning for their children - and OBA members start thinking about ways to improve their practice and enhance their knowledge through their involvement with Sections. In Trusts and Estates, we find that our members benefit from attending in our regularly scheduled Section and CLE programs, participating in the Brown Bag Lunches (either in person or via satellite conference facility), and reading Deadbeat (our Section newsletter). Unfortunately, E. & O. claims in the area of estates practice are on the rise. Which means that sharing our knowledge with one another is one of the best and most effective ways to help our Section members - individually and collectively - to avoid having to pay the $5,000 deductible that accompanies an E. & O. claim.
Here’s a brief sampling of some troublesome situations that Trusts and Estates members have dealt with recently:
1. Family-owned businesses form the backbone of the Canadian economy, so the odds are that you will have one or more business owners as clients. Consider the situation of a husband and wife owning shares of a family business. The family included two adult children both of whom were married with minor children. The parents wanted the business to stay in the family. So, on the death of the first spouse, the shares were to be transferred to the survivor. On the death of the surviving parent, all of the shares were to be divided equally between the two children with a gift over to the issue of any predeceased child in equal shares per stirpes. Unfortunately, under the terms of both parents’ Wills the provision in favour of the children did not include a condition that a child had to survive the surviving parent in order to inherit, and the gift-over language in favour of a deceased child’s issue was not included.
In this case, the un-thought-of happened – a child predeceased the parents and by the time an OBA member became involved, the surviving parent lacked the capacity to correct the deficiencies in the Will. The anti-lapse provisions of the Succession Law Reform Act meant that, when the surviving parent died, the predeceased child’s share of the family business was divided among the surviving spouse and minor children of the child as if the child died intestate and without taking into account the spouse’s preferential share. Clearly this is not what the parents intended. A simple solution would have been to draft the Will to ensure the anti-lapse provisions under the Succession Law Reform Act did not take effect.
2. What about the situation of a gift or trust for a beneficiary upon them attaining an age beyond the age of majority (18 years in Ontario), such as age 25? The decision in Saunders v. Vautier means that, once a beneficiary attains the age of 18 years, the beneficiary will be able to direct the executors and trustees of the Estate to collapse and pay-out the gift or trust to him or her - even though the beneficiary had not yet reached the age of 25. A simple solution to this obvious defeat of the testator or testatrix’s intention is to provide for a gift-over to another beneficiary if the first named beneficiary does not live to the requisite age.
3. Our office recently encountered the following practice point on a Passing of Accounts. Mr. Justice Cullity took issue with the standard Affidavit of Service sworn by the solicitor involved. As you know, the Affidavit requires the deponent to swear that everyone with “a financial interest in the Estate” has been served with the Notice of Application. In this case, there were a few legatees entitled to fixed dollar amounts under the terms of the Will. The legatees had provided the executors with a Receipt acknowledging that they had received the appropriate cash amount of the legacy and otherwise had no further claim against the assets of the Estate. Since the legatees had received their requisite cash legacies and provided an appropriate Receipt, they were not otherwise served with the Notice of Application to Pass Accounts.
Upon reviewing the materials, Mr. Justice Cullity took issue with the Affidavit sworn by the solicitor as it was clear none of the legatees had been served with the Notice of Application. In his Honour’s opinion the Affidavit did not accurately reflect the facts since not everyone with “a financial interest in the Estate” had been served with the Notice of Application. His Honour ordered that the Executors (or more accurately, the solicitor) had to serve all of the legatees with the Notice of Application. If the legatees either indicated in writing that they did not object to the accounts or did not otherwise respond to the Notice, Mr. Justice Cullity ordered that the Judgement could be signed after the expiry of 30 days after the date upon which the legatees had been served with the Notice.
