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Volume 1, No. 2 - January/Janvier 2007
Please click on the link below the Section name to view the complete article.
Administrative Law
Fresh Perspectives on the Rule of Law
Alternative Dispute Resolution
The ADR Section Considers An Act to Amend the Human Rights Code
Business Law
Ontario’s Securities Transfer Act, 2006: New Rules for Securities as Collateral
Charity and Not-for-Profit Law
The Year in Review
Citizenship and Immigration
Criminality & IRPA
Civil Litigation
Tennis and Justice: A Love Match?
Constitutional, Civil Liberties and Human Rights
Anti-Terrorism
Construction Law
The Construction Industry and Environmental Protection Legislation
Criminal Justice
Corroborative Evidence and R v. Khelawon: At Last, Sanity from the Supremes!
Education Law
Bill 52 - Learning to Age 18
Environmental Law
Ontario Government Proposes Brownfields Reform
Family Law
Three Parents?
Feminist Legal Analysis
Formidable Feminists
Health Law
Government Cannot be Sued for Failing to Prevent the Spread of West Nile Virus
Information Technology and E-Commerce
Electronic Payments: Industry and Legal Developments and Trends
Insolvency Law
Wide Ranging Insolvency Reforms May Yet Become a Reality in 2007
Insurance Law
Bill 18 Heralds Changes to Vicarious Liability for Leased and Rented Vehicles in Ontario
International Law
How Trade and Investment Treaties Impact Our Clients (And What They Can Do About It)
Labour Relations
Ontario Arbitration Board Rules on Random Drug Testing Using Oral Fluid Testing
Municipal Law
Municipal Planning Reform and the Agency Cluster Pilot Project
Pensions and Benefits
Establishment of an Expert Commission on Pensions in Ontario
Privacy Law
The Changing Face of Privacy
Public Sector Lawyers
Courts, Not Politicians, Should Decide on Bail
Sexual Orientation and Gender Identity
Rutherford Applicants Secure Parental Recognition for Lesbian Parents and Children
Sole, Small Firm and General Practice
Notes from the Middleground
Trusts and Estates
Domestic Contracts and Disclosure
Young Lawyers
The Effect of Procedural and Substantive Changes in the Law
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.
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Administrative Law
Fresh Perspectives on the Rule of Law
Sebastian Spano*
A renewed interest in the rule of law is one development that may have a significant impact on the administrative law landscape in 2007. Two recent decisions from British Columbia, one from the Court of Appeal and one from the Supreme Court, have raised a number of important questions about the rule of law and what it implies as a constitutional imperative. These cases will likely generate considerable discussion about how to articulate the principle, its content, its application to administrative tribunals, its limits, its sources, and the extent to which it may invalidate or render inoperable otherwise validly enacted legislation.
The Rule of Law and Tribunal Independence
In McKenzie v. Minister of Public Safety and Solicitor General, 2006 BCSC 1372, the B.C. Supreme Court declared of no force and effect as against the petitioner, otherwise validly enacted legislation on the basis that the legislation interfered with the security of tenure, and thus, the independence, of a provincially appointed residential tenancy arbitrator. The security of tenure to which arbitrators are entitled was held to have its source in the unwritten constitutional principle of the rule of law. The judgment extends the principle of judicial independence to adjudicators appointed pursuant to provincial legislation where that legislation may not provide for security of tenure if those adjudicators perform quasi-judicial functions, particularly in areas of adjudicative jurisdiction that were drawn from the courts.
The judgment represents an important refinement of, if not an actual challenge to, the principles enunciated by the Supreme Court of Canada in Ocean Port Hotel v. British Columbia (General Manager, Liquor Control and Licensing Branch), [2001] 2 S.C.R. 781. In Ocean Port, the Court refused to extend the unwritten constitutional principle of judicial independence, rooted in the preamble to the Constitution Act, 1867, as articulated by Lamer, C.J. in the Provincial Court Judges Reference, to at-pleasure appointees of the B.C. Liquor Appeal Board. It rejected the argument that where an administrative tribunal performs adjudicative functions, particularly where the tribunal has the power to impose sanctions comparable to the powers possessed by courts for violations of statutes, the principle of judicial independence should apply. The Court held instead that the degree of independence that a tribunal requires is to be determined by the legislation that created the tribunal. In other words, it is for Parliament or a legislature to determine the degree of independence that a tribunal may enjoy.
In the McKenzie case the Court considered the argument that Ocean Port must be read in light of subsequent Supreme Court of Canada judgments on judicial independence, particularly Bell Canada v. Canadian Telephone Employees Assn., [2003] 1 S.C.R. 884 and Ell v. Alberta, [2003] 1 S.C.R. 857. It was argued that the Court in Bell Canada acknowledged the existence of a type of tribunal to which the principles in Ocean Port may not apply, that there may be said to be a “spectrum” of tribunals, and that tribunals at the “high end” of the spectrum performing judicial or quasi-judicial functions did not the fit the broad characterization of tribunals in Ocean Port. In Ell, the Court extended the unwritten principle of judicial independence to justices of the peace in Alberta because they exercised judicial functions “related to the basis upon which the principle is founded.”
Mr. Justice McEwan’s functional approach to the issues in McKenzie distinguishes between tribunals. Not all tribunals, he held, are so closely associated with the executive that they are government decision-makers, or instruments of the executive, and therefore not required to be constitutionally independent. Mr. Justice McEwan concluded that those tribunals which are “constituted to try issues of law as between private citizens”, or perform judicial functions, many of which were once performed by courts, require constitutional independence.
The Rule of Law and Access to Justice
A different element of the rule of law was addressed by the B.C. Court of Appeal in Christie v. British Columbia, 2005 BCCA 631. In that case a majority of the Court struck down the Social Services Tax Amendment Act (No. 2), 1993, S.B.C. c. 24, which imposed a 7% tax on fees billed for legal services. The Supreme Court of Canada has granted leave to appeal the decision, with the appeal scheduled to be heard on 21 March 2007 (File 31324, Attorney General of British Columbia v. Dugald E. Christie). The basis for the decision was that the legislation offended the principle of access to justice as an element of the rule of law. The court considered two sources for the rule of law: the rule as an unwritten constitutional principle; or, one of two principles mentioned in the preamble to the Canadian Charter of Rights and Freedoms (“Whereas Canada is founded upon the principles that recognize the supremacy of God and the rule of law…”). The Court held that the tax impeded all persons trying to access legal assistance. This includes legal services “related to the determination of rights and obligations by courts of law or independent administrative tribunals.” To the extent that the legislation purported to tax these services, it was held to be unconstitutional.
The Christie case is to be contrasted with the Supreme Court of Canada’s most recent pronouncement on the rule of law in British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49. In that case, Major J., writing for the Court, held that the rule of law, as developed in cases such as Re Manitoba Language Rights, [1985] 1 S.C.R. 721 and Reference Re Secession of Quebec, [1998] 2 S.C.R. 217, embraces three principles: that the law is supreme over government officials and private individuals, thereby precluding the exercise of arbitrary power; that it requires an order of positive laws which preserve and embody a more general normative order; and that the relationship between the state and the individual be regulated by law. Major J. considered it difficult to conceive, on the basis of these three principles, that the rule of law could ever be used to invalidate legislation. On Major J.’s conception of the rule of law, any constraints on the actions of a legislature can only be in respect of the legislative requirements as to the manner and form by which legislation is enacted, not in respect of its content.
Looking Ahead
Both McKenzie and Christie represent a significant shift in the discourse around the rule of law. The Courts in both cases have made important pronouncements in fashioning the rule(s) to meet current realities both in the administrative law and constitutional law fields. These pronouncements are significant beyond the level of doctrine and will no doubt have important practical implications for practitioners.
* Sebastian Spano, Parliamentary Information & Research Service – Law & Government Division, (613) 995-7918, SpanoS@parl.gc.ca. Sebastian is the Newsletter Editor of the Administrative Law Section.
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Alternative Dispute Resolution
The ADR Section Considers An Act to Amend the Human Rights Code
Barry B. Fisher*
 In December of 2006, the Ontario Legislature passed Bill 107, An Act to Amend the Human Rights Code. The major focus of the Bill was to allow for direct access to the Human Rights Tribunal, thereby eliminating the previous procedure where the Human Rights Commission in effect had carriage on any case before the Tribunal.
Our Section saw this as a major opportunity to improve on the ADR components of the new procedure. We have therefore developed a position paper which we will be presenting to the OBA for their approval and then for submission to the Human Rights Tribunal as part of its public consultation process in developing the Tribunal Rules of Procedure.
The ADR Section proposes that the Bill and the Tribunal Rules incorporate the following proposal.
1. Mediation of all disputes would be mandatory, subject to exemption by the Tribunal, and therefore no hearing before the Tribunal could be started unless a mediation had already been held.
2. The Tribunal would provide the parties with the services of a Tribunal member at no cost to conduct the mediation. However, if all the parties wanted to use a mediator of their own choice, they would be free to do so, but the cost of doing so would be borne by the parties.
We will now explain in more detail these proposals:
Mandatory v Voluntary Mediation
The existing practice of the Commission and the Tribunal is to offer, but not require, mediation. According to the 2005-2006 Annual report of the Ontario Human Rights Commission, only in 1096 cases of the 2399 cases filed did the parties agree to conduct an early mediation without investigation. This means that only 45% of the cases filed actually went to mediation at the Commission. Once at mediation the success rate was quite high, in that 71 % of the cases were then settled.
We believe that under the new proposed scheme of direct access to the Tribunal it will be extremely important to develop new processes that will reduce the number of actual Tribunal hearings, or to limit the length of those hearings. We submit that the cornerstone of these processes should be mandatory mediation. If the settlement figures achieved through the existing voluntary mediation process carry forward to a mandatory system then presumably 70% of all cases will settle at mediation, whereas under the present system only 34.4% do so. Mandatory mediation would therefore substantially reduce the number of cases that actually proceeded to a Tribunal hearing. It is also reasonable to assume that the number of complaints filed will increase as the introduction of direct access to the Tribunal will hopefully dramatically shorten the time it takes to get to a hearing. It is well understood that the present undue delay in processing a human rights complaint undoubtedly discourages many complaints from even being filed.
