Animal welfare trumping indigenous communities

Transcription

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Vol. 34, No. 11
lawyersweekly.ca
July 18 , 2014
Big money still changes hands
but not nearly as much as before
Feds suffer
stiff rebuke
in expat case
Michael Benedict
Softwood lumber peace dividend cuts civil law bill
Sum total, Page 2
Fair, Page 5
INTERNATIONAL TRADE
BUSINESS LAW
BUSINESS & CAREERS
Modernizing
NAFTA deal
Trend toward
full disclosure
Don’t hide
from media
While trade has evolved,
NAFTA has stayed static
Privilege is not a given in
internal corporate probes
They’ll do the story with
or without your input
PAGE 10
PAGE 20
Ottawa’s spending on the privatesector lawyers handling its civil
work fell by 43 per cent in
2013 — contributing to a steep
three-year decline, internal
Department of Justice records
disclose.
Law firms last year billed the
federal government a total of
$15.6 million (including disbursements), down from $27.5
million the year before, reveal
records obtained under the federal Access to Information Act.
The 2012 tab was itself a 32
per cent drop from 2011, which
in turn was down 11 per cent
from 2010.
The single biggest contributor
to Ottawa’s dramatically reduced
legal bills in 2013 was the hardwon peace in the U.S. softwood
lumber war.
In 2013, Hughes Hubbard &
Reed of Washington, D.C.,
remained the No. 1 Crown agent,
billing nearly $2.8 million — $2.2
million of that to the Department
of Foreign Affairs, and the balance to the RCMP.
That was a 56 per cent drop
from $6.3 million in 2012, which
PAGE
14
STB_LW_basebar_03_12v2_STG
Clarke Hunter of Norton Rose Fulbright’s Calgary office, seen above in Ottawa, is part of the team defending
Canada in a multibillion-dollar lawsuit. Three Indian bands say the Crown mismanaged their oil and gas
reserves. Roy Grogan for The Lawyers Weekly
in turn was a drastic decline from
the $10.7-million bill (including
significant disbursements) the
top-tier American firm handed
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Joanne Osendarp and her
Hughes Hubbard team. In 2012,
the team persuaded an inter-
Cristin Schmitz
OTTAWA
To subscribe to The Lawyers Weekly,
visit www.lawyersweekly.ca/subscribe
Ottawa in 2011.
The smaller 2013 tab reflects a
string of recent victories won by
Canadian trade law expert
The Court of Appeal for Ontario
has delivered another stiff rebuke
to the federal government’s
efforts to curtail the voting rights
of expat Canadians.
In Frank v. Canada (Attorney
General) [2014] O.J. No. 2981,
Justice Robert Sharpe denied a
government request for a stay
from a lower court decision that
declared unconstitutional a law
banning Canadians from voting
if they have lived outside the
country for more than five years.
If granted, the stay would have
prevented untold Canadians
from voting in last month’s four
federal by-elections.
The contested legislation was
passed in 1993, but interpreted
loosely until 2007. Up until then,
any brief home visit home constituted a break in the five-year period. In the interim, Elections Canada asked the government to
rescind the voting prohibition on
some 1.4 million Canadians, a recommendation backed by an allparty parliamentary committee.
Meanwhile, when two academics living in the United States
learned two years ago that they
would be denied the right to vote
in the next federal election, they
launched a legal challenge. An
Ontario Superior Court judge
2
• July 18 , 2014
THE LAWYERS WEEKLY
News
Contents
News
Big money still changes hands,
just not as much
1
Feds get a stiff rebuke over expat
voting move
1
Context seen as key when it
comes to fee disclosure
3
Scope of notary role at issue in
British Columbia
4
Special-case rule requires
consensus, court says
Municipalities get say on cell
tower placement
5
23
Focus
BUSINESS LAW
Privilege is no longer a given in
internal corporate probes
10
No-contest settlements affected
by U.S. ruling
11
Who is responsible for that
bounced cheque?
12
The right price is only the
beginning
13
INTERNATIONAL TRADE
Other negotiations offer chance
to upgrade NAFTA 14
Animal welfare trumping
indigenous communities
15
Business & Careers
Better to be out front than to
hang back
Understanding fiduciary duty
crucial to governance
20
22
22
21
19
16
11
4
ANNOUNCEMENTS
CAREERS
CLASSIFIED ADS
DIGEST
LAWDITTIES
NAMES IN THE NEWS
Sum total: The biggest earners
who acted for the feds last year
Continued from page 1
national arbitration tribunal to
dismiss every one of American
softwood lumber producers’
complaints that they were owed
hundreds of millions of dollars
under the 2006 Canada-U.S.
softwood lumber agreement for
illegal B.C. subsidies. The previous year, Hughes Hubbard also
convinced the London International Court of Arbitration
(LICA) to reduce from $1.1 billion to $59 million the export
taxes claimed by the U.S. from
Ontario and Quebec lumber
exporters for the subsidies the
latter got via loans, loan guarantees and tax credits.
Osendarp and four others
were back last year at the LICA,
where
they
successfully
defended against U.S. demands
that the Ontario and Quebec
exporters continue paying penalties for those subsidies beyond
Oct. 12, 2013 (the original expiration date for the softwood lumber agreement) until Oct. 12,
2015 (the agreement was
extended for two years).
“The tribunal said, ‘No, all the
export taxes only have to be collected until Oct. 12, 2013,’ and
everything that was collected
after…had to be reimbursed to
the Ontario and the Quebec
exporters,” Osendarp told The
Lawyers Weekly. “So that was a
real victory again for Canada,
and for Ontario and Quebec producers…We saved them close to
$40 million in export taxes.
That’s two in a row now where
we’ve have won flat-out, and
we’ve not heard a peep from the
Americans since then.”
While there have been six
months of peace under the softwood lumber agreement, it
remains an open question what
happens when it expires next
year, Osendarp acknowledged.
“It will be up to the two coun-
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MICHAEL YUN, B.SC. (BIOCHEM), J.D.
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We saved them close
to $40 million in
export taxes. That’s
two in a row now
where we’ve have won
flat-out, and we’ve not
heard a peep from the
Americans since then.
tries whether they want to
renegotiate a new agreement that
is supposed to bring peace on
earth again and, who knows, we
may have many arbitrations
under that one” as well, she said.
Another possibility is that the
U.S. jettisons managed trade
when the agreement expires and
launches “Lumber 5” — the latest
in a string of multi-proceeding,
exorbitantly expensive trade
actions since 1982.
“And maybe, just maybe — which
would be wonderful — this agreement expires and the Americans
don’t bring a case; that is the
third scenario,” Osendarp said.
The No. 2 billing firm in 2013
was Toronto’s Davies Ward Phillips & Vineberg at $2.7 million — most of it billed to Natural
Resources Canada — down from
$3.2 million in 2012 and $4.6
million in 2011.
Coming in at No. 3 was Norton
Rose Fulbright’s Calgary office,
billing $2.5 million to the
Department of Aboriginal
Affairs — about the same as the
year before. Norton Rose Fulbright (formerly Macleod Dixon)
is defending Canada in a 25-yearold, multibillion-dollar lawsuit
in which three Alberta Indian
bands contend the Crown mismanaged their oil and gas
reserves. The case has been up to
the Supreme Court of Canada,
where some of the bands’ claims
were dismissed.
In 2013, “[We did] preparations
and work on the oil and gas issues
that remain outstanding,” said
Clarke Hunter. “There’s a lot of
detail in these claims, and they go
back many, many years, so there
is quite a bit of research to do.”
The firm has moved on behalf
of the Crown to strike out the
claim of the Samson and Ermineskin bands related to the “madein-Canada” energy policies of the
1970s which the plaintiffs say
reduced the Crown’s royalty pay-
Joanne Osendarp
Hughes Hubbard & Reed
ments. The Crown argues the
six-year limitation period was
breached because the bands did
not file suit until 1989 and 1992.
If the Crown succeeds, it will
knock out a large part of the
long-running lawsuit.
“There have been a number of
procedural issues relating to an
affidavit filed on behalf of one of
the bands, but we expect the
application will be heard some
time later this year,” Hunter says.
In 2013, 91 per cent of Ottawa’s
total tab for civil legal work
went to just 20 law firms, with
only five firms billing more than
$1 million.
The only other firms that rendered bills of more than $1 million were Cassels, Brock & Blackwell, which charged Natural
Resources Canada $1.3 million,
and Warner Norcross & Judd of
Lansing, Mich., which charged
Transport Canada $1.2 million.
The Department of Aboriginal
Affairs spent the most on outside law firms in 2013: $3.5 million. The number two spender,
at $3 million, was Natural
Resources Canada.
Others who doled out more
than $1 million were: the
Department of Foreign Affairs
$2.2 million; Transport Canada, $1.7 million; Department
of Finance, $1.6 million; and
the RCMP, $1 million.
top 20 agents and revenue
2012
2013
$6,284,732.19
$2,773,290.52
DAVIES WARD PHILLIPS & VINEBERG LLP (ON)
$3,197,771.01
$2,668,263.03
NORTON ROSE FULLBRIGHT CANADA LLP (AB)
$2,477,541.37
$2,476,932.10
$81,740.50
$1,314,901.84
$941,463.29
$1,232,430.66
Crown Agent Firm
HUGHES HUBBARD & REED LLP (DC)
CASSELS, BROCK & BLACKWELL (ON)
WARNER NORCROSS & JUDD (MI)
ATD LEGAL SERVICES (ON)
LENCZNER SLAGHT ROYCE SMITH GRIFFIN (ON)
$919,931.90
$1,200,349.84
$592,909.90
MCMILLAN LLP (ON)
$643,869.79
$419,447.30
MILBANK, TWEED, HADLEY & MCCLOY LLP (NY)
$308,602.14
$231,906.19
HOGAN LOVELLS LLP (CHINA)
HOGAN LOVELLS LLP (NY)
$1,958.25
$67,728.70
$226,669.38
$2,298,835.85
$206,926.65
FASKEN MARTINEAU DUMOULIN LLP (ON)
$37,362.65
$201,212.50
BAYNE SELLAR BOXALL (ON)
$19,008.00
$187,141.34
$1,135,754.34
$150,494.03
$331,260.72
$120,339.70
GILBERT SIMARD TREMBLAY (QC)
BENNETT JONES LLP (ON)
HEENAN BLAIKIE (ON)
DENTONS (QC)
KOWARSKY RITSON LLP (BC)
$88,347.88
$451,875.38
MCCARTHY, TETRAULT (ON)
$78,971.01
$78,440.22
GOWLING LAFLEUR HENDERSON (ON)
$969,326.90
$76,045.50
MCINNES COOPER (NB)
$373,949.10
$72,624.16
$20,823,130.02
$14,117,225.81
All Other Agents Total
$6,654,959.09
$1,445,642.63
Grand Total
$27,478,089.11
$15,562,868.44
Top 20 Total
July 18 , 2014 •
THE LAWYERS WEEKLY
3
News
Context seen as key when it comes to fee disclosure
Luis Millan
The amount of professional fees
paid to lawyers is no longer
automatically deemed to be protected by solicitor-client privilege following a recent ruling by
the Court of Quebec that appears
to be in conflict with guidance
given earlier this year by the
Quebec Court of Appeal, according to some legal observers.
In a ruling that will be the
subject of a judicial review by
Quebec Superior Court later
this year, Justice Diane Quenneville held that while billings
are prima facie protected by
professional secrecy because
they generally contain a
description of accomplished
tasks, services rendered and
often advice given, the amount
of legal fees paid to a lawyer is
not necessarily protected by
professional secrecy.
“Context is a fundamental element in this issue,” noted Justice Quenneville in her 35-page
ruling that provides a wellrounded analysis of Quebec and
Canadian jurisprudence on the
relationship between billings
and solicitor-client privilege.
“There is no doubt that jurisprudence clearly states that a
lawyer’s bill of account is covered by professional secrecy,”
observed Danielle Ferron, a
partner and the chair of the
litigation group of Langlois
Kronström Desjardins in Montreal. “But insofar as the amount
of the legal fees is concerned,
nuances have to be made.
“The court comes to the conclusion that even though the
principle of professional secrecy
applies, it is a rebuttable presumption and that each case
must be analyzed in light of the
facts. One cannot therefore
automatically come to the conclusion that the amount of legal
billings is covered by professional secrecy.”
Francis Gervais, the former
president of the Barreau du
Québec, said he believes Quenneville’s ruling is at odds with
jurisprudence, including a ruling issued this March by the
Quebec Court of Appeal in Canada (Procureur général) c.
Chambre des notaires du Québec [2014] J.Q. no 2296.
“The Quebec Court of Appeal
held that in Quebec there exists
a presumption of confidentiality
for legal fees and that this is well
established but our problem is
that Justice Quenneville says
there is no such presumption in
Quebec. So it seems to be the
opposite of what the appeal
court found,” said Gervais, who
is representing the City of Terrebonne, a Montreal bedroom
community seeking judicial
There is no doubt that
jurisprudence clearly
states that a lawyer’s
bill of account is
covered by professional
secrecy. But insofar
as the amount of the
legal fees is concerned,
nuances have to be
made.
Danielle Ferron
Langlois Kronström Desjardins
review of the Quenneville ruling.
The case dates back to three
years ago when a journalist
working for the Journal de
Montréal sought to find out the
amount that the Montreal suburb paid lawyers in a suit
launched by a citizen. The newspaper also wanted to know how
much four Quebec school commissions paid in legal fees in a
class action suit that was filed
against them. In both cases the
Quebec Access to Information
Commission refused to provide
the information, holding that
the amount of legal billings is
information protected by solicitor-client privilege as per section 9 of the Canadian Charter
of Rights and Freedoms.
But Justice Quenneville, who
heard both cases at the same
time, overturned the ruling,
holding that the Access to
Information Commission “erred
by proceeding through automation” when it concluded that
the information being sought
was necessarily protected by
professional secrecy, even
though it would not have
revealed confidential information provided to lawyers or
The Quebec Court of
Appeal held that in
Quebec there exists
a presumption of
confidentiality for legal
fees and that this is
well established but our
problem is that Justice
Quenneville says there
is no such presumption
in Quebec.
Francis Gervais
Lawyer
advice given by lawyers.
After reviewing Canadian and
Quebec jurisprudence, Justice
Quenneville held that it is “not
appropriate” for a court to summarily hold in all circumstances
that the amount of legal fees is
automatically protected by professional secrecy.
“Each case is unique,” noted
Justice Quenneville. “The court
must first determine whether it
is a case of professional secrecy.
It is therefore necessary to
examine the legal context. To
this end, it is necessary to
determine whether the information that is requested reveals
or does not reveal the nature of
services rendered, advice or
opinion given or if the information puts into question the confidentiality of the solicitorclient relationship,” regardless
of whether it is a civil or a criminal case.
Heeding guidance from the
Supreme Court of Canada in
Foster Wheeler Power Co. v.
Société intermunicipale de gestion et d’élimination des déchets
(SIGED) inc. [2004] S.C.J. No.
18, Justice Quenneville held
that in civil matters the scope
and intensity of the protection
varies according to the nature
of the duties carried out and the
services rendered.
In the case of an individual
professional act, simple or summary evidence is sufficient to
establish the confidentiality of
the information being sought.
