Thursday, April 11, 2019

Equity, Diversity, and Inclusion and the Law Society of Ontario's Bencher Election

I will not be voting for any bencher candidates that do not fully and openly support equity, inclusion and diversity initiatives.  Here’s why.

I graduated from Queen’s University law school in 1983.  I was the only black student, and one of only a handful of racialized (non-white) students, in my class of 150.  One day, after I’d asked a question in a lecture, a classmate to whom I’d never spoken looked perplexed.  He asked me whether I was a foreign student.  No, I’m from Kitchener, I replied.  After second year of law school, I applied  for an articling position in Toronto.  During an interview, a partner of the firm said to me – “You’re black, you must come from a poor family.”  No, I’m from a pretty average, middle class family, I replied.  (My mother, although a single parent, was a psychology professor at the University of Guelph).  I didn’t get the articling position.  Several years into practice, a client who I was meeting for the first time looked at me, surprised, and said  “You didn’t sound black on the phone.”  Frankly, since the person was client I didn’t reply.  I just smiled (in a black sort of way).   A couple of years ago, I was attending a reception with judges of the Ontario Court of Justice, as a member of The Advocates’ Society’s board of directors.  I was the only racialized lawyer in a small group.  During introductions, one of the judges turned to me (and only me) and asked, “Are you a sole practitioner?”  No, I’m a partner in a 100 lawyer law firm I replied. 

I could go on, but you get my point.  More than 35 years later, I’m still being asked the same questions that, to some, may seem innocent, but to me are at best annoying and at worst offensive.  Whether or not they intended to so, all of these people put me in a position where I got my back up.  Suddenly, I was on the defensive, trying to justify why I was in the place that I was, doing what I was doing and speaking the way that I speak.  These questions and statements are examples of “unconscious bias”.  They made my “lived experience” so much different from the experience lived by for example, white, middle class law students from Kitchener.  

In the last two weeks of April, Ontario lawyers and paralegals will vote to elect benchers of the Law Society of Ontario (LSO).  These are the people that, over the next few years, will decide how to tackle the important issues that are presently facing the legal profession in our province.  In my view, equity, diversity and inclusion in the profession is one such issue.  The last convocation of benchers decided that the issue was important enough to establish a working group to address challenges faced by racialized licensees.  In 2016, the working group released a report that recommended a number of specific initiatives.  As one of the D&I initiatives, the LSO introduced a Statement of Principles (SOP).  Pursuant to the SOP, all licensees are required to create and abide by an individual SOP that acknowledges their obligation to promote equality, diversity and inclusion generally, and in their behaviour toward colleagues, employees, clients and the public.

Not surprisingly, following the LSO’s introduction of the SOP, there ensued a vigorous debate in the profession, including at my firm, about whether the SOP was somehow offensive because the LSO was purporting to dictate behaviour to intelligent, educated professionals.  Comments made to me went something like this:  How dare the LSO encroach on our independence and freedom of expression with some Orwellian principle?  Isn’t it trite to say that we all believe that that racism and discrimination are bad?  We don’t need the LSO to tell us that!  

Give me a break.  Sure. I agree that the LSO’s approach to the SOP is ham-fisted.  However, sometimes you need to be act with a fist to bring about change.  In my experience, attitudes simply don’t change with the passage of time.  People don’t magically become more enlightened. Real change happens because the people to whom it matters, simply refuse to accept the status quo.  If attitudes change, we’ve learned that the outward manifestation of those attitudes into meaningful action can be painstakingly slow.  It has proven to be the case in a profession that seems incredibly resistant to change.  In terms of diversity and inclusion,  the legal profession has not yet fully embraced the concept.

Racialized and other equity seeking lawyers still face disproportionate barriers in obtaining articling positions, and in the licensing process.  They continue to be underrepresented in proportion to Ontario’s population in legal workplaces and at all levels of seniority.  Lawyers like me are becoming impatient.  A speaker at a recent D&I seminar hosted by my firm told us that sometimes you need to be disruptive to accelerate the pace of change.

Inclusion is an important concept.  To feel included in the profession means a sense of pride and belonging.  It means feeling that your contributions as a member of the profession are respected and valued.  At the very least, it means not being subjected to annoying and inane comments and questions that require you to defend and justify your membership in the profession.  If the LSO doesn’t take up that cause on behalf of its licensees, who else is  going to do it?  We need to drag the profession into the 21st century, and sometimes being disruptive is the only way to accomplish that goal.

On an intellectual level, I can understand why some have a problem with the SOP.  On a practical level, I can’t fathom why some bencher candidates would invest the amount of time and energy it would take to make stopping the SOP the cornerstone of their platforms.  Whatever the reason, I will not be voting for any of them.



Tuesday, April 9, 2019

SCC: Party Autonomy in Arbitration Trumps Access to Justice Concerns

In a 5 to 4 decision, the Supreme Court of Canada held the concept of “party autonomy” and holding parties to a valid arbitration agreement trumped access to justice and policy concerns.  The Court allowed an appeal from the Court of Appeal for Ontario in which the majority ruled that part of a class action should be stayed and should proceed by way of arbitration even where there was a possibility of duplicating proceedings and inconsistent results.

In this case, the plaintiff Avraham Wellman proposed a class action for damages against TELUS Communications Inc. (“TELUS”) on behalf of about 2 million Ontario residents who had entered into mobile phone service contracts with TELUS during a specified time frame.  The proposed class consisted of both consumer and business customers.  Wellman alleged that TELUS had engaged in an undisclosed practice of rounding up calls to the next minute such that customers were overcharged and were not provided the number of minutes to which they were entitled.  TELUS’s standard terms and conditions in its service contracts included an arbitration clause stipulating that all claims arising out of or in relation to the contract (apart from collection of accounts) must be determined through mediation and then arbitration.

