Monday, January 20, 2014

Police Involved in Fatal Shootings Not Entitled to Consult Counsel Before Making Notes

This case concerns whether police officers, who are involved in fatal shootings of civilians, are permitted by the Police Services Act (the "Act") and the Special Investigations Unit regulations (the "Regulation") to seek the assistance of legal counsel before completing their notes on the shootings. 
 
In two independent fatal incidents, Douglas Minty and Levi Schaeffer were shot by the police.  Minty was shot dead by a Constable of the Ontario Provincial Police ("OPP") after he ignored the officer's command to drop a knife he was carrying.  Schaeffer was shot and killed by an Constable of the OPP when he also did not comply with a command to drop a knife.  In both cases, the officers were instructed by superiors to refrain from making their police notes until they had spoken with legal counsel.  The families of the two deceased brought an application before the Superior Court of Ontario seeking an interpretation of various provisions of the Act and "conduct and duties of police officers" respecting investigations in the Regulation.  The relevant issue raised by the families for the purposes of the appeal was whether the legislative scheme of the Act and the Regulation permitted the officers to consult with counsel before completing their notes.
 
The application was dismissed by the court on procedural grounds.  The Ontario Court of Appeal dealt with the matter on its merits and held that the Regulation did not permit police officers to seek counsel's assistance to complete their notes.  The Court of Appeal found that the Regulation did enitle the officers to receive basic legal advice as to their nature of their rights and obligations.  The police officers appealed that finding to the Supreme Court of Canada.  The Director of the Special Investigations Unit ("SIU") cross-appealed, arguing that police officers are not entitled to legal advice, basic or otherwise, prior to completing their notes. 
 
The majority of the Supreme Court of Canada dismissed the police officers' appeal and allowed the cross-appeal of the SIU.
 
Justice Moldaver wrote the decision of the majority of the court.  He held that permitting police officers to consult with counsel before preparing their notes is contrary to the very transparency that the legislative scheme of the Act and the Regulation aims to promote.  Justice Moldaver held that police officers are entrusted by the public with significant legal authority, including in some circumstances, the authority and power to use deadly force against their fellow citizens.  The "indispensable" foundation for such authority is the community's trust in the police.  Such trust can be tested when a member of the community is killed by the police.  The SIU is charged with the task of independently and transparently determining what happened when the community's trust in the police is at stake.  It is imperative that the investigatory process be, and appear to be, transparent. 
 
The majority of the court held that under the Act and the Regulation, a police officer who witnessed or participated in an incident which is being investigated by the SIU is not permitted to speak with a lawyer before preparing his or her notes concerning the incident.  While officers in their capacity as ordinary citizens may be free at common law to consult with counsel, the court was considering them in their professional capacity as police officers who are involved in SIU investigations.  In those circumstances, the Regulation governs.  It comprehensively sets out their rights and duties including their entitlement to counsel.  Justice Moldaver held that so long as police officers chose to wear a badge they must comply with their duties and responsibilities under the Regulation, even if this means at times having to forgo liberties they would otherwise have enjoyed as ordinary citizens. 
 
He held the following:
 
1.    Consultation with legal counsel at the note-making stage is contrary to the dominant purpose of the legislative scheme because it risks eroding the public confidence that the SIU process is meant to foster.  Allowing police to consult with counsel at the note-making stage creates an appearance problem.  A reasonable member of the public would naturally question whether counsel's assistance at the note-making stage was sought by officers in their self-interest to protect themselves and their colleagues from the potential liability of an adverse SIU investigation; 
 
2.    The legislative history demonstrated that the Act was never intended to create a free standing entitlement to consult with counsel that extended to the note-making stage; and
 
3.    Consulting with counsel at the note-making stage impinges on the ability of police officers to prepare accurate, detailed and comprehensive notes in accordance with their duty under the Regulation.  Police officers have a duty to prepare accurate, detailed and comprehensive notes as soon as practicable after an incident.  Permitting officers to consult with counsel before preparing their notes risks having the focus of the notes shift away from the officer's public duty towards his or her private interest and justifying what has taken place.       
 