In this case, the burden of proof
is placed on the person claiming professional secrecy.
However, in matters deemed
to be complicated and prolonged mandates, a rebuttable
presumption exists in which all
communications between client
and lawyer and the information
they shared would be considered prima facie confidential in nature. In such cases, the
burden of proof rests with the
party seeking the information.
That burden was never established in the case involving the
City of Terrebonne, argues Gervais. Besides seeking judicial
review on the grounds that a
presumption of professional
secrecy covers legal billings,
Terrebonne maintains that the
Quebec Access to Information
Commission never determined
whether the lawsuit they were
involved in should be considered as an individual professional act or a complicated and
prolonged mandate.
“Depending on whether it is
determined to be a simple or
complex act, the onus of showing that that information is
protected or not shifts” from
“us to them, and that has not
been determined,” said Gervais.
The reach of the decision may
be extend well beyond the
amount of professional fees
paid to lawyers, noted Ferron.
“The first point that Justice
Quenneville makes in her ruling
is that it is not appropriate for
the courts to summarily hold
that legal billings in all circumstances are automatically protected by professional secrecy,”
said Ferron, adding that she
does not believe that the reach
of professional secrecy has been
diluted by the Quenneville ruling. “The ruling does not diminish professional secrecy but it
does remove the concept of
automation, that there exists a
rebuttable presumption.”
Gervais disagrees. He asserted
that even revealing only the
amount of professional fees
paid to a lawyer infringes solicitor-client privilege. “There are
decisions that have been rendered in other provinces that
held that an astute person,
knowing the total amount and
being able to look at the public
file, can understand some of the
strategy
that
has
been
taken — and that goes against
privilege,” said Gervais.
Quebec Superior Court granted
the motion for judicial review,
and suspended its execution,
pointed out Raymond Doray, a
Montreal lawyer with Lavery, de
Billy, representing the school
commissions. “Consequently,
you will easily understand that
this decision cannot for the
moment be considered as a significant judgment,” said Doray,
who successfully represented the
Chambre des Notaires in the
case that was heard by the Quebec Court of Appeal.
Repeated calls to the Journal
de Montréal were not returned.
Visit us online at:
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4
• July 18 , 2014
THE LAWYERS WEEKLY
News
Moves
■ Marsha Lindsay has been
appointed vice-president,
general counsel and corporate
secretary with Purolator Inc. in
Mississauga, Ont. Lindsay was
formerly legal counsel with
Purolator, and before that was
at Lang Michener in Toronto.
■ Project finance lawyer Alison
Lacy has joined the Toronto
office of Fasken Martineau
Dumoulin as a partner in the
firm’s mining group. Lacy,
called to the Ontario bar in
1987, was formerly at Torys.
■ Albert Oosterhoff has joined
Whaley Estate Litigation in
Toronto as firm counsel.
Oosterhoff is professor
emeritus at Western University
and has also taught wills, trusts
and property law at the
University of Windsor and
University of Toronto.
■ Joanna Nairn has joined
Toronto litigation firm Pape
Barristers. Nairn, who formerly
clerked for Supreme Court
Justice Morris Fish, was most
recently at Washington, D.C.,
firm O’Melveny & Myers.
Announcements
■ The Legal Leaders for
Diversity, a group of general
counsel from across the
country, have established the
Legal Leaders for Diversity
Trust Fund offering annual
scholarships to support
disabled youth studying law in
Canada. Eight scholarships
ranging from an annual
$3,000 to $5,000 will be
awarded to students with
physical, mental, intellectual
or sensory impairments for
undergraduate or graduate
studies in Canadian law
faculties. To date, $210,000
has been raised from 42
general counsel and
managing partners who each
committed $5,000 to the
trust fund.
Publisher
Ann McDonagh
Editor In Chief
Rob Kelly
Senior Editor
Matthew Grace, LL.B.
Focus Editor
Richard Skinulis
Scope of notary role at issue in B.C.
Standing to appeal granted as case takes strange turn
for the court to make a general
statement about the validity of
those clauses when the issue was
not, and might never be, in front
of the court, said McKendrick.
The judge determined the
issue of legality of the clauses
was not moot, as the notary had
expressed her intention to use
them in the future.
Justice Maisonville, while
restricting her order to granting an injunction against MacDonald, included in her reasons
a determination that the province’s notaries couldn’t legally
draft wills that created life
estates by using the 2007 and
2009 clauses.
“An interesting wrinkle in this
case is that though generally
one appeals an order or judgment and not reasons, here the
Court of Appeal permitted the
appeal to be launched from reasons because the order was deficient by not particularizing the
notarial activities allegedly contravening the B.C. Legal Profession Act,” noted Eugene Meehan,
a partner at Supreme Advocacy,
a firm specializing in Supreme
Court of Canada advocacy.
In explaining its decision, in
Law Society of British Columbia v. MacDonald [2014] B.C.J.
No. 1285, to allow an appeal
from the reasons for judgement,
the Court of Appeal noted, “In
order for any notary to know
what was specifically prohibited
by the order, he or she would
have to read the reasons for
judgement. Similarly, to enforce
the order, the Law Society
would have to have reference to
the reasons for judgement.”
McKendrick said the notaries
sought to appeal the ruling
because “it left everyone in a bit
of confusion” as to whether the
judge’s comments in the reasons
section were binding on notaries.
“Ideally, we’d like the court to
say the order is what the order
is and this other stuff really is
unnecessary and we’re not
going to decide on it, as they
did in Gravelle (Law Society of
British Columbia v. Gravelle
[1998] B.C.J. No. 2383),” he
said. “Everybody wants to get
along and everybody wants to
be sure they’re doing the right
thing but it’s really difficult
right now to tell notaries what
they can and can’t do. I mean,
notaries have been putting life
estates in wills for a very long
time.”
Jasmine Akbarali, a partner at
Lerners, is skeptical that the
legal issue of the clauses can be
deemed unnecessary now that
it has been addressed by the
court. “You’d have this judgment sitting out there, and
maybe its obiter, but it’s still
persuasive even if it is obiter.”
She added that the court’s
decision on standing and on the
issue of reviewing the reasons
for judgement reflect a prevailing culture about allowing the
procedurally unusual in cases
where it makes sense.
In granting the notaries standing to appeal, the court noted
the law society’s agreement that
the issue was “a matter of genuine interest to notaries,” as well
as the society’s appropriate role
in representing them.
“This appeal may thus be the
most efficient and effective way
of bringing the interpretation
issue before this Court,” noted
Justice Risa Levine.
Meehan says the case is
worthy of watching. “It may not
be a summer Transformers
blow-em-up CGI special effects
blockbuster, but for litigators
considering test-case-type litigation it’s certainly a Saturday
night Netflix special.”
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Kim Arnott
The role of notaries in creating
wills that contain life estates
may be part of a future case to
be heard by the British Columbia Court of Appeal.
In what observers say is a rare
and interesting turn of events,
the court has granted B.C.’s
Society of Notaries Public
standing to appeal an order
from the B.C. Supreme Court in
a case where they originally
acted as interveners.
In that decision (Law Society
of British Columbia v. MacDonald [2013] B.C.J. No. 1470),
Justice Miriam Maisonville
granted an injunction sought
by the law society prohibiting
notary public Gail MacDonald
from engaging in the practice of
law not authorized by the
Notaries Act.
The society claimed MacDonald had improperly engaged in
the practice of law when she
drafted a 2005 will creating a
life estate, as well as when she
represented a party involved in
a probate dispute.
“The situation was that the
member acted outside the scope
of practice and admitted doing
that,” said Todd McKendrick,
special counsel to the Society of
Notaries Public. “The member
was off-side.”
In a statement during her
deposition, MacDonald said
that if she drafted wills that
included life estates in the
future, she would incorporate
clauses recommended in seminars given to notaries in 2007
and 2009. The clauses were
proposed to comply with both
the Notaries Act and the Legal
Profession Act.
The Society of Notaries Public
intervened in the case to argue
that it would be inappropriate
An interesting wrinkle
in this case is that
though generally one
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the B.C. Legal
Profession Act.
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July 18 , 2014 •
THE LAWYERS WEEKLY
5
News
Special-case rule requires consensus, court says
Christopher Guly
The B.C. Court of Appeal has
underlined the need for both parties to come to agreement on the
facts to ensure the application of
special-case rules aimed at promoting pre-trial resolutions.
British Columbia’s Supreme
Court Civil Rules set out a special case procedure under Rule
9-3 in which “the parties to a
proceeding may concur in stating a question of law or fact” to
the court. But in JEKE Enterprises Ltd. v. Philip K. Matkin
Professional Corp. [2014] B.C.J.
No. 1180, the appellate court
stressed that both parties have to
be on the same page in order for
the court-efficiency tool to work.
The appellants are among those
who hold about 18,950 timeshares
in a resort owned by Northmont
Resorts Properties Ltd. that was
represented by trustee Philip Matkin, a Calgary-based lawyer who
served as the petitioner-respondent in the action.
To fund significant renovations to the resort, Northmont
last year gave timeshare holders
the option of paying either a
renovation project fee or a cancellation fee. The appellants disputed the respondent’s ability to
impose those fees and argued
that Northmont’s application to
dispose of the matter under Rule
9-3 was not appropriate because
of an absence of consensus on
the facts.
B.C. Supreme Court Justice
Linda Loo proceeded with the
special case, noting in her ruling — Philip K. Matkin Professional Corp. v. Northmont
Resort Properties Ltd. [2013]
B.C.J. No. 2492 — that to do
otherwise would result in “thousands of separate actions against
owners who do not pay the renovation
project
fee…[and
require] an enormous amount
of time, expense, and involve
many in unnecessary litigation,”
while “time” and “money” were
“running out.” She concluded
that Northmont was entitled to
levy the cancellation and renovation project fees.
On appeal, the timeshare owners
argued that the application was
based on a hypothetical assumption that the timeshare agreements were valid, and was based
on highly contested evidence.
In setting aside Justice Loo’s
order in a unanimous ruling, the
Court of Appeal held that her
decision to proceed by way of
special case was “fundamentally
ill-conceived” and allowed the
timeshare owners’ appeal.
“The chambers judge’s quest
for efficiency overwhelmed her
analysis and failed to give proper
effect to the Rule [9-3] and the
rights of the time share Owners,”
said Justices Pamela Kirkpatrick, Daphne Smith and Nicole
A court should not
be entertaining
hypotheticals and
rarely entertain
assumed fact, and
should have both
parties signing off on
the agreed statement
of facts upon which
the court will make
a ruling. But if one
party doesn’t agree,
it occasions some
unfairness to that party.
Bryant Mackey
University of Victoria
Garson in the court’s written
reasons. “This proceeding did
not favour access to justice — it
precluded it.”
A question of law in a special
case must be unambiguous and
supported by a statement of facts
agreed to by the parties to an
action, according to Bryant
Mackey, who teaches civil procedure at the University of Victoria.
“A court should not be enter-
taining hypotheticals and rarely
entertain assumed fact, and
should have both parties signing
off on the agreed statement of
facts upon which the court will
make a ruling,” said Mackey.
“But if one party doesn’t agree, it
occasions some unfairness to
that party.”
B.C.’s appellate court said the
agreements were “assumed…to
be valid and enforceable, thus
placing the opinion in hypothetical terms, contrary to the
jurisprudence.”
The special-case process was
designed to address a dispute
between parties over what evidence
“means, not what it is,” explained
John Alexander, co-counsel for the
appellants and a partner with Cox,
Taylor in Victoria.
“Under the rule, parties forward an agreed-upon statement
of facts and documents, but may
not agree on the effect of those
documents and facts and ask the
court to draw inferences from
them as an efficient way of
resolving an issue.”
He said Justice Loo used the
“wrong tool” in trying to “shoehorn” some 400 pages of disputed affidavits and about 1,000
pages of documents not agreed
to by the appellants into a special case, when she should have
used a “hammer” under Rule 9-7
and disposed of the action by
way of a summary trial.
The Court of Appeal held that
“once it became apparent that
the validity and enforceability of
the Agreements was in issue,
and that the respondents
intended to have the case
decided on the basis of disputed
evidence, the chambers judge
should have directed a trial on
that issue in whatever manner
was most efficient.”
Counsel for the respondent did
not respond to an interview
request.
Mackey, a lawyer with the constitutional and administrative
law group at B.C.’s Justice Ministry, said that while Northmont
relied on the proportionality
principle, in the context of
access to civil justice, highlighted earlier this year by the
Supreme Court of Canada in
Hryniak v. Mauldin [2014]
S.C.J. No. 7, the defendant
missed a key point in that unanimous ruling.
“Proportionality is inevitably
comparative,” wrote Justice
Andromache Karakatsanis in
Hryniak. “Even slow and
expensive procedures can be
proportionate when they are
the fastest and most efficient
alternative.”
Mackey said the top court’s
message is that forcing some
pre-trial resolution procedure
could result in an injustice for
one of the parties in dispute.
Alexander said that special
cases are seldom used, but he
has relied on them in municipal
litigation cases where courts
have been asked to interpret a
question of law or fact involving
a bylaw.
As Mackey added, “while parties might agree on controlling a
set of legal principles to animate
a court decision, they don’t often
agree on a statement of facts,
which is why special cases are
less commonly used than other
procedures, such as summary
trial applications.”
Fair: Feds say expatriate voting exclusion ‘reasonable’
granted their motion on May 2,
declaring that the legislation violated their Charter right to vote.
On May 11, Prime Minister Stephen Harper called four by-elections for June 30, and on June 2
the government launched an
appeal of the Charter decision. At
the same time, the attorney general requested the stay.
In rejecting the government’s
motion, Justice Sharpe said it
failed to demonstrate that
allowing these expats to vote
would cause irreparable harm or
that a stay was justified on a balance of convenience. Sharpe also
rejected the government’s claim
that it has “something approaching an automatic right to a stay
due to a presumption of irreparable harm…”
Said Sharpe: “A court will only
grant a stay where it is satisfied,
after careful review of the facts
and circumstances of the case,
that the public interest and the
interests of justice warrant a stay.”
Observers agreed that the judgment’s significance lies mainly in
its rejection of the presumption
argument. “The court has provided important clarification on
how to apply the test for a stay,”
said Brendan van Niejenhuis of
Stockwoods in Toronto, and an
adjunct professor of administrative law at Osgoode Hall. “It says
there must be a critical examination of the precise harm alleged
and that the government must
introduce concrete evidence to
support its claim of harm.
“The government seems to have
rested its case on the strong presumption of irreparable harm. The
judge said that was not enough.”
As Justice Sharpe put it, “I cannot agree with the Attorney General that there is a presumption
approaching an automatic right to
a stay in every case where a court
of first instance has ruled legislation to be unconstitutional.” He
added, pointedly, that “…the decision to grant or withhold a stay
lies in the discretion of the court.”
In this case, a stay would have
disenfranchised those voters who
had registered for the by-elections following the lower court
decision. “If the government got a
stay, it would fully decide the case
in their favour for these voters,”
said Toronto lawyer Shaun
O’Brien. “The expats would have
lost the right to vote that they
had just won.”
O’Brien, who has been handling the case pro bono at Cavalluzo Shilton McIntyre Cornish,
wondered why the Harper government is continuing to pursue
the issue, given the strength of
the lower court decision.