Presumably when explaining why a legatee was not served, despite having “a financial interest in the Estate” for the period of accounts covered by the Passing, it would be necessary to attach as Exhibits the executed Receipts. However, the “standard” Receipt executed by legatees may not be sufficiently broad in wording to enable Executors to avoid having to serve everyone who had “a financial interest in the Estate” because the usual Receipt does not expressly acknowledge that the legatee no longer has a financial interest in the estate. In addition, query whether the Receipt should also include an acknowledgment that the legatee will not participate in any future Passing of Accounts.
These issues are but a few of the issues that members of the Trusts and Estates Section have dealt with in recent months. In the first two cases, potential E. & O. claims could have been avoided if the solicitor preparing the Wills had ensured that relevant provisions were included in the Wills. In the case of the Passing of Accounts, practice requirements change over time and even the most accomplished and knowledgable lawyer may end up in a situation where “the way things have always been done” no longer applies.
As a member of the Trusts and Estate Section, you will have the opportunity to share in and learn from the experiences of fellow estates practitioners from across the province. And, as a result, may well avoid paying those ever-increasing deductibles being collected by LPIC!
* For more information on the contents of this article or the Trusts and Estates Section, please feel free to contact Corina S. Weigl, Partner, Fasken Martineau DuMoulin LLP at (416) 865-4549 or cweigl@tor.fasken.com. Corina is the Chair of the Trusts and Estates Section.
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Only two thirds of the way into the year, and already 2006 is shaping up to be one of the most eventful in recent memory on the Aboriginal Law front.
The Family Statute Law Amendment Act 2006, (Bill 27) and its accompanying regulations, was the government’s response to the use of religious law in family arbitrations in Ontario. It will significantly change family arbitration process in Ontario when its relevant sections come into force. (The bill has received royal assent but its operative provisions are not yet in force. The draft regulations have not yet been circulated to the profession.)
Updated from Past Chair, Howard Simmons' article in Briefly Speaking, June 2006. 
Are the instructions to an expert, and the draft reports of the expert, producible as part of the discovery process or does litigation privilege protect such information, even though the expert is called to testify at trial? 
In its decision in Seneca College of Applied Arts and Technology v. Bhadauria, [1981] 2 S.C.R. 181, the Supreme Court of Canada held that the courts could not enforce the Human Rights Code (the “Code”) and strongly suggested that the same reasoning would apply to other administrative tribunals. Recent developments, both in legislation and case law, will lead to a change in this law, and mean that both courts and other administrative tribunals will have an important role in directly applying and interpreting the Code.
On July 7, 2006, the Ontario Court of Appeal overturned the 217 page decision of Justice Kiteley in Wynberg et al. v. Ontario and Deskin et al. v. Ontario (hereinafter “Wynberg Deskin”). Briefly, Justice Kiteley had ruled that the Ontario government’s decision to deny funding of IBI/ABA therapy to children over five years of age was, in fact, a violation of their right to equal treatment at law under section 15 of the Canadian Charter of Rights and Freedoms (the “Charter”). For educators, Justice Kiteley’s ruling was especially significant because it rested on her determination that autistic children could not profit from public education without access to IBI/ABA therapy. Perhaps more significant is the Court of Appeal’s determination that the nature of IBI/ABA makes it impossible to deliver in a school setting. 
The spectre of unlimited liability for contaminated site civil claims is one of the most interesting and challenging issues in environmental law practice today.
This article originally appeared in Matrimonial Affairs, Vol. 17, No. 4, May 2006.
The Feminist Legal Analysis Section - we refer to ourselves as “FLAC” – is a very unique group amongst the OBA Sections. Where most of the other sections focus on a single area of law, FLAC has a wide-ranging interest in all areas of law that touch upon women and children. We take note of procedures and decisions in Family Law, Criminal Law, Employment and Labour Law, Education Law, Civil Litigation, Administrative Law, and Refugee and Immigration Law just to name a few areas of law where women and children can be impacted by less than fair treatment. Accordingly, our Section members come from diverse areas of the practice of law: large and small law firms, sole practitioners, tribunals, the government, in-house counsel, and academia. Thus, we have an interesting cross section of OBA members in our Section.
