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HLA Journal August 2020

Articles in This Issue
Criminal Law News | Geoffrey Read
Family Law News | Renee M. Roy
Commercial Law News: Advising Clients on Protecting Ideas in a Co-Working Space | Alex Ross,Gowling WLG
Personal Injury News  | Andrew Spurgeon, Ross & McBride LLP
York University v. Access Copyright: Tariffs & Fair Dealing Revisited on Appeal | Michele Ballagh, Ballagh & Edwards LLP
New Lawyers' Update: Navigating the Pandemic as a New Lawyer | Zachary Peachey, Sullivan Festeryga LLP
Real Estate News | Anthony J. DiSilvetroDi Silvestro Associates
Estates Law News: Compensation - Power of Attorney for Personal Care | Angela Papalia Regency Law Group
History Update: The Hamilton Club - A Brief History Amanda J. McInnis, Inch Hammond Professional Corporation

Criminal Law News

By Geoffrey Read

SAVE THE JURY

The Defence Bar lost the fight to save the preliminary inquiry, now comes another call to arms, this time to save the jury. It all began with a public comment by Supreme Court of Canada Chief Justice Richard Wagner who said that Criminal Code amendments on how jury trials function to deal with the massive caseload backlog caused by COVID-19 disruptions, including reducing the number of required jurors.

It drew instant negative reaction from the Defence Bar, and even Ontario Chief Justice George Strathy said “I’m not sure that I would personally be in favour of reducing the number of jurors, which is an important protection of the rights of the accused and of the prosecution”. Toronto Defence lawyer Jack Gemmell has pointed out that studies in the US following a 1970 US Supreme Court decision, Williams v. Florida, generally show that going to 6 leads to poorer justice, particularly diminishing the diversity of the jury. This is especially problematic given the inherent bias in composition of jury panels. One study (A Meta-Analysis of the Effects of Jury Size by Michael J. Saks & Mollie Weighner Marti in Law and Human Behaviour volume 21, pages 451–467(1997)) said that in a series of opinions in the 1970s, the U.S. Supreme Court concluded that juries smaller than 12 persons would be constitutional if they performed no differently than traditional 12-person juries. The effects of jury size on the criteria the court specified as the basis for making such comparisons were examined, and a search identified 17 relevant studies that examined differences between 6- and 12-member juries. The total sample for the 17 studies was 2,061 juries involving some 15,000 individual jurors. Among other findings, it appears that larger juries are more likely than smaller juries to contain members of minority groups, deliberate longer, hang more often, and possibly recall trial testimony more accurately.

Critics also said that a chief justice should not be asking and suggesting potential amendments to the Criminal Code, noting a conflict of interest and a lack of perceived impartiality if the top court should have to hear and decide a challenge to any such amendments.

There doesn’t seem to be a lot more media attention since the Chief’s remarks were published, but it bears watching, for, to borrow another saying, the price of liberty is eternal vigilance.

 CRIMINAL CODE S. 33 UNCONSTITUTIONAL

In R. v. Sullivan, 2020 ONCA 333, Paciocco J.A., writing for himself and Watt J.A. (paras. 1-188), and Lauwers J.A. in a separate concurring opinion (paras. 189-292) Ontario Court of Appeal, held that Criminal Code s. 33.1 is unconstitutional and declared it to be of no force or effect.  The case is succinctly stated in these paragraphs of Paciocco J.A.’s reasons:

[1] Mr. Thomas Chan and Mr. David Sullivan share similar, tragic experiences. In separate incidents, while in the throes of drug-induced psychoses and without any discernible motive, both men attacked and stabbed loved ones. Mr. Chan, who became intoxicated after consuming “magic mushrooms”, killed his father and grievously injured his father’s partner. Mr. Sullivan, who had become intoxicated after consuming a heavy dose of a prescription drug in a suicide attempt, repeatedly stabbed his elderly mother. Both men allege that they were in a state of automatism at the time of the attacks.

[6]  Mr. Chan and Mr. Sullivan each relied on non-mental disorder automatism as their primary defence. The hurdle they each faced is that their non-mental disorder automatism claims arose from their intoxication, and each man was charged with violent offences. Yet, s. 33.1 of the Criminal Code ... removes non-mental disorder automatism as a defence where the state of automatism is self-induced by voluntary intoxication and the offence charged includes “as an element an assault or any other interference or threat of interference by a person with the bodily integrity of another person” [a “violence-based offence”].

[9] Both ... men were convicted of the violence-based charges they faced.

[10] They now appeal. They both raise additional grounds of appeal, but their appeals have in common that they both challenge convictions claiming that s. 33.1 unconstitutionally deprived them of access to the non-mental disorder automatism defence...

An interesting feature of Paciocco J.A.’s analysis is stated thus:

[60]  I do not share my colleague’s view that we are bound by Bedford or Carter to apply the principles of “arbitrariness, overbreadth and gross disproportionality” to the issue of whether s. 33.1 limits s. 7 Charter rights. Arbitrariness, overbreadth and gross disproportionality are engaged if the s. 7 challenge is that the effect of the law is not connected to its objective (“arbitrariness”), that the law catches situations that have no connection to its objective (“overbreadth”), or that the law imposes consequences that are grossly disproportionate to its objective (“gross disproportionality”)

Like the trial judge, he found three fatal flaws with s. 33.1, as stated in these paragraphs:

[75]  The trial judge was correct to find that s. 33.1 contravenes ss. 7 and 11(d) of the Charter because it bypasses the requirement of voluntariness, which is a principle of fundamental justice.

[78] ... By enabling the Crown to prove voluntary intoxication instead of intention to assault, s. 33.1 relieves the Crown of its burden of establishing all the elements of the crimes for which Mr. Chan was prosecuted, contrary to s. 11(d) of the Charter [the “improper substitution breach”].

[79]  Section 33.1 also infringes s. 7 of the Charter by enabling the conviction of accused persons who do not have the constitutionally required level of fault for the commission of a criminal offence.

Contrary, however, to the trial judge, Paciocco J.A. also found that

[97] ... that s. 33.1 cannot be justified under s. 1.

[153] Put simply, the deleterious effects of s. 33.1 include the contravention of virtually all the criminal law principles that the law relies upon to protect the morally innocent, including the venerable presumption of innocence.

[154] Only the most compelling salutary effects could possibly be proportional to these deleterious effects. Yet, s. 33.1 achieves little...

SCC ON BAIL MENS REA AND UNNECESSARY CONDITIONS

As with several major cases lately, the Supremes have pressed the re-set button. This time it is again on bail, in the case of R. v. Zora, 2020 SCC 14. The appellant was convicted of failure to comply with conditions of an undertaking or recognizance, after failing to answer the door when the police attended his residence. The main issue on appeal was whether the mens rea for the offence of failure to comply with conditions of an undertaking or recognizance was to be assessed on the subjective or objective standard. The summary conviction appeal judge and the British Columbia Court of Appeal both held that objective mens rea was sufficient convict under s.145(3) but the Supreme Court, without dissent,  held that the Crown must prove subjective mens rea by proving that the accused knowingly or recklessly breached a condition.

In coming to that conclusion, the court distinguished on the one hand between duty-based offences which are directed at legal duties and so call for an objective mens rea, and, on the other hand, the obligation to comply with the conditions of a judicial order. While the wording in s. 145(3) does not show a clear intention on the part of Parliament with regard to either the subjective or objective mens rea, the text and context of s. 145(3) suggest that Parliament intended for subjective fault to apply. The absence of express words indicating a subjective intent cannot on its own displace the presumption of subjective mens rea. The offence of failure to comply with bail conditions is similar to the offence of breach of probation for which a subjective mens rea is required. The multiple serious consequences of a s. 145(3) breach conviction, including adverse bail, criminal record and sentence results, presuppose that the person knowingly, rather than inadvertently, breached their bail condition.

Subjective mens rea under s. 145(3) can be satisfied where the Crown proves: (1) the accused had knowledge of the conditions of their bail order or were wilfully blind to those conditions; and (2) either the accused knowingly failed to act according to the bail conditions or they were wilfully blind to those circumstances and failed to comply despite that knowledge, or the accused recklessly failed to act according to the conditions, meaning they perceived a substantial and unjustified risk that their conduct would likely fail to comply with the conditions and persisted in this conduct. Genuinely forgetting a condition could be a mistake of fact and would negate mens rea. The accused need not have knowledge of the legal consequences or scope of their condition, but they must know that they are bound by the condition. Knowledge in the second component of the mens rea means that the accused must be aware of, or be wilfully blind to, the factual circumstances requiring them to act or refrain from acting. The second component of the mens rea can also be met by showing that the accused was reckless.