“I don’t understand the public
policy reasons why they are pursuing this,” she said. “In a globalized world, we should be fostering
connections
with
Canadians living abroad. Why
are we pushing away rather than
drawing in Canadians like Mark
Carney and Wayne Gretzky?”
Vancouver immigration lawyer
Rudolf Kischer of Maynard
Kischer Stojicevic went one step
further. “It’s disappointing and
unfortunate that the government feels it is necessary to pursue this case when it has little
chance of success,” he said. “It’s
a waste of taxpayers’ money and
unfair because the government
has unlimited resources, and it
is difficult for the other side to
get its costs.”
Mary Liston, of the University of
British Columbia Faculty of Law,
agreed with Kisher’s sentiment that
the stay motion and pending appeal
of the original decision reflects a
lack of respect for the judiciary.
Liston said the government “overreached” in asserting a near-automatic presumptive right to a stay.
Asked whether the government
will appeal the stay order, a justice department spokesperson
instead referred The Lawyers
Weekly to an earlier statement by
Minister of State for Democratic
Reform Pierre Poilievre in which
he expressed disappointment
that a stay had been refused.
Despite the lower court ruling to
the contrary, Poilievre described
the five-year voting limit as “fair
and reasonable.”
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10
• July 18 , 2014
THE LAWYERS WEEKLY
Focus
Business Law
m
co
o.
ot
h
p
k
oc
St
io
l
fo
ta
ic
/i
p
The trend toward full disclosure
Privilege is no longer a given when conducting internal corporate investigations
Janice Wright
Greg Temelini
Editor’s note: In a late-breaking development, the U.S. Court of Appeals for the
District of Columbia has overturned the decision in Barko and affirmed the
sanctity of privilege in internal investigations. Nevertheless, the tension identified
in the article between disclosure of material and protection of privileged and
confidential information remains a significant issue for corporate counsel.
A
recent U.S. decision suggests that full disclosure of material gathered or
developed during corporate investigations may become the norm when
the investigation is connected to a regulatory requirement.
It is hardly news that internal corporate investigations are no longer rare or
isolated events. They are part of today’s corporate reality and often motivated, at
least in part, by concerns related to accommodating financial compliance and
other regulatory requirements.
In March, the Ontario Securities Commission gave boards and senior management more reason to seriously consider the benefits of full disclosure. The OSC
adopted its Revised Credit for Cooperation Program that for the first time allows for
the possibility of “no contest” and “no enforcement action” settlement agreements.
The notice setting out the program provides a list of behaviour that disqualifies a
market participant from availing itself of credit for co-operation including “claim[ing]
a privilege to avoid providing details of potential breaches of Ontario securities law.”
It is one matter to choose to disclose material in order to handle a thorny regulatory matter. More concerning to boards and senior management are situations
when they are compelled to produce documents or other information related to
an internal investigation.
In the Nortel fraud prosecution, the Ontario Superior Court of Justice held that
counsel for senior executives could be compelled to testify about interviews conducted
by the audit committee during its investigation into the restatement of Nortel’s financial reports. Counsel were not required to produce their notes on the ground that they
were subject to litigation privilege (R. v. Dunn [2011] O.J. No. 6363 and [2012] O.J.
No. 1988). Nevertheless, this decision to compel counsel highlights the need to carefully manage all of the information accumulated during internal investigations.
The recent case of United States ex rel. Barko v. Halliburton Company et al.,
Case No. 1:05-CV-1276 (D.D.C. March 6, 2014) reiterates this point and adds
yet another dimension to the complexity of information flow analysis during
internal investigations.
Regulatory, Page 13
July 18 , 2014 •
THE LAWYERS WEEKLY
Focus
11
BUSINESS LAW
No-contest settlements affected by U.S. ruling
Shara Roy
he U.S. Court of Appeals for
T
the Second Circuit released its
decision earlier this month in SEC
v. Citigroup Global Markets Inc.
It overturns a widely publicized
decision of Judge Jed Rakoff of
the U.S. District Court for the
Southern District of New York,
and has the potential to shake up
regulatory “no-contest” settlements in the U.S. and Canada.
In SEC v. Citigroup Global
Markets Inc., 827 F. Supp. 2d 328
(SDNY 2011), the SEC sought
approval of a settlement with
Citigroup Global Markets concerning allegations that Citigroup had negligently misrepresented its role and economic
interest in a fund of subprime
mortgage-backed
securities.
When the subprime market collapsed in the U.S., investors in
the fund lost millions while, it
was alleged, Citigroup made a
profit of $160 million from a
short position it had taken in the
same securities.
As part of the settlement agreement, Citigroup agreed to the dis-
VallarieE / iStockphoto.com
gorgement of $160 million it
earned from the short position,
and a civil penalty of $95 million
plus interest. Citigroup also
agreed not to seek an offset against
any compensatory damages in any
related investor action and consented to make certain internal
changes. Citigroup agreed to the
settlement on the basis that they
“neither admitted, nor denied” the
facts as set out by the SEC in the
settlement agreement.
In refusing to approve the
settlement, Judge Rakoff identified, among other things, the
inability of investors to rely
upon admissions contained in a
settlement in companion civil
actions. Without the admissions, Judge Rakoff decided
that he did not have a sufficient
factual basis to rule that the
settlement should be approved.
In the wake of Judge Rakoff ’s
decision, the SEC announced that
it would not offer no-contest
settlements in cases involving
criminal proceedings in which a
defendant admitted to violations
of criminal law or in proceedings
where there is a “special need for
public accountability and acceptance of responsibility,” even in the
absence of any admission of guilt
in parallel criminal proceedings.
The SEC and Citigroup appealed
the District Court’s decision.
Although the Court of Appeals
for the Second Circuit found that
Judge Rakoff did not require that
Citigroup admit liability as a precondition to approving the settlement, it held that the District
Court had abused its discretion
by requiring that the SEC establish the “truth” of the allegations,
by admissions or otherwise:
“Trials are primarily about the
truth. Consent decrees are primarily about pragmatism.” The
Court of Appeals held that a factual basis for the order was
required, but that in most cases
the colourable claims supported
by the SEC’s assertion of facts
that are neither admitted nor
denied by a respondent are sufficient. The Court of Appeals left
the door open for cases where
more might be required.
The Canadian regulatory climate was also affected by Judge
Rakoff ’s decision. On March 11,
the OSC announced new enforcement initiatives, including a new
program for no-contest settlements. The policy provides that
the OSC may be prepared to settle
a matter in circumstances where
the “facts are declared by Staff to
be true based on its investigation
and which are not denied by the
respondent” and there is an
acknowledgement
by
the
respondent that it accepts the
settlement agreement as a basis
for resolving the proceeding. For-
merly, all settlements with the
OSC required admissions from
the settling party.
The announcement came after
an extensive review and comment
period, and an OSC-commissioned report released June 4
evaluated its policies in light of its
mandate and compared with the
SEC. The report included robust
consideration of Judge Rakoff ’s
decision. The resulting policy
appears to address Judge Rakoff ’s
concerns by allowing “no deny”
settlements, without speaking to
the “no admit” element.
Recent Canadian case law has
made it potentially problematic
for respondents to settle regulatory proceedings while continuing
to defend civil action. The civil
courts have held that they will
hold respondents to the admissions they make in settling regulatory proceedings in civil proceedings on related facts on the basis
that it is an affront to natural justice to permit a respondent to
deny in one forum what they have
already admitted in another (see
Buckingham Securities Corp.
(Receiver of) v. Miller Bernstein
LLP [2008] O.J. No. 1859;
National Bank Financial Ltd. v.
Potter [2012] N.S.J. No. 97).
An OSC no-contest policy more
in keeping with the U.S. Court of
Appeals decision would make
settlements more appealing to
respondents in OSC proceedings
and the policy more effective.
Shara Roy is a senior associate with
Lenczner Slaght, practising in the
areas of corporate commercial and
securities litigation.
Malach + Fidler LLP
Mediation & Arbitration Services
La_Corivo / iStockphoto.com
For thieves, it’s not easy being green
It was a crime written all over the perpetrator’s face. A 28-year-old
London man, Yafet Askale, was convicted of theft on June 10 after being
sprayed with an ultraviolet anti-theft liquid, the U.K.’s The Telegraph
reports. SmartWater is an invisible, odourless dye embedded with a
unique identification number that glows green and can be read only
under UV light. Askale was covered in a fine mist of the liquid, which
can’t be washed off for weeks, when he broke into a car that was booby
trapped by police. Not only was he marked with the SmartWater’s
unique “forensic asset marker,” so were items stolen from the car found
in his possession. Although he pleaded not guilty, he was convicted of
theft from a motor vehicle and sentenced to 49 hours of community
work and £400 costs. Police liked the anti-theft system so much they
gave free SmartWater to residents of a north London suburb so they
could mark their belongings. This, they said, has led to reductions in
burglary and street robbery of 80 and 40 per cent respectively. — STAFF
A Fair Settlement
Is No Accident
Jon Fidler, C.Med.
John Soule
Stephen Malach, Q.C.
Ivan Luxenberg
30 Wertheim Court
Unit 6
Richmond Hill, Ontario L4B 1B9
(905) 889-1667
(416) 598-1667
(905) 889-1139 (fax)
e-mail: [email protected]
malach-fidler.com
A division of Malach Fidler Sugar + Luxenberg LLP
12
• July 18 , 2014
Focus
THE LAWYERS WEEKLY
BUSINESS LAW
Who’s responsible for that bounced cheque?
Ephraim Stulberg
Rehana Moosa
hen a business falls vicW
tim to cheque fraud, it
may look to its bank for recov-
ery for allowing the fraudulent
cheques to be cashed. In some
recent cases, banks have been
found liable and have been
required to make whole their
clients’ losses. However, there
have been other cases in which
claims against banks have been
disallowed or severely limited.
Cheque fraud can come in a
variety of forms, including: forging the account holder’s signature; issuing a cheque to a fictitious person or entity; and
issuing a legitimate cheque that
is subsequently altered.
Under Section 48 of the Bills
of Exchange Act (RSC 1985 c
B-4), a forged cheque is “wholly
inoperative.”
Nonetheless,
banks can face potential litigation if the forgery is not
detected and the cheque is
cashed. Banks have successfully
limited or eliminated this liability by arguing that the issuing company:
n
Had executed a verification
agreement, which specifically
limited the bank’s liability; or,
n
Had weak internal controls,
which allowed the fraud to
occur or to continue.
A verification agreement is a
contract between the bank and
its customer, outlining each
party’s responsibilities. It normally requires the customer to
review their bank statements
and notify the bank of any
fraudulent transactions or
errors within a certain time
period. If no claim is filed
within this time period, the
bank cannot be held liable for
any losses, even if the losses are
discovered at a later date.
Courts
have
consistently
allowed banks to use them as a
defence in cases involving
cheque fraud.
In the landmark case of Arrow
Transfer Co. v. Royal Bank of
Canada [1972] S.C.R. 845,
Arrow sued Royal Bank for
allowing a former employee to
deposit forged cheques. Arrow’s
verification agreement required
it to notify the bank of any
invalid or fraudulent transactions within 30 days. However, the forged cheques were
not reported until six years
after the fraud commenced.
The trial judge found that the
verification agreement limited
Royal Bank’s liability to those
Double_Vision / iStockphoto.com
Even in the absence of a verification agreement,
courts may determine the date at which the
company should reasonably have discovered the
fraud, as was done in Nasrin Karim Professional
Corp. v. Bank of Nova Scotia ...
determine the date at which the
company should reasonably
have discovered the fraud, as
was done in Nasrin Karim Professional Corp. v. Bank of Nova
Scotia [2004] A.J. No. 607. In
this case, the plaintiff wrote a
cheque to purchase the franchise rights for a sandwich
business. A fraudulent endorsement was made on the cheque,
and the funds were misappropriated. The plaintiff sued her
bank for allowing the cheque to
be cashed. The trial judge dismissed the case, and this decision was upheld on appeal. Justice O’Leary found that the
plaintiff had received ample
warning that the funds may
have been misappropriated
more than two years before a
claim was filed with the Bank of
Nova Scotia. For example, her
attorney discovered that the
seller was not a real person, and
she had been unable to contact
the seller once her cheque had
been cashed. The court found
that over two years had passed
since the plaintiff should reasonably have discovered the
fraud, and had therefore missed
the limitation period. This
illustrates the importance of
implementing internal controls
within a business and of acting
in a prudent and expeditious
manner once suspicious transactions are discovered.
Failure to implement internal
controls can not only lead to
fraud, but it can also have a ser-
ious impact on the fraud victim’s ability to recover its losses
from third parties such as
banks. To minimize the risk of
cheque fraud:
n
Review all bank statements
and cancelled cheques on a
monthly basis. Ensure that all
cheques are legitimate and all
cancelled company cheques are
accounted for.
n
Periodically perform an
internal control assessment and
identify any weaknesses that
would allow an individual to
misappropriate funds (e.g.
access to blank cheques, signing authority, etc.).
n
If cheque fraud is suspected, it
is important to act quickly. Hire
a forensic accountant to conduct
an investigation, and seek legal
advice regarding when your
bank should be notified.
n
Ensure you understand your
verification agreement, and the
obligations outlined with
respect to forged cheques.
n
Bank reconciliation should
be performed by an individual
other than the person who
issues the cheques. If this is not
possible, the reconciliation process should be supervised by an
independent person with management responsibilities.
Ephraim Stulberg and Rehana Moosa
are managers with the forensic
accounting firm Matson, Driscoll and
Damico. Their practice focuses on
economic loss quantification in a
variety of areas.
Ephraim Stulberg and Rehana Moosa
Matson, Driscoll and Damico
cheques which had been
reported within the 30-day
notification period. This decision was upheld on appeal.
In this case, the requirement
that Arrow notify the bank of any
irregular transactions was treated
as a contractual obligation.
Verification agreements often
require companies to implement and monitor internal control systems. Manor Windsor
Realty Ltd. v. Bank of Nova
Scotia [2011] O.J. No. 3434,
highlights the importance of
failing to do so. Manor notified
its bank that all cheques
required two signatures before
they could be cashed. Nonetheless, Manor’s bookkeeper managed to misappropriate more
than $400,000 over six years
by forging cheques that had
been pre-signed by only one of
Manor’s owners.
Manor sued its bank on the
basis that the bank should have
prevented cheques with only
one signature from being
cashed. The bank used its verification agreement as a defence,
since the agreement required
the company to maintain internal controls to prevent and
detect forged cheques. Manor’s
management did not supervise
the bookkeeper or regularly
review her work. Although
monthly bank statements were
provided to Manor, the statements were never reviewed and
the reasonableness of the
fraudulent transactions was
never investigated. The bank
successfully claimed that had
Manor reviewed the bank statements, it would have noticed
the forged cheques immediately, and could have avoided
further losses.
Even in the absence of a verification agreement, courts may
NEXT WEEK IN FOCUS:
 Family Law
 Mining Law
July 18 , 2014 •
THE LAWYERS WEEKLY
Focus
13
BUSINESS LAW
The right price is only the beginning
When it comes to selling a business, there are nine potential traps you should know and avoid
complement their existing business and may place a high value
on synergies. Financial buyers
tend to look for companies that
have solid businesses in place but
whose valuation could be boosted
over a fixed investment horizon
(e.g., five to eight years) by implementing operational efficiencies
or by injecting new capital into
the business. Treating every
buyer the same can be foolhardy.