Mandatory mediation has been proven to be an effective way of resolving disputes in Ontario where there is direct access to a tribunal or a Court. The Ontario Mandatory Mediation Program, (OMMP) set out in Rules 24.1 and 78 of the Rules of Civil Procedure, has dramatically changed the legal landscape of litigation in those areas that it is in force (Toronto, Ottawa and Windsor). An important reason for the program’s success has been the element of mandatory mediation. Without mandatory mediation, parties may tend to consider requesting or agreeing to mediation as a sign of weakness. Once mandatory mediation becomes part of the legal culture, lawyers quickly become very skilled in reaching settlements at mediation. It should also be noted that in the OMMP, the highest rate of settlement has been in the employment field. Since the majority of the complaints filed under the Ontario Human Rights Code are also work related, we have good reason to believe that the successful integration of mandatory mediation under the OMMP would carry forward in a mandatory mediation model for human rights complaints.
In order to enforce mandatory mediation, the Tribunal Rules would have to provide for a number of related issues.
First, it is recognized that even in a mandatory mediation process, there must be a mechanism for exempting those cases where mediation is not appropriate. The parties would have to apply to the Tribunal for an exemption from mediation. Consent of the parties alone would not constitute a sufficient reason for exemption. This is similar to Rule 24.1.05 of the Rules Of Civil Procedure which reads as follows:
EXEMPTION FROM MEDIATION
24.1.05 The court may make an order on a party’s motion exempting the action from this Rule.
Second, the Tribunal Rules would have to determine the date by which the mediation would have to occur and provide for a “gate keeper” process to insure compliance.
There are competing interests at stake here.
On the one hand, the parties should be given the flexibility to determine when they think it is best to conduct the mediation in accordance with their right of self determination of their own dispute.
On the other hand, it has been shown that early mediation, especially in employment or labour related disputes, is very important and can result in more meaningful settlements. As it stands now, although the Tribunal has the power to reinstate employees as a remedy, it is a power rarely exercised, largely because by the time the Tribunal hears the case many years have passed, making reinstatement virtually impossible. Requiring that the parties engage in a mediation at an early stage, especially when the prospect of a Tribunal hearing is in the near future, will enhance the parties ability to negotiate meaningful reinstatement agreements.
Moreover, there is another important consideration as to the timing of the mediation. On the one hand the parties need to be properly informed of the relevant facts of the case before they can be expected to settle their case at a mediation. On the other hand the longer the case remains unresolved, the higher the costs to the parties (and to the Tribunal) and the less likely that certain remedies will remain useful.
The Tribunal will undoubtedly be developing rules in regards to the production of documents, witness statements and other issues of disclosure. The timing of the mediation should be tied to the requirement of disclosure and production. We therefore recommend that the Rules provide that the mediation must take place no later than a specified number of days after the end of the production / disclosure stage.
In order to enforce the rule that mediation is mandatory, it is important for the Tribunal to have the ability to ensure that no case is heard by it, unless it has either been mediated or been previously exempted. Our recommendation is that this be determined at the time that the Tribunal schedules cases for a hearing. In other words, the parties would have to show the Tribunal that they have either had a mediation or have a scheduled date for mediation before the Tribunal will schedule a hearing date.
Delivery of Mediation Services
We recommend that the parties be able to conduct a mediation in one of two ways:
- By using a Tribunal member at no cost to the parties, or
- By using a mediator of their choice, with the cost of the mediator being borne by the parties.
Our rationale behind these submissions are as follows:
As our proposal would make mediation compulsory, it is important that the parties have access to qualified mediators at no cost to them.
There are two ways in which this could be provided; by using Tribunal members to mediate cases or by using staff mediators.
We submit that the preferable model is to utilize Tribunal members as mediators rather than staff mediators. Our reasoning is as follows:
1. Flexibility:
There are many models of alternative dispute resolution other than mediation. Many of these other models involve skills quite different from those usually found in those whose only practice is mediation. For instance there is a popular form of dispute resolution commonly used in the labour relations world called MedArb, which provides that the same person performs both the function of a mediator and an arbitrator. The Tribunal is mandated by Section 43(a) to provide procedures that are “alternatives to traditional adjudicative practices and procedures”. If staff mediators are utilized, the Tribunal would not be able to use MedArb as a dispute resolution technique, as only Tribunal members have adjudicative powers. Therefore if staff mediators were employed, they could only do traditional mediations and Tribunal members would have to be used to do many other forms of ADR. This splitting of ADR functions will undoubtedly lead to institutional inefficiencies and therefore backlog. By providing that Tribunal members would provide all the state funded dispute resolution functions, you increase the efficiency and the time frame in which disputes can be resolved.
2. Attracting High Quality Tribunal Members
Section 32(3)3 of the Code provides that one of the criteria in choosing Tribunal members shall be “aptitude for applying the alternative adjudicative practices and procedures that may be set out in the Tribunal rules.”
This means that Tribunal members must be more than traditional adjudicators; in fact one can easily imagine the Tribunal consisting of skilled ADR professionals with expertise in many different dispute resolution techniques. People of that nature will want to do mediations and therefore the ability to perform both mediations and adjudicative hearings will attract the best candidates. If potential candidates for Tribunal positions are told that the job consists only of endless hearing dates interrupted by writing days, this will not entice the same quality of candidate who is told that the position consists of a mix of mediating, adjudicating and writing.
It is critical to the success of the Tribunal that they attract excellent candidates. We know that the monetary compensation being offered for these positions does not compare with what a comparable lawyer could make in private practice, therefore quality of life and job satisfaction will go a long way to ensuring that the Tribunal attracts the best qualified candidates.
3. Credibility
There is certainly no question that one does not have to be a Tribunal member to be an effective mediator just like you don’t have to be a judge or former judge to be an effective mediator of civil disputes. However, we must remember that a large number of parties to these proceedings may well be self-represented. It would probably enhance the overall settlement rate, especially of those cases involving self represented parties, if they were aware of the fact that the person mediating their dispute was also a Tribunal member.
4. Cost Effectiveness:
Whether the mediations are performed by Tribunal members or staff mediators, the Province will still be paying for those services. We would imagine that the direct staffing costs of a Tribunal member as opposed to a staff mediator would show the Tribunal member as being more expensive. However, we suggest that when you look at the larger picture, the staffing costs may be very similar. For example, staff mediators would have to be supervised by a body of supervisors, managers and directors. Tribunal members on the other hand do not have such management oversight and supervision, as the Chair of the Tribunal is more like a “first among equals. Thus, the total staffing costs of the two models may in fact be quite similar. Moreover, if the settlement rate of Tribunal members conducting mediations was higher than that of staff mediators, then overall it may well turn out that the use of Tribunal members to conduct mediations (and thus less hearing days) would be more cost effective.
However, we also submit that the Tribunal mediator model not be the only acceptable mediation model, but that the parties also be able to engage their own mediator of choice if they agree to do so. Our reasons for proposing this additional delivery model are as follows:
- Allowing the parties to choose their own mediator has a significant positive effect on the settlement rates. In other words, when parties choose their own mediator instead of having one assigned to them, they are more likely to settle. This is because mediation is an intensely human process, and not surprisingly, the personality and techniques of the mediator is highly relevant to the outcome. Some mediators are known as being highly facilitative, others more evaluative, some are fairly formal in their mediations, others are more “laid back”. One mediator may be seen as being very effective on age discrimination cases but not as effective on sexual harassment cases. Where lawyers are involved in the process, they have a wealth of knowledge as to the perceived strengths and weaknesses of mediators and spend a lot of effort in negotiating with the other parties the right mediator for their case.
- As this mediator by choice would only be available if all of the parties agreed, there is no worry that one side could bully the other into choosing a mediator that they did not really agree to as that party could always insist on a staff mediator being assigned to the case. Moreover if the parties could not agree on a mediator, then a staff mediator would be assigned.
- As the entire cost of the mediator by choice would be the responsibility of the parties, the Tribunal would save staffing costs every time the parties opted not to use a staff mediator. This could provide considerable relief to the Tribunal’s staffing budget.
- At present, many human rights complaints are done at the same time as other legal proceedings such as court litigation or labour arbitrations. Since the parties may well be in a regime of mandatory mediation in the other proceedings, to require the parties to repeat the process using a staff mediator would be extremely unproductive. The chances of settling a case that is before two or more adjudicative bodies without the matters being discussed before a single mediator for all aspects of the case are slim to none. It would not be realistic to expect the staff mediators to mediate these types of disputes as their experience and training has not been focused on these non-human rights matters. Just as knowledge of human rights law is an essential prerequisite to mediating human rights matters, so to does a knowledge of other areas of law act as a prerequisite for other types of cases that form part of the overall dispute.
- The Tribunal should set standards of eligibility over these mediators of choice as they would be performing a function required by the Tribunal Rules.
The sort of matters that could be regulated by the Tribunal could include requiring that each mediator of choice:
- Be a member in good standing of a professional mediation organization that requires adherence to a Code of Conduct, e.g. the Ontario Bar Association – ADR Section or the ADR Institute of Ontario.
- Undertake in writing to adhere to a specific Code of Ethics approved by the Tribunal. For example the Tribunal could designate an existing Code of Conduct for this purpose, such as has been done under the Ontario Mandatory Mediation Program (“the OMMP”). Currently, the CBAO “Model Code of Conduct” applies in its entirety to all mediators under the OMMP.
- Carry satisfactory errors & omissions insurance coverage.
- Have sufficient experience in and/or have taken an approved set of courses in human rights law.
These types of oversight functions are similar to those governing mediators under the OMMP.
6. To facilitate the creation of clear standards of competence for the selection of mediators of choice, we recommend that the Tribunal establish and maintain a roster of mediators who meet certain criteria, including the criteria set out above. The roster would be posted on the Tribunal website. These measures would allow the public to choose a mediator who meets certain required criteria and ensure that any mediation conducted by a roster mediator would qualify as a mandatory mediation under the Tribunal Rules, thereby allowing the matter to be scheduled for a hearing, in the event a mediated resolution is not achieved.
Conclusions:
1. Mediation of human rights complaints should be mandatory, requiring a Tribunal order if the parties want to be exempted. Case exemptions should only be made in exceptional circumstances.
2. The mediation should be required to be held no later than within a fixed number of days after the production, disclosure and investigative requirements have been completed.
3. The Tribunal would not schedule a hearing date unless the parties have already held or have scheduled a mediation, or have been exempted from mediation.
