Administrative Law

A Look at the Supreme Court of Canada's Administrative Law Calendar

Sebastian Spano*

A number of important and interesting cases are currently before the Court dealing with a range of novel administrative law issues. The judgments that are expected from the Court over the coming months will address such issues as:

• whether a grievance adjudicator has the jurisdiction to rule that procedural fairness should have been accorded to an “at pleasure” appointee in the course of his dismissal;
• whether a contract between a government body and a mechanic who certifies automobiles on behalf of the government body can attract administrative law principles, particularly procedural fairness;
• the interpretation and effect of the code of ethics of the governing body for real estate professionals in Québec; 
• whether the principles of interpretation adopted for the federal Access to Information Act should be applied to a judicial review in respect of the Personal Information Protection and Electronic Documents Act;
• whether conduct contravening a right protected in a human rights statute can meet the requirement for an independently actionable tort and whether human rights statutes should be incorporated in individual employment contracts; and
• whether a pragmatic and functional analysis is required where the Federal Courts Act prescribes a statutory standard of review.

Jurisdiction of a Grievance Adjudicator to Rule on Procedural Fairness

In David Dunsmuir v. Her Majesty the Queen in right of the Province of New Brunswick, File 31459, appeal from 2006 NBCA 27 (appeal heard 15 May 2007), the Appellant, a non-unionized Legal Officer employed with the Department of Justice, was terminated from his employment with 4.5 months pay in lieu of notice. Under the Public Service Labour Relations Act, R.S.N.B., 1973, c. P-25, non-unionized civil servants in New Brunswick may initiate a grievance to an adjudicator in respect of a discharge, suspension or other employment matter. The adjudicator assigned to hear the grievance ruled in a preliminary decision that he had jurisdiction to inquire into the reasons for the discharge and whether there was cause. The Province argued that as the Appellant was not discharged for cause, it was irrelevant whether there were sufficient grounds for discharge and, therefore, the adjudicator’s jurisdiction was limited to assessing the reasonableness of the notice period. In a second decision, the adjudicator ruled that, as an “at pleasure” appointee, the employee was owed a duty of procedural fairness, which was not provided. The dismissal was ruled void ab initio and the employee was ordered reinstated. On judicial review, the reviewing judge set aside the decision, holding the adjudicator’s preliminary decision to a standard of correctness. The adjudicator was held to have no jurisdiction to determine whether procedural fairness had been accorded. The adjudicator also erred in reinstating an “at pleasure” appointee. The Court of Appeal held that the appropriate standard of review was reasonableness, but the adjudicator’s decision failed to meet that standard.

When is a Contract between a Government Body and an Individual Subject to Procedural Fairness?

In Société de l'assurance automobile du Québec v. Yvan Cyr, et al., File 31657, appeal from 2660 QCCA 932 (Appeal heard 18 October 2007), the respondents, a mechanic and his employer, an auto service centre, were engaged under a contract with the Société de l'assurance automobile du Québec, a Crown corporation, to provide vehicle inspections and to issue certificates of mechanical fitness. The mechanic is also accredited by the Société. Following several notices to the mechanic that his inspections were deficient and not in accordance with the guidelines prepared by the Société, his accreditation to perform vehicle inspections and issue certificates was revoked. An application for judicial review was dismissed on the grounds that the relationship between the respondents and the Société was purely contractual and that its decision to revoke the respondent Cyr’s accreditation was not a decision in the administrative law sense, but the exercise of a contractual right. A majority of the Quebec Court of Appeal reversed the lower court’s decision, holding that the respondent Cyr was entitled to procedural fairness. The Société was also held to be subject to the Loi sur la justice administrative, which requires administrative agencies to comply with the principles of procedural fairness.

The Interpretation and Effect of a Professional Regulatory Body`s Code of Ethics

In Association des courtiers et agents immobiliers du Québec, et autre c. Proprio Direct Inc., File 31664, appeal from 2006 QCCA 978 (tentatively scheduled to be heard 30 January 2008), the respondent real estate broker was found by the discipline committee of the Association des courtiers et agents immobiliers du Québec, the professional governing body for the respondent broker, to have breached the legislation and regulations respecting brokers by contracting with vendors to pay a non-reimbursable fee, whether or not a sale of the property takes place. The decision of the committee was upheld on judicial review. The Quebec Court of Appeal reversed that decision finding, in the first instance, that the legislation did not prevent the respondent from entering into the fixed fee contracts. In addition, the contracts could not be said to be contrary to the public interest or bring the profession into disrepute on the basis of contravening the Association’s code of ethics. The standard of review on the first question (whether the contracts were permitted by the legislation and regulations was held to be correctness. On the second question (whether the conduct of the respondent was contrary to the Association’s code of ethics), the standard of review was reasonableness.

Should Access to Information Act Principles Apply on Judicial Reviews Under PIPEDA?

In Privacy Commissioner of Canada v. Blood Tribe Department of Health, File 31755, appeal from 2006 FCA 334 (tentatively scheduled to be heard 21 February 2008), an employee of the respondent was dismissed from her employment. Her employment file contained correspondence between the employer and its solicitors. Following the dismissal the employee requested access to the information in her employment file. The contents of the file were eventually disclosed to her except for the correspondence between the employer and its solicitors, the employer citing privilege. The Privacy Commissioner ordered production of the documents over which privilege was claimed pursuant to paragraphs 12(1)(a) and (c) of the Personal Information Protection and Electronic Documents Act (PIPEDA). The Federal Court of Appeal held the Commissioner’s decision to a standard of review of correctness. It concluded that the lower court had erred in adopting a purposive and liberal interpretation of paragraphs 12(1)(a) and (c) of PIPEDA and in adopting Access to Information Act principles in a PIPEDA review. The Court reversed the lower court’s decision and the Commissioner’s order for production of the documents was vacated.

Can a Breach of a Human Rights Statute found an Independently Actionable Wrong?

In Honda Canada Inc. operating as Honda of Canada Mfg. v. Kevin Keays   and   Ontario Human Rights Commission, File 31739, appeal from 2006 CanLII 33191 (ON C.A.) (tentatively scheduled to be heard 20 February 2008), a long-term employee was wrongfully dismissed from his employment following an absence from work due to medical reasons including chronic fatigue syndrome. He returned to work after his long-term disability benefits were terminated, although he continued to experience difficulties performing his work and missed work intermittently. The employment was terminated following a series of failed attempts to reach a work accommodation, the culminating event being the employee’s request for clarification of the purpose and methodology of an examination by a doctor proposed by the employer.  In addition to damages for wrongful dismissal, including an extended notice period for bad faith in the manner of dismissal, the employee was awarded punitive damages as a result of discriminatory conduct contrary to the Ontario Human Rights Code. The damages were awarded on the basis that conduct contravening a right protected in the Human Rights Code meets the requirement for an independently actionable wrong. The trial judge’s decision was upheld on appeal, except the quantum of punitive damages, which the majority ruled was excessive. Should discrimination and harassment be treated as separate causes of action? Should human rights statutes be incorporated in individual employment contracts?

Is a Pragmatic and Functional Analysis Required Where Legislation Prescribes a Standard of Review?

The respondent in Minister of Citizenship and Immigration v. Sukhvir Singh Khosa, File 31952, appeal from 2007 FCA 24 (leave granted 25 October 2007) is a permanent resident who came to Canada in 1996 at the age of 14. He was accused of criminal negligence causing death as a result of engaging in an automobile street race. He was not incarcerated and received a conditional sentence of two years less a day that included house arrest, a ban on driving and community service. A removal order was issued against him under s. 36(1)(a) of the Immigration and Refugee  Protection Act on the basis of serious criminality. The Immigration Appeal Division (IAD) of the Immigration Appeal Board refused to grant special relief from the removal order on the basis of humanitarian and compassionate grounds. The application for judicial review was denied. A majority of the Federal Court of Appeal allowed the appeal and ordered the Board`s decision set aside. What is the standard of review of the IAD`s decision? The majority held the appropriate standard of review to be reasonableness. Is a pragmatic and functional analysis required where the Federal Courts Act prescribes a statutory standard of review?

* Sebastian Spano, Parliamentary Information & Research Service – Law & Government Division, (613) 995-7918, SpanoS@parl.gc.ca.

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Alternative Dispute Resolution

He Said, She Said

Gary Furlong and Genevieve Chornenki 

This article originally appeared in the OBA Alternative Dispute Resolution Section Newsletter, Volume 15, No. 1, December/Décembre 2006.

Mediation is finding its way into more areas of practice, especially in the sensitive areas of family law, custody, and children’s issues. With the recent implementation of mediation in child protection issues, it has once again raised the issue of power and power differentials in the mediation arena. Power is often the elephant on the table, the issue that no one, it seems, wants to deal with. We ask, once again, the impertinent question of, “What is the mediator’s responsibility when dealing with power imbalances?” Here are the two sides of the coin – or perhaps, two facets of a bigger crystal.

He Said

Gary Furlong*

Once again, the seemingly unsolvable problem of power imbalances, and the mediators’ role to address them, is on the table. Like the legions of the undead, this issue continues to rise back to life, attacking the unsuspecting mediator in every dark alley of the mediation process it can find. Here, at last, is a remedy, a recipe for driving a wooden stake in the heart of the power debate, preventing it from rising to life ever again.

Power imbalances are here to stay. Every day and in every way, we work with parties who have power differentials across many dimensions. Power differentials exist not only in mediation, but in every other facet of the legal system, and just about any other human system in the world. And so, we must ask ourselves one simple question: So What?

Put simply, as mediators, power differentials are the air that we breathe, and we are no more required to get rid of them as we are to get rid of the oxygen in the room. They’re not good, they’re not bad, they just are what they are. We must learn to accept them, and move on.

This does not mean, however, that imbalances are irrelevant. They are very relevant, and we must find a context for understanding and working with power imbalances. But most assuredly not through that most prescribed home remedy for curing different perceptions of power - power balancing. This is the cure that is worse than the disease. We should remove this concept from our lexicon; put this idea to bed forever. It is the source of many mistakes mediators make.

Essentially, mediators have two primary tasks when it comes to power, neither of which relates to “balancing” that power in any way, shape or form.

First, it is the mediators’ job to host and run a “good process”. This means a process that is safe, transparent, ethical and fair enough to have all parties participate. This is not done by taking some parties’ power away or giving more power to others. It is done by running a clear and open process that helps the parties negotiate effectively.

So if one party tries to threaten or coerce another, the mediator doesn’t try to “balance” that power, the mediator names the behaviour, helps the parties understand each other, helps the parties explore their options given each other’s behaviour, and then helps the parties make an informed decision about what to do next.

Should either party be unable to make informed decisions for any reason (whether from the perceived “power” of the other party, a better BATNA away from the table, or a lack of competence to make these decisions at all), the mediator should simply terminate the process altogether. Not because of power problems, but because the process is no longer adding value to their negotiations.

In other words, the mediator must screen the parties and the process on an ongoing basis to make sure they’re playing by some very basic rules the mediator has set for the process. And as long as they’re following the rules (or changing the rules in a way that’s acceptable to all), they may bring and apply whatever power they have with them. Period.

The second obligation mediators have is to help the parties make informed decisions about the dispute they’re in. To do this, the mediator must accept the power imbalances the parties bring to the table and help them make a good decision in light of the power issues that present themselves. It is not the mediator’s role to change anyone’s power, to balance any power, nor attempt to shift it in any way. It is to help each party decide what is best for them, given the situation they’re in.

To look a bit deeper, consider answering the following questions:

• How often are parties honest with the mediator about how powerful they are (or how weak they are)?
• If you decide to balance power, how will the party that you are taking power from feel about your “impartiality”? How will the party the mediator is supporting or giving more power to feel about the mediator’s neutrality?
• How confident are you that you can accurately assess who has more power?
• How often does the perception of power change for each party through the course of a mediation?
• How often does the mediator tell all parties up front that if they have too much power, the mediator will be suppressing that as part of the process?

The questions themselves should paint a picture of just how incompatible the entire concept of power balancing is with the role of the mediator.

As mediators, we should leave all power balancing to where it rightfully belongs – to counsel who advocate on behalf of the client. It is not now, or ever, the mediators’ role to arbitrate or address power balances in the mediation process.

* Gary Furlong is a mediator, trainer, conflict resolution and Partnering specialist in Toronto. He is a principal with Agree Dispute Resolution, and can be reached at 1-800-524-6967, or at gary@agreeinc.com.

She Said

Genevieve Chornenki**

“It’s all about balancing power.” That’s what I heard a colleague say over and over again the last time we taught mediation together, and every time I heard it I winced. Balancing power sounds simultaneously grandiose and naïve. Mostly troublingly, it appears to entail the imposition of the mediator’s personal value judgments on the unsuspecting participants. This one is deprived. That one is advantaged. This one is good. That one is bad. As a mediator, I wanted no part of that thinking, so I resisted the notion whenever it came up.

But two experiences recently eroded my resistance.

The first was personal. Last summer, a good friend loaned me a parenting book by Thomas Phelan. She’d grown tired of me complaining about my pre-adolescent son, I think. The book quickly pointed out the vast power disparity between children and parents and identified this as a persistent source of acting up.

Power imbalance in my house? Not since the Supreme Court of Canada deprived me of my wooden spoon. If anybody in the house had the power, it wasn’t me. What about all my efforts at inclusiveness, family conferences and collaborative discussion?

Yet, I knew that Phelan was on to something big. I did have power over my son. Lots of it and his nasty little behaviours were his way of recalibrating the scale. My problem was in confusing my intentions – to be a good modern day parent – with his reality as the lowest guy on the totem pole. I’d failed to see things from his point of view because that vantage point was no longer relevant to me.

My second experience was professional. In August, I had the pleasure of working with Justice June Maresca and Maggie Hall, MSW, on the curriculum for Child Protection Mediation Training. They were experienced experts in the field. My contribution was curriculum design.

Inevitably we came to a section called “Power Balancing” and inevitably I was irked, ready to pick a fight. But in that team, no question was too provocative and each challenge received a thoughtful and gracious response.

What Justice Maresca and Maggie Hall taught me was that power balancing is not a naïve sociological
concept, an economic imperative or an exercise in personal gratification for the mediator. Nor is it about judging the people involved.

In its most admirable form, power balancing is an acute awareness of the reality of every person at the table. Power balancing is about the mediator extending herself - not to order the world in her own image as most power balancers I’d encountered - but for the benefit of everyone else.