That alone makes this an important decision, but the court went further to hold that bail conditions can be imposed only if they are clearly articulated, minimal in number, necessary, reasonable, the least onerous in the circumstances and sufficiently linked to the accused’s risks regarding the statutory grounds for detention in s.515(10). Bail conditions must be consistent with the presumption of innocence and the right not to be denied reasonable bail without just cause under s.11(e) of the Charter. Only conditions specifically tailored to the individual circumstances of the accused can meet the ladder principle codified in section 515 that the form the conditions of release must be no more onerous than necessary to address the risks listed in s.515(10). Bail conditions are to be imposed with restraint to establish particularized standards of behaviour designed to curtail statutorily identified risks posed by a particular person.

In practice, the court observed that most bail orders include numerous conditions of release which often do not clearly address an individual accused’s risk. A culture of risk aversion contributes to courts applying excessive conditions and the expeditious nature of bail hearings generates a culture of consent which aggravates the lack of restraint in imposing excessive bail conditions and encourages accused persons to agree to onerous terms of release rather than run the risk of detention. These restraint and ladder principles require anyone proposing bail conditions to consider what risks might arise if the accused is released without conditions.

A bail condition must attenuate a defined statutory risk (flight, public protection and safety, and maintaining confidence in the administration of justice) that would otherwise prevent release without conditions and cannot be imposed for gratuitous or punitive purposes and should not be behaviourally based. They must have a sufficient nexus, be as narrowly defined as possible, reasonable, clear, minimally intrusive and proportionate to any specific-risk posed by the accused. They will only be reasonable if they realistically can and will be met by the accused, and they cannot contravene federal or provincial legislation or the Charter. The setting of bail is an individualized process and there is no place for standard, routine, or boilerplate conditions, whether bail is contested or the product of consent. Some specific non-enumerated conditions are commonly included in release orders but must be scrutinized to ensure that each condition is necessary, reasonable, least onerous and sufficiently linked to a risk in s. 515(10). The judicial official has the ultimate obligation to ensure appropriate bail including consent releases. So, although judicial officials should ordinarily accept joint proposals by counsel, they have the discretion to reject overbroad proposals and must act with caution when reviewing and approving consent releases.

RCMP ABANDONING REID INTERROGATIONS

The notorious Reid interrogation technique is being abandoned by the RCMP. Critics know from evidence-based case studies that the problem with it is not that it is ineffective but that, to the contrary, it is too effective, indiscriminately succeeding in eliciting confessions from the guilty and the innocent alike. It therefore fails as a trustworthy instrument to find the truth and contributes to miscarriages of justice when false confessions occur.

Check this link: https://www.rcmp-grc.gc.ca/en/gazette/the-art-an-effective-interview. Sgt. Darren Carr, an “interviewing specialist in the RCMP”, says that the RCMP has adopted the “Phased Interview Model for Suspects”, which he describes as a hybrid approach of non-accusatory and accusatory-based interviewing. He says that “in North America, we’ve tended to use the Reid Technique of interrogation, which is very accusatory. The new phased model is influenced by the United Kingdom’s PEACE model. Non-accusatory based interviewing is all about getting the person talking, letting them say what they have to say and focusing more on things like provable lies and slowly dismantling the story rather than accusing them... Previously, we were always taught to shut down the suspect’s denial. We don’t teach that anymore. We always default back to a non-accusatory based interview. If the person wants to give us what they believe is a reasonable explanation as to why their DNA is on the knife, we’ll take that.

And we don’t do the subjective assessment of body language or spoken word anymore. Research has proven this simply doesn’t work. And that’s fundamentally what’s been wrong with the Reid approach: it’s very much prefaced on this faulty belief that we can subjectively assess the veracity of a statement and we can’t.

Another difference is we’re not focused on getting a confession, we’re focused on gathering information. And that’s probably a good way to characterize PEACE versus Reid...

In the first stage of an interview, we just want to get the person talking about anything. Then slide into the reason we’re in that room. We may objectively know they are lying based on evidence, but we don’t care. We’re just going to let them talk.

And then the next important stage is what we call the challenge where I’ll go in and highlight the inconsistencies but I’m doing it in a non-accusatory way. I let them explain it how they want rather than accusing them and shutting them down.

The other technique that we focus on is what we refer to as the strategic use of evidence. Traditionally, we’d have a piece of evidence, say, your vehicle caught on video, and we’d walk into the interview room and say, “I absolutely know you committed this crime. There’s no point in denying it. We have your vehicle on video. Now, why did you do this?” In the new approach, I’ll just say, “Tell me where you were last night.” And I know that I have this piece of evidence in my back pocket. And if you lie, I know objectively that you’re lying. And then at some point in the interview, I will present that evidence to you and say, “Well, can you explain this?” That’s a strategic use of evidence.”

 

Family Law News: COVID-19 Case Law - The Hamilton Perspective

By Renee M. Roy

COVID-19 has presented a number of new challenges for the Family Law community. One of the recurring themes appearing in the courts is when one parent feels the other parent is not following best practices when it comes to protecting the children from the virus. When is a parent’s concern for their children genuinely a matter of safety, and when are they simply trying to take advantage of a difficult situation? Below are a few recent cases that illustrate the challenges facing the Court.

Ribeiro v. Wright, 2020 ONSC 3971

This motion was before Justice Pazaratz as the triage judge, in the early days of the suspension of regular court operations due to COVID-19. The question before His Honour was the preliminary determination of urgency. The parties have joint custody of their nine-year-old child. The mother sought suspension of all access between the child and the father, who until then was having access on alternating weekends. The mother was concerned that the father would not maintain social distancing during his time and the mother did not want the child to leave the house for any reason in any case during this time, including to see the father.

At paragraph 21 the Court indicated,

“We will deal with COVID-19 parenting issues on a case-by-case basis.  

a.    The parent initiating an urgent motion on this topic will be required to provide specific evidence or examples of behavior or plans by the other parent which are inconsistent with COVID-19 protocols. 

b.  The parent responding to such an urgent motion will be required to provide specific and absolute reassurance that COVID-19 safety measures will be meticulously adhered to – including social distancing; use of disinfectants; compliance with public safety directives; etc.

c.    Both parents will be required to provide very specific and realistic time-sharing proposals which fully address all COVID-19 considerations, in a child-focused manner.

d.  Judges will likely take judicial notice of the fact that social distancing is now becoming both commonplace and accepted, given the number of public facilities which have now been closed. This is a very good time for both custodial and access parents to spend time with their child at home.”1

The motion was determined to be not urgent. At paragraph 23 Justice Pazaratz further indicated, with respect to parenting and taking precautions to protect children during COVID-19,

“We know there’s a problem. What we’re looking for is realistic solutions. We will be looking to see if parents have made good faith efforts to communicate; to show mutual respect; and to come up with creative and realistic proposals which demonstrate both parental insight and COVID-19 awareness.”2

Wallengham v. Spigelski, 2020 ONSC 2663

In the case of Wallengham v. Spigelski, the parties had a long-standing time-sharing arrangement with respect to one child. They shared joint custody of her, which had been agreed upon on consent. The child’s primary residence was with the mother and she was sharing time with the father on alternating weekends.

The mother took the position that the father’s access needed to be significantly decreased due to COVID-19. Justice Pazaratz addressed the matter as triage judge. As there had been a long-standing time-sharing arrangement in place that was now being disrupted, the Court determined that the matter was potentially urgent. His Honour indicated at paragraph 13:

“In general terms, most cases seem to be reinforcing the view that “COVID-19 awareness” and “meaningful timesharing” are not mutually exclusive. To the contrary, they can co-exist quite effectively and safely with just a little bit of extra work and cooperation among parents.

In this, both parties consented to a “joint custody” designation. That’s not an empty label. It means both parties are presumed to have made a commitment to child-focused creative problem-solving. Which is exactly what COVID-19 requires.”3

Blythe v. Blythe, 2020 ONSC 2871 

The parties had an existing parenting arrangement where the children resided primarily with the mother and spent time on alternating weekends and some time during the week with the father. The father commenced an urgent motion when the mother withheld the children on the basis that the father was an essential worker, and she resided with her elderly parents who she felt to be at increased risk.