The case is indexed as Wood v. Schaeffer 2013 SCC 71.
 
Regards,
 
Blair

Tuesday, January 14, 2014

Fired Employee Entitled to Both Damages and Full Pension Benefits

Richard Waterman had worked for IBM for 42 years when the company fired him without cause.  IBM provided him with 2 months notice of the termination of his employment.  He was 65 years old.  Waterman sued IBM to enforce his contractual right to be given reasonable notice of termination.  The trial judge set the appropriate period of notice at 20 months.  When he was fired, Waterman had a vested interest in IBM's defined benefit pension plan.  Under the terms of the plan, IBM had contributed a percentage of Waterman's salary to the plan on his behalf.  Upon termination, Waterman was entitled to a full pension and his termination had no effect on the amount of his pension benefits.  The trial judge declined to deduct the pension benefits paid to Waterman during the notice period in calculating his damages.  IBM's appeal was dismissed by the British Columbia Court of Appeal.  
 
The Supreme Court of Canada, Justice Cromwell writing for the majority, dismissed IBM's further appeal.  Chief Justice McLachlin and Justice Rothstein dissented.
 
Justice Cromwell held that the rule that damages are measured by the plaintiff's actual loss does not cover all cases.  He ruled that pension benefits are a form of deferred compensation for an employee's service and constitute a type of retirement savings.  They are not intended to be an indemnity for wage loss due to unemployment.  
 
In this case, it was clear to the court that a "compensating advantage" had arisen:  Waterman received both his full pension benefits and the salary he would have earned had he worked during the period of reasonable notice.  Had IBM given him working notice, he would have received only his salary during that period.  A compensating advantage arises if a source other than the damages payable by the defendant ameliorates the loss suffered by the plaintiff as a result of the defendant's breach of a legal duty.  A problem only arises with a compensating advantage when the advantage is one that: (a) would not have accrued to the plaintiff but for the breach; or
(b) was intended to indemnify the plaintiff for the sort of loss that resulted from the breach.
 
Justice Cromwell saw this case as akin to the "private insurance exception" - in general a benefit will not be deducted if it is not an indemnity for the loss caused by the breach and if the plaintiff has contributed in order to obtain entitlement to it.  In addition, the deduction issue was subject to broader policy considerations. 
 
Justice Cromwell held that in this case the factors clearly supported not deducting Waterman's retirement pension benefits from his wrongful dismissal damages.  Waterman's contract of employment was silent on the issue but it did not have any general bar against receiving full pension entitlement and employment income.  Waterman's retirement pension was not an indemnity for wage loss, but rather a form of retirement savings.  While IBM had made all of the contributions to fund the plan, Waterman had earned his entitlement to benefits through his years of service.  Therefore, as in the private insurance exemption, the pension benefits were not an indemnity and Waterman had contributed to the benefits.
 
Finally, the broader policy concerns in this case supported not deducting the pension benefits.  Justice Cromwell held that the law should not provide an economic incentive to dismiss pensionable employees rather than other employees.
 
In his dissenting opinion, Justice Rothstein wrote that the private insurance exception has no application to this case.  The case required an assessment of Waterman's loss under the terms of a single contract which gave rise to both the right to reasonable notice and a right to pension benefits.  Waterman's entitlement therefore turned on the ordinary governing principle that he should be put in a position that he would have been in had the contract been performed.  If his pension benefits were not deducted, he would have been given more than he bargained for and IBM would have been charged more than it had agreed to pay. 
 