In Child Protection Mediation, the disparity between families and children’s aid societies can be extreme and some of the clientele simply cannot understand concepts and language that we take for granted. The mediator’s job is not to defeat the state and champion the oppressed. It is to encourage all participants to engage at a meaningful level, to take part in the discussions, to do the work that needs to be done to protect and sustain the child at risk. This begins from the moment the mediator assumes the file because she meets one-on-one with each participant and thus begins to hear first hand about their realities.

It’s a David and Goliath situation to be sure. But here’s the important thing. The mediator does not whisper, “David, come hither and I’ll help you defeat Goliath.” Instead she conveys, “You are a Goliath too, if only you would see yourself as that.” It’s a heart level communication and observing Justice Maresca in action it’s as if something intangible passes from her to another person.

This goes way beyond fair process. It’s not about turn-taking, or ground rules or interrupting a diatribe to protect the recipient. Nor is it about social engineering. Like a true apology, it’s about a profound interaction between two human beings – the mediator and the individual participant. The mediator helps each person see that he or she does count for something, is respected, can do what needs to be done.

I don’t ever intend to practise Child Protection Mediation but the application of this is obvious for every context I’ve seen - the grievor with a thousand grievances; the millionaire business man whose professional advisors let him down; the family real estate feud; the patient whose doctor offended him; the not-for-profit whose construction project went badly awry. Difficult mediations are always interpersonal at some level and that’s where these notions add value and have practical significance.

In all really difficult mediations I’ve undertaken –those where I succeeded and those where I failed – I concede that power was at play despite my insistence that it was irrelevant. In every instance, my ability to motivate people at the table varied directly with my ability to inhabit their realities and convey understanding without judgment. The more I was able to do so, the more of a difference I could make. And when the connection just wasn’t there we couldn’t grasp the golden ring.

Power balancing is a regrettable misnomer. It’s time to strip away that arrogant label and lay bare what can really happen in a mediation on a straight human level, for there lies the greatest potential of this process.

** Genevieve Chornenki was inaugural Chair of the ADR Section of the OBA. She has practiced ADR since 1989, and can be reached at (416) 975-9898, or at gac@chornenki.com.



 

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Business Law

The Canadian Climate Exchanges: The Future of Canadian Emissions Trading

Barbara Hendrickson and Wendy Chun*

This article originally appeared in Business Beat, the OBA Business Law Section Newsletter, Volume 17, No. 3, May/Mai 2007.

Currently at least three Canadian exchanges have declared their intentions to enter into the Canadian carbon market: the Toronto Stock Exchange (“TSX”), the Montreal Exchange (“MX”) and the Winnipeg Stock Exchange (“WSE”). All three of the exchanges are waiting on the Canadian government to finalize the proposed federal Clean Air Act (“Bill C-30”)¹ and to clarify its intentions with respect to meeting its commitments under the Kyoto Protocol including meeting emission targets. The following is a brief description of the proposals put forward by these three Canadian exchanges for the development of Canadian carbon markets.

The Montréal Exchange

After signing of a Letter of Intent in December 2005, MX and Chicago Climate Exchange (“CCX”) entered into a joint venture to create the Montreal Climate Exchange (“MCeX”), a Canadian environmental products market on July 12, 2006. The MCeX’s stated mission is to offer price transparency, environmental integrity, low cost, wide access and reliability to the many sectors of the Canadian economy involved in air quality and climate change concerns. The MCeX intends to provide cost-effective trading products for the Canadian carbon market through trading in carbon dioxide emissions contracts, and plans to develop trading, clearing, as well as registry services for Canadian environmental products. The MCeX will be geared towards trading by companies which are end users, but retail investors and hedge funds are also expected to trade. The MX advocates for a market-based risk management approach where price is managed in futures and options. The MCeX hopes to build on the CCX experience in North America and in the European Union (“EU”). The MX recently announced that it will go ahead with the launch of its trading platform for GHG credits and derivatives of GHG credits.

The TSX Group

The TSX first announced its intention to launch a global exchange for pollution emissions credits in June of 2005. The TSX’s plan is to initially operate a cash market for the trading of emissions credits and in the future to develop a futures and options market for emissions. On February 27, 2007 the TSX released their submission to the federal Canadian government legislative committee on Bill C-30, which urged the federal government to act quickly in establishing a carbon-emission contract registry and a framework of basic policies (including national compliance requirements) to support “efficient and complementary emissions trading services”. The TSX’s view is that it is in a good position to create trading solutions for the reduction of GHG emissions because many of the TSX’s existing clients are Canadian LFEs. The TSX has advocated for competition in the carbon markets in Canada. Its position is that competition will ultimately benefit the market because it will reward the most innovative solutions and the most efficient facilities, leading to more cost effective solutions for participants.

The Winnipeg Commodity Exchange

The WCE has also been studying emissions trading for some time, and has set up the Canadian Climate Exchange (“CCE”) to pursue the domestic market. The CCE was established in February 2003, but since the Canadian Government has not yet enacted clear market rules, its development has been stalled. CCE Inc. was created by WCE Holdings Inc., the parent company of the WCE, in order to trade emissions credits and to provide market-based solutions for the reduction of GHG emissions in Canada.

Models for Operation

While the details of the future operations of these Canadian carbon exchanges are not clear, two of the possible models are the voluntary model such as the one that the CCX operates in the U.S. or the EU model with mandatory targets.

The CCX operates a GHG registry and trading system in the U.S. The CCX system supports both exchange-cleared trades, which preserve anonymity, and the exchange of electronic bilateral trades, which are established through private negotiations off-system. The CCX has an offset program, including agricultural offsets based in Canada. Under the CCX model, participants enter into agreements to set targets for reducing their GHG emissions by a specific amount within a certain period. If the companies meet and exceed those targets, they generate emission credits which they can either keep for themselves for future use, or sell to the highest bidder on the CCX. If the company is unable to meet its initial target, it will then have to buy the credits on the CCX or face possible penalties.

The EU model is based on the EU Emissions Trading System (“EU ETS”). The EU ETS is based on a directive² adopted in October 2003 by the EU Parliament for a pan-European emissions trading system establishing a scheme for GHG emission ‘cap-and-trade’ system within the EU Member States. EU ETS targets are mandatory and excesses over allowances will result in fines. The EU ETS was developed in response to the requirements of the Kyoto Protocol, which came into force in 2005 imposing GHG emission limits for the period commencing in 2008 through 2012, the first Kyoto Protocol commitment period. The system currently has approximately 12,000-15,000 participants, making it the largest such system in the world.

Conclusions

The development of carbon exchanges in Canada has been hampered by an uncertain regulatory climate in the GHG area. There is still a great deal of uncertainty regarding the most recent Canadian federal proposals, which provide for a broad based consultation process and a prolonged timeline for implementation of GHG targets. It is not clear whether domestic emissions trading will interface with the EU markets and the trend is for the federal government to align Canadian regulations in the area of GHG emissions and other air pollutants with U.S. regulations and standards. In addition, several of the provinces have announced that they are speaking with U.S. states to build a North American emissions trading system. It is therefore unclear what the Canadian federal government’s intentions are in terms of linking up with the international markets. These issues – timing, targets and interface with international systems – raise considerable uncertainty with respect to the future of emissions trading in Canada.

* Barbara Hendrickson, Partner, McMillan Binch Mendelsohn LLP, (416) 865-7903, barbara.hendrickson@mcmbm.com.

Wendy Chun, Student-at-Law, McMillan Binch Mendelsohn LLP, (416) 865-7000, wendy.chun@mcmbm.com.

¹ An Act to amend the Canadian Environmental Protection Act, 1999, the Energy Efficiency Act and the Motor Vehicle Fuel Consumption Standards Act (“Clean Air Act”).
² Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC.
 

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Canadian Corporate Counsel

Through Your Client’s Eyes

Patrick J. McKenna*

This article originally appeared in the Canadian Corporate Counsel Association (CCCA) magazine, Fall 2007 Automne, Volume 1, No. 2.

Improve relevance and satisfaction by talking to your internal corporate clients.

According to Inside Counsel magazine’s 18th Annual Survey of General Counsel, 70.5% of in-house counsel scored their outside firms a mere B for overall performance. Another 10.5% rated their firms C or worse. And those percentages have eroded each year for the past three years. However, when asked for their views, 62% of law firms gave themselves a solid A for performance! Anybody see a disconnect here?

This incongruity reappears when we ask corporate executives to grade the performance of their internal legal departments. The individual lawyers in the department grade themselves highly on their ability to understand the organization and deliver true value. But the executive team’s perceptions are often captured in comments like these:

“Corporate Legal doesn’t seem to really understand the business or our business relationships. Currently, some of our key suppliers cringe whenever they have to deal with us on a contractual matter.”

“Our Legal Department needs to do more trend line analysis on repetitive issues that they are observing, and then initiate the discussion on how these issues could be prevented or better addressed.”

“It would be great to have our Legal Department come out and do a presentation for
us on how the work flows and how they could be most effective. No one from Legal has ever visited with us.”

It seems we hold entirely different views based on whether we are the procurer or the provider of professional services.

Once every year, you have to get out into the various departments and divisions within your organization and talk to the key executives—your clients—oneon- one about what their current needs are, how they view your legal department and what recommendations they may have to offer you.

My experience has been that asking the key business heads what they think the legal department should be doing, and comparing their feedback to what the lawyers in your department think these executives will say, usually produces the necessary impetus for focused change.

Some of the questions that I’ve used in these kinds of interviews include:

1. Are there any aspects of your business, strategic objectives or competitive challenges
   that you wish we (the legal department) understood better?
2. What would you suggest (if anything) our lawyers could do to become a more integral part of your internal business team?
3. Are there specific things we could be doing to reduce the time you have to spend managing your responsibilities? (or: What could we do that would make your life easier?)
4. Is there any policy, procedure or process that you feel we’re trying to impose on you, and you don’t understand why?
5. How would you describe what our legal department does best? What is the most valuable service we perform for your area of responsibility?
6. How could we improve the level of responsiveness, proactive counsel or general service to you? (Or: tell us what the legal department could do to be more useful to you.)
7. As you think about the range of services that our lawyers provide, what could an innovative legal department be doing that executives like you may not yet have asked for?

Asking questions like these might seem threatening, but the answers can be extremely revealing. Here are some of the insights that departments report from the exercise:

• Don’t assume that all the important projects and issues in the organization are hitting your desk, or that the value of your work speaks for itself.
• Focus your greatest efforts on unearthing and understanding your organization’s top priorities, helping solve them, and reporting regularly to senior management on what you’ve achieved.
• Include performance metrics to illustrate where your work comes from, where your time goes, and where you spend the organization’s resources. (See my last column, “The Metric System,”March 2007, p. 62)
• Structure your reports around the organization’s top priorities, rather than legal issues.

Some legal departments have seized the opportunity to see through their clients’ eyes by asking themselves hard questions before others do. What you learn can help you position your legal team to become an integral part of the business that really can demonstrate its strategic value to the organization. Here’s to getting straight A’s!

* Patrick J. McKenna (www.patrickmckenna.com) is a principal in Edge International (www.edge.ai) and since 1983 has worked exclusively serving the legal profession in matters of strategy and practice management.

  

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Charity and Not-for-Profit Law

Charitable Gaming
 
Kate Lazier*

This article originally appeared in Charitable Thoughts, the OBA Charity and Not-for-Profit Law Section Newsletter, Volume 11, No. 1, September/Septembre 2007.

In Canada, an independent gambling operation may be considered an offence under the Criminal Code. However, charities may fundraise using games and lotteries provided that they obtain a licence and follow the rules set out in the licence.

The Criminal Code casts a wide net around gambling. Where property is disposed of by an element of chance and consideration is paid for a chance to win, it may be an offence for the operator of the game, players and everyone else involved. Under the Criminal Code it is illegal to keep a place (even temporarily) where a fee is charged to the players to participate in a game or use gaming equipment. It is also an offence for a person to be found without a lawful excuse in such a place or knowingly to permit one's place to be used for the purpose of gambling. Managing, advertising selling tickets for or, buying tickets for a lottery or game of chance is also an offence. Further, it is an offence to dispose of goods by way of game of chance or mixed chance and skill in which the contestant pays money or other valuable consideration.

Charities can carry on a gaming "fun night" without a license. In such events players are given chips free of charge to gamble for the purpose of entertainment and no prizes are awarded. These events raise money by charging for some other aspect of the event such as a dinner. Charities undertaking fun nights should carefully structure the event to ensure that it does not contravene the Criminal Code.

A charity can charge a fee to participants to play a game if the charity obtains a gaming licence from a provincial regulator to carry on charitable gaming events. According to the Canadian Partnership for Responsible Gambling, in 2005 over 30,000 charitable gaming licenses were issued across Canada, and charities received over $600 million in net gaming revenue. However, it is important to note that given the nature of gambling, not all gaming fundraisers are profitable.

Provinces licence such games as bingo, raffles, sports pools, break open tickets and casino nights. Some provinces license card games including blackjack and poker. The recent popularity of poker has led several provinces to license poker events in order to bring the existing games into the legal system, assist charities to raise funds, and ensure the integrity of game play.

While the rules for obtaining a license differ among the provinces, the Criminal Code requires that the charity itself must conduct and manage the game or lottery and that all of the proceeds from the lottery must be used for charitable or religious purposes. This means that if a donor hosts an event and provides all of the funds to a charity, the donor may still be committing a Criminal Code offence. This unfortunate rule could land an entrepreneurial philanthropist in trouble.

Charitable gaming also raises charitable tax receipting issues. Lottery tickets usually lack the element necessary to be considered a gift according to the CRA and therefore they are not eligible for a charitable receipt. However, poker tournaments are eligible for a receipt under the split-receipting rules according to the CRA. A receipt can be given for the amount paid to play minus: the value of dinner, the total prize amount divided by the numbers of participants, and the fee for a similar non-charitable tournament.

The law of charitable gaming is complex raising the possibility of criminal charges as well as charitable receipting issues.

* Kate Lazier, Miller Thomson LLP, (416) 595-8197, klazier@millerthomson.com.

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Citizenship and Immigration

The Immigration and Refugee Protection Act (“IRPA”),¹ and its Regulations have been in effect since June 28, 2002, and provide more flexibility to hire foreign workers than previous immigration legislation.  However, employers should plan carefully when considering international relocations, to avoid the pitfalls that plague the system, including misunderstanding as to who can work in Canada and for how long, delays at visa processing posts overseas and compliance with Service Canada requirements for obtaining Labour Market Opinions (“LMOs”).

Definition of “Work”

A foreign worker may be authorized to work in Canada without a permit or may be required to obtain one.  The first step in determining whether a Work Permit is needed, is to consider the nature of the activities to be performed by the foreign worker.  “Work” is defined in Section 2 of the IRPA Regulations as an activity for which wages or commission are earned, or which competes directly with Canadian citizens or permanent residents in the labour market.