The Court found that the children were being negatively impacted by the lack of contact with their father. The father submitted he was abiding by COVID-19 protocol and his workplace had minimized his risk. The matter was found to be urgent. Justice Chappel determined that the current parenting arrangement was not in the children’s best interests. Instead, she varied the arrangement to allow for contact with the father in outdoor locations only, in order to limit their potential exposure to COVID-19. The Court rejected the notion that the father could take time off work to have make-up access with the children, thereby alleviating the concerns, as he could unknowingly be a carrier of COVID-19 and he had not been tested. Even with extended leave he would need to isolate for a period of time before resuming access, and he was re-exposed each time he went to work.

The Court further indicated that this was not intended to create a new status quo and as the circumstances evolved a different situation could arise which would be in the best interests of the children. Justice Chappel indicated at paragraph 35, 

“I wish to emphasize once again for the Respondent’s benefit that this order will not be carved in stone pending a final resolution of the custody and access issues.  As circumstances evolve, the court may reach a different conclusion as to the parenting arrangement that best serves Abigail’s and Naomi’s needs and interests. For instance, if the Respondent were able to confirm that he has arranged an extended leave of absence from work, and he were to isolate for an appropriate period of time at home without showing symptoms of COVID-19, this could potentially alleviate some of the concerns that have informed my decision and result in a different outcome.”4

Johnson v. Johnson, 2020 ONSC 2896

The mother commenced a motion seeking to suspend the father’s in person time sharing and proposed that he have hour long video calls with the child three times per week in lieu of face to face visits. The mother cited concerns that the father was not following COVID-19 safety precautions, and further, the child indicated to the mother that she had spent time with extended family members that did not live with the father on two different weekend visits. The mother indicated that factors to consider from her perspective were that the child had health concerns, and the child lived with the maternal grandparents who were being put at risk due to access with the father. Justice Pazaratz held that the mother’s request to suspend access was not urgent. The allegations in relation to COVID-19 did not establish that the father was being unsafe or irresponsible. Justice Pazaratz specifically indicated at paragraph 30,

“Once the court concludes that both parties fall into the category of “loving, caring, responsible, safety-conscious parents”, it is unnecessary – and inappropriate – for judges to conduct a microscopic analysis of every single decision each parent makes during their time with a child.

a. During COVID-19, daily life for separated parents has become exponentially more complicated, entailing many new responsibilities and countless judgment calls.

b. Parents have to think about and agonize over activities and interactions previously regarded as routine and benign.

c. They have to stop doing certain things.

d. They have to do other things differently and more safely.

e. Parents have to provide children with as normal a life as possible in abnormal times.

f.  If parenting standards demonstrably fall below a certain threshold, the court will have no hesitation to intervene.

g. But once parental insight, trustworthiness and devotion have been firmly established, we need to step back a bit and let parents make some of the tough day-to-day decisions on their own.”5

Brazeau v. Lejambe, 2020 ONSC 3117

The father commenced an urgent motion seeking an order that the mother comply with provisions of two orders relating to custody and access. This matter had been previously triaged and determined to be urgent by Justice Pazaratz. The children live primarily with their mother. They travelled with her to Mexico in March, and subsequently quarantined for 14 days. Following this, the mother indicated to the father that she would not make the children attend at his home against their wishes, citing that they did not want to visit with him and that it was unsafe for them to do so as he is employed in a long-term care home.

Justice Bale determined that the matter was indeed urgent, and that this was a case where one parent was attempting to capitalize on the current health crisis to marginalize the children from the other parent. It was found that it was not in the best interests of the children to suspend the access arrangements. Despite COVID-19 there is a presumption that parenting and time-sharing arrangements will continue.

The court distinguished this case from that of Blythe v. Blythe, indicating that the mother does not have the authority to unilaterally make changes to the court order. At paragraph 44 Justice Bale strongly indicated that “there is an absolute expectation that the terms of this Order will be enforced. If the Applicant father is required to return this matter to court for further enforcement for any reason including the children’s ‘refusal’ to attend, the mother is forewarned that far more drastic remedial measures will likely be ordered by the court”.6 

Endnotes

1 Ribero v. Wright, 2020 ONSC 3971, para. 21
2 Ibid.
3 Wallengham v. Spigelski, 2020 ONSC 2663, para 13
4 Blythe v. Blythe, 2020 ONSC 2871, para. 35
5 Johnson v. Johnson, 2020 ONSC 2896, para. 30
6 Brazeau v. Lejambe, 2020 ONSC 3117, para 44

Commercial Law News

By Alex Ross, Gowling WLG

ADVISING CLIENTS ON PROTECTING IDEAS IN A CO-WORKING SPACE

Co-working spaces (CoMotion on King Street is a local example) allow individuals flexible access to office space in a larger facility with shared amenities.  Clients can rent an individual desk or office with daily, weekly, or monthly access.  These co-working spaces are a convenient way to have a small space at a more affordable price than conventional leasing, and may provide flexibility to use the space only when needed.  An additional benefit is that the shared space can be more motivating than an individual office, as the client will be able to socialize with other people rather than being in an office alone.

Although COVID-19 now has many of us commuting from the bedroom to the den (possibly with a layover in the kitchen, leading to the “COVID-15”), the Province of Ontario is beginning to lift restrictions.  Eventually things will return to some semblance of normal and people will begin to rejoin conventional workplaces, including co-working spaces.  Once this happens, instead of asking the dog for feedback on your latest document (my dog only offers constructive criticism), you will be able to turn to a human neighbour for advice instead.

These sorts of discussions are rarely problematic in a conventional workplace where everyone is part of the same company, but co-working spaces present unique challenges.  While a shared space environment can lead to valuable innovation through cross-cultivation, there are two important risks to consider before exchanging ideas with one’s neighbours: (1) other parties acquiring inventorship rights; and (2) jeopardizing protection of confidential information.  As lawyers, we should be prepared to advise our clients how to protect against these risks.

Inventorship Rights

In general, where there is no employment relationship and no agreement setting out the rules of ownership, each inventor will have ownership rights in an invention to which they contribute.  Therefore, if a client shares ideas with one of their neighbours and the neighbour contributes to an invention that relates to the client’s business, the neighbour will have ownership rights in that invention which may limit the client’s ability to exploit the invention.  They may not say anything at the time, but may later observe the client’s success in the market and say “Wait, that was my idea!” (and depending on how ideas were shared, they may have e-mails, texts or other documents to back up their claim).

Confidentiality

Confidential information is only legally protected to the extent that appropriate steps are taken to safeguard it.  Moreover, a person who receives confidential information will only be required to protect it, and to refrain from using it for their own advantage, if the information is communicated in circumstances where it should have been clear to them that it was to be treated as confidential.  In some cases, it is obvious that certain information is confidential, such as where there is a written confidentiality agreement.  However, in other cases it may not be clear at all.  Disclosing information to neighbours, deliberately or even carelessly, may vitiate confidentiality or trade secret protections.

Recommendations

The following recommendations are intended to reduce the risks associated with exchanging information in shared space.  These recommendations are merely a starting point, and you should tailor them to the client based on their particular circumstances, including the type of business and the type of intellectual property they are likely to generate.

(1) If your client is seeking input from their neighbours, before beginning detailed discussions they should make sure that the neighbour is willing to give up (or share) the rights to any resulting invention that relates to your client’s business.  You can provide the client with a reusable written agreement (with a space to describe the subject matter being discussed) setting out the respective rights of each party (for example, it may provide each party with reciprocal rights for ideas the parties may contribute that are relevant to the other party’s business).  There may be a single agreement for a pair of neighbours covering anything they share over time, or the agreements may be ad hoc (still using a standard form). 

While this may seem like an awkward conversation for your client, it is better to have it before there is a dispute over a valuable invention than afterward when tension is high.  Use plain language in these documents. If a neighbour makes a contribution that looks to be potentially important to your client’s business, the initial document should be followed up with a more formal assignment of rights.  Also, consider if, and when, independent legal advice for the other side is advisable. 

(2) Your client should not share confidential information with their neighbours unless they sign a written confidentiality agreement first (again, you can provide a standard form to your client in advance, which may be bilateral or unilateral, and might be combined with the invention form mentioned above).  You should also advise your client to take all appropriate steps to protect their confidential information, like always keeping confidential documents in a locked filing cabinet and using passwords and encryption (not only to log in to their computer but also to protect individual confidential files).  All documents (physical and electronic) should be secured when your client leaves the room.  Physically locking the computer to the desk (or other solid object) and connecting to the internet through a reliable virtual private network (VPN) is also a good idea.

By following these guidelines, your clients should be able to reap the benefits of co-working in shared space while protecting their rights. 

Finally, after my dog read this over, he said I should mention that this article is only for general information, and does not constitute legal advice.