The arbitration clause was invalidated by Ontario’s Consumer Protection Act to the extent that it would otherwise prevent class members who were consumers from pursuing their claims in court.  However, it did not apply to business customers.  TELUS sought to have the class action stayed with respect to business customers, relying on the arbitration clause.  The motion judge dismissed TELUS’s motion for a stay and certified the action.  She held that Section 7(5) of the Arbitration Act, 1991 (“Act”) grants the courts discretion to refuse a stay where it would not be reasonable to separate the matters dealt with in the arbitration agreement from the other matters.  The motions judge held that this discretion could be exercised to allow business customers’ claims that were otherwise subject to the arbitration clause to participate in the class action where it was reasonable to do so.  The Ontario Court of Appeal dismissed TELUS’s appeal.

Justice Moldaver wrote the opinion for the majority of the SCC (Justices Gascon, Cote, Brown and Rowe concurred).  Justice Moldaver held that Section 7(5) of the Act does not grant the court discretion to refuse to stay claims that are dealt with in an arbitration agreement. 

This finding is somewhat perplexing because Section 7(5) of the Act reads as follows:

The court may stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that,

(a) the agreement deals with only some of the matters in respect of which the proceeding was commenced; and

(b) it is reasonable to separate the matters dealt with in the agreement from the other matters.

However, Justice Moldaver held that in keeping with the modern approach that sees arbitration as an autonomous, self-contained, self-sufficient process to which the parties agree to have their disputes resolved by an arbitrator, courts should generally take a hands off approach to matters governed by the Act.  The general rule reaffirms the concept of party autonomy and upholds the policy underlying the Act that says that parties to a valid arbitration agreement should abide by their agreement.  Paragraph 7(5)(a) and 7(5)(b) set out two preconditions.  The first precondition is met if the agreement deals with only some of the matters in respect of which the proceeding was commenced.  The second precondition is met if it is reasonable to separate the matters dealt with in the agreement from the other matters.  If both preconditions are met, instead of ordering a full stay, the Court may allow the matters that are not dealt with in the arbitration agreement to proceed in Court and may stay the court proceeding in respect of the matters that are dealt with in the agreement.  Justice Moldaver held that policy considerations cannot be permitted to distort the actual words of the statute, read “harmoniously” with the scheme of the statute, its objects and the intention of the legislature.  In this case, the legislature had already spoken to some of the concerns by shielding consumers from the potentially harsh results of enforcing arbitration agreements through the Consumer Protection Act.  The legislature made a careful policy choice to exempt consumers and only consumers.  That choice must be respected and must not be undermined by reading Section (7)(5) in a way that permitted courts to treat consumers and business customers as one and the same. 

Justice Moldaver held that while there can be no doubt as to the importance of promoting access to justice, this objective cannot, absent express direction from the legislature, be permitted to overwhelm the other important objectives pursued by the Act.  To do so would undermine the legislature’s objective of ensuring parties to a valid arbitration agreement abide by their agreement, reduce the degree of certainty and predictability associated with arbitration agreements, and weaken the concept of party autonomy in the commercial setting. 

The dissenting opinion was jointly written by Justices Abella and Karakatsanis (Chief Justice Wagner and Justice Martin concurred).

The dissenting judges held that Section 7(5) of the Act did give courts discretion to allow the entire proceedings to continue in court even if some parties would be otherwise subject to an arbitration clause.  A discretionary ability to grant a partial stay logically includes the power to refuse a partial stay.  They held that the only interpretation that gives meaningful effect to the discretionary language of Section 7(5) is one that confers on judges the ability to allow both arbitrable and non-arbitrable dispute to proceed in court.  Otherwise the words “may stay the proceedings with respect to the matters dealt with in the arbitration agreement” are superfluous and add nothing. 

The dissenters reasoned that the Ontario Court of Appeal has since 2002 granted stays of proceedings that would otherwise be subject to arbitration and for nearly a decade has permitted otherwise arbitrable matters to be joined with class actions in the public interest of avoiding duplicative proceedings, increasing costs and risking inconsistent results.  They held that the overall purpose of the Act was promote access to justice because the court system can be costly and slow.  The court’s discretion to intervene was narrow to further the goals of expedient dispute resolution.  Arbitration was intended to be a means by which parties on a relatively equally bargaining footing chose to design an alternative dispute mechanism.  However, all of TELUS’s clients, both business and consumer, signed the same non-negotiable standard form agreement.  TELUS’s individualized arbitration clause effectively precludes access to justice for business clients when a low-value claim does not justify the expense.  It’s mandatory nature illustrates that the rationales of party autonomy and freedom of contract are not existent. 

By inserting the reasonable requirement in Section 7(5)(b) of the Act the legislature clearly contemplated that in certain circumstances, it would be unreasonable to separate matters dealt with in the arbitration agreement from other matters.  In this case, eliminating judicial discretion effectively eliminates access to justice.  TELUS’ interpretation would result in costly and time consuming factual inquiries on how to divide the arbitrable and non-arbitrable claims even where the substance of both claims is identical as in this case. 

Here to impose arbitration on willing parties violates the spirit of the Act and operates as an invisible barrier to a remedy and presumptively immunizes wrongdoing from accountability contrary to fundamental notions of civil justice.

TELUS Communications Inc. v. Wellman 2019 SCC 19



Tuesday, January 22, 2019

Ontario Judge Awards Substantial Damages to Musician for "Despicable" Deceit By Former Girlfriend

I admit that I’m late to the party in reporting on this case, but it has such an interesting and unusual fact set that, when I read it,  I thought “better late than never”.  In a recent decision, Justice David L. Corbett of the Ontario Superior Court of Justice (Abramovitz v. Lee 2018 ONSC 3684), granted default summary judgment and substantial damages, including punitive and aggravated damages, against the defendant Jennifer Lee  for what the judge called “her despicable interference in Mr. Abramovitz’s career.”  Lee had impersonated the plaintiff Eric Abramovitz and frustrated a unique opportunity that Abramovitz had to advance his career as a professional musician.  She did so, apparently because she feared that Abramovitz would move to California and end their relationship.