Ted Maduri
Andrew Lord
any owners of companies
M
may think they will never
sell — that is, until an offer is presented. Realizing the value contained in that offer, and the time
that will be required to get to
closing, will depend on how well
the business has been run, how
organized it is, and how well connected the sellers are to the right
team of advisors. We provide
below a number of traps to avoid:
Deferred housecleaning
ARTQU / iStockphoto.com
Not understanding the value
To be effective in negotiating the
sale of a business, the seller and
their advisors need to have a realistic understanding of the value of
the business — including not only
the top-level enterprise value, but
also how that value is derived. For
example, if the value is tied to a
core group of customers, then the
seller should ensure that it has
“sticky” agreements (i.e., no early
termination, assignable, etc.) in
place with those customers.
The tax treatment
of the potential sale,
including the ability
of the seller to access
lifetime capital gains
exemptions, is usually
the key determinant of
the optimal structure.
Ted Maduri and Andrew Lord
Davis LLP
Not using optimal structure
When it comes time to sell, the
optimal ownership structure for a
business is one that makes it easy
for buyers to acquire the business
while maximizing the seller’s takehome proceeds. Several considerations therefore come into play
when analyzing the structure. The
tax treatment of the potential sale,
implemented at the last minute,
so advance planning is advisable.
No confidentiality agreement
In the excitement of receiving an
expression of interest for their
business, a seller may start sharing commercially valuable information with a prospective buyer
before putting a non-disclosure
agreement in place. This can
jeopardize the value of the business. Confidentiality agreements
help separate serious buyers from
those who may have other motives
for looking at the business.
Not understanding the buyer
including the ability of the seller
to access lifetime capital gains
exemptions, is usually the key
determinant of the optimal structure. Some strategies cannot be
Potential buyers typically fall into
one of two groups: industry buyers (a.k.a. “strategic” buyers) and
financial buyers (e.g., private
equity funds), and their goals can
differ significantly. Industry buyers are often looking to grow or
While every company ought to
keep its books and records up to
date, the reality is that many do
not. Books and records will be
scrutinized as part of a buyer’s
due diligence. If a seller’s books
are a mess, the buyer’s advisors
may recommend more thorough
diligence on the remainder of the
business; this may delay closing
and result in additional demands
during negotiation.
No link to new contracts
When negotiating agreements
with key customers and suppliers, the focus is usually placed on
the business terms; however,
attention should also be paid to
restrictions on change of control,
or which may be triggered by a
future sale. Removing these types
of barriers ensures that the value
of the agreement can ultimately
be transferred to a third party,
thereby ensuring the full value of
those deals can be realized on a
subsequent sale of the business.
Not protecting IP
For some businesses, the most
valuable asset they have is their
intellectual property. However,
those companies may focus more
on building their IP assets than
on protecting them. Where IP is
critical to the value of the business, a seller should ensure: that
it has registered all of its trademarks, patents, copyrights and
business names; that it has properly licensed any critical software;
and that its employees and contractors have assigned their interests in intellectual property and
waived any moral rights thereto.
No shareholder agreement
A written unanimous shareholders agreement can be critical in
facilitating a smooth sale, as it can
clearly define who has approval
rights, who can sell under what
conditions and who must sell
under certain other conditions.
Ignoring pending liabilities
A company’s perspective on pending litigation or regulatory compliance issues may change drastically when an offer is received to
buy the business. Where the best
strategy prior to a sale may have
been to let these issues play out
over time, once a sale is imminent,
the strategy will likely become to
eliminate, or define and contain,
any contingent liabilities. To the
extent that such liabilities remain
contingent at closing, they may
become the subject of purchase
price adjustments, holdbacks, or
indemnity obligations, all of which
will diminish or defer the value of
the deal for the sellers.
Ted Maduri is a partner in Davis
LLP’s corporate/commercial and
corporate finance groups. Andrew
Lord is a corporate/commercial
associate in Davis’s Toronto office.
Regulatory: Contractors had to maintain de facto whistleblower program
In Barko, a case out of the U.S.
District of Columbia Circuit, District Court Judge James S. Gwin
ordered the corporate defendants
to produce documents related to
internal audits and investigations
undertaken years earlier.
The plaintiff, Henry Barko, commenced a qui tam action under
the U.S. False Claims Act which
allows an individual to sue for
fraud committed against the U.S.
government and keep a portion of
any amounts recovered. Barko
alleged fraudulent activity had
occurred respecting government
contracts involving his former
employer and related companies.
Judge Gwin reviewed the
documents at issue in camera
and referred to them as “eyeopeners” which demonstrated a
number of instances of serious
misconduct by employees of the
corporate defendants. The documents contained evidence that
certain defendants’ employees
provided information to a subcontractor involved in reconstruction activities in Iraq about
competitive bids to allow them
to be undercut, and that the subcontractor bribed employees in
order to get hired.
The corporate defendants
sought to resist production of the
documents on the basis of solicitor-client and litigation (“workproduct”) privilege. Judge Gwin
held that solicitor-client privilege
did not apply to the documents
primarily because the investigations “were undertaken pursuant
to regulatory law and corporate
policy” rather than for the purpose of obtaining legal advice.
Judge Gwin highlighted the
fact that U.S. Department of
Defense contracting regulations
required corporate defendants
to maintain internal control systems designed to discover misconduct in performing government contracts. In essence, the
corporate defendants were
required to maintain a whistleblower program that provided
for timely investigations into
allegations of misconduct.
Judge Gwin characterized the
corporations’ investigative action
as a “compliance investigation
required by regulatory law and
corporate policy,” and held that
the internal investigations were
done “in the ordinary course of
business irrespective of the prospect of litigation” because government regulations required them.
The Barko decision leaves
counsel to grapple with the difficult issue of determining when
an investigation arises out of a
regulatory requirement. There is
a circularity to the reasoning in
Barko as the bulk of corporate
investigations arise from a concern related to a potential legal or
regulatory breach. Taken to its
extreme, Barko suggests a major
narrowing of the scope of privilege and, correspondingly, a
broader obligation to disclose.
The analysis in Barko may gain
little traction in Canada, as generally our courts look more favourably on assertions of privilege
than their American counterparts.
Nevertheless, it is wise to be aware
of this decision and its potential
impact on the complex task of
managing information in the context of internal investigations.
Janice Wright and Greg Temelini are
litigators specializing in regulatory
defence, and commercial and
securities litigation at the firm
Wright Temelini.
14
• July 18 , 2014
Focus
THE LAWYERS WEEKLY
iNTERNATIONAL TRADE
Modernizing NAFTA
ck
ph
ot
o.c
om
Trans-Pacific Partnership negotiations an opportunity to update, strengthen 20-year-old North American pact
t
iS
o
h
Be
ol
n
di
ye
gE
/
Aaron Libbey
Jenny Paramonova
N
AFTA, in force since 1994, is in
need of an update. Despite its success
in integrating the North American market,
NAFTA is in jeopardy of losing relevance. While international trade norms and flows of commerce have evolved, NAFTA
has remained static. Canada, the United States and Mexico are looking beyond North
America for new partnerships and market access.
“Rising Asia” is eclipsing NAFTA as a top strategic trade priority for both the Canadian
and U.S. administrations. The Trans-Pacific Partnership (TPP), in particular, is being
pursued as a mechanism to grow North American commerce in Asia.
At the same time, the three NAFTA countries remain deeply interconnected. From the
Canadian perspective in particular, shared history, cultural and market congruence and
integration, market-size differential and proximity will ensure that the United States
remains a key player in Canada’s economic future. This means that Canada’s moves to
further integrate with Asia will not be carried out in a vacuum. Any such strategy will
necessarily unfold in the context of the Canada-U.S. relationship. This close relationship
can be harnessed to improve the trade negotiation outcomes for the NAFTA countries.
The more the North American market is integrated, the stronger the position of the
NAFTA countries will be in extra-NAFTA negotiations.
Therefore, it would be a sound tactical move for Canada, the U.S. and Mexico to pragmatically deepen their economic integration — both to improve intra-NAFTA commerce
and extra-NAFTA opportunities.
Canada and the U.S. are well-positioned to drive improvements to the NAFTA scheme
alongside the creation of new trade alliances, by folding the NAFTA modernization pro-
ject into current trade-treaty negotiations. The TPP presents a high-profile
opportunity to reignite a much-needed dialogue on NAFTA and address its deficiencies. As
NAFTA and the TPP are not contradictory in substance,
new trade liberalizations and mechanisms that are built into the
TPP can simultaneously inform the metamorphosis of NAFTA.
At 20 years old, NAFTA is showing its age. Key changes could foster a more competitive regional market, including implementing common standards and regulations for
North American manufactured products, increasing support for innovation and education, facilitating more efficient cross-border movement and investment in physical infrastructure, enabling increased labour mobility, and aligning energy policies.
Although the TPP is still under negotiation, early indications suggest that it will cover
a materially broader range of issues than the current NAFTA. It is likely to include
enhanced provisions regarding labour, the environment, intellectual property, procurement practices and issues not addressed in the original NAFTA, such as state-owned
enterprises. The TPP could be used as a vehicle to correct NAFTA’s deficiencies, particularly in the areas of services, regulatory harmonization and investment.
Despite its currency and political support, the TPP is far from being a done deal. There
are currently 26 negotiation groups and 29 chapters under consideration. Conflicting
interests and disagreement between the diverse parties could stall negotiations. The
complexity of the negotiations could also mean that the final agreement is riddled with
carve-outs and raises questions about how much the substance of the final agreement
reflects the project’s lofty goals. There is also a risk that the TPP project will disaggregate
Leverage, Page 15
July 18 , 2014 •
THE LAWYERS WEEKLY
Focus
15
INTERNATIONAL TRADE
Animal welfare trumping indigenous communities
…Canada’s Inuit
community remains
less than enthused
about the decision. On
the day it was released,
national Inuit leader
Terry Audla blasted the
decision as ‘morally
reprehensible.’
Elizabeth Whitsitt
ver the past couple of years
O
Canada has seen little success before the world’s foremost
international trade arbiter. Emerging and traditional Canadian
industries have each come into
the crosshairs of Canada’s international trading partners and
have not been viewed favourably.
In 2013, Japan and the EU successfully challenged elements of
Ontario’s renewable energy
scheme for having violated Canada’s trade obligations under
GATT and related trade agreements. As a result, the part of the
program designed to stimulate
development of Ontario’s emerging renewable energy technology sector (i.e. minimum local
content requirements) has since
been eliminated. Now, a little
over a year later, the World Trade
Organization has once again
ruled against Canada — only this
time, the ruling arguably places
European morality (animal welfare concerns) ahead of Canadian
morality (indigenous peoples’
rights) and may potentially have
negative consequences for one of
Canada’s traditional indigenous
industries, namely sealing.
Just a few short weeks ago the
WTO issued its final word on the
legality of a regime that bans
seal products from the EU market. In a decision that has Canadian and EU officials claiming
victory, the appellate body determined that the EU’s ban on seal
products is justified under the
Elizabeth Whitsitt
University of Calgary
KeithSzafranski / iStockphoto.com
right to protect public morals,
specifically on the grounds of
protecting animal welfare. The
AB also found, however, that the
ban is discriminatory in the way
it is applied, and should be
modified in order to fully comply
with the EU member states’
international trade obligations.
The decision comes some six
months after a panel ruled that
the EU’s seal regime could be
justified on public morals
grounds, despite the fact that certain aspects of it discriminated
against Canadian Inuit interests.
Shortly after that decision all
parties to the dispute issued
notices of appeal, resulting in a
wholesale challenge to many
aspects of the panel’s ruling.
While the appellate body upholds
some of the panel’s findings, it
does depart from the panel’s reasoning in significant ways.
The appellate body takes steps
to clarify the relationship between
the Technical Barriers to Trade
Agreement and GATT. In result,
the ruling seems more palatable
than the panel’s decision because
it acknowledges the EU’s failure
to meaningfully accommodate
the interests of Canada’s Inuit
community. This acknowledgment, along with the message
that the EU must make bona fide
attempts to accommodate seal
products derived from Canada’s
Inuit population, explain the
Canadian government’s positive
response to the decision.
However, Canada’s Inuit community remains less than
enthused about the decision. On
the day it was released, national
Inuit leader Terry Audla blasted
the decision as “morally reprehensible.” Such reaction was
almost certainly a response to the
appellate body’s decision about
the moral justifications for the
EU’s ban on seal products. The
appellate body did find that the
EU’s ban on seal products is justifiable under the public morals
exception articulated in GATT
article XX(a). That finding was
made despite the discriminatory
nature of the EU seal regime and
with little recognition that the
prohibition will effectively
destroy a cultural and economic
practice of certain Canadian
indigenous communities.
Criticizing aspects of the panel’s
analysis under the public morals
exception, Norway argued that
the EU seal regime is not just
aimed at protecting animal welfare but also meant to protect
indigenous community interests.
Additionally, Norway and Canada argued that the EU seal
regime should materially contribute to protecting seal welfare,
a fact not established by the evidence in the case. In a disappointing ruling, the appellate body
rejected these arguments. By
narrowly construing the primary
objective of the EU seal regime as
“protecting animal welfare” and
choosing to emphasize the ban’s
potential to contribute to seal
welfare, the decision does little to
remedy concerns about the
impact of Europe’s measure on
indigenous
communities.
Despite evidence of discrimination against indigenous communities and spurious evidence
that the EU seal regime actually
protects seals from inhumane
treatment, in an ironic twist animal welfare concerns appear to
outweigh concerns for the
human rights of indigenous
communities to pursue their
own means of subsistence.
The ultimate impact on Canada’s indigenous communities’
seal hunts is not yet known. The
AB has directed the EU to first
consult with Canada regarding
potential measures to accommodate seal products derived from
Canada’s Inuit population and
then implement such measures.
Whether that process results in a
meaningful amelioration of
impact of the EU’s ban Canada’s
indigenous sealing industry
remains to been seen.
Elizabeth Whitsitt is an assistant
professor at the University of
Calgary. Her research focuses on the
international trade and international
investment law regimes.
Leverage: Possible changes to Canada’s foreign ownership rules
into a cluster of loosely-affiliated
bilateral agreements, with TPP
hopefuls such as the U.S. and
Japan (the two largest prospective TPP members) pursuing
bilateral negotiations.
If the parties do conclude the
expanded TPP agreement, the
TPP will significantly impact the
trade and investment climate in
North America. The TPP is likely
to include stricter standards in
core areas such as the environment, labour and IP rights.
Investment, services, and government procurement may also be
affected. There is also a material
possibility that the U.S. will use
the TPP negotiations to push for
... [I]t would be a
sound tactical move for
Canada, the U.S. and
Mexico to pragmatically
deepen their economic
integration .. .
Aaron Libbey
and Jenny Paramonova
Blake Cassels & Graydon
changes to foreign ownership
rules in certain of Canada’s protected industries, such as telecommunications.
Canada and Mexico will be particularly sensitive to these effects.