Justice Rothstein wrote that employer-provided benefits are an integral component of the employment contract so deductibility of such benefits turns on the terms of the employment contract and the intention of the parties.  Under the terms of Waterman's employment contract he would have been eligible to receive pension benefits only upon being terminated or retiring.  Therefore, his contractual right to wrongful dismissal damages and his contractual right to his pension benefits were based on opposite assumptions about his availability to work.  Damages could not be paid on the assumption that he could have earned both. 
 
Unlike a defined contribution plan, a defined benefit plan guarantees the employee fixed predetermined payments upon retirement for life.  Deducting the benefits would provide the wrongfully terminated employee with exactly what he would have received had the employment contract been performed:  an amount equal to his salary during the reasonable notice period and thereafter defined benefits for the rest of his life.
 
In this case, Waterman's wrongful dismissal had no impact on his pension entitlement and he could not have received both his salary and his pension benefits had he continued to work for IBM through the reasonable notice period.
 
Regards,
 
Blair

Monday, January 13, 2014

Supreme Court Enlarges Public Interest Powers of Provincial Securities Commissions

Patricia McLean served as a director of Hucamp Mines Ltd., a reporting issuer registered in Ontario under the Ontario Securities Act, from March of 1996 to June of 2001.   Beginning in July of 2001, McLean began cooperating with the Ontario Securities Commission ("OSC") in respect of certain possible improper actions at Hucamp.  Although the OSC announced in July of 2005 that it would hold a hearing under its public interest powers to sanction McLean and others for their alleged misconduct at Hucamp, McLean did not enter into a settlement agreement with the OSC until September 8, 2008.  In the settlement agreement, McLean consented to the making of an order against her which barred her for 5 years from trading in securities, with some exceptions, and banned her for 10 years from acting as an officer or director of certain entities registered under the Ontario Securities Act.  
It was not until 15 months latter - January 14, 2010 - that the executive director of the British Columbia Securities Commission notified McLean that he was applying to that commission for a "public interest" order against her in British Columbia.   The BC Commission relied on McLean's settlement agreement with the OSC in bringing the proceeding.  However, section 159 of the BC Securities Act provides that all proceedings under that Act "must not be commenced more than 6 years after the date of the events that gave rise to the proceedings".   The BC Commission issued an order adopting the same prohibitions that were set out in the OSC's order.  In doing so, it interpreted that "the event" that had triggered the 6 year limitation period was McLean's entering into a settlement agreement with the OSC and not the misconduct that occurred in 2001 or earlier.  The BC Court of Appeal applied a correctness standard of review and upheld the commissions implied decision.  
McLean appealed to the Supreme Court of Canada.  The court dismissed her appeal.  
Justice Moldaver, writing for the majority of the court, held that that issue before the court was whether "the event" that triggered the 6 year limitation period, was the underlying misconduct that gave rise to McLean's settlement agreement with the OSC or the settlement agreement itself.  
Justice Moldaver found that in reviewing the ordinary meaning, the context and the purpose of the relevant provisions of the BC Securities Act, the Commission's conclusion that the event giving rise to the proceeding was McLean's settlement agreement was reasonably supported. 
He further held that the appropriate standard of review of the Commission's decision was "reasonableness", not correctness as the BC Court of Appeal had held.  Justice Moldaver held that both parties, i.e. the Commission and McLean, had proposed reasonable interpretations of the British Columbia Securities Act.  However, under the reasonableness review, the courts will defer to any reasonable interpretation adopted by an administrative decision maker, even if other reasonable interpretations may exist.  Because the Commission'`s interpretation was not shown to be an unreasonable one, there was no basis to interfere on judicial review. 
Justice Moldaver held that the modern approach to judicial review recognizes that courts may not be as qualified as an administrative tribunal to interpret that tribunal's home statute.  In particular, the resolution of unclear language in a home statute is usually best left to the administrative tribunal because the tribunal is presumed to be in the best position to weigh the policy considerations often involved in choosing between multiple reasonable interpretations of such language. 
Allowing secondary jurisdictions (British Columbia in this case) to wait until the conclusion of a primary proceeding (the OSC proceeding) obviates the need for parallel and duplicative proceedings that will overburden securities commissions and the targets of proceedings.  The Commission's interpretation of its statute therefore furthered the legislative goal of improving inter-jurisdictional cooperation between provinces and territories.
Finally, Justice Moldaver found that although the Commission's interpretation significantly extended the duration of time for which a person might be subject to regulatory action, of itself, that was not offensive to the purpose of limitation periods.  Limitation periods are always driven by policy choices in an attempt to balance the interests of the parties.  The Commission's interpretation struck a reasonable balance between facilitation of inter-provincial cooperation and the underlying purposes of limitation periods.  
Regards,
Blair