Personal Injury News

By Andrew Spurgeon, Ross & McBride 

As the summer gets under way in earnest in these remarkable times, I write this update thinking about the struggle we all face in advancing the interests and rights of our clients in a time of growing focus on how our institutions sometimes exhibit harshness, rigidity and intolerance of the suffering and needs of others.  In this vein, I want to discuss three different points which have come to the fore since my last Update.  They are:

1. A proposed change to the Class Proceedings Act designed to inhibit certification of potential class proceedings;
2. The case of Girao v. Cunningham 2020 ONCA 260; and
3. The Supreme Court’s refusal to grant leave to appeal on Tomec v. Economical Insurance 2019 ONCA 882.

The Smarter and Stronger Justice Act

This is an omnibus bill which amends various aspects of several civil justice statutes in Ontario.  One of the amendments in it would result in a change to s. 5 of the Class Proceedings Act.  This amendment would introduce the “Predominance” or “Superiority” test found in Rule 23(B)(3) of the U.S. Federal Rules of Procedure into Ontario class proceedings. 

The effect of the proposed amendment would be to require a court in hearing a certification motion to determine whether a class proceeding is not just the preferable procedure for resolving common issues as it is now, but rather, whether a class proceeding is:

“superior to all reasonably available means of determining the entitlement of the class members to relief or addressing the impugned conduct of the defendant, including, as applicable, a quasi-judicial or administrative proceeding, the case management of individual claims in a civil proceeding, or any remedial scheme or program outside of a proceeding ….”1

This legislative change makes it more difficult to certify class proceedings in two ways.

First, it raises the bar for certification from a determination that a class proceeding is preferable to the alternatives to that which is now superior to all alternative approaches.  In the pre-existing legislation, “So long as the common issues form a substantial ingredient of the class members’ claims, a class action can still be preferable, despite the need for individual issues trials down the road.”2

The second way in which class action certification will be made much harder is because the legislation would require that to certify a class, a court must be satisfied that “questions of fact or law common to the class predominate over any questions affecting only individual class members.”  This means that the common issues in the litigation must predominate over individual issues for the class proceeding to be certified. 

In a commentary on the subject of the proposed Superiority and Predominance test in the Legislation, University of Windsor Professor Jasminka Kalajdizic has said:

“The new superiority and predominance tests are conservative American principles that make many types of mass wrong impossible to litigate as class actions. There is a reason that mass torts – like defective medical devices or pharmaceutical cases – are not litigated as class actions in the US. Successful cases in Canada that could not have been pursued as class actions if the predominance test existed, because they involved one or only a few common issues and many individual issues, include: Indian residential Schools, Walkerton [and] the tainted blood supply litigation”.3

It is a sad coincidence that these changes to the Class Proceedings Act – at the time of writing this article – appear to be proceeding in light of the tragic outcomes we have experienced in Nursing Homes and Long Term Care facilities during the COVID-19 pandemic.  Several class proceedings have been initiated.  Time will tell if these changes, if implemented, will have a material impact upon the ability of people injured and killed by COVID-19 in Nursing Homes with inadequate infection control protocols, to get justice. 

Girao v. Cunningham 2020 ONCA 260

This is a very interesting case involving a woman who was injured in a motor vehicle accident in which she asserted she had chronic pain and depression.  She was an immigrant to Canada.  In her home country she was a professional.  In Canada she struggled with English and worked as a cleaner.  She had pre-existing trauma and sequalae.  After the accident she ceased working as a cleaner.  She settled her accident benefits prior to trial for a substantial sum.  At the time of trial the plaintiff was on ODSP.  The defence’s theory of the case was that she was a malingerer seeking profit off the accident.

The plaintiff managed to represent herself at trial.  The jury awarded her $45,000 in general damages and $30,000 in special damages for past loss of income.  After the case went to the jury the defence moved successfully to dismiss the claim for general damages based upon the statutory threshold.  The trial judge reduced the award of special damages to $0 to account for income replacement benefits received from her AB insurer. 

The trial judge then assessed costs against the plaintiff in the sum of $311,845.34.

The Court of Appeal allowed the plaintiff’s appeal and ordered a new trial.  Four issues were dealt with by the Court of Appeal and you are commended to read the Court’s comments concerning those four points in which the Court found substantial trial unfairness to the plaintiff: 

  • The preparation, content, delivery and use of a “Joint Trial Brief”;
  • The defence’s treatment of expert evidence;
  • The defence’s use of information about the plaintiff’s AB settlement; and
  • The role of the trial judge and counsel where one party is self-represented.

I want to discuss the last issue – what do judges and counsel do when facing a self-represented litigant? 

The Court of Appeal noted that the Canadian Judicial Counsel in 2006 issued a Statement of Principles on Self-represented Litigants and Accused Persons which was endorsed by the Supreme Court of Canada in 2017.4  The Statement indicates that depending on circumstances, in order to ensure a trial is fair, a judge may:

  • Explain the process to the litigants;
  • Inquire whether both parties understand the process and the procedure;
  • Make referrals to agencies able to assist the litigant in the preparation of the case;
  • Provide information about the law and evidentiary requirements;
  • Modify the traditional order of taking evidence; and Question witnesses.

The Court then went on to quote Morwald-Benevides v. Benevides5 saying:

“It is no longer sufficient for a judge to simply swear a party in and then leave it to the party to explain the case, letting the party flounder and then subside into an unhelpful silence.  As the court has noted, ‘it is well-accepted that trial judges have special duties to self-represented litigants in terms of acquainting them with courtroom procedure and the rules of evidence.  . . .  In ensuring that a self-represented litigant has a fair trial, the trial judge must treat the litigant fairly and attempt to accommodate their unfamiliarity with the trial process, in order to permit them to present their case.” 

This is all balanced with the court’s obligation to maintain impartiality. 

Opposing counsel in circumstances where there is a self-represented litigant have certain obligations under the Rules of Professional Conduct.6  Moreover, there is a general obligation to bring binding authority which is on point to the Court’s attention. 

The Court of Appeal notes that these lawyers’ and judges’ obligations may converge.  Where counsel is advancing legally complex positions it may be incumbent on the judge to require counsel to provide “briefing notes” to enable all sides, including the self-represented litigant to deal with and address such complex issues in trial.  This obligation may – for counsel – be encompassed in Rule 5.1-2 of the Rules of Professional Conduct

Self-represented opposing litigants can create a minefield of problems for counsel.  The Girao case is helpful in understanding how to navigate that minefield.

Tomec v. Economical 2019 ONCA 882

Recently, the Supreme Court of Canada denied leave to appeal brought by the insurer in Tomec v. Economical.  The bare bones facts in Tomec were that Ms. Tomec was badly injured in a car accident.   She was given caregiver and housekeeping benefits post-accident by her insurer.  She was advised of the 104 week time limit on benefits absent a CAT determination. 

Instead of recovering, Ms. Tomec slowly declined.  Five years post-accident a physician declared her catastrophically impaired.  A form OCF-19 was signed.  The insurer denied the claim, asserting that the application for determination was out of time.  The Court of Appeal, relying on the Supreme Court case of Pioneer Corp. v. Godfrey 2019 SCC 42, noted a fundamental binary rule relating to when the clock starts to run on a limitation period:

“First, where the running of a limitation period is contingent upon the accrual of a cause of action or some other event that can occur only when the plaintiff has knowledge of his or her injury, the discoverability principle applies in order to ensure that the plaintiff had knowledge of the existence of his or her legal rights before such rights expire.

Second (and conversely), where a statutory limitation period runs from an event unrelated to the accrual of the cause of action or which does not require the plaintiff’s knowledge of his or her injury, the rule of discoverability will not apply.”

Ms. Tomec’s cause of action – the contractual right to seek CAT benefits from her insurer – was one which can only accrue when she had knowledge of her injury.  Consequently, the discovery principle applied and the time limit only started to run at the point at which she had that knowledge, the date at which she was advised by a physician that she qualified under the CAT threshold.  On this point, the Court of Appeal further quotes Justice Brown of the Supreme Court of Canada:

“In determining whether a limitation period runs from the accrual of a cause of action or knowledge of the injury, such that discoverability applies, substance, not form, is to prevail: even where the statute does not explicitly state that the limitation period runs from ‘the accrual of the cause of action’, discoverability will apply if it is evident that the operation of a limitation period is, in substance, conditioned upon accrual of a cause of action or knowledge of an injury.”

The Supreme Court in denying leave in Tomec reaffirmed its position in Pioneer.