Political concerns related to sovereignty and certain politically salient
industries could influence Canada
and Mexico to opt out of the TPP
negotiations. In Mexico’s case, a key
fear is losing its preferred status as
a manufacturing hub for the U.S.
market, once the TPP opens the
door to Vietnam and Malaysia,
Mexico’s main low-cost competitors for American customers. In
Canada’s case, the fear centres on
Australia and New Zealand, Canada’s main beef competitors.
But with access to roughly $300
billion in annual global commerce
on the table and the current political appetite for Asian economic
engagement, it is likely that the
TPP will eventually come to fruition in one form or another.
The TPP expands upon core
areas of NAFTA and provides a
valuable opportunity to deepen the
North American trade relationship
while creating jobs. As the NAFTA
parties are already engaged in the
political balancing necessary to
implement further market liberalizations on the TPP front, these
liberalizations and modernizations
could readily be folded into a
refreshed NAFTA. Further, modernizing NAFTA will pay dividends
for Canada as it negotiates future
trade pacts, including the CanadaEuropean Union Comprehensive
Economic Trade Agreement.
Deeper integration will empower
the North American triad to bargain more effectively, since the unit
will have more negotiating leverage compared to individual countries. European and Asian nations
have already begun to reap the
benefits of combining forces in this
way. North America would be wise
to follow suit.
Aaron Libbey is an associate in the
corporate and international trade
groups at Blake Cassels & Graydon.
Jenny Paramonova is a summer
student at the firm.
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• July 18 , 2014
THE LAWYERS WEEKLY
Digest
Aboriginal Law
ABORIGINAL LANDS
Types - Reserve lands - Duties of the
Crown - Sui generis fiduciary duty Practice and procedure - Appeals
and judicial review
Application by Canada for judicial review of a judge’s decision
finding the Crown breached a
legal obligation to the Kitselas
First Nation by failing to include
a parcel of land in a reserve. When
B.C. entered Confederation, a
Joint Indian Reserve Commission
was set up by Canada and B.C. for
the purpose of determining
reserve allotments for each
aboriginal nation in B.C. From
the largest reserve set aside for
the Kitselas First Nation, the
commissioner excluded 10 acres
on the left bank of the Skeena
River, on which a storehouse of
the Hudson’s Bay Company was
located. B.C. and Canada
approved the reserves as recommended by the Commissioner.
The excluded land ultimately
became a provincial park. In
2000, the Kitselas submitted a
claim to the Minister of Indian
Affairs, alleging that Canada
breached its fiduciary duty in
connection with the exclusion of
the parcel from its reserve. The
Minister did not accept the claim,
therefore the Kitselas commenced
a proceeding under the Specific
Claims Tribunal Act. The judge
found that there were Indian
dwellings and an ancient village
located on the excluded parcel at
the time the reserves were allocated, while there was no evidence white settlers or the Company needed the land for their
purposes. The judge found the
Kitselas had a cognizable Indian
interest in the excluded land, and
that the Kitselas were not
informed by the Commissioner
that the parcel was to be excluded.
He found Canada failed to act
reasonably and with diligence in
regard to the best interests of the
Kitselas in excluding the parcel
from the reserve lands, save for
the Company’s one-acre site.
HELD: Application dismissed.
Canada owed a fiduciary duty to
the Kitselas once Canada undertook to control the creation of
reserve lands. The evidence that
the Kitselas informed the Company in 1892 that the site of its
storehouse was on their lands
supported the judge’s conclusion
that they were not informed the
parcel was being excluded from
their reserve. The facts before the
judge established that the parcel
was not excluded for public
transportation purposes, as there
had already been lands set aside
for such purposes. This sup-
ported the conclusion that the
exclusion of the parcel was not
reasonable. The potential liability
of B.C. was a matter to be dealt
with at the compensation stage of
the hearing.
Canada v. Kitselas First Nation,
[2014] F.C.J. No. 569, Federal
Court of Appeal, Sharlow, Stratas
and Mainville JJ.A., June 5, 2014.
Digest No. 3411-001
adjudicators in the settlement
process, as well as to the Court
Monitor charged with investigating the extent to which their
arrangements violated the prohibitions on charging contingency fees, providing legal services or assigned settlement funds
to Form Fillers.
Fontaine Estate v. Canada, [2014]
M.J. No. 159, Manitoba Court of
Queen’s Bench, P. Schulman J.,
June 4, 2014. Digest No. 3411-002
TREATIES AND AGREEMENTS
Construction and interpretation Enforcement - Agreements - Practice
and procedure - Orders Enforcement of orders
Directions with respect to the
administration of a settlement
agreement reached between nine
provincial governments and First
Nations persons who attended
residential schools. The agreements provided First Nations
class members with set compensation based on their shared
experiences of attending residential schools. Members who suffered serious physical abuse, sexual abuse, or serious psychological
harm during their attendance at
residential schools were entitled
to additional compensation, to be
assessed on an individual basis.
Certain class members who
desired to assert individual compensation claims availed themselves of the services of non-lawyer agents, who came to be known
as “Form Fillers”, in having their
claims processed. It was alleged
that Form Fillers had exercised
inappropriate, sometimes coercive tactics in collecting form filling fees from claimants. Two
claimants provided evidence
about being required to make
expensive and lengthy trips to
their Form Fillers office to obtain
compensation cheques in person
and subsequently being intimidated into paying additional fees
to Form Fillers once they had
received their cheques.
HELD: Certain categories of contracts between class members
and Form Fillers were illegal and
unenforceable. These included
contracts pursuant to which
Form Fillers agreed to provide
services that were essentially
legal in character in exchange for
contingency payments prohibited
under the settlement agreement.
The settlement agreement also
precluded assignments or directions to pay settlement funds to
someone other than the member
claimant. These provisions were
incorporated into the settlement
agreement to ensure claimants
were not re-victimized by the
settlement process. Form Fillers
were ordered to disclose their
agreements with claimants to
Criminal Law
CONSTITUTIONAL ISSUES
Canadian Charter of Rights and
Freedoms - Legal rights - Protection
against arbitrary detention and
imprisonment
Motion by the accused for leave
to appeal his conviction for refusing to provide a breath sample
into an approved screening
device (“ASD”). Police observed
the accused driving a car in the
dark without operating headlights and travelling through a
stop sign without fully stopping.
As a result, the police conducted
a traffic stop. They observed that
the accused had glassy eyes and
that there were unopened cans of
beer in the vehicle, and the
accused admitted alcohol consumption. The police made a
demand that the accused provide
a sample of his breath into an
ASD. After a number of failed
attempts, the police concluded
that the accused was purposely
failing to give an appropriate
sample and the accused was
arrested for refusing to give a
sample into an ASD. At the station, the accused refused to exercise his right to counsel despite
being provided with an opportunity to do so. Based on their
previous observations, the smell
of alcohol which the police had
noticed at the station and the
accused’s uncooperative demeanour, the police also charged the
accused with impaired driving.
After again refusing to speak to
counsel, the accused was taken to
a breathalyzer room where he
refused to provide breath samples. As a result, he was charged
with refusing to provide breathalyzer samples. He was held overnight. At trial, the accused testified that he had briefly turned off
his headlights to ensure they
were working. He denied driving
through a stop sign. He alleged
he tried his best to provide a
breath sample and denied that he
refused to contact counsel. He
argued that the police violated
his s. 8 charter rights because
they did not have reasonable
grounds to make an ASD demand
and that the demand was not
made forthwith. He also argued
that his s. 10(b) Charter rights
were violated because he was not
advised of his right to counsel
before the demand was made. He
argued there were further
breaches of his s. 8 and 10(b)
Charter rights at the police station and that his overnight detention breached his s. 9 Charter
rights. Based on the alleged
breaches, he requested a stay of
proceedings or the exclusion of
the evidence of his refusal. The
trial judge convicted the accused
of refusing to provide a breath
sample by means of an ASD. She
found that the accused was not
credible and she rejected his
Charter arguments. The accused’s
appeal of his conviction was dismissed by the summary conviction appeal judge. The appeal
judge found that the trial judge
made no error and he adopted
her reasons. The accused now
sought leave to appeal his conviction on the basis that the appeal
judge erred in law by failing to
give adequate reasons and in placing an onus on the accused to
establish that the police violated
s. 497 of the Code.
HELD: Motion allowed. Leave to
appeal was granted on the question of law of whether the appeal
judge erred by concluding that
the onus was on the accused to
show his detention was arbitrary
and in holding that the accused’s
continued detention was justified. In adopting the reasons of
the trial judge, the appeal judge
gave adequate reasons. The issues
of whether the evidence relied on
by the police was sufficient to
ground reasonable suspicion and
whether the demand was made
forthwith did not raise a question
of law alone. The issue of whether
the judge erroneously placed the
onus on the accused to prove a
breach of his s. 9 Charter right
raised an arguable case of sufficient importance to merit the
attention of the full court. There
were varying decisions in the
lower court, the issues raised
went beyond the facts of this particular case and an appeal would
allow the court to provide some
guidance on the issue.
R. v. Hardy, [2014] M.J. No. 152,
Manitoba Court of Appeal, D.M.
Cameron J.A., May 30, 2014.
Digest No. 3411-003
CONSTITUTIONAL ISSUES
Canadian Charter of Rights and
Freedoms - Protection against
unreasonable search and seizure Exclusion of evidence Administration of justice brought
into disrepute
Appeal from a judgment of the
Saskatchewan Court of Appeal
that affirmed Spencer’s conviction for possession of child pornography, set aside his acquittal
for making available child pornography and ordered a new trial.
The police identified the Internet
Protocol (IP) address of a computer that had been used to access
and store child pornography
through an Internet file-sharing
program. Without prior judicial
authorization, they obtained from
Shaw Communications Inc., the
Internet Service Provider (ISP),
the subscriber information associated with that IP address. This
led them to Spencer. He had
downloaded child pornography
into a folder that was accessible to
other Internet users using the
same file-sharing program. Spencer was charged and convicted of
possession of child pornography.
He was acquitted on a charge of
making it available. At trial, Spencer claimed that the police had
conducted an unconstitutional
search by obtaining subscriber
information matching the computer’s IP address and that the
evidence obtained as a result
should be excluded. He also testified that he did not know that
others could have access to the
shared folder and argued that he
therefore did not knowingly make
the material in the folder available to others. The trial judge
concluded that there had been no
breach of Spencer’s right to be
secure against unreasonable
searches and seizures. However,
he was of the view that the “making available” offence required
some positive facilitation of access
to the pornography, which Spencer had not done. The Court of
Appeal upheld the conviction for
possession of child pornography,
but set aside the acquittal on the
making available charge on the
basis that the trial judge had
erred in requiring proof of positive facilitation of access by others
to the material. A new trial was
ordered on this charge.
HELD: Appeal dismissed. The
identity of a person linked to
their use of the Internet had to be
recognized as giving rise to a privacy interest beyond that inherent in the person’s name, address
and telephone number found in
the subscriber information. The
police request to link a given IP
address to subscriber information was in effect a request to link
a specific person to specific online
activities. This sort of request
engaged the anonymity aspect of
the informational privacy interest by attempting to link the suspect with anonymously undertaken online activities, activities
which were recognized by the
Court in other circumstances as
July 18 , 2014 •
THE LAWYERS WEEKLY
17
Digest
engaging significant privacy
interests. In the totality of the
circumstances of this case, there
was a reasonable expectation of
privacy in the subscriber information. The disclosure of this information could amount to the identification of a user with intimate
or sensitive activities being carried out online, usually on the
understanding that these activities would be anonymous. A
request by a police officer that an
ISP voluntarily disclose such
information amounted to a
search. Without the subscriber
information, the warrant could
not have been obtained and the
search of the residence was therefore unlawful. However, exclusion
of the evidence rather than its
admission would bring the
administration of justice into disrepute. Police conduct in this case
could not be characterized as constituting wilful or flagrant disregard of the Canadian Charter of
Rights and Freedoms, and society
had an interest in seeing a full
and fair trial based on reliable
evidence, and all the more so for a
crime which implicated the safety
of children. With respect to the
making available offence, given
that the trial judge’s error in holding that a positive act was required
to meet the mens rea component
of this offence resulted in him not
considering the wilful blindness
issue, the error could reasonably
be thought to have had a bearing
on his decision to acquit. The
Court of Appeal’s order for a new
trial on the making available
count was upheld.
when he swung the metal pipe at
Mohamed. She did not leave the
limited defence of self-defence
for initial aggressors with the
jury, noting that this was a more
limited defence that required
proof of retreat by Mohamed.
R. v. Spencer, [2014] S.C.J. No. 43,
Supreme Court of Canada,
McLachlin C.J. and LeBel, Abella,
Rothstein, Cromwell, Moldaver,
Karakatsanis and Wagner JJ., June
17, 2014. Digest No. 3411-004
Appeal by the accused from an
order of forfeiture of over
$116,000 in firearms and ammunition. The accused were convicted of various firearms
offences, the majority of which
involved the possession of firearms without the proper license
or authorization. The male
accused was a firearms dealer
and manufacturer. The two
accused decided to protest the
gun laws by breaching them,
leading to gun charges, then
defending by challenging the
constitutionality of the laws. The
male accused was sentenced to
18 months’ imprisonment and
one year probation. The female
accused received a suspended
sentence plus six months probation. The Crown’s request for
mandatory forfeiture of the over
200 weapons and related devices,
plus over 20,000 rounds of
ammunition that had been seized
at the time of the accuseds’
arrest, was deferred until after
the accuseds’ appeals against
conviction and sentence were
heard and dismissed. At the forfeiture hearing, the accused challenged the constitutionality of
the mandatory forfeiture provision. The trial judge upheld the
constitutionality of the provision
and ordered a number of the
seized firearms forfeited. Other
DEFENCES
Self-defence - Reasonable
apprehension of death or grievous
bodily harm
Appeal by Mohamed from his
manslaughter
conviction.
Mohamed and two friends were
drinking before going to a bar
and being refused service. They
went to another bar where they
were again refused service.
Mohamed twice threw a pool ball
at the bar owner before the bar
owner came at him swinging a
metal pipe. The pipe contacted
Mohamed’s head, causing a gash,
before Mohamed reached into
his waistband and retrieved a
knife, stabbing the bar owner in
the back. The bar owner started
to fall as one of Mohamed’s companions struggled with him.
Mohamed fled the bar. The owner
died from his stab wound.
Mohamed wanted the defence of
self-defence left with the jury.
The judge determined the threshold issue was whether the bar
owner was acting in self-defence
HELD: Appeal allowed and new
trial ordered. The judge erred in
limiting the jury to a consideration of whether the owner was
acting in self-defence. It was not
the owner’s state of mind that
was at issue, but the state of mind
of Mohamed as to whether or not
the owner was engaged in an
assault when he swung the pipe
at Mohamed. While a conclusion
that the owner was acting in selfdefence in swinging the pipe at
Mohamed was reasonable, it was
also possible to conclude that
Mohamed believed he was being
unlawfully assaulted when the
owner swung at him and struck
him as he tried to retreat from
the bar. The judge erred in finding that an unlawful assault by
the owner was necessary for the
defence of self-defence to be
available to Mohamed. An assault
alone was sufficient.
R. v. Mohamed, [2014] O.J. No.
2695, Ontario Court of Appeal, P.S.