Tuesday, January 7, 2014

Ontario Court of Appeal Allows Enforcement Action Against Chevron To Proceed

Last September, I blogged about a decision of Justice David Brown of the Ontario Superior Court of Justice in which the judge concluded that the courts of Ontario had jurisdiction to hear an action commenced by Ecuadorean plaintiffs to enforce a US $18 billion judgment that they had obtained in Ecuador against Chevron Corporation ("Chevron").   However, this finding was not necessarily good news for the plaintiffs.  On his own motion, Justice Brown stayed the action on the basis that, "Chevron does not possess any assets in this jurisdiction at this time" and "the plaintiffs have no hope of success in their assertion that the corporate veil of Chevron Canada should be pierced and ignored so that its assets become exigible to satisfy the judgment against its ultimate parent". 
The Ecuadorian plaintiffs appealed to the Ontario Court of Appeal from Justice Brown's order imposing a stay of the action.  Chevron and its co-defendant in Ontario, Chevron Canada,  cross-appealed from the judge's finding that Ontario had jurisdiction to hear the case. 
The Court of Appeal unanimously allowed the plaintiffs' appeal and dismissed Chevron's cross-appeal.  Justice MacPherson wrote the judgment of the court. 
Justice MacPherson briefly summarized the facts of the case, noting that since the date of Justice Brown's decision, the highest appeal court in Ecuador had affirmed the judgment of the intermediate appeal court for damages for remediation for Chevron's alleged environmental pollution and costs totaling US$9.51 billion, but had allowed Chevron's appeal with respect to punitive damages.  The bottom line was that there was a final judgment in Ecuador against Chevron for US$9.51 billion.  The Ecuador plaintiffs sought to have this order recognized and enforced in Ontario against Chevron and Chevron Canada.
The Court of Appeal held that the appeal and cross-appeal identified two distinct and separate issues:
1.    Did Justice Brown err by, on his own initiative, staying the action? and
2.    Did Justice Brown err by concluding that an Ontario court has jurisdiction to determine whether the judgment of the Ecuadorean court should be recognized and enforced in Ontario? 
The Court of Appeal considered the jurisdictional question first.  The three justices agreed with Justice Brown's analysis.  Justice MacPherson found that the ruling of the Supreme Court of Canada in the Beals v. Saldhana case was "crystal clear" about how the real and substantial connection test is to be applied.  That case held that the real and substantial connection test requires that a significant connection exist between the cause of action and the foreign court and that the enforcing court was required to determine whether such a connection existed, i.e. the exclusive focus of the real and substantial connection test is on the foreign jurisdiction.   There is no parallel or even secondary inquiry into the relationship between the legal dispute and the foreign country and the domestic Canadian court being asked to recognize and enforce the foreign judgment (as Chevron had argued).
Once it is established that the foreign court had a real and substantial connection to the subject matter of the action, the analysis shifts to a consideration of whether the judgment is enforceable in Ontario as a matter of domestic law.
It was clear that the Ecuadorean judgment against Chevron satisfied the requirements of Rule 17.02(m) of Ontario's  he Rules of Civil Procedure, i.e. that a statement of claim may be served on a defendant without a court order outside Ontario where the claim is based on a judgment of a court outside Ontario.  With respect to Chevron Canada, Justice Brown correctly found that Chevron Canada had a physical, non-transitory, presence in Ontario and carried on business in Ontario.  
However, the Court of Appeal disagreed with Justice Brown's decision to stay the action on his own motion pursuant to section 106 of Courts of Justice Act.  Justice MacPherson gave several reasons for this decision.  