The parties met in 2013 when they were both students at McGill University’s Schulich School of Music.  Abramovitz was a gifted musician, and an accomplished clarinetist.  He had studied the clarinet since he was seven years old with some of Canada’s greatest clarinet teachers.  He was the winner of a number of prestigious prizes and awards and in 2013 was named as a promising up and coming artist.

In December of 2013 Abramovitz applied to study at the Coburn Conservatory of Music in Los Angeles, California (“Coburn”).  He hoped to complete the last two years of his bachelor’s degree.  Every Coburn receives a full scholarship including tuition, room and board and a living stipend to cover meals and other expenses.  The scholarship was worth tens of thousands of dollars.

Abramovitz had applied to study under Yehuda Gilad, an internationally renowned "clarinet pedagogue". Gilad was recognized as one of the best clarinet teachers in the world and accepted only two new clarinet students per year at Coburn from dozens of applicants.  Students applied from all over the world to study with Gilad.  Abramovitz had long aspired to study with Gilad and after a very selective pre-screening process he was invited to a live audition at Coburn in Los Angeles in February of 2014.  Abramovitz and his parents flew to Los Angeles for this audition which was conducted in front of a committee of faculty members including Gilad.  Abramovitz was told he could expect a decision by April 1, 2014.

Meanwhile, Abramovitz and Lee’s relationship progressed quickly.  They began living together.  Abramovitz trusted Lee and let her use his laptop computer and gave her his passwords.

Coburn got back to Abramovitz by email on March 27, 2014.  It offered Abramovitz a place to study with Gilad on full scholarship. 

Lee intercepted Coburn’s acceptance email and responded to it, impersonating Abramovitz.  She declined Coburn's scholarship offer because Abramovitz would be “elsewhere”.  Lee then deleted the acceptance email and recomposed another email purportedly from Gilad’s email account (which she established under her own name).  The fake Gilad email advised Abramovitz that he had not been accepted at Coburn.  Instead, the fake email from Gilad advised Abramovitz that he would not be given a full scholarship and would have to pay substantial amounts in expenses to attend another program at the University of Southern California and pay his own living expenses.  Lee knew that Abramovitz would not be able to afford this alternative, fake offer.

Abramovitz was completely fooled by this deception and stayed in Montreal and completed his music degree at McGill.  As a result, Gilad lost the two year full scholarship opportunity to study with Gilad.

Abramovitz brought an action against Lee in Ontario claiming damages on the basis of deceit, intrusion upon seclusion, invasion of privacy and intentional or negligent infliction of mental suffering.  In Justice Corbett’s view, this case was primarily about deceit – that is Lee’s impersonation of Abramovitz to send a false rejection letter to Coburn and her impersonation of Gilad to create an email account in his name and send a false rejection letter to Abramovitz. 

Lee was personally served with the statement of claim in Montreal.  She did not file a notice of intent to defend or statement of defence and was noted in default.  Abramovitz moved for summary judgment. 

Justice Corbett held that he was satisfied from the facts alleged in the statement of claim, which were deemed to be true by virtue of Lee’s default, and from the supplementary evidence filed by Abramovitz that Ontario had jurisdiction simpliciter because Lee’s primary residence was in Ontario.  Residence is the first presumptive connecting factor establishing jurisdiction.  Before attending McGill, Lee had lived with her parents in Ontario.  Her parents continued to live in Ontario and Lee maintained a residence at her parents’ home while she was away at school in Montreal.  Accordingly, she was domiciled both in Ontario and Quebec. 

Justice Corbett held that the law to be applied to the torts alleged in the statement of claim was the law of the place where the activity occurred i.e. the civil law of Quebec.  Quebec law is a “foreign law” in Ontario and the substance of Quebec law is a question of fact that has to be proved by evidence.  However, Abramovitz introduced no evidence of what the applicable law in Quebec was.  As a result, Justice Corbett relied on the presumption that the applicable law was, in substance, the same as Ontario common law.  The judge was satisfied that justice could be best done by applying Ontario law under the presumption that applies when foreign law is not proved.

Abramovitz’s damages were extensive.  They included loss of educational opportunity and loss of income caused by redirection of his career.  Justice Corbett held that his claim for loss of reputation by being rejected by Coburn was short term and would be addressed, at least in part, by the judgment. Under loss of educational opportunity, Abramovitz argued that he had lost a “big break” to study under Gilad that could have launched his career.  Instead he stayed at McGill and completed his Bachelor of Music.  After that he attended a two year graduate certificate in performance at USC and in those circumstances eventually had a chance to study with Gilad in a certificate program not a degree program two years later than he had hoped and not on full scholarship.  The judge was satisfied that Abramovitz had lost the value of his scholarship with Coburn and that his career had been delayed for about two years.  (Gilad’s affidavit was filed in support of the motion for summary judgment).  The judge fixed the lost income at two years of a starting salary with a reputable symphony orchestra.  He then awarded damages for loss of scholarship and Abramovitz’s additional educational costs.  All such losses amounted to US $334,000.00.  However, Abramovitz had claimed only $300,000.00 CAD for general damages in his statement of claim.  Considering the relevant currency exchange rate, the amount calculated by the judge exceeded the amount claimed.  However, in part because of the default nature of the proceedings, Justice Corbett awarded Abramovitz $300,000.00 CAD in general damages – the sum that he had claimed  and the sum for which Lee had been given notice.