4. Tribunal members would conduct the mediations at no cost to all parties.
5. The parties would be at liberty to agree to use a mediator of their choice who was not a Tribunal member as long as they paid the mediator themselves.
6. The Tribunal would set standards for eligibility of the mediators of choice in order to protect the public and maintain a Web based public roster of those mediators.
* Barry B. Fisher, Barry B. Fisher Mediation & Arbitration, (416) 585-2330, barryfisher@rogers.com. Barry is the Past Chair of the Alternative Dispute Resolution Section.
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Business Law
Ontario’s Securities Transfer Act, 2006: New Rules for Securities as Collateral
John Cameron*
 This article originally appeared in Business Beat, Volume 17, No. 1, December 2006.
The new Securities Transfer Act, 2006 (Ontario) (the STA) has been proclaimed to come into force on January 1, 2007. It creates a complex set of rules relating to the transfer of securities that govern the rights and obligations of issuers of securities, securities intermediaries, investors and secured parties. Despite this complexity, the STA and related amendments to the Personal Property Security Act (Ontario) (the PPSA), which also come into force on January 1, 2007, will greatly facilitate the use of securities as collateral.
This article provides a brief summary of the important rules.1 To understand these rules, the reader must bear in mind that securities are held in North America under two systems: the direct holding system and the indirect holding system. The direct holding system applies where a direct relationship exists between an issuer and an investor. For example, the direct holding system applies to the relationship between a private company and its shareholders. The indirect holding system applies to the indirect relationship between an issuer and an investor, where the securities are held through a securities intermediary such as CDS Clearing and Depository Services Inc. (CDS),2 a bank or trust company acting as custodian, or a securities dealer. The indirect holding system depends in part on the direct holding system because for every security held in the indirect holding system, a direct relationship exists between an issuer and a person registered as the owner of a security or holding a bearer security, such as CDS.
The most common types of secured lending transactions that lawyers in private practice deal with occur under the direct holding system. For example, when a corporate borrower pledges the shares of its subsidiaries to secure a credit facility, and delivers the duly endorsed share certificates to the lender at closing, the direct holding system applies. While the terminology used in the PPSA will change slightly, the substance of the relevant rules applicable to secured transactions in the direct holding system remains largely unchanged by the STA. The most significant changes arise in the context of the indirect holding system, where secured parties will have a new ability to perfect their security interest by way of a “control agreement” between the securities intermediary, the secured party and the debtor (i.e., the investor).
The STA, together with the related PPSA amendments, contains an enormous amount of detail, including many subtle nuances. Simplifying greatly, I summarize the most important rules in practice below. For the purposes of this summary, I use the words “investor” and “debtor” interchangeably, depending on the context.
Methods of Perfection
Apart from some special rules, there are three methods to perfect a security interest under the new rules:
- Registration: A secured party can continue to perfect its security interest by registering a financing statement against the debtor, whether securities are held in the direct or indirect holding system.
- Control: “Control” is the best method to perfect a security interest, whether securities are held in the direct or indirect holding system. In essence, “control” means that the secured party has the ability to transfer the investment property without further action by the debtor.
- Possession: A secured party can continue to perfect a security interest in a certificated security in registered form by obtaining possession of that security. With an appropriate endorsement, the secured creditor obtains “control” of that security.
Control in the Direct System
In the direct system, a security can be certificated or uncertificated. The method to obtain control varies depending whether the security is certificated or uncertificated:
- Certificated Securities: For a bearer security, a secured party obtains control by receiving the certificate. For a registered security, a secured party obtains control by receiving the certificate, together with (i) an appropriate endorsement, or (ii) arranging for the issuer to register the security in the name of the secured party. These steps correspond to the steps that would be taken under current law for the secured party to acquire the status of a “good faith purchaser” of a certificated security.
- Uncertificated Securities: If the security is not evidenced by a certificate, control is obtained by (i) arranging for the issuer to register the security in the name of the secured party, (ii) obtaining a control agreement from the issuer, or (iii) someone else having control for the benefit of the secured party. Most mutual fund securities are issued in uncertificated form. Until the new laws come into force, the only way to perfect a security interest in an uncertificated mutual fund unit is by registration of a financing statement under the PPSA. The new rules will introduce a new method of perfection – that is, by a secured party obtaining a control agreement from the issuer of the mutual fund security.
Control Agreement in the Direct System
In the direct holding system, a control agreement is an agreement between the issuer of an uncertificated security, the secured party and the debtor, under which the issuer agrees to comply with instructions from the secured party without the debtor’s further consent. A control agreement need not give exclusive control to a secured party. A debtor can retain the right to give instructions, and other secured parties can obtain (or may already have) a concurrent right to give instructions.
Securities Accounts in the Indirect System
Under the indirect system, a securities intermediary (such as CDS, a bank or trust company acting as custodian or a securities dealer) holds securities and other “financial assets” in a securities account for the benefit of its customer (e.g., an investor). In addition to securities, financial assets held in a securities account can include virtually any form of property if the securities intermediary and the customer agree that it is to be treated as a financial asset for the purposes of the STA. “Financial assets” also include any credit balance in the securities account unless the securities intermediary and the customer otherwise agree.
Security Entitlements in the Indirect System
An investor acquires a “security entitlement” when a securities intermediary indicates by book entry that a financial asset has been credited to that investor’s securities account. A “security entitlement” consists of a bundle of property and contract rights created under Part VI of the STA. A security entitlement is not bought or sold. Instead, when an investor sells a security or other financial asset in the indirect system, the securities intermediary extinguishes the investor’s security entitlement, and (if the related security or financial asset remains in the indirect system after the sale – as would normally be the case), a new security entitlement is created in favour of the purchaser.
Control in the Indirect System
A secured party obtains control of a security entitlement by (i) arranging for the securities intermediary to record the secured party as the entitlement holder, (ii) obtaining a control agreement from the securities intermediary, or (iii) someone else having control for the benefit of the secured party.
Control Agreement in the Indirect System
In the indirect holding system, a control agreement is an agreement between the securities intermediary, the secured party and the debtor, under which the securities intermediary agrees that it will comply with instructions from the secured party without further consent of the debtor. A control agreement need not give exclusive control to the secured party. A debtor can retain rights to give instructions, and other secured parties can obtain (or may already have) a concurrent right to give instructions.
Key Priority Rules
The key PPSA priority rules are as follows:
- Control Trumps Non-control: A security interest perfected by control has priority over another security interest perfected otherwise than by control.
- Two Security Interests Perfected by Control: If two or more security interests are perfected by control, they rank by priority in time to obtain control.
- Securities Intermediary Priority: Despite the above rules, in the indirect holding system, a securities intermediary with a security interest in a security entitlement that it created has priority over other secured parties unless the intermediary otherwise agrees.
“Protected Purchasers”
In the direct holding system, a “protected purchaser” acquires priority over any adverse claim to a security by giving value without notice of any adverse claim to the security and obtaining control of the security. In the indirect holding system, there is no single corresponding rule; instead, there are a series of complex cut off rules and legal principles.
Conflict of Law Rules
There are four main conflict of laws rules.
- Perfection by Registration of Financing Statement: Perfection of a security interest by registration of a financing statement must take place in the debtor’s location, which is defined in same manner as under the current PPSA – looking to the debtor’s chief executive office if it has more than one place of business.
- Certificated Securities in Direct Holding System: Apart from the rule for place of perfection by registration, the rules for the validity, perfection and priority of a security interest in certificated securities point to the location of the certificate.
- Uncertificated Securities in Direct Holding System: Apart from the rule for place of perfection by registration, the rules for the validity, perfection and priority of a security interest in uncertificated securities point to the issuer’s jurisdiction. The issuer’s jurisdiction is determined according to (i) the location of the registered office or head office of a federally incorporated non-Crown issuer, and (ii) the jurisdiction of incorporation or organization for other non-Crown issuers. An issuer has the flexibility to choose its own jurisdiction outside its jurisdiction of incorporation or organization. Uncertificated securities issued by the Crown will normally be held through the indirect holding system, so the conflict of laws rules for security entitlements will govern the validity, perfection and priority of security interests in security entitlements relating to most securities issued by the Crown.
- Security Entitlements: Apart from the rule for the place of perfection by registration, the rules for the validity, perfection and priority of a security interest in a security entitlement point to the securities intermediary’s jurisdiction, which can be (and invariably will be) determined by contract between the securities intermediary and the security entitlement holder.
Where Will Litigation Occur?
Even with the new conflict of laws rules, a secured party must always ask, “Where is litigation likely to occur if the debtor does not repay?” The secured party should make sure that all steps have been taken in those jurisdictions to protect the secured party, in addition to the jurisdiction dictated by the STA.
Transitional Rules
The transitional rules offer a four-month period within which to make sure that previously perfected security interests under current law remain perfected under new law. If a security interest was perfected under the current rules, in most (if not all) cases, the circumstances relating to that perfection will likely be sufficient to perfect the security interest under the new rules. For example, if a secured party relied on the old rules for deemed possession of a security held in CDS, the facts will invariably establish that the secured party (or a person acting on its behalf) has control of the related security entitlement under the new rules.
The STA and related PPSA amendments are complex; but despite that complexity, the law is evolving in a fashion that recognizes market practices in the securities industry and that provides greater certainty to all market participants. Virtually identical legislation has already been enacted in Alberta, and is expected to come into force on January 1, 2007. Saskatchewan has introduced a similar bill. Quebec is working on draft legislation, which is expected to be introduced some time next year. British Columbia has drafted a similar bill, which is expected to be introduced early in the new year. These developments are welcome additions to Canada’s business laws, which all participants in the securities industry hope will be adopted in virtually identical form across Canada.
This summary is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss with you the issues raised by this summary in the context of your particular circumstances.
* John Cameron, Torys LLP, (416) 865-8112, jcameron@torys.com. John is the Chair of the PPSL Subcommittee of the Business Law Section.
1 A more detailed description of the relevant rules is available in a paper published jointly by the Ontario Bar Association and The Law Society of Upper Canada: Cameron, “The New Securities Transfer Act, 2006: New Rules for Perfection and Priority”, November 20, 2006.
2 CDS Clearing and Depository Services Inc. is the successor to The Canadian Depository for Securities Limited, under a corporate restructuring completed in November 2006.