If a foreign worker performs an activity that will result in receiving remuneration, he or she will be engaging in “work”.  This includes salary or wages, commissions, receipts for fulfilling a service contract, or any other situation where foreign nationals receive payment for the performance of services.  Even if the foreign worker does not receive remuneration, the activities performed may still constitute “work” if there appears to be an element of competition with the local labour force.  To determine which activities could be considered “work”, ask yourself the following questions:

• Will the foreign worker be doing something that a Canadian or permanent resident should really have the opportunity to do?
• Will the foreign worker be engaging in a business activity that is competitive in the marketplace?

The answers to these questions are not always obvious.  Some examples of “work”, may include, but are not limited to:

• Technical personnel coming to Canada to repair machinery or equipment, even if they are paid outside of Canada by a third party contractor.
• A foreigner who intends to engage in self-employment, either directly or by receiving commissions or payment for services.

On the other hand, the following activities are not considered to be “work”:

• Volunteer work for which a person would not normally be paid, such as activities for charitable or religious institutions.
• Helping a friend or family member with housework or childcare in the home.
• Attending meetings on behalf of a foreign employer to discuss products or services, take orders or specifications for a manufacturer abroad. 

In a recent case, the Federal Court had to decide what is the scope of the term “work” as defined in the IRPA Regulations.  In Juneja v. Canada,² the court was faced with an interesting fact situation:  Mr. Juneja entered Canada with a Study Permit, which prohibited his employment unless authorized by Citizenship and Immigration Canada, a standard requirement.  During the course of an investigation, Mr. Juneja was observed to be working at a local automobile dealership in Edmonton. He was arrested for working without authorization, contrary to Section 30(1) of the IRPA.³  An admissibility hearing was then convoked where Mr. Juneja was declared to be inadmissible to Canada and issued an Exclusion Order requiring him to leave the country.  Mr. Juneja did not dispute the fact that he was not in possession of a Work Permit; however, he contended that his activity did not constitute “work” as defined in the IRPA Regulations.  Mr. Juneja argued that he was not being paid, and that he was only keeping track of his time in case he received the authorization to work in Canada.  Although there was some dispute about the factual context, it was clear from the evidence that the employer had agreed to pay him $8 an hour retroactively for the time he had spent performing his services at the dealership, should he receive his Work Permit.

At the admissibility hearing, it was determined that this “contingent” arrangement entered upon between Mr. Juneja and the dealership owner was an agreement to bank Mr. Juneja’s hours and to pay him a wage, albeit conditionally, and, therefore it was either an activity for which wages are paid or reasonably expected, or which is otherwise in direct competition with the employment activities of Canadians or permanent residents.  Therefore, the tribunal concluded that, despite the fact that Mr. Juneja was not being paid immediately, his activities constituted “work” as defined in the IRPA Regulations. 

Upon judicial review, the Federal Court entertained the question of whether a contingent arrangement to pay a wage for work performed meets the legal definition of “work” as set out in the IRPA Regulations.  The question was answered in the affirmative.  The Court held that Mr. Juneja had an expectation of future payment and the dealership had at least a conditional, and perhaps an absolute, legal obligation to pay for the work that he performed. This activity was of a character for which wages are paid or anticipated. 

The Court further held that, even if Mr. Juneja was correct in arguing that the definition of “work” sets an absolute standard which is not fulfilled by a conditional arrangement for payment, his conduct was still caught by the second part of the definition, that is, the performance of an activity in direct competition with the activities of Canadians and permanent residents in the Canadian labour market: his employment directly competed with others who were legally entitled to work in Canada, and this was so whether a wage was paid or not.  The Court rejected the contention that the second part of the definition of “work” only applied to self-employed persons, and held that the definition contains no such qualification. 

Further, the Court also referred to the Regulatory Impact Analysis Statement (RIAS), published with the regulations in the Citizenship and Immigration department guidelines, indicating that the definition of “work” includes unpaid employment undertaken for the purposes of obtaining work experience, such as an internship or practicum normally done by a student.  This could have serious implications for many small businesses which are not normally familiar with Work Permit requirements and are rather lax when hiring help.

Last, the Court referred to pre-2002 litigation on the matter and noted that the definition of “work” had been changed, and that the previous provision spoke of “an activity for which a person received or might reasonably be expected to receive valuable consideration”. That provision made no reference to competing for work that should otherwise be available to Canadians.  The Federal Court had already found in the previous case of Georges v. Canada,⁴ that the essential concern of that definition was to protect employment opportunities for Canadians whether wages were paid or not.  The Court reasoned that neither Georges⁵ nor the later case of Bernardez v. Canada⁶ on the same subject could support a finding that Mr. Juneja was not working whether under the prior or current definition of “work”.

In light of this recent Federal Court decision, it is important that individuals not be engaged to perform any services, either paid or where a reasonable expectation of earnings exists, without first obtaining a Work Permit for a specific employer and activity, in accordance with the IRPA Regulations.

* Sergio R. Karas is a Certified Specialist in Canadian Citizenship and Immigration Law by the Law Society of Upper Canada. He is current Chair of the Ontario Bar Association Citizenship and Immigration Section, Co-Chair of the International Bar Association Immigration and Nationality Committee and Vice-Chair of the American Bar Association Canada Committee, Section of International Law.  His comments and opinions are personal and do not necessarily reflect the position of any organization.  He can be reached at (416) 506-1800 or karas@karas.ca.

¹ S.C. 2001, c. 27
² 2007 FC 301
³ 30(1) Work and study in Canada - a foreign national may not work or study in Canada unless authorized to do so under the Act.
⁴ [1978] F.C.J. No. 140, [1979] 1 F.C. 349 (ca)
⁵ Supra
⁶ (1995), 101 F.T.R. 203, [1995] F.C.J. No. 1927

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Civil Litigation

The Latest on Disclosure regarding the Sale of Securities

 Jeffrey Radnoff*

The Supreme Court of Canada’s recent decision in Kerr v. Danier Leather Inc. [2007] CarswellOnt 6445 (S.C.C.) is significant for the following reasons: 

1. 1.  it clarifies, to some extent, the disclosure of obligations of an issuer who sells shares under the Ontario Security Act, R.S.O. 1990, c.S.5;
1. 2.  assists in clarifying a recently enacted legislative right of action for cause of action for misrepresentations by an issuer in a prospectus;” and,
2. 3.  states that the disclosure obligations of an issuer are governed by the relevant provincial security statues/rules, and not by the common law business judgment rule.

Danier is a well known company that sells leather goods.  In the spring of 1998 it made its first public offering.  The prospectus contained a year-end sales forecast as of May 6, 1998.  In or around May 16, 1998, Danier management ascertained that due to warmer than expected spring weather, the forecast may not be achieved.  The initial public offering closed on May 20, 1998.  Danier did not amend its forecast between May 16, 1998 and May 20, 1998, however, it  did substantially achieve the forecast and sales.

The trial judge found that although the management honestly believed that the year-end forecast would be met, its belief became objectively unreasonable in a narrow window of time during the course of the distribution when it became aware of the shortfall in expected sales.  At trial, the investors were successful and the trial judge found that the shareholders who sold their shares after June 10, 1998, were entitled to the difference between the IPO price ($11.25) and the price of closing on June 10 ($8.90), for a total loss of $2.35 per share.

The Court of Appeal reversed the trial judgment on four separate basis:

1. the prospectus  on its filing date (May 6, 1998) provided full, true, and plain disclosure of all material facts and, thereafter, investors were only entitled to notice of material changes, and no material changes arose during the period of distribution;
2. the court of appeal disagreed with the trial judge’s findings that the forecast contained an implied representation of objective reasonableness;
3. there was nothing in the language of the prospectus to suggest that Danier’s subjective belief in the forecast was reasonable or was being put forward by reasonable business people or otherwise being put forward as objectively reasonable; and,
4. the forecast was objectively reasonable  as of May 20, 1998, the closing date.  The fact that the forecast was substantially achieved, in the court’s view, was at least some evidence of its objective reasonableness as of May 20, 1998. 

Further, the Court of Appeal stated that the trial judge erred by failing to give any deference to the business judgment of senior management.  Applying the business judgment rule, the Court of Appeal found that the trial judge wrongfully substituted his own view as to whether the forecast was objectively reasonable as of May 20, 1998 for management’s view, and also that the trial judge overlooked important pieces of evidence that tended to support management’s view.

The Supreme Court of Canada dismissed the appeal from the Court of Appeal.  The decision of the Supreme Court of Canada is significant because Justice Binnie, speaking for the Court, states that the business judgment rule does not apply to the sales of securities regulated by the Ontario Securities Commission.  This is an important point of clarification.
 
In particular, in respect of business judgment rule, the Supreme Court of Canada held as follows:

On the broader legal proposition, however, I agree with the appellants that while forecasting is a matter of business judgment, disclosure is a matter of legal obligation.  The Business Judgment Rule is a concept well-developed in the context of business decisions but should not be used to qualify or undermine the duty of disclosure.  The Business Judgment Rule was sell stated by Weiler J.A. in Pente Investment Management Ltd. v. Schneider Corp. (1998), 42 O.R. (3d) 177 (Ont. C.A.):

The court looks to see that the directors made a reasonable decision not a perfect decision.  Provided the decision taken is within a range of reasonableness, the court ought not to substitute its opinion for that of the board even though subsequent events may have cast doubt on the board’s determination.  As long as the directors have selected one of several reasonable alternatives, defence is accorded to the board’s decision.

[Emphasis in original deleted; p. 192.]

The traditional justifications for the rule against its application here.  It is said, truly enough, that judges are less expert than managers in making business.  Moreover, business decisions often involve choosing from amongst a range of alternatives.  In order to maximize returns for shareholders, managers should be free to take reasonable risks without having to worry that their business choices will later be second-guessed by judges.  These justifications—based on relative expertise, and on the need to support reasonable risk-taking—do not apply to disclosure decisions. …

* Jeffrey Radnoff, Radnoff Law Offices, (416) 203-3641, Jradnoff@radnofflaw.com.

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Constitutional, Civil Liberties and Human Rights

More than 100 Toronto High School Students Attend Law Day Event at OBA

This article originally appeared in the OBA Constitutional, Civil Liberties and Human Rights Section Newsletter, Volume 10, No. 3, June/Juin 2007.

The Ontario Bar Association Toronto office played host to some lively visitors on Tuesday, April 17, when about 125 Grade 10 and 11 students from five high schools from across the city attended a Law Day event at the OBA Conference Centre. The event called “The Charter and You” was sponsored jointly by the OBA’s Constitutional, Civil Liberties and Human Rights Section and the legal clinic Justice for Children and Youth, with participation by the Education Law Section. It was one of a series of province-wide events which were part of a collaborative project of the OBA, the Ontario Justice Education Network, the Law Society of Upper Canada and the Association of French Speaking Jurists of Ontario to commemorate the signing of the Charter of Rights and Freedoms.

The morning began with an overview of the significance of the day by Lucy McSweeney of the Constitutional, Civil Liberties and Human Rights Section; proceeded with team crosswords and games based on “Jeopardy” and “Cranium” designed to test the students’ knowledge of the Charter; student debates on the proposition that young people should have the same rights of freedom of expression as adults; and concluded with an information session on being a lawyer.

Law Day featured three guest speakers who were particularly well received. Dr. Justice Blainey-Broker spoke at the lunch plenary session about her experience challenging her exclusion from the boys’ hockey league [Re Blainey and Ontario Hockey Association et al (1986) 54 O.R. (2d) 513]. She inspired the young people to think about what they would do to fight for their own rights or the rights of others, giving the moving example of how her brother gave up his spot on the team because he thought that she had been unfairly denied a place. Robbie Barnett-Kemper spoke at one of the afternoon breakout sessions about his mothers’ participation in the successful challenge to the constitutionality of Ontario’s adoption laws which prevented same sex couples from adopting [M.D.R. v. Ontario (Deputy Registrar General) 270 D.L.R. (4th) 90]. Gurbaj Multani participated in another afternoon session through videoconferencing from Montreal. Mr. Multani is the now 17 year old Sikh student whose school board prohibited him from wearing a kirpan to school, a decision which the Supreme Court of Canada held was not a justifiable restriction of his Charter right to freedom of religion (Multani v. Commission scolaire Marguerite-Bourgeoys [2006] 1 S.C.R. 256).

This was the first Law Day event organized by the Constitutional, Civil Liberties and Human Rights Section. Judging from comments received from teachers and students, it achieved its aim to be fun for the students while promoting learning about and engagement with the Charter. Thanks to all of the volunteers from both Sections and Justice for Children and Youth for helping to make the event such a success.

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Construction Law

Ontario Court of Appeal Rules Assembly Line Not Lienable

Paul Ivanoff and Roger Gillott*

On September 27, 2007, the Ontario Court of Appeal held that the installation or repair of an assembly line that was portable and capable of removal from a building did not give rise to lien rights under the Construction Lien Act.

In Kennedy Electric Limited v. Dana Canada Corporation, two subcontractors registered liens against an automobile parts manufacturing facility in which they had installed an assembly line. The assembly line was pre-built by the general contractor at its premises and was tested and inspected. The subcontractors were then retained to take the line apart, transport it to the facility and install it.

The assembly line consisted of 100 platforms and 165 robots and, when installed, as attached to the floor by several thousand chemical and mechanical bolts. The line covered 100,000 square feet of the building, was twenty feet high and weighed approximately 500,000 tons. Transportation of the line required 165 transport trucks.

Court rules assembly line not an “improvement” under CLA

A dispute arose and two subcontractors, Kennedy Electric and Cassidy, registered liens against the facility. At trial, the court concluded that the assembly line could not be considered an “improvement” to the land, as required by the Construction Lien Act (CLA) to give rise to lien rights. In assessing lienability, the court considered the issue of portability and the degree to which the equipment was integrated into the building.

The Court of Appeal unanimously held that the subcontractors did not have lien rights under Ontario’s Construction Lien Act. The court relied on the trial judge’s finding that the assembly line was portable and found that the trial judge had made no “palpable and overriding error.” Speaking for the court, Justice Armstrong went on to say, “[w]hile a different judge may have come to another conclusion on the issue of portability, I am satisfied that it was open to the trial judge to reach the conclusion that he did.”

Lienability a factual determination

The court reviewed a number of other cases on the issue and concluded that, “[w]hether [the cases] fall within the definition of improvement is essentially a fact-finding exercise. While a trial judge must apply the statutory definition of ‘improvement’ to the evidence and he or she is therefore engaged in deciding a question of mixed fact and law, the factual determination is by far the more significant element in the exercise.”