Justice Corbett held that Lee’s conduct had been despicable, was sufficiently blameworthy to  merit awards of punitive and aggravated damages.  He assessed punitive damages at $25,000.00 to address the betrayal of trust by Lee.  He awarded aggravated damages of 25,000.00 to represent the “incompensable” personal loss suffered by Abramovitz by having a closely held personal dream snatched from him by a person he trusted.  Frankly, it is difficult to understand the apparently artificial distinction the judge made between the two heads of damage.  Nevertheless, the fact scenario is remarkable, and if true, worthy of sanction.



Wednesday, December 12, 2018

Ontario Court of Appeal Declines to Clarify When Judges Can Impose Fines Below Statutory Minimum

In a decision released on December 7, 2018, the Ontario Court of Appeal missed an opportunity to provide lower courts with guidance  regarding the circumstances in which they could depart from imposing statutory minimum fines required by provincial regulatory statutes.  Section 59(2) of the Provincial Offences Act (“POA”)  gives the court discretion to impose something less than the minimum where “exceptional circumstances” make it “unduly oppressive” or “not in the interests of justice” to do so.   However, the Court of Appeal ruled that the provincial offence regime is better served by leaving the requirements for departure from minimum fines and sentences intentionally vague.  In fact, the Court may have even muddied the waters by appearing to say that “exceptional” means “unusual” and then failing to define the term unusual.
The case, Ontario (Environment, Conservation and Parks) v. Henry of Pelham Inc. 2018 ONCA 999, drew attention from a number of third parties who sought to intervene before the court of appeal to weigh in on the meaning of exceptional circumstances.  However, only the Criminal Lawyers Association was granted such leave.  Many expected the court to determine the standard to be applied in the exercise of judicial discretion to depart from mandatory minimum sentences found in over 600 Ontario provincial offences to which section 59(2) of the POA applied.  In addition, the case would have an influence on similar cases in other provinces where there was no jurisprudence at the appeal court level.  The judge who granted leave to appeal to the Court of Appeal, Justice Ian Nordheimer, in his endorsement noted both the importance of having guidance from the Court of Appeal on an unclear issue and stated that it was “essential for the due administration of justice that leave be granted”.  Justice Nordheimer held, “It is evident that there is no clear guidance as to when the requirements of section 59(2) are met.  Indeed, from the existing cases, it would appear that a very broad approach has been taken that may not reflect an apparent will of the Legislature that a departure from a minimum fine should only occur in exceptional circumstances.  Consequently, some guidance from this court respecting the minimum requirements that need to be established before section 59(2) can be invoked would be helpful.” 
Section 59(2) of the POA provides that, “although the provision that creates the penalty for an offence prescribes a minimum fine, where in the opinion of the court exceptional circumstances exist so that to impose the minimum fine would be unduly oppressive or otherwise not in the interests of justice, the court may impose a fine that is less than the minimum or suspend the sentence”. 
In November 2017, a resident of St. Catharines, Ontario called the Ministry of Environment and  Climate Change Pollution Hotline, claiming that one of the two ponds on his property had turned black.  Ministry officers investigated and observed a black pond with a faint organic odor.  The respondent, Henry of Pelham, a Niagara area winery, advised the Ministry that the corporation had spread a mixture of cattle manure and grape pomace on its lands for approximately two weeks and it had not been incorporated into the soil because of wet weather conditions.  The respondent speculated that the manure/pomace mixture may have entered one of the creeks that emptied into the pond through a tile drain.  As soon as Pelham became aware of this situation, it retained an environmental firm to assess it, prepare an action plan, replace a pump for the ponds aeration system that had not been operating for about one year, and arranged for black organic matter to be cleaned from the entrance to the pond.  These actions cost Pelham $12,000. 
At trial, the justice of the peace found that exceptional circumstances existed, not because of the monetary implications of the case, but because the nature of the offence and Pelham’s immediate actions in light of the offence and therefore the statutory minimum of $25,000 should not automatically be accepted as appropriate.
On appeal to a Superior Court judge, the appeal judge agreed that there were exceptional circumstances and concluded that a fine is “not in the interests of justice” when it is unfair.  He concluded that imposing a $25,000 fine in the circumstances would be seen as patently unfair and that the offence was a very modest incident.  He then asserted that it was not obvious that the Crown could have proved its charge without Pelham’s guilty plea.  However, he concluded that the fine should be raised from $600 to $5,000 instead of the minimum $25,000 prescribed by the Act. 
In short, both JP and the Superior Court judge had imposed fairly modest fines on Pelham for a discharge into a pond that had the effect of creating a “faint organic odor” for an unknown period of time.  Both courts held that the corporation’s acts were, essentially minimal, had no lasting effect, and took into consideration that Pelham had pleaded guilty to the charge of “discharging or causing or permitting the discharge of material into a water course” and had taken remediation measures at an expense of some $12,000.  They concluded that these were exceptional circumstances that justified departing from the minimum fine of $25,000 imposed by the Ontario Water Resources Act (“Act”).    
The Crown appealed that decision to the Court of Appeal.  Leave to appeal was granted by Justice Nordheimer.  At issue was whether the court should provide some guidance as to the operation of section 59(2) and how it affects the numerous statutes, other than the Act, that provide for provincial offences that are subject to a statutory minimum fine or sentence.  The Court of Appeal held that regulatory offences arise in a situation different from the criminal law.  They were strict liability offences where the Crown had to prove the commission of the prohibited act beyond a reasonable doubt and that liability followed unless the defendant could establish a defence of due diligence on the balance of probabilities. In addition, the main sentencing objective for regulatory offences was deterrence as opposed to punishment.  Under the Act, Pelham’s  offence was one of the more serious in which the higher range of penalties applied and that the corporation’s guilty plea put the $25,000 minimum fine in play. 
The Court of Appeal disagreed with both lower court decisions, but Justice Grant Huscroft, writing for the court, refused to identify circumstances where section 59(2) of the POA would allow the court to impose a lesser fine.  Justice Huscroft looked at the nature of minimum fines and held that they apply without regard to the circumstances of individual offenders or circumstances surrounding the particular offence.  It was an approach chosen to achieve deterrence by the legislature and the court’s responsibility to apply that approach.  In this case, the prosecutor chose to prosecute under part III of the Act where the minimum fine had to be imposed on a conviction unless relief under section 59(2) of the POA was warranted. 
Justice Huscroft went on to find that the court’s discretion in not applying a minimum fine was not unfettered but the difficulty was that the criteria in 59(2) of the POA was vaguely worded, i.e. the meaning of “exceptional”, “unduly oppressive” and “not in the interests of justice” were evaluative and comparative concepts that have no settled court meaning and leave room for interpretation in application.   Justice Huscroft held that such vague terms must be interpreted in context as the modern approach to statutory interpretation makes clear.  Trial judges must not recognize exceptional circumstances too readily less they become the norm.  Specifically, unduly oppressive includes financial hardship.  Interests of justice “allows consideration for broader residual considerations” and interests of justice does not mean fairness.     
He held that the appeal judge had erred in concluding that the circumstances of this case were exceptional and that it would not be in the interests of justice to impose the minimum fine under the Act.  The strength of the Crown’s case given the plea of guilt was irrelevant and the minimum fine ought to have been imposed.
Justice Huscroft summarized his reasoning as follows: 