Endnotes

1 Bill 161, Sch. 4, s. 7(2), amending S. 5 of the Class Proceedings Act.
2 Blog commentary of Prof. Jasminka Kalajdzic, University of Windsor.     https://classactionclinic.com/2019/12/10/one-step-forward-two-steps-back-commentary-on-proposed-changes-to-ontarios-class-proceedings-act/
3 Ibid.
4 Pintea v. Johns, 2017 SCC 23
5 2019 ONCA 1023
6 Rule 7.2-9 of the Rules of Professional Conduct

York University v. Access Copyright: Tariffs & Fair Dealing Revisited on Appeal

By Michele Ballagh, Ballagh + Edward

On April 22, 2020, the Federal Court of Appeal released its long-awaited decision in an ongoing copyright dispute between York University (“York”) and the collective society, Access Copyright. We reviewed the trial court decision in a previous article published in the HLA Journal in 2017. The appeal resulted in divided success for both parties.

Background

The dispute arose after York refused to sign a new license agreement with Access Copyright and refused to tender royalties to Access Copyright under an Interim Tariff issued by the Copyright Board for secondary education institutions. York took the position that paying royalties under the Interim Tariff was voluntary and, in any event, that copies made under its so-called “Fair Use Guidelines” (the “Guidelines”) qualified for the fair dealing exemption to copyright infringement. Access Copyright commenced an action to enforce the Interim Tariff. York denied the claim and counterclaimed for a declaration that its Guidelines qualified for the fair dealing exemption.

In the trial court decision, the Federal Court held that: (a) payment of the royalties set under the Interim Tariff was mandatory in the absence of a license agreement; and (b) York’s Guidelines did not qualify for the “fair dealing” exemption. In the result, York was liable to pay Access Copyright for royalties under the tariff.

In the appeal court decision, the Federal Court overturned the trial court decision insofar as it found that the Interim Tariff is voluntary and York was not required to pay royalties to Access Copyright under the tariff. However, it upheld the trial court decision that York’s Guidelines were not “fair”. In the result, York is not liable to pay Access Copyright royalties under the Interim Tariff, but remains potentially liable to the copyright owners for copyright infringement. Subject to any appeal decision from the Supreme Court, this appears to be a pyrrhic victory for both parties.

 Access Copyright & the Tariff

Access Copyright is a collective society which administers copyright for a vast portfolio of published literary works in Canada under the Copyright Act. Access Copyright is responsible for collecting royalties from users of the copyrighted works in its portfolio and then distributing the proceeds to the authors and creators of the works.

Unlike some other collective societies, Access Copyright is not entitled to sue third parties for copyright infringement on behalf of the works in its portfolio. Given its agreement with its members, Access Copyright is limited to negotiating voluntary licenses and asking the Copyright Board to issue tariffs.

Tariffs are a set royalty rate payable by identified categories of users established by the Copyright Board for authorized use of copyright protected materials. At the request of Access Copyright, an Interim Tariff was issued by the Copyright Board in December 2010 with respect to the reproduction of literary works by secondary educational institutions.

Fair Dealing Guidelines

Per section 29 of the Copyright Act, “fair dealing for the purpose of research, private study, education, parody or satire does not infringe copyright”. Assuming that copies are made for an authorized purpose, several factors are considered to determine whether the dealing is “fair”, including: (a) the purpose of the dealing; (b) the character of the dealing; (c) the amount of the dealing; (d) alternatives to the dealing; (e) the nature of the work; and (f) the effect of the dealing on the work.

In an attempt to qualify for the fair dealing exemption, York adopted the Guidelines which permitted the copying of a “short excerpt” from a copyrighted work in either paper or electronic form. A “short excerpt” was defined as 10% or less of a work, or no more than (a) one chapter from a book; (b) a single article from a periodical; (c) an entire artistic work from a compilation containing other artistic works; (d) an entire single poem or musical score from a compilation containing other poems or musical scores; or (e) an entire entry from an encyclopedia, dictionary or similar reference work; whichever is greater.

The trial court found that the threshold of 10% of a work or one component (chapter, article, poem etc.) to be arbitrary and unfair. It noted that such a limit would allow the copying of an entire story if it was found in a compilation while prohibiting the copying of the same story if published as a standalone work. The trial court also found that the Guidelines would not prevent the copying of almost an entire work if it was divided up in the context of different courses and publishing formats. Finally, the trial court found that the Guidelines lacked any consideration of what copying would be qualitatively fair, meaning that the core content of a work could be copied so long as the quantitative size of an excerpt was kept below the threshold.

The trial court further found that York was systematically copying materials on a massive scale, producing approximately 2.9 million paper copies of published works in course packs between September 2011 and December 2013. The trial court also found that its digital distribution of materials through databases and sharing services was voluminous, being estimated at 16.3 million digital copies for the same time period.

The trial court finally found that York lacked infrastructure to administer its Guidelines, failed to test or otherwise take steps to ensure compliance with them and failed to discipline staff who contravened them.

Tariff on Appeal

In its decision, the appeal court conducted a detailed review of the history of tariffs under the Copyright Act. It found that tariffs were first established in the 1930’s when a small group of performing rights societies successfully got control over the public performance rights for the vast majority of popular musical and dramatic works. Amendments to the Copyright Act starting in 1931 sought to correct this quasi-monopoly by prohibiting the collection of royalties in excess of an approved tariff. Users who tendered or paid the royalty set out in the tariff were immune from liability for infringement. This became known as a “statutory license”.

In sum, the appeal court found that the tariff regime is a means of “regulating licensing schemes which, by definition, are consensual”. Although courts subsequently started to use the tariff as a convenient means of calculating damages for copyright infringement, the appeal court found that this does not render the tariff enforceable against parties who did not seek a license or tender the royalty set out in the tariff. In such cases, the remedy is an action for copyright infringement. It is not an action for enforcing the tariff.

In other words, Access Copyright cannot enforce the Interim Tariff against York. The only remedy is an action for copyright infringement, but Access Copyright cannot sustain an action for copyright infringement given its agreement with its members. Access Copyright’s claim was therefore dismissed.

Fair Dealing on Appeal

In its decision, the appeal court substantially agreed with the trial court’s finding that compliance with York’s Guidelines would not necessarily qualify as “fair dealing” and that in certain respects the Guidelines were markedly unfair.

While institutions who permit or undertake copying under the banner of fair dealing need not demonstrate fair dealing by each of their patrons, they must show that the institution’s dealings were fair. Given that York relied on its Guidelines to demonstrate that its dealings were fair, it was required to justify its guidelines. In the end, it failed to do so.

In particular, the appeal court found that:

York’s real purpose or motive in adopting the Guidelines was to “obtain for free what it had previously paid for” and use the savings to minimize student costs and support other parts of its operations;

it was incumbent on York to ensure that its Guidelines were implemented according to their intent and the fact that safeguards were virtually absent undermines its fair dealing claim;

York did not attempt to forestall downstream copying and redistribution by students by including any limitations in the Guidelines that would preclude students from retaining, copying and sharing the copies of works provided to them by York; and

York provided no evidence, rationale or justification for its definition of ‘short excerpts’ under which it permitted copying only 10% of a work when published as a freestanding work, but permitted copying of the same work in its entirety when originally published as part of a compilation.

The Decision and its Impact

The dismissal of Access Copyright’s claim under the tariff may provide York with some leverage to negotiate a more favourable license for future use of the Access Copyright portfolio of works. However, that leverage may be effectively undermined and any savings set off by claims for copyright infringement by individual members of Access Copyright for voluminous copying in the past which may not qualify as “fair dealing” even if it complied with the Guidelines.

Per section 38.1 of the Copyright Act, statutory damages for copyright infringement may be awarded in a sum of not less than $100 for non-commercial infringement and not less than $500 for commercial infringement for each work. The court has discretion to reduce the resulting reward considering: (a) the good faith or bad faith of the defendant; (b) the conduct of the parties; (c) the need to deter infringements; and (d) the need for the award to be proportionate to the infringement. Educational institutions are exempt from awards of statutory damages in certain limited situations, but do not enjoy a broad immunity to such awards. With the findings that York’s real motive was to “obtain for free what it had previously paid for”, that safeguards to ensure compliance with its Guidelines were virtually absent and that its copying was voluminous, York may find it challenging to convince a court to reduce a statutory damage award.