Justice Armstrong summarized the court’s view, saying, “In most cases, the installation or repair of machinery used in a business operated in a building, particularly where the machinery is portable, will not give rise to lien rights under the CLA. On the other hand, where machinery is installed in a building for the use of a business and is completely and permanently integrated into the building, a lien claim will arise.”

Significance

This decision will be of interest to both purchasers and suppliers of machinery and equipment in manufacturing and other facilities.

Kennedy Electric Limited v. Dana Canada Corporation http://www.ontariocourts.on.ca/decisions/2007/september/2007ONCA0664.htm

* Paul Ivanoff, Osler, Hoskin & Harcourt LLP, (416) 862-4223, pivanoff@osler.com.
 
Roger Gillott, Osler, Hoskin & Harcourt LLP, (416) 862-6818, rgillott@osler.com.     

 
 

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Criminal Justice

Declaration of Innocence

 James Morton*

Recently, counsel for the wrongfully convicted have sought declarations of factual innocence.  While from time to time (witness the recent tainted blood case) judges have gone so far as to state, in their reasons, that an accused is exonerated from any blame (and not merely not proven to be guilty to the criminal standard of proof), declarations of innocence are unknown to Canadian law.

 The recent decision (released on the Court of Appeal website) in R. v. Mullins-Johnson, 2007 ONCA 720 makes the refusal to make such a declaration very clear.  The relevant passages of the decision follow:

[23]    There are not in Canadian law two kinds of acquittals: those based on the Crown having failed to prove its case beyond a reasonable doubt and those where the accused has been shown to be factually innocent.  We adopt the comments of the former Chief Justice of Canada in The Lamer Commission of Inquiry Pertaining to the Cases of:  Ronald Dalton, Gregory Parsons, Randy Druken, Annex 3, pp. 342:

[A]    criminal trial does not address “factual innocence”.  The criminal trial is to determine whether the Crown has proven its case beyond a reasonable doubt.  If so, the accused is guilty.  If not, the accused is found not guilty.  There is no finding of factual innocence since it would not fall within the ambit or purpose of criminal law.

[24]    Just as the criminal trial is not a vehicle for declarations of factual innocence, so an appeal court, which obtains its jurisdiction from statute, has no jurisdiction to make a formal legal declaration of factual innocence.  The fact that we are hearing this case as a Reference under s. 696.3(3)(a)(ii) of the Criminal Code does not expand that jurisdiction.  The terms of the Reference to this court are clear: we are hearing this case “as if it were an appeal”.  While we are entitled to express our reasons for the result in clear and strong terms, as we have done, we cannot make a formal legal declaration of the appellant’s factual innocence.

[25]    In addition to the jurisdictional issue, there are important policy reasons for not , in effect, recognizing a third verdict, other than “guilty” or “not guilty”, of “factually innocent”.  The most compelling, and, in our view, conclusive reason is the impact it would have on other persons found not guilty by criminal courts.  As Professor Kent Roach observed in a report he prepared for the Commission of Inquiry into Certain Aspects of the Trial and Conviction of James Driskell,  “there is a genuine concern that determinations and declarations of wrongful convictions could degrade the meaning of the not guilty verdict” (p. 39).  To recognize a third verdict in the criminal trial process would, in effect, create two classes of people: those found to be factually innocent and those who benefited from the presumption of innocence and the high standard of proof beyond a reasonable doubt.

* James Morton, Steinberg Morton Hope & Israel, (416) 225-2777, ext. 230, jmorton@smhilaw.com.

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Education Law

Toronto District School Board’s School Community Safety Advisory Panel and Its Impact

Nicola Simmons*

This article originally appeared in the OBA Education Law Section Newsletter, Volume 17, No. 1, October/Octobre 2007.

On May 23, 2007, a fifteen year old student was fatally shot in the hallway of a public high school in Toronto. This incident has had a significant impact on the Toronto District School Board, the broader Toronto community, the Province, and on the highest court of the Province, which recently made comments in obiter in the decision R. v. L.B., [2007] O.J. No. 3290 (Ont. C.A.).

Following this horrific incident and the accompanying public and media outcry, the Toronto District School Board created a School Community Safety Advisory Panel on June 5, 2007, chaired by Toronto lawyer Julian Falconer. The Panel’s mandate is to make findings and recommendations to the Director of the Board with respect to school supervision, student discipline and security at the School.¹ The panel is required to consult with students, parents and employees of the School, and is empowered to make other enquiries and consultations, including with community agencies, advocacy groups, trustees, administration, unions and employee groups.

Early in its consultation process, the Panel learned of a serious incident alleged to have occurred at the School in October, 2006. As a result, the Panel’s Terms of Reference were expanded to include a review of the particular safety risks to female visible minority students in the Board’s schools.²

On August 28, 2007, following two months of consultations with students, staff, and other stakeholders, the Panel released An Interim Report on School Safety, detailing the perspectives of students at the School and providing four non-systemic, narrow recommendations. Firstly, the Panel recommended that a building safety audit of the School be conducted. Secondly, the Panel recommended that additional human resources be provided to the geographical quadrant in which the School is located. Thirdly, the Panel recommended that the superintendent responsible for the family of schools that includes the School and the trustee for the area engage in mediation. Finally, the Panel recommended that its work be extended to the other schools in the geographical quadrant and that the timeline for the Final Report be extended to November 15, 2007.³

The Interim Report was based largely on confidential in-person interviews of 41 students, and an anonymous and confidential questionnaire in which 423 of the 838 students at the School participated.⁴ The Panel found that students felt that their School had been unfairly negatively portrayed in the media. There were, however, several recurrent issues with respect to safety. The first issue concerned the negative impact of “hallway students” on the School. Hallway students are students who congregate in the hallway when they are either skipping class, let out of class to go to the washroom, let out of class early, are trespassing, or have been removed from their class as a form of discipline. The problems associated with hallway students were compounded by ineffective hallway monitors.⁵

Another issue the students identified was difficulty in the student-teacher relationship, including students talking back to teachers, and students threatening or assaulting teachers. In addition, teachers felt that the administration was unresponsive to their concerns and unwilling to impose consequences on students who misbehaved. Possible reasons for this unwillingness to impose discipline were attributed to the pressure from the Board to decrease suspension and expulsion rates, and following the settlement between the Board and the Ontario Human Rights Commission,⁶ a growing feeling among administrators that suspensions and expulsions, as consequences for poor classroom behaviour, should not be utilized. There is a perception that, as an alternative, administrators have increased the number of “safe schools transfers”.⁷ The effects of the settlement will be canvassed in more detail in the Final Report.⁸

Safe schools transfers were also raised as an issue of concern. Safe schools transfers are administrative and are arranged by the Board centrally. They are utilized in situations where students are prohibited from returning to their original school pursuant to court order, where students are returning from a limited or full expulsion and there are circumstances that require that the student change schools, and/or where the student has been excluded from their original school. “Administrative transfers”, in contrast, are arranged between principals and are utilized where a student requires a compassionate transfer, where students are involved in serious incidents off-school property, or where the student’s continued presence in the school raises safety concerns regardless of whether the student is a victim or perpetrator. Both forms of transfer can be used to provide the student with a fresh start. There is no right of appeal from a decision to transfer a student to another school.⁹

The Panel found that the safe schools transfers in the School’s region usually followed alleged conduct of a serious criminal nature and were related to incidents both on and off school property.¹⁰

The concern about safe schools transfers was focused on the absence of a policy or procedure requiring programs or counselling for students before they transfer to the receiving school. The safe schools transfer students were described as “programless”¹¹ and the “walking wounded”.¹² Other issues of concern that were noted included: the difficulty of organizing schedules for students transferred mid-term or mid-semester, resulting in students having a high number of spares (also contributing to the problems of hallway students); that safe schools transfer students have a disproportionately negative impact on the environment of the receiving school; that students and teachers would learn of the circumstances of the student’s arrival at the school through a “whisper campaign”;¹³ that students are transferred within the same family of schools and often know students at the receiving school, thus detracting from the intended “fresh start”; and that safe schools transfers were being used as a form of discipline without the statutory procedural safeguards afforded to students subject to discipline in the Education Act.¹⁴

In light of the issues raised about safe schools transfers, it should be noted that transfers were listed as an acceptable form of progressive discipline in the 2007 settlement reached between the Ministry of Education and the Ontario Human Rights Commission following the Commission initiated complaint against the Ministry with respect to the Safe Schools Act. It is expected that, pursuant to the terms of the settlement, transfers will remain an acceptable form of progressive discipline, and may indeed be included in the anticipated Ministry of Education Policy/Program Memorandum regarding progressive discipline.

The Panel found, based on the questionnaire, that most students perceived the School to be a relatively safe environment, with the exception of the period immediately following the shooting death. The Panel canvassed students to identify the types of problems at the school, the rate of student victimization both on and off school property, the incidence of students witnessing a crime and reporting it, and how to improve safety and discipline at the School.¹⁵ The Panel found that the serious problems identified by the students included problems in the student-teacher relationship, disorder in the hallways, students who talk back and disrespect their teachers, discrimination by teachers against students, and the presence of weapons, drug dealing and gangs in the School. The Panel also found that a significant proportion of the students had been victims of threats, physical assaults, theft and other types of crime in the past two years, both on and off school property.¹⁶ The incidence of reporting crime to the police was low.¹⁷

A Final Report detailing systemic issues and broader recommendations is expected in November 2007. The Final Report will include the results of broader consultations. It is expected that the Final Report will focus on broader social issues, such as poverty, racism, sexism, violence and alienation, school-police relationships, the Ontario Human Rights Commission settlement with the Board and Ministry, as well as the erosion of student discipline and the increase in youth violence. The Final Report will also include reviews of other schools. The following is perhaps a precursor of the Report to come: “…the death of Jordan Manners should not be seen as an isolated incident, but rather as a disturbing harbinger of things to come if we, as a society, do not put a stop to the ongoing neglect of significant numbers of our youth. It is a harbinger because the influx of guns in this city has, in the words of one of our community agency deputants created the following sad reality: ‘It is easier to get a gun than get a job.’”¹⁸

* Nicola Simmons, Keel Cottrelle LLP.

¹ School Community Safety Advisory Panel, An Interim Report on School Safety (August 28, 2007) at p.2 [Interim Report]. Specifically, the Panel was asked to review the practices and procedures at the high school in the two influencing the ability of the School or TDSB schools in general to maintain student order and discipline; and improving practices in TDSB schools with regard to prevention, school supervision, discipline and security in order to create a positive, safe and welcoming school environment.
² Other results of the finding were that the Principal and Vice Principal of the School were placed on home assignment with pay, and the Police were notified and commenced an investigation.
³ Interim Report, supra note 1 at pp. 55-57.
⁴ In fact, 459 students completed the questionnaire; however, 36 of the questionnaires were unusable.
⁵ Interim Report, supra note 1 at pp. 15-18.
⁶ The Ontario Human Rights Commission initiated a public interest human rights complaint against the TDSB and the Ministry of Education in 2005 alleging that the TDSB’s application of the Safe Schools Act disproportionately affected racialized students and students with disabilities.
⁷ Interim Report, supra note 1 at p. 24.
⁸ Ibid. at pp. 25-28.
⁹ Ibid. at pp. 18-22. Note that a principal’s decision to transfer two students from a Toronto high school is currently under judicial review in the case K.B. v. Toronto District School Board before the Ontario Divisional Court.
¹⁰ Ibid. at p. 22.
¹¹ Ibid. at p. 22.
¹² Ibid. at p. 23.
¹³ Ibid. at p. 23.
¹⁴ Ibid. at pp. 22-24. Education Act, R.S.O. 1990, c.E-2.
¹⁵ Ibid. at pp. 33-52.
¹⁶ Ibid. at p. 53.
¹⁷ Ibid. at p. 48.
¹⁸ Ibid. at p. 3.
 

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Environmental Law

Recent Environmental Regulatory Changes and Initiatives

Barry Spiegel*

This article includes a table that identifies and briefly describes many of these changes and proposals. Readers may be particularly interested in some of the following developments:

• Ontario’s Environmental Penalties regime, Phase 1, came into force on August 1, 2007. Some of the complexities involved in determining the amount of such penalties are alluded to in the table below. It will be interesting to see how often this tool is used;
• Expanded regulatory requirements for any person reporting a spill took effect on August 1, 2007. Companies with potential for spills should update staff training and spill reporting protocols. Other spill-related initiatives include the Spill Prevention and Contingency Plans regulation and the updated Chemical and Waste Storage Guidelines;
• Regulations to implement the Budget Measures and Interim Appropriation Act, 2007¹ (Bill 187) changes to the Environmental Protection Act² (“EPA”) and the Ontario Water Resources Act³ (“OWRA”) to clarify Brownfields liability are currently outstanding. It is expected that these regulations could be posted on the Environmental Bill of Rights Registry (“Registry”) for comment in spring of 2008. The regulations will deal with a new Record of Site Condition (“RSC”) review and filing process, and a complex new system for certifying RSCs where contamination may move off-site. It is also not clear at this point how the Ministry of the Environment (“MOE”) intends to address the current definition of a “qualified person” in O. Reg. 153/04 which sunsets in April 2008; and
• Items not typically characterized as environmental include Ontario’s Integrated Power System Plan for electricity and the Bill 51 amendments to the Planning Act.⁴

Readers may have noticed that the preceding table does not include any mention of progress made in the Federal Government’s climate change plan. A report was recently released to meet obligations imposed by the Kyoto Protocol Implementation Act⁵ requiring the Canadian Government to submit a plan outlining how it intends to meet its Kyoto targets. However, much of the most recently released plan was rhetoric about how Canada’s economy would collapse if significant regulatory action were to be taken. The Report declared that the Federal Government does not intend to deviate from the plan it released in the Spring of 2007.

Another item that is not included in the preceding table but is also worthy of note is the MOE’s proposal to update its brownfields clean-up standards. While the proposed amendments were introduced for 60 days of consultation in the Spring, these controversial changes are still a hot topic, as evidenced by the fact that the proposal generated well over 100 submissions. The MOE appears to be somewhat overwhelmed by this degree of public response and it is not expected that a decision will be made on whether to proceed or withdraw the proposal until well after the election. Meanwhile environmental lawyers and consultants need to inform their clients of the potential uncertainty posed by the proposed new standards on development and clean-up plans.