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Charity and Not-for-Profit Law
The Year in Review
Arthur Drache*
 This article originally appeared in the December issue of the Not-For-Profit News.
It also appeared in Charitable Thoughts, Volume 10, No. 2, December 2006.
It is the time of the year that we review the events of the year affecting the non-profit sector.1 Rarely, however, have we reflected on a year with more dismay than we do this time around.
To be sure there was some good news, particularly for those organizations which are aggressive fundraisers. The Conservative government came through on a key promise and eliminated the capital gains tax on all listed securities donated to public registered charities. This announcement triggered some truly enormous charitable donations, each of which was in excess of $10 million dollars. This is a far cry from the situation in the early days of this publication when a million dollar gift was considered hugely newsworthy. And the government at least held out the possibility that the incentive might be extended to private foundations.
In mid-November, the government finally (it only has been three years and eleven months since the initial announcement) brought forward legislation to implement the more generous definition of charitable organization/public foundation first announced in December 2002.2 The same bill also finally legislates the rules dealing with split receipting. The intervening years, since announcement, have been devoted in part to trying to fix up earlier flawed proposals as well as implementing second (and third) thoughts by both the sector and the finance bureaucrats.
A less remarked administrative change of heart by the CRA adopted the view that borrowing by a foundation (whether public or private) for investments purposes was acceptable. This reversed a thirty year position that such borrowing contravened certain provisions of the Income Tax Act. The change was effectively forced on the CRA by the decision of the Federal Court of Appeal in the Acorn Foundation case which dealt with the matter in an indirect fashion.
That was the good news.
While on the subject of court cases, the past year was gloomy. The cases involving “art flips” all went against the taxpayers involved and the fallout of the courts’ interpretation of how gifts in kind are to be appraised still has not been fully felt.
Aside from the Acorn Foundation case, the FCA found against organization in the Bayit Lepletot case (use of agency agreements), AYSA (whether the promotion of amateur sport is charitable)3 and the Redeemer Foundation case where the Appeal Court reversed the Federal Court Trial Division decision and said that charities have a legal obligation to reveal donors lists to a CRA auditor upon request. The Court also rejected Blake Bromley’s arguments in the Travel Just case, reported on elsewhere in this issue of Charitable Thoughts.
But the real damage was from an interplay of government decisions and the Charity Directorate’s performance.
We wrote about the very significant spending cuts announced by the government which seemed to be disproportionately tough on the non-profit sector. Indeed, one could conclude that their exercise had as much to do with settling political scores as it did with saving what amounted to minuscule amounts of money.
Part of that exercise involved the cancelling of groups which were used by the CRA for consultation, most notably from the sector’s point of view, the Charity Advisory Committee. We viewed this as a mixed event. We have been consistently sceptical of the engagement between the sector and government, most notably with the Charities Directorate. We have said in the past that we believed that members of the various advisory groups ran the danger of “going native”, becoming conduits for telling the sector what the government wanted to say rather than strongly pushing the sector’s views.
Put bluntly, we now are firmly of the belief that the whole exercise, carried on over a period of about five years, has resulted in a much worse environment for charities except in the area of better tax incentives for donations.
While on the basis of government decisions, the announcement of the plan to tax income trusts and give offsetting relief to investors by enhancing the dividend tax credit (DTC) is bad news for charities and other non-profits which hold these investments. The proposed regime should mean lower cash distributions from trusts while at the same time the offsetting DTC is of no use to non-profits. Those having such holdings now have a four year breathing space in which to make decisions but the government move highlights the fact that tax decision making seldom takes into account the non-profit sector.
Putting aside such things as the hugely flawed (both in policy and technical terms) new rules on disbursement quotas and other changes which were slipped into the revised legislation,4 it is abundantly clear that the introduction of intermediate sanctions which were proposed as a means to reduce revocations has been a disaster for the sector.
For example, the simplest example of an intermediate sanction was to be a fine for late or non-filing of the T-3010. What has happened, and a review of the Canada Gazette will confirm this, is that the CRA is revoking charities for failure to file at the same rate as in the past, but now are imposing the fine after the fact, if the charity wants to restore its status. This is a perversion of what had been a key recommendation of the sector.
We have also seen the Charities Directorate take back the audit function from Consulting and Audit Canada5 and the auditors seem to have become hugely more aggressive than ever before. It is clear to anybody who has the experience of advising on audits that not only are the auditors still poorly trained but that they have abandoned any semblance of using the audit as an “educational tool”. There have been too many cases where revocation is threatened on a first audit to believe anything else. These auditors are like the vast majority of CRA auditors, charged with finding fault in every audit. The failure to find fault is considered to be a failure of the process, so that the faults identified range from (legally) non-existent to extremely minor.
One of the factors which triggered the whole charity review exercise, a half dozen or so years ago, was the extreme inability of the Charities Directorate to deal with matters in a timely fashion. In those days, it was not unusual to have to warn a client that a simple registration might take a year. A few years ago, we were happy to write about the enormous improvement in the CRA’s handling of routine matters.
Now, we have a reversal. Why can it now take eight to ten months to deal with an application? Why can simple requests (a change in fiscal year or an address change) go unanswered for months? Why has the Directorate had to (over and over) publicly apologize on its website for its inability to get out the T-3010 forms?6
Other changes still have to be assessed. Aside from the late filing issue, how are intermediate sanctions to be determined? So far there have been few if any instances where the sanctions have been used insofar as we can tell. The new requirement that a charity faced with revocation must file a Notice of Objection and get a decision on that before heading to the Court of Appeal has not yet been really tested.7 Will the review at this level be genuinely fair? Do the personnel who do the review have enough charity law expertise? Next year should give us some clarification on whether this is a real first bite at the appeal apple or just another hurdle to be overcome.
Of course, there are other items which seem to have disappeared from the legislative horizon. We aren’t hearing much about the new federal non-profit corporation legislation. We should be grateful that in November legislation was finally unveiled which will implement the changes to the definitions of various categories of registered charities which were first announced on December 20, 2002.8
To be fair, the problems which we have outlined don’t apply to all. If you don’t get audited, if you don’t have to get anything done by the Charities Directorate, if you don’t rely on federal government funding, if you don’t hold income trust units as investments, if you don’t worry about disbursement quota calculations, getting your T-3010s in on time and so forth, you probably won’t have any concerns. But those who deal with multiple organizations (lawyers, accountants and other professional advisers and umbrella groups) have to be aware of what has happened in the past year…or two.
This was a bad year for the sector…except for fundraisers. We can only hope that things will look up in 2007, though we are far from sanguine about the possibility.
* Arthur Drache of Drache LLP, Ottawa and Miller Thomson LLP, Toronto.
1 Timing problems make this more of a ten and a half month review.
2 See other article in this issue.
3 The Supreme Court of Canada has given leave to appeal in this case.
4 One might look at the “improved” rules relating to the revocation tax calculations.
5 This group was effectively gutted by government a year or so ago.
6 There is some indication as we write that the problem may have been solved. We hope that is the case.
7 In October we were told that less than 30 Notices of Objection had been filed to date.
8 See an article on his subject which appears in this issue.
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Citizenship and Immigration
Criminality & IRPA
Leslie H. Morley*
 This article originally appeared in the Citizenship and Immigration Section Newsletter, Volume 10, No. 1, November 2006.
It all seems like a dream now. Can it really be true that as recently as 1995 all convicted permanent residents and Convention refugees, no matter what their sentence, had a right to a full appeal hearing in equity before an independent tribunal which could quash or stay the removal order made against them? Was it really possible then for a landed immigrant, convicted of murder but rehabilitated, to be allowed by the Immigration & Refugee Board to remain in Canada on terms and conditions? In fact it was true then,1 but it is certainly not true anymore.
In the last ten years the concept of independent adjudication in equity for such cases has been subject to assault from all angles. First the Immigration Act was amended to impose a “danger to the public” override that restricted the right of appeal of a removal order to those not so found.2 By this initiative the hopes for remaining in Canada of most of those permanent residents sentenced to penitentiary3 time were dashed.
Then, with the advent of the Immigration & Refugee Protection Act, the discretion inherent in the danger review process was excised from the law. Thereafter, pursuant to subsection 64(2) of IRPA, only those permanent residents sentenced to less than two years in jail have had access to a hearing before the Immigration Appeal Division of the Immigration & Refugee Board. Since 2002 long-term permanent residents, even middle-aged adults living here since young childhood, may be stripped of their status and sent packing, without a right to speak a word to the decision-maker about why they should be allowed to remain in Canada.
In this environment it is important that those without Canadian citizenship understand the limitations of their status in the face of a criminal conviction and that, when an allegation of criminality is made, they take steps from the beginning to assess the immigration implications for them both of a conviction, and of any sentence that might be imposed upon them.
Immigration & Refugee Protection Act
In general, the provisions of the IRPA have been interpreted in accordance with the “get tough” approach of that statute. As stated by Chief Justice McLachlin in Medovarski:
The objectives as expressed in the IRPA indicate an intent to prioritize security. This objective is given effect by preventing the entry of applicants with criminal records, by removing applicants with such records from Canada, and by emphasizing the obligation of permanent residents to behave lawfully while in Canada. This marks a change from the focus in the predecessor statute, which emphasized the successful integration of applicants more than security.4
As a consequence, the provisions of the Act were construed so as to restrict access to the IAD in transitional cases where the sentence imposed was two years or more,5 or where the violation of the terms of a stay happened before IRPA came into force.6
IRPA’s tougher approach to criminality is not restricted only to the appeal rights of permanent residents. Protected persons too are affected. Now, as before, a refugee claim may be suspended where criminal charges are laid.7 However, now those claiming protected status are ineligible to do so after a penitentiary sentence has been imposed in Canada or if, outside Canada, a conviction has registered for an offence equivalent to one punishable in Canada by ten years or more in jail.8 Prior to IRPA it was required that there be establishment of inadmissibility, and that a danger review, with the opportunity it presents for written advocacy. A danger finding was necessary to prohibit access to the Refugee Division.9
It should also be noted that the immigration consequences of criminality have been extended under IRPA even for Canadian citizens and for those permanent residents whose removal from Canada is not being sought. Formerly, sponsors of members of the Family Class could not be under an active or conditional removal order or confined in jail, and their right to sponsor was under suspension while they were before the courts for most offences under federal legislation.10 To these prohibitions, however, IRPA now has added bars to those who have been convicted in Canada or elsewhere of any offence, threat or attempted offence “of a sexual nature” or that caused bodily harm in the domestic context, unless subsequently there has been an acquittal, pardon or the passage of five years. In the case of an offence committed outside of Canada, there must be evidence of rehabilitation. Suspension of processing is now required where the sponsor is charged with an offence punishable by ten years or more in jail.11
Pre-sentence Custody
The situation worsened for immigrants and protected persons when pre-sentence custody began to be considered part of the sentence imposed by the criminal court. Now, where a sentence of even less than two years is imposed, access to the IAD will be unavailable where pre-sentence custody is incorporated into the term of imprisonment calculated by the court. Therefore there is no jurisdiction for a removal order appeal where, for instance, the sentencing judge imposed an 18 month term in jail, after explicitly crediting the offender for nine months of pre-sentence custody, even if the nine months was calculated at the rate of two or three months credited per month actually served.