Rouleau, P.D. Lauwers and K.M. van
Rensburg JJ.A., June 5, 2014.
Digest No. 3411-005
Sentencing
Criminal Code offences - Weapons
offences - Particular sanctions Forfeiture - Procedure - Appeals
firearms, which did not belong to
the two accused, were ordered
returned to their owners. However, the judge declined to order
the forfeiture of a large quantity
of the seized ammunition that
had been found to be readily
accessible to some of the firearms on the basis that the
accused had been convicted
under the wrong section and that
the forfeiture provisions did not
apply to ammunition that was
not loaded in any firearm. He
also ordered that some non-firearm items be returned to the
accused. The accused appealed
the forfeiture order attacking the
constitutionality of the mandatory forfeiture provision, s. 491(1)
(b), under s. 12 of the Charter.
The Crown opposed the appeal
and sought an order varying the
forfeiture order to include the
ammunition seized.
erroneously convicted under s.
95(1). The accused was convicted under s. 95(1) of the
Code because he did not hold
an authorization or license for
the relevant weapons that were
in proximity to readily accessible ammunition.
HELD: Appeal allowed in part.
The forfeiture order was varied
to include the ammunition that
was seized and was the subject
matter of the conviction under
s. 95(1) of the Code. The mandatory forfeiture of firearms
and ammunition involved in an
offence committed by the
accused was one of the consequences that formed part of the
punishment for the offence,
and therefore was a sentence
for the purpose of s. 675 of the
Criminal Code and was appealable with leave of the court.
There was no prejudice to the
Crown in allowing the accused
to raise arguments based on s.
12 of the Charter because s. 12
challenges were based on the
facts and reasonable hypotheticals. Issue estoppel did not
apply because the s. 12 argument on the issue of forfeiture
was not previously raised. The
forfeiture of the firearms did
not constitute cruel and
unusual punishment. The
offences were serious as the
accused possessed a large quantity of firearms and knowingly
violated the law by refusing to
maintain licenses, creating and
storing automatic weapons and
removing the serial numbers
from other firearms. Furthermore, while the firearms
offences were not the most serious offences, the mandatory
forfeiture consequence was not
a particularly onerous one. The
mitigating factors, which
included the accused’s standing
in the community and lack of
prior record, did not offset the
gravity of the offences. The forfeiture consequences were not
disproportionate as it was the
accused’s own actions that put
their firearms collection at risk.
The trial judge erred by failing
to order the mandatory forfeiture of the ammunition that was
the subject of the accused’s conviction under s. 95(1) of the
Criminal Code, as he erred in
finding that the accused was
Appeal by the father from the
dismissal of his motion to vary
the support he was paying to the
mother for their adult son, whose
schizophrenia and bipolar disorder prevented him from living
independently.
The
father
reduced his support payments for
the son when he learned the son
had applied for and received
ODSP payments. He took the
position his support obligation
should be reduced dollar-for-dollar by the son’s ODSP benefit
payments. The judge considered
this too simplistic an approach,
noting that child support payments were controlled by the
mother, and could be used by her
for any necessary expenses, while
the son’s ODSP payments
belonged to the son alone. The
judge noted the large disparity in
the parties’ incomes and rejected
the father’s assertion that the
mother’s partner’s income should
be taken into account in determining his support obligation.
The Divisional Court agreed with
the judge’s determination that
the father remained obliged to
pay the Table amount for support
for the child.
R. v. Montague, [2014] O.J. No.
2654, Ontario Court of Appeal,
K.N. Feldman, E.E. Gillese and M.H.
Tulloch JJ.A., June 3, 2014. Digest
No. 3411-006
Family Law
Senos v. Karcz, [2014] O.J. No.
2808, Ontario Court of Appeal,
R.G. Juriansz, S.E. Pepall and G.R.
Strathy JJ.A., June 12, 2014. Digest
No. 3411-007
Government
Law
ACCESS TO INFORMATION
AND PRIVACY
Protection of privacy - Legislation Provincial and territorial Interpretation - Unauthorized
disclosure or release - Offences and
penalties - Practice and procedure
MAINTENANCE AND SUPPORT
Child support - Considerations Effect of benefits from third parties Child support guidelines Presumptive rule
HELD: Appeal allowed. The son’s
receipt of almost $10,000 in
annual ODSP payments was sufficient to displace the presumption that the father should pay
Table support. The mother
exerted control over the ODSP
payments as the son’s trustee.
There was potential overlap
between the ODSP payments the
son received and the amounts
paid by the father for child support. The assumption by the state
of some responsibility for the
son’s care made the Table
approach to support inappropriate. As it was unclear how the
mother had been using the ODSP
payments, it was impossible for
the court to determine how much
the father’s support obligation
should be reduced as a result. A
new trial was ordered for the
father’s variation motion.
Appeal by Skakun from the dismissal of his appeal from a conviction for making an unauthorized
disclosure of personal information. Skakun was a municipal
councillor at the time he delivered
to the Canada Broadcasting Corporation a confidential workplace
harassment report he had received
during a closed, restricted city
council meeting. He disagreed
with the finding of the trial judge
that he was an officer of a public
body when he made the disclosure. Skakun took the position the
term “officer” meant appointed
officials only. The appeal judge
agreed with the trial judge.
term “officer” in section 30.4 of
the Freedom of Information and
Protection of Privacy Act
included an elected municipal
councillor. This interpretation
accorded with the broad purposes of the Act and its wideranging scope of application to
public bodies and organizations.
The legislative intention was for
the term officer to include both
elected and appointed officials.
To interpret the Act otherwise
would leave a legislative gap.
R. v. Skakun, [2014] B.C.J. No. 1151,
British Columbia Court of Appeal,
D.M. Smith, A.W. MacKenzie, D.C.
Harris JJ.A., June 11, 2014. Digest
No. 3411-008
Human Rights
Law
ENFORCEMENT AND
PROCEDURE
Commissions - Complaints - Time for
– Appeals and judicial review
Appeal by Mzite from a decision
setting aside a decision of the
Human Rights Tribunal allowing
the appellant’s late-filed complaint. The appellant claimed he
was discriminated against on the
basis of his physical disability
when he was denied access to
HIV medication while on remand
in a provincial institution
18
• July 18 , 2014
THE LAWYERS WEEKLY
Digest
between 2007 and 2009. The
appellant failed to file a complaint
while in remand because he was
advised by two officers and a
number of prisoners that to do so
would be counterproductive,
might result in retaliation by staff,
and might impact on his security
classification in the federal system. He made a complaint in 2011
after speaking to another inmate
who also had trouble accessing
HIV medication at the same institution. The Tribunal accepted the
complaint on the basis that it was
in the public interest to do so and
that no substantial prejudice
would result because of the delay
in making the complaint. In setting aside the Tribunal’s decision,
the judge found the Tribunal erred
by erroneously assessing the reasons for the complainant’s delay in
making a complaint and by giving
inappropriate weight to the allegation of systemic discrimination
in assessing the public interest.
HELD: Appeal allowed. The
judge did not err in engaging in
judicial review of the Tribunal’s
interim decision to accept the
complaint. The decision arose
out of a distinct preliminary process and the petition was brought
before the substantive hearing
had commenced, during an interval in proceedings. It could not be
said that the petition to set aside
the decision so interfered with
the process of the Tribunal that it
ought not to have been heard.
While the exercise of the discretion to engage in preliminary
review should be rare, the judge
in this case did not err in exercising that discretion. According to
the Tribunal’s own policy, it was
not an error to place little weight
upon the reasons for the delay.
Given the discretionary nature of
the assessment, it was not open
to a reviewing judge to give primacy to the delay or to set aside
the exercise of the discretion on
the basis that insufficient weight
had been afforded to it, as only
one of the factors to be weighed
by the Tribunal. There was no
basis to say the Tribunal’s assessment of the delay that occurred
on remand was arbitrary, not
supported by the evidence, or
otherwise unreasonable. The
judge weighed the complainant’s
evidence again and did not
address this finding by the Tribunal with appropriate deference. It
was an error on the part of the
judge to say the Tribunal’s finding, that the complainant’s access
to advice was limited, was only
conjecture on the part of the Tribunal. That finding did not demonstrate respectful attention to
the reasons offered or that could
be offered in support of the decision of the Tribunal. There was
no basis upon which it could be
said that the decision of the Tribunal that the complaint raised
systemic issues was patently
unreasonable. The judge erred in
finding, in effect, that the Tribu-
nal could consider only the complainant’s personal interest in the
substance of the dispute. There
was some evidence upon which
the Tribunal could conclude that
the complainant was denied
access to antiretroviral medication as a result of the application
of policies that might continue. It
was an error on the part of the
judge to substitute his own view
of the weight that ought to be
given to an allegation of systemic
discrimination for that of the Tribunal. The Tribunal had been
given a legislative mandate to
exercise discretion in the public
interest to hear late-filed complaints. In exercising that discretion the Tribunal considered relevant factors.
time the tenants occupied Manitoba Housing’s complex, it could
not be said their need for shortterm shelter continued.
British Columbia (Ministry of Public Safety and Solicitor General) v.
Mzite, [2014] B.C.J. No. 1122, British Columbia Court of Appeal, P.D.
Lowry, S. Stromberg-Stein and P.M.
Willcock JJ.A., June 9, 2014. Digest
No. 3411-009
Appeal by Manitoba Housing
from a decision finding the Residential Tenancies Act did not
apply to its application for orders
of possession and compensation
for rent arrears from certain tenants. In 1996, the tenants had
been expelled from their homes
on the Waterhen First Nation as
a result of a political dispute.
They moved into a housing complex owned by Manitoba Housing, a public agency that managed subsidized housing. The
tenants did not pay rent to Manitoba Housing for nine years
before the public agency, in 2010,
commenced proceedings to
remove the tenants from the
complex. It obtained orders of
possession and partial compensation. These were set aside on
appeal by the tenants, the Residential Tenancies Commission
finding that the tenants were persons in need occupying a temporary shelter to which the provisions of the Residential Tenancies
Act did not apply.
Appeal by Canadian Natural
Resources Ltd. from a decision
upholding a preliminary decision
of the Composite Assessment
Review Board to admit evidence in
a complaint against the 2009
municipal tax assessment of the
Horizon Oil Sands Project. In
2010, the Municipality issued a
2009 tax assessment notice for the
project to the appellant, stating an
assessed value of approximately
$2.413 billion. Five days later, the
Municipality issued an amended
2009 assessment notice which
specified an assessed value of
$3.222 billion. The appellant
requested specific information
from the Municipality about how it
had prepared the amended assessment. The Municipality replied
that the amended assessed value
was a percentage of the total capital expenditures that the appellant
had had reported. The appellant
then filed a complaint arguing that
the amended 2009 assessment
was illegal because it was prepared
on a basis not authorized by the
legislation. At a preliminary hearing, the Board permitted the
Municipality to file a report
which defended the amended
assessment on a completely different basis, alleging that the
appellant’s 2009 costs rendition
contained numerous errors. The
appellant argued that the Municipality could only adduce the
information which it had provided to the appellant in reply to
the request for information. The
Board found the report was
admissible because the Municipality had met its obligation
under the Municipal Government Act in answering the appellant’s request for information.
Commission’s interpretation of
the Act and the outcome of its
decision were not reasonable. An
ordinary interpretation of the Act
showed only shelter provided to
address an immediate need was
exempt from the Act’s application. There was no evidence
showing that the emergency situation in which the tenants found
themselves in the 1990s continued to exist. Given the lengthy
Board erred in finding that the
Municipality had complied with
the appellant’s request for information. The central purpose of
taxpayer information rights was
to provide taxpayers with information about the preparation of
their tax assessments. Reliance on
this information for bringing a
complaint was defeated if the
Municipality was permitted to
defend a tax assessment on a
Landlord &
Tenant Law
RESIDENTIAL TENANCIES
Legislation - Application of legislation
- Public housing
Manitoba Housing v. Amyotte,
[2014] M.J. No. 155, Manitoba
Court of Appeal, B.M. Hamilton,
D.M. Cameron and W.J. Burnett
JJ.A., June 4, 2014. Digest No.
3411-010
Municipal Law
FINANCE
Taxation – Real or immoveable
property assessment – Appeals –
Tribunals - Procedure
basis different from that disclosed
before the complaint was brought.
S. 9(4) of the Matters Relating to
Assessment Complaints Regulation precluded the Board from
hearing any evidence relating to
information that was requested
by a complainant that the Municipality failed to provide. It
reflected a reasonable policy
choice on the part of the Legislature, prohibiting a tax authority
from assessing tax on one basis
and defending it on another.
Canadian Natural Resources Ltd. v.
Wood Buffalo (Regional Municipality), [2014] A.J. No. 587, Alberta
Court of Appeal, R.L. Berger, P.W.L.
Martin and M.B. Bielby JJ.A., June
11, 2014. Digest No. 3411-011
Planning and
development
Zoning regulations - Bylaws Interpretation
Application by the Toronto
School Board for an order
declaring
that
proposed
improvements to a high school
playing field complied with the
City of Toronto’s zoning bylaw.
The Board proposed to have a
dome added to the playing
field to allow use during the
winter. It applied to the City
for a preliminary decision on
whether or not the proposed
improvements complied with
the City’s zoning bylaw. The
Zoning Examiner concluded
the proposal was not a permitted use of the school property
because it exceeded the mere
incidental use of the school
property for purposes other
than education or instruction.
The Board then asked the
Committee of Adjustment for a
minor variance. The Committee declined to do so. The Board
then sought review of its proposal by the City’s Deputy Chief
Building Official. The Official
came to the same conclusion as
the Zoning Examiner. Both
based their decisions on the
fact that the proposed facilities
would be used only 30 per cent
of the time by the Board, and
that the bulk of the use of the
facility would be for a noneducational purpose.
HELD: Application dismissed.
The interpretation of the bylaw
adopted by the Zoning Examiner
and Building Official was reasonable and consistent with the
purpose of the exemption to the
zoning bylaw granted to school
facilities. The proposal did not
fall within the exemption because
it would result in a greater than
incidental use of the facility for
non-school purposes.
Toronto District School Board v.
Toronto (City), [2014] O.J. No.
2831, Ontario Superior Court of
Justice, D.L. Corbett J., June 13,
2014. Digest No. 3411-012
Natural
Resources Law
HUNTING AND TRAPPING
Offences and penalties - Hunting or
trapping in a prohibited area
Appeals by the accused Legande
and Gauchier, Aboriginals, from
dismissal of their appeals from
convictions for hunting in a wildlife sanctuary. After receiving
reports of illegal hunting in the
area, Wildlife Officers positioned a
fake moose in a Road Corridor
Wildlife Sanctuary. The appellants
arrived at the site and both shot at
the surrogate moose. At trial, the
appellants argued that that they
did not realize they were not
allowed to hunt in the area. The
trial judge rejected their mistake of
fact defence. The trial judge concluded that the appellants were not
confused about their location when
they shot at the surrogate moose.
There was nothing to mislead
them to believe they could hunt in
the area, even though they might
not have seen the signage to the
opposite effect. He concluded that
their failure to appreciate that they
could not hunt in the area resulted
exclusively from ignorance of the
law. The trial judge also concluded
that even if the appellants were
mistaken, their mistake was not a
reasonable one. The appellants
argued that the trial judge erred in
rejecting their defence. The appellants argued that they were mistaken about the scope of their
authority to hunt.