While the preceding table is not comprehensive, it illustrates the wide range of federal and provincial initiatives implemented or moved forward in 2007. Federal and provincial elections will inevitably affect the amount and content of regulatory activity as new or shuffled politicians come to grips with their portfolios.

* Barry Spiegel is the Director of Research and Professional Development at Willms & Shier Environmental Lawyers LLP, (416) 862-4837, bspiegel@willmsshier.com.

¹ S.O. 2007, c. 7.
² R.S.O. 1990, c. E.19.
³ R.S.O. 1990, c. O.40.
⁴ R.S.O. 1990, c. P.13.
⁵ S.C. 2007, c. 30.

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Family Law

Shea v. Fraser: When is an Equalization Payment Really a Support Payment?

Ann Wilton*

This article originally appeared in Matrimonial Affairs, the OBA Family Law Section Newsletter, Volume 19, No. 1 - September/Septembre 2007.

In the Ontario Court of Appeal’s decision in Shea v. Fraser 2007 CarswellOnt 1772, one of the issues was whether a payment characterized in a separation agreement as an equalization payment could in fact be considered a support payment. This issue is important because an equalization payment would not survive the payor’s bankruptcy, but a support payment would.

The parties had signed a separation agreement which provided that the husband was to pay $30,000 to the wife in full satisfaction of her equalization claim. The parties released all rights to support from each other. Subsequently, the husband made an assignment in bankruptcy. The wife’s solicitor asked the husband to pay $24,000, which was the balance characterized in the agreement as an equalization payment. The husband was discharged from bankruptcy and the wife initiated proceedings to enforce payment of the $24,000. The judge held that as the wife was not named as a creditor, there was no genuine issue for trial and granted her summary judgment for $24,000. Subsequently, the husband sought to have the summary judgment set aside and summary judgment granted in his favour, containing a declaration that he did not owe anything.

On appeal, Justice Weiler, writing for the court, accepted the application judge’s finding that the husband failed to give the wife the required notice under the Bankruptcy and Insolvency Act, (BIA). Consequently, the wife was prevented from seeking a declaration that the payment would survive the bankruptcy or, alternatively opposing his discharge in bankruptcy, until she could negotiate an amendment to the separation agreement. The court held that the husband’s discharge in bankruptcy released him from all claims provable in bankruptcy, unless the claim was one excepted under s.178 of the BIA or until the discharge was set aside or permission obtained to proceed with the claim.

The relevant parts of ss. 178(1) and (2) of he BIA provide:

(1) An order of discharge does not release the bankrupt from
(c)any debt or liability…under an agreement for maintenance and support of a spouse, former spouse…
(2) Subject to subsection (1), an order of discharge releases the bankrupt from all claims provable in bankruptcy.

The court stated that a finding of fact that the payment is “in effect maintenance and support or a substitute for it” does not mean that the obligation to pay must qualify as a support order within the meaning of the Divorce Act or pursuant to provincial legislation. Even though a payment which is intended to be maintenance or a substitute for it would not be considered to be support under the Divorce Act, it can fall within s.178 of the Bankruptcy Act.

The husband in resisting summary judgment and seeking an order declaring that he “… [did] not owe $24,000 in an equalization payment to the [wife]”, raised s. 178(2) and the characterization of the payment stipulated in the separation agreement as an equalization payment as a shield to the wife’s enforcement measures taken after bankruptcy. Justice Weiler wrote that the case law indicated that enforcement could not be undertaken after bankruptcy without first a judicial determination that it was a support obligation, or a judicial allocation or attribution as to what portion was referable to support. The application judge did not make such a determination.

The court stated that the test for determining whether summary judgment should be granted is whether there was a genuine issue for trial. The court held that the husband’s conduct in the bankruptcy proceedings raised a triable issue as to whether he acknowledged that the payment in issue was a substitute for support. Was the $24,000 a debt or indemnity obligation in the nature of support that survived the husband’s bankruptcy under s. 178(1) of the BIA? The court’s position was that its conclusion was strengthened by a consideration of some of the principles set out in Robert Klotz’s text, Bankruptcy, Insolvency and Family Law, looseleaf (Toronto: Carswell, 2001), at p.3-24 and following. These principles were as follows:

1.  Would the claimant have been entitled to support had the debt not been granted?
2.  Does the debt reflect a specific valuation of an asset, or can it be traced in amount or nature to a property interest claimed in the proceeding?
3.  The wording of the agreement must be examined in order to attempt to glean an intention from the language used and the degree of integration with or differentiation of the debt from other parts of the document.
4.  The labels used in the document are not determinative.
5.  The court must consider the attributes of the obligation.
6.  The tax treatment of the debt is not determinative.
7.  The court may consider the conduct of both spouses.

Justice Weiler also considered an additional principle:

8.  A statutory interpretation which might help defeat the feminization of poverty is to be preferred over one which does not.

The thrust of the Court of Appeal’s judgement suggested that the “equalization payment” would be a support payment and not a property payment.

1.  The wife was in need of monthly support at twice the amount provided for as a monthly equalization payment. [She had relinquished her rights to support in the separation agreement].
2.  Other than using the words equalization payment in the separation agreement, there was no indication of assets that related to the payment given. There was no schedule of the assets and their value attached to the agreement. There was also no indication of how the lump sum amount was calculated and no suggestion of why the payment was not made as a lump sum.
3.  Although the payment was called an equalization payment in the separation agreement, the court emphasized that labels used in the agreement were not determinative. The court stated that given the wife’s circumstances, it would be difficult to imagine that she could have agreed to a support order of $600 unless that amount was conditional upon her receiving periodic payments totalling $30,000. If the agreement were conditional upon that payment being made, the husband’s bankruptcy would not release him from his obligation to make the payment even if it were termed as an equalization payment rather than as a support payment.
4.  While the wording of the separation agreement did not specifically link the periodic payments to support, a structural analysis of the agreement suggested the possibility that the releases, including the releases of support, were related to fulfillment of the settlement clauses.
5.  The amount to be paid did not bear interest and there was no acceleration clause if default occurred, attributes which suggested that the “equalization payment” was in fact a support payment.
6.  There was no evidence before the court of the tax treatment of these payments. Consequently, this factor cannot be considered.
7.  The husband’s conduct prevented the wife from seeking a declaration that the payment in issue would survive the bankruptcy, or, alternatively, opposing his discharge in bankruptcy until she could negotiate an amendment to the separation agreement.
8.  The court expressed that where possible, statutory interpretation should try to prevent the feminization of poverty. Since the wife and children could not achieve financial independence without the “equalization payment”, then for her to do without it would seem to contribute to the feminization of poverty.

The court dismissed the husband’s request for a declaration that his discharge in bankruptcy released him from his obligation to $24,000 which he owed to the wife. Instead the court set aside the summary judgment ordering the husband to make that payment and directed the trial of an issue as to whether $24,000 payment was in fact maintenance within the meaning of s.178(1) of the BIA.

The court made an additional comment stating that the BIA ought to be amended to reflect the existing state of the common law, which is that any payment that fulfills the function of maintenance is maintenance.

* Ann Wilton, MacDonald & Partners, awilton@macdonaldpartners.com.

 

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Feminist Legal Analysis

Presentation to Ursula Franklin of Ontario Bar Association Feminist Legal Analysis Section Award for her Commitment to Equality - May 22, 2007

Presented by Linda Silver Dranoff*

This article originally appeared in Voices, the OBA Feminist Legal Analysis Section Newsletter, Volume 14, No. 1, September/Septembre 2007.

Ursula Franklin put herself into context, in a speech in 1996 to a non-feminist conference on privacy issues, when she said “I have a standpoint from which I look at the world. I am a Canadian. I am a scientist. But I am also an unrepentant feminist and an unrepentant pacifist.”

In an age when some women are reluctant to define themselves as feminists, concerned that it may be considered a pejorative, Ursula boldly defines herself to the wider community as a feminist. And in her recent book “The Ursula Franklin Reader: Pacifism as a Map,” she goes beyond that and identifies feminist thought and practise as a pathway to a peaceful and egalitarian society, as a solution to the conflicts in our society. She believes that a peaceful society cannot function within existing hierarchical structures, and set up feminism and the insights and struggles of the women’s movement, as a model of new structures of collaborative non-hierarchical process.

But I am getting ahead of myself. Let me set out the impressive biographical facts.

Ursula Franklin received her Ph.D. in experimental physics in 1948 from the Technical University of Berlin, and came to Canada the following year. She started her career in Toronto as a post doc in the University’s Department of Physics and after 1952, as a senior research scientist at the Ontario Research Foundation. In 1967 she re-joined the University of Toronto’s then Department of Metallurgy and Materials Science, becoming a full professor in 1973. She has published many scholarly papers in her field of science. She is a Fellow of the Royal Society of Canada, a former Board member of the National Research Council and the Science Council of Canada. She became in 1984 the first woman honoured by the University of Toronto with the title of University Professor, and is now University Professor Emerita in U of T’s Department of Materials Science Engineering. She is Senior Resident and a Fellow at Massey College where she continues to this day to teach, study, learn, and mentor graduate students.

To most people, this distinguished scientific career would be sufficient contribution for a lifetime, but for Ursula Franklin, this was the place she started from, the context for her larger life, the place from which she found opportunities to be an active and courageous participant in our society. She has given as a citizen with a generosity of spirit and visionary humanitarianism, using the scientific tools she possesses.

Ursula had trained, taught and researched in experimental physics. But she became concerned about the military uses to which her research could be put, and the military purposes, which her students were well-equipped to advance. She chose to give up the application of the skills to contemporary materials problems entirely, rather than have her intellect used for purposes inimical to her. She did not, as some others might say, “they are going to do the work anyway; I might as well earn my living at it, instead of someone else doing it.,” Ursula acted on her conscience, voting honestly with her mind and her feet.

Instead, she applied her intellect to studying the materials culture of the past and became a pioneer in tachometry, applying modern techniques of materials analysis to artefacts found by archaeologists.

As a member of the Science Council of Canada, she headed the Conserver Society Study in 1977, which anticipated many of the environmental problems presently, finally, on the national agenda.

She has mentored and encouraged women students throughout her career. Her viewpoint is that women scientists use the tools of science to answer questions that may not otherwise be asked by their male counterparts. She believes that women bring to science a spirit of cooperation and a concern for the connection between knowledge gained and the potential impact on communities.

An academic leader, Ursula was one of a group of women to take the University of Toronto to court over its discriminatory remuneration policies, which resulted in inadequate pensions for many retired female faculty. The case was settled on terms she described as honourable.

She objected when American President George Bush Senior in 1997 was to receive an honorary doctorate from the University of Toronto. As an academic entitled to sit on the stage when honorary degrees were presented, she used the opportunity to take a principled stand. She got to her feet, and with a flounce and a wave of her mortarboard cap, she marched off the stage together with a number of other members of the faculty.

She is a peace activist, both as a Quaker and through her work with Voice of Women, an early feminist peace group which she described as not a “ban the bomb” group but one focussed on the insanity of using war or the threat of war as an instrument of politics.

In the early 1960’s, she coordinated for the Voice of Women a study on the effect of strontium 90 on children’s teeth, and encouraged women to protest the dangerous environmental contamination from atmospheric testing of nuclear weapons and later from Ontario’s nuclear energy program. One result of this campaign was that they were instrumental in persuading the governments of the U.S.A., U.S.S.R. and Britain to halt atmospheric nuclear weapons testing. Another result was when the Minister of Energy in 1985 put her name forward for appointment to the Board of Directors of Atomic Energy Canada Ltd., the federal cabinet vetoed it. She stood up for her beliefs and accepted the consequences.

She has spoken out about apartheid, the free trade agreement, the Multilateral Agreement on Investment (MAI), anti-terrorism laws after 9/11, NATO bombing in Kosovo, the complicity with Marc Lépine of the male engineering students, the dysfunctionality of war for the resolution of conflict, and more.

She used the legal system when she could. She was part of a court challenge, objecting that part of her taxes were going to fund the military, requesting their redirection to constructive purposes. Unfortunately, the action was not successful.

Ursula has used her exceptional intellectual gifts to contribute to the life of her times. Her 1989 Massey Lectures published as The Real World of Technology has influenced a generation of citizens and decision-makers and was an attempt to understand how science and technology shape our society and are, in turn, shaped by the demands that society makes of them. In it, she stressed “how new technologies, new ways of doing things …. have profoundly altered the relationships of people to nature, to each other and their own communities.”

In 1995, the Toronto District School Board named a public school in her honour. The Ursula Franklin Academy attempts to integrate its math, science and liberal arts curricula by means of innovative technologies. Ursula takes an active interest in the work of the school to this day. Among other work, she played a central role in the creation of an innovative program in cross-cultural understanding and conflict resolution.

She is a Companion of the Order of Canada, a Member of the Order of Ontario, a recipient of the Governor-General’s Award in Commemoration of the Persons Case, and has, depending on your source, 25 or 40 honorary doctorates.

She was awarded the Pearson Peace Medal, because “by her direct actions, in support of or in opposition to ideas and policies, she has changed the thinking, the assumptions, the direction of the lives of those who have welcomed her clarity, her honesty, her beautiful and often humorous use of language, her constant search for truth and her ability to share this search with others.”

She was awarded the Elsie Gregory MacGill Memorial Award for her contributions to education, science and technology. She received the Vigand Award, which recognizes Canadians who have made outstanding contributions to our understanding of the human dimensions of science and technology.

Her numerous speeches and articles, which analyze our society and envision a better one was published last year as The Ursula Franklin Reader: Pacifism as a Map. This book explicitly links her unrepentant feminism and pacifism, the context for her life. In it, she acknowledges that her pacifism is grounded in her experience of war and her time in a Nazi work camp, her Quakerism and her feminism. She is very clear that to achieve a peaceful egalitarian society, women in power need to retain feminist values. In one interview she gave (Peace Magazine), she commented on the definition of the natural order of things and its effect on women--: “I think one should be very questioning about social order as natural order. Women have always been very suspicious, because it was the natural order for some peculiar reason that always turned out to leave the women in the kitchen and the men in government.”

Her definition of pacifism goes far beyond its usually understood context as the opposite of militarism. To her, pacifism is the underpinning of all social interactions and forms the basis of an ethical, peaceful, just and egalitarian world. It is not just failing to take up arms; it is negotiating and reasoning instead. Ursula has written that “Winning is the least useful thing that can happen in any conflict… conflicts must be transcended in order to be resolved. Militarism is “the ultimate manifestation of the threat system that when stripped of all its extraneous verbiage simply says “Do what I tell you – or else.” “The time has come—in fact, it is long overdue – to recognize not only that violence is lethal and that the military is an inappropriate instrument of conflict resolution, but that the threat system is dysfunctional. It does not work. Its dysfunctionality stares us in the face. Nothing will ever work except justice and we might as well stop the nonsense of relying on war and violence and start to work on global justice.”