While initially the IAD assumed jurisdiction in such pre-sentence custody situations,12 with the Allen, Atwal, and Smith and subsequent cases,13 the Federal Court went the other way. For instance, in Mr. Atwal’s first appearance before the Immigration Appeal Division, his appeal was granted and the deportation order against him was stayed on terms and conditions.14 He had received a sentence of six months in jail for robbery and 12 months consecutive for use of a firearm, on top of 20 months of pre-sentence custody. On oral review the Minister brought an application to discontinue the appeal because Mr. Atwal’s sentence, including the pre-sentence custody, exceeded the two-year threshold. This argument was rejected by the tribunal, and the application to discontinue the appeal was denied.
At the Federal Court, however, Justice Pinard followed the previously ignored Allen case, noting the Board had “focussed on a narrow interpretation of ‘sentence’ and ‘term of imprisonment’” and ignored the principles set out by the Supreme Court” in Wust,15 the principles set out by the Federal Court in Allen (above), the purposes of the Immigration & Refugee Protection Act, the sentencing principles expressed in the Criminal Code and the “reality of sentencing”.16 The matter was returned to the IAD, which now found it had no jurisdiction to proceed further.17 The Federal Court of Appeal has yet to rule on the pre-sentence custody issue.
One might be forgiven for concluding that, if it is the actual time in jail that is important, including pre-sentence custody, then when one is released early on parole for good behaviour, that the sentence has been shortened, in some cases so as to bring it back under the two-year mark. However, the Cartwright and Martin cases have put an end to that flight of fancy, as the Federal Court determined that it is the sentence imposed that governs, and not the amount of time actually served.18 As for the question of whether IAD jurisdiction is lost in the case of a conditional sentence, served in the community after pre-sentence custody, there is still no conclusive answer.19
After the Removal Appeal
Even, if one is successful in establishing jurisdiction in the IAD, and in arguing the case before that tribunal, it would be imprudent to be complacent. After a stay of removal has been imposed by the IAD, the Board now, as under the previous legislation, maintains the jurisdiction to review the case. Upon non-compliance with the terms of the stay, the Minister may apply to amend the conditions or dismiss the appeal.
Under IRPA, however, the Minister now has new tools to effect removal. Once a stay is imposed, if there is a new conviction with a sentence of six months in jail or more, or where the maximum available sentence is ten years in jail or more, regardless of penalty actually imposed, the stay is cancelled by operation of law and the appeal is terminated.20 This continues to be the case if the duration of stay is extended by the Board, through and until the removal order is quashed.21 Further, it is now clear that even comparatively minor offences, including lesser crimes and provincial offences such as speeding and possibly even parking infractions, can put an immigrant in jeopardy, if committed after he or she has been bound by the IAD to keep the peace and be of good behaviour.22
While statistics have not been reviewed, it seems that, over the years, there has been a trend to the imposition of a requirement for periodic reviews of stays by the IAD to monitor compliance with conditions, and to consider whether or not an extension of the term of the stay is required.
Avoiding Charges
Given the above, it is clear that the immigration cost of offending is greater than ever before. In the circumstances, what is counsel to do when their client is facing criminal or provincial charges?
First, it is important that your non-citizen clients be advised from the outset that the status you help them to obtain is subject to review in cases of criminality. By extension, all temporary residents should be advised that permanent resident status offers them enhanced protection, as citizenship does for protected persons and permanent residents.
Once charges are contemplated, a dialogue with the criminal lawyer should be established as soon as possible, and it should be drawn to his or her attention that success in criminal proceedings is measured differently in immigration law terms. For instance, to a criminal lawyer, pre-sentence custody can be seen as a two-for-one sale, but the immigration practitioner must be wary of its consequences, as set out above. A quick plea to a minor criminal or provincial offence may be recommended by criminal counsel where the legal fees for a trial seem an unnecessary extravagance, where the accused already has a lengthy criminal record, or where bail is denied but, in immigration terms, that conviction will advance or may even make the case for removal. Likewise, a conviction and finite sentence may seem to be preferable to a “not criminally responsible” finding and indefinite term in custody, but in immigration proceedings a conviction upon guilty plea may constitute a ground for removal, perhaps even summarily.
As the stakes in criminal proceedings may amount effectively to banishment from Canada, creative resolutions should be explored wherever possible, beginning with the development of alternatives to the laying of a charge, and continuing, if it is laid nonetheless, to diversion, participation in victim-offender reconciliation programs, discharges, peace bonds or Family Court restraining orders.
Even where prosecution must proceed, negotiation respecting the classification of the offence to which a plea is made may make a difference. For instance, conviction of a provincial offence, such as trespass to property, is generally preferable to conviction of a criminal offence such as trespass by night,23 as a provincial offence will not trigger inadmissibility. On the other hand, the straight summary offence of trespass at night is preferable to the electible offence of being unlawfully in a dwelling house as, pursuant to IRPA, all offences which may be prosecuted by indictment will be deemed for purposes under the Act to be indictable.24
Sentence Strategies
It is well established that the risk of deportation can be a factor to be taken into consideration in choosing an appropriate sentence, and tailoring that sentence to best fit the crime and the criminal. On this point, the leading case is still R. v. Melo, a decision of the Ontario Court of Appeal, in which Arnup, J.A. stated:
The fact that a convicted shoplifter may be in jeopardy under the Immigration Act is not, in itself and in isolation, a sufficient ground for the granting of a conditional or absolute discharge. It is one of the factors which is to be taken into consideration by the trial Court, in conjunction with all of the other circumstances of the case.25
Also noteworthy is R. v. Abouabdellah,26 in which the Quebec Court of Appeal reduced a sentence of a fine for shoplifting to a conditional discharge, so that a foreign student would not be deported, as that would be a “disproportionate” response to his transgression.
In some cases, for instance where the person concerned is already subject to a stay of deportation, no conviction can be countenanced. In others, such as where the person concerned is a temporary resident, every effort should be made to avoid conviction, although a realistic option of overcoming minor transgressions with a Temporary Resident Permit may exist. In yet other cases, where a conviction registers, a carefully crafted sentence may avoid otherwise devastating immigration consequences.
For instance, while, as indicated above, recognition of pre-sentence as part of a sentence may oust the jurisdiction of the IAD, pre-sentence custody is not likely to be a factor for immigration purposes where there is silence on the record respecting its effect on the calculation of the term of the sentence. For this purpose the “record” would include the warrant of committal, the endorsement on the indictment and the verbal judgment of the court. Note that, if there is an indication within this record that pre-sentence custody has been credited, the impact on sentence calculation of pre-sentence custody may be inferred, even if the manner in which it is credited is not explicitly expressed.27
Despite this, however, it is submitted that a credit for pre-sentence custody in a sentence is still discretionary, and should not be inferred absent evidence on the record that it was considered nor, of course, in the face of a statement by the court that credit was considered and rejected. This raises the issue of whether or not it might be possible for pre-sentence custody to be considered by a criminal court as a mitigating factor in imposing sentence, but one either silently or explicitly excluded from the calculation of the length of sentence, so that the impact of the pre-sentence custody in immigration terms is reduced.
As may be evident, avoiding the sentence thresholds in IRPA can be important. To a criminal court it may be a matter of little importance whether a sentence is six months or six months less a day, yet from an immigration perspective the former sentence constitutes serious criminality so as to render a permanent resident inadmissible, where the latter, in the absence of other inadmissibility, does not.28 Further, there is little additional deterrent impact to a two-year sentence, as opposed to a sentence of two years less a day but, as set out above, only the former terminates access to the IAD, assuming no pre-sentence custody has been credited.
Finally, in developing sentencing options with criminal counsel where there are multiple convictions, careful attention should be given to the distinction between consecutive and concurrent sentences. Appeal rights are lost where a permanent resident is sentenced for a single crime that has been punished in Canada by a term of imprisonment of two years or more.29 Criminal courts often render sentences globally, and the allocation of time between the charges may not always be considered by the court to be a matter of critical significance. Therefore, if a permanent resident is sentenced to three years, it may make little difference to the criminal court if the sentence is calculated as three concurrent sentences of three years, or three consecutive sentences of one year each. In the latter case, however, each of the sentences imposed individually is only one year in jail, less than the two-year cut-off, and access to the IAD is retained despite the penitentiary sentence. In the former case, as for each of the crimes the sentence was three years, each one exceeds the two-year threshold.
After the Sentence is Imposed
Once the criminal process has concluded, it is time to address its immigration consequences directly. If not already done, consideration should be given at this point to whether or not the person concerned may have a claim to Canadian citizenship, for instance, where he or she was born outside of Canada after 1977 to a Canadian citizen. While Canadian citizens cannot be deported, if a claim to citizenship is never asserted, deportation orders have issued.
Still, even if there is no possible citizenship claim, there is some scope for advocacy with the Immigration Officer who is reviewing the allegations of criminality, as under IRPA there is a limited authority not to issue a report, or not to refer a report for admissibility hearing.30 While the discretion of the Officer may not be broad, he or she may be persuaded in the case of a long-term permanent resident, for instance, that a warning is an adequate response to low-level or isolated criminality. An argument can certainly be made that submissions on whether or not a report or direction should issue should be received and considered.