This is an exciting time to practice Health Law in Ontario. Just this year the Law Society of Upper Canada (LSUC) formally recognized Health Law as a new area in which lawyers can be certified as specialists. The OBA Health Law Section (HLS) was a major contributor to this initiative, assisting in the development of practice standards for certification. 
Our clients are increasingly using the Internet to conduct business, both as consumers and as sellers. Accordingly, lawyers should be aware of recent legislative changes in Ontario's consumer protection legislation that were introduced to regulate certain e-commerce transactions. On July 30, 2005 amendments to the Consumer Protection Act, 20021 came into force that significantly enhanced consumer rights and created a new category of consumer agreement known as “internet agreements”. This article will briefly discuss internet agreements and other major amendments brought in by the Act.
I have always believed that insolvency law is a critically integral component of any capitalist or market based economy. It is the necessary flipside to the capital raising and allocation process. In a market based economy, risk capital is allocated to certain enterprises in the hopes that they succeed. Inherently, some (if not many) of these endeavours fail – otherwise it wouldn’t be risk capital in the first place. Accordingly, for a system of risk capital allocation to work efficiently, a supporting system to efficiently reallocate the capital from failed enterprise is a necessarily critical component. This is the purview of insolvency law.
Bridgewood Building Corp. (Riverfield) v. Lombard General Insurance Co. of Canada1 - April 2006
As the threat of a global pandemic receives increasing attention around the world, organizations are considering how best to prepare for the potential crisis. It will undoubtedly be human capital that will be most affected in the event of a pandemic and discussed below are just a few of the pieces of legislation which may have a direct or indirect impact on an employers’ ability to continue its operations in the event of a pandemic.
Our Section is pursuing some exciting new initiatives this year, such as a listserve so managing partners can consult each other by e-mail to get advice on problems that other firms may have faced in the past. We are also producing a basic “How to Manage a Law Firm” binder so that those new to the job have a resource to answer questions associated with the finance and administration of their law firm. The Section will continue to produce a newsletter that carries articles from my law firm consultants and others on the various issues of the day, and it will also continue to run law firm management seminars periodically, either in the traditional format, or by way of teleconference or videoconference formats. The newsletter also updates members of case law that is of interest to managing partners, such as the Strother1 case that was recently released by the British Columbia Court of Appeal.
Over the last few years, the Courts have taken a significant role in resolving complex pension and benefit disputes. If the early part of 2006 is any indication, this trend appears determined to continue. Two cases of particular note, which were released this year, are the Ontario Divisional Court decision in Nolan v. Superintendent of Financial Services (better known as Kerry) and the Supreme Court of Canada decision in Buschau v. Rogers Communications Inc. Both cases deal with trusts in the context of pension plans and are important in that they attempt to clarify issues related to the administration and management of pension plans.
This article originally appeared in the Public Sector Lawyers' Section Newsletter, 
Today’s real estate lawyers are being challenged everyday. Luckily the real estate industry is vibrant and lawyers are busy. So busy with the files on their desks they are not looking at the long range global challenges facing our industry and practices. Our services are being turned into a commodity. Real estate lawyers have been on 
Summer’s end means that parents start thinking about “Back to School” planning for their children - and OBA members start thinking about ways to improve their practice and enhance their knowledge through their involvement with Sections. In Trusts and Estates, we find that our members benefit from attending in our regularly scheduled Section and CLE programs, participating in the Brown Bag Lunches (either in person or via satellite conference facility), and reading Deadbeat (our Section newsletter). Unfortunately, E. & O. claims in the area of estates practice are on the rise. Which means that sharing our knowledge with one another is one of the best and most effective ways to help our Section members - individually and collectively - to avoid having to pay the $5,000 deductible that accompanies an E. & O. claim.