HELD: Appeals dismissed. A
mistake about the scope or extent
of a lawful authorization was a
mistake of law, not of fact. The
appellants were under the
impression that they could hunt
there, but the reason for that
impression was that they were
mistaken as to the legal characterization of the land on which
they were hunting. What they did
not realize was that this land was
legally designated as a wildlife
sanctuary and that any authorization they had to hunt did not
extend to that land. The trial
judge’s finding that any mistake
was not reasonable demonstrated
no reviewable error. The trial
judge’s finding that the appellants did not act reasonably was a
mixed question of fact and law
which was entitled to deference.
That conclusion was supportable
on this record, and no reviewable
error was disclosed.
R. v. Gauchier, [2014] A.J. No. 585,
Alberta Court of Appeal, M.S.
Paperny, F.F. Slatter and R.S.
Brown JJ.A., June 6, 2014. Digest
No. 3411-013
PUBLIC UTILITIES
Regulatory tribunals - Practice and
procedure - Discovery - Provincial
boards, tribunals and commissions
July 18 , 2014 •
THE LAWYERS WEEKLY
19
Digest
Appeal by TransAlta Corporation
from an order requiring it to disclose to Market Surveillance
Administration (“MSA”) documents over which it claimed litigation privilege. In 2011, after
receiving a complaint from within
the industry with respect to TransAlta’s activities, MSA began an
investigation
to
determine
whether TransAlta had artificially
influenced the price of electricity
by keeping some of its electrical
power plants off-line during periods of high demand. As part of
the investigation, MSA sought the
production of TransAlta’s records.
TransAlta produced approximately 250,000 records, but withheld production of approximately
1,000 records, claiming that they
were subject to either solicitorclient privilege, including litigation privilege, or were personal
records of employees and were
therefore irrelevant. The disputed
records were sealed and taken
before a judge for review. The
judge held that the term “solicitorclient” privilege in s. 50 of the
Alberta Utilities’ Commission Act
(“AUCA”) referred only to solicitor-client privilege dealing with
obtaining legal advice and did not
include litigation privilege. She
also held that personal records
were not privileged under the
AUCA. She then reviewed the
sealed documents and set out her
findings with respect to each record. TransAlta sought to appeal
the decision of the chambers
judge on the basis that she erred
in concluding that s. 50 of the
AUCA did not include litigation
privilege, in finding that there was
no reasonable expectation of privacy for a former employee and in
finding that certain records over
which it claimed solicitor-client
privilege did not fall within the
continuum of communication of
legal advice.
HELD: Appeal allowed in part.
The issue of whether litigation
privilege fell within “solicitorclient privilege” for the purposes of
the interpretation an application
of s. 50 of the AUCA was an issue
of law which was reviewable on
the standard of correctness. The
issues of whether privilege could
be claimed for personal records
and whether the judge erred in
finding that certain individual records did not fall within solicitorclient privilege were questions of
mixed fact and law which called
for deference. Section 50 of the
AUCA did not exclude claims for
litigation privilege. At the time
that the statute was enacted,
solicitor-client privilege included
litigation privilege and had the
Legislature intended to remove
the right to claim litigation privilege, it would have expressly done
so. Furthermore, embarking on
the procedure set out in s. 50 of
the AUCA for a determination of
solicitor-client privilege did not
preclude raising a claim for
another type of privilege at com-
mon law. In addition, the judge
was too quick in finding the alleged
employee records were subject to
production. She did not review the
records to determine if they were
relevant and the employee’s claim
to a reasonable expectation of privacy in respect of the alleged personal records could not summarily
be rejected. With few exceptions,
being duplicate documents and
some email attachments, the judge
correctly found there was no privilege in certain records.
TransAlta Corp. v. Market Surveillance Administrator, [2014] A.J.
No. 607, Alberta Court of Appeal,
C.D. O’Brien, P.A. Rowbotham and
C.L. Kenny JJ.A., June 13, 2014.
Digest No. 3411-014
Real Property
Law
INTERESTS IN LAND
Easements - Creation - In equity Contract to create an easement Particular easements - Positive
easements - Rights of way
Appeal by the defendant from an
order granting summary judgment on the plaintiff ’s claim for a
declaration that an easement
agreement was binding and for a
vesting order of the easement and
motion by the defendant for leave
to appeal costs. The parties owned
neighbouring lots fronting a lake.
The plaintiff entered into an agreement with the defendant’s predecessor in title for an easement to
permit the construction of an
access road in exchange for
$15,000. When the defendant
acquired the property, he agreed to
assume the obligations under the
easement agreement. The parties
entered into an agreement that
provided for a 32-foot easement to
allow the construction of a road no
wider than 16 feet in exchange for
$45,000. In addition, the plaintiff
agreed to seek severance of a portion of its land to provide the
defendant with waterfront area. If
the severance was successful, the
defendant was to pay to the
defendant $15,000. The plaintiff
advanced $45,000 to the defendant and made a severance application, which was later withdrawn.
Neither the easement nor the severance had occurred and the
plaintiff commenced an action to
enforce the agreement. The
defendant counterclaimed for an
order requiring the plaintiff to
complete the severance or pay
damages equivalent to the value of
the land. On the plaintiff ’s summary judgment motion, the judge
allowed the plaintiff to amend its
claim and allowed the claim. The
judge concluded that the parties
had entered into a binding agreement pursuant to which the
defendant agreed to provide the
plaintiff with the easement in
exchange for $45,000 and the
plaintiff ’s efforts to obtain severance of the portion of its property.
He found that although the agreement was preliminary, it was binding and enforceable and the parties acted on it. He further found
that the plaintiff never agreed to
pay the defendant the value of the
property he sought to sever, if the
severance application failed and
that granting the easement was
not contingent on obtaining severance. He concluded that the plaintiff fulfilled its obligation to take
all reasonable steps to obtain severance. Having concluded that the
agreement was valid and binding
and the plaintiff was not in breach,
the judge dismissed the counterclaim. In a later decision, the judge
awarded costs of $53,261 to the
plaintiff. The defendant sought to
appeal on the grounds that the
judge erred in finding that there
was no genuine issue for trial,
erred in awarding judgment based
on the agreement, erred in awarding specific performance and erred
in granting leave to amend the
statement of claim. The defendant
also sought leave to appeal the
costs award.
included the essential terms of a
contract for an easement. It was
acknowledged and understood
that the individual with whom
the defendant negotiated spoke
for the plaintiff. Specific performance was warranted as the easement was essential to provide
road access to the plaintiff ’s property. The judge made no error in
allowing the amendment to the
statement of claim as the amendments did not introduce a new
cause of action, there were no
limitation issue and there was no
prejudice to the defendant. In
awarding costs to the plaintiff, the
judge correctly concluded that
the plaintiff was entirely successful and applied the principle that
costs follow the event.
HELD: Appeal and motion for
leave to appeal costs dismissed.
The motion judge did not ignore
the defendant’s evidence and was
aware that the defendant’s
account differed from the plaintiff ’s. The judge was entitled to
weigh the evidence, evaluate
credibility and draw any reasonable inference from the evidence.
The defendant’s credibility was
affected by documents that were
inconsistent with what he said in
his affidavit and there were inherent contradictions in his pleadings and affidavit that undermined his account. The trial judge
did not err in failing to draw and
adverse inference from the plaintiff ’s failure to file affidavits from
certain individuals as no evidence
from those individuals was relied
on by the plaintiff. The conclusion
that the parties entered into a
binding preliminary agreement
that enabled them to take the
necessary steps that they in fact
undertook was consistent with
the evidence. The agreement
FRAUD AND
MISREPRESENTATION
Nordlund Family Retreat Inc. v.
Plominski, [2014] O.J. No. 2701,
Ontario Court of Appeal, K.N. Feldman, G.J. Epstein and K.M. van
Rensburg JJ.A., June 6, 2014.
Digest No. 3411-015
Tort Law
Fraudulent misrepresentation Specific elements - Recklessness of
truth or falsity
Appeal by the estate executrix
from the dismissal of the estate’s
claim against the defendant for
civil fraud. The deceased was
referred to the defendant, an
oncologist, for his opinion
regarding systemic therapy. Prior
to meeting with the defendant,
the deceased attended the United
States for treatment for his condition. Although he was advised
to seek prior approval from the
provincial health authority for
the cost of his treatment, he did
not. Instead, he applied for reimbursement once the treatment
was complete. The provincial
health authority sought the opinion of the defendant regarding
the nature and availability of certain cancer treatments that could
be provided to the deceased in
the province and in Canada.
Based on that information, which
the estate claimed was inaccurate, the provincial health authority denied the deceased’s request
for a reimbursement finding that
the deceased had not demonstrated that the service was not
available in the province or in
Canada. The deceased appealed.
His appeal was denied on the
basis that he did not obtain a
referral for any of the medical
services he received in the US
from a medical practitioner in
the province who was a specialist
in the field. The appeal board did
not consider whether the services
were available in the province on
in Canada. It found that the letter
provided by the defendant was of
little weight as it contained assertions that contradicted viva voce
evidence and was contrary to the
deceased’s interests. The deceased
sued the defendant alleging that
the misstatements in his letter
amounted to civil fraud which
caused the rejection of his application for reimbursement. The
trial judge dismissed the action
finding that the tort of civil fraud
was not made out. He found that
the most blatant misstatement in
the letter was a typographical
error and that the balance of the
inaccuracies did not rise to the
level of reckless or willful misstatements required to constitute
a civil fraud. The estate executrix
appealed arguing that the trial
judge did not consider that the
inaccurate statements made by
the defendant constituted a civil
fraud.
judge made no palpable or overriding error. His findings of fact
and the conclusions he made
were available to him on the record. Causation had not been
proven. The appeal board
rejected the deceased’s claim on
the basis that he did not obtain a
referral by a provincial medical
practitioner.
Coyle Estate v. Winnipeg Regional
Health Authority Inc., [2014] M.J.
No. 158, Manitoba Court of Appeal,
B.M. Hamilton, D.M. Cameron and
W.J. Burnett JJ.A., June 5, 2014.
Digest No. 3411-016
Classifieds
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20
• July 18 , 2014
THE LAWYERS WEEKLY
Business & Careers
Better to be
out in front than
hiding in the back
Working relationship with media can help manage message
Tomacco / iStockphoto.com
GEOFF KIRBYSON
T
oronto lawyers still laugh about the time a highprofile client was instructed to walk out of the
courtroom, refer media questions to counsel, walk
directly to his car and leave — only to lose his mind when
he saw the bank of microphones, run in the opposite direction with a rain coat over his head and slam into a
parking meter.
There’s a commonly held perception that nothing good
can come from lawyers dealing with the media, but some
legal experts believe there’s a strong argument to be
made for having a working relationship with one or
more reporters.
It could benefit a client, if not in the courtroom then
certainly in the court of public opinion.
Will McDowell, a partner at Toronto-based Lenczner
Slaght Royce Smith Griffin and a leading practitioner of libel
and media law, says talking to a reporter doesn’t have to mean
your name will end up in the paper or on the six o’clock news.
In some cases, a media story will be in the client’s best
interests and in others, it won’t. Regardless, when a reporter contacts you, get back to them one way or another. In
some cases, you may be doing little more than confirming
or denying information that was sourced elsewhere.
Whatever the case, lawyers need to check their egos at
the door when dealing with the media, he says.
“If the media is there, I want to make sure they accurately report the evidence. If they ask me for spelling or
technical explanations, I’ll give that to them on background so at least there’s an accurate report,” he says.
“Lawyers don’t always appreciate that the media has a
job to do. They’re going to do the story with or without
you and you’re better off if they understand what’s going
on, whether your name gets in print or not.”
McDowell recommends lawyers be wary of new media,
however, as they’re not necessarily subject to the same
ethical rules as newspapers, radio and television. “Some
bloggers may or may not respect off the record,” he says.
Paul Doroshenko, a Vancouver-based criminal lawyer, believes lawyers are “scared” of the media on a
number of levels.
First, they’re worried about running afoul of their law
society but they also want to avoid criticism from their
peers, particularly if they’re wrong about something.
“They’re also worried their message will be lost or spun
by the media in a way that will make them or their client
look bad. That’s why we don’t see lawyers coming out
enough and taking a significant stance,” he says.
As the most photographed lawyer in B.C. over the last
four years — in his own estimation, anyway — Doroshenko
has learned a few strategies to deal with the media.
“Pick your points and stick to them. Try not to get too far
off or philosophical about it. I try to simplify my language
as much as possible to be very straightforward. Instead of
saying somebody’s driving prohibitions were ‘put in abeyance,’ why not say they were ‘put on hold?’ ” he says.
But in order to put yourself in a position to deal with the
media effectively, you’ve first got to develop a rapport with
one or more reporters. This could mean meeting for a cup
of coffee for an off-the-record discussion about a case, or
to talk about how the media is likely to react when certain
facts are made public.
Bob Sokalski, a partner at Hill Sokalski Walsh Trippier
in Winnipeg, believes media-friendly lawyers fulfil a duty
to the public by keeping them properly informed on legal
issues. Creating a relationship with a reporter can create
a two-way street, he says.
“If a client is losing a battle in the court of public opinion, that’s an opportunity for the lawyer, having sown the
seeds of relationship-building, to say to a reporter, ‘my
client is getting beaten up. We’re not asking for a favour,
just a level playing field.’ It’s easier to have that conversation with somebody you have a pre-existing relationship
with than making a cold call,” he says.
Of course, just because you have a relationship with a
reporter or news outlet doesn’t mean you’ll never be on
the wrong end of a story.
“There are no allegiances,” Doroshenko says, “And
there better not be if the reporters are sticking to their
ethical standards.”
One thing Sokalski will never say to a reporter is “no
comment.”
“If you can’t say something, tell them why and explain to
Speak, Page 21
July 18 , 2014 •
THE LAWYERS WEEKLY
21
Business & Careers
Speak: ‘No comment’ is not a suitable answer
them that it wouldn’t be appropriate to
comment on it at this time. Maybe it’s
going before a judge tomorrow. Be candid
and tell them the truth,” he says.
Dealing with the media is far from an
exact science, however. Sokalski says there
are times when you’ve got to determine
whether to be proactive or reactive with
particular clients and let the chips fall
where they may.
“If you’re trying to do damage control
and you do a pre-emptive (strike), the risk
you run is drawing attention to something that might not otherwise have
attention drawn to it. If it’s inevitable that
the media will zero in on your client,
you’re probably better off being proactive.
If not, you may expose your client to scrutiny they may not (otherwise) be exposed
to,” he says.
Judges are not influenced by what they
read or hear in the media so it’s not recommended to try to litigate your case in
the newspapers or on radio or TV, says
Pascale Daigneault, a personal injury lawyer at Fleck Law in Sarnia, Ont.
If it’s inevitable that the
media will zero in on your
client, you’re probably better
off being proactive. If not,
you may expose your client
to scrutiny they may not
(otherwise) be exposed to.
Bob Sokalski
Hill Sokalski Walsh Trippier
“It’s a good idea to save the best arguments for the courtroom,” she says.