Frequently sentence is imposed without any attention to its immigration ramifications. In such circumstances, the Courts of Appeal in three provinces have recognized that it is appropriate to reduce the sentence, even by many months and long after the limitation period for doing so has expired, where the consequences of doing so would do “no disservice to the fitness of the sentence” and the prospect of deportation without a hearing was a “serious but unintended collateral effect of the penalty”.31 While there is some authority going the other way,32 generally the criminal appeal courts have been accommodating.
If all else fails, a humanitarian and compassionate application pursuant to section 25 of IRPA is available to advocate for an exemption of the person concerned “from any applicable criteria or obligation of this Act”, including inadmissibility. In such cases a balance must be struck between filing the application early, which is a positive factor when a stay or removal is requested at the end of a sentence, and filing it later, after rehabilitation has been advanced through institutional programming and educational upgrading. For those who are loathe to spend any more than the minimum time in jail, parole for deportation, and the remote prospect of obtaining the Minister’s consent to return to Canada in the distant future, may be an attractive option.
For more than a decade the direction of immigration policy and decision-making has been ever more removal-oriented. This trend has been marked by a diminishing scope for discretion and independent decision-making within the removal process and, as a consequence, there is a more limited opportunity for advocacy in the face of criminality. The debasement of permanent resident status, and the value of citizenship, have never been clearer.
* Leslie H. Morley, Morley Law Office , (613) 542-2192 les@lesmorley.com. Leslie is a Member-At-Large of the Citizenship and Immigration Section.
1 Stephen Paul O’Connor v. Minister of Citizenship & Immigration (1992), 21 Imm. L.R. (2d) 64.
2 Immigration Act , R.S.C. 1985, c.I-2, as amended, s. 70(5)(c).
3 Terms of incarceration of two years or more are served in penitentiaries, Criminal Code of Canada, R.S.C. 1985, c. C-46, s.743.1(1).
4 Medovarski v. M.C.I.; Esteban v. M.C.I., [2005] 2 S.C.R. 539, 2005 SCC 51.
5 Ibid.
6 Singh v. M.C.I. 2005 FCA 417.
7 Immigration Act, s.46.1 and IRPA 100(2)(b)) & (103(1)(b).
8 IRPA (s.101(2)(a) & (b) & 112(3)(b). Ineligibility for referral to the RPD requires a danger finding where the conviction was outside Canada, IRPA, s.101(2)(b).
9 Immigration Act, s.46.01(1)(e)
10 Immigration Act, R.S.C. 1985, c.I-2, as amended, s. 5(2)(c) & (d) and (6).
11 IRPA, s.133(1)(e) & (f); s. 133(2) and (3); and s.136(1)(c).
12 M.C.I. v. Markland Davis (IAD TA1-26990), Néron, March 24, 2003; Iqbal Singh Atwal v. M.C.I. (IAD T99-06240), Néron, April 8, 2003; M.C.I. v. Kungansky Antoine (IAD MA2-03203), Lavoie, April 9, 2003; Ronald John Gomes v. M.C.I. (IAD TA2-21401), Kalvin, August 5, 2003 (reversed on appeal M.C.I. v. Gomes, 2005 FC 299); Dwight Anthony Smith v. M.C.I. (IAD VA2-02916), Clark, April 4, 2003 (reversed on appeal M.C.I. v. Smith, 2004 FC 63); Igor Stepanchikov v. M.C.I. (IAD TA2-07007), Whist, November 4, 2003; and, as respects a subsection 68(4) application, also in Timolie Albert Christie v. M.C.I. (IAD TA0-02536), Collins, October 30, 2003.
13 Allen v. Minister of Citizenship and Immigration (May 5, 2003), IMM-2439-02, Snider J.; .M.C.I. v. Atwal, 2003 F.C. 7 (January 8, 2004), IMM-3260-03 (F.C.T.D.), Pinard J; and M.C.I. v. Smith 2004 F.C. 63 (January 16, 2004), IMM-2139-03 (F.C.T.D), Campbell J..
14 Iqbal Singh Atwal v. M.C.I. (IAD T99-06240), Néron, April 8, 2003.
15 R. v. Wust, [2000] 1 S.C.R. 455.
16 Atwal, (F.C.T.D.) ¶12-3.
17 Iqbal Singh Atwal v. M.C.I. (IAD T99-06240), D'Ignazio, June 15, 2004.
18 Cartwright v. M.C.I, 2003 FCT 792; and Martin v. Canada (M.C.I.), 2005 FC 60.
19 See David Matas, “Two years or more”, ImmQuest, II:8 (September, 2006), p.7 for a careful review of the interplay of the conditional sentence and pre-sentence custody.
20 IRPA, s. 68(4).
21 Leite v. M.C.I. 2005 FC 984.
22 Huynh v. M.C.I., 2003 F.C. 1426; and Stanhope St. Aubyn Cooper v. M.C.I. 2005 FC 1253 (FCTD).
23 Trespass to Property Act, R.S.O. 1990, c. T.21, as am., s.2; and Criminal Code of Canada, s. 177.
24 Criminal Code of Canada, s. 177 and 349(1); and IRPA, s.36(3).
25 R. v. Melo (1975) 26 C.C.C. (2d) 510, at p.516. This case was cited with approval in R. v. Wisniewski, 2002 MBCA 93 (CanLII) (M.C.A.); R. v. Hamilton, 2004 CanLII 5549 (O.C.A.); and R. v. Kanthasamy, 2005 BCCA 135 (CanLII) (B.C.C.A.). Please note, however, that authority in Alberta tends in a different direction, for instance, R. v. Fung (1973), 11 C.C.C. (2d) 195 (Alta. C.A.).
26 R. v. Abouabdellah (1996), 109 C.C.C. (3d) 477.
27 Jamil v. M.C.I., 2005 FC 758.
28 IRPA, s. 36(1) & (2).
29 IRPA, s. 64(2).
30 IRPA, s.44(1) & (2), and for the scope of review see Henandez v. M.C.I., 45 Imm.L.R. (3d) 249; Cha v. M.C.I, 2004 F.C. 1507; Leong v. Solicitor-General, 2004 F.C. 1126; and Correia v. M.C.I., 2004 FC 782.
31 R. v. Lacroix, 2003 CanLII 36164 (O.C.A); R. v. Leung, 2004 ABCA 55 (CanLII); R. v Hamilton and Mason (2004) 186 C.C.C. (3d) 129; R. v Kanthasamy, 2005 BCCA 135 (CanLII); R. v. Curry, 2005 CanLII 32191 (O.C.A.); R v. Mai, 2005 BCCA 615 (CanLII) and R. v. Tigse, 2006 CanLII 10392 (O.C.A.).
32 R. v. To, 2004 ABCA 197 (CanLII).
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Civil Litigation
Tennis and Justice: A Love Match?
Peter Henderson*
This article originally appeared in the Civil Litigation Section Newsletter, Volume 15, No. 1, September 2006.
There is a lot of talk these days about how lawyers should act. Many of the growing number of publications that arrive on a lawyer's desk these days purport to provide guidance on how lawyers should interact with each other, and with clients. Given the various perspectives from which the publishers of this commentary come at the issue, it's not surprising that there is a great divergence of opinion as to the, shall we say, degree of delicacy with which lawyers should conduct themselves.
In the most recent edition of the National magazine published by the Canadian Bar Association, an article on "Management mini-miracles” suggests a straightforward approach to client relations: "Don't be afraid to fire problem clients….When you're on vacation, think about the clients you least enjoy dealing with. When you return, fire them." Ironically, this edition of the National arrived plastic-wrapped together with the most recent version of the Canadian Bar Association Code of Professional Conduct, which counsels a more measured approach to the withdrawal of legal services: "The lawyer owes a duty to the client not to withdraw services except for good cause and upon notice appropriate in the circumstances."
Now, the two approaches suggested above are not necessarily mutually exclusive, and I would be among those who would argue that there is some merit to either approach. However, it could certainly be argued that the two approaches are difficult to reconcile on their face, and that a lawyer who followed a strict interpretation of the first suggestion might be placing him or herself on the wrong side of the second. The lawyer is faced with a professional rule of conduct that seems at odds with practical advice sanctioned by a (in this case the very same) professional association.
Strangely, this "rule vs. reality” dichotomy presents just as much of a problem when it comes to the issue of civility among lawyers. I say strangely because one would expect that there would be little disagreement among lawyers that civil and collegial dealings between counsel are a good thing. Certainly, not many lawyers have taken the position publicly that the promulgation of rules about civility and their creeping adoption by the courts are bad things.
In private, however, many lawyers view the discourse about civility in the legal profession as an anachronism, carried on and promoted by big firm lawyers to create a set of rules and a body of doctrine that favour themselves intrinsically. It is easier, some say, to conduct oneself with an air of civility when representing clients who have nothing but time and money, than when not. Others view such rules as an unnecessary and ill-advised interference with personal style, even the discussion of which focuses attention on counsel rather than where it belongs, on the dispute. They hold up as examples successful, highly-regarded counsel who were or are famously difficult to deal with.
Sometimes, the response by proponents of civility misses the point. Civility has nothing to do with being nice to opposing counsel, or even liking them. It simply has to do with counsel focusing their effort on the resolution of the dispute, rather than engaging in or reacting to conduct that distracts from that effort. Civility between counsel furthers the purpose of the justice system, in the same way as do rules of procedure. Counsel who engage in unduly “partisan” conduct or rhetoric do their clients and the system a disservice.
I attended the Rogers Cup in Toronto this summer, and during a particular match I was struck by the analogy between civility in tennis and civility in justice. During this match, there was a particularly (I would say obnoxiously) vocal group of supporters of one of the players. They chanted and yelled and waved flags. They engaged in all sorts of tennis heresy, such as screaming "out" when the opponent of their favoured player hit a shot close to the line. Several times the umpire requested that they settle down so that the players could concentrate on the match. In the final set, the player for whom this group was cheering looked in their direction and held a finger up to his lips, obviously entreating them to quell their enthusiasm. They persisted, however, and their distracting behaviour became an obvious factor in this player’s surprising loss to a much lower-seeded player.
Lawyers are not cheerleaders for their clients, and good clients know it. Uncivil, rude or obnoxious behaviour, whether it is born of an excess of enthusiasm for a particular client or something else, distracts everyone involved in the process, including the client, from the task at hand. It is counterproductive, and that is the reason, at least from a professional perspective, that it should be avoided.