Firstly, Chevron and Chevron Canada are sophisticated parties with excellent legal representation.  They chose not to attorn to the jurisdiction of the Ontario courts and did not seek a stay of the action.  The Court held that Justice Brown's decision to stay a major case involving poor and vulnerable foreign residents and one of the world's largest corporations in a long and difficult process in a foreign court and a huge damages award was entirely his own construct.  No party had sought it.  Consequently, the issue was not argued before Justice Brown and no cases were put before him regarding the appropriateness of granting a discretionary stay.  
Secondly, Chevron and Chevron Canada made the decision to refuse to attorn to Ontario's jurisdiction "with their eyes wide open".  Having made this choice, they were limited to making only a jurisdictional objection in their motion. 
Thirdly, against the backdrop of no law and no argument on section 106, what Justice Brown really did was to embark on a disguised, unrequested and premature rule 20 and/or rule 21 (summary judgment) motion.  He made significant findings about the corporate and legal structures of Chevron and Chevron Canada and the viability of the plaintiffs' action as pleaded in the statement of claim.  Those issues deserved to be addressed and determined in the context of a record and legal arguments made under the rules 20 or 21 or at trial.  To do so, without a complete record would constitute an injustice to the plaintiffs. 
Fourthly, Justice Brown erroneously imported a forum non conveniens argument into his reasoning on the stay.  Justice MacPherson held that there was a serious problem with such an  analysis.  The location of Chevron's head office and Chevron's place of business in the United States and the lack of any connection between Chevron and Chevron Canada were issues that were at the heart of the conflict between the parties.  They could not be decided by easy resort to a potential action in New York.  It was an error in principle for Justice Brown to stay the action on these grounds absent a hearing on the matter and an opportunity for the plaintiffs to fully contest this very issue.  Additionally, the forum non conveniens analysis was not appropriate, and indeed may be irrelevant, in the recognition and enforcement context.
Fifthly, there was a disconnect between the rationale underlying Justice Brown's reasons on the jurisdiction issue and the content of his reasons on the discretionary stay issue.  His jurisdictional reasons properly opened the door to a "hugely significant decision of Ecuador's highest court possibly being recognized and enforced in Ontario".   However, his discretionary stay analysis "completely undermines the jurisdiction of the court" by pointing to a myriad of factors that show that New York was the better forum and suggested that the case not be heard in Ontario.  In Justice MacPherson's view, this derailment was premature in the context of the respondents not raising the discretionary stay issue. 
Sixthly,  Justice MacPherson did not share Justice Brown's concern about the waste of judicial resources where "there is nothing to fight over".  He held that the long history of this litigation and especially Chevron's role in it, suggested the opposite.  He held that the picture is an obvious one.  For 20 years Chevron has contested the legal proceedings of every court involved in this litigation - in the United States, Ecuador and Canada.  Chevron even sought and briefly obtained a global injunction against enforcement of the Ecuadorean judgment.  Accordingly, the recognition and enforcement action in Ontario is not an academic exercise and would not be an "utter and unnecessary of valuable judicial resources."  

In these circumstances, Justice MacPherson held that the Ecuadorean plaintiffs do not deserve to have their entire case fail on the basis of an argument against a position that was not even made and to which they did not have an opportunity to respond.  He held that it is not the role of the court to weed out cases on this basis and it is a risky practice for a judge to second guess counsel on strategy in the name of judicial economy.
The Court of Appeal held that this case cries out for assistance, not unsolicited and premature barriers and allowed the appeal.

Regards,

Blair