1.      Section 59(2) applies exceptionally.  It will be an “unusual case” in which the imposition of a minimum fine would be considered “unduly oppressive” or “otherwise not in the interest of justice”. Justice Huscroft did not elaborate what he meant by “unusual”;
2.      Whether a minimum fine is unduly oppressive usually will depend on consideration of personal hardship.  The bar for relief is set very high where difficulty in paying a minimum fine is inadequate to justify discretionary relief;
3.      Whether a minimum fine is otherwise “not in the interests of justice” involves consideration of not only the interests of an individual offender but also the interests of the community protected by the relevant public welfare legislation; and
4.      The discretion under section 59(2) cannot be exercised arbitrarily.  Trial judges must explain their reasons for invoking section 59(2) and in particular must demonstrate both that circumstances are exceptional and that it would be unduly oppressive or otherwise not in the interests of justice to apply the minimum fine.
He held that in this case, the appeal judge erred in concluding that the circumstances were exceptional and not in the interests of justice because the appeal judge had determined that the interests of justice means no more than fairness.  Secondly, he concluded that the appeal judge had erred in engaging in a what he called “counterfactual” exercise by considering several factors that, in his view, would have rendered prosecution difficult had it occurred.  The judge had concluded that the facts in this case were so minimal that they created exceptional circumstances for the purpose of section 59(2).  Justice Huscroft held that the counterfactual analysis involved speculation on matters that the appeal judge was not entitled to consider. 
In the result, Justice Huscroft and his fellow appeal court Justices  -Watt and Fairburn - allowed the Crown’s appeal and imposed the minimum fine of $25,000 on Pelham.

Friday, November 30, 2018

Ontario Court Gives OK For Lawyer to Sue Law Society

The Ontario Court of Appeal is permitting lawyer Paul Robson’s action against the Law Society of Upper Canada (now the Law Society of Ontario) (“LSO”) and three of its employees for malicious prosecution and misfeasance in public office to proceed.  The appeal court’s decision overturned the decision of Justice Patrick Monahan of the Superior Court of Justice on a motion to strike by the LSO.  Mr. Robson argued before the court that he is a thorn in the side of the LSO and someone at the LSO wishes to silence him.

At the motion brought by the LSO, Justice Monahan had struck Mr. Robson’s fresh as amended statement of claim, without leave to amend, and dismissed his action against the LSO and four of its employees.  This was the second time that a Superior Court judge had struck Mr. Robson’s pleading without leave to amend.   On a prior motion, Justice Firestone had struck the plaintiff’s claim for negligence and his claims for malicious prosecution and misfeasance in public office on the basis that Mr. Robson had failed to plead the full particulars of his claims as required by the Rules of Civil Procedure (“Rules”).  As a result of that motion, Mr. Robson amended his claims for malicious prosecution and misfeasance in public office and responded to the law society’s demand for particulars.  The defendants then brought a second motion to strike which was heard by Justice Monahan.  Justice Monahan held that Mr. Robson’s pleading did not respond to the directions set out in Justice Firestone’s prior order and that he had failed to provide sufficient particulars of the LSO’s improper purpose or ulterior motive necessary to ground his claims. 

On appeal, a three judge panel of the Court of Appeal agreed with Mr. Robson that Justice Monahan had erred in striking the bulk of his claim and allowed the appeal with respect to the LSO and three of the four individual defendants. 

The background to this case began in 2002 when Justice Lax presided over a trial on the issue of whether Mr. Robson had acquired shares in certain companies while he was an undischarged bankrupt.  During the course of that trial, Justice Lax made a number of factual findings against Mr. Robson including a finding that he had attempted to conceal assets and the truth relating to such assets from the trustee in bankruptcy. 