I leave you with two other noteworthy aspects of the analogy that I drew from the tennis match. Firstly, no one involved in the process was consumed with trivialities. The occasional "Go Marcos!” was not only tolerated, but welcomed, because it was a positive addition in the context. Sometimes, a gentle admonition from the umpire was required to keep everyone focused on the matter at hand, but generally things proceeded on the understanding that in a contest emotions sometimes run high, and, just as it is advisable to contain one's own enthusiasm, it doesn't assist the process to overreact to every perceived slight.
Finally, the umpire of the contest was not concerned with crowd control, beyond the occasional admonition to keep matters focused. The umpire's focus was the resolution of the dispute between the two contesting players. Had one of the adoring fans of the eventually eliminated player persisted in creating an unacceptable distraction, he may have been escorted out of the stadium by security and thereby removed from the picture altogether. For the umpire, however, to become overtly involved in regulating the conduct of the "supporters" would have been to permit the distraction created by them to prevail, to the benefit of no one. As exciting as the match was, I was happy to see it brought to a well-played, timely conclusion.
* Peter Henderson, Kramer Henderson LLP, (416) 601-6820, pthenderson@kramerhenderson.com. Peter is the Chair of the Civil Litigation Section.
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Constitutional, Civil Liberties and Human Rights
Anti-Terrorism
Stephen McCammon*
 This originally appeared as part of the article: “The Ontario Bar Association’s 5th Annual Charter Conference – Report” in the Constitutional, Civil Liberties and Human Right Section Newsletter, Volume 10, No. 1, January 2007.
Barbara Jackman (Jackman and Jackman), posed the question, are there human rights protections for non-citizens when concerns about national security and a fear of strangers dominate? In 1985, when the Supreme Court of Canada decided the Singh case, there was reason to believe that the answer might be “yes” as the Court decided that the protections provided by section 7 of the Charter extended to non-citizens. Subsequent decisions indicate otherwise, Jackman argued.
In the Kindler and Ing cases, the Court upheld government decisions to extradite non-citizens to the U.S. in the absence of any assurances that the accused murderers would be spared the death penalty. In contrast, the Court insisted on such assurances in Burns and Raffy, a case concerning the extradition of co-accused Canadian citizens to face murder trials in the U.S. And in Suresh, the Supreme Court left open the possibility that government could justify the deportation of non-citizens suspected of having links to terrorism even where there is a risk that they will face torture overseas.
Jackman currently represents a client detained under the Immigration and Refugee Protection Act security certificate powers. A security certificate allows the Minister of Immigration to detain and process a non-citizen for deportation on the basis of classified and non-classified intelligence. The constitutionality of the Federal Court security certificate proceedings, which leave a single judge in the position of having to arrive at a final decision on the basis of evidence unseen by the public or the impugned non-citizen, has been argued before the Supreme Court in the Charkaoui case (heard together with Almrei and Harkat on June 13, 2006). A decision is anticipated early in 2007.
Sunil Mathai (Falconer, Macklin) who stood in for Julian Falconer, discussed Justice O’Connor’s recently released report on the actions of Canadian officials in relation to Maher Arar. Mr. Arar is being represented by Falconer, Macklin in his civil suit against the Canadian government.
After September 11, 2001, but before the introduction and enactment of Bill C-36, the Anti-Terrorism
Act, the Canadian Security Intelligence Service transferred a number of national security files to the RCMP. Some of those files ended up in the hands of Project A-O Canada, the RCMP operation that identified Maher Arar as a “person of interest” on the basis of Mr. Arar’s association with another Canadian citizen suspected of being associated with al-Qaeda, Abdullah Almalki. Subsequently, RCMP officers with Project A-O passed information about Mr. Arar to their U.S. counterparts, describing Arar as an Islamic extremist. En route from Switzerland to Montreal via New York on September 26, 2002, Mr. Arar was detained by U.S. authorities for over a week and then subjected to extraordinary rendition to Syria where he was held and tortured for nearly one year.
All this occurred, argued Mathai, in a climate of fear in which everything or anyone, but particularly everything and anyone Arab or Muslim, is treated as suspicious. With the federal government focused on preventing further terrorist attacks, the RCMP decided to redirect its energies, first to prevention, second to intelligence gathering, and third to criminal prosecution. Such a stark reversal of regular policing priorities came at the same time as the RCMP allowed criminal investigators to implement the force’s return to a national security and intelligence mandate; a mandate that had been stripped from the RCMP following the revelations of RCMP wrongdoing before the MacDonald Commission.
As the Arar case revealed, long-standing information sharing policies were breached as under supervised members of the RCMP operated on the basis that information-sharing caveats were “down”. Justice O’Connor, who expressly noted that there was nothing to indicate that Mr. Arar committed an offence or was a threat to the security of Canada, has recommended that there be ongoing independent, arms-length review of the RCMP’s information-sharing practices and arrangements. Mr. Mathai went further, urging the federal government to provide for fulsome oversight of the RCMP.
Ziyaad Mia described Canada’s response to the terrorist attacks of September 11, 2001 as the legalization of a “permanent emergency model.” The climate of fear that has pervaded policy development since the attacks, Mia argued, has opened the door to political and legal responses in Canada that threaten to undermine the rule of law. In particular, Mia raised concerns about a lack of accountability from, and increasing surveillance and secrecy by, the state in Canada.
Acknowledging the graciousness of RCMP Commissioner Zaccardelli’s personal apology to Mr. Arar, Mia nonetheless worried that no official had, (at that time), been held accountable for the damming actions of the RCMP. If the RCMP were a private corporation, the shareholders would be up in arms said Mia. Mia went on to discuss increasing surveillance, for example, of travelers in programs like the air passenger information database enacted under the Public Safety Act in 2002 and watch list powers such as the long anticipated Canadian version of the U.S. “no-fly” list. Referring to numerous reports of Muslim Canadians being questioned by the authorities about their prayer practices, their travel choices, and their political opinions, Mia painted a picture of a community subject to profiling and under a siege by suspicion. Mia also pointed to the increasing allowance new laws make for the use of secret evidence in proceedings such as the listing of individuals and organizations as terrorist entities. Citing remarks by Israeli Supreme Court Justice Barach, Mia reminded those assembled that we are always safer under the rule of law whatever threats we may face.
Professor Don Stuart (Queen’s University, Faculty of Law) criticized the Anti-Terrorism Act as a bill rushed through Parliament within three months, only to be made a permanent feature of Canadian law. Citing remarks made by former CSIS Director, Reid Morton, Professor Stuart argued that most of the new powers are simply unnecessary, while many are dangerous. Pointing to ministerial powers to issue fiats to authorize surveillance (the Minister of Defence) and keep evidence secret (the Minister of Justice) as dangerous examples of unnecessary powers, Stuart referred to Parliament’s Anti-Terrorism Act Review as having received more than a dozen great briefs on reform. While not optimistic of reform, he argued that the pressure for reform is building with each new report and revelation. A June 2005 SIRC report described a dangerous trend within CSIS towards the manipulation of facts. Stuart also contrasted remarks attributed to former Deputy Prime Minister Anne McClellan to the effect that if racial profiling occurs, “heads will role”, with the results of a survey tabled before the Senate indicating that 8% of Canadian Muslims have been visited by CSIS.
* Stephen McCammon, Legal Counsel, Information and Privacy Commissioner of Ontario, (416) 326-1920, Stephen.McCammon@ipc.on.ca. Stephen is the Newsletter Co-Editor of the Constitutional, Civil Liberties and Human Rights Section.
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Construction Law
The Construction Industry and Environmental Protection Legislation
Gregory D. Hersen*
Since 1994, environmental regulations have been in force in Ontario which deal with the disposal of waste on construction and demolition sites. Under these regulations, general contractors, property owners, architects and engineers are, or could be, responsible for ensuring compliance with various waste-disposal requirements. Prosecutions may result and fines may be imposed if these regulations are not complied with.
Surprisingly, many players in the construction industry are not aware of the requirements of these regulations. A key reason for this is that until recently, these regulations were not consistently enforced by the Ministry of the Environment. Lately, however, municipalities and the provincial government have increased their focus on waste reduction and diversion. These regulations are now being much more diligently enforced.
In March 1994, the Province enacted the "Waste Audits and Waste Reduction Work Plans" regulation and the "Industrial, Commercial and Institutional Source Separation Programs" regulation under the Environmental Protection Act. These Regulations apply to either a construction project or a demolition project with a total floor area of 2,000 square metres or more. Any person who undertakes a construction or demolition project – whether on their own behalf or on behalf of another person – is required to complete a waste audit and prepare and implement waste-reduction plans and source-separation programs for the waste that will be generated during the construction or demolition. The exact requirements are set out in detail in the regulations. It is not only the owner or the contractor who may be held liable for compliance.
Construction law practitioners may be surprised at how far-reaching environmental statutes can be. Obviously, owners and general contractors are affected. Architects and engineers who are acting in a pure consultancy role may not be liable for compliance, but they may have potential liability for compliance to the property owner, depending on the terms of their contract. In circumstances in which a design consultant is participating in a more direct role as a design-builder, or in any capacity that involves more than pure consultancy, the regulations may become directly applicable to them. In these cases it would be prudent for the design consultant to seek professional advice regarding their potential obligations under the regulations.
In addition to the construction context, these regulations apply to retail establishments, shopping complexes, office buildings, restaurants, hotels and motels, hospitals, educational institutions, large manufacturing establishments, and multi-unit residential buildings. Owners and property managers will certainly wish to ensure compliance with the regulations.
Lawyers practicing in the area of construction law should be aware of these issues and be able to advise their clients of their responsibilities and potential exposure if the regulations are not complied with.
* Gregory D. Hersen, Certified Specialist – Construction Law, Partner, Torkin Manes, (416) 777-5400, ghersen@torkinmanes.com. Gregory is the Chair of the Construction Law Section.
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Criminal Justice
Corroborative Evidence and R v. Khelawon: At Last, Sanity from the Supremes!*
Suhail Akhtar and Joe Dart**
 Introduction
The principled exception to the hearsay rule is now a commonly used tool to elicit evidence from witnesses who cannot or will not testify for a variety of reasons. The Khan/Smith and B. (K.G.) tests are well-known to all criminal lawyers: is the out-of-court statement that is sought to be admitted both necessary and reliable?