Her new book makes a great contribution to our thinking about pacifism and feminism and demonstrates how true was the citation for her 2006 honorary degree of Doctor of Science from McGill: “Professor Ursula Franklin is a pacifist, an environmentalist, a feminist, and a social thinker remarkable for her originality… In her research and in her social activism, Ursula Franklin has lived the life of a pioneer.”

Ursula is a citizen, scientist, pacifist and feminist, she is a wife and mother, as are many feminists. She has been married for 55 years to Fred Franklin to whom she dedicated The Ursula Franklin Reader. She has two children, Monica, a lawyer, and Martin a schoolteacher, and grandchildren on whom she dotes.

I first met her when she spoke at a conference of educators. She spoke about clarity of thinking, and then exemplified it. She made the most complex ideas simple and the most simple ideas compelling. Her capacity for vision and wisdom and engagement and friendship has not flagged with the passing years.

It is our pleasure as feminists to honour one of our own. To a person who seems to have met her own criterion for a good life, to be personally happy and publicly useful, we pay tribute to you.

In her Pacifism Reader, Ursula admitted to often feeling very lonely using the unpopular maps of pacifism and feminism to navigate our society. We are grateful you have clung to your convictions. We are with you.

To our philosopher of feminism, our path-maker to peace, to our conscience and visionary guide, to our brilliant, insightful and deeply compassionate Ursula Franklin, the Feminist Legal Analysis Section salutes you with our Commitment to Equality Award.

* Linda Silver Dranoff, LSM, is founding Chair of FLAC.  

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Insurance Law

Underinsured Motorist Coverage Does Not Extend to All Jurisdictions

Hans Goddard*

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Labour Relations

Health Services Supreme Court Decision: Collective Bargaining Now Included in the Section 2(d) Freedom of Association

Karen A. Hamway*

This article originally appeared in the OBA Labour Relations Section Newsletter, Volume 10, No. 1, October/Octobre 2007.

With the Health Services¹ decision, the Supreme Court of Canada has sent ripples through the labour and employment law bar. For all unionized workplaces, the decision caused a significant shift in the labour relations power dynamics. For non-unionized employees, especially those employed in the public sector and exempted from legislated labour relations regimes, the decision has precipitated monumental changes.

Although the Supreme Court had repeatedly refused to include the right to collective bargaining in the section 2(d) Charter² freedom of association, in Health Services, the Supreme Court found that its earlier reasoning could no longer stand. This decision is leading employers and employees to review their historical relations and consider strategies for change in the future.

Health Services: Factual Background

In 2002, the British Columbia legislature passed legislation that significantly changed important terms of the health services workers’ collective agreements affecting both private and public sectors. The government’s reason for these unilateral changes was to address a ‘crisis of sustainability’³ by reducing costs and facilitating the efficient management of the workforce in the health sector. There was no meaningful consultation by the legislature with the unions before passing the law. The unions launched a Charter challenge arguing primarily that the legislation constituted an infringement of section 2(d) of the Charter, the freedom of association.⁴

At trial and in the British Columbia Court of Appeal, the courts rejected the section 2(d) Charter challenge on the basis that the Supreme Court precedents denied any Charter protection for the activity of collective bargaining. The legislated unilateral changes to negotiated terms of the collective agreements had the effect of undermining the unions’ associational purposes. However, the B.C.C.A. could not strike down the legislation in the face of the earlier Supreme Court decisions.

Supreme Court’s Historical Review of the Ambit of Freedom of Association

A unanimous Supreme Court in Health Services critically analyzed its earlier decisions. The ambit of section 2(d) as enunciated in the 1987 Supreme Court trilogy of cases⁵ expressly excluded the right to strike and bargain collectively. Those principles were approved and summarized in PIPSC.⁶ In that case, Sopinka J. concluded that section 2(d) protected the freedom to establish, belong to and maintain an association but did not protect an activity solely on the ground that the activity was a foundational or essential purpose of an association. He confirmed that section 2(d) protected the exercise in association of the constitutional freedoms and lawful rights of individuals only.

In PIPSC, the Supreme Court decided that the impugned Northwest Territories legislation, which precluded nurses from forming a certified bargaining unit, did not violate the Charter. The Court reasoned that the freedom of association was not violated since the nurses could still join PIPSC. It did not matter that such membership would be of no practical use to them without certification since the activities of the association were not protected.

The Supreme Court considered section 2(d) again in Delisle,⁷ where the impugned legislative provision exempted all RCMP members from the application of the Canada Labour Code. As a result of the provision, the RCMP were effectively prohibited from being certified as a bargaining unit and benefiting from the protections afforded by a labour relations regime. The Supreme Court held that the legislation was constitutional because it did not prevent RCMP members from forming associations. The employer in this case, a governmental actor, had to respect Charter rights and would violate section 2(d) if it attempted to hinder the RCMP’s efforts to form associations. However, the right to a collective bargaining regime was again found to be outside the scope of the freedom of association.

A window toward change was opened by the Court in Dunmore⁸ where agricultural workers challenged legislation that excluded them from the statutory labour relations regime. The Court held that, while not all collective activities, such as the right to strike and collectively bargain, were worthy of constitutional protection, certain collective activities must be included in the freedom of association if it was to have any meaning. The Court found that, for agricultural workers, the impossibility of forming an association without the protection of the statutory regime had been proved. Therefore, the legislation was struck down as violating section 2(d). The legislature was provided an opportunity to find a balance between the governmental objectives and the agricultural workers’ right to form associations.

The Decision in Health Services

In Health Services, the Supreme Court made the following ground-breaking statement:

“At issue in the present appeal is whether the guarantee of freedom of association in s. 2(d) of the Charter protects collective bargaining rights. We conclude that s. 2(d) of the Charter protects the capacity of members of labour unions to engage, in association, in collective bargaining on fundamental workplace issues. This protection does not cover all aspects of ‘collective bargaining’, as that term is understood in the statutory labour relations regimes that are in place across the country. Nor does it ensure a particular outcome in a labour dispute, or guarantee access to any particular statutory regime. What is protected is simply the right of employees to associate in a process of collective action to achieve workplace goals. If the government substantially interferes with that right, it violates s. 2(d) of the Charter; Dunmore. We note that the present case does not concern the right to strike, which was considered in earlier litigation on the scope of the guarantee of freedom of association.”⁹

The Court went on to explain that the constitutional right to bargain collectively did not guarantee that the association would achieve the objectives sought. Rather, it was the process through which those goals were pursued that was enshrined in the freedom of association. Where the subject matter of the collective bargaining was of such importance that a legislature or governmental employer’s bad faith approach would undermine the employees’ ability to pursue common goals collectively, then a failure to consult and negotiate in good faith would constitute a violation of section 2(d). This right was found to impose a corresponding duty on the legislatures and governmental employers “to meet and bargain in good faith in the pursuit of a common goal of peaceful and productive accommodation.”¹⁰

The Court struck down the impugned legislation as violating section 2(d) but allowed the B.C. government one year to comply with the principles contained in the decision.

Significance of the Decision

Before the decision in Health Services, the Supreme Court had considered arguments seeking to expand the basic freedom of association to include the right to strike,¹¹ collective bargaining¹² and the application of legislated labour relations regimes.¹³ Traditionally, the Supreme Court had resisted any expansion of the scope of the freedom of association that would include the activities of labour associations. In Dunmore, the Court allowed a carefully circumscribed broadening of the scope of section 2(d) but only to the extent necessary to give meaning to the right to form an association of employees.

The effect of that interpretation of the Charter section 2(d) left unionized employees with no protection against unilateral legislated changes to significant terms of their collective agreements where the government deemed it expedient. Since legislated changes to the terms and conditions of employment were not prohibited by labour relations regimes, and collective bargaining fell outside the ambit of section 2(d) of the Charter, there was no recourse for unions in those circumstances.

Further, non-unionized employees were in a completely unprotected position. They had the right to form associations. However, if they were not covered by a labour relations regime, such as in the many employment sectors to which these regimes expressly do not apply, employees’ associations were only as effective at collective bargaining as their employers permitted. They had no legal protection if an employer chose to respond in bad faith to collective demands from the association.

In view of the dramatic change of the law in Health Services, unionized employees in the public sector will be more confident in their demands for favourable terms and conditions, knowing that there is a constitutional right and corresponding duty to engage in a good faith process of bargaining. Unionized employees in both the public and private sectors will be supported further by the general prohibition, subject to section 1 of the Charter, against unilateral legislative changes. Any legislated changes could only occur now following good faith consultation with the unions.

For non-unionized employees in the public sector, the significance of the change in their labour relations will depend on their historical ability to effectively bargain collectively. Public sector employers will need to review their own practices and ensure future compliance with their duty to bargain in good faith on all important matters presented for negotiation by employee groups. The employees will be encouraged by this decision to form associations, if they have not already done so, and present demands for negotiations. Although the outcome will not be guaranteed, the process must be conducted in good faith by the employer or a Charter challenge will ensue.

For non-unionized employees in the private sector, other than the possibility of Charter challenges arising from legislative interference with the expanded ambit of the freedom of association, the significance of this decision is less clear. Where a private sector employees’ association identifies a nexus between an employer’s bad faith dealings and Charter obligations, expansion of the scope of the freedom of association may be the subject of future litigation.

* Karen A. Hamway, partner at Gowling Lafleur Henderson LLP, (613) 786-0174, karen.hamway@gowlings.com.  Thanks also to my partner, Ronald Snyder, who collaborated in the consideration of the Health Services decision.

¹ Health Services and Support-Facilities Subsector Bargaining Association, et al. v. Her Majesty the Queen in Right of the Province of British Columbia, et al., 2007 S.C.C. 27.
² Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act (1982) (U.K.), 1982, c. 11.
³ Health Services, supra note 1.
⁴ A violation of the equality provisions of section 15 of the Charter was also argued on the basis that the health care workers were predominantly women and, therefore, this law affected women unequally. This argument was rejected by the trial judge and the British Columbia Court of Appeal and was not pivotal to the outcome at the Supreme Court.
⁵ Reference re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313; R.W.D.S.U. v. Saskatchewan, [1987] 1 S.C.R. 460, and P.S.A.C. v. Canada, [1987] 1 S.C.R. 424. (the :”Trilogy”)
⁶ Professional Institute of the Public Service of Canada v. Northwest Territories (Commissioner), [1990] 2 S.C.R. 367.
⁷ Delisle v. Canada (Deputy Attorney General), [1999] 2 S.C.R. 989.
⁸ Dunmore v. Ontario (Attorney General), 2001 S.C.C. 94 (Can LII).
⁹ Health Services, supra note 1 at para. 19.
¹⁰ Ibid. at para. 90.
¹¹ Trilogy, supra note 5.
¹² PIPSC, supra note 6.
¹³ Delisle, supra note 7. 

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Law Practice Management

Synergy and Entropy—The Dynamics of a Law Firm Business Plan
 
David Debenham*

I am often asked, “Why should a law firm have a business plan?”  When I first began practicing, the answer was that next year was the same as last year, so who needs to plan?  Now the answer is that firms are changing so fast that the past is no predictor, so what good is a plan that is going to be drastically wrong as a prognosticator?   

The answer is simple. Brand loyalty.  Brand loyalty is usually defined as a long-term customer preference for a particular product or service. Brand loyalty can be produced by factors such as customer satisfaction with the performance, the price of a specific product or service, or through identifying with a brand image encouraged by advertising.

In a law firm brand loyalty is important for both internal and external marketing.  A law firm is an increasingly loose coalition of entrepreneurs that are moving away from a partnership model and towards a joint venture model of cooperation if, and as, the need arises.  The ocean liners are breaking down into a series of speed boats ‘manned’ by individual captains who combine as market forces require.  In today’s marketplace a business plan substitutes for culture as a force of cohesion in large or small firms, so that even the smallest of crafts has a sense of what they are doing, and why. 

A business plan is nothing short of a flag and constitution to declare and display a firm’s core values in uncharted waters.  All the numbers and data in the plan are early warning signals about whether intentions are being carried out, whether dissent exists that questions the core values, and whether the core values themselves are under sufficient pressure to be modified or abandoned.

Core values are often linked to implicit or explicit models of profitability. There are many models of profitability for law firms:  For the full service law firm, the core values were built on a model of professionalism and mentorship that implied a model of profitability that leveraged associates into firm profitability by paying them less in salary and overhead than their billings.  The more associates, the more profits.  If an associate netted $100,000 per year, why not have three associates instead of two as a strategy for increasing firm profitability? If three produce more, why not four, and so on?   This of course is building a firm on a foundation of clay because associates either become partners, or they leave.    Partners, however, last three times as long as associates.  To maintain even a two to one ratio requires a firm to triple in size over every five to eight years to keep pace, depending on the size of associate turnover.  When the cost of training new associates is factored in at a firm with high turnover, the profitability margin diminishes in terms of hard costs, and soft costs such as morale, an inability to attract new talent, and other intangibles.

Competition amongst firms for talent also puts pressure on margins in a leverage-based strategy. High turnover leads firms to under-invest in associate development, which in turn encourages associates to seek opportunities elsewhere, and where firms over-invest in talent with a view to generate future margins, that talent tends to command a higher salary and thus generate a lower margin for the firm. 

More mundane tasks formally done by associates are now downloaded to technology or to law clerks, thereby reducing the demand for associates.  As competitive price pressures in the marketplace also drive down market prices for legal services and the natural forces of law firm entropy in the form of partner, and later practice group, departures begin to exert centrifugal forces that sometimes prove irresistible.  So how does a business plan help?

A business plan lends focus to what keeps a coalition of otherwise independent minded partners together.  Long after the partnership agreement has become a dead letter, a business plan, as continually renewed and revisited, acts as a document that stimulates discussion over what the constituent elements of a firm need from each other.  It’s a branding document, reminding lawyers how the firm assists them and in turn communicates what they are to give back, and why. 

Everyone has their role, and a role for everyone.  As competition increases, the need for a firm brand as a beacon to the marketplace increases,  and as the need for a strong brand increases, the need for closely knit groups used to working together to build that brand as a cohesive unit increases with it.   The brand puts a face to the unit, just as the team logo does for a sports enterprise. 