Lawyers should be careful to provide
only accurate and useful information to
reporters that is within their area of exper-
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Sokalski agrees. He like to tells the
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because he had already heard it on the
radio that morning.
“That was sending a shot over the bow.
Lawyers have to keep in mind that they
have a duty to the public, the client and
the courts.
In discharging one’s duty to the public or
the client, one cannot breach their duty to
the court by disrespecting or dishonouring
the courts. “We’ve got a lot of balls in the
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innovative financial products to meet the individual needs of our customers. Whether
a customer chooses to purchase, lease or rent equipment, AGCO Finance can provide
a competitive solution. Working with AGCO Finance, professional farmers around the
world can acquire the right equipment to help them grow their business and also improve
their management of cash flow and credit lines.
We are an equal opportunity employer. We thank all candidates who have applied, but
only those selected for an interview will be contacted.
CommerCial lawyer, ContraCt, oakville, on
Algonquin Power & Utilities Corp. (“Algonquin”) owns and operates a diversified
$3.8 billion portfolio of regulated and non-regulated utilities in North America.
Due to continued growth, Algonquin seeks a commercial lawyer for a twelve
month contract with the possibility of a permanent position thereafter.
Key Qualifications:
•
be a member in good standing with the Law Society of Upper Canada, with
excellent academic credentials;
•
have at least 6 years of general corporate commercial practice experience;
•
be able to thrive in a fast-paced environment with multiple competing
priorities;
•
demonstrate a capacity to work closely with businesspeople, shepherding
multiple projects to completion;
•
knowledge of French and called to the bar in a US state, although not
required, would be assets.
Key Responsibilities:
•
provide efficient and timely delivery of general legal services as a member of
the Algonquin-Liberty Business Services unit;
•
negotiate key agreements relating to the renewable energy sector including
the following: equipment supply contract; service contracts; power
purchase agreements; land rights agreements; interconnection agreements;
transmission agreements; engineering, procurement and construction (EPC)
contracts; operations and maintenance (O&M) agreements; turbine supply
agreements; and equipment warranties;
•
negotiate software license agreements and other commercial contracts; and
•
handle and be part of a team dealing with numerous M&A and financing
transactions both in Canada and the US.
Those interested in applying should forward a cover letter and resume
no later than August 15, 2014 to:
[email protected]
Please indicate “Commercial Lawyer, Contract” in all correspondence.
Please note that an internal and external search will be held simultaneously.
22
• July 18 , 2014
THE LAWYERS WEEKLY
Business & Careers
Understanding fiduciary duty crucial to governance
Vern Krishna
Tax Views
he concept of fiduciary duty in law is
T
intended to protect the integrity of our
institutions and enterprises that depend on
trust and confidence. The word “fiduciary”
derives from the Latin verb “fidere” — to
trust. The law requires that corporate directors and senior officers owe a fiduciary
duty of faithfulness to the corporation that
they serve, rather than to its members who
are “shareholders” of the corporation.
Hence, in all matters relating to their
undertaking of trust and confidence as dir-
ectors of the corporation, directors must
act solely in the best interests of the corporation. A fiduciary duty is the highest
standard known at either equity or law.
One becomes a fiduciary when he stands
in a position of trust to another individual. A
fiduciary relationship arises where one party
has placed its “trust and confidence” in
another,
and
the
latter
has
accepted — expressly or by operation of
law — to act in a manner consistent with the
reposing of such trust and confidence.
As a matter of practice, we often use the
terms “fiduciary” and “trustee” interchangeably. There are, however, significant differences between directors and
trustees. For example, a director need not
comply with the Trustee Act. It is not
necessary for a true “trust” to exist or for
trust property to be involved to have a
fiduciary relationship (Standard Investments Ltd. et al v. Canadian Imperial
ANNOUNCEMENT
CHOOSE FROM CANADA’S TOP
MEDIATORS AND ARbITRATORS
A person breaches her fiduciary
duty when she departs from
her obligation to act in the best
interests of the beneficiary.
Vern Krishna
Borden Ladner Gervais
Bank of Commerce [1985] O.J. No. 2668).
Over the years, the courts have recognized
many categories or classes of fiduciaries.
Although the classes of fiduciaries are not
closed, there are certain “traditional relationships” that the courts recognize as fiduciary relationships — for example, trusteebeneficiary,
director-company,
agent-principal, and solicitor-client.
Thus, if an individual falls into one of these
well-established fiduciary classes — for
example, by becoming a director of a corporation — he or she is prima facie a fiduciary
(Re Owen Sound Lumber Co. (1917), 33
D.L.R. 487, affg (1915), 25 D.L.R. 812). In the
absence of proof to the contrary, a director of
a corporation is presumed to be a fiduciary
vis-à-vis the corporation (Canadian Aero
Service Ltd. v. O’Malley [1974] S.C.R. 592).
This common law fiduciary duty of directors
is in addition to any statutory obligation to
act in the best interests of the corporation.
What does being a fiduciary mean?
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In Hodgkinson v. Simms, the Supreme Court
of Canada said that “the fiduciary duty may
properly be understood as but one of a species of a more generalized duty by which the
law seeks to protect vulnerable people in
transactions with others…the concept of vulnerability…is an important indicium of (the
existence of a fiduciary relationship).”
The overarching duty of a fiduciary is
faithfulness, which can vary depending on
the nature and expectations inherent to a
particular relationship. However, in all fiduciary relationships the duty of faithfulness
entails at the very least the duty of
loyalty — the duty to avoid conflicts of interest and to act exclusively in the best interests of another. In Canadian Aero Service,
Justice Bora Laskin described the fiduciary
duty as one of “loyalty, good faith and avoidance of a conflict of duty and self-interest.”
A person breaches her fiduciary duty
when she departs from her obligation to act
in the best interests of the beneficiary. Neither the fiduciary’s motive nor the actual
result of the departure is relevant (Regal
(Hastings), Ltd. v. Gulliver, [1942] 1 All
E.R. 378 (H.L.)). Thus, even where the fiduciary acts in good faith and in fact reaps a
profit for the beneficiary, his actions will
constitute a breach of fiduciary duty where
he places his own interests ahead of, or
equal to, the party to whom he owes the
duty. The single-mindedness of his intentions must be directed toward the beneficiary to the detriment of his own self-interest.
Corporate directors as fiduciaries
The law has long recognized and enforced
the fiduciary duty of directors. In Aberdeen
Railway Co. v. Blaikie Brothers, for example,
Lord Cranworth aptly described the role of
corporate directors: “The directors are a
body to whom is delegated the duty of managing the general affairs of the company. A
corporate body can only act by agents, and it
is, of course, the duty of those agents so to
act as best to promote the interests of the
corporation whose affairs they are conducting. Such an agent has duties to discharge of a fiduciary character towards his
principal, and it is a rule of universal application that no one having such duties to
discharge shall be allowed to enter into
engagements in which he has or can have a
personal interest conflicting or which possibly may conflict with the interest of those
whom he is bound to protect. So strictly is
this principle adhered to that no question is
allowed to be raised as to the fairness or
unfairness of a contract so entered into.”
The precise duties of a fiduciary depend on
the nature of the relationship and reasonable
expectations of the parties. The expectations
derive from the express or implied undertakings of the fiduciary, the circumstances of
each case and the industrial, professional,
cultural or other social standards.
However, at the very least, a corporate
director’s fiduciary duty of faithfulness
includes the duty of loyalty (i.e. avoiding
conflicts of interest and of duty), the duty to
personally perform tasks that one cannot
delegate, and the duty of good faith (i.e. acting honestly; giving full disclosure; and
exercising prudence, care, skill).
There is often confusion as to whom corporate directors owe their fiduciary duty.
There is a temptation to believe that a director owes his duty to the shareholders — as
the ultimate owners of the corporation — and/or possibly to corporate creditors. However, corporate directors owe their
fiduciary duty to the corporation itself.
Moreover, where a director of a business
corporation is also a shareholder, his rights
as shareholder should be subservient to his
duty of utmost loyalty to the corporation
and, hopefully, its shareholders in general.
One of the reasons the duty is owed to the
corporation is that it would be impossible
for a corporate director to fulfil a duty
owed directly to shareholders, who often
constitute a very large amorphous body.
Individual shareholders may not always
share common interests and, in fact, frequently may have conflicting interests, or
even some interests that conflict with the
corporation itself. Furthermore, usually
directors are not aware of the interests of
all of the shareholders, but rather only a
small portion (i.e. the most vocal) of them.
Thus, in order to best protect the interests
of the shareholders as a whole, a director’s
fiduciary duty is to the corporation, in
which all shareholders share an interest.
The concept of fiduciary relationship and
the responsibilities that flow from the relationship are an important, indeed crucial
element of governance. Only by strictly
adhering to fiduciary principles can we protect and reinforce the integrity of [our] social
institutions, capital markets, and enterprises
that depend on the trust and confidence of
their participants to remain effectual.
Prof. Vern Krishna, CM, QC, LSM of the University
of Ottawa (Common Law) is tax counsel at
Borden Ladner Gervais. [email protected]
July 18 , 2014 •
THE LAWYERS WEEKLY
23
News
Municipalities get say on cell tower placement
Quebec appeal court rules Montreal suburb can dictate location
Luis Millan
In a closely watched ruling that
pitted a Montreal suburb against
a national telecommunications
giant, the Quebec Court of Appeal
held that municipalities cannot
prevent the installation of new
cell towers but can have a say over
their location within city limits.
Highlighting the “significant
challenges that can sometimes
occur with the installation of communications towers in urban settings,” the Quebec Court of Appeal,
in White c. Châteauguay (Ville de)
[2014] J.Q. no 5163, unanimously
held that the Montreal bedroom
community of Chateauguay was
not overstepping its bounds nor
was it meddling in federal matters
when it proposed an alternate site
in an industrial sector for the
future cellphone tower.
“The ruling is important for
municipalities because it holds
that they can play an active role
to help telecommunication companies install communication
towers in their territory while
respecting the fundamental
objective of a municipality to
ensure the harmonious development and the well-being of its
citizens,” said Patrice Gladu, a
Montreal lawyer with Dunton
Rainville who successfully
pleaded the case.
In 2008, with cellphone use
exploding across Canada and
ratcheting up demand for wireless
networks, Rogers Communications Inc. wanted to install a cell
tower in a residential neighborhood in Chateauguay, an off-island
suburb of Montreal, and struck a
deal with the owner of the property. Facing opposition from citizens concerned about aesthetics
and the potential long-term exposure to electromagnetic energy
fields, the city proposed an alternative site in an industrial sector
bordering
the
Kahnawake
Mohawk Territory reserve that
conformed to Industry Canada
standards. Cell tower locations are
ultimately decided by Industry
Canada, but telecommunications
companies normally make recommendations after they have scouted
desired locations. The municipality
then filed a land reserve — which
prohibits during its term any construction, improvement or addition on the immovable property — on the residential property
as well as an expropriation notice
on the property located in the city’s
industrial sector.
Rogers fought back, as did
Christina White, owner of the
property that was served with an
expropriation notice. Rogers
argued that both the land reserve
and the expropriation notice
were unconstitutional because
The ruling is important
for municipalities
because it holds that
they can play an
active role to help
telecommunication
companies install
communication towers
in their territory
while respecting the
fundamental objective
of a municipality…
The test since Western
Bank is not easy
to meet. Rogers
would have had to
demonstrate that it
touched at the heart
of federal jurisdiction
insofar as radio
communications is
concerned.
Jean Leclair
Université de Montréal
Patrice Gladu
Dunton Rainville
Allkindza / iStockphoto.com
they sought to prevent the telecom company from installing a
cell tower on the residential
property. It maintained that both
notices should be deemed as
ultra vires because they infringed
on radio communications, a sector that falls exclusively within
federal jurisdiction. At the very
least, Rogers argued, the paramountcy doctrine should be
applied to render the two notices
null and void.
A lower court upheld the expropriation notice but concluded
that the city had acted in bad faith
and abused its power by imposing
a land reserve on the residential
property to prevent Rogers from
installing its antenna.
The Quebec Court of Appeal
partially overturned the lower
court ruling and held that since
the city had acted in the “interests of its citizens, for municipal
reasons,” it did not act in bad
faith and upheld the land reserve
notice on the residential property. Under the Quebec Cities and
Towns Act, municipalities have
the power to possess immovable
property for the purposes of land
claims and expropriation.
“The notice of expropriation
and land reserve, examined
together, have a valid municipal
objective as its goal was to
respond to the concerns of the
citizens of Chateauguay who
were worried about the possible
health repercussions of radio
waves and to ensure a harmonious development in their territory,” said Justice Julie Dutil in
her reasons. “Its true nature was
not to infringe upon a federal
jurisdiction.”
Justice Dutil also rejected Rogers’ contention that the doctrine
of interjurisdictional immunity
should apply. Heeding guidance
from the Supreme Court of Canada in Quebec (Attorney General)
v. Canadian Owners and Pilots
Association [2010] S.C.J. No. 39,
Justice Dutil noted that in order
to apply the doctrine, longstanding precedent must be established — and there is none over
the placement of radio communication equipment. In fact, a 1905
ruling, Toronto Corporation v.
Bell Telephone Co. of Canada,
held that municipal council has a
say “in determining the position
of the (telephone) poles in streets
selected by the company.”
“In this case, since the objective of this litigation is the determination of the radio communication
antennas
in
the
geographical area pre-estab-
lished by the federal enterprise
and that there is no precedent
that supports the application of
the doctrine of interjurisdictional immunity in this case, I
conclude that it does not apply,”
said Justice Dutil, who also
rejected Rogers’ contention that
the doctrine of federal paramountcy should be applied in
this case.
The appeal court notes that
since the SCC ruling in Canadian Western Bank v. Alberta
[2007] S.C.J. No. 22, the
Supreme Court has insisted on
several occasions over the past
few years that a flexible and
modern approach to federalism
should be encouraged.
“It seems to me that this case is
a good example of putting cooperative federalism into practice,” said Justice Dutil. “Chateauguay cannot prevent Rogers
from installing a tower in the
geographical area (approved by
Industry Canada) within its territory, but it can specify its location for municipal purposes.”
It has proven to be very difficult for companies to successfully plead the doctrine of interjurisdictional immunity ever
since Canadian Western Bank,
said Jean Leclair, a constitu-
tional law professor at the Université de Montréal.
“The test since Western Bank is
not easy to meet,” said Leclair.
“Rogers would have had to demonstrate that it touched at the
heart of federal jurisdiction insofar as radio communications is
concerned. But that wouldn’t be
enough. They would also have to
make the case that it led to
adverse consequences, and not
just affect,” that which makes a
federal subject or object of rights
specifically of federal jurisdiction.
“There are certain questions
where rather than seek refuge
behind the doctrine of interjurisdictional immunity, one is
going to have to proceed in a
co-operative manner — that is
what the appeal court is saying,
especially in cases that does not
lead to adverse consequences,”
added Leclair.
A Union of Quebec Municipalities spokesman said it was
delighted with the ruling as it is
clear that municipalities now
have a say over the placement of
cell towers.
Rogers Communication counsel Pierre Lefebvre said the
company intends to file a motion
for leave to appeal before the
Supreme Court.
This is being asked to draft the terms of the Privacy-Policy
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