But what do the courts mean by "reliable"? When the exception was created, the natural tendency was to look at evidence which  corroborated the truth of
the statement and therefore enhanced its reliability. However, a line of cases, culminating in the Supreme Court of Canada's 2000 decision in R. v. Starr, dramatically changed that position and pigeon-holed the principled approach
to the hearsay rule into an often inflexible exercise. For six years, the decision
and the main principle (for the purpose of this paper), i.e. that corroborative evidence should not be considered at the threshold reliability stage of the hearsay statement voir dire, led to confusion and criticism. Finally, in R v.
Khelawon1 the Supreme Court of Canada (S.C.C.) reversed the corroborative evidence ruling in Starr and restored the analysis as originally intended in Khan/Smith/B.(K.G.). The restoration of the previous and more flexible approach was much-need because, as will be argued in this paper, the use of evidence outside the "four corners" of the statement is an essential ingredient in determining "reliability" and should therefore be a part of the test in admitting hearsay evidence.
The Initial Position in Canada
What should not be forgotten is that the original ground-breaking cases in Canadian law all used corroborative evidence in determining whether an out-of-court statement would be deemed admissible evidence. In R. v. Khan,2 the S.C.C. took account of a semen stain on the clothing of a young complainant to conclude that her statement was reliable. In R. v. Smith,3 the same court appeared to acknowledge the significance of other statements made by a hearsay declarant: the fact of a previous assault, the use of an alias by the declarant and her possession of a stolen credit card. All these factors had the effect of making the hearsay statement unreliable and therefore inadmissible for the truth of its contents. Finally, in R. v. B. (K.G.),4 the extension of the rule to cases where the declarant was actually available, the S.C.C. noted that reliability of the previous out-of-court statements could be gleaned from the fact that the evidence given at trial by the declarants was a lie.
The U.S. Position: Idaho v. Wright
The U.S. Supreme Court had already created its hearsay exception founded on the same premise adopted in the Canadian jurisdiction. The case which established it, Ohio v. Roberts,5 was decided in 1980 and enunciated the principle that if a hearsay statement did not fall within an established exception, it could only be admissible if it demonstrated "particularized guarantees of trustworthiness". Ten years later, the U.S. Supreme Court refined its requirements in the case of Idaho v. Wright.6 Two accused, Laura Lee Wright and Robert Giles, were charged with allegations that Giles had raped Wright's daughters while she held them down. The younger of the daughters volunteered information confirming the sexual assaults to a doctor who examined her. She, however, was deemed to be too young to testify and therefore the doctor became a prosecution witness recounting what he had been told. Wright appealed her conviction, arguing that her daughter's hearsay account should not have been allowed into evidence.
The Supreme Court divided, 5-4, on the issue. The majority held that the daughter's statement should not have been admitted. The key difference between the majority and the dissent was the use of "other evidence at trial which corroborates the truth of the statement". The majority held that only the circumstances surrounding the making of the statement could be used to demonstrate reliability of the statement itself. Reliability could only be shown by virtue of the statement's inherent trustworthiness and not by reference to other extrinsic evidence. Corroborating evidence would therefore permit admission of "a presumptively unreliable statement by bootstrapping on the trustworthiness of other evidence at trial". Thus the physical evidence of the abuse, the opportunity of the accused to commit the offence, and the corroborating testimony of the victim's older sister were irrelevant to a "showing of the particularized guarantees of trustworthiness" necessary for admission.
The minority, however, held that to ignore corroborating evidence would be undesirable and unworkable. It was a matter of "common sense" that the trustworthiness of a statement be evaluated by looking at independent confirmatory evidence. Justice Kennedy, writing for the minority, pointed out the legal absurdity that would occur in the operation of the rule espoused by the majority: a statement that was made spontaneously or under circumstances indicating reliability but which could be proven to be so inaccurate that its credibility would be fatally undermined would nevertheless satisfy the majority test and be admissible. The corroborating evidence in this case, physical and testimonial, pointed overwhelmingly in favour of admitting the hearsay.
The "common sense" approach is difficult to deny. What is even more puzzling is Justice O'Connor's basis for excluding corroborating evidence; i.e. that "it would permit admission of a presumptively unreliable statement by bootstrapping on the trustworthiness of other evidence at trial". Surely the point is that if the "other evidence" is trustworthy, the presumption of unreliability is displaced. What, therefore, is wrong with allowing such "bootstrapping"?
The Position in Canada: The Early Days
North of the border, the relaxation of the hearsay rule began to be applied across the Canadian jurisdiction with vigour. And, as in Khan, the existence of confirmatory evidence was not unnoticed by the court.
In Ontario, the Court of Appeal in R. v. D. (G.N.)7 held that statements made by a child complainant to care workers in a sexual assault case were admissible once the child was held to be incompetent. The court emphasized that in assessing the reliability of the statements, the utterances were not to be looked at "in isolation" but should be looked at as a whole, each statement providing an indicia of reliability to the other. In R. v. Persaud,8 a charge of second degree murder, the trial judge permitted the Crown to lead, as B. (K.G.) evidence, statements of two witnesses who had recanted their evidence at trial. As part of the reliability assessment the judge took into account the similarity of the two witnesses' prior statements and the physical evidence, bullets and casings found at the scene, which confirmed the truth of the prior statements. This procedure was approved of by the Ontario Court of Appeal.9
R. v. Kharsekin,10 a decision of the Newfoundland Court of Appeal, proposed that corroborative medical evidence could be used to assess the reliability of a murder victim's identification of the accused to the doctor who was examining him shortly before he died. On the other side of the country, the British Columbia Court of Appeal in R. v. Harvey11 permitted the admission into evidence of a recorded conversation of a witness who had been killed in an accident prior to trial. Its reliability was founded in part on the confirmatory evidence of an admission by the accused and evidence placing the accused at the location of the offence charged.
On the flip side of the coin, in the case of R. v. Meaney,12 the Newfoundland Court of Appeal held that hearsay statements should have been held unreliable as the maker had made false allegations in the past and had been shown to be manipulative. Similarly, in R. v. R. (D.),13 a case of sexual assault against children, the S.C.C. held that one of the complainants' out-of-court statements had been wrongly admitted as there was evidence that one of her brothers had entered into sexual activity with her and that she had previously lied to protect him and cover up any sexual activity that had taken place between them.
The undoubted high point of the corroborative component of the principled exception rule came, however, with the S.C.C.’s decision in R. v. U. (F.J.).14 The accused was charged with incest and sexual touching of his daughter. She gave a statement to the police outlining the allegations in detail and informed them that the last time that sexual activity had taken place was the day before she gave the statement. The accused was interviewed by the police and admitted having sex with the complainant and added that the last time they had indulged in sexual activity was the day before he gave the statement. At trial, the complainant recanted her previous statement and said that she had lied to the police. The accused, in testifying, denied having any form of sexual activity and he, too, claimed that he lied to the police. The S.C.C. held that the complainant's previous testimony was admissible under the Khan/Smith/B. (K.G.) exception. Necessity, of course, had been demonstrated due to the complainant's recantation at trial. Reliability had also been demonstrated as a comparison between the statements given by the complainant and the accused to the police demonstrated a "striking similarity". Using this similarity, the court concluded:
The statements made by the accused and by his daughter contained both a significant number of similarities in detail and the strikingly similar assertion that the most recent sexual contact between the two had been the previous evening. As a voir dire was also held with regard to the accused's statement, there was also sufficient evidence presented to found a conclusion that the accused and his daughter had neither a reason nor an opportunity to collude, and that the accused was not improperly influenced by the police officers who took his statement. On the basis of all these factors, I conclude that her statement was, therefore, substantively admissible at trial.15
It seemed therefore entrenched into the principled exception doctrine that the presence of extrinsic corroborative/conflicting evidence could be used to determine the reliability and thus admissibility of hearsay statements. One year later, however, the Ontario Court of Appeal would enunciate a different view.
R. v. Conway; R. v. Merz: Idaho v. Wright Rides Into Town
In December 1997, the tide abruptly turned. In R. v. Conway,16 the admissibility of a B. (K.G.) statement in a second-degree murder trial was examined by the Ontario Court of Appeal. The case itself involved the robbery of an elderly man which had resulted in his death. A key Crown witness recanted his testimony at trial and the Crown sought to have it admitted under the B. (K.G.) test. Since the witness' previous statement had not been made under oath, the court found that the test for threshold reliability had not been met as there were no other factors that could act as a substitute for the oath. The Crown therefore argued that the court could look at other confirmatory evidence to support the correctness of the ruling. The Court of Appeal disagreed:
For this proposition, the Crown relies on the minority decision of the Supreme Court of the United States in Idaho v. Wright (1990), 110 S.Ct. 3139. In that case, the majority concluded that hearsay statements of a child victim of sexual abuse who was unavailable to testify at trial did not bear adequate indicia of reliability. The court stated that the circumstances relevant to the admissibility of the statements include only those that surround the making of the statement. The issue of admissibility cannot be decided by reference to other evidence at trial; however, other evidence corroborating the truth of a statement can be looked at, but only on the issue of harmless error. The dissenting minority would have considered the existence of corroborating evidence, apart from the circumstances in which the statements were made, in determining their admissibility.
The decision of the majority to the effect that the relevant circumstances include only those that surround the making of the statement is consistent with the position of Chief Justice Lamer in KGB while the minority position does not appear to have been adopted in any reported case in Canada.17
The court appeared to be unaware of the other decisions, discussed earlier, which had indeed implicitly adopted the minority in Idaho v. Wright.
The position became unequivocal in the case of R. v. Merz.18 The accused had been charged with the first-degree murder of his former common-law wife after the couple had become involved in an acrimonious custody battle over their two children. The deceased's hearsay evidence contained a description of how the accused had threatened to kill her on two separate prior occasions. The trial judge admitted the testimony and, in the assessment of reliability, noted that the testimony could be "confirmed by other evidence". The Ontario Court of Appeal dismissed the accused's appeal, ruling that although the hearsay evidence should not have been admitted it did not, in the court's view, have an impact on the jury's verdict. Doherty J.A., writing for the court, ruled that the trial judge had erred in using the confirmatory evidence from other witnesses. It was his view that although use of confirmatory evidence was initially permitted by the courts, there had been a newer trend to the contrary:
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