A strong brand becomes the face of a firm operating as a cohesive unit, attracting clients to the firm and only secondarily individual players.  A business plan is the play book for a team acting in unison in a competitive environment.  It is a decisive communicative device.  It coordinates and directs. Those teams who without a playbook suffer the fate of any disorganized enterprise under pressure.  Those who have a playbook are part of a well oiled machine that benefits from the synergies that make the team greater than the sum of its parts, and participants stay with the team for the intangible esprit de corps and the brand loyalty of clients/fans, even in the face of being offered more tangible benefits by competitors.   The highest paid players want to be part of a winner. A business plan is the formula for a winning team, and being associated with a strong brand is the tangible result of contributing to a strong team effort.  

My question is, “How can you afford not to have a business plan?”

* David Debenham, M.B.A., C.M.A. of the law firm of Lang Michener LLP.

 

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Natural Resources and Energy

How to Mitigate Political Risk in International Mining Projects

Robert Wisner*

This article originally appeared in The Resource, the OBA Natural Resources and Energy Section Newsletter, Volume 10, No. 2, June /Juin 2007.

The global rise of resource nationalism was a central theme of the 2007 Annual Convention of the Prospectors & Developers Association of Canada. The management of the “above ground” risks created by political and legal instability in developing countries was addressed by at least half a dozen presentations aimed at managers, investors and other industry participants.

Mining lawyers also shared experiences learned in unstable jurisdictions during a panel on “International Reactions to Mining Projects” organized by the OBA’s Natural Resources and Energy Law Section. Michael Bourassa of Fasken Martineau DuMoulin LLP and Lorna MacGillivray of Glencairn Gold Corporation served as panel co-chairs. Recent developments in Bolivia and Venezuela were addressed by Fernando Aguirre of Bufete Aguirre in La Paz and Jorge Neher of the Caracas office of Macleod Dixon LLP. I had the privilege of addressing the more general topic of political risk mitigation. My remarks are summarized below.

What is Political Risk?

Political risk is a broad term that covers all non-business risks to international companies. Some political risks involve direct government action such as expropriation, unfair or discriminatory regulation, breaches of host government contracts or restrictions on the convertibility of currency and the transfer of profits. Other political risks involve harm to international businesses caused by private political actors. This includes losses from terrorism, strikes, rioting or other civil unrest. These events may be targeted at specific foreign firms or may be part of a broader pattern of instability in the country.

The Need for Legal Remedies

There are a number of business strategies that can mitigate political risk, including public relations efforts, corporate social responsibility codes and local partnerships. By definition, however, only legal strategies can provide a reliable remedy in the event of losses from political risk. The presentations covering Bolivia and Venezuela proved this point by offering examples of well-managed mining companies who believed that they had mitigated political risk by involving politically influential business partners in their projects. When the political winds changed, these companies were subject to recriminations due to their connections with opposition leaders.

The Uses and Limits of Political Risk Insurance

Export Development Canada and various private insurers offer insurance against political risk. Standard coverage includes expropriation, breaches of government contracts, political violence and currency transfer restrictions. One of the main advantages of political risk insurance is that claims are made against the insurer rather than directly against the host government.

Political risk insurance, however, is no panacea for international companies. Coverage is often limited to a fairly narrow category of risks and even then there are extensive and complex exclusions and limitations. Furthermore, political risk insurance can be much more expensive than good legal advice on drafting contracts and structuring investments. This legal advice can achieve some (but not all) of the protections offered by political risk insurance policies.

Drafting Host Government Contracts to Cover Political Risk

Natural resource and energy companies often enter into concessions, license agreements or other contracts with host governments. Two essential tools for mitigating political risk are the inclusion of international arbitration clauses and stabilization clauses in host government contracts.

Many developing countries lack the tradition of judicial independence that Canadians take for granted. A well-drafted international arbitration clause resolves this problem by creating a neutral forum for the resolution of disputes against government entities. Stabilization clauses or stand-alone legal stability agreements complement international arbitration by providing assurances that the regulatory and tax regime governing the foreign investment will not be modified unexpectedly.

Contractual solutions to political risk, however, can be difficult to negotiate with host governments and raise complex questions of enforceability. An undertaking by one branch or level of government may not be binding on another. Later laws may purport to supersede stability guarantees. As a result, governments have agreed to grant additional protections to foreign investments in bilateral investment treaties (“BITs”) or similar provisions in regional free trade agreements (“FTAs”) such as NAFTA, CAFTA and The Energy Charter Treaty.

The Role of Investment Treaties and Free Trade Agreements

BITs and FTAs can mitigate political risk by providing foreign investors with broad guarantees against direct or indirect expropriation, discriminatory, unfair or inequitable treatment and other forms of host government misconduct. Unlike many international treaties, BITs have strong enforcement mechanisms. They grant foreign investors a direct right of international arbitration against host governments for breaches of treaty obligations.

The government of Canada has entered into BITs with twenty-two countries and NAFTA Chapter 11 covers Canadian investments in the U.S. and Mexico. Many Canadian mining companies, however, operate in jurisdictions that are not covered by a Canadian BIT.

In addition, some Canadian BITs provide weaker protections than those of other OECD countries. In two recent arbitrations, Encana and Occidental Petroleum brought claims against the government of Ecuador for its reversal of a policy of VAT rebates that was relied upon for their investments. While Oxy obtained a US $75 million award, Encana’s claim was dismissed. The different outcomes turned largely on small differences in treaty exemptions for tax measures and in the structuring of the investments held by the two companies.

Recent arbitral jurisprudence confirms that careful investment planning can be used by foreign investors to obtain the protection of strongly worded BITs through the use of subsidiaries incorporated in third party states. Thus, even when Canadian BITs are unavailable or inadequate, Canadian investors may be able to avail themselves of the protections of some of the 2,500 BITs signed by other countries. The scope of protection, however, depends on subtle differences in BIT language – so expert advice on these matters is essential.

Conclusion

Mining companies can no longer afford to avoid politically risky jurisdictions if they wish to remain competitive. However, they can mitigate political risk by seeking expert legal advice on host government contract language, structuring of foreign investments for treaty protection and optimal political risk insurance coverage. Taking these steps will ensure that mining companies have some legal remedies if they find themselves caught in the storms of resource nationalism.

* Robert Wisner is a partner in the Toronto office of McMillan Binch Mendelsohn LLP where his practice focuses on international arbitration and litigation, foreign investment protection and international trade agreements.

 

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Real Property

Factors to Consider in Order to Ensure the Priority of a Leasehold Mortgage

 Thomas Santram*

This article originally appeared in The Abstract Page, the OBA Real Property Section Newsletter, Volume 33, No. 2, April/Avril 2007.

Introduction

Despite the increasing flexibility and sophistication of contemporary commercial loan transactions, the constant that remains is the commercial lender’s desire to secure its loan with a mortgage over real property. However, where the borrower is a tenant pursuant to a lease, it is unlikely the registered owner/landlord will consent to the registration of a mortgage over the real property which is the subject of the lease.

There are numerous factors which a lender must consider when determining whether to advance a loan to a tenant, and how best to secure such a loan. A lender obtains a leasehold interest pursuant to security that it takes in a tenant’s lease. It is important to note that, even though a leasehold interest in land is personal property, the Personal Property Security Act (Ontario) does not apply to such interest.

The Leasehold Interest

The integrity of, and security in, a leasehold interest is based upon the validity and existence of a lease between a tenant and its landlord. A leasehold interest is finite, having a clearly defined expiration date, being the last day of the term of the lease. Should the lease expire prior to repayment of the loan, the lender will no longer have any security to enforce repayment of the monies owing to it.

Because a leasehold interest is based upon a lease rather than the fee of the registered landowner, a lender’s security will be effected through either an assignment of lease, or a sublease, and not simply from a charge of the lease.

When determining whether to obtain an assignment of lease or a sublease, it is important to note that the courts have held that an assignment of lease leaves a lender liable for the obligations of the tenant.¹ Therefore, lenders prefer to be secured by a sublease. In a sublease, the tenant charges its interest in the lease in favour of the lender, and the courts have held that the lease effectively belongs to the leasehold mortgagee.²

In order to prevent a sublease from possibly being construed as an assignment of lease, the tenant holds the last day of the lease in trust for its lender. The tenant appoints the lender as its agent for the purposes of the last day of the lease term. This ensures that the lender is secured in the event that the tenant defaults under its lease.

As its security stems from the lease, lenders require that a tenant register the lease, or notice thereof, on title to the lands which are the subject of the lease. Most tenants prefer to register a Notice of Lease rather than the lease itself, since this maintains the confidentiality of the terms of the lease. It should be noted that the original term of the lease and each renewal under an option to renew constitutes a separate and unique term, notice of which must be registered separately. Note that any amendments made to a lease should also be registered.

Priority among Lenders – Landlord’s Mortgagee is First to Register

In the event that the landlord registers a mortgage on title in favour of its lender prior to granting a lease (and thereby prior to the registration of a Notice of Lease and a sublease or assignment of lease), then the leasehold mortgagee may not obtain an leasehold interest that is greater than the interest of the landlord’s lender. The sole interest which the leasehold mortgagee may secure is that interest which the landlord has not charged in favour of its own lender, namely the landlord’s equity of redemption. This means that should the landlord’s lender take possession of the lands mortgaged in its favour, it will terminate any leasehold interest created subsequent to the registration of its mortgage security. Under such circumstances and, in the absence of a non-disturbance agreement, the mortgagee would be entitled to evict the tenant.³

Priority among Lenders – Tenant’s Mortgagee is First to Register

In the event that lands are leased, and notice of such lease is registered on title to the lands prior to the registration of a mortgage registered by the landlord, any mortgage registered by the landlord in favour of its own lender will be subject to the lease. The landlord’s mortgagee will only receive an interest in the landlord’s reversionary interest in the lands pursuant to the provisions of the lease. In order for the landlord’s mortgagee to obtain priority over the lands charged, it must obtain a postponement of the notice of lease and the sublease and/or assignment of lease. Landlords are understandably loathe to permit the registration of any instrument on title which may impede their ability to realize the full potential and benefits of their assets; most leases contain specific provisions precluding any registration on title to the lands which are the subject of the lease without the landlord’s express consent.

Issues for the Leasehold Mortgagee

In order to ensure that it obtains the best security available to it, a leasehold mortgagee must satisfy itself as to, and/or obtain, the following:

(i) The Term of the Lease: A leasehold mortgagee must ensure that the lease will not end prior to the repayment of the monies owing to it. Accordingly, it is common for a leasehold mortgagee to require that all monies be repaid well in advance of the end of the lease;

(ii) Landlord’s Termination Rights: To avoid having its security completely voided, a leasehold mortgagee must review the lease in order to determine the rights that a landlord may have with respect to terminating the lease;

(iii) Tenant’s Right to Register the Lease: Since the leasehold mortgagee’s rights flow from the lease, it is imperative that the lease permit the tenant to register a Notice of Lease on title to the lands in question;

(iv) Tenant’s Right to Encumber the Lease: A leasehold mortgagee should ensure that the lease contains a right for the tenant to grant a leasehold mortgage (charge by way of a sublease);

(v) Tenant’s Right to Renew the Lease: A leasehold mortgagee must determine whether the lease contains a right of renewal. The leasehold mortgagee should ensure that it be notified in the event that the tenant does not exercise such right of renewal. In the event that the tenant does not exercise its right of renewal, the leasehold mortgagee should ensure that it has a right to exercise such renewal;

(vi) Nature of Leasehold Interest: A leasehold mortgagee should ensure that the right of lease renewal runs with the leasehold estate and does not pertain solely to a particular tenant;

(vii) Landlord’s Acknowledgement: A leasehold mortgagee should obtain the landlord’s acknowledgement that (a) it consents to the granting of a leasehold mortgage; (b) the lease is in good standing and has not been amended; and (c) there exist no unclaimed set off rights claimed by either the landlord or the tenant;

(viii) Survival of Tenant’s Default: The leasehold mortgagee should ensure that its charge by way of sublease will survive any default of the tenant, and any subsequent termination of the lease triggered by such tenant default; such survival effectively charges the landlord’s freehold estate since the act of terminating the lease voids the security granted by the tenant in favour of the leasehold mortgagee;

(ix) No Assumption of Tenant’s Obligation: The leasehold mortgagee should ensure that it obtains the landlord’s written agreement that, in the absence of enforcement of the leasehold mortgage security and delivery of notice to such effect, the leasehold mortgagee does not assume any of the obligations or liabilities of the tenant whatsoever.

(x) Leasehold Agreement: Most landlords do not agree to charge their freehold estates in favour of the leasehold mortgagee. Instead, they enter into a leasehold mortgage agreement with the tenant and the leasehold mortgagee.

Leasehold agreements require that the landlord give notice to the leasehold mortgagee of any default of the tenant, and afford the leasehold mortgagee the right to cure the tenant’s default within a specified time. In the event of an incurable default (such as the bankruptcy of the tenant), the leasehold mortgagee should have the ability to enter into a new lease with the landlord, upon the same terms as the lease with the tenant. The existence of a leasehold agreement means that there exists privity of contract between the landlord and the leasehold mortgagee, thus better protecting the leasehold mortgagee’s interests. However, the leasehold mortgagee must be careful that it does not, through the execution of a leasehold agreement, become liable for any default of the tenant.

Priorities under a Municipal Tax Sale

The Municipal Tax Sales Act (Ontario) was repealed effective January 1, 2003. At this time the operative provisions of the Municipal Tax Sales Act (Ontario) were incorporated in the Municipal Act (Ontario).

Section 383.(1) of the Municipal Act (Ontario) states that, in the event of a sale of property because of unpaid municipal taxes, the registration of the Tax Deed vests title in the successful purchaser pursuant to a tax sale, subject only to proof of fraud. Therefore, the interest of a mortgagee and a leasehold mortgagee are terminated on the registration of a Tax Deed. Note that neither the interests of the federal and provincial crown (including their various agencies, departments and entities) are compromised by registration of a Tax Deed. Note also that, after registration of a Tax deed, title continues to be subject to easements and restrictive covenants that run with the land, and “any interest or title acquired by adverse possession by abutting landowners before the registration of the tax deed or notice of vesting”.⁴

* Thomas Santram, Pallett Valo LLP.

¹ Jameson v. London and Canadian Loan and Agency Co., (1897), 27 S.C.R. 435
² Re Royal Centre Inc., (1978), 19 O.R. (2d) 295 (S.C.)
³ Goodyear Canada Inc. v. Burnhamthorpe Square Inc., 9 R.P.R. (3d) 244, 32 O.R. (3d) 657, 1977 (Ont. Gen. Div.)
⁴ Municipal Act, 2001, S.O. 2001, c.