As we have stated in the past, the subjective nature of certain factors in the “fair dealing” test make it a risky challenge for any institution to develop practical guidelines that comply with the law. The need to implement safeguards to ensure compliance with such guidelines will also result in additional costs. Although the terms of written license agreements with Access Copyright and the tariffs granted to Access Copyright can be criticized as arbitrary, they do have the benefit of being predictable and relatively easy to administer for both parties.

Given the divided result, both parties have sought leave to appeal to the Supreme Court of Canada and, given the importance of the issues, there is some chance that leave may be granted. Of course, the parties may ultimately agree that it would be prudent, in all the circumstances, to settle their differences and move forward.

New Lawyers’ Update: Navigating the Pandemic as a New Lawyer

Zachary Peachey, Sullivan Festeryga

The advent of COVID-19 has forced the legal profession and the rest of the world to do things in other ways. Offices have been replaced by spare bedrooms and kitchen tables. Mediators and reporting centres are operating almost entirely by audio and videoconferencing. The Ontario Court of Justice and the Superior Court of Justice in Ontario have been operating at a reduced capacity, and how they will manage the backlog of matters remains to be seen. We are all figuring things out at the same time, and it is easy to be overwhelmed.

Being a new lawyer during this period comes with advantages and disadvantages. Each day is met with insecurities and a new notice to the profession. Although there is light at the end of the proverbial tunnel, there remains great uncertainty for new lawyers trying to grow their practice. While new lawyers may have to actively seek out mentorship more now that most of us are working from home, there are also benefits to the remote nature of today’s proceedings. New lawyers also have the benefit of not being stuck in their ways – or hung up on the way that things have always been done, especially when it comes to technology. Use your common sense. Be creative. This may be an opportunity to help your not-so-new colleagues through new challenges.

Finding and Maintaining Mentorship

Completing my articles and starting my practice in Hamilton was a great experience. There were weekly events and countless opportunities to mingle with my peers. Without sounding like a seasoned veteran of the profession as I enter my fifth year as a lawyer, the experience is going to be a lot different for new lawyers than it was “back in my day.”

As new lawyers, a lot of our learning comes from serendipitous conversation. If there is one thing lawyers like to do, it is talk about their files. Being around senior lawyers, overhearing their triumphs or struggles and listening to them strategize has taught me about the areas of law that I practice, practice management, how to negotiate with other lawyers, you name it. Not being in the office daily has yielded less organic one-on-one time, but with proper planning these conversations can still continue. Setting up a weekly video call with a senior lawyer or a group of lawyers is an easy and effective way to stay connected and work out problems. If you show initiative as a young lawyer you will find that senior members of the bar are quite receptive and willing to help. It can be an opportunity to have real questions answered, however it is important for the new lawyer to facilitate the discussion and be prepared with real issues. My firm started biweekly meetings where we have the opportunity to discuss files, ask questions and review new case law – all things that used to happen organically. While it is important to be prepared and not waste the time of other lawyers, maintaining the facetime is actually worthwhile on its own.

The lack of face-to-face interaction will undoubtably hinder direct mentorship for new lawyers. However, the virtual world promotes inclusion at a reduced cost to clients and your firm. The ability for an articling student or a new lawyer to shadow a senior lawyer while conducting an examination for discovery or mediation is easier than ever. Removing the commute and physical attendance at a specific location will allow students and new lawyers to easily tag along to continue their learning. As a new lawyer, perhaps you have not conducted a discovery on your own, or you have a mediation coming up that is more complicated than usual. Take the opportunity to “shadow” a senior lawyer at a mediation or discovery. It is easy to tune into the parts relevant to you and then excuse yourself and turn your camera/microphone off. You no longer need to sacrifice 8 billable hours to get the experience you’re looking for because you do not have to sit there in person. It is also an easy way to meet clients – stop in virtually, say hi, introduce yourself and let the client know you are using your colleagues discovery/mediation to assist in preparing for your own.

Effective Use of Technology

I have noticed that lawyers are more interested in settling matters given the uncertainty and limited operations of the court system. The paradox of court closures is that it requires counsel to get creative with their methods of negotiation and implement new techniques. A lawyer’s favourite piece of technology continues to be the fax machine. Multiple pieces of correspondence are traded between counsel, with the true tone of the message getting lost in translation. This often leads to a breakdown in settlement discussions between the parties. Since I do not have a fax machine readily available at home, I have reverted back to forgotten technology. The telephone is an underrated and efficient method for negotiations and to aid in reaching settlement.

Telephone conversations with opposing counsel generally start the same way for me lately. The first few minutes are usually spent discussing the current situation and our coping mechanisms, connecting us as human beings with a common ground. I have found that this connection has made negotiations easier by separating the people from the problem and I encourage new lawyers to continue to pick up the phone.

Stay Current

The culture of our profession has certainly slowed down. Our inability to gather and conduct in-person hearings has compelled a much-needed change to the technological inefficiencies in the court system. This is particularly beneficial to new lawyers as they are generally technologically savvy. It is important for new lawyers to continue to utilize these skills and increase their knowledge of technology. Use this as an opportunity to make yourself indispensable. Stay current on the changes in technology, learn how to use it, and offer to assist others. Many clients of mine are shocked by how simple it was to conduct a meeting virtually, or how efficient it was to execute a document over Zoom. I am sure the senior lawyers in your firm will appreciate how easy it is as well. Continuing to find ways to streamline the process and adopt new methods to serve clients without in-person meetings will increase efficiency while decreasing costs, making you a valuable piece of your firm.

The new practice directions also allow for electronic filing. No more squandered days at the courthouse, so that is a bonus. It is important for new lawyers to keep on top of the Notices to the Profession and Practice Directions. The Law Society of Ontario and the courts are constantly trying to facilitate moving matters forward. It is critical to read these notices and pass along the information. Given the quantity that we all receive daily, some go overlooked.

Final Thoughts

Around the country we have seen many industries step up with their gracious contributions to the pandemic. The generosity of the Hamilton legal community should not be overlooked. One firm (Findlay Law) has offered free Wills for frontline workers, another firm (McCourt Law) has offered free bail hearings for people detained while participating in peaceful protests, and the Family Law Bar has remained connected through weekly Zoom meetings. The pandemic has seen many firms and lawyers work together to overcome the obstacles in our current world. Lawyers in Hamilton should be proud.

Someday our courts will reopen and we will return to our offices, but we should remember the generosity and collaboration of those in our community. If we can all remember that opposing counsel are human beings and we are in this together, the practice of law will benefit.

Real Estate News

Anthony J Di Silvestro

DEEMED TRUST FOR UNREMITTED HST AND LIABILITY OF SECURED CREDITORS

Pursuant to ss. 222(1) and (3) of the Excise Tax Act, every person who makes a taxable supply shall collect GST as agent for the Crown, and the collected amounts are deemed to be held in trust for the Crown and remitted to the Receiver General, or properly withdrawn as input tax credits or deductions. This deemed trust extends to property held by a secured creditor that, but for the security interest, would be the property of the person (who owes the taxes). But how far does this deemed trust extend? What happens when funds are advanced on a mortgage security by a lender with no knowledge of the existence of unremitted HST, and who later discharges the mortgage upon repayment?

In Toronto-Dominion Bank v. Canada, 2020 FCA 80 (CanLII), the Federal Court of Appeal affirmed a lower court ruling that a secured creditor who receives proceeds from a tax debtor’s property at a time when the debtor owes GST (and the same analysis applies to HST) to the Crown, is required to pay the proceeds or the portion thereof equaling the tax debt to the Receiver General in priority to all security interests.

The facts of the case are as follows. The debtor operated a landscaping business as a sole proprietor. He was required to collect and remit GST to the Receiver General. He collected GST in the amount of $67,854 in 2007 and 2008 which he did not remit to the Receiver General. In 2010, he obtained loans from the Toronto-Dominion Bank, secured by mortgages against a property. The bank was not aware of the GST debt he owed. He sold the secured property in 2011. The bank’s loans were repaid in full from the sale proceeds and on that basis the mortgages were discharged. In 2013 and 2015, Canada Revenue Agency asserted a deemed trust against the bank under section 222 of the Excise Tax Act on the basis that $67,854 of the proceeds the bank received from the sale should have been paid to the Receiver General. The bank refused to pay. The Crown commenced an action which the bank defended unsuccessfully. The trial in the Federal Court proceeded solely on the basis of an agreed statement of facts. The Bank appealed the decision.