As a result of the trial judge’s findings, the LSO began to investigate Mr. Robson’s conduct in 2002 in connection with his bankruptcy proceedings.  Separately, the bankruptcy trustee brought a motion to set aside Mr. Robson’s discharge from bankruptcy on the basis that he had obtained his discharge by fraud.  The trustee relied primarily on Justice Lax’s reasons.   Justice Campbell dismissed the trustee’s motion which was appealed to the Court of Appeal.   Justice Doherty, J.A., for the Court of Appeal, found that while Justice Lax had made a finding of fraud, that finding was not binding against Mr. Robson in subsequent proceedings because it was not “necessary” to the determination of the issue before Justice Lax., i.e. namely whether Mr. Robson had acquired the shares while an undischarged bankrupt.  Further, Justice Doherty held that since Mr. Robson did not have notice that the trustee was seeking a determination that he acted fraudulently and had not fully defended the action before Justice Lax, it would be unfair to preclude him from re-litigating the issue in subsequent proceedings. 

Seven years later, in 2013, a LSO hearing panel held that Mr. Robson had engaged in conduct unbecoming a licensee.  The LSO relied exclusively on the findings made by Justice Lax as to Mr. Robson’s fraudulent and dishonest conduct.  Mr. Robson was disbarred. 

In 2015 a LSO appeal panel overturned the hearing panel’s finding of professional misconduct.  It held that the hearing panel had erred in law in precluding Mr. Robson from leading evidence and from re-litigating the factual findings made by Justice Lax because Justice Doherty’s decision in Mr. Robson’s bankruptcy proceedings was controlling.  As a result the appeal panel set aside the disbarment. 

Mr. Robson then brought the action for negligence, malicious prosecution and misfeasance in public office against the LSO and four of its employees.  The Court of Appeal set out the applicable legal principles for the torts of malicious prosecution and misfeasance.  It then referred to rule 25.06(8) of the Rules which applies where these torts are pleaded.  The rule provides:  “Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances for which it is to be inferred.”   

Essentially, Mr. Robson’s fresh as amended pleading alleged that the respondents knew that Justice Lax’s judgment was not correct and that many of the facts that she relied upon were inaccurate but that they deliberately acted contrary to Justice Doherty’s decision and deliberately precluded unfavourable witnesses in order to harass and harm him.  In his oral submissions to the Court of Appeal, but not in his pleadings, Mr. Robson says that he is a thorn in the side of the Law Society and someone at the Law Society wishes to silence him.  The Court of Appeal concluded that the elements of both torts had been sufficiently pleaded.  The facts pleaded, if true, supported the inference of an improper LSO purpose.  If true, they also pointed to a deliberate and dishonest wrongful abuse of the powers given to a public officer.   

The Court of Appeal allowed Mr. Robson’s appeal except as it related to one LSO employee,  because Mr. Robson had provided no particulars as to her role in the LSO’s investigation and prosecution.

See Robson v. The Law Society of Upper Canada, 2018 ONCA 944



Friday, October 12, 2018

Ontario Judge Considers Systemic Anti-Black Racism As A Sentencing Principle

Earlier this year, a Toronto jury found Kevin Morris (“Morris”), a 26 year old black man, guilty of several gun-related charges including possession of an unauthorized firearm, possession of a prohibited firearm with ammunition and carrying a concealed weapon.  The jury acquitted Morris of assaulting a police officer with intent to resist arrest. Morris was sentenced to 15 months in jail.  Predictably, there was an outcry in some media and corners of the criminal justice community that the sentence was too lenient and “soft on crime”.  On September 11, 2018, several months after Morris’s conviction, Justice Shaun Nakatsuru, the trial judge, released his written reasons for the sentence, including why he spared Morris from serving time in a federal penitentiary.   The reasons run twenty-one pages in length.  At the end of the reasons, Justice Nakatsuru attached as an appendix a report entitled “Expert Report on Crime, Criminal Justice and the Experience of Black Canadians in Toronto,” written by three social scientists.  The appended report, also runs 21 pages in length, excluding another 10 pages of footnotes. 

The Crown objected to the admission of this report.  The Crown also objected to the admission of a second report entitled “Social History of Kevin Morris”, written by one of the social scientists.  The second report focussed on how systemic anti-black racism had affected Morris’s particular circumstances and led him to be where he is now.  However, both reports were either admitted or considered by Justice Nakatsuru on the basis that sentencing judges should take a broader and more liberal view of materials that should be admissible at a sentencing hearing.  The judge reasoned that the goal of a sentencing hearing is to arrive at a fit and proportionate sentence.  Justice Nakatsuru concluded that the more he knew about Morris and his crimes, the better he could arrive at such a sentence.  This was particularly important when it came to tackling the problem of the disproportionate imprisonment of black offenders.

Justice Nakatsuru described the facts of the case as being straight-forward.  In December of 2014, four years earlier when Morris was 22 years old, the police received a call about a home invasion in Scarborough.  As they were investigating the scene, the police came upon four black males walking in a parking lot.  The police stopped the young men.  Morris ran away.  As he was running, Morris discarded his jacket, which police eventually recovered and found that the jacket contained a loaded revolver.  Prior to trial, Morris brought a Charter application to stay the charges.  Justice Nakatsuru did not stay the charges but did find some Charter violations that were relevant to the sentencing. 

The Crown and the defence were far apart on the appropriate sentence.  The Crown asked for 4 to 4.5 years in jail.  The defence argued that the sentence should be 1 year before credit was given for the Charter breaches.  At the sentencing hearing, the defence presented the two reports.  The first report was written by Professor Akwasi Owusu-Bempah, Camisha Sibblis and Professor Carl James.  They are all very qualified academics and experts in their field.  Ms. Sibblis was the primary author of the second report.  As to the first report which dealt with anti-black racism in Canadian society, Justice Nakatsuru agreed with the Crown that an expert report was not required at the sentencing hearing because the law has “now long taken notice of these sorts of things”.  Justice Nakatsuru nevertheless found the report to be so useful that he attached it as an appendix to his reasons, noting “It is invaluable to have such a report available for every judge on every sentencing of a black offender.”.  Justice Nakatsuru indicated that he agreed with the authors’ conclusions which he set out in his reasons in full.  In part, the report concluded “that the social circumstances of Black Canadians in general, and of Black male Torontonians in particular, should be viewed as criminogenic…” and while “no one individual should be completely absolved of their own offending behaviour when it comes to offending behaviour, the social realities that have produced or contributed to such behaviour can be acknowledged, and serve to guide judicial decision making”.    