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Sexual Orientation and Gender Identity

Legal Activism Still Needed on LGBT Issues Worldwide

Milé Komlen*

Canadian lawyers have been very effective in challenging barriers to the full participation of lesbians, gays, bisexuals and transgender (LGBT) individuals in Canadian society. These legal activists have helped to achieve measures of equality in Canada that are among the best in the world. With many of the principal legal obstacles removed, queer jurists are wondering whether there is anything left to fight for. While some suggest that it’s time now to retreat and enjoy the spoils of victories such as same-sex marriage, others claim that the fight for other rights within the broader community have only just begun.

These issues were raised by panelists during a CLE last June, which was co-hosted by the Law Society of Upper Canada and the OBA’s Sexual Orientation and Gender Identity Section (“SOGIC”). The panel noted that while great strides had been made for the LGBT community in Canada, there were still many other domestic and international challenges that had yet to be addressed. Notably, the rights of transgender individuals remain largely uncharted in Canadian jurisprudence, while much work is left to be done in promoting diversity and tolerance in education. Moreover, sexual minorities continue to encounter a patchwork of discriminatory legislation throughout the world.

Although the legal landscape has become increasingly favourable to members of the LGBT community domestically, the struggle for equality among gays and lesbians remains elusive in many foreign jurisdictions. Several organizations in Canada are working to support activists in other countries where the crime of homosexuality is still punishable by hard labour and, in some cases, death.

The situation of sexual minorities in countries such as Zimbabwe is alarming, with the country’s president, Robert Mugabe, openly calling for violent acts to be committed against gays and lesbians, whom he states “are worse than pigs and dogs”. Mugabe has even stated that police would arrest and jail clergy who performed ceremonies for gay couples in that country, and that homosexuality should be “left for whites to do”.

In Iran, the situation is even bleaker, with two teenage boys having recently been hanged for allegedly engaging in “sexual improprieties” with each other. Fuelling the pervasive contempt for sexual minorities in that country are remarks by Iranian President Mahmoud Ahmadinejad where, at a recent appearance at Columbia University in New York, he stated that Iran doesn’t have the “problem of homosexuals”.

Several countries in the Caribbean also remain dangerous places for gays and lesbians, and have poor track records on the protection of LGBT rights. Earlier this year, media outlets worldwide reported on the case of three men in Jamaica who were cornered by a mob of 2,000 people upon the mere suspicion that they were gay. Although police rescued the men, the hostility against LGBT individuals is perpetuated by legislation that still calls for up to nine years’ imprisonment if a person is caught having consensual gay sex.

Incidents such as these are all too often the reality in jurisdictions where sexual orientation and gender identity remain unprotected as basic elements under human rights legislation. It is for this reason that SOGIC continues to identify and deconstruct barriers to equality for LGBT individuals, and shares its successes with advocates around the world.

SOGIC applauded the leadership demonstrated by the Advocates’ Society earlier this year when it decided to move its annual conference from Jamaica as a result of the homophobic climate that continues to exist there. We hope to build alliances with other practice bars and legal organizations that are dedicated to achieving fairness, equality and access to justice.

* Milé Komlen, Chair, Sexual Orientation and Gender Identity Section, Ontario Bar Association. 


 

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Sole, Small Firm and General Practice

Notes from the Middleground

 Peter K. Hrastovec*

This article previously appeared in Caveat, Essex Law Association, 2007 Volume, Issue 4 and the OBA Sole, Small Firm and General Practice Section Newsletter, Volume 5, No. 1 - October/Octobre 2007.

My cell phone is dead. Well, not really.  It is still sitting on the mantle of the fireplace at home where I left it. It is still charged but is turned off. But for all intents and purposes it is dead.

I liked this phone. It was simple and easy to use. No gizmos or fancy gadgets. Just a phone. I remember when I bought it three years ago. At the time, the salesperson tried desperately to get me to purchase a camera phone. "Why do I need a camera phone?" I asked with apparent naiveté. He looked at me with the incredulous glare of a twenty-something. "Why, almost everyone wants one of these", he said pointing to the camera phone. I guess I was in the one percent minority who was clueless or, at the very least, undecided on the issue. I just wanted a phone. Period.

After the intellectual debate regarding best phones was over, I walked out of the store with the phone that I wanted. Hail to the victor (they still killed me on the monthly plan, so call it a draw). I mean, after all, should I not get what I want a phone. A simple, easy-to-use, 'I-just-wanna-call-somebody- style' phone.

That is what I thought. That is what I believed. That is, until last week. My phone had-you know, the one that I wanted and the one that I bought been dropping some calls as of late. And the screen started scrambling and sometimes did not flash on at all. In essence, I was witnessing the beginning of the end. Some chronic digital disease was attacking my phone.

My future engineer son assured me that this was planned obsolescence, the natural order of things. "Technology does not last", he proclaimed. "It is not good for the economy for things to last". I suppose I could say the same about his college bank account but that wouldn't be fair. And, after all, he was just trying to be helpful.

With my phone terminally ill or on prolonged wind-down, my good wife made me an offer I couldn't refuse. She took over some of my Saturday afternoon errands while I was directed to go to the Phone Store and replace my dying relic. SO, off I went to buy a new one. Again, I wanted to buy something simple. But I learned quickly that life is no longer that simple.

Someone must have spiked my fruit juice that morning. Or perhaps it is the onset of old age. I walked out of the store a half-hour later with a combination telephone, organizer, messenger, MP3 player, camera and file storage system. Don't forget the thick user manual and simple-to-use DVD loaded with helpful instructions and easy hints on productivity.

Was I nuts?  I took this thing home and plugged it in to charge the battery. This was an overnight requirement so I convinced myself that I did not have to read the heavy-duty manual that day, opting instead for the newspaper, a music magazine and whatever else I could get my hands on instead of the dreaded manual. Task avoidance at its best.

The next day, I fired up the machine and was dazzled by the colours, the lit keyboard and the sudden realization that this thing is really a minicomputer. I barely understand how my big computer works, the desk model that, on most days, has a life of its own. Now, I have a miniature version, with tiny keys and tiny letters and me, the farsighted wonder, scrambling for his reading glasses because I can no longer make heads or tails of the labels in the spice cabinet let alone the small writing on this new contraption.

Unlike my last phone, I no longer had to dial. I just touch the screen with the stylus. Just like using a calculator. Or, I can scroll down my calling list, touch a name, and, voila, I have contact. In truth, I bought this thing not because I wanted to be hip, up-to-date or on the cutting edge. I figured that by buying a multi-purpose gadget like this, I could avoid having to carry around an organizer, a phone and whatever else I need to make it through the day.

In addition, I could not find the right "manbag" to carry all of this stuff in my jacket pockets. I was starting to look like some latter-day Captain Kangaroo, pockets stuffed with machinery, weighing me down and making me look "thicker" than normal. At family gatherings, I was the awkward one in the photo shoots. "Why does Uncle Peter look so fat in his suit?" my nephews would ask. "Be respectful", their mother would say, "he is on technology overload and just can't help himself". Like I have some run-away gland problem.

So, I now have this multi-purpose phone that can play music, organize my day-month-year-life, take and store pictures of my wife, kids, friends, clients, documents, the fender-bender outside my office window, allows my suits to fit better and, at the same time, lets me make phone calls.

Say, wasn't that the real reason why I bought this thing in the first place? The phone calls.

Then I realized something. I am getting fewer phone calls than I did, say, a year or so ago. And now, I am getting three or four times as many emails. Not to mention the text messages that people send. And I can retrieve all of these with my new, supposedly easy-to-use gizmo. Someone also suggested that I now have enough fire power to set off a space shuttle.

I look at the screen and decide that I need stronger reading glasses.

Such is progress in my little world.

The old phone still sits on the mantle gathering dust.

The metaphor, like this article, practically writes itself.

* Peter K. Hrastovec, Raphael Partners LLP, (519) 966-1300, phrastovec@raphaelpartners.com.


 

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(14) Nothing in this Act affects the law relating to giving or refusing consent on another person’s behalf to one of the following procedures:

1. …

2. The removal of regenerative or non-regenerative tissue for implantation in another person’s body.

Clearly, the SDA does not provide authority to a SDM under a POAPC to make decisions regarding the donation of organs of the grantor.

ANALYSIS

The raison d’être of a POAPC is to authorize substitution of the decision maker, to replace the first-person decision maker with a third party decision maker. The authority for such delegation of decision-making as expressed in the instrument itself is rooted in the SDA. Since neither the SDA nor the TGLNA contemplate a grantor’s delegation of decision making to consent to organ donation, the use of a POAPC under the SDA with respect to organ donation is an inappropriate use of a POAPC as the SDA does not apply to matters involving transplantation. However, if part of a POAPC, among other things, states the first-person’s consent to organ donation after death, it is “a writing” which constitutes written consent to donate. Clearly, in the latter example, the document is used as a vehicle to record consent and not as a POAPC. That an attorney is named in that POAPC is irrelevant. Hence, when advocating the use of a POAPC regarding post-mortem organ donation it is important to clarify that such instructions are enforceable (barring family objection) not because a POAPC is used as the vehicle, but rather, because the instructions are first person written consent, in compliance with the TGLNA.

ADVISING CLIENTS

The rationale for providing written instructions to donate organs after death in a POAPC is that this document is likely to be examined by hospital staff and family prior to death while the same instructions provided for in a Will may not be read until after burial of the deceased, thus frustrating the donor’s intentions. However, to achieve the proper timing does not require the use of a POAPC. It is possible to achieve the same results by advising clients who are executing a POAPC and have expressed a wish to donate organs after death, to provide written instructions to that effect, perhaps attached as a Memorandum to the POAPC and referred to in the POAPC. This approach may reduce misunderstanding by the client, his or her family and the public at large, with respect to the role of the POAPC regarding the intended organ donation. Separating the contents of the documents demonstrates their independent legal status, while the physical attachment (by a paper clip for example) achieves the timing goal.

Finally and perhaps most significantly, the estate lawyer may emphasize to the client that notwithstanding the existence of written consent or oral consent to two witnesses during time of illness, objection from a family member will prevent a hospital from harvesting the donated organs. Informing close family members of intentions to donate and requesting that they do not thwart them may be the clients’ best way to ensure that their wishes are followed.

CONCLUSION

In the context of post-mortem organ donation the provisions of the SDA are inapplicable. The sole statute governing consent to post-mortem organ donations is the TGLNA, which, while providing for consent by third party family members in the absence of first party consent, does not contemplate consent by an attorney pursuant to a POAPC. Furthermore, notwithstanding binding written consent by the potential donor, hospitals do not carry out those wishes if there is objection from the family.

Estate lawyers’ role in advising clients on these matters is limited. When clients raise questions regarding the use of a POAPC for purposes of organ donation after death, the lawyer’s advice should reflect the distinction between delegation of decision-making authority in a POAPC, and written consent provided in writing under the TGLNA. In the context of organ donation, the former cannot be done. With respect to the unsettled state of affairs given the legislative context and public policy considerations, at best, the lawyer may, by encouraging the client to convey his or her wishes to close family members, increase the likelihood that the client’s wishes will be honoured after death.

* Irit Gertzbein, Torkin Manes Cohen Arbus LLP.

¹ Confirmed by Jennifer Tracy, Director of Public Affairs and Communication, Trillium Gift of Life Network, in discussions with the author.
² Trillium Gift of Life Network Act, R.S.O. 1990, CHAPTER H.20
³ TGLNA, s. 3(1)
⁴ ibid, s. 4(1)(a) and (b)
⁵ ibid, s. 3(3)
⁶ See website www.giftoflife.on.ca of the TGLN for its suggested form of writing.
⁷ TGLNA, s. 5(2)
⁸ Substitute Decisions Act, 1992, S.O. 1992, CHAPTER 30, as amended.
⁹ SDA s. 49(1)
¹⁰ ibid s. 66(4) The sole statute governing consent to post-mortem organ donations is the TGLNA, which, while providing for consent by third party family members in the absence of first party consent, does not contemplate consent by an attorney pursuant to a POAPC. Furthermore, notwithstanding binding written consent by the potential donor, hospitals do not carry out those wishes if there is objection from the family.

 

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Young Lawyers
 
Starting Out and Marketing Your Niche Practice

Susannah B. Roth*

On October 2, 2007, YLD brought you “Starting Out and Marketing Your Niche Practice”, an insightful dinner program full of practical tips on starting and marketing a niche law practice, which specifically focussed on four different areas of law, but also provided information which would be of use to any young lawyer looking to market their practice.  The following is a (brief) summary of that program.

“Starting Out and Marketing Your Niche Practice” brought together Suzana Popovic-Montag, Hull & Hull LLP, Nora Osbaldeston, Miller Thomson LLP, Mark J. Zega, Evans Philp, and Martha McCarthy, Martha McCarthy & Company, four experienced speakers to give their tips and insights to young lawyers regarding how to market an estates law, an employment law, a corporate law, and a family law practice.  The program was co-chaired by Ian Hull, Hull & Hull LLP, and myself.  The speakers provided different perspectives regarding big versus small firms, starting your own practice, specializing, and other important matters.

Some of the common themes discussed by all the speakers were:

1. developing your technical skills;
2. developing inter-personal relationships;
3. establishing yourself as an expert; and,
4. setting yourself apart from the competition.

Developing inter-personal relationships includes creating and maintaining your database of contacts, as well as finding personal interest activities which you enjoy and in which you can market your services to new clients.  The speakers also discussed the variety of ways in which you can keep in touch with potential sources of referrals, and issues of knowing your niche audience and what they are looking for in a lawyer.

There are a plethora of means available to lawyers these days which can be used to establish yourself as an expert with other lawyers and with potential clients, as well as with your firm’s current clients, and these means were canvassed and discussed by the speakers.  Some examples include speaking engagements, writing articles, newsletters and blogging.

Establishing yourself as an expert goes hand in hand with setting yourself apart from the competition, and the speakers discussed the ways that you can put yourself in a separate class from other lawyers in your niche practice area, both with other lawyers and with potential and current clients.  Client service ranks first in this area, but other ways that are not as often discussed but which were canvassed by the speakers, include the various technological ways that you can now provide service to a client, but which might not be available from another lawyer in the same niche practice area.

The speakers also each discussed the unique aspects of their practice areas, and the tips and pitfalls of establishing and marketing a practice in that niche area.

Tor order a a CD or MP3 recording of the program, and to obtain the materials from it, please go to http://www.softconference.com/oba/multimedia.aspx?userID=9495566209112269810152007120708&code=07YLD1002T

* Susannah B. Roth, O’Donohue & O’Donohue, (416) 361-3231, susannah.roth@odonohue.ca.

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