The appeal court looked at the legislative history and the ordinary meaning of the language of ss. 222(1) and (3) of the Excise Tax Act and found that priority was granted to a deemed trust regardless of when the security interest arose in relation to when the GST was collected. An exception to the deemed trust claim is a prescribed security interest under ss. 222(4), which is, generally speaking, a mortgage registered against a debtor’s real property before the GST debt arises. The bank’s mortgages in this case were not prescribed security interests. The court went on to note that priority does not survive bankruptcy under the Bankruptcy and Insolvency Act or arrangements under the Companies’ Creditors Arrangement Act.

The court concluded that the deemed trust created by the collected taxes is not like a floating charge. No triggering event (ie, initiation of proceedings by the Crown, or the exercise of a security interest) is necessary for the deemed trust to crystallize. The deemed trust attaches to the sale proceeds received by the debtor and follows payment to the bank.

The bona fide purchaser for value defense offers no protection to lenders who advance funds and take security from a borrower who is in default of GST remittance obligations. Although the bank in this case was unaware of the GST debt when it took its security, the court denied this defense because it felt lenders are not comparable to third party purchasers. The court further noted that Parliament was attempting to ensure, through the legislation, the recovery of collected unremitted GST, and it would be irrational for it to simultaneously allow this defense which would “eviscerate” the deemed trust provisions.

According to ss. 222(1) and (3) of the Excise Tax Act, it appears that proceeds from the sale of a tax debtor’s property are not subject to the deemed trust provisions when received by unsecured creditors. The bank claimed this anomalous and illogical. The court, however, concluded that Parliament made a considered policy decision to prioritize recovery of collected, unremitted GST debts over the interests of secured creditors (subject to the prescribed security exclusion) and rejected this argument.

The court noted measures which secured lenders can take to manage the risks posed by deemed trusts, including: identifying higher risk borrowers; requiring borrowers to provide evidence of tax compliance; and obtaining authority from borrowers to verify with CRA whether there are any known GST liabilities outstanding. None of these options offer much comfort to lenders.

EASEMENTS - Less common ways of establishing and terminating them

When it comes to easements, sometimes it’s ‘use it or lose it’. Easements are most often created by express grant (i.e., registration of a Transfer Easement in Teraview) and terminated by express release (i.e., registration of a Transfer, Release & Abandonment). However, easements may also be created by prescription and terminated by abandonment. A couple of recent cases deal with these issues.

Yekrangian v. Brogren, 2020 Carswell Ont 6646, deals with abandonment. The right of way (ROW) in question ran along the side yard of the Applicants’ property and then across their backyard where it adjoined the respondents’ back yards. The Applicants claimed that the right of way had been abandoned. The Respondents denied the abandonment, although their backyards were fenced in, without gates. Use of the right of way was limited to lifting things over the fence to set them into their back yards. This was the only means of directly accessing their back yards from the street. The Applicants wanted to build a large house that would block the right of way and prevent the Respondents from accessing it.

Concerning abandonment, the Court noted that:

•  It is a question of fact.
• The burden of proof is on the Applicants.
• The only way in which a ROW can be extinguished by the act of the parties interested is by release, actual or presumed.
•  In the absence of an actual or express release, non-user is essential to abandonment.
• Non-user is not sufficient to permit a conclusion of abandonment.
•  There must be some intention to abandon this property right (i.e., that the person entitled to the ROW has knowingly, and with full appreciation of his or her rights, determined to abandon it).
•  In some circumstances, evidence of non-user may lead to a finding of acquiescence on the part of the holder of title to the ROW. Non-user will not have the effect of establishing abandonment unless a release can be implied from such non-user and the surrounding circumstances.
• Including the express ROW in a registered conveyance is evidence that abandonment was not intended by the owner of the dominant tenement or not presumed by the owner of the servient tenement.

There was evidence that the ROW was not used for decades at a time. It was at times nearly completely obstructed by sheds and a previous renter of the servient lands refused to allow the Applicants to use the ROW. There was also evidence that the ROW had been used for a short time when a deck builder had reversed his truck along it and lifted materials into backyards in order to build two decks in 2015. That was sufficient for the Court to decide that the evidence did not support a finding of non-use.

For abandonment, non-use must be coupled with a firm intention from the owner of the dominant lands that he/she and his or her successors in title should thereafter not make any use of the easement. Properties which have been converted or registered in the Land Titles system may not acquire an easement through use, however, an easement in the LT system may be abandoned either expressly or by intention. That is, new easements cannot be acquired without an express grant, but existing easements may be abandoned.

 Schott v. Malfara, 2020 ONSC 3411 (CanLII) deals with acquisition of a ROW by prescription.

In this case, the three pairs of Applicants were property owners in the Town of South Bruce Peninsula. The Respondents owned property with frontage on Chesley Lake. At issue was the Applicants’ claims to right of way over a 20’ wide strip of land from a road extending to the water’s edge for access and for launching water craft. The Respondents had taken various actions to prevent or restrict the Applicants’ use of it, including planting trees, to obstruct the ROW. The first pair of Applicants had a registered easement. Through inadvertence, the second pair of Applicants did not have a registered easement in favour of their property as it was not recited in the 2017 Transfer of the property to them and no longer appeared on the register. Previous Transfers included the ROW, and the second pair of Applicants used the ROW. The register for the Respondents’ property also described the land as being subject to the easement in favour of the second pair of Applicants. The court found an unregistered easement in favour of the second pair of Applicants and ordered the Land Registrar to amend the register accordingly.

The parties seemed to agree that the third pair of Applicants had neither a registered nor an unregistered easement. Their claim was based on prescription and s. 31 of the Real Property Limitations Act. To establish a prescriptive easement, the owner of a dominant tenement must establish that the owner of the servient lands has consented or acquiesced to the establishment of the right in land as opposed to granting a license to use the land. To acquire an easement by prescription, the dominant owner must show use as of right and not by permission for a period of at least 20 years. Older cases described this use as being “nec vi, nec clam, nec precario” (without violence (!), without stealth, and without permission). To overcome s. 31 of the RPLA, the use must be open and continuous for a period of at least 20 years. Oral or written consent of the servient owner defeats a claim within the 20 year period, but only written consent defeats a claim of 40 years.

The third pair of Applicants gave evidence that either they or their predecessors in title had used the ROW, openly and continuously for a period of at least 20 years prior to conversion of the property to Land Titles in 2007, without the consent of the servient owners.

The use of the easements by all of the Applicants was for pedestrian and vehicular access (mainly for launching boats). The court found easements for both pedestrian and vehicular access for all of the Applicants and ordered the Respondents to remove obstructions. Since there was no evidence that the Respondents were required to maintain the ROW, an order to do so was denied. The Land Registrar was directed to amend the parcel registers accordingly and presumably, the boats found their way to water once again.

It is important to note that a mature claim to a prescriptive easement must be established while a property is registered under the Registry Act, prior to conversion to Land Titles. The existence of possible mature claims based on adverse possession are noted on the parcel register when a property is administratively converted to Land Titles Conversion. While conversion to Land Titles prevents a claim from continuing to mature, the release of a right of way by abandonment is not precluded by conversion to Land Titles.

As Registry Act properties become more rare (to my knowledge they comprise less than 1 % of properties in the Province), dealing with them and their peculiar issues - i.e. adverse possession and prescription, become more rare as well, but they still exist. 

Estates Law News

By Angela Papalia, Regency Law Group

COMPENSATION: POWER OF ATTORNEY FOR PERSONAL CARE

Personal Care Powers of Attorney derive compensation support from s. 61(1) of the Trustees Act:

A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.

Re Brown1 clarifies there is no statutory prohibition against such compensation, that the standard in assessing compensation is reasonableness and that the services must be necessary and/or desirable in the circumstances.

Unlike property attorneys, the calculation for compensation is not provided; instead it is determined through quantum meriut: a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract.

What is Reasonable?

Reasonableness is at the Court’s discretion. The assessment must consider the need for the services, the nature of the services provided, the qualifications of the person providing the services, the value of such services and the period over which the services were furnished.   …  There must be an evidentiary foundation to support the claim for compensation.2

Kiomall v. Kiomall3 explains that the Court must be satisfied that the amount awarded is “reasonable” in relation to the services performed and also proportional to the grantor’s means before issuing an Order for personal care compensation.

Who may act?

An unrelated person cannot act as an Attorney for Personal Care if they also provide healthcare, residential, social, training or support services to the incapable person for compensation.4

In Cheney v. Bryne,5 two solicitors were appointed as Trustees and Powers of Attorney for an elderly couple. The decision completes a detailed analysis of their claims in each capacity, focusing here on their compensation claim for provision of Mrs. Byrne’s personal care; which was granted, despite Mrs. Byrne having then resided in a care facility. In assessing this, the decision cites:6

The test should be: is it reasonable for the applicants to charge $250 per hour each and charge for 188 hours of work, when most caregiver services are rendered by someone other than the applicants?