The second report was intended to provide the judge with more information about Morris, the accused.  The author provided her analysis as to the impact of systemic racism on Morris’s experience in and out of the justice system.  Justice Nakatsuru admitted the second report, but with some qualifications.  The judge indicated that he used his own independent evaluation of how systemic factors applied in Morris’s case and was free to disagree with what the author of the report had said.   While Justice Nakatsuru found that the reports were helpful to him, he also held that we live in a real world of limited resources, and recognized that not every accused is going to be able to present such sentencing reports to the courts for their assistance. 

Justice Nakatsuru held that in arriving at a fit sentence for Morris he was aware that the sentencing principles of general deterrence and  denunciation was most important for offences such as these.  In obiter he held that, “We have a serious problem with gun crime.  Reducing gun crime and its associated violence, is a long game.  Effective solutions take time, money and commitment.  There is no one single solution in the short term.”  He them commented on some of the issues that were responsible for gun crime including addressing social and economic inequalities and disadvantages, supporting smart and fair policing with adequate resources, dismantling gangs and getting at the reason why young people join them, and indicated that the problems are complex and the answers were not easy.   The criminal justice system plays an important role not only to deter gun crime with fit sentences but to make sure the criminal justice system demands the respect of the people who look to is for solution. 

Justice Nakatsuru ruled that when looking at the case in a principled manner, “broader systemic factors such as racism and the effects of colonialis must surely have some impact upon the application of general deterrence and denunciation".  He recognized that criminal judges have limited tools available to them to meet the objectives of sentencing.  But the law does not say that systemic and background factors should play no role in the assessment of the seriousness of the crime and the weight to be given to general deterrence and denunciation. 

In arriving at the sentence for Morris, Justice Nakatsuru considered a number mitigating factors including the factors set out in the second report.  In all of the circumstances he found that a sentence of 15 months was the fit and appropriate sentence in order to deter and denounce.  After finding some Charter violations, Justice Nakatsuru reduced the jail sentence to 12 months accounting for the “dead” time that Morris had already spent in jail.

Justice Nakatsuru recognized that some would see the sentence as being too lenient.  He responded, “In my opinion, we have to get past this idea of waiting for the perfect person to be lenient.  Waiting for the most benevolent soul by the standards of the privileged and the few before we decide to extend consideration for leniency.  For we may be waiting a long time.” 

see R. v. Morris, 2018 ONSC 5186



Wednesday, July 25, 2018

Ontario Court Allows Increased Political Activity By Charities

In an important decision released on July 16, 2018, Justice E.M. Morgan of the Ontario Superior Court of Justice held that the provision of the Income Tax Act (“ITA”) which restricted a charity’s “political activities” to a maximum of ten per cent of its resources were unconstitutional because it offended the charity’s right of freedom of expression contained in the Canadian Charter of Rights and Freedoms (“Charter”).  As a result, Justice Morgan ordered the Canada Revenue Agency (“CRA”) to immediately cease interpreting and enforcing the impugned section of the ITA in that manner.  In doing so, Justice Morgan effectively ended CRA’s “political activities” audits of Canadian charities and opened the door for charities to engage in much more non-partisan political activity.

In this case, (Canada Without Poverty v. AG Canada, 2018 ONSC4147), CRA had threatened to revoke the charitable status of Canada Without Poverty (“CWP”) on the basis that the charity was offside the maximum 10 per cent rule concerning its political activities.  CWP argued that the ITA’s distinction between “charitable activities” and “political activities” was artificial and that almost all of its work could be labelled political activity in the sense that public advocacy for policy change was fundamental to its charitable purpose of poverty relief. 

ITA Prohibits “Political Activities” By Charities

Section 149.1(6.2) of the ITA defines the extent to which a registered charity can devote its resources to political activities and provides that where a charity devotes substantially all of its resources to charitable activities, it can only devote ten per cent of such resources to political activities, provided that the political activities are “ancillary and incidental” to its charitable activities and the political activities do not include the direct or indirect support or opposition to any political party or candidate for public office. 

The CRA has the power to revoke a charity status if it determined that the charity carried on more than the allowed ten per cent of its activities as political activities as opposed to charitable activities.  As a matter of interpretation, the CRA divided political activities into two general types – submissions directly to government and public advocacy.  In doing so, the CRA acknowledged that there could be policy and advocacy components to charitable activities.  In this respect, political activities and charitable activities are not always treated as distinct. 

Section Violates Guarantee of Freedom of Expression

Canada Without Poverty challenged the overall distinction between charitable activities and political activities that were embodied in the ITA and challenged the CRA rule of interpretation enforcement limiting political activity to ten per cent of its resources.  It argued that there was no valid distinction between political expression and (with the exception of partisan political involvement) and charitable activities and so the distinction in the ITA was redundant violated the guarantee of freedom of expression under section 2(b) of the Charter .  CWP argued that the infringements could not be justified under section 1 of the Charter. 

Justice Morgan agreed.  He held that there is no widely agreed upon definition of what is political.  Certainly there was no definition of political activities in the ITA.  Virtually all of Canada Without Poverty’s activities are communicative or expressive and in that sense “political”.  Justice Morgan wondered whether one could “coherently distinguish between political activities and charitable activities or for that matter any other kind of activities”.