In this case, it was reasonable. The Court discounted this claim only for work that overlapped with compensation paid in their related roles and praised the lawyers for having kept a serious and accurate docket for their time.7

The Court recognized the conscientiousness that counsel implemented in caring for Mrs. Byrne, citing that she was a lucky person to have the applicants oversee her personal care. It is noteworthy that the grantors had substantial assets, Mr. Byrne was a sophisticated executive, the solicitors kept impeccable records and the deceased did not have children to challenge this award or to otherwise benefit from the estate.

Diligence take-away 

The right to compensation and the precise calculation should be spelled out in the document. Section 61(5) of the Trustee Act, confirms that [n]othing in this section applies where the allowance is fixed by the instrument creating a Trust.

If the lawyer is named, consider sending the client for ILA or at a minimum, keep meticulous records that compensation was discussed and understood. You may also wish to have a colleague present for this discussion.

This is best practice even when the entitlement is legislated, highlighted by Justice Sheard’s decision that reduced a Trustee’s payment based on a Trust Officer’s evidence that the estate was less complex than average. 8

Endnotes

Brown (Re), 1999 CarswellOnt 4628, [1999] O.J. No. 5851, 31 E.T.R. (2d) 164 at pages 166
Supra at page 167
3  [2009] O.J. No 1718 (S.C.)
4 Substitute Decisions Act 1992, SO 1992, c30 s. 46(3)
5 (2004), 9 E.T.R. (3d) 236 (Ont. S.C.J.)
6 Supra at 147
7 Supra at 151
Heron Estate (1996), 10 E.T.R. (2d) 281 (Ont. Ct. (Gen. Div.). Capital receipts was reduced to 1% and capital disbursements to 1.5% - while keeping 2.5% for revenue receipts and 2.5% for revenue disbursements.

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History Update

Amanda McInnis, Inch Hammond Professional Corporation

The Hamilton Club; A Brief History

The Hamilton Club, located in a brick building on the corner of Main and James, was established in 1873. Its presence is inconspicuous with only a flag-framed awning bearing the Club’s crest, going unnoticed by most passersby, but it has a fascinating history with ties to the legal community.  

I appreciate that, historically, the Hamilton Club was the proverbial and literal “old boys’ club”.   As a private club with membership fees, I recognize that it was (and in some respects, still is) a club for the privileged. However, its history, from its architecture and art collection, to the anecdotal stories of its members and esteemed guests, to its hosting of circuit Judges, offers a fascinating glimpse into a small part of Hamilton’s past.

The Hamilton Club was established to be a gathering place for members of Hamilton’s political, professional, and business community; the Club’s founding articles declaring “the acknowledged necessity of a comfortable Gentlemen’s Club”.

In 1873 the founders, which included several notable lawyers and judges, purchased a brick house on Lot 40, at the corner of Main and James, from Charles Magill for $10,000.00 (interestingly, financed with a mortgage which was not paid off until approximately 60 years later with a 5% interest rate).

The building was a prestigious choice, being the first brick building erected in Hamilton. It was substantially damaged by fire in 1906, requiring significant repairs to restore the skeleton of the building, which has remained substantially the same to the present day, with the construction of some further additions and renovations (including the “women’s annex,” which was built in 1960 after women were permitted membership).

In 1912 the Club started to collect artwork, much of which continues to be displayed throughout the Club today. Apparently, the purchase of a Tom Thompson painting in 1945 for $5,000 was considered by many members of the Club to be “scandalous” and the picture “incoherent”.

The third floor of the Club, which currently houses a full-sized billiard table, also has small storage rooms which once were bedrooms. Though initially constructed to provide a room for guests to stay after late-night poker or whist tournaments, they eventually became the headquarters for Judges travelling to Hamilton on the Assizes circuit. Even into the 1930’s, the visiting Judges would stay in the dorms, descending to the dining room for breakfast, after which they would be picked up by the Sheriff and escorted to the Court House.

According to the Law Society of Ontario’s article “Superior Court on Autumn Circuit1”, “[i]n addition to the usual luggage, judges and lawyers on circuit had to take with them legal forms and documents, collars and tabs, and their gowns. Specialized carrying cases were manufactured for ease of transport of these items. Judges carried on long-standing traditions that dated from Britain of carrying with them a black cap to pronounce a sentence of death. Occasionally judges picked up additional items on circuit: if there was no criminal business, the judge was presented with a pair of white gloves to symbolize what was referred to as a “virgin assizes”.

The Hamilton Club has also been the host to many prominent guests. As a young man, Sir Winston Churchill visited and gave a lecture. In 1906, Earl Grey dined at the Hamilton Club. Earl Grey was in Canada as Governor-General from 1904-1911. A football fan, he also donated the ultimate prize for Canadian football – the Grey Cup.

The records kept by the Club reflect not only important events in Hamilton and Canada’s history, like the memorial scrolls and plaques in honour of the members who died in WWI and WWII, but also the ordinary and mundane. I find the latter to be particularly revealing with respect to the daily life and character of the Club’s members.

These records document over a century of discussions, deliberations, and debate amongst members and management with respect to the operation and administration of the Club and through these routine issues, the attitude and personality of the individual members is displayed.

There are strongly worded letters raising issues such as pricing, operation of hours, and the quality of Club amenities. Apparently at one point there was significant concern by some members that the billiard table would fall through the second floor. On another occasion, the addition of a bowling alley was hotly debated.

The 1910 rules provide detailed, strict (and apparently essential) rules on card games, including limiting dice to backgammon and permitting only specific stakes to be played with each game. Infringing members would have their names posted in the card room and “any member whose name shall be twice so posted within twelve months shall (ipso facto) cease to belong to the Club, and his name shall be erased from the list of members”.

There are also messages from management scolding members, invoking what appears to be the rules prohibiting disorderly conduct with the ominous potential of the suspension of all Club rights and privileges.

Two of such complaints, from 1889, I found amusing, and have accordingly reproduced below:

“Dear Sir:

It was brought before the Committee of Management yesterday that a few evenings ago you were so helplessly intoxicated that it was necessary to stop the Dundas train immediately opposite the Club and that you were carried by the waiters from this Club to the train to the evident amusement of the on-lookers. As such proceedings as this cannot fail to give a bad reputation to the Club, and as it is unquestionably a breach of Rule 45, I am instructed to notify you that upon any repetition of this conduct the committee will deal with you under that rule”.

“Dear Sir:

I regret to say that I am instructed by the Committee of Management to write to you about your conduct generally, and, more particularly early yesterday, in regard to your dog. It was reported to the Committee that, not only was your dog in the Club contrary to the Rules, but he was evidently there with your knowledge and approval inasmuch as you took him into the dining room and allowed him to sit on a chair at the table and fed him there. The Committee feels that so flagrant and willful a breach of the Rules of the Club cannot be allowed to pass and I am instructed therefore to notify you that any further breach of the Rules by you and the Committee will proceed under Rule 43 and suspend you from all privileges of the Club”.

McMaster University houses much of the Hamilton Club’s archives; boxes and boxes of financial records, handwritten notes, membership lists, menus, telegraph cables, messages and even a box of complaints. I was hoping to attend at the archives and explore the contents of these boxes to find more specific ties to Hamilton’s legal community. Unfortunately, at this current time and due to the current pandemic, these records cannot be accessed.

However, I still find reading about these little moments of history not only amusing, but disproving of the bleak, rigid and stuffy character that the Club’s members of decades past must commonly be presumed to have had. In contrast, exploring the Club’s history reveals lively and boisterous characters, who were critical and demanding of each other and themselves. As was beautifully expressed in the retrospect written for the Hamilton Club’s 100th anniversary “There is no real calendar for generations. There is none for the Hamilton Club; only the painstakingly hand-written records of the first few decades, where ghosts emerge as people, and the more formal records that followed, where people emerge more as ghosts.”

The Club will soon celebrate its 150th anniversary. As we are currently going through some of the most historically significant and tumultuous times in recent memory, it will be interesting what these records will say about this generation for those future historians reflecting back. n

Many thanks to Vanessa Ciccarelli and the staff at the Hamilton Club for providing me with many of the historical resources used in my research of the history of the Hamilton Club.

Endnotes

1 https://www.lso.ca/getdoc/fb7b6f10-83d2-4ea0-b4b3-ec12e5f1f9e9/superior-court-on-autumn-circuit