CWP argued that public advocacy for policy change was fundamental to its charitable purpose of poverty relief.  Without this component its charitable activities could not accomplish their purpose.  CWP’s approach to relieving poverty is one that strives for the full civic engagement of people living in poverty.  Its purpose is to relieve poverty by sharing ideas with its constituency.  Relying on various international studies on poverty relief, CWP placed its resources and efforts behind civic engagement and public dialogue with the goal of bringing about legislative policy change for the effective relief of poverty.  Justice Morgan held that while this approach may be in keeping with contemporary activism in the field, it was out of step with ITA and the CRA policy statement on interpretation and enforcement of the ITA.  Canada Without Poverty argued that the CRA’s ten per cent rule should no longer be applied because there was no cogent distinction between non-partisan political activities and charitable activities and therefore no reason for political activities to be ancillary or incidental to charitable activities.    

Justice Morgan found that even the Minister of National Revenue in a consultation report agreed with many of the positions taken by CWP.  The consultation panel had recognized that a key principle with respect to charitable activities is that public advocacy and charitable works go hand in hand in a modern democracy and are seen as an essential part of the democratic process.  

Canada Without Poverty challenged the sections of the ITA as infringing its right to freedom of expression.  Justice Morgan held that it would be difficult to express the importance of freedom of expression as a Charter right any higher than the Supreme Court of Canada has put it, “fundamental – because in a free, pluralistic and democratic society we prize a diversity of ideas and opinions for their inherent value both to the community and to the individual”.   Justice Morgan held that there was no doubt that the activity in which the charity wished to engage, i.e. public advocacy of policy change, is within the guarantee of freedom of expression.  CWP argued that non-partisan political advocacy is an accepted charitable activity under the ITA.  The arbitrary ceiling of ten per cent of the organization’s resources restricted the charity’s expressive conduct.  It was the ten per cent restriction that was the target of CWP’s complaint not the status itself. 

Justice Morgan reviewed the evidence.  According to affidavit evidence adduced by CWP, its activities that could be seen as political encompassed far more than ten per cent of its efforts and resources.  It argued that the application of the impugned sections of the ITA imposed restrictions on all expressive activity whose goal was entirely wrapped up with communicating to the public that a law or policy decision at any level of government should be changed or retained for the purpose of relieving poverty.  This ten per cent restriction was fundamentally at odds with the charity achieving its charitable purpose because virtually everything the charity did was “political”.  The fact that a parliament allowed political activity, but the restriction was arbitrarily limited to ten per cent, infringed the charity’s freedom of expression rights.  CWP adduced evidence that it would not be able to function absent its charitable status.

Justice Morgan held that as a registered charity, Canada Without Poverty had a right to effective freedom of expression, i.e. the ability to engage in unimpaired public policy advocacy towards its charitable purpose.  The burden imposed by the sections of the ITA and by the policy adopted by CRA in enforcing that section runs counter to that right.  Accordingly, CWP’s right to freedom of expression under section 2(b) of the Charter was thereby infringed. 

Prohibition Can Not Be Justified Under Section 1 of Charter

Justice Morgan then looked at whether the impugned sections of the ITA could be saved because they were justifiable under section 1 of the Charter. 

Having found that the section of the ITA violated section 2(b) of the Charter so that it burdens CWP’s pursuit of public policy advocacy, it was necessary to turn to section 1 of the Charter.   At that point the burden shifted to the Attorney General to establish that the infringement was reasonable and justified in a free and democratic society. 

The analysis follows the Oakes test (Supreme Court of Canada case – R. v. Oakes).  In full, the test considers whether the legislative objective is pressing and substantial, whether the means chosen by the legislature is rationally connected to the objective, whether the legislation minimally impairs the right of free expression, and whether it is proportional considering the deleterious and salutary effects on the right.  All these tests must be addressed in sequence.  The failure of government to pass any one of the hurdles results in the conclusion that the infringement of the Charter is diversified. 

Justice Morgan held that the first question to arise under Oakes is whether “the state’s action under challenge has good ends”.   In considering the answer to that question, Justice Morgan looked at the right that was being infringed.  He quoted former Chief Justice McLachlin in saying that, “It is difficult to image a guaranteed right more important to a democratic society than freedom of expression…it seems that the rights enshrined in section 2(b) should therefore only be restricted in the clearest of circumstances.”   

Justice Morgan rejected the Attorney General’s submission that the ITA section was a permissive one, i.e. it permitted a charitable organization to devote substantially all, rather than all of its resources to charitable activities.  He held that it was obvious that rather than being permissive the section was prohibitive in that while it permitted ten per cent of an organization’s resources to be devoted to public policy advocacy, it prohibited the remaining 90 per cent of the resources from being devoted to public policy advocacy. 

Seen that way, the objective of the section of the ITA was to limit political expression, i.e.  keep it to a small percentage of the organization’s time, effort and resources.  He held that the government had offered no rationale for the ten per cent ceiling or not answered the question as to why parliament had not opened registered charity status to organizations pursuing political purposes but had limited political speech in furtherance of accepted charitable purposes.  He held that there was an artificial distinction made in the sections between charitable activity and non-partisan political activity and that having not established a pressing and substantial objective, the government’s case had not passed the first hurdle of Oakes.  Accordingly, there was no justification for the infringement of the charity’s right to freedom of expression under section 2(b) of the Charter.

Justice Morgan ordered and declared that:

  1. CRA cease interpreting and enforcing the section of the ITA that limited ten per cent of a charity’s resources to political activities;

  1. the phrase “charitable activities” used in the ITA be read to include political activities without quantum limitation in furtherance of the organization’s charitable purposes;

  1. there be a declaration that the impugned sections of the ITA are of no further force and effect; and

  1. the exclusion from charitable activities of partisan political activities remained in force.